May 30, 2012 / 5:58 PM / 5 years ago

UPDATE 1-Eastplats suspends funding for two S.Africa projects

May 30 (Reuters) - Eastern Platinum Ltd suspended funding for its Mareesburg mine and Kennedy’s Vale concentrator plant in South Africa due to the operating environment in the country and the global slowdown, sending its shares down 16 percent.

A recovery in price of platinum group metals (PGM) is unlikely in the near term due to volatility in the European markets, which consume about 50 percent of South Africa’s platinum production, the company said in a statement.

Platinum prices fell to their lowest since mid-January on Wednesday at $1,395.35 an ounce as the dollar extended gains against the euro.

Spot platinum was down 2 percent at $1,396.25 an ounce.

High costs, unfavorable currency exchange rates, weak chrome prices and labor unrest are also weighing on the South African PGM industry, the company said.

Eastplats, which produces platinum group metals such as platinum, palladium and rhodium, said in March PGM ounces sold fell 39 percent to 19,854 in the fourth quarter.

The Vancouver, British Columbia-based company has assets on the western and eastern limbs of the Bushveld Complex in South Africa, which holds about 80 percent of the world’s platinum, according to its website.

Shares of Eastern Platinum, which have lost half of their value in the last three months, fell as much as 16 percent to touch a low of 23.5 Canadian cents on Wednesday on the Toronto Stock Exchange.

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