| Wed 25 Jul 2007, 8:00 | | AQP - Aquarius Platinum - Fourth quarter 2007 prod |
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AQP
AQP
AQP - Aquarius Platinum - Fourth quarter 2007 production results
Aquarius Platinum
JSE code: AQP
ISIN: BMG0440M1029
25 July 2007
Aquarius Platinum Fourth Quarter 2007 Production Results
* Attributable production for Q4 2007 increased 3.6% to 128,994 PGM
ounces compared to Q3 2007
* PGM prices continue to strengthen
* Buyback acquisition of 3.5% of South African subsidiary completed
P&SA1 at Kroondal
* Production 98,370 PGM ounces (Aquarius attributable: 49,185 PGM
ounces)
* Underground primary and re-development progressing ahead of plan
* Five day strike in May resolved, resulting in reduced production
160,000 tons
* Cash margin for the quarter at 66%
P&SA2 at Marikana
* Production 32,286 PGM ounces (Aquarius attributable: 16,143 PGM
ounces)
* Five day strike in May resolved, resulting in a reduction of 21,700
tons
* Gross cash margin for the quarter at 35%
Everest
* Production 40,923 PGM ounces
* Underground ramp-up continues, with underground production growing to
92% of total tonnage
* Gross cash margin for the quarter at 64%
Mimosa
* Production increased 25% to 43,732 PGM ounces (Aquarius attributable:
21,366 PGM ounces)
* Wedza Phase V expansion plans interrupted to be enhanced for more
production
* Gross cash margin increased to 77%
CTRP
* Production 1,877 PGM ounces (Aquarius attributable: 938 PGM ounces)
* Gross cash margin for the quarter steady at 77%
Commenting on the results, Stuart Murray, CEO of Aquarius said: "Despite
tough operating conditions in Zimbabwe and industrial action at certain of
the South African operations, I am pleased to report a small increase in
production. Prior decisions to focus on improving redundancy and
flexibility at Kroondal and Marikana, I believe, will lead to further
production improvements - not withstanding further industrial action in the
new financial year."
Metals Prices and Foreign Exchange
Platinum, palladium and rhodium reported price increases over the quarter.
Platinum closed the period 2% stronger at $1,273 per ounce. Palladium
added 4% over the quarter. Despite finished metals stocks, palladium
continues to benefit from an improved outlook owing to its discount to
platinum and anticipated substitution opportunities in autocatalysts.
Rhodium added $100 per ounce or 1% to $6,250 per ounce. While speculation
would appear to account in part for these gains, rhodium`s unique
autocatalyst and flat screen glass applications continue to see strong
demand set against supply constraints.
PGM basket prices continued a strong performance, buoyed by PGM price
increases. At South African operations the 4 element basket price advanced
above R10,000 per PGM ounce, to average an achieved price of R10,534 per
PGM ounce for the quarter, equal to $1,488 per PGM ounce in dollar terms.
In Zimbabwe, the average achieved basket price for the quarter broke over
$1,000 to $1,047 per PGM ounce.
The Rand Dollar exchange rate was volatile through the quarter, opening at
7.26 then falling, rising and falling back again to close at 7.07. The
average exchange rate achieved at South African operations was 7.08.
AQUARIUS PLATINUM (SOUTH AFRICA) (PTY) LTD (Aquarius Platinum 54%)
P&SA 1 at Kroondal
Safety
The 12-month rolling average DIIR for the quarter improved from 0.86 to
0.75. The Department of Minerals and Energy`s investigation into the
fatality previously reported that occurred on 26 March 2007 at Central
Shaft has been referred to the Public Prosecutor for further consideration.
Five lost-time injuries occurred during the quarter (two on surface and
three underground).
Mining
* The mine recorded production of 1,512,291 underground tons and 77,037
open pit tons
* The K5 Project remains on schedule
* Head grade decreased from 2.80 g/t to 2.73 g/t
Processing
* Plant processed 1,464,124 tons
* Recoveries increased to 77% from 76% in the previous quarter
* Production fell to 98,370 PGM ounces
Revenue
Revenue at Kroondal decreased by 15% to R962 million for the quarter
(Aquarius share: R481 million). This was due in part to lower production
due to an illegal strike by MRC employees, a strengthening in the exchange
rate and a reduction in the four-month-rolling sales adjustment due to the
quarter-on-quarter volatility of the ruthenium price. The cash margin for
the quarter consequently decreased to 66% from 71% in the previous quarter.
Operations
Total tons mined increased by 6% to 1,589,328 tons. Underground production
increased by 8% to 1,512,291 tons and open pit production decreased by 20%
to 77,037 tons.
During the quarter, production was adversely impacted by 5-working-day
unprotected industrial action by MRC employees related to bonus payments.
It is estimated that this reduced production by 160,000 tons. A task-team
consisting of all stakeholders was established to investigate and recommend
a new bonus scheme.
Tons processed declined by 2% to 1,464,124 tons, including 72,206 tons of
opencast material.
Over the quarter, stockpiles increased to 78,745 tons.
The head grade decreased to 2.73 g/t compared to 2.80 g/t in the previous
quarter as a result of the ramp up of lower-grade ore from the new K5 shaft
during the establishment phase of the shaft. Dilution at K5 has improved
but is not yet comparable with existing shafts.
Primary development has progressed well, increasing redundancy at both the
Central and East Shafts, but No. 3 Shaft still remains constrained due to
an increase in potholing.
Plant recoveries increased by 1% to 77% compared to 76% during the previous
quarter.
PGM production decreased by 4% to 98,370 PGM oz (Aquarius attributable:
49,185 PGM ounces).
Subsequent to the quarter end, a second illegal strike by MRC employees
occurred, which began on Sunday 15th July and ended with a return to
normalised operations on 23rd July.
Operating Cash Costs
Cash costs increased by 1% to R226 per ROM ton. Consequently, cash costs
per PGM ounce for the quarter increased 2% to R3,361. The increase in unit
cost is mainly due to a reduction in head grade and reduction in production
volumes.
Operating cash costs include ledging and primary development costs of R445
per PGM ounce (up 22% on the previous quarter), secondary development costs
of R103 per PGM ounce (up 47% on previous quarter) and engineering
infrastructure costs of R150 per PGM ounce (down 36% on previous quarter).
The stoping cost was R2,663 per PGM ounce, a 2% increase compared to the
previous quarter. It should be noted that operating costs continue to
include costs associated with the new K5 Shaft of R278 per PGM ounce. The
K5 Shaft is in a ramp-up phase and therefore attracts high relative unit
costs.
K5 Project Capital Expenditure
During the quarter R11.5 million was spent, including R4.4 million for
initial strike and dip conveyor extensions, R2.1 million for K5 surface
infrastructure and dip conveyor extensions and R5 million on the K5 rail-
link.
The appointed contractor Deilmann-Haniel (SA) (Pty) Ltd continues to
perform satisfactorily.
A total 158,318 tons were produced. The geology remains challenging with
ground conditions adversely affected by faulting and rolling reef and
compounded by variations in the leader reef parting.
Construction of the surface silo, rail-link and off-loading facilities at
Klipfontein were completed as planned. Underground belt infrastructure
construction is also progressing well despite adverse ground conditions.
P&SA2 at Marikana
Safety
The 12-month rolling DIIR remained unchanged at 0.36. Two lost-time
injuries occurred during the quarter.
Mining
* Open pit operations produced 389,258 tons and underground operations
204,314 tons
* Stockpile increased 5% to 193,014 tons
* Head grade fell to 3.10 g/t as open pit ore increased against
underground
* No 4 shaft transferred to Operations from Projects
Processing
* Plant processed a total 581,943 ROM tons
* Recoveries decreased to 56% due to higher feed of oxidised material
from the open pit operations
* Production increased 7% to 32,286 PGM ounces (Aquarius attributable:
16,143 PGM ounces)
Revenue
The PGM basket price for the quarter averaged $1,453 per PGM ounce, 6%
higher than the previous quarter. However, mine revenue decreased to R311
million for the quarter (AQPSA share: R155 million) due to a reduction in
the four-month-rolling sales adjustment caused by the quarter-on-quarter
volatility in the ruthenium price. The reduction in revenue coupled with a
5% increase in unit costs per ounce, resulted in the cash margin for the
quarter decreasing to 35% from 46%.
Operations
Total production increased by 34% to 593,573 ROM tons for the quarter, with
34% coming from underground and 66% from open pit operations.
As at Kroondal, during the quarter, production was adversely impacted by 5-
working-day unprotected industrial action which impacted on underground
production only.
Open pit production increased 31% to 389,258 tons. The open pit operation
was replanned and rescheduled in January 2007 which resulted in an increase
in stripping ratios, contributing to higher operating costs.
Underground production increased by 39% to 204,314 tons, with an estimated
21,700 tons reduction due to the industrial action. At No. 4 Shaft 873
meters, and at No. 1 Shaft 423 metres of primary development were completed
respectively during the quarter. With the constant build up of production,
vacant key labour have resulted in some production losses. A Recruitment
Officer has since been employed by underground contractor MRC which has
seen the situation improve considerably.
At No. 2 Shaft, mining operations started at the beginning of the quarter
and 411 meters of primary development was completed during the quarter.
The stockpile at the end of quarter amounted to a total of 193,014 tons,
comprising of 183,789 open pit tons and 9,222 underground tons
respectively.
A total of 581,943 tons were processed during the quarter, comprising of
207,858 tons from underground and 374,085 tons of open pit material. For
the quarter 480,224 tons were fed to the mills, with a split of 308,573
open pit and 171,650 underground tons.
On the P&SA2 Project, expansion capital totalled R6.2 million for the
quarter. The total expansion capital expenditure to date is R105 million
(AQPSA share: R 52.5 million).
Subsequent to the quarter end, a second illegal strike by MRC employees
occurred, which began on Sunday 15th July and ended with a return to
normalised operations on 23rd July.
Operating Cash Costs
Cash cost per ROM ton decreased by 12% to R348 per ROM ton, however, the
cash cost per PGM ounce increased by 5% to R 6,274 per PGM ounce, mainly as
a result of lower recoveries and head grade consistent with the increased
feed of oxidised open pit material. A contributing factor is the increase
in stripping ratio and increase in underground development.
Contractor dispute with Moolman Mining
On 19 March 2007, AQPSA delivered its reply to Moolman Mining`s response to
AQPSA`s original motion proceedings application to stay the Arbitration
proceedings in this matter, pending the outcome of the trial action
proceedings instituted by AQPSA against Moolman Mining based on Moolman
Mining`s misrepresentation of the extent of its foreign currency exposure
when it originally concluded the mining contract with Moolman Mining.
AQPSA is awaiting a response to its reply from Moolman Mining.
The discovery of documents by Moolman Mining which was necessary for
AQPSA`s above mentioned reply in the motion proceedings has not disclosed
any documentation which would support any foreign exposure by Moolman
Mining, tends to confirm that AQPSA`s original decision to resile from the
mining contract was correct in the circumstances.
AQPSA will be serving a plea to Moolman Mining`s counterclaim in the action
proceedings in due course. AQPSA denies that any amounts whatsoever are
owing to Moolman Mining as the misrepresentation at the instance of Moolman
Mining has the effect that no such amounts will be payable.
Everest Platinum Mine
Safety
The 12-month rolling DIIR deteriorated to 0.62 from 0.58. The Department
of Minerals and Energy has issued a report regarding the investigation that
was performed following the fatality that occurred during the previous
quarter. The report concluded that the requisite safety management systems
were in place, ascribing the basic cause of the accident to the deceased
taking an unsafe position and not following procedures. The implementation
of remedial actions arising from the investigations was completed during
the quarter. Five lost-time injuries occurred during the quarter. Safety
initiatives continue to focus on fall-of-ground prevention and materials
handling.
Mining
* Underground ore production increased by 15% to 531,191 tons
* Opencast operations production decreased to 47,130 tons
* Opencast mining extension through the South-West Pit continued
Processing
* Plant processed 573,265 tons, a 5% increase compared to the previous
quarter
* Recoveries were consistent with the previous quarter, remaining at
78%.
* Production increased 2% to 40,923 PGM ounces
Revenue
Revenue decreased by 4% to R400 million for the quarter, due to a
strengthening in the exchange rate and a reduction in the four-month-
rolling sales adjustment due to the quarter-on-quarter volatility of the
ruthenium price. The average PGM basket price for the quarter increased to
$1,438 per PGM ounce. The cash margin for the quarter decreased to 64%
from 66% in the previous quarter.
Operations
Opencast and underground mining combined produced a total 578,321 tons, a
9% increase compared to the previous quarter, with the production balance
roughly 92% from underground and 8% from opencast operations respectively.
Opencast mining production followed plan and continued to decrease to
47,130 tons, largely comprising of high grade, high cost tons from the
deeper areas of the South-West Pit. Production capacity remains limited by
the small reserve in the South-West Pit and the boulder laden nature of the
overburden. The reduction in opencast production, high boulder volumes and
the high stripping ratios inherent in the South-West Pit extension resulted
in an increase in opencast mining unit cost.
Underground on-reef development and the establishment of stoping sections
continued during the quarter. The underground production showed a 15%
increase in production to 531,191 tons from 463,202 tons. The performance
of the underground mining contractor, Shaft Sinkers Mining, showed some
improvement as shown by the increase in production. Shaft Sinkers Mining
did however request a revision in mining rates on the basis of mining
parameters, specifically pillar layouts, explosives and support
specifications; which had changed as a result of geological and
geotechnical conditions. The request was approved following a validation
and review process. Shaft Sinkers Mining wage negotiations are underway,
and it is anticipated that the revision and mining rates coupled with wage
increases will result in an increase in underground mining cost in the next
quarter.
The underground head grade was consistent with the previous quarter. The
plant head grade for the quarter decreased to 2.84 g/t from 2.94 g/t in the
previous quarter due to a reduction in high-grade opencast material.
Concentrator throughput was 573,265 tons milled for the period, with no
tons consumed from the stockpile, which increased to 11,471 tons at the end
of the quarter.
Recoveries were consistent at 78%.
Operating Cash Costs
Cash costs decreased by 2% to R252 per ROM ton milled in line with the
increased ratio of underground tons at higher cost which was offset by a
reduction in high cost opencast material. Process plant unit costs reduced
as a result of the higher throughput. As a consequence of lower grades and
consistent recoveries, cash costs per PGM ounce for the quarter increased
by 1% to R3,528 per PGM ounce.
MIMOSA INVESTMENTS (Aquarius Platinum 50%)
Mimosa Platinum Mine
Safety
The DIIR improved to 0.23 for the quarter from 0.50 in the previous
quarter. Regrettably on the 18th of May, two fatalities occurred
underground when a Safety Health Environmental Officer and an Acting
Ventilation Officer succumbed to asphyxia in a previously abandoned
underground area where pumping was being carried out to reopen it. An
official investigation is underway; however, the results have not yet been
released.
Mining
* Underground production decreased 3% to 449,000 tons
* The surface stockpile decreased to a total 361,000 tons at the end of
the quarter
Processing
* Concentrator plant recoveries improved to 77.9% from 77.7%
* Total mine production increased 23% to 42,732 PGM ounces, equalling
previous production record (Aquarius share: 21,366)
Revenue
The average achieved PGM basket price for the quarter increased 10% to
$1,047 per PGM ounce. The average nickel price over the quarter rose by
36% to $20.52 per pound from $15.21 per pound in the previous quarter.
Together with a contribution from base metals of approximately 44% of gross
revenue, sales revenue for the quarter totalled $60.4 million, an increase
of $13.4 million when compared to the previous quarter. The gross cash
margin increased to 77% from 72% in the previous quarter.
Operations
During the quarter mining operations hoisted 449,000 tons compared to
463,000 tons in the previous quarter. Tons milled during the quarter
totalled 481,000 tons, with the balance from the stockpile, which totalled
361,000 tons at the quarter end using the reconciliation method.
The average plant head grade was steady at 3.64 g/t, compared to 3.68 g/t
in the previous quarter.
Tons processed totalled 481,000, a 27% increase compared to the previous
quarter. This increase was planned following the plant shutdowns in the
previous quarters. The milling situation is now back to normal. Recoveries
for the quarter slightly increased to 77.9% from 77.7%.
PGM production during the fourth quarter increased by 23% to 42,732 ounces
(Aquarius attributable: 21,366 ounces).
Operating Cash Costs
Cash costs for the quarter decreased to $350 per PGM ounce, a 12% decrease
compared to the previous quarter`s figure of $396 per PGM ounce.
Net of by-products, however, cash costs were negative at ($289) per PGM
ounce, compared to ($154) per PGM ounce in the previous quarter, primarily
due to the high nickel price.
Although operating costs are 12% better compared to the previous quarter,
the country is still operating under hyperinflationary conditions. Annual
inflation is over 4,500% and given a controlled foreign exchange rate
regime, the inflation -rate disparity continues to exacerbate pressure on
local costs.
Wedza Phase 5 Expansion
Satisfactory progress has been achieved as regards the mining side of the
project. Most of the equipment is now on site and being commissioned.
The process side of the project is facing challenges. The project scope has
been revised twice due to concerns about the re-use of old equipment, and
slow progress is being registered as a result. The (RSA based) contractors
who were awarded most of the work are pressed due to the difficulties of
operating in Zimbabwe. Consequently, completion of the project will be
delayed until the last quarter of calendar 2007 and the capital cost has
escalated by $5.7 million to $28.9 million.
AQUARIUS PLATINUM (SA) CORPORATE SERVICES (PTY) LTD
Chromite Tailings Retreatment Plant (CTRP) (Aquarius Platinum 50%)
Safety
The DIIR is zero. No Lost Time Accidents have occurred since the project
commenced.
Processing
* Material processed steady at 68,556 tons
* Grade decreased to 4.0 g/t and recoveries decreased to 22%
* Production decreased slightly to 1,877 PGM ounces
Revenue
The PGM basket price for the quarter increased 3% to $1,856 per PGM ounce.
Revenue for the quarter decreased to R19 million (Aquarius share: R9.5
million). The cash margin remained steady at 77%.
Operations
The drop in recovery and ounces is attributable to the decrease in head
grade. This decrease is a result of treating lower grade dump material.
Operating Costs
Cash costs decreased by 12% to $336 per PGM ounce. The decrease was due to
reduced maintenance costs.
CORPORATE MATTERS
Aquarius completes purchase of 3.5% of South African subsidiary from SavCon
On 26th April 2007, Aquarius announced the completion of the acquisition of
a 3.5% equity interest in AQPSA from SavCon for a cash consideration of ZAR
342.5 million, as first announced in November 2006.
As a result of the Transaction, Aquarius increased its ownership of AQPSA
from 50.5% to 54%. The number of new Aquarius shares to which SavCon will
be entitled in exchange for its equity interest of 26% in AQPSA will reduce
proportionately by 2,918,590 shares to 21,680,952 shares. The conditions
for ultimate disposal of SavCon`s 26% in AQPSA and the take-up of its
Aquarius shares in terms of the Final Phase remain unchanged.
More information on all the corporate matters can be found at
www.aquariusplatinum.com
Aquarius Platinum Limited
Incorporated in Bermuda
Exempt company number 26290
Board of Directors
Nicholas Sibley Non-executive Chairman
Stuart Murray Chief Executive Officer
David Dix Non-executive
Timothy Freshwater Non-executive
Edward Haslam Non-executive
Sir William Purves Non-executive
Kofi Morna Non-executive
Zwelakhe Mankazana Alternate to Kofi Morna
Audit/Risk Committee
Sir William Purves (Chairman)
David Dix
Edward Haslam
Nicholas Sibley
Remuneration/Succession Planning Committee
Edward Haslam (Chairman)
Nicholas Sibley
Nomination Committee
The full Board comprises the Nomination Committee
Company Secretary
Willi Boehm
AQPSA Management
Stuart Murray Executive Chairman
Anton Wheeler Managing Director
Ayanda Khumalo Finance Director
Graham Ferreira General Manager Admin & Company Secretary
Hugo Holl General Manager Everest
Willie Byleveld General Manager Marikana
Gordon Ramsay General Manager Metallurgy
Rudi Rudolph General Manager Kroondal
Gabriel de Wet General Manager Engineering
Mimosa Mine Management
Alex Mhembere Managing Director
Winston Chitando Finance Director
Herbert Mashanyare Technical Director
Peter Chimboza Operations Director
Issued Capital
At 30 June 2007, the Company had on issue:
85,485,101 fully paid common shares and 1,098,652 unlisted options
Trading Information
ISIN number BMG0440M1029
Aquarius Platinum (South Africa) (Proprietary) Ltd
54% Owned
(Incorporated in the Republic of South Africa)
Registration Number 2000/000341/07
Block A, 1st Floor, The Great Wall Group Building
5 Skeen Boulevard, Bedfordview
South Africa 2007
Postal Address P O Box 1282, Bedfordview, 2008, South Africa.
Telephone: +27 (0)11 455 2050
Facsimile: +27 (0)11 455 2095
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, Australia
Postal Address PO Box 485, South Perth, WA 6151, Australia.
Telephone: +61 (0)8 9367 5211
Facsimile: +61 (0)8 9367 5233
Email: info@aquariusplatinum.com
Glossary
A$ Australian Dollar
Aquarius Aquarius Platinum Limited
ABET Adult Basic Education Training programme
APS Aquarius Platinum Corporate Services Pty Ltd
AQPSA Aquarius Platinum (South Africa) Pty Ltd
ASACS Aquarius Platinum (SA) (Corporate Services) (Pty) Limited
CTRP Chromite Ore Tailings Retreatment Operation
DIFR Disabling Injury Incidence 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 South African Government Department of Minerals and Energy
DMS Dense Media Separation
Dollar or $ United States Dollar
EMPR Environmental Management Programme Report
Everest Everest Platinum Mine
Great Dyke Reef A PGE bearing layer within the Great Dyke Complex in
Zimbabwe
g/t Grams per tonne, measurement unit of grade (1g/t = 1 part per million)
JORC code Australasian code for reporting of Mineral Resources and Ore
Reserves
JSE JSE Securities Exchange South Africa
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
MRC Murray & Roberts Cementation
NOSA National Occupational Safety Association
PGE(s) (6E) Platinum Group Elements plus Gold. Five metallic elements
commonly 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) (4E) Platinum Group Metals plus Gold. Aquarius reports the PGMs
as 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
RK1 Consortium comprising Aquarius Platinum (SA) (Corporate
Services) (Pty) Limited (ASACS), Ivanhoe Nickel and Platinum
Limited and Sylvania South Africa (Pty) Ltd (SLVSA).
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.
RPM Rustenburg Platinum Mines Limited
SavCon The Savannah Consortium. The principal Black Empowerment
Investor in Aquarius Platinum
TKO TKO Investment Holdings Limited
Ton 1 Metric tonne (1,000kg)
UG2 Reef A PGE bearing chromite layer within the Critical Zone of the
Bushveld Complex
Z$ Zimbabwe Dollar
For further information please contact:
In Australia:
Willi Boehm
Aquarius Platinum Corporate Services Pty Ltd
+61 (0)8 9367 5211
In the United Kingdom and South Africa
Nick Bias
BuckBias Limited
+ 44 (0)7887 920 530
or visit: www.aquariusplatinum.com
Date: 25/07/2007 08:00:06 Produced by the JSE SENS Department.
