IMPALA Platinum Holdings (Implats), the holding company of Zimbabwe Platinum Mines (Zimplats), said there is renewed optimism in Zimbabwe, which has the world's second-largest platinum reserves after South Africa, and where Implats has the biggest investments among foreign mining firms.

Implats, the world's No. 2 producer of the precious metal, also said its third quarter refined platinum production rose by 9% but prices received for the metal nearly halved due to weak demand.

Implats' gross refined platinum output rose to 385,000 ounces in the three months to end-March, in 9% from the same period of last year, it said in a statement on Monday.

Production for the nine months to end-March stood at 1.3 million ounces compared with 1.4 million ounces last year.

Impala did not give a forecast of its full year output.

Implats said output of platinum at its own mines fell 12% to 153 000 ounces, due to a build-up in pipeline stocks and a decrease in tonnage milled at its Merensky facility.

Implats refines platinum from its own mines at its leased area in South Africa as well as from other producers.

A new management team had been installed at Merensky, and would focus on reversing the production drop, Implats said.

"The company is on a more solid footing compared to its peers," Paul Theron, a director at asset manager Vestact said.

"The price has brought a difficult scenario compared to last year, and given the lower demand from the auto sector, I won't be surprised if they take it easy on production."

Implats has previously said it could trim output due to weaker demand for platinum, used in auto catalytic converters to remove pollutants from exhausts, and in jewellery.

The white metal hit $2 276 an ounce in March 2008, driven by a weak dollar and a power shortage in South Africa that disrupted mining, triggering supply jitters, but has since fallen to trade around $1 100 an ounce.

The metal's price has been hit by the credit squeeze and global economic downturn, which saw demand for cars plummet. This led to big cutbacks on planned capital expenditure in the sector, including at Implats, which put off growth projects.

Implats said it had cash net of debt of R1.5bn by end-March.

Price fall

Implats said it received $955 per ounce of platinum in the third quarter, compared with $1 695 in the same quarter of 2008. Power shortages hit Africa's biggest economy in January last year, disrupting mining, and metal prices soared on supply jitters.

"Metal prices in the current quarter have dropped steeply from the previous period a year ago when they were dominated by supply concerns, driven in part by the Eskom power crisis," Implats said in a statement.

"In contrast prices in this quarter were the victim of the severe economic downturn which translated into weaker demand."

The deterioration of the price was partly negated in rand terms by the 33% weakening in the rand/dollar exchange rate, the company said. South African platinum producers sell their gold in dollars and receive earnings in rand.

Implats said the formation of a coalition government in neighbouring Zimbabwe had brought renewed optimism in the southern African country, where expansion of operations at its unit Zimplats would be completed later this year.

Miners have since 2002 struggled with a political and economic crisis and foreign currency shortages, forcing mines to shut down while skilled labour fled to other countries.

"The formation of a coalition government has brought about a sense of renewed optimism in the country," Implats said.