VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 06/12/12 -- 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.