Wrap Text
PRELIMINARY FULL YEAR RESULTS TO 30 JUNE 2012
ry Full Year Results to 30 June 2012
Aquarius Platinum Limited
(Incorporated in Bermuda)
Registration Number: EC26290
Share Code JSE: AQP
ISIN Code: BMG0440M1284
PRELIMINARY FULL YEAR RESULTS TO 30 JUNE 2012
Key Points: Financial
- Revenue decreased by 29% to $486 million (FY2011: $683 million)
-Mine operating net cash flow decreased by 85% to $26 million
(FY2011: $176 million)
- Mine EBITDA decreased by 86% to $29 million (FY2011: $206 million)
- Headline loss (before exceptional charges) of $154 million
(FY2011: headline earnings $143 million)
- Headline loss per share of US 32.88 cents per share
- Reported net loss of $158 million (US 33.77 cents loss per
share) after forex loss of $97 million on the revaluation of
inter-company loans
- Group cash balance at FY close of $180 million
- No dividend declared (FY2011: US 8 cents)
Key Points: Operational
- Group attributable production decreased by 14% to 411,398 PGM
ounces for the full year
- US Dollar PGM prices decreased materially, partially offset in
South Africa by weaker Rand-US Dollar exchange rate
- Average Rand Basket Price flat year-on-year at just over R10,300
per PGM ounce
- Weighted average on-mine unit cash costs in South Africa
increased by 39% in Rand terms
- Operations suspended at Marikana and Everest mines due to low
Rand PGM prices
Key Points: Strategic
- Moving to tested hybrid hangingwall support methodology to
retain complete mine safety while enhancing profitability
- Moving to Owner Operator model – contractor arrangement with
mining services provider, Murray & Roberts Cementation (MRC)
terminated
- Focus on a turnaround at Kroondal
- All unprofitable operations have been placed on care and
maintenance for the duration of the current downturn
Fourth Quarter 2012: Production Results
Commenting on the results, Stuart Murray, CEO of Aquarius Platinum
said:
“The last financial year has been an exceptionally challenging one
for the Company and indeed for many players in the SA PGM
industry. Company specific operational performance issues, a
significant drop in the Rand price basket especially since
February coupled with rising input costs in SA and Zimbabwe, poor
labour relations at the primary mining contractor in SA, and
unreasoned safety stoppages all combined to deliver an unfortunate
operational and financial outcome for Aquarius. Whilst some of the
issues are Company specific, the general operating environment
combined with the poor pricing conditions place the South African
PGM sector under real pressure.
Aquarius has felt these impacts but has swiftly resolved to
conserve cash and protect the value of its in-the-ground reserves
and resources by placing Marikana and Everest under care and
maintenance. This is a responsible reaction to the price
environment as sustained production surpluses merely raise the
level of above-ground metals inventory. The unfortunate side of
this decision is the human cost of job-losses but some success has
been achieved in placing about one thousand employees into
alternative employment. As the market recovers – and there is no
reason to doubt that it will – Aquarius will be well placed to re-
build its production profile.”
Financial results: Year to 30 June 2012
Aquarius’ consolidated result for the financial year ended 30 June
2012 was a loss of $154 million (33.77 cents per share). The
result includes a foreign exchange loss (forex) of $97 million
arising substantially from the revaluation of intercompany loans
within the group.
Headline Earnings, Profit & Production Comparison by Half Year &
Full Year (FY 2012 & 2011)
2nd
1st
half
half FY2012 FY2011 Movement
FY
FY 2012
2012
Headline
($113M) ($41M) ($154M) $143M ($297M)
earnings/(loss)
EBITDA $30M ($1M) $29M $206M ($177M)
Foreign
exchange ($91M) ($4M) ($95M) $60M ($155M)
gain/(loss)
Fourth Quarter 2012: Production Results
Net profit
before ($136M) ($49M) ($185M) $185M ($370M)
impairment
Impairment - ($4M) ($4M) ($160M) $156M
Net
profit/(loss)
after ($113M) ($45M) ($158M) ($10M) ($148M)
impairment and
tax
Profitability at mine level (on-mine EBITDA) was $29 million
compared to $206 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 $31
million sales adjustment to be incurred.
Revenue (PGM sales, interest) for the year was $486 million, down
29% from $683 million in the pcp. The decreased revenue compared
to FY2011 was a result of reduced production down 14% and lower
PGM prices down 17% in dollar terms (and down 9% in Rand terms).
Measured on a PGM ounce basis, group revenue decreased by 17% to
$1,158 per PGM ounce from $1,395 per PGM ounce in the pcp.
Group attributable mine production for the period was 411,398 PGM
ounces, down 14% from the pcp.
Total cash cost of production was $531 million, up 22% per PGM
ounce in Dollar terms (and 34% 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 a revised underground hangingwall safety support regime as well
as a significant increase in the incidence of so-called “section
54” safety stoppages. Unfortunately industrial action as a result
of inter union rivalry particularly during the second half was an
added complication to the operating challenges noted above.
Group gross cash margin decreased to 4% from 35% due to a
combination of higher mining costs and lower PGM metal prices. PGM
basket prices achieved (i.e. after smelter payability) decreased
17% to $1,158 per PGM ounce reflecting the low PGM price
environment.
Average unit cash costs for FY2012 were $1,131 per 4E ounce, up
21% compared to FY2011. The average cash cost per PGM ounce at the
Fourth Quarter 2012: Production Results
South African operations increased by 39% to R9,708, equivalent to
$1,254 per PGM ounce at the average Rand exchange rate for the
year. The increase in US dollar terms was 26%, as a result of a
stronger dollar relative to the Rand during the year. Lower
production in South Africa, down 18% also contributed to higher
unit costs as the ability to spread fix production costs
diminishes. In Zimbabwe the cash cost per PGM ounce was $752, an
8% increase. Increases in cash costs were driven by inflationary
factors affecting inputs such as labour, electricity, steel and
diesel.
Exchange rate movements continued to have a volatile effect on
earnings with a $95 million forex loss recorded in the financial
year. This consisted of a $26 million gain on adjusting revenue
recorded at the time of production to realised receipts received
at the end of the four month pipeline, $97 million loss on the
revaluation of intercompany loans, $18 million loss on pipeline
advances and a $6 million loss incurred on the revaluation of net
monetary assets.
Amortisation and depreciation expenses (D&A) incurred totalled $66
million (FY 2011: $62 million) due to additional plant and
equipment as Everest and $5.5 million of write-offs following
closure of the Marikana open pit.
Corporate administration expenses of $12 million was comparable to
the prior period. Finance costs for the year of $35 million
included $19 million interest on convertible notes and bank
borrowings, $10 million accretion of the interest component of the
convertible note debt, $5 million non-cash interest arising from
the unwinding of the net present value of the rehabilitation
provisions of AQPSA and $1 million pipeline interest.
Income tax benefit comprises a $46 million deferred tax credit,
offset by $10 million normal tax, $4 million withholding tax and
$1 million royalties.
1st half 2nd half
FY2012 FY2011 Movement
FY 2012 FY 2012
Revenue $252M $234M $486M $683M ($197M)
PGM ozs
production
215,453* 195,945* 411,398* 487,404* (76,006)
(in
operation*)
Fourth Quarter 2012: Production Results
Average
revenue per
$1,154 $1,163 $1,158 $1,395 ($237)
PGM ounce
achieved
*excludes PGM ounces of Blue Ridge production capitalised.
Group Financials by Operation
Kroo Marik Ever Mimos Blue Corpo Tota
PMR CTRP
ndal ana est a Ridge rate l
PGM
ounces
167, 51,37 72,9 105,4 11,7 2,45 411,
(4E) - -
425 0 93 47 06 7 398
(attribut
able)
$M
Revenue 180 57 84 143 11 2 - 8 486
Cost of
Sales -
(189 (114 (465
mining, (68) (80) (9) (3) - (1)
) ) )
processin
g & admin
Cost of
Sales -
depreciat
(23) (15) (13) (10) (4) - - - (66)
ion &
amortisat
ion
Gross
profit/(l (32) (25) (43) 52 (2) (1) - 6 (45)
oss)
Other
- - - - - - - 2 2
income
Corporate
administr - - - - - - - (12) (12)
ation
Foreign
exchange
12 3 1 - - - - (112) (95)
gain/(los
s)
Finance
- - - - - - - (35) (35)
costs
Impairmen
- - - - - - (4) - (4)
t losses
Fourth Quarter 2012: Production Results
Profit
before (189
(19) (22) (42) 52 (2) (1) (4) (150)
income )
tax
Cash Balances
Net operating cash flows for the year generated by the group’s
mining operations decreased 85% to $26 million in line with lower
production and lower prices achieved compared to the pcp. Other
cash flows included $95 million for mine development, $12 million
for acquisition of Platinum Mile, $15 million deposit paid on the
Booysendale acquisition, $18 million interest paid, $15 million
proceeds from borrowings and $19 million dividends paid.
Group cash balance at 30 June 2012 was $180 million representing a
decrease of $148 million over the pcp.
Aquarius is of the view that its present cash reserves are
sufficient to manage its operating mines for the next twelve
months based on present market dynamics but point out that
Aquarius will need to secure additional funding if it was required
to conclude the Booysendale acquisition. In noting the necessity
for securing additional capital, Aquarius is taking advice on a
number of alternatives.
Group Debt
Group interest bearing debt (excluding pipeline advances) at 30
June 2012 of $304 million comprised $257 million convertible
notes, $12 million AQPSA equipment leases and $35 million bank
loans at subsidiary level.
Ridge assets
As previously disclosed, Blue Ridge has been closed for
redevelopment since August 2010. During FY2012 $4 million (50%
attributable to Aquarius) was expensed whilst the operations
remained on care and maintenance. The Blue Ridge mine remains on
care and maintenance.
Impairment assessment of mines
As previously disclosed, the partners in the Marikana Pooling &
Sharing Agreement agreed to place the P&SA2 operations on care and
maintenance, due to the enduring low PGM basket price environment.
In addition, Aquarius also placed its Everest mine on care and
maintenance in June 2012. These decisions were made in the
interests of preserving the ore reserves until an improved
economic climate merits their extraction in the future.
Aquarius has assessed the carrying value of its mines to determine
if an impairment charge be recognised should the accounting
Fourth Quarter 2012: Production Results
carrying value exceed the recoverable amount of the assets.
Various methods have been undertaken to determine the recoverable
amount of the assets. Accounting standards state that the
recoverable amount is the higher of value in use and fair value
(an arm’s length sale value).
To determine the value of the mines, Aquarius has considered its
own internal modelling using consensus macros as well as external
modelling to determine the carrying value of the mines. On the
basis of the above reports, management has concluded that the
carrying value of its assets are appropriate.
Rand-US Dollar Exchange Rate
The Rand weakened significantly over the 2012 financial year,
starting the year at R6.80 to the US Dollar and ending it at
R8.24. This 22% fall in the value of the currency was largely
driven by the debt crisis in Europe, as the European Union is
South Africa’s largest trading partner and there has historically
been a relatively close correlation between the Euro and the Rand.
The Rand averaged 7.78 to the US Dollar during the year, 11%
weaker than the average of 7.01 recorded in the prior financial
year.
Financial Year 2012: Rand US Dollar Exchange Rate
Please refer to www.aquariusplatinum.com for the graph
Platinum Group Metal Prices
Platinum group metals prices weakened considerably in US Dollar
terms over the period under review, primarily as a result of
falling investor perception relating to Europe and the abiding and
much-publicised surplus across the entire suite of metals.
Fundamental demand for these metals continues to grow, but the
worsening situation for European auto and its implications for
platinum demand have slowed this growth. On the supply side, the
industry is producing slightly less, but none of the major
producers have indicated a willingness to cut production in any
meaningful way. The result is a continuing surplus that will take
some time to work through, as emissions standards are implemented
for heavy duty trucks and other diesel applications in Europe and
the US, and auto emissions regulations are rolled out in
developing world nations. Chinese jewellery demand has remained
robust, as platinum traded at a discount to gold for much of the
year. Platinum fell 16% over the year to close at $1,428 per ounce
and averaged $1,601 per ounce for the financial year, a 6% decline
over the prior year. Palladium fell 23% over the year and 1% on
Fourth Quarter 2012: Production Results
average, while the average rhodium price fell by 32% versus the
prior year, lacking support from any material investment demand.
Gold rose by 6% during the period.
Financial Year 2012: Platinum, Palladium, Rhodium and Gold Prices
Please refer to www.aquariusplatinum.com for the graph
As a consequence of the weaker US Dollar PGM prices during the
year, US Dollar 4E basket prices in both South Africa and Zimbabwe
decreased compared to the prior financial year. The basket price
was 9% lower for the year across the South African operations at
$1,325 per 4E ounce, however in Rand terms the basket price was
flat as a result of the weaker Rand-Dollar exchange rate. The US
Dollar basket price in Zimbabwe remained flat at $1,277 per 4E
ounce compared to $1,280 per 4E ounce in the previous year.
Financial Year 2012: PGM Basket Prices (4E)
Please refer to www.aquariusplatinum.com for the graph
Production
Total production from all operations in the 2012 financial year
decreased by 14% to 739,109 4E ounces. Production attributable to
Aquarius and its shareholders decreased by 16% to 411,398 4E
ounces, as a result of operational problems resulting from the new
hangingwall support regime, as well as labour relations issues at
Everest. Everest and Marikana were placed on care and maintenance
at the end of the year under review, as they had remained
unprofitable throughout the year. Production focus is now on
Kroondal, Mimosa and the tailings operations. All of the South
African operations suffered excessive governmental safety
stoppages during the first half of the year, as did the rest of
the mining industry, but these have now improved. In Zimbabwe,
Mimosa yielded yet another outstanding performance, once again
producing in excess of its nameplate capacity of 200,000 4E
ounces. The chart below illustrates the annual production profile.
Aquarius Group Attributable Annual Production (4E PGM ounces)
Please refer to www.aquariusplatinum.com for the graph
The tables below compare production by operation and attributable
to Aquarius over the four quarters and year-on-year.
Production by Mine
PGMs Quarter Ended Full Year Ended
(4E) Sep-11 Dec-11 Mar-12 Jun-12 FY 2011 FY 2012
Fourth Quarter 2012: Production Results
Kroondal 88,908 86,796 76,934 82,212 414,946 334,850
Marikana 25,992 28,809 26,405 21,533 105,924 102,739
Everest 23,074 18,712 15,926 15,281 100,252 72,993
Mimosa 53,798 50,456 52,052 54,588 208,016 210,895
CTRP 661 1,109 1,412 1,732 4,876 4,914
Platinum 3,087 3,328 3,473 2,831 11,417 12,719
Blue - - - - 17,707 -
Total 195,520 189,210 176,202 178,177 863,138 739,109
Production by Mine Attributable to Aquarius
Quarter Ended Full Year Ended
PGMs
Sep-11 Dec-11 Mar-12 Jun-12 FY 2011 FY 2012
Kroondal 44,454 43,398 38,467 41,106 207,473 167,425
Marikana 12,996 14,405 13,202 10,767 52,962 51,370
Everest 23,074 18,712 15,926 15,281 100,252 72,993
Mimosa 26,899 25,228 26,026 27,294 104,008 105,447
CTRP 331 554 706 866 2,438 2,457
Platinum 2,074 3,328 3,473 2,831 11,417 11,706
Blue - - - - 8,854 -
Total 109,828 105,625 97,800 98,145 487,404 411,398
FINANCIALS
Aquarius Platinum Limited
Consolidated Income Statement
Year ended 30 June 2012
$’000
Half year ended Year ended
Note
30/06/12 31/12/11 30/06/12 30/06/11
Blue Ridge - - - 8,854
Attributable Production
(4E PGM Ounces)
(excluding Blue Ridge 215,453 195,945 411,398 478,550
production)
Total production 215,453 195,945 411,398 487,404
Revenue (i) 233,355 252,381 485,736 682,859
Cost of Sales (including (ii) (258,217) (272,952) (531,169 (507,728)
D&A) profit/(loss)
Gross (24,862) (20,571) )
(45,433) 175,131
Other income 968 1,108 2,076 1,764
Corporate admin & other (iii) (4,556) (7,394) (11,950) (13,030)
costs
Finance costs (iv) (17,091) (17,583) (34,674) (30,945)
Foreign exchange (v) (3,712) (91,289) (95,001) 60,068
gains/(losses)contractor
Settlement of
- - - (7,810)
dispute
Impairment of assets (vi) (3,983) - (3,983) (159,779)
Profit/(loss) before tax (53,236) (135,729) (188,965 25,399
)
Fourth Quarter 2012: Production Results
Income tax (vii) 8,441 22,237 30,678 (35,795)
benefit/(expense)
Net profit/(loss) (44,795) (113,492) (158,287 (10,396)
Earnings per share (9.46) (24.31) )
(33.77) (2.25)
(basic – cents)
Notes on the June 2012 Consolidated Income Statement
(i) Sales revenue increase reflects lower production and lower PGM
basket price achieved.
(ii) Cash costs in South Africa in unit terms increased by 26% in
US Dollar terms and 39% in Rand terms due to a 10% average
decrease in the value of the Rand compared to the US Dollar.
(iii) Corporate administration costs are comparable to the prior
period.
(iv) Finance costs comprised interest of $29 million on
convertible notes and bank borrowings, $1 million pipeline
interest and $5 million of non-cash interest arising from the
unwinding of the net present value of the rehabilitation
provisions of AQPSA.
(v) Foreign exchange loss of $95 million includes a $27 million
gain on adjusting revenue recorded at time of production at
Kroondal, Marikana and CTRP to realised receipts received at the
end of the four month pipeline, $98 million loss on the
revaluation of group loans, $18 million loss on pipeline advances
and a $6 million loss incurred on the revaluation of net monetary
assets.
(vi) Reflects impairment charges for Ridge assets.
(vii) Income tax comprises $46 million deferred tax credit, offset
by $10 million normal tax, $4 million withholding tax and $1
million royalties.
Aquarius Platinum Limited
Consolidated Cash flow Statement
Year ended 30 June 2012
$’000
Half year ended Financial year ended
Note: 30/06/12 30/06/11 30/6/12 30/6/11
Net operating cash
(i) 2,632 24,948 27,580 175,915
flow
Net investing cash
(ii) (50,858) (69,221) (120,079) (209,908)
flow
Net financing cash
(iii) (1,399) (34,350) (35,749) (47,131)
flow
Fourth Quarter 2012: Production Results
Net
increase/(decrease) (49,625) (78,623) (128,248) (81,124)
in cash held
Opening cash balance 230,127 328,083 328,083 381,734
Exchange rate
(iv) (414) (19,333) (19,747) 27,473
movement on cash
Closing cash balance 180,088 230,127 180,088 328,083
Notes on the June 2012 Consolidated Cash flow Statement
(i) Net operating cash flow includes net inflow from operations
$28 million, interest received of $9 million, income tax paid $11
million and other income of $1 million.
(ii) Net investing cash flow includes payments for mine
development and development costs $95 million, acquisition of
Platinum Mile $12 million and deposit on Booysendale acquisition
$15 million.
(iii) Net financing cash flow includes interest paid $19 million,
proceeds from borrowing $15 million and dividends paid of $19
million.
(iv) Exchange rate movement reflects movement of other currencies
against the US Dollar.
Aquarius Platinum Limited
Consolidated Balance Sheet
At 30 June 2012
$’000
Financial year ended
Note: 30/06/12 30/06/11
Assets
Cash assets 180,088 328,083
Current receivables (i) 87,100 108,395
Other current assets (ii) 44,258 44,747
Property, plant and
(iii) 276,195 325,763
equipment
Mining assets (iv) 437,574 480,634
Other non-current assets (v) 88,093 91,735
Intangibles (vi) 87,882 77,989
Total assets 1,201,190 1,457,346
Liabilities
Current liabilities (vii) 116,727 120,549
Non-current payables (viii) 4,204 6,150
Non-current interest-
(ix) 262,265 257,599
bearing liabilities
Fourth Quarter 2012: Production Results
Other non-current
(x) 141,349 221,711
liabilities
Total liabilities 524,545 606,009
Net assets 676,645 851,337
Equity
Issued capital 23,516 23,509
Unissued shares 2,436 -
Treasury shares (18,128) (16,190)
Reserves 722,734 727,372
Retained earnings (60,195) 116,646
Non-controlling interests 6,282 -
Total equity 676,645 851,337
Notes on the June 2012 Consolidated Balance Sheet
(i) Reflects debtors receivable on PGM concentrate sales.
(ii) Reflects PGM concentrate inventory, consumables, stores and
critical spares.
(iii) Represents fixed assets within the Group.
(iv) Includes group’s mining assets at Kroondal, Marikana, Mimosa,
Everest, Blue Ridge, CTRP and Platmile
(v) Includes recoverable portion of rehabilitation provision at
P&SA sites of $11 million, cash contributed to Rehabilitation
Trusts of $18 million, listed investments of $3 million and $29
million owed by the RBZ to Mimosa relating to the previous
requirements to repatriate US Dollar proceeds on metals sales to
the RBZ.
(vi) Includes intangibles relating to acquisition of Platmile
Resources
(vii) Includes trade creditors $73 million and Blue Ridge bank
loans $27 million, which is not guaranteed by Aquarius
(viii) Reflects P&SA partners’ right of recovery of rehabilitation
provisions.
(ix) Includes convertible notes of $257 million and AQPSA vehicle
leases of $5 million.
(x) Reflects deferred tax liabilities of $98 million and provision
for closure costs of $43 million.
OPERATING REVIEW
This section contains summarised operating reviews of each of the
Company’s operations. Full operating statistics are provided on
page 22 of this report, and other updates relevant to all
operations can be found under Corporate Matters on page 21. In
addition, further detail on each of the operations can be obtained
from the quarterly and half-yearly reports released by the Company
throughout the 2012 financial year which are available on the
Company’s website, www.aquariusplatinum.com.
Fourth Quarter 2012: Production Results
AQUARIUS PLATINUM (SOUTH AFRICA) (PTY) LTD (“AQPSA”) (Aquarius
Platinum - 100%)
P&SA 1 at Kroondal (Aquarius Platinum – 50%)
- 12-month rolling average DIIR deteriorated to 1.20 per 200,000
man hours from 0.77 the previous year
- Production deteriorated by 9% to 5.6m tonnes
- Volumes processed to 5.6m tonnes
- Head grade deteriorated to 2.38 g/t
- Recoveries weakened by 2% to 78% due to instability in
processing created by stop/starting of the plants
- PGM production reduced by 19% to 334,850 PGM ounces
- Revenue deteriorated by 26% to R2.8 billion compared to the
previous financial year due to lower production
- Mining cash costs increased by 26% to R524 per tonne, and costs
per PGM ounce by 39% to R8,748
- Kroondal’s cash margin for the period fell from 30% to (6)%
P&SA2 at Marikana (Aquarius Platinum – 50%)
- 12-month rolling average DIIR improved to 0.47 per 200,000 man
hours from 0.48 the previous year
- Production decreased by 6% to 1.8m tonnes, with an increase of
12% from underground operations as the open pit was ramped down
and depleted during the year
- Volumes processed decreased to 1.8m tonnes
- Head grade decreased by 1% to 2.32 g/t
- Recoveries were stable at 75%
- PGM production decreased by 3% to 102,739 ounces
- Revenue decreased by 12% to R869 million compared to the
previous financial year due principally to the reduction in PGM
ounce production
- Mining cash costs increased by 26% to R575 per tonne, and costs
per PGM ounce by 22% to R10,208
- Marikana’s cash margin deteriorated from 10% to (21)%
Commentary – Kroondal and Marikana
Safety, Health and Environment
Regrettably, two fatalities occurred at Kroondal during the 2012
financial year. During October 2011, Mr Hennie Otto was fatally
injured in a lifting and equipment handling incident at a Kroondal
K1 processing Plant, and on the 17 April 2012 Mr Tomas Ubissi a
utility vehicle operator passed away in a fall of ground accident
at Kroondal Simunye Shaft.
Operations
Fourth Quarter 2012: Production Results
Kroondal and Marikana: Mine production continued to be negatively
impacted by the implementation of the new hangingwall support
regime as manual drilling of support holes remained necessary
during much of the year. Slower-than-plan installation of support
thus continued to interfere with the blasting cycle. The change in
mining orientation also continued to require the establishment of
additional face at the expense of head grade. Both of these issues
are presently being resolved, with a return to optimum mining
orientation and a hybrid hangingwall support regime underway. This
will enable an improvement at Kroondal but due to the high
incidence of poor ground conditions at Marikana a return to a
hybrid hangingwall support regime is not possible and hence this
mine has been placed on care and maintenance pending an increase
in PGM prices.
Production in the period was significantly below capacity, which
had a negative effect on unit costs due to the high fixed cost
base. The extent of the fixed cost base is a feature of the mining
contractor agreement across Aquarius’s South African operations,
and this agreement was terminated in the final quarter of the
year.
Rustenburg Platinum Mines’ (RPM) Siphumelele 3 ore reserves were
included in both P&SA1 and P&SA2 and mining there has commenced,
in accordance with an agreement between RPM and AQPSA. However,
the Siphumelele 3 shaft itself has now been placed on care and
maintenance pending improved PGM prices.
An elevated incidence of Section 54 safety stoppages issued in the
Rustenburg district negatively affected production during the
first half of the year. A dialogue has been established with the
new Principal Inspector of the region, and this has improved this
situation materially.
The third quarter was severely impacted by a reduction in the
number of production shifts in January, caused by seasonal
absenteeism relating to the Christmas and New Year holidays which,
together with Section 54 safety stoppages (“S54s”) issued to the
two mines, resulted in the loss of 15 production days.
At Marikana, the M5 Shaft project and the Siphumelele (Bleskop)
shaft were placed on care and maintenance on 27 March 2012 until
further notice, as a result of the current low Rand basket prices.
Production at Kroondal improved over the fourth quarter, but
remained disrupted by the current hangingwall support regime.
Fourth Quarter 2012: Production Results
Production at Kroondal is expected to trend back towards full
capacity by the end of the calendar year. However, unlawful strike
action has occurred intermittently at Kroondal’s Kwezi Shaft
during July, accompanied by incidents of intimidation and violence
as a result of the continuing tensions between rival mining unions
on the Western Limb of the Bushveld. This strike has now been
resolved, but industrial relations in the Rustenburg district
remain strained.
Operating Cash Costs
Cash costs increased by 39% at Kroondal and by 22% at Marikana
over the year, due largely to the fixed cost base impacting on
lower than optimal mining volumes, as well as the addition of
costs associated with the new safety measures, and inflationary
factors linked to electricity, labour and steel.
Update on recent serious security breach at Kwezi Shaft
As previously announced, on 1 August 2012 a very serious security
incident occurred at Kwezi shaft, a production unit at the
Kroondal PSA near Rustenburg in the North West Province. A
gathering of approximately 200 people, some of whom were armed,
forced their way onto the mine property. Members of the private
security company under contract to the mine attempted to disperse
this unruly crowd as the actions of the group, which included the
throwing of petrol bombs, threatened both mine employee lives and
property. A total of 450 employees were on the shaft and
underground at the time of this invasion. Six people died and at
least 20 others were injured in this incident. The people are
understood to be former employees of the mine’s mining contractor,
who were dismissed following illegal strike action in June 2012.
Following the intervention of the South African Police Services
(SAPS), the situation has calmed and production has returned to
normal. Mine management continues to liaise with the SAPS, and
officials of both the National Union of Mineworkers and the
Department of Mineral Resources to assess this situation and
action any outcomes from ongoing investigations.
Everest Mine (Aquarius Platinum – 100%)
- 12 month rolling DIIR deteriorated to 2.24 per 200,000 man hours
from 0.41 the previous year
- Production deteriorated by 9% to 1.2m tonnes
- Volumes processed reduced to 1.2m tonnes
- Head grade deteriorated from 2.76 g/t to 2.28 g/t
- Recoveries remained stable at 82% PGM production deteriorated by
27% to 72,993 PGM ounces
Fourth Quarter 2012: Production Results
- Revenue decreased by 36% to R643 million compared to the
previous year
- Mining cash costs increased by 30% to R727 per tonne, but costs
per PGM ounce increased by 58% to R12,120
- Everest’s cash margin deteriorated from 23% to (38%)
Commentary - Everest
Safety, Health and Environment
Regrettably, two fatalities occurred at Everest during the
financial year under review. Regrettably Mr C Venter, a shiftboss
working for Precrete lost his life at Everest in a motor vehicle
accident on the 18 July 2011 and Mr D Sebulela, a Rock Drill
Operator working for MRC, passed away after a fall of ground
accident on the 7 of September 2011. The DIIR also deteriorated
compared to the previous year, which is unacceptable. Everest has
now been placed on care and maintenance but safety will be a focus
when it is returned to production, as AQPSA will be the operator
and will have full control, in keeping with the Aquarius
commitment to safe operations.
Operations
Mining during the year was negatively impacted by oxidised ore and
resulting poor ground conditions, section 54s and maintenance
issues. This was exacerbated by a protected strike in the second
quarter by certain employees of the mining contractor. The strike
was called by the Association of Mining and Construction Unions
(“AMCU”), which demanded full organisational rights from MRC in
terms of the South African Labour Relations Act. The strike was
ended by AQPSA coming to an interim arrangement with AMCU while
their dispute with MRC continued. As a consequence of the strike,
Everest was unable to operate for in excess of two weeks.
The eastern side of Everest is within the last 18 months of its
life, and is being replaced by the reserves on the western side.
As mining has proceeded into the shallower extremities of the
orebody, the oxidised zone has been encountered with the
associated poor ground conditions and grade reductions. Given this
development, it was anticipated that underground production could
be slowed, and supplemented by a targeted 3,000 4E ounces per
month of production from the Hoogland opencast pit. However,
notwithstanding the fact that the application for converting the
exploration right at Hoogland into a mining authorisation was
submitted in May 2011, it has yet to be approved by the DMR, a
delay occasioned by, among other things, a jurisdictional dispute
between the DMR regional offices of Mphumalanga and Limpopo.
Fourth Quarter 2012: Production Results
As with Kroondal and Marikana, absenteeism and the associated loss
of production shifts negatively impacted production in the third
quarter. The mine also suffered further “go-slows” at the hands of
labour and the AMCU union. Mining at several panels also had to be
stopped for safety reasons due to poor ground conditions during
this quarter. The lower achieved head grade is related to the poor
ground conditions, as the majority of tons are currently being
mined in the northern portions of the eastern part of the mine.
Given the issues described above, the Everest mine has been placed
on care and maintenance until further notice, as a result of the
current low Rand basket prices, temporary geological problems and
unstable labour relations.
Operating Cash Costs
Unit cash costs in Rand terms rose significantly compared to the
prior year, as the ramp-up in production did not materialise and
the full effect of the mine’s fixed cost base continued to be
felt.
AQPSA Operating costs per ounce (R/oz)
4E 6E 6E net of by-
(Pt+Pd+Rh+Au) (Pt+Pd+Rh+Ir+Ru+Au) (Ni&Cu)
Kroondal 8,748 7,171 7,040
Marikana 10,208 8,397 8,165
Everest 12,120 10,041 9,679
AQPSA Capital expenditure
All stay-in-business capital expenditure for the AQPSA operations
is up-to-date as per the mine plans for the specific operations.
The ongoing construction of the K6 shaft at Kroondal cost
approximately R163 million of development capital expenditure in
the 2012 financial year, and will require a further R158 million
in the 2013 financial year.
Kroondal Marikana Everest
(R’000 unless Per 4E Per 4E Per 4E
otherwise stated) Total oz Total oz Total oz
Ongoing
Infrastructure 190,36 100,08
Establishment 0 568 0 974 95,343 1,306
163,63
Project Capital 8 489 269 3 5,714 78
141,91
Mobile Equipment 8 424 9,737 95 1,445 20
Fourth Quarter 2012: Production Results
495,91 110,08 102,50
Total 6 1,481 6 1,072 3 1,404
MIMOSA INVESTMENTS (Aquarius Platinum - 50%)
Mimosa Platinum Mine
- 12-month rolling average DIIR deteriorated to 0.24 per 200,000
man hours from 0.03 the previous year
- Production decreased by 4% to 2.3m tonnes
- Volumes processed increased by 1% to 2.3m tonnes
- Head grade improved by 1% to 3.65g/t
- Recoveries were maintained at 77%
- PGM production increased by 41% to 210,895 PGM ounces
- Revenue decreased by 16% to $285 million due to lower basket
price
- Mining cash costs increased by 12% to $70 per tonne, PGM ounce
cost increased by 11% to $769
- Mimosa’s cash margin for the period decreased to 47% from 57%
Commentary
Safety, Health and Environment
No fatalities occurred at Mimosa during the 2012 financial year.
Very few lost-time injuries were reported during the year, with a
commensurate improvement in the DIIR.
Operations
The Mimosa mine itself continues to operate well. However, the
Zimbabwean political and regulatory environment has remained
challenging for all mining companies operating in the country.
Power
Mining operations were adversely affected by load shedding during
the second and third quarters. The load shedding was caused by
limited electricity imports to supplement the low domestic
electricity generation capacity. Local power generation continues
to require augmenting by imports from Hydro Cabhora Basa (HCB) of
Mozambique, which threatened to cut off supply to ZESA for long
outstanding arrears. Following an agreement between Mimosa and
ZESA reached in late March 2012 guaranteeing uninterrupted power
supply of 20MW for the next five years, Mimosa has experienced no
issues with electricity supply. Quarterly meetings are being held
with ZESA senior management to discuss potential power disruptions
and ways to improve reliability of power supply.
Mining Fees
Fourth Quarter 2012: Production Results
Discussions are still ongoing between the Chamber of Mines and the
relevant authorities concerning the issue of increased mining
fees. It is hoped that the discussions will result in reduced and
sustainable mining fees. If the proposed fees are implemented,
this would have a significant negative impact on operating costs.
Offshore accounts
Mimosa formerly operated offshore accounts domiciled in London and
Mauritius. Mimosa has now complied with the directive by the
Reserve Bank of Zimbabwe requiring all companies to localise
offshore accounts in Zimbabwe. To date this has not negatively
impacted the mine`s operations. Payments, including foreign
outflows, have continued to be processed smoothly.
Indigenisation
As part of the fulfilment of the indigenisation and Empowerment
Act, Mimosa officially launched the Zvishavane Community Share
Trust on 16 February 2012. Meanwhile discussions continue between
Mimosa and the Government of Zimbabwe in relation to the terms and
conditions on which Mimosa will comply with the legal requirements
pertaining to the Indigenisation legislation of Zimbabwe.
Taxes and Government Royalties
Royalties for gold and platinum were increased with effect from 1
January 2012 to 7% and 10% of revenue respectively, putting more
pressure on costs. Corporate tax has remained at 25%. Review of
the Income Tax Act is still underway and is expected to be
finalised during the second half of the calendar year.
Operating Cash Costs
Cost increases during the year were attributable to deteriorating
ground conditions and the associated use of additional equipment.
Sales-related costs such as royalties, commission and technical
fees were below budget, in line with lower sales revenue.
However, royalties were higher than budget owing to the increase
in rates on platinum and gold metals.
Operating cash costs per ounce ($/oz)
4E net of by-
4E 6E
products
(Pt+Pd+Rh+Au) (Pt+Pd+Rh+Ir+Ru+Au)
(Ni, Cu & Co)
Mimosa 752 712 396
Capital expenditure
Fourth Quarter 2012: Production Results
Capital expenditure at Mimosa for the 2012 financial year was $61
million ($291 per PGM ounce), spent largely on housing projects
and stay in business capex.
TAILINGS OPERATIONS
Chromite Tailings Retreatment Plant (CTRP) (Aquarius Platinum -
50%)
- Material processed increased by 169% to 327,000 tonnes
- Head grade decreased marginally to 2.90 g/t
- Recoveries decreased by 62% to 16%
- Production increased by 1% to 4,914 PGM ounces
- Cash costs increased by 20% to R8,661 per PGM ounce
- Revenue decreased by 30% to R34 million for the financial year
- The cash margin for the period was (31%), a decrease from (1%%)
the previous year
Platinum Mile (Aquarius Platinum – 91.7%)
- Material processed increased by 9% to 4.8m tonnes
- Head grade decreased by 24% to 0.52 g/t
- Recoveries decreased by 30% to 16%
- Production decreased by 44% to 12,719 PGM ounces
- Cash costs increased by 36% to R6,506 per PGM ounce due to
improved grades and recoveries
- Revenue decreased by 50% to R100 million for the financial year
- The cash margin for the period was 13%, an increase from 45% the
previous year
Commentary
CTRP:
A project to install a thickener at the plant has been started.
This should result in finer material being presented to the fine
grind mill to improve recoveries. Metallurgical test work on the
effects of grinding on recoveries has been completed and the
results are due to be presented to the Management Board for
approval.
Platinum Mile:
The decrease in recoveries was directly related to the decrease in
the head grade of feed material. The operation still achieved a
positive cash margin in the current difficult market conditions.
During the final quarter three used coarse grinding mills were
purchased from Anglo Platinum for R10 million. The civil and
electrical design work has commenced and these mills should come
Fourth Quarter 2012: Production Results
into operation in February 2013. The coarse grinding circuit
should yield an additional 480 PGM ounces per month and the total
capital cost for this expansion is expected to be around R20
million.
Operating cash costs per ounce (R/oz)
4E net of by-
4E 6E
products
(Pt+Pd+Rh+Au) (Pt+Pd+Rh+Ir+Ru+Au)
(Ni, Cu& Co)
CTRP 8,661 8,160 8,020
Platinum 6,506 5,652 5,036
CORPORATE MATTERS
Premium Listing on the London Stock Exchange
On 28 November 2011, 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 is be eligible for
inclusion in the JSE equity indices.
Update on Zimbabwean Indigenisation
Mimosa has confirmed its willingness to sell 51% of its shares to
Zimbabwean entities and thereby to comply with the law requiring
51% local ownership of foreign-owned companies. The Government of
Zimbabwe appears to be satisfied with this confirmation in
principle, and ongoing discussions are now focused on arriving at
a detailed and mutually acceptable agreement on the shareholder
structure, valuation and funding of the proposed share
Fourth Quarter 2012: Production Results
transactions. Further announcements will follow as progress is
made.
Mine Closures
As disclosed at the time, the Marikana and Everest mines were
placed on care and maintenance with immediate effect, pending a
sustained improvement in Rand PGM prices. Please see extensive
separate disclosures in this regard.
Change to Owner Operator
As disclosed shortly after the year end, AQPSA and its mining
contractor, M&RC, mutually agreed to terminate their contract
mining arrangements. AQPSA will become the Owner Operator of the
Kroondal Mine following a handover period which will conclude at
the end of 2012. The transition to Owner Operator will be
facilitated by, specialised consulting firm Partners in
Performance. The Owner Operator model will be rolled out at
AQPSA’s other mines as they are brought back into production.
Please see the Operational Update released on 4 July 2012 for more
detail in this regard.
Appointments
Jean Nel was appointed as an executive director of Aquarius in the
second half of the year. Mr. Nel joined Aquarius in 2011 and was
appointed to the board of its South African operating subsidiary,
AQPSA, as Commercial Director in January 2012. Mr. Nel has been
active in the Southern African mining and resources sector since
1999. Mr. Nel qualified as a CA (SA), obtained the CFA (AIMR)
qualification and also completed the Advanced Management Programme
at Insead.
Robert Schroder was been appointed as Managing Director of AQPSA
shortly after the year end. Rob was previously Director: Projects
for AQPSA, and prior to that he was MD of Shaft Sinkers (Pty) Ltd.
As a result of the mine closures and as part of the process of
moving to Owner Operator, several other management changes have
become necessary. These are in the process of being finalised.
More information on all the corporate matters can be found at
www.aquariusplatinum.com
Please refer to www.aquariusplatinum.com for the table of
Statistical information
Aquarius Platinum Limited
Incorporated in Bermuda
Fourth Quarter 2012: Production Results
Exempt company number 26290
Board of Directors
Nicholas Sibley Non-executive Chairman
Stuart Murray Chief Executive Officer
Jean Nel Executive: Commercial
David Dix Non-executive
Tim Freshwater Non-executive
Edward Haslam Non-executive
Sir William Purves Non-executive (Senior Independent
Director)
Kofi Morna Non-executive
Zwelakhe Mankazana 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
AQPSA Management
Stuart Murray Executive Chairman
Robert Schroder Managing Director
Jean Nel Director: Commercial
Graham Ferreira Director: Finance & Company
Secretary
Wessel Phumo General Manager: Kroondal
Mimosa Mine Management
Winston Chitando Managing Director
Fourth Quarter 2012: Production Results
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 30 June 2012, the Company had in issue: 470,312,578 fully paid
common shares and 120,000 unlisted options.
Substantial Shareholders 30 June Number of
Percentage
2012 Shares
Savannah Resources Limited 34,004,767 7.23
State Street Nominees Limited 33,355,185 7.09
JP Morgan Nominees Australia 31,079,384 6.61
National Nominees Limited 26,611,322 5.66
Case Nominees Limited 26,444,397 5.62
Main Listing: Australian Trading Information
Securities Exchange
(AQP.AX)
Secondary London Stock ISIN number BMG0440M1284
Listing: Exchange (AQP.L)
Secondary JSE Limited ADR ISIN number
Listing: (AQP.ZA) US03840M2089
Convertible Bond ISIN
number XS0470482067
Broker (LSE) (Joint) Broker (ASX) Sponsor (JSE)
Liberum Capital Euroz Securities Rand Merchant Bank
Limited Level 18 Alluvion (A division of
City Point, 1 58 Mounts Bay Road, FirstRand Bank
Ropemaker Street, Perth WA 6000 Limited)
London, EC2Y 9HT Telephone: +61 (0) 1 Merchant Place
Telephone: +44 (0) 8 9488 1400 Cnr of Rivonia Rd
20 3100 2000 and Fredman Drive,
Bank of America Sandton 2146
Aquarius Platinum (South Africa) (Proprietary) Ltd
100% Owned
(Incorporated in the Republic of South Africa)
Registration Number 2000/000341/07
Fourth Quarter 2012: Production Results
Unit 16, Berkley Office Park, 8 Bauhinia Street, Highveld Techno
Park, Centurion, Pretoria, South Africa
Postal Address: PO Box 76575, Wendywood, 2144, South Africa
Telephone: +27 (0)120012001
Facsimile: +27 (0)120012070
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:
Willi Boehm
+61 (0) 8 9367 5211
Glossary
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) Aquarius Platinum (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
Fourth Quarter 2012: Production Results
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
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
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.
Tonne 1 Metric tonne (1,000kg)
UG2 Reef A PGE-bearing chromite layer within the
Critical Zone of the Bushveld Complex
Date: 08/08/2012 08:34:00 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
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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.
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