26 Oct 2010 07:00
Aquarius Platinum LimitedFirst Quarter 2011: Financial & Production Results
Highlights
Attributable production increased by 12% quarter-on-quarter to 123,392 PGM ounces, with record quarterly production at Mimosa
Most average PGM Dollar prices deteriorated through quarter - platinum down 5%, rhodium down 17% while palladium was unchanged
The Rand strengthened against the Dollar by 3% on average and by 8% over the quarter
Costs down or flat in local currency terms compared to the previous quarter at all operations except Marikana
On-mine EBITDA for the quarter of $39.2 million
Net operating cash flow of $39.8 million
Net profit after tax for the quarter of $42.4 million
New hangingwall monitoring and support systems in place
Blue Ridge placed on care and maintenance pending redevelopment planimplementation Q1 2011 Operating Results Summary Kroondal Marikana Everest Blue Ridge Mimosa CTRP Plat. * + Mile 4E PGM Production Total (100% basis) 110,575 27,756 20,417 8,092 54,133 1,470 3,923 Attributable 55,287 13,878 20,417 4,046 27,067 735 1,962 4E Basket Price R/oz 9,671 9,666 9,360 9,523 8,042 10,470 9,516 $/oz 1,307 1,306 1,265 1.301 1,144 1,426 1,300 Cash Costs (4E basis) R/oz 6,037 8,752 8,981 - - 5,504 5,908 $/oz 816 1,183 1,213 - 595 750 807 Cash Margin 28 -1 4 - 57 17 25 Stay-in-Business Capex R/oz 534 2,174 1,069 2,327 - 969 90 $/oz 72 294 144 318 225 132 12 * Everest is in ramp-up + Blue Ridge is in the
process of being placed on care and maintenance for redevelopment
Commenting on the results, Stuart Murray, CEO of Aquarius Platinum said:
"The first quarter of our 2011 financial year had a tragic start, with the terrible accident at our Marikana mine in which five men lost their lives. Our thoughts are with their family, friends and colleagues. This well-publicised accident set in motion a process which has culminated in the Company researching and implementing global best practice hangingwall monitoring and support methodologies, and we continue to champion the universal acceptance of these improved standards by the DMR and the rest of the South African mining industry.
The remainder of the quarter was a good one, despite a challenging Rand pricing environment. Our operations performed strongly during the quarter, for the most part. Everest is ramping up nicely, Rand costs were largely contained, Mimosa achieved record production and the tailings operations both enjoyed much improved recoveries. As a result, production is on track to achieve our previous guidance for FY2011. Progress was also made at Blue Ridge, with a Board decision to place the mine on care and maintenance for redevelopment, which is now underway. Continuing Rand strength remains an issue and average Dollar PGM prices fell over the quarter, but the Company has done well to manage the aspects of its business that are within its control and I believe the outlook for the rest of the year is on track for Aquarius."
Production by mine Quarter ended PGMs (4E) Dec 2009 March 2010 June 2010 Sept 2010 Kroondal 108,254 103,071 108,438 110,575 Marikana 37,160 35,147 31,889 27,756 Everest - - 8,496 20,417 Blue Ridge 18,598 15,338 10,202 8,092 Mimosa 50,079 49,008 49,709 54,133 CTRP 2,087 1,268 1,303 1,470 Platinum Mile 8,539 2,737 2,411 3,923 Total 224,717 206,569 212,448 226,366
Production by mine attributable to Aquarius
Quarter ended PGMs (4E) Dec 2009 March 2010 June 2010 Sept 2010 Kroondal 54,127 51,536 54,219 55,287 Marikana 18,580 17,574 15,945 13,878 Everest - - 8,496 20,417 Blue Ridge 9,299 7,669 5,101 4,046 Mimosa 25,039 24,504 24,855 27,067 CTRP 1,044 634 652 735 Platinum Mile 4,270 1,369 1,206 1,962 Total 112,359 103,286 110,474 123,392
Aquarius Group attributable production (PGM ounces) to 30 September 2010
[Please refer to www.aquariusplatinum.com for graph]
Metals prices
As a result of the very high US Dollar prices across all PGM metals in April and May, average prices in the fourth quarter of FY2010 were higher than those in the quarter under review, with the result that the average platinum price fell by 5% and that of rhodium fell 17%. Palladium was unchanged while gold rose by 3% on average. Dollar PGM prices remained relatively static during the first half of the current quarter as the effects of the May correction continued to be felt, before rising again in September. Platinum closed the quarter up 8% at $1,662 per ounce, and palladium rose by 28% to $573 per ounce over the same period. These movements appear to have been driven largely by investment demand, given seasonally lower jewellery demand and only moderately improved automotive demand. The Dollar rhodium price, a bellwether of automotive industry health, declined by 8% to $2,300 per ounce over the quarter. Gold rose 6% to $1,313 per ounce. Since the end of the quarter under review, platinum has continued to trade at or above the $1,670 level, and has even approached its April highs.
12-month individual PGM prices to September 2010
[Please refer to www.aquariusplatinum.com for graph]
Rand-Dollar exchange rate
The average Rand-Dollar exchange rate for the quarter strengthened by 3% from R7.55 to R7.33 to the US Dollar. Notably, from the end of June the exchange rate strengthened by 8% to close the quarter at R6.98 to the Dollar. This is below the psychologically important R7 level, and where it has remained since, driven by relatively higher South African interest rates which support a strong Rand carry trade, particularly given the promise of further quantative easing in the US.
12-month Rand-Dollar exchange rate to September 2010
[Please refer to www.aquariusplatinum.com for graph]
The strength of the Rand has exacerbated the fall in average Dollar PGM prices. Average PGM basket prices weakened at all operations in both currencies over the quarter. The US Dollar weighted average group basket price decreased by 9% to $1,222 per 4E PGM ounce compared to the previous quarter, while the weighted average basket price at the South African operations was $1,244 per PGM ounce. The South African basket price is equivalent to R9,601 per PGM ounce at the average exchange rate for the period, an 8% decrease compared to the prior quarter. However, the South African basket price ended the quarter at R9,802 per PGM ounce, above the quarter average. Rand basket prices have continued to slowly improve since the end of the quarter, as increased US Dollar metals prices have begun to just outweigh Rand strength.
Average PGM basket prices achieved at Aquarius operations: US$ per PGM ounce(4E) Basket prices (Quarter ended) Dec 2009 March 2010 June 2010 Sept 2010 Kroondal 1,163 1,328 1,402 1,307 Marikana 1,173 1,328 1,407 1,306 Everest - - 1,321 1,265 Blue Ridge 1,138 1,313 1,399 1,301 Mimosa 910 1,074 1,184 1,144 CTRP 1,266 1,456 1,510 1,426 Platinum Mile 1,192 1,308 1,300 1,300 Aquarius Group average 1,094 1,267 1,347 1,222
12-month PGM basket prices to September 2010 (Dollar and Rand per PGM basket ounce)
[Please refer to www.aquariusplatinum.com for graph]
Financial results
Aquarius recorded an improved financial result over the previous corresponding period (pcp), with a net profit after tax of $42.4 million (9.2 cents per share) for the quarter. On-mine EBITDA of $39.2 million was 138% higher compared to the pcp, September 2009. The increase in on-mining earnings was driven by increased production up 28% on the pcp and up 12% quarter-on-quarter.
EBITDA, Profit & Production Comparison by corresponding quarters
Quarter Quarter ended ended Movement FY2010 Sept. 2010 Sept. 2009 EBITDA $39.2M $16.5M $22.7M $145.0M Net profit (loss) after tax $42.4M $9.5M $32.9M $27.8M Revenue $149.5M $85.9M $63.6M $472.2M
PGM ozs production (in operation) 119,346* 89,265* 30,081 393,336
*
Average PGM basket price per ounce $1,253 $962 $291 $1,199 achieved
* excludes PGM ounces of Blue Ridge production capitalised.
On-mine EBITDA for the quarter of $39.2 million was despite incurring foreign exchange losses on sales of $13.5 million as a result of the continued strength of the Rand during the quarter. These foreign exchange losses (at mine level) were however more than offset by foreign exchange gains recorded by the group on cash balances (Rand, Australian dollar, Pound Stirling), and the revaluation of net monetary assets against a weaker US Dollar; resulting in net foreign exchange gains to the group of $45 million.
Revenue (PGM sales and including interest income of $3.2 million) was up 75% to $149.5 million from $85.8 million compared to the pcp and up 9% quarter-on-quarter. Revenue was inclusive of positive sales adjustments of $3.6 million due to the flow-through of improved PGM prices experienced during the quarter but was impacted by the continued strength of the Rand against the US Dollar causing foreign exchange losses on sales of $13.5 million to be recorded. This resulted in a slightly lower revenue per PGM ounce return of $1,253 per PGM ounce compared to $1,303 per PGM ounce in the June 2010 quarter.
Quarter ended Sep '09 Dec '09 Mar '10 June'10 Sep '10 Revenue $82.0m $108.0m $117.9m $131.3m $159.4m
Forex gain/(loss) on sales ($4.4m) ($1.1m) ($1.4m) $4.7m ($13.5m)
PGM sales adjustments $8.2m $13.4m $12.3m $1.3m $3.6m Total revenue $85.8m $120.3m $128.8m $137.3m $149.5m
Production for the quarter was 28% at 123,392 PGM ounces from 96,500 PGM ounces in the pcp and was 12% higher quarter-on-quarter. The increase in production was from the recently recommissioned Everest mine which performed extremely well producing 20,417 PGM ounces in the quarter whilst still in ramp up phase. This made up for the lower production from Marikana during the quarter.
Quarter ended
Attributable ounces Sep '09 Dec '09 Mar '10 June'10 Sep '10
4PGE production 89,265 103,060 95,617 105,373 119,346 Blue Ridge 7,235 9,299 7,669 5,101 4,046 Total production 96,500 112,359 103,286 110,474 123,392
Total cash cost of production was higher at $107 million due to the increase in production. On a unit cost basis (PGM ounce), in Rand terms costs were 4.5% higher quarter-on-quarter and 9.8% higher compared to September 2009. In Dollar terms, unit costs increased 6% quarter-on-quarter and 17.1% higher compared to September 2009 due materially to Rand strength against the US Dollar.
Marikana was the only operation that recorded an increase in unit costs in Rand terms. Unit costs at Mimosa reduced 7%. Operating costs at Blue Ridge will continue to be capitalised pending completion of the redevelopment of the mine.
Amortisation and depreciation were higher at $13.5 million from $9.2 million in the pcp, in line with the 28% increase in production.
Administration and other costs at $3.9 million is trending down following completion of the Group's finance restructure in the previous financial year. Finance costs for the quarter of $8.0 million comprised interest expense of $5.4 million for convertible notes, $0.3 million pipeline finance, borrowing costs $$0.3 million and $1.5 million on the unwinding of the rehab provision.
During the quarter, Aquarius' subsidiary AQPSA agreed a settlement with Moolman Mining in full and final settlement of all disputes and claims between the parties. A non-recurring charge of $9 million (representing the difference between the full settlement amount of $12 million and the amount accrued in previous periods) has been expensed in the income statement.
Cash
Group cash remained strong at $364 million at the end of the quarter.
Net operating cash flow for the quarter of $39.8 million comprised $125.5 million from sales, $88.1 million paid to suppliers, income tax paid $3.3 million and net finance expenses of $1.6 million. Development and capital expenditure for the quarter was $45.7 million. During the quarter, the Moolman dispute was settled for $12 million. Payment of Aquarius' dividend of 4 cents per share to Aquarius shareholders: $18.5 million was made on the last day of the quarter.
Group cash at 30 September 2010 was held as follows:
AQP $306 million AQPSA $ 23 million ACS(SA) $ 3 million Mimosa $ 18 million Ridge Mining $ 13 million Platmile $ 1 million Total $ 364 million Aquarius Platinum Limited Consolidated Income Statement Quarter ended 30 September 2010 $'000 Quarter Ended Financial Year Ended 30/09/10* 30/09/09 30/06/10 Note: * PGM Production from operating 119,346 89,265 393,336mines 4,046 7,235 29,309Blue Ridge 123,392 96,500 422,645Total production Revenue (i) 149,511 85,884 472,220 Cost of sales (including D&A) (ii) (120,549) (76,443) (352,029) Gross profit 28,962 9,441 120,191 Other income 150 87 1,588 Admin & other operating costs (iii) (3,984) (6,034) (13,468) Other FX movements (iv) 45,301 16,410 (4,846) Fair value movement in derivative (v) - (3,415) 6,084 liability Finance costs (vi) (8,005) (5,126) (25,750) Loss on early redemption of - - (26,919) Convertible Note Impairment reversals 43 - 301 Settlement of contractor dispute (vii) (9,087) - - Transaction and acquisition costs - - 1,248 associated with Ridge Mining Profit before tax 53,380 11,363 58,429 Income tax benefit/(expense) (10,944) (1,815) (30,656) Net profit 42,436 9,548 27,773 EPS (basic - cents per share) 9.2 2.1 6.1
*Unaudited
Notes on the September 2010 Consolidated Income Statement
Revenue increase reflects higher PGM basket price achieved and increased production
Cost of sales (cash) per PGM ounce increased 4.5% in Rand quarter-on-quarter and 10.7% compared to September 2009. In US Dollar terms unit costs increased 6.0% quarter-quarter and 17.1% compared to September 2009 materially due to Rand strength compared to the US Dollar
Administration and other costs of $3.9 million are lower following conclusion of refinance of debt and concluded Ridge acquisition activity in the previous periods
Gain is largely attributable to positive revaluation adjustments on intergroup debt, cash balances held in Rand, Australian dollars and Pound Stirling, and the revaluation of pipeline debtors following the weakening of the US Dollar against other currencies
Relates to the movement in the fair value of the derivative component of R650 million ($78 million) convertible bond issued during May 2009, since repaid
Finance costs include group debt $3.0 million, non-cash interest accretion on the convertible note $2.4 million, pipeline finance $0.3 million, borrowing costs $0.3 million and unwinding of the rehabilitation provision $1.5 million.
Settlement payment of the contractor dispute between Moolman Mining and AQPSA pursuant to an agreement of settlement signed in August 2010, in full and final settlement of all disputes and claims between the parties.
Aquarius Platinum Limited
Consolidated Cash flow Statement
Quarter ended 30 September 2010
$'000 Quarter Ended Financial Year Ended Note: 30/09/10* 30/09/09 30/06/10 * Net operating cash inflow (i) 39,790 28,124 112,780 Net investing cash outflow (ii) (45,754) (44,219) (79,591) Net financing cash inflow/(outflow) (iii) (30,159) 48,729 195,898 Net increase (decrease) in cash held (36,123) 32,634 229,087 Opening cash balance 381,734 153,600 153,600 Exchange rate movement on cash 18,273 8,421 (953) Closing cash balance 363,884 194,655 381,734 * Unaudited
Notes on the September 2010 Consolidated Cash flow Statement
Net operating cash flow for the September quarter includes $125.5 million inflow from sales, $88.1 million paid to suppliers, net finance income of $1.6 million and income tax paid of $3.3 million.
Includes development and plant and equipment expenditure of $21 million on AQPSA and Mimosa operations, $24 million capex and opex capitalised on Blue Ridge.
Includes proceeds on exercise of unlisted Aquarius staff options $0.5 million, settlement of Moolman dispute $12 million and payment of Aquarius 4 cents per share to Aquarius shareholders: $18.5 million.
Aquarius Platinum Limited Consolidated Balance Sheet At 30 September 2010 $'000 Quarter Financial Year Ended Ended 30 June 30 Sept 2010 2010 Note: $'000 $'000 Assets Cash assets 363,884 381,734 Current receivables (i) 106,194 96,846 Other current assets (ii) 51,113 49,338 Property, plant and equipment (iii) 298,528 272,117 Mining assets (iv) 470,553 425,882 Other non-current assets (vi) 89,041 80,450 Intangibles (v) 79,110 72,833 Total assets 1,458,423 1,379,200 Liabilities Current liabilities (vii) 111,843 103,906 Non-current payables (viii) 5,068 4,631
Non-current interest-bearing liabilities (ix) 241,969 238,289
Other non-current liabilities (x) 218,258 195,341 Total liabilities 577,138 542,167 Net assets 881,285 837,033 Equity Issued capital 23,162 23,154 Reserves 670,115 649,777 Retained earnings 188,008 164,102 Total Equity 881,285 837,033 * Unaudited
Notes on the September 2010 Consolidated Balance Sheet
Reflects debtors receivable on PGM concentrate sales
Reflects PGM concentrate inventory, consumables, stores and critical spares.
Represents plant and equipment within the Group
Includes group's mining assets at Kroondal, Marikana, Mimosa, Everest, Blue Ridge, CTRP and Platmile
Includes intangibles relating to goodwill and contract value acquired on acquisition of 50% equity interest in Platinum Mile Resources (Pty) Ltd.
Includes recoverable portion of rehabilitation provision at P&SA sites of $13 million, cash contributed to Rehabilitation Trusts of $16 million, listed investments of $4 million and $28 million owed by the RBZ to Mimosa relating to the previous requirements to repatriate US Dollar proceeds on metals sales to the RBZ, Blue Ridge receivable from outside shareholders $27 million.
Includes trade creditors of $81.8m, DBSA and IDC bank loans in Blue Ridge of $24.7m, current tax liabilities of $4.3m and provision for annual leave $1m.
Includes rehabilitation obligations on P&SA1 and P&SA2 structures.
Includes convertible notes of $239.3m, Blue Ridge Standard Bank lease facility of $1.7m, AQPSA vehicle leases of $0.7m and TKO Land & Agricultural Bank of SA loan of $0.2m.
Reflects deferred tax liabilities $143 million, provision for closure costs $75 million.
AQUARIUS PLATINUM (SOUTH AFRICA) (PTY) LTD (Aquarius Platinum 100%)
P&SA 1 at Kroondal
Safety
The 12-month rolling average disabling injury incidence rate (DIIR) for the quarter deteriorated to 0.78 per 200,000 hours worked from 0.57 in the previous quarter. 22 lost-time injuries were reported during the quarter, mainly due to a fire incident at Kopaneng Shaft on 6 July 2010. This incident was commendably dealt with by all those involved, with safety procedures strictly adhered to, resulting in the prevention of loss of life or serious injury. It nonetheless led to an 83% increase in the number of lost-time injuries reported compared with the previous quarter. Regrettably, on 13 August 2010 a fatal accident occurred at Kopaneng Shaft when Mr Vasco Macamo was caught between two LHDs on surface at the start of the shift.
Mining
Production tonnes for the quarter decreased by 1% to 1,618,699 tonnes
Head grade improved from 2.61 g/t to 2.62 g/t
Processing
Tonnes processed increased by 2% to 1,630,559 tonnes
Recoveries remained stable at 81%
PGM production increased by 2% to 110,575 PGM ounces
P&SA1 at Kroondal PGM production and Rand cash costs per PGM ounce (100%)
[Please refer to www.aquariusplatinum.com for graph]
Revenue
Revenue for the quarter decreased by 3% to R922 million (R461 million attributable) due to the weakening of the basket price for the 4E metals.
The Kroondal US Dollar-denominated basket price deteriorated by 7% compared to the previous quarter to an average of $1,307 per PGM ounce.
Operations
Following the fatal accident at the Marikana mine, the DMR issued a S9(7) instruction at both the Kroondal and Marikana mines, as disclosed at the time. This had a negative impact on production at these mines for the quarter under review. As disclosed further, the DMR later stated that the instruction had been misinterpreted by the mining industry, and production was continued on 10m bords. See the update on the impact of the remedial action taken on hanging wall support below. Overall tonnes hoisted decreased by 1% to 1,618,699 tonnes for the quarter.
Overall volumes processed improved by 2% to 1,630,559 tonnes with stockpiles at the end of the quarter totalling approximately 44,426 tonnes.
Off-reef mining decreased by 18%. Recoveries remained stable at 81% a result of a more stable metallurgical operating regime.
Kroondal is proud to announce the highest PGM production for the last 4 quarters. PGM production increased by 2% to 110,575 4E PGM ounces (55,2874E PGM ounces attributable).
Kroondal: Metal in concentrate produced (PGM ounces)
Quarter ended Pt Pd Rh Au PGMs Attributable to Aquarius Sep 2010 65,068 32,901 12,057 548 110,575 55,287 Jun 2010 63,803 32,324 11,789 522 108,438 54,219 Mar 2010 60,580 30,729 11,228 534 103,071 51,535 Dec 2009 63,772 32,153 11,808 521 108,254 54,127 Operating cash costs
Mining cash costs increased marginally to R409 per tonne, and costs per PGM ounce remained stable at R6,037. The average PGM basket price decreased and was further negatively affected by the strengthening R/$ exchange rate. This reduced Kroondal's cash margin for the period from 31% to 28%.
Update on impact of revised hangingwall support strategy
The design of the new regional and systematic hangingwall support systems and mining layouts have been completed, and the Company is now in a position to confirm that no material impact on ore extraction percentages will occur. Once-off capital costs of R42 million will be incurred at Kroondal, and operating costs will increase by approximately 1.5% after cost mitigation, as a result of the implementation of these new measures. Several initiatives have been implemented to reduce these costs and one of them is to appoint Partners in Performance, a consulting company, to assist with investigating opportunities for improved efficiencies across the mine.
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 6,037 4,938 4,809 Capital expenditure
Capital expenditure for the quarter was R59 million (R534 per PGM ounce). This was due to ongoing underground infrastructure establishment and start up capital for the K6 Project.
P&SA2 at Marikana
Safety
The 12-month rolling average DIIR for the quarter deteriorated to 0.76 per 200,000 hours worked from 0.74 in the previous quarter. This was due to the catastrophic fall of ground (FOG) accident at Marikana 4 Shaft on 6 July 2010, which has been comprehensively dealt with in previous disclosures. At the time of the incident there were 8 people inside the relevant panel, 5 of whom were killed and one seriously injured. The block of rock that fell was located between two dip orientated low angle joints and a steep dipping strike joint. The block sheared off approximately 1m from the face and fell out up to the doublets situated approximately 1.7m above the leader seam.
Mining
Production tonnes decreased by 2% to 512,972 tonnes, comprising 401,218 tonnes from underground and 111,754 tonnes from open-pit operations.
Head grade decreased by 8% to 2.48 g/t.
Processing
Tonnes processed increased by 1% to 508,791 tonnes.
Recoveries decreased by 6% to 69%.
PGM production decreased by 13% to 27,756 ounces (13,878 ounces attributable to Aquarius).
P&SA2 at Marikana PGM production and Rand cash costs per PGM ounce (100%)
[Please refer to www.aquariusplatinum.com for graph]
Revenue
Revenue at Marikana decreased by 18% to R240 million (R120 million attributable) compared to the previous quarter due to lower ounce production and a lower basket price.
The US Dollar-denominated basket price averaged $1,306 per PGM ounce, 7% lower than the previous quarter.
Operations
Marikana underground production was negatively affected by the Section 54 suspension notice and the memorial service which was held for the 5 employees who passed away in the tragic FOG accident. 4 Shaft lost more than two weeks of production due to this stoppage.
Primary development decreased by 12% due to the Section 54 notice at 4 Shaft and bad ground conditions experienced at 1 Shaft.
The open pit was scheduled to be mined out by the end of this September quarter, however indications are that the open pit will only be completed by the December quarter. 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.
Processed tonnes mirrored the mining tonnes with total volumes processed at 508,791 tonnes, 1% higher than in the previous quarter.
The head grade deteriorated by 8% to 2.48 g/t, due to a high incidence of potholes which leads to increased off-reef mining due to difficulties stowing waste underground. At 1 Shaft, the high ratio of development to stoping contributed to a much lower grade coming out to the plant.
Recoveries were 6% lower at 69%. In the current quarter the manual valves in the flotation section were replaced with automatic valves. During this period, lower retention time was experienced in the plant as 3 to 4 rougher cells were continuously out of the circuit. This resulted in low recoveries. This process has been completed and recoveries are expected to improve.
PGM production for the quarter decreased by 13% to 27,756 4E PGM ounces (13,878 4E PGM ounces attributable).
Marikana: Metal in concentrate produced (PGM ounces)
Quarter ended Pt Pd Rh Au PGMs Attributable to Aquarius Sept 2010 16,544 8,160 2,887 165 27,756 13,878 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
Operating cash costs
Cash costs increased by 15% to R477 per tonne, while costs per PGM ounce increased by 33% to R8,752 as a result of low production. Underground costs rose as it took longer to get to normal production levels after the Section 54 stoppage at 4 Shaft.
1 Shaft at Marikana is being placed on care and maintenance as it is not sufficiently profitable at current Rand price levels. 1 Shaft accounts for approximately 10% of attributable production from Marikana; however the intention is to cease development at this shaft immediately but mine out and stockpile all remaining available ore. This will result in the production of some profitable ounces from this shaft before it is placed on care and maintenance.
Gross revenue decreased by 18% to R240 million as a result of lower ounce production and a lower basket price.
Update on impact of revised hangingwall support strategy
As at Kroondal, the design of the new regional and systematic hangingwall support systems and mining layouts have been completed for Marikana, and the Company is now in a position to confirm that no material impact on ore extraction percentages will occur. Once off capital costs of R25 million will be incurred at Marikana, and operating costs will increase by approximately 5% after cost mitigation, as a result of the implementation of these new measures.
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 8,752 7,195 6,975 Capital expenditure
Stay-in-business capital expenditure totalled R60 million (R2,174 per PGM ounce), an increase of 26%. Capital costs were mainly incurred for the establishment of the 5 Shaft project as well as underground infrastructure establishment.
Contractor dispute with Moolman Mining
The dispute with Moolman Mining was finally settled by agreement between the parties during the quarter, as disclosed previously. Pursuant to an agreement of settlement signed on 18 August 2010, AQPSA will pay to Moolman Mining, in full and final settlement of all disputes and claims between AQPSA, Moolman Mining and the MD of Moolman Mining, Mr Brian Wilmot, an amount of R87.8 million (approximately $12 million), representing only work actually done by Moolman Mining, interest and certain legal costs.
Everest Mine
Safety, Health and Environmental
No lost time injuries were recorded during the quarter
The 12 month rolling DIIR for the period was 0.18
Mining
Production tonnes for the quarter increased by 36% to 256,040 tonnes
Head grade declined from 3.09 g/t to 2.75 g/t
Processing
Tonnes processed increased by 100% to 300,000 tonnes
Recoveries increased from 57% to 77%
PGM production increased by 140% to 20,417 PGM ounces
Everest PGM production and Rand cash costs per PGM ounce (100%)
[Please refer to www.aquariusplatinum.com for graph]
Revenue
Revenue at Everest increased by 156% to R191 million all attributable to AQPSA.
The Everest US Dollar-denominated basket price averaged $1,265 per PGM ounce, 4% lower than the previous quarter.
Operations
The ramp up at Everest is proceeding as planned and the final touches to phase 2 of the re-establishment project were completed during the quarter, with the underground chairlift being the only remaining work in progress.
The initial remnant open pit was mined out with mine production during the quarter being predominantly underground. A total of 256,040 tonnes was mined during the quarter, 36% more than in the previous quarter. Recruitment and training of new crews for production is in progress 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.
The grade reduced for the quarter due to the mining of the pyroxinite hanging wall between the reef and the shear zone. This area will mined out by the end of October, when undercutting of the pyroxinite will commence and grades will return to normal.
Processed tonnes doubled for the quarter to 300,000 tonnes, 100% higher than in the previous quarter.
Recoveries increased by 35% to 77% as ore from lower in the open pit which was less oxidised was treated.
PGM production for the quarter increased by 140% to 20,417 4E PGM ounces (100% attributable).
Update on impact of revised hangingwall support strategy
As at Kroondal and Marikana, the design of the new regional and systematic hangingwall support systems and mining layouts have been completed for Everest, and the Company is now in a position to confirm that no material impact on ore extraction percentages will occur. Once off capital costs of R2.5 million will be incurred at Everest, and operating costs will increase by approximately 2% after cost mitigation, as a result of the implementation of these new measures.
Capital Expenditure
Expansion capital expenditure decreased by 59% as work on the re-establishment project was completed. Work on the valley boxcut continued with the boxcut excavation now complete and installation of an AMRCO lining now in progress.
On-mine capital projects expenditure amounted to R24.7 million for the quarter, mainly for the construction of new primary underground belts.
RIDGE MINING LIMITED
Blue Ridge Platinum Mine (Aquarius Platinum - 50%)
Safety
The 12-month rolling average DIIR for the quarter increased to 2.12 from 1.86 in the previous quarter
7 Lost time injuries were reported for the quarter, predominantly related to materials handling
Mining
Production from underground operations decreased by 16% to 136,127 tonnes
Head grade improved to 2.35 g/t
Production ceased during the quarter in line with the Blue Ridge redevelopment plan, and the mine is now on care and maintenance and preparing for the implementation of this plan (known as Scenario 3.5)
Processing
Tonnes processed decreased by 21% to 141,926 tonnes
Recoveries decreased from 76% to 74%
PGM production decreased by 21% to 8,092 ounces (4,046 ounces attributable to Aquarius)
Revenue
Revenue for the quarter decreased by 23% to R73.9 million (R36.9 million attributable to Aquarius) as a result of lower PGM production. The achieved mine basket price for the quarter deteriorated by 7% to an average of $1,301 per PGM ounce.
Operations
The training and safety awareness program following the 2 fatalities in June was completed by the end of June, thus rolling over into the first week of the 2011 financial year. As communicated to shareholders, the decision to redevelop the mine and install infrastructure was taken by the Board during the quarter and the implementation of the plan has commenced.
The plan entails:
The redeployment of approximately 700 employees, in a process that was completed by mid October.
Shutting down the plant at the end of September, with all underground material subsequently produced to be stockpiled, potentially enabling an earlier restart of the plant than previously envisaged.
Certain of the affected employees have been re-deployed to the MRC services division and will carry on vamping operations for the duration of the closure in order to increase the tonnages available when the plant restarts, with a plan to deliver 7,500 tonnes per month from back areas.
Infrastructure upgrades including:
Second surface belt installation: Due 3rd Quarter FY11Permanent piping installation: Due 4th Quarter FY11Level Waste Silo: Due 3rd Quarter FY11Southern Decline System EMP/Design: Due 4th Quarter FY11
Blue Ridge: Metal in concentrate produced (PGM ounces)
Attributable Quarter ended Pt Pd Rh Au PGMs to Aquarius Sept 10 4,888 2,343 777 84 8,092 4,046 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
Operating cash costs
Total operating expenditure during the quarter amounted to R123.7 million.
Operating expenditure continued to be capitalised during the ramp-up phase. The mine generated a negative operating cash margin (before finance costs) of R50 million for the quarter (on a 100% basis).
MIMOSA INVESTMENTS (Aquarius Platinum 50%)
Mimosa Platinum MineSafety
The 12-month rolling average DIIR for the quarter deteriorated to 0.45 from 0.07 achieved in the previous quarter. 1 lost-time injury and, regrettably, 1 fatality were recorded during the quarter, both as a result of a failure to observe established safety procedures. Mr Innocent Ndlovu, an Acting Machine Operator, was fatally injured in an explosion when an operating rock drill intersected a socket containing misfired explosives. Management changes were made as a result of this accident, which ended a period of 2.7 million fatality-free shifts for Mimosa.
Mining
Underground production increased by 16% to 652,734 tonnes
Head grade increased by 1% to 3.63g/t
The surface stockpile increased to a total of 130,715 tonnes at the end of the quarter
Processing
Concentrator plant recoveries increased to 78% from 76%
Total mine production increased by 9% to 54,133 PGM ounces (Attributable to Aquarius: 27,067 PGM ounces), the highest quarterly production figure for Mimosa ever recorded
Mimosa Mine PGM production and Dollar cash cost per PGM ounce (100%)
[Please refer to www.aquariusplatinum.com for graph]
Revenue
The average achieved PGM basket price for the quarter decreased by 3% to $1,144 per PGM ounce, while the average achieved nickel price decreased by 12% to $9.13 per pound. Revenue for the quarter increased to $76.2 million, with base metals accounting for approximately 24% of this. A $2.9 million positive price adjustment is included in revenue for the quarter.
The cash margin increased to 57% from 54% in the previous quarter, mainly due to higher sales volume achieved and a lower cost base as a result of improved cost management.
Operations
Mimosa mining operations hoisted 652,734 tonnes of ore in the current period compared to 563,976 tonnes in the previous quarter. Volumes milled and processed totalled 594,135 tonnes, with 58,599 tonnes being transferred to the stockpile. As a result the surface stockpile totalled 130,715 tonnes at the quarter end.
The average plant head grade was 3.63 g/t, and recoveries increased to 78% from 75.7% in the previous quarter.
As a result of these factors, PGM production increased by 9% to 54,133 4E PGM ounces (27,067 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 Sept 2010 27,349 20,829 2,174 3,781 54,133 27,067 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
Mimosa: Base metals in concentrate produced (tonnes)
Mine production Attributable to Aquarius Quarter ended Ni Cu Co Ni Cu Co Sept 2010 759 618 23 379.5 309 12 Jun 2010 691 565 19 346 283 10 Mar 2010 685 561 19 343 281 10 Dec 2009 695 574 19 348 287 10 Operating cash costs
During the quarter, cash costs decreased by 3% to $54 per ROM tonne, and costs per PGM ounce decreased by 7% to $595. This was largely as a result of cost saving initiatives that management is implementing.
Net of by-products, cash costs were $245 per PGM ounce, compared with $265 per PGM ounce in the previous quarter, primarily due to higher sales volumes of base metals achieved in the current quarter.
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 595 563 245 Economic and Political Update
The inclusive government continues to function although there are now plans for elections in 2011. Royalties on precious metals were increased from 3.5% to 4% of gross revenue during the quarter, to be effective as of 1 October 2010 while the rate for base metals will remain unchanged at 2% of gross revenue. The multicurrency regime is expected to continue until 2012. The US dollar and South African Rand remain the most widely used currencies in the economy.
The draft of the new Income Tax Act which was published in June 2010 for comments is expected to be finalised before the announcement of the 2011 Fiscal Budget in November 2010. Consultations from all stakeholders are still ongoing and are expected to be completed before the fiscal budget presentation. Proposed changes in the tax regime 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. The income tax rate for all companies including mines will remain at 25%.
Update on Indigenisation
Since the submission of the company`s indigenisation plans and proposals as required by the Indigenisation Act, no formal response has been received from the Ministry of Youth Development, Indigenisation and Economic Empowerment. However, the board of Mimosa has always been supportive of the principle of localising a part of its business, and a decision in principle to do this was made prior to the promulgation of the Indigenization and Economic Empowerment Act. A process has been agreed on by the shareholders of Mimosa to achieve this objective which may include seeking a listing on the Zimbabwe Stock Exchange. Further details will be made available once relevant regulatory approvals have been granted.
AQUARIUS PLATINUM (SA) CORPORATE SERVICES (PTY) LTD
Chromite Tailings Retreatment Plant (CTRP) (Aquarius Platinum 50%)
SafetyThe DIIR remained at 0. Processing
Material processed decreased 44% to 42,000 tonnes
Grade increased to 2.72 g/t
Recoveries increased by 86% to 40%
Production increased to 1,470 PGM ounces (735 ounces attributable to Aquarius)
CTRP PGM production and Rand cash costs per PGM ounce (100%)
[Please refer to www.aquariusplatinum.com for graph]
Revenue
The achieved mine basket price for the quarter averaged $1,426 per PGM ounce, 6% lower than the previous period.
Operations
Material processed decreased to 42,000 tonnes for the quarter, at a higher head grade of 2.72 g/t. Recoveries increased to 40% from 22% in the last quarter.
CTRP: Metal in concentrate produced (PGM ounces)
Quarter ended Pt Pd Rh Au PGMs (4E) Attributable to Aquarius Sept 2010 903 316 248 3 1,470 735 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 Operating costs
Cash costs decreased by 7% to R5,504 per PGM ounce primarily as a result of lower tonnes processed and better recoveries.
Capital Expenditure
Capital expenditure in the plant over the quarter was approximately R1.4 million.
The cash margin for the period was 17%, a slight decrease from 18% in the previous quarter.
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 5,504 3,762 3,654
Platinum Mile (Aquarius Platinum 50%)
Safety
The DIIR was 1.47 for the quarter, as the plant recorded its first-ever lost-time injury.
Processing
Tailings processed totalled 1.12 million tonnes compared to 1.20 million tonnes processed in the previous quarter
PGM grade was 0.63 g/t, an increase of 11% on the previous quarter
Production was 3,923 PGM ounces (1,962 PGM ounces attributable to Aquarius)
Platinum Mile PGM production and Rand cash costs per PGM ounce (100%)
[Please refer to www.aquariusplatinum.com for graph]
Revenue
Revenue increased/decreased to R31 million (R16 million attributable). The achieved mine basket price for the quarter averaged $1,300 per PGM ounce, consistent with that of the previous quarter.
Operations
Production levels increased by 63% during the quarter. Recoveries increased to 17%, an increase of 42% on the previous quarter. The head grade of the tailings processed increased to 0.63g/t from 0.57g/t in the previous quarter.
As a result of the higher head grade of tailings processed, production increased to 3,923 4E PGM ounces (1,962 4E PGM ounces attributable).
Platinum Mile: Metal in concentrate produced (PGM ounces)
Quarter ended Pt Pd Rh Au PGMs (4E) Attributable to Aquarius Sept 2010 2,246 1,221 313 143 3,923 1,962 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 Operating costs
Cash costs were R5,908 per PGM ounce, significantly lower than the R8,473 per PGM ounce recorded in the previous quarter, as a result of increased production yields.
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 5,908 5,093 4,460 Capital expenditure
Capital expenditure was R667,000 for the quarter.
CORPORATE MATTERS
Update on implementation of new hangingwall monitoring and support methodologies
The design of the new regional and systematic hangingwall support systems and mining layouts have been completed at AQPSA's three operating mines, as detailed in the operating reviews for the individual mines above. The Company is now in a position to confirm that no material impact on ore extraction percentages will occur at any of these mines, although once off capital costs and modest increases in operating costs will be incurred. Several initiatives have been implemented to reduce these costs and one of them is to appoint Partners in Performance, a consulting company, to assist with investigating opportunities for improved efficiencies.
A presentation detailing the comparisons between the previous support systems and those now in place entitled "Managing Instability in Room and Pillar Workings" is now available on the Aquarius website, www.aquariusplatinum.com.
More information on all corporate matters can be found at www.aquariusplatinum.com
Statistical Information: Kroondal P&SA1
[Please refer to www.aquariusplatinum.com for statistical table]
Statistical Information: Marikana P&SA2
[Please refer to www.aquariusplatinum.com for statistical table]
Statistical Information: Everest
[Please refer to www.aquariusplatinum.com for statistical table]
Statistical Information: Blue Ridge
[Please refer to www.aquariusplatinum.com for statistical table]
Statistical Information: Mimosa
[Please refer to www.aquariusplatinum.com for statistical table]
Statistical Information: Chrome Tailings Retreatment Plant
[Please refer to www.aquariusplatinum.com for statistical table]
Statistical Information: Platinum Mile
[Please refer to www.aquariusplatinum.com for statistical table]
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 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 Management
Winston 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 September 2010, the Company had in issue: 463,231,008 fully paid common shares and 462,458 unlisted options.
Substantial Shareholders 30 September 2010 Number of Shares Percentage
Savannah Consortium 63,254,371 13.66 JP Morgan Nominees Australia Limited 44,152,107 9.53
HSBC Custody Nominees (Australia) Limited 38,355.903 8.25
National Nominees Limited 26,529,839 6.13 Chase Nominees Limited 25,729,854 5.01 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, 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 or AQP 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 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 DMR South African Government Department of Mineral Resources, 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 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 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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