| Mon 27 Feb 2012, 7:08 | | ARI - African Rainbow Minerals Limited - Unaudited interim results |
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ARI
ARIM
ARI - African Rainbow Minerals Limited - Unaudited interim results
for the six months ended 31 December 2011
African Rainbow Minerals Limited
Incorporated in the Republic of South Africa
Registration number: 1933/004580/06
JSE share code: ARI
ISIN: ZAE000054045
("ARM" or the "Company")
Unaudited interim results
for the six months ended 31 December 2011
Salient features
- Headline earnings increased 24% to R1.94 billion (1H F2011: R1.56 billion).
Headline earnings per share were 912 cents per share (1H F2011: - Cash
generated from operations increased by 25% to R2.56 billion (1H F2011:
R2.05 billion).
- Increased sales volumes for iron ore, manganese ore, manganese alloys,
PGMs, nickel, chrome concentrate and Eskom thermal coal.
- Robust financial position maintained, with net cash (excluding partner
loans) of R1.66 billion.
- Growth projects continue to progress:
- The Khumani Iron Ore Expansion Project from 10 mtpa to 16 mtpa has been
handed over to the mine and is currently ramping up production well ahead
of schedule.
- The Nkomati Nickel Large-Scale Expansion Project is ramping up in
accordance with the revised plan and showed notable improvements in plant
- The Goedgevonden Coal Mine reached design capacity.
- The Konkola North Copper Project continues to advance on schedule and
within budget. Commissioning of the concentrator plant is expected
inDecember 2012.
- Government`s commitment to substantially invest in rail, port and
electricity, supports and accelerates ARM`s aggressive growth strategy.
Shareholder information
Issued share capital at 31 December 2011 213 750 888 shares
Market capitalisation at 31 December 2011 ZAR36.55 billion
Market capitalisation at 31 December 2011 US$4.53 billion
Closing share price at 31 December 2011 R171.00
Six-month high (1 July 2011 - 31 December 2011) R198.88
Six-month low (1 July 2011 - 31 December 2011) R160.01
Average volume traded for the six months 404 451 shares per day
Primary listing JSE Limited
Ticker symbol ARI
ARM operational review
The ARM Board of Directors (the Board) announces improved earnings for the six
months ended 31 December 2011 (1H F2012). Headline earnings for the period
increased by 24% to R1.94 billion when compared to the corresponding six months
ended 31 December 2010 (1H F2011: R1.56 billion). Headline earnings were 912
cents per share (1H F2011: 734 cents per share).
The improvement in earnings was driven mainly by increased sales volumes in iron
ore as the Khumani Iron Ore Expansion Project progressed well ahead of schedule.
Higher sales volumes were also achieved in manganese ore, manganese alloys,
PGMs, nickel and Eskom thermal coal. The positive effect of improved sales
volumes was, however, reduced by a decline in US Dollar commodity prices as
uncertainty in global markets continued to put pressure on demand for
commodities and thus commodity prices. A 7.2% weakening in the Rand against the
US Dollar from an average of R7.10/US$ to R7.61/US$ did, however, offset some of
the US Dollar price decreases.
The following increases in sales volumes were achieved:
- 68% increase in iron ore sales from 4.0 million tonnes to 6.8 million
tonnes;
- 21% increase in nickel sales from 4.3 thousand tonnes to 5.2 thousand
tonnes;
- 20% increase in manganese alloy sales from 87 thousand tonnes to 104
thousand tonnes;
- 9% increase in manganese ore sales from 1.5 million tonnes to 1.6 million
tonnes; and
- 6% increase in PGM (including Nkomati) sales from 361 thousand ounces to
384 thousand ounces.
Contribution to headline earnings
Commodity group six months ended 31 December
R million 2011 2010 % change
Platinum Group Metals 162 161 1
Nkomati nickel and chrome (128) 134 (196)
Ferrous metals 1 974 1 256 57
Coal (12) (54) 78
Copper (30) (64) 53
Exploration (54) -
Gold 38 32 19
Corporate and other (6) 97 (106)
ARM headline earnings 1 944 1 562 24
The interim results for the six months ended 31 December 2011 have been prepared
in accordance with International Financial Reporting Standards (IFRS) and the
disclosures are in accordance with IAS 34: Interim Financial Reporting.
Rounding of figures may result in minor computational discrepancies on the
tabulations.
ARM`s aggressive growth continues
ARM continues to focus on growth through the development of its four major
projects in iron ore, nickel, coal and copper. Capital risk on the four projects
is limited with three of the projects already complete and currently in ramp-up
phase. At the end of December 2011, 87% of the approved capital expenditure was
already committed on the copper project which is under construction. The Khumani
Iron Ore Expansion Project, which will increase production volumes from 10
million tonnes to 16 million tonnes per annum (mtpa), is currently ahead of
schedule and is well within budget. The ramp-up of the mine coincides with
improved demand and pricing conditions in the iron ore market and resulted in
iron ore delivering a 79% increase in headline earnings in 1H F2012.
At the Nkomati Nickel Mine, both the 375 thousand tonnes per month and the 250
thousand tonnes per month concentrator plants were successfully commissioned.
Tonnes milled increased by 48% in 1H F2012 as the ramp-up of the Nkomati Large
Scale Expansion Project progressed. However, challenges experienced with the
head grade and plant recoveries persisted and hampered nickel production.
Management is addressing these challenges and has commenced with accelerated
stripping to create increased mining flexibility. The measures implemented are
yielding encouraging results evident in the increased plant recoveries during
the last two months of 1H F2012. Further improvements are expected over the next
12 months as the large open pit is developed.
The Goedgevonden Coal Mine (GGV) reached design capacity. However
underperformance of the GGV Coal Handling Processing Plant coupled with
industrial action resulted in lower than expected sales volumes in the ramp-up
of GGV.
The Konkola North Copper Project in Zambia, which will produce 45 000 tonnes of
copper per annum, is progressing on schedule and within budget. As at 31
December 2011, 87% of the approved capital expenditure of US$399 million (in
July 2010 terms) was committed. Commissioning of the plant is expected in
December 2012. The second phase of this project, which is expected to lead to
the exploitation of Area `A`, is also progressing well with five exploration
drill rigs deployed and a total of 10 612 metres drilled during 1H F2012. The
drill results are being analysed and initial results are encouraging.
Development of Area `A` is currently expected to increase the total production
of Konkola North to 100 000 tonnes of copper per annum.
Projects in pipeline
ARM has a number of projects in the pipeline whose feasibility studies are well-
advanced. These include: expansion of the iron ore operations, increasing
manganese ore production, an expansion of the Modikwa Mine, and the Two Rivers
Merensky Project. The expansions under consideration require additional
infrastructure capacity in the form of rail, port and electricity.
Reconfirmation of the Government`s commitment to investment in infrastructure
bodes very well for development of these projects. ARM is confident about
developing these projects and continues to work with Transnet and Eskom to
evaluate different alternatives for increased rail, port and electricity
capacity.
Focus on operational efficiencies
ARM`s target is to have all operations positioned below the 50th percentile of
each commodity`s respective global cost curve by the end of 2012. Despite
inflationary pressure on the South African mining industry resulting from above
inflation increases in the cost of diesel, electricity and labour, ARM has to
date managed to achieve this target for all its operations, except the Nkomati
Nickel Mine and the ferrochrome operations. Nkomati is expected to reach this
target in 2014 while the ferrochrome operations are in the process of being
converted from ferrochrome to ferromanganese. One furnace at Machadodorp Works
has been successfully converted and a further two furnaces will be converted by
the end of the 2012 calendar year. Konkola North Copper is expected to produce
copper below the median world production cost by 2015.
CEO succession
As per ARM`s announcement titled "Completion of Chief Executive Officer (CEO)
succession process" published on 23 June 2011 the Board welcomes Mike Schmidt as
the CEO of ARM effective from 1 March 2012. Andre Wilkens will continue as an
executive director in the role of Executive Director (Growth and Strategic
Development) based in the office of the Executive Chairman.
Changes to resources and reserves
There has been no material change to ARM`s mineral resources and reserves as
disclosed in the Integrated Annual Report for the financial year ended 30 June
2011, other than depletion due to continued mining activities at the operations.
These results have been achieved in conjunction with ARM`s partners at the
various operations, Anglo American Platinum Limited ("Anglo Platinum"), Assore
Limited ("Assore"), Impala Platinum Holdings Limited ("Implats"), Norilsk Nickel
Africa (Pty) Ltd ("Norilsk"), Xstrata South Africa (Pty) Ltd ("Xstrata") and
Vale S.A. ("Vale").
Financial commentary
Headline earnings for the six months ended 31 December 2011 were R1 944 million
or 24% higher than the corresponding period`s headline earnings (1H F2011: R1
562 million).
Sales for the reporting period were 30% higher than the corresponding period
last year at R8.72 billion (1H F2011: R6.71 billion). The consolidated average
gross profit margin of 38% is lower than the corresponding period (1H F2011:
41%) due to decreased US Dollar commodity prices for manganese ore,
ferromanganese alloys, rhodium and nickel, coupled with above inflation unit
cost increases for iron ore, nickel and coal. Nkomati operated at a gross loss
for the period, having been negatively affected by significant waste stripping
costs as the mine improves mining flexibility. The margins achieved at each
operation may be ascertained from the detailed segment reports provided in note
9 to the financial statements as well as in the reviews for each operation.
The 1H F2012 average Rand/US Dollar exchange rate of R7.61/US$ was 7.2% weaker
than the corresponding period average of R7.10/US$. The weaker Rand had a
positive impact on the Rand prices achieved for commodities. The closing
exchange rate was R8.07/US$ at 31 December 2011.
ARM`s earnings before interest, tax, depreciation and amortisation (EBITDA),
excluding exceptional items and income from associates, were R3 635 million,
which represents an increase of 17% or R532 million over the amount for 1H
F2011.
Key features from the segmental contribution analysis are:
- The ARM Ferrous contribution to ARM`s headline earnings increased by 57% to
R1 974 million (1H F2011: R1 256 million). The major portion of this
increase is attributable to the increased contribution by the iron ore
division.
- The ARM Platinum segment contribution, which includes the negative results
of Nkomati, was R34 million which is R261 million less than the
corresponding period and represents an 88% decrease. The fall in
contribution was solely due to the negative contribution of R128 million
from Nkomati (1H F2011: R134 million profit).
- The ARM Coal segment result was a loss of R12 million (1H F2011: R54
million loss). Goedgevonden contributed increased headline earnings of R31
million (1H F2011: R6 million) while the Participating Coal Business (PCB)
operations showed a loss of R43 million (1H F2011: R60 million loss).
- ARM Copper, which comprises the Vale/ARM joint venture, made a reduced loss
of R30 million for the period (1H F2011: R64 million loss).
- Costs for the newly formed ARM Exploration segment were R54 million and
included mainly the cost of exploration on the Rovuma (Mozambique) project.
- The ARM Corporate, other companies and consolidation segment shows a
negative contribution of R6 million compared to a positive contribution of
R97 million for the previous corresponding period. This segment`s results
include a tax charge of R85 million reflecting the reversal of the deferred
tax asset raised at 30 June 2011 pertaining to Secondary Tax on Companies
(STC) which ceases in April 2012. The results include attributable
insurance premium income of R72 million, recognised in an insurance cell
captive, representing premium income earned following the restructuring of
an underlying policy providing annual insurance protection to group
operations. This income and the STC charge are not expected to be
recurring.
- ARM received a dividend of R38 million in October 2011 from its investment
in Harmony Gold Mining Company Limited relating to their F2011 results (1H
F2011: R32 million).
ARM`s basic earnings for 1H F2012 approximate headline earnings as exceptional
items amounted to only R39 million for the period. The sale of the Spitzkop and
Tselentis coal assets in Mpumalanga by PCB was concluded during the period and
realised an attributable gain of R37 million net of taxation.
At 31 December 2011 cash and cash equivalents amounted to R2 825 million (F2011:
R3 668 million) with gross debt at R3 062 million (F2011: R3 069 million). The
net debt at 31 December 2011 therefore amounted to R237 million (F2011: R599
million net cash) indicating a decrease of R836 million relative to the position
at 30 June 2011. Net cash at 31 December 2011 excluding partner loans (Implats:
R50 million, Anglo Platinum: R114 million and Xstrata: R1 727 million) amounted
to R1 654 million as compared to R2 594 million at 30 June 2011.
- Cash generated from operations increased by R512 million from R2 049
million to R2 561 million despite an increased working capital requirement
of R1 148 million resulting from the increased activity levels at
operations.
- Capital expenditure amounted to R1 875 million for the period (1H F2011: R1
552 million) and was mainly expended at the growth projects of Khumani and
Konkola North Copper Project.
ARM`s consolidated total assets of R34.3 billion (F2011: R32.3 billion) include
the marked-to-market valuation of ARM`s investment in Harmony of R6.0 billion at
a share price of R95.00 per share (F2011: R89.95 per share).
Included in Other Expenses is an amount of R222 million for mineral royalties
tax (1H F2011: R98 million which included State Share of Profits which was
discontinued in August 2011).
The effective tax rate of 33% was in line with that of the corresponding period
last year.
The International Financial Reporting Interpretations Committee (IFRIC) issued
IFRIC Interpretation 20: Stripping Costs in the Production Phase of a Surface
Mine, during October 2011 to be mandatorily effective for financial years
commencing on or after 1 January 2013. When implemented this interpretation
could result in all "in production" waste stripping costs, subject to certain
criteria being met, being capitalised and then amortised over the life of each
open-pit mining campaign. The implementation of IFRIC 20 would be treated as a
change in accounting policy and would, if material, result in restatement of
prior period results. ARM is in the process of evaluating this new
interpretation as it would apply to its operations. It is ARM`s intention to
early adopt this policy by the end of F2012.
Safety
Safety is a top priority for ARM and all its operations. In 1H F2012 ARM
maintained an excellent Lost Time Injury Frequency Rate (LTFIR) of 0.41 per 200
000 man hours (1H F2011: 0.41).
Despite concerted efforts to improve our safety performance, two employees were
fatally injured at Two Rivers. On 13 December 2011, Mr Ananias Silvano Chambale
was injured and subsequently passed away on 15 December 2011 as a result of
injuries sustained in the incident. Subsequent to the six-month period under
review, on 21 January 2012, Mr Daniel Ntuli was fatally injured during a fall of
ground accident. The last fatality at Two Rivers was in July 2007.
Modikwa Mine suffered a double fatality post 1H F2012. On 27 January 2012, two
employees, Ms Patricia Moropa and Mr Katheane Lenong, were fatally injured from
a fall of ground whilst installing support in an old underground working area.
Modikwa Mine`s last fatality was April 2006 and since that time the mine had
achieved more than 8 million fatality-free shifts.
The ARM Board and management extends their heartfelt condolences to the family,
friends and colleagues of the deceased.
Safety achievements
- Modikwa achieved 68 fatality-free months at the end of December 2011;
- Dwarsrivier Mine achieved one million fatality-free shifts and 3 000
fatality-free production shifts in the Department of Mineral Resources
(DMR) competition;
- Khumani Mine achieved two million fatality-free shifts and 2 000 fatality-
free production shifts in the DMR competition;
- Cato Ridge Works completed one million fatality-free shifts;
- Black Rock Mine won an award as the safest underground mine and the most
improved underground mine in the Northern Cape Mine Managers Association
competition; and
- Nkomati Mine achieved two million fatality-free shifts.
Safety figures and statistics in this report are presented on a 100% basis and
exclude the Konkola North Copper Project and ARM Coal operations.
ARM Ferrous
ARM Ferrous reported a 57% increase in attributable headline earnings to R1 974
million (1H F2011: R1 256 million). The improvement in earnings was driven by
increased iron ore sales volumes and prices. Higher sales volumes were achieved
across all the ARM Ferrous commodities, except chrome ore and chrome alloys.
Chrome ore sales volumes remained constant whilst volumes for chrome alloys
decreased as a result of the strategy to convert furnaces at Machadodorp Works
from ferrochrome to ferromanganese.
Realised US Dollar prices for iron ore increased 8%, while US Dollar prices for
manganese ore decreased by 16% and manganese alloy by 9%. Charge chrome prices
remained constant compared to the corresponding period. The 7.2% weakening in
the Rand against the US Dollar had a positive impact on headline earnings.
Iron ore sales volumes increased by 68% to 6.8 million tonnes as the Khumani
Iron Ore Expansion Project continues to ramp up from 10 mtpa to 16 mtpa.
Manganese ore sales volumes (excluding intra-group sales) increased by 9% to 1.6
million tonnes while chrome ore and chrome alloy sales volumes decreased by 1%
and 6%, respectively. Manganese alloy sales volumes increased by 20% as a result
of increased ferromanganese produced from the successfully converted No. 5
Furnace at Machadodorp Works.
Increased power consumption due to the start-up of the Khumani crusher, higher
tonnages processed and additional waste stripping resulted in an 18% increase in
iron ore production unit costs. Chrome alloy production unit costs increased by
21% due to increased electricity tariffs coupled with lower production volumes
following the conversion of the No. 5 Furnace at Machadodorp Works. Cost
increases at the manganese ore operations were in line with inflation. A
reduction in costs was achieved at the chrome ore and manganese alloys
operations due to higher production volumes and improved efficiencies.
Total capital expenditure was R2.0 billion (1H F2010: R2.1 billion). Major items
included on-going development of the Khumani Iron Ore Mine (R1.5 billion) and
the conversion of furnaces from ferrochrome to ferromanganese at Machadodorp
Works (R40 million). The balance of the capital expenditure related to
feasibility studies, information technology, replacement of vehicles and
ensuring compliance to legislative changes.
Assmang headline earnings
100% basis six months ended 31 December
R million 2011 2010 % change
Iron ore division 3 126 1 750 79
Manganese division 833 849 (2)
Chrome division (10) (87) 88
Total 3 949 2 512 57
Headline earnings attributable 1 974 1 256 57
to ARM (50%)
Assmang production volumes
100% basis six months ended 31 December
Thousand tonnes 2011 2010 % change
Iron ore 6 413 4 646 38
Manganese ore 1 692 1 305 30
Manganese alloys 153 103 49
Charge chrome 113 122 (7)
Chrome ore 498 442 13
Assmang sales volumes
100% basis six months ended 31 December
Thousand tonnes 2011 2010 % change
Iron ore 6 781 4 039 68
Manganese ore* 1 590 1 456 9
Manganese alloys 104 87 20
Charge chrome 86 91 (5)
Chrome ore* 211 214 (1)
* Excluding intra-group sales
Assmang cost and EBITDA margin performance
Rand per tonne EBITDA
cost change margin
Commodity group % %
Iron ore 17.8 64.1
Manganese ore 4.4 37.3
Manganese alloys (5.3) 41.0
Charge chrome 20.8 (0.2)
Chrome ore (2.8) 38.4
Assmang capital expenditure
100% basis six months ended 31 December
R million 2011 2010
Iron ore 1 644 1 601
Manganese 265 380
Chrome 128 92
Total 2 037 2 073
Khumani Iron Ore Mine Expansion Project
The Khumani Iron Ore Expansion Project from 10 mtpa to 16 mtpa was handed over
to the operations and is ramping up to full production ahead of schedule.
Assmang approved R1.2 billion for a Wet High Intensity Magnetic Separation
(WHIMS) plant at Khumani. The WHIMS plant will enhance the life of mine at
Khumani by enabling recovery of an additional 3% of Run of Mine (ROM) material.
R426 million was also approved for an additional on-mine stockpile area and the
diversion of the Transnet Freight Rail (TFR) main line, which runs through a
future mining area.
Beeshoek Village Pit Project
Capital of R885 million has been approved for development of the East pit at
Beeshoek Iron Ore Mine which will extend production to July 2014. To allow for
future mining of the Beeshoek Village Pit the capital approved also includes the
diversion of the R385 road between Postmasburg and Olifantshoek as well as
development of residential properties in Postmasburg to relocate employees
currently residing in the village.
Manganese ore projects
The feasibility study to expand the Black Rock Manganese Ore Mine from 3 mtpa to
4 mtpa is progressing well and the possibility of sinking two additional shafts
is being investigated. The additional 1 mtpa from this expansion will supply the
manganese ore required for the converted furnaces at Machadodorp Works and also
provide the mine with additional flexibility to produce consistent grades and
increased tonnages. A scoping study to expand manganese ore production at Black
Rock mine from 4 mtpa to 6 mtpa, was completed during the 2011 calendar year
with the feasibility study expected to be completed by the fourth quarter of
F2012.
A study into the viability of building a sinter plant was conducted; a decision
in this regard is expected in 2H F2012.
Conversion of ferrochrome furnaces to ferromanganese furnaces
The No. 5 Furnace at Machadodorp Works has been successfully converted from
ferrochrome to ferro-manganese production. Conversion of the No. 2 and No. 3
furnaces is expected to commence in May 2012 with completion expected by August
2012. Upgrading of the raw material section is already in progress.
Logistics
Assmang`s iron ore export rail and port capacity throughput increased by
approximately 60% due to increased volumes at Khumani, improved Transnet
performance and increased Transnet capacity installed as part of the expansion
of the Saldanha Export Channel from 47 mtpa to 60 mtpa.
Assmang and Transnet are continuing with dialogue on future export capacity
growth. The iron ore industry, together with Transnet, embarked on a joint
feasibility project to expand the current Saldanha Export Channel beyond 60
mtpa. This study is expected to be completed by March 2012.
The agreement to export manganese ore through Port Elizabeth will expire on 31
March 2013. A parallel study is being conducted to evaluate options to export
manganese ore through Saldanha or Ngqura (Coega) by 2016. This feasibility study
is expected to be completed by April 2012. To ensure continued export channels
for our major customers, manganese ore stockpile capacity was secured at
Richards Bay and Durban ports until June 2014 and June 2015, respectively.
Assmang is utilising road transport to haul approximately 20% of its manganese
ore and manganese alloys. The ability to reduce road transport and increase rail
transport is dependent on operational levels achieved by Transnet and future
rail and port capacity allocation.
The ARM Ferrous operations, held through its 50% investment in Assmang, consist
of three divisions: iron ore, manganese and chrome. Assore Limited, ARM`s
partner in Assmang, owns the remaining 50%.
ARM Platinum
ARM Platinum had a challenging six months with attributable headline earnings
decreasing by R261 million (88%) to R34 million. PGM production (on 100% basis
including Nkomati) increased 6% to 383 809 ounces (1H F2011: 361 192 ounces)
while total nickel produced increased by 23% to 6 014 tonnes (1H F2011: 4 886
tonnes).
With respective unit costs of R4 734/6E PGM oz and R4 891/6E PGM oz, Two Rivers
and Modikwa continue to be positioned below the 50th percentile of the global
PGM cost curve.
A 7.2% weakening in the Rand against the US Dollar resulted in the basket prices
for Modikwa and Two Rivers increasing by 9% and 8% to R272 154/kg and R285
315/kg, respectively.
The table below sets out the relevant price comparison:
Average metal prices
Average for six months ended 31 December
2011 2010 % change
Platinum $/oz 1 652 1 625 2
Palladium $/oz 691 585 18
Rhodium $/oz 1 667 2 191 (24)
Nickel $/t 19 763 21 863 (10)
Chrome concentrate $/t 177 257 (31)
ARM Platinum capital expenditure
100% basis six months ended 31 December
R million 2011 2010 % change
Modikwa 246 154 60
Two Rivers 164 53 209
Nkomati 112 628 (82)
Total 522 835 (38)
Capital expenditure at ARM Platinum was R522 million (R343 million
attributable). Capital expenditure at Nkomati was R112 million of which R12
million was for the completion of the Large-Scale Expansion Project and the
balance to sustain operations. Modikwa`s major capital items included the
deepening of North shaft, the sinking of South 2 shaft and an underground mining
fleet replacement programme. At Two Rivers, 31% of the capital spent related to
the replacement of the underground mining fleet, with the balance incurred for
the deepening of the Main and North declines.
Modikwa
Modikwa`s tonnes milled and head grade decreased slightly and together with a
10% increase in unit costs, resulted in the cash operating profit being 9%
lower. During the period 164 thousand tonnes of UG2 open pit material was
treated. This oxidised material realised lower recoveries, resulting in PGM
ounces decreasing to 176 490 ounces (1H F2011: 179 224 ounces). Unit cost
increased 10% to R706 per tonne milled (1H F2011: R640 per tonne milled) and as
a result of treatment of the open pit material, Rand unit cost per 6E PGM ounce
increased 11% to R4 891 per ounce (1H F2011: R4 416 per ounce). The cost
increases are mainly as a result of high industry inflation, in particular on
labour, electricity and diesel.
In September 2011, Modikwa Platinum Mine acquired the prospecting right for a
portion of the Doornbosch adjoining property from Randgold and Exploration
Company Limited. The property has mineral resources of 160 thousand 4E ounces
and will provide short-term flexibility to South shaft.
Modikwa operational statistics
100% basis six months ended 31 December
2011 2010 % change
Cash operating profit R million 335 369 (9)
Tonnes milled Mt 1.22 1.24 (2)
Head grade g/t, 6E 5.57 5.65 (1)
PGMs in concentrate Ounces, 6E 176 490 179 224 (2)
Average basket price R/kg, 6E 272 154 249 803 9
Average basket price $/oz, 6E 1 112 1 096 1
Cash operating margin % 28 32
Cash cost R/kg, 6E 157 246 141 964 11
Cash cost R/tonne 706 640 10
Cash cost R/Pt oz 12 310 11 150 10
Cash cost R/PGM oz, 6E 4 891 4 416 11
Cash cost $/oz, 6E 643 623 3
Headline earnings R million 74 85 (13)
attributable to ARM
(41.5%)
Two Rivers
The 5% increase in tonnes milled at Two Rivers combined with a 4% increase in
plant recoveries, led to a 14% increase in cash operating profit. The slight
reduction in head grade was mainly caused by the trial milling of 90 thousand
tonnes of Merensky ore. PGMs in concentrate improved 7% to 163 177 PGM ounces
(1H F2011: 152 859 ounces). Unit cost increased by 6% to R495 per tonne milled
(1H F2011: R469 per tonne milled).
Two Rivers operational statistics
100% basis six months ended 31 December
2011 2010 % change
Cash operating profit R million 418 368 14
Tonnes milled Mt 1.56 1.48 5
Head grade g/t, 6E 3.81 3.94 (3)
PGMs in concentrate Ounces, 6E 163 177 152 859 7
Average basket price R/kg, 6E 285 315 264 917 8
Average basket price $/oz, 6E 1 166 1 162
Cash operating margin % 35 34
Cash cost R/kg, 6E 152 200 146 527 4
Cash cost R/tonne 495 469 6
Cash cost R/Pt oz 10 088 9 536 6
Cash cost R/PGM oz, 6E 4 734 4 557 4
Cash cost $/oz, 6E 622 643 (3)
Headline earnings R million 88 76 16
attributable to ARM
(55%)
Nkomati
A 48% increase in tonnes milled combined with improved recoveries at the 250
thousand tonnes concentrator plant, delivered a 23% growth in nickel output.
Nickel produced was however hampered by a 23% decline in head grade. The low
head grade, as a result of oxidised zones being mined in Pit 3, is expected to
recover during the next 12 months when the exploitation of deeper, fresher ore
commences. This higher quality ore will also contribute to increased recoveries
in the concentrator plants. Increased mining flexibility was achieved through
the accelerated waste stripping campaign, during which 2.5 million additional
tonnes were removed.
Chrome ore sales decreased to 64 144 tonnes (1H F2011: 223 279 tonnes) while
chrome concentrate sales increased by 76% to 250 687 tonnes (1H F2011: 142 138
tonnes). A 31% decline in chrome concentrate prices negatively affected the
earnings from chrome.
Nkomati realised a cash operating loss of R201 million for the period under
review. The shift in results from the previous period can be attributed to an
increase in general mining and processing costs, the termination of pre-
production costs being capitalised (1H F2011: R266 million), a depressed chrome
market during the last quarter, and the additional costs for the waste stripping
campaign (R59 million) being expensed. For the same reasons, the unit cost
increased to R328 per tonne milled (1H F2011: R226 per tonne milled) and to
$10.24/lb net of by-products (1H F2011: US$2.38). Chrome credits contributing to
the cash cost net of by-products reduced to US$0.28/lb (1H F2011: US$2.89/lb).
It is estimated that R200 million of waste stripping costs at Nkomati are
included in working costs for 1H F2012, which could be capitalised on the
adoption of IFRIC 20 referred to in the financial commentary.
The availability and utilisation of the primary crusher improved during the last
six months while enhanced ore fragmentation was sustained. Detailed
interventions are in progress to achieve improved utilisation and design
throughputs.
The Nkomati laboratory results have shown significant accuracy improvement and
are now aligned with the Metals Trade Overseas (MTO) assay results. The focus
during the next six months will be to enhance management control systems. The
accreditation process for the Nkomati laboratory has been initiated and will be
finalised during 2012.
Nkomati operational statistics
100% basis six months ended 31 December
2011 2010 % change
Cash operating (loss)/profit R million (201) 715 (128)
Cash operating (loss)/profit
- Nickel Mine R million (228) 498 (146)
Cash operating profit
- Chrome Mine R million 27 217 (88)
Cash operating margin % (15) 47
Tonnes milled Thousand 3.14 2.12 48
Head grade % nickel 0.30 0.39 (23)
Nickel on-mine cash cost per R/tonne 328 226 45
tonne milled
Cash cost net of by-products * $/lb 10.24 2.38 >200
Contained metal
Nickel ** Tonnes 6 014 4 886 23
PGMs Ounces 44 142 29 110 52
Copper Tonnes 3 108 2 885 8
Cobalt Tonnes 281 321 (12)
Chrome ore sold Tonnes 64 144 223 (71)
279
Chrome concentrate sold Tonnes 250 687 142 76
138
Headline (loss)/earnings R million (128) 134 (196)
attributable to ARM (50%)
* This reflects US Dollar cash costs net of by-products (PGMs, copper, cobalt
and chrome) per pound of nickel produced. The unit cost was adjusted to
accommodate the restated units produced as explained in the note below.
** As reported in the F2011 Annual Results the nickel units produced, which
were previously reported as 5 321 tonnes, have been adjusted to 4 886
tonnes as a result of updated assay results.
Modikwa projects
The UG2 Phase 2 replacement project is in progress.
Preparatory work on the South 2 decline system continues as expected. The
materials decline has advanced 285 metres and the Chairlift decline has advanced
290 metres from surface.
Two Rivers projects
A feasibility study has been completed on the extraction of UG2 ore from the
deeper southern strike limit of the Main Decline. As part of the Merensky reef
feasibility study, Two Rivers is currently conducting Merensky reef trial mining
and milling. To date, 167 500 tonnes have been mined and 90 000 tonnes have been
milled. Infill drilling to further verify metallurgical recoveries in the
shallow UG2 ore at the proposed North Open Pit is in progress.
Nkomati Nickel Large Scale Expansion Project
Total funds committed at 31 December 2011 amounted to R3.5 billion of the total
R3.7 billion approved for the capital project. The upgrade of the 132kV overhead
distribution lines was delayed as a result of Eskom processes, with completion
now expected by March 2012. This has no material impact on Nkomati in the short
to medium term.
Kalplats PGM Exploration Project
Platinum Australia (PLA) submitted a Definitive Feasibility Study (DFS) to ARM
Platinum for review in 2011. ARM Platinum had reported that pilot plant scale
metallurgical test work would be carried out on a bulk sample during the first
half of F2012; however the bulk sample exercise and test work has been put on
hold pending the outcome of the review of the DFS.
The ARM Platinum division comprises three operating mines: Modikwa, Two Rivers
and Nkomati. It has an effective 41.5% interest in Modikwa where local
communities hold an 8.5% effective interest. The remaining 50% is held by Anglo
Platinum. Two Rivers is an incorporated joint venture with Implats, with ARM
holding 55% and Implats 45%. Nkomati is a 50:50 partnership with Norilsk. ARM
Platinum also has an interest in two joint ventures with PLA. The first is the
"Kalplats Platinum Project" in which ARM Platinum owns 90% and PLA can earn-in
up to 49% by completing a bankable feasibility study. The second joint venture,
"Kalplats Extended Area Project", is a 50:50 partnership between ARM Platinum
and PLA.
ARM Coal
Total saleable coal production for 1H F2011 included 575 thousand tonnes from
the Tselentis and Spitzkop collieries (together "the Mpumalanga assets") which
were treated as "assets held for sale" as from 1 March 2011. Saleable coal
production in 1H F2012 was therefore in line with 1H F2011 excluding production
from the Mpumalanga assets. Production levels achieved during the second quarter
of F2012 were encouraging as the majority of the challenges experienced in the
first quarter were successfully addressed.
Total saleable coal production for 1H F2011 included 575 thousand tonnes from
the Tselentis and Spitzkop collieries (together "the Mpumalanga assets") which
were treated as "assets held for sale" as from 1 March 2011. Saleable coal
production in 1H F2012 was therefore in line with 1H F2011 excluding production
from the Mpumalanga assets. Production levels achieved during the second quarter
of F2012 were encouraging as the majority of the challenges experienced in the
first quarter were successfully addressed.
Transnet showed a marked improvement in performance since August 2011. ARM Coal
however did not fully benefit from this improvement owing to industrial action
on two occasions which hampered production. The first industrial action, in
which 10 days of production was lost, occurred in July 2011 and was related to
wage negotiations. The second related to the implementation of an Employee Share
Ownership Plan (ESOP) and took place in October 2011 during which a similar
period of production was lost.
Goedgevonden Coal Mine (GGV)
Attributable cash operating profit increased to R144 million (1H F2011: R96
million) whilst headline earnings increased from R6 million in 1H F2011 to R31
million. Increased finance and amortisation charges negatively affected headline
earnings.
Export and Eskom sales volumes increased 14% and 65%, respectively, attributable
to the performance improvement of Transnet. US Dollar prices realised for export
coal increased 42% to US$100.37 per tonne (1H F2011: US$70.49) whilst prices
realised on Eskom sales prices reduced 19% as a result of supplying lower
quality coal. Attributable revenue for GGV was R62 million (26%) higher than 1H
F2011 as a result of higher volumes.
Although saleable production was in line with the previous reporting period, the
production results are below ARM Coal`s expectations.
Attributable on-mine operating cost increased by R35 million. Operating costs
per saleable tonne increased 36% to R209 per tonne (1H 2011: R154 per tonne).
Factors contributing to the increase in costs include the termination of the
capitalisation of working costs (1H F2011: R9 million attributable): as well as
an additional attributable cost of R33 million associated with increased
overburden stripping volumes. Overburden stripping volumes increased 33% during
1H F2012 compared to 1H F2011 resulting in 2.5 million tonnes of exposed in-pit
inventory in situ at the end of December 2011. The increased in-pit inventory
levels will have a positive impact on costs at GGV going forward.
Goedgevonden (GGV) operational statistics
100% basis six months ended 31 December
2011 2010 % change
Total production sales
Saleable production Mt 2.80 2.90 (3)
Export thermal coal sales Mt 1.62 1.42 14
Eskom thermal coal sales Mt 1.88 1.14 65
Attributable production and
sales
Saleable production Mt 0.73 0.75 (3)
Export thermal coal sales Mt 0.42 0.37 14
Eskom thermal coal sales Mt 0.49 0.30 65
Average received coal price
Export (FOB) $/tonne 100.37 70.49 42
Eskom (FOT) R/tonne 155.85 192.06 (19)
On mine saleable cost R/tonne 208.80 153.80 36
Cash operating profit
Total R million 555 369 50
Attributable (26%) R million 144 96 50
Headline earnings attributable R million 31 6 >200
to ARM
Attributable profit analysis
six months ended 31 December
R million 2011 2010 % change
Cash operating profit 144 96 50
Less: interest paid (48) (42) 14
Less: amortisation (47) (41) 15
Less: fair value adjustments (5) (6) (17)
Profit before tax 44 8 >200
Less: Tax (13) (2) >200
Headline earnings attributable to ARM 31 6 >200
Participating Coal Business (PCB)
The disposal transaction relating to the Mpumalanga assets was concluded on 15
December 2011. Competition Commission approval and the Section 11 transfer, the
last two conditions precedent, were obtained during December 2011.
The PCB attributable cash operating profit increased by 37% to R152 million. The
attributable headline loss improved to R43 million (1H F2011: R60 million) and
was affected by increased finance, amortisation and taxation charges.
Increased demand pushed Eskom sales volumes 36% higher whilst local coal sales
declined by 32%. Attributable export sales volumes in 1H F2012 were lower due to
the exclusion of the Mpumalanga assets which were disposed of. Export sales from
the Mpumalanga assets were 103 thousand tonnes in 1H F2011.
Attributable run of mine production was 15% lower mainly due to the inclusion of
240 thousand tonnes from the Mpumalanga complex in 1H F2011. Attributable
saleable production was 11% lower than 1H F2011 as 116 thousand tonnes of
production from the Mpumalanga assets was included in 1H F2011. Production at
the South Stock underground operation ceased but this reduction was compensated
for by an increase in production at iMpunzi East.
Attributable on-mine cash costs were R42 million lower than the previous period
as a result of the inclusion of R61 million relating to the Mpumalanga assets in
1H F2011. The on-mine saleable cost of R328 per tonne was well-controlled and
similar to the previous period (1H F2011: R327 per tonne).
Participating Coal Business (PCB) operational statistics
100% basis six months ended 31 December
2011 2010 % change
Total production sales
Saleable production Mt 6.38 7.18 (11)
Export thermal coal sales Mt 4.67 5.40 (14)
Eskom thermal coal sales Mt 2.05 1.51 36
Local thermal coal sales Mt 0.47 0.69 (32)
Attributable production and
sales
Saleable production Mt 1.29 1.45 (11)
Export thermal coal sales Mt 0.94 1.09 (14)
Eskom thermal coal sales Mt 0.41 0.31 32
Local thermal coal sales Mt 0.09 0.14 (36)
Average received coal price
Export (FOB) $/tonne 97.65 72.90 34
Eskom (FOT) R/tonne 93.51 98.67 (5)
Local (FOR) R/tonne 223.07 289.02 (23)
On mine saleable cost R/tonne 329.30 326.60 1
Cash operating profit
Total R million 750 553 36
Attributable (20.2%) R million 152 111 37
Headline loss attributable to R million (43) (60) 28
ARM
Attributable profit analysis
six months ended 31 December
R million 2011 2010 % change
Cash operating profit 152 111 37
Less: interest paid (58) (51) 14
Less: amortisation (144) (128) 13
Less: fair value adjustments (10) (16) (38)
Loss before tax (60) (84) 30
Tax PCB 17 23 (26)
Headline loss attributable to ARM (43) (60) 28
ARM`s economic interest in XCSA (PCB) as at 31 December 2011 remains at 20.2%.
PCB consists of 10 mines all situated in Mpumalanga. ARM has a 26% effective
interest in the GGV Mine situated near Ogies in Mpumalanga.
Attributable refers to 20.2% of Xstrata Coal South Africa (XCSA) Operations and
whilst total refers to 100%.
ARM Copper
After the inauguration of the newly elected President and Government of the
Republic of Zambia (GRZ) in October 2011, all the required agreements, governing
the tenure of the mining lease area, were signed in Lusaka by the authorised
representatives of all the parties. During 1H F2012 Zambian Consolidated Copper
Mines Investment Holdings (ZCCM-IH) exercised its right to a 20% shareholding in
Konnoco (Zambia) Ltd and fulfilled all the obligations in terms of the signed
shareholder agreement.
Konkola North Copper Project
The Konkola North Copper Project continues to advance well with 16 of 27 month
of project development having been completed in December 2011. The project
progress is in line with the baseline schedule with commissioning of the
concentrator plant expected in December 2012. Despite worse than expected ground
conditions in the East Limb, the mechanised development is progressing well. The
first ore body intersection from the East Decline was made on 4 December 2011
and the first owner mining crews commenced with access development on 23
November 2011. Another three crews are in training and ready to commence
development in 2012. The refurbishing of the No. 2 Vertical Shaft was negatively
affected by the steel industry strike in South Africa and resultant late
delivery of steel. The delay was largely mitigated by early access development
to the 100 metre level of the vertical shaft. Early access enables development
operations at No. 2 Shaft Complex to commence before the commissioning of the
vertical shaft system. Production ramp-up to 45 000 tonnes of contained copper
is still expected by the end of F2015.
Project expenditure in July 2010 terms is estimated at US$399 million, of which
87% was committed at 31 December 2011. All project costs will be capitalised and
include the cost of relocating approximately 205 informal settlement houses
built on a potential mining subsidence area as defined by Zambian Mining
Legislation.
The mine`s throughput design from both the South and East Limb ore bodies
remains at 2.5 mtpa of ore with an average mill head grade of 2.3% copper, which
will yield 45 000 tonnes of contained copper in concentrate per annum for 28
years. The copper concentrate will be toll smelted and refined in Zambia for
which all the off-take agreements have been signed.
The Konkola North Copper Project is the first phase of exploiting the mineral
resource under mining license 7061-HQ-LML (Previously LML 20), covering an area
of approximately 240 km2. The second phase, which provides for the exploitation
of Area `A` South, 6 km to the south of the present mine development, may
provide for another shaft and the expansion of the processing plant to
potentially increase the total production to 5 million tonnes of ore, yielding
100 000 tonnes of copper per annum. Exploration drilling is continuing in Area
`A` and during 1H F2012 five exploration drill rigs were deployed and a total of
10 612 metres were drilled to further define the resources base. Drilling
results are being analysed and initial results are encouraging. Further to the
drilling programme, an Aerial Magnetic Survey was conducted across the whole
Mining Lease area with the intention to identify further exploration target
areas.
Kalumines project
The feasibility study at the Kalumines prospecting area was completed and
submitted to the shareholders on 28 July 2011 for consideration. Variability
drilling and test work are underway to identify further areas of possible
optimisation. Initial assessment of the feasibility study indicates that the
project is marginal. The shareholders are evaluating different options and have
received an extension on the development decision until 2 July 2012.
ARM Copper owns 50% of the Vale/ARM joint venture. Previously, ARM owned 65% of
TEAL which was listed on the Toronto Stock Exchange.
ARM Exploration
ARM Exploration`s minerals exploration programme is integral to ARM`s future
growth and is focused on identifying and capturing projects for future
development that will add value to ARM`s existing portfolio of assets.
Exploration targets include: ferrous metals, base metals, PGMs and coal mineral
deposits in sub-Saharan Africa.
An agreement with Rovuma Resources Limited, a Mozambican exploration company,
was signed in July 2011. Rovuma has been exploring in Mozambique since 2007 and
numerous PGMs, nickel, copper and other and base metal deposits have been
identified. ARM will fund on-going exploration at an estimated cost of US$7
million per year and have exclusive rights to exercise options to purchase
prospecting and/mining rights to the resources. Exploration in the first year of
funding includes the completion of airborne geophysical surveys, geochemical
sampling and mapping. Further base metal targets have been identified and will
be investigated through drilling.
In Zambia, reconnaissance exploration work on prospective areas for high grade
manganese mineralisation has been undertaken. Numerous targets have been
identified and discussions with the relevant rights holders have commenced.
Discussions are also in progress in Namibia for the possible evaluation of iron
ore deposits.
ARM Exploration continues to build a large database of mining and exploration
projects in Africa, focusing on iron ore, manganese ore, base metals and coal
and is investigating numerous opportunities in the region that could offer
investment opportunities for the medium- to long-term project pipeline.
The ARM Exploration headline loss attributable to ARM for 1H F2012 is R54
million.
Harmony Gold Mining Company Limited
Harmony reported a 123% increase in its operating profit to R3 383 million
compared to R1 519 million recorded in 1H F2011. Headline earnings were 234%
higher at 337 cents per share (1H F2011: 101 cents per share). Harmony achieved
these results through continued focus on improving grade quality and controlling
costs during a period when the gold price was favourable.
Gold production increased 2% to 20 925kg while the gold price realised increased
by 42% from R295 069/kg to R418 381/kg. The increase in production and a higher
gold price resulted in revenueincreasing by R2 676 million or 44%. Cash
operating costs were 15% higher from R222 787/kg to R257 114/kg mainly due to
increases in electricity and inflation-driven costs.
Harmony continued to focus on the optimisation of its asset portfolio and in the
period under review announced the disposal of its Evander operations to a
consortium comprising Pan African Resources plc and Witwatersrand Consolidated
Gold Resources Limited for a purchase consideration of R1.7 billion. Harmony
progressed the prefeasibility study of the Walfi Golpu project reaching key
strategy milestones in the selection of preferred strategies for mining,
underground access, processing, port and power infrastructure. The Walfi deposit
resource is 6.2 million ounces (Moz) gold while the Golpu deposit is 19.3 Moz
gold and 9 million tonnes copper. A recent drill hole, WR406, showed a 961 metre
(m) intersection at 1.37% copper and 1.39 grams per tonne (g/t) gold from 958m
including 199m at 2.57% copper and 2.87g/t gold from 1 286m.
Harmony declared a first interim dividend of 40 cents per share. ARM will
account for this dividend in its 2H F2012 results.
The ARM statement of financial position at 31 December 2011 reflects a mark-to-
market investment in Harmony of R6.05 billion which is based on a Harmony share
price of R95.00 per share. Changes in the value of the investment in Harmony are
accounted for by ARM through the statement of comprehensive income, net of
deferred capital gains tax. Dividends are recognised in the ARM income statement
on the last day of registration following dividend declaration.
Harmony`s results for the quarter and six months ended 31 December 2011 can be
viewed on Harmony`s website at: www.harmony.co.za
ARM owns 14.8% of Harmony`s issued share capital.
Outlook
Uncertainty in global markets persists driven by: (i) European sovereign debt
issues: (ii) the delayed US recovery and (iii) concerns about a slowdown in
China after the introduction of tightening measures in 2011. During the period
under review this manifested in volatile commodity and financial markets. This
volatility in financial markets was demonstrated in the Rand/US Dollar exchange
which during the last six months peaked at R8.57/US$ after reaching a low of
R6.67/US$, while the spot price for high grade iron ore ranged between a high of
US$185 per tonne and a low of US$118 per tonne. Volatile trading conditions are
expected to continue.
Such market volatility makes planning difficult and also heightens the
importance of controlling costs. Above inflation increases particularly in
labour, electricity and diesel continue to be a challenge for the mining
industry. It is nevertheless ARM`s view that commodity prices will remain robust
over the medium to long term and as a result ARM continues to invest in
expansion capital at its existing operations and to fund exploration. ARM
remains focused on aggressive growth and is ramping-up production of iron ore to
16 million tonnes per annum at the Khumani Mine, while nickel production at
Nkomati is being increased to 20 500 tonnes per annum. The Goedgevonden Mine is
ramped up to design capacity of 7.0 million tonnes per annum and the copper
output at the Konkola North Copper Project is forecast to be 45 000 tonnes per
annum at full production.
Independent auditors
The financial results for the six months ended 31 December 2011 have not been
reviewed or audited by the Company`s registered auditors, Ernst & Young Inc.
Signed on behalf of the board:
PT Motsepe AJ Wilkens
Executive Chairman Chief Executive Officer
Johannesburg
27 February 2012
Group statement of financial position
as at 31 December 2011
Unaudited Audited
Six months ended Year ended
31 December 30 June
2011 2010 2011
Note Rm Rm Rm
ASSETS
Non-current assets
Property, plant and equipment 16 959 14 219 15 500
Investment property 14 53 12
Intangible assets 196 206 202
Deferred tax assets 1 44 87
Loans and long-term 195 192 186
receivables
Financial assets 67 87 45
Inventories 157 127 130
Investment in associate 1 306 1 375 1 331
Other investments 6 129 5 346 5 798
25 024 21 649 23 291
Current assets
Inventories 2 506 2 170 2 162
Trade and other receivables 3 898 3 355 3 113
Taxation 37 38 75
Cash and cash equivalents 2 2 825 2 301 3 668
9 266 7 864 9 018
Total assets 34 290 29 513 32 309
EQUITY AND LIABILITIES
Capital and reserves
Ordinary share capital 11 11 11
Share premium 3 896 3 822 3 840
Other reserves 1 562 804 1 201
Retained earnings 17 164 14 367 16 105
Equity attributable to equity 22 633 19 004 21 157
holders of ARM
Non-controlling interest 1 155 834 958
Total equity 23 788 19 838 22 115
Non-current liabilities
Long-term borrowings 3 1 835 2 627 2 337
Deferred tax liabilities 3 842 3 360 3 571
Long-term provisions 652 520 549
6 329 6 507 6 457
Current liabilities
Trade and other payables 2 377 1 926 2 448
Short-term provisions 201 181 287
Taxation 368 291 270
Overdrafts and short-term 3 1 227 770 732
borrowings
4 173 3 168 3 737
Total equity and liabilities 34 290 29 513 32 309
Group income statement
for the six months ended 31 December 2011
Unaudited Audited
Six months ended Year ended
31 December 30 June
2011 2010 2011
Note Rm Rm Rm
Revenue 9 093 6 924 15 357
Sales 8 721 6 714 14 893
Cost of sales (5 439) (3 940) (8 952)
Gross profit 3 282 2 774 5 941
Other operating income 545 174 511
Other operating expenses (743) (414) (1 130)
Profit from operations before 3 084 2 534 5 322
exceptional items
Income from investments 141 108 216
Finance costs (93) (99) (216)
Loss from associate* (6) (60) (135)
Profit before taxation and 3 126 2 483 5 187
exceptional items
Exceptional items 4 2 (4) (11)
Profit before taxation 3 128 2 479 5 176
Taxation 6 (1 060) (851) (1 671)
Profit for the period 2 068 1 628 3 505
Attributable to:
Non-controlling interest 85 70 194
Equity holders of ARM 1 983 1 558 3 311
2 068 1 628 3 505
Additional information
Headline earnings (R million) 5 1 944 1 562 3 319
Headline earnings per share 912 734 1 559
(cents)
Basic earnings per share 930 732 1 555
(cents)
Fully diluted headline 906 727 1 552
earnings per share (cents)
Fully diluted basic earnings 924 725 1 548
per share (cents)
Number of shares in issue at 213 751 212 932 213 133
end of period (thousands)
Weighted average number of 213 233 212 768 212 889
shares in issue (thousands)
Weighted average number of 214 579 214 827 213 871
shares used in calculating
fully diluted earnings per
share (thousands)
Net asset value per share 10 588 8 925 9 927
(cents)
EBITDA (R million) 3 635 3 103 6 434
* Exceptional gain included in 37 - -
loss from associate (R
million)
Dividend declared after year- - - 450
end (cents)
Group statement of comprehensive income
for the six months ended 31 December 2011
Revaluation
of listed Retained
investments Other earnings
Rm Rm Rm
Six months ended 31 December 2011
(Unaudited)
Profit for the period - - 1 983
Other comprehensive income:
Net impact of revaluation of 276 - -
listed investment
Revaluation of listed investment 321 - -
Deferred tax on revaluation of (45) - -
listed investment
Foreign currency translation - 20 -
Foreign exchange on loans to - 110 -
foreign Group entity
Deferred tax on foreign exchange - (18) -
onloans to foreign Group entity
Cash flow hedge reserve - (35) -
Other - 2 (2)
Total other comprehensive income 276 79 (2)
Total comprehensive income for the 276 79 1 981
period
Six months ended
31 December 2010 (Unaudited)
Profit for the period - - 1 558
Other comprehensive income:
Net impact of revaluation of 88 - -
listed investment
Revaluation of listed investment 102 - -
Deferred tax on revaluation of (14) - -
listed investment
Foreign exchange on loans to - (95) -
foreign Group entity
Cash flow hedge reserve - 12 -
Foreign currency translation - 55 -
Other - (11) 11
Total other comprehensive income 88 (39) 11
Total comprehensive income for the 88 (39) 1 569
period
Year ended 30 June 2011 (Audited)
Profit for the year - - 3 311
Other comprehensive income:
Net impact of revaluation of 468 - -
listed investment
Revaluation of listed investment 544 - -
Deferred tax on revaluation of (76) - -
listed investment
Foreign exchange on loans to - (82) -
foreign Group entity
Deferred tax on foreign exchange - 11 -
on loans to foreign Group entity
Cash flow hedge reserve - (4) -
Foreign currency translation - 40 -
Total other comprehensive income 468 (35) -
Total comprehensive income for the 468 (35) 3 311
year
Total Non-
share- controll-
holders ing
of ARM interest Total
Rm Rm Rm
Six months ended 31 December 2011
(Unaudited)
Profit for the period 1 983 85 2 068
Other comprehensive income:
Net impact of revaluation of 276 - 276
listed investment
Revaluation of listed investment 321 - 321
Deferred tax on revaluation of (45) - (45)
listed investment
Foreign currency translation 20 - 20
Foreign exchange on loans to 110 - 110
foreign Group entity
Deferred tax on foreign exchange (18) - (18)
onloans to foreign Group entity
Cash flow hedge reserve (35) - (35)
Other - - -
Total other comprehensive income 353 - 353
Total comprehensive income for the 2 336 85 2 421
period
Six months ended
31 December 2010 (Unaudited)
Profit for the period 1 558 70 1 628
Other comprehensive income:
Net impact of revaluation of 88 - 88
listed investment
Revaluation of listed investment 102 - 102
Deferred tax on revaluation of (14) - (14)
listed investment
Foreign exchange on loans to (95) - (95)
foreign Group entity
Cash flow hedge reserve 12 - 12
Foreign currency translation 55 - 55
Other - - -
Total other comprehensive income 60 - 60
Total comprehensive income for the 1 618 70 1 688
period
Year ended 30 June 2011 (Audited)
Profit for the year 3 311 194 3 505
Other comprehensive income:
Net impact of revaluation of 468 - 468
listed investment
Revaluation of listed investment 544 - 544
Deferred tax on revaluation of (76) - (76)
listed investment
Foreign exchange on loans to (82) - (82)
foreign Group entity
Deferred tax on foreign exchange 11 - 11
on loans to foreign Group entity
Cash flow hedge reserve (4) - (4)
Foreign currency translation 40 - 40
Total other comprehensive income 433 - 433
Total comprehensive income for the 3 744 194 3 938
year
Group statement of changes in equity
for the six months ended 31 December 2011
Share
capital Revaluation
and of listed Retained
premium investments Other earnings
Rm Rm Rm Rm
Six months ended
31 December 2011
(Unaudited)
Balance at 30 June 2011 3 851 914 287 16 105
Profit for the period - - - 1 983
Other comprehensive income - 276 79 (2)
Total comprehensive income - 276 79 1 981
for the period
Part disposal of interest in - - - 37
Konnoco
Share-based payments 56 - - -
Share options exercised - - 6 -
Dividend paid - - - (959)
Balance at 31 December 2011 3 907 1 190 372 17 164
Six months ended 31 December
2010 (Unaudited)
Balance at 30 June 2010 3 814 446 282 13 223
Profit for the period - - - 1 558
Other comprehensive income - 88 (39) 11
Total comprehensive income - 88 (39) 1 569
for the period
Share-based payments - - 27 -
Share options exercised 19 - - -
Dividends paid - - - (425)
Balance at 31 December 2010 3 833 534 270 14 367
Year ended 30 June 2011
(Audited)
Balance at 30 June 2010 3 814 446 282 13 223
Profit for the year - - - 3 311
Other comprehensive income - 468 (35) -
Total comprehensive income - 468 (35) 3 311
for the year
Share-based payments - - 37 -
Share options exercised 37 - - -
Dividends paid - - - (426)
Other - - 3 (3)
Balance at 30 June 2011 3 851 914 287 16 105
Total Non-
share- controll-
holders ing
of ARM interest Total
Rm Rm Rm
Six months ended
31 December 2011
(Unaudited)
Balance at 30 June 2011 21 157 958 22 115
Profit for the period 1 983 85 2 068
Other comprehensive income 353 - 353
Total comprehensive income 2 336 85 2 421
for the period
Part disposal of interest in 37 112 149
Konnoco
Share-based payments 56 - 56
Share options exercised 6 - 6
Dividend paid (959) - (959)
Balance at 31 December 2011 22 633 1 155 23 788
Six months ended 31 December
2010 (Unaudited)
Balance at 30 June 2010 17 765 764 18 529
Profit for the period 1 558 70 1 628
Other comprehensive income 60 - 60
Total comprehensive income 1 618 70 1 688
for the period
Share-based payments 27 - 27
Share options exercised 19 - 19
Dividends paid (425) - (425)
Balance at 31 December 2010 19 004 834 19 838
Year ended 30 June 2011
(Audited)
Balance at 30 June 2010 17 765 764 18 529
Profit for the year 3 311 194 3 505
Other comprehensive income 433 - 433
Total comprehensive income 3 744 194 3 938
for the year
Share-based payments 37 - 37
Share options exercised 37 - 37
Dividends paid (426) - (426)
Other - - -
Balance at 30 June 2011 21 157 958 22 115
Group statement of cash flows
for the six months ended 31 December 2011
Unaudited Audited
Six months ended Year ended
31 December 30 June
2011 2010 2011
Note Rm Rm Rm
CASH FLOW FROM OPERATING
ACTIVITIES
Cash receipts from customers 8 487 6 660 15 409
Cash paid to suppliers and (5 926) (4 611) (9 511)
employees
Cash generated from operations 7 2 561 2 049 5 898
Interest received 95 83 181
Interest paid (36) (52) (117)
Dividends received 38 32 33
Dividends paid (959) (425) (426)
Taxation paid (631) (486) (1 240)
Net cash inflow from operating 1 068 1 201 4 329
activities
CASH FLOW FROM INVESTING
ACTIVITIES
Additions to property, plant and (419) (430) (797)
equipment to maintain operations
Additions to property, plant and (1 449) (1 202) (2 151)
equipment to expand operations
Proceeds on disposal of 1 1 3
property, plant and equipment
Investment in associate - Coal - (16) (131) (178)
loan
Investments in Richards Bay Coal (9) (176) (63)
Terminal
(Increase)/decrease in loans and (10) 1 (106)
long-term receivables
Net cash outflow from investing (1 902) (1 937) (3 292)
activities
CASH FLOW FROM FINANCING
ACTIVITIES
Proceeds on exercise of share 10 19 37
options
Proceeds on subscription by 86 - -
minority shareholder in Konnoco
Long-term borrowings raised 165 363 283
Long-term borrowings repaid (98) (300) (596)
Decrease in short-term (110) (150) (312)
borrowings
Net cash inflow/(outflow) from 53 (68) (588)
financing activities
Net (decrease)/increase in cash (781) (804) 449
and cash equivalents
Cash and cash equivalents at 3 227 2 791 2 791
beginning of period
Foreign currency translation on 19 (19) (13)
cash balances
Cash and cash equivalents at end 2 2 465 1 968 3 227
of period
Cash generated from operations 1 201 963 2 770
per share (cents)
Notes to the financial statements for the six months ended 31 December 2011
1. STATEMENT OF COMPLIANCE
The consolidated Group financial statements for the half-year ended 31 December
2011 have been prepared in accordance with International Financial Reporting
Standards (IFRS) of the International Accounting Standards Board (IASB), the AC
500 standards as issued by the Accounting Practices Board or its successor,
requirements of the South African Companies Act, 2008, as amended, and the
Listings Requirements of the JSE Limited.
BASIS OF PREPARATION
The consolidated Group financial statements for the half-year ended 31 December
2011 have been prepared on the historical cost basis, except for certain
financial instruments that are fairly valued by marking to market. The
accounting policies used are consistent with those in the most recent annual
financial statements, except for those listed below, and comply with IFRS and
are in terms of the disclosure requirements of IAS 34 - Interim Financial
Reporting.
The Group financial statements for the period have been prepared under the
supervision of the financial director, Mr M Arnold, CA(SA).
The Group has adopted the following new and revised standards and
interpretations issued by the International Financial Reporting Interpretation
Committee (IFRIC) of the IASB that became effective before and on 1 July 2011:
Standard Subject
IFRS 1 First-time adoption of International Financial Reporting
Standards - Accounting policy changes in the year of
adoption (Annual improvements project 2010)
First-time adoption of International Financial Reporting
Standards - Severe hyperinflation and removal of fixed dates
for first time adaptors (Amendment)
First-time adoption of International Financial Reporting
Standards - Revaluation basis as deemed cost (Annual
improvements project 2010)
First-time adoption of International Financial Reporting
Standards - Replacement of fixed dates for certain
exceptions with the date of transition to IFRS (Amendment)
First-time adoption of International Financial Reporting
Standards - Use of deemed cost for operations subject to
rate regulation (Annual improvements project 2010)
IFRS 7 Financial instruments: Disclosures - Transfer of financial
assets (Amendment)
Financial instruments: Disclosures - Clarification of
disclosures (Annual improvements project 2010)
IAS 1 Presentation of financial statements - Clarification of
statement of changes in equity (Annual improvements project
2010)
IAS 24 Related party disclosure (revised)
IAS 34 Interim financial reporting - Significant events and
transactions (Annual improvements projects 2010)
IFRIC 13 Customer loyalty programmes - Fair value of award credit
(Annual improvements project 2010)
IFRIC 14 IAS 19 - The limit on a defined benefit asset, minimum
funding requirements and their interactions - Prepayments of
a minimum funding requirement (Amendment)
The adoption of these amendments, standards and interpretations had no effect on
these financial statements.
In addition, the following amendments, standards or interpretations have been
issued but are not yet effective. The effective date refers to periods beginning
on or after, unless otherwise indicated.
Standard Subject Effective date
IFRS 9 Financial instruments: Classification and 1 January 2013
measurement
IFRS 10 Consolidated financial statements 1 January 2013
IFRS 11 Joint arrangements 1 January 2013
IFRS 12 Disclosure of interest in other entities 1 January 2013
IFRS 13 Fair value measurement 1 January 2013
IAS 1 Presentation of other comprehensive income 1 January 2012
(Amendment)
IAS 12 Income taxes - Recovery of underlying 1 January 2012
assets (Amendment)
IAS 19 Employee benefits (Amendment) 1 January 2013
IAS 27 Separate financial statements (as revised 1 January 2013
in 2011)
IAS 28 Investment in associate and joint ventures 1 January 2013
(as revised in 2011)
IFRIC 20 Accounting for stripping costs in the 1 January 2013
production phase of a surface mine
The Group is currently assessing the impact of adopting these standards.
Unaudited Audited
Six months ended Year ended
31 December 30 June
2011 2010 2011
Rm Rm Rm
2. CASH AND CASH EQUIVALENTS
- African Rainbow Minerals Limited 174 678 962
- Assmang Limited 1 357 498 1 473
- ARM Platinum (Pty) Limited 291 276 285
- Kingfisher Insurance Co Limited 138 134 139
- Nkomati 46 93 176
- Two Rivers Platinum (Pty) 9 57 4
Limited
- Vale/ARM joint venture 86 26 36
- Venture Building Trust 6 - 5
- Restricted cash 718 539 588
Total as per statement of financial 2 825 2 301 3 668
position
Less: overdrafts 360 333 441
Total as per statement of cash 2 465 1 968 3 227
flows
3. BORROWINGS
Long-term borrowings are held as
follows:
- African Rainbow Minerals Limited - 683 410
- Assmang Limited - 2 -
- ARM Coal (Pty) Limited 1 676 1 808 1 781
- ARM Platinum (Pty) Limited 1 - 1
- Two Rivers Platinum (Pty) 142 134 145
Limited
- Vale/ARM joint venture 16 - -
1 835 2 627 2 337
Overdrafts and short-term
borrowings are held
- African Rainbow Minerals Limited 561 - -
- Assmang Limited - - 2
- ARM Platinum (Pty) Limited 119 121 129
- ARM Coal (Pty) Limited 51 39 27
- Two Rivers Platinum (Pty) 407 340 464
Limited
- Two Rivers Platinum (Pty) 50 232 73
Limited - Implats
- Other 39 38 37
1 227 770 732
Total borrowings 3 062 3 397 3 069
Interest of R5 million was capitalised for the half-year ended 31 December 2011.
(Half-year to 31 December 2010: R12 million.Full year to 30 June 2011: R12
million).
4. EXCEPTIONAL ITEMS
Profit on sale of property, plant 1 1 -
and equipment
Loss on sale of property, plant and - (1) (7)
equipment
Reversal/(Impairments) of property, 1 (4) (4)
plant and equipment
Exceptional items per income 2 (4) (11)
statement
Profit on sale of property, plant 52 - -
and equipment in Associate - ARM
coal
Total exceptional items 54 (4) (11)
Taxation (15) - 3
Total amount adjusted for headline 39 (4) (8)
earnings
5. HEADLINE EARNINGS
Basic earnings per income statement 1 983 1 558 3 311
(Reversal)/Impairment of property, (1) 4 4
plant and equipment
Profit on sale of property, plant (1) - 7
and equipment
Profit on sale of property, plant (52) - -
and equipment in Associate - ARM
coal
1 929 1 562 3 322
Taxation 15 - (3)
Headline earnings 1 944 1 562 3 319
6. TAXATION
South African normal tax - current 718 355 975
year
South African normal tax - mining 649 308 875
South African normal tax - non- 69 47 100
mining
State`s share of profits - 60 93
Deferred tax - current year 292 386 503
Secondary Tax on Companies 50 50 100
Taxation 1 060 851 1 671
7. CASH GENERATED FROM OPERATIONS
BEFORE WORKING CAPITAL MOVEMENTS
Cash generated from operations 3 709 3 031 6 538
before working capital movement
Working capital changes (1 148) (982) (640)
Movement in receivables (784) (253) (10)
Movement in payables (34) (360) (216)
Movement in inventories (330) (369) (414)
Cash generated from operations (per 2 561 2 049 5 898
statement of cash flows)
8. COMMITMENTS AND CONTINGENT LIABILITIES
Commitments in respect of future capital expenditure which will be funded
from operating cash flows and by utilising debt facilities at entity and
corporate levels, are summarised below:
Approved by directors
- contracted for 4 143 3 066 3 383
- not contracted for 536 2 032 600
Total commitments 4 679 5 098 3 983
Contingent liabilities
Shareholders are advised that there have been no significant changes to the
contingent liabilities of the Group as disclosed in the June 2011 annual report.
The company is in discussion with the South African Revenue Services on
progressing the 1998 tax dispute concerning the claim of a loan stock redemption
premium.
ARM ARM ARM ARM**
Platinum Ferrous Coal Copper
Rm Rm Rm Rm
9. SEGMENTAL INFORMATION
Primary segmental information
Six months ended
31 December 2011 (Unaudited)
Sales 2 491 5 830 400 -
Cost of sales (2 133) (3 018) (310) -
Other operating income 37 325 6 -
Other operating expenses (198) (354) (1) (18)
Segment result 197 2 783 95 (18)
Income from investments 14 46 - -
Finance cost (22) (6) (51) -
Finance cost Implats: (2) - - -
Shareholders loan Two Rivers
Finance cost ARM: Shareholders (3) - - -
loan Two Rivers
Finance cost: Shareholders loan - - - (17)
ARM
Income from associate - - (6) -
Exceptional items*** 1 1 - -
Taxation (63) (849) (13) (3)
Non-controlling interest (87) - - 8
Contribution to earnings 35 1 975 25 (30)
Contribution to headline 34 1 974 (12) (30)
earnings
Other information
Segment assets including 8 629 13 505 2 921 1 364
investment in associate
Investment in associate - - 1 306 -
Segment liabilities 1 849 1 236 1 880 166
Unallocated - Deferred taxation
and taxation
Consolidated total liabilities
Cash generated from/(utilised 440 1 948 177 (52)
in) operations
Cash in/(out)flow from 414 1 436 182 (49)
operating activities
Cash outflow from investing (332) (1 035) (60) (473)
activities
Cash (out)/inflow from (85) (13) (125) 102
financing activities
Capital expenditure 343 977 74 479
Amortisation and depreciation 235 259 52 2
EBITDA 432 3 042 147 (16)
ARM Corporate*
Explora- and
tion other Gold
Rm Rm Rm Rm
9. SEGMENTAL INFORMATION
Primary segmental information
Six months ended
31 December 2011 (Unaudited)
Sales - - - 8 721
Cost of sales - 22 - (5 439)
Other operating income - 177 - 545
Other operating expenses (54) (118) - (743)
Segment result (54) 81 - 3 084
Income from investments - 43 38 141
Finance cost - 8 - (71)
Finance cost Implats: - - - (2)
Shareholders loan Two Rivers
Finance cost ARM: Shareholders - - - (3)
loan Two Rivers
Finance cost: Shareholders loan - - - (17)
ARM
Income from associate - - - (6)
Exceptional items*** - - - 2
Taxation - (132) - (1 060)
Non-controlling interest - (6) - (85)
Contribution to earnings (54) (6) 38 1 983
Contribution to headline (54) (6) 38 1 944
earnings
Other information
Segment assets including - 1 826 6 045 34 290
investment in associate
Investment in associate - - - 1 306
Segment liabilities - 1 161 - 6 292
Unallocated - Deferred taxation 4 210
and taxation
Consolidated total liabilities 10 502
Cash generated from/(utilised (54) 102 - 2 561
in) operations
Cash in/(out)flow from (54) (899) 38 1 068
operating activities
Cash outflow from investing - (2) - (1 902)
activities
Cash (out)/inflow from - 174 - 53
financing activities
Capital expenditure - 2 - 1 875
Amortisation and depreciation - 3 - 551
EBITDA (54) 84 - 3 635
* Corporate, other companies and consolidation adjustments.
** With effect from 1 July 2011 ARM Copper comprises the development of the
Konkola North Copper Project and copper exploration cost in Zambia and the
DRC.
*** Exceptional gain included in loss from associate - R37 million.
ARM
ARM ARM ARM Explora-
Platinum Ferrous Coal tion
Rm Rm Rm Rm
9. SEGMENTAL INFORMATION
continued
Six months ended
31 December 2010 (Unaudited)
Sales
Total sales 2 419 4 056 244 -
Inter-group sales to ARM 5 - - -
ferrous
External sales 2 414 4 056 244
Cost of sales (1 803) (1 962) (191) -
Other operating income 16 24 - -
Other operating expenses (76) (255) (1) (72)
Segment result 551 1 863 52 (72)
Income from investments 14 26 - -
Finance cost (13) (2) (44) (1)
Finance cost Implats: (14) - - -
Shareholders loan Two Rivers
Finance cost ARM: Shareholders (11) - - -
loan Two Rivers
Finance cost: Shareholders loan - - - (4)
ARM
Income from associate - - (60) -
Exceptional items (4) - - -
Taxation (152) (631) (2) -
Non-controlling interest (80) - - 13
Contribution to earnings 291 1 256 (54) (64)
Contribution to headline 295 1 256 (54) (64)
earnings
Other information
Segment assets including 8 426 10 300 3 507 280
investment in associate
Investment in associate - - 1 375 -
Segment liabilities 1 731 924 1 937 36
Unallocated - Deferred taxation
and taxation
Consolidated total liabilities
Cash generated from/(utilised 675 1 570 91 (108)
in) operations
Cash in/(out) flow from 659 1 148 89 (108)
operating activities
Cash outflow from investing (436) (1 043) (228) (57)
activities
Cash (out)/in flow from (131) (4) 143 -
financing activities
Capital expenditure** 444 995 48 24
Amortisation and depreciation 281 236 46 3
EBITDA 832 2 099 98 (69)
Corporate*
and
other Gold
Rm Rm Rm
9. SEGMENTAL INFORMATION
continued
Six months ended
31 December 2010 (Unaudited)
Sales
Total sales - - 6 719
Inter-group sales to ARM - - 5
ferrous
External sales - 6 714
Cost of sales 16 - (3 940)
Other operating income 134 - 174
Other operating expenses (10) - (414)
Segment result 140 - 2 534
Income from investments 36 32 108
Finance cost (10) - (70)
Finance cost Implats: - - (14)
Shareholders loan Two Rivers
Finance cost ARM: Shareholders - - (11)
loan Two Rivers
Finance cost: Shareholders loan - - (4)
ARM
Income from associate - - (60)
Exceptional items - - (4)
Taxation (66) - (851)
Non-controlling interest (3) - (70)
Contribution to earnings 97 32 1 558
Contribution to headline 97 32 1 562
earnings
Other information
Segment assets including 1 718 5 282 29 513
investment in associate
Investment in associate - - 1 375
Segment liabilities 1 396 - 6 024
Unallocated - Deferred taxation 3 651
and taxation
Consolidated total liabilities 9 675
Cash generated from/(utilised (179) - 2 049
in) operations
Cash in/(out) flow from (619) 32 1 201
operating activities
Cash outflow from investing (173) - (1 937)
activities
Cash (out)/in flow from (76) - (68)
financing activities
Capital expenditure** 41 - 1 552
Amortisation and depreciation 3 - 569
EBITDA 143 - 3 103
* Corporate, other companies and consolidation adjustments.
** Capital expenditure in the ARM Exploration segment relates to the ARM
Copper development of the Konkola North Copper Project.
ARM Platinum ARM ARM
Platinum Nickel Ferrous Coal
Rm Rm Rm Rm
9. SEGMENTAL INFORMATION
continued
Year ended 30 June 2011
(Audited)
Total sales 3 355 1 499 9 538 505
Inter-group sales to ARM - 4 - -
Ferrous
Sales 3 355 1 495 9 538 505
Cost of sales (2 477) (1 122) (5 009) (381)
Other operating income 20 11 125 -
Other operating expenses (96) (236) (425) (2)
Segment result 802 148 4 229 122
Income from investments 25 8 71 -
Finance cost (43) (2) (13) (85)
Finance cost Implats: (16) - - -
Shareholders loan Two Rivers
Finance cost ARM: Shareholders (20) - - -
loan Two Rivers
Loss from associate - - - (135)
Exceptional items - (4) (7) -
Taxation (186) (43) (1 388) (5)
Non-controlling interest (212) - - -
Contribution to earnings 350 107 2 892 (103)
Contribution to headline 350 110 2 897 (103)
earnings
Other information
Segment assets including 5 903 2 640 11 923 3 544
investment in associate
Investment in associate - - - 1 331
Segment liabilities 1 585 226 1 271 1 924
Unallocated - Deferred taxation
and taxation
Consolidated total liabilities
Cash generated from/(utilised 1 179 397 4 364 173
in) operations
Cash in/(out) flow from 988 405 3 413 174
operating activities
Cash (out)/in flow from (293) (393) (1 822) (427)
investing activities
Cash (out)/in flow from (329) - (3) 78
financing activities
Capital expenditure ** 429 404 1 967 85
Amortisation and depreciation 304 203 499 95
Impairment - 4 - -
EBITDA 1 106 351 4 728 217
ARM Corporate*
Explora- and
tion other Gold Total
Rm Rm Rm Rm
9. SEGMENTAL INFORMATION
continued
Year ended 30 June 2011
(Audited)
Total sales - - - 14 897
Inter-group sales to ARM - - - 4
Ferrous
Sales - - - 14 893
Cost of sales - 37 - (8 952)
Other operating income - 355 - 511
Other operating expenses (151) (220) - (1 130)
Segment result (151) 172 - 5 322
Income from investments - 80 32 216
Finance cost (47) 10 - (180)
Finance cost Implats: - - - (16)
Shareholders loan Two Rivers
Finance cost ARM: Shareholders - - - (20)
loan Two Rivers
Loss from associate - - - (135)
Exceptional items - - - (11)
Taxation (2) (47) - (1 671)
Non-controlling interest 27 (9) - (194)
Contribution to earnings (173) 206 32 3 311
Contribution to headline (173) 206 32 3 319
earnings
Other information
Segment assets including 683 1 892 5 724 32 309
investment in associate
Investment in associate - - - 1 331
Segment liabilities 209 1 138 - 6 353
Unallocated - Deferred taxation 3 841
and taxation
Consolidated total liabilities 10 194
Cash generated from/(utilised (133) (82) - 5 898
in) operations
Cash in/(out) flow from (136) (547) 32 4 329
operating activities
Cash (out)/in flow from (313) (44) - (3 292)
investing activities
Cash (out)/in flow from - (334) - (588)
financing activities
Capital expenditure ** 475 44 - 3 404
Amortisation and depreciation 6 5 - 1 112
Impairment - - - 4
EBITDA (145) 177 - 6 434
* Corporate, other companies and consolidation adjustments.
** Capital expenditure in the ARM Exploration segment relates to the ARM
Copper development of the Konkola North Copper Project.
Additional information
for the six months ended 31 December 2011
The ARM platinum segment is analysed further into Nkomati, Two Rivers Platinum
(Pty) Limited and ARM Mining Consortium Limited which includes 50% of the
Modikwa Platinum Mine.
Two Rivers Modikwa Nkomati ARM Platinum
Rm Rm Rm Rm
SEGMENTAL INFORMATION
Six months ended 31 December
2011 (Unaudited)
Sales
External sales 1 200 599 692 2 491
Cost of sales (915) (460) (758) (2 133)
Other operating income 9 - 28 37
Other operating expenses (36) (25) (137) (198)
Segment result 258 114 (175) 197
Income from investments 2 8 4 14
Finance cost (20) (1) (1) (22)
Finance cost Implats: (2) - - (2)
Shareholders loan Two Rivers
Finance cost ARM: (3) - - (3)
Shareholders loan Two Rivers
Exceptional items - - 1 1
Taxation (75) (32) 44 (63)
Non-controlling interest (72) (15) - (87)
Contribution to earnings 88 74 (127) 35
Contribution to headline 88 74 (128) 34
earnings
Other information
Segment assets 3 207 2 997 2 425 8 629
Segment liabilities 893 736 220 1 849
Cash inflow/(outflow) from 291 150 (27) 414
operating activities
Cash outflow from investing (110) (122) (100) (332)
activities
Cash outflow from financing (72) (10) (3) (85)
activities
Capital expenditure 164 123 56 343
Amortisation and 127 45 63 235
depreciation
EBITDA 385 159 (112) 432
Six months ended 31 December
2010 (Unaudited)
Sales
Total sales 1 071 580 768 2 419
Inter-group sales to ARM - - 5 5
ferrous
External sales 1 071 580 763 2 414
Cost of sales (819) (440) (544) (1 803)
Other operating expenses 6 - 10 16
Other operating expenses (16) (14) (46) (76)
Segment result 242 126 183 551
Income from investments 2 9 3 14
Finance cost (16) 4 (1) (13)
Finance cost Implats: (14) - - (14)
Shareholders loan Two Rivers
Finance cost ARM: (11) - - (11)
Shareholders loan Two Rivers
Exceptional items - - (4) (4)
Taxation (65) (36) (51) (152)
Non-controlling interest (62) (18) - (80)
Contribution to earnings 76 85 130 291
Contribution to headline 76 85 134 295
earnings
Other information
Segment assets 3 052 2 760 2 614 8 426
Segment liabilities 979 543 209 1 731
Cash inflow from operating 236 154 269 659
activities
Cash outflow from investing (39) (72) (325) (436)
activities
Cash outflow from financing (130) (1) - (131)
activities
Capital expenditure 53 77 314 444
Amortisation and 116 40 125 281
depreciation
EBITDA 358 166 308 832
Iron ore Manganese Chrome Ferrous Attributable
Proforma analysis division division division Total to ARM
of the Ferrous
segment on a 100% Rm Rm Rm Rm Rm
basis
Segmental
Information
Six months ended 31
December 2011
(Unaudited)
Sales
External sales 7 517 3 181 962 11 660 5 830
Other operating 468 330 53 851 325
income
Other operating (645) (165) (99) (909) (354)
expenses
Operating 4 499 1 068 (1) 5 566 2 783
profit/(loss)
Contribution to 3 126 834 (10) 3 950 1 975
earnings
Contribution to 3 126 833 (10) 3 949 1 974
headline earnings
Other information
Segment assets 17 514 8 699 1 430 27 643 13 505
Segment liabilities 4 540 2 028 616 7 184 1 236
Cash in/(out)flow 1 510 571 (210) 1 871 1 436
from operating
activities
Cash outflow from (1 684) (218) (167) (2 069) (1 035)
investing
activities
Cash outflow from - - (26) (26) (13)
financing
activities
Capital expenditure 1 644 265 128 2 037 977
Amortisation and 337 126 71 534 259
depreciation
EBITDA 4 836 1 194 70 6 100 3 042
Six months ended 31
December 2010
(Unaudited)
Sales
External sales 3 987 3 204 921 8 112 4 056
Other operating 6 54 3 63 24
income
Other operating (202) (227) (96) (525) (255)
expenses
Operating 2 436 1 402 (112) 3 726 1 863
profit/(loss)
Contribution to 1 750 849 (87) 2 512 1 256
earnings
Contribution to 1 750 849 (87) 2 512 1 256
headline earnings
Other information
Segment assets 10 561 8 869 1 657 21 087 10 300
Segment liabilities 2 615 2 573 667 5 855 924
Cash in/(out)flow 1 546 (30) (220) 1 296 1 148
from operating
activities
Cash outflow from (1 600) (350) (136) (2 086) (1 043)
investing
activities
Cash outflowfrom - - (8) (8) (4)
financing
activities
Capital expenditure 1 601 380 92 2 073 995
Amortisation and 284 143 71 498 236
depreciation
EBITDA 2 720 1 545 (41) 4 224 2 099
Contact details and administration
Registered office
ARM House
29 Impala Road
Chislehurston, Sandton, 2196
South Africa
PO Box 786136, Sandton, 2146
South Africa
Telephone: +27 11 779 1300
Fax: +27 11 779 1312
E-mail: ir.admin@arm.co.za
Website: http://www.arm.co.za
Transfer secretaries
Computershare Investor Services (Pty) Limited
Ground Floor, 70 Marshall Street
Johannesburg, 2001
PO Box 61051, Marshalltown, 2107
Telephone: +27 11 370 5000
Telefax: +27 11 688 5222
E-mail: web.queries@computershare.co.za
Website: http://www.computershare.co.za
Forward-looking statements
Certain statements in this report constitute forward-looking statements that
are neither reported financial results nor other historical information. They
include but are not limited to statements that are predictions of or indicate
future earnings, savings, synergies, events, trends, plans or objectives. Such
forward-looking statements may or may not take into account and may or may not
be affected by known and unknown risks, uncertainties and other important
factors that could cause the actual results, performance or achievements of the
Company to be materially different from the future results, performance or
achievements expressed or implied by such forward-looking statements. Such
risks, uncertainties and other important factors include among others: economic,
business and political conditions in South Africa; decreases in the market price
of commodities; hazards associated with underground and surface mining; labour
disruptions; changes in government regulations, particularly environmental
regulations; changes in exchange rates; currency devaluations; inflation
and other macro-economic factors; and the impact of the AIDS crisis in South
Africa. These forward-looking statements speak only as of the date of
publication of this report. The Company undertakes no obligation to update
publicly or release any revisions to these forward-looking statements to
reflect events or circumstances after the date of publication of this report or
to reflect the occurrence of unanticipated events.
Directors
PT Motsepe (Executive Chairman)
AJ Wilkens (Chief Executive Officer)
F Abbott*
M Arnold
Dr MMM Bakane-Tuoane**
TA Boardman**
AD Botha**
JA Chissano (Mozambican)**
WM Gule
MW King**
AK Maditsi**
KS Mashalane
MP Schmidt
LA Shiels
Dr RV Simelane**
JC Steenkamp
ZB Swanepoel**
*Non-executive?**Independent non-executive
Investor relations
Jongisa Klaas
Head of Investor Relations and Corporate Development
Telephone: +27 11 779 1300
Fax: +27 11 779 1312
E-mail: jongisa.klaas@arm.co.za
Corne Dippenaar
Corporate Development
Telephone: +27 11 779 1300
Fax: +27 11 779 1312
E-mail: corne.dippenaar@arm.co.za
Company secretary
Alyson D`Oyley, LL.B., LL.M.
Telephone: +27 11 779 1300
Fax: +27 11 779 1318
E-mail: alyson.doyley@arm.co.za
www.arm.co.za
Johannesburg
27 February 2012
Sponsor
Deutsche Securities (SA) (Proprietary) Limited
Date: 27/02/2012 07:08:15 Produced by the JSE SENS Department.
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