FOR: EASTERN PLATINUM LIMITED
TSX, AIM SYMBOL: ELR
February 14, 2007
Eastern Platinum Reports Record Quarterly Revenue, Increases in Production and Development at CRM, New Order
Mining and Prospecting Rights Issued, Cash Position of $70 Million
VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Feb. 14, 2007) - Eastern Platinum Limited ("the Company")
(TSX:ELR)(AIM:ELR) is pleased to report record quarterly revenue of $28.4 million (0.01 per share) for the
second quarter ended December 31, 2006 ("Q2-07") compared with nil revenue for the second quarter for the three
month period ended 31st December 2005, from integrated operations at its direct and indirectly held interests
in South Africa.
Highlights for the quarter are:
- Production and sales of 25,873 ounces of platinum group metals ("PGM"), up from 22,666 ounces produced in Q1-
07, the previous quarter.
- Revenues of $28.4 million with operating costs of $18.9 million.
- Operating margin in the quarter was $228.31/oz PGM.
- 11,262 meters of in-fill drilling at the Spitzkop PGM Project confirmed a high grade, platinum and rhodium
rich UG2 reef.
- Further drilling reported additional high grade platinum-rhodium rich UG2 reef intersections at Spitzkop.
- Receipt of New Order Prospecting Rights at the Mareesburg PGM Project issued by the Department of Minerals
and Energy ("DME").
- Appointment of J. Merfyn Roberts, B.Sc., M.Sc., CA, as a Director
- A Net Income of $7.4 million results from increased production at CRM and from the Foreign Exchange Gain for
the quarter of $5.8 million (six months ended December 31, 2006 $1.6 million).
- At December 31, 2006, the Company had a cash position (including temporary investments) of $70.7 million.
Operational highlights at the Barplats Crocodile River Mine ("CRM") and the Company's ongoing feasibility study
programs include:
- 1.5 million fatality-free shifts completed in the last quarter.
- Average total mining rate of 70,000 tonnes per month during the quarter (compared to 64,800 tonnes per month
in the previous quarter) at an average PGM grade of 4.02 g/t (5PGE+AU).
- Underground development increased to 2,438m during the quarter up from 2,351m in the prior quarter.
Additionally, one adit system is being upgraded from a tracked to a conveyor system; these two factors should
increase throughput rates and decrease power unit costs.
- Additional decline development commenced at the Zandfontein section of the CRM.
- New Order Mining Right granted by the DME over the eastern part of the Maroelabult section enabling CRM to
resume production on this eastern boundary thereby enabling monthly throughput from this section to increase to
a production level of 40,000 tonnes a month over the next nine months; this level of production will be
sustainable for approximately eight years.
- Equipping of the existing 500m deep vertical shaft at the Zandfontein section of the CRM has commenced. The
vertical shaft option is considered to be the most effective method to access the deeper portions of the
Zandfontein Section. The shaft will be commissioned by March 2008 and will support a production level of
120,000 tonnes per month from this section.
- Results of a technical evaluation of previous drilling on the Kareespruit section at CRM suggest that this
block has the potential to be developed into a significant PGM resource; this will be further evaluated with
confirmatory drilling in 2007.
- The Company and Barplats continue with their drilling programs as part of ongoing feasibility studies, with
an excess of 15,000 meters being drilled during the quarter on three PGM properties.
"The increase in production and underground mine development at CRM, along with excellent results from drilling
at Spitzkop are in line with our planning and expectations and reflect the excellent progress being made on all
fronts," stated President and CEO, Ian Rozier.
"Progress at the Crocodile River Mine operations is very encouraging and combined with the very strong
fundamentals for platinum and rhodium, suggest that our investment in Barplats, made just over 10 months ago,
was a very timely and cost effective acquisition," added Mr. Rozier.
Teleconference call details:
Eastern Platinum Limited will host a telephone conference call on Thursday, February 15, 2007 at 2:00 p.m.
Pacific Standard Time (5:00 p.m. Eastern) to discuss these results. The conference call may be accessed by
dialing Toll-free 1-800-319-4610 from Canada and the United States, or 1-604-638-5340 internationally.
The conference call will be archived for later playback until May 15, 2007 and can be accessed by dialing 1-800-
319-6413 using the pin code 9257 followed by the number sign.
Please go to www.eastplats.com to review our Management's Discussion and Analysis of Financial Conditions and
Results of Operations. The full financial statements and management discussion has been filed on SEDAR at
www.sedar.com and are available on the Company's website, www.eastplats.com. Eastern Platinum Limited trades on
the TSX and AIM stock exchanges under the trading symbol ELR.
Results of Operations for the six months ended December 31, 2006
/T/
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Three months ended Six months ended
December 31, 2006 December 31, 2006
2006 2005 2006 2005
Production 5PGE+Au oz(1) 25,873 - 48,539 -
Realized Basket Price per oz(2) $ 1,046 $ - $ 1,109 $ -
Canadian $ '000's
Total revenue $ 28,363 $ - $ 53,813 $ -
Total Cash Costs(3) $ 19,792 $ - $ 36,871 $ -
Depletion and depreciation $ 3,513 $ - $ 6,485 $ -
Total Production Costs $ 22,038 $ - $ 40,491 $ -
EBITDA(4) $ 4,870 $ (487) $ 9,409 $ (1,253)
Net Income (Loss) for the period $ 7,413 $ 30 $ 4,934 $ (392)
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(1) 5PGE+Au represent Platinum, Palladium, Rhodium, Ruthenium, Iridium and
Gold.
(2) Realized Basket Price is the price received under the off-take
agreement.
(3) Total Cash Costs is a non-GAAP measure and is used in this MD&A and
represents all costs associated with production and development and
excludes amortization, depreciation and inventory accounting
adjustments.
(4) EBITDA Earnings Before Interest (income and expense including foreign
exchange gains and losses and non-controlling interests), Taxes
(income and capital), Depreciation and Amortization (including
depletion) is a nonGAAP measure. See EBITDA note in section 14
page 7 in the MD&A for more details on EBITDA.
/T/
The Company's assets are comprised of direct and indirect investments and interests in Barplats Investments
Limited ("Barplats"), Mareesburg Platinum JV ("Mareesburg") and Spitzkop PGM Project ("Spitzkop").
Review of Financial Results
The Company was transformed during April 2006 by acquiring a 69% interest in Barplats which owns operational
PGM properties at the Crocodile River Mine ("CRM") and the Kennedy's Vale Project (separate development
properties). Revenues and costs directly attributable to Barplats activity have caused the changes in the
financial results when compared to the three and six month periods ended December 31, 2005. During the three
and six months ended December 31, 2005, the Company continues to explore Kennedy's Vale, Mareesburg and
Spitzkop properties.
For the three months ended December 31, 2006, PGM production/sales were 25,873 ounces (previous quarter 22,666
and NIL for the three and six months ended December 31, 2005).
The Net Profit for the three months ended December 31, 2006, results from increased production at CRM and from
the Foreign Exchange Gain for the quarter of $5.8 million (six months ended December 31, 2006 $1.6 million).
Metal Prices
As depicted below the market prices of three of the PGM elements that significantly impact the Company's
revenues (platinum, rhodium and palladium) have experienced volatility over the last six quarters (Source:
Johnson Matthey, www.platinum.matthey.com).
To view the accomanying graphs please click on the following link:
http://www.ccnmatthews.com/docs/Graphs1_2_3.pdf
Currency Exchange Rates
Approximately 90% of the Company's production and development costs are denominated in South African Rand
("ZAR") and therefore the Company is exposed to fluctuations in both Canadian and US exchange rates. With 100%
of production revenue being US dollar based (on a Canadian dollar, Canadian GAAP reporting basis), the Company
is exposed to exchange rate fluctuations. As the Company does not hedge any transactions, it is inherently
exposed to the devaluation of both the US dollar and the ZAR over the reporting quarter (and remains exposed to
future fluctuations in currency exchange rates to the ZAR).
Foreign currency denominated monetary assets and liabilities are translated at the period-end exchange rate.
Gains and losses arising from foreign currency translation are recognized in the statement of operations and
deficit. Translation gains or losses on the consolidation of the financial statements of self-sustaining
operations are accumulated in the currency translation account ("CTA") on the consolidated balance sheet.
Translation adjustments arise as a result of fluctuations in foreign currency exchange rates. The currency
translation adjustment for this quarter was caused by a 9% strengthening of the ZAR to the Canadian dollar, and
the adjustment of $58.2 million ($33.2 million for the six months ended December 31, 2006) recorded in the CTA
is a result of translating the Barplats financial statements.
Safety Results
Through the second quarter the Company continued to operate fatality free. During the quarter CRM achieved 1.5
million fatality free shifts, while reporting four lost time injuries (previous quarter one lost time injury)
resulting in a Lost Time Injury Frequency Rate ("LTIFR") of 3.53 (LTIFR previous quarter 0.93 and six months
ended December 31, 2006 2.26). This compares well against some of the other platinum producers in South Africa,
indicated in the graph below, whose average LTIFR was above 8.00 according to information compiled by the
Bushveld Safety Forum.
To view accompanying graph please click on the following link: http://www.ccnmatthews.com/docs/Graph4.pdf
Operating Results
The Company's Financial Statements present a measure of historical information that differentiates between
operating and development costs. The Company's operating results are affected by the fact that the Company is
exposed to exchange rate fluctuations to the ZAR and the US Dollar.
During the quarter the Company experienced a 4% drop in the realized revenue per ounce to $1,046 from $1,082
due to a decline in platinum pricing when compared to the previous quarter. Production costs have stayed
consistent over the period on a per ounce basis at approximately $755 ounce, which is in line with management's
current expectations. The Company continues to fast track development and made the decision to accelerate the
current development activity to build a production profile of 160,000 tonnes per month. To accomplish this, the
Company will continue to develop its reserves so that there is 18 to 24 months of completed development. The
Company expenses on-reef development in the period in which the costs are incurred.
The average total mining rate during Q2-07 was 70,000 tonnes per month (previous quarter 64,800 tonnes and six
month average 67,400 tonnes per month) at an average PGM grade of 4.02 g/t (5PGE+Au). With the increased ore
production at Zandfontein, ore transport from underground at Zandfontein is being transformed from truck
haulage to an underground conveyor system. Underground development increased to 2,438m during the quarter
(prior quarter 2,351m) which is integral in generating additional mineable reserves which in turn allows for
continued production build up.
There was no revenue generated from Mareesburg, Spitzkop or Kennedy's Vale properties during the quarter.
Other Costs and Expenses
The depreciation and amortization due to Barplats' activities for the current quarter is $3.5 million (previous
quarter $3.0 million and six months ended December 31, 2006 $6.5 million) based upon the fair value allocation
to these assets.
Non-controlling interest during the quarter was $0.7 million (previous quarter $0.7 million and six months
ended December 31, 2006 $1.4 million) due to Barplats non-controlling shareholders.
Corporate
The general and administrative expenses for the current quarter were $4.3 million (previous quarter $3.8
million and six months ended December 31, 2006 $8.1 million). Included within these balances are costs
associated with managing the South African operations and severance paid to a past director and officer of the
Company.
In the current quarter the Company expensed $0.2 million (previous quarter $0.06 million) in share based
compensation. The value of the options has been calculated using the Black-Scholes option-pricing model.
Interest income recorded during the current quarter totaled $2.0 million (previous quarter $1.9 million and six
months ended December 31, 2006 $3.9 million). Interest continued to accrue on bank and short-term investment
balances
During the quarter the Company paid and accrued interest on Barplats' outstanding debt as agreed at the time of
acquisition. Portions of this debt are still outstanding and interest continues to accrue.
Development Activity
Management evaluates development priorities on a continuous basis and in the second quarter continued with
development on approved activities.
Design at the Crocette section of CRM has progressed and will be finalized along with the environmental impact
study in the third quarter of the current fiscal year.
Management has awarded the $1.5 million infill drilling program on Kareespruit to OM Tsehla Drilling. As at
January 31, 2007, 1,580 meters had been drilled at an average drilling rate of 32 meters per shift.
Drilling on the De Goedeverwachting farm totaled 9,172 meters at the end of the second quarter which completes
Phase I of the drilling program. Samples have been submitted for assay and results are awaited. The seismic
data which exists over portions of Kennedy's Vale is being re-processed and the final report is expected during
the third quarter. There was no additional exploration work at Mareesburg during the period.
During the quarter 11,262 meters were drilled at Spitzkop leaving only 2,000 meters to be completed in 2007. To
date assay results have been received back for the first four batches comprising 31 holes on the UG2 reef and
nine holes on the Merensky reef. All results are in line with management expectations (see the Company release
"More High Grade Platinum - Rhodium rich UG2 Reef Intersections reported at Spitzkop", January 30, 2007).
Existing seismic data over portions of Spitzkop is being re-processed and the final report is expected during
the third quarter.
/T/
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Eastern Platinum Limited Summary of Mineral Resources
Mineral Resource - UG2
--------------------------------------------------------------------------
Crocodile River Mine Tonnes ('000) 3PGE+Au (g/t) 3PGE+Au (000oz)
--------------------------------------------------------------------------
Measured 6,894 4.19 928
Indicated 30,324 4.41 4,303
Inferred 52,482 4.41 7,449
Total 89,700 4.40 12,680
--------------------------------------------------------------------------
Kennedy's Vale Tonnes ('000) 5PGE+Au (g/t) 5PGE+Au (000oz)
--------------------------------------------------------------------------
Indicated 152,100 5.41 26,475
Inferred 70,000 6.17 13,880
Total 222,100 5.65 40,355
--------------------------------------------------------------------------
Spitzkop Project Tonnes ('000) 5PGE+Au (g/t) 5PGE+Au (000oz)
--------------------------------------------------------------------------
Measured 37,460 7.70 9,270
Total 37,460 7.70 9,270
--------------------------------------------------------------------------
Mareesburg Project Tonnes ('000) 3PGE+Au (g/t) 3PGE+Au (000oz)
--------------------------------------------------------------------------
Measured 8,757 5.38 1,515
Indicated 6,737 2.31 501
Total 15,494 4.05 2,016
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Mineral Resource - Merensky
--------------------------------------------------------------------------
Kennedy's Vale Tonnes ('000) 5PGE+Au (g/t) 5PGE+Au (000oz)
--------------------------------------------------------------------------
Indicated 96,500 3.88 12,038
Inferred 67,300 3.44 7,443
Total 163,800 3.70 19,481
--------------------------------------------------------------------------
Spitzkop Project Tonnes ('000) 5PGE+Au (g/t) 5PGE+Au (000oz)
--------------------------------------------------------------------------
Indicated 47,380 2.43 3,710
Total 47,380 2.43 3,710
--------------------------------------------------------------------------
/T/
Investing Activity, Liquidity, Capital Resources and Outlook
On August 1, 2006, subsequent to the Barplats acquisition, the Company purchased the Nedbank Capital loan of
$16.7 million and $9.5 million of Gubevu Consortium Holdings (Pty) Limited ("Gubevu") debt from Nedbank Capital
(Gubevu is the Barplats BEE partner).
As at December 31, 2006, the Company's working capital position was $78.8 million (previous quarter $79.4
million) and its cash and cash equivalents and short-term investments totaled $70.7 million (previous quarter
$91.6 million). The decrease in the cash balances from previous quarter is due in part to exploration
expenditures including associated property, plant and equipment totaling $15.8 million (previous quarter $11.3
million).
The Company anticipates platinum, rhodium and palladium prices to remain strong in 2007. The Company is well
positioned to build upon the progress made to date with a strategy to ramp up production at CRM and to advance
Mareesburg and Spitzkop so as to achieve maximum monetary returns in the shortest time frame. In addition, the
Company will continue to review and evaluate accretive acquisitions that could provide the Company with
additional cash flow in the short to medium term.
Certain statements included herein constitute "forward-looking statements" within the meaning of applicable
Canadian securities legislation. These forward-looking statements are based on certain assumptions by Eastplats
and Barplats and as such are not a guarantee of future performance. Actual results could differ materially from
those expressed or implied in such forward-looking statements due to factors such as general economic and
market conditions, increased costs of production and a decline in metal prices. Eastplats is under no
obligation to update or revise any forward-looking statements, whether as a result of new information, future
events or otherwise, except as required by applicable laws.
-30-
FOR FURTHER INFORMATION PLEASE CONTACT:
Eastern Platinum Limited
Mr. Ian Rozier, M.Sc., P. Eng.
President & CEO
(604) 685-6851
(604) 685-6493 (FAX)
Email: info@eastplats.com
Website: www.eastplats.com
-0-
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