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Eastplats Stops Funding for South African Platinum Project

May 30 (Bloomberg) -- Eastern Platinum Ltd., a producer of the metal in South Africa, stopped funding for the development of its Mareesburg mine and Kennedy’s Vale processing plant after prices fell and costs rose.

The Mareesburg/KV project is about 20 percent complete and was on schedule to be commissioned in the first quarter, Eastplats said today in a statement. The Vancouver-based company said it will reassess the economics of the project, which is northeast of Johannesburg, if it sees a sustained recovery in the global economic environment and metals prices.

Platinum prices have declined 24 percent in New York in the past 12 months. The company is also dealing with “unrelenting” operating cost inflation, unfavorable currency exchange rates and concerns about reliable power supply at its South African operations, Eastplats said.

There is “little or no fundamental recovery or supply reduction forecast in the near to medium term” for platinum-group metals, the company said. “A near-term recovery in PGM prices to sustainably appropriate levels is unlikely.”

Eastplats dropped 14 percent to 24 cents at the close in Toronto. The shares have plunged 56 percent this year.

South Africa is the world’s largest producer of platinum, used in devices that cut vehicle emissions and to make jewelry.

To contact the reporter on this story: Liezel Hill in Toronto at lhill30@bloomberg.net

To contact the editor responsible for this story: Simon Casey at scasey4@bloomberg.net

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