| Mon 11 Feb 2008, 9:00 | | AMS / AMSP - Anglo Platinum - Abridged Financial Results For The Year |
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AMS AMSP
ANANP
AMS / AMSP - Anglo Platinum - Abridged Financial Results For The Year
Ended 31 December 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
MAIN FEATURES
* Rand basket price per Pt oz increased by 31,2%
* Refined Pt production of 2,47 million oz
* Headline earnings of R12.3 billion
ABRIDGED FINANCIAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2007
Consolidated Income Statement
Audited Audited
Year Year
ended ended
31 % 31
December December
R millions 2007 Change 2006
Gross sales revenue 46 961 19,3 39 356
Mined 40 749 34 979
Purchased metals 6 212 4 377
Commissions paid (345) (201)
--------- ---------
Net sales revenue 46 616 19,1 39 155
COST OF SALES (27 519) (22,1) (22 531)
--------- ---------
GROSS PROFIT ON METAL SALES 19 097 16 624
Mined 18 470 16 284
Purchased metals 627 340
Other net expenditure (119) (130)
Market development and (324) (236)
promotional expenditure
--------- ---------
Operating profit 18 654 16 258
Interest expensed (182) (154)
Interest received 403 180
Income from associates 448 430
--------- ---------
Profit before taxation 19 323 16 714
Taxation (6 656) (4 782)
--------- ---------
PROFIT for the year 12 667 6,1 11 932
--------- ---------
Attributable to:
Equity holders of the company 12 330 11 917
Minority shareholders` interest 337 15
Reconciliation between net
profit and headline earnings
Net profit 12 330 11 917
Less: Deemed dividend to (16) -
preference shareholders
Less:
Declared and undeclared (15) (237)
cumulative preference share
dividends and related STC
--------- ---------
Basic earnings attributable to 12 299 5,3 11 680
ordinary shareholders
Adjustments (after tax where
applicable):
Profit on disposal of conversion - (22)
rights
Cost on disposal of 15% interest - 105
in Union section
Profit on disposal and scrapping (5) (7)
of property, plant and equipment
--------- ---------
Headline earnings attributable 12 294 11 756
to ordinary shareholders
Add:
Declared and undeclared 15 237
cumulative preference share
dividends and related STC
Add: Deemed dividends to 16 -
preference shareholders
--------- ---------
Headline earnings 12 325 2,8 11 993
--------- ---------
Number of ordinary shares in 236,4 229,6
issue (millions)
Weighted average number of 234,7 218,8
ordinary shares in issue
(millions)
Attributable earnings per
ordinary share (cents)
- Basic 5 241 5 339
- Diluted 5 203 5 317
Attributable headline earnings
per ordinary share (cents)
- Headline 5 239 5 374
- Diluted 5 201 5 352
Dividends per ordinary share 5 200 5 300
(cents)
- Interim 2 900 1 400
- Final 2 300* 3 900
Dividends per preference share 638 638
(cents)
Dividend cover per ordinary 1,0 1,0
share (headline earnings)
*Proposed ordinary dividend
Group statement of recognised income and expense
Audited Audited
Year ended Year ended
31 December 31 December
R millions 2007 2006
Income and expense recognised
directly in the income statement
profit after taxation 12 667 11 932
Less: Taxation recognised directly - (79)
in equity
--------- ---------
12 667 11 853
--------- ---------
Attributable to:
Equity holders of the company 12 330 11 838
Minority shareholders interest 337 15
--------- ---------
12 667 11 853
--------- ---------
Consolidated Balance Sheet
Audited Audited
Year ended Year ended
31 December 31 December
R millions 2007 2006
ASSETS
Non-current assets 36 964 31 137
Property, plant and equipment 20 697 20 872
Capital work-in-progress 15 561 9 128
Investment in associates 391 944
Investments held by environmental 120 -
trusts
Other financial assets 116 110
Other non-current assets 79 83
Current assets 14 832 15 176
Inventories 6 370 5 300
Accounts receivable 4 246 4 605
Other assets 134 278
Derivative financial assets 3 5
Cash and cash equivalents 4 079 4 988
Assets classified as held for sale 2 254 -
--------- ---------
Total assets 54 050 46 313
--------- ---------
EQUITY AND LIABILITIES
SHARE CAPITAL AND RESERVES
Share capital and premium 9 319 5 591
Accumulated profits 18 988 22 590
Minority shareholders` interest 466 511
--------- ---------
Shareholders` equity 28 773 28 692
Non-current liabilities 10 108 8 466
Deferred taxation 8 748 7 168
Environmental obligations 840 530
Employees` service benefit 30 293
obligations
Obligations due under finance 490 475
leases
Current liabilities 14 012 9 155
Interest-bearing borrowings 7 465 100
Accounts payable 3 508 4 173
Other liabilities 2 212 1 856
Share-based payment provision 474 318
Taxation 353 2 708
Liabilities directly associated 1 157 -
with assets classified as held for
sale
--------- ---------
Total equity and liabilities 54 050 46 313
--------- ---------
Consolidated Cash Flow Statement
Audited Audited
as at as at
31 December 31 December
R millions 2007 2006
CASH FLOWS FROM OPERATING
ACTIVITIES
Cash from operations 20 665 18 405
Interest received/(paid) (net 5 (125)
of interest capitalised)
Taxation paid (6 821) (1 274)
--------- ---------
Net cash from operating 13 849 17 006
activities
--------- ---------
CASH FLOWS USED IN INVESTING
ACTIVITIES
Purchase of property, plant (10 653) (6 525)
and equipment (includes
interest capitalised)
Proceeds from sale of plant 81 30
and equipment
Investment in associates (11) (34)
Proceeds from sale of - 77
conversion rights
Net proceeds on sale of 15% - 385
interest in Union Section
(Increase)/decrease in (120) 11
investments held by
environmental trusts
Interest received 379 165
Growth in environmental trusts 24 15
Dividends received 279 148
Advances made - (70)
--------- ---------
Net cash used in investing (10 021) (5 798)
activities
--------- ---------
CASH FLOWS USED IN FINANCING
ACTIVITIES
Proceeds from the issue of 100 169
ordinary share capital
Proceeds/(repayment) of 7 575 (3 705)
interest-bearing borrowings
Ordinary and preference (12 276) (4 851)
dividends paid
Dividends paid to minorities (382) -
--------- ---------
Net cash used in financing (4 983) (8 387)
activities
--------- ---------
Net (decrease)/increase in (1 155) 2 821
cash and cash equivalents
Cash and cash equivalents at 4 988 2 167
beginning of year
Transfer to assets held for 246 -
sale
--------- ---------
Cash and cash equivalents at 4 079 4 988
end of year
--------- ---------
MOVEMENT IN NET (DEBT)/CASH**
Net cash/(debt) at beginning 4 413 (2 293)
of year
Net cash from operating 13 849 17 006
activities
Net cash used in investing (10 021) (5 798)
activities
Other (12 117) (4 502)
--------- ---------
Net (debt)/cash at end of year (3 876) 4 413
--------- ---------
** Net debt comprises interest-bearing liabilities and obligations under
finance leases net of cash and cash equivalents.
Notes to the abridged results
1. This abridged report 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 abridged report has been prepared using accounting policies that
comply with South African Statements of Generally Accepted Accounting Practice
and International Financial Reporting Standards. The accounting policies are
consistent with those applied in the financial statements for the year end 31
December 2006, except for the following changes:
* Adoption of IFRS 7 - Financial Instruments: Disclosure;
* Adoption of the amendment of IAS 23 - Borrowing Costs;
* Change in method of valuation of stores and materials from a weighted
average basis to a First-in-First-Out basis; and
* Change the measurement of the costs and liability arising on the leasing of
metal.
For full details of the impact of these changes, please refer to the annual
report.
Year ended Year ended
31 December 31 December
R millions 2007 2006
3. Commitments
Mining and process property,
plant and equipment
Contracted for 4 224 4 866
Not yet contracted for 13 085 9 563
--------- ---------
Authorised by the directors 17 309 14 429
--------- ---------
Other
Operating lease rentals - 575 603
buildings
Due within one year 47 44
Due within two to five years 213 197
More than five years 315 362
Information Technology 569 165
Service Providers
Due within one year 147 74
Due within two to five years 411 91
More than five years 11 -
These commitments will be funded from existing cash resources, future
operating cash flows, borrowings and any other funding strategies embarked on
by the Group.
4. Contingent liabilities
Letters of comfort have been issued to financial institutions to cover certain
banking facilities. There are no encumbrances of Group assets, other than the
houses held under finance leases by the Group.
Aquarius Platinum (South Africa) (Proprietary) Limited holds a put option to
put their interest in the Kroondal pooling on 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
dependant on a discounted cash flow valuation of their interest at that point
in time.
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 R70 million (2006: R73
million).
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 closure
cost and amounts held in the environmental trusts. At 31 December 2007 these
guarantees amounted to R1 939 million (2006: R159 million).
The Group has provided Lexshell 36 General Trading (Pty) Ltd (a company owned
by the Bakgatla-Ba-Kgafela traditional community) with a facility that covers
their debt repayments should that company not be able to meet the repayments.
The facility is limited to Union Section`s cash flows and a call on this
facility is considered a remote possibility.
Rustenburg Platinum Mines Limited ("RPM") has granted a R2 billion loan
facility to Royal Bafokeng Resources (Pty) Ltd ("RBR") for the purpose of
funding its contributions to the BRPM Joint Venture. The loan is repayable in
full on 11 August 2012. The RBR has ceded and pledged its interest in the BRPM
Joint Venture to RPM as security for the loan. RPM also has the right to
register a notarial bond and a mortgage bond over RBR`s undivided share of the
assets of the BRPM Joint Venture.
5. Changes in accounting estimate - Metal inventories
During the year, 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 only take place
once per annum.
This change in estimate has had the effect of increasing the value of
inventory disclosed in the financial statements by R148 million (2006: R102
million). This results in the recognition of an after-tax gain of R105 million
(2006: R72 million).
The amount of the effect in future periods has not been disclosed because
estimation is impracticable.
6. Comparative figures
The interest received and interest paid figures for 2006 have been restated by
R39 million each due to the incorrect elimination of intergroup interest in
the prior year. Consequently, interest received and interest paid are now
reflected at R165 million and R196 million respectively.
Amounts in cash investments held in the environmental trusts of R264 million
in 2006 that meet the definition of cash and cash equivalents have been
reclassified from non-current assets to cash and cash equivalents. The cash
flow statement has been amended accordingly.
7. Post balance sheet events
Formation and Approval of Group Employee Share Option Scheme
Anglo Platinum is finalising its plans for a broad based share scheme for
employees who do not currently participate in any other share scheme. The
scheme will be presented to shareholders for approval at a general meeting to
be held in this financial year. A circular containing full details of the
proposed transaction, including pro-forma financial effects, will be posted to
shareholders once the terms are finalised.
Proposed Revision to Conversion Price
As the ordinary dividend cover in respect of the 2007 dividends is less than
1.4 times, it is necessary to adjust the conversion price to be used when
convertible preference shares are converted into ordinary shares. Currently
the conversion price is R284.24 or 35.18154 ordinary shares for each 100
convertible preference shares converted. The revised ratio will be based on
the volume weighted average traded price of Anglo Platinum ordinary shares on
the JSE Limited for the five business days ended Friday, 7 March 2008 and will
be published on SENS and in the press once this has been determined.
8. 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 II.
9. Audit opinion
The auditors, Deloitte & Touche, have issued their opinion on the Group`s
financial statements for the year ended 31 December 2007. The audit was
conducted in accordance with International Standards on Auditing. They have
issued an unqualified audit opinion. A copy of their audit report is available
for inspection at the Company`s registered office. These abridged financial
statements have been derived from the Group financial statements and are
consistent in all material respects, with the Group financial statements.
Commentary
1. FINANCIAL RESULTS
Anglo Platinum achieved record headline earnings in 2007. Factors contributing
to the increase were higher US dollar prices realised on metals sold and a
rand / US dollar exchange rate that was on average weaker during 2007. This
was offset by lower sales volumes on the back of reduced production from
mining operations.
Headline earnings and headline earnings attributable to ordinary shareholders
increased to R12.3 billion with headline earnings per ordinary share
decreasing 3% to 5,239 cents as a result of an increased weighted average
number of shares in issue in 2007. A final dividend of 2,300 cents per
ordinary share has been declared, maintaining a dividend cover ratio of 1.
Gross sales revenue increased by R7.61 billion to R47.0 billion. The increase
was the result of higher US dollar metal prices achieved on all metals sold,
contributing R8.28 billion of the increase and a weaker average rand / US
dollar exchange rate of R7.04, compared to R6.82 achieved in 2006, increasing
revenue by R1.59 billion. This was offset by lower volumes of metals sold,
which reduced revenue by R2.26 billion. Refined platinum sales for the year
ended 31 December 2007 amounted to 2.48 million ounces.
The average prices achieved on platinum, palladium and nickel sales for the
year were US$1,302 per ounce, US$355 per ounce and US$17.04 per pound
respectively. The average price achieved on rhodium sales for the year was
US$4,344 per ounce affected by existing long term contractual arrangements
with some customers to support and develop the rhodium market. Anglo Platinum
is at an advanced stage of negotiations to achieve mutual recognition with its
relevant customers of structural changes to the rhodium market affecting the
US dollar price of the metal. The objective of the negotiations is to move
towards a contractual price for rhodium that is market related.
Cost of sales increased by R4.99 billion to R27.5 billion, because:
* the cost of purchases of metal increased by 40% to R5.54 billion. This was
due to higher prices paid for metals, contributing R1.05 billion of the
increase, and an increase in the volume of metals purchased from the Marikana
and Mototolo joint ventures, contributing a further R541 million.
* cash mining, smelting and refining costs rose 22% to R18.5 billion with cash
operating cost per equivalent refined platinum ounce rising by 34% to R8,181.
The increase in unit costs is attributable to reduced production, substantial
inflationary pressures including above inflation increases in wages, diesel,
tyres, chemicals and steel grinding media, costs associated with the safety
intervention, increased support costs and ramp-up costs at Mototolo and
Marikana. In addition, a higher labour complement to support a planned
increase in production at mining operations in 2007 further contributed to the
increase in unit costs.
* depreciation increased by 14% or R336 million mainly as a result of the
capital expenditure programme and increased utilisation of new operating
assets. During 2007 Anglo Platinum revised its depreciation method for
capitalised shaft and development costs which are now depreciated on a unit of
production basis.
* the value of metals in inventory increased by R957 million during 2007.
Despite a net volume decrease in pipeline stock, the value of metal in stock
rose as a result of the increase in the cost at which metal inventories are
valued.
The Group`s taxation charge increased to R6.66 billion. Higher dividends paid
in 2007 resulted in a higher STC charge in respect of the final 2006 dividend
and the interim dividend for 2007. The increased STC resulted in an effective
tax rate of 34.4% compared to 28.6% in 2006.
The Group`s net debt position at 31 December 2007 amounted to R3.88 billion,
compared to the R4.41 billion net cash position at the end of 2006 and is in
line with Anglo Platinum`s intention of introducing gearing onto its balance
sheet.
2. SAFETY
Anglo Platinum remains committed to the principle of zero harm and has
implemented a major shift in its approach to safety. The Board has implemented
steps to align Anglo Platinum`s approach to employee safety to that adopted by
the Anglo American Group.
The creation of a culture in which safety standards are paramount, with
effective learning from safety incidents to ensure `no repeats`, underlies
this new approach. This includes a visible, felt commitment from leadership to
eliminate harm and increase capacity to manage safety risks wherever they may
occur.
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 approach to safety is being implemented at all
Anglo Platinum operations.
A significant deterioration in safety performance occurred in the first half
of 2007 with 18 fatalities, 12 of which occurred at the Rustenburg mine. A
decision was taken to suspend production at all Rustenburg shafts on a
staggered basis, with the aim of:
* ensuring that every employee fully understands the principles and
accountability underlying all safety standards initiatives;
* implementing programmes to identify and address any factors that may have
contributed to the deterioration; and
* recognising that safety is the overriding priority.
The intervention provided invaluable insight into all operational areas and
further improved the implementation of the new approach to safety.
Following the temporary closure of Rustenburg, senior management and other
relevant stakeholders developed a comprehensive enhanced safety improvement
plan for the Group, which is being implemented over the next three years.
In the second half of 2007, following the initial intervention, there was a
marked improvement in safety performance with the lost time injury frequency
rate at managed operations reducing to 1.71 compared to 2.37 in the first half
of the year.
Regrettably, 25 fatalities occurred at Anglo Platinum`s managed operations in
2007.
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 2007 decreased by 167,200 ounces or 6% when
compared to 2006. The intervention aimed at achieving a significant
improvement in employee safety as well as reduced production efficiency in
2007 as a result of a shortage of skilled labour, competition for labour at
all levels, strike action at joint ventures, the unsettled labour situation
associated with wage negotiations and lower grades at Potgietersrust
contributed to the decrease in production. In addition, UG2 as a percentage of
total tons milled has increased to 59% in 2007 further reducing grades across
all underground operations.
Refined platinum production for 2007 decreased by 12% to 2.47 million ounces.
The decrease is attributed to the reduced production experienced in 2007 as
well as the once-off release of 112,000 ounces from the process pipeline in
2006 attributable to the effect of the shutdown of the Polokwane smelter in
late 2005.
Mining operations
Increased production volumes were recorded at:
* Mototolo: The joint venture delivered its first production in the last
quarter of 2006. In 2007 the operation contributed 95,200 ounces of equivalent
refined platinum production of which 47,600 ounces were attributable to Anglo
Platinum with the balance purchased in concentrate from the joint venture
partner.
* Marikana: Equivalent refined platinum production attributable to Anglo
Platinum increased by 81% or 10,400 ounces. Marikana remains in ramp-up and is
expected to continue increasing production with steady state production of
74,000 equivalent refined platinum ounces.
* Twickenham: Reported separately for the first time in 2007, mining at
Twickenham produced 9,300 equivalent refined platinum ounces, compared to
6,400 ounces produced in the comparative period of 2006.
* Western Limb Tailings Retreatment: Equivalent refined platinum production
increased to 45,300 ounces with an improvement in the concentrator recovery
due to increased stability of the ultra fine grinding circuit.
Lower production was recorded at:
* Rustenburg: The mine experienced increased fatalities in 2007 resulting in
an increase in unplanned remedial work stoppages. Following the spate of
fatalities in the first half of 2007, a decision was taken to `stop and fix`
Rustenburg. This entailed the stopping of production at each of the five
shafts on the lower mine for a period of five days. The ramp-up in production
following the shaft closures took longer than anticipated and consequently
production levels reduced during the second half of the year. Labour disputes
amongst contractors during the first half of the year and high labour turnover
and the employment of novice workers resulted in a marked reduction in labour
efficiencies, which impacted on production. A decision was also taken during
November to suspend operations at Turffontein shaft and rehabilitate some of
the shaft steel work. Consequently this shaft will not be producing until the
second quarter of 2008. Output from UG2 ore sources increased from 63% to 69%,
impacting negatively on 4E built-up head grades which reduced to 3.98 g/t from
4.26 g/t reported in 2006. This resulted in a 20% or 167,800 ounce decrease in
equivalent refined platinum production and a significant decrease in primary
development which prevented the planned improvement in key underground
metrics.
* Amandelbult: Equivalent refined platinum production decreased by 3% or
18,500 ounces. The decrease in ounces is attributable to lower grades as a
consequence of an increase in the UG2 component of tonnes milled and the
continued low grades encountered in the transition zone on the Merensky
horizon. The stockpiles of UG2 ahead of the concentrator, as reported at the
half year, have been depleted with stockpiles currently running at normal
levels.
* Union: Equivalent refined platinum production decreased by 2% or 7,300
ounces. The lower output was caused by power and labour disruptions, safety
stoppages associated with re-organising of mining activities at the declines
following the replacement of contractors during the first half of the year and
stoppages for safety training as part of the Group safety intervention
programme.
* Potgietersrust: Mining at the new PPRust North pit, which commenced in
December 2006, continued in 2007. In the area mined during 2007 the effect of
oxidised material negatively impacting process recovery was more extensive
than initially anticipated. Unscheduled mill and crusher maintenance resulted
in lower volumes milled which, together with the impact of the oxidized
material on recoveries, reduced refined output at Potgietersrust in 2007 to
163,500 ounces. The increase in tonnes mined from the PPRust North Pit and the
commissioning of the new mill at the end of the first quarter of 2008 are
expected to result in an increase in refined platinum production in 2008 with
the mine expected to reach full capacity in 2009.
* Bafokeng-Rasimone: Mill breakdowns during the second quarter, strike action
of contractor employees, difficult ground conditions and safety work stoppages
resulted in equivalent refined platinum production decreasing by 11% or 24,200
ounces.
* Lebowa: Equivalent refined platinum production decreased by 11% or 11,300
ounces. This lower output was due to power outages, high labour turnover and
resultant labour inefficiencies.
* Modikwa: Labour unrest experienced during the first quarter of 2007, which
included a protected strike that lasted 25 days, severely hampered production
during the first half of 2007 resulting in the decrease of equivalent refined
platinum production by 13% or 17,500 ounces compared to 2006.
* Kroondal: Total equivalent platinum ounce production at the Kroondal mine, a
joint venture with Aquarius Platinum South Africa (Pty) Ltd, declined by 5% to
130,200 ounces due to labour disruptions, safety stoppages, lack of skilled
resources to maintain mechanised equipment and a lower built-up head grade.
Process operations
The focus on continuous business improvement and the implementation of
proactive performance monitoring of concentrator operations has resulted in a
further improvement in concentrator recoveries in 2007. This was achieved
despite a 5% decrease in built-up head grade as a result of an increase in the
ratio of UG2 and Platreef ore to total ore treated, both of which have a lower
recovery potential than Merensky ore.
Smelting operations performed well over the period with a satisfactory
solution to furnace cooling at the Polokwane smelter being implemented. As
previously reported the scheduled re-build of the Waterval No. 1 furnace was
completed successfully with full output achieved in June 2007. The slag
cleaning furnace failure at the Waterval complex has been repaired and was
fully operational in August 2007. The increase in pipeline stocks that built
up as a result of the failure were processed in the second half of 2007 with
pipeline stocks at the slag cleaning furnace returning to normal levels.
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. An increase in the costs of key inputs, including
chemicals and steel grinding media, increased energy, labour and maintenance
costs further contributed to the cash smelting and refining cost per refined
platinum ounce increasing by 25%.
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 against Anglo Platinum`s growth strategy. The long term
outlook for metal prices remains positive and consequently studies evaluating
the ramping up of various projects continue.
In 2007 the Board approved projects totalling R10.7 billion, in 2007 money
terms. Included in these approvals are the expansion of the Base Metals
Refinery, the Rustenburg Townlands ore replacement project and the Mainstream
Inert Grind projects on various operations.
The R1.9 billion Base Metals Refinery project is to expand the capacity of the
existing plant to 33ktpa of contained nickel by the end of 2010.
The R1.0 billion Rustenburg Townlands ore replacement project 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. This
project is considered to be an important component of Rustenburg`s strategy
and business plan.
The R1.4 billion Mainstream Inert Grind projects were approved in November
2007. These projects will improve mineral liberation and metallurgical
performance within the process flow of the current concentrators, and will
result in an increase in PGM recovery.
The R1.7 billion Lebowa Middelpunt Hill phase 3 125ktpm UG2 project was
approved in May 2007 prior to conclusion of the Transaction Framework
Agreement between Anglo Platinum and Anooraq Resources in September 2007. In
light of the recently announced major black economic empowerment transaction
capital expenditure on the project has been deferred.
The PPRust North expansion project, which will mill an additional 600,000
tonnes of ore per month, is progressing. Commissioning of the new concentrator
has commenced. The relocation of the Ga-Puka and Ga-Sekhaolelo communities
commenced in July 2007 under the guidance of a representative task team
facilitated by the office of the Premier of Limpopo. As at the date of this
report some 640 families have been relocated to the new villages and all
schools are now operating. The remaining 317 families are scheduled to
complete the relocation by the end of April 2008. The relocations were
conducted in line with World Bank resettlement guidelines to ensure that the
communities are better off after resettlement than they were before. In this
regard, Anglo Platinum has established community trusts to ensure that
benefits flow to these communities to build sustainable development in the
areas such as infrastructure, education, health and job creation. The
relocations are expected to cost some R650 million.
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 on schedule.
The R2.3 billion Rustenburg Paardekraal 2 shaft replacement project is in
progress 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 Marikana and the
Mototolo joint ventures, with Mototolo delivering its first production in the
last quarter of 2006.
The R5.9 billion Twickenham expansion project was approved in the first
quarter of 2008. The project will expand current operations and exploit the
UG2 reef horizon.
The strong global demand for resources is placing material inflationary
pressure on capital expenditure and the ability to meet project schedules, the
effect of which was experienced in the latter part of 2007. These pressures
are likely to continue in the foreseeable future.
5. CAPITAL EXPENDITURE
Total capital expenditure amounted to R10.7 billion, an increase of R4.13
billion over 2006. Expansion expenditure was R5.24 billion with expenditure to
maintain operations at R5.14 billion. Capitalised interest amounted to R275
million.
Anglo Platinum expects capital expenditure for 2008 to be between R10.5
billion and R11.5 billion.
6. MINERALS LEGISLATION AND TRANSFORMATION
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 and social transformation.
Anglo Platinum has completed a number of empowerment transactions over the
years. On 4 September 2007 Anglo Platinum, Anooraq Resources and Mvela
Resources announced transactions that would result in the creation of two
significant and sustainable historically disadvantaged South African managed
and controlled platinum group metal producers, with critical mass and
significant growth potential.
The key features of the announced transactions include:
* The sale by Anglo Platinum of an effective 51% of Lebowa Platinum Mines and
an effective 1% of the Ga-Phasha Project for a total consideration of R3.6
billion to Anooraq.
* The purchase by Mvela Resources of Anglo Platinum`s 50% interest in the
Booysendal Project and 22.4% direct interest in Northam for a total
consideration of R4.0 billion.
* The formation by Anglo Platinum of an employee share ownership plan
benefiting more than 44,000 employees, which will comprise up to 1.5% of Anglo
Platinum`s issued share capital.
Further details of the key terms of the transactions will be announced during
2008 once the agreements have been finalised and funding arrangements are in
place.
Anglo Platinum has made significant progress towards achieving its
transformation objectives as envisaged by the Act and the mining charter.
Noteworthy milestones achieved in support of Anglo Platinum`s social and
labour plan include:
* 10% women in mining
* 43% historically disadvantaged South Africans in management positions
* R7.40 billion spent on procurement from historically disadvantaged South
Africans in 2007, some 32% of Anglo Platinum`s total discretionary procurement
spend
* Continued investment in housing and community projects.
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 consideration of current and future
funding requirements and are paid out of cash generated from operations.
Anglo Platinum paid an interim ordinary dividend of 2,900 cents per share. The
Board has declared a final ordinary dividend of 2,300 cents per share
resulting in a dividend cover ratio of 1 on full year headline earnings. A
preference dividend of 318 cents and 320 cents per preference share was
declared and paid in May 2007 and November 2007 respectively, maintaining the
full year preference share dividend of 638 cents per share.
8. PROSPECTS
Anglo Platinum`s commitment to employee safety, including the principle of
zero harm will continue to be an area of focus in 2008. The new approach to
safety, alongside operational difficulties, has had a material impact on 2007,
which is likely to continue in 2008. Production disruptions arising from
Eskom`s inability to supply sufficient power have been experienced in 2008.
Consequently refined platinum production is expected to be 2.4 million ounces
in 2008.
A combination of a weak dollar, robust demand for platinum and slower than
anticipated supply growth is supportive of higher US dollar prices. The
autocatalyst sector remains buoyant, driven by rising European demand for
diesel vehicles and their associated catalyst and filter requirements as well
as growing Asian automotive production. Purchases of newly mined platinum for
jewellery manufacturing in China are holding up well in the face of record
prices, but new metal demand is declining in the Japanese and US jewellery
markets as recycling of old jewellery is encouraged by the higher price
levels. Industrial demand remains firm, particularly in the electrical and
petroleum sectors.
Palladium demand for autocatalyst and industrial applications continues to
grow, supported by the low price relative to platinum. Jewellery demand is
expected to take increasing market share from white gold as palladium prices
have lagged the recent significant increase in the gold price. Palladium
prices continue to trade in a narrow band and remain vulnerable to a change in
investor and fund sentiment.
The Exchange Traded Funds for platinum and palladium, established in 2007,
have attracted considerable interest of late. It still remains to be seen what
influence these funds will exert on metal prices, however, it is possible that
they could contribute to increased price volatility going forward,
particularly in the platinum market.
Prices for rhodium are anticipated to stay strong as the market remains finely
balanced.
Management continues to vigorously address unit costs. The emphasis on
increasing volumes and improving operating efficiencies remains a driver of
performance at operations. Key risks affecting future production include:
* The impact of constrained electricity supply on production and expansion
projects;
* The ongoing skills shortage;
* Production stoppages related to safety.
D G Wanblad N B Mbazima T M F J D Meyer
Phaswana
(Executive (Executive (Chairman) (Company
Director: Projects Director: Finance Secretary)
and Engineering and Acting Joint
Acting Joint Chief Chief Executive
Executive Officer) Officer)
Johannesburg
7 February 2008
notice of annual general meeting
Notice is hereby given that the annual general meeting of shareholders of the
company will be held in the Auditorium on the 18th Floor, 55 Marshall Street,
Johannesburg on Monday, 31 March 2008 at 14:00 to consider and if approved,
adopt the annual financial statements for the year ended 31 December 2007
together with the report of the auditors, re-elect directors retiring by
rotation, pass ordinary resolutions placing the unissued ordinary shares under
the control of directors and approving non-executive director`s fees and
passing a special resolution permitting the company and/or its subsidiaries to
acquire shares in the company. A detailed notice of AGM will be posted to
shareholders.
Declaration of Final Ordinary Dividend (no. 110)
Notice is hereby given that a final dividend of 2 300 cents per ordinary
share, in the currency of the Republic of South Africa, has been declared in
respect of the year ended 31 Decemb er 2007. The dividend is payable to
shareholders recorded in the books of the Company at the close of business on
Friday, 14 March 2008.
The salient dates for the final ordinary dividend are as follows:
Salient dates for South Africa and United 2008
Kingdom
Last day to trade (cum dividend) Friday, 7 March
First day of trading (ex dividend) Monday, 10 March
Currency conversion date (for sterling Monday, 10 March
payments from London)
Record date Friday, 14 March
Payment date Monday, 17 March
Share certificates may not be dematerialised or re-materialised and no
conversion of preference shares into ordinary shares will be permitted between
Monday, 10 March 2008 and Friday, 14 March 2008, both days inclusive, nor may
transfers take place between the South African and United Kingdom share
registers during this period.
On Monday, 17 March 2008, 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 17 March 2008 will be posted on that
date. Holders of dematerialised shares will have their accounts credited at
their CSDP or broker on 17 March 2008.
Shareholders registered on the United Kingdom register will be paid the
dividend in pounds sterling at the rate of exchange determined on Monday, 10
March 2008.
A further announcement stated the rand/sterling conversion rate will be
released through the relevant South African and United Kingdom news services
on Tuesday, 11 March 2008.
The dividend is payable subject to payment conditions which may be inspected
at or obtained from the Company`s Johannnesburg Office or from its London
Secretaries.
supplementary information
Consolidated Statistics (Unaudited)
Year ended Year ended
31 December 31 December
Total operations 2007 2006
Marketing
statistics
Average market
prices achieved
Platinum (US$/oz) 1 302 1 140
Palladium (US$/oz) 355 319
Rhodium (US$/oz) 4 344 3 542
Nickel (US$/lb) 17,04 10,74
US$ Basket price (US$) 2 579 2 030
(Net sales revenue
per refined Pt
ounce sold)
Platinum (R/oz) 9 149 7 785
Palladium (R/oz) 2 499 2 178
Rhodium (R/oz) 30 593 23 996
Nickel (R/lb) 121,13 74,04
R Basket price (R) 18 167 13 852
(Net sales revenue
per refined Pt
ounce sold)
Average exchange (R : US$) 7,0431 6,8223
rate achieved on
sales
Exchange rate at (R : US$) 6,8360 7,0010
end of period/year
Financial
statistics and
ratios
Gross profit (%) 40,7 42,2
margin
Earnings before (R millions) 21 946 19 187
interest,
taxation,
depreciation and
amortisation
(EBITDA)
Operating profit (%) 58,6 56,2
to average
operating assets
Return on average (%) 44,1 48,2
shareholders`
equity
Return on capital (%) 66,6 70,5
employed
Interest cover - 54,6 97,1
EBITDA
Net asset value (R) 121,7 122,7
per share
Net debt to total (%) 13,1 n/a
capital employed
Interest-bearing (%) 28,4 2,0
debt to
shareholders`
equity
Cost of sales per (R) 10 711 7 963
total Pt oz sold
Cash operating
cost per
equivalent Pt oz
(excluding ounces (R) 8 181 6 116
from purchased
concentrate and
associated costs)
Cash operating (R) 8 129 5 748
cost per refined
Pt oz
Equivalent refined (thousands) (oz) 2 471,4 2 638,6
platinum
production
Gain in smelting (thousands) (oz) 9,8 39,9
and refining
pipeline
Refined platinum (thousands) (oz) (2 474,0) (2 816,5)
production
Mining (thousands) (oz) (2 164,0) (2 506,3)
Purchase of (thousands) (oz) (310,0) (310,2)
concentrate
--------- ---------
Platinum pipeline (thousands) (oz) 7,2 (138,0)
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) Limited,
20 Carlton House Terrace, London, SW1Y 5AN, England
Facsimile +44 207 968-8755
Telephone +44 207 968-8888
united kingdom registrars
Capita Registrars Limited
The Registry, 34 Beckenham Road
Beckenham, Kent, BR3 4TU, England
Facsimile +44 208 639-2142
Telephone +44 870 162-3100 (within UK)
Telephone +44 208 639-2157 (from 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: N B Mbazima (Zambian), (Executive Director, Finance and
Acting Joint Chief Executive Officer), D G Wanblad (Executive Director,
Projects and Engineering and Acting Joint Chief Executive Officer).
NON-EXECUTIVE DIRECTORS: T M F Phaswana (Chairman), P M Baum, C B Carrol
(American), R J King (British), R Medori (French), A E Redman (British).
INDEPENDENT NON-EXECUTIVE DIRECTORS: T A Wixley (Deputy Chairman), R M W Dunne
(British), Dr. B Khumalo, M V Moosa, S E N Sebotsa.
ALTERNATE DIRECTORS: P G Whitcutt.
Company Secretary: J D Meyer
8 February 2008
Date: 11/02/2008 09:00:01 Produced by the JSE SENS Department.
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