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AQP
AQP
AQP - Aquarius Platinum Limited - Fourth quarter 2010 - production results to
30 June 2010
Aquarius Platinum Limited
(Incorporated in Bermuda)
Registration Number: EC26290
Share Code JSE: AQP
ISIN Code: BMG0440M1284
AQUARIUS PLATINUM: FOURTH QUARTER 2010 - PRODUCTION RESULTS TO 30 JUNE 2010
Highlights
- Attributable production up 7% quarter-on-quarter to 110,474 4E ounces
- Average PGM Dollar prices improved - platinum up 5%, rhodium up 5% and
palladium up 12%, against a backdrop of continued Rand strength
- Anton Lubbe appointed as Managing Director of principal South African
operating subsidiary
- Implementation and successful re-audit of the ISO 9000 and 14000 and
OSHAS 18000 management systems undertaken at Kroondal and Marikana
- Mine plan review in progress at the Blue Ridge mine
- Regrettably, two fatalities at Blue Ridge during the quarter and five
more at Marikana in a single incident subsequent to the quarter end -
Group-wide safety review underway (see recent separate disclosures and
Corporate Matters section below)
Q4 Operating Results Summary
Kroon Marik Everest Blue Mimosa CTRP Plat.
dal ana * Ridg Mile
e +
4E PGM
Production
Total (100% 108,4 31,88 8,496 10,2 49,709 1,303 2,411
basis) 38 9 02
Attributable 54,21 15,94 8,496 5,10 24,855 652 1,206
9 5 1
4E Basket Price
R/oz 10,52 10,56 9,912 10,5 - 11,33 9,791
1 0 06 3
$/oz 1,402 1,407 1,321 1,39 1,184 1,510 1,300
9
Cash Costs (4E
basis)
R/oz 6,037 6,583 9,150 - n/a 5,927 8,473
$/oz 805 877 1,219 - 640 790 1,125
Cash Margin 31 28 (4) - 54 18 13
Stay-in-
Business Capex
R/oz 530 1,507 2,121 955 - 626 -
$/oz 71 201 283 127 92 83 -
* In ramp-up + In development / capitalised
Commenting on the results, Stuart Murray, CEO of Aquarius Platinum said:
"The final quarter of the 2010 financial year has been positive overall, with
production volumes better than those achieved in the previous quarter, and
improved average PGM prices. Kroondal and Mimosa performed well during the
period, which also saw the early and very promising restart of production from
Everest. However, the quarter was not without its challenges. The two
fatalities at the Blue Ridge mine in two separate incidents during the quarter
have prompted us to review and overhaul the safety procedures at this mine,
and Blue Ridge will also now undergo an extensive review to improve its long
term mine plan. Marikana experienced a difficult quarter due to the
intersection of potholes in the drill rig section, followed by the tragic
accident at 4 Shaft shortly after the quarter end, and feed quality and supply
volume to the tailings operations remained volatile, with a commensurate
impact on their results. We are proactively resolving these issues, and we
have renewed our commitment to best practice safety throughout our
operations."
Production by mine
PGMs (4E) Quarter ended
Sep 2009 Dec 2009 March June 2010
2010
Kroondal 88,808 108,254 103,071 108,438
Marikana 31,223 37,160 35,147 31,889
Everest - - - 8,496
Blue Ridge 14,469 18,598 15,338 10,202
Mimosa 50,828 50,079 49,008 49,709
CTRP 1,740 2,087 1,268 1,303
Platinum Mile 5,932 8,539 2,737 2,411
Total 193,001 224,717 206,586 212,448
Production by mine attributable to Aquarius
PGMs (4E) Quarter ended
Sep 2009 Dec 2009 March June 2010
2010
Kroondal 44,404 54,127 51,536 54,219
Marikana 15,611 18,580 17,574 15,945
Everest - - - 8,496
Blue Ridge 7,235 9,299 7,669 5,101
Mimosa 25,414 25,039 24,504 24,855
CTRP 870 1,044 634 652
Platinum Mile 2,966 4,270 1,369 1,206
Total 96,500 112,359 103,286 110,474
Aquarius Group attributable production (PGM ounces) - quarters to 30 June 2010
(Please refer to www.aquariusplatinum.com for graph)
Metals prices
The strong PGM price momentum seen in the previous quarter continued into
April and early May, driven by a recovering automobile sector and to some
extent investment demand for the physically backed platinum and palladium
Exchange Traded Funds (ETFs). The US Dollar price of platinum peaked for the
financial year at $1,738 per ounce on the last day of April and first day of
May this year.
In mid May the Greek sovereign debt crisis reintroduced market uncertainty
regarding the strength of the global economic recovery, and this was
exacerbated by rumours of faltering growth in China and weaker-than-expected
economic indicators reported by the USA. The situation in Greece in particular
cast doubt on the wider European economy, which is the largest consumer of
diesel passenger cars in the world. Because of its importance in diesel
catalytic converters, the platinum price has been affected negatively by these
events and the associated worsening in consumer sentiment. Uncertainty around
the strength of the global recovery and European economy persists, and
continuing market volatility is likely throughout the northern hemisphere
summer.
Despite the price of platinum falling 6% over the quarter and at one point
losing over $200 per ounce, the volumes of both the physical platinum and
physical palladium ETFs have remained encouragingly stable, increasing
slightly in May and falling marginally in June. The platinum ETFs together
continue to represent approximately 1m oz of underlying metal.
Platinum volumes on the Shanghai Gold Exchange (a proxy for Chinese platinum
jewellery demand) spiked in May and were above average again in June, driven
largely by recent price falls. Jewellery demand appears to be providing a
floor for the platinum price of approximately $1,500 per ounce.
Switzerland remained a net exporter of platinum over the quarter, indicating
continuing restocking by automobile manufacturers. Market consensus
nonetheless continues to suggest a slowing in automobile demand which is
likely to persist for some time, with sales of palladium-rich gasoline cars
outperforming those of diesel cars.
As a result of price strength early in the quarter, the average prices of the
PGMs increased quarter-on-quarter. Platinum and rhodium each rose 5% on
average, while palladium rose 12%. Gold rose by 8% over the period on average.
All of the PGMs ended the quarter below the point at which they began,
however, with platinum falling 6% to $1,532 per ounce, palladium down 9% to
$446 per ounce and rhodium down 4% to $2,500 per ounce. Gold improved over the
quarter, rising 11% to $1,243 per ounce.
PGM prices by individual metal - 12 months to 30 June 2010
(Please refer to www.aquariusplatinum.com for graph)
Rand-Dollar exchange rate
The Rand remained broadly stable for yet another quarter, averaging R7.55 to
the US Dollar, a depreciation of 0.4% compared to the average in the prior
period. The Rand was stronger in April, weakening in May to a low of R7.97 to
the US Dollar, before rising again in June to end the quarter under review at
R7.62.
Despite weaker PGM prices from mid May, average PGM basket prices once again
strengthened at all operations in both currencies over the quarter. The US
Dollar weighted average group basket price increased by 6% to $1,347 per 4E
PGM ounce compared to the previous quarter, while the weighted average basket
price at the South African operations was $1,394 per PGM ounce. The South
African basket price is equivalent to R10,460 per PGM ounce at the average
exchange rate for the period, a 5% increase over the second quarter. However,
the South African basket price ended the quarter at R9,979 per PGM ounce, 2%
lower than at the start of the period. The reduction in the basket price in
the last portion of the quarter will result in a negative sales adjustment of
approximately $2 million for this period.
Rand-Dollar exchange rate - 12 months to 30 June 2010
(Please refer to www.aquariusplatinum.com for graph)
Average PGM basket prices achieved at Aquarius operations: US$ per 4E PGM
ounce
Basket prices (Quarter ended)
Sep 2009 Dec 2009 March June 2010
2010
Kroondal 972 1,163 1,328 1,402
Marikana 999 1,173 1,328 1,407
Everest - - - 1,321
Blue Ridge 967 1,138 1,313 1,399
Mimosa 805 910 1,074 1,184
CTRP 1,074 1,266 1,456 1,510
Platinum Mile 1,004 1,192 1,308 1,300
Aquarius Group 931 1,094 1,267 1,347
average
PGM basket prices (Dollar and Rand per 4E PGM ounce) - 12 months to 30 June
2010
(Please refer to www.aquariusplatinum.com for graph)
AQUARIUS PLATINUM (SOUTH AFRICA) (PTY) LTD (Aquarius Platinum 100%)
P&SA 1 at Kroondal
Safety, Health and Environmental
- The 12-month rolling average disabling injury incidence rate (DIIR per
200,000 hours) was 0.57 for the quarter and 0.54 for the 2010 financial
year, a 23% improvement on the Q4 2009 rate of 0.74
- During the quarter, Kroondal achieved 18 months without a fatal accident
- ISO 9000 and 14000 and OSHAS 18000 management systems implemented and
successfully re-audited
Mining
- Production tonnes for the quarter increased by 11% to 1,635,594 tonnes
- Head grade improved from 2.56 g/t to 2.61g/t
Processing
- Tonnes processed increased by 2% to 1,604,734 tonnes
- Recoveries increased by 2% to 81%
- PGM production increased by 5% to 108,438 4E PGM ounces (54,219 4E PGM
ounces attributable)
P&SA1 at Kroondal PGM production and Rand cash costs per PGM ounce (100%)
(Please refer to www.aquariusplatinum.com for graph)
Revenue
Revenue for the quarter decreased by 3% to R951 million (R476 million
attributable) due to negative sales adjustments as a result of the weakening
of metal prices and stronger Rand in the last weeks of the quarter.
The Kroondal US Dollar-denominated basket price improved by 6% compared to the
previous quarter to an average of $1,402 per PGM ounce. The Rand/Dollar
exchange rate decreased slightly on average to R/$7.50.
Operations
The number of mining shifts increased from 65 in Q3 to 69 in Q4, and as a
result the on-reef stoping square metres mined increased by 5% and primary
development (currently at 3,388 metres) increased by 6% during the quarter.
Overall tonnes hoisted increased by 11% to 1,635,594 tonnes for the quarter.
Improved mining volumes assisted in increasing the amount of ore sent to the
stockpile. Overall volumes processed improved by 2% to 1,604,734 tonnes with
stockpiles at the end of the quarter totalling approximately 56 thousand
tonnes.
Off-reef mining increased from 1.1% of the on-reef square meters mined to 4.0%
as more unforeseen geological structures were encountered. Recoveries
increased from 79% to 81% as a result of a more stable metallurgical operating
regime.
PGM production increased by 5% to 108,438 4E PGM ounces (54,219 4E PGM ounces
attributable).
Kroondal: Metal in concentrate produced (PGM ounces)
Quarter Pt Pd Rh Au PGMs Attributable
ended to Aquarius
Jun 2010 63,803 32,324 11,789 522 108,43 54,219
8
Mar 2010 60,580 30,729 11,228 534 103,07 51,535
1
Dec 2009 63,772 32,153 11,808 521 108,25 54,127
4
Sep 2009 52,287 26,366 9,708 447 88,808 44,404
Operating cash costs
Mining cash costs increased by 6% to R408 per tonne, and costs per PGM ounce
increased by 2% to R6,037. Absolute operating costs increasing from R609
million to R655 million for the quarter, as a result of higher electricity
cost due to the winter tariffs and engineering cost (major repairs). The
increased average PGM basket price was offset by the reduction of the basket
price in the last month of the quarter resulting in a negative sales
adjustment. This reduced Kroondal`s cash margin for the period from 38 % to
31%.
Kroondal: Operating cash costs per ounce
4E 6E 6E net of by-
(Pt+Pd+Rh+Au) (Pt+Pd+Rh+Ir+Ru+Au) products
(Ni&Cu)
Kroondal R6,037 R4,942 R4,806
Capital expenditure
Capital expenditure for the quarter was R57 million (R530 per PGM ounce). This
was due to underground infrastructure enhancement and the establishment and
mobilising of the K6 project.
P&SA2 at Marikana
Safety, Health and Environmental
- The 12-month rolling average disabling injury incidence rate (DIIR per
200,000 hours) was 0.74 and is a 19% improvement on Jun 2009 (0.91)
- ISO 9000 and 14000 and OSHAS 18000 management systems implemented and
successfully re-audited
- Marikana achieved 17 fatality free months during the quarter; however on
6 July 2010 a serious accident occurred at the mine in which 5 people
tragically lost their lives
- A detailed note on the fall of ground incident referred to above is
included in the Corporate Matters section of this quarterly report
Mining
- Production tonnes decreased by 1% to 521,712 tonnes, comprising 361,358
tonnes from underground and 160,354 from open-pit operations
- Head grade increased by 4% to 2.68g/t
Processing
- Tonnes processed decreased by 10% to 505,631 tonnes
- Recoveries decreased by 3% to 73%
- PGM production decreased by 9% to 31,889 4E PGM ounces (15,944 4E PGM
ounces attributable)
P&SA2 at Marikana PGM production and Rand cash costs per PGM ounce (100%)
(Please refer to www.aquariusplatinum.com for graph)
Revenue
Revenue at Marikana decreased by 15% to R292 million (R146 million
attributable) due to negative sales adjustments as a result of the weakening
of metal prices and a stronger Rand in the last weeks of the quarter, as well
as a reduction in production.
The Marikana US Dollar-denominated basket price averaged $1,407 per PGM ounce,
6% higher than the previous quarter.
Operations
Marikana Mine production was negatively affected by the intersection of
potholes in the drill rig section. Primary development increased by more than
50% to negate the negative effect of the high geological losses, resulting in
a significant stay-in-business capital expenditure increase.
Processed tonnes mirrored the mining tonnes with total volumes processed at
505,631 tonnes, 10% lower than in the previous quarter.
The head grade improved by 4% to 2.68g/t, as development activities at 5 Shaft
are now on reef, as explained in the previous quarter.
Recoveries were 3% lower at 73%, due to instability in the plant operation as
a result of intermittent feed.
PGM production for the quarter decreased by 9% to 31,889 4E PGM ounces (15,944
4E PGM ounces attributable).
Marikana: Metal in concentrate produced (PGM ounces)
Quarter Pt Pd Rh Au PGMs Attributable
ended to Aquarius
Jun 2010 19,163 9,114 3,423 190 31,889 15,945
Mar 2010 21,007 10,236 3,698 206 35,147 17,574
Dec 2009 22,838 10,470 3,642 209 37,160 18,580
Sep 2009 19,515 8,407 3,100 200 31,222 15,611
Operating cash costs
Cash costs decreased by 7% to R415 per tonne, while costs per PGM ounce
decreased by 8% to R6,583 as a result of a reduction in stripping ratio from
27:1 to 14:1 in the open pit as the pit approaches its end of life.
Underground costs fell as a result of a positive variable cost variance
because fewer tonnes were mined. Number 1 Shaft (within the pit) at Marikana
is currently under operating review, as it is currently not contributing
sufficiently at spot prices. This shaft currently accounts for approximately
8% of Marikana`s overall production.
Gross revenue decreased by 15% to R292 million as a result of negative sales
adjustments and a reduction in the ounces produced, resulting in a cash margin
of 28%.
Marikana: Operating cash costs per ounce
4E 6E 6E net of by-
(Pt+Pd+Rh+Au) (Pt+Pd+Rh+Ir+Ru+Au) products
(Ni&Cu)
Marikana R6,583 R5,387 R5,146
Capital expenditure
Stay-in-business capital expenditure totalled R48 million (R1,507 per PGM
ounce), an increase of 125%. Capital costs increased because of increased
equipping of infrastructure and development of the Marikana 5 Shaft.
Contractor dispute with Moolman Mining
As disclosed in previous Aquarius Platinum quarterly updates, this dispute has
been referred to the courts and provisional dates in September 2010 have been
allocated for the trial.
Everest Mine
Safety, Health and Environmental
- No lost time injuries were recorded during the quarter
- The 12 month rolling DIIR for the period was 0.31
Operations
Phase 2 of the re-establishment project progressed well for the quarter with
95% of the work completed.
The establishment of permanent underground services, the reclamation of
infrastructure, and the equipping of declines and strike sections have all
been completed. The completion of this infrastructure resulted in early
delivery of ore from underground and a total of 107,289 tonnes were hoisted
during this quarter, which is 72% above the initial plan.
The overland conveyor belt and chairlift is 95% complete with final touches
still being applied. Work is scheduled to be completed at the end of July
2010.
Work at the Valley box cut commenced during the quarter. Box cut excavation
and access road construction is in progress, with completion targeted for the
end of August 2010. 81,542 tonnes of opencast ore was mined from the remnant
section around the collapsed decline system during the quarter, bringing
mining for the quarter to 188,831 tonnes (199,503 for the full year).
Construction of the Chromite Spiral Plant was completed at the end of May and
commissioning was completed at the end of June. The Spiral Plant is currently
running within the designed criteria.
The processing plant was recommissioned in May with 150,279 tonnes processed
for the quarter at a grade of 3.09g/ton. A total of 8,496 ounces were produced
at a recovery rate of 57%. The recovery was negatively affected by the initial
open pit material which was oxidized, and by challenges experienced with the
plant PLC system during re-commissioning.
Capital Expenditure
The total re-establishment project capital (both Phase 1 and Phase 2 as
previously announced) amounts to R265 million. Project expenditure is within
budget, at a total of R87 million for the quarter, bringing the project
expenditure for the year to R217 million. On mine capital projects expenditure
amounted to R 30.3 million for the year, mainly for the construction of the
Chrome Spiral plant (R21.2 million), and also for the re-establishment of the
main decline belts (outside the scope of the project) and the Hoogland EIA
study.
MIMOSA INVESTMENTS (Aquarius Platinum - 50%)
Mimosa Platinum Mine
Safety
- The 12-month rolling average DIIR for the period improved to 0.07 from
0.09 in the previous quarter
- Zero lost-time injuries were recorded during the quarter under review
Mining
- Underground production increased by 16% to 563,976 tonnes
- Head grade was static at 3.60g/t
Processing
- Concentrator plant recoveries decreased slightly to 75.7% from 76.1%
- Total mine production increased to 49,709 4E PGM ounces (24,855 4E PGM
ounces attributable)
- The surface stockpile decreased to a total of 72,117 tonnes at the end of
the quarter
Mimosa Mine PGM Production & $ Cash Cost per PGM Ounce (100%)
(Please refer to www.aquariusplatinum.com for graph)
Revenue
The average achieved PGM basket price for the quarter increased by 10% to
$1,184 per PGM ounce, while the average achieved nickel price increased by 28%
to $10.34 per pound. Revenue for the quarter increased to $72 million, with
base metals accounting for approximately 25% of this. A $5 million positive
price adjustment is included in revenue for the quarter.
The cash margin increased to 54% from 49% in the previous quarter, mainly due
to stronger average metal prices.
Operations
Mimosa mining operations hoisted 563,976 tonnes of ore in the current period
compared to 486,804 tonnes in the previous quarter. Volumes milled and
processed totalled 567,845 tonnes, with 3,869 tonnes being taken from the
stockpile. As a result the surface stockpile totalled 72,117 tonnes at the
quarter end.
The average plant head grade was static at 3.60g/t, and recoveries decreased
to 75.7% from 76.1% in the previous quarter.
As a result of these factors, PGM production increased by 2% to 49,709 4E PGM
ounces (24,855 4E PGM ounces attributable) during the quarter, with base
metals production rising by a similar margin.
Mimosa: PGMs in concentrate produced (ounces)
Quarter Pt Pd Rh Au PGMs Attributable
ended to Aquarius
Jun 2010 25,264 19,053 1,999 3,393 49,709 24,855
Mar 2010 24,898 18,744 1,972 3,394 49,008 24,504
Dec 2009 25,388 19,237 2,012 3.442 50,079 25,039
Sep 2009 25,691 19,569 2,096 3,473 50,829 25,414
Mimosa: Base metals in concentrate produced (tons)
Mine production Attributable to Aquarius
Quarter Ni Cu Co Ni Cu Co
ended
Jun 2010 691 565 19 346 283 10
Mar 2010 685 561 19 343 281 10
Dec 2009 695 574 19 348 287 10
Sep 2009 705 572 19 353 286 10
Operating cash costs
During the quarter, cash costs decreased by 4% to $56 per ROM tonne, and costs
per PGM ounce decreased by 3% to $640. This was largely as a result of cost
saving initiatives that are being implemented in the mine.
Net of by-products, cash costs were $265 per PGM ounce, compared with $333 per
PGM ounce in the previous quarter, primarily due to the decrease in operating
cash costs.
Mimosa operating cash costs per ounce
4E 6E 4E net of by-
(Pt+Pd+Rh+Au) (Pt+Pd+Rh+Ir+Ru+Au) products
(Ni, Cu & Co)
Mimosa $640 $607 $265
Economic and Political Update
The inclusive government continues to function and there is continued hope
that this will result in an improved economic environment. In the 2010 Mid
Term Fiscal Policy Statement which was presented on 14 July 2010, royalties on
precious metals were increased from 3.5% to 4% of gross revenue while that
applied to base metals remained unchanged. The minister indicated that the
multicurrency regime would continue until 2012. Inflationary pressures from
wage increases, public utility charges and the strengthening of the South
African Rand against the US dollar caused the inflation figure to reach 6.1%
in May 2010 from 0.7% in January 2010. The US dollar and South African Rand
remain the most widely used currencies in the economy.
A draft revised Income Tax Act was published in June 2010 for comments. The
proposed changes include restrictions on deductible expenditure for taxable
income, and changing the Special Initial Allowance for mining entities from
100% in the year of expenditure to 25% over four years. However, the income
tax rate for mines remained unchanged at 25%.
Update on the Indigenisation Bill
Following the signing into law of the Indigenisation Bill, companies were
required to submit to the Zimbabwean Ministry of Youth Development,
Indigenisation and Economic Empowerment their indigenisation plans and
proposals by 15 April 2010. As reported last quarter, Mimosa has complied with
this requirement. There have been no formal developments since then in respect
of the Indigenisation Bill.
RIDGE MINING LIMITED
Blue Ridge Platinum Mine (Aquarius Platinum - 50%)
Safety
- The 12-month rolling average DIIR for the quarter deteriorated to 1.86
from 1.43 in the previous quarter
- Regrettably, 2 fatalities occurred in two separate incidents during June
- Senior management personnel changes and a safety review at Blue Ridge
have been initiated
Mining
- Production from underground operations increased by 20% to 162,526 tonnes
- Head grade improved to 2.32 g/t
- Surface stockpiles largely depleted at the end of the quarter
Processing
- Tonnes processed decreased by 40% to 179,209 tonnes due largely to
depleted stockpiles
- Recoveries increased from 72% to 76%
- PGM production decreased by 33% to 10,202 ounces (5,101 ounces
attributable to Aquarius)
Revenue
Revenue for the quarter decreased by 35% to R96.5 million (R48 million
attributable to Aquarius) as a result of lower PGM production. The achieved
mine basket price for the quarter improved by 6% to an average of $1,399 per
PGM ounce.
Operations
Following the two fatalities that occurred during June a decision was taken by
Aquarius to halt all operations at the Blue Ridge mine for a two week period,
during which time all employees were retrained. All codes of practice, safe
operating procedures and base line risk assessments were reviewed. All
employees were taken through a "Stop Think" behaviour program which included
an industrial theatre performance and a workshop on the importance of
reporting injury incidence. Staged mock ups were erected showing the dangers
associated with 10 cardinal rules of safety. The section 54 suspension which
was issued was lifted on 25 June and mining recommenced on 29 June.
Production for the 4th quarter saw the initiation of the managed contract
model at Blue Ridge, as used throughout Aquarius` other South African
operations. By the first day of the quarter all relevant mining personnel were
formally employed by Murray and Roberts Cementation.
Extremely high levels of labour turnover were experienced at the beginning of
the quarter, largely due to the active poaching of skilled personnel by
competitors. This had a negative effect on the production achieved overall.
This was exacerbated by the loss of 22 production days as a result of section
54 stoppages imposed by the DMR during their eight inspections of the mine
during the quarter.
Underground mining for the quarter improved from the 135,621 tonnes achieved
in the previous quarter to 162,526 tonnes.
As a result, processed tonnes at 179,209 tonnes were materially lower than the
297,826 treated in the previous quarter, as surface stockpiles were depleted
and only ROM material was processed.
The head grade improved to 2.32g/t from 2.24g/t, an improvement of 4%.
PGM production was 10,202 PGM ounces (5,101 ounces attributable to Aquarius).
Development improved compared to the previous quarter. Primary development
achieved was 1,681m for the quarter against the 1,513m achieved for the
previous quarter.
Blue Ridge: Metal in concentrate produced (PGM ounces)
Quarter Pt Pd Rh Au PGMs Attributable
ended
to Aquarius
Jun 10 6,144 2,995 963 100 10,202 5,101
Mar 10 9,237 4,499 1,452 150 15,338 7,669
Dec 09 11,201 5,454 1,762 181 18,598 9,299
Sep 09 8,598 4,383 1,347 141 14,469 7,235
Operating cash costs
Total operating expenditure during the quarter amounted to R96 million, a 24%
decrease on the previous quarter. Blue Ridge remains in project phase, and as
a result operating expenditure continued to be capitalised during the quarter.
The resultant capitalisation of costs and revenue to the project (including
finance costs) amounted to R34 million for the quarter (on a 100% basis).
Update on review of Blue Ridge business plan
Further to the announcement on 1 July 2010 regarding the safety review at the
Blue Ridge mine, the shareholders (Aquarius and Imbani Platinum) are now in
the process of finalising a substantially revised Life of Mine business plan
to optimise the operation. The current lower Rand 4E basket price at Blue
Ridge and the ongoing focus on safe mining operations has necessitated the
initiation of a fundamental redevelopment programme at the mine, which is
expected to run for a 10 to 12 month period. This optimisation programme will
focus on mine access, ore and waste mass flows. It will provide for a third
mine access point and reinstates the construction of a second decline, the
plans for which were shelved by the prior managers. Underground waste surge
capacity infrastructure and aggressive on- and off-reef development will also
be provided for. The redevelopment programme is focused on the efficient and
sustainable operation of the mine in the medium and long term.
The shareholders of Blue Ridge Platinum Mine are currently evaluating a number
of options for the execution of this programme. Given certain short term
geological and mining infrastructure limitations, management has proposed that
one of the options to be considered is the termination of production at the
mine for up to seven months. This will provide a period to be used exclusively
for the implementation of fundamental mining infrastructure alterations and
key development initiatives on the mine. It is management`s view that this
option will prove the most cash-efficient. Blue Ridge will continue to be
treated as a project for accounting purposes throughout this process.
If the proposed optimisation plan for Blue Ridge is approved by its
shareholders and implemented as described above, the expected PGM production
from Blue Ridge for the 2011 financial year will be substantially lower than
guided, pending conclusion of the plan. Management is committed to the
redevelopment of the Blue Ridge mine in the short term, in order to realise
its potential as a safe, sustainable and profitable mine in the medium and
long term, and to ensure its survival in the current market conditions.
AQUARIUS PLATINUM (SA) CORPORATE SERVICES (PTY) LTD
Chromite Tailings Retreatment Plant (CTRP) (ACS (SA) - 50%)
Safety
- The DIIR remained at zero for the quarter.
Resource development
Treatment of material from one of the recently acquired tailings dams
commenced during the quarter. The material proved to be challenging to treat
in that it was more oxidised than expected and necessitated a number of
circuit changes to be undertaken in the CTRP plant to accommodate the change
in feed material characteristics. Aquarius believes that the changes that have
now been made to the plant will deliver improved results going forward.
Processing
Material processed decreased by 1% to 75,000 tonnes
Grade increased by 22% to 2.50g/t - but this grade was influenced by higher
levels of oxidation
Recoveries decreased by 14% to 22%
Production increased by 3% to 1,303 4E PGM ounces (652 ounces attributable)
CTRP PGM production and Rand cash costs per PGM ounce (100%)
(Please refer to www.aquariusplatinum.com for graph)
Revenue
The achieved mine basket price for the quarter averaged $1,510 per PGM ounce,
4% higher than the previous period.
Operations
Material processed decreased slightly to 75,000 tonnes for the quarter, at a
higher head grade of 2.50g/t. Recoveries decreased to 22% from 25% in the last
quarter. The higher grade material was sourced from the treatment of a new
tailings dam in the Kroondal area. However, the new dam has higher levels of
oxidation which led to lower recoveries over the quarter. The net result was a
marginal increase in the production of 4E ounces to 1,303 PGM ounces (652 PGM
ounces attributable).
CTRP: Metal in concentrate produced (PGM ounces)
Quarter ended Pt Pd Rh Au PGMs Attribut
(4E) able to
Aquarius
Jun 2010 800 297 203 3 1,303 652
Mar 2010 777 279 210 3 1,268 634
Dec 2009 1,267 464 353 4 2,087 1,044
Sep 2009 1,048 381 308 3 1,740 870
Operating costs
Cash costs increased by 32% to R5,927 per PGM ounce primarily as a result of
the costs of transporting feed material to the CTRP plant, important circuit
changes effected in the plant and higher than usual levels of maintenance and
equipment replacement in the plant.
Capital Expenditure
Capital expenditure in the plant over the quarter was approximately R816,000.
The cash margin for the period was 18%, down from 55% in the previous quarter.
CTRP Operating cash costs per ounce
4E 6E 4E net of by-
(Pt+Pd+Rh+Au) (Pt+Pd+Rh+Ir+Ru+Au) products
(Ni, Cu& Co)
CTRP R5,927 R4,208 n/a
Platinum Mile Resources (ACS (SA) - 50%)
Safety
- The DIIR was zero for the quarter
Processing
- Tailings processed totalled 1,203 million tonnes.
- PGM grade was 0.57g/t, an increase of 12% on the previous quarter
- Production was 2,411 4E PGM ounces (1,206 ounces attributable)
Platinum Mile PGM production and Rand cash costs per PGM ounce (100%)
(Please refer to www.aquariusplatinum.com for graph)
Revenue
Revenue decreased to R23 million (R11.5 million attributable). The achieved
mine basket price for the quarter averaged $1,300 per PGM ounce, 2% lower than
the previous quarter.
Operations
Production levels decreased by only 12% during the quarter despite 35% lower
volumes processed. Recoveries increased to 12%, an increase of 33% on the
previous quarter. The head grade of the tailings processed increased to
0.57g/t from 0.51g/t in the previous quarter. Merensky reef tailings were
received and treated throughout the quarter, while no UG2 tailings were
treated in May or June due to low grades.
As a result of lower volumes processed, production fell to 2,411 4E PGM ounces
(1,206 4E PGM ounces attributable).
Options to improve metal output from Platinum Mile are being explored by
securing additional feed from Kroondal`s K1 and K2 operations.
Platinum Mile: Metal in concentrate produced (PGM ounces)
Quarter Pt Pd Rh Au PGMs Attributable
ended (4E) to Aquarius
Jun 2010 1,45 694 192 73 2,411 1,206
2
Mar 2010 1,60 835 243 58 2,737 1,369
1
Dec 2009 4,95 2,64 769 170 8,539 4,269
3 7
Sep 2009 3,44 1,83 534 119 5,932 2,966
0 9
Operating costs
Cash costs were R8,473 per PGM ounce, marginally higher than the R8,236 per
PGM ounce the previous quarter.
Platinum Mile operating cash costs per ounce
4E 6E 4E net of by-
(Pt+Pd+Rh+Au) (Pt+Pd+Rh+Ir+Ru+Au) products
(Ni, Cu& Co)
Platinum R8,473 R6,713 n/a
Mile
Capital expenditure
Capital expenditure was zero for the quarter.
CORPORATE MATTERS
Appointment of Managing Director of Aquarius Platinum (South Africa) (Pty) Ltd
("AQPSA")
Aquarius is pleased to announce that Mr Anton Lubbe has been confirmed in the
role of Managing Director of AQPSA, with effect from 1 August 2010. Mr Lubbe
replaces Hugo Holl, who resigned in March. Mr Lubbe was previously Operations
Director for Aquarius` Western Limb Operations, and has been Acting Managing
Director of AQPSA since Mr Holl`s departure.
Mr Lubbe has 29 years of mining experience, with exposure to gold, platinum,
chrome and copper. He has 10 years of experience as a General Manager, three
years as Divisional Director New Business for DRDGOLD, and three years
contracting experience as Operations Director of JIC (Mining). He also served
on the boards of DRDGOLD and its subsidiaries, and Westdawn Investments
(Trading as JIC Mining). He joined AQPSA in October 2008.
Other AQPSA appointments
Paul Smith has been appointed Director: New Business, Projects and Long-Range
Planning, a new AQPSA Board position. He transfers into AQPSA from Aquarius
Corporate Services (South Africa), a Group company that is due to be absorbed
into AQPSA in due course.
Mkhululi Duka has been appointed as Director: Human Capital, a new AQPSA Board
position. Prior to this appointment he was General Manager: Human Resources
and Transformation, based at Kroondal.
Abraham van Ghent has been appointed as Senior General Manager - Operations,
an AQPSA Executive position responsible for operations on all AQPSA managed
mines in South Africa. Prior to this appointment he was General Manager:
Kroondal.
A new General Manager for Kroondal will be appointed in due course.
Safety Initiatives - Marikana Mine Multiple Fatal Accident - 6 July 2010
(to be read in conjunction with Aquarius` announcement released on 26 July
2010 regarding the lifting of the s54 suspension notice at Marikana)
Summary of Events
On 6 July 2010 at approximately 6:30pm, a block of ground measuring 18.6m long
by 5.4m wide by 1.7m thick fell from the hanging wall (roof of mine shaft) in
Workplace 75S of 4 Shaft at the Marikana Platinum Mine on the Western Limb of
the Bushveld Igneous Complex near Rustenburg, South Africa. Workplace 75S is
70 vertical metres deep, which is relatively shallow in the context of
platinum mining. This fall of ground killed five employees and injured two
others. The employees were busy drilling the working face at the time of the
accident.
Persons involved and affected by the tragic incident were given psychological
counselling. The families have been assisted with funeral arrangements and
financial benefits.
A memorial ceremony was held in association with the relevant trade unions and
other employee associations and local government, and attended by the
workforces of both the Kroondal and Marikana mines. The memorial was also
attended by the Minister of Mines, Ms. Susan Shabangu.
As announced at the time, the Department of Mineral Resources ("DMR") issued a
s54 suspension notice in respect of Marikana 4 Shaft, and thereafter
instructed all mining operations employing the bord and pillar mining method
(as used at Marikana and other Aquarius operations) in the North West area to
reduce their bord widths to 6m. This instruction was clarified after a meeting
with the DMR to mean that mines using bords wider than 6m were required to
present action plans to move to more safe and conservative mining methods.
Aquarius duly presented action plans in respect of Marikana 4 Shaft to the DMR
on Thursday 22 July, and these were mutually agreed. Aquarius is currently
rolling these new measures out at its Kroondal and Marikana mines, while it
continues to review its safety practices at the Everest and Blue Ridge mines.
What follows below is a summary of the current generally accepted safety
design methodology for mines in the Bushveld Igneous Complex, and the new
initiatives and measures that AQPSA plans to implement in order to modify it
to world best practice.
Current Generally Accepted Mine Design Methodologies
AQPSA currently design stope hanging wall systems using the generally accepted
methodologies (the "Standard Design Methodologies") laid out in South African
rock engineering handbooks that, with respect to stope hanging wall support
design, are supported by the Safety in Mining Research Advisory Council
("SIMRAC") sponsored research reported in Project Reports GAP 032 and GAP 067
(the "Standard References").
The Standard References and the Standard Design Methodologies suggest that the
heights of hanging wall failure in South African platinum mines rarely exceed
one metre above a cut reef hanging wall, however -
- databases of the heights of failure above a cut reef hanging wall should
be compiled on a mine-specific basis (Figure 1);
- within the scope of design, consideration should be given to any
preferential parting plane or planes/plane or planes of weakness that
might exist in a hanging wall sequence;
- designs (support lengths and densities) should be based on the height of
failure that encompasses 95 percent of all the recorded falls-of-ground
at a mine in question/of interest (the "95 Percent Rule"); and
- site-specific criteria should be defined, adopted and applied to assess
additional support requirements for the remaining five percent of
assessed heights of failure, based on site-/location-specific rock mass
ratings (either the RMR, Q or MRMR system, as appropriate or preferred).
The Standard References also describe the methodologies for the design of
minimum safe tendon and bolt lengths and maximum safe support densities for
the assessed design height of instability, which methodologies may reasonably
be described as being consistent with standard rock engineering practice.
Figure 1 - AQPSA`s Fall-of-Ground Database for Marikana Platinum Mine
(Please refer to www.aquariusplatinum.com for figure 1)
Although the AQPSA database suggests that for the 95 Percent Rule, the maximum
height of failure is less than 0.5 m, the design maximum height is 1.0 m. The
designed standard support systems encompass 1.5 m long, 18 mm diameter resin
grouted and tensioned rebar bolts. The design concept is based on the
reinforced Voussoir arch concept, illustrated in Figure 2. Stability
assessments are undertaken for the standard bord width of 10 metres.
Figure 2 - An Illustration of the Reinforced Voussoir Arch Concept
(Please refer to www.aquariusplatinum.com for figure 2)
The remaining five percent of potential falls of ground are covered by a
management system (Trigger Actions and Response, or TARP) that relies on the
assessment of instability potential and the additional support required to
overcome the assessed risk (Figure 3).
Figure 3 - A Summary of AQPSA`s TARP System (for illustrative purposes)
(Please refer to www.aquariusplatinum.com for figure 3)
New safety measures adopted
AQPSA is now proposing to move to hanging wall stope support systems that
cover 100% of the potential fallout height. The means and methods of
accomplishing this are being developed in conjunction with an international
mining consultant. Additional work is required before the methods and systems
can be finalised, but at present, where the potentially unstable layer is less
than 2 m thick (which covers the majority of AQPSA`s mines), support design is
based on the suspension method (Figure 4). Where the potentially unstable
layer is found to be more than 2 m thick, it will be reinforced with cable
anchors.
Figure 4 - An Example of the Suspension Method of Hanging Wall Support
(Please refer to www.aquariusplatinum.com for figure 4)
In addition, the TARP system has been enlarged to include remote sensing of
the hanging wall mass to identify the position of key controlling rock mass
features and any anomalous geology. Instruments to monitor rock mass movement
will also be installed.
Figure 5 - Ground Penetrating Radar and a Ground Movement Meter
(Please refer to www.aquariusplatinum.com for figure 5)
As part of an integrated design package, the mining layouts have been modified
to a room and pillar system, to minimize instability risk and at the same time
maintain a productive mining environment. The principal jointing directions
(Figure 6) have been fully considered within the scope of the layout designs,
such that the pillars will now intersect these.
Figure 6 - The Dominant Jointing Directions at AQPSA`s Western Bushveld Mines
(Please refer to www.aquariusplatinum.com for figure 6)
More information on all corporate matters can be found at
www.aquariusplatinum.com
Statistical Information: Kroondal P&SA1
(Please refer to www.aquariusplatinum.com for the Statistical Information)
Statistical Information: Marikana P&SA2
(Please refer to www.aquariusplatinum.com for the Statistical Information)
Statistical Information: Mimosa
(Please refer to www.aquariusplatinum.com for the Statistical Information)
Statistical Information: Everest
(Please refer to www.aquariusplatinum.com for the Statistical Information)
Statistical Information: Blue Ridge
(Please refer to www.aquariusplatinum.com for the Statistical Information)
Statistical Information: Chrome Tailings Retreatment Plant
(Please refer to www.aquariusplatinum.com for the Statistical Information)
Statistical Information: Platinum Mile
(Please refer to www.aquariusplatinum.com for the Statistical Information)
Aquarius Platinum Limited
Incorporated in Bermuda
Exempt company number 26290
Board of Directors
Nicholas Sibley Non-executive Chairman
Stuart Murray Chief Executive Officer
David Dix Non-executive
Tim Freshwater Non-executive
Edward Haslam Non-executive
Sir William Purves Non-executive (Senior
Independent Director)
Kofi Morna Non-executive
Zwelakhe Mankazana Non-executive
Audit/Risk Committee
Sir William Purves (Chairman)
David Dix
Edward Haslam
Kofi Morna
Nicholas Sibley
Remuneration/Succession Planning Committee
Edward Haslam (Chairman)
David Dix
Zwelakhe Mankazana
Nicholas Sibley
Nomination Committee
The full Board comprises the Nomination Committee
Company Secretary
Willi Boehm
Investor Relations
Gavin Mackay Business Development &
Communications Executive
AQPSA Management
Stuart Murray Executive Chairman
Anton Lubbe Managing Director
Helene Nolte Director: Finance
Hulme Scholes Commercial Director
Paul Smith Director: New Business,
Projects and Long-Range
Planning
Mkhululi Duka Director: Human Capital
Abraham van Ghent Senior General Manager:
Operations
Graham Ferreira General Manager: Group Admin &
Company Secretary
Wessel Phumo General Manager: Marikana
Gabriel de Wet General Manager: Engineering
Augustine Simbanegavi General Manager: Everest
Anthony Joubert General Manager: Blue Ridge
Mimosa Mine Management
Winston Chitando Managing Director
Herbert Mashanyare Technical Director
Peter Chimboza Resident Director
Fungai Makoni General Manager Finance &
Company Secretary
Platinum Mile Management
Richard Atkinson Managing Director
Paul Swart Financial Director
Issued Capital
At 30 June 2010, the Company had in issue: 463,070,936 fully paid common
shares and 702,566 unlisted options.
Substantial Shareholders 30 June Number of Percentage
2010 Shares
Savannah Consortium 68,658,728 14.83
HSBC Custody Nominees 38,718,101 8.36
(Australia) Limited
JP Morgan Nominees Australia 34,587,626 7.47
Limited
National Nominees Limited 26,529,839 5.73
Chase Nominees Limited 25,729,854 5.56
Trading Information
ISIN number BMG0440M1284
ADR ISIN number US03840M2089
Convertible Bond ISIN number XS0470482067
Broker (LSE) (Joint) Broker (ASX) Sponsor (JSE)
Liberum Capital Euroz Securities Rand Merchant Bank
Limited Level 14, The (A division of
City Point, 1 Quadrant FirstRand Bank
Ropemaker Street, 1 William Street, Limited)
London, EC2Y 9HT Perth WA 6000 1 Merchant Place
Telephone: +44 (0) Telephone: +61 (0) Cnr of Rivonia Rd
20 3100 2000 8 9488 1400 and Fredman Drive,
Bank of America Sandton 2146
Merrill Lynch Johannesburg South
2 King Edward St Africa
London, EC1A 1HQ
Telephone: +44 (0)20
7628 1000
Aquarius Platinum (South Africa) (Proprietary) Ltd
100% Owned
(Incorporated in the Republic of South Africa)
Registration Number 2000/000341/07
1st Floor, Building 5, Harrowdene Office Park, Western Service Road, Woodmead
2191, South Africa
Postal Address:
PO Box 76575, Wendywood, 2144, South Africa.
Telephone: +27 (0)11 656 1140
Facsimile: +27 (0)11 802 0990
Aquarius Platinum Corporate Services Pty Ltd
100% Owned
(Incorporated in Australia)
ACN 094 425 555
Level 4, Suite 5, South Shore Centre, 85 The Esplanade, South Perth, WA 6151,
Australia
Postal Address:
PO Box 485, South Perth, WA 6151, Australia
Telephone: +61 (0)8 9367 5211
Facsimile: +61 (0)8 9367 5233
Email: info@aquariusplatinum.com
For further information please visit www.aquariusplatinum.com or contact:
In Australia
Willi Boehm
+61 (0) 8 9367 5211
In the United Kingdom and South Africa
Gavin Mackay
gavin.mackay@aquariusplatinum.com
+ 44 7909 547 042
Glossary
A$ Australian Dollar
Aquarius Aquarius Platinum Limited
APS Aquarius Platinum Corporate Services
Pty Ltd
AQPSA Aquarius Platinum (South Africa) (Pty)
Ltd
ACS(SA) Aquarius Platinum (SA) Corporate
Services (Pty) Ltd
BEE Black Economic Empowerment
BRPM Blue Ridge Platinum Mine
CTRP Chromite Ore Tailings Retreatment
Operation. Consortium comprising
Aquarius Platinum (SA) (Corporate
Services) (Pty) Limited (ASACS),
Ivanhoe Nickel and Platinum Limited and
Sylvania South Africa (Pty) Ltd
(SLVSA).
DIFR Disabling injury frequency rate - being
the number of lost-time injuries
expressed as a rate per 1,000,000 man-
hours worked
DIIR Disabling injury incidence rate - being
the number of lost-time injuries
expressed as a rate per 200,000 man-
hours worked
DME formerly South African Government
Department of Minerals and Energy
Affairs
DMR South African Government Department of
Mineral Resources and Energy, formerly
the DME
Dollar or $ United States Dollar
Everest Everest Platinum Mine
Great Dyke Reef A PGE bearing layer within the Great
Dyke Complex in Zimbabwe
g/t Grams per tonne, measurement unit of
grade (1g/t = 1 part per million)
JORC code Australasian code for reporting of
Mineral Resources and Ore Reserves
JSE JSE Limited
Kroondal Kroondal Platinum Mine or P&SA1 at
Kroondal
LHD Load haul dump machine
Marikana Marikana Platinum Mine or P&SA2 at
Marikana
Mimosa Mimosa Mining Company (Private) Limited
nm Not measured
PGE(s) (6E) Platinum group elements plus gold.
Five metallic elements commonly found
together which constitute the
platinoids (excluding Os (osmium)).
These are Pt (platinum), Pd
(palladium), Rh (rhodium), Ru
(ruthenium), Ir (iridium) plus Au
(gold)
PGM(s) (4E) Platinum group metals plus gold.
Aquarius reports the PGMs as comprising
Pt+Pd+Rh plus Au (gold) with the Pt, Pd
and Rh being the most economic
platinoids in the UG2 Reef
P&SA1 Pooling & Sharing Agreement between
AQPSA and RPM Ltd on Kroondal
P&SA2 Pooling & Sharing Agreement between
AQPSA and RPM Ltd on Marikana
R South African Rand
Ridge Ridge Mining Limited
ROM Run of mine. The ore from mining which
is fed to the concentrator plant. This
is usually a mixture of UG2 ore and
waste.
Tonne 1 Metric tonne (1,000kg)
UG2 Reef A PGE-bearing chromite layer within the
Critical Zone of the Bushveld Complex
29 July 2010
Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Date: 29/07/2010 08:00:01 Produced by the JSE SENS Department.
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