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AQP
AQP
AQP - Aquarius Platinum Limited - Half Year Financial Results (31 December
2006)
Aquarius Platinum Limited
(Incorporated in Bermuda)
Registration Number: EC26290
Share Code JSE: AQP ISIN Code: BMG0440M1029
("Aquarius Platinum")
Aquarius Platinum Half Year Financial Results (31 December 2006)
Record Interim Profits up 229% and Doubling of Interim Dividend
Highlights of the half year
* Net Profit more than triples to $85.4 million (100.4 US cents per
share)
* Record half year production, at 277,156 PGM ounces attributable
* Interim dividend doubles to 12 US cents per share
Operational
* On-mine production up 30% to 471,403 PGM ounces (Aquarius
attributable: up 45% to 277,156 PGM ounces)
* P&SA1 at Kroondal builds momentum, production increased 3% to 238,900
* PGM ounces (Aquarius attributable: 119,450 PGM ounces)
* P&SA2 at Marikana comes of age, adding 45% new production to 69,941
PGM ounces (Aquarius attributable 34,971 PGM ounces)
* New Everest Mine ramp-up boosts production to 82,908 PGM ounces
* Mimosa Mine production up 6% to 76,078 PGM ounces despite Q2
production issues (Aquarius attributable: 38,039 PGM ounces)
Financial
* Revenues more than double for the period to $330.8 million
* Average basket prices increased to $1,274 per PGM ounce in South
Africa and $949 per PGM ounce in Zimbabwe
* Net profit before non cash charges up 190% at $151.8 million
* Net profit attributable to members of Aquarius (to IFRS) up 229% at
$85.4 million (100.4 cents per share)
* Consolidated cash balances at period end $263.6 million, up $102
million since June 2006.
Strategic
* Completed conversion of mining rights to new order licenses approved
at all South African mines
* Agreement with Bakgaga Mining to drill and conduct feasibility work at
prospective PGM properties in South Africa
* Mimosa Phase IV expansion completed and Phase V expansion to 195,000
PGM ounces announced
* Purchase by Aquarius of 3.5% of South African subsidiary from BEE
Partner SavCon
Commenting on the results, Stuart Murray, CEO of Aquarius Platinum said,
"The financial performance of Aquarius for the first six months of the 2007
financial year has been aided by a strong PGM basket price which together
with our increased production has seen our net profit more than triple to
$85.4 million compared with the same period last year. This is despite of
the second quarter challenges as we focus on mine development for longer-
term benefits, in order to continue to deliver production into the high
commodity price environment.
Our focus in the first half of the financial year has been solidly on
improving development at all operations, and all are now on a better
footing for continued growth and improved efficiencies in the second half
of the Financial Year and beyond. Concurrently, our cash balances have
increased to $263.6 million dollars, permitting the board to double the
interim dividend.
Financial results: Half Year to 31 December 2006
Aquarius Platinum Limited announces consolidated earnings for the half year
to 31 December 2006 of $85.4 million (100.4 US cents per share), up 229% on
the previous corresponding six month period December 2005, and equivalent
to 99.8% of the net profit for the financial year ended 30 June 2006.
Revenues from ordinary activities for the period rose 107% to $330.8
million (comprising sales revenue of $322.3 million and interest and other
income of $8.4 million) up from $159.7 million (sales revenue $157.7
million and interest and other income of $2.0 million) in the previous
corresponding period (pcp). The increase in revenue has been driven by
higher PGM basket prices and a 45% increase in Aquarius` attributable PGM
production. PGM basket prices increased 48% in South Africa, and 49% in
Zimbabwe, with strong base metal prices (Nickel up 63% and Copper up 125%)
which contribute approximately 33% of Mimosa`s revenue.
PGM production for the period increased 45% to 277,156 operating PGM ounces
attributable to Aquarius at a total cost of production of $138.9 million,
up 41%.
Amortisation and depreciation at $18.9 million (December 2005, $12.8m) was
in line with the 45% increase in production over the previous corresponding
period.
Net finance income for the period of $0.7 million, comprised $8.0 million
in interest income and $7.3 million in interest expense. Interest expense
was higher compared to the previous corresponding period due to an increase
in pipeline finance which is directly related to sales revenue from PGM
concentrate sales.
Aquarius` cash balances of $264 million at 31 December 2006 have grown
sharply, and are expected to increase progressively in the second half of
the year in the current high commodity environment, as group production
increases.
The Directors have declared an interim dividend of 12 US cents per share
(2005: 6 US cents per share) payable on 23 March 2007 to shareholders
registered on 2 March 2007.
Group Financials by Operation
$ million Kroondal Marikana Everest Mimosa CTRP Corporate Total
PGM ounces 119,450 34,971 82,908 38,039 1,788 - 277,15
(attributable) 6
Revenue (net of 132.6 39.8 91.3 57.7 2.6 3.9 327.9
FX sales
variance)
Cost of sales (47.5) (21.3) (37.6)) (16.5) (0.8) - (123.7
)
Depreciation & (4.9) (4.4) (4.4) (1.4) (0.1) (15.2)
Amortisation
Gross profit 80.2 14.1 49.3 39.8 1.7 3.9 189.0
Amortisation of (3.4) - - (0.4) - - (3.8)
fair value
Gross profit 76.8 14.1 49.3 39.4 1.7 3.9 185.2
after FVU
Corporate admin (3.5) (3.5)
& other costs
Foreign 0.3 0.2 1.4 2.5 - 0.2 4.6
currency
gain/(loss)
Finance charges - - (1.4) (0.6) - (5.3) (7.3)
Profit/(loss) 77.1 14.3 49.3 41.3 1.7 (4.7) 179.0
before tax
Tax Expense (7.5) (38.7) (46.2)
Profit/(loss) 77.1 14.3 49.3 33.8 1.7 (43.4) 132.8
after tax
Minority (47.4) (47.4)
interest
Profit/(loss) 77.1 14.3 49.3 33.8 1.7 (90.8) 85.4
after minority
interest
Production
Total on-mine production increased 30% to 471,403 PGM ounces. Attributable
group operating production for the half year was 277,156 PGM ounces, an
increase of 45% period on period. The Group`s production profile will
continue to increase in the second half as operational ramp-ups continue.
Aquarius Group PGM Production
Half Year Total Mine & Attributable Production (PGM Ounces)
Production by Mine and Production by Mine attributable to Aquarius
PGMs (4E) Production by Mine Production attributable to
Aquarius
Half Year Half Year Half Year Half Year
endedDec endedDec endedDec endedDec 2006
2005 2006 2005
Kroondal 232,537 238,900 116,269 119,450
Marikana 48,111 69,941 37,716(a) 34,971
Everest 7,111 82,908 7,111(b) 82,908
Mimosa 71,762 76,078 35,881 38,039
CTRP 2,897 3,576 1,449 1,788
Total 362,418 471,403 198,426 277,156
(a) Marikana implemented with effect from second quarter, resulting
attributable production reducing by 10,395 PGM ounces for the period.
(b) Everest costs were capitalised to 31 December 2005. The mine was
handed over to operations on 1 January 2006. *P&SA2 at
Foreign Exchange
The Rand proved relatively volatile through the 6 months to December 2006,
averaging 7.23 for the period, despite opening and closing the period at
around 7.03.
Rand : $ Exchange Rate
Platinum Group Metal Prices
Commodity prices through the second half remained firm consolidating on the
strong gains realised over the first half. The chart below illustrates the
individual prices for the platinum, palladium, rhodium and gold. Platinum
prices peaked in November at over $1,300 per ounce on news of the possible
introduction of a Platinum ETF, while rhodium closed the year firm, having
peaked once again above $6,000 per ounce due to continued physical demand.
Gold and palladium also maintained gains made over the period, closing the
second half of the financial year at similar price levels to the start.
Platinum Group Metal Prices (Dollar per PGM ounce)
The Rand basket price at South African operations averaged $1,274 per PGM
ounce over the second half. In Rand terms, this is equal to R9,211 per PGM
ounce. In Zimbabwe, the Dollar basket price averaged $949 per PGM ounce.
In addition, by-product base metals copper and nickel recorded strong
prices at Mimosa, with copper averaging $3.40/lb and nickel averaging
$11.00/lb over the half year. .
Platinum Group Metal Basket Prices ($ and Rand per ounce PGM ounce)
Financials
Aquarius Platinum Limited
Consolidated Income Statement
For the Half Year ended 31 December 2006
$`000
Audit Reviewed
Half Year Ended Year Ended
Note: 31/12/06 31/12/05 30/6/06
Revenue (i) 330,774 159,706 426,569
Foreign exchange loss on sales (ii) (2,914) (2,297) 13,228
Cost of sales (including D&A) (iii) (138,822) (98,550) (223,064)
Gross profit 189,038 58,859 216,733
Amortisation of fair value (iv) (3,756) (3,725) (7,162)
uplift of mineral properties
Gross profit after amortisation 185,282 55,134 209,571
of fair value uplift
Corporate Admin & other (v) (3,574) (1,983) (8,027)
operating costs
Finance costs (vi) (7,322) (2,324) (10,383)
Foreign exchange gains/(losses) (vii) 4,598 1,207 913
Profit before tax 178,984 52,034 192,074
Income tax expense (viii) (46,175) (12,581) (51,071)
Profit after tax 132,809 39,453 141,003
Minority interest (ix) (47,438) (13,538) (55,373)
Net profit 85,371 25,915 85,630
Earnings per share (basic - 100.39 31.50 100.87
cents)
Notes on the Consolidated Income Statement
(i) Sales revenue increase reflects impact of increased PGM production and
higher PGM basket price achieved
(ii) Reflects effects of adjusting revenue recorded at time of
production at Kroondal, Marikana and CTRP to actual receipts received
at the end of the four month pipeline
(iii) Increase in cost of sales is related to the 45% increase in PGM
production
(iv) Relates to amortisation of purchased goodwill associated with the
Kroondal, Marikana and Mimosa mines
(v) Relates to administration costs of the Aquarius Group
(vi) Finance costs are higher to Dec `06 due to increased pipeline finance
as a result of increased sales revenue, and interest on Everest mine
no longer capitalised,
(vii) Reflects foreign exchange movements on net monetary assets
(vii) Income tax expense for the period for AQPSA and Mimosa
(ix) Minority interests reflect 49.5% outside equity interest of the
Savannah Consortium (SavCon) and Impala Platinum Holdings Limited
(Implats) in AQPSA
Aquarius Platinum Limited
Consolidated Cash Flow Statement
Half year ended 31 December 2006
$`000
Audit Reviewed
Half year ended Year ended
Note: 31/12/06 31/12/05 30/06/06
Net operating cash (i) 159,026 58,701 175,531
inflow
Net investing cash (ii) (25,489) (75,406) (112,880)
outflow
Net financing cash (iii) (36,895) 23,496 27,161
outflow
Net increase in cash 96,642 6,791 89,812
held
Opening cash balance 162,425 75,251 75,251
Exchange rate movement (iv) 4,496 2,912 (2,638)
on cash
Closing cash balance 263,563 84,954 162,425
Notes on the Consolidated Cash Flow Statement
(i) Net operating cash flow includes $180 million inflow from
operations, income tax paid $22 million and $0.7 million net
finance income
(ii) Reflects payments for mine development and development costs
(ii) Reflects repayment of loans $23 million, proceeds of the issue of
shares on exercise of employee options $1.5 million and payment
of dividends of $15 million
(iii) Reflects movement of Rand against the US dollar
Aquarius Platinum Limited
Consolidated Balance Sheet
At 31 December 2006
$`000
Audit Reviewed
Half year ended Year ended
Note: 31/12/06 31/12/05 30/06/06
Assets
Cash assets 263,563 84,954 162,425
Current receivables (i) 71,245 46,098 66,721
Other current assets (ii) 27,610 22,798 19,828
Property, plant and (iii) 212,140 208,811 206,626
equipment
Mining assets (iv) 279,145 270,199 247,601
Other non-current assets 8,571 460 6,994
Total assets 862,274 633,320 710,195
Liabilities
Current liabilities (v) 48,237 37,089 35,463
Non-current payables (vi) 124,410 147,626 130,104
Non-current interest- (vii) 34,843 44,042 45,372
bearing liabilities
Other non-current (viii) 132,813 85,811 105,419
liabilities
Total Liabilities 340,303 314,568 316,358
Net assets/(liabilities) 521,971 318,752 393,837
Equity
Parent entity interest 392,814 270,578 315,559
Minority interest 129,157 48,174 78,278
Total Equity 521,971 318,752 393,837
Notes on the December 06 Consolidated Balance Sheet
(i) Reflects debtors receivable on increased PGM concentrate sales
(ii) Reflects PGM concentrate inventory
(iii) Represents fixed assets within the Group
(iv) Increase in mining assets reflects Kroondal, Marikana, Mimosa and
Everest mining (mining rights)) assets
(v) Includes tax payable ($11 million) and creditors ($37 million)
(vi) Includes non interest bearing portion of AQPSA shareholder loans (
Implats $49 million and Savcon $73 million)
(vii) Includes interest bearing debt payable to RMB ($27 million), embedded
lease re Everest mine $7 million.
(viii) Reflects deferred tax liabilities $91 million, provision for closure
costs $41 million
OPERATIONS
AQUARIUS PLATINUM (SOUTH AFRICA) (PTY) LTD (Aquarius Platinum 50.5%)
P&SA 1 at Kroondal
Safety
The (12-month rolling average) DIIR improved to 0.93 during the half year.
Kroondal achieved 1,777,521 fatality-free shifts to the end of December
2006.
Mining
* Total production increased 5% to 3.5 million tons
* Significant primary development completed to improve face-availability
and mining flexibility
* K5 Project remains ahead of schedule
* Head-grade averaged 2.86 g/t for the first half
Processing
* Plant processed a record 3.4 million tons
* Concentrator recoveries steady at 77%
* Record production of 238,902 PGM ounces, a 3% increase period on
period
Revenue
The PGM basket price for the half year held strong at $1,299 per PGM ounce.
With higher production volumes, mine revenue increased to R1.9 billion for
the half year (AQPSA share 50%). The on-mine cash margin for the half year
to December 2006 rose to 64% compared with 53% for the first half to
December 2005.
Operations
Production for the first six months increased 9% compared with the first
half 2006, totalling 3.5 million tons: 3.2 million tons from underground
operations and 0.3 million tons from open pit operations. Considerable
underground development was completed during the first half. In the second
quarter, some production was adversely impacted by downtime mechanised
mining machinery. This has since been rectified with the underground
contractor, Murray & Roberts Cementation, by recruiting additional
personnel and a revision of the maintenance, replacement and rebuild
programmes. By the end of period, the stockpile was increased to 100,000
tons in preparation for the Christmas close and to mitigate the Q3 holiday
impact.
Tons processed increased 5% to 3.4 million tons. The plant head grade fell
slightly to 2.86g/t. for the first half for two reasons: first, the
considerable underground development and second a planned 3-day maintenance
shutdown at both the K1 and K2 Concentrators. It is anticipated that the
high rate of development that has been ongoing at Kroondal, will decrease
in the second half and that this should result in a positive effect on the
head grade and unit cost. Nevertheless, despite the operational
challenges, PGM production increased by 3% to a record 238,900 PGM ounces
for the half year (Aquarius attributable: 119,450 PGM ounces).
Operating Cash Costs
Cash costs for the first half increased to R204 per ROM ton and $396 per
PGM ounce.
Kroondal: Operating Cash Costs
4E (Pt+Pd+Rh+Au) 6E (Pt+Pd+Rh+Ir+Ru+Au) 6E net of by-
products (Ni&Cu)
Kroondal R2,866 per PGM R 2,359 per PGE ounce R2,211 per PGE
ounce ounce
Operating cash costs include ledging and primary development costs of R395
per PGM ounce (up 32% period on period), secondary development costs of R49
per PGM ounce (up 11% period on period) and engineering infrastructure
costs of R236 per PGM ounce (up 82% period on period). Cash cost of
stoping for Kroondal were R763 per PGM ounce, 2 % increase period on
period. It should be noted that operating costs also include costs
associated with the new K5 shaft of R60 per PGM ounce. The K5 Shaft is in
a ramp-up phase and therefore attracts high relative unit costs at this
stage.
Kroondal Operating Cash Costs Reconciliation
Rand per PGM ounce 1H (Dec 2006) 1H (Dec 2005) Variance
Cash costs 2,866 2,458 17%
Ledging and primary (395) (299) 32%
development costs
Secondary development costs (49) (44) 11%
Engineering infrastructure (236) (129) 82%
costs
Cash cost after adjustments 2,186 1,986 10%
It is expected that the unit costs will start to decrease going forward.
It is anticipated that primary development will reduce in the following
quarter, followed by a reduction in equipping and engineering
infrastructure in the subsequent quarter. Ensuring adequate face
availability and mining flexibility at Kroondal is key to the longer-term
management of the mine and while development has taken time the benefits
are now expected to be realised.
P&SA 1 at Marikana
Safety
The (12 month rolling average) DIIR for the half year improved to 0.43
compared with 0.76 in the previous corresponding period.
Mining
* The new opencast contractor continues to perform well
* Underground production ramp-up progressing well, totaling 359,246 tons
for the period
* Open pit operations produced 722,882 tons, though bias is shifting
towards underground tons
* Surface stockpile totalled 196,000 tons at end of period (though
largely poorer openpit material)
Processing
* Marikana Dense Media Separation Plant commissioned
* Record 988,000 tons processed during the quarter, a 34% increase
period on period
* 69,941 PGM ounces produced (Aquarius attributable 34,971 PGM ounces),
a 45% increase period on period
Revenue
The PGM basket price for the half year increased 48% period on period to
$1,276 per PGM ounce. Revenues increased nearly threefold to R580 million
from R197 million in the previous corresponding period. Reflecting the
improvements in volumes, prices and operating efficiencies, the gross
margin for the first half was 46% compared with 14% in the previous
corresponding period.
Operations
Total production for the first 6 months increased to 1.1 million tons, made
up of 359,246 underground tons and 722,882 open pit tons.
The opencast mining contractor, MCC Mining (Pty) Ltd, is performing well
and is managing costs effectively as both efficiencies and output have
improved since their appointment. Production in Marikana Pit B was
accelerated to facilitate a box cut for the construction of a second
decline shaft, an expedient way to access the underground ore from the
opencast operations. Stormwater controls and additional pumping capacity
have been established to prepare for the local rain-season in the third
quarter. As underground operations are established and ramp-up, it is
expected that the majority of tons will be from underground.
At No. 1 Shaft, 805 metres of primary development was completed during the
period. A hybrid-mining method was successfully implemented. This has
resulted in a reduced stoping-width, thereby contributing to an increase in
the plant head grade. At No. 4 Shaft 1,552 metres of primary development
was completed during the first half. Some potholes were encountered in the
main decline ends. Infill drilling is being undertaken to determine the
extent of the geological disturbance, resulting in a short delay in tonnage
build up. Preparation of the high wall at No. 2 Shaft was completed and
development of the twin-decline system has commenced.
The surface stockpile (predominantly comprising oxidised material) was
196,000 tons at the end of the half year. During the first six months, a
total of 988,000 tons were processed, a 34% increase period on period.
The plant head grade averaged 3.18g/t for the first six months. Plant
recoveries increased significantly by 12% to 69%, resulting in production
of 69,941 PGM ounces, up a substantial 45% increase period on period.
Operating Cash Costs
Cash costs averaged R312 per ROM ton for the period. Cash costs per PGM
ounce decreased by 5% to R4,405 period on period. Indeed cash costs in the
second quarter, decreased by 12% to R4,147 per PGM ounce compared with the
first quarter, reflecting the improving cost performance at Marikana.
Marikana: Operating Costs
4E (Pt+Pd+Rh+Au) 6E (Pt+Pd+Rh+Ir+Ru+Au) 6E net of by-
products (Ni&Cu)
Marikana R4,405 per PGM R3,623 per PGE ounce R3,754 per PGE
ounce ounce
New Marikana Dense Media Separation Plant
View from North of DMS tower DMS tower in centre, with fines
with sink screen in the section on the left. Background
foreground. shows coarse ore silos fed by
overland conveyor from ROM pad.
Contractor dispute with Moolman Mining
Moolman Mining was the primary opencast mining contractor employed at the
Marikana Mine from start up in May 2002 until December 2005. In December
2005, AQPSA resiled from the contract with Moolman Mining on discovering
misrepresentations by Moolman, which induced the contract. Moolman has
been replaced by MCC as opencast contractor and MCC has since improved
production from the opencast mine significantly at no additional cost over
the disputed Moolmans contract rates.
In April 2006, AQPSA instituted action against Moolman arising from the
misrepresentation. The action includes a damages component. In May 2006,
AQPSA served an application to stay the arbitration in respect of the Rise
and Fall claim pending the determination of the action. In September 2006,
AQPSA received Moolmans` response in the application to stay the
arbitration as well as a plea to the action. Moolmans delivered a
conditional counterclaim, comprising four components in an aggregate amount
of ZAR472 million. The AQPSA legal team is in the process of preparing a
reply in the application proceedings and a plea to the conditional
counterclaims. During the course of this process, AQPSA has requested
further documentation from Moolmans relating to the Marikana contract. The
process of finalising the replying affidavit and inspection of documents
continues and is expected to be finalised in the Third Quarter of the 2007
financial year.
It is anticipated that legal proceedings relating to the dispute may take
years to resolve.
Everest Platinum Mine
Safety
The (12 month rolling average) DIIR for the half year improved to 0.52
compared with 1.18 in the previous corresponding period.
Mining
* Underground ramp-up resulted in production rise to 810,540 tons
* Opencast production was reduced to 452,811 tonnes in favour of
underground production
* Opencast mining extended through development of the South-West Pit
adding 320,000 tons to the opencast reserve
Processing
Total 1.3 million tons processed
Significant improvement in recoveries to 72% reflecting increased
underground to openpit production blend
Production ramps up to 82,908 PGM ounces
Revenue
The PGM basket price increased period on period by 34% to $1,188 per PGM
ounce. The strong increase in prices, combined with significantly higher
volumes as the operation continues to ramp up and the positive impact of a
weaker average Rand Dollar exchange rate, resulted in revenues of R652
million. This is a significant contribution to group earnings compared
with R31 million in the previous corresponding period when the mine was
established and awarded operational status. Although still in a ramp-up
phase, Everest achieved a 59% cash margin.
Operations
Operational ramp-up continued with opencast and underground producing a
total 1,263,351 tons. Through the half year, the production of underground
to open pit ore shifted firmly in favour of the higher quality underground
ore.
The opencast mining contractor (MCC Mining) continues to perform well. In
line with the shift towards more favourable underground production,
opencast mining declined to 452,811 tons. As the North Pit was depleted,
the opencast reserve was boosted through the establishment of an extension
at the South-West Pit, adding an additional 320,000 tons to the opencast
reserve. The opencast ROM grade fell over the period with more production
coming from the low-grade area in the North Pit and shallow oxidised reef
from the South-West Pit extension. It is anticipated that opencast grades
will improve during the remainder of the 2007 financial year as mining
extends into the deeper areas of the South-West pit yielding more competent
reef.
On-reef decline development and the establishment of stoping sections
continued during the half year, resulting in underground production of
810,540 tons. The underground head grade average 2.80g/t during the first
six months.
Concentrator throughput was 1.3 million tons milled for the period
including stockpile consumption. At the end of the period, the surface
stockpile totalled 13,743 tons.
Metallurgical recoveries improved to an average 72% for the first six
months compared with 55% in the previous corresponding period, reflecting
the larger underground contribution in the feed blend. Looking to enhance
recoveries further, advanced flotation process control systems were
implemented towards the end of the period and a reduction in oxidised
material will result in improved recoveries during the next quarter.
Production for the first six months totalled 82,908 PGM ounces. It is
anticipated that the ramp-up at Everest will continue through the second
half of the 2007 financial year and that full production rates are
achievable in the first quarter of the 2008 financial year (Quarter to
September 2007).
Operating Cash Costs
Cash costs for the period increased to R212 per ROM ton milled as a result
of the higher consumption of underground production, which has not yet
achieved steady-state and the unit cost increase from higher opencast
stripping ratios during the establishment of the South-West Pit.
Consequently, cash costs per PGM ounce for the period increased by 3% to
R3,234 per PGM ounce.
It is anticipated that unit costs will reduce as the underground volumes
ramp up to steady-state production and metallurgical recovery and head
grade improvements are realised.
Everest Operating Costs
4E (Pt+Pd+Rh+Au) 6E 6E net of by-
(Pt+Pd+Rh+Ir+Ru+Au) products (Ni&Cu)
Everest R3,324* per PGM R2,735 per PGE R2,714 per PGE
ounce ounce ounce
*Included in the cash cost is IFRIC-4 (determining whether an arrangement
contains a lease) for R128 per PGM ounce.
Mimosa Mine (Aquarius 50%)
Safety
The 12-month rolling average DIIR deteriorated to 0.47 for the period.
Regrettably, a fatality occurred during the half year when an Underground
Team Leader was fatally injured by a fall of ground.
Mining
* Wedza Phase IV Expansion Project completed and Phase V Expansion
Project announced
* Underground production increased to 935,000 tons
* The surface stockpile increased by 33% to 308,383 tons at the end of
the period
Processing
* Tons processed increased 8% to 833,000 tons period on period despite
plant shutdowns
* Average concentrator plant recoveries steady at 78%
* Total mine production increased 6% to 76,078 ounces period on period
(Aquarius attributable: 38,039 PGM ounces)
Revenue
The PGM basket price for the period averaged $949 per PGM ounce, a 49%
increase period on period. The average nickel price over the period
averaged 63% higher at $11 per pound from and copper 125% higher at $3.40
per pound. With base metals contributing approximately 33% of gross
revenue, sales revenue for the period was $91 million (Aquarius
attributable: 50%), a 65% increase period on period.
Operations
During the period mining operations hoisted 935,143 tons compared with
861,995 tons in the previous corresponding period. Tons milled during the
quarter totalled 833,000 tons, with the surface stockpile at the end of the
period 308,383 tons.
The average plant head grade for the period was steady at 3.66 g/t. During
November, the plant underwent a planned major maintenance shut down,
resulting in a budgeted production shortfall over the previous quarter. In
addition, during October the plant suffered an unplanned mill breakdown due
to a bearing failure, which had been scheduled to be changed concurrently
with the November planned maintenance shut down. This resulted in
additional unbudgeted production shortfall. While the lost time resulted
in a build up of the stockpile and ultimately lost production, the plant is
now operating at capacity, and no shutdowns or maintenance stoppages are
envisaged for the second half of the year.
Recoveries for the period were steady at 78%. Despite the plant shutdowns,
production for the period increased 6% to 76,078 PGM ounces (Aquarius
attributable: 38,039 PGM ounces. This increase is a consequence of the
Phase IV expansion project, completed during the period. In January 2007,
a new Phase V expansion was announced, targeting an annual 195,000 PGM
ounces, with full production anticipated in July 2007.
Operating Cash Costs
Cash costs for the period increased to $36 per ROM ton and by 16% to $395
per PGM ounce period on period. The increase in cash costs was
attributable to high Zimbabwe dollar denominated costs, mainly due to
disparity between inflation rate and exchange rate and lower production
throughput due to the plant shutdown.
Cash costs net of by-products were -$10 per PGM ounce, a significant
windfall, even compared with $96 per PGM ounce in the previous quarter.
Mimosa Operating Costs
4E 6E 4E net of by-products
(Pt+Pd+Rh+Au) (Pt+Pd+Rh+Ir+Ru+Au) (Ni, Cu& Co)
Mimosa $395 per PGM $374 per PGE ounce ($10) per PGE ounce
ounce
AQUARIUS PLATINUM (SA) CORPORATE SERVICES (PTY) LTD
Chromite Tailings Retreatment Plant (CTRP) (Aquarius Platinum 50%)
Safety
The DIIR is zero. No Lost-Time Accidents have occurred since the project
commenced.
Processing
* 70,000 ton of feed processed
* Average recoveries for the period increased to 48%
* 3,576 PGM ounces produce (Aquarius attributable: 1,788 PGM ounces) a
45% increase compared with the previous corresponding period
Revenue
The PGM basket price for the period increased 57% to $1,606 per PGM ounce.
The CTRP enjoys a high rhodium content hence the higher basket prices
achieved. The strong basket price and weaker Rand Dollar exchange rate
resulted in revenues more than doubling to R35 million (Aquarius
attributable: 50%). The cash margin for the period was 78%.
Operations
The dump material project successfully commissioned during the first
quarter resulted in a 68% increase in tons processed in the second quarter
and 70,000 tonnes for the first half in total.. Over the period the ROM
grade improved 37% to 4.04g/t compared with the previous corresponding
period. Average recoveries were 45% higher at 48% period on period,
however, while a substantial improvement in throughput was experienced in
the second quarter, lower recoveries resulted compared with the first
quarter due to oxidisation of dump materials. To rectify the situation, a
project to reconfigure the flotation circuit has commenced.
Operating Costs
Cash costs decreased by 32% to R 2,172 per PGM ounce. The decrease in
costs is a result of higher volumes.
4E (Pt+Pd+Rh+Au) 6E (Pt+Pd+Rh+Ir+Ru+Au) 6E net of by-
products
CTRP R2,172 per PGM R 1,510 per PGE ounce R931 per PGE
ounce ounce
CORPORATE MATTERS
Development of Prospective Platinum Properties in South Africa with Bakgaga
Mining (Pty) Ltd
In October 2006 Aquarius announced the signing of a farm-in agreement
between its wholly owned subsidiary Aquarius Platinum (SA) Corporate
Services (Pty) Ltd and Bakgaga Mining (Pty) Ltd to drill and conduct
feasibility work at prospective Platinum Group Metals (PGMs) bearing
properties on South Africa`s Bushveld.
An initial site investigation was undertaken during September 2006 with
subsequent field mapping during October 2006. Historical exploration data
for the farms adjacent to the farms in the Bakgaga Project areas was
obtained in December 2006. This data is currently being evaluated to
determine the exploration programme going forward.
Appointment of New Broker
On 13th December, Aquarius announced the appointment of Investec Bank (UK)
Limited and Morgan Stanley & Co International Limited as joint corporate
brokers to Aquarius Platinum on the London Stock Exchange.
Further Expansion in Production Announced at Mimosa
Subsequent to the end of the half year, on 9th January 2007, Aquarius
announced an approved low capital cost expansion to increase annual
production capacity to 195,000 PGM ounces (100,000 platinum ounces in
concentrate) at the Mimosa Platinum Mine in Zimbabwe.
The expansion project, known as "Wedza Phase V", follows four earlier
successful expansion projects at Mimosa and is expected to increase annual
PGM production from 168,750 PGM ounces to 195,000 PGM ounces. The increase
in mining will come from the South Hill ore body where current operations
are based, increasing throughput by 17% from 150,000 tons to 175,000 tons
milled per month. The expansion will not have an impact on day-to-day
operations, or have any material impact on the life-of-mine.
Total capital cost of the expansion, which has an estimated payback period
of twenty-four months, is forecast at $23.2 million. It will be funded
from retained cash flows at Mimosa level.
Conversion of Mining Licenses to New Order Rights
On 24th October 2006 Aquarius announced that the South African Department
of Minerals and Energy (DME) approved AQPSA`s applications for the new
order mining rights conversions in respect of all three of its mines:
Kroondal, Marikana and Everest. Consequently, AQPSA is now in full
compliance with the South African Mineral and Petroleum Resources
Development Act 2002, having exceeded the requirement for 26% Black
Economic Empowerment ownership by 2014.
Aquarius purchases 3.5% of South African subsidiary from SavCon
On 7th November 2006, Aquarius announced that an agreement was reached with
Black Empowerment partner SavCon for the acquisition by AQP of a 3.5%
equity interest in AQPSA from SavCon for a cash consideration of R342.5
million. The transaction represented a partial implementation of the final
phase of the Black Economic Empowerment transaction approved by
shareholders in Special General Meeting on 11 October 2004 and increased
AQP`s equity interest in AQPSA from 50.5% to 54%. Implementation requires
South African DME approval as per section 9 of the AQPSA`s converted mining
rights.
Board of Directors
Subsequent to the end of the half year, Mr Zwelakhe Sisulu has resigned
from the Board of Aquarius effective 6th February 2007 due to an increasing
work load in South Africa. The Board wish to record their appreciation of
Mr Sisulu`s contribution as director to the Company. Mr Kofi Morna who
currently acts as Mr Sisulu`s alternate director will join the board
effective immediately. Mr Zwelakhe Mankazana will act as Mr Morna`s
alternate director.
Statistics Kroondal Marikana
P&SA1 P&SA2
Unit 6 6 6 6
months months months months
Dec Dec Dec Dec
2006 2005 2006 2005
Safety
DIIR Rate/200, 0.93 0.96 0.43 0.76
000 man
hrs
Revenue
Gross Millions 1,917 1,227 580 197
revenue
PGM basket $/oz 1,299 879 1,276 863
Price
Gross cash % 64 53 47 14
margin
Nickel Price $/lb 14.11 6.17 14.11 6.17
Copper Price $/lb 3.35 1.83 3.35 1.83
Ave R/$ rate 7.23 6.52 7.23 6.52
Cash Costs on-mine
Per ROM ton R/ton 204 179 312 374303
$/ton 28 27 43 47
Per PGM R/oz 2,866 2,458 4,405 4,642
(3E+Au)
$/oz 396 377 609 712
Per PGE R/oz 2,359 2,025 3,623 3,857
(5E+Au)
$/oz 326 311 501 592
Capex
Current/Sust R`000s 124,65 33,525 25,507 6,746
aining 100% 1
$`000s 17,241 5,145 3,528 1,035
Expansion R`000s - 57,936 90,996 8,147
100%
$`000s - 8,891 12,586 1,250
Mining Processed
Underground ROM ton 3,103 2,911 343 36
`000s
Open Pit ROM ton 255 285 645 700
`000s
Total ROM ton 3,358 3,195 988 736
`000s
Grade
Plant Head g/t PGM 2.86 2.92 3.18 3.25
Recoveries % 77 78 69 62
PGM Production
Platinum Ozs 143,76 138,95 42,215 30,131
1 9
Palladium Ozs 68,914 67,752 20,162 13,288
Rhodium Ozs 24,974 24,672 7,039 4,327
Gold Ozs 1,253 1,155 526 365
Total PGM Ozs 238,90 232,53 69,941 48,111
(3E+Au) 2 7
Total PGE Ozs 290,22 282,26 85,039 57,887
(5E+Au) 2 8
Base Metals Production
Nickel Tons 230 222 121 72
Copper Tons 100 98 65 41
Chromite Tons 197 258 57 104
(000) `000s
Continued
Statistics Everest Mimosa CTRP
Unit 6 6 6 6 6 6
months months months months months months
Dec Dec Dec Dec Dec Dec
2006 2005 2006 2005 2006 2005
Safety
DIIR Rate/200, 0.52 1.18 0.47 0.12 0 0
000 man
hrs
Revenue
Gross Millions 652 31 91 55 35 17
revenue
PGM basket $/oz 1,188 886 949 637 1,606 1,024
Price
Gross cash % 59 28 72 61 78 44
margin
Nickel Price $/lb 14.11 6.09 11.27 6.53 14.11 6.17
Copper Price $/lb 3.35 2.08 3.40 1.60 3.35 1.83
Ave R/$ rate 7.23 6.35 - 7.23 6.52
Cash Costs on-mine
Per ROM ton R/ton 212 168 - - 111 95
$/ton 29 27 36 32 15 15
Per PGM R/oz 3,234 3,136 - 2,172 3,268
(3E+Au)
$/oz 447 494 395 343 300 501
Per PGE R/oz 2,735 2,695 - 1,510 2,318
(5E+Au)
$/oz 378 424 374 323 209 356
Capex
Current/Sust R`000s 71,190 - - - - -
aining 100%
$`000s 9,846 - 5,123 4,327 - -
Expansion R`000s 21,117 349,18 - - - 378
100% 9
$`000s 2,921 55,026 1,453 3,581 - 58
Mining Processed
Underground ROM ton 809 39 935 862 - -
`000s
Open Pit ROM ton 456 89 - - -
`000s
Total ROM ton 1,265 129 935 862 70 98
`000s
Grade
Plant Head g/t PGM 2.80 3.12 3.66 3.74 4.04 2.95
Recoveries % 72 55 78 78 48 33
PGM Production
Platinum Ozs 46,954 4,161 38,423 36,509 2,155 1,801
Palladium Ozs 27,624 2,351 29,342 27,497 783 632
Rhodium Ozs 7,535 532 2,987 2,797 631 458
Gold Ozs 795 67 5,326 4,959 7 6
Total PGM Ozs 82,908 7,111 76,078 71,762 3,576 2,897
(3E+Au)
Total PGE Ozs 98,047 8,223 38,423 - 5,143 4,085
(5E+Au)
Base Metals Production
Nickel Tons 113 13 1,023 1,000 2 -
Copper Tons 57 5 852 832 4 -
Chromite Tons - - 31 30 - -
(000) `000s
*Data reflects 100% of operations
Aquarius Platinum Limited
Incorporated in Bermuda
Exempt company number 26290
Board of Directors
Nicholas Sibley Non-executive Chairman
Stuart Murray Chief Executive Officer
David Dix Non-executive
Tim Freshwater Non-executive
Edward Haslam Non-executive
Kofi Morna Non-executive
Sir William Purves Non-executive
Patrick Quirk Non-executive
Zwelakhe Mankazana Alternate to Kofi Morna
Audit/Risk Committee
Sir William Purves (Chairman)
David Dix
Edward Haslam
Nicholas Sibley
Remuneration/Succession Planning Committee
Edward Haslam (Chairman)
Nicholas Sibley
Nomination Committee
The full Board comprises the Nomination Committee
Company Secretary
Willi Boehm
Issued Capital
At 31 December 2006, the Company had on issue:
84,575,558 fully paid common shares and 2,020,320 unlisted options
Substantial Shareholders 31 Number of Percentage
December 2006 Shares
Impala Platinum Holdings Ltd 7,127,276 8.43
Nutraco Nominees Limited 5,877,403 6.95
Trading Information
ISIN number BMG0440M1029
Broker (LSE) (Joint) Broker (ASX) Sponsor (JSE)
Morgan Stanley & Co Euroz Securities Investec Bank
International Limited Level 14, The Quadrant Limited
20 Cabot Square 1 William Street 100 Grayston Drive
Canary Wharf Perth WA 6000 Sandown
London, E14 4QW Sandton 2196
Telephone: +44 (0)20 Telephone: +61 (0)8 Telephone: +27 (0)11
7425 8000 9488 1400 286 7326
Facsimile: +44 (0)20 Facsimile: +61 (0)8 Facsimile: +27 (0)11
7425 8990 9488 1478 291 1066
Investec Securities
Limited
Investec Bank (UK)
Limited
2 Gresham Street
London, EC2V 7QP
Telephone: +44 (0)20
7597 5970
Facsimile: +44 (0)20
75975120
Aquarius Platinum (South Africa) (Proprietary) Ltd.
50.5% Owned
(Incorporated in the Republic of South Africa)
Registration Number 2000/000341/07
Block A, 1st Floor, The Great Wall Group Building
5 Skeen Boulevard, Bedfordview
South Africa 2007
P O Box 1282
Bedfordview South Africa 2009
Telephone: +27 (0)11 455 2050
Facsimile: +27 (0)11 455 2095
Email: info@aquariussa.co.za
Aquarius Platinum Corporate Services Pty Ltd
100% Owned
(Incorporated in Australia)
ACN 094 425 555
Level 4, Suite 5, South Shore Centre,
85 The Esplanade, South Perth, WA 6151, Australia
PO Box 485
South Perth, WA 6151, Australia
Telephone: +61 (0)8 9367 5211
Facsimile: +61 (0)8 9367 5233
Email: info@aquariusplatinum.com
AQPSA Management
Stuart Murray Executive Chairman
Gert Ackerman Managing Director
Ayanda Khumalo Finance Director
Anton Wheeler Operations Director
Graham Ferreira General Manager Finance & Company Secretary
Hugo Holl General Manager Everest
Robert Mallinson General Manager Marikana
Gordon Ramsay General Manager Projects
Abraham (Rudi) Rudolph 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 Operations Director
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
DME South African Government Department of Minerals and Energy
DMS Dense Media Separation
Dollar or $ United States Dollar
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 or P&SA1 at Kroondal
LHD Load Haul Dump machine
Marikana Marikana Platinum Mine or P&SA2 at Marikana
Mimosa Mimosa Mining Company (Private) Limited
NOSA National Occupational Safety Association
PGE(s) (6E) Platinum Group Elements plus Gold. Five metallic elements
commonly found together which constitute the platinoids (excluding Os
(osmium)). These are Pt (platinum), Pd (palladium), Rh (rhodium), Ru
(ruthenium), Ir (iridium) plus Au (gold)
PGM(s) (4E) Platinum Group Metals plus Gold. Aquarius reports the PGMs
as comprising Pt+Pd+Rh plus Au (gold) with the Pt, Pd and Rh being the most
economic platinoids in the UG2 Reef.
P&SA1 Pooling & Sharing Agreement between AQPSA and RPM Ltd on
Kroondal
P&SA2 Pooling & Sharing Agreement between AQPSA and RPM Ltd on
Marikana
R South African Rand
RK1 Consortium comprising Aquarius Platinum (SA) (Corporate
Services) (Pty) Limited (ASACS), Ivanhoe Nickel and Platinum Limited 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
SavCon The Savannah Consortium. The principal Black Empowerment
Investor in Aquarius Platinum
TKO TKO Investment Holdings Limited
Ton 1 Metric tonne (1,000 kg)
UG2 Reef A PGE bearing chromite layer within the Critical Zone of the
Bushveld Complex
Z$ Zimbabwe Dollar
For further information please contact:
In Australia:
Willi Boehm
Aquarius Platinum Corporate Services Pty Ltd
+61 (0)8 9367 5211
In the United Kingdom:
Nick Bias
BuckBias Limited
+ 44 (0)7887 920 530
In South Africa:
Stuart Murray
Aquarius Platinum (South Platinum) (Pty) Ltd
+27 (0)11 455 2050
or visit aquariusplatinum.com
Date: 07/02/2007 11:03:01 Produced by the JSE SENS Department.
