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Third Quarter 2012: Financial and Production Results

30 Apr 2012 07:07

Third Quarter 2012: Financial and Production Results Aquarius Platinum Limited

Aquarius Platinum Limited Financial and Production Results to 31 March 2012

Highlights

Average PGM Dollar prices increased in the quarter - platinum and palladium rose 5% and 8% respectively while rhodium fell 8%

The Rand strengthened against the US Dollar by 4% on average quarter-on-quarter

Attributable production for the third quarter decreased by 7% quarter-on-quarter to 97,802 4E ounces

Seasonal absenteeism, continuing Section 54 safety stoppages, labour "go-slows" and poor ground conditions negatively impacted South African production

Net loss of US$9.4 million recorded on reduced production

Cash balance at quarter end US$207 million

New commercial arrangement reached with principal mining contractor, closer to a cost-target basis and better aligning interests of both parties

Q3 2012 Operating Results Summary Kroondal Marikana Everest Mimosa CTRP Plat. Mile 4E PGM Production Total (100% basis) 76,935 26,405 15,926 52,053 1,413 3,474 Attributable 38,467 13,203 15,926 26,026 707 3,474 4E Basket Price R/oz 10,312 10,387 10,240 - 10,954 10,249 $/oz 1,321 1,330 1,311 1,199 1,425 1,338 Cash Costs (4E basis) R/oz 8,965 10,538 13,474 - 6,272 6,163 $/oz 1,148 1,350 1,726 796 803 782 Cash Margin (%) 9 -5 -27 31 34 25 Stay-in-Business Capex R/oz 941 982 1,132 1,829 - 115 $/oz 120 126 145 235 - 15

Commenting on the results, Stuart Murray, CEO of Aquarius Platinum said:

"The first quarter of the calendar year is always a difficult one, due largely to seasonal absenteeism following the Christmas and New Year holidays. This year was worse than usual, with the customary poor labour performance and concomitant reduced number of shifts exacerbated by continuing Section 54 interference in our Rustenburg operations. At Everest, poor ground conditions have not been helped by constant labour "go-slows" and the failure by the DMR to grant the mining right to the Hoogland open pit, despite our application being lodged over a year ago. These unnecessary operational and regulatory headwinds are occurring against a backdrop of a pricing environment that remains relentlessly tough, with unabated on-mine cost inflation, little fundamental demand recovery and continuing volatility in financial markets. The result is that margins are under severe pressure throughout the industry, and it is my view that labour unions and the government need to start co-operating constructively with mining companies immediately if the very sustainability of the platinum industry and the thousands of jobs it provides is not to be threatened.

There were some encouraging aspects to the quarter. A new and promising commercial arrangement has been reached with our primary mining contractor, and both tailings operations are now profitable. There does seem to be a decline in the number and length of Section 54 stoppages, although it remains too early to call it a trend. In Zimbabwe, Mimosa has continued to operate well despite power supply disruption, and the mine is engaged in constructive discussions with the Government over the final terms and structure of its compliance with the Indigenisation Act.

We remain pragmatic about our business and the industry at large. Each asset in our portfolio is required to generate a return to shareholders and to the extent that they do not, we will take action as appropriate to ensure sustainability and a return to profitability."

Production by mine

Quarter ended PGMs (4E) Mar 2012 Dec 2011 % Change Mar 2011 % Change Kroondal 76,935 86,796 -11 95,731 -20 Marikana 26,405 28,809 -8 23,927 10 Everest 15,926 18,712 -15 27,737 -43 Blue Ridge - - - 6,671 - Mimosa 52,053 50,456 3 51,255 2 CTRP 1,413 1,117 26 1,270 11 Platinum Mile 3,474 3,328 4 10,095 -66 Total 176,206 189,218 -7 216,686 -19

Production by mine attributable to Aquarius

Quarter ended PGMs (4E) Mar 2012 Dec 2011 % Change Mar 2011 % Change Kroondal 38,467 43,398 -11 47,866 -20 Marikana 13,203 14,404 -8 11,963 10 Everest 15,926 18,712 -15 27,737 -43 Blue Ridge - - - 3,336 - Mimosa 26,026 25,228 3 25,628 2 CTRP 706 559 26 635 11 Platinum Mile 3,474 3,328 4 5,048 -31 Total 97,802 105,629 -7 122,213 -20

Aquarius Group attributable production (PGM ounces) to 31 March 2012

[Please refer to www.aquariusplatinum.com for graph]

Aquarius Group attributable production (PGM ounces) by month to 31 March 2012

[Please refer to www.aquariusplatinum.com for graph]

Market Summary

Metals prices

The quarter began with the platinum price rising relatively steeply in Dollar terms in response to supply issues in South Africa, as significant production was lost as a result of both industrial action at a major producer and continuing sector-wide safety stoppages. This improvement in Dollar pricing was largely sentiment-driven, with investor perception of tightening platinum supply coinciding with a consensus view that the threat posed by the European sovereign debt crisis was receding. During January palladium prices fell, giving up value to platinum which had arguably been oversold in prior periods. For the rest of the quarter, platinum, palladium and rhodium traded in a similar pattern, reaching a plateau in February as strong US economic data and global auto sales offset fears of slowing Chinese growth. Sentiment soured in March, as focus returned to Europe in the form of rising Spanish sovereign bond yields, and the dollar prices of all the metals began to fall. Prices continued to be set largely by ETF inflows and outflows. Fundamental industrial demand did not improve, but did remain broadly stable.

The average platinum and palladium prices rose broadly in line quarter-on-quarter, by 5% and 8% respectively. Rhodium fell by 8%, reflecting oversupply and the lack of an investment market for the metal. Gold remained flat on average. Platinum closed the quarter up 17% at $1,640 per ounce, while palladium fell by 2% to $651 per ounce over the same period. The rhodium price finished the period flat at $1,400 per ounce and gold rose 6% to $1,664 per ounce.

Rand-Dollar exchange rate

The average Rand-Dollar exchange rate strengthened during the quarter, rising by 4% from R8.10 to R7.76 to the US dollar. This was driven by relative Dollar weakness in the face of a partial recovery in the Euro. The Rand closed the quarter 5% stronger at R7.68 to the Dollar.

As always, Rand strength largely offset rises in Dollar metals prices. The average Rand basket price remained broadly unchanged quarter-on-quarter, but rose by 6% over the period. The US Dollar weighted average group basket price increased by 1% to $1,289 per 4E PGM ounce compared to the previous quarter, while the weighted average basket price at the South African operations was $1,322 per PGM ounce. The average South African basket price was R10,327 per PGM ounce for the period, a 1% improvement compared to the prior quarter.

[Please refer to www.aquariusplatinum.com for graphs]

Average PGM basket prices achieved at Aquarius operations

Quarter ended US$ per PGM ounce (4E) Mar 2012 Dec 2011 % Change Mar 2011 % Change Kroondal 1,321 1,262 5 1,559 -15 Marikana 1,330 1,277 4 1,549 -14 Everest 1,311 1,259 4 1,526 -14 Blue Ridge - - - 1,548 - Mimosa 1,199 1,303 -8 1,365 -12 CTRP 1,425 1,296 10 1,674 -15 Platinum Mile 1,338 1,208 11 1,493 -10 Weighted Avg. 1,289 1,272 1 1,465 -12 Financials

Aquarius recorded a net loss of $9.4 million for the quarter ended March 2012, a decrease of $34.7 million compared to the previous corresponding period (pcp), March 2011. On-mine EBITDA of $2.2 million was also lower compared to $76.6 million in the pcp. The decrease in on-mining earnings was driven by lower production, down 18% on the pcp and lower PGM basket prices, also down 18% compared to the pcp.

EBITDA, Profit & Production Comparison by corresponding quarters

Quarter ended Quarter ended Movement March 2012 March 2011 EBITDA $2.2M $76.6M ($74.4M) Forex gain / (loss) $1.8M ($7.6M) $9.4M Net profit (loss) after tax ($9.4M) $25.3M ($34.7M) Revenue $124.8M $183.0M ($58.2M) PGM ozs production (in operation) 97,802 118,877* (21,075) Average PGM basket price per ounce $1,251 $1,519 ($268) achieved

* excludes PGM ounces of Blue Ridge production capitalised.

On-mine EBITDA for the quarter of $2.2 million was negatively impacted by on-going weakness in PGM basket prices and lower than expected PGM production. Both of these factors have a material impact on margins, particularly mining costs which are largely fixed in nature and as such impact adversely on unit costs when production falls.

Revenue (PGM sales and including interest income of $2.4 million) was down 32% to $124.8 million from $183.0 million in the pcp. Lower revenue received was due to lower revenue achieved per PGM ounce of $1,251 compared to $1,519 in the pcp as well as lower PGM production, down 18% compared to the pcp.

Quarter ended Mar '11 June'11 Sep '11 Dec'11 Mar '12 Revenue $174.5m $164.6M $151.3M $125.6M $121.9m

PGM sales adjustments $8.5m ($0.9M) ($6.7M) ($17.9M) $2.9m

Total revenue $183.0m $163.7M $144.6M $107.7M $124.8m

Group gross cash margins decreased to 8.1% from 40.1% in the pcp due to a combination of lower production which impacts materially on the ability to spread fixed mining costs, inflationary pressures and low PGM metal prices.

Production for the quarter was 18% lower at 97,802 PGM ounces from 118,887 PGM ounces in the pcp. The decrease in production was attributable to on-going section 54 work stoppages and labour absenteeism. The high level of fixed costs involved in the mining contract has as such translated into higher unit costs during this period of lower production.

Quarter ended

Attributable ounces Mar '11 June'11 Sep '11 Dec'11 Mar '12

4PGE production 118,877 112,750 109,828 105,629 97,802 Blue Ridge 3,336 1,510 - - - Total production 122,213 114,260 109,828 105,629 97,802

Total cash cost of production was 5% higher at $114.7 million compared to the pcp despite an 18% decrease in PGM production. On a unit cost basis (PGM ounce), costs at the South African operations in Rand terms were 12.1% higher quarter-on-quarter and 23.4% higher compared to March 2011. In Dollar terms, overall group unit costs increased 7.9% quarter-on-quarter and 14.6% compared to March 2011. Increased unit costs quarter-on-quarter generally reflects inflationary pressures and the impact of the fixed nature of mine costs measured against lower production levels for the quarter. The varying degrees of cost increases measured in differing currencies (Rand versus Dollars) reflects exchange rate movements over the period.

Amortisation and depreciation was lower at $12.7 million in line with lower production compared to the pcp.

Administrative costs of $2.3 million were in line with quarterly trends. Finance costs for the quarter include interest paid on borrowings $4.5 million, non-cash interest accretion on convertible bond $2.5 million and unwinding of the rehabilitation provision $1 million.

Group cash remained strong at $207 million at the end of the quarter.

Net operating cash outflow for the quarter of $17.5 million comprised $100 million inflow from sales, $117 million paid to suppliers, income tax paid $3 million and interest received of $2 million. Development and capital expenditure for the quarter was $14.3 million with net financing cash inflows of $1 million comprising interest payments of $4 million offset by a new short term bank loan at Mimosa of $5 million.

Group cash at 31 March 2012 was held as follows:

AQP $ 178 million AQPSA $ 11 million ACS(SA) $ 2 million Mimosa $ 10 million Platmile $ 4 million Ridge Mining $ 2 million Total $ 207 million Aquarius Platinum Limited Consolidated Income Statement Quarter ended 31 March 2012 $'000 Quarter Nine Months Financial Ended Ended Year Ended Note 31/03/12* 31/03/12* 30/06/11 PGM Production from operating 97,802 313,254 483,358mines Blue Ridge - - 4,046 Total production 97,802 313,254 487,404 Revenue (i) 124,764 377,145 682,859 Cost of sales (including D&A) (ii) (127,423) (400,375) (507,728) Gross (loss)/profit (2,659) (23,230) 175,131 Other income 206 1,315 1,764 Administrative costs (iii) (2,348) (9,744) (13,030) Foreign exchange gain/(loss) (iv) 1,800 (89,488) 60,068 Finance costs (v) (8,380) (25,964) (30,945) Impairment losses (vi) - - (159,779) Settlement of contractor dispute (vii) - - (7,810)

(Loss)/profit before income tax (11,381) (147,111) 25,399

Income tax benefit/(expense) (viii) 2,001 24,238 (35,795) Net (loss)/profit (9,380) (122,873) (10,396) Net (loss)/profit is attributable to: Equity holders of Aquarius (9,376) (122,868) (10,396)Platinum Limited Non-controlling interests (ix) (4) (5) - (9,380) (122,873) (10,396) Earnings per share Basic (loss)/earnings per share (1.39) (26.32) (2.25)(cents per share) * Unaudited

Notes on the March 2012 Consolidated Income Statement

Revenue decrease reflects lower production and lower prices compared to the pcp.

Cost of sales: unit cash costs per PGM ounce increased 12.1% in South Africa in Rand quarter-on-quarter and 23.4% compared to March 2011. Movements in US Dollar terms differed due to exchange rates prevailing at the time. Unit costs increased 7.9% quarter-quarter and 14.6% compared to March 2011.

Administration and other costs of $2 million are in line with previous periods.

Forex gain is attributable to 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 Rand against the US Dollar.

Finance costs include interest paid on borrowings $4.5 million, non-cash interest accretion on convertible bond $2.5 million and unwinding of the rehabilitation provision $1 million.

Impairment losses relating to the Blue Ridge mine which has ceased operations

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.

Income tax benefit includes a $4 deferred tax credit offset by $1 million normal tax and $1 million withholding tax.

Reflects the 8.3% non-controlling interest of Platinum Mile Resources (Pty)Ltd. Following the acquisition of an additional 41.7% during the 9 months toMarch 2012, the Group now holds 91.7% and controls Platinum Mile Resources(Pty) Ltd. Aquarius Platinum Limited Consolidated Statement of Cash Flows Quarter ended 31 March 2012 $'000 Quarter Nine Months Ended Financial Year Ended Ended Note 31/03/12* 31/03/12* 30/06/11 Net operating cash (outflow)/inflow (i) (17,516) 7,431 162,311 Net investing cash outflow (ii) (14,279) (83,499) (209,908) Net financing cash inflow/(outflow) (iii) 837 (33,513) (33,527) Net decrease in cash held (30,958) (109,581) (81,124) Opening cash balance 230,127 328,083 381,734 Exchange rate movement on cash 7,609 (11,724) 27,473 Closing cash balance 206,778 206,778 328,083 * Unaudited

Notes on the March 2012 Consolidated Statement of Cash Flows

Net operating cash flow for the March quarter includes $100 million inflow from sales, $117 million paid to suppliers, interest received of $2 million and income tax paid of $3 million.

Includes development and plant and equipment expenditure on AQPSA and Mimosa.

Includes interest paid of $4 million, offset by bank loan funding of $5 millionreceived by Mimosa. Aquarius Platinum Limited Consolidated Balance Sheet At 31 March 2012 $'000 $'000 As at As at Note 31/03/12* 30/06/11 Assets Cash assets 206,778 328,083 Current receivables (i) 109,122 108,395 Other current assets (ii) 49,661 44,747 Property, plant and equipment (iii) 283,429 325,763 Mining assets (iv) 462,334 480,634 Intangibles (v) 94,994 77,989 Other non-current assets (vi) 92,194 91,735 Total assets 1,298,512 1,457,346 Liabilities Current liabilities (vii) 121,081 120,549 Non-current payables (viii) 5,795 6,150 Non-current interest-bearing liabilities (ix) 262,210 257,599 Other non-current liabilities (x) 182,244 221,711 Total liabilities 571,330 606,009 Net assets 727,182 851,337 Equity Issued capital 23,516 23,509 Reserves 722,156 711,182 Retained earnings (24,836) 116,646 Total equity attributable to equity holders of Aquarius Platinum Limited 720,836 851,337 Non-controlling interests (xi) 6,346 - Total equity 727,182 851,337 * Unaudited

Notes on the March 2012 Consolidated Balance Sheet

(i) Reflects debtors receivable on PGM concentrate sales

(ii) Reflects PGM concentrate inventory, consumables, stores and critical spares.

(iii) Represents plant and equipment within the Group

(iv) Includes group's mining assets at Kroondal, Marikana, Mimosa, Everest, Blue Ridge, CTRP and Platmile

(v) Includes intangibles relating to contract value acquired on the acquisition of equity interest in Platinum Mile Resources (Pty) Ltd.

(vi) Includes the recoverable portion of rehabilitation provision from Anglo Platinum of $13 million, receivable from the Reserve Bank of Zimbabwe (RBZ) of $28 million, receivable from outside shareholders of Blue Ridge and Sheba's Ridge of $30 million, investments in rehabilitation trusts of $18 million and investments held for resale of $3 million.

(vii) Includes trade creditors of $81 million, DBSA and IDC bank loans in Blue Ridge of $39 million and provision for annual leave of $1 million.

(viii) Includes rehabilitation obligations on P&SA1 and P&SA2 structures.

(ix) Includes convertible bonds of $254 million and AQPSA / Blue Ridge lease facilities of $8 million.

(x) Includes deferred tax liabilities $116 million and provision for closure costs $66 million.

(xi) Reflects the 8.3% non-controlling interest of Platinum Mile Resources (Pty) Ltd. Following the acquisition of an additional 41.7% during the 9 months to March 2012, the Group now holds 91.7% and controls Platinum Mile Resources (Pty) Ltd.

Operating Review Summary (all numbers on 100% basis)

AQUARIUS PLATINUM (SOUTH AFRICA) (PTY) LTD (Aquarius Platinum - 100%)

P&SA 1 at Kroondal (Aquarius Platinum - 50%)

12-month rolling average DIIR deteriorated to 1.08 per 200,000 man hours from 0.78 in the previous quarter

Production decreased to 1,273,000 tonnes

7% fall in planned production due to Section 54 stoppages

Head grade improved from 2.37 g/t to 2.39 g/t

Recoveries improved by 1%

Volumes processed decreased to 1,282,000 tonnes

Stockpiles at the end of the quarter totalled approximately 19,000 tonnes

PGM production decreased by 11% to 76,935 PGM ounces

Revenue improved by 18% to R755 million quarter-on-quarter due to a positive sales adjustment

Mining cash costs increased by 9% to R538 per tonne, and costs per PGM ounce by 7% to R8,965

Kroondal's cash margin for the period improved from -14% to 9%

P&SA2 at Marikana (Aquarius Platinum - 50%)

12-month rolling average DIIR deteriorated to 0.50 per 200,000 man hours from 0.33 in the previous quarter

Production decreased by 6% to 497,000 tonnes, all from underground operations

Head grade decreased by 6% to 2.20 g/t

Recoveries increased by 1% to 74%

Volumes processed decreased by 4% to 503,000 tonnes

PGM production decreased by 8% to 26,405 ounces

Revenue increased by 21% to R266 million quarter-on-quarter despite lower volumes, due to slightly higher basket prices which resulted in a positive sales adjustment of R27 million

Mining cash costs increased by 5% to R553 per tonne, and costs per PGM ounce by 11% to R10,538

Marikana's cash margin increased from -24% to -5%

Everest Mine (Aquarius Platinum - 100%)

12 month rolling DIIR deteriorated to 2.01 per 200,000 man hours from 1.71 in the previous quarter

Production decreased by 3% to 305,000 tonnes

Head grade deteriorated from 2.27 g/t to 2.10 g/t

Recoveries deteriorated to 79%

Volumes processed decreased by 6% to 297,000 tonnes

PGM production decreased by 15% to 15,926 PGM ounces

Revenue increased by 21% compared to the previous quarter to R169 million

Mining cash costs increased by 11% to R722 per tonne, and costs per PGM ounce increased by 23% to R13,474

Everest's cash margin improved from -46% to -27%

Commentary

Kroondal and Marikana: The quarter under review was severely impacted by a reduction in the number of production shifts in January, caused by seasonal absenteeism relating to the Christmas and New Year holidays, together with further Section 54 safety stoppages ("S54s") issued to the two mines. A total of eight S54s were issued at the Rustenburg operations during the quarter, resulting in the loss of 15 production days. The negative impact of these mining stoppages was exacerbated by the loss of five processing days as a result of a S54 which was issued to the K2 Processing Plant.

During the quarter an additional five mechanised support drill rigs were delivered, bringing the total number of such rigs operating at Kroondal to nine. As previously stated, hanging wall support by means of cable anchors will be rolled out in stages as and when the required drill rigs are delivered. Implementation of the new support system is still proving problematic and disruptive to the mining cycle. Management continues to strive to improve the implementation of the regime.

At Marikana, the M5 Shaft project and the Siphumelele (Bleskop) shaft were placed on care and maintenance on 27 March 2012 until further notice, as a result of the current low Rand basket prices.

Everest: As with Kroondal and Marikana, absenteeism and the associated loss of production shifts negatively impacted production. The mine also suffered further "go-slows" at the hands of labour and the AMCU union, and the DMR still has yet to issue a mining licence for the Hoogland open pit, despite AQPSA having applied over a year ago. Both of these factors will continue to negatively impact on Everest's performance. In addition, mining at Everest is approaching surface, with the result that ground conditions are deteriorating due to weathering, which is continuously impacting production. Mining at several panels had to be stopped for safety reasons due to poor ground conditions during the quarter. This is expected to improve as the shallower areas are mined out.

The lower achieved head grade is related to the poor ground conditions, as the majority of tons are currently being mined in the northern portions of the eastern part of the mine. A number of mining crews are now being moved to different areas in order to improve the mining mix.

Everest was deliberately restricted during the quarter in order to align it with the revised short term steady state production plan. Poor performance from the mining crews during this process is being addressed through a crew training initiative, aimed at addressing the alignment between the three shifts and optimising the mining cycle. Management is also considering the optimal manner in which to integrate the Buttonshope (Booysendal South) property into the Everest operation and bring it into production. The alternatives are either to continue mining and developing concurrently, or to or cease mining and expedite development so that full capacity is achieved earlier at the expense of ounce production for a 12-18 month period. In the case of the latter option, loss of current production is broadly value neutral given the current PGM price environment.

AQPSA Operating costs per ounce

4E 6E 6E net of by-products (Pt+Pd+Rh+Au) (Pt+Pd+Rh+Ir+Ru+Au) (Ni&Cu) Kroondal 8,965 7,348 7,210 Marikana 10,538 8,641 8,414 Everest 13,474 11,157 10,853 Capital expenditure Kroondal Marikana Everest

(R'000 unless otherwise stated) Total Per 4E oz Total Per 4E oz Total Per 4E oz

Ongoing Infrastructure Establishment 39,385 512 25,904 981 17,290 1,086

Project Capital 33,031 429 20 1 741 47 Mobile Equipment 30,470 396 5,127 194 89 6 Total 102,885 1,337 31,051 1,176 18,121 1,138

The project capital at Kroondal is being incurred on the K6 shaft project, which is a replacement shaft scheduled for first production in June 2013, with reef intersection anticipated in June 2012.

The Mobile Equipment Capital is being financed through a lease agreement over the life of the equipment.

MIMOSA INVESTMENTS (Aquarius Platinum - 50%)

Mimosa Platinum Mine

12-month rolling average DIIR deteriorated to 0.18 per 200,000 man hours

Production decreased by 7% to 540,184 tonnes

Head grade improved slightly to 3.66g/t

Recoveries deteriorated to 77%

Volumes processed increased by 4% to 577,691 tonnes

Stockpiles at the end of the quarter totalled approximately 144,510 tonnes

PGM production increased by 3% to 52,053 PGM ounces

Revenue decreased by 15% to US$58.8 million due to lower metal prices achieved during the quarter

Mining cash costs increased by 7% to US$72 per tonne, and costs per PGM ounce by 8% to $796

Stay-in-business capital expenditure was $235 per PGM ounce for the quarter

Mimosa's cash margin for the period fell from 49% to 31% due to lower revenue

Commentary: The Mimosa mine itself continues to operate well. However, as with every other mine in Zimbabwe, the mine was affected by the following economic and regulatory issues:

Power

Mining operations were adversely affected by load shedding during the quarter. The load shedding was caused by limited electricity imports to supplement the low domestic electricity generation capacity, as referred to in the last quarterly report. Local power generation continues to require augmenting by imports from Hydro Cabhora Basa (HCB) of Mozambique, which has threatened to cut off supply to ZESA for long outstanding arrears. Discussions are ongoing with ZESA and HCB to finalize a structure in which Mimosa will assist in clearing the amount owed to HCB in return for uninterrupted power supply. These discussions are now at an advanced stage and are targeted to be finalized during the next quarter of 2012.

Mining Fees

As reported in the last quarterly report, discussions are still ongoing between the Chamber of Mines and the relevant authorities concerning the issue of increased mining fees. It is hoped that the discussions will result in reduced and sustainable mining fees. If the proposed fees are implemented, this would have a significant negative impact on operating costs.

Offshore accounts

Mimosa formerly operated offshore accounts domiciled in London and Mauritius. Mimosa has now complied with the directive by the Reserve Bank of Zimbabwe requiring all companies to localise offshore accounts in Zimbabwe. To date this has not negatively impacted the mine`s operations. Payments, including foreign outflows, have continued to be processed smoothly.

Indigenization

Subsequent to the directive issued by the Minister of Indigenization in February 2012, further discussions have been held concerning Mimosa's proposed indigenization plan, and Mimosa has indicated its willingness in principle to comply with the Zimbabwean law that requires 51% local ownership. Discussions are now focused on agreeing issues to do with shareholder structure, valuation and funding of the share transactions.

Taxes and Government Royalties

Royalties for gold and platinum were increased with effect from 1 January 2012 to 7% and 10% of revenue respectively, putting more pressure on costs. Corporate tax has remained at 25%. Review of the Income Tax Act is still underway and is expected to be finalised during the second half of the calendar year.

Operating cash costs per ounce

Unit cash costs per PGM ounce (before by-product credits) were 8% higher than those achieved in the previous quarter mainly due to ZESA load shedding during the period, as well as the increase in gold and platinum royalties. Management will continue to prioritise cost management in order to operate within budget.

4E 6E 4E net of by-products (Pt+Pd+Rh+Au) (Pt+Pd+Rh+Ir+Ru+Au) (Ni, Cu & Co) Mimosa 796 753 461 Capital Expenditure

The total capital expenditure for the third quarter declined from $17m to $12m due to the near completion of most projects, in keeping with management expectations. The major projects running during the quarter constituted more than 75% of this expenditure, and these were the Conveyor Belt Extension, the Drill Rigs Front End Replacements, Down Dip Development, Drill Rig Replacements, LHD Replacements and the Housing Project.

TAILINGS OPERATIONS

Chromite Tailings Retreatment Plant (CTRP) (Aquarius Platinum - 50%)

Material processed increased 5% to 90,000 tonnes

Head grade decreased to 2.77 g/t

Recoveries increased by 29% to18%

Production increased to 1,413 PGM ounces

Cash costs decreased by 44% to R6,272 per PGM ounce

Revenue was R12 million for the quarter

CTRP's cash margin for the period was 25%, an increase from -80% in the previous quarter

Platinum Mile (Aquarius Platinum - 91.7%)

Material processed decreased 23% to 1.014 million tonnes

Head grade marginally increased to 0.52 g/t

Recoveries increased to 21%

Production increased to 3,474 PGM ounces, all of which is now attributable to Aquarius as Platinum Mile is consolidated

Cash costs decreased by 3% to R6,163 per PGM ounce

Revenue was R29 million for the quarter

The cash margin for the period was 25%, an increase from 8% in the previous quarter

Commentary

CTRP: The plant modifications and improvements referred to in the previous quarterly report have resulted in positive cash margins being generated for the current quarter. Metallurgical testwork is currently being performed to evaluate the effects of grinding on recoveries.

Platinum Mile: Improved recoveries and lower costs during the quarter have contributed to the achievement of increased cash margins despite lower processing volumes. The feasibility study to evaluate the viability of pumping Kroondal tailings for treatment at the operation is progressing and will be finalised during the next 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 6,272 5,956 5,779 Platinum Mile 6,163 5,313 4,676

Statistical Information: Kroondal P&SA1