AQUARIUS Platinum slumped the most in more than four months on Monday on plans to open a second shaft at a joint venture in Zimbabwe, where companies are compelled to cede stakes to local investors.
The stock fell 5.1% to R6.83 by the close in Johannesburg on Monday, the most since June 19.
That compares with a 0.6% decline in the six-member FTSE/JSE Africa Platinum Mining Index. Aquarius is the worst one-day performer on the gauge.
Aquarius co-owns the Mimosa platinum mine in Zimbabwe with Impala Platinum, the world’s second-largest producer of the metal.
Mimosa chairman Winston Chitando said last Saturday that the partners were in the process of undertaking a feasibility study for a second shaft. Impala’s stock dropped 0.8% to R123.85 on Monday.
Perth, Australia-based Aquarius reported a net loss of $10.2m in the three months through September, compared with a $19.6m loss a year earlier as higher costs eroded profitability, according to a statement last week.
“With the recent results in mind, news of a shaft feasibility study at Mimosa in Zimbabwe may be further highlighting investor concerns about rising costs in the current platinum environment,” said Investec’s head of equity dealing for frontier and emerging markets Ryan Wibberley.
Mining companies in Zimbabwe must sell or cede 51% of their local assets to black citizens of the country or the government.
The country has the world’s second-largest known reserves of platinum in the world after South Africa. The metal is used in the automotive manufacturing industry.
“Any consideration of further investment in Zimbabwe, and a second shaft, would be quite a significant one, is not going to be viewed all that positively,” said Charles Stanley Securities analyst Kieron Hodgson, in London.
“Mimosa would bear 100% of the cost, but just receive 49% of the benefit,” he said.
“We are in the process of undertaking a feasibility study,” Mr Chitando said in interview at the mine, near Zvishavane, 299km southwest of Harare, the capital.
“There is work taking place in assessing various options,” he said, declining to give further details.
Mimosa is one of three operating platinum mines in Zimbabwe, and has the second-biggest reserves of the metal after South Africa.
Zimbabwe Platinum Mines, a unit of Johannesburg-based Impala, and Anglo American Platinum also run mines in the country. Mimosa produced about 218,000oz of platinum group metals in its last financial year. – Bloomberg