Eastern Platinum Limited ("Eastplats" or the "Company")
(TSX:ELR)(AIM:ELR)(JSE:EPS) reports a review of funding for all its
South African mining operations based on the current economic
environment has been completed. Management at the Crocodile River
Mine ("CRM") has thoroughly analysed its mining operations and
proposes to implement a comprehensive mine development plan to
reduce costs and improve efficiencies. The proposed plan would
involve extensive underground development resulting in reduced
stoping production and increased "on-reef" development in the near
term, leading to significant increases in mineable reserves,
production, and operating flexibility in the medium and
long-term.
As reported in the Company's news release dated May 30, 2012
("Eastplats Suspends Funding for the Mareesburg/KV Project"), the
review of all the Company's mining and development projects was
conducted in response to continuing cost pressures combined with
depressed metal prices and negative industry outlook for a
near-term recovery.
There have been encouraging improvements in production at CRM,
particularly from the Zandfontein section. However, as a result of
continued issues facing the industry, the Company proposes to
temporarily suspend stoping at Zandfontein and embark on a 12 to 18
month development program. This program will focus on "on-reef"
development by "wide raising/winzing" in preparation for increased
future stoping production, as well as "off-reef" development of the
new service decline and the 5, 6 and 7-level footwall drives. Over
18 months, this plan would result in the completion of up to 28
raise lines available for mining as well as providing production of
UG2 reef for plant feed. Additionally, cleaning, sweeping and
vamping of previously mined areas will be maximized, along with the
reclamation of material and equipment from "back-areas". Combined
with the continued construction and equipping of underground
infrastructure and the new chairlift-conveyor, this development
plan would provide the necessary stope availability to sustain
significantly greater production levels over the long term with
lower unit costs. Additionally, the deeper levels of the mine will
be developed for production securing the long-term future of the
operation. Should there be a marked improvement in industry
conditions in the interim, CRM can react quickly and ramp up
production at Zandfontein at any time.
At the Maroelabult section, it is proposed to continue "on-reef"
mining operations, along with the development of major conveyor
development ends, with the objective of achieving a sustainable
production target of 30,000 tpm.
The concentrator at CRM has two streams and its operation would
be optimized to suit the revised production tonnages, utilizing one
stream for "Run-of-Mine" material only, and the secondary circuit
handling "re-mined" tonnes from the tailings dam.
Overhead and administrative costs across the Company's
operations would also be targeted for reduction, and non-critical
capital expenditures would be deferred to beyond 2013.
In keeping with the South African Labour Relations Act, CRM
management will commence the required consultation process with
potentially affected employees and their representatives to review
the need for possible restructuring and the potential implications
to staffing levels as a result of the proposed plan.
The capital expenditure required to implement the proposed
development plan would be funded by cash generated from "on-reef"
mining operations at both Zandfontein and Maroelabult, cash on
hand, and the sale of mining equipment and real estate assets owned
by CRM that are surplus to requirements. Following the consultation
period and final costing exercise to be conducted over the next 30
days, the Company will be in a position to provide guidance for
production for both 2012 and 2013.
As a result of the Company's decision to suspend funding for the
ongoing development of the Mareesburg open pit mine and
construction of the Kennedy's Vale Concentrator Plant (the
"Project"), the Company has terminated the Facilities Agreement
dated December 30, 2011 with UniCredit Bank AG, London Branch and
Standard Finance (Isle of Man) Limited (a subsidiary of Standard
Bank Group Limited) for the US$100 million financing package that
was to be used to part fund the development costs of the Project.
The Company and the banks have agreed to investigate the
restructuring of the financing package when the Project is
restarted.
"We are committed to the ongoing operation and accelerated
development of CRM in the near-term in order to maintain its
potential as a safe, sustainable and profitable mine in the medium
and long-term, and at the same time, safeguard our cash resources
and overall business interests; this development plan would achieve
these objectives and would provide us with enormous operational
flexibility going forward," stated Ian Rozier, CEO of
Eastplats.
The qualified person having reviewed the operating disclosures
presented in this press release is Mr. Brian Montpellier,
P.Eng.
Total shares issued and outstanding: 928,187,807
Cautionary Statement on Forward-Looking Information
This press release, which contains certain forward-looking
statements, is intended to provide readers with a reasonable basis
for assessing the financial performance of the Company. All
statements, other than statements of historical fact, are
forward-looking statements. The words "believe", "expect",
"anticipate", "contemplate", "target", "plan", "intends",
"continue", "budget", "estimate", "may", "will", "schedule" and
similar expressions identify forward looking statements.
Forward-looking statements are necessarily based upon a number of
estimates and assumptions that, while considered reasonable by the
Company, are inherently subject to significant business, economic
and competitive uncertainties and contingencies. Known and unknown
factors could cause actual results to differ materially from those
projected in the forward-looking statements. Such factors include,
but are not limited to, fluctuations in the currency markets such
as Canadian dollar, South African Rand and U.S. dollar,
fluctuations in the prices of PGM and other commodities, changes in
government legislation, taxation, controls, regulations and
political or economic developments in Canada, the United States,
South Africa, or Barbados or other countries in which the Company
carries or may carry on business in the future, risks associated
with mining or development activities, the speculative nature of
exploration and development, including the risk of obtaining
necessary licenses and permits, and quantities or grades of
reserves. Many of these uncertainties and contingencies can affect
the Company's actual results and could cause actual results to
differ materially from those expressed or implied in any
forward-looking statements made by, or on behalf of, the Company.
Readers are cautioned that forward-looking statements are not
guarantees of future performance. There can be no assurance that
such statements will prove to be accurate and actual results and
future events could differ materially from those acknowledged in
such statements. Specific reference is made to the Company's most
recent Annual Information Form on file with Canadian provincial
securities regulatory authorities for a discussion of some of the
factors underlying forward-looking statements.
The Company disclaims any intention or obligation to update or
revise any forward-looking statements whether as a result of new
information, future events or otherwise, except to the extent
required by applicable laws.
No stock exchange, securities commission or other regulatory
authority has approved or disapproved the information contained
herein.
Contacts: Eastern Platinum Limited Investor Relations
1-(604)-685-6851 1-(604)-685-6493 (FAX)info@eastplats.com
www.eastplats.com Canaccord Genuity Limited, London Rob Collins
NOMAD +44 (0) 207 7523 8000 PSG Capital (Pty) Limited Johan Fourie
JSE SPONSOR +27 21 887 9602johanf@psgcapital.com
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