* Says mine operating now, but workers still protesting
* Confident of hitting full production soon: CEO
* Q1 loss/shr $0.01 vs breakeven per share a yr ago
* Shares slump 28 pct to 18-month low on TSX (Adds CEO comments, analyst quotes, updates share movement)
By Bhaswati Mukhopadhyay
BANGALORE, May 12 (Reuters) - Canadian miner Eastern Platinum said it was forced to suspend work temporarily at two mines in its flagship Crocodile River project in South Africa after they were damaged by union workers following a failure to resolve wage disputes.
The disruptions, coupled with Eastern Platinum reporting its first quarterly loss in two years, drove the stock down 28 percent to an 18-month low. With almost 5.5 million shares changing hands, it was the most active stock on the Toronto Stock Exchange on Thursday.
Several workers had occupied Eastern Platinum’s Zandfontein and Maroelabult mines and damaged facilities last Friday, a day after the company’s revised wage offer was rejected by members of South Africa’s National Union of Mineworkers.
The company said it was forced to suspend operations on May 7, after underground electrical and pumping equipment were damaged resulting in flooding.
The Zandfontein and Maroelabult mines, which produce platinum, palladium and rhodium, are Eastern Platinum‘s, or Eastplats’, only two operating mines at the Crocodile River project in the Bushveld Complex.
The Bushveld Complex, where the company is developing two more mines, holds about 80 percent of the world’s platinum supply, according to the company’s website.
The disruptions at the mines come at a time when platinum prices are expected to remain high despite a moderation in demand and palladium facing a fifth year of deficit, according to metals consultancy GFMS. [ID:nL9E7EA00H]
Eastplats said the mines were now operational but a few workers were still protesting and preventing non-striking workers from entering.
“These illegal actions of a very small minority of our employees have not prevented the mine from operating and we are confident that we will soon be back at full production,” Chief Executive Ian Rozier told Reuters.
Eastplats sold 131,901 ounces of platinum group metals (PGM), which includes platinum, palladium and rhodium, in 2010. In the first quarter, PGM sales fell 17 percent to 25,387 ounces.
“This week’s incident, which involves mine workers and not contractors ... could perhaps be more difficult to resolve,” Tyler Broda of Canaccord Genuity said, referring to a similar incident two years ago.
For a Factbox on S.African wage talks in mines [ID:nLDE7441PW]
Rozier said these type of demonstrations around wage issues were not uncommon in South Africa, especially this year when they are taking place at the same time as the national elections.
Eastplats also reported a first-quarter loss hurt by the fall in production and a 37 percent rise in operating costs.
“Due to the sharply lower production and the implementation of new safety supports, this quarter is a poor guide for the rest of the year,” Canaccord’s Broda said.
It posted a loss of $5.6 million, or 1 cent per share, compared with earnings of $824,000, or breakeven per share, a year ago. Cash cost were $1,154 per ounce.
Eastplats stock was trading down 13 percent at 90 Canadian cents in afternoon trade and was the biggest percentage loser on the TSX. Its Johannesburg-listed stock closed down 18 percent. (Reporting by Aftab Ahmed and Savio D‘Souza in Bangalore; Editing by Jarshad Kakkrakandy and Saumyadeb Chakrabarty)