AQP Aqua Plat Fpo 5Cus (delisted)

Aquarius Platinum Ltd. (AQP.AU) said Thursday it will halt operations at its Everest mine in South Africa after low metal prices and an ongoing industrial relations dispute rendered the mine uneconomic.

The announcement to place the mine "on care and maintenance" from close of business Thursday comes less than two weeks after the company stopped operations at its Marikana mine, citing sustained weak platinum group metal prices. Aquarius moved to assured investors, though, that no further mine closures are envisaged within the company.

"Aquarius now has two of its seven mines operating, but crucially we estimate the residual company is now cash break-even, something none of its competitors Lonmin PLC (LMI.LN), Northam Platinum (NHM.JO), Impala or Amplats can boast," said Liberum Capital analyst Dominic O'Kane in a note.

South African platinum producers' profit margins have come under "severe pressure" from cost inflation, a strong rand and soft PGM prices, the miner said. The spot price of platinum Thursday traded around US$1,456 a troy ounce, down 16% from its 2012 high of US$1,734 an ounce recorded in February.

Metals consultancy Thomson Reuters GFMS estimates that the platinum market will be over-supplied by 735,000 ounces this year, while Johnson Matthey said the 2012 surplus will be similar to last year's--which was 430,000 ounces.

"The board of Aquarius has concluded that the only defensible strategy for any platinum producer is to cut all non-essential capital expenditure, and place all non-contributing assets on care and maintenance while optimising profitable operations for maximum contribution in the current low price environment," it said in a statement to the Australian stock exchange.

PGM producer Anglo American Platinum Ltd. (AMS.JO) has already cut capital spending plans at its South African platinum mines, saying it wants to prioritize less capital-intensive projects in the near term given volatility in the platinum markets and escalating costs.

Aquarius said its business plan is focused on cash conservation and keeping its reserves and resources healthy until economic conditions improve.

"Aquarius expects that operating its remaining two mines and its two tailings operations will maximise short and medium term cash flows, while the three mines currently not producing will all be maintained in a state to enable their rapid ramp up when PGM prices rise sufficiently to generate an economic return once again, and labour relations are stabilised," it said.

Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com

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