10 Feb 2011 09:00
AQUARIUS PLATINUM LIMITED
Aquarius Platinum 2011 Half Year Financial Results - December 2010
Key Points: Operational
Attributable production for the first half of the 2011 financial year was 250,972 PGM ounces, 20% higher than the 6 months to December 2009
Weighted average Group cash costs were $861 per PGM ounce, driven higher by the weakened US Dollar and including temporarily higher costs at Everest during the initial phase of the ramp-up
Rand cash costs at flagship Kroondal mine increased by 4% compared to the six months to December 2009
Group gross cash margin increased from 31.2% to 36.5%
Key Points: Financial
Weighted average basket prices increased by 30% to $1,337 per PGM ounce compared to the six months ended December 2009
Revenues increased by 63% to $336.1 million as a result of higher PGM prices and production volumes
Mine EBITDA increased by 64% to $93.1 million
Net profit increased by 23 times to $94.3 million (US 20.43 cents per share), as a result of higher PGM prices and production volumes and foreign exchange gains on revaluation of net monetary assets
Net operating cash flow was $47.1 million
Consolidated cash balances at period end of $368.5 million, in line with period ending June 2010
Interim dividend of US 4 cents per share declared, absorbing approximately $18.5 million
Key Points: Strategic
Ramp-up of Everest proceeding smoothly, with mine production there already significantly profitable
Blue Ridge closed for redevelopment during the period; redevelopment project progressing well
Commenting on the results, Stuart Murray, CEO of Aquarius Platinum said:
"I am very pleased with the somewhat stronger operational and financial performance of the business in the first six months of the 2011 financial year, despite the challenging Rand PGM price environment prevailing over the period. This success was unfortunately marred by the terrible accident at Marikana in July 2010. Safety remains absolutely paramount, and in addition to the extensive measures put in place after this accident, we are continually retraining the workforces on safety behaviour and continue to strive for industry and world best practice.
Stronger prices, increased production and well-contained cost increases enabled Aquarius to generate sufficient cashflow to afford all of its working costs and stay-in-business and development capital expenditure requirements, including those for the new hangingwall support methodologies at SA operations. We were also able to pay dividends and settle the Moolman litigation, all while leaving the company's cash balances largely unchanged. The ramp-up at Everest is progressing smoothly and the mine is already contributing to Group profits, while the Blue Ridge redevelopment project is now in full swing and is on track for producing the desired results.
I am confident that the hard work of all our people over the last several months will be rewarded during the next half year as the outlook for fundamental PGM demand improves, resulting in a rising basket price for our products."
Aquarius Half Year Group Attributable Production
[Please refer to www.aquariusplatinum.com for the graph]
Production
Total production from all operations for the six months to December 2010 was 456,380 PGM ounces, representing a 10% increase compared to the period ended December 2009 (the previous corresponding period or "pcp"). Production attributable to Aquarius was up 20% to 250,972 PGM ounces for the period under review when compared to the pcp and 17% up compared to the six months ended June 2010, largely due to the ramping up of the Everest Mine following the successful conclusion of the re-establishment project in May 2010.
Production by Mine and Attributable to Aquarius
Mine Attributable to Aquarius PGMs (4E) Half Year ended Half Year ended Half Year ended Half Year ended Dec 2010 Dec 2009 Dec 2010 Dec 2009 Kroondal 230,019 197,061 115,010 98,531 Marikana 60,587 68,381 30,294 34,192 Everest 45,561 - 45,561 - Mimosa 101,156 100,907 50,578 50,454 CTRP 2,921 3,827 1,461 1,914 Platinum Mile 8,044 12,345 4,022 7,236 Blue Ridge 8,092 33,067 4,046 16,534 Total 456,380 415,588 250,972 208,859
As illustrated in the chart below, production in the first half of the 2011 financial year was positively affected primarily by the return to production of Everest, as well as a strong performance at Kroondal. These factors resulted in substantially increased production compared to the first half of the 2010 financial year, despite lower ounces from Marikana following the tragic accident there in July 2010. Blue Ridge also produced less in the current period as it was closed for redevelopment during the first quarter. All production from Blue Ridge since it was acquired by Aquarius in mid 2009 has in any event been capitalised, due to that mine's status as a project. With the continued ramp-up of Everest and the planned ramp-up of Blue Ridge in the next financial year, Aquarius has the steepest short-term production growth profile of any company in the PGM industry.
[Please refer to www.aquariusplatinum.com for the graph]
Foreign Exchange
The Rand continued to strengthen over the 6 months to December 2010, moving from an average of R7.65 to the US Dollar in the period to December 2009 to an average of 7.12 over the current period, driven by continuing interest rate differentials and quantitative easing programmes in the US and Europe. The Rand closed the half year at R6.63 to the US Dollar.
Rand Dollar Exchange Rate
[Please refer to www.aquariusplatinum.com for the graph]
Platinum Group Metal Prices
Fundamental demand for PGMs continued to improve slowly over the period under review, driven by a gradual strengthening of the automotive industry and other industrial users. US Dollar PGM prices nonetheless improved significantly, driven more by investment demand which remained extremely strong. Investor interest in these metals ranged from the speculative to a "store of value" concept much akin to gold demand in the face of quantitative easing, and volumes of platinum and palladium underpinning the physically-backed ETFs had reached record levels by the end of December 2010. Platinum jewellery demand was largely supplanted by investment demand above the $1,500 per ounce level.
Palladium significantly outperformed the other metals in the first half, rising by 84% to close the period at $797 per ounce. Platinum closed the period 16% higher at $1,755 per ounce, while rhodium fell 3% to close at $2,425 per ounce. Gold was 14% higher at $1,413 per ounce.
Individual PGM Prices December 2009 - 2010 (US Dollar per PGM ounce)
[Please refer to www.aquariusplatinum.com for the graph]
The strengthening Rand continued to put pressure on Rand basket prices for much of the first half of the financial year, but ever stronger US Dollar PGM prices began to outweigh the adverse currency effect towards the end of the period. South African operations averaged $1,378 per PGM ounce on a production-weighted basis (equivalent to R9,852 per PGM ounce) and closed the period at R10,150 per PGM ounce. In Zimbabwe, the achieved basket price for the first half of the financial year was $1,173 per ounce. This resulted in a group basket price equivalent of $1,337 per PGM ounce, up 30% from the six months ended December 2009.
PGM Basket Prices December 2009 - 2010 (US Dollar and Rand per PGM ounce)
[Please refer to www.aquariusplatinum.com for the graph]
Financial results: Half Year to 31 December 2010
Aquarius has recorded a net profit of $94.3 million (20.43 cents per share) for the half-year, a significant improvement compared to $3.9 million in the previous corresponding period (pcp).
Revenue (PGM sales $328 million, interest $8 million) for the half-year was $336 million, up 63% from $206 million in the pcp. The increased revenue was a result of increased production, up 54,603 PGM ounces and a 30% increase in the US Dollar PGM basket price achieved. Measured on a PGM ounce basis, revenue increased to $1,361 per PGM ounce from $1,072 per PGM ounce in the pcp.
Mine EBITDA of $93.1 million was $36.3 million higher (64%) compared to the pcp, despite a $25.1 million forex loss on sales adjustments incurred at mine level as a result of a weaker US Dollar relative to the Rand.
The Directors have declared an interim dividend of US 4 cents per share (2009: 2 cents) payable on 25 March 2011 to shareholders registered on 4 March 2011, reflecting the company's improved operational cash flow and the Directors' increasing confidence in the improved economic environment.
Group Financials by Operation
US$M Kroondal Marikana Everest Mimosa PMR CTRP Blue Corporate Total Ridge PGM ounces (4E) 115,010 30,294 45,561 50,579 4,022 1,460 4,046 - 250,972(attributable) Revenue 145.7 39.9 64.8 72.5 4.7 1.5 7.0 336.1 Cost of sales - mining, processing & (93.1) (34.2) (50.6) (31.2) (3.5) (0.9) (213.5) admin Cost of sales - depreciation
& (12.7) (5.0) (3.6) (3.9) (2.5) (0.1) (27.8) amortisation Gross profit 39.9 0.6 10.7 37.3 (1.2) 0.5 7.0 94.8 Other income 0.3 0.3 Corporate (8.1) (8.1) administration Foreign exchange gain/ (14.5) (3.8) (2.6) (0.6) 87.8 66.2 (loss) Finance costs (15.4) (15.4) Settlement of contractor (7.8) (7.8) dispute Profit before 25.4 (3.2) 8.1 36.7 (1.2) 0.5 63.7 130.0 income tax Income tax (35.7) (35.7) expense Net profit
from ordinary 25.4 (3.2) 8.1 36.7 (1.2) 0.5 28.0 94.3 activities
Group gross cash margin increased from 31.2% to 36.5% with higher margins recorded at all mines with the exception of CTRP and Platmile. The increased margins were attributable to higher PGM metal prices compared to the pcp.
Total cash cost of production was $213.5 million, up 17% per PGM ounce in Dollar terms, partially influenced by Rand strength. Amortisation and depreciation was higher at $27.8 million from $20.0 million reflecting increased production in the six months. Finance costs for the period of $15.3 million includes interest on convertible notes and a non cash element of $3.1 million relating to the net present value adjustments to the Marikana and Kroondal rehabilitation provisions.
During the half-year Aquarius recorded net foreign exchange gains of $66.2 million. These gains are mainly as a result of the weakening of the Dollar against other major currencies, in particular the Rand and Australian dollar. To the extent that the Dollar appreciates against these currencies, some of these gains which are unrealised may reverse.
Income tax expense which was higher on increased profits comprised $8.7 million normal tax, $24.6 million deferred tax and $2.4 million M&PRA royalty paid in South Africa.
Consolidated cash balances at period end of $368.5 million were in line with June 2010. Cash generated during the period funded the group's capital expenditure program of $59 million, and $18 million in dividends (4 cents per share) to Aquarius shareholders.
Subsequent to the end of the period under review, Aquarius entered into a set of agreements in terms of which it will, subject to the fulfilment of certain conditions precedent, acquire 100% of the issued share capital of a company which owns a number of prospecting rights on the western limb of the Bushveld complex in South Africa of strategic importance to Aquarius. The total purchase consideration payable upon completion of the transaction will be approximately US$109 million of which US$67 million will be paid in cash and the remainder in cash or Aquarius shares, at the election of Aquarius. A further $15 to $20 million may be committed by Aquarius to fund exploration of these rights.
Financials Aquarius Platinum Limited Consolidated Income Statement For the Half Year ended 31 December 2010 $'000 Half Year Ended Year Ended Note 31/12/10 31/12/09 30/6/10 Attributable Production (PGM Ounces) 246,926 * 192,323* 393,131*(* before Blue Ridge production) Revenue (i) 336,152 206,089 472,220 Cost of sales (including D&A) (ii) (241,327) (161,633) (349,952) Gross profit 94,825 44,456 122,268 Other income 288 510 1,588 Administrative costs (iii) (8,105) (8,509) (15,243) Foreign exchange gain/(loss) (iv) 66,202 16,086 (4,846) Finance costs (v) (15,369) (10,644) (25,750)
Settlement of contractor dispute (vi) (7,810) - -
Fair value movement in derivative - 6,084 6,084liability Loss on early redemption of - (26,920) (26,920)convertible note Transaction and acquisition costs associated with Ridge Mining, net of - 246 1,248discount on acquisition Profit before income tax 130,031 21,309 58,429 Income tax expense (vii) (35,751) (17,438) (30,656) Net profit attributable to equity 94,280 3,871 27,773holders of the parent Earnings per share (basic - cents) 20.43 0.86 6.09
Notes on the Consolidated Income Statement
Revenue is higher compared to December 2009 in line with higher PGM prices and increased production.
The 17% increase in cost of sales on a unit cost basis reflects Rand strength, the restart of Everest and the impact of inflation on mine cash costs. It includes depreciation and amortisation of $27.8 million.
Relates to administration costs of the Aquarius Group inclusive of costs associated with business development activities, legal and financial advisory expenses.
Net foreign exchange (FX) gains reflect gains on group loans and cash due to the weakening of the Dollar against other currencies and FX losses on sales adjustments.
Finance costs reflect a $11.1 million interest expense on convertible notes, pipeline finance of $0.4 million and interest expense on the unwinding of the rehabilitation provisions of $3.1 million.
Relates to the settlement paid to Moolman Mining.
Income tax includes $8.7 million normal tax, $24.6 million deferred tax and $2.4 million M&PRA royalty.
Aquarius Platinum Limited Consolidated Cash Flow Statement Half year ended 31 December 2010 $'000 Half year ended Year ended Note: 31/12/10 31/12/09 30/06/10 Net operating cash inflow (i) 47,061 17,651 93,967 Net investing cash outflow (ii) (59,388) (29,881) (60,953) Net financing cash outflow (iii) (25,816) 312,872 196,073
Net increase/(decrease) in cash held (38,143) 300,642 229,087
Opening cash balance 381,734 153,600 153,600
Exchange rate movement on cash (iv) 24,868 10,334 (953)
Closing cash balance 368,459 464,576 381,734
Notes on the Consolidated Cash Flow Statement
Net operating cash flow includes a $278.4 million net inflow from sales, $223.4 million paid to suppliers, interest income of $7.8 million, interest expense of $6.5 million and income tax paid of $9.5 million.
Reflects development and plant and equipment expenditure incurred supporting the group's capital expenditure program.
Includes $18.5 million dividend paid to shareholders, and $9.3 million settlement of contractor dispute.
Reflects movement of other currencies against the Dollar.
Aquarius Platinum Limited Consolidated Balance Sheet At 31 December 2010 $'000 Half year ended Year ended Note 31/12/10 31/12/09 30/06/10 Assets Cash assets 368,459 464,576 381,734 Current receivables (i) 123,937 165,661 96,846 Other current assets (ii) 54,005 50,255 49,338 Property, plant and equipment (iii) 320,789 299,616 272,117 Mining assets (iv) 507,095 389,120 425,882 Other non-current assets (v) 98,860 26,685 80,450 Intangibles (vi) 82,767 76,980 72,833 Total assets 1,555,912 1,472,893 1,379,200 Liabilities Current liabilities (vii) 109,553 179,525 103,906 Non-current payables (viii) 5,383 5,532 4,631
Non-current interest-bearing liabilities (ix) 246,027 254,959 238,289
Other non-current liabilities (x) 249,221 193,196 195,341 Total liabilities 610,184 633,212 542,167 Net assets 945,728 839,681 837,033 Equity Issued capital 23,162 23,125 23,154 Treasury shares (15,076) (3,431) (14,264) Reserves 697,789 670,532 664,041 Retained earnings 239,853 149,455 164,102 Total equity 945,728 839,681 837,033
Notes on the Consolidated Balance Sheet
Reflects debtors receivable on PGM concentrate sales.
Reflects PGM concentrate inventory, reef stockpiles and consumables stores.
Represents plant and equipment within the Group.
Mining assets relate to Kroondal, Marikana, Everest, Mimosa and Blue Ridge mine properties and mine development.
Includes recoverable portion of rehabilitation provision from Anglo Platinum of $14.5 million, receivable from the Reserve Bank of Zimbabwe (RBZ) of $28.5 million, receivable from outside shareholders of Blue Ridge and Sheba's Ridge of $35.8 million, investments in rehabilitation trusts of $17.0 million and investments held for resale of $3.0 million.
Includes intangibles relating to goodwill and contract value acquired on acquisition of 50% equity interest in Platinum Mile Resources (Pty) Ltd.
Includes creditors and other payables of $80.9 million, DBSA and IDC loans at Blue Ridge of $27.0 million and tax payable of $1.6 million.
Includes rehabilitation obligations on P&SA1 and P&SA2 structures.
Includes convertible notes of $242m, AQPSA and Ridge equipment leases of $3.7 million and TKO loan of $0.3 million.
Includes deferred tax liabilities of $168.1 million and provision for closure costs of $81.1 million.
OPERATIONS
AQUARIUS PLATINUM (SOUTH AFRICA) (PTY) LTD (Aquarius Platinum Limited - 100%)
P&SA1 at Kroondal (Aquarius Platinum - 50%)
Safety
Regrettably, one fatality occurred during the period - on 13 August 2010 Mr Vasco Macamo was fatally injured when he was caught between the LHD he was operating and another vehicle on surface at the start of the shift
33 lost-time injuries were reported during the first half, mainly due to a fire incident at Kopaneng Shaft on 6 July 2010 and some slip-and-fall and materials handling incidents. The fire was commendably dealt with and resulted in no serious injuries, but it did nonetheless lead to an increase in the number of lost-time injuries reported
The 12-month rolling average disabling injury incidence rate (DIIR) deteriorated from 0.63 to 0.74 during the half year
Mining
Underground volumes rose by 8% to 3.4 million tonnes
Achieved head grade in the first half increased by 1% compared to H1 2010, to 2.62 g/t
Processing
Volumes of ore processed in the concentrator plants increased by 13% to 3.4 million tonnes
Concentrator recoveries improved from 79% to 80%
Production increased by 17% to 230,019 PGM ounces
Revenue
Kroondal achieved a US Dollar PGM basket price of $1,385 per PGM ounce for the first half, an increase of 29% over the pcp. This improved the mine's realised revenue per ounce and also resulted in positive sales adjustments. Together with increased volumes, this resulted in overall revenue from the mine rising by 33% to R2,056 million.
Operations
The increased production of ore from the Kroondal underground operations for the first six months of FY2011 was largely due to improved operating efficiencies and the fact that ore production in the pcp was negatively impacted by unprotected industrial action. In the period under review the two year wage agreement reached with the National Union of Mineworkers (NUM) at the conclusion of the strike in 2009 remained in force, and industrial relations have been stable throughout the period.
Following the fatal accident at the Marikana mine on 6 July 2010, the DMR issued a S9(7) instruction at both the Kroondal and Marikana mines, as disclosed at the time, which had the potential to negatively impact production at these mines. The DMR later stated that the instruction had been misinterpreted by the mining industry, and production has continued using the same methodology as before, subject to certain changes to safety equipment and procedures. Production has not been materially impacted by these events. See the update on the impact of the remedial action taken on hangingwall support below.
Primary development increased by 72% over the period to a total of 7,029 metres due to improved operational efficiencies and ground conditions. Stockpiles at the end of the first half totaled approximately 34,956 tonnes.
The increase in tonnes processed resulted from improved mining volumes and better operating efficiencies, which also improved recoveries slightly. The head grade also rose slightly, resulting in the production of 230,019 PGM ounces (115,010 ounces of which are attributable to Aquarius), an improvement of 17% over the pcp.
Operating Cash Costs
Cash costs in Rand terms for the first half increased by 7% to R390 per ROM tonne and by 4% to R5,757 per PGM ounce compared to H1 2010.
The Rand strengthened against the Dollar during the period, resulting in cash costs in Dollar terms increasing by 11% to $805 per PGM ounce. Control of Rand-denominated costs was made possible through improved operating efficiencies and higher production, which reduced the impact of the mine's fixed cost base.
Kroondal: Operating Cash Costs
4E (Pt+Pd+Rh+Au) 6E 6E net of by-products (Ni& (Pt+Pd+Rh+Ir+Ru+Au) Cu) Kroondal R 5,757 per PGM R 4,707 per PGE R 4,574 per PGE ounce ounce ounce Capital Expenditure
Capital expenditure at Kroondal for the first half was R156 million (R678 per PGM ounce), spent largely on ongoing underground infrastructure establishment, new safety equipment, the initial capital for the K6 Shaft project and some mobile equipment. Kroondal's expenditure is up to date as per mine plan.
Update on impact of revised hangingwall support strategy
Following the Marikana accident in July 2010 and the ensuing analysis, new hangingwall support methodologies are now largely in place at Kroondal. The implementation of the TARP control process with the ground penetrating radar scanning, in-stope rock watch, in-stope lighting and strata control team has resulted in a decrease in fall of ground (FOG) incidents, with only 1 FOG-related LTI in the second quarter versus 3 in the first quarter. The support crews were mobilized and trained during the second quarter and all necessary equipment ordered. The additional support strategy will be fully implemented in the next quarter.
P&SA2 at Marikana (Aquarius Platinum - 50%)
Safety
A catastrophic FOG accident at Marikana 4 Shaft occurred on 6 July 2010, causing 5 fatalities. The circumstances of the accident and remedial measures taken have been comprehensively dealt with in previous disclosures
The 12-month rolling average DIIR for the half year improved from 1.08 in the pcp to 0.68 in the current period as underground operations stabilised following the move from largely open pit operations
Management actions have been implemented to focus on improving the safety behaviour of employees and effective interaction from supervisors
Mining
Underground production increased to 890 thousand tonnes while opencast production fell by 44% to 235 thousand tonnes, as per mine plan
Overall volumes mined fell by 5% to 1.1 million tonnes, largely as a result of the accident in July 2010
Achieved head grade in the first half decreased by 11% compared to H1 2010 to 2.39 g/t, as a result of lower-than-expected underground grades due to geological anomalies
Processing
Volumes of ore processed in the Marikana concentrator plant decreased by 2% to 1,133 thousand tonnes
Concentrator recoveries improved from 69% to 70%
Production decreased by 11% to 60,587 PGM ounces
Revenue
Marikana achieved a US Dollar PGM basket price of $1,387 per PGM ounce for the first half, an increase of 27% over the pcp. As with Kroondal, this improved the mine's realised revenue per ounce and also resulted in positive sales adjustments. This offset the decrease in volumes, resulted in overall revenue from the mine rising by 1% to R561 million.
Operations
The decreased production of ore from the Marikana operations for the first six months of FY2011 was largely due to underground production being negatively affected by the Section 54 suspension notice and the memorial service which was held for the 5 employees who died in the tragic fall of ground accident. 4 Shaft lost more than two weeks of production due to this stoppage. While the ratio of underground tonnes to opencast continues to increase, this safety stoppage and the intersection of geological anomalies have slowed the underground ramp up. The open pit was scheduled to be mined out by the end of December 2010, however indications are that it will now only be completed during the second half of this financial year. Only one pit remains (West-West), which has a steeply dipping ore body which reduces the amount of mining equipment that can be accommodated in the pit at any one time.
1 Shaft became uneconomical during the second quarter and is being placed on care and maintenance. Development has been stopped and stoping will stop in June 2011. As with Kroondal, the accident and the S9(7) instruction issued by the DMR to Marikana will not have any ongoing impact on production levels. See the update on the impact of the remedial action taken on hangingwall support below.
Primary development increased by 109% over the period to a total of 5,855 metres due to the high level of potholing that was intersected. Stockpiles at the end of the first half totaled approximately 12,786 tonnes.
The decrease in tonnes processed resulted from decreased mining volumes. Recoveries improved slightly as a result of the implementation of a batch milling program in terms of which tonnes from different ore sources are batched and processed over an extended period before changing the source of the ore. The head grade deteriorated materially due to a higher incidence of potholes which led to increased off-reef mining due to difficulties in packing waste underground. These factors together resulted in the production of 60,587 PGM ounces (30,294 ounces of which are attributable to Aquarius), a decrease of 11% over the pcp.
Operating Cash Costs
Cash costs in Rand terms for the first half fell by 2% to R429 per ROM tonne as more underground tonnes were mined, but rose by 9% to R8,026 per PGM ounce compared to H1 2010.
The Rand strengthened against the Dollar during the period, resulting in cash costs in Dollar terms increasing by 16% to $1,122 per PGM ounce.
Marikana: Operating Costs 4E (Pt+Pd+Rh+Au) 6E 6E net of by-products (Ni& (Pt+Pd+Rh+Ir+Ru+Au) Cu) Marikana R8,026 per PGM R6,589 per PGE ounce R 6,361 per PGE ounce ounce Capital Expenditure
Capital expenditure at Marikana for the first half was R94 million (R1,561 per PGM ounce), spent largely on ongoing underground infrastructure establishment, new safety equipment, the initial capital for the 5 Shaft project and some mobile equipment. Marikana's expenditure is up to date as per mine plan.
Contractor dispute with Moolman Mining
As disclosed at the time, the dispute with Moolman Mining was finally settled by agreement between the parties during the first quarter of the financial year. AQPSA paid R87.8 million (approximately $12 million) to Moolman Mining, representing only work actually done by Moolman Mining, interest and certain legal costs, in full and final settlement of all disputes between the parties.
Update on impact of revised hangingwall support strategy
As at Kroondal, the new hangingwall support methodologies are now largely in place at Marikana and are being implemented. All the required equipment has been purchased and is being used during day-to-day mining activities. All personnel vacancies needed to implement the support strategy were filled during the second quarter.
Everest (Aquarius Platinum - 100%)
Safety
No fatalities occurred during the period
Only 2 lost-time injuries were reported during the first half
The 12-month rolling average disabling injury incidence rate (DIIR) was 0.25 during the half year - Everest was not operating in the pcp
Mining
Underground volumes rose to 605 thousand tonnes from nil in the pcp
Achieved head grade in the first half was 2.78 g/t, and is improving steadily
Processing
Volumes of ore processed in the Everest concentrator plant was 643 thousand tonnes
Concentrator recoveries were 79%
Production totalled 45,561 PGM ounces
Revenue
Everest achieved a US Dollar PGM basket price of $1,354 per PGM ounce for the first half. Realised revenue per ounce together with positive sales adjustments resulted in overall revenue from the mine of R457 million for the first half of the 2011 financial year.
Operations
Access to the Everest mine workings was re-established and production restarted in May 2010 following the suspension of mining operations there in December 2008 following a subsidence event. The progress of the re-establishment project and the ramp-up of production in the first half of the 2011 financial year is in line with plan and is proceeding well. Grades and recoveries both improved steadily over the period.
The final touches to Phase 2 of the re-establishment project were completed during the period under review, and recruitment and training of new crews for production is almost complete, in line with the planned build up. To date all employees who are being recruited are former employees in line with the retrenchment agreement signed with the unions when operations were ceased.
Operating Cash Costs
Cash costs in Rand terms for the first half were R558 per ROM tonne and R7,879 per PGM ounce, and remain on a decreasing trend as the production ramp-up continues.
The Rand strengthened against the Dollar during the period, and so cash costs in Dollar terms were $1,101 per PGM ounce. As the production ramp-up continues, the impact of the mine's fixed cost base will reduce.
Everest: Operating Cash Costs
4E (Pt+Pd+Rh+Au) 6E 6E net of by-products (Ni& (Pt+Pd+Rh+Ir+Ru+Au) Cu) Everest R 7,879 per PGM R 6,556 per PGE R 5,857 per PGE ounce ounce ounce Capital Expenditure
Capital expenditure at Everest for the first half was R136 million (R2,975 per PGM ounce), spent largely on ongoing underground infrastructure establishment, new safety equipment, capital for the Valley Boxcut project and some mobile equipment.
Update on impact of revised hangingwall support strategy
The majority of the action steps to implement the new support system at Everest have been implemented.
RIDGE MINING (PTY) LTD
Blue Ridge Mine (Aquarius Platinum - 50%)
Safety
Regrettably, one fatality occurred during the period - on 2 November 2010 Mr V.M Cossa was fatally injured in a blasting accident caused by a failure to follow ignition procedures
12 lost-time injuries were reported during the first half
The 12-month rolling average disabling injury incidence rate (DIIR) deteriorated from 1.09 to 2.02 during the half year
Mining
Stoping operations were stopped at the end of the first quarter to enable the redevelopment of the mine
Underground volumes decreased by 51% to 204 thousand tonnes compared to H1 2010
Achieved head grade in the first half decreased by 5% to 2.35 g/t
Processing
The Blue Ridge concentrator plant was stopped at the end of the first quarter
Volumes of ore processed in the first half was 141,926 thousand tonnes
Concentrator recoveries were 74%, a 7% improvement over the pcp
Production totalled 8,092 PGM ounces, all of which were capitalised
Operations
As disclosed at the time, the decision to redevelop the Blue Ridge mine and install infrastructure was taken by the AQPSA Board in September, given the low Rand basket prices prevailing at the time and the inherited sub-optimal mine design.
The redevelopment project was outlined in the Aquarius Q1 2011 production report, and the implementation of the project commenced during the second quarter. Approximately 900 employees have been redeployed, some to other operations, in a process that was concluded satisfactorily and with retrenchments limited to a bare minimum.
Development for the half year totalled 2,365 metres. Ore reserve creation also increased over the period, with a number of raised holings having been completed. Currently the developed ore reserves at Blue Ridge total 1,843 meters. Operations are currently underway to equip these raises in order to facilitate the production build-up.
Update on progress:
The waste silo is currently being blasted, and the material required for the equipping thereof has been ordered. This includes the extension of the existing belt past the silo position, and completion is expected during the 3rd quarter of the 2011 financial year
The contractor is on site for the installation of the second conveyor belt. The work has started and the anticipated completion date remains the end of the 3rd quarter
The upgrading of the service columns was reviewed and it was decided to continue to use compressed air. Installation will commence during the 3rd quarter and be completed by the 4th quarter
The vamping project is underway and tonnage throughput to the plant is being supplemented by the recovery of tonnage lock-up from old areas
A centralised blasting system has been commissioned
The Change House civil engineering has been completed
The 25MVA Eskom powerline installation to the mine is complete
Capital Expenditure
Capital expenditure at Blue Ridge for the first half was R206 million, spent largely on the redevelopment project.
MIMOSA INVESTMENTS LIMITED (Aquarius Platinum - 50%)
Mimosa Platinum Mine
Safety
Regrettably, one fatality occurred during the period - during the first quarter Mr Innocent Ndlovu, an Acting Machine Operator, was fatally injured in an explosion when an operating rock drill intersected a socket containing misfired explosives as a result of a failure to observe established safety procedures
Management changes were made as a result of this accident, which ended a period of 2.7 million fatality-free shifts for Mimosa
Only 1 lost-time injury was reported during the first half
The 12-month rolling average disabling injury incidence rate (DIIR) deteriorated from 0.14 to 0.25 during the half year
Mining
Underground volumes decreased by 1% to 1,213 thousand tonnes
Achieved head grade in the first half increased by 1% compared to H1 2010, to 3.61 g/t
Processing
Volumes of ore processed in the Mimosa concentrator plant mirrored tonnes mined
Concentrator recoveries improved from 76% to 77%
Production increased slightly to 101,156 PGM ounces
Revenue
Mimosa achieved a US Dollar PGM basket price of $1,173 per PGM ounce for the first half, an increase of 37% over the pcp. This improved the mine's realized revenue per ounce and also resulted in positive sales adjustments. These factors resulted in overall revenue from the mine rising by 5% to R115 million.
Operations
After record production levels achieved in the first quarter of the 2011 financial year, challenging ground conditions were encountered across all areas of Mimosa in the second quarter, resulting in lower production which offset the gains in the first three months. As a result Mimosa's production was flat compared to the pcp.
Operating Cash Costs
Cash costs for the first half increased by 10% to $55 per ROM tonne and by 5% to $623 per PGM ounce compared to H1 2010.
Mimosa: Operating Cash Costs
4E (Pt+Pd+Rh+Au) 6E 6E net of by-products (Ni& (Pt+Pd+Rh+Ir+Ru+Au) Cu) Mimosa $623 per PGM ounce $590 per PGE ounce $254 per PGE ounce Capital Expenditure
Capital expenditure at Mimosa for the first half was $30 million ($295 per PGM ounce), spent largely on ongoing underground infrastructure establishment ($13 million) and staff housing ($8 million). Mimosa's expenditure is up to date as per mine plan.
Economic and Political Update
In the 2011 Fiscal Budget Statement which was presented on 25 November 2010, royalties on gold and platinum were increased from 4% to 4.5% and 5% of gross revenue respectively. The draft revised Income Tax Act published in June 2010 for comments is expected to be finalised during the first half of 2011. The proposed changes in the act include restrictions on deductible expenditure for taxable income, and revision of the Special Initial Allowance for mining entities which is currently 100% in the year of expenditure.
Update on the Indigenisation Bill
The sector specific requirements for the mining industry have not yet been publicised, though intense discussions on the matter are ongoing. As further information becomes available the market will be kept informed.
TAILINGS OPERATIONS
Chromite Tailings Retreatment Plant (CTRP) (Aquarius Platinum - 50%)
The DIIR for the period was 0.00
Feed processed was 65 thousand tonnes, a decrease of 54%
Head grade rose by 29% to 2.95 g/t
Average recoveries for the period increased from 37% to 47%
Production fell 24% to 2,921 PGM ounces (Aquarius attributable: 1,913 PGM ounces)
The US Dollar PGM basket price for the period was $1,492 per PGM ounce, an increase of 27% compared to H1 2010 - CTRP produces proportionately more rhodium than the other operations, which contributes to the higher basket prices achieved
Revenue at CTRP decreased by 25% to R21 million
Cash costs increased by 85% to R5,742 per PGM ounce, equal to $803 per PGM ounce
Platinum Mile Resources (Pty) Ltd (Aquarius Platinum - 50%)
The DIIR for the period was 1.46, up from 0.00 in the pcp - the plant recorded its first-ever lost-time injury
Feed processed was 2.3 million tonnes, a decrease of 42%
Head grade fell by 2% to 0.62 g/t
Average recoveries for the period increased from 15% to 17%
Production fell 35% to 8,044 PGM ounces (Aquarius attributable: 4,022 PGM ounces)
The US Dollar PGM basket price for the period was $1,429 per PGM ounce, an increase of 23% compared to H1 2010
Revenue at Platinum Mile decreased by 42% to R67 million
Cash costs increased by 129% to R5,709 per PGM ounce, equal to $821 per PGM ounce
Tailings Operations: Operating Cash Costs
4E (Pt+Pd+Rh+Au) 6E 6E net of by-products (Pt+Pd+Rh+Ir+Ru+Au) CTRP R 5,742 per PGM ounce R 3,954 per PGE ounce R 3,852 per PGE ounce
Platinum Mile R 5,709 per PGM ounce R 4,921 per PGE ounce R 2,535 per PGE ounce
[Please refer to www.aquariusplatinum.com for statistical table]
CORPORATE MATTERS
Official Department of Mineral Resources safety statistics for the South African platinum industry
The DMR has released its safety statistics for the platinum industry to the end of December 2010, which are charted in the graph below.
[Please refer to www.aquariusplatinum.com for the graph]
More information on all corporate matters can be found at www.aquariusplatinum.comAquarius Platinum LimitedIncorporated in BermudaExempt company number 26290Board of DirectorsNicholas Sibley Non-executive Chairman Stuart Murray Chief Executive Officer David Dix Non-executive Tim Freshwater Non-executive Edward Haslam Non-executive
Sir William Purves Non-executive (Senior Independent Director)
Kofi Morna Non-executive Zwelakhe Mankazana Non-executive Audit/Risk CommitteeSir William Purves (Chairman)David DixEdward HaslamKofi MornaNicholas Sibley
Remuneration/Succession Planning Committee
Edward Haslam (Chairman)David DixZwelakhe MankazanaNicholas SibleyNomination Committee
The full Board comprises the Nomination Committee
Company SecretaryWilli BoehmInvestor Relations
Gavin Mackay Business Development & Communications Executive
AQPSA ManagementStuart Murray Executive Chairman Anton Lubbe Managing Director H©l¨ne Nolte Director: Finance Mkhululi Duka Director: Human Capital Abraham van Ghent Senior General Manager: Operations Graham Ferreira General Manager: Group Admin & Company Secretary Wessel Phumo General Manager: Marikana Jan Hattingh General Manager: Engineering Radesh Sukhdeo General Manager: Metallurgical David Starley General Manager :Projects Augustine Simbanegavi General Manager: Everest Anthony Joubert General Manager: Blue Ridge Mimosa Mine ManagementWinston Chitando Managing Director Herbert Mashanyare Technical Director Peter Chimboza Resident Director Fungai Makoni General Manager Finance & Company Secretary
Platinum Mile Management
Richard Atkinson Managing Director
Paul Swart Financial Director
Issued Capital
At 31 December 2010, the Company had in issue: 463,241,295 fully paid common shares and 452,171unlisted options.
Substantial Shareholders 31 December 2010 Number of Shares Percentage
Savannah Consortium 63,254,371 13.66 JP Morgan Nominees Australia Limited 46,135,926 9.96
HSBC Custody Nominees (Australia) Limited 38,189,609 8.25
National Nominees Limited 32,498,637 7.02 Chase Nominees Limited 25,268,975 5.45 Trading InformationISIN number BMG0440M1284ADR ISIN number US03840M2089Convertible Bond ISIN number XS0470482067Broker (LSE) (Joint) Broker (ASX) Sponsor (JSE) Liberum Capital Limited City Point, 1 Ropemaker Street, London, EC2Y 9HT Euroz Securities Rand Merchant Bank Telephone: +44 (0) 20 3100 Level 18 Alluvion (A division of FirstRand 2000 58 Mounts Bay Bank Limited) Road, 1 Merchant Place Bank of America Merrill Perth WA 6000 Cnr of Rivonia Rd and Lynch Telephone: +61 Fredman Drive, Sandton 2146 2 King Edward St (0) 8 9488 1400 Johannesburg South Africa London, EC1A 1HQ Telephone: +44 (0)20 7628 1000
Aquarius Platinum (South Africa) (Proprietary) Ltd
100% Owned(Incorporated in the Republic of South Africa)
Registration Number 2000/000341/07
1st Floor, Building 5, Harrowdene Office Park, Western Service Road, Woodmead2191, South AfricaPostal Address: PO Box 76575, Wendywood, 2144, South Africa.Telephone: +27 (0)11 656 1140Facsimile: +27 (0)11 802 0990
Aquarius Platinum Corporate Services Pty Ltd
100% Owned
(Incorporated in Australia)
ACN 094 425 555
Level 4, Suite 5, South Shore Centre, 85 The Esplanade, South Perth, WA 6151,AustraliaPostal Address: PO Box 485, South Perth, WA 6151, AustraliaTelephone: +61 (0)8 9367 5211Facsimile: +61 (0)8 9367 5233Email: info@aquariusplatinum.com
For further information please visit www.aquariusplatinum.com or contact:
In AustraliaWilli Boehm+61 (0) 8 9367 5211
In the United Kingdom and South Africa
Gavin Mackay
gavin.mackay@aquariusplatinum.com
+ 44 (0) 7909 547 042GlossaryA$ Australian Dollar Aquarius Aquarius Platinum Limited or AQP AQPSA Aquarius Platinum (South Africa) (Pty) Ltd BEE Black Economic Empowerment
CTRP Chrome Tailings Retreatment Operation. Consortium comprising Aquarius
Platinum (SA) (Corporate Services) (Pty) Limited (ASACS), Ivanhoe
Nickel and Platinum Limited and Sylvania South Africa (Pty) Ltd
(SLVSA).
DIFR Disabling injury frequency rate - being the number of lost-time
injuries expressed as a rate per 1,000,000 man-hours worked
DIIR Disabling injury incidence rate - being the number of lost-time
injuries expressed as a rate per 200,000 man-hours worked
DME formerly South African Government Department of Minerals and Energy,
now the DMR
DMR South African Government Department of Mineral Resources, formerly the
DME Dollar United States Dollar or $ Everest Everest Platinum Mine FOG Fall of ground Great A PGE bearing layer within the Great Dyke Complex in Zimbabwe Dyke Reef g/t Grams per tonne, measurement unit of grade (1g/t = 1 part per million) JORC Australasian code for reporting of Mineral Resources and Ore Reserves code JSE JSE Limited Kroondal Kroondal Platinum Mine or P&SA1 at Kroondal LHD Load haul dump machine Marikana Marikana Platinum Mine or P&SA2 at Marikana Mimosa Mimosa Mining Company (Private) Limited pcp Previous corresponding period PGE(s) Platinum group elements plus gold. Five metallic elements commonly (6E) found together which constitute the platinoids (excluding Os (osmium)). These are Pt (platinum), Pd (palladium), Rh (rhodium), Ru (ruthenium), Ir (iridium) plus Au (gold) PGM(s) Platinum group metals plus gold. Aquarius reports the PGMs as (4E) comprising Pt+Pd+Rh plus Au (gold) with the Pt, Pd and Rh being the most economic platinoids in the UG2 Reef PlatMile Platinum Mile Resources (Pty) Ltd P&SA1 Pooling & Sharing Agreement between AQPSA and RPM Ltd on Kroondal P&SA2 Pooling & Sharing Agreement between AQPSA and RPM Ltd on Marikana R South African Rand Blue Blue Ridge Platinum Mine Ridge or Ridge ROM Run of mine. The ore from mining which is fed to the concentrator plant. This is usually a mixture of UG2 ore and waste. Tonne 1 Metric tonne (1,000kg)
UG2 Reef A PGE-bearing chromite layer within the Critical Zone of the Bushveld
Complex
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