VANCOUVER (miningweekly.com) – Canadian precious metals miner Platinum Group Metals (PTM) has cut its 2017 guidance from 100 000 oz of platinum, palladium, rhodium and gold (4E) to 85 000 oz 4E, saying it is working with BMO Capital Markets and Macquarie Capital to review and assess corporate and asset-level strategic alternatives.

At February 28, PTM held $25-million in cash; however, to achieve positive cash flow and to maintain its working capital covenants in 2017 under existing loan facilities, it will need to source $10-million to $15-million of further funding through refinancing its existing debt, issuing new debt, private or public offerings of equity or the sale of project or property interests.

Delays in underground development, stoping rates and planned tonnages have resulted in ounce production delays. The company stated on Monday that such delays had, and would continue to have, a negative impact on working capital requirements until sufficient mined stoped material was produced to allow mine operations to generate positive cash flow.

Despite continuing productivity issues at PTM’s flagship Maseve mine, near Rustenburg in South Africa, the operation has reported its best-ever output in March of 2 598 oz 4E, reflecting improved stoping and the positive effects of Block 11 production coming on line. The month’s production result, however, was below target and did not offset the lower January and February results. The mine produced 1 351 oz 4E in January and 1 193 oz 4E in February.

The Vancouver-based miner reported that despite more tonnes being mined from Block 11 month-on-month since December, the tonnes mined and delivered have been less than planned. This is mainly owing to low availability levels for trackless mobile machinery (TMM), such as dump trucks and load haul dump machines.

PTM stated that mine crews were demonstrating the ability to blast tonnes at or near plan in Block 11, but lower-than-required TMM availability had restricted the ability to remove waste and ore from the mine. Considerable effort is being applied to improve TMM maintenance and availability.

The company took the step to appoint a new, experienced mine engineer and mechanical team to reorganise and improve TMM maintenance. The planned completion of a new conveyor, now under construction by the new mining contractor, Canada’s Redpath Mining, towards Block 11, will significantly improve the efficiency of moving ore from the mine and will also reduce the number of required dump trucks for tramming from about 11 units to 5. The new conveyor is about 60% complete.

Underperforming contractors and labour have been a significant impediment to meeting development and production targets at the Maseve mine, PTM stated.

Equipment maintenance skills have been an important area requiring improvement. During the second quarter, PTM made changes, terminating the underperforming contractors or reducing their scope of work, while at the same time, Redpath’s scope of work regarding mine production tonnage was increased. PTM has also replaced several senior managers.

While the company incurred some temporary inefficiencies and additional costs through January to make the required changes, improvements in operations have now materialised and PTM believes the actions taken will benefit Maseve’s current and future operations.

PTM said the planned conveyor and silo constructions were on track and targeted to be completed at the end of April and were expected to facilitate and continue to improve performance. Improvements in stoping tonnes versus development during production ramp-up from Block 11 are in progress.

Production during February was also hampered by an extraordinary rain event over a period of days around February 20, which caused surface flooding in the region of the Maseve mine and some underground flooding. Mining operations in Block 11 were suspended for three days and mining operations in general were negatively affected for about ten days.

Milling operations were also suspended at the same time for about a week while an electrical transformer belonging to power utility Eskom was replaced.

Meanwhile, PTM reported that ongoing advancement of the Waterberg project towards a definitive feasibility study in 2017 will be funded by the commitment of Japan Oil, Gas and Metals National Corporation for a further $5.3-million.