AQUARIUS PLATINUM LIMITED
Aquarius Platinum Limited
Production Results to 31 December 2012
Highlights
* Attributable production from operating mines increased by 2% quarter-on-quarter
to 78,987 4E ounces
* Average PGM basket price increased 5% for the quarter in Dollar terms
* The Rand weakened against the US Dollar by 4% on average quarter-on-quarter
* Transition to owner operator completed during the quarter and below budget
* Rollout of revised hanging wall system completed during the quarter
* Cash costs at Kroondal decreased 7% to R8,403 per PGM ounce quarter-on-quarter
* Cash costs at Mimosa increased 8% to $897 per PGM ounce quarter-on-quarter
* Mimosa and Government of Zimbabwe agreed commercial terms on Indigenisation and
signed a term sheet
Q2 2013 Operating Results
Summary
Kroondal Mimosa Platinum Mile
4E PGM Production
Total (100% basis) 102,525 52,752 1,349
Attributable 51,262 26,376 1,349
4E Basket Price
R/oz 10,901 - 10,939
$/oz 1,261 1,213 1,269
Cash Costs (4E
basis)
R/oz 8,403 - 7,688
$/oz 972 897 892
Cash Margin (%) 10 16 13
Stay-in-Business
Capex
R/oz 1,520 - -
$/oz 130 171 -
Commenting on the results, Jean Nel, CEO Aquarius Platinum said:
The quarter under review was yet another challenging quarter during which
industrial relations in South Africa remained strained and metal prices
remained low. The Aquarius management team persisted with its focus on
restoring operational credibility at its Kroondal mine. In this regard I am
very pleased to report that both of the significant processes we committed to
were completed in time and below budget, being the migration to owner operator
and the implementation of the revised hanging wall support regime. The
implementation of these two initiatives, combined with a focussed and motivated
work force at Kroondal contributed to Kroondal's production exceeding 100 000
4E ounces for the quarter for the first time since the Dec 2010 quarter,
notably at reduced on mine unit costs, down 7% for the quarter. Given the macro
environment in the industry this was a pleasing performance. A special mention
should go to Rob Schroder (MD: AQPSA) and Wessel Phumo (GM: Kroondal) who lead
the AQPSA team.
At Mimosa the solid production performance continued, but Mimosa's costs during
the quarter disappointed. Mimosa management team is focussed on addressing
costs having implemented a number of initiatives. The conclusion of the
indigenisation agreement between Mimosa and the Government of Zimbabwe was
particularly pleasing and Winston Chitando (MD: Mimosa) played a pivotal role
in this regard.
The satisfactory operational improvements notwithstanding, Aquarius remains
acutely aware that despite the improvements, the company continued to consume
cash during the quarter. The price improvements and the weakened R/$ exchange
rate in January 2013 combined with the fact that the once-off costs associated
with the two aforementioned processes have been completed, is expected to
substantially reduce cash consumption and enable to company to start producing
cash at mine level.
From a PGM supply and demand perspective there seems to be consensus that both
platinum and palladium will move into primary supply deficit during 2013.
Whilst encouraging the increase in recycling, the continued depressed demand
from the auto producers and the substantial above ground inventories renders
significant further price increases unlikely.
Fact remains that despite the significant operational improvements, cash
generation at current spot prices remains constrained. It is against this
backdrop that management continues to focus on cash preservation and
operational stability and improvements. The Company is also focused on playing
a positive role in terms of improving relations with the South African and
Zimbabwean regulators. Ensuring all stakeholders appreciate what is required
for a sustainable industry in future is critical and work in this regard
continues.
Production by mine
Quarter ended
PGMs (4E)
Dec 2012 Sept 2012 % Change Dec 2011 % Change
Kroondal 102,525 92,073 11 86,796 18
Mimosa 52,752 56,341 (6) 50,456 5
Platinum Mile 1,349 3,270 (59) 3,328 (59)
Marikana - - - 28,809 -
Everest - - - 18,712 -
CTRP - 644 (100) 1,117 -
Total 156,626 152,328 3 189,218 (17)
Production by mine attributable to Aquarius (Operating mines)
Quarter ended
PGMs (4E)
Dec 2012 Sept 2012 % Change Dec 2011 % Change
Kroondal 51,262 46,037 11 43,398 18
Mimosa 26,376 28,171 (6) 25,228 5
Platinum Mile 1,349 3,270 (59) 3,328 (59)
Total 78,987 77,478 2 71,954 10
Aquarius Group quarterly attributable production (PGM ounces) to 31 December 2012
[Please refer to www.aquariusplatinum.com for graph]
Market Summary
At the beginning of the quarter the PGM Rand basket price continued to rise as
persistent illegal strikes triggered concerns for both future supply of PGMs
and how it will impact the overall South African economy. The pessimism on
supply did not last long as the basket price peaked at R12,398 per oz in
mid-October (from a trough R9,525 per oz in mid-August) at which point the US$
dollar metal prices began to retreat; by the end of October, platinum and
palladium were both trading at two-month lows. In November, following the
conclusion of the US Presidential elections and the anticipation of a continued
expansionary monetary policy, commodity prices strengthened. PGM prices were
further supported by the publication of Johnson Matthey's Platinum 2012 Interim
Review highlighting a global deficit in platinum as a result of reduced supply
from South Africa and a decline in open-loop recycling. However, resolutions to
illegal strike activity in the region, together with negative news surrounding
the euro zone economy and investor nervousness over the US 'fiscal cliff' at
the end of the period weighed on PGM prices and resulted in a disappointing end
to a difficult quarter.
The average platinum price increased by 6.6%, while palladium increased by 6.7%
and rhodium decreased by 3.1% quarter on quarter. Gold rallied by 3.9% on
average. Platinum closed the quarter down 8.5% at $1,539 per ounce, while
palladium rose by 9.1% to $703 per ounce and rhodium fell by 1.8% to $1,080
over the same period. Gold fell 5.9% to $1,675 per ounce.
Rand-Dollar exchange rate
The average Rand-Dollar exchange rate weakened during the quarter, falling by
4% from R8.28 to R8.65 to the US dollar. Since then, it has traded in a narrow
range to average 8.62 in the first two weeks of January.
The average Rand basket price for the quarter increased by 10%
quarter-on-quarter, and the spot price by 2% over the period. The US Dollar
weighted average group basket price increased by 5% to $1,245 per 4E PGM ounce
compared to the previous quarter. due to Rand weakness. The average South
African basket price at AQPSA's operations was R10,769 per PGM ounce for the
period. Subsequent to the end of the quarter, the PGM basket price has
consolidated to average R10,788 per PGM ounce for the first two weeks of
January.
[Please refer to www.aquariusplatinum.com for graphs]
Average PGM basket prices achieved at Aquarius operations
Quarter ended
US$ per PGM ounce (4E)
Dec 2012 Sept 2012 % Change Dec 11 % Change
Kroondal 1,261 1,195 6 1,262 (0)
Marikana - - - 1,277 (100)
Everest - - - 1,259 (100)
Mimosa 1,213 1,148 6 1,303 (7)
CTRP - 1,338 (100) 1,296 (100)
Platinum Mile 1,269 1,272 - 1,208 5
Weighted Avg. 1,245 1,182 5 1,272 (2)
Operating Review Summary (all numbers on 100% basis)
AQUARIUS PLATINUM (SOUTH AFRICA) (PTY) LTD (Aquarius Platinum - 100%)
P&SA 1 at Kroondal (Aquarius Platinum - 50%)
* 12-month rolling average DIIR improved to 1.39 per 200,000 man hours from 1.41
in the previous quarter
* Production increased to 1,727,000 tonnes from 1,410,000 tonnes
* Head grade deteriorated from 2.51 g/t to 2.41 g/t
* Recoveries deteriorated by 1% to 79%
* Volumes processed increased to 1,669,000 tonnes
* Stockpiles at the end of the quarter totalled approximately 75,000 tonnes
* PGM production increased by 11% to 102,525 PGM ounces
* Revenue increased by 13% to R956 million quarter-on-quarter due to improved
production and an increase in the 4E Basket Price
* Mining cash costs decreased by 11% to R516 per tonne, due to improved
production
* Unit cost per PGM ounce reduced 7% to R8,403 per PGM ounce due to improved
production
* Kroondal's cash margin for the period improved from 2% to 10%
[Please refer to www.aquariusplatinum.com for graph]
Commentary
Kroondal: Production at Kroondal was 1.72 million tonnes, up 22% compared to
the previous quarter
The migration from contractor to owner operator, which was first announced as
part of the year-end results, has been successfully completed and substantially
all costs in relation to this initiative incurred. The migration has been
positively received by organised labour, employees and suppliers and is one of
the main reasons contributing to the increased morale amongst the workforce and
contributed to the completion of a strike free quarter. Regretfully, two of
Kroondal's employees were killed in separate incidents on their way to work
during the quarter. The Board and Management of Aquarius express their sincere
condolences to the families of the deceased.
All mining sections, on all shafts, have completed training on the
implementation of the revised support regime.
While the Department of Mineral Resources (DMR) continued with visits to the
operations, there were no Section 54 notices issued during the quarter. The
number of Section 54 notices issued has reduced significantly during the course
of the year due to improved communication and relationships between the Company
and the DMR as well as continued focus on its policies and procedures.
P&SA2 at Marikana (Aquarius Platinum - 50%)
As disclosed previously, as a result of current low Rand PGM basket prices, the
remaining shaft (Marikana 4 shaft) and the processing plant at Marikana have
been placed on care and maintenance until further notice.
Everest Mine
As disclosed previously, as a result of current low Rand PGM basket prices,
temporary geological problems and unstable labour relations, the Everest mine
has been placed on care and maintenance until further notice.
AQPSA Operating cash costs per ounce (Rand)
4E 6E 6E net of by-products
(Pt+Pd+Rh+Au) (Pt+Pd+Rh+Ir+Ru+Au) (Ni&Cu)
Kroondal 8,403 6,895 6,756
Capital expenditure
Kroondal
(R'000 unless otherwise stated) Total Per 4E oz
Ongoing establishment of infrastructure 65,099 635
Project capital (K6 shaft) 50,358 491
Mobile equipment 40,382 394
Total 155,839 1,520
Kroondal mine: reconciliation of cash costs per 4E ounce
Cost per 4E ounce
(Rand)
Q2 HY1
Total operating expenditure 10,296 10,633
Less:
Ongoing capital expenditure & mobile equipment (1,029) (1,142)
Project capex (K6 shaft) (491) (509)
Transition costs (373) (294)
On mine cash costs 8,403 8,688
The Company continues to develop the K6 shaft at Kroondal and conduct design
and drill work at Everest. The K6 shaft sinking project remains on budget and
is ahead of time. The Company expects to incur R90 million in capital (R45
million attributable to Aquarius) during H2 on this project, in line with
budget. Work on this shaft is currently performed by a mining contractor and
Aquarius is currently doing the planning to take over operational
responsibility, in line with its decision to move to owner operator.
Almost all other project and growth capital expenditure has been placed on
hold, pending improved market conditions. The Company is continuing with the
necessary maintenance capital expenditure required by its operating mines. The
capital expenditure on mobile equipment is financed through a lease agreement
over the life of the equipment.
MIMOSA INVESTMENTS (Aquarius Platinum - 50%)
Mimosa Platinum Mine
* 12-month rolling average DIIR improved to 0.16 per 200,000 man hours worked
* Production decreased by 5% to 600,066 tonnes, in line with forecast
* Head grade improved slightly to 3.67g/t
* Recoveries improved slightly to 77.8%
* Volumes processed decreased by 7% to 575,638 tonnes
* Stockpiles at the end of the quarter totalled approximately 123,191 tonnes
* PGM production decreased by 6% to 52,752PGM ounces in line with forecast
* Revenue increased by 16% to US$68 million due to improved metal prices
* Mining cash costs increased by 8% to US$82 per tonne, and costs per PGM ounce
by 8% to $897
* Stay-in-business capital expenditure was $171 per PGM ounce for the quarter
* Mimosa's cash margin for the period decreased from 20% to 16% due to increased
cost.
[Please refer to www.aquariusplatinum.com for graph]
Commentary
The Mimosa mine continues to operate well, despite growing cost pressures which
led to above expectation increases in cost. Discussions on indigenisation were
concluded during the month and this culminated in the signing of a term sheet
on the 14 December 2012. The term sheet sets out the key details of the
indigenisation plan and paves way for the drafting of detailed agreements that
will facilitate the implementation of the plan. It is envisaged that all
agreements will be finalised by the end of March 2013.
Operating cash costs per ounce
Unit cash costs per PGM ounce (before by-product credits) were 5% higher than
those achieved in the previous quarter. The higher costs were mainly due to
decreased PGM production relative to Q1, the temporary increase in reagent
usage, as well as costs incurred in building the ore stock pile following the
fire incident in May 2012. Metal recoveries, though marginally improved from
the previous quarter, are still below expected levels. The consumption of
chemicals and reagents was increased, and exceeded budget, in an effort to
improve recoveries and to counter lower-than-anticipated process efficiencies.
Reagents will be changed as soon as existing inventory levels have been
depleted by June 2013. A dedicated team has been put in place to work on an
initiative to improve recoveries and other plant efficiencies by about 3%
within the next 12 months.
4E 6E 4E net of by-products
(Pt+Pd+Rh+Au) (Pt+Pd+Rh+Ir+Ru+Au) (Ni, Cu & Co)
Mimosa 897 848 586
Capital expenditure
The total capital expenditure for the second quarter amounted to $9 million.
Expenditure was mainly incurred in mobile equipment, Drill Rigs and LHD;
Conveyor belt extension, Down dip Development, and Housing project.
TAILINGS OPERATION
Platinum Mile (Aquarius Platinum - 91.7%)
* Material processed decreased 66% to 389 million tonnes
* Head grade increased to 0.78 g/t
* Recoveries decreased to 10%
* Production decreased to 1,349 PGM ounces
* Cash costs increased to R7,688 per PGM ounce
* Revenue was R12 million for the quarter
* The cash margin for the period was 13%, an decrease from 35% in the previous
quarter
Commentary
Platinum Mile:
The results for the quarter were significantly impacted by strikes at Anglo
Platinum during the months of October and November. For this reason the
operation lost 13 production days in September and virtually the whole of
October and November 2012. These strikes continued into early December 2012
when production commenced as per normal. Whilst the results for the quarter
were impacted by these strikes, encouragingly a positive cash margin was
achieved despite these trying circumstances. The recently announced restructure
at Anglo Platinum is not expected to materially impact the operations of
Platinum Mile as it continues to treat only tails from the Merensky
concentrator whilst it is expected that Anglo Platinum will reduce UG2
production as part of its restructure.
Chromite Tailings Retreatment Plant (CTRP) (Aquarius Platinum - 50%)
The operation remains on care and maintenance since 6 August 2012.
Operating cash costs per ounce
4E 6E 4E net of by-products
(Pt+Pd+Rh+Au) (Pt+Pd+Rh+Ir+Ru+Au) (Ni, Cu& Co)
Platinum Mile 7,688 6,730 6,133
CORPORATE MATTERS
Issue of Shares to Support Black Economic Empowerment (BEE) Partners
As previously announced, in October 2012 the Company issued and allotted
14,000,000 fully paid common shares of US$0.05 at a price per share of 41.75
pence (A$0.64) as part of a transaction intended to preserve the black economic
empowerment ("BEE") credentials of Aquarius. The Board of Aquarius resolved
that it was in the interests of Aquarius, and in line with its ongoing
commitment to comply with the BEE and regulatory framework in South Africa, to
assist the BEE Partners to preserve their remaining shareholding in Aquarius.
Subsequent to the end of the quarter these shares which formed a limited
guarantee and pledge provided to the BEE Partners' financiers has been
released. These shares are currently held as Treasury.
Aquarius' full announcement released to the market on 4 October 2012 outlining
details of the transaction is available on Aquarius' website.
Mimosa Indigenisation
On 14 December 2012, Mimosa Investment Holdings ("Mimosa Investments"), which
is held jointly in a 50:50 partnership with Impala Platinum Holdings Limited,
concluded a term sheet in respect of a proposed indigenisation implementation
plan ("IIP") with the Government of Zimbabwe. The term sheet provides for the
key terms, subject to certain conditions precedent, of the sale by Mimosa
Investments of an aggregate 51% equity ownership of Mimosa Holdings (Private)
Limited ("Mimosa Holdings"), the wholly owned operating subsidiary of Mimosa
Investments which owns and manages the Mimosa mine. The sale consideration for
the 51% of Mimosa Holdings to the indigenous parties is US$550 million (50%
attributable to Aquarius), based on an agreed fair market value for Mimosa
Holdings of US$1.078 billion.
Mimosa Investments will provide a vendor loan funding mechanism to facilitate
the transaction which has a term of ten years. This loan will bear interest at
a rate of 9% annually and will be settled through the waiver of the right to
receive 90% of dividends due to the indigenous entities in favour of Mimosa
Investments. Any loan balance outstanding at the end of the ten-year period
will be payable in cash.
Aquarius' full announcement of 14 December 2012 outlines details of the
indigenisation plan and is available on Aquarius' website.
Potential acquisition of the Booysendal reserve
The Company remains in communication with the Department of Mining and
Resources ("DMR") in South Africa in relation to the outstanding approval from
the DMR required to implement this transaction. In the event of the approval
being granted before the end of April 2013 by which date the agreement lapses
the Company will advise shareholders accordingly.
Aquarius' full announcement of 4 May 2011, outlines details of this transaction
and is available on Aquarius' website.
Board Changes
Mr Stuart Murray resigned as director and CEO of Aquarius and executive
chairman of AQPSA in October 2012. Mr Jean Nel was appointed Chief Executive
Officer of the Group on 5 November 2012 and Mr Zwelakhe Mankazana,
Non-executive Chairman of AQPSA. Sir William Purves retired from the AQP Board
on 5 November 2012.
More information on all corporate matters can be found at
www.aquariusplatinum.com
Statistical Information: Kroondal P&SA1
[Please refer to www.aquariusplatinum.com for statistical information]
Statistical Information: Mimosa
[Please refer to www.aquariusplatinum.com for statistical information]
Statistical Information: Platinum Mile
[Please refer to www.aquariusplatinum.com for statistical information]
Aquarius Platinum Limited
Incorporated in Bermuda
Exempt company number 26290
Board of Directors
Nicholas Sibley Non-executive Chairman
Jean Nel Chief Executive Officer
David Dix Non-executive
Tim Freshwater Non-executive (Senior Independent Director)
Edward Haslam Non-executive
Kofi Morna Non-executive
Zwelakhe Mankazana Non-executive
Audit/Risk Committee
David Dix (Chairman)
Edward Haslam
Kofi Morna
Nicholas Sibley
Remuneration/Succession Planning Committee
Edward Haslam (Chairman)
David Dix
Zwelakhe Mankazana
Nicholas Sibley
Nomination Committee
Edward Haslam (Chairman)
Tim Freshwater
Kofi Morna
Willi Boehm
Company Secretary
Willi Boehm
AQPSA Management
Zwelakhe Mankazana Non-executive Chairman
Jean Nel Chief Executive Officer
Robert Schroder Managing Director
Graham Ferreira Finance Director
Wessel Phumo General Manager: Kroondal
Mimosa Mine Management
Winston Chitando Managing Director
Herbert Mashanyare Technical Director
Peter Chimboza Resident Director
Fungai Makoni General Manager Finance & Company Secretary
Platinum Mile Management
Richard Atkinson Managing Director
Paul Swart Financial Director
Issued Capital
At 31 December 2012, the Company had on issue: 486,851,336 fully paid common
shares and 120,000 unlisted options.
Substantial Shareholders 31 December 2012 Number of Shares Percentage
Chase Nominees Limited 31,756,135 6.52
JP Morgan Nominees Australia Limited 29,109,414 5.98
HSBC Custody Nominees (Australia) Limited 26,873,642 5.52
Primary Australian Securities Exchange Trading Information
Listing: (AQP.AX)
Premium London Stock Exchange (AQP.L) ISIN number BMG0440M1284
Listing:
Secondary JSE Limited (AQP.ZA) ADR ISIN number US03840M2089
Listing:
Convertible Bond ISIN number
XS0470482067
Broker (LSE) (Joint) Broker (ASX) Sponsor (JSE)
Liberum Capital
Limited
Ropemaker Place,
Level 12
25 Ropemaker Street, Rand Merchant Bank
London Euroz Securities (A division of FirstRand Bank
Level 18 Alluvion Limited)
EC2Y 9LY 58 Mounts Bay Road, 1 Merchant Place
Telephone: +44 (0) Perth WA 6000 Cnr of Rivonia Rd and Fredman
20 3100 2000 Telephone: +61 (0) 8 Drive, Sandton 2196
9488 1400 Johannesburg South Africa
Bank of America
Merrill Lynch
2 King Edward St
London, EC1A 1HQ
Telephone: +44 (0)20
7628 1000
Aquarius Platinum (South Africa) (Proprietary) Ltd
100% Owned
(Incorporated in the Republic of South Africa)
Registration Number 2000/000341/07
Unit 16, Berkley Office Park, 8 Bauhinia Street, Highveld Techno Park,
Centurion, Pretoria, South Africa.
Postal Address: PO Box 76575, Wendywood, 2144, South Africa
Telephone: +27 (0)120012001
Facsimile: +27 (0)120012070
Aquarius Platinum Corporate Services Pty Ltd
100% Owned
(Incorporated in Australia)
ACN 094 425 555
Level 4, Suite 5, South Shore Centre, 85 The Esplanade, South Perth, WA 6151,
Australia
Postal Address: PO Box 485, South Perth, WA 6151, Australia
Telephone: +61 (0)8 9367 5211
Facsimile: +61 (0)8 9367 5233
Email: info@aquariusplatinum.com
For further information please visit www.aquariusplatinum.com or contact:
In the United Kingdom and South Africa: In Australia:
Jean Nel Willi Boehm
+27 12 001 2001 +61 (0) 8 9367 5211
Glossary
A$ Australian Dollar
Aquarius Aquarius Platinum Limited
or AQP
APS Aquarius Platinum Corporate Services Pty Ltd
AQPSA Aquarius Platinum (South Africa) (Pty) Ltd
ACS(SA) Aquarius Platinum (SA) Corporate Services (Pty) Ltd
BEE Black Economic Empowerment
BRPM Blue Ridge Platinum Mine
CTRP Chrome Tailings Retreatment Operation. Consortium comprising Aquarius
Platinum (SA) (Corporate Services) (Pty) Limited (ASACS), Ivanhoe
Nickel and Platinum Limited and Sylvania South Africa (Pty) Ltd
(SLVSA).
DIFR Disabling injury frequency rate -being the number of lost-time
injuries expressed as a rate per 1,000,000 man-hours worked
DIIR Disabling injury incidence rate -being the number of lost-time
injuries expressed as a rate per 200,000 man-hours worked
DME formerly South African Government Department of Minerals and Energy
DMR South African Government Department of Mineral Resources, formerly the
DME
Dollar United States Dollar
or $
Everest Everest Platinum Mine
Great A PGE bearing layer within the Great Dyke Complex in Zimbabwe
Dyke
Reef
g/t Grams per tonne, measurement unit of grade (1g/t = 1 part per million)
JORC Australasian code for reporting of Mineral Resources and Ore Reserves
code
JSE JSE Limited
Kroondal Kroondal Platinum Mine or P&SA1 at Kroondal
LHD Load haul dump machine
Marikana Marikana Platinum Mine or P&SA2 at Marikana
Mimosa Mimosa Mining Company (Private) Limited
nm Not measured
PGE(s) Platinum group elements plus gold. Five metallic elements commonly
(6E) found together which constitute the platinoids (excluding Os
(osmium)). These are Pt (platinum), Pd (palladium), Rh (rhodium), Ru
(ruthenium), Ir (iridium) plus Au (gold)
PGM(s) Platinum group metals plus gold.Aquarius reports the PGMs as
(4E) comprising Pt+Pd+Rh plus Au (gold) with the Pt, Pd and Rh being the
most economic platinoids in the UG2 Reef
PlatMile Platinum Mile Resources (Pty) Ltd
P&SA1 Pooling & Sharing Agreement between AQPSA and RPM Ltd on Kroondal
P&SA2 Pooling & Sharing Agreement between AQPSA and RPM Ltd on Marikana
R South African Rand
Ridge Ridge Mining Limited
ROM Run of mine. The ore from mining which is fed to the concentrator
plant. This is usually a mixture of UG2 ore and waste.
Tonne 1 Metric tonne (1,000kg)
TARP Trigger Action Response Procedure
UG2 Reef A PGE-bearing chromite layer within the Critical Zone of the Bushveld
Complex
