Aquarius Platinum Ltd. said it will likely decide by next year whether to expand the Mimosa joint venture in Zimbabwe with Impala Platinum Holdings Ltd., the world’s second-biggest producer of the metal.
Mimosa is considering adding 70,000 ounces of annual production capacity to the mine, which extracted about 220,000 ounces of platinum group metals in the year ended June, Jean Nel, chief executive officer of Perth-based Aquarius, said on a conference call today. The project will cost an estimated $70 million, Nel said.
Zimbabwe, holder of the largest platinum group metals reserves after South Africa, passed a law in 2008 that compels foreign and white-owned companies with assets of more than $500,000 to shift majority ownership to black Zimbabweans. Proposals to comply with the indigenization laws submitted by local units of Anglo American Platinum Ltd., Impala and Aquarius have yet to be agreed to.
“The project is very attractive from a returns perspective because effectively there’s 70,000 ounces of additional production at very little added fixed costs,” Nel said. “The project is evidently self-fundable” at current projections for platinum-group metals prices, he said.
Mimosa has been in contact with Zimbabwean officials on a final agreement to comply with the ownership law, Nel said.
“We really do have good relations in Zimbabwe,” he said. The mine and shareholders’ boards will consider potential “adverse changes” in the country before making a final decision to allocate capital, Nel said.
Mimosa plans to spend $40 million over five years to replace mined-out areas, Nel said.