29 Jul 2010 07:00
AQUARIUS PLATINUM LIMITED
Aquarius Platinum: Fourth Quarter 2010 - Production Results to 30 June 2010
Highlights
Attributable production up 7% quarter-on-quarter to 110,474 4E ounces
Average PGM Dollar prices improved - platinum up 5%, rhodium up 5% and palladium up 12%, against a backdrop of continued Rand strength
Anton Lubbe appointed as Managing Director of principal South African operating subsidiary
Implementation and successful re-audit of the ISO 9000 and 14000 and OSHAS 18000 management systems undertaken at Kroondal and Marikana
Mine plan review in progress at the Blue Ridge mine
Regrettably, two fatalities at Blue Ridge during the quarter and five more atMarikana in a single incident subsequent to the quarter end - Group-wide safetyreview underway (see recent separate disclosures and Corporate Matters sectionbelow) Q4 Operating Results Summary Kroondal Marikana Everest Blue Ridge Mimosa CTRP Plat. * + Mile 4E PGM Production Total (100% basis) 108,438 31,889 8,496 10,202 49,709 1,303 2,411 Attributable 54,219 15,945 8,496 5,101 24,855 652 1,206 4E Basket Price R/oz 10,521 10,560 9,912 10,506 - 11,333 9,791 $/oz 1,402 1,407 1,321 1,399 1,184 1,510 1,300 Cash Costs (4E basis) R/oz 6,037 6,583 9,150 - n/a 5,927 8,473 $/oz 805 877 1,219 - 640 790 1,125 Cash Margin 31 28 (4) - 54 18 13 Stay-in-Business Capex R/oz 530 1,507 2,121 955 - 626 - $/oz 71 201 283 127 92 83 - * In ramp-up + In development / capitalised
Commenting on the results, Stuart Murray, CEO of Aquarius Platinum said:
"The final quarter of the 2010 financial year has been positive overall, with production volumes better than those achieved in the previous quarter, and improved average PGM prices. Kroondal and Mimosa performed well during the period, which also saw the early and very promising restart of production from Everest. However, the quarter was not without its challenges. The two fatalities at the Blue Ridge mine in two separate incidents during the quarter have prompted us to review and overhaul the safety procedures at this mine, and Blue Ridge will also now undergo an extensive review to improve its long term mine plan. Marikana experienced a difficult quarter due to the intersection of potholes in the drill rig section, followed by the tragic accident at 4 Shaft shortly after the quarter end, and feed quality and supply volume to the tailings operations remained volatile, with a commensurate impact on their results. We are proactively resolving these issues, and we have renewed our commitment to best practice safety throughout our operations."
Production by mine Quarter ended PGMs (4E) Sep 2009 Dec 2009 March 2010 June 2010 Kroondal 88,808 108,254 103,071 108,438 Marikana 31,223 37,160 35,147 31,889 Everest - - - 8,496 Blue Ridge 14,469 18,598 15,338 10,202 Mimosa 50,828 50,079 49,008 49,709 CTRP 1,740 2,087 1,268 1,303 Platinum Mile 5,932 8,539 2,737 2,411 Total 193,001 224,717 206,586 212,448
Production by mine attributable to Aquarius
Quarter ended PGMs (4E) Sep 2009 Dec 2009 March 2010 June 2010 Kroondal 44,404 54,127 51,536 54,219 Marikana 15,611 18,580 17,574 15,945 Everest - - - 8,496 Blue Ridge 7,235 9,299 7,669 5,101 Mimosa 25,414 25,039 24,504 24,855 CTRP 870 1,044 634 652 Platinum Mile 2,966 4,270 1,369 1,206 Total 96,500 112,359 103,286 110,474
Aquarius Group attributable production (PGM ounces) - quarters to 30 June 2010
For graph see www.aquariusplatinum.com
Metals prices
The strong PGM price momentum seen in the previous quarter continued into April and early May, driven by a recovering automobile sector and to some extent investment demand for the physically backed platinum and palladium Exchange Traded Funds (ETFs). The US Dollar price of platinum peaked for the financial year at $1,738 per ounce on the last day of April and first day of May this year.
In mid May the Greek sovereign debt crisis reintroduced market uncertainty regarding the strength of the global economic recovery, and this was exacerbated by rumours of faltering growth in China and weaker-than-expected economic indicators reported by the USA. The situation in Greece in particular cast doubt on the wider European economy, which is the largest consumer of diesel passenger cars in the world. Because of its importance in diesel catalytic converters, the platinum price has been affected negatively by these events and the associated worsening in consumer sentiment. Uncertainty around the strength of the global recovery and European economy persists, and continuing market volatility is likely throughout the northern hemisphere summer.
Despite the price of platinum falling 6% over the quarter and at one point losing over $200 per ounce, the volumes of both the physical platinum and physical palladium ETFs have remained encouragingly stable, increasing slightly in May and falling marginally in June. The platinum ETFs together continue to represent approximately 1m oz of underlying metal.
Platinum volumes on the Shanghai Gold Exchange (a proxy for Chinese platinum jewellery demand) spiked in May and were above average again in June, driven largely by recent price falls. Jewellery demand appears to be providing a floor for the platinum price of approximately $1,500 per ounce.
Switzerland remained a net exporter of platinum over the quarter, indicating continuing restocking by automobile manufacturers. Market consensus nonetheless continues to suggest a slowing in automobile demand which is likely to persist for some time, with sales of palladium-rich gasoline cars outperforming those of diesel cars.
As a result of price strength early in the quarter, the average prices of the PGMs increased quarter-on-quarter. Platinum and rhodium each rose 5% on average, while palladium rose 12%. Gold rose by 8% over the period on average. All of the PGMs ended the quarter below the point at which they began, however, with platinum falling 6% to $1,532 per ounce, palladium down 9% to $446 per ounce and rhodium down 4% to $2,500 per ounce. Gold improved over the quarter, rising 11% to $1,243 per ounce.
PGM prices by individual metal - 12 months to 30 June 2010
For graph see www.aquariusplatinum.com
Rand-Dollar exchange rate
The Rand remained broadly stable for yet another quarter, averaging R7.55 to the US Dollar, a depreciation of 0.4% compared to the average in the prior period. The Rand was stronger in April, weakening in May to a low of R7.97 to the US Dollar, before rising again in June to end the quarter under review at R7.62.
Despite weaker PGM prices from mid May, average PGM basket prices once again strengthened at all operations in both currencies over the quarter. The US Dollar weighted average group basket price increased by 6% to $1,347 per 4E PGM ounce compared to the previous quarter, while the weighted average basket price at the South African operations was $1,394 per PGM ounce. The South African basket price is equivalent to R10,460 per PGM ounce at the average exchange rate for the period, a 5% increase over the second quarter. However, the South African basket price ended the quarter at R9,979 per PGM ounce, 2% lower than at the start of the period. The reduction in the basket price in the last portion of the quarter will result in a negative sales adjustment of approximately $2 million for this period.
Rand-Dollar exchange rate - 12 months to 30 June 2010
For graph see www.aquariusplatinum.com
Average PGM basket prices achieved at Aquarius operations: US$ per 4E PGM ounce
Basket prices (Quarter ended) Sep 2009 Dec 2009 March 2010 June 2010 Kroondal 972 1,163 1,328 1,402 Marikana 999 1,173 1,328 1,407 Everest - - - 1,321 Blue Ridge 967 1,138 1,313 1,399 Mimosa 805 910 1,074 1,184 CTRP 1,074 1,266 1,456 1,510 Platinum Mile 1,004 1,192 1,308 1,300 Aquarius Group average 931 1,094 1,267 1,347
PGM basket prices (Dollar and Rand per 4E PGM ounce) - 12 months to 30 June 2010
For graph see www.aquariusplatinum.com
AQUARIUS PLATINUM (SOUTH AFRICA) (PTY) LTD (Aquarius Platinum 100%)
P&SA 1 at Kroondal
Safety, Health and Environmental
The 12-month rolling average disabling injury incidence rate (DIIR per 200,000 hours) was 0.57 for the quarter and 0.54 for the 2010 financial year, a 23% improvement on the Q4 2009 rate of 0.74
During the quarter, Kroondal achieved 18 months without a fatal accident
ISO 9000 and 14000 and OSHAS 18000 management systems implemented and successfully re-audited
Mining
Production tonnes for the quarter increased by 11% to 1,635,594 tonnes
Head grade improved from 2.56 g/t to 2.61g/t
Processing
Tonnes processed increased by 2% to 1,604,734 tonnes
Recoveries increased by 2% to 81%
PGM production increased by 5% to 108,438 4E PGM ounces (54,219 4E PGM ounces
attributable)
P&SA1 at Kroondal PGM production and Rand cash costs per PGM ounce (100%)
For graph see www.aquariusplatinum.com
Revenue
Revenue for the quarter decreased by 3% to R951 million (R476 million attributable) due to negative sales adjustments as a result of the weakening of metal prices and stronger Rand in the last weeks of the quarter.
The Kroondal US Dollar-denominated basket price improved by 6% compared to the previous quarter to an average of $1,402 per PGM ounce. The Rand/Dollar exchange rate decreased slightly on average to R/$7.50.
Operations
The number of mining shifts increased from 65 in Q3 to 69 in Q4, and as a result the on-reef stoping square metres mined increased by 5% and primary development (currently at 3,388 metres) increased by 6% during the quarter. Overall tonnes hoisted increased by 11% to 1,635,594 tonnes for the quarter.
Improved mining volumes assisted in increasing the amount of ore sent to the stockpile. Overall volumes processed improved by 2% to 1,604,734 tonnes with stockpiles at the end of the quarter totalling approximately 56 thousand tonnes.
Off-reef mining increased from 1.1% of the on-reef square meters mined to 4.0% as more unforeseen geological structures were encountered. Recoveries increased from 79% to 81% as a result of a more stable metallurgical operating regime.
PGM production increased by 5% to 108,438 4E PGM ounces (54,219 4E PGM ounces attributable).
Kroondal: Metal in concentrate produced (PGM ounces)
Quarter ended Pt Pd Rh Au PGMs Attributable to Aquarius Jun 2010 63,803 32,324 11,789 522 108,438 54,219 Mar 2010 60,580 30,729 11,228 534 103,071 51,535 Dec 2009 63,772 32,153 11,808 521 108,254 54,127 Sep 2009 52,287 26,366 9,708 447 88,808 44,404 Operating cash costs
Mining cash costs increased by 6% to R408 per tonne, and costs per PGM ounce increased by 2% to R6,037. Absolute operating costs increasing from R609 million to R655 million for the quarter, as a result of higher electricity cost due to the winter tariffs and engineering cost (major repairs). The increased average PGM basket price was offset by the reduction of the basket price in the last month of the quarter resulting in a negative sales adjustment. This reduced Kroondal's cash margin for the period from 38 % to 31%.
Kroondal: Operating cash costs per ounce
4E 6E 6E net of by-products (Pt+Pd+Rh+Au) (Pt+Pd+Rh+Ir+Ru+Au) (Ni&Cu) Kroondal R6,037 R4,942 R4,806 Capital expenditure
Capital expenditure for the quarter was R57 million (R530 per PGM ounce). This was due to underground infrastructure enhancement and the establishment and mobilising of the K6 project.
P&SA2 at Marikana
Safety, Health and Environmental
The 12-month rolling average disabling injury incidence rate (DIIR per 200,000 hours) was 0.74 and is a 19% improvement on Jun 2009 (0.91)
ISO 9000 and 14000 and OSHAS 18000 management systems implemented and successfully re-audited
Marikana achieved 17 fatality free months during the quarter; however on 6 July 2010 a serious accident occurred at the mine in which 5 people tragically lost their lives
A detailed note on the fall of ground incident referred to above is included in the Corporate Matters section of this quarterly report
Mining
Production tonnes decreased by 1% to 521,712 tonnes, comprising 361,358 tonnes from underground and 160,354 from open-pit operations
Head grade increased by 4% to 2.68g/t
Processing
Tonnes processed decreased by 10% to 505,631 tonnes
Recoveries decreased by 3% to 73%
PGM production decreased by 9% to 31,889 4E PGM ounces (15,944 4E PGM ounces attributable)
P&SA2 at Marikana PGM production and Rand cash costs per PGM ounce (100%)
For graph see www.aquariusplatinum.com
Revenue
Revenue at Marikana decreased by 15% to R292 million (R146 million attributable) due to negative sales adjustments as a result of the weakening of metal prices and a stronger Rand in the last weeks of the quarter, as well as a reduction in production.
The Marikana US Dollar-denominated basket price averaged $1,407 per PGM ounce, 6% higher than the previous quarter.
Operations
Marikana Mine production was negatively affected by the intersection of potholes in the drill rig section. Primary development increased by more than 50% to negate the negative effect of the high geological losses, resulting in a significant stay-in-business capital expenditure increase.
Processed tonnes mirrored the mining tonnes with total volumes processed at 505,631 tonnes, 10% lower than in the previous quarter.
The head grade improved by 4% to 2.68g/t, as development activities at 5 Shaft are now on reef, as explained in the previous quarter.
Recoveries were 3% lower at 73%, due to instability in the plant operation as a result of intermittent feed.
PGM production for the quarter decreased by 9% to 31,889 4E PGM ounces (15,944 4E PGM ounces attributable).
Marikana: Metal in concentrate produced (PGM ounces)
Quarter ended Pt Pd Rh Au PGMs Attributable to Aquarius Jun 2010 19,163 9,114 3,423 190 31,889 15,945 Mar 2010 21,007 10,236 3,698 206 35,147 17,574 Dec 2009 22,838 10,470 3,642 209 37,160 18,580 Sep 2009 19,515 8,407 3,100 200 31,222 15,611 Operating cash costs
Cash costs decreased by 7% to R415 per tonne, while costs per PGM ounce decreased by 8% to R6,583 as a result of a reduction in stripping ratio from 27:1 to 14:1 in the open pit as the pit approaches its end of life. Underground costs fell as a result of a positive variable cost variance because fewer tonnes were mined. Number 1 Shaft (within the pit) at Marikana is currently under operating review, as it is currently not contributing sufficiently at spot prices. This shaft currently accounts for approximately 8% of Marikana's overall production.
Gross revenue decreased by 15% to R292 million as a result of negative sales adjustments and a reduction in the ounces produced, resulting in a cash margin of 28%.
Marikana: Operating cash costs per ounce
4E 6E 6E net of by-products (Pt+Pd+Rh+Au) (Pt+Pd+Rh+Ir+Ru+Au) (Ni&Cu) Marikana R6,583 R5,387 R5,146 Capital expenditure
Stay-in-business capital expenditure totalled R48 million (R1,507 per PGM ounce), an increase of 125%. Capital costs increased because of increased equipping of infrastructure and development of the Marikana 5 Shaft.
Contractor dispute with Moolman Mining
As disclosed in previous Aquarius Platinum quarterly updates, this dispute has been referred to the courts and provisional dates in September 2010 have been allocated for the trial.
Everest Mine
Safety, Health and Environmental
No lost time injuries were recorded during the quarter
The 12 month rolling DIIR for the period was 0.31
Operations
Phase 2 of the re-establishment project progressed well for the quarter with 95% of the work completed.
The establishment of permanent underground services, the reclamation of infrastructure, and the equipping of declines and strike sections have all been completed. The completion of this infrastructure resulted in early delivery of ore from underground and a total of 107,289 tonnes were hoisted during this quarter, which is 72% above the initial plan.
The overland conveyor belt and chairlift is 95% complete with final touches still being applied. Work is scheduled to be completed at the end of July 2010.
Work at the Valley box cut commenced during the quarter. Box cut excavation and access road construction is in progress, with completion targeted for the end of August 2010. 81,542 tonnes of opencast ore was mined from the remnant section around the collapsed decline system during the quarter, bringing mining for the quarter to 188,831 tonnes (199,503 for the full year).
Construction of the Chromite Spiral Plant was completed at the end of May and commissioning was completed at the end of June. The Spiral Plant is currently running within the designed criteria.
The processing plant was recommissioned in May with 150,279 tonnes processed for the quarter at a grade of 3.09g/ton. A total of 8,496 ounces were produced at a recovery rate of 57%. The recovery was negatively affected by the initial open pit material which was oxidized, and by challenges experienced with the plant PLC system during re-commissioning.
Capital Expenditure
The total re-establishment project capital (both Phase 1 and Phase 2 as previously announced) amounts to R265 million. Project expenditure is within budget, at a total of R87 million for the quarter, bringing the project expenditure for the year to R217 million. On mine capital projects expenditure amounted to R 30.3 million for the year, mainly for the construction of the Chrome Spiral plant (R21.2 million), and also for the re-establishment of the main decline belts (outside the scope of the project) and the Hoogland EIA study.
MIMOSA INVESTMENTS (Aquarius Platinum - 50%)
Mimosa Platinum MineSafety
The 12-month rolling average DIIR for the period improved to 0.07 from 0.09 in the previous quarter
Zero lost-time injuries were recorded during the quarter under review
Mining
Underground production increased by 16% to 563,976 tonnes
Head grade was static at 3.60g/t
Processing
Concentrator plant recoveries decreased slightly to 75.7% from 76.1%
Total mine production increased to 49,709 4E PGM ounces (24,855 4E PGM ounces attributable)
The surface stockpile decreased to a total of 72,117 tonnes at the end of the quarter
For graph see www.aquariusplatinum.com
Revenue
The average achieved PGM basket price for the quarter increased by 10% to $1,184 per PGM ounce, while the average achieved nickel price increased by 28% to $10.34 per pound. Revenue for the quarter increased to $72 million, with base metals accounting for approximately 25% of this. A $5 million positive price adjustment is included in revenue for the quarter.
The cash margin increased to 54% from 49% in the previous quarter, mainly due to stronger average metal prices.
Operations
Mimosa mining operations hoisted 563,976 tonnes of ore in the current period compared to 486,804 tonnes in the previous quarter. Volumes milled and processed totalled 567,845 tonnes, with 3,869 tonnes being taken from the stockpile. As a result the surface stockpile totalled 72,117 tonnes at the quarter end.
The average plant head grade was static at 3.60g/t, and recoveries decreased to 75.7% from 76.1% in the previous quarter.
As a result of these factors, PGM production increased by 2% to 49,709 4E PGM ounces (24,855 4E PGM ounces attributable) during the quarter, with base metals production rising by a similar margin.
Mimosa: PGMs in concentrate produced (ounces)
Quarter ended Pt Pd Rh Au PGMs Attributable to Aquarius Jun 2010 25,264 19,053 1,999 3,393 49,709 24,855 Mar 2010 24,898 18,744 1,972 3,394 49,008 24,504 Dec 2009 25,388 19,237 2,012 3.442 50,079 25,039 Sep 2009 25,691 19,569 2,096 3,473 50,829 25,414
Mimosa: Base metals in concentrate produced (tons)
Mine production Attributable to Aquarius Quarter ended Ni Cu Co Ni Cu Co Jun 2010 691 565 19 346 283 10 Mar 2010 685 561 19 343 281 10 Dec 2009 695 574 19 348 287 10 Sep 2009 705 572 19 353 286 10 Operating cash costs
During the quarter, cash costs decreased by 4% to $56 per ROM tonne, and costs per PGM ounce decreased by 3% to $640. This was largely as a result of cost saving initiatives that are being implemented in the mine.
Net of by-products, cash costs were $265 per PGM ounce, compared with $333 per PGM ounce in the previous quarter, primarily due to the decrease in operating cash costs.
Mimosa operating cash costs per ounce
4E 6E 4E net of by-products (Pt+Pd+Rh+Au) (Pt+Pd+Rh+Ir+Ru+Au) (Ni, Cu & Co) Mimosa $640 $607 $265 Economic and Political Update
The inclusive government continues to function and there is continued hope that this will result in an improved economic environment. In the 2010 Mid Term Fiscal Policy Statement which was presented on 14 July 2010, royalties on precious metals were increased from 3.5% to 4% of gross revenue while that applied to base metals remained unchanged. The minister indicated that the multicurrency regime would continue until 2012. Inflationary pressures from wage increases, public utility charges and the strengthening of the South African Rand against the US dollar caused the inflation figure to reach 6.1% in May 2010 from 0.7% in January 2010. The US dollar and South African Rand remain the most widely used currencies in the economy.
A draft revised Income Tax Act was published in June 2010 for comments. The proposed changes include restrictions on deductible expenditure for taxable income, and changing the Special Initial Allowance for mining entities from 100% in the year of expenditure to 25% over four years. However, the income tax rate for mines remained unchanged at 25%.
Update on the Indigenisation Bill
Following the signing into law of the Indigenisation Bill, companies were required to submit to the Zimbabwean Ministry of Youth Development, Indigenisation and Economic Empowerment their indigenisation plans and proposals by 15 April 2010. As reported last quarter, Mimosa has complied with this requirement. There have been no formal developments since then in respect of the Indigenisation Bill.
RIDGE MINING LIMITED
Blue Ridge Platinum Mine (Aquarius Platinum - 50%)
Safety
The 12-month rolling average DIIR for the quarter deteriorated to 1.86 from 1.43 in the previous quarter
Regrettably, 2 fatalities occurred in two separate incidents during June
Senior management personnel changes and a safety review at Blue Ridge have been initiated
Mining
Production from underground operations increased by 20% to 162,526 tonnes
Head grade improved to 2.32 g/t
Surface stockpiles largely depleted at the end of the quarter
Processing
Tonnes processed decreased by 40% to 179,209 tonnes due largely to depleted stockpiles
Recoveries increased from 72% to 76%
PGM production decreased by 33% to 10,202 ounces (5,101 ounces attributable to Aquarius)
Revenue
Revenue for the quarter decreased by 35% to R96.5 million (R48 million attributable to Aquarius) as a result of lower PGM production. The achieved mine basket price for the quarter improved by 6% to an average of $1,399 per PGM ounce.
Operations
Following the two fatalities that occurred during June a decision was taken by Aquarius to halt all operations at the Blue Ridge mine for a two week period, during which time all employees were retrained. All codes of practice, safe operating procedures and base line risk assessments were reviewed. All employees were taken through a "Stop Think" behaviour program which included an industrial theatre performance and a workshop on the importance of reporting injury incidence. Staged mock ups were erected showing the dangers associated with 10 cardinal rules of safety. The section 54 suspension which was issued was lifted on 25 June and mining recommenced on 29 June.
Production for the 4th quarter saw the initiation of the managed contract model at Blue Ridge, as used throughout Aquarius' other South African operations. By the first day of the quarter all relevant mining personnel were formally employed by Murray and Roberts Cementation.
Extremely high levels of labour turnover were experienced at the beginning of the quarter, largely due to the active poaching of skilled personnel by competitors. This had a negative effect on the production achieved overall. This was exacerbated by the loss of 22 production days as a result of section 54 stoppages imposed by the DMR during their eight inspections of the mine during the quarter.
Underground mining for the quarter improved from the 135,621 tonnes achieved in the previous quarter to 162,526 tonnes.
As a result, processed tonnes at 179,209 tonnes were materially lower than the 297,826 treated in the previous quarter, as surface stockpiles were depleted and only ROM material was processed.
The head grade improved to 2.32g/t from 2.24g/t, an improvement of 4%.
PGM production was 10,202 PGM ounces (5,101 ounces attributable to Aquarius).
Development improved compared to the previous quarter. Primary development achieved was 1,681m for the quarter against the 1,513m achieved for the previous quarter.
Blue Ridge: Metal in concentrate produced (PGM ounces)
Attributable Quarter ended Pt Pd Rh Au PGMs to Aquarius Jun 10 6,144 2,995 963 100 10,202 5,101 Mar 10 9,237 4,499 1,452 150 15,338 7,669 Dec 09 11,201 5,454 1,762 181 18,598 9,299 Sep 09 8,598 4,383 1,347 141 14,469 7,235
Operating cash costs
Total operating expenditure during the quarter amounted to R96 million, a 24% decrease on the previous quarter. Blue Ridge remains in project phase, and as a result operating expenditure continued to be capitalised during the quarter. The resultant capitalisation of costs and revenue to the project (including finance costs) amounted to R34 million for the quarter (on a 100% basis).
Update on review of Blue Ridge business plan
Further to the announcement on 1 July 2010 regarding the safety review at the Blue Ridge mine, the shareholders (Aquarius and Imbani Platinum) are now in the process of finalising a substantially revised Life of Mine business plan to optimise the operation. The current lower Rand 4E basket price at Blue Ridge and the ongoing focus on safe mining operations has necessitated the initiation of a fundamental redevelopment programme at the mine, which is expected to run for a 10 to 12 month period. This optimisation programme will focus on mine access, ore and waste mass flows. It will provide for a third mine access point and reinstates the construction of a second decline, the plans for which were shelved by the prior managers. Underground waste surge capacity infrastructure and aggressive on- and off-reef development will also be provided for. The redevelopment programme is focused on the efficient and sustainable operation of the mine in the medium and long term.
The shareholders of Blue Ridge Platinum Mine are currently evaluating a number of options for the execution of this programme. Given certain short term geological and mining infrastructure limitations, management has proposed that one of the options to be considered is the termination of production at the mine for up to seven months. This will provide a period to be used exclusively for the implementation of fundamental mining infrastructure alterations and key development initiatives on the mine. It is management's view that this option will prove the most cash-efficient. Blue Ridge will continue to be treated as a project for accounting purposes throughout this process.
If the proposed optimisation plan for Blue Ridge is approved by its shareholders and implemented as described above, the expected PGM production from Blue Ridge for the 2011 financial year will be substantially lower than guided, pending conclusion of the plan. Management is committed to the redevelopment of the Blue Ridge mine in the short term, in order to realise its potential as a safe, sustainable and profitable mine in the medium and long term, and to ensure its survival in the current market conditions.
AQUARIUS PLATINUM (SA) CORPORATE SERVICES (PTY) LTD
Chromite Tailings Retreatment Plant (CTRP) (ACS (SA) - 50%)
Safety
The DIIR remained at zero for the quarter.
Resource development
Treatment of material from one of the recently acquired tailings dams commenced during the quarter. The material proved to be challenging to treat in that it was more oxidised than expected and necessitated a number of circuit changes to be undertaken in the CTRP plant to accommodate the change in feed material characteristics. Aquarius believes that the changes that have now been made to the plant will deliver improved results going forward.
Processing
Material processed decreased by 1% to 75,000 tonnes
Grade increased by 22% to 2.50g/t - but this grade was influenced by higher levels of oxidation
Recoveries decreased by 14% to 22%
Production increased by 3% to 1,303 4E PGM ounces (652 ounces attributable)
CTRP PGM production and Rand cash costs per PGM ounce (100%)
For graph see www.aquariusplatinum.com
Revenue
The achieved mine basket price for the quarter averaged $1,510 per PGM ounce, 4% higher than the previous period.
Operations
Material processed decreased slightly to 75,000 tonnes for the quarter, at a higher head grade of 2.50g/t. Recoveries decreased to 22% from 25% in the last quarter. The higher grade material was sourced from the treatment of a new tailings dam in the Kroondal area. However, the new dam has higher levels of oxidation which led to lower recoveries over the quarter. The net result was a marginal increase in the production of 4E ounces to 1,303 PGM ounces (652 PGM ounces attributable).
CTRP: Metal in concentrate produced (PGM ounces)
Quarter ended Pt Pd Rh Au PGMs (4E) Attributable to Aquarius Jun 2010 800 297 203 3 1,303 652 Mar 2010 777 279 210 3 1,268 634 Dec 2009 1,267 464 353 4 2,087 1,044 Sep 2009 1,048 381 308 3 1,740 870 Operating costs
Cash costs increased by 32% to R5,927 per PGM ounce primarily as a result of the costs of transporting feed material to the CTRP plant, important circuit changes effected in the plant and higher than usual levels of maintenance and equipment replacement in the plant.
Capital Expenditure
Capital expenditure in the plant over the quarter was approximately R816,000.
The cash margin for the period was 18%, down from 55% in the previous quarter.
CTRP Operating cash costs per ounce
4E 6E 4E net of by-products (Pt+Pd+Rh+Au) (Pt+Pd+Rh+Ir+Ru+Au) (Ni, Cu& Co) CTRP R5,927 R4,208 n/a
Platinum Mile Resources (ACS (SA) - 50%)
Safety
The DIIR was zero for the quarter
Processing
Tailings processed totalled 1,203 million tonnes.
PGM grade was 0.57g/t, an increase of 12% on the previous quarter
Production was 2,411 4E PGM ounces (1,206 ounces attributable)
Platinum Mile PGM production and Rand cash costs per PGM ounce (100%)
For graph see www.aquariusplatinum.com
Revenue
Revenue decreased to R23 million (R11.5 million attributable). The achieved mine basket price for the quarter averaged $1,300 per PGM ounce, 2% lower than the previous quarter.
Operations
Production levels decreased by only 12% during the quarter despite 35% lower volumes processed. Recoveries increased to 12%, an increase of 33% on the previous quarter. The head grade of the tailings processed increased to 0.57g/t from 0.51g/t in the previous quarter. Merensky reef tailings were received and treated throughout the quarter, while no UG2 tailings were treated in May or June due to low grades.
As a result of lower volumes processed, production fell to 2,411 4E PGM ounces (1,206 4E PGM ounces attributable).
Options to improve metal output from Platinum Mile are being explored by securing additional feed from Kroondal's K1 and K2 operations.
Platinum Mile: Metal in concentrate produced (PGM ounces)
Quarter ended Pt Pd Rh Au PGMs (4E) Attributable to Aquarius Jun 2010 1,452 694 192 73 2,411 1,206 Mar 2010 1,601 835 243 58 2,737 1,369 Dec 2009 4,953 2,647 769 170 8,539 4,269 Sep 2009 3,440 1,839 534 119 5,932 2,966 Operating costs
Cash costs were R8,473 per PGM ounce, marginally higher than the R8,236 per PGM ounce the previous quarter.
Platinum Mile operating cash costs per ounce
4E 6E 4E net of by-products (Pt+Pd+Rh+Au) (Pt+Pd+Rh+Ir+Ru+Au) (Ni, Cu& Co) Platinum Mile R8,473 R6,713 n/a Capital expenditure
Capital expenditure was zero for the quarter.
CORPORATE MATTERS
Appointment of Managing Director of Aquarius Platinum (South Africa) (Pty) Ltd ("AQPSA")
Aquarius is pleased to announce that Mr Anton Lubbe has been confirmed in the role of Managing Director of AQPSA, with effect from 1 August 2010. Mr Lubbe replaces Hugo H¶ll, who resigned in March. Mr Lubbe was previously Operations Director for Aquarius' Western Limb Operations, and has been Acting Managing Director of AQPSA since Mr H¶ll's departure.
Mr Lubbe has 29 years of mining experience, with exposure to gold, platinum, chrome and copper. He has 10 years of experience as a General Manager, three years as Divisional Director New Business for DRDGOLD, and three years contracting experience as Operations Director of JIC (Mining). He also served on the boards of DRDGOLD and its subsidiaries, and Westdawn Investments (Trading as JIC Mining). He joined AQPSA in October 2008.
Other AQPSA appointments
Paul Smith has been appointed Director: New Business, Projects and Long-Range Planning, a new AQPSA Board position. He transfers into AQPSA from Aquarius Corporate Services (South Africa), a Group company that is due to be absorbed into AQPSA in due course.
Mkhululi Duka has been appointed as Director: Human Capital, a new AQPSA Board position. Prior to this appointment he was General Manager: Human Resources and Transformation, based at Kroondal.
Abraham van Ghent has been appointed as Senior General Manager - Operations, an AQPSA Executive position responsible for operations on all AQPSA managed mines in South Africa. Prior to this appointment he was General Manager: Kroondal.
A new General Manager for Kroondal will be appointed in due course.
Safety Initiatives - Marikana Mine Multiple Fatal Accident - 6 July 2010 (to be read in conjunction with Aquarius' announcement released on 26 July 2010 regarding the lifting of the s54 suspension notice at Marikana)
Summary of Events On 6 July 2010 at approximately 6:30pm, a block of ground measuring 18.6m long by 5.4m wide by 1.7m thick fell from the hanging wall (roof of mine shaft) in Workplace 75S of 4 Shaft at the Marikana Platinum Mine on the Western Limb of the Bushveld Igneous Complex near Rustenburg, South Africa. Workplace 75S is 70 vertical metres deep, which is relatively shallow in the context of platinum mining. This fall of ground killed five employees and injured two others. The employees were busy drilling the working face at the time of the accident.
Persons involved and affected by the tragic incident were given psychological counselling. The families have been assisted with funeral arrangements and financial benefits.
A memorial ceremony was held in association with the relevant trade unions and other employee associations and local government, and attended by the workforces of both the Kroondal and Marikana mines. The memorial was also attended by the Minister of Mines, Ms. Susan Shabangu.
As announced at the time, the Department of Mineral Resources ("DMR") issued a s54 suspension notice in respect of Marikana 4 Shaft, and thereafter instructed all mining operations employing the bord and pillar mining method (as used at Marikana and other Aquarius operations) in the North West area to reduce their bord widths to 6m. This instruction was clarified after a meeting with the DMR to mean that mines using bords wider than 6m were required to present action plans to move to more safe and conservative mining methods. Aquarius duly presented action plans in respect of Marikana 4 Shaft to the DMR on Thursday 22 July, and these were mutually agreed. Aquarius is currently rolling these new measures out at its Kroondal and Marikana mines, while it continues to review its safety practices at the Everest and Blue Ridge mines. What follows below is a summary of the current generally accepted safety design methodology for mines in the Bushveld Igneous Complex, and the new initiatives and measures that AQPSA plans to implement in order to modify it to world best practice.
Current Generally Accepted Mine Design Methodologies
AQPSA currently design stope hanging wall systems using the generally accepted methodologies (the "Standard Design Methodologies") laid out in South African rock engineering handbooks that, with respect to stope hanging wall support design, are supported by the Safety in Mining Research Advisory Council ("SIMRAC") sponsored research reported in Project Reports GAP 032 and GAP 067 (the "Standard References").
The Standard References and the Standard Design Methodologies suggest that the heights of hanging wall failure in South African platinum mines rarely exceed one metre above a cut reef hanging wall, however -
databases of the heights of failure above a cut reef hanging wall should be compiled on a mine-specific basis (Figure 1);
within the scope of design, consideration should be given to any preferential parting plane or planes/plane or planes of weakness that might exist in a hanging wall sequence;
designs (support lengths and densities) should be based on the height of failure that encompasses 95 percent of all the recorded falls-of-ground at a mine in question/of interest (the "95 Percent Rule"); and
site-specific criteria should be defined, adopted and applied to assess additional support requirements for the remaining five percent of assessed heights of failure, based on site-/location-specific rock mass ratings (either the RMR, Q or MRMR system, as appropriate or preferred).
The Standard References also describe the methodologies for the design of minimum safe tendon and bolt lengths and maximum safe support densities for the assessed design height of instability, which methodologies may reasonably be described as being consistent with standard rock engineering practice.
Figure 1 - AQPSA's Fall-of-Ground Database for Marikana Platinum Mine
For picture see www.aquariusplatinum.com
Although the AQPSA database suggests that for the 95 Percent Rule, the maximum height of failure is less than 0.5 m, the design maximum height is 1.0 m. The designed standard support systems encompass 1.5 m long, 18 mm diameter resin grouted and tensioned rebar bolts. The design concept is based on the reinforced Voussoir arch concept, illustrated in Figure 2. Stability assessments are undertaken for the standard bord width of 10 metres.
Figure 2 - An Illustration of the Reinforced Voussoir Arch Concept For picture see www.aquariusplatinum.com
The remaining five percent of potential falls of ground are covered by a management system (Trigger Actions and Response, or TARP) that relies on the assessment of instability potential and the additional support required to overcome the assessed risk (Figure 3).
Figure 3 - A Summary of AQPSA's TARP System (for illustrative purposes)
For picture see www.aquariusplatinum.com
New safety measures adopted
AQPSA is now proposing to move to hanging wall stope support systems that cover 100% of the potential fallout height. The means and methods of accomplishing this are being developed in conjunction with an international mining consultant. Additional work is required before the methods and systems can be finalised, but at present, where the potentially unstable layer is less than 2 m thick (which covers the majority of AQPSA's mines), support design is based on the suspension method (Figure 4). Where the potentially unstable layer is found to be more than 2 m thick, it will be reinforced with cable anchors.
Figure 4 - An Example of the Suspension Method of Hanging Wall Support
For picture see www.aquariusplatinum.com
In addition, the TARP system has been enlarged to include remote sensing of the hanging wall mass to identify the position of key controlling rock mass features and any anomalous geology. Instruments to monitor rock mass movement will also be installed.
Figure 5 - Ground Penetrating Radar and a Ground Movement Meter
For picture see www.aquariusplatinum.com
As part of an integrated design package, the mining layouts have been modified to a room and pillar system, to minimize instability risk and at the same time maintain a productive mining environment. The principal jointing directions (Figure 6) have been fully considered within the scope of the layout designs, such that the pillars will now intersect these.
Figure 6 - The Dominant Jointing Directions at AQPSA's Western Bushveld Mines
For picture see www.aquariusplatinum.com
More information on all corporate matters can be found at www.aquariusplatinum.com
Statistical Information: Kroondal P&SA1
For statistical table see www.aquariusplatinum.com
Statistical Information: Marikana P&SA2
For statistical table see www.aquariusplatinum.com
Statistical Information: Mimosa
For statistical table see www.aquariusplatinum.com
Statistical Information: Everest
For statistical table see www.aquariusplatinum.com
Statistical Information: Blue Ridge
For statistical table see www.aquariusplatinum.com
Statistical Information: Chrome Tailings Retreatment Plant
For statistical table see www.aquariusplatinum.com
Statistical Information: Platinum Mile
For statistical table see www.aquariusplatinum.com
Aquarius 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 Hulme Scholes Commercial Director Paul Smith Director: New Business, Projects and Long-Range Planning 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 Gabriel de Wet General Manager: Engineering 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 30 June 2010, the Company had in issue: 463,070,936 fully paid common shares and 702,566 unlisted options.
Substantial Shareholders 30 June 2010 Number of Shares Percentage
Savannah Consortium 68,658,728 14.83
HSBC Custody Nominees (Australia) Limited 38,718,101 8.36
JP Morgan Nominees Australia Limited 34,587,626 7.47 National Nominees Limited 26,529,839 5.73 Chase Nominees Limited 25,729,854 5.56 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 14, The (A division of FirstRand 2000 Quadrant Bank Limited) 1 William Street, 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, Woodmead 2191, South Africa Postal 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 7909 547 042GlossaryA$ Australian Dollar Aquarius Aquarius Platinum Limited APS Aquarius Platinum Corporate Services Pty Ltd AQPSA Aquarius Platinum (South Africa) (Pty) Ltd ACS(SA) Aquarius Platinum (SA) Corporate Services (Pty) Ltd BEE Black Economic Empowerment BRPM Blue Ridge Platinum Mine CTRP Chromite Ore 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 Affairs DMR South African Government Department of Mineral Resources and Energy, formerly the DME Dollar United States Dollar or $ Everest Everest Platinum Mine 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 nm Not measured 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 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 Ridge Ridge Mining Limited 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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