| Wed 13 Jul 2005, 13:04 | | Marikana Mine |
|
Aquarius - Aquarius And Anglo Platinum Create A Second Pooled Operation Around
Marikana Mine
Aquarius Platinum Limited
(Incorporated in Bermuda)
Registration number: EC26290
Share code on JSE: AQP ISIN: BMG0440M1029
Share code on ASX: AQP.AX ISIN: BMG0440M1029
Share code on LSE: AQP.L ISIN: BMG0440M1029
Share code on US Over the counter market: AQPTY ISIN: US03840M2089
(`Aquarius`)
13th July 2005
AQUARIUS AND ANGLO PLATINUM LIMITED (`ANGLO PLATINUM`) AGREE TO CREATE A SECOND
POOLED OPERATION AROUND MARIKANA MINE AND SHARE IN AN ESTIMATED INCREMENTAL R1.6
BILLION (US$ 265 MILLION) OF REAL NET PRESENT VALUE INCREASE.
* Aquarius and Anglo Platinum to form a second `pool and share` arrangement
around Marikana Mine and Anglo Platinum mineral rights;
* Each party to contribute certain assets and share 50:50 in the arrangement
benefits;
* Marikana to increase annual production to 250,000 PGM ounces (of which half
will be owned by Aquarius Platinum (South Africa) (Pty) Ltd), and mine life
extended by 10 years to 2024;
* Marikana attributable PGM ore reserves inventory boosted from 1.31 million PGM
ounces to approximately 2.20 million PGM ounces from October 2005;
* The boundaries between the existing Kroondal P&SA and the new P&SA will be
optimised to maximise value from both operations; and
* An expected 900 new jobs will be created by this initiative.
Aquarius announced today that its 50.5% owned subsidiary Aquarius Platinum
(South Africa) (Pty) Ltd (`AQPSA`) has entered into a second `pool and share`
arrangement (`the Marikana P&SA` or `P&SA2`) with Anglo Platinum in relation to
their respective mineral rights and assets at and around the Marikana Platinum
mine. The P&SA2, which is subject to certain suspensive conditions being met
including both parties signing off on a development plan as per the Kroondal
P&SA process, and regulatory approvals, is targeted to come into effect on 22nd
September 2005. The P&SA2 will extend the life of mine at Marikana by 10 years
to 2024. This is the second South African operation where Aquarius is
cooperating with Anglo Platinum after the two companies entered into the
Kroondal P&SA (`P&SA1`) in June 2003. The P&SA2 provides Aquarius shareholders
with a further extension to the asset life profile. Venmyn (Pty) Ltd has acted
as advisor to AQPSA in respect of value in this transaction.
Stuart Murray, CEO of Aquarius commented, `This second pooling and sharing
agreement with Anglo Platinum can be seen as an expansion of our successful
arrangements at Kroondal. Marikana has suffered from the relatively high unit
costs of open cast mining coupled with lower than anticipated metallurgical
recoveries. This period was also characterised by some of the lowest PGM basket
price receipts in Rand terms.
This P&SA provides Marikana with quality underground UG2 ore, allowing the
Marikana P&SA to realise a cost structure quite similar to our existing Kroondal
P&SA. Not only will the transaction move Marikana markedly down the cost curve,
but earnings will be further enhanced by lower amortisation charges as a result
of the increase in the PGM mineral resources and ore reserves of this P&SA.
Initially, and as happened in the Kroondal P&SA, Aquarius` attributable
production at Marikana will be halved when the P&SA becomes effective at the end
of September. The attributable production will be built back up to 125,000 PGM
ounces per annum within 18 months through an expansion of the Marikana
metallurgical facility.
Moreover the mine life will be extended by 10 years and operating margins
significantly enhanced. When we combine this new P&SA with the successful
Kroondal P&SA and add the new production growth from our Everest project and the
planned Mimosa mini-expansion, the long-term production profile for Aquarius has
never looked better.`
Aquarius has recognised for some time that the best way to add value to its
Marikana operation is to replicate the successes emanating from P&SA1. It is
forecast that significant synergies will be achieved as the enhanced Marikana
operation will increase its mining life and mining flexibility in a cost-
effective manner in terms of both capital expenditure and operating costs.
Operations will gradually change from a focus on large-scale opencast mining to
underground mining. This transition to primarily underground operations will
take around 18 months, although significant opencast operations will continue
for as long as they achieve reasonable cash margins. Utilising consensus
macroeconomic data it is expected that P&SA2 will add some R1.6 billion (US$265
million) to the net present value of the partners` investment.
The impact of P&SA2 on group earnings is expected to be positive for the current
financial year and significantly accretive thereafter as the full benefits of
P&SA2 accrue. This improvement is due to increased plant throughput, lower unit
costs of underground mining, higher PGM recoveries from underground UG2 ore and
lower amortisation charges.
The total capital cost of P&SA2 is estimated at R228 million to be shared
equally by both parties. AQPSA will fund its portion of the capital for P&SA2
from current cash flows and existing debt facilities.
Marikana Ore Reserves and Production Attributable to AQPSA Before and After
P&SA2 (planned date of pooling 22 September 2005)
Attributable to AQPSA PRE - P&SA2 POST - P&SA2
Ore reserves (ROM tons) 12.88 million 22.17 million
Ore reserves (PGMs 4E) 1.31 million 2.20 million
ounces ounces
Annual Production (ROM tons) 1.6 million 1.5 million
Planned Annual Production 120,000 ounces 125,000 ounces
(PGMs 4E)
Adjustment to Kroondal PSA Boundaries
The new UG2 ore reserves, containing an estimated 3.1 million PGM ounces,
contributed by Anglo Platinum in terms of the P&SA2 lie to the west of the
Kroondal Mine. It is value enhancing for the ore reserves to be mined and for
this ore to be delivered to the existing Kroondal concentrators. The reserves
to the far east of Kroondal will be swapped and mined as part of the P&SA2 with
the ore from the new No.4 Shaft (which currently forms part of the P&SA1) to be
diverted to the nearby Marikana concentrator. This arrangement will minimise ore
transport costs for both the P&SA operations. A resultant adjustment to the ore
reserve boundary of the P&SA1 is shown in the diagram above. Importantly, this
adjustment will ensure that the existing P&SA1 is left ounce and value neutral.
Key Terms of P&SA2
AQPSA will provide access to the mineral rights vested in the Marikana Mine, all
current plant and shaft infrastructure, management and other contractual
operating arrangements associated with the existing mine. Anglo Platinum will
contribute portions of its UG2 ore reserves owned by its subsidiary, Rustenburg
Platinum Mines Limited (`RPM`). The agreement envisages the operation of a
single mining entity. However, both parties will retain ownership of the mining
and mineral assets they contributed, with revenues, costs, capital expenditure
and profits being shared equally.
The current mineral resources and ore reserves attributable to the Marikana Mine
at the pooling and sharing date amount to approximately 1.31 million ounces of
PGMs. The ore reserves attributable to AQPSA rise to 2.2 million ounces of PGMs
with the addition by RPM of approximately 31 million run of mine tons of UG2.
In terms of the project execution, the Marikana concentrator will be upgraded by
retrofitting a dense media separation plant (`DMS`) allowing the throughput of
the existing concentrator to be increased to 250,000 run of mine (`ROM`) tons
per month (`tpm`). It is expected that the upgrade will be completed by the end
of calendar 2006. Mining at the existing West decline shaft on the RPM property
will commence as soon as possible following fulfilment of all suspensive
conditions. This shaft will produce up to 175,000 ROM tpm. A second shaft on the
RPM property will be developed approximately two years later to raise production
from the RPM ore-body to 240,000 ROM tpm. During the period of development of
these new declines, stoping operations will be stepped up at Kroondal`s Central,
East and No. 3 shafts. The reallocated No. 4 Shaft will deliver ore to the
Marikana concentrator at a steady state rate of up to 200,000 ROM tpm, with the
balance of production being made up with existing open cast and underground ores
from the Marikana ore reserves.
Although the parties will share in the proceeds of P&SA2 on a 50:50 basis,
concentrate produced by Marikana will be split between Impala Refining Services
Ltd and Anglo Platinum in accordance with recovered ounces from the Marikana and
RPM ore-bodies respectively. The off-take agreement with Anglo Platinum will be
on the same terms as the existing off-take agreement between P&SA1 and RPM.
Recognition has had to be given to the superior long-term option value of the
RPM ore reserves. AQPSA and Anglo Platinum have therefore agreed to the
following terms in respect of P&SA2: -
A. Principle of sharing `Super Profits`: Super profits are defined as that
cash operating margin in excess of 50%. In the event of margins exceeding 50%,
the super profit portion (that above the 50% margin threshold) will be split in
favour of Anglo Platinum in the ratio 55% to Anglo Platinum and 45% to AQPSA;
and
B. A change of control provision : In the event of change of control of
Aquarius it is agreed that Anglo Platinum may take over management of P&SA2 and
further may elect, under specific circumstances, to purchase the AQPSA mining
and mineral assets contributions to P&SA2 at an independently determined market
value.
Neither of these provisions (A and B above) is applicable to the Kroondal P&SA.
P&SA2 will employ the `Kroondal model` of mechanised wide-reef underground
mining, coupled with DMS to improve ore quality prior to milling and flotation.
The AQPSA management team will remain in place, reporting on a quarterly basis
to a committee comprising an equal number of representatives from both AQPSA and
Anglo Platinum.
Marikana P&SA2
Estimated Additional Ore Reserves Attributable to AQPSA at 22nd September 2005.
Marikana UG2 Ore Reserves (100% attributable to AQPSA)
Tons Pt Pd Au Rh 4E Pt 4E
million g/t g/t g/t g/t g/t Moz Moz
Proven 12.35 1.62 1.17 0.30 0.03 3.09 0.64 1.23
Probable 0.95 1.62 1.17 0.30 0.03 3.55 0.05 0.11
Total (1) 13.30 1.62 1.17 0.30 0.03 3.12 0.69 1.34
Less 3 months production ounces July to September (ROM 0.03
420,000 tons)
Balance 1.31
(1) An average reef width has not been shown due to high width variability, but
approximates 2.20m.
Anglo Platinum UG2 Ore Reserve (100% Attributable to Anglo Platinum)
Tons Pt Pd Au Rh 4E Pt 4E
million g/t g/t g/t g/t g/t Moz Moz
Proven 31.46 1.86 0.90 0.31 0.03 3.10 1.88 3.14
Total (2) 31.46 1.86 0.90 0.31 0.03 3.10 1.88 3.10
(2) An average channel width is 2.23m (0.16m Leader, plus 1.16m internal waste,
plus 0.70m UG2, plus 0.20m footwall overbreak).
4E Moz
Total ounces Pooled by AQPSA and Anglo Platinum in the 4.41
P&SA2
Attributable to AQPSA (50%) 2.20
Less Marikana Ounces Attributable to AQPSA at 22 (1.31)
September 2005 as shown above
Uplift ounces attributable to AQPSA 0.90
Note:
The exchange of mineral resources and ore reserves for PSA2 considered the
complexity of the different mineral resource blocks. This Ore Reserve Statement
has been prepared for JORC Code (Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves) compliance and shows the summary
composition of the exchange. Work is on-going by both AQPSA and Anglo Platinum
and further Mineral Resource and Ore Reserve figures will be disclosed when
available.
The reserve estimate was compiled by Andrew Neil Clay who is a Member of the
AusIMM with 10 years relevant experience to the mineralisation being reported on
and qualifies as a Competent Person as defined in the JORC Code.
For further information please contact:
In Australia : In South Africa :
Willi Boehm Neil Collett - GM P&SA Projects
Aquarius Corporate Services (Pty) Ltd Aquarius Platinum (SA) (Pty) Ltd
+61 8 9367 5211 +27 83 653 7114
In the United Kingdom : In South Africa :
Nick Bias Charmane Russell
Aquarius Platinum Limited Russell & Associates
+44 7887 920 530 +27 11 880 3924 / +27 82 376 2327
