EasternPlats Reports operating loss despite increased revenue
Eastern Platinum has reported its Q2 2020 condensed interim consolidated financial statements and analysis for the three and six months ended June 30, 2020. Below is a summary of the Company’s financial results for Q2 2020:
- Revenue for the six months ended June 30, 2020 increased to $23.5 million (Q2 2019 – $15.8 million) – 49% increase;
- Operating loss for the six months ended June 30, 2020 remained flat at $2.2 million (Q2 2019 – $2.2 million), even with the lost production due to COVID-19;
- Net loss to equity shareholders of $11.2 million during six months ended June 30, 2020 compared with $0.2 million in the same period of 2019 – the large resulting from a $7.5 million change in foreign exchange losses due to a significant devaluation in the South African Rand to the US$ as a result of COVID-19 and the settlement of a legal dispute with AlphaGlobal;
- Strong financial position with cash of $4.7 million and net working capital (excluding non-cash deferred revenue) of $8.0 million as at June 30, 2020; and
- Net operating cash flows generated of $3.3 million during the first six months of 2020 compared with $8.0 million used during the same period of 2019.
OPERATIONS
Barplats Mines (Pty) Ltd. (“Barplats”), a subsidiary of Eastplats, is in full operation with its tailings retreatment project located at the Crocodile River Mine following the South Africa government imposed lockdown which continued into April 2020 and a further brief temporary shutdown in June 2020 both as a result of COVID-19.
Additionally, a PGM scavenger plant operating from the feed following the chrome plant was restarted in late July 2020.
OUTLOOK
The Company is satisfied to have its workforce returned and the Retreatment Project in full operations and also the start-up during July of the PGM scavenger plant.
Eastplats will update its forecasts following the completion of the Optimization Program, which is currently not known. The effects of COVID-19 are changing rapidly and could have material effects on the Company’s 2020 outlook and its ability to attain targets.
The Company’s targets for 2020 subject to capital availability include:
• Completion of the Optimization Program for the Retreatment Project;
• Maximize operating results of the Retreatment Project;
• Establishment and execution of the appropriate TSF phase II capital works program;
• Commissioning and operation of the PGM scavenger plant;
• Assessment of the Circuit H Project;
• Assessment and decision regarding the larger scale PGM production for the tailings resource;
• Assessment of the CRM Zandfontein underground operations;
• Ensure appropriate care and maintenance on all resource properties; and
• Assessment and decision regarding Mareesburg project.
The Company is actively looking at opportunities for its other assets and properties and exploring options to utilize or monetize these assets.
COVID-19
On March 27, 2020, South Africa began a government directed nation-wide lock-down to fight COVID-19 and as a result the Company temporarily ceased its operations at CRM, until an essential services permit was issued by the government on April 8, 2020.
Accordingly, the Company began to recall certain of its workers and following some additional maintenance and after a short ramp-up the Company began operating at 50% of the workforce until May 1, 2020.
During May the Company then began to recall its remaining workforce who were on paid leave back to the mine, so that at June 1, 2020 all staff were back at work.
On June 13, 2020 the Company temporarily halted production for several days at CRM due to positive COVID-19 cases, but after full scale deep cleaning and testing, resumed operations at CRM.
The effects of COVID-19 are evolving and changing and the consequences of a further temporary shutdown of the CRM or other related issues cannot be reasonably estimated at this time but could potentially have material adverse effects on the Company’s business, liquidity and cash flows.
