Lower Q2 production at Eastplats’ Crocodile

Eastern Platinum (elr-t) saw second quarter production from its main Crocodile River platinum group metals (PGM) mine in South Africa’s Bushveld Complex shrink by one third, due to labour issues that led to a strike at the mine in early May.

Crocodile produced 20,528 oz. PGM from 201,986 tonnes grading 3.93 grams per tonne for the period ending June 30, 2011. For the same period last year, the mine yielded 30,820 oz. from 290,028 tonnes at 4.12 grams.

In the first quarter of 2011, the mine churned out 19% more PGM or 25,387 oz.

Eastplats says production at the mine was adversely affected by the illegal sit-in of 155 employees, followed by a strike of another 480 workers at Crocodile. However, it did estimate that it would lose about 7,000 oz. of production because of the labour disruptions.

The interruptions came on the heels of the company rejecting a wage offer by members of the National Union of Mineworkers.

Operations resumed at Crocodile on May 20 after Eastplats signed a two-year wage agreement with the union. The agreement included a cost to company wage hike of 10% year-on-year.   

Eastplats notes because of the events leading up to the strike, underground services and infrastructure at the mine’s Zandfontein and Maroelabult mines were damaged.

While it suspended the 155 workers and retained the other employees in May, the company says resources have been consolidated into the Zandfontein operations and that it has retained JIC Mining on a fixed-term contract to bring Maroelabult back to full production during the third quarter.

Based on actual production results for the first half of 2011, the miner anticipates PGM production of 105,000 oz. for the full year.

The company is also working at its 90,000-tonne-per-month Mareesburg platinum project on the Eastern Limb. It expects Mareesburg to come online in late 2012.

In late June, Siskinds LLP of London, Ont., filed a notice of application for a proposed lawsuit against the company and three of its directors and officers, alleging Eastplats failed to disclose “material changes” at Crocodile. It claims the company waited until mid-April to release its lower-than-expected output for the first quarter. The company notes production fell 22% during the first quarter compared to the last quarter of 2010, because of “a traditional slow start in January combined with the introduction of revised support methods.”  

The company intends to “vigorously” defend the proposed lawsuit.


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