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AQP
AQP
AQP - Aquarius Platinum Limited - Financial and production results to 30
September 2011
Aquarius Platinum Limited
(Incorporated in Bermuda)
Registration Number: EC26290
Share Code JSE: AQP
ISIN Code: BMG0440M1284
FIRST QUARTER 2012 FINANCIAL AND PRODUCTION RESULTS
FINANCIAL AND PRODUCTION RESULTS TO 30 SEPTEMBER 2011
Highlights
- Attributable production for the first quarter decreased by 3% quarter-on-
quarter to 109,828 PGM ounces
- Average PGM Dollar prices deteriorated in the quarter - platinum and
palladium both down 1% and rhodium down 13%
- The Rand weakened against the US Dollar by 5% on average quarter-on-
quarter, and by 20% over the current quarter
- On-mine EBITDA increased by 24% year-on-year to $34.5 million
- Foreign exchange loss of $94.3 million on inter-company loans, resulting in
a net loss after tax (IFRS) for the quarter of $91.8 million
- Production at Kroondal and Marikana remained adversely affected by manual
installation of hangingwall support
- Production at Everest negatively impacted by continuing poor ground
conditions and section 54 stoppages
Q1 2012 Operating Results Summary
Kroond Marika Everes Mimosa CTRP Plat.
al na t * Mile
4E PGM
Production
Total (100% 88,908 25,993 23,074 53,798 661 3,087
basis)
Attributable 44,454 12,996 23,074 26,899 331 2,074
4E Basket
Price
R/oz 10,374 10,431 10,233 - 10,745 10,267
$/oz 1,480 1,488 1,460 1,374 1,535 1,438
Cash Costs
(4E basis)
R/oz 8,507 10,098 9,775 - 16,223 7,723
$/oz 1,213 1,440 1,394 726 2,318 1,082
Cash Margin 1 (14) (6) 50 (516) 22
(%)
Stay-in-
Business
Capex
R/oz 1,062 726 1,970 - 3,763 311
$/oz 151 103 281 301 538 43
* Everest is in ramp-up phase
Commenting on the results, Stuart Murray, CEO of Aquarius Platinum said:
The first quarter of FY2012 has been a truly difficult one. As expected, the
operational issues that we faced at our South African operations in the final
quarter of FY2011 continued to pose challenges in the period under review,
exacerbated by further primary mining contractor underperformance in Q1. This
escalating underperformance relates to a failure to achieve agreed budgeted
production and unit cost targets at all the SA mines, and a failure to maintain
acceptable safety standards and industrial relations practices (particularly at
Everest). This continued underperformance is currently being addressed, and
AQPSA`s management is formulating strategies to resolve it which will include
revisiting the cost reimbursable basis of the primary mining contract. AQPSA
will be taking an increasingly interventionist role in the management of this
contractor as the current risk profile of the contract (which overly favours the
contractor) is not sustainable, especially in the current metal price
environment.
At Kroondal and Marikana, the issues relating to the implementation of our new
support systems, and long lead times for the necessary equipment, do remain.
However, safety is an area in which we will not compromise. Everest continues to
face temporary adverse geological conditions and also suffered extensive section
54 shutdowns and maintenance issues. The tailings operations continued to suffer
from feedstock quality issues, impacting costs through their very high fixed
cost base. On a more positive note, Mimosa returned an outstanding performance,
lowering costs while continuing to produce at capacity. These operational
difficulties, while unhelpful in the quarter under review, are in each case
temporary in nature and are in the process of being rectified.
The global economy is weakening once more. Basket prices were flat quarter-on-
quarter in both currencies, but both fell in the final week of the period, and
have remained at a lower level in October. The reasons for this relate to
macroeconomic issues such as European sovereign debt rather than PGM
fundamentals, which remain strong. Fortunately the Rand has weakened against the
Dollar in step with the Euro, providing some relief from lower Dollar metals
prices.
The quarter did have its positive aspects, with an agreement reached with our
partners at Kroondal and Marikana to exploit the Siphumelele 3 ore reserves
through the P&SAs, in keeping with our commitment to expand the scope of those
operations. We were also able to settle our wage negotiations at a level
acceptable to all parties with no disruption. We are working hard to resolve the
current operational challenges and I am confident that we will be able to
restore our margins in the short term and emerge with a stronger business and
safer, more robust mines. We have among the lowest capital intensities in the
platinum sector and these factors together will enable us to weather any renewed
deterioration in the economic environment.
Production by mine
PGMs Quarter ended
(4E)
Sept 2011 June 2011 % Sept 2010 %
Change Change
Kroondal 88,908 89,196 (0%) 110,575 (20%)
Marikana 25,993 21,411 21% 27,756 (6%)
Everest 23,074 26,954 (14%) 20,417 13%
Blue - 3,021 (100%) 8,092 (100%)
Ridge
Mimosa 53,798 55,605 (3%) 54,133 (1%)
CTRP 661 685 (4%) 1,470 (55%)
Platinum 3,087 4,694 (34%) 3,923 (21%)
Mile
Total 195,521 201,566 (3%) 226,366 (14%)
Production by mine attributable to Aquarius
PGMs Quarter ended
(4E)
Sept 2011 June 2011 % Sept 2010 %
Change Change
Kroondal 44,454 44,598 (0%) 55,287 (20%)
Marikana 12,996 10,705 21% 13,878 (6%)
Everest 23,074 26,954 (14%) 20,417 13%
Blue - 1,510 (100%) 4,046 (100%)
Ridge
Mimosa 26,899 27,803 (3%) 27,067 (1%)
CTRP 331 343 (3%) 735 (55%)
Platinum 2,074 2,347 21% 1,962 44%
Mile
Total 109,828 114,260 (3%) 123,392 (10%)
Aquarius Group attributable production (PGM ounces) to 30 September 2011
Please refer to www.aquariusplatinum.com for the graph.
Market Summary
Metals prices
The Dollar prices of both platinum and palladium remained relatively steady over
much of the first quarter, as fundamental industrial demand continued to improve
slowly and the global supply-chain disruptions caused to the automotive industry
by the Japanese earthquake and tsunami were resolved. The prices of both metals
fell sharply in the final week of the quarter, however, as investor sentiment
deteriorated markedly in response to the debt crisis in Europe and signs of
potential recession in various parts of the world. These falls in price were
accompanied by outflows from both the platinum and palladium physically-backed
ETFs, demonstrating once again that prices are currently driven by investor
views rather than fundamental demand. The price of rhodium weakened throughout
the quarter, reflective of the significant current surplus in that metal.
The average platinum and palladium prices both fell by 1% quarter-on-quarter,
while the average rhodium price fell by 13%. Gold rose by 13% on average,
reflecting the uncertainty in world markets, but in a counterintuitive
development, it weakened along with the industrial commodities at the end of the
quarter, as investor liquidity was pulled from the market. Gold reached parity
with platinum for an unprecedented period during the quarter under review, and
the platinum price has now fallen to below that of gold. Platinum closed the
quarter down 12% at $1,511 per ounce, while palladium fell by 18% to $614 per
ounce over the same period. The rhodium price fell 16% to $1,675 per ounce over
the quarter and gold rose 9% to $1,622 per ounce.
PGM prices have remained at the lower levels reached at the end of the first
quarter in October, and while the European debt crisis remains unresolved and
the global economic recovery continues to slow, this situation is unlikely to
change. The outlook for PGM prices in the medium term remains good, but
macroeconomic concerns are likely to outweigh this in the short term.
Rand-Dollar exchange rate
The average Rand-Dollar exchange rate for the quarter weakened by 5% from R6.80
to R7.15 to the US dollar, with much of the deterioration coming at the end of
the quarter in response to the weakness in the Eurozone (South Africa`s largest
trading partner), investor risk aversion for developing markets and a stronger
US Dollar. The Rand closed the quarter down 20% at R8.13 to the Dollar.
Rand basket prices remained relatively stable over much of the quarter, with
currency moves offsetting changes to US Dollar PGM prices until the final week
of the quarter, when metal price falls began to outweigh currency gains. Average
PGM basket prices over the quarter weakened slightly at all operations in US
Dollar terms but improved slightly in Rand terms. The US Dollar weighted average
group basket price decreased by 2% to $1,450 per 4E PGM ounce compared to the
previous quarter, while the weighted average basket price at the South African
operations was $1,475 per PGM ounce. The average South African basket price was
R10,540 per PGM ounce for the period, a 3% increase compared to the prior
quarter.
12-month individual PGM prices to September 2012 (US$/oz)
Please refer to www.aquariusplatinum.com for the graph.
12-month PGM basket prices to September 2012 (US$ and ZAR per PGM basket ounce)
Please refer to www.aquariusplatinum.com for the graph.
12-month Rand-Dollar exchange rate to September 2012 (ZAR/US$)
Please refer to www.aquariusplatinum.com for the graph.
Average PGM basket prices achieved at Aquarius operations
US$ per PGM Quarter ended
ounce (4E)
Sept 11 June 11 % Sept 11 %
Change Change
Kroondal 1,480 1,519 -3% 1,307 16%
Marikana 1,488 1,523 -2% 1,306 17%
Everest 1,460 1,484 -2% 1,265 17%
Blue Ridge - 1,511 - 1301 -
Mimosa 1,374 1,392 -1% 1,144 22%
CTRP 1,535 1,636 -6% 1,426 15%
Platinum 1,438 1,487 -3% 1,300 14%
Mile
Weighted 1,450 1,480 -2% 1,265 17%
Avg.
Financial results
Aquarius recorded on-mine EBITDA of $34.9 million for the quarter ended
September 2011, an increase of 24% compared to the previous corresponding period
(pcp), September 2010. The result was despite production for the quarter being
8% lower at 109,828 PGM ounces attributable to Aquarius. The net result of the
group, a net loss after tax of $91.8 million, was distorted by $94.3 million of
foreign exchange losses arising from the revaluation of inter-company loans and
non-US Dollar cash balances at period end. Significant currency swings between
the Rand and the US Dollar were experienced during the quarter, which saw the
Rand weaken 20% from R6.76 to R8.13 at the close of the quarter.
EBITDA, Profit & Production Comparison by corresponding quarters
Quarter Quarter Movement Financial
ended ended year
Sept 2011 Sept 2010 ended
June 2011
EBITDA $34.9M $28.1M $6.8M $203.2M
Headline earnings - - - $142.8M
Forex (loss)/gain ($94.3M) $37.0M $131.3M $60.1M
Net (loss)/profit after ($91.8M) $42.4M ($134.2M) ($10.4M)
tax
Revenue $144.6M $149.1M ($4.5M) $682.9M
PGM ozs production (in 109,828 119,346* (9,518) 478,551*
operation)
* excludes PGM ounces of Blue Ridge production capitalised.
On-mine EBITDA for the quarter of $34.9 million was 24% higher compared to the
pcp despite lower production and higher unit costs. This was due to foreign
exchange gains on sales of $27.0 million which were partially offset by negative
PGM sales adjustments of $6.7 million. The foreign exchange gains (at mine
level) were however more than offset by foreign exchange losses recorded by the
group on cash balances (Rand, Australian dollar, Pound Sterling), and the
revaluation of inter-company loans; resulting in net foreign exchange losses to
the group of $94.1 million.
Revenue (PGM sales and including interest income of $3.5 million) was down 3% to
$144.6 million from $149.1 million in the pcp. Revenue was inclusive of negative
sales adjustments of $6.7 million due to the flow-through of declining PGM
prices experienced during the quarter. Despite the decline in PGM prices
towards the end of September, the average revenue per ounce achieved for the
quarter was slightly higher at $1,317 compared to the pcp, despite PGM prices
having retreated in the second half of September to their current low levels.
Quarter ended
Sept Dec 2010 Mar 2011 June 2011 Sept 2011
2010
Revenue $145.5m $174.2m $174.3m $164.8m $151.3m
PGM sales adjustments $3.6m $12.9m $8.5m ($0.9m) ($6.7m)
Total revenue $149.1m $187.1m $182.8m $163.9m $144.6m
Production for the quarter was 8% lower at 109,828 PGM ounces, down from 119,346
PGM ounces in the pcp. This was largely due to lower production at Kroondal and
Marikana; collectively down 11,714 PGM ounces compared to the pcp. Generally,
the decrease in production was linked to the slower than expected implementation
of the new underground support processes as part of the reinforced focus on
increased safety. Everest and Mimosa exceeded production compared to the pcp.
Quarter ended
Attributable Sept 2010 Dec 2010 Mar 2011 June 2011 Sept 2011
ounces
4PGE production 119,346 127,579 122,213 114,220 109,828
Blue Ridge 4,046 - - - -
Total production 123,392 127,579 122,213 114,220 109,828
Total cash cost of production was higher at $126 million despite lower
production due to the high fixed cost nature of the mining contract. This
translated into higher weighted average on-mine unit costs which increased 28%
in South Africa in Rand terms compared to the pcp, and 17% quarter on quarter.
In Dollar terms, unit costs increased 33% compared to the pcp due principally to
Rand weakness against the US Dollar.
Unit costs increased at all operations in Rand and US Dollar terms compared to
the pcp, although Mimosa`s unit costs fell by 9% in US Dollars compared to the
previous quarter.
Amortisation and depreciation was higher at $19.9 million from $13.5 million in
the pcp despite lower production due to an increased write off of mine
development costs following closure of the Marikana open pit.
Administration and other costs at $3.9 million are in line with expectations
based on these costs in previous periods. Finance costs for the quarter of $9.2
million comprised interest on the convertible note of $4.8 million, non-cash
interest accretion on the convertible note of $2.5 million, pipeline finance of
$0.3 million, borrowing costs of $0.3 million and unwinding of the
rehabilitation provision of $1.4 million.
Capitalisation of inter-company loans
During the quarter, Aquarius capitalised $353 million of intercompany loans with
its subsidiaries, AQPSA and ACS(SA). The value of these loans is now
represented as capital in the subsidiaries and will no longer be subject to
monthly revaluation through the income statement. The loans were capitalised at
a ZAR/USD exchange rate higher than that pertaining when the loans were
originally transacted and accordingly, a tax credit has been booked during the
quarter.
Cash
The Group cash balance at the end of the quarter under review was $276 million.
Net operating cash flow for the quarter of $34 million comprised $184 million
from sales, $148 million paid to suppliers, net finance costs of $1 million and
income tax paid of $1 million. During the quarter Aquarius settled the
acquisition of 41.7% of Platmile for $16 million and also paid out Aquarius`
dividend of 4 cents per share to Aquarius shareholders of $19 million.
Group cash at 30 September 2011 was held as follows:
AQP $207 million
AQPSA $ 25 million
ACS(SA) $ 2 million
Mimosa $ 34 million
Ridge Mining $ 2 million
Platmile $ 6 million
Total $276 million
Aquarius Platinum Limited
Consolidated Income Statement
Quarter ended 30 September 2011
$`000
Note Quarter Ended Financial
Year Ended
30/09/11* 30/09/10* 30/06/11
PGM Production from 109,828 119,346 483,358
operating mines - 4,046 4,046
Blue Ridge 109,828 123,392 487,404
Total production
Revenue (i) 144,579 149,102 682,859
Cost of sales (including (ii) (146,189) (120,779) (507,728)
D&A)
Gross (loss)/profit (1,610) 28,323 175,131
Other income 167 150 1,764
Administrative costs (iii) (3,965) (4,039) (13,030)
Foreign exchange (iv) (94,116) 45,301 60,068
(loss)/gain
Finance costs (v) (9,265) (7,505) (30,945)
Impairment losses (vi) - - (159,779)
Settlement of contractor (vi) - (7,810) (7,810)
dispute
(Loss)/profit before income (108,789) 54,420 25,399
tax
Income tax (viii) 16,947 (12,021) (35,795)
benefit/(expense)
Net (loss)/profit (91,842) 42,399 (10,396)
EPS (basic - cents per (19.6) 9.2 (2.25)
share)
* Unaudited
Notes on the September 2011 Consolidated Income Statement
(i) Revenue decrease reflects lower production and flat prices compared to the
pcp.
(iii) Cost of sales: unit cash costs per PGM ounce increased 17.0% in South
Africa in Rand quarter-on-quarter and 28.5% compared to September 2010. In
US Dollar terms unit costs increased 9.6% quarter-quarter and 32.5%
compared to September 2010 principally due to Rand weakness compared to the
US Dollar
(iii) Administration and other costs of $4.0 million are in line with
previous periods.
(iv) Forex loss is largely attributable to negative revaluation adjustments
on intergroup debt, cash balances held in Rand, Australian dollars and
Pound Stirling, and the revaluation of pipeline debtors following the
weakening of the Rand against the US Dollar.
(v) Finance costs include convertible note debt $4.8 million, non-cash interest
accretion on the convertible note $2.5 million, pipeline finance $0.3 million,
borrowing costs $0.3 million and unwinding of the rehabilitation provision $1.4
million.
(vi) Impairment losses relating to the Blue Ridge mine which has ceased
operations
(vii) Settlement payment of the contractor dispute between Moolman Mining and
AQPSA pursuant to an agreement of settlement signed in August 2010, in full and
final settlement of all disputes and claims between the parties.
(viii) Income tax benefit relates to reversal of deferred tax balances on
realisation of foreign exchange losses.
Aquarius Platinum Limited
Consolidated Statement of Cash Flows
Quarter ended 30 September 2011
$`000
Quarter Ended Financia
l Year
Ended
Note 30/09/1 30/09/10 30/06/11
1* *
Net operating (i) 34,056 39,790 162,311
cash inflow
Net investing (ii) (44,489 (209,908
cash outflow ) (45,754) )
Net financing cash (iii) (25,519 (30,159)
inflow/(outflow) ) (33,527)
Net decrease in (35,952 (36,123) (81,124)
cash held )
Opening cash 328,083 381,734 381,734
balance
Exchange rate (16,329 18,273 27,473
movement on cash )
Closing cash 275,802 363,884 328,083
balance
* Unaudited
Notes on the September 2011 Consolidated Statement of Cash Flows
(i) Includes $184 million inflow from sales, $158 million paid to suppliers,
net finance costs of $1 million and income tax paid of $1 million.
(ii) Includes development and plant and equipment expenditure of $28 million on
AQPSA and Mimosa operations and $16m payment for purchase of a 41.7% interest in
Plat Mile.
(iii) Includes payment of 4 cents per share dividend to Aquarius shareholders
of $19 million, purchase of treasury shares of $3 million and repayment of
borrowings of $3 million.
Aquarius Platinum Limited
Consolidated Balance Sheet
At 30 September 2011
$`000
Quarter Financial Year Ended
Ended 30 June 2011
30 Sept 2011
Note $`000 $`000
Assets
Cash assets 275,802 328,083
Current receivables (i) 92,197 108,395
Other current assets (ii) 44,835 44,747
Property, plant and (iii) 279,515 325,763
equipment
Mining assets (iv) 439,955 480,634
Other non-current (vi) 81,323 91,735
assets
Intangibles (v) 64,415 77,989
Total assets 1,278,042 1,457,346
Liabilities
Current liabilities (vii) 112,544 120,549
Non-current payables (viii) 5,266 6,150
Non-current interest- (ix) 256,488 257,599
bearing liabilities
Other non-current (x) 176,591 221,711
liabilities
Total liabilities 550,889 606,009
Net assets 727,153 851,337
Equity
Issued capital 23,509 23,509
Reserves 697,647 711,182
Retained earnings 5,997 116,646
Total Equity 727,153 851,337
* Unaudited
Notes on the September 2011 Consolidated Balance Sheet
(i) Reflects debtors receivable on PGM concentrate sales
(ii) Reflects PGM concentrate inventory, consumables, stores and critical
spares.
(iii) Represents plant and equipment within the Group
(iv) Includes group`s mining assets at Kroondal, Marikana, Mimosa, Everest,
Blue Ridge, CTRP and Platmile
(v) Includes intangibles relating to goodwill and contract value acquired on
acquisition of 50.0% equity interest in Platinum Mile Resources (Pty) Ltd.
(vi) Includes recoverable portion of rehabilitation provision at P&SA sites of
$12 million, cash contributed to Rehabilitation Trusts of $17 million, listed
investments of $1 million, Mimosa receivable from RBZ relating to the previous
requirements to repatriate US Dollar proceeds on metals sales to the RBZ of $28
million, and Blue Ridge receivables from outside shareholders of $23 million.
(vii) Includes trade creditors of $81 million, DBSA and IDC bank loans in Blue
Ridge of $30 million, current tax liabilities of $1 million and provision for
annual leave of $1 million.
(viii) Includes rehabilitation obligations on P&SA1 and P&SA2 structures.
(ix) Includes convertible bonds of $248 million and AQPSA / Blue Ridge lease
facilities of $8 million.
(x) Includes deferred tax liabilities $116 million and provision for closure
costs $61 million.
Operating Review Summary (all numbers on 100% basis)
AQUARIUS PLATINUM (SOUTH AFRICA) (PTY) LTD (Aquarius Platinum - 100%)
P&SA 1 at Kroondal (Aquarius Platinum - 50%)
- 12-month rolling average DIIR improved to 0.63 per 200,000 man hours from
0.77 in the previous quarter
- Production increased by 4% to 1,483,000 tonnes
- Head grade deteriorated from 2.46 g/t to 2.39g/t
- Recoveries deteriorated by 0.4%
- Volumes processed increased by 3% to 1,478,000 tonnes
- Stockpiles at the end of the quarter totalled approximately 20,000 tonnes
- PGM production decreased by 0.3% to 88,908 PGM ounces
- Revenue increased by 0.3% to R766 million Q-on-Q due to a slight increase
in the Rand basket price
- Mining cash costs increased by 13% to R512 per tonne, and costs per PGM
ounce by 17% to R8,507
- Kroondal`s cash margin for the period decreased from 15% to 1%
P&SA2 at Marikana (Aquarius Platinum - 50%)
- 12-month rolling average DIIR improved to 0.30 per 200,000 man hours from
0.48 in the previous quarter
- Production increased by 18% to 476,692 tonnes, all from underground
operations
- Head grade increased by 3% to 2.30 g/t
- Recoveries increased by 2% to 75%
- Volumes processed increased by 16% to 467,334 tonnes
- PGM production increased by 21% to 25,993 ounces
- Revenue increased by 22% to R230 million Q-on-Q due to improved PGM
production
- Mining cash costs increased by 13% to R562 per tonne, and costs per PGM
ounce by 8% to R10,098
- Marikana`s cash margin deteriorated from (6%) to (14%)
Everest Mine (Aquarius Platinum - 100%)
- 12 month rolling DIIR deteriorated to 1.28 per 200,000 man hours from 0.41
in the previous quarter
- Production decreased by 11% to 326,000 tonnes
- Head grade deteriorated from 2.62 g/t to 2.57 g/t
- Recoveries remained stable at 85%
- Volumes processed decreased by 13% to 327,000 tonnes
- PGM production decreased by 14% to 23,074 PGM ounces
- Revenue decreased by 13% compared to the previous quarter to R213 million
- Mining cash costs increased by 19% to R689 per tonne, and costs per PGM
ounce increased by 20% to R9,775
- Everest`s cash margin decreased from 10% to (6%)
Commentary
Kroondal and Marikana: Mine production continued to be negatively impacted by
the implementation of the new hangingwall support systems, as manual drilling of
support holes remained necessary during the quarter. Slower-than-plan
installation of support thus continued to interfere with the blasting cycle.
These mines are now trialling a locally manufactured prototype rock drill for
mechanised support installation, and it is possible that these significantly
cheaper units may be rolled out to use in place of the imported drilling rigs
currently under order but subject to long lead times.
The change in mining orientation also continued to require the establishment of
additional face at the expense of head grade. Production in the quarter was
comparable to the previous period but significantly below capacity, which had a
negative effect on unit costs due to the high fixed cost base. The extent of the
fixed cost base is a feature of the mining contractor agreement across
Aquarius`s South African operations, and this agreement is currently being
renegotiated to remove this inflexibility.
Mine management has been informed that the supplier of the imported specialty
drill steel used in the new hangingwall support methodology will be unable to
deliver sufficient units to meet AQPSA`s requirements until the middle of the
third financial quarter of 2012. This has necessitated moving certain areas of
these mines back to the old national standard of roof support in the short term.
While this situation is not optimal, it has enabled those mining areas to begin
producing at capacity once again. The new technologies for the early detection
of geological anomalies (ground penetrating radar, snake-eye cameras and the
other elements of the revised TARP system) remain in place in all mining areas.
Rustenburg Platinum Mines` (RPM) Siphumelele 3 ore reserves have now been
included in both P&SA1 and P&SA2 and mining there has commenced, in accordance
with an agreement between RPM and AQPSA (see "Corporate Matters" below).
Everest: Mining during the quarter was negatively impacted by the same oxidised
ore and resulting poor ground conditions seen in the prior period. Tragically,
two fatalities also occurred at Everest during the quarter in separate
incidents, and the associated section 54 safety stoppages caused the loss of 27
shifts. One of the accidents involved an underground vehicle (LDV), and further
impacts on production were caused by the need to modify LDV brake systems which
reduced the number of these vehicles available underground, especially for
maintenance. This resulted in lower LHD and drill rig availability. Finally,
there was also an underground belt fire, and a further 9 shifts were lost while
it was repaired. These incidents resulted in production significantly below
plan, and this resulted in materially higher unit costs during the quarter.
As disclosed separately at the time, after the quarter-end a protected strike by
certain employees of Murray & Roberts Cementation (Proprietary) Limited ("MRC"),
a mining contractor to AQPSA, occurred at the Everest Mine. The strike was
called by the Association of Mining and Construction Unions ("AMCU"), which is
demanding full organisational rights from MRC in terms of the South African
Labour Relations Act. This is a dispute between AMCU and MRC, and no demands are
being made by AMCU of Aquarius or its subsidiaries. The strike was ended by
AQPSA coming to an interim arrangement with AMCU while their dispute with MRC
continues. As a consequence of the strike, Everest was unable to operate for in
excess of two weeks.
AQPSA Operating costs per ounce
4E 6E 6E net of by-
products
(Pt+Pd+Rh+Au) (Pt+Pd+Rh+Ir+Ru+Au) (Ni&Cu)
Kroondal 8,507 6,966 6,832
Marikana 10,098 8,294 8,091
Everest 9,775 8,141 7,695
Capital expenditure
Ongoing capital expenditure remained at normal operating levels but project
capital remained higher than usual this quarter with the sinking operations at
K6 shaft.
Kroondal Marikana Everest
(R`000 unless Total Per 4E Total Per 4E Total Per 4E
otherwise stated) oz oz oz
Ongoing 57,857 651 18,609 716 44,967 1,949
Infrastructure
Establishment
Project Capital 36,564 411 250 10 483 21
Mobile Equipment 15,988 180 11,950 460 1,356 59
Total 110,409 1,242 30,808 1,185 46,806 2,029
MIMOSA INVESTMENTS (Aquarius Platinum - 50%)
Mimosa Platinum Mine
- 12-month rolling average DIIR fell slightly to 0.06 per 200,000 man hours,
with three lost-time injuries recorded
- Production increased by 1% to 603,609 tonnes
- Head grade deteriorated by 1% to 3.64g/t
- Recoveries were stable at 78%
- Volumes processed decreased by 2% to 592,056 tonnes
- Stockpiles at the end of the quarter totalled approximately 159,184 tonnes
- PGM production decreased by 3% to 53,798 PGM ounces
- Revenue decreased by 24% to $75.6 million due to lower metal prices
achieved during the quarter
- Mining cash costs decreased by 9% to $67 per tonne, and costs per PGM ounce
by 8% to $734
- Stay-in-business capital expenditure was $301 per PGM ounce for the quarter
- Mimosa`s cash margin for the period fell from 55% to 50%
Commentary
The 9% decrease in cash costs quarter-on-quarter was attributable to
various cost management initiatives being implemented by management as
well as lower off-mine costs. Off-mine costs such as royalties, commissions
and technical fees vary directly with sales and these were lower than the
previous quarter as a result of lower sales revenue due to depressed metal
prices.
The significant increase in stay-in-business capital expenditure quarter-on-
quarter arose because 44% of the approved capital budget for the 2012 financial
year was spent in the first quarter on productive equipment with long lead
times.
Operating cash costs per ounce
4E (Pt+Pd+Rh+Au) 6E (Pt+Pd+Rh+Ir+Ru+Au) 4E net of by-products
(Ni, Cu & Co)
Mimosa 734 696 344
Indigenisation and Economic Empowerment
Discussions are ongoing between the various interested parties in order to
ensure that a suitable Indigenisation proposal is developed. It is anticipated
that the final Indigenisation Implementation Plan will be submitted to the
Zimbabwean Minister of Youth Development, Indigenisation and Economic
Empowerment during the second quarter of FY2012.
TAILINGS OPERATIONS
Chromite Tailings Retreatment Plant (CTRP) (Aquarius Platinum - 50%)
- Material processed increased 128% to 70 tonnes
- Head grade increased to 2.88 g/t
- Recoveries decreased by 54% to 11%
- Production decreased to 661 PGM ounces
- Cash costs increased by 29% to R16,223 per PGM ounce
- Revenue was R2 million for the quarter
- CTRP had a negative cash margin for the period of 516%, down from negative
173% in the previous quarter
Platinum Mile (Aquarius Platinum - 91.70%)
- Material processed increased 24% to 1,244 million tonnes
- Head grade fell to 0.52 g/t
- Recoveries decreased by 32% to15%
- Production decreased to 3,087 PGM ounces
- Cash costs increased by 40% to R7,723 per PGM ounce
- Revenue was R31 million for the quarter
- The cash margin for the period was 22%, a decrease from 31% in the previous
quarter
Commentary
CTRP: Dump material was secured during the prior year because of diminishing
tailings supply from external providers. It was necessary to modify the plant to
accept this type of material. A scrubber was consequently installed and
commissioning was completed at the end of July 2011 and the volumes processed
increased significantly for the quarter. Process optimisation is ongoing and as
a result recoveries were poor during the period under review.
Platinum Mile: Production volumes and recoveries at PlatMile are highly
sensitive to the grade of feed material treated at the plant, which is currently
beyond management control. The current quarter saw a 20% decrease in the plant
feed grade, resulting in the ounces produced declining by 34%. The completion of
Aquarius` acquisition of a further 41.7% of PlatMile became effective during the
quarter and as a result PlatMile is now consolidated in the accounts of Aquarius
and 100% of its production became attributable as of 1 September.
Operating cash costs per ounce
4E (Pt+Pd+Rh+Au) 6E (Pt+Pd+Rh+Ir+Ru+Au) 4E net of by-products
(Ni, Cu& Co)
CTRP 16,223 14,853 14,707
Platinum 7,723 6,658 6,006
Mile
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: Everest
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: 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.
CORPORATE MATTERS
Agreement with Anglo American Platinum regarding Siphumele 3
AQPSA and Anglo American Platinum Limited ("Amplats") have entered into an
agreement in terms of which the Siphumelele 3 Shaft and its remaining UG2
resources has been moved from Amplats` Rustenburg operations to the existing
P&SA arrangements currently operating at the Kroondal and Marikana mines.
Siphumelele 3 shaft is a first generation vertical shaft situated on the
boundary of the current Kroondal and Marikana mining areas. In 2009 Amplats
placed the shaft on care and maintenance, after mining out the Merensky Reef in
the area. The Siphumelele 3 mining area will form part of the P&SAs for four
years from 1 July 2011 or until mined out, whichever is sooner.
AQPSA will extract the remaining UG2 reef at the Siphumelele 3 mining area.
Approximately 70% of the remaining UG2 ore reserves will be mined via the
Siphumelele 3 shaft itself, which will be re-commissioned and used to hoist
approximately 55,000 tons per month of PGM ore, and to transport workers and
materials. This ore will subsequently be delivered to the Marikana concentration
plant, which has excess capacity and dense media separation (DMS) capability.
The remaining 30% of the ore will be mined via Kroondal`s Bambanani shaft, and
processed at Kroondal.
Wage settlement with the National Union of Mineworkers (NUM)
AQPSA and MRC have successfully concluded a 2-year wage agreement with NUM in
terms of which workers at Aquarius` South African mines will receive a headline
wage increase, reduced working hours, an increased contribution to their
provident funds and an increased Living Out allowance. The total increase in the
cost to company will be 8.17% in the first year and 8.3% in the second. This
settlement will be back-dated to 1 July 2011.
Convertible Bonds
On 29 September 2011 Aquarius repurchased two tranches of its outstanding
Convertible Bonds due Dec 2015. Each tranche had a face value of $1 million and
was repurchased at $0.94 million. Aquarius does not have a buy back policy but
may repurchase bonds infrequently when the opportunity presents itself.
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: Kroondal
Jenkins Kroon Acting General Manager: Marikana
Augustine Simbanegavi General Manager: Everest
Anthony Joubert General Manager: Blue Ridge
Jan Hattingh General Manager: Engineering
Radesh Sukhdeo General Manager: Process & Environmental
Dave Starley General Manager: Projects
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 September 2011, the Company had in issue: 470,167,206 fully paid common
shares and 265,372 unlisted options.
Substantial Shareholders 30 Number of Percentage
September 2011 Shares
Savannah Consortium 63,254,371 13.45
JP Morgan Nominees Australia 44,728,165 9.51
Limited
HSBC Custody Nominees 38,627,667 8.22
(Australia) Limited
National Nominees Limited 32,57,596 6.93
Main Australian Securities Trading Information
Listing: Exchange (AQP.AX)
Secondary London Stock Exchange ISIN number BMG0440M1284
Listing: (AQP.L)
Secondary JSE Limited (AQP.ZA) ADR ISIN number
Listing: US03840M2089
Convertible Bond ISIN
number XS0470482067
Broker (LSE) (Joint) Broker (ASX) Sponsor (JSE)
Liberum Capital Euroz Securities Rand Merchant Bank
Limited Level 18 Alluvion (A division of
City Point, 1 58 Mounts Bay Road, FirstRand Bank Limited)
Ropemaker Street, Perth WA 6000 1 Merchant Place
London, EC2Y 9HT Telephone: +61 (0) 8 Cnr of Rivonia Rd and
Telephone: +44 (0) 20 9488 1400 Fredman Drive, Sandton
3100 2000 2146
Bank of America Johannesburg South
Merrill Lynch2 King Africa
Edward StLondon, EC1A
1HQTelephone: +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 or AQP 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 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
DMR South African Government Department of
Mineral Resources, 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
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
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
Date: 27/10/2011 08:00:55 Produced by the JSE SENS Department.
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