| Thu 11 Aug 2005, 10:52 | | Aquarius Platinum - Reviewed Annual Results |
|
Aquarius Platinum Limited
(Incorporated in Bermuda)
Registration number: EC26290
Share code on JSE: AQP ISIN: BMG0440M1029
Share code on ASX: AQP.AX ISIN: BMG0440M1029
11 August 2005
REVIEWED ANNUAL RESULTS: 30 JUNE 2005
EXPANDING PRODUCTION PROFILE CONTINUES TO DELIVER EARNINGS GROWTH
* Net Profit $20.95 million, cash profit $47.5 million
* Full Year Dividend increased to US 8 cents per share
* Record group production: 327,669 PGM ozs
* Secure and funded projects to deliver growth: FY 2006: 500,000 PGM ozs
Highlights of the year:
Operational
* Group attributable production up 7% to 327,669 PGM ounces (2004: 307,063 PGM
ounces)
* Kroondal production record as expansion ramps up production
* Marikana improvement in second half
* Mimosa continues a consistent strong performance
* CTRP commissioned, already operating profitably
* Everest on track for hot commissioning in December 2005
Financial
* Revenue increased 14% to $222.3 million
* Net profit after tax "cash basis" up 4% to $47.5 million (US 57 cents per
share)
* Accounting net profit (to IFRS) of $20.95 million (25.3 cents per share)
following 149% increased earnings over first half year's earnings ($6 million)
to December 2004. The result for the year is not comparable with the previous
year which included $10.9 million on sale of assets.
* Cash balance remains strong at $75.3 million
* Interest bearing debt reduced to $16 million, down from $78.2 million in 2004
* US 5 cents per share final dividend declared, payable on 7 October 2005,
(2004: US 3 cents). Total 2005 dividend (interim and final) up 33% to US 8 cents
(2004: US 6 cents)
Strategic
* Black Economic Empowerment (BEE) transaction completed in October 2004, R860
million banked
* Kroondal P&SA expansion commissioned 3 months ahead of schedule
* Chrome Tailings Retreatment Plant (CTRP) commenced production in January 2005
* Board strengthened with the appointment of Zwelakhe Sisulu as a non-executive
director
* Subsequent to year end, a Pool & Share Agreement at Marikana (P&SA 2)
announced, extending life of mine by 10 years
Aquarius announces consolidated earnings for the year to 30 June 2005 of $20.95
million (US 25.3 cents per share) following a strong second half result of
$14.95 million. The second half saw PGM production increase by 25% over the
first half as the Group's expanding production profile commenced delivery of new
PGM ounces.
Profit for the year included $3.1 million from the sale to Implats of a 2%
interest in AQPSA in October 2004 at the conclusion of the BEE transaction.
Cash earnings (before depreciation and amortisation) were $47.5 million. The
result for the year is not comparable with the previous year, which included a
profit of $10.9 million from the sale of the Waterval mineral rights.
As outlined in the table below, this year's performance has shown an improvement
in the second half of the year as the Group's expansion program commenced
production. This is attributable to improved production and financial
performance across the group, notably as the Kroondal P&SA entered production
and continues to ramp-up in to the 2006 financial year. The Kroondal operation,
which produced 324,730 PGM ounces this year, is on track (following the
successful commissioning of the P&SA concentrator in March 2005) to produce
505,000 PGM ounces in FY 2006; 50% of which is attributable to Aquarius.
1H 2005 2H 2005 FY 2005
Net Profit After Tax & $6.00 m $14.95 m $20.95 m
Outside Equity Interests
PGM Production (ounces) 145,714 181,955 327,669
The Directors have declared a final dividend of 5 cents (2004: 3 cents) per
share payable on 7 October 2005 to shareholders registered on 16 September 2005.
This brings the total dividend payable for the year ended 30 June 2005 to US 8
cents, an increase of 33% over last year.
Commenting on the results, Stuart Murray, CEO of Aquarius said, "I believe that
the 2005 financial year is one of considerable progress. First of all, the
group has delivered firm operating results, and second, an active year on the
corporate front has positioned the group securely to deliver superior growth.
Results for the financial year are firm, despite challenging economic
circumstances in both South Africa and Zimbabwe. Attributable production has
increased 7%, yet actual production by mine increased 25%. This pattern is
expected to continue, with the group forecasting production to increase
significantly in 2006 to 500,000 PGM ounces attributable to Aquarius.
It has been a very busy year too on the corporate front. At AQPSA we have
completed a well received BEE transaction, and banked R860 million. Proceeds
from the transaction, combined with firm operating cash flows, have been put to
good use, with plans completed or underway to increase production at all
operations and construct the new Everest Mine.
The second half of the 2005 financial year showed the first signs of this
strategy to deliver growth, as production, costs and indeed the bottom line all
suggest significant scope to improve in the near future. I believe that this
potential is unique to Aquarius and our innovative strategies to grow the
Company, notably at a time when the economic outlook for the industry is
improving, and position us well to deliver superior growth."
Production of PGMs attributable to shareholders of Aquarius increased 7% to
327,669 PGM ounces from 307,063 ounces, with all mines achieving increased
production over the previous period. Of particular significance was the
commissioning of the second concentrator at Kroondal as part of the P&SA
expansion, three months ahead of schedule in March 2005. This concentrator is on
track to increase Kroondal's production to 505,000 PGM ounces per annum in FY
2006; of which 50% is attributable to Aquarius.
Revenue for the year, net of currency adjustments, was $225 million, an increase
of 17% over the previous year.
Interest of $9.8 million was charged to the P&L during the year. This included a
non cash component of $1.9 million relating to the movement in the net present
value of the Marikana and Kroondal rehabilitation provisions.
Depreciation increased to $19.7 million from $12.2 million due to capital
expenditure on the respective developments and expansions at Kroondal and
Marikana. Amortisation arising from the fair value uplift at Kroondal at $6.7
million was $1.7 million higher due to increased production at the mine and an
adjustment to the Marikana ore reserve to reflect the decrease in recoveries.
The US Dollar was 10% weaker against the Rand during the year at an average
exchange rate of R6.17 to the US Dollar for the year. This continued to place
the South African operations, particularly Marikana, under pressure. During the
last quarter of the financial year, the US dollar strengthened against the Rand
to close at R6.67 to the US Dollar. This shift is positive as the Company's
South African operations incur costs in Rand and revenues in US Dollars.
Cash costs at Kroondal were well controlled, increasing by 8% to R2,311 per PGM
ounce compared to the previous year. This is particularly credible as the
Kroondal operating costs include R198 per PGM ounce of P&SA decline development
costs. In US Dollar terms cash costs rose 21%, reflecting the weakness of the
US Dollar during the year. In addition to the above, $1.8 million was spent on
rehabilitation of the previously mined open cast areas to reduce final closure
costs.
Marikana has underperformed during the year and was impacted by poor contractor
performance and difficult mining in parts of the ore body. Excessive internal
waste dilution and a greater overburden than anticipated in the feasibility
study contributed to the lower than expected PGM ounces produced during the year
resulting in unit costs of R4,035 per PGM ounce. In US Dollar terms cash costs
rose 11% reflecting the weakness of the US Dollar during the year. Marikana's
performance was characterised by a very poor first half which saw cash costs
average R4,699 per PGM ounce on production of 45,713 PGM ounces and a much
improved second half which saw operating costs reduce from R4,699 to R3,030 per
PGM ounce on increased production of 53,448 PGM ounces. The improvement in the
second half is a result of deeper ore being mined and higher plant recoveries of
65% achieved.
Operating costs at the Mimosa Mine increased in US Dollar terms to $358 per PGM
ounce, and $141 per PGM ounce after by-product credits. The increase in cash
costs is predominantly attributed to the impact of high inflation and a "fixed"
foreign exchange rate. The Mimosa Mine experienced fluctuating exchange rates
towards the end of the year as a result of revised government exchange control
procedures. In May 2005, the Reserve Bank of Zimbabwe depreciated the Zimbabwean
currency by some 45% to approximately 9,000 Zimbabwean Dollars to the US Dollar.
Subsequent to year end, the Reserve Bank of Zimbabwe further depreciated the
Zimbabwean Dollar to 17,500 Zimbabwean Dollars to the US Dollar.
PGM prices in US Dollar terms continued to perform well during the year as a
whole. Platinum, rhodium and gold closed the financial year stronger, with the
rhodium price in particular performing well, having doubled through the period.
Looking to platinum, management believes that continued supply-side constraints
due to higher South African costs associated with a strong rand have continued
to hamper new production. Demand, however, has continued to be strong, notably
for platinum autocatalysts and this has resulted in a continued platinum supply-
deficit and historically high prices. The palladium price has continued to fall,
losing some $30 over the year to close at $183 per ounce.
It should be noted however, that Aquarius mines a basket of platinum group
metals: platinum, palladium, rhodium and gold, referred to as 4PGE. These metals
occur in different ratios in South Africa and Zimbabwe, and when priced
accordingly, provide a PGM basket price, one of the principal revenue drivers.
With the sustained high prices of platinum and gold, and the strong increases in
rhodium the South African PGM the average basket prices for the year increased
11% in US Dollar terms to $711 per PGM ounce. Due to the weaker US Dollar which
depreciated by 10% against the Rand over the year, the PGM basket price was
R4,392 in local currency terms, marginally up from the previous year. In
Zimbabwe, despite a higher ratio of palladium in the basket, the average PGM
basket price for the year increased 10% to $590 PGM ounce.
Cash balances
Aquarius Group cash balances at 30 June 2005 were $75.3 million, a decrease of
$2.7 million. Major factors other than mine operations that impacted on the
movement in cash during the year were:
Net proceeds from BEE transaction $133 million
Investec/ABSA and other loan repayments ($ 71 million)
and deposit offset
Interest expense ($ 8 million)
Interest income $7 million
Dividends paid ($5 million)
Capital expenditure ($91 million)
Group Debt
In December 2004, AQPSA signed an addendum to the current debt facility
agreement with Investec / ABSA to create an innovative cash balance management
offset mechanism in respect of its existing term debt facility. Under this
addendum, AQPSA is permitted to deposit its cash (up to the outstanding balance
of the debt facility) in order to reduce its interest expense for the period.
This was done because the prevailing interest rate on the loan is about 3%
higher than the rate that could be earned by placing the funds on deposit. In
addition to two loan repayments made during the year totalling R63 million an
additional R320 million was deposited into the debt facility as per the deposit
offset agreement with Investec/ABSA. This has effectively reduced the interest
expense charge to the Group and reduced the balance of the amount owing to
Investec/ABSA to R2.5 million at 30 June 2005. The R320 million may be redrawn
as required.
Group interest bearing debt at 30 June 2005 comprises:
* Investec/ABSA $ 0.4 million
* Savcon Long term debt: $14.9 million
Review of Group's debt facilities
The Company is currently in the process of evaluating various proposals received
in regard to replacing the current debt facility with a more appropriate funding
package.
Financials
Aquarius Platinum Limited
Consolidated Income Statement
Year ended 30 June 2005
$'000
Half year ended Year ended
30/06/05 31/12/04 30/6/05 30/6/04
Aquarius PGM Production 181,955 145,714 327,669 307,063
(attributable ounces)
Note:
Revenue (i) 123,565 98,762 222,327 194,850
Foreign (ii) 4,491 (1,694) 2,797 (2,975)
exchange
gain/(loss)
Cost of Sales (iii) (91,848) (83,088) (174,936) (125,420)
Gross Profit 36,208 13,980 50,188 66,455
Amortisation of (iv) (4,146) (2,599) (6,745) (4,951)
fair value
uplift of
mineral
properties
Gross profit 32,062 11,381 43,443 61,504
after
amortisation of
fair value
uplift
Admin & other (v) (2,587) (3,389) (5,976) (8,619)
operating costs
Other FX (vi) (1,911) 2,395 484 (3,094)
movements
Finance costs (vii) (3,704) (6,185) (9,889) (10,661)
Profit before 23,860 4,202 28,062 39,130
tax
Income tax (4,559) 1,113 (3,446) (5,674)
expense
Profit after 19,301 5,315 24,616 33,456
tax
Minority (viii) (4,353) 687 (3,666) (4,752)
interest
Net profit 14,948 6,002 20,950 28,704
EPS (basic - 18.04 7.28 25.32 35.07
cents)
Notes on the June 2005 Consolidated Income Statement
(i) Sales revenue is higher due to increased PGM ounces (20,606 ounces) and
higher basket prices.
(ii) Foreign exchange variances caused by the difference between revenue
recorded at time of production to cash received at the end of the four month
pipeline.
(iii) Cost of sales is higher due to increased production, Marikana costs and
high inflation in Zimbabwe against a fixed exchange rate.
(iv) Amortisation of fair value uplift of mineral properties is up due to
increased Kroondal production and an adjustment to the Marikana ore reserve to
reflect the decrease in recoveries to 64%.
(v) Administration and other costs are lower due to the reallocation of certain
"other" costs into cost of sales.
(vii) Reflects foreign exchange movements on net monetary assets.
(vii) Finance costs were higher in the first half on Zimbabwean working capital
debt and lower in the second half on reduced Zimbabwean debt and the impact of
the R320 million deposited into the deposit offset account as part of the
Investec debt facility with AQPSA.
(vii) Reflects profit of AQPSA attributable to minority interests (Savcon and
Implats 49.5%).
Aquarius Platinum Limited
Consolidated Cash flow Statement
Year ended 30 June 2005
$'000
Half year ended Financial year
ended
30/06/05 31/12/0 30/06/0 30/06/0
4 5 4
Note:
Net operating cash (i) 21,580 9,878 31,458 54,365
inflow
Net investing cash (ii) (51,305) (36,847 (88,152 (10,380
outflow ) ) )
Net financing cash (iii) (21,524) 76,445 54,921 15,786
outflow
Net increase (decrease) (51,249) 49,476 (1,773) 59,771
in cash held
Opening cash balance 136,550 77,942 77,942 16,996
Exchange rate movement (iv) (10,050) 9,132 (918) 1,175
on cash
Closing cash balance 75,251 136,550 75,251 77,942
Notes on the June 2005 Consolidated Cash flow Statement
(i) Net operating cash flow includes $32.0 million inflow from operations, $1.6
million tax paid and $1 million net finance costs. Net decrease from FY 2004 was
due to pipeline drawdown in FY2004 of $16 million and increased mining costs at
Marikana and Mimosa in FY 2005.
(ii) Reflects payments for mine development and development costs ($90.3
million), proceeds from sale of assets ($4.7 million), mine-site rehabilitation
($1.8 million).
(iii) Reflects net proceeds from issue of shares ($31.8 million), proceeds from
Savcon BEE loan ($97.4 million), repayment of loans including Investec ($71.0
million), proceeds from repayment of share plan loans $1.7 million and payment
of dividends of $4.9 million.
(iv) Reflects movement of Rand against the $US.
Aquarius Platinum Limited
Consolidated Balance Sheet
At 30 June 2005
$'000
Financial year ended
Note: 30/06/05 30/06/04
Assets
Cash assets 75,251 77,942
Current receivables (i) 44,695 23,262
Other current assets (ii) 16,312 10,736
Non-current (iii) 2,928 4,627
receivables
Mining assets (iv) 408,765 356,509
Other non-current 541 150
assets
Total assets 548,492 473,226
Liabilities
Current liabilities (v) 35,480 41,766
Non-current payables (vi) 150,735 59,600
Non-current interest- (vii) 16,037 62,716
bearing liabilities
Other non-current (viii) 78,315 74,947
liabilities
Total Liabilities 280,567 239,029
Net assets 267,925 234,197
Equity
Parent entity 235,352 224,975
interest
Minority interest 32,573 9,222
Total Equity 267,925 234,197
Notes on the June 2005 Consolidated Balance Sheet
(i) Reflects debtors receivable on PGM concentrate sales. Increase reflects
debtors from new Kroondal concentrator commissioned in March 2005
(ii) Reflects PGM concentrate inventory.
(iii) Reduction reflects Aquarius share plan loans repaid.
(iv) Increase in mining assets reflects Mimosa mining assets, Marikana plant,
Kroondal expansion and Everest expansion.
(v) Includes tax payable ($9.6 million) and creditors ($25.9 million).
(vi) Includes BEE deferred settlement proceeds ($10.6 million) and non interest
bearing portion of AQPSA shareholder debt (Implats $62.7 million and Savcon
$77.5 million).
(vii) Includes interest bearing debt payable to Investec ($0.3 million), Savcon
($15.0 million) and other ($0.7 million).
(viii) Reflects deferred tax liabilities $53.8 million, provision for closure
costs $24.5 million.
Corporate
Board
In February the Company strengthened the Board with the appointment of Mr
Zwelakhe Sisulu as a non-executive Director. Mr Sisulu is the Chairman of
Savannah Resources (Pty) Ltd, the lead partner in the Savannah Consortium,
Aquarius Platinum's Black Economic Empowerment partner.
Black Economic Empowerment (BEE)
The BEE transaction announced to shareholders on 26th July 2004 and approved by
shareholders in Special General Meeting on 11th October 2004 was formally
concluded with the receipt of R860 million in cash by the Aquarius Group on the
29th October 2004.
The transaction has two key components, the first of which is now completed.
This saw the BEE consortium, led by Savannah Resources (Pty) Limited, subscribe
for a 29.5% shareholding in the enlarged share capital of AQPSA. Concurrently
Impala Platinum Holdings Limited (Impala) acquired an additional holding in
AQPSA from Aquarius to increase their shareholding to 20% in AQPSA following the
dilution resulting from the issue of the new shares in AQPSA to the BEE
consortium. At this time, the shareholdings in AQPSA are as follows:
* 50.5% interest by AQP
* 29.5% by the Savannah consortium
* 20% held by Impala
The consideration paid by Impala amounted to R71.5 million, which was settled by
the cession of R71.5 million of interest bearing loan account to Aquarius. At
the time of the BEE transaction, AQPSA had an interest bearing loan of over R93
million (both principal and accumulated interest) to Impala. Following cession
of R71.5 million of the loan to Aquarius, AQPSA settled the outstanding balance
of the loan in cash.
The final component of the transaction will in time and subject to the
conditions detailed in the notice of meeting to shareholders of 17th September
2004, see the Savannah consortium's 29.5% holding in AQPSA be exchanged for
24,599,542 new Aquarius shares. Following this exchange, Aquarius will hold 80%
of AQPSA and Savannah consortium constituent members will hold approximately 23%
of the enlarged share capital of Aquarius.
JSE Securities Exchange South Africa
In December 2004, the Company announced its listing on the JSE Securities
Exchange South Africa (JSE). Aquarius Platinum is the first foreign listed
company to list on the JSE under the relaxed exchange control regulations. The
new listing means that Aquarius' shares are traded on the Australian, London and
Johannesburg Exchanges in addition to a sponsored Level 1 ADR program in the
United States.
Projects
Aquarius remains on track to produce its strategic target of 600,000 ounces,
attributable to Aquarius.
In South Africa the Kroondal Pool and Share Agreement (P&SA1) is already
delivering new production ounces and ahead of schedule to deliver 505,000 PGM
ounces (50% attributable to Aquarius) a year, with a significant life extension
to 2017.
The Marikana Pool & Share Agreement (P&SA2) announced in July 2005 will see the
mine produce 250,000 PGM ounces (50% attributable to Aquarius), with a
significant life extension to 2024.
The Everest Mine is under construction and scheduled to be commissioned in
December 2005, rapidly ramping up production in 2006 to a targeted 225,000 PGM
ounce a year over the project's 10 year life of mine.
The CTRP is also ramping production, towards a stated 28,000 PGM ounces (50%
attributable to Aquarius) a year.
In Zimbabwe, the Mimosa Mine will commence a small scale expansion to increase
production some 30% to 70,000 PGM ounces.
The targeted production demonstrates three positive strategic shifts in the
Aquarius production profile:
1. An almost doubling of production to 600,000 PGM ounces
2. Significant life extension of operations at Kroondal and Marikana
3. Innovative expansion through pool and share transactions, in an industry
where new assets are limited
4. Exercising production growth where costs (expansion and production) are some
of the lowest in the industry
The table below details individual mine production for the 2005 financial year
end against the targeted and attributable mine production.
PGMs (4E) Production Targeted Targeted
Year Ended Production Attributable
2005 Production
Kroondal 324,730 505,000 252,500
Marikana 99,161 250,000 125,000
Everest - 225,000 225,000
Mimosa 130,167 162,500 81,250
CTRP 2,117 28,000 14,000
Total 556,175 1,170,500 697,750
Pool and Share Agreements
Kroondal
The Kroondal Pool & Share Agreement (P&SA1) entered production during the year,
with first new production delivered in March 2005. The mine is now ramping
production towards an annual target of 505,000 PGM ounces (Aquarius attributable
50%).
The new operation sees a new decline at Kroondal to access additional ore
reserves pooled by P&SA1 partner Anglo American Platinum. A new concentrator was
also constructed in record time and commissioned three months ahead of schedule
and within budget.
AQPSA's commitments on the P&SA1 expansion project totalled R314m at the end of
the financial year with R278m paid. The expected final cost to AQPSA is
estimated at R358m, under the R375 originally announced (R750 million in total,
50% attributable to each partner).
Marikana
Although a post year end event, the Company announced a significant transaction
in July 2005 to create a Pool & Share Agreement at the Marikana Mine (P&SA2).
The P&SA2 is targeted to come in to effect in September 2005 and will see the
mine increase production to 250,000 PGM ounces (Aquarius attributable 50%) while
extending the life of mine by 12 years to 2004. Utilising consensus
macroeconomic data it is expected that P&SA2 will add some R1.6 billion ($265
million) to the net present value of the partners' investment.
Aquarius has recognised for some time that the best way to add value to its
problematic 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.
Mine Operations
On mine financial Kroondal Marikana Mimosa CTRP
performances:
PGM ounces 162,365 99,161 66,084 1,059
(attributable)
Revenue (net of FX $103.1 $59.8 $49.2 $0.7
variance on sales) million million million million
Cash Costs Rand per R2,311 R4,035 nm Nm
PGM ounce
Cash costs ($) per $375 $654 $358 $367
PGM ounce
Gross margin 40% (10%) 60% 38%
EBITDA $40.8 ($4.3 $21.1 $0.3
million* million)* million million
* Kroondal and Marikana figures are before outside equity interest
Depreciation and $9.3 $14.3 $2.8 $0.1
amortisation million million million million
AQUARIUS PLATINUM (SOUTH AFRICA) (PTY) LTD (Aquarius Platinum 50.5%)
Kroondal Platinum Mine
Safety
The DIIR rate improved to 0.75 from 1.66 in the previous year, a credible
improvement in safety performance both at mining operations and during a period
of intense construction associated with the P&SA.
Production
Kroondal achieved record production of 324,730 PGM ounces for the year, an
increase of 37% on the previous year. The year's production is characterised by
increased production as the P&SA enters full operational status, and the mine is
on track to produce 505,000 PGM ounces annually.
Kroondal: Metal in concentrate produced (PGM ounces)
Year Pt Pd Rh Au PGMs PGMs (4E)
Ended (4E) attributable
to Aquarius
2005 194,290 93,984 34,916 1,540 324,730 162,365**
2004 143,408 68,223 24,913 1,081 237,625 160,190*
2003 128,811 58,179 21,175 895 209,061 209,061
2002 133,238 60,682 22,102 1,274 217,296 217,296
*Reflects P&SA effective November 2003 (4 months production at 100% & 8 months
production at 50%)
**Reflects full impact of P&SA (12 months production at 50%)
Production resulted from 4,240,000 ROM tons: 3,974,000 from underground
operations and 266,000 ROM tons from open pit operations. The average head grade
over the period was constant at 3.04g/t with recoveries improving marginally to
79%.
Cash costs at Kroondal increased 8% to R2,311 per PGM ounce compared to the
previous year. This increase, which is in line with the local inflation rate, is
commendable given that the mines operating costs for the year include R198 per
PGM ounce of P&SA development costs. On an adjusted basis, cash costs (after
allowing for development costs) for the year was R2,113 per PGM ounce. As the
P&SA enters full production mode, cash cost are expected to trend down.
The average achieved PGM basket price per ounce for the year was $711, notably
increasing throughout the year to average $745 in the fourth quarter.
Marikana Platinum Mine
Safety
The Marikana Mine reported an improved DIIR of 0.81 for the year. A small but
significant improvement of 5% on the previous year, notably as in the fourth
quarter the Mine reported a DIIR of zero.
Production
Production for the year was 99,161 PGM ounces as the mine continued to build up
production. Production resulted from 1,515,000 ROM tons from open pit
operations. The average grade over the period was marginally lower at 3.60 g/t,
though recoveries improved to 57% for the year compared to 49% the previous
year. Notably recoveries of 65% were achieved in the second half of the year.
Cash costs for the period were R4,035 per PGM ounce, equal to $654 per PGM
ounce. Costs did trend downwards, to R3,578 ($565) per PGM ounce in the fourth
quarter. The average achieved PGM basket price per ounce for the year was $713.
Performance at the Marikana Mine has continued to disappoint. However,
improvements into the second half suggest that good progress is being made.
Pool & Share Agreement (P&SA2)
In July 2005 Aquarius announced a Pool & Share Agreement for the Marikana Mine,
similar to the successful P&SA at Kroondal. The P&SA2, subject to certain
suspensive conditions and regulatory approvals being met, is targeted to come
into effect in September 2005.
The total capital cost of P&SA2 is estimated at R228 million, to be shared
equally by both parties. AQPSA will fund its portion from current cash flows and
existing debt facilities.
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.
Over 18 months, operations will gradually change from a focus on large-scale
opencast mining to underground mining. Utilising consensus macroeconomic data it
is expected that P&SA2 will add some R1.6 billion ($265 million) to the net
present value of the partners' investment.
Marikana Mineable Reserves and Production Attributable to AQPSA Before and After
P&SA2
PRE - P&SA2 POST - P&SA2
Mineable reserves (ROM tons) 12.7 million 21.9 million
Mineable reserves (PGMs 4E) 1.29 million 2.20 million
ounces ounces
Annual Production (ROM tons) 1.6 million 1.5 million
Planned Annual Production (PGMs 120,000 ounces 125,000 ounces
4E)
When the P&SA becomes effective at the end of September, as at Kroondal,
Aquarius' initial attributable production at Marikana will be shared.
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.
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.
Contractor dispute
In June 2005, Grinaker-LTA Limited trading as Moolman Mining (South Africa)
requested a postponement of the arbitration. This was requested to enable an
audit to be conducted from inception up until the end of March 2005 on the cost
elements and expenditure incurred which formulate the rise and fall calculation.
The audit is currently being conducted by KPMG and assisted by independent
auditing experts representing Moolman Mining South Africa and AQPSA
respectively. It is anticipated that the audited report will be available during
the next quarter, after which the parties will agree on a way forward.
Everest Platinum Mine
Safety
The DIIR for the quarter to June 2005 rose to 0.39 from zero in the previous
quarter as a result of two lost time injuries occurring during the period.
Mining
Ahead of underground mining, small scale open cast mining is planned to provide
initial feedstock. During the quarter, the opencast North Pit was established,
with opencast mining continuing from the South Pit. Opencast mining is on
schedule, with a total of 599,385m3 of waste moved and 56,580 tons of reef
produced. The decline development commenced in April 2005 as scheduled, and is
ahead of programme with a system advance of 135 metres against the 99 metre
programme advance. The decline conveyor and first underground tip was
successfully commissioned during the period.
Progress
The Everest construction programme is proceeding as planned. Civil construction
and erection of steel structures are ongoing and piping, electrical and
instrumentation and tailings dam construction commenced during the period.
Engineering, design and procurement activities are proceeding in parallel and
project execution is on track for hot commissioning during December 2005.
Everest expects to mine and process 250,000 tons per month of UG2 ore to produce
225,000 PGM ounces per annum at steady state, with full production to be
attained in 2006.
Everest Mine Development (end June 2005)
The Everest capital budget is R819 million, including a R33 million allowance
for escalation. The Everest project capital expenditure commitments were R533
million at the end of the quarter, with capital expenditure paid to date of R223
million.
MIMOSA INVESTMENTS
Mimosa Mine (Aquarius 50%)
Safety
The DIIR for the year improved to 0.31, compared to 0.52 for the previous year.
Production
PGM production for the year increased 9% to 130,167 ounces (Aquarius
attributable 65,084 ounces). ROM tonnes increased 7% to a milled tonnage of
1,432,000 tons. With grade slightly lower at 3.69 g/t it was improved recoveries
of 1.4% to 77% that assisted in boosting production.
Cash costs per ounce for the year were $358 per PGM ounce. After by-product
credits cash costs per ounce were $141 per PGM ounces.
Increases in cash costs are attributed to a fiscal regime, which despite high
inflation, maintained a "fixed" exchange rate regime rapidly depreciating
currency until May 2005. In May, and subsequently in July also, the Z$ was
devalued further taking the exchange rate to Z$17,500 to 1 US Dollar. In
conjunction with the devaluation of the Z$ to Z$17,500 the Export Incentive
Scheme has been cancelled. The anticipated effect is near neutral on earnings.
Expansion Potential
Mimosa mine has completed technical work for the Wedza Phase IV upgrade to
increase concentrator throughput by 25% by June 2006. The project will be funded
by Mimosa's own cash resources and a debt facility that is currently being
negotiated.
Indigenisation
Negotiations are on going with regard to the indigenisation of 15% of Mimosa's
shareholding.
AQUARIUS PLATINUM (SA) CORPORATE SERVICES (PTY) LTD
Chromite Tailings Retreatment Plant (CTRP) (Aquarius Platinum 50%)
Safety
The Plant recorded a DIIR of zero for the quarter and the year.
Operations
As the project continues to steadily ramp up, PGM production during its first 6
months of operations totalled 2,117 PGM ounces (Aquarius attributable 1,056 PGM
ounces).
The ability of the CTRP plant to process the designed tonnages has been
restricted by excessive water feeding the plant via the tailings streams
received from the chrome mine. Cyclones will be installed during the next
quarter to remove the excess water, thereby increasing the ability to reach the
designed dry solids throughput. Cash costs at the CTRP continue to decrease as
the plant reaches steady state production. The PGM basket price increased to
$834 per PGM ounce. This is higher than the other operations due to a higher
rhodium content in the concentrate.
Statistical Information
Unit Kroondal Marikana Mimosa CTRP
Year ended Year ended Year ended Year ended
June June June June June June June June
2005 2004 2005 2004 2005 2004 2005 2004
Safety
DIIR Rate/20 0.75 1.66 0.81 0.85 0.31 0.52 0 -
0,000
man
hours
Revenue
Gross R'M 1,25 869 364 334 $83. $72 1.3 -
revenue 0 8
PGM basket $/oz 711 599 713 627 590 538 834 -
Price
Gross cash % 40 52 (10) (5) 60 66 37.5 -
margin
Nickel Price $/lb 6.92 5.56 6.92 5.56 6.52 5.57 - -
Copper Price $/lb 1.43 1.06 1.43 1.06 1.23 0.95 - -
Ave R/$ rate 6.17 6.86 6.17 6.86 - - - -
Cash Costs
Per ROM ton R/ton 177 156 264 235 - - - -
$/ton 29 23 43 34 33 23 13.6 -
7
Per PGM R/oz 2,31 2,13 4,03 4,03 - - - -
ounce 1 2 5 1
$/oz 375 311 654 588 358 252 367 -
Per PGM R/oz 2,17 1,98 3,82 3,92 - - - -
ounce after 3 7 7 7
by-product
credit
$/oz 352 290 620 572 141 56 - -
Capex
Current 100% R `000s 20,5 28,8 19,3 6,44 - - - -
21 94 62 2
$ ` 3,32 4,21 3,13 939 13,6 9,28 - -
000s 6 2 8 72 7
Expansion R `000s 462, 91,8 - - - - - -
100% 374 05
$ `000s 74,9 13,3 - - 1,10 4,25 - -
39 83 8 7
Mining Processed
Underground ROM ton 3,97 2,86 - - 1,43 1,33 - -
'000 4 2 2 4
Open Pit ROM ton 266 277 1,51 1,49 - - - -
'000 5 3
Total ROM ton 4,24 3,13 1,51 1,49 1,43 1,33 - -
'000 0 9 5 3 2 4
Plant Head g/t 3.04 3.07 3.60 3.70 3.69 3.71 2.71 -
Recoveries % 79 77 57 49 77 76 42 -
PGM & Base Metal Production
Platinum Ozs 194, 143, 63,8 57,7 66,7 61,4 1,32 -
290 408 68 74 42 22 1
Palladium Ozs 93,9 68,2 26,4 22,5 49,2 44,6 439 -
84 23 13 98 59 97
Rhodium Ozs 34,9 24,9 8,06 6,06 5,15 5,03 353 -
16 13 1 2 6 6
Gold Ozs 1,54 1,08 819 742 9,01 8,23 4 -
0 1 0 4
4PGE Total Ozs 324, 237, 99,1 87,1 130, 119, 2,11 -
730 625 61 76 167 389 7
Nickel Tons 314 206 133 86 1,89 1,70 - -
5 8
Copper Tons 141 94 73 50 1,56 1,40 - -
3 2
Chromite Tons 461 256 247 106 56 52 - -
(000) (000)
Data reflects 100% of operations.
Note: CTRP operation commenced production of concentrate in late January 2005
Aquarius Platinum Limited
Incorporated in Bermuda
Exempt company number 26290
Board of Directors
Nicholas Sibley Non-executive Chairman
Stuart Murray Chief Executive Officer
Sir William Purves Senior Independent Non-executive Director
David Dix Non-executive
Edward Haslam Non-executive
Catherine Markus Non-executive
Patrick Quirk Non-executive
Zwelakhe Sisulu Non-executive
Audit/Risk Committee
Sir William Purves (Chairman)
David Dix
Edward Haslam
Nicholas Sibley
Remuneration/Succession Planning Committee
Edward Haslam (Chairman)
Catherine Markus
Nicholas Sibley
Nomination Committee
The full Board comprises the Nomination Committee
Senior Independent non-executive director
Sir William Purves
Company Secretary
Willi Boehm
Issued Capital
At 30 June 2005, the Company had on issue:
82,753,892 fully paid common shares
3,794,626 unlisted options
Substantial Shareholders 30 June Number of Percentage
2005 Shares
Impala Platinum Holdings Ltd 7,141,966 8.63 %
J P Morgan Nominees Australia 6,072,196 7.34 %
Limited
Chase Nominees Limited (FISL) 5,691,676 6.88 %
National Nominees Limited 4,446,210 5.37 %
Broker (LSE)
Williams de Bro
Plc
6 Broadgate
London EC2M 2RP
Telephone: +44
(0)20 7588 7511
Facsimile: +44
(0)20 7588 8860
Broker (ASX)
Euroz Securities
Level 14, The
Quadrant
1 William Street
Perth WA 6000
Telephone: +61
(0)8 9488 1400
Facsimile: +61
(0)8 9488 1478
Sponsor (JSE)
Nedbank Capital
135 Rivonia Road
Sandown, Sandton
2196
Telephone: +27
(0)11 294 3601
Facsimile: +27
(0)11 294 8602
Aquarius Platinum (South Africa) Aquarius Platinum Corporate
(Proprietary) Ltd. Services Pty Ltd
50.5% Owned 100% Owned
(Incorporated in the Republic of (Incorporated in Australia)
South Africa) ACN 094 425 555
Registration Number 2000/000341/07
Level 4, Suite 5, South Shore
Block A, 1st Floor, The Great Wall Centre,
Group Building 85 The Esplanade, South Perth,
5 Skeen Boulevard, Bedfordview WA 6151,
South Africa 2007 Australia
P O Box 1282 PO Box 485
Bedfordview South Africa 2009 South Perth, WA 6151, Australia
Telephone: +27 (0)11 455 2050 Telephone: +61 (0)8 9367
Facsimile: +27 (0)11 455 2095 5211
Email: Facsimile: +61 (0)8 9367
info@aquariussa.co.za 5233
Email:
info@aquariusplatinum.com
AQPSA Management
Stuart Murray Executive Chairman
Gert Ackerman Managing Director
Ayanda Khumalo Finance Director
Neil Collett General Manager P&SA Project
Graham Ferreira General Manager Finance & Company Secretary
Hugo Hªll General Manager Everest
Robert Mallinson General Manager Marikana
Gordon Ramsay General Manager Projects
Dave Starley General Manager Kroondal
Gabriel de Wet General Manager Engineering
Mimosa Mine Management
Alex Mhembere Managing Director
Winston Chitando Finance Director
Herbert Mashanyare Technical Director
Peter Chimboza General Manager
Glossary
A$ Australian Dollar
Aquarius Aquarius Platinum Limited
ABET Adult Basic Education Training programme
APS Aquarius Platinum Corporate Services Pty Ltd
AQPSA Aquarius Platinum (South Africa) Pty Ltd
ASACS Aquarius Platinum (SA) (Corporate Services) (Pty) Limited
CTRP Chromite Ore Tailings Retreatment Operation
DIFR Disabling Injury Incidence Rate - being the number of lost time
injuries expressed as a rate per 1,000,000 man-hours worked
DIIR Disabling Injury Incidence Rate - being the number of lost time
injuries expressed as a rate per 200,000 man-hours worked
EMPR Environmental Management Programme Report
Everest Everest Platinum Mine
Great Dyke
Reef A PGE bearing layer within the Great Dyke Complex in Zimbabwe
g/t Grams per tonne, measurement unit of grade (1g/t = 1 part
per million)
JORC code Australasian code for reporting of Mineral Resources and Ore
Reserves
JSE JSE Limited
Kroondal Kroondal Platinum Mine
LHD Load Haul Dump machine
Marikana Marikana Platinum Mine
Mimosa Mimosa Mining Company (Private) Limited
NOSA National Occupational Safety Association
PGE(s) (6E) Platinum Group Elements. Six metallic elements commonly found
together which constitute the platinoids. These are Pt
(platinum), Pd (palladium), Rh (rhodium), RU (ruthenium), Ir
(iridium) and Os (osmium)
PGM(s) (4E) Platinum Group Metals. Aquarius reports the composite grade
comprising Pt+Pd+Rh+Au (gold), the Pt, Pd and Rh being the most
economic platinoids in the UG2 Reef.
P&SA Pooling & Sharing Agreement between KPM and RPM Ltd
R South African Rand
RK1 Consortium comprising Aquarius Platinum (SA) (Corporate Services)
(Pty) Limited (ASACS), GB Mining and Exploration (SA) (Pty)
Limited (GB) and Sylvania South Africa (Pty) Ltd (SLVSA).
ROM Run of Mine. The ore from mining which is fed to the
concentrator plant. This is usually a mixture of UG2 ore and
waste.
RPM Rustenburg Platinum Mines Limited
TKO TKO Investment Holdings Limited
Ton 1 Metric tonne (1 000kg)
UG2 Reef A PGE bearing chromite layer within the Critical Zone of the
Bushveld Complex
$ United States Dollars
Z$ Zimbabwe Dollar
Further information please contact:
In Australia:
Willi Boehm
Aquarius Platinum
Corporate Services Pty
Ltd
+61 (0)8 9367 5211
In United Kingdom:
Nick Bias
BuckBias Limited
+ 44 (0)7887 920 530
Alex Buck
BuckBias Limited
+44 (0)7392 740 452
In South Africa:
Stuart Murray
Aquarius Platinum (South
Platinum) (Pty) Ltd
+27 (0)11 455 2050
Charmane Russell
Russell & Associates
+27 (0)11 880 3924
or visit:
www.aquariusplatinum.com
Date: 11/08/2005 10:37:16 AM Produced by the JSE SENS Department
