PALABORA MINING COMPANY LIMITED - BUSINESS UPDATE AND CAUTIONARY ANNOUNCEMENT
PALABORA MINING COMPANY LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1956/002134/06)
Share Code: PAM ARC ISIN: ZAE000005245
(`Palabora` or `the Company`)
BUSINESS UPDATE AND CAUTIONARY ANNOUNCEMENT
Strategic Review
The Company finalised a review of the business in the third quarter of 2004
addressing operational performance and organisational structure. Benefits of
the review are now resulting directly in improved production and lower operating
costs. A new daily average record of 27,500 tonnes hoisted per day was achieved
in November 2004. Operating costs have benefited from improved production and a
reduction of 20 percent in the management team and 13 percent in the workforce.
The balance sheet value of Palabora`s copper assets is being assessed in light
of the completion of the review and the ongoing strength of the Rand against the
US dollar. The outcome of this assessment will be reflected in the financial
results for the year ending 31 December 2004.
The management team is encouraged by the results to date and is committed to
further improvement in the performance of the business.
Sale of Magnetite Assets
The Company has recently received approval from the lenders to permit a prior
ranking charge over the Company`s magnetite assets in favour of Rio Tinto
Finance plc to secure a loan of US$25,000,000. This loan is to be repaid from
the proceeds of sale of the magnetite assets, details of which will be published
at a later date.
Cave Induced Surface Subsidence
The failure of the north wall of the open pit has continued and all affected
infrastructure has been relocated. The failure is limited to a zone close to the
pit rim, within that zone the subsidence is progressing as predicted by the most
recent geotechnical analysis.
Pension Fund Surplus
Work continues on the pension fund distribution. To date Palabora has not
received its portion of the surplus distribution. Management is doing its best
to ensure that the surplus portion is received by the third quarter of 2005.
Cautionary announcement
In accordance with the JSE Listings Requirements, shareholders and debenture
holders are advised that there are circumstances relating to the Company, the
full impact of which is currently being determined, which may have a material
effect on the price of the Company`s securities. Shareholders and debenture
holders are accordingly advised to exercise caution when dealing in the
Company`s securities until a further announcement is made.
Phalaborwa
22 December 2004
Sponsor:
Barnard Jacobs Mellet Corporate Finance (Pty) Limited
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