JSE-listed Eastern Platinum’s (Eastplats’) revenue for the three months ended September 30 increased to $21.8-million, from $3.6-million in the prior year’s corresponding period, representing an $18.2-million or 505.6% increase.

Revenue for the nine months ended September 30 increased to $80.5-million from $41.5-million for the first nine of 2022, representing a 94% increase.

Mine operating income increased by $5.1-million (or 268.4%) to $7-million in the third quarter, while gross margin decreased from 52.5% to 32.1%.

Mine operating income for the nine months increased by $16.1-million (or 171.3%) to $25.5-million, with the gross margin having increased to 31.7% from 22.8%.

Operating income for the third quarter was $3.6-million, compared with a loss of $900 000 in the prior comparable period.

Operating income for the nine months improved by $17.4-million year-on-year to $17.5-million

Net income attributable to equity shareholders was $3.1-million ($0.02 a share) for the quarter, compared with a net loss attributable to equity shareholders of $6.6-million or a loss of $0.05 a share.

The increase in the quarter’s net income was largely attributable to the significant increase in third-party chrome revenue from the sales of chrome concentrate from the company retreatment project at Barplats Mines’ tailings storage facility located at the Crocodile River Mine (CRM), in South Africa.

Net income attributable to equity shareholders increased to $12.1-million ($0.07 earnings per share) for the nine months, compared with a net loss attributable to equity shareholders of $2.4-million in the prior comparable period.

The improvement for the nine-month period was mainly attributable to the increased revenue and positive gross margins generated by the significant increase in third-party chrome revenue as mentioned above.

Eastplats had a working capital deficit (current assets less current liabilities) of $17.1-million at period end and short-term cash resources of $17.3-million.

OPERATIONS

Eastplats continues to produce chrome concentrate from its retreatment project, and has also started blasting operations at CRM, which initiated the soft restart of the Zandfontein underground section.

The company also derives revenue from platinum group metals (PGM) concentrate sales under a PGM offtake agreement with Impala Platinum. Eastplats produces PGMs from further processing tailings material following the production of chrome concentrates.

The majority of the company’s revenue (100% for the third quarter) has been generated from chrome concentrate sales to third parties since the fourth quarter of 2022.

Total tailings feeds for the third quarter was 519 914 t, compared with 654 802 t in the prior comparable period; and for the nine months 1.77-milllion tonnes, compared with 1.89-million tonnes in the prior comparable period.

While PGM prices have decreased from the prior year, chrome prices have increased during the same period, which has driven revenue and mine operating income growth for the company.

However, chrome revenue is expected to wind down into 2024 as the retreatment project approaches its completion date.

When that occurs, the PGM Circuit D and PGM Main Circuit B will become the main source of revenue as the company ramps up production at the Zandfontein underground section of the CRM.

PGM production for the third quarter was 854 t, compared with 1 532 t in the prior comparable period; and for the nine months was 2 969 t, compared with 4 279 t for the first nine months of 2022.

“Although chrome production decreased this quarter, we are still encouraged by revenue generated from the tailings storage facility. As we have commenced blasting activities at the Zandfontein underground section of the CRM, we expect to process the underground ore in the first quarter of 2024,” says CEO and president Wanjin Yang.

OUTLOOK

Eastplats’ targets for 2023 remain to operate and optimise the PGM Circuits; raise additional capital to support the full re-opening of Zandfontein underground operations at the CRM; operate and optimise the retreatment project; complete the optimisation of the chrome recovery plant for the retreatment project; and assess the value for continued use of the chrome recovery plant after optimisation.

Moreover, it aims to complete the second phase of the tailings storage facility capital works programme; advance the Mareesburg project (located on the Eastern Limb) environmental work to complete the environmental-impact assessment and other environmental studies and amendments; and continue prospecting and assessment work in relation to Zandfontein, Crocette and Spitzkop orebodies.

It will also strive to commission main plant circuit A for underground operations; and update other capital assessments upon completion of additional capital fundraising.

The company will update its targets for 2024 in due course.

COMMITTEE UPDATE

The board has formed a special committee  comprised of two independent directors to conduct an investigation, review and analysis of unproven whistleblower allegations, including allegations of undisclosed related party transactions pertaining to the sale of chrome concentrate at discounted prices as announced in April.

It reports that the committee’s investigation has advanced significantly this quarter.

The committee’s work in retrieving and reviewing relevant documents, with the assistance of independent counsel and a third party e-discovery specialist, is nearing completion.

Over 135 000 documents comprising of emails and other documents from the company’s document management system have been collected and uploaded into an e-discovery and legal search platform.

Various searches have been implemented and relevant documents reviewed.

Interviews with key members of management have occurred and the committee anticipates conducting further interviews with material persons this month, consistent with its mandate.

A report of the committee’s findings will be provided to the board, anticipated before the end of the year.