15th Dec 2008 07:30
AQUARIUS PLATINUM LIMITED 15 December 2008 Business Interruption at Everest Platinum Mine
Aquarius Platinum Limited wishes to update shareholders on the situation at the company's Everest Platinum Mine. As previously announced, operations at the mine were suspended from night shift on Sunday 7 December after instability was detected in the upper areas of the mine. The instability was subsequently found to be a result of subsidence that has occurred over an upper area of the mine with the area affected by subsidence limited to a mined out area of the orebody which includes the upper levels of the decline shaft. Following a comprehensive assessment of the options available to mine management, and primarily focussing on the future safety of the mine and its personnel, the decision has been made to suspend operations for a minimum of six months. This is considered a prudent time frame that will permit assessment of the best way forward for the long-term.
Commenting on this decision, Stuart Murray, CEO of Aquarius Platinum said: "Our decision to suspend operations is most regrettable, however it is the right one because it will allow us the time we need to ensure that Everest is brought back into production in the safest manner for the long-term, rather than rushing into a short-term high-risk decline rehabilitation project. The suspension of operations also places the least strain on the South African business as a whole at a time of low platinum group metals prices."
Subsidence
The instability is found to be a result of subsidence across the upper decline area and a contributing factor may have been the exceptionally high rainfall preceding the event, with a third of typical annual rainfall, occurring in one day on 23 November. Pro-active monitoring measures gave early warning of the event and decisive action by mine management ensured that no personnel were injured. The subsidence has continued during the course of the last week.
Management has continued to assess the situation in conjunction with the South African Department of Minerals and Energy (DME) and a Section 54 notice in terms of the Mines Health and Safety Act is in force prohibiting normal mining operations but allowing inspection teams to enter the mine and permitting the resumption of pumping operations.
Specialist inspection teams including Proto Members (Mine Rescue Services Team) were able to access the underground workings and determine the extent of the subsidence area by observing where pillar scaling was visible on the periphery of the area. Although the rate of subsidence had decreased by the weekend of 14 December, as evidenced by a significant reduction in settlement noise, it cannot be quantified when the area will finally settle. It is therefore uncertain when the area can be safely accessed to perform detailed assessments and commence with remedial activities. The vertical extent of the subsidence as calculated by surface measurements is currently estimated at a maximum of 15 centimetres.
The affected area is limited to mined-out areas across the upper part of the decline. Rock engineering specialists have confirmed that the subsidence will not propagate beyond this area and that it is constrained by geological features on the north and south and by the regional pillars to the north-west.
Location of Subsidence Area at Everest Platinum Mine
The subsidence resulted in pillar damage in the affected area, making the area unsafe, thereby preventing use of the decline system. Even though the subsidence did not affect any of the working faces, the decline access and decline belt system cannot be utilised, preventing any resumption of normal mining activities. Based on the current damage assessment and with input from an independent rock engineering expert any short-term attempt to resume production through rehabilitation of the decline would pose a significant safety-risk to employees.
Business Interruption
This business interruption due to subsidence is a significant event, and in assessing the lowest-risk way forward in terms of safety and operating cashflow impact, the decision has been made to suspend operations for a minimum of six months. This time will allow for a detailed technical investigation and the determination of alternatives to re-establish access and beltways into the underground workings after which Everest can to be returned to production in a safe manner. One possibility includes two alternate decline positions that could be developed from the previous opencast areas, each offering a technically acceptable access route. It should therefore be emphasised that the subsidence event does not jeopardise the sustainability of Everest on a long-term basis.
Retrenchments
Regrettably this decision also means that the majority of the workforce (approximately 1,950 people) will be retrenched. To this extent the process of consultation with the workforce and the unions has already commenced. Some limited opportunities exist for the redeployment of personnel to other AQPSA operations and a small team will be maintained at Everest. Existing consumables and stores stocks at Everest will be used at Kroondal and Marikana.
Insurance
An insurance claim is in preparation based on the subsidence event. AQPSA believes that there is sufficient ground for a combination of claims for subsidence, loss of earnings, clearance costs, and that the potential insurance cover will off-set a large part of the business interruption.
Production Update for October and November 2008
Until this event at Everest, the second quarter for the 2009 financial year to December 2008 had promised to be a continuation of the improvements reported in the first quarter at all the AQPSA operations. For the two months to November 2008, Kroondal, Marikana and Everest all experienced increases in production and decreases in cash costs, helping to offset further declines in operating margins due to current platinum group metals prices. Based on the actual production for October and November 2008 and an estimate for December 2008, both Kroondal and Marikana will show an increase of approximately 6% in PGM production and a reduction of approximately 8% in on-mine unit costs.
For further information please contact:
Nick Bias [email protected] + 41 (0)79 888 1642 Charmane Russell [email protected] +27 (0)11 880 3924 +27 (0)82 372 5816
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