| Thu 26 Mar 2009, 11:44 | | AQP - Aquarius - Proposed Placing Of Up To 46 330 000 Common Shares Of |
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AQP
AQP
AQP - Aquarius - Proposed Placing Of Up To 46,330,000 Common Shares Of
Aquarius Platinum Limited And Intention To Launch A Rights Issue And
Convertible Bond Issue
Aquarius Platinum Limited
(Incorporated in Bermuda)
Registration Number: EC 26290
Share code JSE: AQP
ISIN Code: BMG0440M1284
("Aquarius" or the "Company")
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR
INTO THE UNITED STATES, CANADA OR JAPAN.
THIS ANNOUNCEMENT IS AN ADVERTISEMENT AND NOT A PROSPECTUS AND INVESTORS
SHOULD NOT SUBSCRIBE FOR OR PURCHASE ANY SHARES OR RIGHTS REFERRED TO IN THIS
ANNOUNCEMENT PURSUANT TO THE RIGHTS ISSUE EXCEPT ON THE BASIS OF INFORMATION
IN THE PROSPECTUS TO BE PUBLISHED BY AQUARIUS PLATINUM LIMITED IN CONNECTION
WITH THE PROPOSED RIGHTS ISSUE. COPIES OF THE PROSPECTUS WILL, FOLLOWING
PUBLICATION, BE AVAILABLE FROM THE COMPANY`S REGISTERED OFFICE DURING NORMAL
BUSINESS HOURS.
26 March 2009
PROPOSED PLACING OF UP TO 46,330,000 COMMON SHARES OF AQUARIUS PLATINUM
LIMITED AND INTENTION TO LAUNCH A RIGHTS ISSUE AND CONVERTIBLE BOND ISSUE
Aquarius Platinum Limited ("Aquarius" or the "Company") today announces its
intention to place up to 46,330,000 new common shares (the "Placing Shares")
of the Company, representing up to approximately 14.2 per cent. of the
existing issued common share capital of the Company (the "Placing"), with both
new and existing institutional investors.
The Placing is being conducted, subject to the satisfaction of certain
conditions, through an accelerated book-building process to be carried out by
Merrill Lynch International ("Merrill Lynch") who is acting as sole global co-
ordinator and bookrunner (the "Bookrunner") and Euroz Securities Limited
("Euroz"), who is acting as co-lead manager (the "Co-Lead Manager").
The timing of the closing of the book, pricing and allocations are at the
discretion of Aquarius, Merrill Lynch and Euroz. The number of Placing Shares
and the price at which the Placing Shares are to be placed (the "Placing
Price") is subject to agreement between Aquarius, Merrill Lynch and Euroz at
the close of the book-building process. The Placing Price will be determined
in pounds Sterling, with an equivalent Australian Dollar Placing Price (for
those wishing to settle in Australian dollars) to be determined by the
Bookrunner and Co-Lead Manager at the closing of the book. Details of the
number of Placing Shares and the Placing Price in both sterling and Australian
Dollars will be announced as soon as practicable after the close of the book-
building process.
The Placing Shares will, when issued, be credited as fully paid and will rank
pari passu in all respects with the existing common shares of 5 US cents each
in the capital of the Company, including the right to receive all dividends
and other distributions declared, made or paid on or in respect of such shares
after the date of issue of the Placing Shares and will also be entitled to
participate in the Proposed Rights Issue (referred to below). The Placing will
be made on a non-pre-emptive basis.
Application will be made to ASX for quotation of the Placing Shares on ASX. It
is expected that dealings on ASX in the Placing Shares will commence at 10.00
a.m. (AWST) on 1 April 2009.
Application will be made to the UK Listing Authority and to the London Stock
Exchange for the Placing Shares to be admitted to a secondary listing on the
Official List of the UK Listing Authority and to trading on the main market
for listed securities of the London Stock Exchange, respectively
("Admission"). It is expected that Admission will become effective and that
dealings on the London Stock Exchange in the Placing Shares will commence at
8.00 a.m. (London time) on 31 March 2009.
Application will be made to the JSE for the Placing Shares to be admitted to
listing and trading on the Main Board of the JSE. It is expected that
admission will become effective and that dealings on the JSE in the Placing
Shares will commence at 9.00 a.m. (CAT) on 31 March 2009.
The Placing is conditional upon, amongst other things, raising a minimum of
GBP55 million (the "Placing Minimum Proceeds") and Admission becoming
effective. The Placing is also conditional on the Placing and Rights Issue
Underwriting Agreement (the "Placing and Rights Issue Underwriting Agreement"
or "Placing Agreement") between the Company, Merrill Lynch and Euroz not being
terminated.
The Appendix to this announcement (which forms part of this announcement) sets
out the terms and conditions of the Placing.
Proposed Rights Issue
Subject to the Placing achieving the Placing Minimum Proceeds, Aquarius
intends to announce the terms of a rights issue (the "Proposed Rights Issue"),
to be fully underwritten at the time when the terms are announced, which when
taken in aggregate with the gross proceeds of the Placing will raise
approximately GBP125 million.
Placees allocated new common shares in the Placing will be entitled to
participate in the Proposed Rights Issue.
The Proposed Rights Issue will be offered at a price to be determined, which
will represent a discount to the theoretical ex-rights price of the Common
Shares which is in line with recent UK market precedents.
The terms of the Proposed Rights Issue will be announced to the market as soon
as practicable after the close of the book-building process, subject to the
conditions above.
Proposed Convertible Bond Issue
Subject to the Placing achieving the Placing Minimum Proceeds, Aquarius
intends to raise a further ZAR500 million up to ZAR650 million by way of a
private placement of convertible bonds (the "Convertible Bonds") (the
"Proposed Convertible Bond Issue"). The minimum denomination of the
Convertible Bonds will be ZAR1 million. The Convertible Bonds will be
denominated in Rand and are expected to be listed only on the JSE.
The Proposed Convertible Bond Issue will be managed by Rand Merchant Bank, a
division of FirstRand Bank Limited ("RMB"), and will raise a minimum of ZAR500
million (fully underwritten by RMB). Furthermore the Company has granted RMB
an option to require the Company to issue additional Convertible Bonds to the
value of ZAR150 million, to increase the total amount that may be raised under
the Convertible Bond Issue to ZAR650 million. Participation in the Proposed
Convertible Bond Issue will only be available to persons who may lawfully be,
and are, invited to participate by RMB. Aquarius shareholders will be treated
preferentially in the allocation process. Completion of the Proposed
Convertible Bond Issue is expected to take place on or around 11 May 2009,
subject to customary closing conditions.
Background to the Placing, the Proposed Rights Issue and the Proposed
Convertible Bond Issue
At 30 June 2008 the Aquarius Group was the fourth largest primary platinum
producer in the world with annual attributable PGM(4E) production of 500,203
PGM ounces from existing operations. Over the last decade the Company has
expanded through acquisitions, as well as the successful development of new
mines.
During 2008 the Aquarius Group simplified its group structure by removing all
minority shareholdings in its subsidiary, AQPSA, through various actions,
including the repurchase by Aquarius of Impala Platinum`s 20 per cent.
interest in AQPSA for US$790 million in April 2008. This repurchase was partly
financed through a bridge loan facility from RMB (the "Bridge Loan Facility").
The Bridge Loan Facility is due for repayment on 30 June 2009 and on 25 March
2009 (being the last practicable date before the date of this announcement),
had an outstanding balance of approximately ZAR1,577.5 million (approximately
US$165 million). Part of the proceeds of the Placing, the Proposed Rights
Issue and the Proposed Convertible Bond Issue are expected to be applied in
repaying this balance.
On 8 December 2008, Aquarius management announced the temporary suspension of
operations at the Everest mine owing to geotechnical issues, namely
instability as a result of subsidence occurring over an upper area of the
mine. However, Aquarius management believes that the subsidence event does not
jeopardise the sustainability of the Everest mine on a long term basis and
that technically acceptable alternatives exist to re-open the mine. The
capital expenditure associated with the potential restart of the Everest mine
is currently estimated to be ZAR200 to 250 million. Part of the proceeds of
the Placing, the Proposed Rights Issue and the Proposed Convertible Bond Issue
are expected to be applied to this capital expenditure.
Since the third quarter of the 2008 calendar year, there has been a rapid
deterioration in end markets for PGM metals as well as other commodities. As a
consequence the market price for PGMs has declined significantly which has
impacted on Aquarius` cash flow generation. Cash balances during the six
months ended 31 December 2008 were impacted by the net repayment of
approximately US$90 million of pipeline sales advances resulting from the
deadline in PGM prices from the time of the advance to the time of sale. While
the Company`s mechanised mining approach positions it at the lower end of the
industry cost curve, making it resilient even under the current difficult
economic conditions, the Directors believe that an equity raising will provide
the Company with greater financial flexibility to settle the outstanding
amount under the Bridge Loan Facility and robustly capitalise the Aquarius
Group for ongoing operating requirements. This will be particularly important
should the weakening in the PGM market and liquidity constraints in the debt
markets continue.
Possible Acquisition
As announced today, the Company expects to sign an implementation agreement
with Ridge Mining plc ("Ridge") (the "Implementation Agreement") pursuant to
which, subject to the satisfaction of pre-conditions relating to: (i) the
successful outcome of the Placing, Proposed Rights Issue and Proposed
Convertible Bond Issue; and (ii) the arrangement, on terms satisfactory to
Aquarius, acting reasonably, in its absolute discretion, of sufficient
bridge funding for the continued operation of the Blue Ridge Mine, the Company
will make an offer for the entire issued and to be issued share capital of
Ridge at an exchange ratio of 1 Common Share for every 2.75 Ridge shares. To
the extent that the theoretical ex-rights and Placing Price of the Aquarius
shares, calculated on a basis agreed between Aquarius and Ridge to take into
account the final terms of the Placing and Proposed Rights Issue, is more than
8 per cent. below the five day volume weighted average price measured on the
London Stock Exchange at the close of business on 25 March 2009, Aquarius and
Ridge will agree an adjustment to the exchange ratio, the final ratio is
anticipated to be published on Friday, 27 March 2009. The proceeds of the
Placing, Proposed Rights Issue and the Proposed Convertible Bond Issue will in
part be used to fund the acquired operating and capital expenditure
commitments of Ridge should the Possible Acquisition complete.
Aquarius believes that there is a compelling strategic and commercial
rationale for a combination with Ridge. The Possible Acquisition, should it
complete, is expected to result in:
- diversification of the Aquarius portfolio and corresponding decrease in
single project risk for Ridge;
- significant expansion of reserve and resource base;
- short-term increase in attributable production with the commissioning of
the Blue Ridge Mine;
- enhance Aquarius mine-life profile through the Blue Ridge Mine;
the Blue Ridge mine is well executed and would be a small project:
- complementary fit with the Aquarius portfolio;
- opportunities to reduce overhead costs with combined administrative and
technical functions;
- added optionality through the Sheba`s Ridge project;
- combined leverage of mining and processing skills;
- strengthened position amongst peers operating on the Bushveld; and
- some small synergies between combined operations, noticeably through
sharing of skills and procurement.
To fully realise the benefits of the Possible Acquisition, Aquarius will
require additional operating and capital expenditure currently estimated to be
ZAR310 million through the 2010 calendar year.
Use of proceeds
The Company intends to raise gross proceeds of approximately GBP125million
(approximately US$183 million, ZAR1,741 million) under the Placing and
Proposed Rights Issue and between ZAR500 million and ZAR650 million under the
Proposed Convertible Bond Issue. It is anticipated that, of the up to ZAR2,391
million (US$251 million) to be raised under the Placing, Proposed Rights Issue
and Proposed Convertible Bond Issue, ZAR1,577.5 million (approximately US$165
million) will be applied to repaying the Bridge Loan Facility, approximately
ZAR200 to 250 million will be applied to capital requirement to open the
Everest mine and approximately ZAR310 million will be applied to capital and
operating expenses for Ridge.
Dividends and dividend policy
Subject to the provisions of the bye-laws and in accordance with the Companies
Act, the Directors may from time to time declare a dividend to be paid to
Shareholders in proportion to the number of Shares held by them, and such a
dividend may be paid in cash or by distribution of specific assets.
Pursuant to Bermuda law, the Directors are restricted from declaring or paying
a dividend, or making a distribution out of contributed surplus, if there are
reasonable grounds for believing that (i) the Company is, or would after the
payment be, unable to pay its liabilities as they become due, or (ii) the
realisable value of the Company`s assets would thereby be less than the
aggregate of its liabilities, its issued share capital and share premium
accounts.
The Board elected not to pay an interim dividend in respect of the six months
ended 31 December 2008. Future dividend decisions will be based on conditions
prevailing and information available at any given point in time and the
completion of the refinancing of the Bridge Loan Facility. The Board intends
to resume dividend payments at the earliest opportunity.
The Placing Shares will rank pari passu in all respects with the Existing
Shares, including the right to receive all dividends or other distributions
declared after the issue of the Placing Shares. The Company intends to adjust
future dividend payments per Common Share pro rata to take account of New
Common Shares issued in connection with the Placing and the Proposed Right
Issue, respectively.
Current trading and prospects
In its interim results for the six months ended December 2008, the Group
announced attributable production of 260,208 PGM ounces and a net operating
loss of US$70.1 million (US 25.1 cents per share). The results for the period
were significantly influenced by:
(i) a substantial reduction in metal prices, which saw platinum decrease from
an average of US$2,036 per ounce in June 2008 to an average of US$840 per
ounce in December 2008. During the same period, rhodium decreased from an
average of US$9,774 per ounce to US$1,220 per ounce. By-product nickel fell 50
per cent., averaging US$6.76/lb for the period compared to US$13.47/lb in the
previous corresponding six month period to December 2007;
(ii) an interest expense of US$21.6 million (pre-tax) due to increased debt
following the repurchase of 20 per cent. of AQPSA and 6.8 per cent. of
Aquarius;
(iii)US$16.8 million (pre-tax) of adjustments associated with the temporary
suspension of mining at the Everest mine on 7 December 2008. US$10.1 million
of this related to impairment of mining assets damaged as a result of the
subsidence event;
(iv) a US$29 million foreign currency loss (pre-tax) on pipeline advances due
to the US dollar strengthening during the half year; and
(v) US$41 million of negative PGM sales adjustments (pre-tax) due to
declining PGM prices.
Aquarius expects to publish its production and financial results for the
quarter ended 31 March 2009 during the week commencing 20 April 2009.
Production overview
Total on mine production for the quarter ended 31 March 2009 is expected to be
approximately 190,600 PGM ounces of which 95,300 PGM ounces are attributable
to Aquarius. Production in the quarter ended 31 March 2009 is not directly
comparable to the previous quarters due to the suspension of operations at the
Everest mine in December 2008. Adjusting for the temporary closure of the
Everest mine, Aquarius attributable production for the third quarter is
estimated to be approximately 5,000 PGM ounces (5 per cent.) lower when
compared to the quarter ended 31 December 2008. The third quarter production
was affected by the number of public holidays falling within the period.
Production from Kroondal and Marikana was affected by the lower number of
mining shifts in the quarter, with planned mill relines further impacting on
production at Kroondal. As a consequence of these public holidays, the third
quarter experienced a 13.5 per cent. decrease in the number of mining shifts
worked during the quarter as compared to the quarter ended 31 December 2008.
Both Kroondal and Marikana operations have shown production improvements to
the prior comparable period (the third quarter ended 31 March 2008) with
significant production improvement from Marikana. Adjusting for the temporary
closure of the Everest mine, production for the quarter ended 31 March 2009 is
expected to be approximately 19 per cent. higher compared to the previous
corresponding quarter on a year on year basis. Despite the slightly lower
production due to the impact of holidays, unit cost costs are expected to be
comparable to the quarter ended 31 December 2008.
Production at the Mimosa mine in Zimbabwe was 5 per cent. above the quarter
ended 31 December 2008. Unit costs at the Mimosa mine remain amongst the
lowest in the industry despite an increase of 15 per cent. to 20 per cent. in
the quarter, following increases in labour, water, electricity, levies, and
municipal rates. The increased unit costs at Mimosa are a result of the
dollarisation of the Zimbabwean economy. The full impact of the dollarisation
of the Zimbabwean economy is yet to be determined as there are still
distortions in terms of pricing in the economy which are expected to stabilise
in the near future and some positive effects may materialise to offset the
obvious negatives.
Production statistics by mine
Quarter Ended
PGMs (4E) Mar Jun Sep Dec Mar
2008 2008 2008 2008 2009**
Kroondal 100,020 83,062 101,731 109,707 103,000
Marikana 24,223 28,416 38,883 42,451 39,000
Everest 31,107 31,327 32,365 31,703 -
Mimosa 34,283 38,517 43,638 43,232 45,000
CTRP 2,309 2,044 1,764 1,784 1,200
Platinum Mile - 5,035 5,983 3,103 2,400
Total 191,942 188,401 224,364 231,980 190,600*
* Q3 production is not comparable to previous quarter`s production due to
the temporary closure of the Everest mine in December 2008
** Q3 production figures are preliminary estimates based on actual
production results for the two months ended February 2009, and estimates for
the March production month
Production statistics by mine attributable to Aquarius
Quarter Ended
PGMs (4E) Mar Jun Sep Dec Mar
2008 2008 2008 2008 2009**
Kroondal 50,010 41,531 50,866 54,854 51,500
Marikana 12,110 14,208 19,442 21,226 19,500
Everest 31,107 31,327 32,365 31,703 -
Mimosa 17,140 19,258 21,819 21,616 22,500
CTRP 1,155 1,022 882 892 600
Platinum Mile - 2,517 2,992 1,552 1,200
Total 111,522 109,863 128,366 131,843 95,300*
* Q3 production is not comparable to previous quarter`s production due to
the temporary closure of the Everest mine in December 2008
** Q3 production figures are preliminary estimates based on actual
production results for the two months ended February 2009, and estimates for
the March production month
Metals prices and foreign exchange impacts
Metals prices, both provisional and realised, for PGMs improved from the lows
experienced in the December 2008 quarter. At 25 March 2009 platinum closed at
US$1,124 per ounce, up 24 per cent. from the December 2008 closing price. Much
of the increase is attributed to the tightening of the PGM markets as demand
for autocatalysts is less subdued than anticipated due to the introduction of
state subsidies for new light vehicle purchases in Germany and France, a
strengthening market for platinum jewellery in China and increased investment
demand via the platinum ETFs as investors look to diversify their investment
portfolios into gold and other precious metals. Palladium remained flat at
US$215 per ounce. Rhodium, which had decreased significantly from July 2008 to
December 2008, has stabilised at US$1,200 per ounce in early March 2009. Gold
increased 9 per cent. to close February 2009 at US$945 per PGM ounce.
Impact on pipeline advances
Following the recent stabilisation in PGM prices since a December 2008 month
average of US$840 per ounce for platinum, prices have stabilised and shown
some recovery through the 2009 calendar year to date. The residual impact on
cash flow from declining PGM prices in the months of November and December
2008 flowed through into February 2009. The recent stability and recovery in
prices should reflect less volatile cash flow movements in price adjustments
going forward.
Pricing
The 4PGE basket prices calculated for the third quarter 2009 (to March 2009)
showed firm increases in January and February which have been held through
March. The calculation of achieved basket prices is complex, however, it can
be seen at South African operations that the average achieved basket price for
the operations in the second quarter 2009 (to December 2008) was $744 per PGM
ounce, whereas the average basket price calculated using daily prices from
Bloomberg for the third quarter 2009 to March 2009 (though using data only to
19 March 2009) is approximately $795 per PGM ounce. An approximate increase of
7 per cent. It is too early to provide any firm comparison for the Mimosa Mine
in Zimbabwe.
Production Outlook
The Company is targeting reductions in operating costs during the second half
of the current financial year. Further, it is anticipated that the fourth
quarter should see an improvement in production at all operations. Group
attributable production for the current financial year is expected to be in
the range of 450,000-475,000 PGM ounces.
Contacts
Aquarius Platinum Limited
Stuart Murray, CEO +27 11 455 2050
Willi Boehm, Company Secretary +61 8 9367 5211
Nicholas Bias, IR +41 79 888 1642
Merrill Lynch International
Andrew Osborne +44 20 7628 1000
Rupert Hume-Kendall +44 20 7628 1000
Euroz Securities Limited
Doug Young +61 8 9488 1400
Rand Merchant Bank, a division of FirstRand Bank Limited
Peter Hayward-Butt +27 11 282 8000
Carel Vosloo +27 11 282 8000
Lazard & Co., Limited
Peter Kiernan +44 20 7187 2000
Spiro Youakim +44 20 7187 2000
The statements contained in this announcement that are not historical facts
are "forward-looking" statements. These forward-looking statements are subject
to a number of risks and uncertainties, may of which are beyond Aquarius`
control and all of which are based on Aquarius` current beliefs and
expectations about future events. Forward-looking statements are typically
identified by the use of forward-looking terminology such as "believes",
"expects", "may", "will", "could", "should", "intends", "estimate", "plans",
"assumes" or "anticipates" or the negative thereof or other variations thereon
or comparable terminology, or by discussions of strategy that involve risks
and uncertainties. In addition, from time to time, Aquarius or its
representatives have made or may make forward-looking statements orally or in
writing. Furthermore, such forward-looking statements may be included in, but
are not limited to, press releases or oral statements made by or with the
approval of an authorised executive officer of Aquarius. These forward-looking
statements and other statements contained in this announcement regarding
matters that are not historical facts involve predictions. No assurance can be
given that such future results will be achieved; actual events or results may
differ materially as a result of risks and uncertainties facing the Aquarius
Group. Such risks and uncertainties could cause actual results to vary
materially from the future results indicated, expressed or implied in such
forward-looking statements. Please refer to "Risk Factors" set out in Appendix
II to this announcement for further information in this regard.
The forward-looking statements contained in this announcement speak only as of
the date of this announcement and none of Aquarius or Merrill Lynch or Euroz
undertakes any duty to, and will not necessarily, release publicly any updates
or revisions to any forward-looking statements contained here to reflect any
change in Aquarius` expectations with regard thereto or any change in events,
conditions or circumstances on which any such statement is based, except to
the extent required by applicable law, the Corporations Act, the ASX Listing
Rules, the Prospectus Rules, the UK Listing Rules and the Disclosure and
Transparency Rules, JSE Listing Requirements and the South African Companies
Act.
This announcement is for information purposes only and shall not constitute an
offer to buy, sell, issue, or subscribe for, or the solicitation of an offer
to buy, sell, issue, or subscribe for any securities, nor shall there be any
sale of securities in any jurisdiction in which such offer, solicitation or
sale would be unlawful prior to registration or qualification under the
securities laws of any such jurisdiction.
This announcement has been issued by and is the sole responsibility of
Aquarius.
No representation or warranty, express or implied, is or will be made as to,
or in relation to, and no responsibility or liability is or will be accepted
by Merrill Lynch, Euroz or by any of their respective affiliates or agents as
to, or in relation to, the accuracy or completeness of this announcement or
any other written or oral information made available to or publicly available
to any interested party or its advisers, and any liability therefor is
expressly disclaimed.
Both Merrill Lynch and Euroz are acting exclusively for Aquarius and for no-
one else in connection with the Placing and Proposed Rights Issue, and will
not regard any other person as a client in relation to the Placing or the
Proposed Rights issue and will not be responsible to anyone other than
Aquarius for providing the protections afforded to clients of either Merrill
Lynch or Euroz nor for providing advice in relation to the Placing or Proposed
Rights Issue or any other matter referred to in this announcement (including
the Appendices).
Both Rand Merchant Bank and Lazard are acting exclusively for Aquarius and no
one else in connection with the matters referred to in this announcement and
will not be responsible to any other person for providing the protections
afforded to clients of either Rand Merchant Bank or Lazard nor for providing
advice in relation to the matters referred to in this announcement.
The distribution of this announcement and the offering of the Placing Shares
in certain jurisdictions may be restricted by law. No action has been taken by
Aquarius or the Bookrunner or Euroz that would permit an offering of such
shares or possession or distribution of this announcement or any other
offering or publicity material relating to such shares in any jurisdiction
where action for that purpose is required. Persons into whose possession this
announcement comes are required by Aquarius, the Bookrunner and Euroz to
inform themselves about, and to observe such restrictions.
The price of shares and the income from them may go down as well as up and
investors may not get back the full amount invested on disposal of the shares.
MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE PLACING. THIS
ANNOUNCEMENT (INCLUDING THE APPENDICES), AND THE TERMS AND CONDITIONS SET OUT
IN THIS ANNOUNCEMENT ARE FOR INFORMATION PURPOSES ONLY AND ARE DIRECTED ONLY
AT PERSONS WHO ARE: (A) (I) INVESTMENT PROFESSIONALS FALLING WITHIN ARTICLE
19(5) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION)
ORDER 2005 (THE "ORDER"), OR (II) PERSONS FALLING WITHIN ARTICLE 49(2)(A) TO
(D) ("HIGH NET WORTH COMPANIES, UNINCORPORATED ASSOCIATIONS, ETC") OF THE
ORDER, OR (III) PERSONS TO WHOM IT MAY OTHERWISE BE LAWFULLY COMMUNICATED; AND
(B) (I) PERSONS IN MEMBER STATES OF THE EUROPEAN ECONOMIC AREA WHO ARE
QUALIFIED INVESTORS ("QUALIFIED INVESTORS") (AS DEFINED IN ARTICLE 2(1)(E) OF
EU DIRECTIVE 2003/71/EC (THE "PROSPECTUS DIRECTIVE")), AND/OR (II) PERSONS IN
THE UNITED KINGDOM WHO ARE QUALIFIED INVESTORS (ALL SUCH PERSONS TOGETHER
BEING REFERRED TO AS "RELEVANT PERSONS"). THIS ANNOUNCEMENT (INCLUDING THE
APPENDICES), AND THE TERMS AND CONDITIONS SET OUT IN THIS ANNOUNCEMENT MUST
NOT BE ACTED ON OR RELIED ON BY PERSONS WHO ARE NOT RELEVANT PERSONS. ANY
INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS ANNOUNCEMENT (INCLUDING THE
APPENDICES) AND THE TERMS AND CONDITIONS SET OUT IN THIS ANNOUNCEMENT RELATE
IS AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH
RELEVANT PERSONS. THIS ANNOUNCEMENT (INCLUDING THE APPENDICES) DOES NOT ITSELF
CONSTITUTE AN OFFER FOR SALE OR SUBSCRIPTION OF ANY SECURITIES IN AQUARIUS
PLATINUM LIMITED.
This announcement is not a prospectus for the purposes of the Australian
Corporations Act and may not contain all of the information that an Australian
investor may find in a prospectus prepared in accordance with the Australian
Corporations Act which may be required in order to make an informed investment
decision regarding, or about the rights attaching to, Placing Shares. As no
prospectus will be lodged with the Australian Securities & Investments
Commission ("ASIC") or otherwise prepared in accordance with the Australian
Corporations Act in respect of the Placing, the Placing Shares will only be
offered or issued to persons in Australia to whom an offer of shares for issue
may be made without a prospectus under Part 6D.2 of the Australian
Corporations Act or to persons outside Australia in accordance with the laws
of any other applicable jurisdiction. If you are located in Australia, you
confirm and warrant that you are a person to whom an offer of securities may
be made under section 708(8) or 708(11) of the Australian Corporations Act
such that any offer or invitation to you does not require a prospectus or
other form of disclosure document under the Australian Corporations Act and
you agree that you will not offer to sell the Placing Shares to any person
that is not a sophisticated or professional investor under section 708(8) or
708(11) of the Australian Corporations Act until the day after a notice is
lodged by the Company with ASX that complies with subsections 708A(5)(e) and
(6) of the Australian Corporations Act.
This announcement is not a prospectus for the purposes of the New Zealand
Securities Act 1978 (NZ) and may not contain all of the information that a New
Zealand investor may find in a prospectus prepared in accordance with the New
Zealand Securities Act 1978 (NZ) which may be required in order to make an
informed investment decision regarding, or about the rights attaching to,
Placing Shares. As no prospectus will be lodged with the New Zealand Companies
Office or otherwise prepared in accordance with New Zealand law in respect of
the Placing, the Placing Shares will only be offered or issued to persons in
New Zealand to whom an offer of shares for issue may be made without a
prospectus under the New Zealand Securities Act 1978 (NZ) or to persons
outside New Zealand in accordance with the laws of any other applicable
jurisdiction. If you are located in New Zealand, you confirm and warrant that
you are a person to whom an offer of securities may be made under section
3(2)(ii) of the New Zealand Securities Act 1978 (NZ) such that any offer or
invitation to you does not require a prospectus or other form of disclosure
document under the New Zealand Securities Act 1978 (NZ) and you acknowledge
that any Placing Shares allotted to you are not being allotted with a view to
them being offered for sale to the public in New Zealand and further warrant
that if in the future you elect to directly or indirectly sell or offer any of
the Placing Shares allotted to you, you undertake not to do so in a manner
which will, or is likely to, result in a contravention of the New Zealand
Securities Act 1978 (NZ) or may result in the Company or the Bookrunner or Co-
Lead Manger incurring liability.
This announcement, including the Appendix, is not for distribution directly or
indirectly in or into the United States (including its territories and
possessions, any State of the United States and the District of Columbia),
Canada or Japan or any jurisdiction into which the same would be unlawful.
This announcement does not constitute or form part of an offer or solicitation
to purchase or subscribe for shares in the capital of Aquarius in the United
States, Canada or Japan or any jurisdiction in which such an offer or
solicitation is unlawful. In particular, the Placing Shares referred to in
this announcement have not been, and will not be, registered under the US
Securities Act of 1933, as amended (the "Securities Act") or under the
securities legislation of any state of the United States, and may not be
offered or sold in the United States absent registration or pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements under the Securities Act. Subject to exceptions, the Placing
Shares referred to in this announcement are being offered and sold only
outside the United States in accordance with Regulation S under the Securities
Act. No public offering of securities of Aquarius will be made in the United
States.
The Placing Shares have not been approved or disapproved by the US Securities
and Exchange Commission, any State securities commission or any other
regulatory authority in the United States, nor have any of the foregoing
authorities passed upon or endorsed the merits of the Placing or the accuracy
or adequacy of this announcement. Any representation to the contrary is
unlawful.
The relevant clearances have not been, and nor will they be, obtained from the
securities commission of any province or territory of Canada; no prospectus
has been lodged with, or registered by Investments Commission or the Japanese
Ministry of Finance; and the Placing Shares have not been, and nor will they
be, registered under or offered in compliance with the securities laws of any
state, province or territory of Canada or Japan. Accordingly, the Placing
Shares may not (unless an exemption under the relevant securities laws is
applicable) be offered, sold, resold or delivered, directly or indirectly, in
or into Canada or Japan.
This announcement relates to an Exempt Offer in accordance with the Offered
Securities Rules of the Dubai Financial Services Authority (the "DFSA"). This
announcement is intended for distribution only to persons of a type specified
in the Offered Securities Rules of the DFSA. It must not be delivered to, or
relied on by, any other person. The DFSA has no responsibility for reviewing
or verifying any documents in connection with Exempt Offers. The DFSA has not
approved this announcement nor taken steps to verify the information set forth
herein and has no responsibility for this announcement.
This announcement does not constitute a prospectus within the meaning of
Articles 652a and 1156 of the Swiss Code of Obligations or a listing
prospectus according to Article 32 of the Listing Rules of the SWX Swiss
Exchange. The Placing Shares will not be listed on the SWX Swiss Exchange and,
therefore, this announcement does not comply with the disclosure standards of
the Listing Rules of the SWX Swiss Exchange. Accordingly, the Placing Shares
may not be offered to the public in or from Switzerland, except to a selected
and limited group of investors, who do not subscribe the Placing Shares with a
view to distribution to the public.
By participating in the Bookbuild and the Placing, such person will be deemed
to have read and understood this announcement, including the Appendix, in its
entirety and to be making such offer on the terms and conditions, and to be
providing the representations, warranties, acknowledgements, and undertakings
contained in the Appendix. In particular each such Placee represents, warrants
and acknowledges that:
(a) It is a Relevant Person and undertakes that it will acquire, hold, manage
or dispose of any Placing Shares that are allocated to it for the purposes of
its business;
(b) It is outside the United States and is subscribing for the Placing Shares
in an "offshore transaction" (within the meaning of Regulation S under the
Securities Act); and
(c) It is a person to whom an offer of securities may be made under section
708(8) or 708(11) of the Australian Corporations Act and agrees that it will
not offer to sell the Placing Shares to any person that is not a sophisticated
or professional investor under section 708(8) or 708(11) of the Australian
Corporations Act until the day after a notice is lodged by the Company with
ASX that complies with subsections 708A(5)(e) and (6) of the Australian
Corporations Act.
Persons (including, without limitation, nominees and trustees) who have a
contractual or other legal obligation to forward a copy of the Appendix or
this announcement should seek appropriate advice before taking any action.
Neither the content of Aquarius` website nor any website accessible by
hyperlinks on Aquarius` website is incorporated in, or forms part of, this
announcement.
APPENDIX I
TERMS AND CONDITIONS OF THE PLACING
IMPORTANT INFORMATION FOR PLACEES ONLY REGARDING THE PLACING
Details of the Placing
The Bookrunner and Co-Lead Manager have entered into an agreement with
Aquarius (the "Placing and Rights Issue Underwriting Agreement") under which,
subject to the conditions set out in that agreement, the Bookrunner and the
Co-Lead Manager have severally agreed, as agent for and on behalf of Aquarius,
to use all reasonable endeavours to procure subscribers for Placing Shares at
a price determined following completion of the bookbuilding process in respect
of the Placing (the "Bookbuild"), described in this announcement and set out
in the Placing Agreement. The Placing is not underwritten, save as regards
settlement of Placees commitments.
The Placing Shares will, when issued and fully paid, rank pari passu in all
respects with the existing common shares of Aquarius including the right to
receive all dividends and other distributions declared, made or paid on or in
respect of such shares after the date of issue of the Placing Shares.
As part of the Placing, Aquarius has agreed that it will not, save as will be
disclosed in the Prospectus (as referred to below), issue any common shares
during the Restricted Period without the prior consent of Merrill Lynch and
Euroz (such consent not to be unreasonably withheld or delayed). This
agreement does not however prevent Aquarius from granting or satisfying
exercises of outstanding options, warrants or conversion rights outstanding as
disclosed in the Prospectus or the grant of options or rights under Aquarius`
existing share schemes.
"Restricted Period" means the period ending on the first to occur of:
(a) the date on which all of Merrill Lynch`s and Euroz`s obligations under
the Placing and Rights Issue Underwriting Agreement in relation to the Placing
cease (in the event the Placing does not proceed);
(b) the date falling 60 dealing days after the date on which all of their
obligations under the Placing and Rights Issue Underwriting Agreement in
relation to the Proposed Rights Issue cease; and
(c) the date falling 60 dealing days after the date on which Merrill Lynch`s
and Euroz`s obligations under the Placing and Rights Issue Underwriting
Agreement cease upon making payment pursuant to their underwriting
obligations.
Application for listing and admission to trading
Application will be made to ASX for quotation of the Placing Shares on ASX. It
is expected that dealings on ASX in the Placing Shares will commence at 10.00
a.m. (AWST) on 1 April 2009.
Application will be made to the UK Listing Authority and to the London Stock
Exchange for the Placing Shares to be admitted to a secondary listing on the
Official List of the UK Listing Authority and to trading on the main market
for listed securities of the London Stock Exchange, respectively. It is
expected that admission will become effective and that dealings on the London
Stock Exchange in the Placing Shares will commence at 8.00 a.m. (London time)
on .31 March 2009.
Application will be made to the JSE for the Placing Shares to be admitted to
listing and trading on the Main Board of the JSE. It is expected that
admission will become effective and that dealings on the JSE in the Placing
Shares will commence at 9.00 a.m. (CAT) on 31 March 2009.
Bookbuild
The Bookrunner and the Co-Lead Manager will today commence the Bookbuild to
determine demand for participation in the Placing by Placees. This Appendix
gives details of the terms and conditions of, and the mechanics of
participation in, the Placing. No commissions will be paid to Placees or by
Placees in respect of any Placing Shares.
The Bookrunner and the Co-Lead Manager and Aquarius shall be entitled to
effect the Placing by such alternative method to the Bookbuild as they may, in
their sole discretion, determine.
Participation in, and principal terms of, the Placing
1. Merrill Lynch is acting as Bookrunner and agent of Aquarius, and Euroz is
acting as Co-Lead Manager and agent of Aquarius.
2. Participation in the Placing will only be available to persons who may
lawfully be, and are, invited to participate by the Bookrunner or the Co-Lead
Manager. The Bookrunner and the Co-Lead Manager and their affiliates are each
entitled to enter bids in the Bookbuild as principal.
3. The Bookbuild will establish a single price in sterling. An Australian
Dollar price will be determined from that sterling price at an exchange rate
to be determined at the sole discretion of the Bookrunner. Placees will be
entitled to choose the currency they wish to settle in, payable to the
Bookrunner or Co-Lead Manager by all Placees whose bids are successful (the
"Placing Price"). The Placing Price and the number of Placing Shares to be
issued will be agreed between the Bookrunner, the Co-Lead Manager and Aquarius
following completion of the Bookbuild. Any discount to the market price of the
Common Shares will not be limited by UKLA Rules, as Aquarius has a secondary
not primary listing in the UK. The Placing Price and the number of Placing
Shares will be announced on a Regulatory Information Service following the
completion of the Bookbuild.
4. To bid in the Bookbuild, Placees should communicate their bid by
telephone to their usual sales contact at the Bookrunner or the Co-lead
Manager. Each bid should state the number of Placing Shares which the
prospective Placee wishes to subscribe for at either the sterling or
Australian Dollar Placing Price, which is ultimately established by Aquarius
and the Bookrunner and the Co-Lead Manager, or at prices in sterling or
Australian Dollars up to a price limit in sterling or Australian Dollars
specified in its bid. Bids may be scaled down by the Bookrunner and the
Co-Lead Manager on the basis referred to in paragraph 9 below.
5. The Bookbuild is expected to close no later than 4.30 p.m. (London time)
on 26 March 2009 but may be closed earlier or later at the discretion of the
Bookrunner and the Co-Lead Manager. The Bookrunner and Co-Lead Manager may, in
agreement with Aquarius, accept bids that are received after the Bookbuild has
closed. Aquarius reserves the right (upon the agreement of the Bookrunner and
the Co-Lead Manager) to reduce or seek to increase the amount to be raised
pursuant to the Placing, or not to proceed with the Placing, in its absolute
discretion.
6. Each prospective Placee`s allocation will be agreed between the
Bookrunner, the Co-Lead Manager and Aquarius and will be confirmed orally or
in writing by the Bookrunner or Co-lead Manager as agent of Aquarius following
the close of the Bookbuild. Except as otherwise provided that oral or written
confirmation will constitute an irrevocable legally binding commitment upon
that person (who will at that point become a Placee) to subscribe for the
number of Placing Shares allocated to it at the Placing Price in the currency
of its bid on the terms and conditions set out in this Appendix and in
accordance with Aquarius`s bye-laws.
7. Each prospective Placee`s allocation and commitment will be evidenced by
a contract note issued to such Placee by the Bookrunner or Co-lead Manager.
The terms of this Appendix will be deemed incorporated in that contract note.
8. Each Placee will also have an immediate, separate, irrevocable and
binding obligation, owed to the Bookrunner or Co-lead Manager as appropriate
as agent of Aquarius, to pay in cleared funds, an amount equal to the product
of the Placing Price and the number of Placing Shares such Placee has agreed
to subscribe for and Aquarius has agreed to allot and issue to that Placee.
9. The Bookrunner or the Co-Lead Manager may choose to accept bids, either
in whole or in part, on the basis of allocations determined in agreement with
Aquarius and may scale down any bids for this purpose on such basis as they
may determine. The Bookrunner and the Co-Lead Manager may also,
notwithstanding paragraphs 4 and 5 above, subject to the prior consent of
Aquarius (i) allocate Placing Shares after the time of any initial allocation
to any person submitting a bid after that time and (ii) allocate Placing
Shares after the Bookbuild has closed to any person submitting a bid after
that time.
10. A bid in the Bookbuild will be made on the terms and subject to the
conditions in this announcement and except otherwise provided will be legally
binding on the Placee on behalf of which it is made and except with the
consent of the Bookrunner and the Co-Lead Manager will not be capable of
variation or revocation after the time at which it is submitted.
11. Irrespective of the time at which a Placee`s allocation pursuant to the
Placing is confirmed, settlement for all Placing Shares to be acquired
pursuant to the Placing will be required to be made at the same time, on the
basis explained below under "Registration and Settlement".
12. All obligations under the Bookbuild and Placing will be subject to
fulfilment of the conditions referred to below under "Conditions of the
Placing" and to the Placing not being terminated on the basis referred to
below under "Termination of the Placing Agreement".
13. By participating in the Bookbuild, each Placee will agree that its rights
and obligations in respect of the Placing will terminate only in the
circumstances described below and will not be capable of rescission or
termination by the Placee.
14. To the fullest extent permissible by law, none of the Bookrunner, the Co-
lead Manager, or any of their affiliates shall have any liability to Placees
(or to any other person whether acting on behalf of a Placee or otherwise). In
particular, none of the Bookrunner, the Co-lead Manager, or any of their
affiliates shall have any liability (including to the fullest extent
permissible by law, any fiduciary duties) in respect of the Bookrunner or Co-
lead Manager`s conduct of the Bookbuild or of such alternative method of
effecting the Placing as the Bookrunner, Co-lead Manager and Aquarius may
agree.
Conditions of the Placing
The obligations of the Bookrunner and the Co-Lead Manager under the Placing
Agreement are conditional on, amongst other things:
(a) agreement being reached between Aquarius and the Bookrunner and the Co-
Lead Manager on the Placing Price and the number of Placing Shares;
(b) the representations and warranties contained in the Placing Agreement
being true and accurate on the date of the Placing Agreement and remaining so
at all times down to and including Admission (by reference to the facts and
circumstances then existing);
(c) Aquarius having complied with its obligations under the Placing Agreement
to the extent the same fall to be performed or satisfied prior to Admission;
(d) the amount raised in the Placing being not less than the Placing Minimum
Proceeds;
(e) Admission taking place by 8.00 a.m. (London time) on 31 March 2009 (or
such later date as Aquarius and the Bookrunner and the Co-Lead Manager may
otherwise agree) and ASX providing approval for quotation on ASX and JSE
agreeing to admit the Placing Shares to trading on the Main Board of the JSE;
(f) approval of the Prospectus by the UKLA;
(g) in the opinion of the Bookrunner and the Co-Lead Manager, there not
having been a material adverse change, or any development reasonably likely to
involve a material adverse change in or affecting the condition (financial,
operational, legal or otherwise), prospects, earnings, solvency, credit
ratings, business affairs, or operations of Aquarius and its subsidiaries,
whether or not arising in the ordinary course of business since the date of
the Placing Agreement as a result of which the Bookrunner and the Co-Lead
Manager (acting in good faith) consider it to be impractical, inappropriate or
inadvisable to proceed with the Placing, Admission or trading in the Placing
Shares;
(h) the representations, warranties and undertakings on the part of Aquarius
contained in the Placing Agreement being true and accurate in all respects and
not misleading in any respect on and as of the date of the Placing Agreement
and at certain other times up until before Admission as if they had been
repeated by reference to the facts and circumstances then existing and no
matter having arisen prior to the time of Admission which might reasonably be
expected to give rise to a claim under the indemnity in the Placing Agreement
and which, in any such case, Merrill Lynch or Euroz, acting in good faith,
considers whether singularly or in the aggregate to be material in the context
of the Placing, the Rights Issue, Admission or trading in the Placing Shares
following Admission;
(i) the Convertible Bond Underwriting Agreement having become unconditional
in all respects (other than certain specified conditions relating to the
Placing and payment of its proceeds) and incapable of termination by any of
the parties to it, and not having lapsed or been terminated prior to
Admission;
(j) the Implementation Agreement relating to Ridge not having lapsed or been
terminated prior to Admission and no condition thereunder having failed as a
result of which either Merrill Lynch or Euroz (acting in good faith) considers
it to be impracticable, in appropriate or inadvisable to proceed with the
Placing;
(k) the Prospectus not containing any information (which is not in the
underwriting proof) which, in the opinion of either Merrill Lynch or Euroz
(acting in good faith), is material and adverse for the purposes of procuring
Placing commitments or the Placees agreeing to subscribe for Placing Shares;
and
(l) no event referred to in section 87G(1) of the Financial Services and
Markets Act 2000 ("FSMA") arising between the time of publication of the
Prospectus and Admission and no Supplementary Prospectus being published by or
on behalf of the Company before Admission which either of Merrill Lynch or
Euroz, acting in good faith, considers whether singularly or in the aggregate
to be material in the context of the Placing, the Rights Issue, Admission or
trading in the Placing Shares following Admission.
If any of the conditions contained in the Placing Agreement in relation to the
Placing Shares are not fulfilled or waived by the Bookrunner and the Co-Lead
Manager (acting together), by the respective time or date where specified (or
such later time and/or date as Aquarius and the Bookrunner and the Co-Lead
Manager may agree), the Placing will not proceed and the Placee`s rights and
obligations hereunder in relation to the Placing Shares shall cease and
terminate at such time and each Placee agrees that no claim can be made by the
Placee in respect thereof.
The Bookrunner and the Co-Lead Manager may, at their discretion and upon such
terms as they think fit, waive compliance by Aquarius with the whole or any
part of any of Aquarius`s obligations in relation to the conditions in the
Placing Agreement save that the condition in the Placing Agreement relating to
Admission taking place may not be waived. Any such extension or waiver will
not affect Placees` commitments as set out in this announcement.
None of the Bookrunner, Aquarius or any other person shall have any liability
to any Placee (or to any other person whether acting on behalf of a Placee or
otherwise) in respect of any decision they may make as to whether or not to
waive or to extend the time and /or the date for the satisfaction of any
condition to the Placing or for any decision they may make as to the
satisfaction of any condition or in respect of the Placing generally, and by
participating in the Placing each Placee agrees that any such decision is
within the absolute discretion of the Bookrunner and the Co-Lead Manager.
Termination of the Placing Agreement
The Bookrunner or and the Co-Lead Manager are each entitled, at any time
before Admission, to terminate the Placing Agreement by giving notice to
Aquarius if, amongst other things:
(a) there has been a breach of any of the warranties or undertakings
contained in the Placing Agreement or of any other provision in the Placing
Agreement which the Bookrunner and Co-Lead Manager consider, acting in good
faith, to be material in the context of the Placing or any of the matters
contemplated by the Placing Agreement; or
(b) it shall come to the notice of the Bookrunner or the Co-Lead Manager that
any statement contained in this announcement, the underwriters` proof, or any
other public document or announcement issued or published by or on behalf of
Aquarius in connection with the Placing (together the "Placing Documents"), is
or has become untrue, incorrect or misleading in any respect, or any matter
has arisen, which would, if such document had been issued at that time,
constitute an omission from such document, or any of them, and which the
Bookrunner or the Co-Lead Manager considers (acting in good faith) to be
material in the context of the Placing, Admission or any of the transactions
contemplated by the Placing Agreement; or
(c) there has occurred (i) any material adverse change in the financial
markets in the United States, the United Kingdom, Australia, South Africa, or
any member state of the EEA or in the international financial markets, (ii)
any outbreak or escalation of hostilities, act of terrorism or other calamity
or crisis or (iii) any change or development involving a prospective change in
national or international political, financial or economic conditions, or
currency exchange rates or exchange controls, in each case the effect of which
is such as to make it, in the judgement of the Bookrunner or and the Co-Lead
Manager, impracticable or inadvisable to proceed with the Placing; or
(e) trading in any securities of Aquarius is suspended or limited by the
London Stock Exchange, the ASX or the JSE or there are certain other
disruptions, limitation or suspensions in respect of the operations of certain
stock exchanges or a banking moratorium is declared by certain authorities; or
(f) there is the occurrence of an adverse change (or a prospective adverse
change) in US, UK, South African, Australian or Bermudan taxation affecting
Common Shares or the transfer of such shares or exchange controls are imposed
by the US, UK, South African, Australia or Bermuda, the effect of which the
Bookrunner and Co-Lead Manager consider, acting in good faith, makes
impracticable, inappropriate, or inadvisable to proceed with the proposed
Placing or Proposed Rights Issue.
Upon such termination, the parties to the Placing Agreement shall be released
and discharged (except for any liability arising before or in relation to such
termination) from their respective obligations under or pursuant to the
Placing Agreement subject to certain exceptions.
By participating in the Placing, Placees agree that the exercise by the
Bookrunner and the Co-Lead Manager of any right of termination or other
discretion under the Placing Agreement shall be within the absolute discretion
of the Bookrunner and Co-Lead Manager and that they need not make any
reference to Placees and that they shall have no liability to Placees
whatsoever in connection with any such exercise or failure so to exercise.
No Prospectus
No Prospectus has been published in order to effect the sale of shares in the
Placing. A Prospectus is anticipated to be approved as soon as practicable by
the UKLA (in accordance with the UK Financial Services and Markets Act 2000)
in order to bring the Placing Shares to Admission and in order to offer new
common shares in the Proposed Rights Issue. No prospectus will be published
within the meaning of the South African Companies Act 61 of 1973 nor the
Australian Corporations Act.
Each Placee, by accepting a participation in the Placing, agrees that the
content of this Announcement (including the Appendices) is exclusively the
responsibility of Aquarius and confirms that it has neither received nor
relied on any other information, representation, warranty, or statement made
by or on behalf of Aquarius, the Bookrunner or the Co-lead Manager or any
other person (save for any other offering document it may receive and agree in
writing with the Bookrunner or Euroz that it has received, which shall also be
exclusively the responsibility of Aquarius ("Agreed Offering Documents") and
none of the Bookrunner, Co-lead Manager or Aquarius nor any other person will
be liable for any Placee`s decision to participate in the Placing based on any
other information, representation, warranty or statement which the Placees may
have obtained or received. Each Placee acknowledges and agrees that it has
relied on its own investigation of the business, financial or other position
of Aquarius in accepting a participation in the Placing. Nothing in this
paragraph shall exclude the liability of any person for fraudulent
misrepresentation.
Registration and settlement
Settlement of transactions in the Placing Shares following Admission will take
place:
in respect of the Placing Shares to be held on the UK share register, in
Depositary Interest form within the system administered by Euroclear UK &
Ireland Limited ("CREST"), subject to certain exceptions; or
in respect of Placing Shares to be held on the Australian share register, on a
delivery versus payment basis in accordance with the CHESS Rules with the
Bookrunner or Co-lead Manager or their respective nominated affiliates acting
as brokers under the CHESS Rules to manage settlement on behalf of the
Company.
Aquarius reserves the right to require settlement for and delivery of the
Placing Shares (or a portion thereof) to Placees in certificated form if, in
the Bookrunner`s opinion, delivery or settlement is not possible or
practicable within the CREST or CHESS system or would not be consistent with
the regulatory requirements in the Placee`s jurisdiction.
Following the close of the Bookbuild for the Placing, each Placee allocated
Placing Shares in the Placing will be sent a contract note stating the number
of Placing Shares to be allocated to it at the Placing Price and settlement
instructions.
Each Placee agrees that it will do all things necessary to ensure that
delivery and payment is completed in accordance with the standing CREST, CHESS
or certificated settlement instructions that it has in place with the
Bookrunner or the Co-Lead Manager.
Aquarius will deliver the Placing Shares:
in Depositary Interest form to a CREST account operated by the Bookrunner as
agent for Aquarius and the Bookrunner will enter its delivery (DEL)
instruction into the CREST system. The input to CREST by a Placee of a
matching or acceptance instruction will then allow delivery of the relevant
Placing Shares to that Placee against payment; or
CHESS holdings as the Bookrunner or Co-lead Manager directs in respect of the
Placing Shares which are to be allotted in uncertificated form and, in each
case, ensure that the same are enabled for settlement as soon as practicable
after Placing Admission and in any event prior to the relevant Record Date.
It is expected that settlement will be on a T + 3 basis in accordance with the
instructions given to the Bookrunner or the Co-Lead Manager.
Interest is chargeable daily on payments not received from Placees on the due
date in accordance with the arrangements set out above at the rate of two
percentage points above LIBOR as determined by the Bookrunner.
Each Placee is deemed to agree that, if it does not comply with these
obligations, Aquarius may sell any or all of the Placing Shares allocated to
that Placee on such Placee`s behalf and retain from the proceeds, for
Aquarius`s account and benefit, an amount equal to the aggregate amount owed
by the Placee plus any interest due. The relevant Placee will, however, remain
liable for any shortfall below the aggregate amount owed by it and may be
required to bear any stamp duty or stamp duty reserve tax or other taxes or
duties (together with any interest or penalties) which may arise upon the sale
of such Placing Shares on such Placee`s behalf.
If Placing Shares are to be delivered to a custodian or settlement agent,
Placees should ensure that the trade confirmation is copied and delivered
immediately to the relevant person within that organisation. Insofar as
Placing Shares in Depositary Interest form are registered in a Placee`s name
or that of its nominee or in the name of any person for whom a Placee is
contracting as agent or that of a nominee for such person, such Placing Shares
should, subject as provided below, be so registered free from any liability to
UK stamp duty or stamp duty reserve tax. Placees will not be entitled to
receive any fee or commission in connection with the Placing.
Representations and warranties
By participating in the Placing each Placee (and any person acting on such
Placee`s behalf) acknowledges, undertakes, represents, warrants and agrees (as
the case may be) the following. It:
1. represents and warrants that it has read this announcement, including the
Appendix and any Agreed Offering Document, in its entirety;
2. acknowledges and agrees that no other offering document, listing
particulars or prospectus has been or will be prepared in connection with the
Placing;
3. acknowledges that the ordinary shares in the capital of Aquarius are
listed as a secondary listing on the Official List of the FSA, and Aquarius is
therefore required to publish certain business and financial information in
accordance with the rules and practices of the FSA, which includes a
description of the nature of Aquarius`s business and Aquarius`s most recent
balance sheet and profit and loss account and that it is able to obtain or
access such information without undue difficulty, and is able to obtain access
to such information or comparable information concerning any other publicly
traded company, without undue difficulty;
4. acknowledges that none of the Bookrunner Co-Lead Manager nor Aquarius nor
any of their affiliates nor any person acting on behalf of any of them has
provided, and will not provide, it with any material regarding the Placing
Shares or Aquarius or any other person other than this announcement; nor has
it requested any of the Bookrunner, the Co-Lead Manager, Aquarius, any of
their affiliates or any person acting on behalf of any of them to provide it
with any such information;
5. represents and warrants that it is outside the United States and is
subscribing for the Placing Shares in an "offshore transaction" (within the
meaning of Regulation S under the Securities Act); and it is acquiring the
Placing Shares for its own account or for an account with respect to which it
exercises sole investment discretion and in either case not with a view to, or
for resale in connection with, the distribution thereof, in whole or in part,
in the United States;
6. acknowledges that (i) it and, if different, the beneficial owner of the
Placing Shares is not, and at the time the Placing Shares are acquired will
not be residents or located in the United States, Canada or Japan, and (ii)
the Placing Shares have not been and will not be registered under the
securities legislation of the United States, Canada or Japan and, subject to
certain exceptions, may not be offered, sold, taken up, renounced or delivered
or transferred, directly or indirectly, in or into those jurisdictions;
7. acknowledges that the content of this announcement is exclusively the
responsibility of Aquarius and that neither of the Bookrunner nor the Co-Lead
Manager nor any person acting on their behalf has or shall have any liability
for any information, representation or statement contained in this
announcement, any Agreed Offering Document or any information previously
published by or on behalf of Aquarius and will not be liable for any Placee`s
decision to participate in the Placing based on any information,
representation or statement contained in this announcement, any Agreed
Offering Document or otherwise. Each Placee further represents, warrants and
agrees that the only information on which it is entitled to rely and on which
such Placee has relied in committing itself to subscribe for the Placing
Shares is contained in this announcement, the any Agreed Offering Document and
any information previously published by Aquarius by notification to a
Regulatory Information Service, such information being all that it deems
necessary to make an investment decision in respect of the Placing Shares and
that it has neither received nor relied on any other information given or
representations, warranties or statements made by any of the Bookrunner, the
Co-Lead Manager or Aquarius and none of the Bookrunner, the Co-Lead Manager or
Aquarius will be liable for any Placee`s decision to accept an invitation to
participate in the Placing based on any other information, representation,
warranty or statement. Each Placee further acknowledges and agrees that it has
relied on its own investigation of the business, financial or other position
of Aquarius in deciding to participate in the Placing;
8. acknowledges that neither of the Bookrunner, the Co-Lead Manager nor any
person acting on behalf of them nor any of their affiliates has or shall have
any liability for any publicly available or filed information, or any
representation relating to Aquarius, provided that nothing in this paragraph
excludes the liability of any person for fraudulent misrepresentation made by
that person;
9. represents and warrants that it has complied with its obligations in
connection with money laundering and terrorist financing under the Proceeds of
Crime Act 2002, the Terrorism Act 2000, the Terrorism Act 2006 and the Money
Laundering Regulations 2007 (the "Regulations") and, if making payment on
behalf of a third party, that satisfactory evidence has been obtained and
recorded by it to verify the identity of the third party as required by the
Regulations;
10. if a financial intermediary, as that term is used in Article 3(2) of EU
Directive 2003/71/EC (the "Prospectus Directive") (including any relevant
implementing measure in any member state), represents and warrants that the
Placing Shares purchased by it in the Placing will not be acquired on a non-
discretionary basis on behalf of, nor will they be acquired with a view to
their offer or resale to, persons in a member state of the European Economic
Area which has implemented the Prospectus Directive other than to qualified
investors, or in circumstances in which the prior consent of the Joint
Bookrunners has been given to the proposed offer or resale;
11. represents and warrants that it has not offered or sold and, prior to the
expiry of a period of six months from Admission, will not offer or sell any
Placing Shares to persons in the United Kingdom, except to persons whose
ordinary activities involve them in acquiring, holding, managing or disposing
of investments (as principal or agent) for the purposes of their business or
otherwise in circumstances which have not resulted and which will not result
in an offer to the public in the United Kingdom within the meaning of section
85(1) of the Financial Services and Markets Act 2000;
12. represents and warrants that it has not offered or sold and will not
offer or sell any Placing Shares to persons in the European Economic Area
prior to Admission except to persons whose ordinary activities involve them in
acquiring, holding, managing or disposing of investments (as principal or
agent) for the purposes of their business or otherwise in circumstances which
have not resulted in and which will not result in an offer to the public in
any member state of the European Economic Area within the meaning of the
Prospectus Directive (including any relevant implementing measure in any
member state);
13. represents and warrants that it has only communicated or caused to be
communicated and will only communicate or cause to be communicated any
invitation or inducement to engage in investment activity (within the meaning
of section 21 of FSMA) relating to the Placing Shares in circumstances in
which section 21(1) of FSMA does not require approval of the communication by
an authorised person;
14. represents and warrants that it has complied and will comply with all
applicable provisions of FSMA with respect to anything done by it in relation
to the Placing Shares in, from or otherwise involving, the United Kingdom;
15. (A) represents and warrants that it is a person falling within Article
19(5) and / or Article 49(2)(a) to (d) of the Financial Services and Markets
Act 2000 (Financial Promotion) Order 2005 or is a person to whom this
Announcement may otherwise be lawfully communicated; and
(B) acknowledges that any offer of Placing Shares may only be directed at
persons to the extent in member states of the European Economic Area who are
"qualified investors" within the meaning of Article 2(1)(e) of the Prospectus
Directive (Directive 2003/71/EC) and represents and agrees that it is such a
qualified investor;
16. represents and warrants that it is a person to whom an offer of
securities may be made under section 708(8) or 708(11) of the Australian
Corporations Act and agrees that it will not offer to sell the Placing Shares
to any person that is not a sophisticated or professional investor under
section 708(8) or 708(11) of the Australian Corporations Act until the day
after a notice is lodged by the Company with ASX that complies with
subsections 708A(5)(e) and (6) of the Australian Corporations Act;
17. represents and warrants that it is entitled to purchase the Placing
Shares under the laws of all relevant jurisdictions which apply to it, and
that its subscription of the Placing Shares will be in compliance with
applicable laws and regulations in the jurisdiction of its residence, the
residence of the Company, or otherwise;
18. undertakes that it (and any person acting on its behalf) will make
payment for the Placing Shares allocated to it in accordance with this
announcement on the due time and date set out herein, failing which the
relevant Placing Shares may be placed with other subscribers or sold as the
Bookrunner or the Co-Lead Manager may in their discretion determine and
without liability to such Placee;
19. acknowledges that its allocation (if any) of Placing Shares will
represent a maximum number of Placing Shares which it will be entitled, and
required, to subscribe for, and that Aquarius may call upon it to subscribe
for a lower number of Placing Shares (if any), but in no event in aggregate
more than the aforementioned maximum;
20. acknowledges that neither of the Bookrunner, the Co-Lead Manager, nor any
of their respective affiliates, nor any person acting on behalf of either of
them, is making any recommendations to it, advising it regarding the
suitability of any transactions it may enter into in connection with the
Placing and that participation in the Placing is on the basis that it is not
and will not be a client of either the Bookrunner or the Co-Lead Manager and
that the Bookrunner and the Co-Lead Manager have no duties or responsibilities
to it for providing the protections afforded to their clients or customers or
for providing advice in relation to the Placing nor in respect of any
representations, warranties, undertakings or indemnities contained in the
Placing Agreement nor for the exercise or performance of any of its rights and
obligations thereunder including any rights to waive or vary any conditions or
exercise any termination right;
21. undertakes that the person whom it specifies for registration as holder
of the Placing Shares will be (i) itself or (ii) its nominee, as the case may
be. Neither of the Bookrunner the Co-Lead Manager or Aquarius will be
responsible for any liability to stamp duty or stamp duty reserve tax
resulting from a failure to observe this requirement. Each Placee and any
person acting on behalf of such Placee agrees to participate in the Placing
and it agrees to indemnify Aquarius and the Bookrunner and the Co-Lead Manager
in respect of the same on the basis that the Placing Shares will be allotted
to the CREST stock account of Merrill Lynch who will hold them as nominee on
behalf of such Placee until settlement in accordance with its standing
settlement instructions (or as otherwise agreed with such Placee);
22. acknowledges that these terms and conditions and any agreements entered
into by it pursuant to these terms and conditions and any non-contractual
obligations arising out of or in connection with such agreements shall be
governed by and construed in accordance with the laws of England and Wales and
it submits (on behalf of itself and on behalf of any person on whose behalf it
is acting) to the exclusive jurisdiction of the English courts as regards any
claim, dispute or matter arising out of any such contract, except that
enforcement proceedings in respect of the obligation to make payment for the
Placing Shares (together with any interest chargeable thereon) may be taken by
Aquarius or the Bookrunner or the Co-Lead Manager in any jurisdiction in which
the relevant Placee is incorporated or in which any of its securities have a
quotation on a recognised stock exchange;
23. acknowledges that Merrill Lynch and Euroz will rely upon the truth and
accuracy of the representations, warranties and acknowledgements set forth
herein and which are irrevocable and it irrevocably authorises Merrill Lynch
and Euroz to produce this announcement, pursuant to, in connection with, or as
may be required by any applicable law or regulation, administrative or legal
proceeding or official inquiry with respect to the matters set forth herein;
24. agrees to indemnify and hold Aquarius, the Bookrunner, the Co-Lead
Manager and their respective affiliates harmless from any and all costs,
claims, liabilities and expenses (including legal fees and expenses) arising
out of or in connection with any breach of the representations, warranties,
acknowledgements, agreements and undertakings in this Appendix and further
agrees that the provisions of this Appendix shall survive after completion of
the Placing;
25. represents and warrants that it will acquire any Placing Shares purchased
by it for its account or for one or more accounts as to each of which it
exercises sole investment discretion and it has full power to make the
acknowledgements, representations and agreements herein on behalf of each such
account;
26. acknowledges that its commitment to subscribe for Placing Shares on the
terms set out herein and in any Agreed Offering Document and in the contract
note will continue notwithstanding any amendment that may in future be made to
the terms of the Placing and that Placees will have no right to be consulted
or require that their consent be obtained with respect to Aquarius`s conduct
of the Placing. The foregoing representations, warranties and confirmations
are given for the benefit of Aquarius as well as the Bookrunner and the Co-
Lead Manager. The agreement to settle a Placee`s subscription (and/or the
subscription of a person for whom such Placee is contracting as agent) free of
stamp duty and stamp duty reserve tax depends on the settlement relating only
to the subscription by it and/or such person direct from Aquarius for the
Placing Shares in question;
27. understands that no action has been or will be taken by any of the
Company, the Bookrunner, the Co-Lead Manager or any person acting on behalf of
Aquarius or the Bookrunner or the Co-Lead Manager that would, or is intended
to, permit a public offer of the Placing Shares in any country or jurisdiction
where any such action for that purpose is required;
28. in making any decision to purchase the Shares, confirms that it has
knowledge and experience in financial, business and international investment
matters as is required to evaluate the merits and risks of subscribing for or
purchasing the Placing Shares. It further confirms that it is experienced in
investing in securities of this nature in this sector and is aware that it may
be required to bear, and is able to bear, the economic risk of, and is able to
sustain a complete loss in connection with the Placing. It further confirms
that it relied on its own examination and due diligence of the Company and its
associates taken as a whole, and the terms of the Placing, including the
merits and risks involved;
29. warrants and represents that it has (a) made its own assessment and
satisfied itself concerning legal, regulatory, tax, business and financial
considerations in connection herewith to the extent it deems necessary; (b)
had access to review publicly available information concerning the Aquarius
group that it considers necessary or appropriate and sufficient in making an
investment decision; (c) reviewed such information as it believes is necessary
or appropriate in connection with its subscription or purchase of the Placing
Shares; and (d) made its investment decision based upon its own judgement, due
diligence and analysis and not upon any view expressed or information provided
by or on behalf of Merrill Lynch or Euroz;
30. understands and agrees that it may not rely on any investigation that
Merrill Lynch or Euroz or any person acting on their behalf may or may not
have conducted with respect to the Company, its group, or the Placing and
Merrill Lynch and Euroz have not made any representation to it, express or
implied, with respect to the merits of the Placing, the subscription or
purchase of the Placing Shares, or as to the condition, financial or
otherwise, of the Company, its group, or as to any other matter relating
thereto, and nothing herein shall be construed as a recommendation to it to
purchase the Placing Shares. It acknowledges and agrees that no information
has been prepared by Merrill Lynch or Euroz for the purposes of this Placing;
31. accordingly it acknowledges and agrees that it will not hold Merrill
Lynch or Euroz, any of their respective associates or any person acting on
their behalf responsible or liable for any misstatements in or omission from
any publicly available information relating to the Company`s group or
information made available (whether in written or oral form) in presentations
or as part of roadshow discussions with investors relating to the Company`s
group (the "Information") and that none of Merrill Lynch, Euroz or any person
acting on behalf of Merrill Lynch or Euroz, makes any representation or
warranty, express or implied, as to the truth, accuracy or completeness of
such Information or accepts any responsibility for any of such Information;
and
32. it will subscribe directly for the Placing Shares and the subscription
price payable by it will be more than Rand 100,000.
By participating in the Placing, each Placee (and any person acting on
Placee`s behalf) subscribing for Placing Shares acknowledges that: (i) the
Placing Shares are being offered and sold only pursuant to Regulation S under
the Securities Act in a transaction not involving a public offering of
securities in the United States and the Placing Shares have not been and will
not be registered under the Securities Act; and (ii) the offer and sale of the
Placing Shares to it has been made outside of the United States in an
"offshore transaction" (as such term is defined in Regulation S under the
Securities Act) and it is outside of the United States during any offer or
sale of Placing Shares to it.
Placees acknowledge that their acceptance is not by way of acceptance of any
public offer but is by way of a collateral contract and as such section 87Q of
the FSMA does not entitle any Placee to withdraw in the event that the Company
publishes a supplementary prospectus in connection with the Rights Issue or
the Placing. If, however, any Placee is entitled to withdraw, by accepting an
obligation to subscribe for Placing Shares, such Placee agrees to confirm its
acceptance of the offer on the terms contained in this letter on the same
terms immediately after such right of withdrawal arises.
In addition, Placees should note that they will be liable for any stamp duty
and all other stamp, issue, securities, transfer, registration, documentary or
other duties or taxes (including any interest, fines or penalties relating
thereto) payable outside the United Kingdom by them or any other person on the
subscription by them of any Placing Shares or the agreement by them to
subscribe for any Placing Shares.
Each Placee and any person acting on behalf of each Placee acknowledges and
agrees that the Bookrunner the Co-Lead Manager or any of their affiliates may,
at their absolute discretion, agree to become a Placee in respect of some or
all of the Placing Shares.
When a Placee or person acting on behalf of the Placee is dealing with the
Bookrunner or the Co-Lead Manager, any money held in an account with any of
the Bookrunner or the Co-Lead Manager on behalf of the Placee and/or any
person acting on behalf of the Placee will not be treated as client money
within the meaning of the rules and regulations of the FSA made under FSMA.
The Placee acknowledges that the money will not be subject to the protections
conferred by the client money rules; as a consequence, this money will not be
segregated from the Bookrunner`s or the Co-Lead Manager`s money in accordance
with the client money rules and will be used by the Bookrunner or the Co-Lead
Manager in the course of their own business; and the Placee will rank only as
a general creditor of the Bookrunner or the Co-Lead Manager.
All times and dates in this announcement may be subject to amendment. The
Bookrunner or the Co-Lead Manager shall notify the Placees and any person
acting on behalf of the Placees of any changes.
Past performance is no guide to future performance and persons needing advice
should consult an independent financial adviser.
APPENDIX II
RISK FACTORS
Investors and prospective investors should consider carefully whether an
investment in Aquarius is suitable for them in light of the information set
out in this announcement.
RISKS RELATED TO THE PGM INDUSTRY
Macroeconomic conditions, PGM commodity price volatility and other potentials
for decreased demand for PGMs may have an adverse impact on the Aquarius
Group.
The Aquarius Group`s revenue and earnings are dependent upon prevailing prices
for the PGM commodities it produces. These commodities are globally traded and
consequently the Aquarius Group is unable to directly control the prices it
receives for them. Historically, commodity prices have been volatile and are
subject to wide fluctuations in response to relatively minor changes in supply
and demand, market uncertainty and the overall performance of world or
regional economies.
PGM commodity prices have exhibited considerable volatility, trading in a wide
range during 2008. During the first half of 2008, pricing was dominated by
supply-side factors with electricity rationing and shortages in South Africa
raising fears of production shortfalls. These factors prompted speculative
activity contributing to the peaking of PGM prices towards the middle of 2008.
Since then, however, the rapid deterioration of the global macroeconomic
environment, in particular for autocatalysts amongst OECD members, has led to
reduced demand globally, stock drawdowns, reductions in inventories and the
unwinding of speculative positions by commodities traders. As a result, prices
of the PGM commodities the Aquarius Group produces have fallen significantly
over a relatively short period of time as depicted in the table below:
Average for
Unit Financial Financial Financial Six
year year year months
ended 30 ended 30 ended 30 ended 31
June 2006 June 2007 June 2008 December
2008
PGM Basket US$/oz 999.4 1,096.81 1,844.10 1,203.50
price
Nickel US$ /lb 6.94 16.89 12.48 6.87
Copper US$ /lb 2.22 3.21 3.54 2.61
Source: Average realised prices by the Aquarius Group
The Aquarius Group has not historically engaged in meaningful hedging against
declines in PGM commodity prices. Consequently, the most recent declines in
commodity prices have resulted in an adverse effect on the Group`s operational
results as reflected in the Group`s 2009 Half-Year Results.
While governments, including certain governments in Europe and that of the
United States, have announced (and implemented) monetary and fiscal stimulus
packages, there can be no assurance that such measures will be successful at
reinvigorating economic growth globally or otherwise. In addition, there can
be no assurance that adverse changes in the political, regulatory and economic
condition of individual countries or regions, particularly in less-developed
or more volatile regions, including China, Brazil, Russia and India, will not
contribute to further economic dislocation or delay global or regional
economic recovery. Continued economic decline (or weaker growth) will
adversely affect the related demand for commodities, which will lead to
further declines in prices for PGMs produced by the Aquarius Group. In
addition, speculative short positions in commodities on the futures markets
may cause further price declines for such commodities. Any sustained price
weakness will adversely affect the results of operations and the financial
condition of the Aquarius Group.
In addition, as a result of the factors described above, visibility as to the
timing of any recovery in the macroeconomic environment or in commodity prices
is limited, which makes forward planning for the management of the Aquarius
Group more difficult. Any changes in production levels in response to current
price levels or the Group`s estimates of future price levels imposes costs,
and if mistimed, could adversely affect the results of operations and the
financial condition of the Aquarius Group.
Other factors which could affect demand in the market for PGMs at any
particular point include:
- changes in automotive demand for PGMs;
- changes in industrial and jewellery demand for PGMs;
- changes in emission legislation necessitating the implementation of
higher PGM loadings in autocatalysts;
- substitution of PGMs in autocatalysts or the use of other `white` metals
in jewellery manufacturing;
- technological innovation in autocatalyst designs and increased thrifting
resulting in lower loadings of PGMs; and
- supply variations of these metals from major producing nations, such as
South Africa, Russia, the US, Canada, and Zimbabwe.
Aquarius may experience delays during development, construction and mine ramp-
up
The development of PGM prospects for mineral production may be subject to
unexpected problems or delays during development, construction and mine ramp-
up as a result of poor geology, inadequate recovery rates, capital expenditure
requirements and availability of funding, environmental and other regulations,
infrastructure requirements and availability and other issues outside of the
Aquarius Group`s control. Such problems may result in delays in the
commencement of mineral production. Accordingly, the Aquarius Group`s future
development activities may not result in the expansion or replacement of
current production with new production at equivalent profitability to what is
currently being achieved.
Actual reserves and resources may be lower than current estimates
The Aquarius Group reports mineral resources and reserves in accordance with
the SAMREC Code and the JORC Code. Mineral resource and reserve estimates are
subject to independent third party review on at least a one year cycle. The
methodology for estimating mineral resources and mineral reserves may be
updated over time and is reliant on certain assumptions being made. Declared
mineral resources and reserves are best estimates that may change as new
information becomes available. Consequently, the Aquarius Group`s mineral
resource and mineral reserves estimates may be revised up or down, which may
in turn have an impact on life-of-mine plans.
In respect of these estimates, no assurance can be given that the anticipated
tonnages and grades will be achieved, that the indicated level of recovery
will be realised or that mineral reserves can be mined or processed
profitably. Actual reserves may not conform to geological, metallurgical or
other expectations and the volume and grade of ore recovered may be below the
estimated levels. In addition, there can be no assurance that mineral
recoveries in small-scale laboratory tests will be duplicated in larger-scale
tests under on-site conditions or during production. Lower market prices,
increased production costs, reduced recovery rates and other factors may
render the Aquarius Group`s reserves uneconomic to exploit and may result in
the revision of its reserve estimates from time to time. Reserve data is not
indicative of the future results of operations. If the Aquarius Group`s actual
mineral reserves and mineral resources are less than current estimates, the
Aquarius Group`s business, results of operations and financial condition may
be materially and adversely affected.
Exploration and development activities for new PGM resources may not be
successful
Exploration for and development of new PGM resources involves significant
risk, which even a combination of careful evaluation, experience and knowledge
will not eliminate. While the discovery of an ore body may result in
substantial rewards, few properties, which are explored are ultimately
developed into producing mines. Major expenses may be required to establish
reserves by drilling, constructing mining and processing facilities at a site.
Substantial expenses may be incurred on exploration projects which are
subsequently abandoned due to poor exploration results or the inability to
define reserves which can be mined economically.
Even if an exploration programme is successful and economically recoverable
PGMs are found, it can take a number of years from the initial phases of
drilling and identification of the mineralization until production is
possible, during which time the economic feasibility of extraction may change
and PGMs that were economically recoverable at the time of discovery, cease to
be. There can be no assurance that PGMs recovered in small-scale tests will be
duplicated in large-scale tests under on-site conditions or in production
scale operations, and material changes in geological resources or recovery
rates may affect the economic viability of PGM projects.
Exploration and development programmes may not result in profitable commercial
mining operations. The economics of developing PGM properties are affected by
many factors including the cost of operations, fluctuations in the price of
PGMs, costs of equipment and government regulations.
The business of mining PGM metals involves a number of risks and hazards, not
all of which are fully covered by insurance
The PGM mining business is susceptible to numerous risks and hazards, some of
which are outside of the Aquarius Group`s control.
In particular, hazards associated with underground mining include:
- rock bursts;
- seismic events;
- underground fires;
- cave-ins or falls of ground;
- discharges of gases and toxic chemicals;
- flooding;
- accidents and injuries; and
- other conditions resulting from drilling, blasting and removal and
processing of material associated with hard-rock underground mining.
Hazards associated with opencast mining operations at the Marikana and
Kroondal sites, which accounted for approximately 3 per cent. of the Aquarius
Group`s tonnage in the financial year ended 30 June 2008, include:
- flooding of the pit;
- collapse of the pit walls;
- accidents associated with the operation of large mining and rock
transportation equipment; and
- accidents associated with the preparation and ignition of large-scale
blasting operations.
Hazards associated with mining waste/tailings dumps include:
- accidents associated with operating a waste dump and transportation;
- production disruptions due to weather; and
- production disruptions due to failure (slumping) of a section of the
tailings dam wall.
The occurrence of one or more of these events may result in the death of, or
personal injury to, personnel, the loss of mining equipment, damage to or
destruction of mineral properties or production facilities, monetary losses,
delays in production, environmental damage and potential legal liabilities. As
a result, Aquarius` operations could be affected and, if such effects were
material, its financial position could be adversely impacted.
Although the Aquarius Group maintains insurance in an amount that it considers
to be adequate, liabilities might exceed policy limits. Insurance fully
covering sovereign risk and many environmental risks (including potential
liability for pollution or other hazards as a result of disposal of waste
products occurring from exploration and production) is not generally available
to the Aquarius Group or to other companies in the mining industry.
Furthermore, the Aquarius Group itself may decide not to take out insurance as
a result of high premiums or other reasons. The realisation of any significant
liabilities in connection with the Aquarius Group`s mining activities as
described above could have a material and adverse effect on its results,
operations or financial conditions.
The PGM industry is subject to general environmental and other regulatory
requirements
The activities of operators in the PGM industry, such as the Aquarius Group
are subject to environmental regulations promulgated by government agencies
from time to time. Environmental legislation generally provides for
restrictions and prohibitions on spills, releases or emissions of various
substances produced in association with mining operations, which would result
in environmental pollution.
Exploration and mining activities generally require permits from various
governmental authorities and such operations are and will be governed by laws
and regulations regarding prospecting, labour standards, occupational health,
waste disposal, toxic substances, land use, environmental protection, safety
and other matters.
There can be no assurance that compliance with these laws and regulations or
changes thereto or the cost of rehabilitation of site operations or the
failure to obtain necessary permits, approvals or prospecting or mining rights
or successful challenges to the grant of such permits, approvals and leases
will not adversely affect the results of operations or the financial condition
of Aquarius.
The PGM mining industry is capital intensive, complex and expensive
The PGM mining industry is capital intensive, complex and expensive. Large
amounts of capital are required to implement projects, and long-term
production and processing requires both significant capital expenditure and
ongoing maintenance expenditure. Any reduction in capital expenditure and
investment undertaken by the Aquarius Group may ultimately result in the
Aquarius Group no longer being able to access sufficient mineral resources to
continue production at cost-effective levels. Furthermore, any such
curtailment may cause the Aquarius Group to forego some of the benefits of any
future rises in commodity prices, as it is generally costly or impossible to
resume production immediately or complete a deferred expansionary capital
expenditure project, which in the longer term may adversely affect the results
of operations or financial condition of the Aquarius Group.
SPECIFIC RISKS RELATED TO AQUARIUS` OPERATIONS IN THE PGM INDUSTRY IN SOUTH
AFRICA
The costs of complying with applicable laws and governmental regulations may
have an adverse impact on the Aquarius Group`s business in South Africa
The majority of the Aquarius Group`s operations and exploration and
development activities are located in South Africa and are subject to laws and
regulations governing various matters. These include laws and regulations
relating to environmental protection, including the management of natural
resources, management and use of hazardous substances and explosives,
exploration, development of mines, production and post-closure reclamation and
rehabilitation, exports, price controls, repatriation of capital and exchange
controls, taxation, mining royalties, labour standards and occupational health
and safety, including mine safety and historic and cultural preservation.
The costs associated with compliance with these laws and regulations are
substantial and possible future laws and regulations, changes to existing laws
and regulations (including the imposition of higher taxes and mining
royalties) could cause additional expense, capital expenditures, restrictions
on or suspensions of the Aquarius Group`s operations and delays in the
development of its mining assets. Moreover, these laws and regulations may
allow governmental authorities and private parties who have a substantial and
direct interest in the mining operations or the consequences of the mining
operations to bring lawsuits based upon damages to property and injury to
persons resulting from the environmental and health and safety impacts of the
Aquarius Group`s past and current operations, and could lead to the imposition
of substantial fines, penalties or other civil or criminal sanctions.
Environmental laws and regulations change frequently and are generally
becoming more stringent. If the Aquarius Group`s environmental compliance
obligations in South Africa were to change as a result of changes to the
legislation or in certain assumptions it makes to estimate liabilities, or if
unanticipated conditions were to arise in its operations, the Aquarius Group`s
expenses and provisions would increase to reflect these changes. If material,
these expenses and provisions could adversely affect its business, operating
results and financial condition.
The Aquarius Group`s exposure to environmental liability in South Africa is
determined by reference to the approved environmental management programs
(EMPs) which the Group has been obliged to obtain for its South African
operations. The process in place requires mining companies, as a prerequisite
for applications for mining rights and prospecting (exploration) rights, to
submit EMPs to the regulator for approval and once so approved, the mining
company is obliged to comply with the approved EMP when prospecting or mining.
The environmental liability of South African mining companies is thus easily
determined by reference to these approved EMPs. Further, under South African
mining legislation, funding for environmental rehabilitation at mine closure
has to be provided as a prerequisite for the granting of mining rights. The
quantum of this funding is reviewed each year. The funding is placed at the
disposal of the regulator if a mining company goes insolvent so that
environmental rehabilitation can take place notwithstanding such insolvency.
Environmental and health and safety legislation is evolving in a manner
requiring stricter standards and these higher standards are taken into account
when compiling EMPs. The Department of Minerals and Energy is the lead
government agency when it comes to enforcement of compliance with EMPs.
Material changes to the royalty legislation in South Africa may have an
adverse impact on the Aquarius Group
The Minerals and Petroleum Resources Royalty Act, No 28 of 2008 (Royalty Act)
was assented to on 17 November 2008 and was signed and gazetted on 24 November
2008. The purpose of the Royalty Act is ``to impose a royalty on the transfer
of mineral resources and to provide for matters connected therewith.``
In terms of the Royalty Act, the government of South Africa will impose a
royalty payment obligation on mineral resources companies in South Africa. The
Royalty Act divides minerals into two types, namely refined and unrefined
minerals. The determination of the royalty is formulaic based on gross sales
and earnings derived from the winning of minerals before interest, taxes,
depreciation and amortisation and therefore the more profitable an operation,
the higher the percentage charged. In terms of the Royalty Act, refined
minerals attract a maximum royalty of 5 per cent. and unrefined minerals a
maximum of 7 per cent.. For the purposes of the royalty, PGMs that are refined
and smelted to 99.9 per cent. purity are deemed, in terms of the Royalty Act,
as refined minerals attracting a maximum royalty of 5 per cent. However, in
the instance where PGMs are sold pre-smelting and refining, they would be
deemed, for the purposes of the Royalty Act, to be unrefined minerals
attracting a maximum royalty of 7 per cent.
The Royalty Act comes into operation on 1 May 2009 and applies in respect of a
mineral resource transferred on or after that date. However, the South African
Minister of Finance, in his February 2009 annual budget speech, suspended the
imposition of royalties under the Royalty Act until March 2010.
The royalty legislation does not present a risk which is unique to the South
African mining industry, but changes regarding the timing of the
implementation and the increased regulatory compliance burden creates a level
of incremental uncertainty.
South African Government transformation initiatives under the MPRD Act and
Mining Charter
The mining industry in South Africa is subject to extensive regulation. Whilst
the regulatory environment is developing, it lacks clarity in a number of
areas and is subject to interpretation, review and amendment. A current risk
pertaining to the mining industry in South Africa is compliance with the Black
Economic Empowerment ("BEE") requirements as prescribed by the regulatory
framework for mining. Aquarius cannot predict the outcome or timing of any
amendments or modifications to applicable regulations or the interpretation
thereof, the release of new regulations or their potential impact on its
business.
Pursuant to the MPRD Act, the South African government is the custodian of all
mineral rights. Applications for prospecting rights and mining rights are
lodged with the DME for consideration and the DME will issue a prospecting
right or a mining right to competent applicants who comply with the relevant
provisions pertaining to the application for such rights.
The MPRD Act outlines a set of procedures designed to transfer previous
mineral property tenure in terms of old order rights. The transitional
arrangements of the MPRD Act require old order prospecting rights to have been
``converted`` into new order prospecting rights by 1 May 2006 and old order
mining rights to be ``converted`` into new order rights by 1 May 2009.
The MPRD Act contains provisions setting out its empowerment objectives, which
are aimed at the economic empowerment of historically disadvantaged persons in
South Africa (HDSAs). One of the requirements which must be met before the DME
will issue a prospecting right or mining right is that an applicant must
facilitate the participation by HDSAs in the prospecting and mining operations
which result from the granting of the prospecting and mining rights. Under the
Mining Charter, which was published to give substance and guidance to the
empowerment provisions set out in the MPRD Act, applicants must be able to
demonstrate that they have an equity participation in a prospecting or mining
venture by HDSAs of 15 per cent. by 1 May 2009 and 26 per cent. by 1 May 2014.
The Mining Charter also includes provisions relating to skills development,
procurement from HDSA companies, social upliftment and beneficiation. The
Aquarius Group`s exploration and mining activities are dependent upon the
timely granting of appropriate licences, permits and regulatory consents which
may be granted for a defined period of time, or may not be granted or may be
withdrawn subject to a regulatory process, or may be subject to statutory
restrictions. The Aquarius Group will require numerous further licences,
permits and regulatory consent for the conduct of any new mining operations.
There can be no assurance that such authorisations will be granted or renewed
(as the case may be) or as to the terms of such grants or renewals. It must be
noted however, that under the MPRD Act, the Minister of Minerals and Energy
must grant prospecting rights or mining rights to applicants for such rights,
if the applicant has complied with the formalities for such applications and
the prerequisites for the granting of the rights. All of these formalities and
prerequisites are objectively determinable from the MPRD Act, the Mining
Charter and the regulations promulgated under the MPRD Act.
The next general election in South Africa will be held on 22 April 2009 and it
could give rise to a change of administration. It is anticipated that the
ruling party, the African National Congress, will retain its majority and
accordingly, no significant change in government policy is expected.
Foreign exchange control risk may arise due to amendments to the existing
South African foreign exchange control regime
Foreign derived loan capital or equity capital may be introduced into South
Africa through a formal system of exchange control. Proceeds from the sale of
assets in South Africa owned by a non-resident are remittable to the non-
resident, provided that appropriate exchange control approvals have been
obtained prior to such remission. There is a risk that amendments to the
existing foreign exchange control regime may adversely affect Aquarius.
Political risk may affect the Aquarius Group`s operations
South Africa has undergone major constitutional changes to effect majority
rule and to upgrade the laws regarding mineral title. Accordingly, all laws
may be considered relatively new, resulting in risks including but not limited
to, misinterpretation of new laws, increased taxes, royalties, environmental
regulation and mine safety arising out of a new sovereignty over mining, any
or all of which could have an adverse impact upon the Aquarius Group. The
Aquarius Group`s operations may also be affected in varying degrees by
political and economic instability, crime, extreme fluctuations in currency
exchange rates and inflation, all of which are beyond the Aquarius Group`s
control.
Changes, if any, in mining or investment policies or shifts in political
attitude in South Africa may adversely affect the Aquarius Group`s operations
or its future profitability. Operations may be affected to varying degrees by
government regulations with respect to, but not limited to, restrictions on
production, price controls, export controls, currency remittance, income
taxes, expropriation of property, foreign investment, maintenance of claims,
environmental legislation, land use, land claims of local people, water use
and mine safety.
Foreign exchange fluctuations may have a material and adverse impact on the
Aquarius Group`s operations and financial position
The Aquarius Group`s primary products - platinum, palladium, rhodium and
nickel - are priced in the international market, primarily in US dollar-based
contracts. The majority of the Aquarius Group`s operating costs are paid in
Rand or US dollars. Exploration projects and joint venture operations outside
of South Africa also require capital expenditure in US dollars. The Aquarius
Group does not hedge the majority of its exposure to fluctuations in foreign
exchange rates.
Therefore, a significant movement in exchange rates (primarily the Rand versus
the US dollar) may have a significant and adverse impact on the Aquarius
Group`s operations and financial condition. Given that the operation in
Zimbabwe is run in US dollars, together with the dollarisation of the economy,
currency risk posed by a weakening in the Zimbabwean dollar exchange rate is
eliminated.
Industrial relations disputes may arise as a result of substantial trade union
participation which may lead to the Aquarius Group experiencing work stoppages
Aquarius` South African workforce is unionised: approximately 75 per cent. of
the workforce is represented by a number of recognised unions, including the
National Union of Mineworkers which is the dominant union in South Africa.
Some of the workforce is directly employed by AQPSA whilst most are employed
by contracting companies, which carry out the mining activities for Aquarius
Platinum (South Africa) (Pty) Ltd (AQPSA). AQPSA, or the contracting company,
negotiates wages and conditions of service with unions every year and, where
possible, multi-year agreements are negotiated. AQPSA, which employs by far
the largest number of Aquarius` employees, has a strong relationship with
these unions and their members (its employees) and is committed to discussing
labour and wage issues with the unions as soon as such issues arise. During
the financial year ended 30 June 2008, AQPSA and/or its subcontracting company
experienced work stoppages at the Kroondal and Marikana mines, which affected
production. There can be no assurance that unresolved labour disputes would
not lead to production being stopped for indefinite periods due to strikes and
other industrial action. In addition, the Aquarius Group may experience
increased employee expenses as a result of collective bargaining.
HIV/AIDS and tuberculosis could have a negative effect on the Aquarius Group`s
workforce
The HIV/AIDS pandemic remains a significant challenge to companies operating
in southern Africa. Allied to the HIV/AIDS pandemic is the increasing
occurrence of tuberculosis amongst the workforce. Any significant increase in
the incidence of HIV/AIDS infection, HIV/AIDS-related diseases and
tuberculosis in the workforce may adversely impact the business, operations
and financial condition of businesses in the industries in which the Aquarius
Group operates. In addition, any significant changes in legislation relating
to HIV/AIDS in the workplace could have a cost impact on the business of the
Group, in relation to providing for anti-retroviral medication, sick leave and
carer leave.
The Aquarius Group may incur cost and damages in connection with existing and
future disputes
AQPSA is currently involved in an ongoing dispute with Grennaker LTA t/a
Moolman Mining SA ("Moolman"). It was agreed by consent, and an order taken on
2 March 2009, that the dispute relating to the misrepresentation issue be
referred to the trial court for resolution and that the arbitration relating
to the rise and fall issue be indefinitely suspended pending outcome of these
trial proceedings. The board of directors of AQPSA is of the reasonable
opinion that there is no exposure to Aquarius. However, there can be no
guarantee that the costs and damages associated with this arbitration and any
future disputes will not have an adverse effect on the Aquarius Group`s
operations and financial condition.
The cost of occupational healthcare services may increase in the future
depending on underlying legislation and the profile of Aquarius Group`s
employees
Healthcare costs in South Africa have increased in recent years. Healthcare,
and particularly occupational healthcare, is provided by company-owned
facilities for the majority of employees. There is a risk that the cost of
providing such services could change in the future, depending on the nature of
underlying legislation and the profile of employees. This cost, should it
transpire, is difficult to estimate. The Aquarius Group has embarked on a
number of initiatives focused on improving the quality of life of its
employees, such as improved housing, transport, clinics and a comprehensive
wellness programme. Significant increase in healthcare cost may have a
material and adverse effect on the Aquarius Group`s operations and financial
condition.
The Aquarius Group depends on its key personnel and skilled workforce. If the
Aquarius Group is unable to attract and retain key personnel and a skilled
workforce, its business may be adversely affected
One critical aspect to be addressed by the government of South Africa is the
ongoing relative shortage of senior mining skills in South Africa. The
Aquarius Group`s challenge is to compete with other employers to attract,
retain, educate and incentivise its workforce and key personnel.
There can be no certainty that the services of its key personnel and skilled
workforce will continue to be available to the Aquarius Group. If the Aquarius
Group is not successful in retaining or attracting highly qualified
individuals in key management positions, highly-skilled engineers, geologists
and other skilled workers, its business may be materially harmed.
Failure of basic infrastructure in South Africa could impact negatively on the
Aquarius Group achieving its production targets
Infrastructure in South Africa is under strain, notably utilities such as
electricity and water supply. The Aquarius Group depends on the reliable and
continuous delivery of sufficient quantities of power to its mines. South
Africa has experienced and continues to a limited extent, to experience
widespread and prolonged power outages, also known as load shedding. Should a
serious failure of basic infrastructure take place or high occurrences of
power outages across the country continue, production at the Aquarius Group`s
operations in South Africa could be materially and adversely impacted.
RISKS RELATED TO THE RESOURCES INDUSTRY IN ZIMBABWE
Social, political and economic uncertainty and instability in Zimbabwe may
affect future foreign investment in the country
The Aquarius Group has a 50 per cent. interest in a joint venture entity in
Zimbabwe. Zimbabwe`s social, political and economic climate is currently
highly uncertain.
The economy has been in decline since 1999. Most sectors, including the health
sector, have virtually collapsed. An estimated 3,200 people have recently died
of cholera and 82,000 people are believed to be infected. Basic water
treatment facilities are non-existent and there is a general shortage of clean
water owing to non-functional facilities and a lack of chemicals. The country
has one of the highest prevalences of HIV/AIDS. Life expectancy is 34 years
for women and 36 years for men.
In March 2008, Zimbabwe held combined presidential, parliamentary and local
government elections which resulted in a run off election between ZANU PF
("PF") and the Movement for Democratic Change ("MDC") which was due to occur
in June 2008. However, the MDC, led by Mr Morgan Tsvangirai withdrew from the
run-off elections and PF became the ruling party led by its President, Mr
Robert Mugabe.
With the assistance of the Southern African Development Community (a regional
grouping of southern African states) led by South Africa, a power sharing
arrangement was brokered, which has led to the formation of a government
involving PF and two MDC formations. The government was officially inaugurated
on 13 February 2009 and remains in place to date.
Continued economic and political uncertainty in Zimbabwe may affect future
foreign investment in the country and may lead to the imposition of further
exchange controls, restrictions on the ownership of the Aquarius Group`s
assets and its ability to operate its business and export minerals and metals
from Zimbabwe. Should such events occur, they may have an adverse effect on
the Aquarius Group`s business and operations in Zimbabwe and its financial
condition.
The Aquarius Group`s operations may be adversely affected by changes to
ownership, mineral rights, royalties and health and safety legislation in
Zimbabwe
The Parliament of Zimbabwe passed the Indigenisation and Economic Empowerment
Bill on 26 September 2007, which requires a 51 per cent. shareholding by
indigenous Zimbabweans in all foreign owned companies. The Indigenisation and
Economic Empowerment Act ("Empowerment Act") was promulgated on 17 April 2008
with some slight changes to the bill passed on 26 September 2007, the most
important of which was the removal of a section that prohibited foreigners
from owning real estate or immovable property in Zimbabwe. The Empowerment Act
remains current law, however none of its provisions have been implemented. The
Empowerment Act empowers the government to impose the choice of indigenous
partners on businesses and to levy on them a fund from which those indigenous
partners can borrow to finance their equity acquisitions in the relevant
businesses.
Specific details on the implementation of the Empowerment Act in various
sectors are pending. The details of implementation of the Empowerment Act on
the mining sector have been under discussion for some time and were proposed
to be incorporated into a revision of the Mines and Minerals Act, which is yet
to be brought before parliament. Depending on the final outcome, one
possibility is that the Aquarius Group may lose joint control over the Mimosa
mine. Loss of joint control would result in the deconsolidation of the
Zimbabwe assets and liabilities and may result in a loss to the Aquarius
Group. It is impracticable to quantify any potential impact of a loss of joint
control at this stage. In addition to the above, as the economic environment
remains uncertain, future developments may have an impact on the ability of
the Aquarius Group to recover the full carrying values of the Aquarius Group`s
assets in Zimbabwe.
If the Government decides to implement the Empowerment Act, the precise manner
in which foreigners may divest themselves of or relinquish their controlling
share in existing entities in accordance with the Empowerment Act is uncertain
and the Aquarius Group cannot predict the outcome of it or its impact on its
business. It is noteworthy that the Empowerment Act allows the relevant
government minister to prescribe, for a temporary period, the duration of
which has not been indicated, a lesser interest than 51 per cent. for
indigenous Zimbabweans in mergers, restructurings, acquisitions, unbundlings
and demergers.
The Empowerment Act requires the relevant government minister to carry out an
indigenous and empowerment rating of every company in a manner to be
prescribed. Such a rating process may present opportunities to impress on the
relevant government minister the need to take into account factors other than
mere equity.
In Zimbabwe, a royalty of 3 per cent. on precious metals and 2 per cent. on
base metals is payable to the government of Zimbabwe under the Mines and
Minerals Act. This royalty, which was introduced in 2002, was off-set by the
lowering of the dividend tax rate to 15 per cent. There can be no assurance
that the level of such royalties payable by Aquarius to the government of
Zimbabwe will not increase in the future. Such increase might have a
significant and adverse impact on the operations of the Aquarius Group and its
financial condition.
The Aquarius Group`s Zimbabwean operations operate under similar health and
safety legislation to that in South Africa. Due to the uncertainty regarding
the political environment in Zimbabwe, it is uncertain whether this
legislation will remain in place or be amended in the future. This could have
an adverse impact on the profitability of the operation in this jurisdiction.
Changes to monetary policy in Zimbabwe require companies operating in Zimbabwe
to hold foreign exchange accounts within the country and to gain approval from
the Reserve Bank of Zimbabwe to remit certain amounts abroad
Due to the economic conditions in Zimbabwe, the country has a severe shortage
of foreign exchange. Under the new monetary policy issued by the Reserve Bank
of Zimbabwe, Aquarius will require exchange control approval from the Reserve
Bank of Zimbabwe to remit amounts in excess of US$1.5 million abroad. This may
result in challenges in repatriating funds to Aquarius. It is too early to
assess the impact of the official dollarisation of the Zimbabwean economy on
Aquarius.
Labour disputes in Aquarius` Zimbabwean operations may adversely affect the
business, operations and financial condition of Aquarius` Zimbabwean
operations
At Aquarius` Zimbabwean operations, the opencast operations have to date been
outsourced to a mining contractor. However, this profile is changing with the
transition to underground mining, which will be owner-managed. There can be no
assurance that labour disputes will not arise from mining contractor
employees. Such disputes may lead to strikes, delays in production and other
industrial action. Such events may have a material and adverse effect on the
operation of Aquarius and the financial condition of Aquarius.
Failure of basic infrastructure in Zimbabwe could impact negatively on
Aquarius achieving its production targets
Infrastructure in Zimbabwe is under great strain, including utilities such as
electricity and water supply. Production could be materially and adversely
impacted in the event of a serious failure of basic infrastructure in the
country. However, large operations have managed to survive power shortages by,
amongst other things, arranging with the national power authority for the
private importation, through the national grids, of power from neighbouring
countries such as South Africa, Mozambique, Zambia and the Democratic Republic
of Congo.
OTHER RISKS RELATED TO THE AQUARIUS GROUP`S OPERATIONS
Forecasts of capital costs and operating costs may differ from estimates
Capital and operating cost figures included in this announcement are in many
instances estimates only and no assurance can be given that such estimates are
accurate. Such estimates are expressions of judgment based on knowledge and
experience. Estimates made at any given time may significantly change when new
information becomes available or when parameters that were used for such
estimates change. Whilst the capital and operating cost estimates contained in
this announcement are thought to be reliable, no assurance can be given that
capital and operating costs will not be greater than those anticipated.
Interest rate fluctuations may adversely affect the Aquarius Group
The Aquarius Group`s exposure to changes in interest rates results from
investing and borrowing activities undertaken to manage the liquidity and
capital requirements of the Aquarius Group. The Aquarius Group may limit its
ongoing exposure to adverse fluctuations in interest rates by using means such
as interest rate hedges (derivatives) and interest rate swaps. However there
can be no assurance that the Aquarius Group will not be adversely affected by
interest rate changes in the future.
The Aquarius Group`s long-term success is in part dependent on developing new
mines
The remaining lives of the Kroondal and Everest mines are 8 and 9 years
respectively. The Aquarius Group`s ability to sustain or increase levels of
PGM production is dependent in part on the successful development of new ore
bodies and/or expansion of existing mining operations. The economic
feasibility of development projects is based upon many factors, including,
among others: the accuracy of reserve estimates; metallurgical recoveries;
capital and operating costs of such projects; government regulations relating
to prices, taxes, royalties, land tenure, land use, importing, exporting and
environmental protection; and PGM prices. Development projects are also
subject to the successful completion of feasibility studies, the issuance of
necessary governmental permits and the availability of adequate financing.
Development projects have no operating history upon which to base estimates of
future cash flow. Estimates of proven and probable reserves and cash operating
costs are, to a large extent, based upon detailed geological and engineering
analysis. The Aquarius Group will conduct feasibility studies for proposed
future mining operations which derive estimates of capital and operating costs
based upon many factors, including, among others: anticipated tonnage and
grades of ore to be mined and processed; the configuration of the ore body;
ground and mining conditions; expected recovery rates; and anticipated
environmental and regulatory compliance costs.
It is possible that actual costs and economic returns of current and new
mining operations may differ materially from the Aquarius Group`s best
estimates. It is not unusual in the mining industry for new mining operations
to experience unexpected problems during the start-up phase and to require
more capital than anticipated. These additional costs could have an adverse
impact on the Aquarius Group`s future cash flows, earnings, results of
operations and financial condition.
An increase in the Aquarius Group`s production costs could reduce
profitability
Changes in the Aquarius Group`s production costs including the cost of energy,
diesel, steel, chemicals and explosives could have a material and adverse
impact on its profitability. Changes in costs of the Aquarius Group`s mining
and processing operations could occur as a result of unforeseen events, and
could result in changes in operating results. Many of these changes are beyond
the Aquarius Group`s control.
Mining operations have been temporarily suspended at the Everest mine
On 8 December 2008 the Aquarius Group announced the temporary suspension of
operations at the Everest mines owing to geotechnical issues, namely
instability as a result of subsidence occurring over an upper area of the
mine. Management has continued to assess the situation in conjunction with the
DME and a Section 54 notice in terms of the Mine Health and Safety Act is in
force prohibiting normal mining operations but allowing inspection teams to
enter the mine and permitting the resumption of pumping operations.
The business interruption due to subsidence is a significant event and in
assessing the lowest-risk way forward in terms of safety and operating cash
flow impact, the decision has been made to suspend operations for a minimum of
six months. This time will allow for a detailed technical investigation and
the determination of alternatives to re-establish access and beltways into the
underground workings after which the Everest mines can be returned to
production in a safe manner. One possibility includes two alternate decline
positions that could be developed from the previous opencast areas, each
offering a technically acceptable access route. It should therefore be
emphasised that the Aquarius Group`s management believes that the subsidence
event does not jeopardise the sustainability of the Everest mine on a long-
term basis. However, there can be no guarantee that the mine will be re-
opened.
An insurance claim may be made based on the subsidence event. AQPSA considers
that there is sufficient ground for a combination of claims for subsidence,
loss of earnings, clearance costs and that the potential insurance cover will
off-set a large part of the business interruption. However, there is no
guarantee that this be will be the case.
Dependence on key personnel and external contractors may have an adverse
effect on the Aquarius Group`s operations and financial condition
The success of the Aquarius Group depends to a significant extent upon its
management and a limited number of key employees. Aquarius has a small
management team and few employees and the loss of a key management member or
one or more key employees could have a adverse effect on the Aquarius Group.
The retention of management and key employees cannot be guaranteed.
The success of the Aquarius Group`s operations is also dependent to a
significant extent on the efforts and abilities of outside contractors. Poor
performance or ceasing of business by the Aquarius Group`s outside
contractors, experts and advisers may have a material and adverse effect on
the operations of the Aquarius Group and its financial condition.
Any failure of management of future growth could adversely effect the Aquarius
Group`s business, operations and financial condition
There can be no assurance that the Aquarius Group will be able to effectively
manage the expansion of its operations, and the Aquarius Group`s current
systems, procedures and controls will need to be expanded and strengthened to
support the Aquarius Group`s future operations. Any failure to manage
effectively the Aquarius Group`s growth and development could have a material
adverse effect on the Aquarius Group`s business, operations and financial
condition. There is no certainty that all or, indeed, any of the elements of
the Aquarius Group`s current strategy, as described in this announcement, will
be delivered.
The Aquarius Group may, from time to time, seek to undertake strategic
acquisitions or other such business opportunities. However, there can be no
guarantee that the Aquarius Group will be able to identify future suitable
opportunities or, if such opportunities are identified, fund such
opportunities, integrate acquisitions or other collaborations into its
existing business or successfully realise the growth expected from such
opportunities. In addition, Aquarius may face increased competition from
diversified resource companies who are taking an interest in PGMs. To the
extent the Aquarius Group encounters such problems, its operations and
financial condition could be adversely affected.
Inflation may increase future operational costs without a concurrent
devaluation of the local currency against the dollar or an increase in the
dollar price of available commodities
As Aquarius is unable to control the market price at which the commodities it
produces are sold (except for any forward sales or derivative contracts), it
is possible that higher inflation in the countries in which the Aquarius Group
operates may result in an increase in future operational costs without a
concurrent devaluation of the local currency against the dollar or an increase
in the dollar price of the applicable commodities. Cost inflation in the
mining sector is more apparent during periods of high commodity prices as
demand for goods and services can exceed supply.
Provisional pricing arrangements may result in future price adjustment and
repayment in part of provisional payments
The Aquarius Group sells PGMs and other metals in concentrate form to Anglo
Platinum and Impala Platinum. The Aquarius Group receives a provisional
payment for the concentrate sold and recognises revenue at fair value based on
the expected forward price. However, final payments for such sales are made
later, based on the average market price for a month which can be up to three
months after the month of delivery. As a result, differences in the metals
price applied upon final payment and that applied on provisionally priced
sales contracts can result in significant PGM price adjustments and may result
in the repayment of provisional payments already received should the PGM
prices fall further.
Most of the Group`s revenues are derived from production at its four mining
operations, one of which is currently closed
The Aquarius Group has interests in 4 mining operations (Kroondal, Marikana,
Everest and Mimosa) and 2 tailings retreatment facilities (Platinum Mile and
Chrome Tailings Retreatment Plant). In the event of operational disruption at
the on site operations, as evidenced by the closure of the Everest mine, cash
flows are likely to be affected and this will have a adverse effect on the
Aquarius Group`s operations and its financial condition.
Corporate structure risk may affect the Aquarius Group`s ability to pay
dividends
As the Aquarius Group conducts business primarily through various subsidiaries
or its shareholdings in joint venture companies incorporated in various
jurisdictions, its ability to pay dividends to its shareholders depends on
such subsidiaries` and companies` ability to pay dividends and to advance
funds to their shareholders. Other contractual and legal restrictions
applicable to the Company`s subsidiaries or to companies in which the Aquarius
Group has shareholdings could also limit its ability to obtain cash from them.
Its rights to participate in any distribution of its subsidiaries` assets or
assets of companies in which it has shareholdings upon their liquidation,
reorganisation or insolvency would generally be subject to prior claims of
those subsidiaries` creditors, including any trade creditors and preferred
shareholders.
RISKS RELATING TO THE PLACING, RIGHTS ISSUE, NEW COMMON SHARES AND NEW DIS
Aquarius` Share price may fluctuate which could result in a decline in the
market price of the New Common Shares and New DIs
The market price of the Placing Shares and/or the Rights Issue Shares and/or
New DIs (including the Nil Paid Rights and DI Nil Paid Rights) and/or the
Common Shares and Depositary Interests could be subject to significant
fluctuations due to a change in sentiment in the market regarding the Placing
Shares and/or the Rights Issue Shares and/or New DIs (including the Nil Paid
Rights and DI Nil Paid Rights).
Any such fluctuations could result from national and global economic and
financial conditions, the market`s response to the Placing, Rights Issue and
Convertible Bond Issue, the PGM volume trend through 2009, market perceptions
of Aquarius, including its ability to manage its existing debt facilities and
raise new capital, regulatory changes affecting the Aquarius Group`s
operations, variations in the Aquarius Group`s operating results, business
developments of the Aquarius Group or its competitors and liquidity of
financial markets.
Stock markets have recently experienced significant price and volume
fluctuations that have affected the market prices for the Common Shares and
Depositary Interests. Further, the operating results and prospects from time
to time may be below the expectations of market analysts and investors. Any of
these events could result in a decline in the market price of the Nil Paid
Rights, DI Nil Paid Rights, New Common Shares and New DIs.
An active trading market in the Nil Paid Rights and DI Nil Paid Rights may not
develop
An active trading market in the Nil Paid Rights may not develop on ASX, the
LSE or JSE respectively. In addition, because the trading price of the Nil
Paid Rights and DI Nil Paid Rights depends on the trading price of the Common
Shares and Depositary Interests, the Nil Paid Rights and DI Nil Paid Rights
prices may be volatile and are subject to the same risks as noted elsewhere in
this announcement.
Aquarius` ability to pay cash dividends in the future will depend on the level
of profits and cash flows generated by the Aquarius Group
Due to current market conditions, the Board elected not to pay an interim
dividend in respect of the six months ended 31 December 2008. The Board has
decided in light of the Rights Issue, not to declare a final dividend for
2009. No assurance can be given that cash dividends will be paid in future.
Shareholders who do not acquire New Common Shares or New DIs in the Placing
and Rights Issue will experience dilution in their ownership of Common Shares
and Depositary Interests
If Shareholders do not take up the offer of Rights Issue Shares (or New DIs)
in the Rights Issue, their proportionate ownership and voting interests in
Aquarius will be reduced and the percentage that their Common Shares (or
Depositary Interests) will represent of the total share capital of Aquarius
will be reduced accordingly. Even if a Shareholder elects to sell his Nil Paid
Rights or DI Nil Paid Rights, the consideration he receives may not be
sufficient to compensate him fully for the dilution of his percentage
ownership of the Company`s share capital that may be caused as a result of the
Rights Issue. Regardless of whether a Qualifying Shareholder takes up the
offer of Rights Issue Shares, the effect of the Placing will be to reduce the
proportionate ownership and voting interests in the Common Shares of
Shareholders who do not participate in the Placing on a pro rata basis.
Any future issues of Common Shares and Depositary Interests will further
dilute the holdings of current Aquarius Shareholders and could adversely
affect the market price of Common Shares and Depositary Interests
Other than the proposed issue of New Common Shares and New DIs under the
Placing and Rights Issue, the issue of Common Shares pursuant to the First
Plats Agreement, conversion of options into Common Shares that have already
been granted, the issue of Common Shares on exercise of existing options, the
conversion rights under the Convertible Bonds in relation to the Convertible
Bond Issue and the Possible Acquisition, Aquarius has no current plans for an
offering of Common Shares or rights converting into Common Shares. However, it
is possible that Aquarius may decide to offer additional Common Shares in the
future either to raise capital or for other purposes. If Shareholders did not
take up such an offer of Common Shares or were not eligible to participate in
such offering, their proportionate ownership and voting interests in Aquarius
would be reduced and the percentage that their Common Shares would represent
of the total share capital of Aquarius would be reduced accordingly. An
additional offering, or significant sales of Common Shares by major
Shareholders, could have a material adverse effect on the market price of
Common Shares and Depositary Interests as a whole.
Restricted Shareholders may not be able to receive the Rights Issue Shares and
New DIs in the Rights Issue
Securities laws of certain jurisdictions may restrict Aquarius` ability to
allow participation by Qualifying Shareholders in the Rights Issue. In
particular, holders of Common Shares and Depositary Interests who are located
in Excluded Territories may not be able to participate in the Rights Issue.
Securities laws of certain of these jurisdictions may restrict Aquarius`
ability to allow participation by shareholders in such jurisdictions in any
future issue of Common Shares carried out by the Company. Qualifying
Shareholders who have a registered address in or who are resident or located
in, or who are citizens of, any Excluded Territory may not, subject to certain
exceptions, participate in the Rights Issue.
The proposed secondary listing of the New Common Shares on the London Stock
Exchange will afford investors a lower level of regulatory protection than a
primary listing
Application will be made for the New Common Shares to be admitted to a
secondary listing on the Official List of the UK Listing Authority. A
secondary listing affords investors in Aquarius a lower level of regulatory
protection than afforded to investors in companies with primary listings on
the Official List of the UK Listing Authority, which are subject to additional
obligations under the UK Listing Rules. However, Aquarius has a primary
listing on ASX and, subject to any waivers granted by ASX in specific
circumstances, is required to comply with all ASX Listing Rules.
The liability of Ernst & Young in relation to the preparation of accounts and
audits is limited
The liability of Ernst & Young is limited by a scheme approved under
Australian professional standards legislation. The limits under the schemes
are:
(i) for audit and related services (category 1) - 10 times the fees to a
maximum of A$75 million;
(ii) for insolvency services (category 2) there is a sliding scale which uses
the 10 times the fees model. There are some variances depending on the
structure of the engagement, otherwise the limit is 10 times the fees to a
maximum of A$20 million; and
(iii)for all other services (category 3) - 10 times the fees to a maximum of
A$20 million.
There is a minimum cap on liability under the schemes of A$500,000 for actions
which occurred up to 30 June 2008. This has increased to A$750,000 for actions
occurring between 1 July 2008 and 30 June 2009 and will increase further to
A$1 million for actions occurring after 1 July 2009.
Should any investor decide to challenge the limited liability of Ernst & Young
in relation to the preparation of accounts and audits, in a court of law,
there can be no assurance about how courts in Australia or the UK or any other
jurisdiction would interpret such limits on liability.
RISKS RELATING TO THE CONVERTIBLE BOND ISSUE
The Convertible Bond Issue could lead to Shareholders experiencing dilution in
their ownership of Aquarius should the Convertible Bonds be converted in
accordance with their terms
Bondholders under the Convertible Bond Issue will have the ability to convert
Convertible Bonds into Common Shares under certain circumstances, which could
result in dilution of existing shareholders to the extent that they are not
Bondholders who are converting at the same time themselves. The number of
Common Shares underlying each Convertible Bond will be specified at the issue
date of the Convertible Bonds, but may increase in the future depending on the
occurrence of certain events, so as to protect Bondholders from future
dilution of the Common Shares underlying the Convertible Bonds. These events
include but are not limited to, the declaration of dividends beyond certain
thresholds and issuance of equity in the Company or options thereon.
The terms of the Convertible Bonds limit the further borrowing by the Company
The terms of the Convertible Bonds limit the amounts, types and maturities of
future borrowings by the Company. The Company may not borrow/commit to any
guarantees which have a capital repayment/claim period prior to the redemption
of the Convertible Bonds. Modest allowances for borrowings with capital
repayments prior to the final maturity of the Convertible Bonds have been
made. These borrowing restrictions may limit the Company`s ability to take
advantage of favourable financing offers with terms that are prohibited by the
Convertible Bond restrictions.
The terms of the Convertible Bonds limit the payment of dividends and other
distributions
The terms of the Convertible Bonds allow the Company to pay unlimited
dividends contingent on certain cash holding requirements being met within the
first 18 months of issuing the Convertible Bonds. The declaration of large
dividends will however result in adjustments to the number of Common Shares
underlying each Convertible Bond, increasing potential dilution. In addition,
certain cash reserving requirements will be placed on the Company after the
first 18 months of issuing the Convertible Bonds. These reserving requirements
will not specifically limit the ability to pay dividends or make other
distributions but may as a consequence of meeting the reserving requirements
indirectly limit the ability of the Company to pay dividends or make
distributions. Failure to meet the reserving requirements will constitute an
event of default on the Convertible Bonds.
Security enforcement in the event of insolvency will not be afforded the
benefits of a ``bank or other financial institution``
A security package provided to Bondholders pursuant to the terms of the
Convertible Bond Issue involves the use of a Security Special Purpose Vehicle
(Security SPV) which is a bankruptcy remote entity that issues guarantees to
the lenders of Aquarius and is in turn indemnified by AQPSA. The Security SPV
then registers security through mortgage bonds, special notarial bonds and
general notarial bonds. The MPRD Act provides that if security is registered
by a ``bank or other financial institution`` over mining rights, and should
the holder of the mining rights be liquidated, the rights will not
automatically lapse. If however the security is registered by another entity,
the liquidation of the holder of the mining rights will not prevent the lapse
of the said rights. Opinion stands that the Security SPV arrangement (which is
commonplace in South African secured financing arrangements) will not be
afforded the benefits of a ``bank or other financial institution``. In an
insolvency event if the said rights lapse, the amounts that will ultimately be
recoverable by Shareholders after settlement of the liabilities of the Company
will be reduced.
RISK FACTORS CONNECTED WITH THE POSSIBLE ACQUISITION
The Possible Acquisition is pre-conditional and those conditions may not be
satisfied
The Possible Acquisition will be conditional, amongst other things, upon
approval by the shareholders of Ridge and regulatory clearances. There can be
no assurance that these conditions will be satisfied and that completion of
the Possible Acquisition will be achieved.
Ridge may not perform in line with the Aquarius Group`s expectations
If the Possible Acquisition completes and the results and cash flows generated
by Ridge are not in line with the Aquarius Group`s expectations, a write-down
may be required against the carrying value of its investment in Ridge.
Failure to integrate in the Ridge business may adversely affect the Aquarius
Group`s results operations or financial condition
If the Possible Acquisition completes, then the integration of Ridge into the
Group following the Possible Acquisition (the "Enlarged Aquarius Group") would
involve a number of risks, including:
the attention of the Enlarged Aquarius Group`s management may be diverted away
from other business concerns;
there may be outstanding or unforeseen legal, regulatory, contractual, labour
or other issues arising from the Possible Acquisition;
the Enlarged Aquarius Group may find it difficult to effectively assimilate
the business and management cultures of the Aquarius Group and Ridge; and
the Enlarged Aquarius Group may not be able to achieve the post-tax cash cost
savings and other potential synergies identified prior to the Possible
Acquisition.
If the Aquarius Group fails to integrate Ridge on a timely and cost-effective
basis, the higher than expected costs and other difficulties could have an
adverse effect upon the results of operations or financial condition of the
Enlarged Aquarius Group.
The mining rights for the Blue Ridge Project have not yet been converted
The ``old order mining right`` for the Blue Ridge Project has not yet been
converted. The conversion application has however been lodged with the DME for
conversion, which conversion application was timeously lodged at the DME and
complies with the requirements of the MPRD Act. Due to the fact that the
application was timeously lodged, the ``old order mining right`` continues to
be valid and enforceable and mining activities at Blue Ridge can continue
lawfully until conversion is obtained.
Ridge is affected by the same operational risks in South Africa as Aquarius
The operational risks relating to Aquarius` operations in South Africa and as
set out in Appendix II of this announcement will, in general, also apply to
the operations of Ridge in South Africa, both being the subject of platinum
mining and processing operational risks.
RISKS RELATING TO INCORPORATION IN BERMUDA
Aquarius is a Bermuda company and it may be difficult for Shareholders and
investors to enforce judgments against the Company or Directors and executive
officers
Aquarius is a Bermuda exempted company. As a result, the rights of holders of
Common Shares will be governed by Bermuda law and Aquarius` Memorandum of
Association and Bye-laws. The rights of shareholders under Bermuda law may
differ from the rights of shareholders of companies incorporated in other
jurisdictions. It is doubtful whether courts in Bermuda will enforce judgments
obtained in other jurisdictions, including those of Australia, the United
Kingdom or South Africa, against Aquarius or its Directors or officers under
the securities laws of those jurisdictions or entertain actions in Bermuda
against Aquarius or Aquarius` Directors or officers under the securities laws
of other jurisdictions.
The Bye-laws of Aquarius restrict Shareholders from bringing legal action
against officers and Directors of Aquarius
The Bye-laws contain a broad waiver by Shareholders of any claim or right of
action, both individually and on Aquarius` behalf, against any of Aquarius`
officers or Directors. The waiver applies to any action taken by an officer or
Director, or the failure of an officer or Director to take any action in the
performance of his or her duties, except with respect to any matter involving
any fraud or dishonesty on the part of the officer or Director. This waiver
limits the right of Shareholders to assert claims against Aquarius` officers
and Directors unless the act or failure to act involves fraud or dishonesty.
APPENDIX III
FURTHER INFORMATION ON THE AQUARIUS GROUP
Overview
Aquarius is a focused PGM producer, with operations on the eastern and western
limbs of South Africa`s PGM-bearing mineralised zone, the Bushveld Complex,
and the Great Dyke in Zimbabwe. Aquarius` attributable PGM (4E) production in
the financial year ended 30 June 2008 was 500,203 ounces. Following the
temporary closure of the Everest mine, Aquarius` production target for the
2009 financial year has been revised to 450,000 to 475,000 ounces.
The Aquarius Group had revenues of US$919 million for the financial year ended
30 June 2008 and US$139 million for the six months ended 31 December 2008. Net
profit for the financial year ended 30 June 2008 was $236 million, equal to
US$0.92 cents per share. The net loss for the six months ended 31 December
2008 of US$70 million equal to US$0.25 per share, was primarily due to the
significant reduction in metal prices experienced since June 2008, which saw
platinum prices decrease from an average of US$2,036 per ounce in the month of
June to an average of US$840 per ounce in the month of December and Rhodium
prices decrease from an average of US$9,774 per ounce in the month of June to
US$1,220 per ounce in the month of December.
The Common Shares are quoted on the ASX and are listed and admitted to trading
on the London Stock Exchange`s main market for listed securities and the JSE.
The Company also has a sponsored Level 1 ADR program in the United States. As
at 25 March 2009, the market capitalisation of Aquarius was approximately
GBP602 million. Aquarius is a member of the FTSE 250, an index that comprises
the 250 ``most capitalised companies on the London Stock Exchange``.
The Company`s primary mining assets in South Africa are the Kroondal, Marikana
and Everest mines which are operated through its wholly owned subsidiary
Aquarius Platinum (South Africa) (Pty) Ltd (AQPSA). In October 2008, Aquarius
increased its equity interest in AQPSA from 67.5 per cent. to 100 per cent.
following completion of the final phase of its South African BEE transaction
with SavCon.
In 2004, SavCon had acquired shares in AQPSA, to comply with the BEE
requirements in the MPRD Act and the Broad Based Socio-Economic Empowerment
Charter ("Mining Charter"). In October 2008, SavCon exchanged its shares in
AQPSA for Common Shares. The Group also holds a 50 per cent. interest in the
Chrome Tailings Retreatment Plant ("CTRP") and in Platinum Mile. CTRP and
Platinum Mile both recover PGMs from the tailings streams of various platinum
and chrome mining operations on the western limb of the Bushveld Complex and
are held through Aquarius` wholly owned subsidiary, Aquarius Platinum (South
Africa) (Corporate Services) (Pty) Ltd ("ASACS").
History and development of Aquarius
Aquarius is a Bermuda incorporated company that was established in 1998 as an
investment holding company in connection with the restructuring and
redomiciliation of Aquarius Platinum Limited (at that time, an Australian
incorporated public company). Aquarius was admitted to listing on the ASX as
an exploration venture in 1999. Aquarius first entered the PGM industry with
the creation and implementation of the project at Kroondal.
A wholly owned subsidiary of Aquarius entered into a strategic alliance with
Impala Platinum in 1998 and signed a concentrate offtake agreement for the
Kroondal mine. In 2000, Impala Platinum sold the Everest and Chieftains Plain
deposits to Aquarius in return for a 25.5 per cent. interest in AQPSA.
The Kroondal mine was commissioned in August 1999, ahead of schedule and below
budget. In October 1999, Aquarius joined the London Stock Exchange`s AIM
market. Aquarius was admitted to the Official List of the UK Listing Authority
and to trading on the London Stock Exchange`s main market for listed
securities in July 2003.
In December 2000, Aquarius launched a cash offer to acquire the minority
interests in Kroondal Platinum Mines Limited ("KPM"), a company listed on the
JSE. In 2002 Aquarius achieved full control of KPM. KPM was subsequently
delisted from the JSE and consolidated with the Aquarius Group`s other South
African interests into AQPSA to provide a more efficient corporate structure.
In July 2002, Aquarius acquired a 50 per cent. stake in ZCE Platinum Limited.
Through this acquisition, Aquarius also acquired Mimosa Mining Company Private
Limited and the Mimosa Mine in Zimbabwe, thereby diversifying its asset base
and providing a significant boost to its resources.
In 2002, the South African government adopted the MPRD Act and the Mining
Charter. The MPRD Act (promulgated in May 2004) requires the transfer of 26
per cent. of the equity of assets at a local South African level within 10
years to Black Economic Empowerment bodies. In November 2004 Aquarius
announced that it had reached agreement with SavCon, a Black Economic
Empowerment consortium, which would provide SavCon with a 29.5 per cent.
interest in AQPSA for a total investment of ZAR860 million (US$140 million).
The proceeds of this sale were used in the construction of the Group`s Everest
mine. As a result of this transaction, and an assisted share buy back and
share split, SavCon became the owner of 19.98 per cent. of Aquarius issued
share capital, which was subsequently reduced to 18.89 per cent.
Longevity to the Group mine life was provided by two pooling and sharing
agreements with Anglo Platinum, one at the Kroondal mine and one at the
Marikana mine respectively. Agreed in 2003, the Kroondal pooling and sharing
agreement added its first new production in March 2005. With the addition of
new reserves by Anglo Platinum, mine operations at Kroondal were expanded and
mine life was extended by 8 years to 2017. Later, this arrangement was
emulated through the Marikana pooling and sharing agreement whereby Anglo
Platinum contributed reserves for underground mining adjacent to Aquarius`
open pit operations and processing infrastructure. Like the Kroondal pool and
share agreement, the Marikana pool and share agreement added new production
and extended mine life by 8 years to 2024.
Strategy
Aquarius` management believe that the Company has demonstrated a strong track
record of growth and development based on a clear strategy and well tested and
effective operating principles.
The key operating principles of Aquarius` business model include:
(a) utilising capital intensive rather than labour intensive mining. This
brings with it a higher degree of mechanisation and other innovations in
design, mining and processing;
(b) ensuring a low overhead structure across the Aquarius Group;
(c) entering into long-term contracts for the sale of concentrate. From
Aquarius` perspective, this approach has overcome the significant financial
and technical barriers to entry and the associated risk within the PGM
business of setting up and running large-scale processing facilities and
marketing infrastructure; and
(d) remaining supportive of the good fiscal regime in South Africa and being
BEE compliant.
Aquarius` strategy is built around the following core areas:
(a) maximising the value of the Aquarius Group`s existing operations through:
extension of the useful life of the operations through brownfields
developments, acquisition of additional adjoining properties and entering into
innovative structures such as the two pool and share agreements put in place
at the Kroondal and Marikana mines; and
rigorous cost control and maintaining a low overhead cost structure;
(b) identifying, acquiring, developing and mining smaller-scale deposits.
Deposits of this nature have often been overlooked by the major players in the
industry. Mineral rights acquired in this way, particularly in light of the
``use it or lose it`` legislation in South Africa, can be cost-effective. The
acquisition and development of Everest demonstrates Aquarius` ability to
deliver on this aspect of its strategy; and
(c) acting as a consolidator in the junior PGM mining space through the
identification and acquisition of junior PGM mining operations. The current
state of the PGM market as well as prevailing conditions in international
financial markets has placed many junior operators under financial strain,
creating an environment where they could benefit from combining with a larger,
more experienced operator such as Aquarius that also benefits from having
current cash flow. The Possible Acquisition is an example of such a
combination.
Industry Overview
During the financial year ended 30 June 2008, the PGM markets experienced
soaring prices followed by a dramatic correction and price reduction during
the second half of the financial year ended 30 June 2008. The prices of
platinum and rhodium rose to all time record levels during the early part of
the financial year ended 30 June 2008. The platinum price peaked at US$2,276
per ounce in early March and that of rhodium at US$10,100 per ounce in June
2008. The price of palladium also touched a multi-year high of US$588 per
ounce. From the record highs reached earlier in the year, the average monthly
prices in December 2008 reduced to US$840 per ounce for platinum, US$176 per
ounce for palladium and US$1,015 per ounce for rhodium, respectively 58 per
cent., 61 per cent. and 89 per cent. lower than in June 2008.
Average prices reported on the free market for the financial year ended 30
June 2007, financial year ended 30 June 2008 and first half of the 2009
financial year were:
FY 2007 FY 2008 H1 2009
Platinum US$1,208 per ounce US$1,661 per ounce US$1,203 per ounce
Palladium US$ 339 per ounce US$ 399 per ounce US$ 261 per ounce
Rhodium US$5,275 per ounce US$7,389 per ounce US$4,069 per ounce
Outlook for the PGM market
High prices during the early part of 2008 drove demand for metal lower
encouraging consumers to control consumption and drive down inventories. This
was coupled with a weakening in global economics which has seen a drop off in
overall global demand for metal. Consequently, the next 12 to 18 months for
the PGM market are expected to be difficult trading conditions with downside
risk to the current basket price remaining. Even though an estimated 30 per
cent. of producers are producing at costs higher than the current basket
price, it will take a period of time for supply and demand momentum to adjust
to the current prices and reach a new equilibrium level.
The reduction in vehicle sales, reduced PGM content resulting from
technological advancement, reduced demand for diesel engines as a result of
lower oil prices and the impact of the general recessionary environment
affecting jewellery sales, have combined to considerably weaken the demand
side.
On the supply side there are a number of expansions which were planned to
start delivering PGMs in 2009 which could increase production by over 700,000
ounces. To date there has been limited information on curtailment of
production and an anticipated 270,000 ounces of incremental supply is expected
to come from these junior producers.
However, over the longer term the Company anticipates that stricter emissions
standards will force the use of diesel particulate filters on almost all
diesel cars sold in Europe, supporting platinum demand despite a worsening
outlook for global vehicle production. In the jewellery industry, latent
demand remains intact and is anticipated to provide price support.
Additionally, the amount of metal returned to the market from second-hand
jewellery in Japan has recently decreased as the price has fallen, and as a
result net demand is expected to improve. However, price volatility affects
the trade`s confidence, so a sustained period of price stability would benefit
the industry further and help rebuild demand to previous levels.
Similarly, the Company anticipates significant supply side intervention should
weak metal prices prevail in the medium term given a significant turn-around
in the economic prospects of production expansions at current prices.
Platinum
Total platinum world supply for the 2008 calendar year showed a second
successive year of declining output at 6.078 million ounces, a decrease of 7
per cent. from 2007. Modest production growth was achieved in North America
but production fell in Russia and South Africa.
South Africa, the world`s largest platinum producer, contributes approximately
76 per cent. of global platinum production and its ability to maintain and
increase output is critical to the determination of platinum prices. In early
2008, shortages of electricity and skilled personnel and a range of technical
issues impacted on production in South Africa and resulted in significant
increases in platinum prices during the first part of 2008. The rapid
deterioration in the global economy, the resultant fall in the demand for
platinum from the auto catalyst industry and sales by speculative investors
led to a dramatic fall in platinum prices during the latter half of 2008.
The net demand for platinum decreased by 3 per cent. from 2007 to 2008 to
6.510 million ounces as the strength in the industrial and investment sectors
was insufficient to offset the weakness in the autocatalyst and jewellery
sectors. Gross auto catalyst demand fell due to the steep decline in vehicle
sales whilst high prices during the first half of 2008 resulted in a decline
in the fabrication of jewellery and a dramatic increase in the recycling of
scrap metals.
However, there was significant uptake in jewellery during the second half of
the year, resulting in higher demand than anticipated. Since the price
collapse to a low in early December 2008, platinum has staged a modest
recovery aided by rising jewellery demand, investments in exchange traded
funds and a rise in net non-commercial open interest on NYMEX and TOCOM.
Palladium
The palladium market ended the 2008 calendar year with a smaller surplus of
0.192 million ounces. Palladium demand remained virtually unchanged in 2008
with the decline in autocatalyst demand offset by strength in other
applications, including jewellery, industrial and investment. Palladium
continued to increase its share of the gasoline and light-duty diesel markets
but the growth in these areas could not counteract the steep decline in demand
from the North American auto catalyst market. Supplies of palladium declined
sharply owing partly to a reduction in South African production and a decline
in shipments from the Russian Federation. The decline in shipments from the
Russian Federation in 2008 was due to less production by Norilsk Nickel, a
major palladium producer and reduced shipments from Russian state-held
inventories.
Supply and demand assumptions point to a moderate surplus in the palladium
market for the
foreseeable future but this is highly dependent on Russian state-held
inventories and when they will be released. In the first two months of 2009
palladium prices have shown a moderate recovery based on investment demand.
Other PGMs
Despite a reduction in rhodium demand, the market for rhodium was in overall
deficit for the 2008 calendar year with total demand of 0.765 million ounces
as compared with total supply of 0.722 million ounces. With the rhodium price
rising dramatically over the past few years, manufacturers have intensified
their efforts to reduce the rhodium content of catalyst systems. Demand
therefore declined in the developed markets of North America, Europe and
Japan. The decline was further exacerbated by the reduction in strategic
inventory held by some manufacturers. An increase in demand from nations such
as China and Russia was insufficient to offset the decline and overall demand
fell to its lowest levels in seven years.
Business overview and description
Aquarius is primarily an explorer, developer and mine operator focussed on
PGMs and associated base metals in sub-Saharan Africa. Aquarius` operating
methods concentrate on mechanised wide reef board and pillar mining via
declines. Aquarius has capitalised on mining lower-grade and smaller deposits
that have been overlooked by other miners. This capital intensive approach has
served Aquarius well in an industry that is still dominated by deep level
labour intensive mining. Efficient ore processing with the application of
dense media separation to increase ore quality is a core Aquarius practice.
Aquarius does not process its metals in concentrate, instead preferring to
sell these metals to Anglo Platinum and Impala Platinum. Aquarius is paid
upfront for these metals, thereby avoiding the lengthy smelting and refining
pipeline processes and sales and marketing of the metals. This mitigates some
of the technical and financial risk associated with the downstream industry.
Current Operations
Kroondal
The Kroondal mine is situated on the western limb of the Bushveld Complex in
North West Province, South Africa. AQPSA has partnered with Anglo Platinum in
a pooling and sharing agreement since 2003. The pooling and sharing agreement
has enabled Aquarius to expand the scope of the Kroondal mine operations and
extend the mine life to 2017. Under the pooling and sharing agreement 50 per
cent. of the mineral resources and reserves are attributable to Aquarius. The
Kroondal mine, which exploits the UG2 Reef, comprises four operating decline
sections: the Central, East, No 3 and K5 shafts which access the Kroondal and
Townlands blocks.
The Kroondal mine also has two concentrator plants, K1 and K2, with a combined
capacity of 570,000 tonnes per month. AQPSA has an offtake agreement for the
processing and refining of its concentrate with Anglo Platinum in respect of
Kroondal. The offtake agreement with Impala Refining Services came to an end
during the course of the financial year ended 30 June 2008.
Key statistics
Financial year
ended 30 June
2008 2007
Tonnes mined (Mt) 6.4 6.6
Tonnes processed (Mt) 6.0 6.3
Average grade (4E) (g/t) 2.61 2.81
Cost per PGM (4E) ounce (R/oz) 4,241 3,069
(US$/oz) 587 427
Capital expenditure (Rm) 347 250
(US$m) 48 35
Production of metal in (oz)
concentrate
Platinum 234,041 263,930
Palladium 113,400 127,048
Rhodium 41,852 46,097
Gold 1,823 2,275
Total production 391,117 439,351
Total attributable 195,558 219,674
production to Aquarius
Marikana
The Marikana mine lies 8 k.m. east of Kroondal, on the western limb of the
Bushveld Complex, in North West Province, South Africa, and consists of
underground (1 and 4 shafts) and open-pit operations. Marikana`s concentrator
plant has a monthly processing capacity of 220,000 tonnes. The mine life for
the Marikana mine is until 2021.
Aquarius has a second pooling and sharing agreement with Anglo Platinum at the
Marikana mine and the financial year ended 30 June 2008 was the second full
year of its operation of this agreement. The pool and share agreement includes
a dense media separation plant. Under the pooling and sharing agreement 50 per
cent. of the mineral resources and reserves are attributable to Aquarius.
Concentrate produced from mineral reserves contributed by Aquarius to the
pooling and sharing agreement is smelted, refined and marketed by Impala
Refining Services. Concentrate produced from mineral reserves contributed by
Anglo Platinum to the pooling and sharing agreement is smelted, refined and
marketed by Anglo Platinum.
Key statistics
Financial year
ended 30 June
2008 2007
Tonnes mined (Mt) 2.1 2.1
Tonnes processed (Mt) 2.1 2.0
Average grade (4E) (g/t) 2.89 3.19
Cost per PGM (4E) ounce (R/oz) 7,575 5,219
(US$/oz) 1,048 727
Capital expenditure (Rm) 110 201
(US$m) 15 28
Production of metal in (oz)
concentrate
Platinum 78,786 80,903
Palladium 33,916 37,719
Rhodium 12,073 12,750
Gold 808 1,003
Total production 125,583 132,375
Total attributable 62,791 66,187
production to Aquarius
Everest
The Everest mine, the newest mine within the Aquarius portfolio was
commissioned in December 2005. Everest is 100 per cent. owned by Aquarius and
is located on the eastern limb of the Bushveld Complex in the province of
Mpumalanga, South Africa. Currently, the mine consists only of an underground
operation that exploits the UG2 Reef, the open pit operation having been
concluded in the financial year ended 30 June 2008. The rehabilitation of the
open pits is largely completed. A concentrator plant with a monthly capacity
of 230,000 tonnes processes the mined material. Concentrate from the Everest
mine is smelted, refined and marketed by Impala Refining Services. The
remaining mine life of the Everest mine is approximately 9 years.
On 8 December 2008 the Aquarius Group announced the temporary suspension of
operations at Everest owing to geotechnical issues, namely instability as a
result of subsidence occurring over an upper area of the mine. Management has
continued to assess the situation in conjunction with the South African
Department of Minerals and Energy and a Section 54 notice in terms of the Mine
Health and Safety Act (South Africa) is in force prohibiting normal mining
operations. Inspection teams are allowed to enter the mine and the resumption
of pumping operations has been permitted.
The business interruption due to subsidence is a significant event and in
assessing the lowest-risk way forward in terms of safety and operating cash
flow impact, the decision has been made to suspend operations for a minimum of
six months. This time will allow for a detailed technical investigation and
the determination of alternatives to re-establish access and beltways into the
underground workings so that Everest can be returned to production in a safe
manner. The directors of the Aquarius Group believe that the subsidence event
does not jeopardise the sustainability of the Everest mine on a long-term
basis.
Key statistics
Financial year
ended 30 June
2008 2007
Tonnes mined (Mt) 2.1 2.4
Tonnes processed (Mt) 2.1 2.4
Average grade (4E) (g/t) 2.98 2.89
Cost per PGM (4E) ounce (R/oz) 4,126 3,373
(US$/oz) 571 470
Capital expenditure (Rm) 81 132
(US$m) 11 19
Production of metal in (oz)
concentrate
Platinum 94,428 94,398
Palladium 46,034 52,527
Rhodium 16,255 15,534
Gold 1,278 1,478
Total production 157,995 163,938
Total attributable 157,995 163,938
production to Aquarius
Mimosa
The Mimosa mine, which is located within the Wedza Geological Complex, on the
southern portion of the Great Dyke in Zimbabwe, comprises a shallow
underground mine accessed via a decline shaft and a surface concentrator
plant. The mine is overseen by joint venture partners Aquarius and Impala
Platinum. Mimosa has an offtake agreement with Centametall AG of Switzerland.
Under this contract, concentrate produced by the Mimosa mine is delivered to
Impala Refining Services in South Africa for processing and refining. The
Mimosa mine has a mine life of 25 years.
Key statistics
Financial year
ended 30 June
2008 2007
Tonnes mined (Mt) 1.89 1.85
Tonnes processed (Mt) 1.73 1.69
Average grade (4E) (g/t) 3.57 3.66
Cost per PGM (4E) ounce (US$/oz) 446 383
Capital expenditure (US$m) 33 14
Production of metal in (oz)
concentrate
Platinum 76,565 77,771
Palladium 58,154 59,216
Rhodium 5,966 6,030
Gold 10,148 10,553
Total production 150,832 153,570
Total attributable 75,416 76,785
production to Aquarius
Chromite Tailings Retreatment Plant
In addition to expanding mining activities, Aquarius has also moved into
processing chromite and platinum tailings to recover PGMs. The CTRP is located
adjacent to the Kroondal mine and re-treats old dump and tailings streams from
the beneficiation process used at neighbouring chromite mines.
Environmentally, CTRP has a beneficial impact as it cleans up old dumps on the
Kroondal property, which are remnants of earlier chromite activities in the
area. CTRP is jointly owned by Aquarius (50 per cent.), which also manages the
plant, Ivanhoe Nickel and Platinum Limited (25 per cent.) and Sylvania South
Africa (Pty) Limited (25 per cent.).
Key statistics
Financial year
ended 30 June
2008 2007
Tonnes processed (000t) 274 182
Average grade (4E) (g/t) 4.20 4.32
Cost per PGM (4E) ounce (R/oz) 2,666 2,377
(US$/oz) 369 311
Capital expenditure (Rm) 20 1
Production of metal in (oz)
concentrate
Platinum 6,114 4,512
Palladium 2,201 1,629
Rhodium 1,513 1,252
Gold 22 15
Total production 9,849 7,408
Total attributable 4,924 3,703
production to Aquarius
Recent Developments
Platinum Mile
In 2008, Aquarius acquired a 50 per cent. interest in Platinum Mile Resources
(Pty) Ltd (Platinum Mile) which operates a tailings retreatment facility
located on RPM`s lease area, adjacent to the Kroondal mine and processes
certain tailings from Rustenburg Platinum Mines Limited. The concentrate
produced by Platinum Mile is sold to RPM with which it has a profit share
arrangement. This concentrate agreement is due for renewal in 10 years` time.
Platinum Mile currently produces approximately 20,000 ounces of PGM in
concentrate per annum. The remaining 38 per cent. of Platinum Mile is held by
Mvelaphanda Holdings (Pty) Limited and 12 per cent. by Platinum Mile
management.
The acquisition of Platinum Mile was effective from 1 March 2008 and
consequently no comparative data is available.
Possible Acquisition
As announced today, the Company expects to sign an implementation agreement
with Ridge ("the Implementation Agreement") pursuant to which, subject to the
satisfaction of pre-conditions relating to: (i) the successful outcome of the
Placing, Proposed Rights Issue and Proposed Convertible Bond Issue; and (ii)
the arrangement by Ridge, on terms satisfactory to Aquarius in its absolute
discretion, of not less than ZAR150 million of bridge funding for the
operation of the Blue Ridge Mine, the Company has agreed to make an offer for
the entire issued and to be issued share capital of Ridge at an exchange ratio
of 1 Common Share for every 2.75 Ridge shares.
First Plats Agreement
In February 2009, Aquarius, AQPSA and First Plats have entered into the First
Plats Agreement pursuant to which AQPSA will acquire from First Plats a
prospecting and mining business for PGMs in the Salene Mining Area and First
Plats Mining Area. The consideration for the acquisition is the issue to First
Plats of 2,732,000 Common Shares. The issue of these Common Shares will only
take place after the transfer of ownership of the relevant mining licences to
AQPSA. This could take up to 18 months to complete.
Organisational Structure
The Aquarius Group is characterised by its flat organisational structure.
Aquarius` registered office is located in Bermuda, and the Aquarius Group
maintains a corporate office in Perth, Australia.
Executive management is limited to the Chief Executive Officer, Stuart Angus
Murray.
AQPSA provides the organisational structure for the Kroondal, Marikana and
Everest mines. AQPSA has its own board of directors and as at the end of
February 2009 had 65 employees and 2 consultants. In Zimbabwe, a local
management team manages operations with oversight from a Board which comprises
representatives of Aquarius, its joint venture partner Impala Platinum and
executive management.
ASACS has 1 employee. There is also a board overseeing the Platinum Mile
tailings project. The labour headcount for the Platinum Mile tailings project
was 4. CTRP has no employees. The current corporate structure is much simpler
following the acquisition by Aquarius of Impala Platinum`s shareholding in
AQPSA in April 2008 and the exchange of the SavCon shareholding in AQPSA to an
interest in Aquarius in October 2008. As a consequence of these transactions,
Aquarius enjoys 100 per cent. ownership of AQPSA.
Property, Plant and Equipment
Property, plant and equipment as stated in the financial statements for the
six months ended 31 December 2008 are valued at US$195.9 million. Cash assets
as stated in the financial statements for the six months ended 31 December
2008 are valued at US$87.0 million.
Summary Mineral Resource and Mineral Reserve Information
The following is summary mineral resource and mineral reserves information
extracted without material amendment from the mineral resource and mineral
reserve statement published by Aquarius in the 2008 Annual Report and Accounts
(the ``mineral resource and mineral reserves statement``). A copy of the full
report is available at www.Aquarius.com.
The mineral resource and mineral reserve statement reflects the mineral
resources and mineral reserves of Aquarius` operations in South Africa
(through AQPSA) and in Zimbabwe as at 30 June 2008 and have been reported in
accordance with SAMREC Code 2007 and JORC Code 2004. The JORC Code is the
Australasian equivalent of SAMREC (with only minor variations) and is prepared
under the auspices of the Australasian Institute of Mining and Metallurgy
(AusIMM). The SAMREC Code and SACNASP (South African Council for Natural
Scientific Professions) are officially recognised on a reciprocal basis by
AusIMM.
The mineral resource and mineral reserves information set out below is based
on information compiled by Competent Persons. The Competent Persons are duly
registered with SACNASP. The mineral resource and mineral reserve statements
are compliant with the SAMREC Code which is analogous with the JORC Code. The
Competent Persons have taken into account the definitions included in both
codes and the mineral resource and mineral reserve quantities reported here
are considered to be fully compliant in all material respects to the
requirements of the SAMREC Code and JORC Code. The Competent Persons have
consented to the inclusions in the minerals resource and mineral reserves
statement of the matters based on their information in the form and context in
which it appears. All mineral resource and mineral reserve estimations for
AQPSA mines have been audited by an independent Competent Person.
Mineral resource and mineral reserve information
Mineral Reserves
attributable to
Aquarius
Mine Ownershi Mining Commodity Prove Probabl Measure
p Method d e (Mt) d (Mt)
(Mt)
Kroondal Pool 50% UG/OC PGM 25.35 4.27 21.11
and Share
Marikana Pool 50% UG/OC PGM 13.76 3.05 13.27
and Share
Everest 100% UG PGM 14.49 7.96 18.02
Mimosa 50% UG PGM 9.22 8.46 21.54
Mineral Resources attributable to
Aquarius
Mine Indicated Inferred Competent
(Mt) (Mt) Person
Kroondal Pool and Share 4.03 0.57 JEV/FHC/AW/
AR
Marikana Pool and Share 5.23 2.03 JEV/FHC/ AW
Everest 15.06 6.49 CH/FHC/AW
Mimosa 13.34 10.84 FHC/JJV
Definitions
OC = opencast;
UG = underground;
Notes:
The Mineral Resources and Mineral Reserve statements are presented on a total
mine basis as at 30 June 2008, unless otherwise stated.
The Measured Mineral Resource is inclusive of the Proved Mineral Reserve.
Rounding off of numbers in the tables may result in minor computational
discrepancies; where this occurs it is deemed insignificant.
Competent Persons:
JEV - Ernie Venter
CH - Cecilia Hattingh
FHC - Ina Cilliers
AW - Anton Wheeler
AR - Rudi Rodulph
JJV - Seef Vermaak
Production
2008 2007 2006
Mine Total Attributabl Total Attributabl Total Attributabl
Productio e Productio e Productio e
n Production n Production n Production
(oz)
Kroonda 391,117 195,558 439,351 219,674 439,445 219,722
l
Marikan 125,583 62,791 132,375 66,187 85,912 56,617
a
Everest 157,995 157,995 163,938 163,938 97,031 97,031
Mimosa 150,832 75,416 153,570 76,785 142,407 71,204
Statutory authorisations, licences and concessions
Mining Rights
In April 2004, the MPRD Act was enacted to provide equal access to, and
sustainable development of South Africa`s mineral and petroleum resources. The
MPRD Act provides a dispensation which entirely replaces that created by the
Minerals Act, 1991 and vests the South African government, as opposed to
private property owners, with custodianship of South Africa`s resources. Based
on the MPRD Act any company or person can apply for the right to prospect for
or mine a mineral from the DME. Under the MPRD Act, any old order mining
rights must be converted by April 2009, or they will lapse.
AQPSA applied for conversion of all material mining rights in October 2006,
and currently holds three converted mining rights as shown in the table below.
Mine Province Type of right
Kroondal Mine North West Converted mining
right
Marikana Mine North West Converted mining
right
Everest Mine Mpumalanga Converted mining
right
The mining rights that Anglo Platinum contributed to both P&SA1 and P&SA2 were
old order mining rights. Anglo Platinum has applied to the DME for conversion
of these rights in terms of the MPRD Act. The DME has accepted the conversion
applications.
Terms and Conditions of mining rights
To be successful, an application for a mining right must comply with the MPRD
Act, which requires every mine to have a mine work programme, an environmental
management plan and a social and labour plan, as outlined below. The MPRD Act
also requires companies to utilise the rights granted to them in order to
retain them.
Mine work programme
The MPRD Act requires companies to submit a mine work programme, which
consists of a mine plan and gives the DME sufficient evidence that the company
has the financial ability to conduct the work proposed.
Environmental management plan
As part of the environmental management plan, the company is required to
conduct an environmental impact assessment, provide evidence of financial
provision for the remediation of environmental damage and make provisions for
the issuing of closure certificates for the mine (which are compulsory upon
the lapsing of the mining right or cessation of activities). The company must
complete and submit annual compliance reports to the DME on the status and
progress of the environmental management plan.
Social and labour plan
The MPRD Act introduced a broad-based socio-economic charter, the Mining
Charter, that sets a framework, targets and timetable for effecting the entry
of HDSAs into the mining industry. Targets, timeframes and commitments are set
for human resource development; employment equity; non-discrimination against
foreign migrant labour; mine community and rural development; housing and
living conditions; procurement and ownership (which has a target of 26 per
cent. equity ownership by HDSAs within 10 years). As such the social and
labour plan, which must be approved as part of the application process, must
focus on community issues. The social and labour plan must contain targets,
timeframes and commitments in accordance with these elements and annual
compliance reports are submitted to the DME. The social and labour plans also
contains specific commitments with regard to expenditure on local economic
development projects and human resource development programmes, as required by
the Mining Charter.
All of AQPSA`s mining rights are held in good order, and all currently comply
with the conditions outlined above. The mining rights, once granted, are valid
for the life of the mine.
APPENDIX IV
OPERATING AND FINANCIAL REVIEW OF THE AQUARIUS GROUP
Capitalisation and indebtedness
As at 31 January 2009, the unaudited gross capitalisation of the Aquarius
Group was US$420.3 million. Of this amount, total shareholders` equity was
US$260.7 million and total gross indebtedness was US$159.6 million. The
current secured debt was US$157.7 million and the non-current secured debt was
US$1.9 million. The Aquarius Group`s unaudited net indebtedness position as at
31 January 2009 was US$19.4 million, being the Aquarius Group`s gross
indebtedness of US$159.6 million (US$157.7 million current debt and US$1.9
million non-current debt) offset by cash or cash equivalents of US$140.2
million.
The following table sets out the unaudited total current debt, total non-
current debt (excluding the current portion of long-term debt) of the Aquarius
Group as at 31 January 2009 and capitalisation (calculated in accordance with
IFRS) of the Aquarius Group as at 31 January 2009:
$`000s
Total current debt
Secured (157,690)
(157,690)
Total non-current debt
Secured (1,922)
(1,922)
Total gross indebtedness as at 31 January (159,612)
2009
Shareholders Equity
Called up share capital (16,355)
Share premium account (244,329)
Total shareholders equity at 31 January (260,684)
2009
Gross capitalisation at 31 January 2009 (420,290)
There has been no material change to the capitalisation of the Aquarius Group
since 31 January 2009.
The table below sets out the net financial indebtedness of the Aquarius Group
as at 31 January 2009, extracted without adjustment from the Aquarius Group`s
internal unaudited management accounts.
$`000s
Cash at bank 53,710
Short term deposits 11,693
Cash equivalents (Receivables) 74,778
Liquidity (a) 140,181
Current bank debt - RMB (i) (157,690
)
Current financial indebtedness (b) (157,690
)
Net Current Financial Indebtedness (a+b) (c) (17,509)
Non-current bank debt - Investec Limited (ii) (1,477)
Non-current bank debt - Land and (iii) (289)
Agricultural Bank of South Africa
Non-current bank debt (v) (156)
Non-current financial indebtedness (d) (1,922)
Net financial indebtedness as at 31 (c) + (d) (19,431)
January 2009
Notes
(i) A secured current Bridge Loan Facility
(ii) A secured non-current bank loan from Investec Bank
(iii) A secured non-current loan from the Land and Agricultural Bank of
South Africa
(iv) Includes a finance lease, which relates to a subsidiary company
Save as disclosed above and excluding intra-group indebtedness and guarantees,
at the close of business on 25 March 2009 no member of the Aquarius Group had
any outstanding loan capital (including loan capital created but unissued),
term loans or any other borrowings or indebtedness in the nature of
borrowings, including indirect indebtedness, bank overdrafts, liabilities
under acceptances (other than normal trade bills) or acceptance credits, hire
purchase commitments, obligations under finance leases, guarantees or other
contingent liabilities.
Liquidity and capital resources
The Aquarius Group`s liquidity requirements arise principally from its working
capital requirements and capital expenditure investments. The Aquarius Group
needs continued access to funding in order to meet its trading obligations, to
support investment in the organic growth of the business and to make
acquisitions when opportunities arise. The Aquarius Group`s sources of funding
include equity contributed by shareholders, cash flows generated by operations
and borrowings from banks and other financial institutions.
Cash and borrowings
Borrowings currently comprise the following:
(i) A Rand Merchant Bank Bridge Loan Facility due 30 June 2009 totalling
ZAR1,577.5 million (US$165 million);
The terms of the facility are as follows:
Interest is calculated as the aggregate of the Johannesburg Interbank
Acceptance Rate ("JIBAR") and a credit margin as follows: 1.85 per cent. for
the period from the date of the initial draw down to 30 September 2008, 2.1
per cent. from 30 September 2008 to 31 December 2008, 2.35 per cent. from 31
December 2008 to 31 March 2009 and 3.00 per cent. from 31 March 2009 to 30
June 2009. Interest is paid on a quarterly basis commencing September 2008.
During the period ended 30 June 2008 the loan from Rand Merchant Bank bore
interest at an average rate of 13.14 per cent.;
The loan is secured by a first ranking fixed and floating charge over all
assets of the company; and
Repayments of principle can be made in full or in part not more than once per
calendar month and in amount of not less than ZAR25 million. On each interest
repayment date a prepayment against the outstanding facility balance will be
made through a cash sweep of AQP(SA)`s available credit bank balances.
(ii) A loan of US$1,477,000 from Investec Bank by Platinum Mile;
The loan bears interest at 10.13 per cent. and is repayable in quarterly
instalments of capital and interest, with final payment due in March 2010. The
loan is secured against the plant and equipment asset of the Plat Mile joint
venture.
(iii)A loan of US$289,566 from Land and Agricultural Bank of South Africa; and
Interest is charged at 13.75 per cent. p.a. and it is repayable in annual
instalments of ZAR427,600 on 15 June of each year, with a final payment due on
15 June 2017. The loan is secured by a first mortgage bond on all the fixed
properties amounting to ZAR3,290,253 and cross guarantees between all the
companies in the TKO group.
(iv) A finance lease, which relates to a subsidiary company, which is secured
by a vehicle included in mining assets to the value of ZAR64,327.
The lease bears interest at the prime bank lending rate. It is repayable in
monthly instalments of ZAR2,378 with the final payment due on 31 August 2011.
All of the above facilities are fully drawn, and Aquarius has no other
borrowings.
Aquarius` cash balances at 31 January 2009 are held at banks in the following
currencies:
(i) US$29.394 million
(ii) ZAR 240.035 million
(iii) GBP1.085 million
(iv) AUD 16.627 million
(v) HKD 0.083 million
(vi) Euro 0.051 million
Aquarius has a debt to equity ratio of 0.022 times, with net financial
indebtedness as at 31 January 2009 of US$19.4m and equity capital value of
US$879 million based upon the closing price of Aquarius on the London Stock
Exchange on 25 March 2009 of 184 pence per share.
Treasury Policy
The Aquarius Group operates internationally and maintains cash balances and
liabilities in a number of currencies. Foreign exchange risk arises from
future commitments, assets and liabilities that are denominated in a currency
that is not the functional currency for each entity within the Group. The
Aquarius Group`s borrowings and cash deposits are largely denominated in US
dollars, South African Rand, Australian dollars and are managed according to
the operational needs of the business.
Apart from the Rand Merchant Bank Bridge Loan Facility, borrowings are on a
limited, asset securitised basis on a fixed or floating basis as appropriate
to the business case.
Currently there are no foreign exchange hedge programmes in place, however,
the Aquarius Group treasury function manages the purchase of foreign currency
to meet operational requirements. Following a decree by the Zimbabwean
Government, Mimosa is required to repatriate a component of US dollar sales
into Zimbabwean dollars. Aquarius anticipates that much of this will be
utilised in meeting local production costs. Remaining holdings of Zimbabwean
currency will be subject to remeasurement as required.
South Africa`s exchange control regulations provide for restrictions on the
exporting of capital and for various other exchange control matters.
Transactions between residents of the Common Monetary Area on the one hand and
non-residents of the Common Monetary Area, on the other hand, are subject to
these exchange control regulations which are enforced by Excon.
The Aquarius Group`s main interest rate exposure arises from short-term loans
with interest charges based on either the London Inter-Bank Offered Rate
(LIBOR) or the Johannesburg Interbank Acceptance Rate (JIBAR). Floating rate
debt exposes the Group to cash flow interest rate risk. Cash holdings are
subject to interest rate risk in the country in which they are held on
deposit. All other financial assets and liabilities in the form of
receivables, investments in shares, payables and provisions, are non-interest
bearing.
The Aquarius Group currently does not engage in any hedging or derivative
transactions to manage interest rate risk. In conjunction with external
advice, management consideration is given on a regular basis to alternative
financing structures with a view to optimising the Aquarius Group`s funding
structure.
Covenants
The existing Rand Merchant Bank Bridge Loan Facility has a number of financial
covenants including:
(i) Debt service cover ratio of not less than 2:1;
(ii) Cumulative debt service cover ratio of not less than 1:1;
(iii) Net debt to equity ratio of less than 3:1; and
(iv) Current asset to current liability ratio of less than 2:1.
As a result of the temporary suspension of operations at Everest, announced on
8 December 2008, Aquarius technically breached an event of default in the term
of the Bridge Loan Facility. Rand Merchant Bank has waived this breach whilst
retaining their rights pending a satisfactory outcome to refinancing plans.
Cash flows from operations
Aquarius Platinum Limited
Consolidated Cash Flow Statement
Half year ended 31 December 2008
$`000
Half year ended Year
ended
30/06/08
Note: 31/12/08 31/12/07
Net operating cash (i) (15,880) 205,152 339,073
inflow
Net investing cash (ii) (24,444) (32,996) (118,048)
outflow
Net financing cash (iii) (30,094) (95,297) (320,081)
outflow
Net increase in (70,418) 76,859 (99,056)
cash held
Opening cash 170,956 287,663 287,663
balance
Exchange rate (iv) (13,584) 4,160 (17,651)
movement on cash
Closing cash 86,954 368,682 170,956
balance
Notes on the Consolidated Cash Flow Statement:
(i) Net operating cash flow includes US$243.5 million net inflow from sales
(includes net repayment of US$90 million of pipeline advances since June
2008), US$247.8 million paid to suppliers, net finance expense of US$9.7
million.
(ii) Reflects development and plant and equipment expenditure of US$24.4
million.
(iii)Includes the final dividend for payment to shareholders of US$26.2
million and US$3.6 million AQPSA dividend to minorities.
(iv) Reflects movement of Rand against the US dollar.
Commodity Price Exposure
The Aquarius Group`s revenues are exposed to commodity price fluctuations, in
particular movements in the price of platinum group metals ("PGMs"). The
Aquarius Group regularly measures exposure to commodity price risk by stress
testing the Aquarius Group`s forecast financial position to changes in PGM
prices.
The Group does not hedge commodity prices. The Plat Mile Joint Venture (of
which the Group has a 50 per cent. interest) had a forward commitment that was
completed in December 2008 for the delivery of a fixed amount PGMs at fixed
prices as described in Note 27 to the consolidated financial statements on
page 120 of 2008 Annual Report and Accounts. The forward commitment program
was not be renewed at its completion.
Cash effects of pipeline sales advances
Net cash inflows from operations primarily comprise sales of concentrate to
smelters under perpetual evergreen contracts. Pipeline sales advances and
balancing payments provide an element of working capital for Aquarius during
the period from concentrate delivery to metal sale. Pipeline sales advances
consist of a cash pre-payment of 90 per cent. of the contained metal value
made to Aquarius by the smelter at the time of delivery of the concentrate
based upon the prevailing metal price at the time. The final settlement of the
contract occurs three to four months after delivery and provides for balancing
cash payments to be made based upon the average prevailing metal price for the
month prior to ultimate sale. In times of rising metal prices the balancing
payments are in Aquarius` favour, and in times of falling metal prices the
balancing payments are in the smelters` favour. Whilst providing a valuable
source of working capital, these arrangements also produce an element of
volatility to Aquarius` cash balances.
During the six months ended 31 December 2008, the net repayment of pipeline
sales advances amounted to US$90 million resulting from the decline in PGM
prices during the period. Following the recent stabilisation in PGM prices,
the directors do not expect the Company`s cash balances to be materially
adversely impacted in the near future from further pre-payment settlement.
Recent Corporate Actions
During the financial year ended 30 June 2008, Aquarius completed the US$790
million repurchase of 8.4 per cent. of Aquarius` issued share capital and a 20
per cent. stake in AQPSA, a landmark transaction that increased Aquarius` free-
float to 100 per cent. and increased ownership in Aquarius` South African
operations. The transaction was financed in part by the issue of 23,144,000
Common Shares, raising a net US$366 million, with the balance being funded by
existing cash resources and debt.
Further details of the movement in cash flows may be found in the Company`s
2008 Annual Report and Accounts, 2007 Annual Report and Accounts and 2006
Annual Report and Accounts, in addition to the announcement of interim results
for the six months ended 31 December 2008.
Capital commitments
The principal capital commitment of Aquarius is the Bridge Loan Facility from
RMB which had an outstanding balance of approximately R1,577.5 million (US$165
million), at 25 March 2009 (being the last practicable date before this
announcement), is due for repayment on 30 June 2009.
On 8 December 2008, Aquarius management announced the temporary suspension of
operations at the Everest mine owing to geo-technical issues, namely
instability as a result of subsidence occurring over an upper area of the
mine. However, Aquarius management believes that the subsidence event does not
jeopardise the sustainability of Everest on a long term basis and that
technically acceptable alternatives exist to reopen the mine. The capital
expenditure associated with the potential restart of Everest is currently
estimated to be ZAR200 to 250 million.
As announced today, the Company expects to sign an implementation agreement
with Ridge ("the Implementation Agreement") pursuant to which, subject to the
satisfaction of pre-conditions relating to: (i) the successful outcome of the
Placing, Proposed Rights Issue and Proposed Convertible Bond Issue; and (ii)
the arrangement by Ridge, on terms satisfactory to Aquarius in its absolute
discretion, of not less than ZAR150 million of bridge funding for the
operation of the Blue Ridge Mine, the Company has agreed to make an offer for
the entire issued and to be issued share capital of Ridge at an exchange ratio
of 1 Common Share for every 2.75 Ridge shares. To fully realise the benefits
of the Possible Acquisition, Aquarius will require additional operating and
capital expenditure currently estimated to be ZAR310 million through the 2010
calendar year.
New capital
The above capital commitments are in excess of existing cash resources of the
Company. In order to meet Aquarius` capital commitments, the Company has today
announced a Placing and Proposed Rights Issue to raise proceeds of
approximately GBP125 million and an underwritten issue of convertible bonds to
raise ZAR500 million up to ZAR650 million. Taking into account the combined
proceeds of these fully underwritten capital raisings, and the existing cash
resources and facilities of the Company, the Company has sufficient working
capital for its present requirements.
APPENDIX V
ADDITIONAL INFORMATION
Litigation
AQPSA is currently involved in an ongoing dispute with Moolman. It was agreed,
and an order taken on 2 March 2009, that the claims in the action proceedings
be referred to arbitration. The dispute concerns Moolman seeking declaratory
relief as to the meaning of the ``rise and fall`` provisions of the contract
between APQSA and Moolman, payment in terms of the rise and fall provisions
thereof; payment for standing time, damages arising from the early termination
of the contract and payment for services in terms of the contract prior to
termination. AQPSA seeks a declaratory relief ordering (amongst other) that
the contract was lawfully rescinded and no claims can arise from it whether in
terms of the ``rise and fall`` provisions or at all and damages. The amount
counterclaimed by Moolman is [ZAR[472,000,000]]. Having taken legal advice
however, the board of directors of AQPSA are of the view that the counterclaim
will not be successful and that there is no exposure to the Company.
Material contracts
The following are all of the contracts (not being contracts entered into in
the ordinary course of business) that have been entered into by members of the
Achilles Group (i) within the two years immediately preceding the date of this
announcement which are, or may be, material to the Achilles Group; or (ii) at
any time and contain obligations or entitlements which are, or may be,
material to the Achilles Group as at the date of this announcement:
Amended and Restated Facilities Agreement
On or about 15 April 2008, AQPSA entered into an amended and restated
facilities agreement with First Rand Bank. The facilities available to AQPSA
included the Bridge Loan Facility of approximately ZAR2.4 billion (US$198.066
million). The Bridge Loan Facility accrues interest at a margin above 3 month
JIBAR of initially 1.85 per cent. and escalating to 3 per cent.. During the
period ended 30 June 2008 the Bridge Loan Facility bore interest at an average
rate of 13.14 per cent.
The facilities are secured by a first ranking fixed and floating charge over
all assets of the Company. Prepayments of principal can be made in full or in
part not more than once per calendar month and in an amount of not less than
ZAR25 million. On each interest payment date a prepayment against the
outstanding Bridge Loan Facility balance will be made through a cash sweep of
AQPSA`s available credit balances in a minimum amount of ZAR1 million. The
total amount available under the Bridge Loan Facility is due for repayment on
30 June 2009.
The amended and restated facilities agreement contains restrictions on
distributions to shareholders of AQPSA and connected parties if an event of
default is, or would be as a result of the distribution, present and if the
dividend cover ratio is not met. AQPSA is only permitted to make a
distribution during September 2008 and March 2009 and any distribution is
capped at ZAR330 million.
If any event of default occurs under the facilities, the lenders shall be
entitled, in their sole discretion to claim immediate payment of all amounts
outstanding under the facilities and amounts in respect of duties, fees and
charges owing by AQPSA. In addition the lenders shall be entitled to:
claim immediate payment from the Company of defined breakage costs;
demand and receive specific performance of the relevant obligation breached by
AQPSA;
take all steps which it regards as desirable in order to enforce, perfect,
preserve or strengthen the security (if entitled to);
cancel the whole or part of the facilities;
refuse to make payment of any further as yet undrawn funds available under the
facilities; and
claim payment from AQPSA of any and all damages, costs and other amounts
incurred as a result of such event of default.
Mimosa Offtake Agreement
On 20 November 2007, Mimosa, Minerals Marketing Corporation of Zimbabwe (MMCZ)
and Centametall Ag (Centametall) entered into a concentrate purchase
agreement. The agreement supersedes a previous agreement between the parties.
Under the agreement MMCZ, for and on behalf of Mimosa, will sell to
Centametall the concentrate to be produced at the Mimosa mine containing
nickel, copper, cobalt and PGMs. Mimosa is a wholly owned subsidiary of Mimosa
Investments Limited, in which Achilles has a 50 per cent. interest. The
quantities of concentrate to be purchased under the agreement increase as the
Mimosa mine expands. Under the agreement Mimosa is to deliver the concentrate
to Impala Refining Services` Smelting facility in South Africa. The purchase
price for the concentrate varies according to the metal value contained in the
concentrate and the quality of the concentrate. The agreement has an initial
term of 15 years from the date of receipt of the first concentrate shipment.
Thereafter, the contract continues in force until terminated by either party
on prior written notice to the other.
Pooling and Sharing Agreement 1 (P&SA1)
In June 2003, AQPSA and Anglo Platinum Limited (Anglo Platinum) entered into
the P&SA1 in relation to their respective mineral rights and assets at and
around the Kroondal mine. The P&SA1 became effective on 1 November 2003. Under
the P&SA1, AQPSA agreed to provide access to the mineral rights vested in the
Kroondal mine, all current plant and shaft infrastructure and management and
other contractual operating arrangements associated with the operation. Anglo
Platinum agreed to contribute a portion of the UG2 orebody on the Rustenburg
Platinum mine. The agreement envisages the operation of a single mining
entity, however, both parties retain ownership of the assets they contributed,
with revenues, costs and profits being shared equally. The agreement provides
for the AQPSA management team to remain in place at Kroondal and to report on
a quarterly basis to a committee comprising representatives from both Achilles
and Anglo Platinum. The agreement contains a put option in favour of AQPSA,
whereby if the P&SA1 is terminated prior to the end of life of the Anglo
Platinum mine, AQPSA shall be entitled to put the AQPSA assets relating to the
Kroondal mine to Anglo Platinum and Anglo Platinum will be obliged to acquire
the assets at a price determined in accordance with the P&SA1.
Pooling and Sharing Agreement 2 (P&SA2)
In July 2005, AQPSA and Anglo Platinum entered into the P&SA2 in relation to
their respective mineral rights and assets at and around Marikana. The P&SA2
became effective on 22 September 2005. Under the P&SA2, AQPSA agreed to
provide access to the mineral rights vested in Marikana, all current plant and
shaft infrastructure and management and other contractual operating
arrangements associated with the operation. Anglo Platinum agreed to
contribute portions of the UG2 ore reserves owned by its subsidiary,
Rustenburg Platinum Mines Limited. The agreement envisages the operation of a
single mining entity, however, both parties retain ownership of the assets
they contributed, with revenues, costs and profits being shared equally. The
P&SA2 contains provisions relating to ``super profits``, which are defined as
cash operating margins in excess of 50 per cent. In the event of there being
super profits, the portion of cash operating margins above the 50 per cent.
margin will be split in favour of Anglo Platinum in the ratio 55 per cent. to
Anglo Platinum and 45 per cent. to AQPSA. In the event of a change of control
in Achilles, the P&SA2 provides that Anglo Platinum may take over management
of P&SA2 and may further elect, under specific circumstances, to purchase the
AQPSA mining and mineral asset contributions to P&SA2 at an independently
determined market value. The acceptance by Anglo Platinum of this offer
triggers mandatory prepayment under the amended and restated facilities
agreement. If Anglo Platinum does not accept this offer, the lenders under the
amended and restated facilities agreement are entitled to decide whether they
wish to continue providing the facilities. The agreement provides for the
AQPSA management team to remain in place at Marikana and to report on a
quarterly basis to a committee comprising an equal number of representatives
from both Achilles and Anglo Platinum.
APPENDIX VI
DEFINITIONS
In this Announcement the following expressions have the following meaning
unless context otherwise requires:
2006 Annual Report and the 2006 Annual Report and
Accounts Accounts as published by the
Aquarius Group
2007 Annual Report and the 2007 Annual Report and
Accounts Accounts as published by the
Aquarius Group
2008 Annual Report and the 2008 Annual Report and
Accounts Accounts as published by the
Aquarius Group
2009 Half-Year Results the Aquarius Group 2009 Half-
Year Financial Results as
notified to a Regulatory
Information Service in the
UK on 7 February 2009
Admission the admission of the Placing
Shares to secondary listing
on the Official List of the
Financial Services Authority
and to trading on the main
market of the London Stock
Exchange
ADRs American Depositary Receipts
AIM the Alternative Investment
Market of the LSE
Anglo Platinum Anglo Platinum Limited, a
subsidiary of Anglo American
plc
Announcement this announcement (including
the appendix to this
announcement)
AQPSA Aquarius Platinum (South
Africa) (Pty) Ltd, a wholly
owned subsidiary of Aquarius
incorporated in the Republic
of South Africa
Aquarius Group or the Group the Company and each of its
subsidiaries and subsidiary
undertakings from time to
time
ASX ASX Limited (ACN 008 624
691), Australian Securities
Exchange or the Australian
Stock Exchange, as
appropriate
ASX Listing Rules the Listing Rules of ASX and
any other rules of ASX which
are applicable while the
Company is admitted the
Official List of ASX
Australian Corporations Act the Corporations Act 2001
(Cth) of Australia
AWST Australian Western Standard
Time
A$ Australian dollars
Board the board of directors of
Aquarius
CAT Central African Time
certificated or in where a share or other
certificated form security is not in
uncertificated form
Common Monetary Area South Africa, Republic of
Namibia and the Kingdoms of
Swaziland and Lesotho
Common Shares common shares of US0.05 each
in the capital of Aquarius
Companies Act the Companies Act 1981 of
Bermuda (as amended)
Convertible Bond the subscription placement
Underwriting Agreement and underwriting agreement
between the Company, AQPSA
and RMB relating to the
Proposed Convertible Bond
Issue
CREST the relevant system, as
defined in the CREST
Regulations (in respect of
which Euroclear UK is the
operator as defined in the
CREST Regulations)
CTRP Chrome Tailings Retreatment
Plant
Depositary Interests or DIs independent securities
constituted under English
law and issued or to be
issued by the Depositary in
respect, and representing on
a 1 for 1 basis, underlying
Common Shares which may be
held or transferred through
the CREST system
DI Nil Paid Rights the rights to New Depositary
Interests credited to CREST
accounts of Qualifying DI
Holders in connection with
the Proposed Rights Issue
Directors the executive director and
non-executive directors of
Aquarius
Disclosure and Transparency the rules relating to the
Rules disclosure of information
made in accordance with
Section 73A(3) of the FSMA
DME South African Department of
Minerals and Energy
EMP environment management
program
Ernst & Young Ernst & Young of 111 Mounts
Bay Road, Perth, WA 6000,
Australia
European Economic Area the European Union, Iceland,
Norway and Liechtenstein
Everest Everest Platinum Mine
Excon Exchange Control Department
of the South African Reserve
Bank
Excluded Territories and the United States, Canada
each an Excluded Territory and Japan
Existing Shares the Common Shares in issue
as at the date of this
document (including, if the
context requires, the
Existing DIs)
First Plats First Platinum (Pty) Ltd, a
company incorporated in the
Republic of South Africa
First Plats Agreement the agreement between
Aquarius, AQPSA and First
Plats dated 5 February 2009
First Plats Mining Area the geographical area
comprising of mining
authorisation in the form of
mining licences to mine for
PGMs
FSA the Financial Services
Authority
Great Dyke Complex a sinuously linear, graven-
like mass of ultramafic
rocks which is known to host
PGMs in economic
concentrations
Great Dyke Reef a PGE bearing layer within
the Great Dyke Complex in
Zimbabwe
IFRS International Financial
Reporting Standards as
issued by the International
Accounting Standards Board
Impala Platinum Impala Platinum Holdings
Limited registration number
1957/001979106, a company
incorporated in the republic
of South Africa
JORC Code the Australasian Code for
Reporting of Exploration
Results, Mineral Resources
and Ore Reserves, effective
17 December 2004
JSE JSE Limited, a public
company incorporated with
limited liability under the
laws of the Republic of
South Africa, with
registration number
2005/022939/06 and licensed
as an exchange under the
South African Securities
Services Act, No 36 of 2004,
as amended, often referred
to as the ``Johannesburg
Stock Exchange``
JSE Listings Requirements the listing requirements of
the JSE
London Stock Exchange or LSE the London Stock Exchange
plc
Marikana Marikana Platinum Mine
Memorandum of Association the memorandum of
association of the Company
Mimosa Mimosa Mining Company
(Private) Limited
Mine Health and Safety Act the Mine Health and Safety
Act (1996) of South Africa
NYMEX New York Mercantile Exchange
OECD the Organisation for
Economic Co-operative and
Development
Placee any person (including
individuals, funds or
otherwise) by whom or on
whose behalf a commitment to
acquire Placing Shares has
been given
Placing Admission the admission of the Placing
Shares to the Official List
by the UKLA in accordance
with Chapter 3 of the
Listing Rules and to trading
by the London Stock
Exchange; quotation of the
Placing Shares on ASX; and
admission of the Placing
Shares to listing and
trading on the Main Board of
the JSE
Placing Agreement the placing and rights issue
underwriting agreement dated
26March 2009 among the
Company the Bookrunner and
the Co-Lead Manager in
respect of the Placing and
the Proposed Rights Issue
Placing Price the price per Common Share
at which the Placing Shares
are placed
Placing Shares up to 46,330,000 Common
Shares to be issued pursuant
to the Placing
pounds sterling, GBP or GBP the lawful currency of the
United Kingdom
Prospectus Directive the Directive of the
European Parliament and of
the Council of the European
Union 2003/71/EC
Prospectus Rules the Prospectus Rules
published by the FSA under
Section 73A of FSMA
P&SA1 Pooling & Sharing Agreement
between AQPSA and Anglo
Platinum relating to
Kroondal
P&SA2 Pooling & Sharing Agreement
between AQPSA and Anglo
Platinum relating to
Marikana
Qualifying Shareholders Qualifying Australian
Shareholders, Qualifying UK
Shareholders and Qualifying
South African Shareholders
Rand or ZAR or R the lawful currency of South
Africa
Record Date the Australian Record Date,
the UK Record Date and/or
the South African Record
Date, as applicable
Regulatory Information one of the regulatory
Service information services
authorised by the UK Listing
Authority to receive,
process and disseminate
regulatory information in
respect of listed companies
Rights Issue Shares the New Common Shares to be
issued by the Company under
the Proposed Rights Issue
RMB or Rand Merchant Bank Rand Merchant Bank, a
division of FirstRand Bank
Limited (Registration Number
1929/001225/06), a public
company registered in South
Africa
RPM Rustenburg Platinum Mines
Limited
Salene Mining Area the geographical area
comprising of mining
authorisation in the
form of mining licences to
mine for PGMs
SAMREC Code South African Code for
Reporting of Mineral
Resources and Mineral
Reserves (2007)
SavCon Savannah Consortium, a
consortium of Savannah,
Chuma and Malibongwe
Securities Act the US Securities Act of
1933, as amended
Shareholder or Aquarius holder of Common Shares
Shareholder
Sheba`s Ridge the project in which Ridge
has an interest as described
in this announcement
TKO TKO Investment Holdings
Limited
UK Listing Authority or UKLA the FSA in its capacity as
the competent authority for
the purposes of Part VI of
FSMA and in the exercise of
its functions in respect of
the admission to the
Official List otherwise than
in accordance with Part VI
of FSMA
United Kingdom or UK the United Kingdom of Great
Britain and Northern Ireland
United States or US the United States of
America, its territories and
possessions, any state of
the United States and the
District of Columbia
US Securities Act the United States Securities
Act 1933, as amended
US dollar or US$ the lawful currency of the
United States
Date: 26/03/2009 11:44:01 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
