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AQP - Aquarius Platinum - Aquarius Platinum Third Quarter 2008 Production &
Financial Results
AQUARIUS PLATINUM
JSE code: AQP
ISIN: BMG0440M1284
Aquarius Platinum Third Quarter 2008 Production & Financial Results
Highlights of the Quarter
Record quarterly net profit of $90.8 million (US 35.4 cps), a 59% increase
quarter-on-quarter
Record achieved PGM basket price
Quarterly mine production reduced to 191,942 PGM ounces (Aquarius attributable:
111,524 PGM ounces) reflecting challenging operating conditions in the quarter
in both South Africa and Zimbabwe
$790 million buyback of Implats stakes in Aquarius and AQPSA and associated $366
million equity fund raising
P&SA1 at Kroondal
PGM production of 100,020 PGM ounces, down 1% quarter on quarter (Aquarius
attributable 50,010 PGM ounces)
Cash margin for the Quarter increased to 76%
P&SA2 at Marikana
PGM production decreased by 36% quarter-on-quarter to 24,223 PGM ounces
(Aquarius attributable: 12,111 PGM ounces) due to industrial action and high
rainfall affecting open pit
Gross cash margin for the quarter remained unchanged at 52%
The P&SA2 project completed under budget
Everest
AQPSA assumed management of the Everest underground operations on 24 January
2008 following the abandonment of the underground mining contract by Shaft
Sinkers Mining (Pty) Limited
PGM production decreased by 33% quarter-on-quarter to 31,107 PGM ounces
(Aquarius attributable: 31,107 PGM ounces)
Cash margin for the quarter increased to 79%
Mimosa
PGM production decreased by 13% quarter-on-quarter to 34,283 PGM ounces
(Aquarius attributable: 17,142 PGM ounces)
Gross cash margin for the quarter reduced to 70% due to continued high
inflationary environment in Zimbabwe
Wedza Phase V Project commissioning is progressing well
CTRP
PGM production decreased by 18% quarter-on-quarter to 2,309 PGM ounces (Aquarius
attributable: 1,154 PGM ounces)
Gross cash margin for the quarter increased to 88%
Commenting on the results, Stuart Murray, CEO of Aquarius Platinum said "The
third quarter results demonstrate a challenging quarter but somewhat profitable
one for the company: net profits increased 59% to $90.8 million quarter-on-
quarter, whereas production reduced 19% to an attributable 111,524 PGM ounces.
Very well flagged power supply and industrial relations issues combined with the
switch to owner-operator mining at Everest all lowered production. On the
corporate front, I am pleased that our buyback of Impala`s stakes was well
received and that we have been able to add more value to our business. I am
pleased to welcome the many new shareholders to our register following this
transaction."
Production Outlook
Total production in the third quarter was approximately 15,000 PGM (4E) ounces
below prior announced targets. It is anticipated that the fourth quarter should
see an improvement in production at all operations. At Kroondal more output is
expected from the K5 Shaft; at Marikana the new labour relationship brokered by
AQPSA between the underground contractor and the workforce is due for
implementation in April 2008; progress at Everest remains very encouraging and
levels of 80 to 85% of ultimate production rates should be achieved in the
fourth quarter, and; at Mimosa the short-term commissioning problems should be
resolved and with a large stockpile ahead of the plant the benefits of the Wedza
Phase 5 expansion should start to materialise. Subject to the final regulatory
approvals for the Platinum Mile transaction, some additional production from
that operation will be added to group output.
Based on the production levels achieved to date, full year production is
envisaged to be in the range 520,000 to 530,000 PGM ounces, a level comparable
to the last financial year`s production.
Metals Prices and Foreign Exchange
All the PGMs reported exceptional price increases over the quarter, with
platinum and rhodium closing 32% higher at $2,040 per ounce and $9,025 per ounce
respectively, palladium 20% higher at $445 per ounce and gold 11% higher at $935
per ounce.
Platinum, rhodium and to a lesser extent palladium continued to benefit from
heightened supply concerns from South Africa, notably due to power constraints.
On the demand side, jewellery has certainly seen some reduction in demand, yet
price inelastic demand from platinum autocatalysts and ETFs in particular, have
seen significant growth. All of our commodities continue to benefit from the
weak US dollar and the flight to precious metals as an alternative asset class
in the face of recessionary concerns.
PGM basket prices for the Group reached improved levels over the quarter in both
Rand and US Dollar terms. The achieved Group basket price peaked at a record
$2,473 per ounce during the quarter, as stated in the Operating and Trading
Update released on 15 April 2008.
At our South African operations, the four element basket price peaked at R19,526
per ounce, and the average achieved price was 34% higher than the previous
quarter at R14,921 per ounce, equal to $2,117 per ounce.
In Zimbabwe, the average achieved basket price for the quarter was 14% higher at
$1,237 per ounce. This resulted in a group basket price equivalent of $1,981
per PGM ounce or R15,664 per PGM ounce. The average achieved nickel price over
the quarter decreased by 4% to $12.92 per pound from $13.41 per pound in the
previous quarter
The Rand Dollar exchange rate for the quarter averaged 7.4, weakening through
the quarter and closing at 8.09 compared to 6.81 at the start of the quarter.
Financials
Consolidated earnings for the quarter to 31 March 2008 were $91million (US 35.4
cents per share) reflecting higher PGM metal prices on a lowered production
base. The results represent a 90% increase compared to the previous
corresponding period to March 2007. The results for the cumulative nine months
to March 2008 which has been favourably impacted by the significant increase in
the PGM basket has exceeded the consolidated earnings for the full financial
year ended June 2007.
The reported net profit figure of $91 million represents a positive variance
over the estimated net profit of $75 million stated in the operating and trading
update released on 15 April 2008 as a result of the recent capital raising.
This increase is due to an increase in the foreign currency gains arising from
the final revaluation of the four month debtor pipeline and metals price
adjustment calculations from December to March during which time the Rand
weakened relative to the US Dollar from 6.79 to 8.10.
Production of PGMs attributable to shareholders of Aquarius was 111,524 PGM
ounces, down 19% from the previous quarter ended December 2007. Production in
the quarter was lower for the following contractor problems at Everest which
resulted in the abandonment of the underground mining contract by Shaft Sinkers
Mining (Pty) Ltd, and the subsequent ramp-up of operations following the
resumption of underground mining activities by Aquarius Platinum (South Africa)
(Pty) Ltd, a reduction in power availability across operations in South Africa
and to a more limited extent in Zimbabwe, and at Marikana abnormally high
rainfall and unprotected industrial action.
Revenue for the quarter was $248 million (comprising sales revenue of $241
million and interest income of $7.0 million). Continued increases in PGM metal
prices recorded during the quarter supported a strong cash flow stream which
contributed $114 million from net operations. Strong metal prices assisted in
mitigating the lower production experienced during the quarter. Gross margins
remain strong across the Group. Finance charges for the quarter at $4 million
were consistent and included a non-cash component of $1.3 million on the
unwinding of the rehabilitation provision.
Cost of sales per PGM ounce increased as a result of lower production volumes.
Aquarius group cash balance at 31 March 2008 totalled $415 million, an increase
of $46 million since December 2007. Net operating cash flow for the quarter
remained strong with $243 million received from sales and $135 million paid to
suppliers. Material cash flow items (other than mine operations) that affected
cash balances during the quarter included capital expenditure of $13 million and
dividends paid of $35 million.
Group cash is held as follows:
AQP $134 million
AQPSA $218 million*
ACS(SA) $6 million
Mimosa $57 million
Total $415 million
Aquarius Platinum Limited
Consolidated Income Statement
Quarter ended 31 March 2008
$`000
Note: Quarter Nine Months Financial Year
Ended Ended Ended
31/03/08* 31/03/08* 30/06/07
Aquarius PGM 111,524 389,335 530,726
Production
(attributable
ounces)
Revenue (i) 248,367 672,024 709,183
Cost of Sales (ii) (84,024) (259,686) (300,813)
Gross Profit 164,343 412,338 408,370
Other income 513 978 2,586
Admin & other (2,779) (6,471) (8,972)
operating costs
Other FX movements (iii) 36,293 28,225 (2,308)
Finance costs (iv) (4,008) (12,916) (15,218)
Profit before tax 194,362 422,154 384,458
Income tax expense (44,670) (103,848) (90,861)
Profit after tax 149,692 318,306 293,597
Minority interest (v) (58,892) (120,860) (106,374)
Net profit 90,800 197,446 187,223
EPS (basic - cents 35.4 77.0 72.8
per share)
* Unaudited
Notes on the March 2008 Consolidated Income Statement
(i) Revenue for the quarter is higher on a 40% increase in the PGM basket price
(ii) Cost of sales per PGM ounce increased due to impact of inflation and
increased unit costs at Marikana and Everest due to lower production levels
caused by contractor issues and power load shedding
(iii)Reflects effects of adjusting revenue recorded at time of production at
Kroondal, Marikana and CTRP to actual receipts received at the end of the
four month pipeline and revaluation of net monetary assets including impact
of depreciating Zimbabwean Dollar
(iv) YTD Finance costs includes group debt ($3.3 million), pipeline finance
($5.7 million) and unwinding of rehabilitation provision ($3.9 million)
(v) Minority interests reflect 46% outside equity interest of the Savannah
Consortium 26% (SavCon) and Impala Platinum Holdings Limited 20% (Implats)
in AQPSA
Aquarius Platinum Limited
Consolidated Cash flow Statement
Quarter ended 31 March 2008
$`000
Quarter Ended Nine Months Financial
Ended Year Ended
Note: 31/03/08* 31/03/08* 30/06/07
Net operating (i) 113,892 319,043 340,787
cash inflow
Net investing (ii) (16,379) (49,375) (111,237)
cash outflow
Net financing (iii) (34,952) (130,250) (106,544)
cash outflow
Net increase in 62,561 139,418 123,006
cash held
Opening cash 368,680 287,663 162,425
balance
Exchange rate (16,512) (12,352) 2,232
movement on cash
Closing cash 414,729 414,729 287,663
balance
* Unaudited
Notes on the March 2008 Consolidated Cash flow Statement
(i) Net operating cash flow for the quarter includes $242.6 million inflow from
sales, $134.8 million paid to suppliers and net finance income and other
income of $6.0 million
(ii) Includes mine development and plant and equipment expenditure of $13.3
million and purchase of investments of $3.0 million
(iii)Includes dividend paid to shareholders and minority shareholders of AQPSA
of $35 million.
Aquarius Platinum Limited
Consolidated Balance Sheet
At 31 March 2008
$`000
Quarter Ended Financial Year
Ended
Note: 31/03/08* 30/06/07
Assets
Cash assets 414,728 287,663
Current receivables (i) 159,873 100,573
Other current assets (ii) 34,975 26,127
Property, plant and (iii) 203,606 207,360
equipment
Mining assets (iv) 269,407 311,425
Other non-current 12,314 12,026
assets
Total assets 1,094,903 945,174
Liabilities
Current liabilities (v) 91,894 50,676
Non-current payables (vi) 2,041 54,228
Non-current interest- (vii) 32,193 35,321
bearing liabilities
Other non-current (viii) 157,866 172,404
liabilities
Total Liabilities 283,994 312,629
Net assets 810,909 632,545
Equity
Parent entity interest 571,826 456,138
Minority interest 239,083 176,407
Total Equity 810,909 632,545
* Unaudited
Notes on the March 2008 Consolidated Balance Sheet
(i) Reflects debtors receivable on PGM concentrate sales
(ii) Reflects PGM concentrate inventory
(iii)Represents plant and equipment within the Group
(iv) Mining assets reflects Kroondal, Marikana, Mimosa and Everest mining
(mining rights) assets
(v) Includes tax payable ($58 million) and creditors ($34 million)
(vi) Reduction reflects repayment of minority loans in AQPSA
(vii)Includes interest bearing debt payable to RMB ($26 million) and deemed
lease liability ($6 million)
(viii)Reflects deferred tax liabilities $97 million and provision for closure
costs $61 million
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 0.44 in the
previous quarter to 0.40. Seven lost time injuries occurred during the quarter.
Mining
- Production tons reduced by 10% to 1,546,967 tons; consisting of 1,515,614
tons from underground and 31,353 tons from open cast operations.
- Head grade decreased by 2.6% to 2.56g/t.
Processing
- Tons processed increased by 1% to 1,581,431 tons.
- Recoveries remained unchanged at 77%.
- PGM production decreased by 1.4% to 100,020 PGM ounces.
Revenue
Revenue at Kroondal increased by 56% to R1,743 million for the quarter (Aquarius
attributable: R871 million). The basket price for the quarter averaged $2,129
per PGM ounce, 28% higher than the previous quarter, despite the average Rand
Dollar exchange rate weakening to 7.40, with a resultant increase in the cash
margin to 76%.
Operations
Total mined production decreased by 10% to 1,546,967 tons. Production from
underground operations decreased by 9% to 1,515,614 tons whilst production from
open cast operations decreased by 37% to 31,353 tons due to the completion of
the Central West Pit.
Production was affected by a 5-day shutdown due to Eskom not supplying power
nationally to all mines and ongoing nationwide power interruptions and load-
shedding. Production was also affected by the fewer production days during the
third quarter due to the Christmas and New Year public holidays that fell in
this production quarter. Further, several work stoppages by underground
contractor, Murray Roberts and Cementation employees, due to bonus related
issues resulted in the loss of 18-shifts.
Tons processed increased by 1% to 1,581,431 tons, comprising 1,555,135 tons from
underground and 26,296 tons of opencast material. Over the quarter, stockpiles
decreased to 41,265 tons.
The head grade decreased by 2.6% to 2.56g/t as a result of a lower in-situ
grade.
Recoveries were flat at 77%.
PGM production decreased by 1.4% to 100,020 PGM ounces.
Primary development for the quarter was 3,342m, 7% less than the previous
quarter.
Operating Cash Costs
Cash costs per ton increased by 7% to R261 and cost per PGM ounce increased by
10% to R4,131.
Capital Expenditure
Capital expenditure for the quarter was R78 million. Major items included
establishment of the second phase of the K5 Rail Project and underground
infrastructure extensions.
P&SA2 at Marikana
Safety
The 12-month rolling DIIR deteriorated from 0.33 to 0.45. Five lost-time
injuries occurred during the quarter of which one was a fatal accident.
Regrettably a fatality occurred 18 March 2008 at the No. 4 Shaft when Mr. Mpho
Modise, an underground rock drill operator employed by mining contractor Murray
Roberts and Cementation, was fatally injured following a load haul dumper
accident. An enquiry into the accident has been conducted by the DME in
conjunction with the Unions, AQPSA and MRC Management. The result of this
enquiry is pending.
Mining
- Production tons decreased by 39% to 367,579 tons: consisting of 253,781
tons from underground and 113,798 tons from open cast operations.
- Head grade decreased by 6% to 2.78 g/t.
Processing
- Tons processed decreased by 30% to 425,683 tons
- Recoveries fell by 2% to 63.84%
- PGM production decreased 36% to 24,223 ounces (Aquarius attributable:
12,111 ounces)
Revenue
Revenue at Marikana increased by 13% to R465 million for the quarter (Aquarius
attributable: R233 million). The basket price for the quarter averaged $2,041
per PGM ounce 25% higher than the previous quarter, despite the average Rand
Dollar exchange rate weakening to 7.40. The high basket prices offset lower
production, resulting in the cash margin for the quarter remaining unchanged at
52%.
Operations
Total production tons decreased by 39% to 367,579 tons for the quarter
comprising of 253,781 tons from underground operations and 113,798 tons from the
open pit.
Production was affected by a 5-day shutdown due to Eskom not supplying power to
all mines in South Africa. Production was also affected by the fewer production
days during the third quarter due to the Christmas and New Year public holidays
that fell in this production period. Although Marikana Mine was also affected
by the ongoing power interruptions, the reduced production from both underground
and the process plant resulted in less than 90% power consumption.
Production from underground operations decreased 2% to 253,781 tons. Production
from underground was adversely effected by a an unprotected strike in December
2007, which led to contractor, Murray Roberts and Cementation dismissing the
total labour force at the end of December 2007. Recruitment of labour
recommenced at the start of the third quarter. The process of recruiting 1,300
employees and the high-turnover of 30% of load-haul- dumper and rock-drill
operators during the quarter, combined with a shortage of key skills
(specifically fitter-artisans), resulted in a slow build-up in underground
production.
A major loss of production during the quarter occurred in the open pit where
production decreased by 67% to 113,798 tons, due to abnormally high rainfall in
both the second and third quarters. This caused the open pit mining contractor
MCC, to fall behind in bulk mining in the second quarter, and therefore needing
to increase the stripping ratio in the third quarter resulting in reduced reef
mining output. At the same time the direction of mining was changed from dip to
strike to prevent a similar occurrence in future. Production output was further
aggravated by 511mm of rainfall during the quarter (compared to an historic
average rainfall for the same period of 100mm), resulting in a loss of 18-days
production.
Stockpiles at the end of the quarter were 113,449 tons, including 70,220 tons of
low recovery oxidised material, which will be mined in the current quarter.
A total of 425,683 tons were processed during the quarter: 253,961 tons from
underground; 116,571 tons of open pit material, and; 55,151 tons of low-recovery
oxidised material from stockpiles. The oxidised material equates to 13% of the
total tons processed during the quarter, thereby negatively affecting
recoveries.
The head-grade deteriorated by 6% to 2.78 g/t due excessive pothole
intersections in the decline sinking operations, as well as the opencast
operations intersecting areas of excessive internal waste.
Recoveries fell by 2% to 63.8% due to the lower head grade and increase in
oxidised stockpile feed.
PGM production decreased 36% to 24,223 ounces (Aquarius attributable: 12,111
ounces)
Operating Cash Costs
Cash costs per ton increased by 64% to R529, whilst costs per PGM ounce
increased by 79% to R9,289. The main contributors to these increases were an
excessive stripping ratio in the open pit, low production output due to grade
and production interruptions.
Capital Expenditure
Capital expenditure totalled R31 million, including R3.7 million of expansion
capital (AQPSA share R1.8million). The P&SA2 project budgeted at R264.6 was
closed out on a positive variance of R13.2 million.
Contractor dispute with Moolman Mining
There have been no developments in the contractor dispute with Moolman Mining
since the previous update provided in the interim results statement, released on
7 February 2008.
Everest Platinum Mine
Safety
The 12-month rolling DIIR improved from 0.84 to 0.75. Two lost-time injuries
occurred during the quarter.
Mining
- AQPSA assumed management of the underground operations on 24 January 2008
following the abandonment of the underground mining contract by Shaft
Sinkers Mining (Pty) Limited.
- Production decreased by 38% to 386,591 tons; consisting of 331,397 tons
from underground and 55,194 tons from opencast
- The head grade remained constant at 2.99 g/t
Processing
- Plant processed 429,011 tons, 31% less than the previous quarter
- Recoveries decreased to 75% from 78%
- PGM production decreased by 33% to 31,107 PGM ounces
Revenue
Revenue increased by 18% to R629 million for the quarter. The basket price for
the quarter averaged $2,112 per PGM ounce, 29% higher than the previous quarter,
despite the average Rand Dollar exchange rate weakening to 7.40, resulting in a
13% increase in the cash margin to 79%.
Operations
Following unprotected industrial action which stopped production, Shaft Sinkers
Mining, the underground mining contractor, dismissed approximately a 1,000
employees on 18 January 2008. On 24 January 2008 Shaft Sinkers Mining notified
AQPSA that it was unable to continue to discharge its obligations under its
contract and had no alternative but to abandon the contract and hand-over the
underground operation of the Everest Mine to AQPSA.
To resume operations and minimise financial losses, AQPSA took the decision to
owner operate the underground operation. This necessitated the expedient
recruitment of a full labour force and the implementation of various
administrative and support systems, such as financial, procurement, payroll,
time and attendance.
The switch to owner operator and the resultant production ramp-up has gone
according to plan. During the fourth quarter, the mine will continue to
increase production as teams are re-established and team dynamics improved. The
total estimated loss of production for the period ending June 2008 due to the
switch to owner operator is estimated at 25,000 PGM (4E) ounces.
For the third quarter, the combined production from opencast and underground was
386,591 tons, a decrease of 38% compared to the previous quarter. Underground
production alone decreased by 40% to 331,397 tons as a result of the changeover,
with the balancing 55,194 tons from opencast, in line with the mine plan.
Although the Everest Mine was affected to some extent by the ongoing power
disruptions, the reduced production from both underground and the process plant
resulted in less than 90% power consumption.
The head grade remained constant at 2.99 g/t.
Concentrator throughput decreased by 31% to 429,011 tons milled for the period,
due to the lower production from underground. Recoveries decreased from 78% to
75% due to processing of weathered opencast stockpile.
PGM production decreased by 33% to 31,107 ounces.
The long-term outlook for production and earnings at Everest remain excellent as
the operation continues to ramp up production to a targeted 205,000 PGM (4E)
ounces per annum.
Operating Cash Costs
Cash costs increased by 22% to R314 per ROM ton milled and by 27% to R4,324 per
PGM ounce, predominately due to lower volumes and recruitment costs. It is
anticipated that unit cost will stabilise in the new financial year.
Capital Expenditure
Capital expenditure for the quarter totaled R11.5 million, all of which was
sustaining capital expenditure.
MIMOSA INVESTMENTS (Aquarius Platinum 50%)
Mimosa Platinum Mine
Safety
The 12-month rolling DIIR improved from 0.26 to 0.16. Two lost-time injuries
occurred during the quarter.
Mining
- Underground production decreased by 18% to 419,000 tons
- Head grade increased 1% to 3.56g/t
- The surface stockpile increased to a total 439,000 tons at the end of the
quarter, equivalent to over 80 days mill feed
Processing
- Concentrator plant recoveries decreased to 75.1% from 75.9%
- Total mine production decreased by 13% to 34,283 PGM ounces (Aquarius
share: 17,141.5)
Revenue
The average achieved PGM basket price for the quarter increased by 14% to $1,237
per PGM ounce. The average achieved nickel price over the quarter decreased by
4% to $12.92 per pound from $13.41 per pound in the previous quarter. Revenue
for the quarter was flat at $52.4 million, with base metals accounting for
approximately 30% of revenue. The gross cash margin decreased to 70% from 72%
in the previous quarter.
Operations
During the quarter mining operations hoisted 419,196 tons compared to 513,383
tons in the previous quarter. Tons milled during the quarter totalled 398,811
tons, with 20,000 being transferred to the stockpile, which totalled 438,865
tons at the quarter end. It is planned that the stockpile will decrease to
405,000 tons by the end of the financial year.
The average plant grade marginally increased to 3.56 g/t, compared to 3.54g/t in
the previous quarter.
Tons processed totalled 398,811, a 13% decrease compared to the previous
quarter, due to power outages and breakdowns related to issues on the primary
mill discharge grating that subsequently led to overload of the tailings
thickener with coarse material and the secondary mill non-drive-end failure.
This was an adverse consequence of the Wedza Phase V commissioning.
Recoveries for the quarter slightly decreased to 75.1% from 75.9%. This was due
to running the rougher flotation circuit at suboptimal. Problems related to
suboptimal densities were resolved by installing and commissioning a second raw
water pipeline to the plant. This pipeline will supplement process water
supplies during the dry-season as well as periods when the tailings thickener is
on by-pass.
In Zimbabwe the political situation in the run up to the 29 March elections was
calm. The economic environment, however, remains challenging, impacting both
the price and availability of goods. The mine initiative to assist with
provisioning of basics has been instrumental in keeping the workforce motivated
and productive.
PGM production during the second quarter decreased by 13% to 34,283 ounces
(Aquarius attributable: 17,141.50 ounces).
Operating Cash Costs
Total ash costs for the quarter increased to $471 per PGM ounce, a 20% increase
compared to the previous quarter`s figure of $392 per PGM ounce. This was
mainly due to low throughput, increased power tariffs and increasing local costs
in line with Zimbabwean inflation which was not in parity with the achieved
exchange rate. On mine cash costs were well retained at $369 per PGM ounce
despite the impact of Zimbabwean inflation on total costs.
Net of by-products, cash costs were negative at $(1) per PGM ounce, compared to
$(71) per PGM ounce in the previous quarter, primarily due to reduced by-product
production, falling nickel prices and increase in the overall mine costs.
Update on Foreign Currency Regime in Zimbabwe
The Zimbabwean economy continues to be characterised by foreign currency
shortages. Mimosa`s foreign currency accounts continue to be maintained
offshore with no changes to the operational modalities agreed between the
company and the authorities.
Update on Indigenisation Legislation in Zimbabwe
The Indigenisation and Economic Empowerment Bill has now received Presidential
ascent and awaits implementation as law. This bill allows for sector specific
arrangements to be made with regards to indigenisation objectives. The
amendments to the Mines and Minerals Act (which provide specifics for the
indigenisation of organisations in the mining sector) have been put on hold
until the constitution of a new House of Assembly in order that they proceed
through the relevant legislative procedure.
Wedza Phase 5 Expansion
The Wedza Phase V Project commissioning is progressing well. The new 25 metre
diameter tailings thickener is fully commissioned. The new primary mill was hot
commissioned with ore from 21 March 2008 and will be on steady operations by end
of April 2008. The raise boring project is also progressing well and will be
completed by the end of May 2008.
AQUARIUS PLATINUM (SA) CORPORATE SERVICES (PTY) LTD
Chromite Tailings Retreatment Plant (CTRP) (Aquarius Platinum 50%)
Safety
The DIIR increased to 5.65. This quarter the first lost time accident ever
unfortunately occurred since the project commenced, with a slip and fall
accident.
Processing
- Material processed decreased to 63,372 tons
- Grade increased 1% to 4.58 g/t
- Production decreased 18% to 2,309 PGM ounces
Revenue
The PGM basket price for the quarter increased by 26% to $2,483 per PGM ounce.
Revenue increased by 79% to R54 million (Aquarius share: R27 million) for the
quarter, due to higher production and commodity prices. The cash margin
increased to 88%.
Operations
The head grade increased 1% to 4.58 g/t
Recoveries decreased by 10% to 25%, resulting in production decreasing by 18% to
2,309 PGM ounces (Aquarius attributable: 1,154 ounces). The drop in recovery
was due to an increase in the amount of oxidised material fed to the plant.
Operating Costs
Cash costs increased by 42% to R2,818 per PGM ounce. The increase is a result
of the fees payable to the suppliers of the raw materials, based on the net
revenue and as such, although the operating costs were static the amount payable
to the supplier increased in proportion to the increase in metal prices.
Bakgaga Mining (Aquarius Platinum Farm In Exploration Agreement)
In October 2006, Aquarius signed a farm-in agreement with Bakgaga Mining to
drill and conduct feasibility work at prospective PGMs bearing properties on the
Eastern Limb of South Africa`s Bushveld.
Exploration has been ongoing and following the intersection of rock types
similar to the Merensky Reef as reported in the first quarter results this year
assay. Results from the first borehole "TBK1" have returned encouraging
results.
The 4E PGE results confirmed Merensky Reef intersection from 1879 metres to
1,821 metres. The highest sample value returned is 24.58 g/t which incidentally
are not on the top chromite stringer. No dip correction was applied to the
sampled with - the average dip of the reef is 8 to 10. The Merensky Reed has a
4GE grade of 9.53 g/t over 1.81 metres. It should be noted that this represents
only one borehole with no deflections.
CORPORATE MATTERS
Repurchase of Implats` stakes and associated equity capital and debt raising
On 15 April 2008, Aquarius announced that it has entered into agreements with
Impala Platinum Holdings Limited ("Implats") to repurchase all the shares
Implats currently holds in Aquarius and that its subsidiary Aquarius Platinum
(South Africa) (Pty) Ltd ("AQPSA") would repurchase all the shares Implats holds
in AQPSA. The combined consideration for the repurchases was $790 million.
The acquisition price agreed for Implats` AQPSA stake took into account the
parties respective views of value, future cashflows, and dividend potential for
the Implats minority stake in an unlisted company, with appropriate discounts
applied for both liquidity issues and pre-emption rights. The transaction is
expected to be earnings accretive in the first full year post completion.
The transaction is being funded through a combination of cash, debt and an
accelerated bookbuild placing which was priced on Wednesday 16th April. The
company issued a total of 23,144,000 new common shares of $0.05 each in Aquarius
Platinum, at a price of GBP 800 pence per placing share, raising gross proceeds
of approximately $366 million (GBP185 million). The placing shares being issued
represent approximately 9.0 percent of Aquarius` issued share capital prior to
the placing.
It is envisaged that the completion of these transactions will be achieved by
the end of April 2008.
Acquisition of 50% Interest in Platinum Mile Resources (Pty) Ltd
On 7 February 2008, Aquarius Platinum announced that it had entered into a
binding agreement for the acquisition of a 50% interest in Platinum Mile
Resources (Pty) Ltd. The shareholding will be acquired from a consortium of
private investors and Mvelaphanda Holdings (Pty) Ltd.
Platinum Mile operates a tailings re-treatment facility which is located in
Rustenburg, North West Province. It is situated within RPM`s Lease Area,
adjacent to Kroondal.
The plant processes certain RPM mine tailings. The concentrates produced by
Platinum Mile are combined and sold to RPM and RPM enjoys a profit share
arrangement with Platinum Mile. The Platinum Mile plant currently produces
approximately 20,000 ounces of PGM (4E) per annum and production ramp-up plans
and technological innovations should see the production from the operation
increase to above 35,000 ounces of PGM (4E) per annum. It is the strategic
intent of the parties to grow the business and the parties will explore current
in-house opportunities as well the acquisition of similar operations within the
industry.
The consideration payable to the shareholders of Platinum Mile for 50% of the
issued share capital amounts to R420 million. The payment comprises of R210
million in cash and R210 million in Aquarius Platinum shares, to be issued on
the South African register, at a fixed price of R78.33 (
January 2008 VWAP).
Following completion of the transaction documentation, completion of conditions
precedent and regulatory approvals, Aquarius and Mvelaphanda Holdings will have
joint control of Platinum Mile. The company will become, where practicable, the
exclusive vehicle for the development and operation of all tailings re-treatment
opportunities identified by, or available to, the parties.
More information will be provided to shareholders following conclusion of this
transaction, which is expected by the end of May 2008
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
Willie Byleveld General Manager Technical Services
Graham Ferreira General Manager Group Admin & Company Secretary
Hugo Holl General Manager Projects & Transformation
Wessel Phumo General Manager Marikana
Jacques Pretorius General Manager Everest
Gordon Ramsay General Manager Metallurgy
Rudi Rudolph General Manager Kroondal
Gabriel de Wet General Manager Engineering
Mimosa Mine Management
Winston Chitando Managing Director
Herbert Mashanyare Technical Director
Peter Chimboza Operations Director
Issued Capital
At 31 March 2008, the Company had in issue:
256,534,266 fully paid common shares and 2,799,861 unlisted options
Trading Information
ISIN number BMG0440M1284
ADR ISIN number US03840M2089
Aquarius Platinum (South Africa) (Proprietary) Ltd
54% Owned (At 31st March 2008)
(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
ACS(SA) 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
Affairs
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
NUM South African National Union of Mineworkers
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
+61 (0)8 9367 5211
In the United Kingdom and South Africa
Nick Bias
+ 44 (0)7887 920 530
nickbias@aquariusplatinum.com
Date: 24/04/2008 08:27:01 Produced by the JSE SENS Department.
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