| Mon 30 Jul 2007, 9:00 | | AMS - Anglo Platinum - Abridged Interim Financial |
|
AMS AMSP
ANANP
AMS - Anglo Platinum - Abridged Interim Financial Results For The Six Months
Ended 30 June 2007 and dividend declaration
ANGLO PLATINUM LIMITED AND ITS SUBSIDIARIES
("Anglo Platinum")
(Incorporated in the Republic of South Africa)
(Registration number 1946/022452/06)
JSE Codes: AMS; AMSP
ISIN: ZAE000013181; ZAE000054474
A member of the Anglo American plc group
ABRIDGED INTERIM FINANCIAL RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2007
MAIN FEATURES
- Headline earnings per ordinary share up 47%
- Dividend per ordinary share up 107%
- Rand basket price per platinum ounce increased by 51%
- Refined platinum sales 1 212 000 ounces
Consolidated Income Statement
Reviewed Reviewed Audited
Six months Six months Year
ended ended ended
30 June 30 June % 31
December
R millions 2007 2006 Change 2006
Gross sales revenue 23 646 16 656 39 356
Mined 20 933 14 882 34 979
Purchased metals in 2 713 1 774 4 377
concentrate
Commissions paid (179) (143) (201)
Net sales revenue 23 467 16 513 42 39 155
COST OF SALES (12 654) (10 429) (21) (22 531)
GROSS PROFIT ON METAL 10 813 6 084 78 16 624
SALES
Mined 10 542 5 921 16 284
Purchased metals in 271 163 340
concentrate
Other net (114) 160 (130)
(expense)/income
Market development and
promotional
expenditure (151) (129) (236)
Operating profit 10 548 6 115 73 16 258
Interest expensed (140) (103) (193)
Interest received 279 74 220
Net income from 322 131 430
associates
Profit before taxation 11 009 6 217 77 16 715
Taxation (3 938) (1 713) (130) (4 783)
profit after taxation 7 071 4 504 57 11 932
Minority interest (171) - (15)
Net profit 6 900 4 504 53 11 917
Reconciliation between
net profit
and headline earnings
Net profit 6 900 4 504 11 917
Less: Declared and
undeclared cumulative
preference share (7) (127) (237)
dividends and related
STC
Less: Deemed dividend to
preference
shareholders (Note 9) (16) - -
Basic earnings
attributable to ordinary
shareholders 6 877 4 377 11 680
Adjustments (after tax
where applicable):
Profit on disposal of - - (22)
conversion rights
Profit on disposal and
scrapping of property,
plant and equipment (3) - (7)
Cost on disposal of 15%
interest of
Union Section - - 105
Headline earnings
attributable to ordinary
shareholders 6 874 4 377 57 11 756
Add: Declared and
undeclared cumulative
preference share 7 127 237
dividends and related
STC
Add: Deemed dividend to
preference
shareholders (Note 9) 16 - -
Headline earnings 6 897 4 504 11 993
Number of ordinary 236,0 219,0 229,6
shares in issue
(millions)
Weighted average number
of ordinary
shares in issue 233,6 218,6 218,8
(millions)
Attributable earnings
per ordinary share
(cents)
- Basic 2 944 2 002 47 5 339
- Diluted 2 926 1 989 47 5 317
Attributable headline
earnings per ordinary
share (cents)
- Headline 2 943 2 002 47 5 374
- Diluted 2 925 1 989 47 5 352
Dividends per ordinary 1 400 5 300
share (cents)
- Interim 2 900* 1 400 107 1 400
- Final 3 900
Dividends per preference 318,0 318,0 638,0
share (cents)
Dividend cover per
ordinary share
(headline earnings) 1,0 1,4 1,0
* Proposed ordinary dividend
Group statement of recognised income and expense
Reviewed Reviewed Audited
Six months Six months Year
ended ended ended
30 June 30 June 31 December
R millions 2007 2006 2006
income and expense
recognised
directly in the income
statement
Profit after taxation 7 071 4 504 11 932
Less: Taxation - - (79)
recognised directly in
equity
Total recognised income
and expense
for the period/year 7 071 4 504 11 853
Attributable to:
Equity holders of parent 6 900 4 504 11 838
Minority shareholder 171 - 15
interest
TOTAL RECOGNISED INCOME
AND EXPENSE
FOR THE PERIOD/YEAR 7 071 4 504 11 853
Consolidated Balance Sheet
Reviewed Reviewed Audited
as at as at as at
30 June 30 June 31 December
R millions 2007 2006 2006
ASSETS
Non-current assets 34 730 27 757 31 401
Property, plant and equipment 20 485 21 189 20 872
Capital work-in-progress 12 730 5 389 9 128
Investment in associates 1 022 811 944
Cash deposits held by 296 216 264
environmental trusts
Prepaid leases and other 197 152 193
receivables
Current assets 13 703 10 130 14 912
Inventories 5 793 4 882 5 300
Accounts receivable 4 476 3 304 4 888
Cash and cash equivalents 3 434 1 944 4 724
Total assets 48 433 37 887 46 313
EQUITY AND LIABILITIES
Share capital and premium 9 292 5 547 5 591
Accumulated profits 20 398 18 260 22 590
Minority shareholders` interest 453 - 511
Shareholders` equity 30 143 23 807 28 692
Non-current liabilities 9 196 7 546 8 466
Deferred taxation 8 098 6 378 7 168
Environmental obligations 569 484 530
Employees` service benefit 25 61 33
obligations
Share based payment provision 23 152 260
Obligations due under finance 481 471 475
leases
Current liabilities 9 094 6 534 9 155
Interest-bearing borrowings 600 779 100
Accounts payable 6 111 4 031 6 029
Share based payment provision 512 240 318
Taxation 1 871 1 484 2 708
Total equity and liabilities 48 433 37 887 46 313
Consolidated Cash Flow Statement
Reviewed Reviewed Audited
Six months Six months Year
ended ended ended
30 June 30 June 31 December
R millions 2007 2006 2006
CASH FLOWS FROM OPERATING
ACTIVITIES
Cash from operations 11 829 6 513 18 403
Interest paid (net of interest (79) (72) (164)
capitalised)
Taxation paid (3 729) (241) (1 274)
Net cash from operating 8 021 6 200 16 965
activities
CASH FLOWS USED IN INVESTING
ACTIVITIES
Purchase of property, plant and
equipment
(including interest (4 653) (1 835) (6 524)
capitalised)
Proceeds from sale of 15% - - 385
interest in Union Section
Interest received 279 74 220
Other 140 104 90
Net cash used in investing (4 234) (1 657) (5 829)
activities
CASH FLOWS USED IN FINANCING
ACTIVITIES
Proceeds from the issue of
ordinary
share capital 73 125 169
Raising/(repayment) of interest-500 (3 042) (3 705)
bearing borrowings
Ordinary and preference
dividends paid, net of
reinvestment (5 421) (1 657) (4 851)
Distributions to minority (229) - -
shareholders
Net cash used in financing (5 077) (4 574) (8 387)
activities
Net (decrease)/increase in cash
and cash
equivalents (1 290) (31) 2 749
Cash and cash equivalents at 4 724 1 975 1 975
beginning of period/year
Cash and cash equivalents at 3 434 1 944 4 724
end of period/year
MOVEMENT IN NET CASH/(DEBT)**
Net cash/(debt) at beginning of 4 149 (2 293) (2 293)
year
Net cash from operating 8 021 6 200 16 965
activities
Net cash used in investing (4 234) (1 657) (5 829)
activities
Other (5 583) (1 556) (4 694)
net cash at end of year 2 353 694 4 149
** Net cash comprises interest-bearing liabilities and obligations under
finance leases net of cash and cash equivalents.
Notes to the interim results
1. This abridged report has been extracted from the interim report which
complies with International Accounting Standard 34 - Interim Financial
Reporting and South African Statement of Generally Accepted Accounting
Practice, AC127, with the same title, as well as with Schedule 4 of the South
African Companies Act and the disclosure requirements of the JSE Limited`s
listings requirements.
2. The interim report has been prepared using accounting policies that comply
with International Financial Reporting Standards and South African Statements
of Generally Accepted Accounting Practice. The accounting policies are
consistent with those applied in the financial statements for the year ended
31 December 2006, except for the changes described in notes 5 and 8.
Reviewed Reviewed Audited
Six months Six months Year
ended ended ended
30 June 30 June 31 December
R millions 2007 2006 2006
3. Commitments
Mining and process
property, plant and
equipment
Contracted for 3 776 1 353 4 867
Not yet contracted 15 751 11 435 9 563
for
Authorised by the 19 527 12 788 14 430
directors
Other
Operating lease 469 612 603
rentals - buildings
- within remainder 30 45 44
of year/one year
- within two to five 158 192 197
years
- thereafter 281 375 362
Information 620 130 165
Technology Service
Providers
- within remainder 153 55 74
of year/one year
- thereafter 467 75 91
4. Contingent liabilities
Letters of comfort have been issued to financial institutions to cover certain
banking facilities. There are no encumbrances over Group assets, other than
houses held under finance leases by the Group.
Aquarius Platinum (South Africa) (Proprietary) Limited holds an option to put
its interest in the Kroondal pooling and sharing arrangement to the Group in
the case of termination of that relationship. The probability of the option
being exercised is considered remote. The amount of such an obligation is
dependent on a discounted cash flow valuation of its interest at that point in
time.
The Group has, in the case of some of its mines, provided the Department of
Minerals and Energy with guarantees that cover the difference between the
closure costs and amounts held in the environmental trusts. At 30 June 2007,
these guarantees amounted to R453 million (31 December 2006: R159 million).
The Group is the subject of various claims, which are individually immaterial.
The expected outcomes of these individual claims are varied, but on a
probability weighting the amount is estimated at R8 million. (30 June 2006:
R92 million, 31 December 2006: R73 million).
The Group has provided Lexshell 39 General Trading (Pty) Limited, a company
owned by the Bakgatla-Ba-Kgafela traditional community, with a facility that
covers their debt repayments should the company not be able to meet its
repayments. The facility is limited to Union section`s cash flows, and call on
this facility is considered a remote possibility.
5. New accounting policies adopted
IFRS 7 - Financial Instruments: Disclosures
On 1 January 2007, the Group adopted the disclosure requirements for financial
instruments under IFRS 7. This standard has no impact on recognition,
measurement and presentation of financial instruments and consequently has no
impact on profit or loss or equity for the period. The primary objective of
IFRS
7 is to provide risk management and financial instrument disclosures that
enable users to evaluate the nature and significance of financial instruments
on an entity`s financial performance and position. These new disclosure
requirements will mainly impact the annual financial statements rather than
the interim financial results.
Amendment to IAS 1 - Presentation of Financial Statements
The Group adopted the amendment to IAS 1. IAS 1 was amended in conjunction
with the issue of IFRS 7. The amendments require additional disclosure of the
entity`s capital management objectives, policies and processes, some
quantitative data around the composition of capital and compliance with any
capital requirements. Due to the nature of the capital disclosures, this will
have an impact on the annual financial statements.
Amendments to IAS 23 - Borrowing costs
The Group early adopted the amendments to IAS 23 - Borrowing costs. The main
change from the previous version is the removal of the option to immediately
recognise borrowing costs that relate to assets that take a substantial amount
of time to get ready for use or sale, as an expense. This has no impact on the
Group.
6. Derivatives - no fair value
The Group holds a call option over a 16,95% (31 December 2006: 17,04%) stake
in Northam Platinum Limited, which option is conditional upon the current
owner achieving certain ownership thresholds by historically disadvantaged
persons. This option has been extended on three occasions and now the
conditions must be met on 30 November 2007. The call option is exerciseable at
R13,45 (31 December 2006: R8,60) per share. No fair value is attributed to
this option as it is contingent upon the event explained above.
7. Change in accounting estimate
Mining Assets
During the period, the Group revised its depreciation method for capitalised
shaft and development costs. These costs which were previously amortised on a
straight-line basis over their expected useful lives, are now amortised on a
unit of production basis. The reason for the change in estimate is due to the
alignment of the accounting policies with the holding company of the Group.
This change in accounting estimate has been applied prospectively and has
resulted in an increase in depreciation of R59 million for the half-year.
The amount of the effect in future periods cannot be disclosed because
estimation is impracticable.
Inventory
During the period, the Group changed its estimate of the quantities of
inventory based on the outcome of a physical count of in process metals. The
Group runs a theoretical metal inventory system based on inputs, the results
of previous physical counts and outputs. Due to the nature of in process
inventories being contained in weirs, pipes and other vessels, physical counts
take place only once per annum.
This change in estimate has had the effect of decreasing the value of
inventory disclosed in the financial statements by R148 million (31 December
2006: increase of R102 million). This results in the recognition of an after-
tax decrease in earnings of R105 million (31 December 2006: R72 million).
The amount of the effect in future periods cannot be disclosed because
estimation is impracticable.
8. Change in accounting policy
During the period, the Group changed its accounting policy of valuing stores
and material at average cost. Stores and material are now valued at cost on a
first in, first out (FIFO) basis. The reason for the change in policy is due
to the alignment of the accounting policies with the holding company of the
Group. The impact of this change is immaterial.
9. Revision of conversion price applicable to convertible preference shares
As the dividend cover in respect of the 2006 dividend was less than 1.4 times,
it was necessary, in accordance with the rights and privileges attaching to
the convertible perpetual cumulative preference shares ("convertible
preference shares"), to amend the conversion price to be used when the
convertible preference shares are converted into ordinary shares. The
conversion price was originally R288.43 or 34.67046 ordinary shares for each
100 convertible preference shares converted. Based on the announcement
published on 12 March 2007, the conversion price was amended to R284.24 or
35.18154 ordinary shares for each 100 convertible preference shares converted.
This decrease in the conversion price has resulted in a deemed dividend for
the purpose of calculating earnings per share in terms of IAS 33 - Earnings
per share to the outstanding preference shareholders at the date of the
adjustment. Consequently, this deemed dividend of R4.19 per convertible
preference share, amounting to R16 million has been taken into account when
calculating the basic earnings attributable to ordinary shareholders. This
amount has been included with the preference dividends due to preference
shareholders of R7 million in the total amount attributable to preference
shareholders.
10. Reclassification - Pandora
Pandora was previously accounted for as a joint venture instead of an
associate. On 1 January 2006, a balance of R94 million in property, plant and
equipment and R27 million in the deferred tax liabilities were reclassified to
`Investment in Associates`.
11. Corporate governance
The Board is of the view that the Company and its subsidiaries are compliant
with the recommendations as set out in the Code of Corporate Practices and
Conduct contained in King 2.
12. Auditors` review
The interim results have been reviewed by the Company`s auditors, Deloitte &
Touche. Their unqualified review report is available for inspection at the
Company`s registered office.
Commentary
1. FINANCIAL RESULTS
The Group achieved a substantial improvement in headline earnings when
compared to those for the first six months of 2006 with higher US dollar
prices realised on metals sold and a weaker rand/US dollar exchange rate the
primary contributing factors.
Headline earnings and headline earnings attributable to ordinary shareholders
increased to R6 897 million and R6 874 million respectively with headline
earnings per ordinary share increasing 47,0% to 2 943 cents. An interim
dividend of 2 900 cents per ordinary share has been declared, maintaining a
dividend cover ratio of 1.
Net sales revenue rose by R6,95 billion to R23,5 billion. The increase was
primarily the result of higher US dollar metal prices achieved on all metals
sold, contributing R4,82 billion to the increase and a weaker average rand/US
dollar exchange rate of R7,16, when compared to the rate of R6,34 achieved in
the first half of 2006, which increased revenue by R2,66 billion. Lower sales
volumes reduced net sales revenue by R526 million largely due to the revenue
reduction from platinum and nickel sales. Refined platinum sales for the half-
year ended 30 June 2007 amounted to 1,212 million ounces.
The average prices achieved on platinum, palladium and nickel sales for the 6
months to 30 June 2007 were US$1 233 per ounce, US$355 per ounce and US$19,98
per pound respectively. The average price achieved on sales of rhodium metal
for the period was US$4 274 per ounce, which includes the effect of long term
contractual arrangements with some customers.
Cost of sales rose by R2,23 billion to R12,7 billion, principally as a result
of the following:
- Purchases of metal in concentrate increased 45,8% to R2,45 billion.
Higher rand prices paid for metals in concentrate contributed R651 million to
the increase, with increased volumes of metals in concentrate purchased from
the Kroondal, Marikana, Bafokeng-Rasimone, Modikwa and Mototolo joint
ventures, contributing a further R117 million.
- Cash mining, smelting and refining costs rose 20,2% to R8,54 billion with
cash operating unit costs per equivalent refined platinum ounce rising by
19,2% to R7 200. The effect of and reasons for cost increases and additional
costs incurred are set out in more detail below.
- Other costs decreased by R130 million or 14,6% as a result of the
reversal of an overprovision of R214 million related to prior periods` share
based payments.
- Amortisation rose by 14,7% or R173 million as a result of the capital
expenditure programme and increased use of new operating assets.
- The value of metals in inventory increased by R448 million during the
first half of 2007, impacted by the increase in the unit cost at which metal
inventories are valued and an increase in process pipeline stocks, offset by a
reduction in refined metal stocks.
Other net expenditure for the period amounted to R114 million and comprised
mainly of consultants fees of R129 million.
The Group`s net cash position at 30 June 2007 amounted to R2,35 billion,
compared to the R4,15 billion net cash position at the end of 2006.
2. SAFETY
Anglo Platinum remains committed to the principle of zero harm. Accordingly
the Board has implemented steps to align Anglo Platinum`s approach to employee
safety with that adopted by the Anglo American Group. Anglo Platinum fully
supports the Anglo American ambition to set the safety standard in the mining
industry and has implemented a major shift in its approach to employee safety.
Safety as the overriding priority, clarity of personal and collective
responsibilities and rigid and consistent application of standards lie at the
heart of the new approach. This new approach is being implemented at all Anglo
American operations.
The significant deterioration in safety performance in the first half of 2007
at Rustenburg resulted in the suspension of production at all shafts on a
staggered basis, with the aim of ensuring that every employee fully
understands the principles and accountability underlying all current safety
standards, initiatives and programmes and to identify and address any new
factors that contributed to the deterioration and that safety is recognised as
the overriding priority. The loss of refined platinum production associated
with the safety intervention at Rustenburg is 38 000 ounces. A similiar safety
intervention will be implemented at all of the Company`s operations and is
expected to reduce 2007 refined platinum production by a further 65 000
ounces.
3. OPERATIONS
Equivalent refined platinum production (equivalent ounces are mined ounces
converted to expected refined ounces) from the mines managed by Anglo Platinum
and its joint venture partners for the first half of 2007 increased by 16 585
ounces or 1,3% when compared to the same period in 2006. The increase was
lower than anticipated due to a shortage of skilled labour, competition for
labour at all levels, contract labour instability, strike action at joint
ventures, the unsettled labour situation associated with wage negotiations,
the increased number of fatal events and lower process recovery at
Potgietersrust.
Despite production from operations increasing, refined platinum production for
the first half of 2007 decreased by 11,2% to 1 193 700 ounces. This was
impacted by the increase in process pipeline stocks, increasing platinum
levels by 90 000 ounces. These stocks are expected to be refined for sale
during the second half of 2007. In addition, refined production in the first
half of 2006 significantly exceeded production from operations due to the
processing of concentrate built up at the Polokwane smelter in 2005.
An increase in labour complement to support the planned increase in production
at mining operations coupled with the labour related reduced production
efficiency resulted in an increase in cash operating costs per equivalent
refined platinum ounce of 19,2% to R7 200.
Mining operations
Increased production volumes were recorded at:
- Mototolo: The joint venture delivered its first production in the last
quarter of 2006. In the first half of 2007 the operation contributed 43 200
ounces of equivalent refined platinum production of which 21 600 ounces were
attributable to Anglo Platinum with the balance purchased in concentrate from
the joint venture partners.
- Union: Equivalent refined platinum production increased by 7% or 10 400
ounces as the decline operations returned to full production following the
completion of remedial support work conducted in 2006.
- Marikana: Equivalent refined platinum production attributable to Anglo
Platinum increased by 122% or 4 400 ounces. Marikana remains in ramp-up and is
expected to continue increasing production in 2007 with steady state
production of 74 000 equivalent refined platinum ounces expected in 2009.
- Western Limb Tailings Retreatment: Increased tons milled and a higher 4E
built up head grade resulted in equivalent refined platinum production
increasing by 3 100 ounces to 23 300 ounces for the first half of 2007.
- Twickenham: Reported separately for the first time in 2007, Twickenham
produced 4 600 equivalent refined platinum ounces, compared to 1 700 ounces
produced in the comparative period of 2006.
Lower production was recorded at:
- Modikwa: Labour unrest experienced during the first quarter of 2007,
which included a protected strike that lasted 25 days, resulted in equivalent
refined platinum production decreasing by 20% or 13 200 ounces compared to the
same period in 2006. An agreement was reached on 4 May 2007 whereby employees
returned to work although some work previously performed on Sundays only re-
commenced on 21 May 2007.
- Potgietersrust: Mining at the new PPRust North pit, which commenced in
December 2006, continued in the first half of 2007. In the area currently
being mined the portion of oxidised material negatively impacting process
recovery is more extensive than expected. Unscheduled mill and crusher
maintenance resulted in lower volumes milled which, together with lower
recovery, resulted in a decrease of 11% or 10 600 equivalent refined platinum
ounces. The impact of the oxidized material on recoveries will reduce refined
output at Potgietersrust in 2007 to 180 000 ounces. Production is expected to
be 280 000 refined platinum ounces in 2008 with the mine expected to reach its
forecast level of 430 000 ounces in 2009.
- Rustenburg: The mine experienced a high number of fatal incidents in the
first half of 2007. This resulted in both unplanned and remedial work
stoppages. Labour unrest amongst contractors in the first quarter of the year
and high labour turnover and resultant employment of novice workers resulted
in a marked reduction in labour efficiencies. This has resulted in a 2% or 8
600 ounce decrease in equivalent refined platinum production and an 18%
decrease in primary development which prevented the planned improvement in key
underground metrics.
- Amandelbult: Equivalent refined platinum production decreased by 2% or 7
100 ounces. Despite an improvement in immediately available reserves, short
term unavailability in UG2 milling capacity resulted in lower tons milled.
This resulted in a 193 000 ton UG2 ore stockpile ahead of the concentrators at
30 June 2007.
- Bafokeng-Rasimone: Lower mined grades, hampered by a mill breakdown in
the second quarter resulted in equivalent refined platinum production
decreasing by 4% or 3 800 ounces. The ore stocks built up ahead of the milling
circuit of 49 500 tons should be sufficient to negate the deficit over the
remainder of the year.
- Lebowa: Equivalent refined platinum production decreased by 4% or 2 100
ounces. This lower output is due to lower underground production affected by
power outages, high labour turnover and labour inefficiencies.
Process operations
Smelting operations performed well over the period with a satisfactory
solution to furnace cooling at the Polokwane smelter. The scheduled re-build
of the Waterval No. 1 furnace, which commenced in January 2007, was completed
successfully with full output in June 2007. A cooling water failure on the
slag cleaning furnace at the Waterval complex resulted in damage that
necessitated bringing forward a shutdown scheduled for later in the year to
carry out maintenance and technical enhancements. While it would have been
possible to process slag accumulated during the repair and revert material
from No. 1 furnace through the primary furnaces it was decided to stockpile
and process the accumulated material through the slag cleaning furnace to
optimise recovery. This has resulted in an increase in pipeline stocks,
including platinum levels of 65 000 ounces, which will be processed during the
second half of 2007. The slag cleaning furnace will be fully operational in
August 2007.
Refining operations performed well over the period with improved recoveries at
the Precious Metals Refinery.
The smelting and refining operations unit costs were impacted by the lower
refined production resulting in cash smelting and refining cost per refined
platinum ounce increasing by 26% over the first half of 2006. Unit costs
increases are expected to be significantly lower at the year end due to the
expected release of metal processed through the slag cleaning furnace and
increased mining production in the second half of the year.
4. PROJECTS
Anglo Platinum remains confident of continued robust demand for platinum and
is continuing with its expansion programme. The rate of expansion is reviewed
on an ongoing basis and currently supports the Group`s stated average compound
growth target of 5% per annum. The long term outlook for metal prices remains
positive and consequently studies evaluating the ramping up of various
projects continue.
In the first half of 2007 the Board approved projects totalling R6,2 billion,
in 2007 money terms. Included in these approvals is expansion of the Base
Metals Refinery, the Rustenburg Townlands ore replacement project and the
Lebowa Middelpunt Hill project.
The Base Metals Refinery project to expand the capacity of the existing plant
to 33ktpa of nickel by 2010 is estimated at R1,9 billion.
The R1,0 billion Rustenburg Townlands ore replacement project was approved and
will replace 70 000 ounces of refined platinum per annum from 2014 with
production expected from the new Merensky and UG2 areas at the Rustenburg
Townlands shaft.
The R1,7 billion Lebowa Middelpunt Hill 125ktpm UG2 project was also approved
and will contribute an additional 93 000 ounces of platinum per annum from
2012.
The implementation of Anglo Platinum`s extensive suite of mining and
processing projects to maintain and expand production continues on schedule
and within budget.
The PPRust North expansion project, which aims to mill an additional 600 000
tons of ore per month producing an additional 230 000 platinum ounces per
annum from 2009, is progressing on schedule. The relocation of the Ga-Puka and
Ga-Sekhaolelo communities commenced in July 2007 under the guidance of a
representative task team which is facilitated by the office of the Premier of
Limpopo. The relocation is the result of extensive consultations with the
communities, tribal authorities and local and provincial government over the
past few years. The relocation is expected to cost some R650 million and is
being conducted according to World Bank resettlement guidelines and aims to
ensure that the communities are better off after resettlement than they were
before. In this regard, Anglo Platinum has established community trusts which
will ensure that benefits flow to these communities, dealing with
infrastructure, education, health and sustainable job creation.
The R1,5 billion Amandelbult East Upper UG2 project, which will contribute an
additional 100 000 ounces of refined platinum per annum by 2012, is
progressing ahead of schedule.
The R2,3 billion Rustenburg Paardekraal 2 shaft replacement project is on
schedule and is expected to produce 120 000 ounces of refined platinum per
annum by 2015, replacing decreasing production as a result of continuing
Merensky ore reserve depletion.
Projects that continue to increase production include Kroondal, Marikana and
for the first time in 2007, the Mototolo joint venture.
5. CAPITAL EXPENDITURE
Total capital expenditure for the 6 months amounted to R4,65 billion (2006:
R1,84 billion). Expansion expenditure amounted to R3,07 billion (2006: R635
million) and expenditure to maintain operations increased to R1,53 billion
(2006: R1,14 billion). Interest of R51 million was capitalised (2006: R64
million).
It is forecast that capital expenditure for 2007 will be between R9 billion
and R10 billion, as previously estimated.
6. NEW MINERALS LEGISLATION AND EMPOWERMENT OF HISTORICALLY DISADVANTAGED
SOUTH AFRICANS
Anglo Platinum is fully committed to the Minerals and Petroleum Resources
Development Act ("the Act") and the mining charter and to achieving the
associated sustainable economic transformation.
This process started in 2000 with the sale of a stake in Northam to
Mvelaphanda Resources and in 2001 with the establishment of our 50:50 joint
venture with the African Rainbow Minerals led consortium at Modikwa.
Subsequent transactions and ventures included the Bafokeng-Rasimone mine, the
Pandora, Ga-Phasha and Booysendal projects, the sale of 15% of Union mine and
prospecting properties to the Bakgatla-Ba-Kgafela traditional community. In
July 2006 a joint review of progress was conducted by Anglo Platinum and the
Department of Minerals and Energy ("DME"). This highlighted the additional
detail required by the DME to facilitate the processing of the submissions
already made by Anglo Platinum to convert its "old order rights" to "new order
rights". The review and subsequent interactions have further confirmed both
the DME`s and the Company`s commitment to a successful conversion process.
Anglo Platinum expects to make significant progress in 2007 to further enhance
its empowerment to fully embrace the transformation envisaged by the Act and
the mining charter and to obtain the associated conversion of rights. Detailed
interactions with the DME to finalise the applications already lodged have
been conducted on a continuing basis, whilst in parallel, the negotiation of
two BEE transactions to complete Anglo Platinum`s transfer of ownership
requirements in accordance with the spirit and letter of the Act to achieve
conversion, have progressed satisfactorily. These transactions will be
announced once concluded.
Noteworthy milestones achieved in support of Anglo Platinum`s social and
labour plan include:-
- 9% women in mining
- 40% historically disadvantaged South Africans in management positions
- R3,1 billion spent on HDSA procurement in the first six months of 2007,
some 32% of Anglo Platinum`s total discretionary procurement spend
- Continued investment in housing and community projects
- R179 million committed to adult basic education over the next 3 years.
In a move to address the ongoing skills shortage facing the industry, Anglo
Platinum approved and commenced the construction of a R283 million mine
training centre on its Twickenham mine property, in support of the social and
labour plans for its new mining projects. The training centre will provide
skills to 2 000 new mining employees per year for the new and existing mining
projects on the Eastern Limb of the Bushveld complex. The centre will include
surface and underground training facilities to equip employees with
conventional and mechanised mining skills to match the range of mining
techniques employed by Anglo Platinum. The first trainees are expected to be
enrolled in 2008.
7. DIVIDENDS
Ordinary dividends are declared after considering current and future funding
requirements and are paid out of cash generated from operations. As was the
case at the 2006 year end, additional considerations currently impacting
funding requirements include:
- Anglo Platinum`s view that metal prices will remain firm for the
foreseeable future
- The advanced level of implementation of expansion and replacement
projects and associated improved confidence in the accuracy of capital
expenditure forecasts
- The magnitude of the planned capital expenditure
- The potential volatility of metal prices and exchange rates.
Consequently Anglo Platinum is able to declare a higher dividend.
The Board has declared an interim ordinary dividend of 2 900 cents per share.
This results in a dividend cover ratio of 1:1 on half-year headline earnings
and represents an increase of 107% on the 2006 interim dividend.
A preference dividend of 318 cents per preference share was declared and paid
in May 2007.
8. PROSPECTS
As a result of the operating difficulties encountered in the first half of the
year and their ongoing impact on operational efficiencies refined platinum
production for 2007 is expected to be between 2,60 and 2,65 million ounces and
for 2008 between 2,80 and 2,95 million ounces.
While the impact of current labour issues, the new approach to safety and
lower recovery at Potgietersrust have materially impacted 2007 and will impact
2008, the compound average production growth target of 5% planned by Anglo
Platinum to meet growing global demand will be maintained.
Demand for platinum remains firm and supportive of higher prices. Purchases of
newly mined platinum for jewellery manufacturing in China have held up well in
the face of higher prices, but new metal demand has slowed in the Japanese and
US jewellery markets. The increase in China of recycled platinum jewellery and
higher US dollar spend are indicators of strong brand support. Platinum demand
for autocatalysts remains robust, driven by European demand for catalysts,
particulate filters for diesel vehicles and growing Asian automotive
production. Industrial demand remains firm, particularly in the glass and
petroleum sectors.
Growth in palladium demand for autocatalysts and in industrial applications
such as electronics is supported by the relatively low metal price. Interest
in palladium for jewellery has spread beyond China to the USA where the lower
price makes palladium jewellery increasingly competitive with white gold.
Palladium prices are trading in a tight band and remain vulnerable to a change
in investor and fund sentiment.
The recently launched Exchange Traded Funds for platinum and palladium have
not significantly reduced market liquidity of either metal and their influence
on prices has so far been muted.
In addition to the refining and sale of process pipeline stocks accumulated
during the first half of 2007, refined platinum production for the second half
is expected to be higher than that of the first half. Increased sales volumes
and variable metal prices in rand terms are likely to have the most
significant effect on earnings in the second half of 2007.
T M F Phaswana R Havenstein Johannesburg
(Chairman) (Chief Executive Officer) 27 July 2007
Declaration of interim ordinary dividend (No. 109)
Notice is hereby given that an interim dividend of 2 900 cents per ordinary
share, in the currency of the Republic of South Africa, has been declared in
respect of the six months ended 30 June 2007. The dividend is payable to
shareholders recorded in the books of the Company at the close of business on
Friday, 24 August 2007.
The salient dates for the interim ordinary dividend are as follows:
Salient Dates for South Africa and United 2007
Kingdom
Last day to trade (cum dividend) Friday, 17 August
First day of trading (ex dividend) Monday, 20 August
Currency conversion date (for sterling Tuesday, 21 August
payments from London)
Record date Friday, 24 August
Payment date Monday, 27 August
Share certificates may not be dematerialised or re-materialised and no
conversion of preference shares into ordinary shares will be permitted between
Monday, 20 August 2007 and Friday, 24 August 2007, both days inclusive, nor
may transfers take place between the South African and United Kingdom share
registers during this period.
On Monday, 27 August 2007, the dividend will be electronically transferred to
the bank accounts of all certificated shareholders where this facility is
available. Where electronic fund transfer is either not available or not
elected by the shareholder, cheques dated Monday, 27 August 2007 will be
posted on that date.
Holders of dematerialised shares will have their accounts credited at their
CSDP or broker on Monday, 27 August 2007.
Shareholders registered on the United Kingdom register will be paid the
dividend in pounds sterling at the rate of exchange determined on Tuesday, 21
August 2007.
A further announcement stating the rand/sterling conversion rate will be
released through the relevant South African and United Kingdom news services
on Wednesday, 22 August 2007.
The dividend is payable subject to payment conditions which may be inspected
at or obtained from the Company`s Johannesburg Office or from its London
Secretaries.
By order of the Board
J D Meyer Johannesburg
Group Company Secretary 27 July 2007
supplementary information
Consolidated Statistics (Unaudited)
Six Six Year
months months
ended ended ended
30 June 30 June 31 December
Total 2007 2006 2006
operations
Marketing
statistics
Average market
prices achieved
Platinum (US$/oz) 1 233 1 104 1 140
Palladium (US$/oz) 355 315 319
Rhodium (US$/oz) 4 274 3 419 3 542
Nickel (US$/lb) 19,98 7,66 10,74
US$ Basket
price (Net
sales revenue
per refined Pt (US$) 2 613 1 953 2 030
ounce sold)
Platinum (R/oz) 8 825 7 018 7 785
Palladium (R/oz) 2 530 2 001 2 178
Rhodium (R/oz) 30 584 21 616 23 996
Nickel (R/lb) 143,64 48,45 74,04
R Basket price (R) 18 706 12 390 13 852
(Net sales
revenue per
refined Pt
ounce sold)
Average (R : US$) 7,1579 6,3440 6,8223
exchange rate
achieved on
sales
Exchange rate (R : US$) 7,0472 7,1452 7,0010
at end of
period/year
Financial
statistics and
ratios
Gross profit (%) 46,1 36,8 42,5
margin
Earnings before
interest,
taxation,
depreciation (R millions) 12 270 7 462 19 187
and
amortisation
(EBITDA)
Operating (%) 67,8 43,1 56,2
profit to
average
operating
assets
Return on (%) 52,4 41,6 48,2
average
shareholders`
equity
Return on (%) 83,1 54,8 70,1
average capital
employed
Interest cover 75,2 49,9 81,8
- EBITDA
Net asset value (R) 125,8 108,7 122,7
per ordinary
share
Net debt to (%) - - -
total capital
employed
Interest- (%) 3,6 5,2 2,0
bearing debt to
shareholders`
equity
Cost of sales (R) 10 087 7 832 7 963
per total Pt oz
sold
Cash operating
cost per
equivalent Pt
oz
(excluding
ounces from
purchased
concentrate and (R) 7 200 6 041 6 116
associated
costs)
Cash operating (R) 7 645 5 672 5 748
cost per
refined Pt oz
Equivalent
refined
platinum
production (thousands) (oz) 1 274,0 1 257,4 2 638,6
Gain in ounces
indicated by
physical stock (thousands) (oz) 9,8 39,9 39,9
count
Refined (thousands) (oz) (1 193,7) (1 344,9) (2 816,5)
platinum
production
Mining (thousands) (oz) (1 062,7) (1 199,6) (2 506,3)
Purchase of (thousands) (oz) (131,0) (145,3) (310,2)
concentrate
Platinum (thousands) (oz) 90,1 (47,6) (138,0)
pipeline
movement
Registered Office
55 Marshall Street, Johannesburg, 2001
(P.O. Box 62179, Marshalltown, 2107)
Facsimile +27 11 373-5111
Telephone +27 11 373-6111
south african registrars
Computershare Investor Services 2004 (Pty) Limited
(Registration No. 2004/003647/07)
70 Marshall Street, Johannesburg, 2001
(P.O. Box 61051, Marshalltown, 2107)
Facsimile +27 11 688-5221
Telephone +27 11 370-5000
London Secretaries
Anglo American Services (UK) Ltd,
20 Carlton House Terrace, London, SW1Y 5AN, England
Facsimile +44 207 968-8755
Telephone +44 207 968-8888
united kingdom registrars
Capita IRG plc
The Registry, 34 Beckenham Road,
Beckenham, Kent, BR3 4TU, England
Facsimile +44 208 639-2142
Telephone +44 870 162-3100 (within UK)
+44 208 639-2157 (outside UK)
Detailed results are available on the Internet at:
http://www.angloplatinum.com
E-mail enquiries should be directed to:
traymond@angloplat.com
Directors and Company Secretary
executive directors:
R Havenstein (Chief Executive Officer), J M Halhead (British),
N B Mbazima (Zambian) R G Mills, A M Thebyane, D G Wanblad,
A I Wood (British).
NON-EXECUTIVE DIRECTORS:
T M F Phaswana (Chairman), P M Baum, C B Carroll (American),
R Medori (French), W A Nairn,
A E Redman (British).
INDEPENDENT NON-EXECUTIVE DIRECTORS:
T A Wixley (Deputy Chairman), R M W Dunne (British), B A Khumalo,
T H Nyasulu.
ALTERNATE DIRECTORS: A H Calver (British), C B Sheppard,
P G Whitcutt.
Group Company Secretary: J D Meyer.
Date: 30/07/2007 09:00:11 Produced by the JSE SENS Department.
