| Fri 28 Oct 2005, 8:27 | | Aquarius - Quarter ended 30 September 2005 |
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Aquarius Platinum Limited - Quarter ended 30 September 2005
Aquarius Platinum Limited
(Incorporated in Bermuda)
Registration number: EC26290
Share code on JSE: AQP ISIN: BMG0440M1029
Share code on ASX: AQP.AXISIN: BMG0440M1029
ROBUST PRODUCTION PROFILE, COUPLED WITH RISING PGM PRICES DELIVERS
STRONG PROFIT RESULTS
Quarterly cash profit climbs strongly to $17.7 million, resulting in a net
profit of $9.9 million
Record group attributable production: 103,869 PGM ounces, marginally up from
the last quarter
Expansion projects on track
Cold commissioning commenced at the new Everest Mine
New senior debt facility in place
Highlights of the Quarter
Kroondal (PSA1)
Expanded operation produced 115,362 PGM ounces (Aquarius attributable 57,681
PGM ounces)
Underground operations produced a record 1.59 million tons
New No. 4 decline on schedule
Underground production ramp up on schedule to 540,000 tons per month by
December 2005
Marikana
Production increased marginally to 27,322 PGM ounces
Operating cash margin of 8% for the quarter, Mine reports a net profit in
September month
Trial underground mining continues, reporting favourable mining conditions
Marikana P&SA2 (signed with Anglo Platinum in July 2005) approvals in
process
Mimosa
Production increased to a record 36,368 PGM ounces (Aquarius attributable
18,184 PGM ounces)
Wedza Phase IV upgrade commenced
Cash costs decreased 7% to $361 per PGM ounce and to $106 per PGM ounce
after by-product credits
Currency devaluation restores margins, new monetary policy issued in October
Everest
Construction activities proceed on schedule and within budget
Ore stockpile at 220,000 tons
Cold commissioning of the plant has commenced
Hot commissioning in December 2005, ahead of schedule
CTRP
Production disappoints due to problems feeding dump material into circuits,
with lower than anticipated recoveries on certain feeds
Alternative process equipment to be fitted during the second quarter to
improve throughput and recovery
Commenting on the results, Stuart Murray, CEO of Aquarius Platinum said,
"Aquarius has worked hard, and I am encouraged to see that our efforts to
expand production and enhance efficiencies at all our operations are finally
resulting in significant improvements to the bottom line. The results of this
quarter are set to continue going forward, and I am confident this will be a
good year for shareholders."
Production by Mine
PGMs (4E) Quarter Ended
Dec 2004 Mar 2005 Jun 2005 Sept 2005
Kroondal 71,523 69,051 116,669 115,362
Marikana 24,019 26,509 26,940 27,322
Mimosa 30,386 33,529 35,644 36,368
CTRP - 644 1,473 1,363
Total 125,928 129,733 180,726 180,415
Production by Mine Attributable to Aquarius
PGMs (4E) Quarter Ended
Dec 2004 Mar 2005 Jun 2005 Sep 2005
Kroondal 35,761 34,526 58,335 57,681
Marikana 24,019 26,509 26,940 27,322
Mimosa 15,193 16,765 17,822 18,184
CTRP - 322 737 682
Total 74,973 78,122 103,834 103,869
Aquarius announces consolidated earnings for the quarter to 30 September 2005
of $9.9 million (US 11.9 cents per share) as the Group"s expansion program
continues to deliver increased profits.Cash earnings (before depreciation and
amortisation) were $17.7 million.
Aquarius Attributable Production and Net Profit Summary
Qtr Mar Qtr June Qtr Sept
2005 2005 2005
PGM Production (attributable
ounces) 78,122 103,834 103,869
Net Profit After Tax & Outside
Equity Interests $6.0 m $8.9 m $9.9 m
Production of PGMs attributable to shareholders of Aquarius was 103,869 PGM
ounces, up slightly from the previous quarter ended June 2005, with all mines
achieving consistent performance.
Revenue for the quarter, net of currency adjustments, was $78.7 million. Net
finance charges for the quarter were $0.6 million comprising interest expense
of $1.6 million, offset by interest income of $1.0 million.
Depreciation was higher at $5.8 million due to capital expenditure on the
developments and expansions at Kroondal and Marikana.Amortisation arising from
the fair value uplift of mineral rights at $2.0 million reflects increased
production.
Aquarius Group cash balances at 30 September 2005 were $102.6 million, an
increase of $27.3 million. Material items other than mine operations that
affected cash balances during the quarter included a redraw from the debt
facility of $25.3 million and capital expenditure of $32.1 million.
Over the quarter, the US Dollar was on average 3% stronger against the Rand at
an average exchange rate of R6.52 to the US Dollar.This coupled with increased
production and higher US dollar PGM basket prices achieved during the quarter
all contributed to the improved quarterly profit performance.
Kroondal"s mining cash costs, excluding development costs for the quarter
increased marginally. Costs per ROM ton increased 5.1% to R155. Costs per PGM
ounce increased 3.1% to R2,012. Reported cash costs, however, on a per ROM ton
basis increased by 11% to R181 compared to the previous quarter and cash cost
per PGM ounce increased by 13% to R2,489 per PGM ounce. The increase is
attributed to a 73% increase in development cost to ensure the production
build-up to 540,000 tons/month, and higher than normal escalation charges,
impacted by higher fuel prices and annual wage increases.
Marikana returned a gross margin of 8% despite cash costs being impacted by
some "one-off" costs. These "one-off" costs involved additional stripping due
to the unanticipated change in location of Pit A reef sub-outcrop as well as
the removal of clay layers found in Pit A as a contingency against heavy
rainfall. Cash costs were R280 per ROM and R4,268 per PGM ounce.
Operating costs at the Mimosa Mine decreased 7% to $358 per PGM ounce, and $106
per PGM ounce after by-product credits. This decrease in cash costs is
predominantly attributed to a devaluation of the Zimbabwean currency to
Z$26,002 to the Dollar.
Foreign Exchange
Rand
Over the quarter, despite the Rand weakening on average, the spot rates for the
Rand strengthened marginally to close the quarter at R6.36 to the Dollar,
having started the quarter at R6.52 to the Dollar.
Zimbabwe Dollar
The Zimbabwean dollar devalued to Z$26,002 to the Dollar during the quarter.
This largely compensated for the abolition of the FOB export credit and cost
inflation.
Metals Prices
The value of the basket continued to rise during the quarter to close at R5,721
per PGM ounce. This represents a 40% increase since January 2005 when the
basket price was below R4,000 per PGM ounce.Encouragingly, this upward move has
continued into the current quarter, having at one point already broken through
R 6,000 per PGM ounce.
The platinum price closed for the quarter at a twenty-five year high of $929
per ounce, having risen 14% since January 2005. The rhodium price was
particularly strong, increasing by 43% to $2,740 per from $1,920 per ounce in
the previous quarter. Palladium also demonstrated positive gains, increasing 7%
to $194 per PGM ounce from $181 per PGM ounce.
The basket price for the operations in South Africa improved from R4,716 ($746)
to R5,262 ($807) at AQPSA, due to a strong rise in the rhodium price.
Significantly the South African basket price broke through R6,000 per PGM ounce
near the quarter"s end.
The basket price for the operations in Zimbabwe improved from $603 to $614, due
to the improvement in the platinum price. Mimosa mine in Zimbabwe produces
significant nickel/copper as a by-product, contributing approximately 30% of
Mimosa"s revenue. Base metal prices remained strong during the quarter, with
nickel falling back lightly from recent highs to $6.92 per pound and copper
continuing to advance, increasing 3% to $1.50 per pound, since the previous
quarter.
Aquarius Platinum Limited
Consolidated Income Statement
Quarter ended 30 September 2005
US$"000
Financial
Quarter Quarter year
ended* ended ended
30/09/05 30/09/04 30/06/05
Aquarius PGM Production
103,869 67,486 327,669
(attributable ounces)
Note
Revenue (i) 80,992 45,591 222,327
Forex sales adjustments (ii) (2,325) (363) 2,797
Total revenue 78,667 45,228 225,124
Cost of sales (iii) (55,859) (42,749) (174,936)
Gross profit 22,808 2,479 50,188
Amortisation of fair value
uplift
of mineral properties (1,958) (941) (6,745)
Gross profit after
amortisation
of fair value uplift 20,850 1,538 43,443
Admin & other costs (1,144) (1,173) (5,976)
Finance costs (iv) (1,644) (2,113) 484
FX movements (v) (480) 1,963 (9,889)
Profit before tax 17,582 215 28,062
Income tax expense (3,940) (1,306) (3,446)
Profit after tax 13,642 (1,091) 24,616
Minority interest (vi) (3,780) 1,136 (3,666)
Net profit for the period 9,862 45 20,950
Earnings per share (basic -
cents) 11.9 0.05 25.3
* Unaudited
Notes on the Consolidated Income Statement
(i) Revenue is up 78% from the previous corresponding quarter due to
increased production and higher PGM prices
(ii) Reflects effects of adjusting revenue recorded at time of production to
cash received at the end of the four month pipeline
(iii) Cost of sales on a per PGM ounce basis are lower from the previous
corresponding quarter due to increased level of low cost ounces from
Kroondal production
(iv) Finance costs reflect interest expense on Group interest bearing
borrowings
(v) Reflects foreign exchange movements on translation of net monetary assets
(vi) Minority interests reflects 29.5% and 20% outside equity interest of
Savannah Consortium and Impala Platinum Holdings Limited (Implats) in
AQPSA
Aquarius Platinum Limited
Consolidated Cash Flow Statement
Quarter ended 30 September 2005
US$"000
Quarter Financial
ended * year ended
30/09/05 30/06/05
Note
Net operating cash inflow (i) 31,264 31,458
Net investing cash outflow (ii) (32,103) (88,152)
Net financing cash inflow (iii) 25,923 54,921
Net increase (decrease) in cash held 25,084 (1,773)
Opening cash balance 75,251 77,942
Exchange rate movement on cash 2,297 (918)
Closing cash balance 102,632 75,251
* Unaudited
Notes on the Consolidated Cash Flow Statement
(i) Net operating cash flow includes $31.1 million net inflow from
operations, $0.9 million net finance costs and $0.9 million income tax
payments
(ii) Reflects payments for mine construction costs of $32.1 million, relating
mainly to the new Everest operation
(iii) Reflects proceeds from redraw of finance facilities of $25.3 million,
conversion of options $0.4 million and repayment of share plan loans $0.1
million
Aquarius Platinum Limited
Consolidated Balance Sheet
at 30 September 2005
US$"000
Quarter Financial year
ended * ended
Note 30/09/05 30/06/05
Assets
Cash assets (i) 102,632 75,251
Current receivables (ii) 42,548 44,695
Other current assets (iii) 19,732 16,312
Non-current receivables (iv) 2,735 2,928
Mining assets (v) 444,645 408,765
Other non-current assets 1,106 541
Total Assets 613,398 548,492
Liabilities
Current liabilities (vi) 39,615 35,480
Non-current payables (vii) 157,738 150,735
Non-current interest-bearing
liabilities (viii) 45,028 16,037
Other non-current liabilities (ix) 82,353 78,315
Total Liabilities 324,734 280,567
Net Assets 288,664 267,925
Equity
Parent entity interest 250,479 235,352
Minority interest 38,185 32,573
Total Equity 288,664 267,925
* Unaudited
Notes on the Consolidated Balance Sheet
(i) Cash balance is up due to redraw on finance facilities,
$25 million during the quarter
(ii) Reflects debtors receivable on PGM concentrate sales
(iii) Increase reflects stockpile build up to accommodate the P&SA expansion.
(iv) Reflects employee share plan loans
(v) Increase in mining assets mainly relates to Everest construction
(vi) Includes tax payable ($12 million) and creditors ($28 million)
(vii) Reflects deferred income from BEE transaction ($10.6 million) and
portion of Implats and Savcon non interest bearing shareholder loans
($148.5 million)
(viii)Reflects non-current portion of Investec debt and Savcon interest
bearing shareholder loan
(ix) Reflects deferred tax liabilities $56 million, provision for closure
costs $26 million
AQUARIUS PLATINUM (SOUTH AFRICA) (PTY) LTD (Aquarius Platinum 50.5%)
Kroondal Platinum Mine
Safety
The DIIR for the quarter was unchanged from the previous quarter at 0.65.The 12
month rolling DIIR has improved to 0.67, reflecting the improved longer-term
safety performance.
Mining
P&SA expansion nears completion, underground operations produced a record
1.59 million tons
New No. 4 decline is on schedule
Underground production is on schedule for ramping up to 540,000 tons per
month by December 2005
Kroondal: Metal in concentrate produced (PGM ounces)
Quarter Pt Pd Rh Au PGMs PGMs (4E)
ended (4E) attributable to
Aquarius
Sep-05 69,129 33,420 12,250 563 115,362 57,681
Jun 05 69,875 33,728 12,499 567 116,669 58,335
Mar 05 41,366 19,971 7,408 306 69,051 34,526
Dec 04 42,659 20,815 7,723 326 71,523 35,761
Processing
DMS feed increased by 1.0% to 1.59 million tons
Production decreased by 1.1% to 115,362 PGM ounces
Overall recovery increased by 1.3% to 78.3%
Operations
Operations produced 1,583,000 tons from underground and 125,000 tons from
opencast mining.
Development and equipping of additional underground mining areas continued at
the Central, East and No. 3 decline shafts. In addition, underground mining at
the new No. 4 decline shaft continues on schedule.In total, 1,265 metres of
development were completed during the quarter.
The increase in mining area as a result of down-dip development as part of the
P&SA project has had a marked positive effect on production, with an average of
2.2km of dip face length mined every month.
Surface stockpiles were depleted due to the early completion of the K2
concentrator and the rapid tonnage build-up during the ramp-up phase.
The head grade to the plant reduced marginally to 2.88g/t from 2.99g/t in the
previous quarter.This was due to development material from underground and a
lower in-situ grade of the surface stockpile material.
PGM Production decreased slightly by 1.1% to 115,362 4PGE ounces for the
quarter (Aquarius attributable 57,681 PGM ounces, largely as a result of the
lower than expected head grades at number 3 shaft and significant development
tonnages.
It is anticipated that total underground mining production will reach
sustainable steady state production of 540,000 tons per month by December 2005.
Remaining work on the P&SA expansion, notably the surface and underground
infrastructure at the No 4 decline shaft, is scheduled for completion by
December 2005.
Both plants (K1 and K2) continued to perform well, with recoveries improving by
1.3% overall. The plants processed 1,590,000 tons during the quarter at 77% and
79% recovery respectively for K1 and K2 concentrators. Recoveries, though
better by 1.3 % than the previous quarter, were affected by reduced head grade
and the processing of open cast tons.
K1 plant continued to perform above design capacity of 250,000 tons per
monthand strong improvements in grind were achieved following a complete reline
of the ball mill during July 2005.
The K2 plant continued to perform at above designed tonnage capacity with
recoveries improving from 76% during commissioning to 79% during the quarter.
This improvement is attributed to optimisation of the DMS plant, fines handling
circuit, and primary mill grinding. The K2 spiral plant has also been
commissioned and is producing on-specification chrome.
Mining cash costs, excluding development costs for the quarter increased
marginally by 5.1% to R155 per ROM ton and by 3.1% to R2,012 per PGM ounce.
Reported cash costs, however, on a per ROM ton basis increased by 11% to R181
compared to the previous quarter and cash cost per PGM ounce increased by 13%
to R2,489 per PGM ounce. The high cost increases can be attributed to a 73%
increase in development cost to ensure the production build-up to 540,000 tpm
is achieved, and higher escalation charges, impacted by annual wage increases
and high fuel prices The PGM basket price increased quarter on quarter by 9%
from $745 per PGM oz to $813 PGM oz at an average ZAR / US$ exchange rate of
R6.52.
P&SA1 PROJECT
The P&SA expansion works continued well and are nearing completion. All
conveyor installations are complete, with electrical installations nearing
completion. At the new No.4 Shaft, the materials handling system (silo, silo
truck load-out facility, silo feed belt, transfer station, decline belt and
underground decline tip) was completed to schedule. .
The final capital cost is expected well below budget. The figures presented
below include mining, plant and infrastructure portions of the project. The
estimated final cost is R689.2 million (100% basis), R132.5 million below the
escalated budget largely due to deferment into future ongoing capital. R587.2
million has been paid to date.
Environmental Management
Environmental management at Kroondal continues to be a fundamental element of
the day to day operations.
Minimising dust pollution from tailings dams is a considerable challenge for
all mining operations in the region.Following numerous trials on different
methods of dust suppression on the K1 tailings dam, an overhead water spraying
system was installed.The system was commissioned on 1 September 2005 with
excellent results, and will now be rolled out to the remaining two tailings
dams. This is an industry first that third parties, including government are
observing with interest.
During the quarter, specific attention was also given to:
Environmental management of all contractors at Kroondal
Community/Stakeholder liaison in terms of dust management and rehabilitation
Water management
Marikana Platinum Mine
Safety
Two lost time injuries were reported for the quarter. The 12 month rolling
DIIR reduced slightly from 0.81 to 0.80 for the current quarter. The FY06
DIIR rate stands at 0.57 for the quarter.
Mining
Both opencast mining contractors delivered against revised mining schedules.
Stockpiles at the end of the quarter totalled 66,000 ROM tons.
Trial underground mining has extended some 60m down dip of the portals.
Processing
417,043 ROM tons were processed during the period, an increase of 3% on the
previous quarter.
Concentrator plant recoveries for the period were 62% overall and in line
with expectations despite high variability in the feed.
A record 27,322 PGM ounces were produced.
End of quarter ROM stockpiles contain an estimated recoverable 2,900 PGM
ounces.
Operations
PGM production increased quarter-on-quarter by 1.4% to a new record of 27,322
PGM ounces.
Marikana made a modest 8% cash margin for the quarter, and realized a modest
net operating profit in September 2005 for the first time since commencement of
operations.
Cash cost for the quarter was R280 per ROM ton and R4,268 per PGM ounce.
Increases on the previous quarter are 17% and 19% respectively.
The increase in cash costs is largely attributed to the two new pits, pit "A"
and "SW"; currently being opened up to sustain production. These had a negative
impact on mining rates and costs. Oxidized reef from Pit A extended an
approximate 15m deeper than expected. Hence the ratio of oxidized to fresh reef
ratio was higher than planned which impacted negatively on recovery, but more
importantly, on planned plant throughput. Due to the clay- like nature of the
oxidized reef, this reef can only be processed effectively and efficiently when
blended with more competent reef at ratios in the order of 5% - 10%. The effect
of this is, however, reflected by stockpiles of approximately 66,000 ROM tons
with an estimated recoverable 2,900 ounces locked up within them, available at
the end of the quarter.
Approximately 50% of the cash cost increase was due to an authorized increase
in strip ratio during July 2005 to allow for additional stripping due to the
unanticipated change in location of Pit A reef sub-outcrop, as well as the
removal of clay layers found in Pit A as a contingency against heavy rainfall.
These costs are deemed as one-off and not on-going.
The PGM basket price increased quarter-on-quarter by 10.5% from R4,722 per PGM
ounce to R5,216 per PGM ounce at an average R/$ exchange rate of R6.52.
Marikana: Metal in concentrate produced (PGM ounces)
Quarter ended Pt Pd Rh Au PGMs(4E)
Sep-05 17,244 7,409 2,466 203 27,322
Jun 05 16,893 7,402 2,428 217 26,940
Mar 05 17,230 6,759 2,324 196 26,509
Dec 04 15,808 6,214 1,800 197 24,019
Marikana Pool & Share Agreement (P&SA2)
On 13 July 2005, AQPSA announced a second Pooling and Sharing Agreement with
Anglo Platinum. In terms of this agreement the Marikana ore-body and
concentrator plant will be pooled with Rustenburg Platinum Mines (RPM)
underground UG2 ore reserves on the farm Brakspruit. At the Marikana
concentrator a dense media separation plant (DMS) will be added allowing an
increase in throughput to 250,000 tpm.
The P&SA2 will see Kroondal P&SA reserves associated with No 4 Shaft move to
Marikana, while these reserves are replaced with reserves from RPM"s Townlands
property. This leaves the Kroondal P&SA ounce neutral. Once the P&SA2 is
effective this exchange of reserves will have little or no impact on Kroondal
P&SA production.
The P&SA2 is subject to a number of conditions precedent and regulatory
approvals. With good progress made during the quarter, it is expected that all
outstanding requirements will be met during the second quarter.
The finalisation of the agreement will result in a revised Business Plan for
Marikana. Underground mining production from No.4 shaft and Marikana, will
gradually replace opencast mining production at Marikana at significantly lower
operating costs.
Trial Underground Mining
Poor ground conditions were experienced within 15m into the high wall in both
portals which necessitated the installation of steel sets and concrete to
stabilise the area. This delayed sinking of the declines by a month. Conditions
underground to date are favourable and the outlook is positive for achieving
future planned tonnage build up
Contractor dispute with Moolman Mining
Aquarius Platinum (South Africa) (Proprietary) Limited ("AQPSA"), is currently
engaged in arbitration proceedings instituted against AQPSA by Moolman Mining,
a division of Grinaker LTA Limited ("Moolman Mining"), relating to the
application of a "rise and fall formula" provided for in the opencast mining
contract concluded between Moolman Mining and AQPSA for AQPSA"s Marikana Mine.
At the request of Moolman Mining, AQPSA agreed to postpone the arbitration
proceedings indefinitely to adhere to a request from Moolman Mining to audit
the weightings in the rise and fall formula by KPMG, who would also investigate
the basis for the original weightings inserted in the mining contract at the
request of Moolman Mining.
A leading forensic auditor, Professor Harvey Wainer, was appointed by AQPSA to
monitor the auditing process and to investigate the conduct of Moolman Mining
when the mining contract was concluded.
In AQPSA"s view, KPMG has inferred that the weightings inserted in the mining
contract by Moolman Mining were materially defective and significantly, KPMG
disclaimed any view on Moolman Mining"s explanation for the gross "error" in
their calculations in the following words -
"Basis for disclaimer of conclusion
We obtained a schedule detailing the various categories of expenses per the
original tender of R799 million, as well as a schedule allocating the various
expense categories to the cost elements (as per appendix B), however we were
not able to obtain sufficient appropriate evidence to substantiate the basis
on which Moolman Mining allocated the expenses included in the tender to
the cost elements of "fuel", "local" and "foreign".
Disclaimer of conclusion
Because of the significance of the matter described in the preceding paragraph,
we do not express an opinion on the calculation and determination of the
original weightings for "fuel", "local" and "foreign" as reflected in the
agreement."
AQPSA views the matter in a very serious light. The disclaimer in the KPMG
report, suggests that there may have been a material misrepresentation of the
facts by Moolman Mining at the time when the mining contract was concluded,
which induced AQPSA to agree to the terms proposed by Moolman Mining. AQPSA is,
however, awaiting the report from its advisors, before a final decision is
taken on the matter.
AQPSA has received a "pro forma" invoice from Moolman Mining for escalation,
based on a proposed revision of the original contractual weightings. Moolman
Mining relied on the KPMG audit in compiling this pro forma invoice. The
validity of this pro forma invoice is under investigation by AQPSA"s advisors,
as part of the enquiry into the apparent misrepresentation of facts by Moolman
Mining at a time when they caused the original weightings to be inserted into
the mining contract.
Everest Platinum Mine
Safety
The DIIR for the quarter rose to 0.41 from 0.39 in the previous quarter as a
result of three lost time injuries.
Highlights
Construction activities are on schedule and within budget
Opencast mining and underground mining activities on programme, with
220,000 tons on stockpile
Plant commissioning is set for December 2005
Mining
Opencast mining progressed well during the period, with opencast production
from both the North and South pits. Opencast mining is ahead of programme, with
a total of 145,720 opencast ROM tons produced during the quarter.
The decline development in the footwall was completed during the period, with
reef intersection on programme. Underground services have been fully
commissioned and 18,000 tons of underground ROM tons were produced. Combined
opencast and underground mining have yielded a stockpile of 220,000 ROM tons,
approximately 10,000 ROM tons more than planned.
Everest Mine Development (end September 2005)
Progress
The Everest construction programme is proceeding as planned.
Earthworks, civil construction and erection of steel structures are complete,
with piping, electrical and instrumentation and tailings dam construction
continuing 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 will mine and process 250,000 tons per month of UG2 ore to produce
225,000 ounces of PGMs per annum at steady state, with full production to be
attained by the end of 2006.
The implementation of Social Upliftment and Sustainable Livelihood projects is
ongoing. Contractor recruitment of local labour is proving beneficial with 523
local people employed during the period.
The Everest capital budget is R819 million including a R33 million allowance
for escalation. The Everest project capital expenditure commitments were R622
million at the end of the quarter with capital expenditure paid to date of R413
million.
MIMOSA INVESTMENTS
Mimosa Mine (Aquarius 50%)
Safety
Safety performance improved by 65% achieving a DIIR of 0.12 for the quarter
compared to a DIIR of 0.34 for the previous quarter.The rolling 12 months DIIR
closed at 0.22 down from 0.31 as at the end of June 2005.
Production
Satisfactory results were achieved in all operations with ROM and PGM
production increasing 10% and 2% respectively compared to the previous
quarter.ROM production at 433,000 dry metric tons achieved during the quarter
was in line with the increase in lashing capacity following the delivery of
additional underground vehicles. The PGM feed grade improved was constant at
3.75g/t. A 1% improvement in the recovery rate to 78% resulted in an increase
in the total PGM ounces produced to a record 36,368 (previous quarter 35,644).
Mimosa: PGMs in concentrate produced (ounces)
PGMs (4E)
Quarter Pt Pd Rh Au PGMs attributable
ended (4E) to Aquarius
Sep-05 18,548 13,915 1,407 2,498 36,368 18,184
Jun 05 18,269 13,518 1,406 2,451 35,644 17,822
Mar 05 17,189 12,665 1,343 2,332 33,529 16,765
Dec 04 15,557 11,514 1,198 2,117 30,386 15,193
Mimosa: Base metals in concentrate produced (tons)
Mine Production Attributable to Aquarius
Quarter
ended Ni Cu Co Ni Cu Co
Sep-05 512 422 15 256 211 8
Jun 05 514 420 15 257 210 8
Mar 05 491 407 14 245 203 7
Dec 04 444 374 13 222 187 6
Revenue
The gross revenue realized for the quarter was up by 20% to US$27.6 million
compared to US$23.0 million for the previous quarter. The increase is directly
attributable to 2% increase in both the PGM basket price and PGM ounce produced
to US$614 per ounce and 36,368 respectively.
Operating Costs
Cash costs per PGM ounce for the quarter decreased by 7% to US$361 compared to
US$389 for the quarter ending 30 June 2005. After by- product credits cash
costs per ounce were 36% lower at US$105 compared to US$164 in the previous
quarter. The reduction in the cash costs was attributable to a 49% devaluation
of Zimbabwean dollar during the quarter from Z$17,500 to US$1.00 down to
Z$26,002 to US$1.00. However the full benefits of this devaluation were partly
eroded by a cost push inflation of local costs and the scrapping of 25% Export
Incentive Scheme by the Reserve Bank of Zimbabwe.
Wedza Phase IV Upgrade
The mine embarked on the Wedza Phase IV upgrade project to increase production
by 25% to 170,000 PGM ounces (86,000 platinum ounces). The project follows
finalization of the Account Management Agreement with the Reserve Bank of
Zimbabwe (RBZ) in terms of the Enhanced Platinum Sector Regime (EPSR), the
granting of a project status by the Ministry of Finance and the conclusion of a
US Dollar based loan facility with the Merchant Bank of Central Africa (MBCA).
The project is due for completion by June 2006.
Foreign exchange
Post the closure of the quarter ended September; the Reserve Bank of Zimbabwe
(RBZ) issued its 2005 3rd Quarter Momentary Policy Statement on 20 October
2005. The policy relaxed controls on foreign exchange management by introducing
a new Tradable Foreign Currency Balances System (TFCBS) to replace the highly
regulated Foreign Exchange Auction Floor System. The new regime together with
the Enhanced Platinum Sector Regime allows platinum exporters to retain foreign
currency in FCA"s for 45 days. Any balance not utilised in the 45 days is
exchanged at the ruling inter bank market rate. The new regime is favourable to
exporters and should assist mine profitability going forward.
AQUARIUS PLATINUM (SA) CORPORATE SERVICES (PTY) LTD
Chromite Tailings Retreatment Plant (CTRP) (Aquarius 50%)
Safety
No lost time injuries occurred during the quarter.
Processing
Throughput during the quarter remained low due to problems in feeding
certain dump material into the process. The installation of cyclones to
remove excess water from the Xstrata feed helped to raise throughput during
September.
Production was lower than the previous quarter due to a decrease in PGM
recovery. The drop off in recovery is a result of excessive water in the
circuit, which has been rectified by the installation of the cyclones.
Recovery of the dump material is still below expectation and negatively
affecting overall plant recovery.
Operations
Cash costs per PGM ounce for the quarter were $448. Costs are above plan
estimates and are expected to reduce once steady state production is achieved.
Despite current high production costs, the operation is cash positive and
returns a small profit.Optimisation of the flotation circuit continued during
September.During the second quarter additional process equipment will be tested
with the aim of solving the feed problems, improving density control and
increasing recoveries. Significant improvements in production are expected from
the third quarter.
CORPORATE MATTERS
New debt facility
AQPSA has entered into a new debt facility with Rand Merchant Bank to refinance
its existing debt facilities on significantly improved terms. The new facility
of R700 million will provide AQPSA with the requisite funding for any future
growth opportunities and for balance sheet optimisation. It reflects the
substantially improved operational profile of AQPSA in comparison to that in
existence when the facility was originally entered into in 2002.
The facility has been structured as a 6 year amortising senior loan and
provides AQPSA with a large degree of flexibility in managing its funding cost
and financial risk. The facility can be denominated in either Rands or US
Dollars at AQPSA"s election and AQPSA is entitled at any time during the
facility term to repay and or redraw principle amounts subject to the
amortising facility limit not being breached.
The margin payable on the new facility will be 190 basis points above both
JIBAR and LIBOR.
Existing debt facility
R175 million ($25.3 million) was redrawn against the existing debt facility for
providing assurances of funding capacity as the Company enters into P&SA2. This
debt will be repaid and cancelled by drawing on the RMB facility.
Statistical Information: Kroondal P&SA1: (Aquarius 50%)
Data reflects 100% of
mine
operations
operations
Unit Current Previous %
Change
Quarter Quarter Quarter
Sept June on
2005 2005 Quarter
Safety
Rate/200,000
man
DIIR hours 0.65 0.65 -
Revenue
Gross Revenue RM 573 466 23
PGM basket Price $/oz 813 745 9
Gross cash margin % 50 45 11
Nickel Price 5/tb 6.60 7.44 (11)
Copper Price USc/lb 170 154 10
Ave R"S rate 6.52 6.33 3
Cash Costs
Per ROM ton R"ton 181 163 11
S/ton 28 26 7
Per PGM oz R"oz 2,489 2,208 13
$/oz 382 349 9
Per PGM oz after by-
product credit R"oz 2,362 2,070 14
$/oz 362 327 11
Capex
Current R"000s 16,522 18,453 (10)
$"000s 2,534 2,915.00 (13)
Expansion R"000s 32,635 67,198 (51)
$"000s 5,005 10,616 (53)
Mining Processed
Underground ROM Ton "000 1,465 1,519 (4)
Open Pit ROM Ton `000 125 59 112
Total ROM Ton `000 1,590 1,578 1
Grade
Plant Head g/t 2.88 2.99 (4)
Recoveries % 78 77 1
PGM Production
Platinum Ozs 69,129 69,875 (1)
Palladium Ozs 33,420 33,728 (1)
Rhodium Ozs 12,250 12,499 (2)
Gold Ozs 563 567 (1)
Total Ozs 115.362 116,669 (1)
Base Metals
Production
Nickel Tonnes 110 119 (8)
Copper Tonnes 48 53 (9)
Chromite (000) Tonnes (000) 275 261 5
Data reflects 100% of
mine
operations
operations
Current Previous +/- % YTD
3 months 3 months 3 months
to to Year on to
Sept 05 Sept04 Year Sept
2005
Safety
DIIR 0.65 0.94 (31) 0.65
Revenue
Gross Revenue 573 257 123 573
PGM basket Price 813 672 21 813
Gross cash margin 50 36 39 50
Nickel Price 6.60 6.00 10 6.60
Copper Price 170.00 129 32 170
Ave R"S rate 6.52 6.34 3 6.52
Cash Costs
Per ROM ton 181 189 (4) 181
28 30 (7) 28
Per PGM oz 2,489 2436 2 2,489
382 384 (1) 382
Per PGM oz after by-
product credit 2,362 2,333 1 2,362
362 368 (2) 362
Capex
Current 16,522 1,455 1,036 16,522
2,534 229 1,007 2,534
Expansion 32,635 115,420 - 32,635
5.005 18,199 - 5,005
Mining Processed
Underground 1,465 803 82 1,465
Open Pit 125 65 92 125
Total 1,590 868 83 1,590
Grade
Plant Head 2.88 3.02 (5) 2.88
Recoveries 78 80 (3) 78
PGM Production
Platinum 69,129 40,389 71 69,129
Palladium 33,420 19,471 72 33,420
Rhodium 12,250 7,285 68 12,250
Gold 563 342 65 563
Total 115,362 67487 71 115,362
Base Metals
Production
Nickel 110 63 75 110
Copper 48 27 78 48
Chromite (000) 275 50 450 275
Statistical Information: Marikana: (Aquarius 100%)
Current Previous %
Change
Data reflects
100% of nine Unit
operations Quarter Quarter Quarter
Sept June on
2005 2005 Quarter
Safety
Rate/200,000
DIIR man hours 0.80 0.81 (1)
Revenue
Gross Revenue RM 127 105 21
PGM basket Price $!oz 800 746 7
Gross cash
margin % 8 8 -
Nickel Price 5/lb 6.60 7.44 (11)
Copper Price USc/lb 170 154 10
Ave R/$ rate 6.52 6.33 3
Cash Costs
Per ROM ton R/ton 280 239 17
5/ton 43 38 (5) 43
Per PGM oz R/oz 4268 3,578 19
$/oz 655 565 16 655
Per PGM ounce
after by product R"oz 4,051 3,342 21
credit
$/oz 621 528 18 621
Capital
expenditure
Current R000s 3,434 6,053 (43)
$`000s 527 956 (45)
Expansion R000s - -
$`000s - - -
Processed
ROM
Underground Ton"000 8 - 8
ROM
Open Pit Ton"000 409 403 1
ROM
Total Ton"000 417 403 3
Grade
Plant Head g/t 3.26 3.20 2
Recoveries % 62 65 (5)
PGM Production
Platinum Ozs 17,244 16,893 2
Palladium Ozs 7,409 7,402 0
Rhodium Ozs 2,466 2,428 2
Gold Ozs 203 217 (6)
Total Ozs 27,322 26,940 1
Base Metals
Production
Nickel Tonnes 40 45 (II)
Copper Tomes 24 27 (11)
Chromite (000) Tonnes (000) 60 66 (9)
YTD Previous Previous YTD
Data reflects
100% of nine
operations 3months 3 months Year on Quarter
to to Year to Sept
Sept05 Sept04 Sept05 2005
Safety
DIIR 0.80 0.80 - 0.80
Revenue
Gross Revenue 127 82 55 127
PGM basket Price 800 685 17 803
Gross cash
margin 8 (37.8) n/a 8
Nickel Price 6.60 6.35 4 6.60
Copper Price 170 129 32 170
Ave R/$ rate 652 6.34 3 6.52
Cash Costs
Per ROM ton 280 282 (1) 280
5/ton 44 (3) 43
Per PGM oz 4,268 5,198 (18) 4,268
$/oz 820 (20) 655
Per PGM ounce
after by product 4,051 5,100 (21) 4,051
credit
$/oz 804 (23) 621
Capital
expenditure
Current 3,434 5,100 (33) 3,434
527 804 (34) 527
Expansion - - -
Processed - - - -
Underground - 8
Open Pit 409 400 2 409
Total 417 400 4 417
Grade
