Wrap Text
Abridged audited group financial results for the year ended 31 December 2012
ANGLO AMERICAN PLATINUM LIMITED
Incorporated in the Republic of South Africa
Registration number: 1946/022452/06
Share code: AMS
ISIN: ZAE000013181
(Amplats or the Company)
ABRIDGED AUDITED GROUP FINANCIAL RESULTS
for the year ended 31 December 2012
KEY FEATURES
- The significant improvement in safety performance has continued in 2012, with a 42% year-on-year reduction in fatalities.
Regrettably, 7 employees lost their lives in 2012
- Equivalent refined platinum production down 8% year-on-year to 2.22 million ounces mainly due to lost production relating to
the illegal industrial action
- Unki's output increased by 20% year-on-year to 62,100 equivalent refined platinum ounces as the mine continued to exceed
ramp-up expectations
- Productivity decreased 4% year-on-year to 6.05m2 per total operating employee, primarily due to the illegal industrial action
- Refined platinum production and sales volume down 6% and 17% respectively; as pipeline stocks continued to be processed
and sales were prioritised in line with contractual commitments, as a precautionary measure, during the period of illegal industrial
action
- Cash operating costs up 21% year-on-year to R16,364 per equivalent refined platinum ounce due to the illegal industrial
action and above inflation increases in input costs, particularly labour
- Headline earnings down 141% to a loss of R1,468 million due to lower sales volumes, higher mining inflation and lower
realised metal prices
- Operating free cash flow down 108% to a net outflow of R717 million, leading to a significant increase in net debt to
R10.49 billion and a continued suspension of dividends in line with our stated dividend policy
- Recommendations of the Anglo American Platinum portfolio review were announced on 15 January 2013; constructive
engagement with all stakeholders progressing
Abridged audited financial report in accordance with recognition and measurement of International Financial Reporting Standards
(IFRS)
Anglo American Platinum Limited's consolidated abridged audited financial results for the year ended 31 December 2012 have
been independently reviewed by the Group's external auditors. The preparation of the Group's audited results for the year ended
31 December 2012 was supervised by the Finance Director, Mr B Nqwababa.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2012
Audited Audited
2012 % 2011
Notes Rm change Rm
Gross sales revenue 43,148 51,484
Commissions paid (310) (367)
Net sales revenue 42,838 (16) 51,117
Cost of sales (41,948) 1 (42,562)
Gross profit on metal sales 3 890 (90) 8,555
Other net expenditure (198) (99)
Loss on scrapping of property, plant and equipment 4 (6,606) (83)
Market development and promotional expenditure (420) (408)
Operating (loss)/profit (6,334) (180) 7,965
IFRS 2 Charge - community economic empowerment transaction - (1,073)
(Loss)/gain on revaluation of investment in Wesizwe Platinum Limited
(Wesizwe) (358) 33
Impairment of associates (105) -
Interest expensed (435) (216)
Interest received 220 216
Remeasurements of loans and receivables 54 215
Losses from associates (net of taxation) (659) (479)
(Loss)/profit before taxation (7,617) (214) 6,661
Taxation 5 897 (2,974)
(Loss)/profit for the year (6,720) 3,687
Other comprehensive income, net of income tax
Items that will be reclassified subsequently to profit or loss 325 131
Deferred foreign exchange translation gains/(losses) 95 557
Share of other comprehensive losses of associates - (5)
Reclassification of unrealised losses on available-for-sale investments
to loss/profit for the year 178 -
Net gains/(losses) on available-for-sale investments 52 (421)
Total comprehensive (loss)/income for the year (6,395) 3,818
(Loss)/profit attributable to:
Owners of the Company (6,677) (286) 3,591
Non-controlling interests (43) 96
(6,720) 3,687
Total comprehensive (loss)/income attributable to:
Owners of the Company (6,352) 3,722
Non-controlling interests (43) 96
(6,395) 3,818
RECONCILIATION BETWEEN (LOSS)/PROFIT AND HEADLINE
(LOSS)/EARNINGS
(Loss)/profit attributable to shareholders (6,677) 3,591
Adjustments
Net loss/(profit) on disposal of assets 6 (56)
Tax effect thereon (2) 16
Loss on scrapping of property, plant and equipment 6,606 83
Tax effect thereon (1,850) (24)
Loss/(gain) on revaluation of investment in Wesizwe 358 (33)
Tax effect thereon - 3
Impairment of associates 105 -
Profit on sale of other mineral rights and investments (14) (14)
Headline (loss)/earnings (1,468) (141) 3,566
Number of ordinary shares in issue (millions) 261.0 261.1
Weighted average number of ordinary shares in issue (millions) 261.0 261.4
(Loss)/earnings per ordinary share (cents)
- Basic (2,558) 1,374
- Diluted (2,547) 1,363
Attributable headline (loss)/earnings per ordinary share (cents)
- Headline (562) 1,365
- Diluted (560) 1,354
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 December 2012
Audited Audited
2012 2011
Notes Rm Rm
ASSETS
Non-current assets 64,652 68,971
Property, plant and equipment 43,946 44,499
Capital work-in-progress 9,149 12,940
Investment in associates 6,653 6,870
Investments held by environmental trusts 642 662
Other financial assets 4,204 3,931
Other non-current assets 58 69
Current assets 21,295 18,309
Inventories 15,937 12,525
Trade and other receivables 2,708 3,066
Other assets 472 419
Other current financial assets 4 3
Cash and cash equivalents 2,174 2,296
Total assets 85,947 87,280
EQUITY AND LIABILITIES
Share capital and reserves
Share capital 27 27
Share premium 20,956 21,014
Foreign currency translation reserve 174 79
Available-for-sale reserve (62) (292)
Retained earnings 28,725 35,534
Non-controlling interests 280 381
Shareholders' equity 50,100 56,743
Non-current liabilities 20,668 15,430
Non-current interest-bearing borrowings 6 8,104 939
Other financial liabilities 69
Environmental obligations 1,709 1,412
Employees' service benefit obligations 24 4
Deferred taxation 10,831 13,006
Current liabilities 15,179 15,107
Current interest-bearing borrowings 6 4,561 5,019
Trade and other payables 6,425 6,762
Other liabilities 1,983 1,792
Other current financial liabilities 131 183
Share-based payment provision 54 76
Taxation 2,025 1,275
Total equity and liabilities 85,947 87,280
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 December 2012
Audited Audited
2012 2011
Rm Rm
Cash flows from operating activities
Cash receipts from customers 43,109 51,278
Cash paid to suppliers and employees (40,417) (38,020)
Cash generated from operations 2,692 13,258
Interest paid (net of interest capitalised) (201) (194)
Taxation paid (602) (752)
Net cash from operating activities 1,889 12,312
Cash flows used in investing activities
Purchase of property, plant and equipment (includes interest capitalised) (7,201) (7,504)
Proceeds from sale of plant and equipment 102 276
Senior loan to Plateau Resources Proprietary Limited (Plateau) - (669)
Proceeds on disposal of interest in Western Bushveld Joint Venture - 126
Proceeds on sale of mineral rights and other investments 14 14
Distribution from associates 94 79
Loans to associates (535) (263)
Advances made to Plateau for the operating cash shortfall facility (305) (242)
Settlement of obligation to subscribe for 'S' preference shares in Newshelf
1061 Proprietary Limited (86) -
Increase/(decrease) in investments held by environmental trusts 78 (73)
Interest received 36 98
Growth in environmental trusts 3 16
Other advances (91) (15)
Net cash used in investing activities (7,891) (8,157)
Cash flows from/(used in) financing activities
Proceeds from the issue of ordinary share capital - 1
Share issue expenses on the community economic empowerment transaction (5) (29)
Purchase of treasury shares for the Bonus Share Plan (BSP) (231) (387)
Proceeds from/(repayment of) interest-bearing borrowings 6,706 (686)
Repayment of finance lease obligation - (1)
Cash dividends paid (532) (3,116)
Cash distributions to minorities (58) (175)
Net cash from/(used in) financing activities 5,880 (4,393)
Net decrease in cash and cash equivalents (122) (238)
Cash and cash equivalents at beginning of year 2,296 2,534
Cash and cash equivalents at end of year 2,174 2,296
Movement in net debt
Net debt at beginning of year (3,662) (4,111)
Net cash from operating activities 1,889 12,312
Net cash used in investing activities (7,891) (8,157)
Other (827) (3,706)
Net debt at end of year (10,491) (3,662)
Made up as follows:
Cash and cash equivalents 2,174 2,296
Non-current interest-bearing borrowings (8,104) (939)
Current interest-bearing borrowings (4,561) (5,019)
(10,491) (3,662)
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2012
Foreign
currency Available- Non-
Share Share translation for-sale Retained controlling
capital premium reserve reserve earnings interests Total
Rm Rm Rm Rm Rm Rm Rm
Balance at 31 December 2010
(audited) 26 21,381 (499) 129 33,521 460 55,018
Total comprehensive income/(loss)
for the year 557 (421) 3,586 96 3,818
Deferred taxation charged directly
to equity (1) (1)
Transfer of deferred taxation on
prior year translation differences on
net investment in foreign subsidiary 21 21
Cash distributions to minorities (175) (175)
Cash dividends paid (3,116) (3,116)
Gain on variation of interests in
associate 25 25
Issue of shares - community
economic empowerment
transaction 1 (29) (28)
Shares acquired in terms of the
BSP - treated as treasury shares (-)* (387) (387)
Shares vested in terms of the BSP -* 49 (49) -
Equity-settled share-based
compensation -community
economic empowerment
transaction 1,073 1,073
Equity-settled share-based
compensation 525 525
Shares purchased for employees (30) (30)
Balance at 31 December
2011(audited) 27 21,014 79 (292) 35,534 381 56,743
Total comprehensive income/(loss)
for the year 95 230 (6,677) (43) (6,395)
Deferred taxation charged directly
to equity 5 5
Cash distributions to minorities (58) (58)
Cash dividends paid (532) (532)
Share issue expenses on
community economic
empowerment transaction (5) (5)
Shares acquired in terms of the
BSP - treated as treasury shares (-)* (231) (231)
Shares vested in terms of the BSP -* 178 (178) -
Equity-settled share-based
compensation 589 589
Shares purchased for employees (16) (16)
Balance at 31 December
2012(audited) 27 20,956 174 (62) 28,725 280 50,100
* Less than R500,000.
ABRIDGED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2012
1. The abridged financial information is in compliance with International Financial Reporting Standards (IFRS) of the International
Accounting Standards Board, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and
Financial Reporting Pronouncements as issued by the Financial Reporting Standards Council and the requirements of the
Companies Act of South Africa. It also contains the information required by International Accounting Standard 34 - Interim Financial
Reporting. The accounting policies are consistent with those applied in the financial statements for the year ended 31 December
2011, except for the adoption of various amendments to accounting standards in the year under review. These changes did not
have a material impact on the financial results of the Group.
2. SEGMENT REVENUE AND RESULTS
Net sales revenue Operating contribution Depreciation
Audited Audited Audited Audited Audited Audited
2012 2011 2012 2011 2012 2011
Rm Rm Rm Rm Rm Rm
Operations
Bathopele Mine 2,059 2,284 (32) 548 318 309
Khomanani Mine 1,824 1,925 (167) 234 213 207
Thembelani Mine 1,556 2,055 (318) 396 227 210
Khuseleka Mine 2,388 2,538 (228) 341 271 236
Siphumelele Mine 1,461 1,865 (56) 381 182 229
Tumela Mine 3,731 5,285 218 1,481 437 476
Dishaba Mine 2,518 2,995 351 701 274 278
Union North Mine 1,159 1,844 (165) 338 132 164
Union South Mine 2,416 3,282 (40) 724 291 308
Mogalakwena Mine 7,649 8,403 2,201 3,413 1,462 1,332
Twickenham Platinum Mine 1 36 1 16 - 1
Unki Platinum Mine 1,345 946 176 287 236 104
Modikwa Platinum Mine 1,185 1,415 141 312 152 165
Kroondal Platinum Mine 1,717 2,095 221 536 61 65
Marikana Platinum Mine 291 544 (110) 42 14 27
Mototolo Platinum Mine 1,006 1,066 274 329 111 98
32,306 38,578 2,467 10,079 4,381 4,209
Western Limb Tailings Retreatment (WLTR) 768 753 265 240 110 92
Chrome refining 464 474 370 451 10 2
Total - mined 33,538 39,805 3,102 10,770 4,501 4,303
Purchased metals 9,300 11,312 525 597 246 224
42,838 51,117 3,627 11,367 4,747 4,527
Other costs (2,737) (2,812)
Gross profit on metal sales 890 8,555
Audited Audited
2012 2011
Rm Rm
3. GROSS PROFIT ON METAL SALES
Gross sales revenue 43,148 51,484
Commissions paid (310) (367)
Net sales revenue 42,838 51,117
Cost of sales (41,948) (42,562)
On-mine (27,607) (25,237)
Cash operating costs (24,167) (21,950)
Depreciation (3,314) (3,243)
Deferred waste stripping (126) (44)
Purchase of metals and leasing activities (8,959) (9,193)
Smelting (3,096) (2,801)
Cash operating costs (2,310) (2,045)
Depreciation (786) (756)
Treatment and refining (2,693) (2,316)
Cash operating costs (2,046) (1,788)
Depreciation (647) (528)
Increase/(decrease) in metal inventories 3,144 (203)
Other costs (2,737) (2,812)
Gross profit on metal sales 890 8,555
4. LOSS ON SCRAPPING OF PROPERTY, PLANT
AND EQUIPMENT
Thembelani 2 shaft 2,157 -
Tumela 4 shaft 579 -
Marikana Platinum Mine 653 -
Ore replacement projects 651 -
Slag cleaning furnace 2 633 -
Twickenham ore stockpile 491 -
Other various projects and interest capitalised on the above items 1,442 83
6,606 83
Audited Audited
2012 2011
Rm Rm
5. TAXATION
A reconciliation of the standard rate of South African normal taxation
compared with that charged in the statement of comprehensive income
is set out in the following table:
% %
South African normal taxation (28.0) 28.0
STC 0.7 2.9
(27.3) 30.9
Disallowable items 3.0 3.5
Capital profits - (0.1)
Prior year underprovision 9.9 9.0
Effect of after-tax shared loss from associates 2.4 2.0
Deferred tax asset not raised - 0.5
Other 0.2 (1.2)
Effective taxation rate (11.8) 44.6
Audited Audited Audited Audited
2012 2012 2011 2011
Rm Rm Rm Rm
Facility Utilised Facility Utilised
amount amount amount amount
6. INTEREST-BEARING BORROWINGS
Unsecured financial liabilities measured at amortised cost
Committed 20,181 8,165 20,169 5,958
Uncommitted 6,331 4,500 4,805 -
26,512 12,665 24,974 5,958
Disclosed as follows:
Current interest-bearing borrowings 4,561 5,019
Non-current interest-bearing borrowings 8,104 939
12,665 5,958
The weighted average borrowing rate at 31 December 2012 was 6.12% (2011: 6.60%).
Committed facilities are defined as the bank's obligation to provide funding until maturity of the facility, by which
time the renewal of the facility is negotiated. R15,595 million (2011: R9,498 million) of the facilities is committed
for one to five years, R3,050 million (2011: R3,050 million) is committed for a rolling period of 364 days, while
the rest is committed for less than 364 days.
Uncommitted facilities are callable on demand.
7. CHANGES IN ACCOUNTING ESTIMATES FOR INVENTORY
During the current year, the Group updated its estimate of the quantities of inventory based on the outcome of a physical count
of in-process metals. The Group runs a theoretical metal inventory system based on inputs, the results of previous counts and
outputs. Due to the nature of in-process inventories being contained in weirs, pipes, and other vessels, physical counts only take
place once per annum, except in the Precious Metal Refinery, which takes place once usually every three years.
This change in estimate has had the effect of increasing the value of inventory disclosed in the financial statements by
R1,439 million (2011: R417 million). This results in the recognition of an after-tax gain of R1,036 million (2011: R300 million).
8. REFINANCING OF ATLATSA RESOURCES CORPORATION (ATLATSA)
In 2012, the Group and Atlatsa agreed in principle to the restructure, recapitalisation and refinancing of Atlatsa and Bokoni Platinum
Holdings Proprietary Limited. The implementation of the transactions is subject to the fulfilment of certain conditions precedent
including regulatory approval and Atlatsa shareholder approval. This transaction will be accounted for once the agreements have
been signed and these conditions have been fulfilled. The Group and Atlatsa are collaborating to optimise Bokoni Platinum Mine.
9. UNKI PLATINUM MINES INDIGENISATION PLAN
Negotiations with the Zimbabwean government regarding the compliance of Unki Platinum Mine with the requirements of the
Indigenisation and Economic Empowerment Act continue and significant progress has been made in this regard. A Heads of
Agreement setting out the broad terms of the empowerment plan was signed in November 2012. The detailed agreements to
implement this plan are in the process of being finalised prior to the implementation of the plan and the transaction is expected to
close in the first half of 2013.
10. POST-BALANCE SHEET EVENT
Subsequent to year end, on 15 January 2013, the Group announced the outcome of the Platinum Portfolio Review. The key
proposals from the review were as follows:
- Placement of Khuseleka Mine (shafts 1 and 2) and Khomanani Mine (shafts 1 and 2) on long-term care and maintenance;
- Consolidation of the Rustenburg operations into three operating mines;
- Closure of the Union Mine North declines; and
Placement of the Waterval UG2 concentrator, Mortimer Merensky concentrator and the one furnace (FCE2) at Waterval smelter on
long-term care and maintenance.
As a result, if the Group is not expected to receive future economic benefits from these mines, the property, plant and equipment
with a carrying value of approximately R4.1 billion (after tax: R3.0 billion) could be written off in 2013. These write-offs will be
excluded from headline earnings.
The gross cash costs associated with implementation of the Portfolio Review and overhead review, which is expected to be
approximately R3.2 billion (after tax: R2.3 billion), will be expensed as incurred during the course of 2013 and will be included in
headline earnings for the year.
Reallocation of declared Mineral Reserves to exclusive Mineral Resources will occur at the affected operations (Khomanani,
Khuseleka and Union mines), with the amount being dependent on the final scale of implementation of the Platinum Portfolio
Review. Currently, reliable, reasonable estimation of the scale of impact is not possible because of uncertainty in the
implementation.
11. CONTINGENT LIABILITIES
Letters of comfort have been issued to financial institutions to cover certain banking facilities. There are no encumbrances of Group
assets, other than the assets held under finance leases by the Group.
The Group is the subject of various legal claims, which are individually immaterial and are not expected, in aggregate, to result in
material losses.
In addition, at 31 December 2012, the Group has certain unresolved tax matters where the tax authorities are disputing the Group
treatment of these matters. Management has consulted with external tax and legal advisers, who support the Group position.
Nonetheless, we are actively discussing the issues with the tax authorities with a view to seeking resolution and believe that these
matters have been appropriately treated in the results for the year ended 31 December 2012.
The Group has in the case of some of its mines provided the Department of Mineral Resources with guarantees that cover the
difference between closure cost and amounts held in the environmental trusts. At 31 December 2012, these guarantees amounted
to R2,760 million (2011: R2,653 million).
12. AUDITOR'S REVIEW
The annual report from which the abridged annual results have been extracted has been audited by the Company's auditors,
Deloitte & Touche. The audit of the abridged results was performed in accordance with ISA 810, 'Engagements to Report on
Summary Financial Statements'. Their unmodified report is available for inspection at the Company's registered office. Any
reference to future financial performance, included in this announcement, has not been reviewed or reported on by the Company's
auditors.
GROUP PERFORMANCE DATA
for the year ended 31 December 2012
SALIENT FEATURES
2012 2011
Average market prices achieved
Platinum US$/oz 1,532 1,707
Palladium US$/oz 640 735
Rhodium US$/oz 1,264 2,015
Gold US$/oz 1,669 1,556
Nickel US$/lb 7.76 10.50
Copper US$/lb 3.58 4.04
US$ basket price - Pt
(net sales revenue per Pt oz sold) US$/oz Pt sold 2,406 2,698
US$ basket price - PGM
(net sales revenue per PGM oz sold) US$/oz PGM sold 1,316 1,510
Platinum R/oz 12,596 12,426
Palladium R/oz 5,266 5,322
Rhodium R/oz 10,358 14,642
Gold R/oz 13,872 11,504
Nickel R/lb 63.12 75.42
Copper R/lb 29.46 29.02
R basket price - Pt
(net sales revenue per Pt oz sold) R/oz Pt sold 19,764 19,595
R basket price - PGM
(net sales revenue per PGM oz sold) R/oz PGM sold 10,811 10,968
Exchange rates
Average exchange rate achieved on sales ZAR/US$ 8.2156 7.2625
Exchange rate at end of the year ZAR/US$ 8.4689 8.1055
Unit cost performance
Cash operating cost per equivalent refined
Pt ounce1 R 16,364 13,552
Cash operating cost per refined Pt ounce R 15,660 12,869
Cost of sales per total Pt ounce sold2 R 19,354 16,306
Cost of sales per total Pt ounce sold
(mining and retreatment activities) R 19,872 15,909
Productivity
m2 per total operating employee per month3 6.05 6.32
Refined platinum ounces per employee4 29.3 32.5
1 Cash operating cost per equivalent refined platinum ounce excludes ounces from purchased concentrate
and associated costs.
2 Total platinum ounces sold: refined platinum ounces sold plus platinum ounces sold in concentrate.
3 Square metres mined per operating employee including processing, but excluding projects, opencast and
Western Limb Tailings Retreatment employees.
4 Refined platinum ounces per employee: mined refined platinum ounces divided by own and attributable
Anglo American Platinum Limited joint-venture operational employees.
REFINED PRODUCTION
2012 2011
Total operations
Refined production from mining operations
Platinum 000 oz 1,773.3 1,943.4
Palladium 000 oz 1,080.5 1,122.1
Rhodium 000 oz 240.3 257.9
Gold 000 oz 86.4 85.6
PGMs 000 oz 3,513.9 3,764.5
Nickel 000 tonnes 14.9 17.0
Copper 000 tonnes 9.9 11.0
Refined production from purchases inclusive of returns
Platinum 000 oz 605.3 586.7
Palladium 000 oz 315.4 308.6
Rhodium 000 oz 70.4 79.7
Gold 000 oz 18.8 19.5
PGMs 000 oz 1,126.7 1,122.9
Nickel 000 tonnes 2.8 3.3
Copper 000 tonnes 1.5 1.8
Total refined production
Platinum 000 oz 2,378.6 2,530.1
Palladium 000 oz 1,395.9 1,430.7
Rhodium 000 oz 310.7 337.6
Gold 000 oz 105.2 105.1
PGMs 000 oz 4,640.6 4,887.4
Nickel 000 tonnes 17.7 20.3
Copper 000 tonnes 11.4 12.8
PIPELINE CALCULATION
2012 2011
Total operations
Equivalent refined platinum production1 000 oz 2,219.1 2,410.1
Bathopele Mine 108.7 112.5
Khomanani Mine 96.6 97.2
Thembelani Mine 81.2 101.2
Khuseleka Mine 125.3 126.5
Siphumelele Mine 78.3 96.0
Tumela Mine 217.1 264.0
Dishaba Mine 145.2 150.3
Union North Mine 63.7 91.5
Union South Mine 132.0 162.7
Mogalakwena Mine 300.2 306.3
Twickenham Platinum Mine - 0.9
Unki Platinum Mine 62.1 51.6
Modikwa Platinum Mine 119.6 124.8
Kroondal Platinum Mine 213.2 208.6
Marikana Platinum Mine (net of ounces sold)2 26.4 47.0
Mototolo Platinum Mine 118.8 109.4
Bafokeng-Rasimone Platinum Mine 171.6 180.0
Bokoni Platinum Mine 55.1 59.6
Western Limb Tailings Retreatment 47.6 40.9
Purchases from third parties 56.4 79.1
Pipeline stock adjustment 137.9 35.5
Refined platinum production (excl toll refined metal) (2,329.1) (2,530.1)
Mining (1,773.3) (1,943.4)
Purchases of concentrate (555.8) (586.7)
Platinum pipeline movement 27.9 (84.5)
1 Mines' production and purchases of metal in concentrate, secondary metals and other metals
converted to equivalent refined production using Anglo American Platinum Limited's (Amplats')
standard smelting and refining recoveries.
2 Production attributable to Amplats after accounting for metal concentrate sold to Impala Platinum
in terms of an offtake agreement that was in place when the pooling-and-sharing agreements
commenced. Metal concentrate surplus to the volumes stipulated in the offtake agreement is
refined by Amplats.
COMMENTARY
SAFETY
The significant improvement in safety performance has continued in 2012, however, it is with great sadness that we have to report
that seven of our employees lost their lives during the period. We extend our sincere condolences to their families, friends and
colleagues. The causes of the fatalities were moving machinery, falls of ground and transport related incidents.
The number of lost-time injuries decreased by 10% year-on-year while serious injuries incurred decreased by 11% over the same
period. This resulted in a lost-time injury frequency rate (LTIFR) of 1.15 in 2012, compared with 1.27 in 2011. While materials
handling remains the biggest agency for most lost-time injuries, we are encouraged by the 14% decrease in lost-time injuries
caused by materials handling. The proactive management of safety risks resulted in a decrease in the number of safety stoppages
during the year. In 2012, there were 52 safety stoppages at own operations, compared with 81 in 2011. Since the safety stoppages
were contained to the areas where deviations were observed, their impact on production was considerably reduced in 2012.
The management systems, engineering and technological solutions introduced to prevent the historical causes of injury and death,
have shown remarkable results. Increased focus on behavioural change and visible leadership also had a positive impact on safety
performance. We are pleased that fatalities caused by falls of ground, in particular, have been reduced significantly during recent
years. Of the seven fatalities which occurred in 2012, one was caused by fall of ground as compared to nine in 2007.
Our Safety Strategy has four main pillars: Appropriate safety management systems, engineering out the risk, developing
appropriate behaviour, and wellness in the workplace. This strategy has improved our safety performance since 2008. We have
reduced fatalities and the LTIFR by 61% and 34% respectively since 2008. While the safety strategy is still sound, we continue to
review and adjust it to ensure that we specifically target the recurring agencies that contribute to injuries and fatalities. The journey
to zero harm remains our key strategic objective and we are confident that our zero harm in action programme introduced at the
end of 2011 will contribute to us achieving this objective.
SUSTAINABLE DEVELOPMENT AND TRANSFORMATION
Anglo American Platinum recognises the importance and impact of sustainability on both our legal and social licence to operate.
Performance against sustainability targets is tracked and includes employee safety, employee health, compliance with mineral
policy and legislation, access to and allocation of resources. Achievements in these sustainable development issues include the
following:
Employee health
- Approximately 4,400 employees on Anti-Retroviral Treatment for HIV and Aids
- Maintained 81% Voluntary Counselling and Testing
- Work on reducing noise level of our equipment to 110 decibels continues.
Access to and allocation of energy, water and land
- Reductions in our water consumption and increase in the use of grey and effluent water to reduce the use of potable water
- No level two or three environmental incidents in 2012.
MPRDA and the revised Mining Charter
Anglo American Platinum has made significant progress towards achieving its transformation objectives as envisaged by the
Minerals and Petroleum Resources Development Act (MPRDA) and the revised Mining Charter.
The key milestones achieved in support of our Social and Labour Plans include the following:
- Average of 58% historically disadvantaged South Africans (HDSA) in management positions (Top management 38%, senior
management 40%, middle management 57% and junior management 65%);
- While it is still a challenge to fill underground mining positions with women, in management we have done better: Total
women in management stands at 20% with the following spread across levels: Top management 12.5%, senior management
11.5%, middle management 22.2% and junior management 19.5%. Overall, we have achieved 13% women in mining;
- HDSA procurement of R10.9 billion, up from R10.3 billion spent in 2011, equating to 53.4% of available spend with HDSA
suppliers in 2012. HDSA procurement with suppliers defined as local was R2.8 billion. This is an increase from R2.5 billion spent in
2011 and it equates to 13.5% of available spend with local HDSA suppliers in 2012 against the 11.4% in 2011; and
- Three years ago, we committed to promote employee home ownership and entered into a partnership with the then
Department of Housing to build 20,000 housing units for our employees. To date 1,515 stands have been fully serviced and
approximately 600 housing units have been built. An additional 500 employees have signed up for the "rent to buy" program which
will see them being converted to homeowners within a four year period.
Following the implementation of Project Alchemy, the R3.5 billion landmark mine host community empowerment transaction, in
2011, Lefa La Rona Trust received a maiden dividend at the beginning of 2012. The trustees have identified community projects
and work continues to engage beneficiary communities and finalise the establishment of the beneficiary development trusts.
We have a clear transformation plan which has evolved beyond the recording of numbers to focusing on creating a "great place to
work", and being the employer of choice. This includes creating the right culture within the company and a focus on increasing
women participation in mining.
We are continuing to work with the DMR to resolve issues surrounding a number of our prospecting rights that are under contention
as we believe that these rights were incorrectly awarded to third-party entities.
FINANCIAL REVIEW
Headline earnings per ordinary share decreased year-on-year to a loss of R5.62 in 2012 from a profit of R13.65 reported in 2011.
This was primarily due to lower sales volumes, the impact of higher mining inflation on costs and lower realised metal prices.
Platinum sales volumes for the period were lower primarily due to the two-month illegal industrial action experienced during the
second half of 2012. During the period of the illegal industrial action, Anglo American Platinum prioritised sales in line with its
contractual commitments, as a precautionary measure. Anglo American Platinum, together with its share of joint venture and
associate production, lost 305,600 ounces of equivalent refined platinum production as a result of the initial safety suspension and
subsequent illegal industrial action, and the ramp up period, which commenced on 16 November 2012.
Headline earnings per ordinary share exclude a loss of R463 million resulting from the revaluation of the certain investments as well
as the write-down of various other projects and assets, which are considered uneconomical in the current environment, to the value
of R6.6 billion (after-tax R4.8 billion).
Net sales revenue decreased by 16% or R8.3 billion to R42.8 billion. R6.9 billion of the decrease in gross revenue was due to lower
sales volumes and R1.4 billion was due to lower average realised rand prices, most notably rhodium and nickel. Refined platinum
sales for the year ended 31 December 2012 decreased by 17% compared to the year ended 31 December 2011, to 2,167,000
ounces. The average dollar basket price achieved declined by 11% from US$2,698 per ounce in 2011, to US$2,406 per ounce.
However, the average exchange rate achieved on sales during 2012 was R8.22, 13% weaker compared to R7.26 in 2011. As a
result, the realised average Rand basket price in 2012 was R19,764 per platinum ounce, in line with the basket price of R19,595 in
2011.
Cost of sales decreased 1.4% year-on-year from R42.6 billion to R41.9 billion. On-mine operating expenses increased by R2.4
billion or 9.4% from 2011. The Group incurred R9.0 billion on the purchase of metals, which declined year-on-year, in line with lower
volumes and metal prices. The cost of processing (smelting, treatment and refining) of R5.8 billion increased 13.1% from R5.1
billion incurred in 2011. Cost of sales benefited from the R3.1 billion movement of inventory during the year. The normal inventory
revaluation accounted for R1.7 billion of the increase in metal inventories while the adjustment arising following the physical stock
count accounted for R1.4 billion.
As with the rest of the industry, the company experienced mining inflation well in excess of headline inflation (CPI). Labour costs,
which represented approximately 46% of our cost base, increased by 8.4% from 2011. While the cost of electricity and electrical
components increased by 19.3%, diesel rose by 19.4% and caustic soda increased by 28.7% over the same period. In addition,
operating costs remained under pressure due to illegal industrial action during the second half of 2012, where fixed costs were
incurred despite the disruption in production and additional once-off costs as a direct result of the illegal industrial action.
The cash operating cost per equivalent refined platinum ounce increased by 21% to R16,364. This increase was primarily due to
the illegal industrial action and increases in the cost of labour, electricity, diesel, caustic soda, process chemicals, steel balls and
reagents. The 305,600 ounces of equivalent refined platinum production lost as a result of the illegal industrial action contributed
around R900 per equivalent refined platinum ounce to the increase in unit cash operating cost in 2012, due to the retained fixed
cost base and additional strike-related once-off costs. Excluding the effects of the illegal industrial action, unit cash operating cost
would have been contained to R15,500 per equivalent refined platinum ounce.
Our cost management and productivity improvement initiatives for 2012 were impacted by the illegal industrial action. Productivity,
measured as square meters per total operating employee per month, averaged 6.05m2 in 2012 compared to 6.32m2 in 2011, a
decrease of 4%. Labour productivity of our underground mines was disproportionately impacted by the illegal industrial action,
decreasing by 10%, while joint ventures and associates delivered a 10% improvement.
Operating profit decreased to an operating loss of R6,334 million from a profit of R7,965 million in 2011, primarily as a result of the
revaluation of certain investments and write-down of the assets mentioned above. Excluding the write-down of assets, operating
profit for 2012 was R272 million, a decrease of 97%. As a result, operating margin before write-downs, declined from 16% in 2011
to about 1% during the period under review. The cumulative effect of lower sales revenues and higher costs has led to a
compression of operating margins and a significant decline in operating cash flow.
Operating free cash flow decreased by R10.13 billion compared with 2011, to a net outflow of R717 million. The 61% increase in net
working capital days, predominantly related to an increase in metal inventories, also had a negative impact on operating free cash
flow. This was despite continued improvement in capital discipline and related mainly to an increase in metal inventories.
Capital expenditure for 2012, including capitalised interest, decreased by 4% or R302 million to R7,201 million. This was
significantly reduced from the originally planned R9 billion, due to the capital rationing exercise implemented in 2012, as a result of
the challenging economic and operating environment.
In line with a decline in operating free cash flow, net debt increased by R6.83 billion to R10.49 billion from R3.66 billion at the end of
December 2011. As a result, gearing increased from 11% in 2011 to 25% at the end of December 2012.
Owing to this increase in net debt, the future funding requirements and uncertain global economy, the Board resolved not to declare
a final dividend.
MARKETS
Gross platinum demand declined by 140 koz or 2% in 2012 as weaker demand for autocatalyst and industrial applications
exceeded the increases in jewellery demand, which responded to low prices. Primary supply of platinum was negatively impacted
by labour stoppages and mine closures in South Africa. In addition, autocatalysts recycling decreased by 15.5% in 2012, due to low
platinum price.
Gross demand for palladium rose by 15% in 2012, due to an increase in demand from the autocatalyst sector and a significant
increase in investment demand. The palladium market moved from a surplus in 2011 to a deficit in 2012 as South African output
was lower, also due to labour stoppages and mine closures and less metal was sold from Russian stockpiles.
The rhodium market moved into balance in 2012, after years of surplus, with reduced supplies matching increased demand
primarily from the autocatalyst sector.
Autocatalysts
Global light vehicle sales grew by 5% in 2012 to 81 million units, reflecting a mix of growth and decline in different markets. Growth
in North America, Japan and the BRIC nations (Brazil, Russia, India and China) offset weakness in Europe and other regions. The
ongoing economic uncertainty in Europe continued to impact demand for new vehicles, with sales 8% below those in 2011.
Gross demand for platinum in autocatalysts declined over 2011, with the increase in demand in Japan and other regions unable to
make up for the decline in demand from Europe. The increased production of gasoline vehicles in 2012 underpinned a 7% increase
in palladium demand and a 5.9% increase in rhodium demand. Palladium demand also benefitted from continuing substitution of
platinum by palladium in diesel vehicles.
Supplies of platinum group metals (PGMs) from the recycle of spent catalysts decreased 12% in 2012 to 2.79 million ounces.
Recovery of metal in Europe and North America was negatively impacted by collectors holding back stock in anticipation of higher
PGM prices, while lower stainless steel prices kept dismantlers from de-canning the catalysts. In Japan, recycled supplies
increased as the recovery in sales of new vehicles in 2012 resulted in more vehicles being scrapped.
Industrial
Gross platinum demand for industrial applications was not expected to increase in 2012. The record demand in 2011, addressing
delayed consumption, was unlikely to be repeated. A decline in purchases from the glass and electrical sectors in 2012 resulted in a
decrease of 16% in demand for platinum for industrial applications, to 1.7 million ounces.
Jewellery
Gross platinum demand for the fabrication of jewellery rose by 10% in 2012 to 2.7 million ounces, underpinned by growth in
Chinese demand. Gross demand for platinum jewellery in China increased by 14% in 2012, to 1.9 million ounces, supplied by
purchases of 1.4 million ounces and recycling of old jewellery of 0.5 million ounces. Platinums discount to gold in 2012 provided an
opportunity for manufacturers and retailers to make higher profit margins with the metals premier status attracting a premium over
gold.
Investment
Investment demand for platinum was flat at 460,000 ounces in 2012, although the performance during the year was erratic.
Japanese buyers of large bars were active when the price was lower than Yen 4000/gram (US$1 550/ounce). The release of the
Canadian Platinum Maple Leaf and the Australian Platinum Platypus bullion coins also boosted interest in demand in the United
States (US) and the rest of the world.
After significant liquidation in palladium ETFs in 2011, positive sentiment resulted in a 16% increase in net holdings in 2012 to 2.04
million ounces.
OPERATIONS
Equivalent refined platinum production (equivalent ounces are mined ounces expressed as refined ounces) from the mines
managed by Anglo American Platinum and its joint venture partners for the year ended 31 December 2012 was 2.22 million ounces,
a decrease of 8% compared to 2011. Total equivalent refined platinum production lost in 2012 as a result of the illegal industrial
action, including from joint ventures and associates, amounted to 305,600 ounces.
Equivalent refined platinum production from own mines and the Western Limb Tailings Retreatment plant decreased by 143,600
ounces or 9% year-on-year to 1.46 million ounces in 2012, primarily due to the impact of the illegal industrial action. Equivalent
refined platinum production at Rustenburg mines (Bathopele, Khuseleka, Khomanani, Siphumelele and Thembelani) decreased by
43,300 ounces or 8% year-on-year. Amandelbult mines (Tumela and Dishaba) and Union (North and South) mines recorded year-
on-year decreases of 52,000 ounces or 13% and 58,500 or 23% respectively. Mogalakwena mine output was 300,200 equivalent
refined platinum ounces, down 6,100 or 2% year-on-year due to lower throughput at the concentrators and lower head grade. The
decreased performance was partly offset by higher production volume at Unki mine which increased by, 10,500 equivalent refined
platinum ounces, or 20% year on year, as the mine continued to exceed ramp-up expectations.
Equivalent refined platinum production from joint ventures and associates, inclusive of both mined and purchased production, was
down 3% year-on-year at 704,700 ounces. The production in 2012 was impacted mainly by industrial action at Modikwa mine
(11,000 ounces) and Bokoni mine (19,000 ounces), as well as the curtailment of the Marikana mine in June 2012 (22,000 ounces).
The production losses were partly offset by improved output at Kroondal and Mototolo mines.
Equivalent refined platinum ounces purchased from third parties decreased by 29% from 79,100 to 56,400 ounces in 2012.
Anglo American Platinum's share of tonnes milled in 2012 decreased by 7% to 38.7 million while the overall 4E built-up head grade
was 3.20 grams per tonne compared with 3.24 grams per tonne in 2011.
Refined platinum production decreased by 6% compared to the same period in 2011, to 2.38 million ounces in 2012. As mentioned
above, the majority of the loss was primarily due to the impact of the illegal industrial action, offset by the processing of pipeline
stocks.
Although we refined 2.38 million ounces of platinum, we sold 2.17 million ounces, which is 17% lower than in 2011. Given the
uncertainty around the duration of the illegal industrial action, as a precautionary measure, we prioritised our sales in line with
contractual commitments and suspended spot sales which resulted in an increase in stock by year end.
OWN MINES
Anglo American Platinum had a good start to the 2012 financial year, with improved safety and operational performances from
underground mines. The safety stoppages at our own mining operations were more localised and for a shorter period and, as a
result, 14,321 ounces of platinum, compared with 101,068 platinum ounces in 2011, were lost due to non fatality related safety
stoppages. Underground mining performances were principally impacted by the illegal industrial action during the second half of
2012. Tonnes milled from underground sources were down 9% at 18.7 million tonnes. Surface material tonnes milled reduced by
29% due to depletion at both Tumela and Union North mines. The decline in underground performances was further impacted by a
2% decrease in throughput at Mogalakwena concentrators.
Anglo American Platinum experienced illegal industrial action at its Rustenburg, Union and Amandelbult mining operations during
the second half of 2012. The illegal industrial action started on 18 September 2012, following the initial safety suspension of
operations at Rustenburg mines on 12 September. The illegal industrial action was initially contained to the Rustenburg mining
operations before commencing at Union and Amandelbult operations during the first week of October 2012. The illegal industrial
action ended on 15 November 2012 after Rustenburg, Union and Amandelbult employees accepted the terms of the Companys
offer. Mining operations resumed and gradually ramped up, taking due cognizance of safety, since 16 November 2012.
The company had previously experienced isolated illegal industrial action by around 600 miners around its Rustenburg mining
operations in July 2012. This earlier isolated illegal industrial action was resolved within a week but resulted in a loss of 9,000
ounces of equivalent refined platinum production.
As a result, equivalent refined platinum production from own mines (including the Western Limb Tailings Retreatment plant)
decreased by 143,600 ounces or 9% year-on-year to 1.46 million ounces in 2012.
Individual operational performances were as follows:
Bathopele
Bathopele mine had no fatalities in 2012 and has achieved 977,000 fatality-free shifts. The lost-time injury frequency rate improved
by 6% in 2012 to 0.79 from the 0.84 achieved in 2011.
Equivalent refined platinum production decreased by 3% to 108,700 ounces in 2012 as a result of the illegal industrial action.
Square metres mined decreased by 6%, while 4E built-up head grade declined by 7.5%, mainly due to increased on-reef
development and increased mining of lower grade areas in 2012. Tonnes milled increased by 3%. Bathopele mine feeds ore
directly into the concentrator and was able to do so during the period of illegal industrial action, from available underground ore
stock, hence the increase in tonnes milled volumes. Labour productivity decreased by 6% to 12.3m² per total operating employee.
Khomanani
Regrettably, Khomanani had one fatality in 2012. The lost-time injury frequency rate improved to 1.32 in 2012, down from 1.49 in
2011. Safety remains a key focus and management action plans are in place to further improve safety performance at this
operation.
Equivalent refined platinum production decreased to 96,600 ounces, down by 0.6% from 2011. Production was in line with 2011
performance despite the illegal industrial action during the second half of 2012. Square metres mined decreased 5%, and tonnes milled
decreased by 2%, while the 4E built-up head grade was marginally up on 2011 at 4.35 grams per tonne. Labour productivity declined
by 7% to 5.4m² per total operating employee.
Thembelani
Thembelani mine had no fatalities in 2012 and has achieved 1,632,200 fatality-free shifts. The lost-time injury frequency rate,
however, deteriorated to 2.41 in 2012 from 2.04 in 2011. To counter this deterioration, the annual "safe start" process was again
undertaken in May 2012, where every employee attended safety refresher training for a day. We have also developed a detailed
safety management plan to improve the safety performance of the mine. The lost-time injury frequency rate improved by 13% in the
second half of 2012 from 2.78 at the end of June 2012 to 2.41 at the end of December 2012.
Equivalent refined platinum production decreased by 20% to 81,200 ounces, down from 101,200 ounces in 2011. The mine
produced at similar levels in the first half of 2012, as compared with 2011, but was impacted by the one-week illegal industrial action
in July 2012 and the two-month illegal industrial action in the fourth quarter of 2012. As a result, square metre output decreased by
22%, and tonnes milled decreased by 20%, while the 4E built-up head grade improved by 2%. Productivity was 25% lower at 4.7m2
per total operating employee.
Khuseleka
Disappointingly, two employees lost their lives at Khuseleka mine in 2012. The lost-time injury frequency rate deteriorated to 2.02 in
2012 from the 1.65 achieved in 2011. To counter this unsatisfactory safety performance, we have made management changes
following the fatalities and implemented initiatives and systems to ensure that the employees respond appropriately to high risk
conditions. We have also developed a detailed safety management plan to improve the safety performance of the mine.
Khuseleka Mine increased its output of equivalent refined platinum production in the first half of 2012 by 32% over the same period
in 2011, due to the successful ramp-up of the Khuseleka 2 shaft. The illegal industrial action in the second half of the year more
than offset this strong performance. The mine produced 125,300 equivalent refined platinum ounces for the year, 1% lower than in
2011. Although the square metres mined and labour productivity decreased by 14% and 20% respectively, tonnes milled increased
by 2% as a result of new mining from the Khuseleka Open Pit operation, while the 4E built-up head grade improved by 4%. Labour
productivity decreased by 20% to 4.9m2 per total operating employee.
Siphumelele
Siphumelele mine achieved 1,918,000 fatality-free shifts in 2012. The lost-time injury frequency rate improved to 2.49 from 2.80
reported in 2011, following the implementation of safety improvement action plans. Safety remains a key focus and management
action plans are in place to further improve safety performance at this operation.
Equivalent refined platinum production for the year decreased by 18% to 78,300 ounces, following a strong start in the first half of
2012, which saw production increasing by 8% year-on-year. Production on the mine was affected by the illegal industrial action in
the second half of 2012. Square metres mined decreased by 22%, tonnes milled decreased by 21%, and labour productivity
declined by 19% to 3.9m2 per total operating employee, while 4E built-up head grade improved by 2%.
Tumela
Tumela mine achieved 2,200,000 fatality-free shifts in 2012. The lost-time injury frequency rate improved to 1.56 in 2012 compared
to the 1.60 achieved in the same period in 2011.
The equivalent refined platinum production decreased by 18% to 217,100 ounces, principally due to the illegal industrial action
experienced during the second half of 2012. The depletion of low grade surface material sources and declining Merensky
production also contributed to the lower production. Square metres mined were 19% lower year-on-year, tonnes milled decreased
by 21% year-on-year and labour productivity declined by 19% to 4.2m2 per total operating employee. The 4E built-up head grade
improved by 5% due to higher throughput at the Amandelbult concentrator, after resolving the operational challenges experienced
in the first half of 2012.
Dishaba
Dishaba mine had a very successful year in terms of safety performance, with no fatalities in 2012 and the mine has achieved
2,700,000 fatality-free shifts. The lost-time injury frequency rate significantly improved to 0.90 in 2012 compared with 1.94 in 2011.
Equivalent refined platinum production, at 145,200 ounces, was 3% lower than that achieved in 2011 as a result of the illegal
industrial action experienced during the second half of 2012. Square metres mined decreased by 2% year-on-year, labour
productivity declined by 2% to 4.7m2 per total operating employee, tonnes milled were flat while 4E built-up head grade improved by
1%. The increase in grade was due to improved throughput at the Amandelbult concentrator.
Union North
Regrettably, Union North Mine had one fatality in 2012. The lost-time-injury frequency rate for Union North mine improved to 1.20 in
2012 from 1.30 in the same period in 2011.
The Union North Mine output of equivalent refined platinum production decreased by 30% to 63,700 ounces in 2012. Tonnes milled
decreased by 26% year on year to 1.73 million tonnes in 2012, due to the depletion of low grade surface material sources, the
expected decline in Merensky ore mining and the illegal industrial action which spread over from Rustenburg to Union North Mine in
October 2012. Square metres mined decreased by 22%, while 4E built-up head grade improved by 8% as a result of a significant
decline in processing of lower grade surface material. Productivity decreased by 19% year-on-year to 2.6m2 per total operating
employee.
Union South
Union South mine had one fatality in 2012. The lost-time-injury frequency rate improved to 1.08 in 2012, from 1.34 in the same
period in 2011.
The improved production performance of the first half of 2012 was eroded by the illegal industrial action in the second half of the year.
The mine's output of equivalent refined platinum production decreased by 19% to 132,000 ounces compared to 162,700 ounces in
2011. Square metres decreased by 16%, tonnes milled decreased by 11% and 4E built-up head grade declined by 8% due to
increased mining of UG2 ore. Productivity decreased by 12% year-on-year to 4.3m2 per total operating employee.
Mogalakwena
Regrettably, one employee was fatally injured in a moving machinery related incident in 2012. The lost-time injury frequency rate
deteriorated to 0.67 compared with 0.49 in 2011. The mine is focusing on focusing on enhancing safety management plans to
improve its safety performance.
Equivalent refined platinum production, at 300,200 ounces, was down 2% compared to the same period in 2011 due to lower
throughput at the concentrators and lower head grade, caused by lower production from the high grade Sandsloot pit. Production at
the Sandsloot pit was curtailed due to adverse geo-technical conditions at the bottom of the pit. Tonnes milled decreased by 3%
while the 4E built-up head grade decreased by 4%. The throughput constraints previously experienced at the North concentrator
have been resolved and the plant is now running at steady state level.
Unki
Unki mine had no fatalities in 2012 and has achieved 322,000 fatality-free shifts. The lost-time-injury frequency rate improved to
0.10 in 2012 from 0.18 in the same period in 2011.
Equivalent refined platinum production increased by 20% year-on-year to 62,100 ounces in 2012. The mine continued to exceed its
ramp up schedule. Square metres mined increased by 41% year-on-year, tonnes milled increased by 20%, labour productivity
improved by 17% to 12.6m2 per operating employee, while the 4E built-up head grade was down 6% due to the blasting of large
underground waste rock to establish infrastructure for future mining as well as the processing of lower grade material from the
surface stockpile.
JOINT VENTURE AND ASSOCIATE MINES
The joint venture and associate operations had a challenging start to the 2012 financial year with five employees losing their lives in
the first four months of the year in fall-of-ground incidents (two at Modikwa mine and one each at the Bokoni, Kroondal and BRPM
mines) compared with three fatalities in 2011. The joint-venture and associate mines subsequently proceeded to end the year on
258 days fatality free.
The overall lost-time injury-frequency rate per 200,000 hours deteriorated, from 0.93 in 2011 to 1.03 in 2012. There were
nevertheless notable reductions in the LTIFR at the BRPM, Mototolo, Bokoni and Pandora mines.
While the total number section 54 instructions at joint-venture and associate operations remained the same year-on-year at 48, the
total equivalent refined platinum ounces lost decreased from 25,000 ounces in 2011 to 22,000 ounces in 2012.
Modikwa
Regrettably, two employees lost their lives at Modikwa in a fall of ground incident in January 2012, after the mine had reached an
unprecedented 8.9 million fatality-free shifts. Production decreased by 4% compared with 2011, to 119,600 equivalent refined
platinum ounces. The decrease in production was largely attributable to a prolonged industrial action over wage negotiations, in
which approximately 11,000 equivalent refined platinum ounces were lost.
Mototolo
Mototolo was fatality free in 2012 and the lost-time-injury frequency rate improved by 23% to 0.44. Production increased by 9%
compared to 2011, to 118,800 equivalent refined platinum ounces. This was due to a 7% increase in tonnes milled to 206,000
tonnes per month, which exceeded the nameplate capacity of 200,000 tonnes per month.
Kroondal
Disappointingly, one employee lost his life in a fall of ground incident in April. Production increased by 2% compared to 2011, to
213,200 equivalent refined platinum ounces. The increase in production was largely attributable to the implementation of a revised
hanging-wall support regime to ensure safer and more productive operations. The mine also successfully migrated from contractor
mining to an owner-miner model during the second half of 2012.
Marikana
Marikana mine was placed on care and maintenance in June 2012 due to the low PGM price environment. Most employees (more
than 90%) were successfully redeployed at other operations. Production decreased by 44% to 26,400 equivalent refined platinum
ounces compared to 2011.
BRPM
Regrettably, one employee lost his life in a fall of ground incident in February 2012, shortly after the mine had achieved 2 million
fatality-free shifts. The lost-time injury-frequency rate at the mine improved by 26%, from 0.91 in 2011 to 0.68 in 2012. Production
decreased by 5% to 171,600 equivalent refined platinum ounces in 2012, principally due to safety-related production stoppages and
the volatile employee-relations environment in the second half of 2012.
Bokoni
Disappointingly, one employee was fatally injured in a fall of ground incident at Vertical Shaft in February. Notwithstanding the fatal
incident, the lost-time injury-frequency rate (LTIFR) improved by 21%, from 1.87 in 2011 to 1.49 in 2012. Production for 2012
decreased by 8% compared with 2011, to 55,100 equivalent refined platinum ounces, due to illegal industrial action which resulted
in lost production of 19,000 equivalent refined platinum ounces. The industrial action started on 1 October 2012 and ended on 9
December 2012. Prior to the industrial action, the mine had achieved significant improvements in production and equivalent refined
platinum production for the first nine months of 2012 had increased by 21% compared to the same period in 2011, to 53,900
ounces.
CAPITAL EXPENDITURE PROJECTS
Our capital projects division has achieved a record 1,453 fatality free days. A major focus on safety is ensuring projects are set up
in line with the company safety management system and standards.
Capital expenditure for 2012, excluding capitalised interest, amounted to R6,785 million, a decrease of 5% or R356 million from
2011. This was significantly reduced from the originally planned R9 billion, due to the capital rationing exercise implemented in
2012, as a result of the challenging economic and operating environment. Stay-in-business capital expenditure was R3,010 million
- R272 million lower than in 2011. Waste stripping capital expenses at Mogalakwena Mine decreased to R399 million in 2012 from
R563 million in 2011. Project capital expenditure was R3,376 million, up 2% or R80 million from 2011. Interest capitalised was R416
million, up 15% or R53 million from the previous year.
The majority of the project capital expenditure for 2012 was invested on the Twickenham Platinum Mine, Unki Mine, Mogalakwena
North Expansion, Slag Cleaning Furnace 2, Bathopele Phase 4 & 5 and the Khuseleka Ore Replacement Project.
The Twickenham Platinum Mine achieved 1,872 fatality free days. Current major work on the project includes primary and decline
development. The Slag Cleaning furnace 2 and Thembelani 2 projects have been stopped and were impaired, as highlighted above.
MINERAL RESOURCES AND RESERVES
Anglo American Platinum's total Ore Reserve tonnage increased by 9% to 1,609.6 million tonnes from 1479.1 million tonnes in
2011. The 4E content decreased by 3.0% to 170.8 million ounces from 176.1 million ounces in 2011.
Platreef (Mogalakwena Mine): The Ore Reserves have increased significantly due to the re-design of the Final Pit Shell. This new,
larger, design was the result of Pit Optimisation work done by Mogalakwena and has resulted in the conversion of additional 292.5
million tonnes of Mineral Resources to 22.24 million ounces of Ore Reserves.
The increase in the Mogalakwena Ore Reserves is offset by reallocation of previously reported Ore Reserves back to Mineral
Resources due to the current economic environment (economic assumptions) at:
- Tumela Mine: Re-planning of the 4-shaft area. Reallocated 61.1 million tonnes or 9.8 million ounces of UG2 reserves and
24.5 million tonnes or 4.5 million ounces of Merensky reserves
- Twickenham Mine UG2 Reef: In 2011 Ore Reserves were reported to 7 Level, but only the conversion of reserves up to 3
Level are feasible under anticipated capital constraints. Reallocated 50.9 million tonnes or 8.8 million ounces.
- Siphumelele 1 and 2 mines Merensky and UG2 Reef: Reallocated 16 million tonnes or 2.3 million ounces of 4E.
The Main Sulphide Zone (Unki Mine) Ore Reserve tonnage increased by 39% to 53.7 million tonnes from 38.7 million tonnes in
2011 and the 4E content increased by 38% to 6.5 million ounces from 4.7 million ounces mainly owing to conversion of Mineral
Resources to Ore Reserves: Additional new information resulted in higher resource classification confidence and as a result these
resources were converted to reserves.
The Mineral Resources, exclusive of Ore Reserve tonnage, decreased by 2.3% to 5,275.1 million tonnes from 5,399.1 million
tonnes in 2011, but the 4E content increased by 0.8% to 644.1 million ounces from 639.2 million ounces. The Mineral Resources
have changed mainly at:
Mogalakwena Mine (Platreef): In 2011 the interpretation of the elevated Platreef in localised areas to the west and below the
original 2011 pit shell was reported. It was highlighted that conceptual pit shell evaluations have indicated that the pit could extend
to the west and deeper to exploit some of these resources. During 2012 pit design test work has confirmed that these resources are
open pitable. An additional 307.5 million tonnes (equivalent to 23.37 million ounces) of Mineral Resources were converted to Ore
Reserves.
The decrease in the Mogalakwena Mineral resources is offset mainly by reallocation of previously reported Ore Reserves back to
Mineral Resources primarily due to the economic assumptions and secondarily due to the increase in the minimum mining cut
(change in mine layout) and new information.
Tumela, Twickenham and Siphumelele (Merensky and UG2 Reef): Approximately 88% of the 173.6 million tonnes or 31.2 million
ounces increase is related to the re-allocation of reserves back to resources while the remaining 12% is related to the increase in
mining cut and changes in geological losses.
During 2011, a new Resource evaluation was completed covering Unki South, Helvetia, Paarl, KV and SR projects (contained
within the special mining lease held by Southridge Limited). An independent external review of these Mineral Resources was
completed during the first quarter of 2012. As a consequence the Mineral Resource tonnage, exclusive of Ore Reserves, increased
by 134% to 186.2 million tonnes from 79.5 million tonnes in 2011 and the 4E ounce content increased by 147% to 26.0 million
ounces from 10.5 million ounces in 2011. The 2011 annual report disclosed the Mineral Resources of the Unki East and West
mines while the 2012 annual report incorporates all projects in the Mineral Resources.
BOARD AND EXCO CHANGES
Thomas Wixley retired as a non-executive director on 30 March 2012. On 30 June 2012, the Company Secretary, Sarita Martin,
resigned from the company. The process to find a successor is ongoing. Albertinah Kekana resigned as non-executive director with
effect from 25 September 2012. John Vice was appointed independent non-executive director with effect from 1 November 2012.
Sonja Sebotsa resigned as an independent non-executive director with effect from 1 February 2013.
Neville Nicolau resigned on 19 July 2012 as Chief Executive Officer ("CEO") of the Company. The Board of Anglo American
Platinum Limited appointed Chris Griffith as the company's new CEO with effect from 1 September 2012. In the interim period until
1 September 2012, Bongani Nqwababa, Finance Director of Anglo American Platinum, fulfilled the role of CEO.
Khanyisile Kweyama, Executive Head of Human Resources, was appointed as Executive Director of Anglo American South Africa
with effect from
1 September 2012. The process of finding her replacement is still underway. On 15 October 2012, Khanyisile Kweyama was
appointed as a non-executive director and Godfrey Gomwe resigned as a non-executive director of the Company.
OUTLOOK
Despite the less than optimistic outlook for global economic growth, Anglo American Platinum believes that the global platinum
market is likely to be balanced in the short term, as result of reduced production by Anglo American Platinum and possible supply
disruptions. If South African platinum production returned to pre-strike levels, then the market would be in oversupplied. Overall,
gross platinum demand is expected to grow marginally in 2013, despite the lack of economic growth in the European market.
Tightening emissions legislation in all markets, particularly the implementation of Euro VI and the overall global increase in vehicle
production, especially in China and India, are expected to offset the lower volumes in Japan, North America and Europe.
Jewellery demand is expected to grow, primarily due to increased disposable income spent on platinum jewellery in China and
India, and underpinned by an increase in organised retail and strong marketing campaigns. Continued expansion of retail outlets in
mainland China by Hong Kong jewellers continues to support demand growth.
Industrial demand for platinum in 2012 is expected to recover somewhat in 2013 as LCD glass, glass fibre and chemical capacity
growth resumes. The growing popularity of cloud computing and the associated demand for high-capacity hard drives will increase
platinum demand from the electrical sector.
Primary supply challenges are expected to continue during 2013 with higher mining inflation putting pressure on margins and
increased risk of supply disruptions from industrial action in South Africa. Supplies of metal from the recycle of spent autocatalysts
are expected to rise as pipeline stocks are processed.
Palladium demand is expected to grow in 2013, supported by global vehicle production growth and tightening emissions legislation,
with growth in gasoline vehicle production in China remaining a dominant driver. Industrial demand, dominated by the electronics
sector, is expected to remain flat in 2013. Primary supply is also expected to be constrained by the same factors impacting
platinum production and further decline in Russian stock sales. The palladium market is therefore expected to remain in deficit in
2013.
The Rhodium market is expected to remain depressed in 2013. Autocatalyst and new industrial demand is expected to increase
modestly. Recycling continues to grow resulting in the market remaining in balance.
Anglo American Platinum's revised commercial strategy includes diversifying our customer portfolio and increasing net revenue.
During 2012, contracts representing 20% of sales were either renegotiated or terminated, which improved 2012 revenue by
approximately R100 million. These actions are forecast to have a full year impact of approximately R170 million in 2013. Existing
contracts attracting discounts and commissions, that terminate in 2013, will not be renewed and will improve revenue in 2014 by a
further R600 million. Our revised commercial strategy is on track to achieve over R700 million per annum profit before tax
improvement from the end of 2013, reaching R1 billion per annum by 2015.
Anglo American Platinum announced the recommendations of its portfolio review on the 15th of January 2013. The key objective of
the portfolio review was to thoroughly assess the structural changes that had eroded the profitability of the company and the
changes required to create a sustainable, competitive and profitable Anglo American Platinum. We have reviewed the entire value
chain, from overheads to direct costs, resources to mining to processing, marketing and commercial strategy, as well as the shape
and size of portfolio which will leverage our industry leading resource base. The consultation with stakeholders and thereafter, the
implementation of the proposals of the portfolio review and overheads review is now our key strategic focus.
The key recommendation of the portfolio review is the plan to reduce our production target to between 2.1 and 2.3 million ounces
per annum to more closely align output with expected demand while retaining the flexibility to meet potential demand upside. This
will be achieved through placing of Khuseleka and Khomanani mines (four shafts) on long-term care and maintenance and by
consolidating Rustenburg into three operating mines. Production at Rustenburg mines would reduce to a sustainable level of
320,000350,000 ounces per year. While we plan to keep our production profile flat, we would replace production from high-cost
assets with production from low-cost, high-quality assets over the next decade. Our production profile indicates excess smelting
and refining capacity in the short to medium term and provides an opportunity to improve capital efficiency.
The proposed portfolio review recommendations continue to require extensive consultation with government, organised labour and
other stakeholders prior to implementation. At the meeting of the 28th of January 2013, Anglo American Platinum, the Department of
Mineral Resources and labour unions resolved to postpone the continuation of the Section 189 process under the Labour Relations
Act, which had commenced on 15 January 2013, in order to allow the extensive consultation to take place. We also agreed that the
consultation process will take no more than 60 days, beginning 30 January 2013.
Having set the level of targeted production, we are in the process of adjusting our cost base to align with the proposed footprint. We
also propose to right-size and simplify the overhead structure to support the proposed portfolio option. This is one of the key
proposals of the portfolio review and it is also affected by the postponement of the S189 process. Our asset optimisation and supply
chain activities are well entrenched and continue to deliver value.
Cost inflation will, however, continue to present the company with challenges this year. 'Mining inflation', as measured by the
Producers Price Index, remained well above South African CPI during 2012, at 7.8%, compared to an average inflation rate of 5.8%
for the country; and a similar differential is expected in 2013. During the first half of 2013, we will see another increase in Eskom's
electricity tariffs while the second half of the year will see an increase in wages. Illegal industrial action presents new challenges for
the company as it has impacted production and costs significantly in 2012.
Based on the revised targeted production profile of between 2.1 and 2.3 million ounces of refined platinum for 2013, Anglo
American Platinum aims to contain cash unit costs to between R16,000 and R16,500 per equivalent refined platinum ounce. The
unit cost target excludes the cost of implementing the portfolio review proposals.
We have aligned our project portfolio with the proposed portfolio option to ensure effective capital allocation and appropriate
prioritisation of projects. The review resulted in significant changes to our capital expenditure targets. We have reduced our capital
expenditure target for 2013 to 2015 by approximately R11 billion and for the next decade by 25%, to R100 billion.
Capital expenditure for the next three years is forecast to be between R6 and R7 billion per annum, excluding capitalised interest.
We will continue to optimise capital allocation to focus on the highest return and lowest risk opportunities.
Anglo American Platinum aims to maintain its stated target dividend cover of between 2 and 3 times, after taking into account the
company's future capital expenditure requirements and the market outlook.
Anglo American Platinum is committed to the highest standards of safety and continues to make a meaningful and sustainable
difference in the development of the communities around its operations.
Johannesburg, South Africa
1 February 2013
ADMINISTRATION
EXECUTIVE DIRECTORS
CI Griffith (Chief Executive Officer)
B Nqwababa (Finance Director)
INDEPENDENT NON-EXECUTIVE DIRECTORS
MV Moosa (Deputy Chairman and Lead Independent Non-executive Director)
RMW Dunne (British)
Prof BA Khumalo
WE Lucas-Bull
JM Vice
NON-EXECUTIVE DIRECTORS
CB Carroll (Chairman)(American)
BR Beamish
KT Kweyama
R Médori (French)
ALTERNATE DIRECTORS
PG Whitcutt
COMPANY SECRETARY (ACTING)
Kevin Lester
kevin.lester@angloamerican.com
13th Floor, 55 Marshall Street, Johannesburg 2001
PO Box 62179, Marshalltown 2107
Telephone +27 (0) 11 638 3425
Facsimile +27 (0) 11 373 5111
REGISTERED OFFICE
55 Marshall Street, Johannesburg 2001
PO Box 62179, Marshalltown 2107
Telephone +27 (0) 11 373 6111
Facsimile +27 (0) 11 373 5111
+27 (0) 11 834 2379
SPONSOR
Rand Merchant Bank
a division of FirstRand Bank Limited
REGISTRARS
Computershare Investor Services Proprietary Limited
70 Marshall Street
Johannesburg 2001
PO Box 61051
Marshalltown 2107
Telephone +27 (0) 11 370 5000
Facsimile +27 (0) 11 688 5200
AUDITORS
Deloitte & Touche
Deloitte & Touche Place
The Woodlands
Woodmead
Sandton 2196
INVESTOR RELATIONS
Kgapu Mphahlele
kgapu.mphahlele@angloamerican.com
Telephone +27 (0) 11 373 6239
Date: 04/02/2013 08:00:00 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
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.
Sharenet Sites 
