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ARMgold - RESULTS FOR THE QUARTER ENDED 30 SEPTEMBER 2002
AFRICAN RAINBOW MINERALS GOLD LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1997/015869/06)
(Share code: OAD ISIN ZAE000039244)
("ARMgold" or "the Company")
www.armgold.com
RESULTS FOR THE QUARTER ENDED 30 SEPTEMBER 2002
HIGHLIGHTS
* Cash operating income of R409,3 million (US$39,2 million)
* Cash operating income margin of 46,8%
* Cash cost of R56 053/kg (US$167/oz)
* Headline earnings increased to R275,2 million (US$26,4 million)
* Headline earnings per share:
* ZAR 288 cps
* US$ 28 cps
* Share price increase by approximately 25% since listing
* Strong total cash position of R1,7 billion (US$161 million) to fund future
growth
* On track to achieve target of one million attributable production ounces for
the calendar year 2002
OPERATING RESULTS
ARMgold ARMgold FREEGOLD
September Attribu ARMgol
quarter table d
compared
to the
average
per Orkney Welkom Total Total to Con-
quarter
for the
first two
quarters
Unaudited Operati Operati Company Freegold ARMgold solida
ons ons ted
Ore - t`000 Sept- 456 136 592 2 192 1 096 1 688
milled 02
AVE 471 112 583 2 186 1 093 1 676
Q1& Q2
Jun-02 478 107 585 2 283 1 142 1 727
Mar-02 464 117 581 2 087 1 044 1 625
% (3) 21 2 0 0 1
Change
Yield - g/t Sept-0 7,49 3,68 6,61 4,01 4,01 4,92
2
AVE Q1 7,65 4,88 7,12 3,97 3,97 5,07
& Q2
Jun-02 7,66 4,41 7,06 4,13 4,13 5,12
Mar-02 7,64 5,29 7,17 3,81 3,81 5,01
% (2) (25) (7) 1 1 (3)
Change
Gold - kg Sept- 3 414 500 3 914 8 787 4 393 8 307
produced 02
AVE Q1 3 602 546 4 148 8 681 4 340 8 488
& Q2
Jun-02 3 659 473 4 132 9 419 4 709 8 841
Mar-02 3 545 620 4 165 7 942 3 971 8 135
% (5) (8) (6) 1 1 (2)
Change
Ounces - Sept- 110 16 126 283 141 267
produced oz`000 02
AVE Q1 116 18 134 279 140 273
& Q2
Jun-02 118 15 133 303 151 284
Mar-02 114 20 134 255 128 262
% (5) (8) (6) 1 1 (2)
Change
Cash - R Sept- 359,1 53,0 412,1 925,6 462,8 874,9
operating million 02
revenue
AVE Q1 382,3 59,3 441,6 918,0 459,0 900,7
& Q2
Jun-02 385,7 52,1 437,9 981,1 490,6 928,5
Mar-02 378,9 66,5 445,4 854,8 427,4 872,8
% (6) (11) (7) 1 1 (3)
Change
Cash - R Sept-0 185,8 46,1 232,0 467,3 233,6 465,6
operating million 2
costs
AVE Q1 202,4 49,6 252,0 431,6 215,8 467,8
& Q2
Jun-02 212,4 42,9 255,4 411,3 205,6 461,0
Mar-02 192,3 56,2 248,5 452,0 226,0 474,5
% 8 7 8 (8) (8) 0
Change
Cash - R Sept- 173,2 6,9 180,2 458,3 229,1 409,3
operating million 02
income
AVE Q1 179,9 9,8 189,7 486,3 243,2 432,9
& Q2
Jun-02 173,3 9,2 182,5 569,9 285,0 467,5
Mar-02 186,6 10,3 196,9 402,8 201,4 398,3
% (4) (29) (5) (6) (6) (5)
Change
Cash - R/kg Sept- 54 437 92 208 59 262 53 181 53 181 56 053
operating 02
costs
AVE Q1 56 184 90 685 60 753 49 724 49 724 55 105
& Q2
Jun-02 58 058 90 853 61 810 43 662 43 662 52 143
Mar-02 54 250 90 557 59 656 56 914 56 914 58 320
% 3 (2) 2 (7) (7) (2)
Change
Cash - U$/oz Sept- 162 275 177 159 159 167
operating 02
costs
AVE Q1 161 260 174 143 143 158
& Q2
Jun-02 176 275 187 130 130 158
Mar-02 148 247 163 155 155 159
% (1) (6) (1) (11) (11) (6)
Change
Cash - Sept- 408 339 392 213 213 276
operating R/tonne 02
costs
AVE Q1 430 442 432 197 197 279
& Q2
Jun-02 445 401 437 180 180 267
Mar-02 415 479 428 217 217 292
% 5 23 9 (8) (8) 1
Change
Capital - R Sept- 17,4 5,4 22,8 23,6 11,8 34,6
million 02
AVE Q1 11,4 3,7 15,1 15,9 7,9 23,0
& Q2
Jun-02 15,3 4,3 19,5 14,6 7,3 26,8
Mar-02 7,4 3,1 10,6 17,1 8,6 19,2
% (53) (45) (51) (49) (49) (51)
Change
Exchange - US$1 Sept- 10,43 10,43 10,43 10,43 10,43 10,43
rate 02
AVE Q1 10,84 10,84 10,84 10,84 10,84 10,84
& Q2
Jun-02 10,27 10,27 10,27 10,27 10,27 10,27
Mar-02 11,42 11,42 11,42 11,42 11,42 11,42
% (4) (4) (4) (4) (4) (4)
Change
OPERATING RESULTS - CONSOLIDATED
Unaudited
Rand/Metric Quarter Quarter Quarter Variance
September ended ended Average ended Sept Qtr %
quarter
compared to
the average
per quarter March June Quarter Sept to Change
for the
first two
quarters
2002 2002 2002 Ave Qtr
Ore milled - tonnes
`000
- 1 044 1 109 1 077 1 131 54 5
underground
- surface 581 618 599 557 (42) (7)
- total 1 625 1 727 1 676 1 688 12 1
Yield - g/tonne
- 7,40 7,48 7,44 7,10 (0,34) (5)
underground
- surface 0,70 0,88 0,79 0,50 (0,29) (36)
- average 5,01 5,12 5,07 4,92 (0,15) (3)
Gold - kg
produced
- 7 728 8 299 8 014 8 026 12 0
underground
- surface 407 542 474 281 (193) (41)
- total 8 135 8 841 8 488 8 307 (181) (2)
Gold price - R/kg 107 105 106 105 (780) (1)
279 011 108 328
Exchange - R/US$ 11,42 10,27 10,84 10,43 0,41 4
rate
Total cash
operating
costs
- R/tonne 292 267 279 276 3 1
- R/kg 58 320 52 143 55 105 56 053 (948) (2)
Total - R/kg 60 633 57 301 58 898 60 526 (1 628) (3)
production
costs
Total cost - R/kg 60 633 57 427 58 964 60 526 (1 562) (3)
of sales
Capital - R million 19 27 23 35 (12) (51)
expenditure
Productivity
per employee - g/tec 177 202 182 194 12 7
- m2/tec 4,1 4,8 4,3 5,1 0,8 19
- 35 39 36 39 3 8
tonnes/tec
FINANCIAL RESULTS - CONSOLIDATED
ABRIDGED INCOME STATEMENT
Unaudited
Rand/Metric Quarter Quarter Quarter Variance
September ended ended Average ended Sept Qtr %
quarter
compared to the
average
per quarter for March June Quarter Sept to Change
the first two
quarters
2002 2002 2002 Ave Qtr
R R R R R
million million million million million
Gold revenue 872,8 928,5 900,7 874,9 (26) (3)
Cash operating 474,5 461,0 467,8 465,6 2 0
costs
Cash operating 398,3 467,5 432,9 409,3 (24) (5)
income
Post retirement 0,0 1,1 0,6 0,0 1 100
benefits
Rehabilitation 0,0 13,5 6,7 2,8 4 58
costs
Amortisation 18,8 32,1 25,4 34,4 (9) (35)
Operating 379,5 420,8 400,2 372,1 (28) (7)
income
Corporate 9,0 8,9 9,0 9,5 (1) (6)
expenditure
Mining income 370,5 411,8 391,2 362,6 (29) (7)
Other (15,0) (4,2) (9,6) 61,8 71 (744)
income/expenses
- net
Income before 355,5 407,6 381,6 424,4 42 11
taxation
Taxation 125,4 155,1 140,3 149,2 (9) (6)
Income for the 230,1 252,5 241,3 275,2 33 14
period
Adjustments:
- Profit on - 1,1 0,5 - 0,5 0,0
sale of mining
assets
Headline 230,1 251,4 240,8 275,2 32 13
earnings
Earnings per
share - cents
- Basis 460 316 372 288 (84) (22)
earnings
- Headline 460 315 371 288 (83) (22)
earnings
Dividends per
share - cents
- - 0,036 - - - -
Capitalisation
issue
Calculated
number of
shares in issue
- Weighted 50,00 79,84 64,92 95,50
average
(million)
OPERATING RESULTS - CONSOLIDATED
Unaudited
Dollar/Im Quarter Quarter Quarter Variance
perial
September ended ended Average ended Sept Qtr %
quarter
compared
to the
average
per March June Quarter Sept to Change
quarter
for the
first two
quarters
2002 2002 2002 Ave Qtr
Ore - tons `000
milled
- 1 151 1 223 1 187 1 247 60 5
underground
- surface 640 680 660 614 (46) (7)
- total 1 791 1 903 1 847 1 861 13 1
Yield - oz/t
- 0,216 0,218 0,217 0,207 (0,010) (5)
underground
- surface 0,020 0,026 0,023 0,015 (0,008) (36)
- average 0,146 0,149 0,148 0,144 (0,004) (3)
Gold - oz`000
produced
- 248 267 258 258 0 0
underground
- surface 13 17 15 9 (6) (41)
- total 262 284 273 267 (6) (2)
Gold - US$/oz 291 313 304 314 10 3
price
Exchange - R/US$ 11,42 10,27 10,84 10,43 0,41 4
rate
Total
cash
operating
costs
- $/ton 23 24 23 24 (1) (3)
- US$/oz 159 158 158 167 (9) (6)
Total - US$/oz 165 174 169 180 (11) (7)
productio
n costs
Total - US$/oz 165 174 169 180 (11) (7)
cost of
sales
Capital - R million 1,7 2,6 2,1 3,4 (1,2) (58)
expenditu
re
Productiv
ity
per - oz/tec 5,7 6,5 5,9 6,2 0,39 7
employee
- ft2/tec 44,1 51,7 46,3 54,9 8,6 19
- tons/tec 38,6 43,0 39,7 43,0 3,3 8
FINANCIAL RESULTS - CONSOLIDATED
ABRIDGED INCOME STATEMENT
Unaudited
FOR THE QUARTER ENDED Quarter Quarter Quarter Variance
ended ended Average ended Sept Qtr %
March June Quarter Sept to Change
2002 2002 2002 Ave Qtr
Dollar/Imperial US$ mil US$ mil US$ mil US$ mil
September quarter
compared to the average
per quarter for the
first two quarters
Gold revenue 76,4 90,4 83,1 83,9 1 1
Cash operating costs 41,6 44,9 43,1 44,6 (2) (3)
Cash operating income 34,8 45,5 40,0 39,2 (1) (2)
Post retirement benefits - 0,1 0,1 - 0 100
Rehabilitation costs - 1,3 0,6 0,3 0 57
Amortisation 1,6 3,1 2,3 3,3 (1) (41)
Operating income 33,2 41,0 37,0 35,7 (1) (4)
Corporate 0,8 0,9 0,8 0,9 (0) (10)
expenditure
Mining income 32,4 40,1 36,2 34,8 (1) (4)
Other (1,3) (0,4) (0,9) 5,9 7 769
income/expenses
- net
Income before 31,1 39,7 35,3 40,7 5 15
taxation
Taxation 11,0 15,1 12,9 14,3 (1) (11)
Income for the 20,1 24,6 22,4 26,4 4 18
period
Adjustments:
- Profit on - 0,1 - - -
sale of mining
assets
Headline 20,1 24,5 22,4 26,4 4 18
earnings
Earnings per
share - US$
cents
- Basic 40 31 34 28 (6) (16)
earnings
- Headline 40 31 34 28 (6) (16)
earnings
Dividends per
share - US$
cents
- - 0,004 - - - -
Capitalisation
issue
Calculated
number of
shares in issue
- Weighted 50,00 79,84 64,92 95,50
average
(million)
Exchange rate =
N.Y. noon
Buying rates 11,42 10,27 10,84 10,43
OPERATING RESULTS - CONSOLIDATED
Unaudited Quarter Quarter Variance
Rand/Metric ended ended per %
June Sept Quarter Change
2002 2002
Ore milled - tonnes
`000
- 1 109 1 131 22 2
underground
- surface 618 557 (61) (10)
- total 1 727 1 688 (39) (2)
Yield - g/tonne
- 7,48 7,10 (0,39) (5)
underground
- surface 0,88 0,50 (0,37) (42)
- average 5,12 4,92 (0,20) (4)
Gold - kg
produced
- 8 299 8 026 (273) (3)
underground
- surface 542 281 (261) (48)
- total 8 841 8 307 (534) (6)
Gold price - R/kg 105 011 105 328 317 0
Exchange - R//US$ 10,27 10,43 (0,16) (2)
rate
Total cash
operating
costs
- R/tonne 267 276 (9) (3)
- R/kg 52 143 56 053 (3 910) (7)
Total - R/kg 57 301 60 526 (3 225) (6)
production
costs
Total cost - R/kg 57 427 60 526 (3 099) (5)
of sales
Capital - R million 27 35 (8) (30)
expenditure
Productivity
per employee - g/tec 202 194 (8) (4)
- m2/tec 4,8 5,1 0,3 6,3
- 39 39 0 0
tonnes/tec
FINANCIAL RESULTS - CONSOLIDATED
ABRIDGED INCOME STATEMENT
Unaudited Quarter Quarter Variance
FOR THE QUARTER ended ended per %
Rand/Metric June Sept Quarter Change
2002 2002
R R R
million million million
Gold revenue 928,5 874,9 (54) (6)
Cash operating 461,0 465,6 (5) (1)
costs
Cash operating 467,5 409,3 (58) (12)
income
Post retirement 1,1 0,0 1 100
benefits
Rehabilitation 13,5 2,8 11 79
costs
Amortisation 32,1 34,4 (2) (7)
Operating 420,8 372,1 (49) (12)
income
Corporate 8,9 9,5 (1) (7)
expenditure
Mining income 411,8 362,6 (49) (12)
Other (4,2) 61,8 66 1571
income/expenses
- net
Income before 407,6 424,4 17 4
taxation
Taxation 155,1 149,2 6 4
Income for the 252,5 275,2 23 9
period
Adjustments:
- Profit on 1,1 - 1 100
sale of mining
assets
Headline 251,4 275,2 24 9
earnings
Earnings per
share - cents
- Basis 316 288 (28) (9)
earnings
- Headline 315 288 (27) (8)
earnings
Dividends per
share - cents
- 0,036 - - -
Capitalisation
issue
Calculated
number of
shares in issue
- Weighted 79,84 95,50
average
(million)
OPERATING RESULTS - CONSOLIDATED
Unaudited Quarter Quarter Variance
Dollar/Imperial ended ended per %
June Sept Quarter Change
2002 2002
Ore milled - tons `000
- 1,223 1,247 23 2
underground
- surface 680 614 (66) (10)
- total 1,903 1,861 (42) (2)
Yield - oz/t
- 0,218 0,207 (0,01) (5)
underground
- surface 0,026 0,015 (0,01) (43)
- average 0,149 0,144 (0,01) (4)
Gold produced - oz`000
- 267 258 (9) (3)
underground
- surface 17 9 (8) (48)
- total 284 267 (17) (6)
Gold price - US$/oz 313 314 1 0
Exchange rate - R//US$ 10,27 10,43 (0,16) (2)
Total cash
operating costs
- $/ton 24 24 (0) (2)
- US$/oz 158 167 (9) (6)
Total - US$/oz 174 180 (7) (4)
production
costs
Total cost of - US$/oz 174 180 (7) (4)
sales
Capital - R million 2,6 3,4 (1) (28)
expenditure
Productivity
per employee - oz/tec 6,5 6,2 (0) (4)
- ft2/tec 51,7 54,9 3,2 6,2
- tons/tec 43,0 43,0 0 0
FINANCIAL RESULTS - CONSOLIDATED
ABRIDGED INCOME STATEMENT
Unaudited
FOR THE QUARTER Quarter Quarter Variance
ENDED
Dollar/Imperial ended ended per %
June Sept Quarter Change
2002 2002
US$ US$ US$
million million million
Gold revenue 90,4 83,9 (7) (7)
Cash operating 44,9 44,6 0 1
costs
Cash operating 45,5 39,2 (6) (14)
income
Post retirement 0,1 - 0 100
benefits
Rehabilitation 1,3 0,3 1 80
costs
Amortisation 3,1 3,3 (0) (6)
Operating 41,0 35,7 (5) (13)
income
Corporate 0,9 0,9 (0) (5)
expenditrue
Mining income 40,1 34,8 (5) (13)
Other (0,4) 5,9 6 1 549
income/expenses
- net
Income before 39,7 40,7 1 3
taxation
Taxation 15,1 14,3 1 5
Income for the 24,6 26,4 2 7
period
Adjustments:
- Profit on 0,1 0 100
sale of mining
asssets
Headline 24,5 26,4 2 8
earnings
Earnings per
share - US$
cents
- Basic 31 28 (3) (10)
earnings
-Headline 31 28 (3) (10)
earnings
Dividends per
share - US$
cents
` 0,004 - - -
Capitalisation
issue
Calculated
number of
shares in
issue
- Weighted 79,84 95,50
average
(million)
Exchange rate = 10,27 10,43 (0,16) (2)
N.Y. noon
buying rates
STRATEGIC OVERVIEW
1 ARMgold had another successful quarter.
2 ARMgold is in an aggressive qualitative growth phase.
3 A number of organic growth projects are under consideration, with the
potential to increase annual gold production by approximately 250 000 ounces per
annum between 2003 and 2007 to partially offset the anticipated decrease in
production from current operations.
4 The projects mentioned above include St Helena Mine, the acquisition by
Freegold, where all the conditions precedent are in the process of being met.
Management teams are on site and the mine will add approximately 60 000
attributable ounces per annum to ARMgold.
5 The ADR programme in the US continues, and listing should be achieved during
2003. A level two sponsorship is envisaged at this stage.
6 ARMgold intends to pay regular dividends and a maiden dividend will be
considered at the end of the current financial period.
7 Since listing on 16 May 2002, ARMgold`s shares have performed well. The
graph below compares ARMgold`s share performance with its South African peers
since the listing. (See press for graph.)
8 South African gold producers have generally out-performed their North
American peers as indicated below. (See press for graph.)
9 ARMgold`s free float is 40%. At the date of listing, the free float
shareholders comprised approximately 60% offshore investors and 40% South Africa
investors. The offshore investor base has now grown to approximately 67% with
33% in South Africa.
The intention is to increase the free float as part of future growth and
acquisitions. (See press for graph.)
OPERATIONAL REVIEW
ARMgold Quarter Quarter Quarter Variance
SALIENT ended ended Average ended Sept Qtr %
FEATURES
March June Quarter Sept to Change
Unaudited 2002 2002 2002 Ave Qtr
Revenue
- R 872,8 928,5 900,7 874,9 (26) (3)
million
- US$ 76,4 90,4 83,1 83,9 1 1
million
Gold
price
received
- R/kg 107 279 105 011 106 108 105 328 (780) (1)
- US$/oz 291 313 304 314 10 3
Exchange 11,42 10,27 10,84 10,43 0,41 4
rate
US$1=R
Cash
operating
income
- R 398,3 467,5 432,9 409,3 (24) (5)
million
- US$ 34,8 45,5 40,0 39,2 (1) (2)
million
Cash
operating
cost
- 474,5 461,0 467,8 465,6 2 0
Rmillion
- R/kg 58 320 52 143 55 105 56 053 (948) (2)
- R/tonne 292 267 279 276 3 1
- US$/oz 159 158 158 167 (9) (6)
- US$/ton 23 24 23 24 (1) (4)
Gold
produced
- kg 8 135 8 841 8 488 8 307 (181) (2)
- oz `000 262 284 273 267 (6) (2)
Tonnes 1 625 1 727 1 676 1 688 12 1
milled
(`000)
RESULTS FOR THE QUARTER ENDED 30 SEPTEMBER 2002
RESULTS FOR THE QUARTER
Full details of the quarter on quarter comparisons are attached. However,
since Freegold was under the ARMgold/Harmony Joint Venture management during the
first six months of the year 2002 it is more representative to compare the
September 2002 quarter with the average per quarter of the first two quarters.
PRODUCTION AND REVENUE
Gold revenue for the quarter amounted to R874,9 million. This represents a
decrease of 3% when compared to the average of
R900,7 million per quarter for the first two quarters. The lower gold price
received resulted in a reduction in revenue of R6,5 million. The further
reduction in revenue is mainly due to the mining strategy to improve the
utilisation of the ore body at Freegold and to mine more average grade ore. The
overall yield from underground operations was reduced by 5%, from the average
per quarter of 7,44g/tonne for the first two quarters, to 7,10g/tonne. Surface
operations decreased by 36% from the average yield per quarter of 0,79g/tonne
for the first two quarters, to 0,50g/tonne, mainly due to the lower grade in the
dumps that are currently being processed.
A total of 812 867 ounces (25 283 kilograms) was produced during the period
January 2002 to September 2002 which is on track with ARMgold`s stated
objectives of achieving one million ounces for the year 2002.
CASH OPERATING COST
Average cash operating cost per quarter for the first two quarters increased
by 2% from R55 105/kg to R56 053/kg (by 6% from US$158/oz to US$167/oz). In
absolute terms, costs decreased by 0,47%, from an average per quarter R467,8
million for the first two quarters, to R465,6 million, despite the
implementation of a wage increase of 9% in Freegold for the lower category
employees.
As a result of the decrease in revenue, and despite the small decrease in
working costs, cash operating income decreased by 5% and amounted to R409,3
million compared to the average per quarter for the first two quarters, of
R432,9 million.
It is anticipated that cash costs will increase over the next few quarters owing
to:
* the stated strategy of mining the ore body to its average grade, thereby
eliminating high grading. The focus will be to recapitalise the ore body to
optimise profitability and to allow for more flexibility;
* additional expenditure to prepare additional face length in anticipation of
the introduction of continuous operations at Freegold;
* full extraction of the high grade shaft pillar of No. 2 Shaft at the Orkney
operations by the end of December 2002; and
* annual wage increases in Orkney, Welkom and Freegold upper levels from
January 2003.
The stated growth strategy of acquiring additional reserves and further cost
reduction initiatives will reduce the negative impact of the above.
SAFETY
Regrettably during the course of the past quarter, three ARMgold employees
died as a result of work-related incidents and another one died at the Freegold
operations. Our condolences are extended to the families, friends and
communities of the deceased.
Safety remains a prime concern at ARMgold and every effort is being made to
eliminate accidents. This has been strengthened by the ongoing enhancement of a
comprehensive safety and health strategy.
One of the Business Units at the Orkney operations achieved 500 000 fatality-
free shifts on 11 September 2002.
ACQUISITION
St Helena - Freegold Joint Venture acquisition.
The only outstanding conditions precedent for the fulfilment of the sale
agreement are in respect of Ongegund 13 - St Helena No. 10 Shaft and are:
* The renewal of the Mining Lease by Gold Fields Limited and ceding thereof to
Freegold with ministerial consent; and
* Mining authorisation for Ongegund 13.
These conditions are expected to be fulfilled by 31 October 2002.
ORKNEY OPERATIONS
Gold revenue decreased by 6% or R23,2 million, from an average of R382,3
million per quarter for the first two quarters, to R359,1 million. This is
mainly due to the yield which decreased from an average of 7,65g/tonne per
quarter for the first two quarters to 7,49g/tonne and the loss of 157 kilograms
resulting from the discontinuation of operations at No. 5 Shaft.
Cash operating cost decreased by 3% from the average of R56 184/kg per quarter
for the first two quarters, to R54 437/kg (an increase of 1% from US$161/oz to
US$162/oz). In absolute terms, costs decreased by 8% or R16,60 million from an
average of R202,4 million per quarter, for the first two quarters to R185,8
million.
As a result of the above, cash operating income for the quarter decreased by
R6,7 million and amounted to R173,2 million, compared to the average of R179,9
million per quarter for the first two quarters.
Restarting of operations at No. 3 Shaft is continuing and the build-up of
production is progressing according to plan. No. 3 Shaft will partially offset
the loss in kilograms resulting from the discontinuation of operations at No. 5
Shaft.
WELKOM OPERATIONS
Gold production decreased by 8% or 46 kilograms, from an average of 546
kilograms per quarter for the first two quarters to
500 kilograms, mainly due to a decrease in the yield from an average of
4,88g/tonne per quarter for the first two quarters to 3,68g/tonne. The lower
yield achieved is part of a strategy introduced to mine available reserves at
No. 6 and 7 Shafts from lower grade areas.
Cash operating cost for the quarter increased by 2% from an average of R90
685/kg per quarter for the first two quarters, to R92 208/kg (an increase of 6%
from US$260/oz to US$275/oz). In absolute terms, costs decreased by 7% from the
average of R49,6 million per quarter for the first two quarters, to R46,1
million.
As a result of the above, cash operating income for the quarter decreased by
R2,9 million and amounted to R6,9 million, compared to the average per quarter
of the first two quarters of R9,8 million.
Development of the lower GK Block at No.1 Shaft has commenced. This mining area
will add three to six years to the life-of-mine of the shaft and will improve
cash operating costs when in full production by end 2004.
FREEGOLD JOINT VENTURE OPERATIONS
Attributable gold production increased by 1% or 53 kilograms, from an average
of 4 340 kilograms per quarter for the first two quarters, to 4 393 kilograms,
mainly due to the grade which increased by 0,04g/tonne, from 3,97g/tonne to
4,01g/tonne. Underground yield decreased from quarter 27,94 g/tonne, 6 months
average 7,82 g/tonne to 7,62 g/tonne in the September 2002 quarter. Tonnages
treated from surface sources were significantly lower in volume and recovery
grade. Underground yield decreased from 7,94g/tonne for the June quarter (an
average of 7,82g/tonne per quarter for the first two quarters) compared to
7,62g/tonne in the September 2002 quarter. A total of 557 000 tonnes, at a
recovery grade of 0,50 g/tonne, were treated, resulting in a gold recovery of
281 kilograms. This was lower than the average of 474 kilograms recovered per
quarter for the first two quarters. The net result was that surface operations
contributed only R9,5 million towards cash operating income, compared to the
average of R30,5 million per quarter for the first two quarters.
Cash operating cost increased by 7% from an average of R49 724/kg per quarter
for the first two quarters to R53 181/kg, due to the recapitalisation of the ore
body, to enable mining at its average grade and to allow for more mining
flexibility. Additional money was spent to prepare additional face length in
anticipation of the introduction of continuous operations in Freegold. In
absolute terms, costs increased by 8% or R17,8 million, from the average of
R215,8 million per quarter for the first two quarters to R233,6 million.
Due to the above, cash operating income attributable to ARMgold for the
quarter amounted to R229,1 million which is R14,1 million lower than the average
of R243,2 million per quarter for the first two quarters.
Highlights achieved for the quarter by the Freegold Joint Venture:
Bambanani Mine Cash operating income R88,2 million
Cash operating cost R51 402/kg (US$153/oz)
Tshepong Mine Cash operating income R97,2 million
Cash operating cost R45 807/kg (US$137/oz)
Eland Mine Cash operating income R22,1 million
Cash operating cost R51 061/kg (US$152/oz)
The negotiations with the unions regarding continuous operations at Freegold
are proceeding. Continuous operations will create 2 500 additional job
opportunities and will significantly reduce the unit cost of production,
enabling improved utilisation of the ore body.
The feasibility study on the Tshepong North Deepening is nearing completion
and the projected start date is early next year.
Nyala Shaft is in the process of being restarted, and will yield some 40 000
attributable ounces per annum for ARMgold.
Other growth projects under consideration are Tshepong South, Surface sources
and Joel.
FINANCIAL REVIEW
Headline earnings increased by 13% or R34,4 million, from an average of
R240,8 million per quarter for the first two quarters, to
R275,2 million. The increase in earnings can be attributed to:
* Net interest received of R41,9 million.
* A part payment of R17,8 million in respect of an insurance claim resulting
from the seismic events at Orkney`s No. 5 Shaft was received. The total amount
in respect of the claim still to be finalised.
* Income from the demolition of the Gold Plant at Welkom operation of R1,9
million.
Date: 23/10/2002 08:00:00 AM Produced by the JSE SENS Department
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