Bauba to capitalise on current elevated PGM pricing

Johannesburg – Bauba Resources in its condensed consolidated interim results for the six-month period ended 31 December 2020 says revenue decreased by 45,1% to R110,459 million (2019: R201,228 million), recording total comprehensive loss for the period of R30,932 million (2019: profit of R1,842 million).

The company also reports that foreign exchange gain realised was R12,611 million (2019: Rnil). Investment in property, plant and equipment increased by 211,9% to R82,960 million (2019: R26,599 million).

There was a significant delay to the development of Bauba underground operations. This was the result of a combination of the COVID-19 lockdown together with the appointment of a new underground mining contractor. This negatively impacted unit costs.

During lockdown, low chrome ore pricing did not justify running the underground operation at 50% capacity due to significantly higher mining costs, therefore Bauba did not produce any material from the underground operations from April to June 2020, which impacted the restart of operations where minimal tonnes were produced in July and August as these were site establishment months.

The current financial period under review commenced in July, three months after the announcement of the national lockdown. Ramp up in production began in July 2020 and progressed positively to over 25 000 tonnes of material hauled in the months of September and October, 31 500 tonnes hauled in November and 29 700 tonnes hauled in December. Total run-of-mine production for the six months under review was 125 200 tonnes versus 77 200 tonnes for the six months ended 31 December 2019.

77 800 tonnes of chrome concentrate was sold during the period under review, compared to 94 960 tonnes sold in the previous six-month period, due to lower wash plant yields as a result of the high on-reef development tonnes (including in stope) in proportion to stoping tonnes as the ramp up progresses.

Chrome ore CIF prices for benchmark 42% concentrate, as reported by FerroAlloyNet, averaged US$137 per tonne (China CIF) for July 2020 to December 2020. The price as at 31 December 2020 was US$132 per tonne (China CIF) but increased to US$165 (China CIF) in mid-March 2021.

H1 2020 prices averaged US$145 per tonne (China CIF) while full year 2019 averaged US$167 per tonne (China CIF). Revenue decreased by 45,1% to R110,459 million. This is due to considerably lower chrome concentrate prices over the period under review, as well as no production over effectively four months due to COVID-19.

During the period under review, Bauba experienced an increase in cost of sales due to a high volume of development tonnes being processed through our wash plant, resulting in a decrease in production yields.

OUTLOOK

Currently, Bauba’s underground development and ramp up is progressing positively with 26 500 tonnes hauled in February 2021. Chrome ore pricing has improved significantly from December 2020 to March 2021.

Risks still remain of reduced global demand due to production capacity constraints in China and potential additional COVID-19 waves, despite the availability of vaccines.

Bauba anticipates that opencast mining will commence before the end of this financial year of its Kookfontein project near Rustenburg. This first phase of opencast mining will target approximately 400 000 tonnes of opencast UG2 ore which includes an estimated 326 000 tonnes of fresh and transitional UG2 ore.

The Kookfontein UG2 project will be for an anticipated 14 months allowing Bauba to capitalise on current elevated PGM pricing, thereafter Bauba will commence mining the opencast LG/MG and UG1 chrome ore seams on this project.