| Tue 28 Oct 2008, 10:01 | | AQP - Aquarius Platinum - Aquarius Platinum first quarter 2009 financial & |
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AQP
AQP - Aquarius Platinum - Aquarius Platinum first quarter 2009 financial &
production results
AQUARIUS PLATINUM
JSE code: AQP
ISIN: BMG0440M1284
Aquarius Platinum First Quarter 2009 Financial & Production Results
Highlights of the Quarter
* Attributable production increased 17% to 128,366 PGM ounces
* Reduction in cash costs per ounce at Kroondal, Marikana, Mimosa, CTRP and
Platinum Mile
* Significant falls in all PGM prices, with some respite from a weaker Rand
US Dollar exchange rate
* Gross "cash" profit of $49.1 million (gross "cash" margin of 34%) before *
negative impact of metal price revenue adjustments ($37.7 million)
attributable to the preceding quarter
* Negative metals price revenue adjustments on metals in pipeline of $71.9
million ($37.7 million from prior quarter and $34.2 million in current
quarter), resulting in a net loss of $21.5 million for the quarter
Commenting on the results, Stuart Murray, CEO of Aquarius Platinum said "Despite
all the gloom in the sector, it is encouraging that the production turnaround we
required has started to deliver, with increases in production and decreases in
unit costs across most of our operations, despite the inflationary cost
pressures experienced over the last two quarters in particular. The operations
at Mimosa had an outstanding quarter despite the challenges facing management
due to the prevailing economic circumstances".
However operations experienced softer margins as the production and cost
improvements were not sufficient to offset shrinking revenue and negative metal
price revenue adjustments attributable to the significant fall in the prices of
all the metals we produce. During the quarter, the shine came off our basket of
metals, with prices falling back to levels last seen in 2006 and earlier. With
this background, the Number 2 Shaft at Marikana has already been placed on care
and maintenance, with the redeployment of skills and underground equipment to
other positive margin generating areas Marikana and Kroondal. The group
financials have reported a net loss for the quarter, attributable in part to the
flow through of negative revaluations of June quarter sales recognized in the
current quarter. Just as profits rose very sharply in Q3 and Q4 of FY2008 at the
time of the electricity crisis, they have fallen as sharply in this quarter due
to ongoing crises in financial markets."
P&SA1 at Kroondal
* PGM production up 22% quarter-on-quarter to 101,731 PGM ounces (Aquarius
attributable 50,866 PGM ounces)
* Effective cash margin of 47%, reduced to -5% after accounting for negative
sales price adjustments
P&SA2 at Marikana
* PGM production up 37% quarter-on-quarter to 38,883 PGM ounces (Aquarius
attributable: 19,442 PGM ounces)
* Effective cash margin of 24%, reduced to -57% after accounting for negative
sales price adjustments
Everest
* PGM production up 3% quarter-on-quarter to 32,365 PGM ounces (Aquarius
attributable 32,365 PGM ounces)
* Effective cash margin of 36%, reduced to -37% after accounting for negative
sales price adjustments
Mimosa
* PGM production up 13% quarter-on-quarter to 43,638 PGM ounces (Aquarius
attributable 21,819 PGM ounces)
* Cash margin for the quarter reduced to 69% following metal price reductions
CTRP
* PGM production down 14% quarter-on-quarter to 1,764 PGM ounces (Aquarius
attributable: 882 PGM ounces)
* Effective cash margin of 69%, reduced to -8% after accounting for negative
sales price adjustments
Platinum Mile
* PGM production up 19% quarter-on-quarter to 5,983 PGM ounces (Aquarius
attributable: 2,992 PGM ounces)
* Cash margin for the quarter at 44%
Financials
Production of PGMs attributable to shareholders of Aquarius was 128,366 PGM
ounces, up 17% from the previous quarter ended 30 June 2008. All mines recorded
increased production with the exception of the CTRP operation where a minimal
shortfall of 140 PGM ounces was recorded. Mine operations that recorded the
most significant production increase were Marikana, up 37% from the previous
quarter and Kroondal, up 22% from the previous quarter.
For the quarter to 30 September 2008, revenue was $178 million before the impact
of negative $71.9 million sales adjustments due to significantly weaker PGM
prices. The $71.9 million comprises a $37.7 million adjustment for production
from the previous June quarter revalued at the lower PGM prices in the current
quarter and an unrealised $34.2 million adjustment for production in the current
quarter repriced at the lower PGM prices at the end of the quarter.
Consequently, revenue recorded to the profit & loss account after the negative
sales adjustment for the quarter was $106 million (comprising sales revenue of
$101 million and interest income of $5 million).
Aquarius settles its PGM concentrate sales based on a four month pipeline.
Accounting standards predicate that revenue is calculated in the month of
concentrate delivery at the prevailing PGM spot price and foreign exchange rate
and in the following months any unsettled sales in the pipeline are revalued to
current spot prices and foreign exchange rates, resulting in positive or
negative sales price adjustments and foreign exchange adjustments. Settlement of
the sales pipeline is concluded in month four following delivery based on PGM
spot prices at the date of settlement. For the quarter to September 2008,
platinum closed 54% lower at $1,004 per ounce and rhodium 58% lower at $4,050
per ounce.
Gross margins for the quarter were eroded due to the impact of the negative
sales adjustment described above. It should be noted, however, that after
adjusting for the $37.7 million negative adjustment to pipeline sales relating
to the previous quarter, the gross "cash" profit would have been $49.1 million
and the gross "cash" margin for the quarter under review would have been be
34.1%.
Reflecting the impact of a significant fall in PGM and base metal prices since
the June quarter and the consequent realised and unrealised negative revenue
adjustments of $71.9 million, the consolidated earnings for the quarter to 30
September 2009 recorded a net loss of $21.5 million (US 8.2 cents per share).
The movement in the PGM sales adjustments as disclosed above is an indicator of
the movement in PGM prices during a quarter. As PGM prices have decreased
further subsequent to the end of the September quarter, it is likely that Q2
will also be impacted by negative sales adjustments unless PGM prices stabilise
at levels recorded at the end of this quarter.
Finance charges for the quarter of $11.5 million included interest payments on
the RMB debt facility of $8.2 million, pipeline finance of $1.6 million and a
non-cash component of $1.7 million on the unwinding of the rehabilitation
provision.
At operations in South Africa, price increases have been experienced in the
following input costs:
Labour costs remain under pressure due to the increasing competition for
critical skills in the mining industry as well as inflation driven wage demands.
These increases are annual, but came into effect during the first quarter at the
same time that the labour complement increased. Even though most input prices
are market driven, management are constantly assessing options to reduce
supplier prices through ongoing re-evaluation and re-tendering of primary
consumables.
The following chart shows the percentage breakdown of cash costs at AQPSA over
the past five quarters. The Rand increases in all costs are evident, though it
should be noted that the relative increased contribution to costs from labour
and explosives do also mask efficiency gains achieved in all components, notably
power (diesel and electricity) and steel consumption.
AQPSA Cash Costs by Type Q1 2008 to Q1 2009
Looking to the second quarter 2009, it is anticipated that reductions in unit
costs will be achieved again as production increases further and falling prices
for diesel, chemicals and steel start to flow through the cost base. In addition
US$ weakness is expected to provide some respite as the falling price of
consumables starts to feed through to costs during the second quarter.
Depreciation and amortisation was in line with expectation at $10.3 million as
was the amortisation arising from the fair value uplift of mineral rights at
$1.7 million.
The Aquarius group cash balance at 30 September 2008 totalled $214 million, an
increase of $43 million since 30 June 2008. Net operating cash flow for the
quarter was $91 million with $208 million received from sales, $113 million paid
to suppliers and net finance costs of $5 million. Material cash flow items
(other than mine operations) that affected cash balances during the quarter
included capital expenditure of $11 million and dividends paid of $26 million.
Group cash is held as follows:
AQP $27 million
AQPSA $157 million
ACS(SA) $8 million
Mimosa $22 million
Total $214 million
Metals Prices and Foreign Exchange
PGM and base metals prices weakened considerably through the first quarter from
record highs down to prices last experienced in early 2006. Platinum closed 52%
lower at $1,004 per ounce; rhodium 58% lower at 4,050 per ounce; palladium 57%
lower at $199 per ounce, while gold fell only 3% at $894 per ounce. Prices have
continued to fall in October 2008 and will continue to impact the financial
performance of the Group.
Platinum experienced strong falls due to redemptions of physical positions from
both TOCOM and the ETF at a time of seasonally low demand as autocatalyst
producers destocked over the northern hemisphere summer. The situation
deteriorated into September with the liquidation of large physical positions as
certain institutional funds were shut down.
Recessionary concerns highlighted by falling auto sales have dampened the
perceived outlook for autocatalyst sales. In the medium term, it is expected
that tightening emissions standards in North America, Europe and Japan in 2009
and 2010 will increase PGM catalyst loadings, and this, together with the need
for replacement catalysts on ageing autos fleet, will offset any reduction due
to declining sales of new autos.
Ongoing constraints in supply have largely continued unnoticed, with industry
production likely to be considerably lower in the short and long-term due to
ongoing power, cost and labour issues and in the long-term as expansions and new
projects by junior and major miners alike are being delayed or indeed scrapped
altogether.
PGM Basket Prices September 2007 to September 2008
PGM basket prices fell to levels last seen in 2006. The average basket price for
South African operations fell 55% over the quarter from $2,378 to $1,082 per
4PGE ounce and 52% in Rand terms from R18,615 to R8,984 per 4PGE ounce. In
Zimbabwe, the average basket price fell 52% from $1,689 to $812 per 4PGE ounce.
The noticeable difference in the dollar and rand falls is due to a weakening of
the rand over the quarter of 6% to 8.30 on 30 September 2008 as shown in the
chart below. Since the quarter end the Rand has continued to weaken against the
US dollar.
Rand Dollar Exchange Rate September 2007 to September 2008
The average PGM basket prices for the Group fell for the quarter in both Rand
and US Dollar terms, down 23% to R13,049 per 4PGE ounce and 23% to $1,684 per
4PGE ounce respectively. While US dollar commodity prices have continued to
weaken in October 2008, the Rand basket price has suffered less due to a
weakening Rand/US dollar rate which broke through 11.00 towards the end of
October.
Aquarius Platinum Limited
Consolidated Income Statement
Quarter ended 30 Sep 2008
$`000
Note: Quarter Ended Financial
Year ended
30/09/08* 30/09/07* 30/6/08
Aquarius PGM Production 128,366 140,357 500,203
(attributable ounces)
Revenue (i) 106,243 201,620 919,012
Cost of sales (ii) (104,870) (88,445) (359,873)
Gross profit/(loss) 1,373 113,175 559,139
Other income 74 298 2,109
Admin & other operating (2,327) (2,012) (10,467)
costs
Other FX movements (iii) (23,427) (7,750) 14,286
Finance costs (iv) (11,598) (3,616) (28,260)
Profit/(loss) before tax (35,905) 100,095 536,807
Income tax expense (1,129) (24,659) (173,214)
Profit/(loss) after tax (37,034) 75,436 363,593
Minority interest (v) 15,475 (25,915) (127,119)
Net profit/(loss) (21,559) 49,521 236,474
EPS (basic - cents) (8.2) 58.2 92.0
* Unaudited
Notes on the September 2008 Consolidated Income Statement
i) Revenue is lower compared to September 2007 quarter despite a higher
average PGM basket price of $1,684 per ounce in the current quarter,
due to (i) $37.7 million realised negative PGM price adjustment
attributable to the preceding quarter, caused by decreasing prices in
the current quarter and (ii) 8.5% lower PGM production in current
quarter.
ii) Cost of sales per PGM ounce increased due to lower production at
Everest and the impact of inflation on SA costs.
iii) Reflects foreign exchange movements on revaluation of net monetary
assets at 30 September including pipeline finance $7.8million, costs
of goods sold at Mimosa $6.9 million, $8.7 million on cash assets.
iv) Finance costs includes group debt $8.2 million, pipeline finance $1.6
million and unwinding of rehabilitation provision $1.7 million.
v) Minority interests reflect outside equity interest of the Savannah
Consortium 32.5% (SavCon) in AQPSA.
Aquarius Platinum Limited
Consolidated Cash flow Statement
Quarter ended 30 September 2008
$`000
$`000
Quarter ended Financial
year ended
Note: 30/09/08* 30/09/07* 30/06/08
Net operating cash inflow (i) 90,637 114,428 346,260
Net investing cash outflow (ii) (11,499) (10,359) (125,235)
Net financing cash outflow (iii) (26,205) (336) (320,081)
Net increase in cash held 52,933 103,733 (99,056)
Opening cash balance 170,956 287,663 287,663
Exchange rate movement on (10,064) 3,623 (17,651)
cash
Closing cash balance 213,825 395,019 170,956
* Unaudited
Notes on the September 2008 Consolidated Cash flow Statement
i) Net operating cash flow includes $208 million inflow from sales, $113
million paid to suppliers and net finance expense of $4.8 million.
ii) Reflects development and plant and equipment expenditure of $11.4
million.
iii) Includes the final dividend transferred to Computershare for payment
to shareholders of $26.2 million.
Aquarius Platinum Limited
Consolidated Balance Sheet
At 30 September 2008
$`000
Note: 30/09/08* 30/06/08
Assets
Cash assets 213,825 170,956
Current receivables (i) 78,888 186,964
Other current assets (ii) 43,141 35,941
Property, plant and (iii) 213,251 214,314
equipment
Mining assets (iv) 295,437 284,629
Other non-current assets 15,283 15,599
Goodwill 56,842 58,505
Total assets 916,667 966,908
Liabilities
Trade and other payables 58,879 56,294
Current interest bearing (v) 202,248 208,161
liabilities
Other current liabilities 4,711 3,157
Non-current interest-bearing 2,462 1,657
liabilities
Other non-current (vi) 150,878 153,125
liabilities
Total Liabilities 419,178 422,394
Net assets 497,489 544,514
Equity
Parent entity interest 477,940 508,914
Minority interest 19,549 35,600
Total Equity 497,489 544,514
* Unaudited
Notes on the September 2008 Consolidated Balance Sheet
i) Receivables relating to PGM concentrate sales, decrease relates to
drop in PGM prices.
ii) Reflects PGM concentrate inventory.
iii) Represents plant and equipment within the Group.
iv) Mining assets for Kroondal, Marikana, Mimosa and Everest mining
(mining rights) operations.
v) Rand Merchant Bank debt facility.
vi) Includes deferred tax liabilities $90 million and provision for
closure costs $59 million.
AQUARIUS PLATINUM (SOUTH AFRICA) (PTY) LTD (Aquarius Platinum 67.5%)
P&SA 1 at Kroondal
Safety
The 12-month rolling average DIIR for the quarter deteriorated from 0.49 in the
previous quarter to 0.54. Eleven lost time injuries were reported during the
quarter.
As already announced, it is regrettable that a fatal accident occurred at the
Kroondal Platinum Mine`s K5 shaft on Friday 5 September when a fitter assistant,
Mr Siyabonga Hlungwani, an employee of mining contractor Redpath Mining, was
fatally injured when he was struck by a Load Haul Dump (LHD) vehicle in the
underground operation.
AQPSA has concluded the internal investigation but was issued a Section 54
instruction under the Mine Health and Safety Act, 1996. The instruction
resulted in a 3-day stoppage on all Kroondal and Marikana shafts. The
Department of Minerals and Energy (DME) has yet to complete the enquiry into the
accident.
Mining
* Production tons increased by 22% to 1,697,669 tons
* Head grade increased marginally to 2.54 g/t.
Processing
* Tons processed increased by 17% to 1,567,146 tons.
* Recoveries improved to 78%.
* PGM production increased by 22% to 101,731 PGM ounces.
Revenue
The basket price for the quarter averaged $1,758 per PGM ounce, 25% lower than
the previous quarter. The Rand Dollar exchange rate averaged 7.75 for the
quarter. Revenue at Kroondal decreased by 60% to R542 million for the quarter
(Aquarius attributable: R271 million).
The increase in production was offset by the significant reduction in the basket
price. This was compounded by negative sales adjustments caused by weakening
PGM prices at the close of the period compared to the close of the prior
quarter.
Operations
Total production increased by 22% to 1,697,669 tons. Production from
underground operations increased by 21% to 1,688,170 tons with only 9,499 tons
produced from open pit operations. It is envisaged that open pit production
will be completed during the next quarter.
Production was adversely affected during the quarter by underground mining
contractors Murray & Roberts and Redpath SA`s employees embarking on protected
industrial action. Two national stay-aways were organised by the National Union
of Mineworkers in protest of the high local price of food resulting in two days
of lost production. In addition, production was also impacted by the Section 54
instruction issued by the DME following the fatal accident at K5 shaft.
Aquarius, in conjunction with Murray & Roberts and organised labour, has
embarked on a comprehensive relationship-building initiative, which was launched
during the quarter. Murray & Roberts finalised wage negotiations during the
period, reaching agreement with organised labour.
Production was also negatively affected by the fewer number of production days
due to two public holidays during the quarter.
Tons processed increased by 17% to 1,567,146 tons, comprising 1,564,187 tons
from underground and 2,960 tons of opencast material. Stockpiles at the end of
the quarter were 23,740 tons.
The head-grade increased to 2.54 g/t.
Recoveries increased 1.5% to 78%.
PGM production increased by 22% to 101,731 PGM ounces (Aquarius attributable:
50,866 ounces) due to the increased underground production.
Primary development for the quarter was 1,935 metres.
Operating Cash Costs
Cash costs per ton increased by 2% to R362 and costs per PGM ounce decreased by
2% to R5,579. The positive effect of increased production was negated by
inflationary factors, including the implementation of market-related wage
increases and exceptionally high increases in electricity, steel and diesel
costs during the period. Nevertheless, the increase in production resulted in
sufficient fixed cost dilution to effect a marginal unit cost reduction for the
period. Gross revenue decreased by 60% to R542m as a result of the significant
decline in PGM prices and the negative sales adjustment. As a result, Kroondal
Mine shows a negative cash margin for the period of -5%, however, the calculated
cash margin for the quarter excluding the sales adjustments is 47% showing that
the operation remains cash generative in terms of current operations.
Capital Expenditure
Capital expenditure for the quarter was R79.05 million, all ongoing capital.
Major items included the rail link to the K5 shaft, upgrade of workshops and
underground infrastructure.
P&SA2 at Marikana
Safety
The 12-month rolling average DIIR for the quarter deteriorated from 0.54 in the
previous quarter to 0.64. Eight lost time injuries were reported during the
quarter.
Mining
* Production tons increased by 35% to 694,832 tons, comprising 360,915 tons
from underground and 333,917 tons from open pit operations
* Head grade increased by 5% to 2.81 g/t
Processing
* Tons processed increased by 30% to 683,525 tons
* Recoveries remain unchanged at 63%
* PGM production increased by 37% to 38,883 ounces (Aquarius attributable:
19,442 ounces)
Revenue
The basket price for the quarter averaged $1,693 per PGM ounce, 27% lower than
the previous quarter. The Rand Dollar exchange rate remained stable at 7.75 for
the quarter. Quarterly revenue at Marikana decreased by 54% to R195 million
(Aquarius attributable: R98 million) due to a significant reduction in PGM
prices and negative sales adjustments caused by weakening PGM prices at the
close of the period compared to the close of the prior quarter as detailed.
Operations
Total production increased by 35% to 694,832 tons for the quarter.
The opencast operation performed well showing a quarter-on-quarter increase of
40% to 333,917 tons. The change in the pit mining direction has now been
completed for all the pits with mining taking place along dip. The stripping
ratio for the quarter decreased by 14% to 30:1.
Production from underground operations increased by 31% to 360,915 tons.
Despite the strong increase, production from underground was adversely affected
by loss of face length due to increased frequency of potholes. Focus has been
placed on development to mitigate the impact of the geological losses. A
Section 54 instruction under the Mine Health and Safety Act, 1996 was issued by
the DME for all the underground operations after a fatality at Kroondal K5
Shaft, resulting in three lost production days during the quarter.
Two national stay-aways were organised by the National Union of Mineworkers in
protest of the high price of food resulting in two days of production lost.
Production was also negatively affected by the fewer number of production days
due to two public holidays during the quarter.
Industrial relations have improved substantially from the last quarter since
AQPSA has assumed more managerial responsibility at the operation previously in
the hands of contractors. During the quarter, a team-building exercise was held
with organised labour to formulate better working relationships, and for the
quarter, no further industrial action took place at Marikana.
The Number 2 Shaft at Marikana will be placed on care and maintenance, with the
redeployment of skills and equipment to other revenue generating shafts at
Marikana and Kroondal. The Shaft suffers from geological constraints and has
been yielding 8,000 tons a month against a target of 20,000 tons. In terms of
annualised production this is approximately equal to 5,600 PGM ounces,
representing approximately 3.6% of Marikana production and 1% of group
production for the quarter to September 2008. Skills and equipment are in
process of being redeployed to other shafts at Marikana and Kroondal.
Tons processed increased by 30% to 683,525 tons, comprising 367,243 tons from
underground and 316,282 tons of open pit. Stockpiles at the end of the quarter
were 104,484 tons, an increase of 49% from the previous quarter. The stockpile
increased from the last quarter in preparation for the rainy season and
primarily consists of open pit ore.
The head-grade increased by 5% to 2.81 g/t, whilst recoveries remain unchanged
at 63%. Although the underground ore processed was 16% more than open pit ore,
lower recoveries of the open pit material was realised due to the deeper zones
of weathering in the pit areas mined during the quarter.
PGM production for the quarter increased 36% to 38,883 PGM ounces (Aquarius
attributable: 19,442).
Operating Cash Costs
Cash costs per ton decreased by 24% to R448, whilst costs per PGM ounce
decreased by 27% to R7,868. The unit cost remained under pressure from
inflationary factors, including the implementation of market-related wage
increases and exceptionally high increases in electricity, steel and diesel
costs during the period, but was positively impacted by the strong production
increase. Gross revenue decreased by 54% to R195m as a result of the
significant decline in PGM prices and the negative sales adjustment. As a
result, Marikana Mine shows a negative cash margin for the period of -57%,
however, the calculated cash margin excluding the sales adjustments is 24%
showing that the operation remains cash generative for the quarter in terms of
current operations.
Capital Expenditure
Capital expenditure totalled R22.4 million, including R20.6 million for ongoing
capital (AQPSA share R10.3 million).
Contractor dispute with Moolman Mining
There have been no new developments during the quarter.
Everest Platinum Mine
Safety
The 12-month rolling average DIIR for the quarter improved from 0.89 in the
previous quarter to 0.65. Two lost time injuries were reported during the
quarter.
Mining
* Underground production increased by 8% to 440,675 tons; all opencast mining
was completed during the previous quarter.
* The head grade deteriorated by 2% to 2.84 g/t.
Processing
* Plant processed 436,762 tons, 4.0% more than the previous quarter.
* Recoveries improved from 80% to 81%.
* PGM production increased by 3.0% to 32,365 PGM ounces.
Revenue
The basket price for the quarter averaged $1,692 per PGM ounce, 25% lower than
the previous quarter, with average Rand Dollar exchange rate of 7.75. Revenue
at Everest decreased by 70% to R157 million for the quarter (Aquarius
attributable: R157 million) due to the significant weakening of PGM prices and
negative sales pipeline adjustments caused by weakening PGM prices.
Operations
Total production increased by 6% to 440,675 tons, all from underground
operations following the completion of open pit operations in the last quarter.
Production from underground operations increased by 8% during the quarter but
was still adversely affected by the low availability of trackless mobile
machinery and the challenging geology on the northern side of the mine resulting
in all bords being cut in length by 50% for safety reasons. Wage negotiations
also had an impact on employee performance and both agreements with Solidarity
and the National Union of Mineworkers were successfully concluded midway through
the quarter. Production was also negatively affected by the fewer number of
production days due to two public holidays during the quarter.
Industrial relations show signs of improving due to the owner-operator model and
active intervention by management through an employee relation and behaviour
specialist.
Tons processed increased by 4% to 436,762 tons in line with the production.
Stockpiles at the end of the quarter were 4,008 tons.
The head-grade decreased by 2% to 2.84 g/t due to the mining of the pyroxenite
hanging-wall up to the shear zone in the northern side of the mine.
Recoveries improved 1.50% to 81% due to ongoing process optimisation.
PGM production increased by 3.0% to 32,365 PGM ounces.
Primary development for the quarter was 1,078 metres.
Operating Cash Costs
Cash costs per ton increased by 13% to R493 per ton, whilst costs per PGM ounce
increased by 14% to R6,656. The increase in unit cost is attributed to
inflationary factors, including the implementation of market-related wage
increases and exceptionally high increases in electricity, steel and diesel
costs during the period. Operational improvement measures are being implemented
to realise a unit cost reduction. The cash margin for the quarter reduced to -
37%. This variance is attributed to the negative pipeline sales adjustment that
resulted from the significant fall in PGM prices during the quarter as detailed
above. Gross revenue decreased by 70% to R157m as a result of the significant
decline in PGM prices and the negative sales adjustment. As a result, Everest
Mine shows a negative cash margin for the period of -37%, however, the
calculated cash margin excluding the sales adjustments is 36% showing that the
operation remains cash generative in terms of current operations.
Capital Expenditure
Capital expenditure for the quarter was R26.6 million, for ongoing capital.
Major items included conveyors at Strike 12 and Dip 5; four new utility vehicles
and one new drill rig.
MIMOSA INVESTMENTS (Aquarius Platinum 50%)
Mimosa Platinum Mine
Safety
The 12-month rolling average DIIR for the quarter improved from 0.23 in the
previous quarter to 0.19. Two lost time injuries were reported during the
quarter.
Mining
* Underground production marginally increased by 0.6% to 500,000 tons
* Head grade slightly decreased 0.3% to 3.59 g/t
* The surface stockpile decreased to a total 482,000 tons at the end of the
quarter, equivalent to over 70-days mill feed
Processing
* Concentrator plant recoveries decreased to 73.4% from 75.9%
* Total mine production increased by 13% to 43,638 PGM ounces (Aquarius
share: 21,819 PGM ounces)The Wedza Phase 5 expansion project has been fully
commissioned and is attaining design throughputs.
Revenue
The average achieved PGM basket price for the quarter decreased by 4% to $1,549
per PGM ounce. The average achieved nickel price over the quarter decreased by
26% to $9.79 per pound from $13.17 per pound in the previous quarter. Revenue
for the quarter decreased to $63.7 million, with base metals accounting for
approximately 21% of revenue. The cash margin decreased to 69% from 77% in the
previous quarter mainly due to falling metal prices.
Operations
During the quarter mining operations hoisted 499,590 tons compared to 497,228
tons in the previous quarter. Tons milled during the quarter totalled 514,867
tons, with 15,277 tons being taken from the stockpile, which totalled 482,416
tons at the quarter end. In line with plan, the stockpile decreased by 15,277
tons.
The average plant grade marginally decreased to 3.59 g/t, compared to 3.60 g/t
in the previous quarter
Tons processed totalled 514,867, a 17% increase compared to the previous
quarter, due to Phase V commissioning at the end of the quarter.
Recoveries for the quarter slightly decreased to 73.4% from 75.9% due to reagent
dosing facilities and poor water balancing.
PGM production during the quarter increased by 13% to 43,638 ounces (Aquarius
attributable: 21,819 ounces).
Operating Cash Costs
Cash costs per ROM ton decreased by 7% to $39, whilst costs per PGM ounce
decreased by 5% to $465. The decrease in cash costs for the quarter was
attributable to high production throughput recorded during the quarter. On mine
cash costs were well retained at $370 per PGM ounce despite the impact of
Zimbabwean inflation on total costs. The gross cash margin decreased to 69%
from 77% in the previous quarter.
Net of by-products, cash costs were positive at $144 per PGM ounce, compared to
$(23) per PGM ounce in the previous quarter, primarily due to falling nickel
prices.
Update on Foreign Currency Regime in Zimbabwe
The Interbank foreign exchange market introduced in April 2008 is still
operational. The interbank exchange rates are; however, way below either the
Old Mutual Implied rates and the parallel rates. The Central Bank has also
recently authorised approximately 1,000 retail and wholesale outlets nation-wide
to sell products in United States dollars.
Update on Indigenisation Legislation in Zimbabwe
The Indigenisation and Economic Empowerment bill was enacted into law during the
last quarter of the previous financial year. Specific details on the
implementation of the act in various sectors are being awaited. The details on
the mining sector are supposed to be incorporated into the amendments to the
Mines and Minerals Act which are yet to be brought before parliament.
Wedza Phase 5.5 Expansion
The Wedza Phase 5.5 Expansion Project has been fully commissioned and is
attaining design throughputs. The major outstanding part of the project is on
ventilation, to be completed in November 2008 allowing for a scope change to
seal the two vent holes. Minor remedial actions are being attended to in the
plant, in particular the replacement of the trammel-screen and completing the
installation of the tailing line. It is planned to complete these in November
2008 as well. An intense programme is also being pursued to improve
efficiencies in particular recoveries.
AQUARIUS PLATINUM (SA) CORPORATE SERVICES (PTY) LTD
Chromite Tailings Retreatment Plant (CTRP) (Aquarius Platinum 50%)
Safety
The DIIR increased from 5.62 to 5.69 from the previous quarter. No lost time
accidents were recorded.
Processing
Material processed remained constant at 70,000 tons
Grade decreased 18% to 2.66g/t
Recoveries increased by 12% to 33%
Production decreased 14% to 1,764 PGM ounces (Aquarius attributable: 882 PGM
ounces)
Revenue
The basket price for the quarter averaged $2,251 per PGM ounce, 21% lower than
the previous quarter, with average Rand Dollar exchange rate of 7.75. Revenue
decreased by 86% to R6 million for the quarter (Aquarius attributable: R3
million) due to the lower production and negative sales pipeline adjustments
caused by weakening PGM prices at the close of the period compared to the close
of the prior quarter.
Operations
Material processed constant at 70,000 tons.
The head grade, however, decreased 18% to 2.66 g/t as a result of treating the
lower grade material from the tailings dam outer areas, this material has a
reduced grade as the PGM fines migrate to the centre of the dam during
deposition.
Nevertheless, recoveries increased by 12% to 33% due the ongoing optimisation of
the fine grind milling circuit. The improvement in grind was achieved by
controlling the out let temperature of the mill. A higher temperature indicates
better utilisation of the mill power thereby improving the grind.
This resulted in production decreasing by 14% to 1,764 PGM ounces (Aquarius
attributable: 882 ounces) this decrease in production was due to the lower feed
grade.
Operating Costs
Cash costs decreased by 13% to R3,785 per PGM ounce. Cash margin for the period
of -8%, however, the calculated cash margin excluding the sales adjustments is
69% showing that the operation remains cash generative in terms of current
operations.
Platinum Mile (Aquarius Platinum 50%)
The effective date of the acquisition of the 50% interest in Platinum Mile was 1
March 2008.
Safety
The DIIR was zero for the quarter. No lost time accidents were recorded.
Processing
* Tailings processed increased 9% compared to the previous quarter to 2,568
million tons
* PGM grade was 0.76 g/t
* Production was 5,983 PGM ounces (Aquarius attributable: 2,992 PGM ounces)
Revenue
Revenue was R42 million for the quarter (Aquarius attributable: R21 million).
The basket price for the quarter averaged $1,085 per PGM ounce, at an average
Rand Dollar exchange rate of R7.76. The cash margin for the quarter was 44%.
Operations
The head grade increased marginally to 0.76 g/t compared to 0.71 g/t the
previous quarter.
Recoveries remained constant at 9% compared to the previous quarter.
Production increased 19% to 5,983 PGM ounces (Aquarius attributable: 2,992
ounces), due to higher volumes treated at a slightly higher head grade, despite
the commissioning of the new fine grind circuits. Significant downtime hampered
production in September as equipment tie-ins necessitated the stopping of the
plant.
Operating Costs
Cash costs decreased by 37% to R4,665 per PGM ounce. The decrease is as a
result of lower supplier compensation fees due to lower average metal basket
prices.
Capital expenditure for the quarter was R19 million incurred in expansion of the
fine grinding circuit at the operation.
CORPORATE MATTERS
AQPSA Appointments
Aquarius is pleased to announce the appointment of Hugo Holl as the Managing
Director of AQPSA on 24 October 2008. Mr Holl was previously the Group Manager
for Projects, and Transformation at AQPSA. Further he was the General Manager
of the Everest Mine where he worked from the very start of the mine`s
feasibility as AQPSA Project Manager.
Former Managing Director, Anton Wheeler, has been appointed to the new post as
Operations Director of eastern limb operations, which currently comprise
Everest, enabling him to focus his operational skills on developing the Everest
Mine to its full potential. In addition, Anton Lubbe has been appointed as
Operations Director of the western limb operations, comprising Kroondal and
Marikana. Mr Lubbe has 28 years of mining experience, with exposure to gold,
platinum, chrome and copper mining.
Update on BEE
On 27 October 2008, Aquarius Platinum announced the completion of the final
phase of its South African BEE transaction with SavCon whereby SavCon exchanged
its 32.5% shareholding in AQPSA into 65,042,856 new shares in Aquarius,
comprising approximately 20% of the enlarged share capital of Aquarius.
Subsequently, Aquarius increased its holding in AQPSA to 100% of AQPSA providing
a modest boost to earnings. Following the take out of other minorities earlier
in the year in Aquarius and AQPSA, Aquarius will also continue to enjoy a 100%
free-float.
More information on corporate matters may 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
Hugo Holl: Managing Director
Helene Nolte: Director: Finance
Hulme Scholes: Commercial Director
Anton Lubbe: Operations Director: West
Anton Wheeler: Operations Director: East
Willie Byleveld: General Manager: Technical Services
Graham Ferreira: General Manager: Group Admin & Company Secretary
Mkhululi Duka: General Manager: Group Human Resources & 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
ACS (SA) Management
Paul Smith: Director: New Business
Mimosa Mine Management
Winston Chitando: Managing Director
Herbert Mashanyare: Technical Director
Peter Chimboza : Operations Director
Fungai Makoni: Finance Executive & Company Secretary
Issued Capital
At 30 September 2008, the Company had in issue: 262,052,778 fully paid common
shares and 1,680,305 unlisted options.
Trading Information
ISIN number BMG0440M1284
ADR ISIN number US03840M2089
Aquarius Platinum (South Africa) (Proprietary) Ltd
67.5% Owned (At 30 September 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
BEE Black Economic Empowerment
CTRP Chromite Ore Tailings Retreatment Operation. Consortium
comprising Aquarius Platinum (SA) (Corporate Services) (Pty)
Limited (ASACS), Ivanhoe Nickel and Platinum Limited and Sylvania
South Africa (Pty) Ltd (SLVSA).
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
nm Not measured
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
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
28 October 2008
Sponsor: Investec Bank Limited
Date: 28/10/2008 10:01:01 Produced by the JSE SENS Department.
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