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AMS
ANANP
AMS - Anglo American Platinum Limited - Abridged audited financial results for
the year ended 31 December 2011 and cash dividend declaration
ANGLO AMERICAN PLATINUM LIMITED
(formerly Anglo Platinum Limited)
Incorporated in the Republic of South Africa
Registration number: 1946/022452/06
JSE code: AMS ISIN: ZAE000013181
ABRIDGED AUDITED FINANCIAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2011 AND CASH
DIVIDEND DECLARATION
KEY FEATURES
- Notwithstanding a 52% reduction in fatalities since 2007,
disappointingly, 12 employees lost their lives in 2011
- Sales volume up 3% to 2.60 million ounces and refined platinum
production down 2% to 2.53 million ounces
- Operating free cash flow increased by 21% to R9,413 million from
R7,783 in 2010
- Operating profit increased by 10% to R7,965 million in 2011 and
adjusted headline earnings up 8% to R20.94 per share
- Unki delivered 51,600 ounces of platinum and reached steady state a
year ahead of schedule
- Cash operating costs were adversely impacted by safety stoppages,
resulting in an increase of approximately 2% above mining inflation,
at 16% year-on-year, to R13,552 per equivalent refined platinum ounce
- Final dividend of R2.00 per share in addition to R5.00 interim
dividend, bringing dividend for the year to R7.00 per share
- Landmark community economic empowerment transaction implemented in
December 2011
Abridged audited financial report in accordance with recognition and measurement
of International Financial Reporting Standards (IFRS)
Anglo American Platinum Limited`s consolidated abridged audited financial
results for the year ended 31 December 2011 has been independently audited by
the Group`s external auditors.The preparation of the Group`s audited results for
the year ended 31 December 2011 was supervised by the Finance Director, Mr B
Nqwababa.
Consolidated statement of comprehensive income
for the year ended 31 December
Audited Audited
2011 % 2010
Notes Rm change Rm
Gross sales revenue 51,484 46,352
Commissions paid (367) (327)
Net sales revenue 51,117 11 46,025
Cost of sales (42,562 (12) (37,991
) )
Gross profit on metal sales 2 8,555 6 8,034
Other net expenditure (182) (405)
Market development and (408) (376)
promotional expenditure
Operating profit 7,965 10 7,253
IFRS 2 Charge - community 3 (1,073) -
economic empowerment transaction
Gain on revaluation of investment
in Wesizwe Platinum Limited
(Wesizwe) 33 -
Profit on disposal of 37%
interest in Western Bushveld
Joint Venture (WBJV) - 788
Gain on listing of Bafokeng- - 4,466
Rasimone Platinum Mine (BRPM)
Interest expensed (216) (318)
Interest received 216 248
Remeasurements of loans and 215 302
receivables
Losses from associates (net of (479) (319)*
taxation)
Profit before taxation 6,661 (46) 12,420
Taxation (2,974) (2,304)
*
Profit for the year 3,687 10,116
Other comprehensive income, net
of income tax
Items that will be reclassified 131 (97)
subsequently to profit or loss
Deferred foreign exchange 557 (240)
translation gains/(losses)
Share of other comprehensive (5) 14
(losses)/income of associates
Net (losses)/gain on available- (421) 129
for-sale investments
Total comprehensive income for 3,818 10,019
the year
Profit attributable to:
Owners of the company 3,591 (64) 9,959
Non-controlling interests 96 157
3,687 10,116
Total comprehensive income
attributable to:
Owners of the company 3,722 9,862
Non-controlling interests 96 157
3,818 10,019
RECONCILIATION BETWEEN PROFIT
AND HEADLINE EARNINGS
Profit attributable to 3,591 9,959
shareholders
Adjustments
Gain on listing of BRPM - (4,466)
Tax effect thereon - 111
Gain on revaluation of investment (33) -
in Wesizwe
Tax effect thereon 3 -
Loss on disposal and scrapping of 27 153
property, plant and equipment
Tax effect thereon (8) (43)
Profit on disposal of 37% - (788)
interest in WBJV
Tax effect thereon - 17
Profit on sale of other mineral (14) (14)
rights and investments
Tax effect thereon - 2
Headline earnings 3,566 (28) 4,931
Number of ordinary shares in 261.1 261.6
issue (millions)
Weighted average number of 261.4 3 254.8
ordinary shares in issue
(millions)
Earnings per ordinary share
(cents)
- Basic 1,374 (65) 3,909
- Diluted 1,363 (65) 3,896
Headline earnings per ordinary
share (cents)
- Headline 1,365 (29) 1,935
- Diluted 1,354 (30) 1,929
* Refer to note 6 for details of the reclassification of these
amounts.
Abridged consolidated statement of financial position
as at 31 December
Audited Audited
2011 2010
Note Rm Rm
s
ASSETS
Non-current assets 68,971 65,408
Property, plant and equipment 44,499 37,438
Capital work-in-progress 12,940 17,065
Investment in associates 6,870 7,339
Investments held by environmental trusts 662 569
Other financial assets 3,931 2,904
Other non-current assets 69 93
Current assets 18,309 18,393
Inventories 12,525 12,558
Trade and other receivables 3,066 2,988
Other assets 419 305
Other current financial assets 3 8
Cash and cash equivalents 2,296 2,534
Total assets 87,280 83,801
EQUITY AND LIABILITIES
Shareholders` equity 56,743 55,018
Non-current liabilities 15,430 19,774
Interest-bearing borrowings 4 939 6,622
Obligations due under finance leases - 1
Other financial liabilities 69 148
Environmental obligations 1,412 1,388
Employees` service benefit obligations 4 -*
Deferred taxation 13,006 11,615
Current liabilities 15,107 9,009
Current interest-bearing borrowings 4 5,019 22
Trade and other payables 6,762 6,190
Other liabilities 1,792 2,042
Other current financial liabilities 183 183
Share-based payment provision 76 108
Taxation 1,275 464
Total equity and liabilities 87,280 83,801
* Less than R500,000
Abridged consolidated statement of cash flows
for the year ended 31 December
Audited Audited
2011 2010
Rm Rm
Cash flows from operating activities
Cash receipts from customers 51,278 45,617
Cash paid to suppliers and employees (38,020) (34,261)
Cash generated from operations 13,258 11,356
Interest paid (net of interest capitalised) (194) (220)
Taxation paid (752) (905)
Net cash from operating activities 12,312 10,231
Cash flows used in investing activities
Purchase of property, plant and equipment (7,504) (7,989)
(includes interest capitalised)
Proceeds from sale of plant and equipment 276 29
Senior loan to Plateau Resources Proprietary (669) -
Limited (Plateau)
Net proceeds on disposal of 13% of Royal - 1,323
Bafokeng Platinum Limited
Proceeds on disposal of interest in WBJV 126 186
Subscription for `N` preference shares in - (273)
Newshelf 848 Proprietary Limited
Loans to associates (263) (260)
Advances made to Plateau for the operating cash (242) (141)
shortfall facility
Other 119 84
Net cash used in investing activities (8,157) (7,041)
Cash flows used in financing activities
Proceeds from the issue of ordinary share 1 18
capital
Share issue expenses on the community economic (29) -
empowerment transaction
Proceeds from the rights offer (net of costs) - 12,404
Purchase of treasury shares for the Bonus Share (387) (270)
Plan (BSP)
Repayment of interest-bearing borrowings and (687) (16,148)
finance lease obligation
Cash dividends paid (3,116) -
Cash distributions to minorities (175) (192)
Net cash used in financing activities (4,393) (4,188)
Net decrease in cash and cash equivalents (238) (998)
Cash and cash equivalents at beginning of year 2,534 3,532
Cash and cash equivalents at end of year 2,296 2,534
Movement in net debt
Net debt at beginning of year (4,111) (19,261)
Net cash from operating activities 12,312 10,231
Net cash used in investing activities (8,157) (7,041)
Other (3,706) 11,960
Net debt at end of year (3,662) (4,111)
Abridged consolidated statement of changes in equity
for the year ended 31 December
Non-
Other Retained controlling
equity earnings interests Total
Rm Rm Rm Rm
Balance at 31 December 2009 9,029 23,109 495 32,633
(audited)
Total comprehensive income (111) 9,973 157 10,019
for the year
Deferred tax charged (28) (28)
directly to equity
Proceeds from rights offer 12,404 12,404
(net of transaction costs)
Transfer of prior year
translation differences on
net
investment in foreign (121) 121 -
subsidiary
Rights offer shares (30) 30 -
subscribed for by the Group
ESOP
Cash distributions to (192) (192)
minorities
Ordinary shares issued 18 18
Issue of shares to certain
former preference
shareholders 88 (88) -
Shares acquired in terms of
the BSP - treated as
treasury shares (270) (270)
Shares vested in terms of 30 (30) -
the BSP
Equity-settled share-based 475 475
compensation
Shares purchased for (41) (41)
employees
Balance at 31 December 2010 21,037 33,521 460 55,018
(audited)
Total comprehensive income 136 3,586 96 3,818
for the year
Deferred tax charged (1) (1)
directly to equity
Transfer of prior year
translation differences
on net investment in 21 21
foreign subsidiary
Cash distributions to (175) (175)
minorities
Cash dividends paid (3,116)
(3,116)
Gain on variation of 25 25
interests in associate
Issue of shares - community (28) (28)
economic empowerment
transaction
Shares acquired in terms (387) (387)
of the BSP - treated as
treasury shares
Shares vested in terms of 49 (49) -
the BSP
Equity-settled share-based 1,073 1,073
compensation - community
economic empowerment
transaction
Equity-settled share-based 525 525
compensation
Shares purchased for (30) (30)
employees
Balance at 31 December 2011 20,828 35,534 381 56,743
(audited)
Segmental information
for the year ended 31 December
Net sales Operating Depreciation
revenue contribution
2011 2010 2011 2010 2011 2010
Rm Rm Rm Rm Rm Rm
Operations
Bathopele Mine 2,284 2,526 548 701 309 299
Khomanani Mine 1,925 1,709 234 129 207 182
Thembelani Mine 2,055 1,735 396 292 210 165
Khuseleka Mine 2,538 2,275 341 299 236 209
Siphumelele Mine 1,865 1,590 381 178 229 200
Tumela Mine 5,285 5,162 1,481 1,831 476 460
Dishaba Mine 2,995 2,634 701 609 278 260
Union Mine+ 5,126 5,099 1,062 1,331 472 488
Union North Mine 1,844 338 164
Union South Mine 3,282 724 308
Mogalakwena Mine 8,403 6,187 3,413 1,927 1,332 1,321
Twickenham Platinum 36 70 16 (155) 1 34
Mine
Unki Platinum Mine 946 - 287 - 104 -
Modikwa Platinum 1,415 1,304 312 270 165 156
Mine
Kroondal Platinum 2,095 2,202 536 730 65 67
Mine
Marikana Platinum 544 636 42 128 27 30
Mine
Mototolo Platinum 1,066 983 329 325 98 81
Mine
Bafokeng-Rasimone - 1,019 - 176 - 121
Platinum Mine*
38,578 35,13 10,079 8,771 4,209 4,073
1
Western Limb 753 672 240 179 92 85
Tailings Retreatment
(WLTR)
Masa Chrome 474 376 451 356 2 2
Total - mined 39,805 36,17 10,770 9,306 4,303 4,160
9
Purchased metals 11,312 9,846 597 913 224 161
51,117 46,02 11,367 10,219 4,527 4,321
5
Other costs (2,812 (2,185
) )
Gross profit on 8,555 8,034
metal sales
*Bafokeng-Rasimone Platinum Mine was equity accounted from 8
November 2010.
+ Union Mine was successfully reorganised into two separate mines,
namely Union North Mine and Union South Mine, during 2011.
Notes to the abridged consolidated financial statements
for the year ended 31 December
1. The abridged financial information is in accordance with the framework
concepts and the measurement and recognition requirements of IFRS, the South
African Statements and Interpretations of Statements of Generally Accepted
Accounting Practice (AC 500 Series) and the requirements of the Companies Act of
South Africa. It also contains the information required by International
Accounting Standard 34 - Interim Financial Reporting. The accounting policies
are consistent with those applied in the financial statements for the year ended
31 December 2010, except for the adoption of the May 2010 annual improvements to
IFRS in the period under review. These changes did not have a material impact on
the financial results of the Group.
Audited Audited
2011 2010
Rm Rm
2. GROSS PROFIT ON METAL SALES
Gross sales revenue 51,484 46,352
Commissions paid (367) (327)
Net sales revenue 51,117 46,025
Cost of sales (42,562) (37,991)
On-mine (25,237) (23,227)
Cash operating costs (21,950) (19,919)
Depreciation (3,243) (3,275)
Deferred waste stripping (44) (33)
Purchase of metals and leasing activities (9,193) (9,215)
Smelting (2,801) (2,574)
Cash operating costs (2,045) (1,846)
Depreciation (756) (728)
Treatment and refining (2,316) (1,785)
Cash operating costs (1,788) (1,467)
Depreciation (528) (318)
(Decrease)/increase in metal inventories (203) 995
Other costs (2,812) (2,185)
Gross profit on metal sales 8,555 8,034
Gross profit margin (%) 16.7 17.5
3. IFRS 2 CHARGE - COMMUNITY ECONOMIC EMPOWERMENT TRANSACTION
Anglo American Platinum shareholders approved a broad-based
community economic empowerment transaction involving certain
Anglo American Platinum host communities on 14 December 2011.
In terms of this transaction, Anglo American Platinum
established a trust (Lefa La Rona Trust) through which the
certain mine host communities will hold a participation
interest. Anglo American Platinum has subsequently issued
6,290,365 Anglo American Platinum ordinary shares (the
subscription shares) on 14 December 2011 to Lefa La Rona
Trust (the transaction). The subscription shares have been
issued subject to a notional vendor finance (NVF) mechanism.
The transaction value is R3.5 billion and equates to a 2.33%
ownership interest in Anglo American Platinum at the date of
announcement.
The key terms of the transaction are included in the circular
sent to shareholders on 14 November 2011. The actual economic
cost of the transaction has been determined in accordance
with IFRS 2 - Share-based payments. The economic cost was
determined using a Monte Carlo simulation option pricing
model for valuing the option and was done using available
market-sourced data and an estimation of future dividend
yields at given dates, to determine the expected future
ordinary share prices. These amounts were then discounted to
the present resulting in an IFRS 2 charge of R1,073 million
which has been expensed, in full, on the effective date.
The share-based payment charge was calculated using the
following key assumptions:
Risk-free interest rate 5.20%
Expected volatility 43.55%
Expected dividend yield 3.00%
Notional funding rate (naca) 9.50%
Market price of an Anglo American Platinum ordinary R520.02
share at effective date
2011 2011 2010 2010
Rm Rm Rm Rm
Facility Utilised Facility Utilise
d
amount amount amount amount
4. INTEREST-BEARING
BORROWINGS
Committed 20,169 5,958 21,491 6,644
Uncommitted 4,805 - 4,730 -
24,974 5,958 26,221 6,644
Disclosed as
follows:
Current interest- 5,019 22
bearing borrowings
Interest-bearing 939 6,622
borrowings
5,958 6,644
The weighted average borrowing rate at 31 December 2011 was
6.60% (2010: 6.31%).
R9,498 million (2010: R15,812 million) of the facilities are
committed for one to five years, R3,050 million (2010: R1,607
million) is committed for a rolling period of 364 days, while
the rest is committed for less than 364 days.
5. CHANGES IN ACCOUNTING ESTIMATES FOR INVENTORY
During the year, the Group changed its estimate of the
quantities of inventory based on the outcome of a physical
count of in-process metals. The Group runs a theoretical metal
inventory system based on inputs, the results of previous
counts and outputs. Due to the nature of in-process
inventories being contained in weirs, pipes and other vessels,
physical counts only take place once per annum, except in the
PMR which takes place once every three years.
This change in estimate has had the effect of increasing the
value of inventory disclosed in the financial statements by
R417 million (2010: decrease of R520 million). This results in
the recognition of an after-tax gain of R300 million (2010:
loss of R374 million).
6. RECLASSIFICATION OF COMPARATIVE FIGURES
During the current period, the Group changed its disclosure of
taxation arising on equity-accounted earnings. Previously, the
associates` share of taxation was included in the Group`s
taxation expense on the statement of comprehensive income.
Losses from associates are now reflected net of the Group`s
share of the associates` taxation. This resulted in the losses
from associates reducing by R107 million for the year ended 31
December 2010 and the Group`s taxation expense increasing by
the corresponding amount.
7. POST-BALANCE SHEET EVENT
Subsequent to year end, the Group and Anooraq concluded a
binding term sheet for the restructure, recapitalisation and
refinancing of Anooraq Resources Corporation and Bokoni
Platinum Holdings Proprietary Limited. The detailed terms have
been included in a joint announcement to shareholders dated 2
February 2012. The implementation of the transaction is
subject to the fulfilment of certain conditions precedent
including regulatory approval. This transaction will be
accounted for once these conditions have been fulfilled.
8. CORPORATE GOVERNANCE
The Board reaffirms its commitment to sound governance
ensuring that business is conducted in accordance with high
standards of corporate governance, using risk management and
control in accordance with local and internationally accepted
corporate practice. These standards are well embedded in the
Group`s system of internal controls, which complies with the
King III recommendations and the governance requirements of
the 2008 Companies Act which came into effect on 1 May 2011.
Anglo American Platinum Limited applies the King III
principles set out in the new Code and identified the
following areas of governance requiring attention:
Enhanced governance of information technology by the Board.
Revising the Governance Compliance Framework which governs the
relationship between the company and its holding company,
Anglo American plc.
Cynthia Carroll, chief executive of Anglo American plc serves
as chairman of the Board. As the chairman is non-independent,
the Board appointed Valli Moosa as lead independent non-
executive director/deputy chairman, supported by six other
independent non-executive directors, who provide a robust
Board structure to ensure good governance. To ensure further
clarity of roles, the Board has adopted a Statement of
Division of Responsibilities among the chairman, the lead
independent non-executive director and the chief executive
officer, which clearly sets out the responsibilities of each
individual`s role and is available on the company`s website.
This allows for a clear balance of power and authority at
Board of directors` level to ensure that no one director has
unfettered powers of decision-making.
9. AUDITOR`S REVIEW
The annual report from which the abridged annual results have
been extracted has been audited by the company`s auditors,
Deloitte & Touche. The audit was performed in accordance with
ISA 810, "Engagements to Report on Summary Financial
Statements". Their unmodified report is available for
inspection at the company`s registered office. Any reference
to future financial performance, included in this
announcement, has not been reviewed or reported on by the
company`s auditors.
Consolidated statistics*
Supplementary information
TOTAL OPERATIONS 2011 2010
Marketing
Average market prices
achieved
Platinum US$/oz 1,707 1,611
Palladium US$/oz 735 507
Rhodium US$/oz 2,015 2,424
Gold US$/oz 1,556 1,259
Nickel US$/lb 10.50 9.70
Copper US$/lb 4.04 3.23
US$ basket price - Pt
(net sales revenue per Pt oz US$/oz Pt 2,698 2,491
sold) sold
US$ basket price - PGM
(net sales revenue per PGM oz US$/oz PGM 1,510 1,336
sold) sold
Platinum R/oz 12,426 11,733
Palladium R/oz 5,322 3,690
Rhodium R/oz 14,642 17,731
Gold R/oz 11,504 9,106
Nickel R/lb 75.42 71.23
Copper R/lb 29.02 23.62
R basket price - Pt
(net sales revenue per Pt oz R/oz Pt sold 19,595 18,159
sold)
R basket price - PGM
(net sales revenue per PGM oz R/oz PGM sold 10,968 9,740
sold)
Exchange rates
Average exchange rate ZAR/US$ 7.2625 7.2890
achieved on sales
Exchange rate at end of the ZAR/US$ 8.1055 6.6031
year
Ratio analysis
Gross profit margin (%) 16.7 17.5
Operating profit as a % of 14.0 14.0
average operating assets
Return on average 6.6 23.1
shareholders` equity (%)
Return on average capital 12.5 12.5
employed (%)
Current ratio 1.2:1 2:1
Debt:equity ratio 1:9.5 1:8.3
Interest cover - EBITDA 23.1 11.8
Debt coverage ratio 2.2 1.7
Net debt to capital employed 6.1 7.0
(%)
Interest-bearing debt to 10.5 12.1
shareholders` equity (%)
Net asset value as a % of 39.6 30.1
market capitalisation
Effective tax rate (%) 44.6 18.6
Unit cost performance
Cash operating cost per
equivalent refined
Pt ounce1 R 13,552 11,730
Cash operating cost per R 12,869 11,336
refined Pt ounce
Cost of sales per total Pt R 16,306 14,986
ounce sold2
Equivalent refined platinum 2,410.1 2,484.0
production
Pipeline stock adjustment 35.5 (34.0)
Refined platinum production (2,530.1) (2,569.9
)
Mining (1,943.4) (1,989.3
)
Purchases of concentrate (586.7) (580.6)
Platinum pipeline movement (84.5) (119.9)
*Not reviewed or audited.
Cash operating cost per equivalent refined platinum ounce
excludes ounces from purchased concentrate and associated costs.
Squared Total platinum ounces sold = refined platinum ounces sold
plus platinum ounces sold in concentrate.
COMMENTARY
SAFETY
It is with great sadness that we have to report that twelve of our employees
lost their lives during the period. We extend our sincere condolences to their
families, friends and colleagues. The major causes of the fatalities were falls
of ground, tramming and transport related incidents and explosives management.
Even though there has been an improvement of 20% in injuries related to falls of
ground, our major risk area, an increase in low energy incidents (slip and fall,
twisting of ankle, bumps, scrapes and hand and foot injuries) resulted in a
slight increase in the lost-time injury frequency rate (LTIFR) to 1.27 in 2011
from 1.17 in 2010. While this is disappointing, it is encouraging that the
severity of the these injuries has decreased. The severity index (calculated
as days lost divided by lost-time injuries) declined by 8% to 40.1 in 2011 from
43.6 in 2010. In addition, the management systems, engineering and technological
solutions introduced to prevent the traditional causes of injury and death,
falls of ground, tramming and transport incidents and inundations, have shown
remarkable results.
Consistent with peers in the industry, there was a significant increase in the
number of safety stoppages during the year. In 2011, there were 81 safety
stoppages in our own operations, compared with 36 in 2010. There have been more
safety stoppages in 2011 than in any of the last three years. We continue to
work relentlessly with our partners in Government and our workforce to implement
more effective means of addressing major risks and non-compliance to standards.
Our Safety Strategy has four main pillars: Appropriate safety management
systems, Engineering out the Risk, Developing appropriate behavior, and Wellness
in the Workplace. This strategy had improved our safety performance since 2007.
We have reduced fatalities and the LTIFR by 52% and 37% respectively since 2007.
We have also increased self-imposed localised safety stoppages by 46% in 2011.
Anglo American Platinum halted production on 03 November 2011 for the CEO safety
day and to emphasize the importance of safety. While 2011 has been a step
backward, the overall trend remains positive as our safety performance during
the period is still the second best year we have had. The journey to zero harm
remains our key strategic objective.
However, in light of our performance in 2011, we have comprehensively reviewed
our safety strategy using internal and external experts. While the overall
program is still sound, we have adjusted our priorities within the program to
specifically target the recurring agencies that contribute to injuries and
fatalities.
MINERALS LEGISLATION, TRANSFORMATION AND COMMUNITIES
Anglo American Platinum has made significant progress towards achieving its
transformation objectives as envisaged by the Minerals and Petroleum Resources
Development Act (MPRDA) and the revised Mining Charter. The key milestones
achieved in support of our Social and Labour Plans include the following:
12% women in mining, compared with the 10% requirement; (While it is still a
challenge to fill underground mining positions with women, in management we have
done better: Top management 22%, senior management 11%, middle management 21%
and junior management 20%);
54% historically disadvantaged South Africans (HDSA) in management positions,
compared to the 40% Charter requirement; (Top management 44%, senior management
41%, middle management 56% and junior management 63%);
HDSA procurement of R10.4 billion, up from R8.2 billion reported for 2010,
equating to 42% spend with HDSA suppliers in 2011; and
Three years ago, we committed ourselves to promoting employee home ownership and
entered into a partnership with the then Department of Housing to build 20,000
housing units for our employees. To date 1300 stands have been fully serviced,
some 300 housing units have been built and 250 of them are now occupied by proud
homeowners. The company will be embarking on a "rent to buy" program during the
first quarter of 2012 which will see more of our employees converted to
homeowners.
We have a clear and transformational plan which has evolved beyond the recording
of numbers to focusing on creating a "great place to work", and being the
employer of choice. This includes creating the right culture within the company
and a focus on increasing women participation in mining.
Anglo American Platinum recognises the importance and impact of sustainability
on our core business and we track our sustainability targets. Notable
achievements include reductions in our water consumption and that we did not
have any level two or three environmental incidents in 2011.
Anglo American Platinum implemented a landmark mine host community economic
empowerment transaction in December 2011. The company has facilitated the
funding of the purchase of 6.3 million ordinary shares by certain mine host
communities and historical labour sending areas. The shares equate to
approximately 2.33% ownership interest in Anglo American Platinum, at the date
of the announcement of the transaction, and will be housed in the Lefa La Rona
Trust on behalf of mine host communities. The market value of the shares, funded
by a notional vendor finance structure, at the time of the transaction, was R3.5
billion.
We recently announced the refinancing of Anooraq Resources Corporation
("Anooraq") and the restructuring and recapitalisation of Bokoni Platinum
Holdings. The company will, through a series of related transactions, acquire
the whole of the Boikgantsho project and the eastern section of the Ga-Phasha
project. On implementation of these transactions the effective net consideration
of R1.7 billion received by Anooraq will be applied to reduce it`s approximately
R3.0 billion debt owing to Anglo American Platinum.
The transactions underscore the company`s commitment to empowerment and
community development. Anglo American Platinum believes that these transactions
and the related development dialogue with the mine host communities will mark a
significant step towards true broad-based and sustainable empowerment and the
ongoing development of the beneficiaries.
FINANCIAL REVIEW
Operating profit increased by 10% to R7,965 million from R7,253 million in 2010,
mainly due to higher sales and a stronger average realised basket price. Refined
platinum sales for the year increased by 3% to 2.60 million ounces despite a
higher number of safety stoppages. This is due to increased reliability and
efficiency of our smelters, as depicted by the absence of any major incident for
the past three years. The strong performance from our smelters played a key
role in the achievement of our 2011 annual sales volume target of 2.6 million
ounces.
The average dollar basket price achieved improved by 8% from US$2,491 per ounce
in 2010 to US$2,698 per ounce. However, the exchange rate achieved over the last
financial year was R7.26, largely unchanged over the same period (R7.29 in
2010). As a result, the realised average Rand basket price in 2011 was R19,595
per platinum ounce, an increase of 8% compared with the 2010 basket price of
R18,159.
Cash operating cost per equivalent refined platinum ounce increased by 16% to
R13,552 primarily due to lower production volumes and increases in the cost of
electricity, labour and consumables which materially exceeded the escalation in
the mining producer price index of 14%. Cash operating cost per equivalent
refined platinum ounce would have been contained at approximately R13,000 had
the 109,212 ounces of platinum not have been lost due to undue scope of safety
stoppages. We have also managed to keep the cash operating cost per equivalent
refined platinum ounce essentially flat in real terms, between R11,000 and
R12,000, between 2008 and 2010. Cost of sales per platinum ounce sold increased
by 8%.
To mitigate the industry-wide cost pressures, Anglo American Platinum continued
to focus on asset optimisation and supply chain management and increasing lower
cost production from Mogalakwena mine. As a result, operating margin for mining
and retreatment activities improved from 25.7% in 2010 to 27.1% in 2011.
Furthermore, despite various challenges, gross profit margin was 17%, consistent
with 2010 gross profit margin of 18%.
Operating free cash flow increased by 21% compared to 2010. The company
generated R1,902 million more cash than in 2010. This was achieved as a result
of an 8% improvement in the Rand basket price, a 3% increase in Platinum sales
volumes and a 23% reduction in net working capital days. In addition capital
discipline continues to improve. As a result, a final dividend of R2.00 per
share, amounting to a total dividend of R532 million, was declared. This implies
a dividend cover of 2.5 times, after adjusting for the once-off share based
payment charge on the community economic empowerment transaction, for the
financial year 2011. This is in line with our targeted dividend cover of between
2 and 3 times. The dividend declared will be paid on 19 March 2012.
In line with the improvement in operating free cash flow, net debt decreased by
11% to R3.66 billion from R4.11 billion at the end of December 2010. The
strength of the balance sheet continues to improve with gearing declining from
56% in 2008 to 11% in 2011. This reflects positively on the effectiveness of the
restructuring initiatives implemented in 2008 which improved the company`s cash
generation and the equity raising of 2009.
Headline earnings per ordinary share decreased by 29% year-on-year to R13.65.
This was primarily due to the impact of a once-off accounting charge for the
broad-based community economic empowerment transaction (R1.07 billion), which
more than offset the increase in operating profit. Headline earnings per
ordinary share excluding the once-off accounting charge for the broad-based
community economic empowerment transaction (R1.07 billion), the US$10 million
donation to the Tongogara district community in Zimbabwe and other once-off
costs increased by 8% to R20.94 from R19.35 in 2010. Headline earnings for 2010
excluded the R771 million profit on the disposal of our 37% interest in the
Western Bushveld Joint Venture and an after-tax gain of R4.4 billion on the
listing of Bafokeng Rasimone Platinum Mine (BRPM).
Labour productivity of our underground mines was adversely affected by safety
related stoppages. Measured as square meters per total operating employee per
month, the average for the period was 6.32m2 compared to 7.06m2 in 2010, a
decrease of 10%. This is 4.2% lower than our targeted average labour
productivity for 2011 of 6.6 m2 despite the 81 safety stoppages at own
operations seen during 2011. While 2011 was a particularly challenging year for
our underground operations, labour productivity improved by 23% to 7.06m2 in
2010 from 5.73m2 in 2008. We have restructured the operating base of the company
from over 85,000 employees and contractors in 2008 to 58,000 in 2011.
MARKETS
The global platinum market displayed resilience in 2011 with muted growth in
autocatalyst and jewellery demand, a strong increase in industrial demand and
much lower investment demand. Gross platinum demand remained unchanged while a
small increase in recycling and a 5% increase in mined supply resulted in the
platinum market in 2011 remaining in balance.
The palladium market in 2011 however saw a 19% supply surplus where solid
increases in demand for palladium in autocatalysis and industrial applications
could not offset the significant declines in jewellery and investment demand.
The rhodium market saw its fourth consecutive surplus as recycle volumes remain
high.
Anglo American Platinum worked with industry partners and stakeholders to
continue developing the platinum markets to maintain existing, and develop new
industrial applications and through Platinum Guild International, maintain the
health of jewellery markets.
Autocatalysts
Demand for light vehicles increased by 1% in 2011 to 75 million units. Vehicle
production was constrained by the earthquake and tsunami in Japan and by
flooding in Thailand. Vehicle production in Europe increased by 3%, buoyed by
Germany and export markets. Gross autocatalyst demand for platinum increased by
2% to 3.15 million ounces and for palladium increased by 5% to 5.8 million
ounces. Autocatalyst demand for rhodium was slightly lower year-on-year at
705,000 ounces.
Industrial
Gross industrial demand for platinum attained a new record high of 1.96 million
ounces, largely due to growth in the glass and petroleum industry. Wider
application of process catalysts in the chemical industry saw platinum demand
increase proportionately higher than the corresponding increase in chemical
demand. High fuel cell unit growth driven by competitive stationary applications
continued in 2011. Palladium process catalyst use for plastic bottle feedstock
increased as new capacity increased. Rhodium content in rhodium / platinum
catalysts for glass manufacturing increased at low rhodium price levels.
Jewellery
Platinum jewellery demand in 2011 increased 2% despite higher average prices
during the year. Platinum and gold price volatility increased in the last
quarter of 2011 and the platinum price fell to below that of gold. Increased
platinum demand resulted from consumer preference over gold and in China the
increased gold demand improved retail profits, leading to a further increase in
the number of new retail stores - increasing platinum stockholding and sales.
Investment
Ongoing macro-economic uncertainty continues to dampen investment sentiment and
in the last quarter of 2011 platinum and gold suffered the consequences of the
risk averse trades by global investment and hedge funds. Although there was
little change in physical demand for platinum, the increased platinum trading
liquidity greatly exaggerated the consequent fall in the platinum price. Since
then reduced investor participation, particularly by gold investors who
previously held both metals, continues to keep the platinum price at depressed
levels - with the rand basket price below the incentive price of the majority of
production. Trade in non-visible or over-the-counter metal continues to have a
material impact on short-term prices and price volatility at higher levels than
those experienced in 2011 is expected in 2012, with bias to higher prices if
investment sentiment improves.
OPERATIONS
Refined platinum production decreased by 2% to 2.53 million ounces in 2011
compared to the same period in 2010.
Equivalent refined platinum production (equivalent ounces are mined ounces
expressed as refined ounces) from the mines managed by Anglo American Platinum
and its joint venture partners for the year ended 31 December 2011 was 2.41
million ounces, a decrease of 3% compared to 2010.
Equivalent refined platinum production from wholly owned mines increased by
3,000 ounces to 1,560 koz in 2011. Mogalakwena mine increased output to 306,300
platinum ounces, up 18% year on year due to higher head grade and improved
recoveries. Unki mine delivered 51,600 new platinum ounces while production from
other underground operations decreased by 7% or 94,800 ounces to 1,202 koz from
1,297 koz in 2010. Operational performances were largely impacted by regulator
imposed safety stoppages. This was further exacerbated by, an unprotected strike
at Bathopele Mine, and other short term operational challenges across the mines.
Joint ventures and associates were also impacted by regulator imposed safety
stoppages and short term operational challenges with production volume down 8%
from 790,300 ounces to 729,400 ounces in 2011. Equivalent refined platinum
ounces purchased from third parties decreased by 14% to 79,000 from 92,000
ounces in 2011 due to decline in receipts from Eland Platinum mine.
The overall 4E built-up head grade was 3.24g/t compared with 3.23g/t in 2010
despite an increase in the milling of lower grade surface stockpiles and new
medium grade ore from Unki mine. The 4E built-up head grade at Mogalakwena mine
increased by 12% from 2.60g/t in 2010 to 2.91g/t in 2011 while the Merensky 4E
built-up head grade declined 2% to 5.11g/t over the same period. The 4E built-up
head grade for UG2 increased 1% to 3.80g/t during 2011.
Tonnes milled decreased by 2% to 41.5 million in 2011 due to a higher number of
safety stoppages and operational challenges which resulted in lower production
at Amandelbult, Union and Rustenburg mines. Included in the comparative 2010
tonnes milled number is some 666,000 tonnes from Bafokeng Rasimone mine (BRPM)
now reported as an associate mine. The decline in production from underground
operations was partly offset by increased volumes from Mogalakwena and surface
materials as well as new production from Unki.
Planned maintenance was carried out at Waterval and Polokwane furnaces to
inspect and replace end-walls. The Mortimer furnace was shutdown in the second
half of the year to carry out technical enhancements and a power upgrade to
38MW, providing the group with enhanced smelting flexibility.
OWN MINES
Anglo American Platinum had a very challenging year, with a high number of
safety related stoppages. There were 81 safety related stoppages at wholly owned
operations during 2011 compared with 36 in 2010. While we agree with the need
for the regulator to stop operations for non-compliance, the key issue is the
nature of stoppages and their effectiveness in addressing real risks. The
regulator moved from localized stoppages to shutting down entire shafts or mines
and this resulted in higher production losses.
As a result, 101,068 ounces of platinum, compared with 34,359 in 2010 were lost
due to non fatality related and non localized safety stoppages. The company also
lost 37,147 ounces, compared with 17,115, as a result of fatality related safety
stoppages. In total, Anglo American Platinum lost 138,215 platinum ounces in
2011 due to safety stoppages, compared with 51,474 ounces in 2010. The higher
number of safety stoppages resulted in lower production at Amandelbult, Union
and Rustenburg mines. The own mines division suffered the loss of 11 employees
across its operations in 2011 while processing division lost 1 employee over the
same period.
The key highlights for the own mines division in 2011 include the successful and
early commissioning of Unki platinum mine, significant improvement in recoveries
and 4E built-up head grade at Mogalakwena mine, the re-organisation of Union
mine into two separate entities namely Union North and Union South mines and the
reopening of the Khuseleka 2 shaft.
Individual operational performances were as follows:
Bathopele
Disappointingly, two employees lost their lives at Bathopele mine during 2011.
The lost-time injury frequency rate however improved by 23% in 2011 to 0.84 from
the 1.09 achieved in 2010.
Equivalent refined platinum production decreased by 19% to 112,500 ounces in
2011 as a result of safety related stoppages and unprotected industrial action
partly offset by a higher 4E built-up head grade.
Khomanani
Khomanani mine achieved a record four fatality free years and four million fatal
free shifts respectively during the first half of 2011. Regrettably, two
employees lost their lives in 2011. The lost -time injury frequency rate
deteriorated to 1.49 in 2011, up 11% compared with 2010.
Output of equivalent refined platinum production decreased by 2% to 97,200
ounces primarily due to lower grades and safety stoppages.
Thembelani
Disappointingly, two employees lost their lives at Thembelani mine during 2011.
However, the mine achieved in excess of four million shifts without a fall-of-
ground incident. The lost-time injury frequency rate deteriorated to 2.05, a 34%
regression from the rate achieved in 2010.
Equivalent refined platinum production increased by 6% to 101,200 ounces from
95,600 ounces in 2010 as a result of a 2% increase in tonnes milled and a 3%
improvement in 4E built-up head grade.
Khuseleka
The mine achieved 3.7 million fatality-free shifts in 2011. The lost-time injury
frequency rate however deteriorated to 1.65, up 16% from 2010.
Production at 126,500 equivalent refined platinum ounces was down 2% in 2011
compared to 2010 as a result of operational challenges, safety stoppages and an
underground fire experienced at Khuseleka 1 shaft. These production losses were
offset by 23,400 new ounces from the re-opened Khuseleka 2 shaft where
production ramp-up is progressing according to schedule.
Siphumelele
Siphumelele mine achieved one million fatality free shifts during the fourth
quarter of 2011. The lost-time injury frequency rate deteriorated by 31% year on
year to 2.61.
Equivalent refined platinum production increased by 2% to 96,000 due to
increased processing of low grade surface stockpiles. The 4E built-up head grade
from underground sources was unchanged at 4.58g/t while the overall grade
decreased by 24% to 3.85g/t as a result of the increased treatment of surface
material.
Tumela
Tumela mine achieved two million fatality-free shifts in August 2011.
Regrettably, one employee lost his life at Tumela mine following the achievement
of this milestone. The lost-time injury frequency rate improved by 10% to 1.60
in 2011 compared to the 1.77 achieved in 2010.
The equivalent refined platinum production decreased by 11% to 264,000 ounces
principally due to safety stoppages, lower 4E built-up head grade and decreased
processing of surface material. Tonnes milled decreased by 7% to 4.2 million
tonnes while the 4E built-up head grade declined by 3.0% to 3.91 g/tonne as a
result of an increase in development on the UG2 reef horizon to establish
sufficient ore reserves.
Dishaba
Disappointingly, a winch operator was fatally injured by falling objects on 13
January 2011. The lost-time injury frequency rate deteriorated by 2% to 1.94 in
2011 compared with 1.90 in 2010.
Equivalent refined platinum production at 150,300 ounces was 1% below that
achieved in 2010 despite the increase in safety stoppages experienced during
2011.
Union
The management of the Mine was successfully restructured into Union North and
Union South mines during the last quarter of 2011 and henceforth will be
reported as two separate entities. Commentary for 2011 will be on a consolidated
basis with some reference to the individual mines performances. From 2012 full
individual operational reports will be available.
Disappointingly, two employees lost their lives at Union mine during 2011. The
lost-time-injury frequency rate for North Mine deteriorated to 1.30 from 1.41 in
2010 while South Mine recorded the lost-time-injury frequency rate of 1.34
compared with 1.29 in 2010.
The equivalent refined platinum production for the combined mine decreased by
13% to 254,200 ounces (North Mine: 91,500 and South Mine: 162,700) in 2011. This
was due to safety stoppages, expected decline in Merensky ore mining, a decrease
in low grade surface sources as well as operational issues at the declines.
Mogalakwena
Mogalakwena mine had no fatalities in 2011 and has achieved 1.85 million
fatality-free shifts. The loading, hauling and blasting teams have achieved five
years lost-time injury free shifts in May 2011. The challenge for Mogalakwena
was the high number of minor incidents like slip and fall, twisting of ankle,
bumps and scrapes in non-production areas. The mine incurred eight lost-time
injuries during 2011 resulting in a frequency rate of 0.48 compared with 0.40 in
2010.
Equivalent refined platinum production increased to 306,300 ounces, up 18% on
2010. This was due to a 12% improvement in 4E built-up head grade, a 4% increase
in tonnes milled and a 16% improvement in recoveries at North concentrator
during the second half of 2011. The throughput constraints previously
experienced at the North concentrator have been resolved and the plant is now
running at steady state level.
Unki
Regrettably, one employee was fatally injured on 7 April 2011 in a fall of
ground incident. The mine achieved a 0.18 lost-time injury frequency rate in
its first year of production compared with a rate of 0.13 during project phase
in 2010.
Equivalent refined platinum production was 51,600 for the year exceeding ramp-up
expectations. The mine milled 1.3 million tonnes for the year at an average
of107,000 tonnes per month reaching and exceeding concentrator plant capacity of
120,000 tonnes per month in the last quarter of 2011.
JOINT VENTURE AND ASSOCIATE MINES
The joint venture operations and associates had a challenging production period
due largely to regulatory safety stoppages, with the lost-time injury frequency
rate per 200 000 hours deteriorating 9% from 0.85 in 2010 to 0.93 in 2011. There
were 50 safety stoppages at joint venture and associate mines during 2011. The
joint venture operations and associates lost 23,776 ounces of platinum in 2011
due to non fatality related safety stoppages and 1,892 ounces as a result of
fatality related safety stoppages. In total, joint venture operations and
associates lost 25,668 platinum ounces in 2011 due to safety stoppages. The
higher number of safety stoppages resulted in lower production for the joint
venture and associates mines.
The individual operational performance reflects the challenges experienced
during 2011.
JOINT VENTURE MINES
Modikwa
Production decreased by 4% to 124,800 equivalent refined platinum ounces
compared with 2010 due to lack of immediately available and stopable Ore
Reserves and regulator imposed safety stoppages. Modikwa achieved eight million
fatality free shifts on the 21 June 2011 and set a new benchmark for mine safety
in South Africa.
Kroondal
Production was down 18% to 208,600 equivalent refined platinum ounces in 2011
compared to 2010 due to the implementation of more stringent support standards
which disrupted mining cycles, regulatory safety stoppages and lack of stoping
face availability. Unfortunately, Kroondal had one fatality in 2011, prior to
which two million fatality free shifts were recorded.
Marikana
Production at 60,400 equivalent refined platinum ounces was down 19% in 2011
compared to 2010 due to regulator imposed safety stoppages, the implementation
of more stringent ground support standards and new mining layout.
Mototolo
Production increased by 1% to 109,400 equivalent refined platinum ounces
compared to 2010. Production at the higher grade Borwa Shaft declined as a
result of the shaft developing through a dyke and fault zone. The decline in
production at Borwa was however supplemented by increased production from the
lower grade Lebowa shaft. Regrettably Mototolo had its first fatality since
inception in 2011.
ASSOCIATE MINES
BRPM
Production decreased by 2% to 180,000 platinum ounces during 2011 due to a two
week strike by contractors, regulator imposed safety stoppages and a conveyor
belt failure at North Shaft. BRPM had no fatalities in 2011.
Bokoni
Production for the year ended 31 December 2011 was 5% lower compared to 2010.
Production was impacted by regulator imposed safety stoppages, lack of mining
flexibility and lower head grade resulting from challenging geological
conditions. Regrettably, a fatality occurred at Bokoni in 2011. Remediation
action will continue until a consistent level of production is maintained.
Following the recently announced refinancing, restructuring and
recapitalisation, Anooraq and Bokoni mine are now set up for sustainable
operational turnaround and growth.
CAPITAL EXPENDITURE PROJECTS
Our capital projects division has achieved a record 871 fatality free days. A
major safety focus is ensuring projects are set up in line with the company
safety management system and standards.
Capital expenditure for 2011, excluding capitalised interest, amounted to R7,141
million, a decrease of 1% or R103 million from 2010. Stay-in-business capital
expenditure was R3,282 million - R308 million higher than in 2010 due to safety
related spend. However, waste stripping capital expenses at our Mogalakwena Mine
decreased to R563 million in 2011 from R599 million in 2010. Project capital
expenditure was R3,296 million, down 10% or R375 million from the 2010 figure.
Interest capitalised was R363 million, down 51% or R382 million from the
previous year.
The majority of the project capital expenditure for 2011 was invested on the
Twickenham Platinum Mine, the Mortimer Furnace Upgrade, the Unki Platinum Mine,
the Base Metal Refinery 33 kt nickel expansion, the Thembelani 2 shaft
replacement project and the Khuseleka ore replacement project.
The Unki Platinum Mine was handed over to operations in January 2011 and has
reached steady state production of 120,000 tonnes milled per month during the
fourth quarter of 2011, a year ahead of schedule. Housing construction
commenced in 2011 and is planned to be completed in 2014.
The Base Metal Refinery 33,000 tonnes nickel expansion has harvested first metal
in line with expectations and reached steady state production during the fourth
quarter of 2011, as planned.
The Twickenham Platinum Mine achieved 1.5 million fatality free shifts. Current
major work includes declines and primary developments.
Anglo American Platinum continues to prioritise capital projects and stay-in-
business expenditure to ensure that capital funding requirements are aligned
with our strategy.
MINERAL RESOURCES AND RESERVES
Anglo American Platinum`s total Ore Reserves 4E content increased by 6.4% from
165.5 million ounces to 176.1 million ounces primarily due to:
Platreef: Mogalakwena South`s additional drilling and re-evaluation resulted in
higher resource confidence and therefore, was converted to Ore Reserves. This
resulted in an increase in ore reserves of 118.6Mt or 13.0Moz.
UG2 Reef: Conversion at various mines due to feasibility studies in progress,
additional projects in execution and new information mainly at Thembelani,
Siphumelele, Union, and Twickenham mines added 52.6Mt or 7.8Moz.
The increase in the Ore Reserves is partly offset by re-allocation of previously
reported Ore Reserves back to Mineral Resources at Tumela 4-shaft`s UG2 reef due
to mining engineering related issues (-19.6Mt or - 2.8 Moz) and at Thembelani `s
Merensky Reef due to economic assumptions ( -17.7Mt or - 2.9 Moz).
The Mineral Resources exclusive of Ore Reserve 4E content increased by 3.2% from
619.5 million ounces to 639.2 million ounces primarily due to positive results
yielded through increased drilling at Mogalakwena Mine. Additional borehole
information for Mogalakwena North has confirmed the presence of the Platreef at
higher elevation in localised areas to the west and below the original pit
shell. Conceptual pit shell evaluations have indicated that the pit could extend
to the west and deeper to exploit these resources. Consequently, the Mineral
Resource reporting depth has increased by approximately 200m to 650m below
surface elevation. Due to this increase in reporting depth the Mineral Resources
exclusive of Reserves increased substantially by 784.4Mt or 71.0Moz.
The increase in the Mineral Resources is partly offset by:
Mining constraints at Merensky and UG2 Reef: Investigations conducted in 2011 to
determine maximum mining depths related to virgin rock temperatures have been
concluded. A virgin rock temperature of 75 Celsius is currently considered to be
the limit to mining given anticipated technology, metal prices and energy costs.
The Inferred Mineral Resources of 128.7Mt or 26.1Moz within the Mining Rights of
Tumela Mine, Twickenham Mine and Ga-Phasha project are affected and are
therefore re-classified as Mineral Deposit within the Anglo Platinum portfolio.
Platreef Mogalakwena Mine: Conversion of Mineral Resources to Ore Reserves for
Mogalakwena South resulted in a decline of 123.6Mt or 13.9Moz.
Decline in Anglo American Platinum`s shareholding in Wesizwe: During 2011
Wesizwe issued additional shares which diluted Anglo American Platinum`s
shareholding to about 13%. As a result Anglo American Platinum can no longer
apply equity accounting in reporting this investment and therefore the
attributable Mineral Resources of 27.0Mt or 4.6Moz are excluded.
BOARD AND EXCO APPOINTMENTS
Albertinah Kekana was appointed independent non-executive director with effect
from 1 July 2011. Khanyisile Kweyama joined us as Executive Head of Human
Resources, also with effect from 1 July 2011. Andrew Hinkly joined us as
Executive Head of Marketing in January 2012. He replaced Sandy Wood who retired
at the end of 2011. Sarita Martin joined us as Company Secretary. She replaced
Doug Alison who also retired at the end of 2011.
OUTLOOK
For the past 4 years Anglo American Platinum has been on a journey of
transformation. We are transforming our operations, transforming our corporate
culture, and transforming the race and gender demographics throughout the
company. This journey has made steady and irreversible progress. It is therefore
unfortunate that 2011 was a very difficult year on this journey.
Although 2011 was a particularly challenging year, the restructuring programme
implemented by Anglo American Platinum since 2008 delivered the intended step
change in our operational performance. We have reduced fatalities and LTIFR by
52% and 37% respectively since 2007 and kept our unit costs essentially flat in
real terms, between R11,000 and R12,000, during the period 2008 to 2010. We
reduced our labour force from over 85,000 employees and contractors in 2008 to
just 58,000 in 2011, an appropriate level for our production base. Labour
productivity improved by 25% to 7.06m2 in 2010 from 5.7m2 in 2008. We have also
restructured the balance sheet to enable the company to be better positioned for
economic uncertainty and resumed dividend payments.
The year ahead is expected to be challenging with ongoing macro-economic
uncertainty and volatility expected to continue, particularly in the developed
world. The concerns about European sovereign debt continue to create volatility
in the financial markets and are expected to impact market sentiment. This has
largely been reflected in the investment markets where reduced appetite for
participation in commodity markets continues to depress platinum and palladium
prices.
Overall platinum demand is expected to grow in 2012, despite the lack of
economic growth in the European market. Tightening emissions legislation in all
markets and the overall global increase in vehicle production, including heavy
duty diesel, are expected to offset the depressed volumes in Europe. Jewellery
demand growth is also expected, primarily in response to the depressed platinum
price. Industrial demand for platinum in 2012 is unlikely to experience the
solid growth seen in 2011 which was primarily driven by capacity expansions in
glass and petroleum applications.
Primary supply challenges are expected to escalate during 2012 with increased
risk of supply disruptions from power shortages, industrial actions and safety
stoppages in South Africa. The ongoing constraint on capital investment posed by
low prices continues to limit South African output growth and 2012 may exhibit
the compounding effects of similar capital constraints in recent years.
Consequently, we expect the platinum market to remain in balance in 2012. We
believe the expected growth in platinum demand and the ongoing challenges faced
by platinum miners will be key drivers of the recovery in the platinum price in
2012.
Palladium demand is expected to grow in 2012 supported by global vehicle
production growth and tightening emissions legislation with growth in gasoline
vehicle production in China remaining a dominant driver. Industrial demand,
dominated by the electronics sector, is expected to remain robust in 2012.
Primary supply is also expected to be constrained by the same factors impacting
platinum production. The palladium market is therefore expected to return to a
deficit in 2012.
The Rhodium market is expected to remain depressed in 2012. Autocatalyst and new
industrial demand is expected to increase modestly. Recycling continues to grow
resulting in the market remaining in surplus.
Anglo American Platinum has commenced a review of its marketing and commercial
strategy with a particular focus on adding value by better matching our product
offering to customer needs. Security of supply, metal quality and product
development are integral to this approach. The review will include our customer
mix, contractual terms and risk management.
Anglo American Platinum plans to refine and sell between 2.5 and 2.6 million
ounces of platinum in 2012, subject to market conditions. Last year Anglo
American Platinum had forecast growth to 2.7 million ounces of platinum in 2012.
Given the current circumstances, we have reduced this to between 2.5 and 2.6
million platinum ounces for 2012. We will monitor the situation during the year
for both changes in demand and the opportunity to fill supply gaps created in
the market. Our strategy of understanding the platinum market, growing into that
market and doing so safely, cost effectively and profitability is well
established. By monitoring platinum supply and demand we are able to adjust our
production plan appropriately, as would be expected of a major participant in
this market.
Having set the level of production, we are in the process of adjusting our cost
base. Our asset optimisation and supply chain activities are well entrenched
and continue to deliver value. Our production profile indicates excess smelting
and refining capacity in the short to medium term and provides an opportunity to
improve capital efficiency. Following the successful introduction of some
secondary material in 2011, we plan to secure additional secondary material to
further increase capacity utilisation. Management focus and effectiveness with
regard to labour and organisation structure will increase. The ongoing reduction
of redundant labour, preferably through mechanisms that avoid retrenchment, will
continue. Overhead and shared services labour will be adjusted to the needs of
the business. All recruitment, particularly in non-production jobs will be
frozen and no new contractors appointed. We will also reconfigure our portfolio
and operating model and put in place appropriate structures to support it. Any
drop in metal prices during the year will result in more intense efforts in all
of these cost management areas.
Cost inflation will, however, continue to present the company with challenges
this year. `Mining inflation`, as measured by the Producers Price Index,
remained well above South African CPI during 2011, at
14%, compared to an average inflation rate of 5% for the country; and a similar
differential is expected in 2012. During the first half of 2012, we will see
another 25% increase in Eskom`s electricity tariffs while the second half of the
year will see a 9% increase in wages.
Notwithstanding the difficult inflationary environment, as a result of the swift
actions highlighted above, Anglo American Platinum aims to contain cash unit
costs to between R14,000 and R14,500 per equivalent refined platinum ounce. This
implies growth in cash operating cost per refined platinum ounce of between 3%
and 7%, well below expected mining inflation. We will also closely monitor cash
cost per refined platinum ounce, which is also the more widely targeted unit
cost metric in the industry and more of an end-to-end measure of overall cost
position. This unit cost target is based off an expected production level of 2.6
million ounces of platinum, which is subject to continual review in light of
market uncertainty.
Following a significant improvement in operating free cash generated by the
company, Anglo American Platinum`s net debt decreased by 11% to R3.66 billion
from R4.11 billion at the end of December 2010. The company plans to reduce its
net debt further in 2012, based on current expectations of market conditions.
Capital expenditure excluding capitalised interest will be up to R8 billion in
2012, R3.6 billion of which is expect to be stay-in-business capital; R0.4
billion will be allocated to waste stripping at Mogalakwena. The remaining R4.0
billion will be allocated to project capital. Although, in 2011, we had forecast
capital expenditure for 2012 of approximately R9 billion, it is prudent to
reduce this forecast to R8 billion in light of current market uncertainty.
Anglo American Platinum aims to maintain its stated target dividend cover of
between 2 and 3 times, after taking into account the company`s future capital
expenditure requirements and the market outlook.
Anglo American Platinum is committed to the highest standards of safety and
continues to make a meaningful and sustainable difference in the development of
the communities around its operations.
CB Carroll NF Nicolau B Nqwababa
Chairman Chief Executive Officer Finance Director
Johannesburg, South Africa
13 February 2012
DECLARATION OF FINAL DIVIDEND (NO 114)
On Thursday, 9 February 2012, the Board declared a final cash dividend (Number
114) of 200 cents per share (2010: 683 cents) in respect of the year ended 31
December 2011, to shareholders on the register of the company on Friday, 9 March
2012. This, together with the 2011 interim dividend of 500 cents, brings the
total dividend for the 2011 financial year to 700 cents (2010: 683 cents).
Salient dates for the final dividend No 114 2012
Last day to trade (cum dividend) Friday, 9 March
First date of trading (ex dividend) Monday, 12 March
Currency conversion date (for Sterling payment Monday, 12 March
to UK resident shareholders)
Record date Friday, 16 March
Payment date Monday, 19 March
Shares certificates may not dematerialised or rematerialised between Monday, 12
March 2012 and Friday, 16 March 2012 both days inclusive.
The Board is satisfied that the capital remaining after the payment of dividend
No 114, together with anticipated borrowings, will be sufficient to support
current operations and to facilitate future development of the business.
For and on behalf of the board
S Martin
Company Secretary
Johannesburg
9 February 2012
Anglo American Platinum Limited and its subsidiaries (formerly Anglo Platinum
Limited)
Incorporated in the Republic of South Africa
Date of incorporation 13 July 1946
Registration number: 1946/022452/06
JSE code: AMS ISIN: ZAE000013181
Directors
Executive directors
NF Nicolau (Chief Executive Officer), B Nqwababa (Finance Director)
Non-executive directors
CB Carroll (Chairman)1, BR Beamish, GG Gomwe2, R Medori3
Independent non-executive directors
MV Moosa (Deputy Chairman and Lead Independent Non-executive)
RMW Dunne4, Dr BA Khumalo, A Kekana , WE Lucas-Bull, SEN Sebotsa` TA Wixley
1American?2Zimbabwean?3French?4British
Company secretary
S Martin
Registered office
55 Marshall Street, Johannesburg 2001
PO Box 62179, Marshalltown 2107
Telephone +27 (11) 373 6111
Facsimile +27 (11) 373 5111
+27 (11) 834 2379
Investor relations
Kgapu Mphahlele
Telephone +27 (11) 373 6239
Email kgapu.mphahlele@angloamerican.com
Registrars
Computershare Investor Services Proprietary Limited
Registration number 2004/003647/07)
70 Marshall Street, Johannesburg, 2001
PO Box 61051, Marshalltown, 2107 South Africa
Telephone +27 (11) 370 5000
Telefax +27 (11) 688 5200
The 2011 integrated annual report will be posted to shareholders on or about 8
March 2012.
For further information, please contact:
Investors: Media:
Kgapu Mphahlele
+27 (0) 11 373 6239
kgapu.mphahlele@angloamerican.com
Mary Jane Morifi
+27 (0) 11 373 6638
mary-jane.morifi@angloamerican.com
Mpumi Sithole
+27 (0) 11 373 6246
mpumi.sithole@angloamerican.com
Sponsor
RAND MERCHANT BANK (a division of FirstRand Bank Limited)
Notes to editors:
Anglo American Platinum Limited is a member of the Anglo American plc Group and
is the world`s leading primary producer of platinum group metals. The company is
listed on the Johannesburg Securities Exchange (JSE). Its mining, smelting and
refining operations are based in South Africa. Elsewhere in the world, the Group
owns Unki Platinum Mine in Zimbabwe and is actively exploring in Brazil. Anglo
American Platinum has a number of joint ventures with several historically
disadvantaged South African consortia as part of its commitment to the
transformation of the mining industry. Anglo American Platinum is committed to
the highest standards of safety and continues to make meaningful and sustainable
difference in the development of the communities around its operations.
www.angloamericanplatinum.com
Anglo American is one of the world`s largest mining companies, is headquartered
in the UK and listed on the London and Johannesburg stock exchanges. Anglo
American`s portfolio of mining businesses spans bulk commodities - iron ore and
manganese, metallurgical coal and thermal coal; base metals - copper and nickel;
and precious metals and minerals - in which it is a global leader in both
platinum and diamonds. Anglo American is committed to the highest standards of
safety and responsibility across all its businesses and geographies and to
making a sustainable difference in the development of the communities around its
operations. The company`s mining operations, extensive pipeline of growth
projects and exploration activities span southern Africa, South America,
Australia, North America, Asia and Europe. www.angloamerican.com
Date: 13/02/2012 09:00:01 Produced by the JSE SENS Department.
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