25th Jan 2008 07:53
AQUARIUS PLATINUM LIMITEDASX, LSE & JSEFriday 25 January 2008
Change to underground mining regime at the Everest Mine
Aquarius announces that the underground mining contractor (Shaft Sinkers Mining (Pty) Limited `SSM') at its South African subsidiary's Everest Mine has abandoned the mining contract due to industrial relations and financial issues. With immediate effect, Aquarius Platinum (South Africa) (Pty) Limited `AQPSA' has assumed management of the Everest Mine's underground operations and the management are implementing contingency plans to resume production at the mine on 28th January 2008.
Background to the announcement
SSM were appointed in April 2005 to manage underground operations. In August 2007, Shaft Sinkers (Pty) Limited entered into a transaction to sell its contract mining subsidiary SSM to JIC Mining Services (Pty) Limited `JIC'.
On return from the traditional Christmas and New Year break significant concerns have arisen within the workforce of SSM in respect of the decision to sell the Everest business to JIC. Employees of SSM have staged a series of go-slows and unprotected strike actions resulting in significant production decline to a level of around 50% of the pre-Christmas output. AQPSA has informed SSM of a number of material breaches of contract and coupled with the industrial relations climate the situation deteriorated to the point where SSM dismissed very significant numbers of employees on 18 January 2008. This halted production on the mine. As a result of this unfortunate situation and other factors not fully disclosed to AQPSA it appears that the situation led to a breakdown of the sale process between SSM and JIC in recent days.
On 24th January, AQPSA received notice from Shaft Sinkers that it was abandoning the SSM contract because "After serious consideration of our obligations in terms of the Everest Mine Contract [SSM] regret[s]to advise you that (having regard to recent developments at the Everest Mine including the spate of strikes and go-slows culminating in the dismissal of the entire workforce on 18 January) we are unable to continue to discharge our obligations under the contract and have been left with no alternative but to abandon the contract and hand over operation of the Everest Mine to AQPSA."
As AQPSA realised that the mining contract would no longer transition smoothly between SSM and JIC, the Board took the decision on receipt of SSM's abandonment letter to protect the Company's interests and has as of 24 January 2008 entered into an agreement to acquire SSM's assets relating to mining activities at Everest for an amount of approximately ZAR 34 million. AQPSA will also assume the responsibility for the financial leases of the mobile mining equipment at Everest.
Very importantly AQPSA will also invite all SSM's employees to apply for employment within the group and significant progress in establishing contact with employees and reassuring them of job security has already occurred.
Despite the contractual process for dealing with contract breech, AQPSA has decided for the purpose of expediency and in the interests of SSM's employees and the need to retain skills in a remote part of the country that prompt termination of this business relationship is in its best interests. The alternative would have seen AQPSA and SSM run a legal separation process where the business costs to AQPSA might far outweigh any possible recoveries from SSM.
While it is anticipated that partial production will commence on Monday 28 January 2008, it is expected that the recruitment process to fill the labour compliment will continue until the end of February 2008. Consequently, as a result of the dismissal and shut down of operations, production losses are to date estimated to be 12,000 PGM (4E) ounces, and until operations are back to normal it is not possible to quantify the total lost production at AQPSA.
AQPSA has already engaged additional external resources in the fields of human resources, payroll administration and operational management to prepare for the hiring, induction and retraining of ex SSM employees wishing to join the Aquarius stable.
The processing operations will continue to be managed by contractor Minopex (Pty) Ltd.
AQPSA believes that the long-term outlook for production and earnings at Everest remain excellent as the operation continue to ramp production to a targeted 215,000 PGM (4E) ounces per annum.
For further information please contact:
In Australia: Willi Boehm
Aquarius Platinum Corporate Services
+61 8 9367 5211
In the United Kingdom and South Africa:
Nick Bias Aquarius Platinum + 44 7887 920 530 REGISTERED OFFICE
Aquarius Platinum Limited ¢â€" Clarendon House ¢â€" 2 Church Street ¢â€" Hamilton HMCX Bermuda
Email: [email protected]
Telephone: +61 8 9367 5211
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