Royal Bafokeng set to reduce capex

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“RBPlat announced on 21 June 2012, that it had introduced cash preservation measures in response to the difficult market conditions, at the time characterised by the softening of Platinum Group Metals (PGM) prices as a result of a weaker demand for PGM’s as well as local cost pressures. To this end, the company identified opportunities to defer expenditure in the short to medium-term on certain non-critical items without any material negative impact on the business,” the company said.

[DATA RBP:Royal Bafokeng Platinum] (RBPlat) announced that it would defer exploration drilling at Bafokeng Rasimone Platinum Mine (BRPM) and Styldrift II, defer construction of a chairlift at BRPM’s South shaft, and defer the BRPM concentrator upgrade.

The upgrade, together with an additional 50 million rand in order to construct a Upper Group 2 (UG2) blending facility, was intended to increase BRPM’s concentrator facility to 230,000tpm and thereby enable the treatment of greater quantities of UG2. This is now replaced by the BRPM upgrade to 350,000tpm to process ore from BRPM and Styldrift,” said RBPlat.

“The BRPM Joint Venture has revised its overall capex budget for the Styldrift I project from 11.4 billion rand to 11.0 billion rand and reduced the BRPM capex budget by 350 million rand resulting in a combined reduction of 750 million rand.”

The upgraded BRPM concentrator facility was scheduled to come on-stream by the end of 2013 and would have enabled the treatment of ore comprising up to 30 per cent UG2, from the current limit of eight per cent UG2.

RBPlat had undertaken a detailed strategic review of its operating activities, long-term capital expenditure commitments and reduction in capital expenditure as a means to strategically focus on its core business strength.

“A deteriorating PGM pricing environment and associated industry cost escalations, together with the company’s pro-active approach, has resulted in an increased focus on its more profitable core business, that of mining and processing the Merensky Reef, supported by a re-emphasis on the importance of cash preservation and value creation,” it said.

“Consequently, the company has made a strategic decision that is anticipated to provide certainty around the processing solution of its core business while continuing with the trial mining of the UG2 reef. The aim is to improve the company’s ability to extract the UG2 reef optimally, and provide a permanent processing solution for the UG2 ore when the PGM market supports a value enhancing business case.”