PLATINUM (Pl) PRODUCERS

[sumisu]

Xstrata to Exploit Platinum Price

By Charlotte Mathews

09 Oct 2007 at 10:41 AM GMT-04:00

http://www.resourceinvestor.com/pebble.asp?relid=36377

JOHANNESBURG (Business Day) -- Diversified global miner Xstrata [LSE:XTA] would ramp up production at the Elandsfontein platinum mine beyond the current mine plan if it made economic sense, Xstrata Alloys CEO Peet Nienaber said yesterday.

In June, Xstrata made a $1 billion offer to buy all the shares of Eland Platinum Holdings, the owner of Elandsfontein, and Eland’s shareholders voted in favour of the deal on Friday.

This is only Xstrata’s second platinum operation. It also holds 50% of Mototolo, a joint venture with Anglo Platinum [JSE:AMS] to develop a platinum mine on the eastern limb of the Bushveld.

Nienaber said with platinum prices as high as they were, Xstrata would like to maximise opportunities for its shareholders. As a mining company, Xstrata would like to add to its portfolio, and platinum was driven by factors different to other commodities.

China was the engine room for growth in most commodities, but platinum was underpinned by global demand for vehicle fuel catalysts.

Xstrata was not looking to build up size in the platinum sector as much as quality assets with the potential to generate cash flow, Nienaber said. Asked whether Xstrata might consider buying out AngloPlat’s stake in Mototolo, he said nothing was impossible but AngloPlat wanted to be part of the joint venture as much as Xstrata did.

Elandsfontein is about to produce its first concentrate, within two years of being established as a company and within 18 months of Eland Platinum’s listing on the JSE to raise R575 million. Mining from the open pit began in January and about 650,000 tonnes of ore have been stockpiled, ready to feed into the concentrator. Development of the underground mine will start next year.

Based on capital available, Elandsfontein is designed to mine about 300,000 tonnes of ore a month from underground but, with more capital, it could be reconfigured to produce about 750,000 tonnes a month.

The team that put Eland Platinum together, headed by Chairman Loucas Pouroulis and CEO David Salter, previously returned the Barplats platinum mine to production.

Asked about his plans, Pouroulis said the team would leave Eland Platinum when Xstrata took over the management. It had another venture in the pipeline, which could be in platinum or base metals, but he could not discuss it at present.