| Thu 10 Feb 2011, 11:00 | | AQP - Aquarius Platinum Limited - 2011 Half year financial results - December |
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AQP
AQP
AQP - Aquarius Platinum Limited - 2011 Half year financial results - December
2010
Aquarius Platinum Limited
(Incorporated in Bermuda)
Registration Number: EC26290
Share Code JSE: AQP
ISIN Code: BMG0440M1284
2011 HALF YEAR FINANCIAL RESULTS - DECEMBER 2010
Key Points: Operational
- Attributable production for the first half of the 2011 financial year was
250,972 PGM ounces, 20% higher than the 6 months to December 2009
- Weighted average Group cash costs were $861 per PGM ounce, driven higher
by the weakened US Dollar and including temporarily higher costs at
Everest during the initial phase of the ramp-up
- Rand cash costs at flagship Kroondal mine increased by 4% compared to the
six months to December 2009
- Group gross cash margin increased from 31.2% to 36.5%
Key Points: Financial
- Weighted average basket prices increased by 30% to $1,337 per PGM ounce
compared to the six months ended December 2009
- Revenues increased by 63% to $336.1 million as a result of higher PGM
prices and production volumes
- Mine EBITDA increased by 64% to $93.1 million
- Net profit increased by 23 times to $94.3 million (US 20.43 cents per
share), as a result of higher PGM prices and production volumes and
foreign exchange gains on revaluation of net monetary assets
- Net operating cash flow was $47.1 million
- Consolidated cash balances at period end of $368.5 million, in line with
period ending June 2010
- Interim dividend of US 4 cents per share declared, absorbing
approximately $18.5 million
Key Points: Strategic
- Ramp-up of Everest proceeding smoothly, with mine production there
already significantly profitable
- Blue Ridge closed for redevelopment during the period; redevelopment
project progressing well
Commenting on the results, Stuart Murray, CEO of Aquarius Platinum said:
"I am very pleased with the somewhat stronger operational and financial
performance of the business in the first six months of the 2011 financial
year, despite the challenging Rand PGM price environment prevailing over the
period. This success was unfortunately marred by the terrible accident at
Marikana in July 2010. Safety remains absolutely paramount, and in addition to
the extensive measures put in place after this accident, we are continually
retraining the workforces on safety behaviour and continue to strive for
industry and world best practice.
Stronger prices, increased production and well-contained cost increases
enabled Aquarius to generate sufficient cashflow to afford all of its working
costs and stay-in-business and development capital expenditure requirements,
including those for the new hangingwall support methodologies at SA
operations. We were also able to pay dividends and settle the Moolman
litigation, all while leaving the company`s cash balances largely unchanged.
The ramp-up at Everest is progressing smoothly and the mine is already
contributing to Group profits, while the Blue Ridge redevelopment project is
now in full swing and is on track for producing the desired results.
I am confident that the hard work of all our people over the last several
months will be rewarded during the next half year as the outlook for
fundamental PGM demand improves, resulting in a rising basket price for our
products."
Aquarius Half Year Group Attributable Production
(Please refer to www.aquariusplatinum.com for the graph)
Production
Total production from all operations for the six months to December 2010 was
456,380 PGM ounces, representing a 10% increase compared to the period ended
December 2009 (the previous corresponding period or "pcp"). Production
attributable to Aquarius was up 20% to 250,972 PGM ounces for the period under
review when compared to the pcp and 17% up compared to the six months ended
June 2010, largely due to the ramping up of the Everest Mine following the
successful conclusion of the re-establishment project in May 2010.
Production by Mine and Attributable to Aquarius
PGMs (4E) Mine Attributable to Aquarius
Half Year Half Year Half Year Half Year
ended ended ended ended
Dec 2010 Dec 2009 Dec 2010 Dec 2009
Kroondal 230,019 197,061 115,010 98,531
Marikana 60,587 68,381 30,294 34,192
Everest 45,561 - 45,561 -
Mimosa 101,156 100,907 50,578 50,454
CTRP 2,921 3,827 1,461 1,914
Platinum Mile 8,044 12,345 4,022 7,236
Blue Ridge 8,092 33,067 4,046 16,534
Total 456,380 415,588 250,972 208,859
As illustrated in the chart below, production in the first half of the 2011
financial year was positively affected primarily by the return to production
of Everest, as well as a strong performance at Kroondal. These factors
resulted in substantially increased production compared to the first half of
the 2010 financial year, despite lower ounces from Marikana following the
tragic accident there in July 2010. Blue Ridge also produced less in the
current period as it was closed for redevelopment during the first quarter.
All production from Blue Ridge since it was acquired by Aquarius in mid 2009
has in any event been capitalised, due to that mine`s status as a project.
With the continued ramp-up of Everest and the planned ramp-up of Blue Ridge in
the next financial year, Aquarius has the steepest short-term production
growth profile of any company in the PGM industry.
(Please refer to www.aquariusplatinum.com for the graph)
Foreign Exchange
The Rand continued to strengthen over the 6 months to December 2010, moving
from an average of R7.65 to the US Dollar in the period to December 2009 to an
average of 7.12 over the current period, driven by continuing interest rate
differentials and quantitative easing programmes in the US and Europe. The
Rand closed the half year at R6.63 to the US Dollar.
Rand Dollar Exchange Rate
(Please refer to www.aquariusplatinum.com for the graph)
Platinum Group Metal Prices
Fundamental demand for PGMs continued to improve slowly over the period under
review, driven by a gradual strengthening of the automotive industry and other
industrial users. US Dollar PGM prices nonetheless improved significantly,
driven more by investment demand which remained extremely strong. Investor
interest in these metals ranged from the speculative to a "store of value"
concept much akin to gold demand in the face of quantitative easing, and
volumes of platinum and palladium underpinning the physically-backed ETFs had
reached record levels by the end of December 2010. Platinum jewellery demand
was largely supplanted by investment demand above the $1,500 per ounce level.
Palladium significantly outperformed the other metals in the first half,
rising by 84% to close the period at $797 per ounce. Platinum closed the
period 16% higher at $1,755 per ounce, while rhodium fell 3% to close at
$2,425 per ounce. Gold was 14% higher at $1,413 per ounce.
Individual PGM Prices December 2009 - 2010 (US Dollar per PGM ounce)
(Please refer to www.aquariusplatinum.com for the graph)
The strengthening Rand continued to put pressure on Rand basket prices for
much of the first half of the financial year, but ever stronger US Dollar PGM
prices began to outweigh the adverse currency effect towards the end of the
period. South African operations averaged $1,378 per PGM ounce on a production-
weighted basis (equivalent to R9,852 per PGM ounce) and closed the period at
R10,150 per PGM ounce. In Zimbabwe, the achieved basket price for the first
half of the financial year was $1,173 per ounce. This resulted in a group
basket price equivalent of $1,337 per PGM ounce, up 30% from the six months
ended December 2009.
PGM Basket Prices December 2009 - 2010 (US Dollar and Rand per PGM ounce)
(Please refer to www.aquariusplatinum.com for the graph)
Financial results: Half Year to 31 December 2010
Aquarius has recorded a net profit of $94.3 million (20.43 cents per share)
for the half-year, a significant improvement compared to $3.9 million in the
previous corresponding period (pcp).
Revenue (PGM sales $328 million, interest $8 million) for the half-year was
$336 million, up 63% from $206 million in the pcp. The increased revenue was a
result of increased production, up 54,603 PGM ounces and a 30% increase in the
US Dollar PGM basket price achieved. Measured on a PGM ounce basis, revenue
increased to $1,361 per PGM ounce from $1,072 per PGM ounce in the pcp.
Mine EBITDA of $93.1 million was $36.3 million higher (64%) compared to the
pcp, despite a $25.1 million forex loss on sales adjustments incurred at mine
level as a result of a weaker US Dollar relative to the Rand.
The Directors have declared an interim dividend of US 4 cents per share (2009:
2 cents) payable on 25 March 2011 to shareholders registered on 4 March 2011,
reflecting the company`s improved operational cash flow and the Directors`
increasing confidence in the improved economic environment.
Group Financials by Operation
US$M Kroondal Marika Everest Mimosa PMR CTRP Blue Corpor Total
na Ridge ate
PGM ounces 115,010 30,294 45,561 50,579 4,022 1,460 4,046 - 250,972
(4E)
(attributab
le)
Revenue 145.7 39.9 64.8 72.5 4.7 1.5 7.0 336.1
Cost of (93.1) (34.2) (50.6) (31.2) (3.5) (0.9) (213.5)
sales -
mining,
processing
&
admin
Cost of (12.7) (5.0) (3.6) (3.9) (2.5) (0.1) (27.8)
sales -
depreciatio
n &
amortisatio
n
Gross 39.9 0.6 10.7 37.3 (1.2) 0.5 7.0 94.8
profit
Other 0.3 0.3
income
Corporate (8.1) (8.1)
administrat
ion
Foreign (14.5) (3.8) (2.6) (0.6) 87.8 66.2
exchange
gain/(loss)
Finance (15.4) (15.4)
costs
Settlement (7.8) (7.8)
of
contractor
dispute
Profit 25.4 (3.2) 8.1 36.7 (1.2) 0.5 63.7 130.0
before
income tax
Income tax (35.7) (35.7)
expense
Net profit 25.4 (3.2) 8.1 36.7 (1.2) 0.5 28.0 94.3
from
ordinary
activities
Group gross cash margin increased from 31.2% to 36.5% with higher margins
recorded at all mines with the exception of CTRP and Platmile. The increased
margins were attributable to higher PGM metal prices compared to the pcp.
Total cash cost of production was $213.5 million, up 17% per PGM ounce in
Dollar terms, partially influenced by Rand strength. Amortisation and
depreciation was higher at $27.8 million from $20.0 million reflecting
increased production in the six months. Finance costs for the period of $15.3
million includes interest on convertible notes and a non cash element of $3.1
million relating to the net present value adjustments to the Marikana and
Kroondal rehabilitation provisions.
During the half-year Aquarius recorded net foreign exchange gains of $66.2
million. These gains are mainly as a result of the weakening of the Dollar
against other major currencies, in particular the Rand and Australian dollar.
To the extent that the Dollar appreciates against these currencies, some of
these gains which are unrealised may reverse.
Income tax expense which was higher on increased profits comprised $8.7
million normal tax, $24.6 million deferred tax and $2.4 million M&PRA royalty
paid in South Africa.
Consolidated cash balances at period end of $368.5 million were in line with
June 2010. Cash generated during the period funded the group`s capital
expenditure program of $59 million, and $18 million in dividends (4 cents per
share) to Aquarius shareholders.
Subsequent to the end of the period under review, Aquarius entered into a set
of agreements in terms of which it will, subject to the fulfilment of certain
conditions precedent, acquire 100% of the issued share capital of a company
which owns a number of prospecting rights on the western limb of the Bushveld
complex in South Africa of strategic importance to Aquarius. The total
purchase consideration payable upon completion of the transaction will be
approximately US$109 million of which US$67 million will be paid in cash and
the remainder in cash or Aquarius shares, at the election of Aquarius. A
further $15 to $20 million may be committed by Aquarius to fund exploration of
these rights.
Financials
Aquarius Platinum Limited
Consolidated Income Statement
For the Half Year ended 31 December 2010
$`000
Half Year Ended Year
Ended
Note 31/12/10 31/12/09 30/6/10
Attributable Production (PGM 246,926 * 192,323* 393,131*
Ounces)
(* before Blue Ridge
production)
Revenue (i) 336,152 206,089 472,220
Cost of sales (including (ii) (241,327) (161,633 (349,952)
D&A) )
Gross profit 94,825 44,456 122,268
Other income 288 510 1,588
Administrative costs (iii) (8,105) (8,509) (15,243)
Foreign exchange gain/(loss) (iv) 66,202 16,086 (4,846)
Finance costs (v) (15,369) (10,644) (25,750)
Settlement of contractor (vi) (7,810) - -
dispute
Fair value movement in - 6,084 6,084
derivative liability
Loss on early redemption of - (26,920) (26,920)
convertible note
Transaction and acquisition - 246 1,248
costs associated with Ridge
Mining, net of discount on
acquisition
Profit before income tax 130,031 21,309 58,429
Income tax expense (vii) (35,751) (17,438) (30,656)
Net profit attributable to 27,773
equity holders of the parent 94,280 3,871
Earnings per share (basic - 20.43 0.86 6.09
cents)
Notes on the Consolidated Income Statement
(i) Revenue is higher compared to December 2009 in line with higher PGM
prices and increased production.
(ii) The 17% increase in cost of sales on a unit cost basis reflects Rand
strength, the restart of Everest and the impact of inflation on mine cash
costs. It includes depreciation and amortisation of $27.8 million.
(iii) Relates to administration costs of the Aquarius Group inclusive of
costs associated with business development activities, legal and
financial advisory expenses.
(iv) Net foreign exchange (FX) gains reflect gains on group loans and cash due
to the weakening of the Dollar against other currencies and FX losses on
sales adjustments.
(v) Finance costs reflect a $11.1 million interest expense on convertible
notes, pipeline finance of $0.4 million and interest expense on the
unwinding of the rehabilitation provisions of $3.1 million.
(vi) Relates to the settlement paid to Moolman Mining.
(vii)Income tax includes $8.7 million normal tax, $24.6 million deferred tax
and $2.4 million M&PRA royalty.
Aquarius Platinum Limited
Consolidated Cash Flow Statement
Half year ended 31 December 2010
$`000
Half year ended Year
ended
Note: 31/12/10 31/12/09 30/06/10
Net operating cash inflow (i) 47,061 17,651 93,967
Net investing cash outflow (ii) (59,388) (29,881) (60,953)
Net financing cash outflow (iii) (25,816) 312,872 196,073
Net increase/(decrease) in (38,143) 300,642 229,087
cash held
Opening cash balance 381,734 153,600 153,600
Exchange rate movement on (iv) 24,868 10,334 (953)
cash
Closing cash balance 368,459 464,576 381,734
Notes on the Consolidated Cash Flow Statement
(i) Net operating cash flow includes a $278.4 million net inflow from sales,
$223.4 million paid to suppliers, interest income of $7.8 million,
interest expense of $6.5 million and income tax paid of $9.5 million.
(ii) Reflects development and plant and equipment expenditure incurred
supporting the group`s capital expenditure program.
(iii)Includes $18.5 million dividend paid to shareholders, and $9.3
million settlement of contractor dispute.
(iv) Reflects movement of other currencies against the Dollar.
Aquarius Platinum Limited
Consolidated Balance Sheet
At 31 December 2010
$`000
Half year ended Year ended
Note 31/12/10 31/12/09 30/06/10
Assets
Cash assets 368,459 464,576 381,734
Current receivables (i) 123,937 165,661 96,846
Other current assets (ii) 54,005 50,255 49,338
Property, plant and (iii) 320,789 299,616 272,117
equipment
Mining assets (iv) 507,095 389,120 425,882
Other non-current assets (v) 98,860 26,685 80,450
Intangibles (vi) 82,767 76,980 72,833
Total assets 1,555,912 1,472,893 1,379,200
Liabilities
Current liabilities (vii) 109,553 179,525 103,906
Non-current payables (viii) 5,383 5,532 4,631
Non-current interest- (ix) 246,027 254,959 238,289
bearing liabilities
Other non-current (x) 249,221 193,196 195,341
liabilities
Total liabilities 610,184 633,212 542,167
Net assets 945,728 839,681 837,033
Equity
Issued capital 23,162 23,125 23,154
Treasury shares (15,076) (3,431) (14,264)
Reserves 697,789 670,532 664,041
Retained earnings 239,853 149,455 164,102
Total equity 945,728 839,681 837,033
Notes on the Consolidated Balance Sheet
(i) Reflects debtors receivable on PGM concentrate sales.
(ii) Reflects PGM concentrate inventory, reef stockpiles and consumables
stores.
(iii)Represents plant and equipment within the Group.
(iv) Mining assets relate to Kroondal, Marikana, Everest, Mimosa and Blue
Ridge mine properties and mine development.
(v) Includes recoverable portion of rehabilitation provision from Anglo
Platinum of $14.5 million, receivable from the Reserve Bank of Zimbabwe
(RBZ) of $28.5 million, receivable from outside shareholders of Blue
Ridge and Sheba`s Ridge of $35.8 million, investments in rehabilitation
trusts of $17.0 million and investments held for resale of $3.0 million.
(vi) Includes intangibles relating to goodwill and contract value acquired on
acquisition of 50% equity interest in Platinum Mile Resources (Pty) Ltd.
(vii) Includes creditors and other payables of $80.9 million, DBSA and IDC
loans at Blue Ridge of $27.0 million and tax payable of $1.6 million.
(viii)Includes rehabilitation obligations on P&SA1 and P&SA2 structures.
(ix) Includes convertible notes of $242m, AQPSA and Ridge equipment leases of
$3.7 million and TKO loan of $0.3 million.
(x) Includes deferred tax liabilities of $168.1 million and provision for
closure costs of $81.1 million.
OPERATIONS
AQUARIUS PLATINUM (SOUTH AFRICA) (PTY) LTD (Aquarius Platinum Limited - 100%)
P&SA1 at Kroondal (Aquarius Platinum - 50%)
Safety
- Regrettably, one fatality occurred during the period - on 13 August 2010
Mr Vasco Macamo was fatally injured when he was caught between the LHD he
was operating and another vehicle on surface at the start of the shift
- 33 lost-time injuries were reported during the first half, mainly due to
a fire incident at Kopaneng Shaft on 6 July 2010 and some slip-and-fall
and materials handling incidents. The fire was commendably dealt with and
resulted in no serious injuries, but it did nonetheless lead to an
increase in the number of lost-time injuries reported
- The 12-month rolling average disabling injury incidence rate (DIIR)
deteriorated from 0.63 to 0.74 during the half year
Mining
- Underground volumes rose by 8% to 3.4 million tonnes
- Achieved head grade in the first half increased by 1% compared to H1
2010, to 2.62 g/t
Processing
- Volumes of ore processed in the concentrator plants increased by 13% to
3.4 million tonnes
- Concentrator recoveries improved from 79% to 80%
- Production increased by 17% to 230,019 PGM ounces
Revenue
Kroondal achieved a US Dollar PGM basket price of $1,385 per PGM ounce for the
first half, an increase of 29% over the pcp. This improved the mine`s realised
revenue per ounce and also resulted in positive sales adjustments. Together
with increased volumes, this resulted in overall revenue from the mine rising
by 33% to R2,056 million.
Operations
The increased production of ore from the Kroondal underground operations for
the first six months of FY2011 was largely due to improved operating
efficiencies and the fact that ore production in the pcp was negatively
impacted by unprotected industrial action. In the period under review the two
year wage agreement reached with the National Union of Mineworkers (NUM) at
the conclusion of the strike in 2009 remained in force, and industrial
relations have been stable throughout the period.
Following the fatal accident at the Marikana mine on 6 July 2010, the DMR
issued a S9(7) instruction at both the Kroondal and Marikana mines, as
disclosed at the time, which had the potential to negatively impact production
at these mines. The DMR later stated that the instruction had been
misinterpreted by the mining industry, and production has continued using the
same methodology as before, subject to certain changes to safety equipment and
procedures. Production has not been materially impacted by these events. See
the update on the impact of the remedial action taken on hangingwall support
below.
Primary development increased by 72% over the period to a total of 7,029
metres due to improved operational efficiencies and ground conditions.
Stockpiles at the end of the first half totaled approximately 34,956 tonnes.
The increase in tonnes processed resulted from improved mining volumes and
better operating efficiencies, which also improved recoveries slightly. The
head grade also rose slightly, resulting in the production of 230,019 PGM
ounces (115,010 ounces of which are attributable to Aquarius), an improvement
of 17% over the pcp.
Operating Cash Costs
Cash costs in Rand terms for the first half increased by 7% to R390 per ROM
tonne and by 4% to R5,757 per PGM ounce compared to H1 2010.
The Rand strengthened against the Dollar during the period, resulting in cash
costs in Dollar terms increasing by 11% to $805 per PGM ounce. Control of Rand-
denominated costs was made possible through improved operating efficiencies
and higher production, which reduced the impact of the mine`s fixed cost base.
Kroondal: Operating Cash Costs
4E (Pt+Pd+Rh+Au) 6E 6E net of by-
(Pt+Pd+Rh+Ir+Ru+Au) products (Ni&Cu)
Kroondal R 5,757 per PGM R 4,707 per PGE R 4,574 per PGE
ounce ounce ounce
Capital Expenditure
Capital expenditure at Kroondal for the first half was R156 million (R678 per
PGM ounce), spent largely on ongoing underground infrastructure establishment,
new safety equipment, the initial capital for the K6 Shaft project and some
mobile equipment. Kroondal`s expenditure is up to date as per mine plan.
Update on impact of revised hangingwall support strategy
Following the Marikana accident in July 2010 and the ensuing analysis, new
hangingwall support methodologies are now largely in place at Kroondal. The
implementation of the TARP control process with the ground penetrating radar
scanning, in-stope rock watch, in-stope lighting and strata control team has
resulted in a decrease in fall of ground (FOG) incidents, with only 1 FOG-
related LTI in the second quarter versus 3 in the first quarter. The support
crews were mobilized and trained during the second quarter and all necessary
equipment ordered. The additional support strategy will be fully implemented
in the next quarter.
P&SA2 at Marikana (Aquarius Platinum - 50%)
Safety
- A catastrophic FOG accident at Marikana 4 Shaft occurred on 6 July 2010,
causing 5 fatalities. The circumstances of the accident and remedial
measures taken have been comprehensively dealt with in previous
disclosures
- The 12-month rolling average DIIR for the half year improved from 1.08 in
the pcp to 0.68 in the current period as underground operations
stabilised following the move from largely open pit operations
- Management actions have been implemented to focus on improving the safety
behaviour of employees and effective interaction from supervisors
Mining
- Underground production increased to 890 thousand tonnes while opencast
production fell by 44% to 235 thousand tonnes, as per mine plan
- Overall volumes mined fell by 5% to 1.1 million tonnes, largely as a
result of the accident in July 2010
- Achieved head grade in the first half decreased by 11% compared to H1
2010 to 2.39 g/t, as a result of lower-than-expected underground grades
due to geological anomalies
Processing
- Volumes of ore processed in the Marikana concentrator plant decreased by
2% to 1,133 thousand tonnes
- Concentrator recoveries improved from 69% to 70%
- Production decreased by 11% to 60,587 PGM ounces
Revenue
Marikana achieved a US Dollar PGM basket price of $1,387 per PGM ounce for the
first half, an increase of 27% over the pcp. As with Kroondal, this improved
the mine`s realised revenue per ounce and also resulted in positive sales
adjustments. This offset the decrease in volumes, resulted in overall revenue
from the mine rising by 1% to R561 million.
Operations
The decreased production of ore from the Marikana operations for the first six
months of FY2011 was largely due to underground production being negatively
affected by the Section 54 suspension notice and the memorial service which
was held for the 5 employees who died in the tragic fall of ground accident.
4 Shaft lost more than two weeks of production due to this stoppage. While
the ratio of underground tonnes to opencast continues to increase, this safety
stoppage and the intersection of geological anomalies have slowed the
underground ramp up. The open pit was scheduled to be mined out by the end of
December 2010, however indications are that it will now only be completed
during the second half of this financial year. Only one pit remains (West-
West), which has a steeply dipping ore body which reduces the amount of mining
equipment that can be accommodated in the pit at any one time.
1 Shaft became uneconomical during the second quarter and is being placed on
care and maintenance. Development has been stopped and stoping will stop in
June 2011. As with Kroondal, the accident and the S9(7) instruction issued by
the DMR to Marikana will not have any ongoing impact on production levels. See
the update on the impact of the remedial action taken on hangingwall support
below.
Primary development increased by 109% over the period to a total of 5,855
metres due to the high level of potholing that was intersected. Stockpiles at
the end of the first half totaled approximately 12,786 tonnes.
The decrease in tonnes processed resulted from decreased mining volumes.
Recoveries improved slightly as a result of the implementation of a batch
milling program in terms of which tonnes from different ore sources are
batched and processed over an extended period before changing the source of
the ore. The head grade deteriorated materially due to a higher incidence of
potholes which led to increased off-reef mining due to difficulties in packing
waste underground. These factors together resulted in the production of 60,587
PGM ounces (30,294 ounces of which are attributable to Aquarius), a decrease
of 11% over the pcp.
Operating Cash Costs
Cash costs in Rand terms for the first half fell by 2% to R429 per ROM tonne
as more underground tonnes were mined, but rose by 9% to R8,026 per PGM ounce
compared to H1 2010.
The Rand strengthened against the Dollar during the period, resulting in cash
costs in Dollar terms increasing by 16% to $1,122 per PGM ounce.
Marikana: Operating Costs
4E (Pt+Pd+Rh+Au) 6E 6E net of by-
(Pt+Pd+Rh+Ir+Ru+Au) products (Ni&Cu)
Marikana R8,026 per PGM R6,589 per PGE R 6,361 per PGE
ounce ounce ounce
Capital Expenditure
Capital expenditure at Marikana for the first half was R94 million (R1,561 per
PGM ounce), spent largely on ongoing underground infrastructure establishment,
new safety equipment, the initial capital for the 5 Shaft project and some
mobile equipment. Marikana`s expenditure is up to date as per mine plan.
Contractor dispute with Moolman Mining
As disclosed at the time, the dispute with Moolman Mining was finally settled
by agreement between the parties during the first quarter of the financial
year. AQPSA paid R87.8 million (approximately $12 million) to Moolman Mining,
representing only work actually done by Moolman Mining, interest and certain
legal costs, in full and final settlement of all disputes between the parties.
Update on impact of revised hangingwall support strategy
As at Kroondal, the new hangingwall support methodologies are now largely in
place at Marikana and are being implemented. All the required equipment has
been purchased and is being used during day-to-day mining activities. All
personnel vacancies needed to implement the support strategy were filled
during the second quarter.
Everest (Aquarius Platinum - 100%)
Safety
- No fatalities occurred during the period
- Only 2 lost-time injuries were reported during the first half
- The 12-month rolling average disabling injury incidence rate (DIIR) was
0.25 during the half year - Everest was not operating in the pcp
Mining
- Underground volumes rose to 605 thousand tonnes from nil in the pcp
- Achieved head grade in the first half was 2.78 g/t, and is improving
steadily
Processing
- Volumes of ore processed in the Everest concentrator plant was 643
thousand tonnes
- Concentrator recoveries were 79%
- Production totalled 45,561 PGM ounces
Revenue
Everest achieved a US Dollar PGM basket price of $1,354 per PGM ounce for the
first half. Realised revenue per ounce together with positive sales
adjustments resulted in overall revenue from the mine of R457 million for the
first half of the 2011 financial year.
Operations
Access to the Everest mine workings was re-established and production
restarted in May 2010 following the suspension of mining operations there in
December 2008 following a subsidence event. The progress of the re-
establishment project and the ramp-up of production in the first half of the
2011 financial year is in line with plan and is proceeding well. Grades and
recoveries both improved steadily over the period.
The final touches to Phase 2 of the re-establishment project were completed
during the period under review, and recruitment and training of new crews for
production is almost complete, in line with the planned build up. To date all
employees who are being recruited are former employees in line with the
retrenchment agreement signed with the unions when operations were ceased.
Operating Cash Costs
Cash costs in Rand terms for the first half were R558 per ROM tonne and R7,879
per PGM ounce, and remain on a decreasing trend as the production ramp-up
continues.
The Rand strengthened against the Dollar during the period, and so cash costs
in Dollar terms were $1,101 per PGM ounce. As the production ramp-up
continues, the impact of the mine`s fixed cost base will reduce.
Everest: Operating Cash Costs
4E (Pt+Pd+Rh+Au) 6E 6E net of by-
(Pt+Pd+Rh+Ir+Ru+Au) products (Ni&Cu)
Everest R 7,879 per PGM R 6,556 per PGE R 5,857 per PGE
ounce ounce ounce
Capital Expenditure
Capital expenditure at Everest for the first half was R136 million (R2,975 per
PGM ounce), spent largely on ongoing underground infrastructure establishment,
new safety equipment, capital for the Valley Boxcut project and some mobile
equipment.
Update on impact of revised hangingwall support strategy
The majority of the action steps to implement the new support system at
Everest have been implemented.
RIDGE MINING (PTY) LTD
Blue Ridge Mine (Aquarius Platinum - 50%)
Safety
- Regrettably, one fatality occurred during the period - on 2 November 2010
Mr V.M Cossa was fatally injured in a blasting accident caused by a
failure to follow ignition procedures
- 12 lost-time injuries were reported during the first half
- The 12-month rolling average disabling injury incidence rate (DIIR)
deteriorated from 1.09 to 2.02 during the half year
Mining
- Stoping operations were stopped at the end of the first quarter to enable
the redevelopment of the mine
- Underground volumes decreased by 51% to 204 thousand tonnes compared to
H1 2010
- Achieved head grade in the first half decreased by 5% to 2.35 g/t
Processing
- The Blue Ridge concentrator plant was stopped at the end of the first
quarter
- Volumes of ore processed in the first half was 141,926 thousand tonnes
- Concentrator recoveries were 74%, a 7% improvement over the pcp
- Production totalled 8,092 PGM ounces, all of which were capitalised
Operations
As disclosed at the time, the decision to redevelop the Blue Ridge mine and
install infrastructure was taken by the AQPSA Board in September, given the
low Rand basket prices prevailing at the time and the inherited sub-optimal
mine design.
The redevelopment project was outlined in the Aquarius Q1 2011 production
report, and the implementation of the project commenced during the second
quarter. Approximately 900 employees have been redeployed, some to other
operations, in a process that was concluded satisfactorily and with
retrenchments limited to a bare minimum.
Development for the half year totalled 2,365 metres. Ore reserve creation also
increased over the period, with a number of raised holings having been
completed. Currently the developed ore reserves at Blue Ridge total 1,843
meters. Operations are currently underway to equip these raises in order to
facilitate the production build-up.
Update on progress:
- The waste silo is currently being blasted, and the material required for
the equipping thereof has been ordered. This includes the extension of
the existing belt past the silo position, and completion is expected
during the 3rd quarter of the 2011 financial year
- The contractor is on site for the installation of the second conveyor
belt. The work has started and the anticipated completion date remains
the end of the 3rd quarter
- The upgrading of the service columns was reviewed and it was decided to
continue to use compressed air. Installation will commence during the 3rd
quarter and be completed by the 4th quarter
- The vamping project is underway and tonnage throughput to the plant is
being supplemented by the recovery of tonnage lock-up from old areas
- A centralised blasting system has been commissioned
- The Change House civil engineering has been completed
- The 25MVA Eskom powerline installation to the mine is complete
Capital Expenditure
Capital expenditure at Blue Ridge for the first half was R206 million, spent
largely on the redevelopment project.
MIMOSA INVESTMENTS LIMITED (Aquarius Platinum - 50%)
Mimosa Platinum Mine
Safety
- Regrettably, one fatality occurred during the period - during the first
quarter Mr Innocent Ndlovu, an Acting Machine Operator, was fatally
injured in an explosion when an operating rock drill intersected a socket
containing misfired explosives as a result of a failure to observe
established safety procedures
- Management changes were made as a result of this accident, which ended a
period of 2.7 million fatality-free shifts for Mimosa
- Only 1 lost-time injury was reported during the first half
- The 12-month rolling average disabling injury incidence rate (DIIR)
deteriorated from 0.14 to 0.25 during the half year
Mining
- Underground volumes decreased by 1% to 1,213 thousand tonnes
- Achieved head grade in the first half increased by 1% compared to H1
2010, to 3.61 g/t
Processing
- Volumes of ore processed in the Mimosa concentrator plant mirrored tonnes
mined
- Concentrator recoveries improved from 76% to 77%
- Production increased slightly to 101,156 PGM ounces
Revenue
Mimosa achieved a US Dollar PGM basket price of $1,173 per PGM ounce for the
first half, an increase of 37% over the pcp. This improved the mine`s realized
revenue per ounce and also resulted in positive sales adjustments. These
factors resulted in overall revenue from the mine rising by 5% to R115
million.
Operations
After record production levels achieved in the first quarter of the 2011
financial year, challenging ground conditions were encountered across all
areas of Mimosa in the second quarter, resulting in lower production which
offset the gains in the first three months. As a result Mimosa`s production
was flat compared to the pcp.
Operating Cash Costs
Cash costs for the first half increased by 10% to $55 per ROM tonne and by 5%
to $623 per PGM ounce compared to H1 2010.
Mimosa: Operating Cash Costs
4E (Pt+Pd+Rh+Au) 6E 6E net of by-
(Pt+Pd+Rh+Ir+Ru+Au) products (Ni&Cu)
Mimosa $623 per PGM ounce $590 per PGE ounce $254 per PGE ounce
Capital Expenditure
Capital expenditure at Mimosa for the first half was $30 million ($295 per PGM
ounce), spent largely on ongoing underground infrastructure establishment ($13
million) and staff housing ($8 million). Mimosa`s expenditure is up to date as
per mine plan.
Economic and Political Update
In the 2011 Fiscal Budget Statement which was presented on 25 November 2010,
royalties on gold and platinum were increased from 4% to 4.5% and 5% of gross
revenue respectively. The draft revised Income Tax Act published in June 2010
for comments is expected to be finalised during the first half of 2011. The
proposed changes in the act include restrictions on deductible expenditure for
taxable income, and revision of the Special Initial Allowance for mining
entities which is currently 100% in the year of expenditure.
Update on the Indigenisation Bill
The sector specific requirements for the mining industry have not yet been
publicised, though intense discussions on the matter are ongoing. As further
information becomes available the market will be kept informed.
TAILINGS OPERATIONS
Chromite Tailings Retreatment Plant (CTRP) (Aquarius Platinum - 50%)
- The DIIR for the period was 0.00
- Feed processed was 65 thousand tonnes, a decrease of 54%
- Head grade rose by 29% to 2.95 g/t
- Average recoveries for the period increased from 37% to 47%
- Production fell 24% to 2,921 PGM ounces (Aquarius attributable: 1,913 PGM
ounces)
- The US Dollar PGM basket price for the period was $1,492 per PGM ounce,
an increase of 27% compared to H1 2010 - CTRP produces proportionately
more rhodium than the other operations, which contributes to the higher
basket prices achieved
- Revenue at CTRP decreased by 25% to R21 million
- Cash costs increased by 85% to R5,742 per PGM ounce, equal to $803 per
PGM ounce
Platinum Mile Resources (Pty) Ltd (Aquarius Platinum - 50%)
- The DIIR for the period was 1.46, up from 0.00 in the pcp - the plant
recorded its first-ever lost-time injury
- Feed processed was 2.3 million tonnes, a decrease of 42%
- Head grade fell by 2% to 0.62 g/t
- Average recoveries for the period increased from 15% to 17%
- Production fell 35% to 8,044 PGM ounces (Aquarius attributable: 4,022 PGM
ounces)
- The US Dollar PGM basket price for the period was $1,429 per PGM ounce,
an increase of 23% compared to H1 2010
- Revenue at Platinum Mile decreased by 42% to R67 million
- Cash costs increased by 129% to R5,709 per PGM ounce, equal to $821 per
PGM ounce
Tailings Operations: Operating Cash Costs
4E (Pt+Pd+Rh+Au) 6E 6E net of by-
(Pt+Pd+Rh+Ir+Ru+Au) products
CTRP R 5,742 per PGM R 3,954 per PGE R 3,852 per PGE
ounce ounce ounce
Platinum Mile R 5,709 per PGM R 4,921 per PGE R 2,535 per PGE
ounce ounce ounce
(Please refer to www.aquariusplatinum.com for the Statistical information)
CORPORATE MATTERS
Official Department of Mineral Resources safety statistics for the South
African platinum industry
The DMR has released its safety statistics for the platinum industry to the
end of December 2010, which are charted in the graph below.
(Please refer to www.aquariusplatinum.com for the graph)
More information on all corporate matters can be found at
www.aquariusplatinum.com
Aquarius Platinum Limited
Incorporated in Bermuda
Exempt company number 26290
Board of Directors
Nicholas Sibley Non-executive Chairman
Stuart Murray Chief Executive Officer
David Dix Non-executive
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
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
Jan Hattingh General Manager: Engineering
Radesh Sukhdeo General Manager: Metallurgical
David Starley General Manager :Projects
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 31 December 2010, the Company had in issue: 463,241,295 fully paid common
shares and 452,171 unlisted options.
Substantial Shareholders 31 Number of Percentage
December 2010 Shares
Savannah Consortium 63,254,371 13.66
JP Morgan Nominees Australia 46,135,926 9.96
Limited
HSBC Custody Nominees 38,189,609 8.25
(Australia) Limited
National Nominees Limited 32,498,637 7.02
Chase Nominees Limited 25,268,975 5.45
Trading Information
ISIN number BMG0440M1284
ADR ISIN number US03840M2089
Convertible Bond ISIN number XS0470482067
Broker (LSE) (Joint) Broker (ASX) Sponsor (JSE)
Liberum Capital Limited Euroz Securities Rand Merchant Bank
City Point, 1 Ropemaker Level 18 Alluvion (A division of
Street, London, EC2Y 9HT 58 Mounts Bay Road, FirstRand Bank
Telephone: +44 (0) 20 3100 Perth WA 6000 Limited)
2000 Telephone: +61 (0) 8 1 Merchant Place
Bank of America Merrill 9488 1400 Cnr of Rivonia Rd and
Lynch Fredman Drive, Sandton
2 King Edward St 2146
London, EC1A 1HQ Johannesburg South
Telephone: +44 (0)20 7628 Africa
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
Aquarius Platinum Limited is listed on the following exchanges:
Australian Stock Exchange: Primary listing
JSE Limited: Secondary Listing
London Stock Exchange: Secondary Listing
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 (0) 7909 547 042
Glossary
A$ Australian Dollar
Aquarius or AQP Aquarius Platinum Limited
AQPSA Aquarius Platinum (South Africa) (Pty) Ltd
BEE Black Economic Empowerment
CTRP Chrome 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, now the DMR
DMR South African Government Department of Mineral
Resources, formerly the DME
Dollar or $ United States Dollar
Everest Everest Platinum Mine
FOG Fall of ground
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 Australasian code for reporting of Mineral Resources and
code 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
pcp Previous corresponding period
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
PlatMile Platinum Mile Resources (Pty) Ltd
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
Blue Ridge or Ridge Blue Ridge Platinum Mine
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
Date: 10/02/2011 11:00:01 Produced by the JSE SENS Department.
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