Wrap Text
Reviewed condensed consolidated interim financial result for the six months ended 30 June 2017
ANGLO AMERICAN PLATINUM LIMITED
Incorporated in the Republic of South Africa
Registration number: 1946/022452/06
Share code: AMS
ISIN: ZAE000013181
(Amplats, the Company, the Group or Anglo American Platinum)
REVIEWED CONDENSED CONSOLIDATED INTERIM FINANCIAL RESULTS
for the six months ended 30 June 2017
Anglo American Platinum Limited's condensed consolidated reviewed interim financial results for the six months ended
30 June 2017 have been independently reviewed by the Group's external auditors. The preparation of the Group's reviewed
interim results for the six months ended 30 June 2017 was supervised by the Finance Director, Mr I Botha, CA(SA).
PERFORMANCE HIGHLIGHTS
Lost-time injury-frequency rate (LTIFR) per 200,000 hours worked
2016: 0.75
2017: 0.63
Refined platinum production
2016: 1.01 Moz
2017: 1.11 Moz
Produced platinum production
2016: 1.15 Moz
2017: 1.19 Moz
Headline earnings
2016: R1.65 billion**
2017: R0.75 billion
Net debt
2016: R9.92 billion
2017: R5.91 billion
Impairments
2016: R0.22 million
2017: R2.21 billion
** Restated.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Restated**
Reviewed Reviewed Audited
six months ended Year ended
30 June 30 June % 31 December
R millions Notes 2017 2016 change 2016
Gross sales revenue 3 27,313 30,663 61,976
Commissions paid (8) (8) (16)
Net sales revenue 27,305 30,655 (11) 61,960
Cost of sales (24,489) (26,971) (9) (56,096)
Gross profit on metal sales 4 2,816 3,684 (24) 5,864
Other net expenditure 7 (263) (306) (600)
Loss on impairment and scrapping of property, plant and equipment (1,520) (15) (22)
Market development and promotional expenditure (349) (317) (683)
Operating profit 684 3,046 (78) 4,559
Impairment of investments in associates 23 (997) (104) (283)
Impairment of non-current financial assets 23 (283) (111) (111)
Share-based payment expense for facilitation of BEE investment in Atomatic - - (156)
Loss on disposal of Rustenburg Mine - - (1,681)
Interest expensed 8 (564) (691) (1,329)
Interest received 148 58 149
Remeasurement of loans and receivables 31 32 27
(Losses)/gains from associates (net of taxation) (179) 34 (115)
(Loss)/profit before taxation (1,160) 2,264 (151) 1,060
Taxation 9 (150) (741) (364)
(Loss)/profit for the period (1,310) 1,523 (186) 696
Other comprehensive (loss)/income, net of income tax
Items that will be reclassified subsequently to profit or loss (308) 21 (465)
Deferred foreign exchange translation losses (230) (385) (769)
Actuarial loss on employees' service benefit obligation - (6) (6)
Net (losses)/gains on available for sale investments (78) 412 310
Total comprehensive (loss)/income for the period (1,618) 1,544 231
(Loss)/profit attributable to:
Owners of the Company (1,187) 1,540 (177) 632
Non-controlling interest (123) (17) 64
(1,310) 1,523 696
Total comprehensive (loss)/income attributable to:
Owners of the Company (1,495) 1,561 167
Non-controlling interest (123) (17) 64
(1,618) 1,544 231
Earnings per share
(Loss)/earnings per ordinary share (cents)
- Basic 10 (453) 588 (177) 241
- Diluted 10 (452) 587 (177) 240
Headline earnings 10 747 1,646 (55) 1,867
** 30 June 2016 amounts restated due to prior period errors. The prior period error note 52 is disclosed in the audited
annual financial statements of Anglo American Platinum Limited for the year ended 31 December 2016 which are available
publicly.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Restated**
Reviewed Reviewed Audited
six months ended Year ended
30 June 30 June 31 December
R millions Notes 2017 2016 2016
ASSETS
Non-current assets 48,993 52,152 51,662
Property, plant and equipment 36,478 39,380 38,574
Capital work-in-progress 4,995 6,417 4,892
Investments in associates 11 3,210 3,969 3,963
Investments held by environmental trusts 1,063 914 907
Other financial assets 12 3,247 1,472 3,326
Current assets 29,065 24,477 26,035
Inventories 13 19,314 17,132 16,369
Trade and other receivables 1,474 1,318 2,140
Other assets 936 702 1,554
Other current financial assets 49 24 45
Taxation 220 - 470
Cash and cash equivalents 14 7,072 5,301 5,457
Total assets 78,058 76,629 77,697
EQUITY AND LIABILITIES
Share capital and reserves
Share capital 27 27 27
Share premium 22,667 22,498 22,498
Foreign currency translation reserve 2,087 2,701 2,317
Available-for-sale reserve 256 436 334
Retained earnings 13,410 15,501 14,840
Non-controlling interest (481) (449) (234)
Shareholders' equity 37,966 40,714 39,782
Non-current liabilities 18,728 21,494 19,187
Non-current interest-bearing borrowings 15 9,380 10,904 9,398
Obligations due under finance leases 16 97 95 96
Environmental obligations 1,993 2,525 1,938
Employees' service benefit obligations 17 17 17
Other financial liabilities 17 229 - 219
Deferred taxation 7,012 7,953 7,519
Current liabilities 21,364 14,421 18,728
Current interest-bearing borrowings 15 3,491 4,210 3,267
Obligations due under finance leases within one year 16 16 15 15
Trade and other payables 10,824 7,391 10,241
Other liabilities 18 6,417 2,573 4,623
Other current financial liabilities 17 603 - 567
Share-based payment provision 13 15 15
Taxation - 217 -
Total equity and liabilities 78,058 76,629 77,697
** 30 June 2016 amounts restated due to prior period errors. The prior period error note 52 is disclosed in the audited
annual financial statements of Anglo American Platinum Limited for the year ended 31 December 2016 which are available
publicly.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Restated**
Reviewed Reviewed Audited
six months ended Year ended
30 June 30 June 31 December
R millions 2017 2016 2016
Cash flows from operating activities
Cash receipts from customers 27,763 30,784 61,783
Cash paid to suppliers and employees (21,196) (24,429) (48,187)
Cash from operations 6,567 6,355 13,596
Interest paid (net of interest capitalised) (510) (556) (1,071)
Taxation paid (383) (399) (1,125)
Net cash from operating activities 5,674 5,400 11,400
Cash flows used in investing activities
Purchase of property, plant and equipment (includes interest capitalised) (1,779) (2,168) (5,018)
Proceeds from sale of plant and equipment 9 76 140
Proceeds on sale of Rustenburg Mine (net of cash disposed) - - 1,356
Rustenburg Mine purchase of concentrate pipeline (1,529) - (1,418)
Funding to associates (424) (156) (448)
Acquisition of equity investment in associate - - (34)
Acquisition of available for sale investment in Greyrock (17) - (36)
Acquisition of Convertible notes in United Hydrogen (4) - (39)
Redemption/(acquisition) of preference shares in Baphalane Siyanda Chrome Company 39 - (84)
Advances made to Plateau Resources Proprietary Limited (214) (111) (312)
Net decrease in investments held by environmental trusts - - 2
Interest received 59 45 95
Growth in environmental trusts - 3 7
Other (122) (39) (40)
Net cash used in investing activities (3,982) (2,350) (5,829)
Cash flows (used in)/from financing activities
Purchase of treasury shares for the Bonus Share Plan (150) (163) (163)
Purchase of Anglo American plc shares for employees - (6) (7)
Proceeds from/(repayment of) interest-bearing borrowings 205 781 (1,668)
Repayment of finance lease obligation (8) (8) (16)
Unpaid dividends written back - (1) -
Funding of non-controlling interests - - 112
Cash distributions to minorities (124) (24) (44)
Net cash (used in)/from financing activities (77) 579 (1,786)
Net increase in cash and cash equivalents 1,615 3,629 3,785
Cash and cash equivalents at beginning of period 5,457 1,672 1,672
Cash and cash equivalents at end of period 7,072 5,301 5,457
Movement in net debt
Net debt at beginning of period (7,319) (12,769) (12,769)
Net cash from operating activities 5,674 5,400 11,400
Net cash used in investing activities (3,982) (2,350) (5,829)
Other (285) (204) (121)
Net debt at end of period (5,912) (9,923) (7,319)
Made up as follows:
Cash and cash equivalents 7,072 5,301 5,457
Non-current interest-bearing borrowings (9,380) (10,904) (9,398)
Obligations due under finance lease (97) (95) (96)
Current interest-bearing borrowings (3,491) (4,210) (3,267)
Obligations due under finance lease within one year (16) (15) (15)
(5,912) (9,923) (7,319)
**30 June 2016 amounts restated due to prior period errors. The prior period error note 52 is disclosed in the audited
annual financial statements of Anglo American Platinum Limited for the year ended 31 December 2016 which are available
publicly.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Foreign
currency Available- Non-
Share Share translation for-sale Retained controlling
capital premium reserve reserve earnings interest Total
Rm Rm Rm Rm Rm Rm Rm
Balance as at 31 December 2015 (audited and restated**) 27 22,395 3,086 24 14,120 (408) 39,244
Total comprehensive income for the period (385) 412 1,534 (17) 1,544
Tax charged directly to equity -* -
Cash distribution to minorities (24) (24)
Shares acquired in terms of Bonus Share Plan (BSP) - treated as treasury shares (-)* (163) (163)
Shares vested in terms of the BSP -* 266 (266) -
Equity-settled share-based compensation 141 141
Shares purchased for employees (27) (27)
Unpaid dividends claimed (1) (1)
Balance as at 30 June 2016 (reviewed and restated**) 27 22,498 2,701 436 15,501 (449) 40,714
Total comprehensive loss for the period (384) (102) (908) 81 (1,313)
Non-controlling interest's 26% share in subsidiary 112 112
Cash distributions to minorities (20) (20)
Equity-settled share-based compensation 248 42 290
Shares purchased for employees (2) (2)
Unpaid dividends written back 1 1
Balance as at 31 December 2016 (audited) 27 22,498 2,317 334 14,840 (234) 39,782
Total comprehensive income for the period (230) (78) (1,187) (123) (1,618)
Deferred tax charged directly to equity (-)* -
Cash distributions to minorities (124) (124)
Shares acquired in terms of BSP - treated as treasury shares (-)* (150) (150)
Shares vested in terms of the BSP -* 319 (319) -
Equity-settled share-based compensation 80 80
Shares purchased for employees (4) (4)
Balance as at 30 June 2017 (reviewed) 27 22,667 2,087 256 13,410 (481) 37,966
* Less than R500 000.
**30 June 2016 amounts restated due to prior period errors. The prior period error note 52 is disclosed in the audited
annual financial statements of Anglo American Platinum Limited for the year ended 31 December 2016 which are available
publicly.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. The condensed consolidated interim financial statements are prepared in accordance with and containing the
information required by IAS 34 Interim Financial Reporting, the SAICA Financial Reporting Guides as issued by the
Accounting Practices Committee and Financial Pronouncements as issued by Financial Reporting Standards Council and the
requirements of the Companies Act of South Africa.
The accounting policies applied in the preparation of these condensed consolidated interim financial statements are in
terms of International Financial Reporting Standards and are consistent with those applied in the financial statements
for the year ended 31 December 2016.
2. SEGMENTAL INFORMATION**
Net sales revenue Operating contribution
Reviewed Audited Reviewed Audited
Six months ended Year ended Six months ended Year ended
30 June 30 June 31 December 30 June 30 June 31 December
R millions 2017 2016 2016 2017 2016 2016
Operations
Mogalakwena Mine 6,450 7,127 14,227 2,022 2,506 4,785
Amandelbult Mine 4,846 5,175 10,870 422 670 1,367
Unki Mine 1,038 1,103 2,227 84 (70) 22
Twickenham Project 15 148 215 (169) (315) (448)
Modikwa Mine1 672 773 1,608 48 24 18
Mototolo Mine1 590 743 1,418 127 188 290
Kroondal Mine1 1,329 1,582 3,101 110 256 318
Rustenburg Mine2 - 5,549 9,307 - 515 410
Union Mine 1,814 1,888 3,958 416 382 596
Total - mined 16,754 24,088 46,931 3,060 4,156 7,358
Purchased metals 10,551 6,567 15,029 1,024 632 1,325
27,305 30,655 61,960 4,084 4,788 8,683
Other costs (1,268) (1,104) (2,819)
Gross profit on metal sales 2,816 3,684 5,864
1 Anglo American Platinum Limited's share (excluding purchase of concentrate).
2 Effective 1 November 2016, Rustenburg Mine was disposed of.
Information reported to the Executive Committee of the Group for purposes
of resource allocation and assessment of
segment performance is done on a mine by mine basis.
**30 June 2016 amounts restated due to prior period errors. The prior period
error note 52 is disclosed in the audited
annual financial statements of Anglo American Platinum Limited for
the year ended 31 December 2016 which are available
publicly.
Reviewed Audited
six months ended Year ended
30 June 30 June 31 December
R millions 2017 2016 2016
3. GROSS SALES REVENUE
Sales revenue emanated from the following principal regions:
Precious metals 24,303 28,086 55,674
Asia 9,287 11,620 23,960
Europe 10,975 13,646 25,186
South Africa 2,215 1,881 3,759
North America 1,826 939 2,769
Base metals 2,018 2,298 4,829
South Africa 345 270 635
Rest of the world 1,673 2,028 4,194
Other 992 279 1,473
South Africa 91 50 118
Rest of the world 901 229 1,355
27,313 30,663 61,976
Gross sales revenue by metal:
Platinum 14,181 18,224 35,156
Palladium 6,584 6,505 13,644
Rhodium 1,530 1,499 3,062
Nickel 1,493 1,785 3,787
Other 3,525 2,650 6,327
Gross sales revenue 27,313 30,663 61,976
Reviewed Audited
six months ended Year ended
30 June 30 June 31 December
R millions 2017 2016 2016
4. GROSS PROFIT ON METAL SALES**
Gross sales revenue 27,313 30,663 61,976
Commissions paid (8) (8) (16)
Net sales revenue 27,305 30,655 61,960
Cost of sales (24,489) (26,971) (56,096)
On-mine (12,926) (16,780) (32,812)
Cash operating costs (11,529) (15,105) (29,615)
Depreciation (1,397) (1,675) (3,197)
Purchase of metals and trading activities (9,640) (6,704) (13,518)
Smelting (1,735) (1,630) (3,515)
Cash operating costs (1,526) (1,332) (2,834)
Depreciation (209) (298) (681)
Treatment and refining (1,887) (1,687) (3,619)
Cash operating costs (1,518) (1,327) (2,868)
Depreciation (369) (360) (751)
Increase in metal inventories 2,967 934 187
Other costs (note 6) (1,268) (1,104) (2,819)
Gross profit on metal sales 2,816 3,684 5,864
Gross profit margin (%) 10.3 12.0 9.5
5. DEPRECIATION OF PROPERTY, PLANT AND EQUIPMENT**
Depreciation of plant and equipment comprises the following categories:
Operating assets 1,975 2,333 4,629
Mining 1,397 1,675 3,197
Smelting 209 298 681
Treatment and refining 369 360 751
Depreciation included in other costs 9 20 38
1,984 2,353 4,667
6. OTHER COSTS
Other costs comprises the following principal categories:
Share-based payments - other share schemes 88 161 265
Corporate costs 223 161 364
Royalties 209 234 493
Contributions to education and community development 143 72 419
Research 71 102 251
Transport of materials 344 208 565
Exploration 27 50 95
Other 163 116 367
1,268 1,104 2,819
**30 June 2016 amounts restated due to prior period errors. The prior period
error note 52 is disclosed in the audited
annual financial statements of Anglo American Platinum Limited for
the year ended 31 December 2016 which are available
publicly.
Reviewed Audited
six months ended Year ended
30 June 30 June 31 December
R millions 2017 2016 2016
7. OTHER NET EXPENDITURE**
Other net expenditure comprises the following principal categories:
Net realised and unrealised foreign exchange (losses)/gains (258) 29 (150)
Project maintenance costs1 (70) (61) (233)
Restructuring and other related costs (8) (344) (342)
(Loss)/profit on disposal of property, plant and equipment and conversion rights (4) 1 (23)
Other - net 77 69 148
(263) (306) (600)
1 Project maintenance costs comprise costs incurred to maintain land held for
future projects and costs to keep
projects on care and maintenance. It also includes the costs of the operations
put onto care and maintenance once the
decision was made.
8. INTEREST EXPENSED
Interest expensed (519) (583) (1,098)
Interest paid on financial liabilities classified as liabilities at amortised cost1 (620) (749) (1,421)
Less: capitalised 101 166 323
Time value of money adjustment to environmental obligations (45) (108) (231)
Decommissioning (33) (73) (154)
Restoration (12) (35) (77)
(564) (691) (1,329)
1 Includes interest paid to Anglo American SA Finance Limited of R545 million
at 30 June 2017 (30 June 2016: R536
million; 31 December 2016: R1,111 million).
% % %
9. TAXATION**
A reconciliation of the standard rate of South African normal taxation
to that charged in the statement of
comprehensive income is as follows:
South African normal tax rate 28.0 28.0 28.0
Disallowable items (1.6) 0.8 9.7
Share-based payment expense for facilitation of BEE investment in Atomatic - - 4.1
Employee housing expenditure disallowed - - 4.3
Impairment of loans and investments (30.9) 2.7 10.4
Impairment of Union Mine (5.4) - -
Prior year underprovision 1.5 0.8 2.3
Effect of after-tax share of losses from associates (4.3) (0.4) 3.0
Interim effective tax rate adjustment 1.2 0.6 -
Difference in tax rates of subsidiaries (1.9) (1.0) (3.1)
Impact of disposal of Rustenburg Mine - - (27.5)
Zimbabwean AIDS levy - - 1.3
Other 0.5 1.2 1.8
Effective tax rate (12.9) 32.7 34.3
** 30 June 2016 amounts restated due to prior period errors. The prior period
error note 52 is disclosed in the audited
annual financial statements of Anglo American Platinum Limited for the
year ended 31 December 2016 which are available
publicly.
Reviewed Audited
six months ended Year ended
30 June 30 June 31 December
R millions 2017 2016 2016
10. RECONCILIATION BETWEEN (LOSS)/PROFIT AND HEADLINE EARNINGS**
(Loss)/profit attributable to owners of the Company (1,187) 1,540 632
Adjustments
Net profit/(loss) on disposal of property, plant and equipment 5 (12) 23
Tax effect thereon (1) 3 (6)
Asset scrappings 30 15 22
Tax effect thereon (8) (4) (6)
Impairment of investments in associate: Bokoni 45 104 130
Impairment of investments in associate: Pandora - - 153
Impairment of investments in associate: BRPM 952 - -
Impairment of Union Mine 1,490 - -
Tax effect thereon (355) - -
Non-controlling interests' share (224) - -
Loss on disposal on Rustenburg Mine - - 1,681
Tax effect thereon - - (762)
Headline earnings 747 1,646 1,867
Shares
Number of ordinary shares in issue (millions) 268.5 268.2 268.3
Weighted average number of ordinary shares in issue (millions) 262.2 261.8 261.9
Weighted average number of diluted ordinary shares in issue (millions) 262.9 262.5 263.0
(Loss)/earnings per ordinary share (cents)
- Basic (453) 588 241
- Diluted (452) 587 240
Attributable headline earnings per ordinary share (cents)
- Headline 285 629 713
- Diluted 284 627 710
11. INVESTMENTS IN ASSOCIATES
Unlisted
Bafokeng-Rasimone Platinum Mine (BRPM)1
Carrying value of investment 2,929 3,526 3,665
Richtrau No 123 Proprietary Limited
Carrying value of investment 5 5 5
Peglerae Hospital Proprietary Limited
Carrying value of investment 56 52 56
Hydrogenious Technologies GmbH
Carrying value of investment 41 17 45
Unincorporated associate - Pandora2
Carrying value of investment 179 369 192
3,210 3,969 3,963
1 The equity investment in BRPM was partially impaired during the
six months ended 30 June 2017. Refer note 23.
2 The equity investment in Pandora was partially impaired during
the year ended 31 December 2016.
** 30 June 2016 amounts restated due to prior period errors.
The prior period error note 52 is disclosed in the audited
annual financial statements of Anglo American Platinum Limited for
the year ended 31 December 2016 which are available
publicly.
Reviewed Audited
six months ended Year ended
30 June 30 June 31 December
R millions 2017 2016 2016
12. OTHER FINANCIAL ASSETS
Loans carried at amortised cost
Loans to Plateau Resources Proprietary Limited (Plateau)1 201 - 201
Loan to ARM Mining Consortium Limited 65 66 65
Advance to Bakgatla-Ba-Kgafela traditional community2 140 189 200
Convertible notes in United Hydrogen Group Inc. 35 29 33
Preference share investment in Baphalane Siyanda Chrome Company 47 - 84
Other 100 75 103
588 359 686
Available-for-sale investments carried at fair value
Investment in Royal Bafokeng Platinum Limited (RB Plat) 766 990 798
Investment in Wesizwe Platinum Limited 116 106 161
Investment in Greyrock Energy Inc. (Greyrock) 53 - 34
Food Freshness Technology Holdings 50 17 49
985 1,113 1,042
Investments carried at fair value through profit or loss
Deferred consideration on the sale of Rustenburg Mine 1,674 - 1,598
Total other financial assets 3,247 1,472 3,326
1 Loans to Plateau were partially impaired during the six months ended 30 June 2017. Refer note 23.
2 The loan to Bakgatla-Ba-Kgafela was partially impaired during the six months ended 30 June 2017.
13. INVENTORIES**
Refined metals 3,401 1,613 3,165
At cost 2,062 1,266 1,665
At net realisable value 1,339 347 1,500
Work-in-process 13,326 12,881 10,593
At cost 5,939 12,403 5,396
At net realisable value 7,387 478 5,197
Trading metal originating from third parties at fair value less costs of disposal1 - 14 3
Total metal inventories 16,727 14,508 13,761
Stores and materials at cost less obsolescence provision 2,587 2,624 2,608
19,314 17,132 16,369
1 Trading metal comprises metal acquired from third parties in a refined state,
and which is valued at spot prices at
the end of the reporting period.
14. CASH AND CASH EQUIVALENTS
Cash on deposit and on hand 7,072 5,201 5,349
Cash investments held by environmental trusts - 100 108
7,072 5,301 5,457
**30 June 2016 amounts restated due to prior period errors. The prior period
error note 52 is disclosed in the audited
annual financial statements of Anglo American Platinum Limited for the
year ended 31 December 2016 which are available
publicly.
Reviewed Audited
six months ended Year ended
30 June 30 June 31 December
R millions 2017 2016 2016
15. INTEREST-BEARING BORROWINGS
The Group has the following borrowing facilities:
Committed facilities 22,271 22,300 22,286
Uncommitted facilities 5,785 8,881 5,824
Total facilities 28,056 31,181 28,110
Less: Facilities utilised1 (12,871) (15,114) (12,629)
Non-current interest bearing borrowings (9,380) (10,904) (9,398)
Current interest bearing borrowings (3,491) (4,210) (3,231)
Available 15,185 16,067 15,481
Total external borrowings 12,871 15,114 12,629
Deferred income top-up - - 36
Total interest-bearing borrowings 12,871 15,114 12,665
Weighted average borrowing rate (%) 8.74 8.57 8.80
1 Includes R9,100 million and R3,457 million (30 June 2016: R4,179 million; 31 December 2016: R3,199 million) owing to
Anglo American SA Finance Limited on the committed and uncommitted facilities respectively at the end of each period.
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. R314 million (30 June 2016 R344 million; 31 December 2016 R329 million)
is committed for more than five years. R20,157 million (30 June 2016 R19,657 million; 31 December 2016 R19,657 million)
of the facilities is committed for one to five years; R1,300 million (30 June 2016 R2,300 million; 31 December 2016
R1,300 million) is committed for a rolling period of 364 days; while the rest is committed for less than 364 days.
The Company has adequate committed facilities to meet its future funding requirements.
16. OBLIGATIONS DUE UNDER FINANCE LEASES
The Group holds, under finance lease, an energy recovery plant at the Waterval Smelter site in terms of an agreement
assessed to be a lease in terms of IFRIC 4 Determining whether an Arrangement contains a Lease. The lease term is for a
period of 15 years, whereafter the Group has the option to purchase the plant at fair value. The interest rate implicit
in the lease amounts to 17.74%.
Reviewed Audited
six months ended Year ended
30 June 30 June 31 December
R millions 2017 2016 2016
Finance lease obligations 113 110 111
Less: Short-term portion included in current liabilities (16) (15) (15)
Long-term portion included in non-current liabilities 97 95 96
17. OTHER FINANCIAL LIABILITIES
Non-current
Financial liabilities carried at fair value
Deferred consideration payable on sale of Rustenburg Mine 229 - 219
229 - 219
Current
Financial liabilities carried at amortised cost
Platinum Producers' Environmental Trust payable to Sibanye1 295 - 282
Financial liabilities carried at fair value
Fair value of forward foreign exchange contracts 2 - 3
Fair value of fixed price commodity contracts 13 - -
Deferred consideration payable on sale of Rustenburg Mine 293 - 282
603 - 567
Total other financial liabilities 832 - 786
1 Investments held in the Platinum Producers'
Environmental trust attributable to Rustenburg Mine.
Reviewed Audited
six months ended Year ended
30 June 30 June 31 December
R millions 2017 2016 2016
18. OTHER LIABILITIES**
Accrual for leave pay 905 1,270 914
Liabilities for the return of metal1 233 780 535
Deferred income liability2 4,336 - 2,015
Other 943 523 1,159
6,417 2,573 4,623
1 Liabilities for the return of metal comprise provisions arising from metal leasing transactions, the best estimate of
which is determined with reference to the spot metal price at the end of the reporting period applied to the ounces of
metal obtained under such leasing arrangements.
2 The deferred income liability represents a payment in advance for metal to be delivered in six months time. The
deferred income is received monthly on a rolling six-month basis over five years of the contract. Cash and cash
equivalents are held as a hedging instrument in respect of the foreign exchange risk of this liability.
19. COMMITMENTS
Mining and process property, plant and equipment
Contracted for 1,770 1,206 1,106
Not yet contracted for 5,987 7,245 5,649
Authorised by the directors 7,757 8,451 6,755
Allocated for:
Project capital 2,687 4,027 3,114
- within one year 498 448 408
- thereafter 2,189 3,579 2,706
Stay-in-business capital 5,070 4,424 3,641
- within one year 2,005 983 2,312
- thereafter 3,065 3,441 1,329
Capital commitments relating to the group's share in associates
Contracted for 733 265 167
Not yet contracted for 1,529 1,671 2,305
Authorised by the directors 2,262 1,936 2,472
Other
Operating lease rentals - buildings 9 44 27
Due within one year 9 35 27
Due within two to five years - 9 -
These commitments will be funded from existing cash resources, future operating cash flows, borrowings and any other
funding strategies embarked on by the Group.
**30 June 2016 amounts restated due to prior period errors. The prior period error note 52 is disclosed in the audited
annual financial statements of Anglo American Platinum Limited for the year ended 31 December 2016 which are available
publicly.
20. FAIR VALUE DISCLOSURES
This announcememt does not include information required pursuant to paragraph 15A(j) of IAS 34. The full interim report
is available on the Company's website, at the Company's registered office and upon request.
21. CONTINGENT LIABILITIES
Letters of comfort have been issued to financial institutions to cover certain banking facilities. There are no
encumbrances over Group assets.
The Group is the subject of various claims, which are individually immaterial and are not expected , in aggregate, to
result in material losses.
The Group has provided guarantees to certain financial institutions to cover various metal borrowing facilities. At 30
June 2017 these guarantees amounted to R1,177 million (30 June 2016: R1,322 million; 31 December 2016: R1,236 million).
The Group has, in the case of some of its mines, provided the Department of Minerals Resources with guarantees that
cover the difference between the closure costs and amounts held in the environmental trusts. At 30 June 2017, these
guarantees amounted to R2,619 million (30 June 2016: R3,567 million; 31 December 2016: R2,654 million).
22. CHANGES IN ACCOUNTING ESTIMATE FOR INVENTORY
During the current period, the Group changed 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, where the physical
count is usually conducted every three years.
This change in estimate has had the effect of increasing the value of inventory disclosed in the financial statements
by R942 million (30 June 2016: increase of R618 million; 31 December 2016: increase of R618 million). This results in
the recognition of an after tax gain of R678 million (30 June 2016: after-tax gain of R445 million; 31 December 2016:
after-tax-gain of R445 million).
23. IMPAIRMENT OF ASSETS AND INVESTMENTS
Impairment of equity investment in Bokoni Holdco and associated loan
Amplats has a 22.76% shareholding in Atlatsa as well as a 49% shareholding in Bokoni Holdco (which is equity accounted
as an associate).
In light of the difficult market conditions and negative cash flows incurred by Bokoni Platinum Mine. Amplats' equity
interest was fully impaired at 31 December 2016. During the first half of 2017, after capitalising 49% of funding
provided to the mine, Amplats equity accounted losses of R161 million and impaired the remaining balance of R45
million. This impairment is excluded from headline earnings.
Atlatsa's ability to service its debt obligations in the context of the current market conditions, where Bokoni
Platinum Mine is its main source of funding, is doubtful. Amplats has impaired all but R201 million in funding provided
to Atlatsa. This resulted in an impairment loss for the period of R214 million, which is included in headline earnings.
Equity investment in Bafokeng Rasimone Platinum Mine
The current level of the Royal Bafokeng Platinum share prices indicates that the Group's investment in BRPM may be
impaired. An impairment test was performed as at 30 June 2017 resulting in an impairment loss of R952 million, using
the implied value derived from the RB Plat share price of R34.18 at 30 June 2017. This is considered to be a level 2
fair value. The impairment loss is excluded from headline earnings.
24. DISPOSAL OF UNION MINE
As part of the Group's divesture initiatives, a binding sale and purchase agreement with a subsidiary of Siyanda
Resources was signed on 14 February 2017 for the Group's interest in Union Mine, which sets out the following key
commercial terms:
Initial purchase price of R 400 million.
Deferred consideration of 35% of net cumulative positive free cash flow for 10 years (with early settlement at the
option of the buyer).
Purchase of concentrate agreement for seven years with a toll arrangement from year eight onwards.
Amplats expects to incur an overall attributable, post-tax loss of between R1.5 billion and R1.9 billion on the
disposal of Union Mine.
This loss has been recognised in part by way of an impairment recognised in the financial results to 30 June 2017. As a
result of definitive agreements being signed, Union Mine has been considered separate from Amplats single cash-
generating unit as of this date and separately assessed for impairment. As such, the recoverable amount of the Union
Mine was calculated as the fair value of the estimated proceeds less costs of disposal, which comprises a level three
fair value. This has resulted in total attributable, post-tax impairment loss of R912 million. This impairment loss is
excluded from headline earnings.
At the effective date of disposal a further attributable, post-tax loss of between R500 million and R1 billion is
expected due to:
The recycling of a non-controlling interest (NCI) balance in respect of Union Mine, which has arisen owing to AAP
funding the minority shareholder's share of cash calls in the past.
The tax effects of the disposal, which include the recycling of deferred tax associated with the disposed assets and
liabilities, deferred tax on the deferred consideration; and current tax implications.
25. POST BALANCE SHEET EVENTS
In line with previously communicated strategy, Anglo American Platinum has taken a decision that it will not continue
to fund loss-making production from Bokoni. Anglo American Platinum's management effort and capital allocation is
focused on its lower-risk, lower-cost, higher-margin, and more mechanised mining operations. Anglo American Platinum
has notified Atlatsa that it will cease to fund its own, and Atlatsa's share of Bokoni mine's operating losses from 31
July 2017. It is expected that Bokoni will be placed on care and maintenance.
26. AUDITOR'S REVIEW
The condensed consolidated interim financial statements have been reviewed by the Group's auditors, Deloitte & Touche.
The review of the condensed consolidated interim financial statements was performed in accordance with ISRE 2410,
Review of Interim Financial Information Performed by the Independent Auditor of the Entity. The auditor's review report
does not necessarily report on all the information contained in this announcement. Shareholders are therefore advised
that, in order to obtain a full understanding of the nature of the auditors' engagement, they should obtain a copy of
the auditor's review report together with the accompanying financial information from the Company's registered office.
The unmodified review report on the Group's condensed consolidated interim financial statements is available for
inspection at the Company's registered office.
Any reference to future financial performance, included in these interim results, has not been reviewed or reported on
by the Company's auditors.
INTERIM GROUP PERFORMANCE DATA (unaudited)
for the six months ended 30 June 2017
SALIENT FEATURES
Six months ended Year ended
30 June 30 June 31 December
2017 2016 % change 2016
Average market prices achieved
Platinum USD/oz 957 971 (1) 993
Palladium USD/oz 780 551 42 610
Rhodium USD/oz 911 679 34 680
Gold USD/oz 1,235 1,210 2 1,244
Nickel USD/lb 4.38 3.93 11 4.36
Copper USD/lb 2.66 2.12 25 2.16
USD basket price - Pt (net sales revenue per Pt oz sold) USD/oz 1,843 1,632 13 1,753
USD basket price - PGM (net sales revenue per PGM oz sold) USD/oz 865 824 5 856
R basket price - Pt (net sales revenue per Pt oz sold) R/oz 24,400 25,100 (3) 25,649
R basket price - PGM (net sales revenue per PGM oz sold) R/oz 11,455 12,679 (10) 12,527
Exchange rates
Average exchange rate achieved on sales ZAR/USD 13.24 15.38 (14) 14.63
Exchange rate at end of the period/year ZAR/USD 13.08 14.68 (11) 13.73
Unit cost performance
Cash on-mine cost/tonne milled R/tonne 790 704 12 729
Cash operating cost per Pt oz M&C1 R/oz 19,970 19,385 3 19,545
Cash operating cost per PGM R/oz 9,203 9,271 (1) 9,298
Productivity
m2 per total operating employee per month2 6.73 6.74 - 6.85
Refined platinum ounces per employee3 35.1 29.7 18 34.7
Financial statistics**
Gross profit margin % 10.3 12.0 (14) 9.5
Operating profit as a % of average operating assets % 2.3 10.4 (78) 7.7
EBITDA R million 2,476 5,429 (54) 9,096
Return on average shareholders' equity % 7.6 9.4 (19) 1.8
Return on average capital employed4 % 8.8 12.0 (27) 8.9
Return on average attributable capital employed4 % 9.5 12.3 (23) 9.4
Current ratio 1.4:1 1.7:1 (18) 1.4:1
Debt:Equity ratio 1:2.9 1:2.7 7 1:3.1
Interest cover - EBITDA times 4.0 7.2 (45) 6.4
Debt cover ratio times 0.5 0.4 21 1.1
Net debt to capital employed % 13.5 19.6 (31) 15.5
Interest-bearing debt to shareholders' equity % 34.2 37.4 (9) 32.1
Net asset value as a % of market capitalisation % 47.0 41.1 14 55.8
Effective cash tax paid rate % 23.4 16.1 45 106.1
Market information and share statistics
Total shares in issue millions 268.5 268.2 - 268.3
Weighted average number of shares in issue millions 262.2 261.8 - 261.9
Treasury shares held millions 1.2 1.4 (14) 1.7
Market capitalisation R billion 80.8 99.0 (18) 71.3
Closing share price cents 29,975 36,727 (18) 26,441
** 30 June 2016 amounts restated due to prior period errors
1 Cash operating cost per produced ounce (metal in concentrate) comprises operating mines and excludes projects.
2 Square metres mined per operating employee including processing, but excluding projects, opencast and tailings
retreatment employees.
3 Refined platinum ounces per employee: Mined refined platinum ounces divided by own and attributable Amplats joint
venture operational employees.
4 June 2017 excludes impact of Union impairment and ACP asset scrapping.
REFINED PRODUCTION
Six months ended Year ended
30 June 30 June 31 December
2017 2016 % change 2016
Total operations
Refined production from mining operations
Platinum 000 oz 615.6 772.8 (20) 1,688.4
Palladium 000 oz 436.6 516.7 (16) 1,090.6
Rhodium 000 oz 86.0 105.7 (19) 227.0
Other PGMs 000 oz 130.0 188.2 (31) 391.0
Total PGMs (6E) 000 oz 1,268.2 1,583.4 (20) 3,397.0
Gold 000 oz 36.4 41.6 (13) 85.8
Nickel 000 tonnes 8.2 10.3 (20) 21.0
Copper 000 tonnes 5.2 6.1 (15) 11.9
Chrome 000 tonnes 430.0 284.1 51 751.6
Refined production from purchases inclusive of returns
Platinum 000 oz 490.0 235.6 108 646.3
Palladium 000 oz 289.9 137.2 111 373.6
Rhodium 000 oz 70.5 32.7 116 90.4
Other PGMs 000 oz 121.6 68.5 78 171.7
Total PGMs (6E) 000 oz 972.0 474.0 105 1,282.0
Gold 000 oz 17.5 8.6 103 22.4
Nickel 000 tonnes 2.9 1.8 61 4.4
Copper 000 tonnes 1.5 0.9 67 2.2
Chrome 000 tonnes - - - -
Total refined production
Platinum 000 oz 1,105.6 1,008.4 10 2,334.7
Palladium 000 oz 726.5 653.9 11 1,464.2
Rhodium 000 oz 156.5 138.4 13 317.4
Other PGMs 000 oz 251.6 256.7 (2) 562.7
Total PGMs (6E) 000 oz 2,240.2 2,057.4 9 4,679.0
Gold 000 oz 53.9 50.2 7 108.2
Nickel - Refined 000 tonnes 11.1 12.1 (8) 25.4
Copper - Refined 000 tonnes 6.7 7.0 (4) 14.1
Chrome 000 tonnes 430.0 284.1 51 751.6
PLATINUM PRODUCED (M&C)1
Six months ended Year ended
30 June 30 June 31 December
2017 2016 % change 2016
Total operations 000 oz
Mogalakwena Mine 225.8 207.8 9 411.9
Amandelbult Mine 207.7 217.1 (4) 466.5
Unki Mine 38.4 36.4 5 74.5
Twickenham Project - 3.0 (100) 3.4
Joint ventures 246.6 255.3 (3) 505.6
Rustenburg Mine - 215.1 (100) 377.5
Union Mine 77.5 75.5 3 151.2
Purchases from third parties and associates 393.1 142.5 176 391.3
M&C platinum production 1,189.1 1,152.7 3 2,381.9
Pipeline stock adjustment 77.2 59.9 29 59.9
1,266.3 1,212.6 4 2,441.8
Refined platinum production (excl. toll refined metal) 1,094.0 1,008.4 8 2,330.1
1 Platinum in concentrate produced and purchased.
2017 INTERIM RESULTS COMMENTARY
DELIVERING CHANGE, BUILDING A RESILIENT BUSINESS AND POSITIONING FOR THE FUTURE
- Managing the business for the current environment
- Continuing to drive operational improvements
- Early restructuring actions paying off but still more to do
- Pricing environment remains subdued
- Record platinum production from high-margin Mogalakwena - up 9%
- Refined production expected to increase in H2 2017 - full year guidance of 2.45 to 2.50 million platinum ounces
- Further deleveraging of the balance sheet despite the current low price environment
- Delivering on our value not volume driven strategy
- Progressing disposals of Union, Pandora and long-dated Amandelbult resources
- Supporting Atlatsa Resources to place Bokoni on care and maintenance
- Disciplined capital allocation, focused on short payback, value accretive projects
ANGLO AMERICAN PLATINUM - DELIVERING ON OUR VALUE DRIVEN STRATEGY IN A CHALLENGING ENVIRONMENT
Anglo American Platinum is delivering on its commitments by improving operational performance across the portfolio and
repositioning the portfolio to own and operate the highest margin assets in the platinum group metals (PGM) industry.
The strategy is focused on creating a value enhancing portfolio from mine to market and investing in the development of
demand for PGMs. Progress is on-going to divest of assets which are not strategic to the Company. In addition, the
Company continues to advance project studies to assess the most value accretive projects in the portfolio. The Company
is delivering on its commitments to build a resilient business for weak price environments, but positioned to benefit
in a stronger price environment.
Repositioning the portfolio
One of the core pillars of the Anglo American Platinum strategy is to complete the repositioning of the portfolio.
The Company aims to own and operate the best assets in the PGM industry, moving down the cost curve and increasing
the contribution from mechanised mining. The retained portfolio will consist of Mogalakwena, Amandelbult, Unki, joint
venture and associate operations Bafokeng-Rasimone Platinum Mine (BRPM), Mototolo and Modikwa, and the downstream
processing assets. The portfolio will comprise at least 70% mechanised production resulting in lower costs, a more
highly skilled work force, safer operations and a less complex organisation with more modern mining operations.
Update on disposal processes
The exit operations comprise of Rustenburg (exit completed on 1 November 2016), Union, Pandora and Bokoni, as well as
the sale of non-core long-dated resources at Amandelbult. Progress has been made on the various transactions with
completion expected in H2 2017:
- The Sale and Purchase Agreement (SPA) to dispose of Union mine to a subsidiary of Siyanda Resources (Siyanda) was
signed on 14 February 2017. The Section 11 application to the DMR will be submitted shortly and is the key outstanding
condition precedent (CP)
- The SPA to dispose of Anglo American Platinum's share of the Pandora JV to Lonmin plc (Lonmin) was signed on 10
November 2016. The Competition Commission approval was granted on 17 May 2017, and consent was received from Northam
(the minority partner) for the transaction to go ahead. The key outstanding CPs are the approval of the Section 11
application which was lodged on 20 February 2017, and Lonmin lender approval
- The SPA to sell long-dated resources at Amandelbult to Northam was signed on 11 October 2016. The DMR Section 102
approval is the only CP outstanding and was filed on 12 January 2017.
Kroondal is not seen as strategic to the Company given its short remaining life of mine, but it remains a cash
generative asset, and a transaction will only be pursued if it is value accretive.
Atlatsa Resources to place Bokoni on care and maintenance
Anglo American Platinum has undergone a rigorous process to ensure that all operations are cash flow positive. Anglo
American Platinum's management effort and capital allocation is focused on its lower-risk, lower-cost, higher-margin,
and more mechanised mining operations.
In 2013, the Company announced the intention to exit the non-managed associate operation, Bokoni. The mine underwent a
technical review to assess the mine extraction strategy, and to develop a path to a sustainable and optimised operation
with reduced costs in collaboration with Atlatsa Resources (Atlatsa), the JV's managing partner. As a result, two
unprofitable shafts, UM2 and Vertical shafts were placed on care and maintenance in Q4 2015, and in 2016 the opencast
operations at Bokoni were also placed on care and maintenance.
Further operational improvement plans were investigated, none of which could ensure that Bokoni would be a cash flow
positive business in the short to medium term. Despite these efforts Bokoni continues to be significantly cash negative
and would require substantial funding from Atlatsa and Anglo American Platinum (collectively Bokoni JV Partners). As
such, the Bokoni JV Partners are no longer able to continue funding loss-making production from Bokoni.
Shareholders are notified of the Atlatsa Resources announcement dated 21 July 2017 in which Atlatsa has commenced
the process to place Bokoni mine on care and maintenance. Bokoni Platinum Mines (Proprietary) Limited, as holder of the
mining rights and employer, have accordingly issued a notice, as contemplated in section 52 of the Mineral and
Petroleum Resources Development Act to the Department of Mineral Resources and a notice in terms of section 189 of the
Labour Relations Act to all employees on 21 July 2017.
Anglo American Platinum has agreed to fund, via a loan account to Bokoni, all once-off costs associated with placing
the mine on care and maintenance, as well as ongoing care and maintenance costs up until 31 December 2019.
Conditional sale of Kwanda North and Central Block prospecting rights and debt write off
Anglo American Platinum has made a conditional offer to acquire the Kwanda North and Central Block prospecting rights
for a cash consideration of R300 million from Atlatsa. The transaction is subject to; inter alia, the following
conditions precedent:
- conclusion of definitive transaction agreements; and
- relevant regulatory approvals for a transaction of this nature including those required by the Mineral and Petroleum
Resources Development Act, 28 of 2002 and registration by the Mineral and Petroleum Titles Registration Office to
complete Anglo American Platinum acquiring and including into its adjacent mining rights the resources specified in the
Central Block and Kwanda North prospecting rights.
Should the Asset Disposal be implemented, Anglo American Platinum has undertaken to, inter alia, to write off the
Atlatsa Group's indebtedness to Anglo American Platinum of c.R4.2 billion which will reduce Atlatsa Group's debt levels
to nil.
OPERATIONAL REVIEW
Safety, Health & Environment
Tragically there were two fatalities due to work related incidents in H1 2017. Mr Nkoliseko Alfred Jikumlambo was
seriously injured in a fall of ground incident at Amandelbult's Tumela mine on 8 April 2017, and sadly passed away on
21 April 2017 in hospital. Mr Kagiso Zacharia Ramokgatla was fatally injured in a loader incident on 7 June 2017 at
Amandelbult's Dishaba mine. Deepest condolences once again go to their families, friends and colleagues.
The safety aspiration remains to move towards zero harm, and despite these tragic incidents, Anglo American Platinum
has made significant progress in improving employee safety, health and wellbeing over the past decade, with significant
improvements in lost-time injury frequency rates and total recordable case frequency rates. As the portfolio of assets
is reconfigured, and given a material improvement in safety performance over time, there was a need to focus on how to
achieve the next step change in safety performance, advancing the commitment to zero harm. A revised safety, health and
environmental strategy was co-created with management, unions and employees during H2 2016 and implementation commenced
in H1 2017.
The revised safety strategy has five key focus areas including leadership and accountability, which focuses on the
creation of a leadership approach and culture conducive to innovation and safety performance improvement; re-
enforcement of compliance to standards and regulations; focus on engineered solutions and a move up the 'hierarchy of
controls' through innovation and engineering capability so as to engineer out hazards; rigorous operational risk
management to ensure top risks and priority unwanted events are identified, assessed, and sound risk controls and
decision making is implemented; and leverage off learnings from incidents as well as operational and incident data
analysis to enable prioritization and take corrective action.
The Company has made significant progress on its disease management programme, increasing enrolment of over 70% of HIV
positive employees onto anti-retroviral therapy, ensuring greater Tuberculosis (TB) screening and administration of TB
prophylaxis (medication to prevent TB) which collectively have seen a decrease in TB cases and the number of TB deaths.
Anglo American Platinum has had no significant environmental incidents (on a Level 3-5 basis which refer to incidents
that might have a medium to major impact on the environment).
Operational performance
Total platinum production (both mined metal in concentrate and purchase of concentrate) increased 3% to 1,189,100
ounces (H1 2016: 1,152,700 ounces). Production is on track to meet year end guidance of 2.35 to 2.40 million platinum
ounces. The built up head-grade of 3.44g/tonne increased 13% due to the exclusion of Rustenburg and the Western Limb
Tailings which had a lower grade (H1 2016: 2.24 g/tonne). Platinum produced by own mines (Mogalakwena, Amandelbult and
Unki) increased 2% to 471,900 ounces (H1 2016: 461,300 ounces).
Mogalakwena
Production from Mogalakwena increased 9% to a record 225,800 ounces (including production from the Baobab concentrator
plant of 16,200). Production benefited from an increase in recoveries and grade, as well as an increase in tonnes
milled, which was seen across all three plants. Mogalakwena will produce between 410,000 - 420,000 platinum ounces in
2017, as the Zwartfontein pit will start production in H2, which has a higher grade but lower recovery.
As part of the transaction terms to sell the Company's stake in the Pandora joint venture to Lonmin, a three-year
contract was secured for the sole use and operational control of Lonmin's Baobab concentrator. This contract will
commence on completion of the transaction, and the current contract will be maintained until then.
Cash operating costs per platinum ounce, including capitalised waste stripping, were flat at R20,632 per platinum ounce
as a result of higher throughput. Despite the lower rand basket price environment, Mogalakwena maintained a 33% cash
operating margin.
Consistent with the strategy to optimise the performance of key assets, a low-cost, high-return, quick payback project
is being implemented that will upgrade both the dry and wet section of the North Concentrator Plant to increase
throughput. This project will yield c.15,000 ounces of platinum at steady state and will take 18 months to complete as
the majority of implementation will coincide with planned maintenance periods. The capex investment is a cost of c.R300
million.
Amandelbult
Amandelbult production reduced 4% to 207,700 ounces in the period (H1 2016: 217,100 ounces). The decrease in production
occurred during Q1 largely due to industrial action which resulted in loss of underground production for two days, and
excessive rainfall which constrained production from the open pit operations. The rainfall also impacted the material
flow of the UG2 feed in the chutes to the concentrators, which led to a backlog. The mine recovered in Q2 and
production was 4% higher than the same period in 2016. Platinum production guidance for the year remains at c.450,000
ounces.
Cash operating costs at Amandelbult increased by 12% to R4.4 billion (H1 2016: R3.9 billion) mainly due to mining
inflation, inclusion of chrome production costs that ramped up in 2016, as well as costs related to the future
replacement of production from the upper section of Tumela which will reach end of life by 2021. Historically this was
to be achieved via the sinking of the new Tumela 5 shaft from 2017. However, further evaluation of the asset base has
identified lower capital intensive replacement options from the UG2 reef at Dishaba which can be accessed via the
current infrastructure used for Merensky mining. The UG2 reef at Dishaba has a favourable prill split with high
platinum content as well as chrome content relative to other UG2 ore bodies on the Western limb. This replacement
production option requires minimal capital to replace the Tumela Upper section.
In preparation to transition from Tumela Upper to Dishaba, additional development and equipping needs to take place at
Dishaba to build up the ore reserves, which may reduce flexibility in mining for the next two years. Total production
from Amandelbult is expected to remain at current levels of platinum production of 450,000 ounces over that period.
Amandelbult successfully commissioned a new chrome plant at the mine in 2016 with steady-state production of 530,000
tonnes on an attributable basis expected in 2017. Even during ramp-up, the project achieved a six month payback period
for the full R400 million capital cost. Production in H1 2017 amounted to 276,300 tonnes of chrome concentrate.
Amandelbult chrome has a low cost of production and generated cash flow of R261 million, despite the fall in the chrome
price and the increase in chrome inventory in H1 2017.
Amandelbult is currently reviewing how to increase the profitability of the mine by reducing the all-in-sustaining
cost. The key steps to this strategy include: operational turnaround of the asset by increasing immediately stopeable
ore reserves (IMS) at Dishaba and implementing productivity improvements; developing the Dishaba UG2 project to mine
the UG2 reef at Dishaba utilising the existing Merensky infrastructure at minimal capital investment to replace Tumela
Upper; extracting the full value of metals mined and expanding chrome production; and assessing two capital light
replacement projects at Dishaba (15E and 62E).
Unki
Production from Unki mine in Zimbabwe increased by 5% to a new production record of 38,400 ounces (H1 2016: 36,400
ounces), driven by a 3% increase in tonnes milled and a 2% increase in the 4E built-up head grade to 3.48g/t from
3.40g/t through better mining reef cut, which reduced waste mining, resulting in more higher grade ore being delivered
to the concentrator. Platinum production guidance for the year is expected to be c.75,000 ounces.
Reported cash operating costs (the costs after allowing for off-mine smelting and refining activities) at Unki
decreased 6% to R881 million (1H 2016: R940 million). This decrease was driven primarily by the rand strengthening
against the dollar by 14%, as Unki is a dollar denominated operation. The mine kept on-mine costs in line with mining
inflation of 6%. The reported cash operating costs per platinum ounce for the year decreased 12% to R22,848 due to
improved production and lower rand costs.
Joint Ventures, associates and third parties
Platinum production from joint ventures and associates, inclusive of both mined and purchased production, decreased by
1% to 383,800 ounces (H1 2016: 388,300 ounces). BRPM production increased 8% to 99,300 ounces (H1 2016: 91,600 ounces)
due to the ramp-up of the Styldrift project in line with expectations, whilst Modikwa production increased 3% to 57,800
ounces (H1 2016: 56,000 ounces) due to increased stoping efficiencies from labour productivity improvements. Mototolo
production declined to 57,800 ounces (H1 2016: 62,000 ounces) due to lower grade while Kroondal production fell to
131,000 ounces (H1 2016: 137,300 ounces) due to lower grade and a two day illegal strike at two of their shafts. Bokoni
production declined to 37,900 ounces (H1 2016: 41,300 ounces) as a result of poor ground conditions and potholing as
well as a fatality and associated S54 stoppage earlier in the year.
Third party purchase of concentrate (POC) increased significantly to 255,900 ounces (H1 2016: 9,500 ounces) following
completion of the sale of Rustenburg to Sibanye and as a result production moved from own mined to third party purchase
of concentrate. Sibanye purchase of concentrate of 242,600 ounces made up the vast majority of the third party POC.
Third party purchased from Maseve increased slightly with H1 2017 production of 7,600 ounces (H1 2016: 4,400 ounces).
Non-core operations - Union
Union mine increased platinum production by 3% to 77,500 ounces (H1 2016: 75,500 ounces) due to improved crew
efficiencies in line with the optimised mine plan, despite a reduction in grade in Q2 due to mining less Merensky
material. Platinum production from Union is expected to be c.160,000 ounces in 2017. The sale of Union to Siyanda
Resources was announced on 15 February 2017 and is expected to be completed during 2017, after which Siyanda will sell
the produced concentrate to the Company.
Refined production & sales
Refined platinum production increased 10% to 1,105,600 ounces (1H 2016: 1,008,400 ounces), with Q1 2016 having been
materially impacted by a Section 54 safety stoppage at the Precious Metal Refinery (PMR).
Following the Waterval smelter run-out in Q3 2016, the Number 1 furnace at Waterval smelter was successfully rebuilt in
Q4 2016 and is running at steady-state in Q1 2017. The Waterval Number 2 furnace underwent a planned rebuild and has
been successfully ramped up to steady state. The backlog in processing pipeline material of 65,000 platinum ounces
following the run-out and rebuild is expected to be made up during H2 2017.
A high-pressure water leak at the Converter Plant (ACP) impacted one converter plant (Phase A) of the operation on 4
June 2017. The second converter plant (Phase B) which was on planned maintenance, was heated up and returned to steady
state production ten days later. The time required to reheat Phase B created a backlog of material, deferring c.90,000
ounces of refined production. The repair and maintenance of Phase A converter will cost c.R500 million, with R120
million expected in 2017 and will take between 9 to 12 months to repair and to get back to steady state.
The process operations are currently all operating at steady state. The Company continues to undergo planned
maintenance of all the processing operations, with the Mortimer smelter rebuild scheduled for 2018.
Platinum sales volumes decreased by 8% to 1,119,300 platinum ounces (H1 2016: 1,221,200 ounces). The result of the
planned rebuild of Waterval Number 2 furnace and ACP Phase A event has impacted refined production for the period, and
therefore lead to lower sales volumes. Sales are also impacted by a lower draw down from finished-goods inventory of
c.21,600 ounces compared to a drawdown of 150,000 ounces in H1 2016. It is anticipated that the increase in refined
production will be used to build-up finished inventory and will also result in increased sales in H2 2017.
FINANCIAL PERFORMANCE REVIEW
Overview
Anglo American Platinum has further strengthened the balance sheet in the first half of 2017 reducing net debt to R5.9
billion as at 30 June 2017 from R7.3 billion at 31 December 2016. The reduction in net debt was driven primarily by a
reduction in working capital. As reported at 31 December 2016, the Company announced that the marketing function
engaged a key customer to advance a prepayment for future guaranteed delivery of metal. The first payment of R2.0bn
was received in the final quarter of 2016 and the remainder of R2.3bn in H1 2017. This prepayment arrangement is part
of the Company strategy to strengthen the balance sheet.
Headline earnings decreased to R0.7 billion from the R1.6 billion for the first half of 2016. The lower earnings were
as a direct result of lower sales volume from mined production and a weaker basket price compared to H1 2016. As a
result, headline earnings per share decreased to 285 cents per share from the restated 629 cents per share in H1 2016.
The Company has recorded attributable post-tax impairments totalling c.R2.2 billion impacting basic earnings of which
c.R0.3 billion impacts both basic and headline earnings. The impairments that impacted only basic earnings included
Union mine of c.R0.9 billion (consequent on the signature of agreements to sell the Company's interest in Union and
shareholding in Masa Chrome), equity interests in BRPM of c.R950 million and Bokoni Platinum Holdings of c.R45 million.
In addition, the Company wrote off term loan facilities advanced to Atlatsa of R0.2 billion and a loan to the Bakgatla
Ba-Kgafela of R0.1 billion related to their interest in Union, which has impacted headline earnings.
The group effective tax rate for H1 2017, adjusted for impairments, was 31.4% compared with the 29.9% recorded in H1
2016.
The increase in unit cost of production was up 3% compared to H1 2016, remaining below mining input cost inflation and
below guidance at R19,970 per platinum ounce.
Net Sales Revenue
Net sales revenue decreased by 11% to R27.3 billion, primarily due to lower PGM sales volumes and a significantly
stronger rand.
The average US dollar basket price per platinum ounce sold increased by 13% to USD1,843 from USD1,632 in H1 2016. The
average US Dollar sales price achieved on all metals improved, with the exception of platinum which was broadly flat at
USD957 per ounce. Palladium was up 42%, rhodium up 34%, nickel up 11% and copper up 25%.
The rand strengthened 14% to R13.24 (H1 2016: R15.38) and eroded the benefit from higher prices which resulted in a 3%
weaker Rand basket price of R24,400 compared to R25,100 in H1 2016.
Refined platinum sales for the period decreased by 8%, but were in line with refined platinum production, whilst sales
of refined palladium and rhodium decreased by 17% and 12% respectively. Nickel sales decreased by 13% whilst Chrome
sales increased by 38%.
Working capital
Working capital decreased by R0.4 billion to R7.6 billion as at 30 June 2017, due to the further customer prepayment of
R2.3 billion received in H1 2017, offset by an increase in work-in-progress material due to the rebuilds at the ACP and
smelters and a 76,000 platinum ounce stock count gain. The temporary increase in work-in-progress material will reduce
in H2 2017 as the locked-up production from the smelter rebuilds and ACP incident will be refined and partially sold.
Costs
Cost of sales decreased by 9%, from R27.0 billion in H1 2016 to R24.5 billion mainly due to the increase in work-in-
progress material. Following the sale of Rustenburg operations in November 2016, the Company now has higher purchase of
concentrate costs and lower on-mine costs due to the purchase of concentrate from Sibanye.
Cash on-mine costs (mines and concentrators) decreased by R3.6 billion mainly due to the Rustenburg exit, partly offset
by input cost inflation. Excluding Rustenburg's on-mine costs from 2016, on-mine costs increased due to input cost
inflation and lower capitalised waste costs at Mogalakwena. Processing costs rose R0.4 billion to R3.0 billion, a 15%
increase due to a 10% increase in refined volume and inflationary increases. Costs for the purchase of metals increased
to R9.6 billion from R6.7 billion, principally due to additional volumes purchased from Sibanye.
Due to the improvement in the competitive position of the business through the exiting of loss making operations,
operating efficiencies and overhead reductions, the cash operating cost per platinum ounce rose by only 3% to R19,970.
This modest increase was mainly due to a reduction in Mogalakwena capitalised waste costs. Year-on-year this increased
unit costs by 2%, equivalent to R359 per platinum ounce.
EBITDA
EBITDA, before impairments, amounted to R4.0 billion, down 26%, compared to R5.4 billion in H1 2016. Uncontrollable
items which include inflation, US dollar metal prices and the rand/dollar exchange rate, reduced earnings by R1.5
billion. Operating costs and overhead were lower by R0.8 billion, including the benefit of a R0.3 billion stock count
gain compared to H1 2016, but was offset by lower sales volumes and higher losses from non-managed associates, mainly
Bokoni (R161 million) and Pandora (R32 million).
Cash flow
The Company generated cash flow from operations of R6.6 billion, which included the R2.3 billion customer prepayment.
The R4.3 billion cash generated by the underlying business, was used to pay capital expenditure and capitalised waste
stripping of R1.7 billion; taxes of R0.4 billion; interest of R0.6 billion; funding to Bokoni of R0.5 billion and other
expenditures of R0.5 billion.
Capital Expenditure
Total capital expenditure (excluding capitalised waste stripping at Mogalakwena) was R1.3 billion, a decrease of 6%
against the R1.4 billion spent in the comparative period as a result of lower project capital. SIB capital expenditure
of R1.1 billion, focused on safety-critical and business continuity projects, including the Waterval smelter rebuild.
Project capital was R0.2 billion, relating to the Unki smelter and Mogalakwena North concentrator optimisation. No new
major projects have been implemented.
Capitalised waste stripping at Mogalakwena decreased to R376 million from R616 million in H1 2016.
Net debt and dividend
Net debt at 30 June 2017 decreased to R5.9 billion from R7.3 billion at 31 December 2016, supported by net free cash
flow generated from the underlying business of R0.6 billion and the additional R2.3 billion customer prepayment, offset
by the Rustenburg purchase of concentrate pipeline payment of R1.5 billion.
The Company has increased liquidity headroom to R16.5 billion, comprising both undrawn committed facilities of R9.4
billion and cash of R7.1 billion and is comfortably within its debt covenants.
Owing to the net debt position of the Company, and considering future capital funding requirements in an uncertain
macroeconomic environment, the Board has decided not to declare a dividend in H1 2017.
Disciplined Capital Allocation
The Company will continue with disciplined capital allocation, prioritising the deleveraging of the balance sheet. The
focus remains on optimal stay-in-business capital allocation and the Company would like to re-introduce a sustainable
dividend once the balance sheet has strengthened. In the current environment the focus will be on low capital, fast-
payback and value accretive projects.
MARKET REVIEW
Platinum
The platinum price fell to USD957 in H1 2017 from USD971 in H1 2016. The decline is partially a result of a stronger US
Dollar following expectations that the US Federal Reserve will increase interest rates in H2 2017, leading to
investment away from low-yielding commodities, including the precious metals.
Demand from the automotive sector is forecast to decline in 2017. Diesel's share of the European light duty vehicle
market, which contributes c.20% of global platinum demand, has fallen at a slightly faster rate than expected in H1
2017. Diesel has been the subject of significant negative news coverage which gained pace early in the year and the
Company expects that diesel share will continue to fall to c.30% by 2025 in the European light duty vehicle market. The
expected increase in light duty diesel outside Europe and heavy duty diesel is expected to offset some of the diesel
decline in Western Europe over the medium term as absolute numbers of these vehicles increase and as platinum loadings
increase to meet rising global emissions legislation.
The wider Chinese jewellery sector continues to struggle following a weak performance in 2016 and sales of platinum
jewellery are expected to fall once again, albeit at a slower pace of decline. There are areas of potential growth
elsewhere: Indian demand is expected to see strong growth as the country's economic activity returns to normal
following the demonetisation in late 2016. In addition, India's Goods and Services Tax (GST) on gold and precious
metals, which came into force in July, has been set at 3%. Expectations were for GST of 5%, up from the previous level
of 2-2.5%. The proposed GST means prices for platinum jewellery will be broadly unchanged and we expect to see
increased buying of platinum in the country as a result.
Industrial demand for platinum remains strong and has grown since 2016. The chemical sector continues to be a major
purchaser of platinum for use as a clean catalyst in the manufacture of many basic chemicals. Electrical and electronic
demand for platinum has been strong and medical and biomedical demand remains robust. Net investment demand is expected
to be positive in 2017, albeit lower than H1 2016.
Palladium
Palladium has been one of the strongest performing commodities in H1 2017, with the price rising by 42% to USD780 (H1
2016: USD551). The ingot market tightened considerably in early June, demonstrating a lack of readily available metals,
with the spot price rising to over USD920, a fifteen year high. Demand for palladium is expected to outstrip supply in
2017. The automotive industry remains the principal user of this metal and, with global light duty vehicle sales
climbing year-on-year, demand from the sector has been strong in 2017 despite weakening growth in China and slowing US
vehicle sales.
Industrial demand remains robust. Net investment demand was more negative than in the same period a year earlier but
selling was slower than in H2 2016. Overall, palladium is expected to be in another substantial fundamental deficit in
2017.
Rhodium
The rhodium price increased from an average USD679 in H1 2016 to USD911 in H1 2017. Demand from the automotive sector
continues to grow due to tightening emission standards and rising global sales. The market continues to be well
supplied although growing industrial and investment demand means the annual surplus is expected to fall this year.
Minor Metals
The prices of both ruthenium and iridium increased in H1 2017, with ruthenium increasing to USD48 an ounce (H1 2016: USD41)
and iridium increasing to USD804 per ounce (H1 2016: USD514). Demand for both metals is strong, from the chemical and
electrical sectors.
Secondary supply
Recovery of platinum from end-of-life autocatalysts is expected to climb by 8% in 2017 (Johnson Matthey's Platinum 2017
report) but still remains below the peak in 2014. Palladium recovery is forecast to increase by more than 10% year-on-
year. This difference in growth rates reflects the substantial growth in use of palladium on gasoline and also on
diesel catalysts since the start of the millennium. Recovery of platinum from the jewellery sector is likely to fall
this year due to lower recycling of unsold stock by Chinese retailers and wholesalers.
Automotive
Global light-vehicle sales have expanded 2.8% in the first half of 2017 to a record 46.8 million units, a positive for
demand for PGMs. Sales in Europe, Japan and South America in particular have been strong. In the USA, sales have fallen
by 2% compared to the same period in 2016. However, demand for palladium and rhodium from the region is expected to
grow as tighter emissions legislation leads to higher loadings per vehicle. In China, the sales tax payable on the
purchase of smaller vehicles was increased from 5% to 7.5% in January. Despite this, light duty vehicle sales have
continued to grow in China but at a significantly slower rate than in 2016.
The outlook for the diesel engine remains a key concern after the emissions scandal of 2015. Diesel's share of the
light duty vehicle market in Europe has fallen to c.46%. This decline is concentrated predominantly in France, Germany,
Spain and the UK. These are all countries where major cities have suggested some or all diesel vehicles might be banned
or their use penalised in the future. While electric vehicles of all types - both battery electric vehicles and their
fuel cell equivalents - are receiving extensive media coverage, their market share remains small accounting for less
than 1% of sales in most countries across Europe. Diesel remains extremely important for light and heavy-duty vehicle
manufacturers and their ability to meet carbon-dioxide emission targets, and is likely to retain a strong position
among larger vehicles where diesel efficiency provides a superior economic performance.
Heavy duty diesel is a growing source of demand for platinum for use in emissions after-treatment. Vehicle numbers are
expected to increase by a CAGR of 3% over the next decade and emissions limits will tighten. China will implement new
emissions rules in 2017 and again in 2019 and this could boost demand by 200,000 ounces of platinum annually, and
tighter rules will also be implemented in India over a similar timescale.
Electrification of the drive train
There has been considerable focus on the continuing electrification of the drivetrain, culminating in Volvo Car's
announcement that all of its new models launched from 2019 will be part-electrified and France's plans to ensure that
all cars sold there from 2040 are electrified. These plans currently indicate that hybrid electric-internal combustion
engine vehicles will be a very significant part of the future both for Volvo and within France. Current catalyst
technology means that PGM loadings are similar on conventional and hybrid vehicles, so hybridisation itself poses
little direct threat to PGM demand.
Nonetheless, improvements in battery technology and recharging infrastructure mean that the battery electric vehicle is
likely to expand its share of the market from its current low levels. It is, though, notable, that fuel cells are
making considerable progress as an alternative route to electrify the car. The Chinese Government has plans for a
million fuel cell cars to be sold in 2030, something that could create a substantial new source of platinum demand, and
concrete progress is being made in larger vehicles today by the provision of generous subsidies for manufacturers of
fuel cell buses and trucks.
Jewellery
Gross global jewellery purchases of platinum are likely to fall for a third year in 2017 but at a slower rate than in
2016. The major negative factor continues to be slowing jewellery sales - both of pure gold and of platinum - in China,
which is the largest jewellery purchaser of platinum. After a period of rapid expansion, the Chinese jewellery retail
sector has come under margin pressure and is going through a period of change while business models adapt to this.
Sales of plain platinum jewellery have come under pressure as a result but the gem-set and bridal sectors have
performed better. Falling jewellery recycling means that net demand here should be relatively stable in 2017.
Outside China, platinum jewellery markets continue to grow. In India, the platinum Evara brand continues to perform
well, demonstrating the success of the Platinum Guild International's approach to marketing in this country. They have
done this by working carefully with manufacturers to improve product quality, design and availability, and by working
with retailers to make platinum more visible and helping staff understand the emotional context of platinum jewellery
and what it offers the consumer. Following the setback caused by demonetisation in late 2016, jewellery demand in the
Indian market is growing and should meet the aspiration of becoming a 500,000 platinum ounce annual market by 2022. In
Japan, the PGI has focused some of its marketing on the older generation who hold a significant proportion of the
country's wealth. The platinum jewellery market in Japan is expected to continue to show modest growth in 2017 and
there is potential for further growth in US demand through the greater use of platinum in diamond ring settings.
Industrial
Industrial demand for platinum and the PGMs remain robust, particularly from the chemical and electrical
sectors. The IMF currently forecasts growth of 3.5% in global GDP this year, with Chinese growth expected to be close
to twice as rapid, and this is supportive of PGM demand. PGMs are used in the clean production of a number of chemicals
and the continuing improvement in the environmental performance of the Chinese chemical sector is therefore positive
for PGM consumption. The use of these metals in applications from anti-cancer treatments to the glass sector further
underpins demand.
Investment
Exchange Traded Fund (ETF) flows in platinum have been positive in the first six months of the year at c.122,000 ounces
(compared to net outflows of 55,000 ounces in 2016). Japanese investment demand remained positive in H1 although it has
weakened compared to 2016. Prices did not dip to sufficiently low levels in Yen terms to stimulate the strong buying
that took place in 2016. Elsewhere, the US Mint produced and sold 20,000 ounces of platinum eagle coins in January,
illustrating that there is pent-up demand for platinum as an investment material, an area that is being addressed by
the World Platinum Investment Council.
Palladium investment demand has been less positive despite its healthy fundamentals as investors continue to sell into
price strength. Palladium ETFs have decreased by 200,000 ounces year to date in 2017. However, with ETF holdings at
their lowest since early 2010, if the high prices seen in June are repeated in the second half of the year it could
encourage new investors to start buying palladium.
Market development
Anglo American Platinum continues to believe in the importance of market development and investing to stimulate demand
is therefore of key strategic importance. The Company invests in market development across a number of demand segments,
through a range of approaches that are appropriate for each activity:
Jewellery demand is developed through the Platinum Guild International (PGI). India has been a notable success story,
with demand performing well despite the challenging economic conditions seen last year as manufacturers, retailers and
consumers each see benefits available from platinum. The PGI is also focusing on further developing platinum's link to
love in the Chinese market to bolster demand for bridal jewellery and gifting. Opportunities exist to leverage from the
experience in India and apply those to building a market for men's platinum jewellery in the Middle East.
A number of South African PGM producers, including Anglo American Platinum, contribute to developing investment demand
through the World Platinum Investment Council (WPIC). The WPIC has developed a multifaceted strategy which includes
improving product availability and the provision of data to allow more informed investor decisions. The WPIC is working
on the development of new types of physically-backed products, in conjunction with partners like the UK's Bullion
Vault, which launched a platinum product in conjunction with its other precious metal products. It has also recently
announced talks with organisations in China and India over the introduction of a platinum ETF. The WPIC have also
joined with Muthoot Exim, an Indian company which specialises in offerings in the precious metals space, to launch
India's first non-jewellery platinum products "Anantavarsham" in the form of religious figurines (deities).
Through the Anglo American Platinum investment fund, the Company takes stakes in companies that use new technologies
that use or enable the use of PGM metals. Investments have been focussed on the fuel cell value chain, but the strategy
has broadened to other areas of demand. For example, the investment in Greyrock. This company has developed a
proprietary technology allowing it to turn gas that would otherwise be flared from oil production into premium diesel
using a PGM-based catalyst. This has a direct environmental benefit in limiting carbon dioxide emissions caused by
flaring; has the potential to drive PGM demand directly through its requirements for a catalyst; and would provide an
additional source of hydrogen as a by-product, with the potential to support fuel production for fuel cell vehicles.
Anglo American Platinum is also active in developing and promoting the hydrogen economy and the potential use of
platinum-based fuel cells in combating climate change. Anglo American Plc has joined the Hydrogen Council as a founder
member. This association of over fifteen major industrial companies aims to accelerate the development and
commercialisation of the hydrogen and fuel cell sectors and to encourage key stakeholders to back hydrogen as part of
any future energy mix. As well as this work, the Company supports a number of infrastructure and demonstration projects
and has invested in a number of companies whose commercial success could be key in driving demand for our metals
through addressing specific areas in the hydrogen and fuel cell value chain.
SOUTH AFRICAN REGULATORY ENVIRONMENT
On 15 June 2017, the South African Department of Mineral Resources (DMR) published its Reviewed Mining Charter 2017
(MCIII). Anglo American Platinum has expressed concern that, unlike the collaborative process for agreeing the 2004 and
2010 Mining Charters, the MCIII was not concluded through agreement between the DMR and all relevant stakeholders,
including the mining industry, despite the best efforts of those stakeholders over the preceding year. Unfortunately,
the practical experience of the mining industry in implementing the previous Mining Charters - which themselves have
contributed to the achievement of the significant transformation that exists across the South African mining industry
today - was not taken into account in the development of MCIII.
Anglo American Platinum is supportive of the legal course of action being followed by the Chamber of Mines, with the
ultimate objective of arriving at a solution that is practically implementable and that preserves and enhances
investment in what is a critically important industry for South Africa. In the absence of new investment, South Africa
will fail to deliver the economic growth required to create greater levels of employment and socio-economic uplift for
the benefit of all South Africans. Anglo American Platinum is committed to meeting South Africa's transformation
objectives and has been a longstanding and major contributor to the country's transformation, pre-dating such
regulatory targets.
Anglo American Platinum welcomes the decision by the ANC at its recent policy conference that further discussion on
MCIII is required with the mining industry in order to ensure that investment and employment levels are not negatively
affected. Anglo American Platinum awaits clarity on how this discussion process will unfold and will also continue to
engage through the Chamber of Mines.
MINERAL RESERVES AND RESOURCES STATEMENT
There have been no material changes to the mineral resource and reserve estimates as disclosed in the 2016 annual
report.
OUTLOOK
In view of the current and expected market conditions for PGMs, Anglo American Platinum remains focused on its strategy
to build a resilient business. The Company has positioned itself to manage through the current environment. Stringent
cost controls have been implemented, and restructuring remains ongoing, with Bokoni to be placed on care and
maintenance by the managing joint venture partner Atlatsa.
Market outlook
Platinum is likely to be in a modest surplus in 2017, with supply outweighing demand. Primary supply of platinum is
expected to slip marginally lower than in 2016, and the combined recovery of platinum from end-of-life autocatalysts
and recycled jewellery should also decline. Looking at demand, purchasing of platinum by the automotive sector is
expected to decrease this year, reflecting a decline in the share of the European light duty vehicle sector taken by
the diesel engine and changes to lower metal content in the catalyst technology being fitted to some of these cars.
Jewellery demand too seems likely to fall modestly year-on-year: the wider Chinese jewellery sector is likely to shrink
this year, although at a slower pace than was the case in 2016; jewellery demand in other regions is set to strengthen.
Industrial demand continues to be strong. Net investment demand is expected to be positive this year but the very
strong buying that took place in Japan in 2015 and again in 2016 has not recurred yet this year, and it currently seems
unlikely that investors will push this metal into deficit this year.
In contrast, palladium is expected to be in a substantial deficit in 2017 and again over the next few years. Mine
supply is likely to fall slightly, in line with lower sales of platinum but, unlike platinum, recycling of palladium is
set to increase this year. Demand for palladium is dominated by its use in the automotive sector and, despite a
slowdown in US light duty vehicle sales and slowing growth in China, global vehicle sales are expected to increase this
year. With emissions legislation being progressively tightened in a number of countries, average catalyst loadings
should rise and automotive palladium demand should further strengthen. Even with some net disinvestment of physical
palladium taking place, total palladium demand should climb further to a new annual record in 2017.
Operational outlook
Platinum production (metal-in-concentrate) is expected to remain within guidance of 2.35-2.40 million platinum ounces.
Refined production should be higher in H2 2017, as a result of refining the build-up in work-in-progress inventory of
65,000 platinum ounces from the smelter run out in Q4 2016, and the ACP high pressure water leak which deferred
refining c.90,000 ounces. Refined platinum production guidance is 2.45 to 2.50 million ounces for 2017.
Financial Outlook
The unit cost guidance remains between R20,350 and R20,850 per platinum ounce (M&C). The Company reiterates that the
decrease in capitalised waste costs at Mogalakwena will add around R400 per ounce to unit costs for 2017.
Capital expenditure guidance for the year remains between R3.7 billion to R4.2 billion excluding capitalised waste
stripping. SIB capital is expected to be between R2.9 billion and R3.2 billion with project capital estimated between
R0.8 billion and R1.0 billion. In addition, capitalised waste stripping will be around R0.8 billion for the year.
The disposal processes for the exit of Union, Pandora and the long-dated Amandelbult resources will continue and are
expected to be completed in H2 2017, subject to the timing of the relevant DMR approvals.
Johannesburg, South Africa
20 July 2017
For further information, please contact:
SPONSOR
Rand Merchant Bank
a division of FirstRand Bank Limited
Investors:
Emma Chapman
Head of Investor Relations
+27 (0)11 373 6239
emma.chapman@angloamerican.com
Media:
Mpumi Sithole
Media Relations
+27 (0)11 373 6246
mpumi.sithole@angloamerican.com
Date: 24/07/2017 08:22:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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