To view the PDF file, sign up for a MySharenet subscription.

AQP - Aquarius Platinum Limited - Financial results for the six months ended

Release Date: 09/02/2012 10:44
Code(s): AQP
Wrap Text

AQP - Aquarius Platinum Limited - Financial results for the six months ended 31 December 2011 Aquarius Platinum Limited (Incorporated in Bermuda) Registration Number: EC26290 Share Code JSE: AQP ISIN Code: BMG0440M1284 FINANCIAL RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2011 Key Points: Financial - Revenue decreased 25% to $252 million (H1 2011: $336 million) - Mine operating net cash flow decreased by 53% to $25 million (H1 2011: $54 million) - Mine EBITDA decreased by 69% to $29 million (H1 2011: $93 million) - Group cash balance at period end of $230 million Key Points: Operational - Group attributable production decreased by 14% to 215,453 PGM ounces (H1 2011: 250,972) - The average US Dollar PGM Basket Price was stable compared to the previous corresponding period despite US Dollar PGM prices weakening over the half year due to deteriorating macroeconomic conditions - The average Rand Basket Price increased by 5% - The Rand weakened by 7% on average against the US Dollar - Production at all South African mines negatively affected by industry- wide increase in `Section 54` safety stoppages - Production at Kroondal and Marikana further impeded by implementation issues related to the new support regime - Everest production suffered due to industrial relations problems and ongoing poor ground conditions on the eastern side of the mine - Weighted average on-mine unit cash costs in South Africa rose by 38% in Rand terms, largely due to lower production - Mimosa performed strongly again, continuing to produce at capacity - Operations at Blue Ridge remained suspended for the entire six month period Key Points: Strategic - Section 102 application submitted to the regulator in regard to the purchase of the Everest extension property - Conversion to a `Premium Listing` on the London Stock Exchange completed during the period - Everest Mine under review - to be optimised to produce at 10,000 PGM oz per month for the next 12-18 months - Contractor arrangements and model under review Commenting on the results, Stuart Murray, CEO of Aquarius Platinum said: "Our financial results for the six months to December 2011 do no more than reflect the ongoing difficult operating and trading conditions facing the Company and the southern African platinum industry. They should come as no surprise to shareholders and observers of this space. In this environment I am pleased to report that the Group generated modest positive cash flow at the operating level, although the business in South Africa is not generating sufficient cashflow to cover replacement capital. Acquisitions and growth capex had to be funded from cash resources. It must also be remembered that the reported net loss and resulting negative EPS figure are rather exaggerated by a substantial non-cash foreign exchange loss generated by the revaluation of inter-company loans as a result of volatile exchange rate conditions. Following the capitalisation of the inter-company loans, much of this exchange rate induced volatility impact on earnings should reduce going forward. As I mentioned in our recent quarterly production report, from an operational perspective the period under review has been a most challenging one. Economic and government-imposed pressures continue to mount against the platinum industry in the region. By the end of the period many of the problems relating to the implementation of the new hangingwall support methodology at Kroondal and Marikana were resolved but ongoing below budget production performance, poor grade control, and poor cost control culminated in significant unit cost escalations at Kroondal, Marikana and Everest. This has lead AQPSA to commence with a thorough review of the current contractual arrangements with its primary mining contractor, Murray & Roberts Cementation. The current cost reimbursable contractual arrangement has become untenable to AQPSA and is expected to be changed or be replaced by the end of the third quarter. Regulatory risks have also markedly escalated. In South Africa, the widespread Section 54 safety stoppages and permitting delays are affecting AQPSA, while in Zimbabwe increased royalties and mineral lease / ground rent charges are damaging Mimosa. In addition the indigenisation process remains ongoing and its outcome uncertain. Our management continues to engage the appropriate departments of the governments of both jurisdictions in order to mitigate these impacts and safeguard our business as best we can. The poor economic outlook remains beyond our control, and looking at the fall in PGM prices from October through December made me think of a mini-GFC at play. At our results for the comparative period ended December 2010 I said we were through the worst and thought the bottom was behind us in this sector. I could not have been more wrong. However until we reach a turning point, we remain committed to the constant re-evaluation and optimisation of all aspects of our business and operations in the current low margin environment with a focus on cash preservation." Aquarius Group attributable production (PGM ounces) - six month periods to 31 December 2011 Please refer to www.aquariusplatinum.com for graph Production Total production from all Aquarius operations for the six months to December 2011 was 384,731 PGM ounces, representing a 16% decrease compared to the period ended December 2010 (the previous corresponding period or "pcp"). Production attributable to Aquarius fell by 14% to 215,453 PGM ounces for the period under review when compared to the pcp and by 9% compared to the six months ended June 2011, due to temporary operational issues encountered as a result of the implementation of new underground hangingwall safety support systems as well as a significant increase in the application of so-called "section 54" safety stoppages imposed by the regulator in South Africa, currently an industry-wide issue. Production by Mine and Attributable to Aquarius PGMs (4E) Mine Attributable to Aquarius Half Year ended Half Year Half Year Half Year Dec 2011 ended ended ended Dec 2010 Dec 2011 Dec 2010 Kroondal 175,704 230,019 87,852 115,010 Marikana 54,802 60,587 27,400 30,294 Everest 41,787 45,561 41,787 45,561 Mimosa 104,254 101,156 52,127 50,578 CTRP 1,769 2,921 885 1,461 Platinum Mile 6,415 8,044 5,402 4,022 Blue Ridge - 8,092 - 4,046 Total 384,731 456,380 215,453 250,972 The chart below illustrates the impact on production of each of the operations. The most significant negative factor was lower production at Kroondal, as a result of both section 54 stoppages and long lead times for the mechanised equipment necessary to install the new safety systems underground. This necessitated manual installation of these systems which slowed the mining cycle considerably in the first half of the 2012 financial year. Marikana encountered similar challenges. Both of these mines had largely overcome the issues relating to the support systems by December 2012. The ramp-up at Everest was interrupted by a two-week strike, ongoing industrial relations issues owing to the emergence of a new union (AMCU), poor ground conditions and section 54 stoppages, and the Blue Ridge mine remained closed for the entire period due to adverse economic conditions. These factors resulted in substantially lower production compared to the first half of the 2011 financial year, despite another strong performance from Mimosa and additional attributable ounces resulting from the purchase of a greater stake in Platinum Mile. Given the significant challenges that continue to face the Company and the platinum industry in the short term, Aquarius intends to retain operational flexibility and will actively manage its near-term production profile by optimising its producing assets to match the prevailing market conditions. Production in the second half of the financial year is expected to increase marginally, prompting management to revise production guidance downwards for the full 2012 financial year, to approximately 440,000 PGM ounces. Please refer to www.aquariusplatinum.com for graph Foreign Exchange The Rand weakened significantly over the 6 months to December 2011, moving from an average of R7.12 to the US Dollar in the period to December 2010 to an average of 7.62 over the current period, driven largely by the sovereign debt crisis in Europe and the associated depreciation of the Euro against the US Dollar, as the Euro Zone remains South Africa`s largest trading partner. The Rand closed the period under review at R8.12 to the US Dollar. Rand Dollar Exchange Rate Please refer to www.aquariusplatinum.com for graph Platinum Group Metal Prices Fundamental demand for PGMs to some extent decoupled from the increasingly poor macroeconomic outlook during the first quarter of the 2012 financial year, as automotive and other industrial users continued to be net buyers of the metals and emerging market investment demand offset physically-backed ETF outflows. This delicate balance was disrupted during the second quarter, however, as macroeconomic concerns coupled with the general PGM oversupply situation began to negatively affect industrial demand. The US Dollar platinum price fell to below that of gold, and has remained there during the period under review, for the first time in decades, an important psychological event which firmly defined PGMs as industrial commodities rather than counter-cyclical "stores of value". Platinum jewellery demand did remain robust, however, in the face of high prices for its primary substitute, gold, and falling platinum prices. Average US Dollar PGM prices in the period under review nonetheless remained static year-on-year, but decreased materially compared to the second half of the 2011 financial year. The PGMs declined almost in step with each other during the first six months of the 2012 financial year. Platinum closed the period 21% lower at $1,354 per ounce while palladium fell 16% to $630 per ounce. Rhodium was the weakest performer, declining by 30% to close the period at $1,400 per ounce. Gold was 6% higher at $1,572 per ounce. Individual PGM Prices December 2010 - 2011 PGM Basket Prices December 2010 - 2011 (US Dollar per PGM ounce) (US Dollar and Rand per PGM ounce) Please refer to www.aquariusplatinum.com for graph The Rand depreciation provided some relief to the South African platinum industry in the period under review, displaying its usual inverse correlation to the US Dollar PGM prices. The average Rand basket price for the period rose by 5%, despite flat average US Dollar metals prices. The average achieved production-weighted US Dollar basket price across all operations for the six months ended December 2011 was flat at $1,364 per PGM ounce, while that for the South African operations was $1,373 (equivalent to R10,369 per PGM ounce). Weaker US Dollar PGM prices outweighed gains in the Rand basket price by the end of the period, which closed at R9,403 per PGM ounce. In Zimbabwe, the achieved basket price for the first half of the financial year was $1,338 per ounce. Financial results: Half Year to 31 December 2011 Aquarius` consolidated result for the half-year ended 31 December 2011 was a loss of $113 million (24.31 cents per share). The result includes a foreign exchange loss (forex) of $91 million arising substantially from the revaluation of intercompany loans within the group. Profitability at mine level (on-mine EBITDA) was $29 million compared to $93 million in the previous corresponding period (pcp) due to challenging operating conditions experienced at the Group`s South African operations, increased mining costs and lower PGM metal prices. Decreasing metal prices caused a negative $25 million sales adjustment to be incurred. Group attributable mine production for the half-year was 215,453 PGM ounces. This was 35,519 PGM ounces (14%) lower compared to the pcp. Revenue (PGM sales and interest) for the half-year to December 2011 was $252 million, 25% lower compared to the pcp due to lower production and lower PGM metal prices. The revenue received per PGM ounce for the half-year was $1,171, down 14% from the pcp. Group Financials by Operation Kroonda Marikan EverestMimosa Plat CTRP Blue Total l a Mile Ridge PGM ounces 87,852 27,400 41,78 52,127 5,402 885 - 215,453 (4E) 7 (attributa ble)
Kroonda Marikan Evere Mimosa Plat CTRP Blue Corpo Total l a $m st $m $m Mile $m $m Ridge rate $m $m $m $m Revenue 94.1 30.0 47.5 72.8 4.4 0.6 - 2.9 252.4 Cost of (98.5) (35.4) (57.1 (38.4) (3.7) (1.9) (1.5) - (236.6) sales - ) mining, processing & Admin Cost of (11.7) (10.6) (6.3) (4.8) (2.3) (0.1) (0.5) - (36.4) sales - depreciati on & Amortisati on Gross (16.1) (16.1) (15.9 29.6 (1.6) (1.5) (2.0) 2.9 (20.6) profit/(lo ) ss) Other - - - - - - - 1.1 1.1 income Administra - - - - - - - (7.4) (7.4) tive costs Foreign 12.6 3.2 1.3 - - 0.1 - (108. (91.3) exchange 5) gain/(loss ) Finance - - - - - - - (17.6 (17.6) costs ) Profit/(lo (3.5) (12.8) (14.5 29.6 (1.6) (1.4) (2.0) (129. (135.7) ss) before ) 5) income tax Income tax - - - - - - - 22.2 22.2 benefit Net (3.5) (12.8) (14.5 29.6 (1.6) (1.4) (2.0) (107. (113.5) profit/(lo ) 3) ss) from ordinary activities Group gross cash margin decreased to 6.2% from 36.5% due to a combination of higher mining costs and lower PGM metal prices. Weighted average unit costs in dollar terms rose 26% to $1,093 per PGM ounce and PGM basket prices achieved (i.e. after smelter payability) decreased 14% to $1,171 per PGM ounce. Total cash cost of production was $237 million, up 26% per PGM ounce in Dollar terms (and 35% in Rand terms) as a result of increased difficulties experienced in the mining process. These included mining contractor underperformance and temporary operational issues encountered as a result of the implementation of new underground hangingwall safety support systems as well as a significant increase in the incidence of so-called "section 54" safety stoppages. Amortisation and depreciation of $36 million was under budget but in line with lower production for the half-year. Finance costs of $18 million included $15 million on convertible notes and bank borrowings and $3 million of non-cash interest arising from the unwinding of the net present value of the rehabilitation provisions of AQPSA. During the half-year Aquarius recorded net foreign exchange losses of $91 million. These losses were incurred substantially "within" the group through exchange movements on intercompany loans. In September 2011, Aquarius took advantage of a stronger US dollar and capitalised $353 million of intercompany loans. This significantly reduces future exchange rate fluctuations on these loans from the income statement. The foreign exchange loss on these loans recorded in this period`s income statement simply reflects a reversal of previously booked forex gains. The loans are now represented as capital in the subsidiaries and will no longer be subject to monthly revaluation through the income statement. No cash left the group as a result of these adjustments. Income tax expense was lower and comprised $10.1 million of Zimbabwean tax of which $3 million was deferred tax, a $32.9 million deferred tax credit in South Africa and $0.6 million of MPRDA royalty paid in South Africa. Consolidated cash balances at period end were $230 million. Net cash of $25 million was generated by operations during the half-year. During the period the group paid $42 million to fund its capital expenditure program, paid $12 million to acquire a further 41.7% equity interest in Platinum Mile Resources (Pty) Ltd, paid a deposit of $15 million towards the acquisition of the Everest extension mineral rights and paid $19 million in dividends to Aquarius shareholders. Financials Aquarius Platinum Limited Consolidated Income Statement For the Half Year ended 31 December 2011 $`000 Half Year Ended Year Ended Note 31/12/11 31/12/10 30/6/10 Attributable Production 215,457 * 246,926 * 478,551* (PGM Ounces) (* before Blue Ridge production) Revenue (i) 252,381 336,152 682,859 Cost of sales (including (ii) (272,952) (241,327) (507,728) D&A) Gross (loss)/profit (20,571) 94,825 175,131 Other income 1,108 288 1,764 Administrative costs (iii) (7,394) (8,105) (13,030) Foreign exchange (iv) (91,289) 66,202 60,068 (loss)/gain Finance costs (v) (17,583) (15,369) (30,945) Settlement of contractor - (7,810) (7,810) dispute Impairment losses - - (159,779) (Loss)/profit before income (135,729) 130,031 25,399 tax Income tax (vi) 22,237 (35,751) (35,795) benefit/(expense) Net (loss)/profit for the period (113,492) 94,280 (10,396) Non-controlling interests 1 - - (Loss)/profit attributable to equity holders of (113,493) 94,280 (10,396) Aquarius Platinum Limited Earnings per share (basic - (24.31) 20.43 (2.25) cents) Notes on the Consolidated Income Statement (i) Revenue has decreased as a result of lower production and a 13% decrease in the US Dollar PGM basket price achieved. (ii) The 29% increase in cost of sales on a unit cost basis reflects the continued ramp-up of Everest, temporary operational issues encountered as a result of the implementation of new underground hangingwall safety support systems, and the impact of inflation on mine cash costs. It includes depreciation and amortisation of $36 million. (ii) Relates to administration costs of the Aquarius Group inclusive of costs associated with business development activities, legal and financial advisory expenses. (iv) Net foreign exchange (FX) loss reflects losses on group loans and cash due to the strengthening of the Dollar against other currencies and FX gains on sales adjustments. (v) Finance costs include a $15 million interest expense on convertible bonds and $3 million in non-cash interest arising from the unwinding of the net present value of the rehabilitation provision of AQPSA. (vi) Income tax credit includes a $30 million deferred tax credit offset by $5 million normal tax, $2 million withholding tax and $1 million MPRDA royalty. Aquarius Platinum Limited Consolidated Cash Flow Statement Half year ended 31 December 2011 $`000 Half year ended Year ended Note: 31/12/11 31/12/10 30/06/11
Net operating cash (i) 24,948 47,061 162,311 inflow Net investing cash (ii) (69,221) (59,388) (209,908) outflow Net financing cash (iii) (34,350) (25,816) (33,527) outflow Net decrease in cash (78,623) (38,143) (81,124) held Opening cash balance 328,083 381,734 381,734 Exchange rate movement (iv) (19,333) 24,868 27,473 on cash Closing cash balance 230,127 368,459 328,083 Notes on the Consolidated Cash Flow Statement (i) Net operating cash flow includes a $306 million net inflow from sales, $279 million paid to suppliers, interest income of $4 million and income tax paid of $7 million. (ii) Reflects development and plant and equipment expenditure incurred supporting the group`s capital expenditure program - $42 million, acquisition of 41.7% of Platmile - $12 million and $15 million deposit towards the Everest extension (Booysendal) (iii) Includes $19 million in dividends paid to shareholders, $9 million interest paid and a $3 million purchase of shares reserved for share plan. (iv) Reflects movement of other currencies against the Dollar. Aquarius Platinum Limited Consolidated Balance Sheet At 31 December 2011 $`000 Half year ended Year ended Note 31/12/11 31/12/10 30/06/11 Assets Cash assets 230,127 368,459 328,083 Current receivables (i) 92,857 123,937 108,395 Other current assets (ii) 47,452 54,005 44,747 Property, plant and equipment (iii) 273,635 320,789 325,763 Mining assets (iv) 434,883 507,095 480,634 Other non-current assets (v) 87,759 98,860 91,735 Intangibles (vi) 90,560 82,767 77,989 Total assets 1,257,273 1,555,912 1,457,346 Liabilities Current liabilities (vii) 105,634 109,553 120,549 Non-current payables (viii) 5,368 5,383 6,150 Non-current interest-bearing (ix) 259,408 246,027 257,599 liabilities Other non-current liabilities (x) 177,836 249,221 221,711 Total liabilities 548,246 610,184 606,009 Net assets 709,027 945,728 851,337 Equity Issued capital 23,516 23,162 23,509 Treasury shares (18,169) (15,076) (16,190) Reserves 712,797 697,789 727,372 Retained earnings (15,461) 239,853 116,646 Total equity attributable to equity holders 702,683 945,728 851,337 of Aquarius Platinum Limited Non-controlling interests (xi) 6,344 - - Total equity 709,027 945,728 851,337 Notes on the Consolidated Balance Sheet (i) Reflects debtors receivable on PGM concentrate sales. (ii) Reflects PGM concentrate inventory, reef stockpiles and consumables stores. (iii) Represents plant and equipment within the Group. (iv) Mining assets relate to Kroondal, Marikana, Everest and Mimosa mine properties and mine development. (v) Includes the recoverable portion of rehabilitation provision from Anglo Platinum of $12 million, a receivable from the Reserve Bank of Zimbabwe (RBZ) of $28 million, a receivable from outside shareholders of Blue Ridge and Sheba`s Ridge of $27 million, investments in rehabilitation trusts of $17 million and investments held for resale of $3 million. (vi) Includes intangibles relating to contract value acquired on acquisition of equity interest in Platinum Mile Resources (Pty) Ltd. (vii) Includes creditors and other payables of $73 million, DBSA and IDC loans at Blue Ridge of $26 million, AQPSA equipment leases of $6 million and provisions of $1 million. (viii) Includes rehabilitation obligations on P&SA1 and P&SA2 structures. (ix) Includes convertible notes of $251 million and AQPSA equipment leases of $8 million. (x) Includes deferred tax liabilities of $116 million and provision for closure costs of $62 million. (xi) Minority interests reflects 8.3% outside equity interest of Platmile Resources (Pty) Ltd, now consolidated following Aquarius` increase in equity to 91.7% during the half year. Operating Review Summary (all numbers on 100% basis) ... This section contains summarised operating reviews of each of the Company`s operations. Full operating statistics are provided on page 18 of this report, and other updates relevant to all operations can be found under Corporate Matters on page 17. In addition, further detail on each of the operations can be obtained from the quarterly and full-year reports released by the Company throughout the 2012 financial year which are available on the Company`s website, www.aquariusplatinum.com. AQUARIUS PLATINUM (SOUTH AFRICA) (PTY) LTD (Aquarius Platinum - 100%) P&SA 1 at Kroondal (Aquarius Platinum - 50%) - 12-month rolling average DIIR deteriorated slightly to 0.78 per 200,000 man hours - Production decreased by 12% to 2,964,000 tonnes - Head grade decreased from 2.62 g/t to 2.38 g/t - Recoveries deteriorated slightly to78% - Volumes processed decreased by 13% to 2,950,000 tonnes - Stockpiles at the end of the period totalled approximately 28,000 tonnes - PGM production decreased by 24% to 175,704 PGM ounces - Revenue decreased by 32% to R1,409 million due to lower production - Mining cash costs increased by 29% to R504 per tonne, and costs per PGM ounce by 47% to R8,459 - Kroondal`s cash margin for the period decreased from 36% to -6% - Contractor arrangements and model under review Commentary Safety, Health and Environment Regrettably, one fatality occurred at Kroondal during the period. Mr Hennie Otto was fatally injured in a lifting and equipment handling incident at the Kroondal processing plant in October 2011. Prior to this, Kroondal had just recorded two million fatality-free shifts. Operations Mine production continued to be negatively impacted by the implementation of the new hangingwall support systems, as manual drilling of support holes remained necessary during much of the first half. Slower-than-plan installation of support thus continued to interfere with the blasting cycle, thereby temporarily reducing mining capacity. To mitigate this issue, and because of an international shortage of the required drill steel for the new support systems, certain areas of the mine have been moved back to the old national standard of roof support in the short term. While this situation is not optimal, it has enabled those mining areas to begin producing at capacity once again. The new technologies for the early detection of geological anomalies (ground penetrating radar, snake-eye cameras and the other elements of the revised TARP system) remain in place in all mining areas. In addition to this, delivery has now been taken of four mechanised support drill rigs, and all cable anchors for hangingwall support will now be drilled on a mechanised basis. Further rigs are on order and their rollout will occur as their lead times permit. These measures resulted in an increase of approximately 18% in daily production, permitting a return to production at capacity by the end of the period under review. However, an elevated incidence of Section 54 safety stoppages issued in the Rustenburg district has also negatively affected production. A dialogue has been established with the new Principal Inspector of the region in an attempt to find a practical solution to this issue. Continued below budget production performance, poor grade control and cost inflation culminating in significant unit cost escalations at Kroondal, Marikana and Everest have lead AQPSA to review the current contractual arrangements with AQPSA`s primary mining contractor, Murray & Roberts Cementation ("MRC"). The current contractual arrangement has become untenable to AQPSA and following the completion of the review will change. The change in mining orientation also continued to require the establishment of additional face at the expense of head grade. Primary development decreased by 16% over the period to a total of 5,898 metres. Rustenburg Platinum Mines` (RPM) Siphumelele 3 ore reserves have now been included in both P&SA1 and P&SA2 and mining there has commenced, in accordance with an agreement between RPM and AQPSA (see "Corporate Matters" below). P&SA2 at Marikana (Aquarius Platinum - 50%) - 12-month rolling average DIIR improved to 0.33 per 200,000 man hours from 0.61 in the previous period - Production decreased by 11% to 1,005,000 tonnes, all from underground operations - Head grade decreased by 3% to 2.32 g/t - Recoveries increased by 6% to 74% - Volumes processed decreased by 13% to 991,000 tonnes - PGM production decreased by 10% to 54,802 ounces - Revenue decreased by 20% to R451 million due to lower production - Mining cash costs increased by 26% to R542 per tonne, and costs per PGM ounce by 22% to R9,800 - Marikana`s cash margin deteriorated from 13% to -19% - Contractor arrangements and model under review Commentary Safety, Health and Environment No fatalities occurred at Marikana during the period under review, and the DIIR at the mine improved materially. Following the tragic accident in July 2010, Marikana has recorded over a year without a fatal accident, and the operations achieved one million fatality-free shifts on 9 January 2012.The Marikana processing plant has recorded 3 million fatality free shifts, and no lost time injuries have occurred there for the past 8 years. Operations Marikana experienced the same challenges relating to the new hangingwall support system implementation as did Kroondal, and the same measures were taken to counteract these temporary capacity reductions. Also in common with Kroondal and most of the mines in the Rustenburg area, Marikana was afflicted by a series of section 54 stoppages during the period under review. Primary development decreased by 41% over the period to a total of 3,440 metres.Marikana`s4 Shaft is now running at capacity, while both the M5 project and the Siphumelele shaft are increasing production in line with their development schedules. The latter two shafts remain in ramp-up phase, and as a result at current Rand basket prices they are loss-making. Everest Mine (Aquarius Platinum - 100%) - 12 month rolling DIIR deteriorated significantly to 1.71 per 200,000 man hours from 0.25 - Production increased by 6% to 641,000tonnes - Head grade deteriorated from 2.78 g/t to 2.42 g/t - Recoveries improved by 6% to 84% - Volumes processed decreased/increased by 0.13% to 642,000 tonnes - PGM production decreased by 8% to 41,787 PGM ounces - Revenue decreased by 23% to R353 million - Mining cash costs increased by 20% to R641 per tonne, and costs per PGM ounce by 31% to R10,311 - Everest`s cash margin decreased from 21% to -22% - Contractor arrangements and model under review Commentary Safety, Health and Environment Regrettably, two fatalities occurred at Everest during the period. Christo Venter was killed in an underground vehicle accident, and David Sedulela died in a fall of ground incident. The DIIR also deteriorated significantly. This is unacceptable and priority initiatives are underway to remedy this. Operations Mining during the first quarter of the 2012 financial year was negatively impacted by the loss of 36 shifts as a result of both section 54 stoppages, a belt fire and maintenance issues with the underground vehicle fleet which resulted in lower LHD and drill rig availability. These incidents resulted in production significantly below plan. In the second quarter, industrial action occurred at Everest as a result of the refusal by the mining contractor at the mine to recognise the AMCU trade union. This strike cost Everest 13 production days, equivalent to approximately 9% of H1 production. AMCU has now been recognised in a new structure, and employees at Everest were transferred to this new structure. Wage negotiations with AMCU were only finalised in late January 2012. As disclosed in the most recent quarterly production report, Aquarius has embarked on a strategic review of the Everest operation, prompted by several factors. These include an extended oxidised zone in the shallower extremities of the western side of the orebody with the associated poor ground conditions and grade reductions, and an inability to mitigate this due to the failure by the DMR to grant the Hoogland open pit mining authorisation, together with ongoing underperformance by the mining contractor and continued industrial relations difficulties. In the interim, given these operational challenges and the currently prevailing low Rand PGM prices, and until the Section 102 consent relating to the Everest extension property has been granted, it has been decided to optimise Everest at a sustainable underground production target of 10,000 4E ounces per month for the next 12 to 18 months. Operating Cash Costs Production during the period was significantly below capacity at all South African mining operations. This had a negative effect on unit costs due to the high fixed cost base. AQPSA Operating costs per ounce (R) 4E 6E 6E net of by-
products (Pt+Pd+Rh+Au) (Pt+Pd+Rh+Ir+Ru+Au) (Ni&Cu) Kroondal 8,459 6,931 6,802 Marikana 9,800 8,084 7,847 Everest 10,311 8,567 8,217 Capital expenditure Ongoing capital expenditure remained at normal operating levels but project capital remained higher than usual at Kroondal with the sinking operations at K6 shaft, which is a replacement shaft scheduled for first production in June 2013, with reef intersection anticipated in June 2012. The Mobile Equipment Capital is being financed through a lease agreement over the life of the equipment. Kroondal Marikana Everest (R`000 unless Total Per 4E oz Total Per 4E oz Total Per 4E oz otherwise stated) Ongoing 98,965 563 49,154 897 59,216 1417 Infrastructure Establishment Project Capital 90,706 516 250 5 2133 51 Mobile Equipment 46,825 266 35,906 655 1,356 32 Total 236,496 1,346 85,310 1,557 62,705 1,501 RIDGE MINING LIMITED (Aquarius Platinum - 50%) Blue Ridge Platinum Mine Commentary Operations at BRPM, the 50% jointly owned mine, were suspended in the final quarter of the 2011 financial year, and the mine remained on care and maintenance throughout the period under review. BRPM remains indebted to its three senior lenders being the Industrial Development Corporation Limited, the Development Bank of Southern Africa and Aquarius for circa R736 million of which R416 million is owed to the IDC and DBSA and R320 million to Aquarius. Blue Ridge is in breach of its debt covenants and remains in discussions with its three senior lenders on how to best manage the mine and its indebtedness going forward. The decision by the Board of Blue Ridge to place the mine on care and maintenance in 2011 was prudent given the continued low prevailing Rand basket prices. MIMOSA INVESTMENTS (Aquarius Platinum - 50%) Mimosa Platinum Mine - 12-month rolling average DIIR was flat at 0.26 per 200,000 man hours - Production decreased by 3% to 1,182,000 tonnes - Head grade improved by 1% to 3.64 g/t - Recoveries improved slightly to 78% - Volumes processed decreased by 1% to 1,147,154 tonnes - Stockpiles at the end of the period totalled approximately-182,017 tonnes - PGM production increased by 3% to 104,254 PGM ounces - Revenue increased by 1% to $146 million due to higher metal prices achieved - Mining cash costs increased by 22% to $67 per tonne, and costs per PGM ounce by 18% to $736 - Stay-in-business capital expenditure was $315 per PGM ounce for the period - Mimosa`s cash margin for the period fell from 56% to 52% Commentary Safety, Health and Environment No fatalities occurred at Mimosa during the period under review. The Disabling Injury Incidence Rate remained low and stable. Operations Mimosa continued to operate at capacity during the period under review, although some production disruption was caused in the latter months of the half-year by power outages as well as surface electrical breakdowns. The Zimbabwe Electricity Supply Authority (ZESA) imports electricity from Hydro Cabhora Basa (HCB) of Mozambique to overcome the shortfall in its own installed power generating capacity. HCB has threatened to cut off supply to ZESA for non-payment, and discussions are currently ongoing between the local power utility, HCB, Mimosa management and other platinum producers in order to arrive at a solution to this situation. The Zimbabwean political and regulatory environment becomes ever more challenging for all mining companies operating in the country. The press reports referred to in the most recent Aquarius quarterly production report relating to a very material increase in ground rental, mining licensing and mineral export licensing fees, among others, were confirmed in early February by the publication of a Government Gazette to that effect. This will result in an additional charge for Mimosa of approximately $6.8 million Dollars each year. Mimosa has now complied with the Reserve Bank of Zimbabwe`s recent directive to localise its offshore foreign currency accounts in Zimbabwe. Mimosa will work closely with its suppliers and bankers in order to ensure that this development does not have a negative impact on operations. As previously disclosed, royalties for gold and platinum have been further increased by 100% to 7% and 10% of revenue respectively, as of 1 January 2012. The relevant authorities are being engaged with a view to taking a holistic approach to the issue of royalties, taxes and other government related payments such that a streamlined payment structure is put in place. Stay-in-business capital expenditure rose because nearly half of the approved capital budget for the 2012 financial year was spent in the first few months of the financial year on production equipment with long lead times. Capital was also spent during the period on a conveyor belt extension, the down-dip development, ventilation walls underground and construction of staff housing. Operating Cash Costs The power issues encountered in the second quarter adversely affected production performance to some degree, which had a resultant negative impact on unit cash costs. Operating cash costs per ounce 4E (Pt+Pd+Rh+Au) 6E(Pt+Pd+Rh+Ir+Ru+Au) 4E net of by-products (Ni, Cu & Co) Mimosa 736 698 366 Indigenisation and Economic Empowerment As disclosed at the time, a deed of trust establishing the Zvishavane Community Trust was signed during the quarter, to form an indivisible part of the full indigenisation plan. Discussions with the Ministry of Indigenisation will resume in January 2012 to get full acceptance of Mimosa`s indigenisation proposal, and the official launch of the trust by the President of Zimbabwe is now expected in early 2012. TAILINGS OPERATIONS Chromite Tailings Retreatment Plant (CTRP) (Aquarius Platinum - 50%) - Material processed increased139% to 156,000tonnes - Head grade was flat at 2.96 g/t - Recoveries decreased by 75% to 12% - Production decreased by 39% to 1,769 PGM ounces - Cash costs increased by 128% to R13,087per PGM ounce - Revenue was R9 million for the period - CTRP`s cash margin for the period was-168%, down from 20% in the previous period Platinum Mile (Aquarius Platinum -91.70%) (consolidated - 100% attributable) - Material processed increased by 10% to 2,539,000 tonnes - Head grade decreased by 18% to 0.51 g/t - Recoveries decreased by 6% to 16% - Production decreased by 20% to 6,415 PGM ounces - Cash costs increased by 23% to R7,019 per PGM ounce - Revenue was R52 million for the period - The cash margin for the period was 16%, down from 31% in the previous period Commentary CTRP: Plant modifications and upgrades were completed in the second quarter. Throughput and recoveries showed a steady increase in the final months of the period under review. It is expected that the operation will again yield positive margins and operate profitably from the third quarter of FY2012 onwards. Platinum Mile: Volumes, grades and recoveries have remained fairly constant year-on-year. Lower basket prices have impacted negatively on cash margins. The operation is running profitably and a feasibility study to evaluate the viability of pumping Kroondal tailings to be treated at the operation has commenced. Platinum Mile is now consolidated in the Aquarius accounts, which results in 100% of production being attributable and the generation of a small minority interest in the group income statement. Operating cash costs per ounce 4E (Pt+Pd+Rh+Au) 6E (Pt+Pd+Rh+Ir+Ru+Au) 4E net of by-products (Ni, Cu& Co)
CTRP 13,087 12,058 10,141 Platinum 7,019 6,051 4,850 Mile CORPORATE MATTERS Agreement with Anglo American Platinum regarding Siphumele 3 AQPSA and Anglo American Platinum Limited ("Amplats") have entered into an agreement in terms of which the Siphumelele 3 Shaft and its remaining UG2 resources has been moved from Amplats` Rustenburg operations to the existing P&SA arrangements currently operating at the Kroondal and Marikana mines. The Siphumelele 3 mining area will form part of the P&SA`s for four years from 1 July 2011 or until mined out, whichever is sooner. AQPSA has commenced mining at the Siphumelele 3 mining area and the Siphumelele 3 shaft itself is presently in ramp-up. Wage settlement with the National Union of Mineworkers (NUM) MRC successfully concluded a 2-year wage agreement with NUM in the first quarter in terms of which employees at Aquarius` South African mines were granted a headline wage increase, reduced working hours, an increased contribution to their provident funds and an increased Living Out allowance. The total increase in the cost to company is 8.17% in the first year and will be 8.3% in the second. This settlement has been back-dated to 1 July 2011. Convertible Bonds On 29 September 2011 Aquarius repurchased two tranches of its outstanding Convertible Bonds due December 2015. Each tranche had a face value of $1 million and was repurchased at $0.94 million. Aquarius does not have a buy back policy but may repurchase bonds infrequently when the opportunity presents itself. Premium Listing on the London Stock Exchange On 28 November, Aquarius completed its transfer of listing category from a standard listing to a premium listing (commercial company) on the Official List of the UK Listing Authority. "Domestic" listing in South Africa Aquarius is listed on the JSE in South Africa via an "inward-bound dual listing", a status which has historically signified that Aquarius` shares are to be treated as foreign assets for the purposes of Exchange Control. This has imposed limitations on South African institutions and individuals holding Aquarius shares. In his 2011 Medium Term Budget speech, the South African Minister of Finance proposed that such shares be henceforth treated as "domestic" for the purposes of trading on the JSE, and be eligible for index inclusion. On 12 January 2012, the JSE announced that the shares of all companies with inward-bound dual listings, including Aquarius, will be treated as domestic with immediate effect. As a result there are no longer any restrictions on South Africans holding Aquarius shares, and subject to free float requirements, Aquarius will be eligible for inclusion in the JSE equity indices. Management changes at AQPSA With effect from January 2012 Robert Schroder was appointed as an Executive Director of AQPSA, responsible for capital and projects. Rob is a qualified Quantity Surveyor, and prior to joining AQPSA Rob was Managing Director of Shaft Sinkers (Pty) Limited, a leading mining contractor in South Africa. Jean Nel, previously Commercial Manager of AQPSA, was also appointed to the Board of AQPSA as Commercial Director. More information on all corporate matters can be found at www.aquariusplatinum.com (Please refer to www.aquariusplatinum.com for the Statistical information) 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 Sir William Purves Non-executive (Senior Independent Director) Kofi Morna Non-executive ZwelakheMankazana Non-executive Audit/Risk Committee Sir William Purves (Chairman) David Dix Edward Haslam Kofi Morna Nicholas Sibley Remuneration/Succession Planning Committee Edward Haslam (Chairman) David Dix Zwelakhe Mankazana Nicholas Sibley Nomination Committee The full Board comprises the Nomination Committee Company Secretary Willi Boehm AQP Management Jean Nel Executive: Commercial Gavin Mackay Executive: Business Development & Communications AQPSA Management Stuart Murray Executive Chairman Anton Lubbe Managing Director Helene Nolte Director: Finance Mkhululi Duka Director: Human Resources & Transformation Jean Nel Director: Commercial Robert Schroder Director: Projects and Capital Abraham van Ghent Senior General Manager: Operations (Acting as GM: Kroondal) Graham Ferreira General Manager: Group Admin & Company Secretary Wessel Phumo General Manager: Marikana Augustine Simbanegavi General Manager: Everest Jan Hattingh General Manager: Engineering Dave Starley General Manager: Projects Mimosa Mine Management Winston Chitando Managing Director Herbert Mashanyare Technical Director Peter Chimboza Resident Director Fungai Makoni General Manager Finance & Company Secretary Platinum Mile Management Richard Atkinson Managing Director Paul Swart Financial Director Issued Capital At 31 December2011, the Company had in issue: 470,312,578 fully paid common shares and 120,000 unlisted options. Substantial Shareholders 31 Number of Percentage December2011 Shares Savannah Consortium 61,754,371 13.13 JP Morgan Nominees Australia 45,207,771 9.61 Limited HSBC Custody Nominees 35,365,053 7.52 (Australia) Limited National Nominees Limited 35,079,474 7.46 Main Australian Securities Trading Information Listing: Exchange (AQP.AX) Secondary London Stock Exchange ISIN number Listing: (AQP.L) BMG0440M1284 Secondary JSE Limited (AQP.ZA) ADR ISIN number Listing: US03840M2089 Convertible Bond ISIN
number XS0470482067 Broker (LSE) (Joint) Broker (ASX) Sponsor (JSE) Liberum Capital Limited Euroz Securities Rand Merchant Bank(A City Point, 1 Ropemaker Level 18 Alluvion division of FirstRand Street, London, EC2Y 9HT 58 Mounts Bay Road, Bank Limited) Telephone: +44 (0) 20 3100 Perth WA 6000 1 Merchant Place 2000 Telephone: +61 (0) 8 Cnr of Rivonia Rd and Bank of America Merrill Lynch 9488 1400 Fredman Drive, 2 King Edward St Sandton 2146 London, EC1A 1HQ Johannesburg South Telephone: +44 (0)20 7628 Africa 1000


Aquarius Platinum (South Africa) (Proprietary) Ltd 100% Owned (Incorporated in the Republic of South Africa) Registration Number 2000/000341/07 1st Floor, Building 5, Harrowdene Office Park, Western Service Road, Woodmead 2191, South AfricaPostal Address: PO Box 76575, Wendywood, 2144, South Africa. Telephone: +27 (0)11 656 1140 Facsimile: +27 (0)11 802 0990 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 Postal Address: PO Box 485, South Perth, WA 6151, Australia Telephone: +61 (0)8 9367 5211 Facsimile: +61 (0)8 9367 5233 Email: info@aquariusplatinum.com For further information please visit www.aquariusplatinum.com or contact: In Australia Willi Boehm +61 (0) 8 9367 5211 In the United Kingdom and South Africa Gavin Mackay gavin.mackay@aquariusplatinum.com + 44 7909 547 042 Glossary $ United States Dollar A$ Australian Dollar Aquarius or AQP Aquarius Platinum Limited APS Aquarius Platinum Corporate Services (Pty) Ltd AQPSA Aquarius Platinum (South Africa) (Pty) Ltd ACS(SA) AquariusPlatinum (SA) Corporate Services (Pty) Ltd BEE Black Economic Empowerment BRPM Blue Ridge Platinum Mine CTRP Chrome Tailings Retreatment Operation.Consortium comprising Aquarius Platinum (SA) (Corporate Services) (Pty)
Limited (ASACS), Ivanhoe Nickel and Platinum Limited and Sylvania South Africa (Pty) Ltd (SLVSA). DIFR Disabling injury frequency 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 formerly South African Government Department of Minerals and Energy DMR South African Government Department of Mineral Resources, formerly the DME Dollar or $ United States Dollar 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 nm Not measured PCP Previous corresponding period 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 PlatMile Platinum Mile Resources (Pty) Ltd 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 Ridge Ridge Mining Limited Run of mine.The ore from mining which is fed ROM to the concentrator plant. This is usually a mixture of UG2 ore and waste.
Tonne 1 Metric tonne (1,000kg) UG2 Reef A PGE-bearing chromite layer within the Critical Zone of the Bushveld Complex
Date: 09/02/2012 10:44:12 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.

Share This Story