| Wed 21 Jul 2004, 12:38 | | Palabora - Second Quarter 2004 - Operations Overvi |
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Palabora - Second Quarter 2004 - Operations Overview, Production Statistics And
Trading Update
PALABORA MINING COMPANY LIMITED
(Incorporated in the Republic of South Africa)
Registration number - 1956/002134/06
Share Code: PAM ARC ISIN: ZAE000005245
(`Palabora` or `the Company`)
SECOND QUARTER 2004 - OPERATIONS OVERVIEW, PRODUCTION STATISTICS AND TRADING
UPDATE
Underground Mine
Construction of the production footprint is nearing completion with two
crosscuts to be finalised. All 166 drawbells have now been constructed and
will come into production by the end of July. The cave induced surface cracking
continues to be monitored, with some minor surface infrastructure likely to be
relocated.
Production levels remain below target but the cave is maturing and fragmentation
is improving as more fine material is being drawn into the drawpoints.
Management continues its focus on optimising cave management.
In the quarter, 1 910 786 tonnes of ore were hoisted from the underground,
equating to a daily average of 20,987 tonnes, a 4,2% improvement over the
previous quarter. A record daily level of 32,571 tonnes of ore hoisted was
achieved in the period. The copper grade averaged 0,74%, slightly (2.63%) below
the previous quarter though a 23% improvement on the comparative period last
year.
Copper Operations
Ore treated during the second quarter was 1,896,600 tonnes, 9.7% below the
previous quarter, due primarily to planned maintenance around the surface plant,
producing 10,007 tonnes of copper in concentrate. Total concentrate smelted was
67,994 tonnes comprising 39,094 tonnes of Palabora concentrates and 28,900
tonnes of purchased concentrates. The milling of low grade oxide ore stockpiles
has been discontinued, resulting in improved recoveries in the concentrator.
Milled tonnes in the corresponding quarter in 2003, included the benefits of the
open cut ramp scavenging program, which concluded in November 2003.
Refined new copper production was slightly lower than the previous quarter due
to a lower anode supply. Refined nickel sulphate was affected by dilution during
repairs to the settling tanks.
Demand for rod and cathode remains high from the national market and copper
revenues continue to increase due to higher realised copper prices.
PRODUCTION STATISTICS
2Q 3Q 4Q 1Q 2Q Full
2003 2003 2003 2004 2004 year
2003
Palabora mine
Tonnes hoisted (`000 1,362 1,689 2,022 1,833 1,910 5,999
tonnes)
Ore treated (`000 2,726 3,398 2,838 2,101 1,897 11,415
tonnes)
Average ore grade: 0.60 0.53 0.63 0.76 0.74 0.59
copper (%)
Copper concentrates
produced 38.2 43.5 46.3 35.9 35.4 163.3
(`000 tonnes)
Average concentrate 32.7 32.9 31.3 29.7 28.3 32.1
grade: copper (%)
Copper in 12.5 14.3 14.5 10.7 10.0 52.4
concentrates (`000
tonnes)
Palabora
smelter/refinery
New concentrate
smelted on site (`000 73.7 64.0 72.5 59.4 68.0 275.2
tonnes)
New copper anodes
produced (`000 20.1 19.4 21.3 15.8 19.7 76.7
tonnes)
Refined new copper
produced (`000 19.2 17.4 20.9 17.9 17.2 73.4
tonnes)
By-products:
Magnetite concentrate 51 53 68 104.8 159.5 215
(`000 tonnes)
Refined nickel 27 26 38 53.7 37.4 152
sulphate (tonnes)
Vermiculite plant
Vermiculite produced 53.9 32.5 35.6 38.40 51.50 173.2
(`000 tonnes)
Vermiculite Operations
Vermiculite production during the quarter was 51,500 tonnes, in line with market
demand. Optimisation of the `mine-to-customer` process has been reviewed and
implementation of a number of process improvements is currently underway.
Overall vermiculite production was marginally ahead of sales for the quarter.
Recoveries across the plant have increased from a planned 57% to 66% whilst
plant feed has been reduced in line with the higher recovery performance.
Zirconium Basic Sulphate (ZBS)
The Board of Directors approved the sale of the ZBS plant to Southern Ionics
Incorporated of Mississippi in the USA, through a lease and purchase
arrangement. Terms of the agreement are currently being drafted.
Trading update and cautionary announcement
Shareholders are advised that the company`s earnings and headline earnings per
share for the period ended 30 June 2004 will be substantially (`substantially`
equates to 30% or more as defined in the Listings Requirements of the JSE
Securities Exchange South Africa (`JSE`)) below those of the comparative period,
resulting in a loss situation. It is anticipated that the unaudited results for
the period ended 30 June 2004 will be published on 29 July 2004, at which stage
further details will be provided regarding the company`s performance.
Shareholders are further advised that the company has embarked on a strategic
review of the business to reduce the operating cost base to a level which is
sustainable in the medium to long term, given the ongoing strength of the Rand
and the completion of underground construction. Various options are being
considered by management.
The company`s results have not been reviewed and / or reported on by the
company`s auditors and accordingly, shareholders are advised to exercise caution
when dealing in the company`s securities an the JSE until the unaudited results
for the period ended 30 June 2004 are published.
For further information please contact the Managing Director, Keith Marshall, on
+27 (0) 15 780 2802.
Phalaborwa
21 July 2004
Sponsor:
Barnard Jacobs Mellet Corporate Finance (Pty) Limited
