10th Aug 2006 07:00
AQUARIUS PLATINUM LIMITED2006 FULL YEAR RESULTS: 30 June 2006Record production and strong prices delivera four-fold increase in net profit to $85.6 millionHighlights of the year: * Record group production of 447,693 PGM ounces * Net profit up 309% to $85.6 million (US 101 cents per share) * Cash profit up 141% to $114.4 million (US135 cents per share) * Full Year dividend increases three-fold to US 24 cents per share Operational * Group attributable production up 37% to 447,693 PGM ounces (2005: 327,669 PGM ounces) * Kroondal production record as expansion ramped up * Significant improvements at year end show promise at Marikana * Everest mine delivers production ahead of schedule * Mimosa expansion completed to deliver more production in new-year * Chrome tailings project increased production Financial * Revenue increased 92% to $426.6 million * Net profit after tax "cash basis" up 141% to $114.4 million, equal to US 135 cents per share * Net profit increases 309% to $85.6 million, equal to US 101 cents per share * Cash balances rose to $162.4 million * US 18 cents per share final dividend declared, payable on 6 October 2005, (2005: US 5 cents). Total 2006 dividend (interim and final) up three-fold to US 24 cents (2005: US 8 cents) Strategic * Everest Mine construction completed with production ahead of schedule, continuing ramp up into 2007 * Marikana Pool & Share Agreement completed, showing promise at year end * Mimosa Wedza IV expansion completed, ramping up into 2007 Commenting on the full year results, Stuart Murray, CEO of Aquarius Platinumsaid, "The 2006 financial year stands out for great commodity prices, and I amdelighted that once again Aquarius has taken full advantage by benefiting fromsignificant growth in production.Our financials are in a strong position: a fourfold increase in net profit hasresulted in the Board declaring a significant increase in the dividend to US 24cents. Looking to the operations the highlight this year is undoubtedly theEverest Mine. We have successfully completed ahead of time and below budget newlow cost platinum mine in South Africa. The implementation of the Marikana P&SA2 was also a major milestone.Looking to the future, 2007 will see further increases in production asoperation ramp-ups complete. I also believe that at our Kroondal and Marikanaoperations there is scope for improvements in our operational performance.But we are not content to sit back and enjoy the fruits of our labours. It isnot my plan to watch Aquarius become an ex-growth story. Aquarius is aboutinnovation and we will continue through 2007 to work hard on corporate andstrategic fronts to deliver new growth opportunities."Aquarius announces consolidated earnings for the year to 30 June 2006 of $85.6million equal to US 101 cents per share. This represents a 309% increase in netprofit over the previous year. The increase is attributed to a 37% increase inproduction to 447,693 PGM ounces and an increase in the average 4E PGM basketprice (Platinum, palladium, rhodium and gold) for the group to US$932 per ouncein 2006 compared to US$641 per ounce in 2005.Cash earnings (before depreciation and amortisation) were $114.4 million orUS135 cents per share representing an increase of 141% for cash earnings overthe previous year.The Directors have declared a final dividend of 18 cents (2005: 5 cents) pershare payable on 6 October 2005 to shareholders registered on 15 September2006. This brings the total dividend payable for the year ended 30 June 2006 toUS 24 cents, an increase of 200% over last year.Net Profit and Production comparison by half year and full year, FinancialYears 2005 and 2006 1H 2006 2H 2006 FY 2006 FY2005 Change Net Profit after tax and $25.9m $59.7m $85.6m $20.9m 309%minorities PGM Production (4E) (ounces) 198,426 249,267 447,693 327,669 37%As outlined in the table above, this year's performance has shown a strongersecond half of the year as the Group's expansion program delivered moreproduction as PGM basket prices increased. The increased production is largelyattributable to the new Everest mine which was commissioned in December 2005.The Group's existing operations expect to produce in excess of 600,000 PGMounces in FY2007.Revenues from ordinary activities for the period rose 92% to $426.6 million(comprising sales revenue of $417.4 million and interest and other income of$9.2 million) from $223.1 million (sales revenue $210.1 million and interestand other income of $12.2 million). The increased revenue was due to a 37%increase in PGM production and a 45% increase in the average PGM basket priceover the year.Cost of production for the year at $223.1 million was lower at $498 per PGMounce from $534 per PGM ounce in FY 2005.Operating performances at all mines was good with Kroondal, the new Everestmine and Mimosa contributing the majority of the profits. The performance ofEverest was particularly pleasing with an on mine cash margin of 61%.Marikana continued its turn around and returned a net profit despite being inthe midst of a transition from an opencast to an underground operation and alsoa change of contractor.The CTRP, despite experiencing problematic feed stock quality issues, delivereda modest net profit for the period.Amortisation and depreciation was marginally higher compared to FY 2005 at $29million from $26 million despite a 37% increase in production. This was due tolower amortisation and depreciation at Marikana arising from the implementationof the P&SA2 and reduced production during the start-up phase of the newcontractor. Amortisation and depreciation at Marikana decreased by $9.6m to$4.7m for the year. Going forward, as the emphasis at Marikana shift tounderground mining a decision has been taken to rehabilitate the portion of thewaste dump that is directly attributable to the open pit operations over ashorter period consistent with the open pit mining plan. This will reduce therehabilitation business risk to the Company, however, this decision will see anadditional R25 million per year charged to the amortisation line of futureincome statements of the next four years.Aquarius incurred net finance charges for the period of $2.1 million,comprising $8.3 million in interest income and $10.4 million interest expense,which included a non-cash component of $1.7 million relating to the movement inthe net present value of the Marikana and Kroondal rehabilitation provisions.Interest expense includes interest paid on pipeline finance advanced from thesmelters.Aquarius' cash balances of $162 million at 30 June 2006 are expected toincrease progressively (subject to any corporate activity) in line with theGroup's increased production profile for FY2007 of +600,000 PGM ounces. Thistogether with the current RMB facility will provide Aquarius with the requisitefunding for any future growth opportunities and for balance sheet optimisationand for the continued progressive dividends.Group Financials by Operation Kroondal Marikana Mimosa CTRP Everest Corporate Total (1) 50% (2) PGM ounces 219,722 56,617 71,204 3,119 97,031 - 447,693(attributable) Revenue (net of FX 214.3 53.4 70.4 3.3 91.5 6.9 439.8sales variance) Cost of sales: On mine cash costs (87.7) (43.8) (34.3) (1.5) (34.1) - (201.4) Amortisation and (8.2) (4.3) (2.9) (0.3) (5.9) - (21.6)depreciation Gross profit 118.4 5.3 33.2 1.5 51.5 6.9 216.8 Amortisation of fair (6.3) (0.4) (0.5) - - - (7.2)value Gross profit after 112.1 4.9 32.7 1.5 51.5 6.9 209.6FVU Corporate admin and - - - - - (8.0) (8.0)other costs Foreign currency 0.6 2.0 1.1 - (0.1) (2.7) 0.9gain/(loss) Finance charges - - (1.1) - - (9.3) (10.4) Profit/(loss) before 112.7 6.9 32.7 1.5 51.4 (13.1) 192.1tax Tax Expense - - (5.3) - - (45.8) (51.1) Profit/(loss) after 112.7 6.9 27.4 1.5 51.4 (58.9) 141.0tax Minority interest - - - - - (55.4) (55.4) Profit/(loss) after 112.7 6.9 27.4 1.5 51.4 (114.3) 85.6minority interest (1) Marikana results are not comparable to previous periods due toimplementation of the Marikana P&SA in September 2005(2)Everest mine was transferred to operations on 1st January 2006.Cash balancesAquarius Group cash balances increased by $87 million since 30 June 2005 to$162.4 million at 30 June 2006.Cash holdings in the group comprise Aquarius Platinum Limited $43 million.Major factors (other than mine operations) that impacted on the movement incash included:Investec facility AQPSA ($26 million) RMB facility drawdown AQPSA $27 million Income tax paid AQPSA/Mimosa ($32 million) Dividends paid AQP ($9 million) Interest received Group $8 million Interest paid Group ($10 million) Share loan repayments/options exercised AQP $10 million Capital expenditure Group ($113 million) Dividends Received AQP 11.5 millionGroup DebtIn October 2005, AQPSA concluded a re-finance of its borrowing facilities whichresulted in a new Corporate facility being established with RMB. The RMBfacility comprises: * R450 million loan facility (main facility) * R200 million standby facility * R50 million guarantee facility Interest bearing debt:In summary, Group interest bearing debt at 30 June 2006 was $41 millioncomprising the RMB facility: $27 million and the SavCon long-term debt: $14million. The previous facility with Investec and ABSA was repaid in October2005.The US Dollar was 10% weaker against the Rand during the year at an averageexchange rate of R6.42 to the US Dollar for the year. This continued to placethe South African operations, particularly Marikana, under pressure. During thelast quarter of the financial year, the US dollar strengthened against the Randto close at R7.15to the US Dollar. This shift is positive for earnings.Cash CostsCash costs at Kroondal were R2,565 per PGM ounce inclusive of costs that wereattributable to the development of the P&SA decline development. On an adjustedbasis (as indicated in the table below) cash costs for the year were R2,226 perPGM ounce, a credible result being 7% higher than costs achieved in theprevious year.Cash costs per PGM ounce: explanation FY2006 FY2005 Variance Cash costs 2,565 2,310 255 P&SA decline development (235) (211) (24) Grade dilution due to decline (104) (24) (80)development Cash costs after adjustments 2,226 2,075 151Marikana's performance was characterised by a difficult third quarter which sawproduction curtailed by a change of contractor and also unusually high rainfallduring January and February. As a result the cash costs increased in the secondhalf year from R4,501 per PGM ounce to R4,980 per PGM ounce for the full year.The present cost profile is not expected to continue as the mine implements theP&SA2.The Everest mine continued its ramp up phase during the year with a crediblecost performance of R2,390 per PGM ounce. These costs are expected to improvefurther once the mine reaches steady state production.Operating costs at the Mimosa Mine decreased by 6% to $336 per PGM ounce ($100per PGM ounce after by-product credits.) The decrease in cash costs is largelydue to above budget production year.Costs at the CTRP averaged R2,507 per PGM ounce for the year. Operating costshave trended down during the year averaging R1,721 per PGM ounce in the lastquarter of the year.Cash Costs at Operations Rand (4E) per ounce Rand (6E) per ounce Rand 6E per ounce Kroondal (P& 2,565 2,111 2,020SA1) Marikana (P& 4,980 4,125 3,975SA2) Everest 2,390 2,057 1,955 Mimosa US$336 US$310 US$100 CTRP 1,721 1,217 1,176Platinum Group Metal Prices ($ per ounce)PGM prices in US Dollar terms continued to perform well during the year.Platinum, palladium, rhodium and gold all closed the year higher.Continued long-term supply concerns coupled with short-term supply constraintsout of South Africa saw platinum average $1,017 per ounce over the year,closing 39% higher at $1,226 per ounce. Palladium, despite greater supply thanplatinum, benefited from improved supply transparency and a new market as analternative white jewellery metal, averaged $264 per ounce over the year, andclosed 75% higher for the year at $316 per ounce. Rhodium supply was tight dueto limited production. Strong demand from the autocatalyst market (due torhodium's ability to limit nitrogen oxide emissions) put pressure on the price.Rhodium started the year at $1,920 per ounce and closed 150% higher at $4,800per ounce. Rhodium reached in excess of $6,000 per ounce in May, averaging ahigh $3,373 per ounce for the year. This boosted the PGM basket during thesecond half.The South African PGM basket price averaged 45% higher for the year at US$1,030per 4PGE ounce driven by a strong rhodium price. In Zimbabwe (where the ratioof metals is lower in rhodium and higher in palladium), the basket price forthe year averaged 26% higher for the year at US$741 per 4PGE ounce.The PGM (4E) basket (platinum, palladium, rhodium and gold) comprises theprincipal revenue driving commodities produced; in addition, economicquantities of ruthenium, iridium, copper, nickel, cobalt and chromite are alsoproduced, with revenues used to offset costs. These metals also enjoyed healthygains over the year demonstrated in the PGE(6E) basket after by-product costsdetailed in the table above.FINANCIALS Aquarius Platinum Limited Consolidated Income Statement Year ended 30 June 2006 $'000 Note: Half year ended Year ended 30/06/06 31/12/05 30/6/06 30/6/05 Aquarius PGM Production 249,267 198,426 447,693 327,669(attributable ounces) Revenue (i) 266,863 159,706 426,569 222,327 Foreign exchange gain/ (ii) 15,525 (2,297) 13,228 2,797(loss) Cost of Sales (iii) (124,514) (98,550) (223,064) (174,936) Gross Profit 157,874 58,859 216,733 50,188 Amortisation of fair value (iv) (3,437) (3,725) (7,162) (6,745)uplift of mineral properties Gross profit after 154,437 55,134 209,571 43,443amortisation of fair value uplift Admin & other operating (v) (6,044) (1,983) (8,027) (5,976)costs Other FX movements (vi) (294) 1,207 913 484 Finance costs (vii) (8,059) (2,324) (10,383) (9,889) Profit before tax 140,040 52,034 192,074 28,062 Income tax expense (38,490) (12,581) (51,071) (3,446) Profit after tax 101,550 39,453 141,003 24,616 Minority interest (viii) (41,835) (13,538) (55,373) (3,666) Net profit 59,715 25,915 85,630 20,950 EPS (basic - cents) 69.37 31.50 100.87 25.32Notes on the June 2006 Consolidated Income Statement i. Sales revenue was higher due to increased PGM ounces (120,024 ounces) and higher PGM basket prices. ii. Foreign exchange variances caused by the difference between revenue recorded at time of production to cash received at the end of the four month pipeline iii. Cost of sales reflects 37% increase in production over previous year iv. Amortisation of fair value of mineral properties at Kroondal, Marikana and Mimosa v. Administration and other costs are higher due to increased corporate activity, BEE management and finance renegotiation vi. Reflects foreign exchange movements on net monetary assets vii. Finance costs were higher on SavCon interest expensed following commissioning of the Everest mine and interest on pipeline finance on increased production viii. Reflects profit of AQPSA attributable to minority interests SavCon [(29.5%) and Implats (20%), totalling 49.5%] ix. Aquarius Platinum Limited Consolidated Cash flow Statement Year ended 30 June 2006 $'000 Half year ended Financial year ended Note: 30/06/06 31/12/05 30/06/06 30/06/05 Net operating cash inflow (i) 116,830 58,701 175,531 31,458 Net investing cash outflow (ii) (37,474) (75,406) (112,880) (88,152) Net financing cash outflow (iii) 3,666 23,495 27,161 54,921 Net increase (decrease) in 83,022 6,790 89,812 (1,773)cash held Opening cash balance 84,954 75,251 75,251 77,942 Exchange rate movement on (iv) (5,551) 2,913 (2,638) (918)cash Closing cash balance 162,425 84,954 162,425 75,251Notes on the June 2006 Consolidated Cash flow Statement i. Net operating cash flow includes inflow from operations ($209 million), tax paid ($32 million) and net finance costs ($2 million). ii. Reflects payments for mine development and development costs ($111 million), mine-site rehabilitation ($1.8 million) iii. Reflects net proceeds from issue of shares ($7.2 million), net proceeds from RMB loan and repayment of Investec loan ($27 million), proceeds from repayment of share plan loans ($2.5 million) and payment of dividends ($9.1 million) iv. Reflects movement of Rand against the US Dollar Aquarius Platinum Limited Consolidated Balance Sheet At 30 June 2006 $'000 Financial year ended Note: 30/06/06 30/06/05 Assets Cash assets 162,425 75,251 Current receivables (i) 66,721 44,695 Other current assets (ii) 19,828 16,312 Property, plant and equipment (iii) 144,449 137,819 Mining assets (iv) 308,517 271,050 Other non-current assets 6,994 3,365 Total assets 708,934 548,492 Liabilities Current liabilities (v) 35,463 35,480 Non-current payables (vi) 143,933 150,735 Non-current interest-bearing (vii) 40,846 16,037liabilities Other non-current liabilities (viii) 105,419 78,315 Total Liabilities 325,661 280,567 Net assets 383,273 267,925 Equity Parent entity interest 304,995 235,352 Minority interest 78,278 32,573 Total Equity 383,273 267,925Notes on the June 2006 Consolidated Balance Sheet(i) Reflects debtors receivable on PGM concentrate sales. Increase reflectsdebtors from new Kroondal concentrator and Everest mine(ii) Reflects PGM concentrate inventory(iii) Reflects Mimosa plant, Marikana plant, Kroondal expansion and Everestexpansion(iv) Mining assets reflects mine development expenditure on Kroondal, Mimosa,Marikana and Everest(v) Includes tax payable ($2.2 million), creditors ($33.2 million)(vi) Includes BEE deferred settlement proceeds ($10.5 million) and non interestbearing portion of AQPSA shareholder debt (Implats $57.6 million) and SavCon($71.2 million), lease liability ($4.5 million)(vii) Includes interest bearing debt payable to RMB ($27 million), SavCon ($14million)(viii) reflects deferred tax liabilities ($73.3 million), provision for closurecosts ($32.1 million)CORPORATEBoardMr Timothy Freshwater has joined the Board of Aquarius Platinum Limitedeffective 9th August 2006. Mr Freshwater is a solicitor in the UK and Hong Kongand has been involved in Asian markets for over 30 years. Mr Freshwater ViceChairman of Goldman Sachs Asia and is also a Director of a number of companies,including Liu Chong Hing Bank Limited, Pacific Century Insurance HoldingsLimited and Cosco Pacific Limited. He is a member of the board of directors ofthe Community Chest of Hong Kong.Marikana Pool & Share Agreement (P&SA2)The P&SA2 between AQPSA and Anglo Platinum was retrospectively implemented onSeptember 22nd 2005. Production from No. 4 shaft, transferred from Kroondal P&SA came on stream in the second half of the financial year as anticipated.Contractor dispute with Moolman MiningAQPSA resiled from the mining contract with Moolman Mining during December 2005on the basis of a misrepresentation on the part of Moolman Mining when themining contract was originally concluded. This misrepresentation becameapparent to AQPSA after the audit, conducted by KPMG during October 2005, intothe rise and fall formula applied in the mining contract.In the notice of recission, AQPSA advised Moolman Mining that AQPSA wouldinstitute a damages claim in an amount of R963,775,098. A notice was served onGrinaker LTA on 18 April 2006. Moolman Mining has indicated their intent todefend the action by serving the applicable notice in law.Arbitration was initiated by Moolman Mining before AQPSA resiled from themining contract. AQPSA launched an application to stay these proceedings. Thisapplication was served on Moolman Mining on 15 May 2006 with them having inreturn, served notice of their intention to oppose same.OPERATIONSProductionProduction of PGMs attributable to shareholders of Aquarius increased 37% to447,693 PGM ounces from 327,669 ounces. All mines enjoyed increased production,with the exception of Marikana where Aquarius' attributable production wasshared following the P&SA2 in September 2005. The P&SA2 is due to doubleproduction and add 10 years additional mine life. The tables below detailproduction by operation and then attributable to Aquarius at each operation,over the four quarters and with annual production compared year on year.Production by mine PGMs Quarter Ended Full Year Ended Quarter 1 Quarter 2 Quarter 3 Quarter 4 FY 2006 FY 2005 % +/- Kroondal 115,362 117,175 107,501 99,406 439,444 324,730 35% Marikana 27,322 20,789 5,810 31,992 85,912 99,161 (9%) Everest - 7,111 46,081 43,838 97,031 - - Mimosa 36,368 35,394 33,252 37,395 142,407 130,167 9% CTRP 1,363 1,533 1,484 1,856 6,234 2,117 194% Total 180,415 182,002 194,128 214,487 771,028 556,175 39%Production by mine Attributable to Aquarius PGMs Quarter Ended Full Year Ended Quarter 1 Quarter 2 Quarter 3 Quarter 4 FY 2006 FY 2005 % +/- Kroondal 57,681 58,588 53,751 49,703 219,722 162,365 35% Marikana 27,322 10,394 2,905 15,996 56,617* 99,161 (43%) Everest - 7,111 46,081 43,838 97,031** - - Mimosa 18,184 17,697 16,626 18,697 71,204 65,084 9% CTRP 682 767 742 928 3,119 1,059 194% Total 103,869 94,557 120,105 129,162 447,693 327,669 37%*Year on year figures are not comparable due to implementation of the MarikanaP&SA (P&SA2) in Sept 2005** Everest mine as commissioned in December 2005Aquarius remains on track to produce its strategic target of 600,000 ouncesattributable to Aquarius. Indeed, the current production profile suggests thepotential to produce up to 700,000 ounces, therefore providing considerableupside from this year's production of 447,693 PGM ounces.In South Africa, the Kroondal P&SA is complete with the project on schedule toproduce 505,000 PGM ounces (50% attributable to Aquarius) per annum, with asignificant life-of-mine extension to 2017.The Marikana Pool & Share Agreement (P&SA2) was completed in September 2005,with construction of underground activities progressing well. As Marikanatransforms into an underground focussed operation, the mine is targetingproduction of 250,000 PGM ounces a year (50% attributable to Aquarius), with asignificant life-of-mine extension to 2024.In December 2005, the Everest Mine completed construction and was transferredto operational status as of 1 January 2006. Production is currently splitbetween open pit and underground operations. In the 2007 financial year theoperation will move exclusively underground and complete its ramp-up and toproduce an annual average of 225,000 PGM ounces over the project's 10 yearlife-of-mine.The Chrome Tailing Retreatment Project (CTRP) continues to ramp up productionwith improvements towards the year-end suggesting a more positive outlook.In Zimbabwe, the Mimosa Mine completed the Wedza IV Upgrade expansion,increasing production capacity to 168,750 PGM ounces from 135,000 PGM ouncecapacity (Aquarius attributable 50%).Mine production FY2006 and targeted mine and attributable productionPGM (4E) Production FY Production FY Production Production ounces 2006 2006 Targeted Targeted (Attributable) (Attributable) Kroondal 439,444 219,722 505,000 252,500 Marikana 85,912 56,617* 250,000 125,000 Everest 97,031 97,030 225,000 225,000 Mimosa 142,407 71,204 168,750 84,375 CTRP 6,234 3,119 18,000 9,000 Total 771,028 447,693 1,166,750 695,875*Reflects Marikana P&SA2, effective Q2 2006AQUARIUS PLATINUM (SOUTH AFRICA) (PTY) LTD (Aquarius Platinum 50.5%)P&SA1 at KroondalSafetyThe 12-month rolling average DIIR for the quarter deteriorated to 0.96 from0.75 in the previous year. By the end of the year Kroondal achieved 1,000,000fatality-free shifts.ProductionKroondal achieved record production of 439,444 PGM ounces for the year, anincrease of 35% on the previous year. The P&SA1 expansion was completed and themine is capable of production of 505,000 PGM ounces annually.Kroondal: Metal in concentrate produced (PGM ounces)Year Ended Pt Pd Rh Au PGMs (4E) PGMs (4E) attributable to Aquarius 2006 262,263 128,318 46,663 2,201 439,444 219,722 2005 194,290 93,984 34,916 1,540 324,730 162,365* 2004 143,408 68,223 24,913 1,081 237,625 160,190** 2003 128,811 58,179 21,175 895 209,061 209,061*Reflects full impact of P&SA (12 months production at 50%)**Reflects P&SA effective November 2003 (4 months production at 100% & 8 monthsproduction at 50%)Production resulted from 6,041,000 ROM tons: 5,639,000 from undergroundoperations and 403,000 ROM tons from open pit operations. The head-grade overthe period averaged 5% lower compared to previous year at 2.89g/t. Improvementsin head grade as a result of development are anticipated by the end of thecalendar year. Recoveries were 1% lower at 78%, although these did see animprovement in the final quarter of the financial year to 79%.RevenueThe average PGM basket price for the year increased 45% to $1,033 per PGMounce. Over the year, however, the PGM basket rose steadily, averaging $1,306per PGM ounce in the final quarter. This resulted in mine revenue of R2.7billion for the year (Aquarius share: R1.37 billion). The cash margin for theyear rose to 59%.Operating CostsCash cost per ROM ton increased by 5% to R187 per ton due to higher costs andlower production. Consequently, cash costs per PGM ounce for the year increased11% to R2,565. During the year Kroondal completed considerable development,costs which are attributed to the profit and loss account and not capitalised.These costs included in the costs in the table below.P&SA1 at Kroondal: Operating Costs Rand 4E per ounce Rand 6E per ounce Rand 6E per ounce (Pt+Pd+Rh+Au) (Pt+Pd+Rh+Ir+Ru+Au) net of by-products (Ni& Cu) FY 2006 2,565 2,111 2,020Early indications are that the development investments made at Kroondal in thesecond half of the 2006 financial year will start to bear fruit in the next sixmonths as production output is expected to rise and the associated economies ofscale kick-in.P&SA2 at Marikana Platinum MineSafetyMarikana reported an improved DIIR of 0.31 for the year compared to 0.81 in theprevious year.ProductionProduction for the year was 85,912 PGM ounces. This represents a 5% reductioncompared to the 2005 financial year; however, comparisons are not meaningfulbecause of a change of focus in the mining type and AQPSA resiling from theprevious open pit mining contract in December 2005.In October 2005, the Marikana Pool & Share Agreement (P&SA2) was completed withAnglo Platinum and retrospectively implemented to September 2005. Productionfrom No. 4 shaft at Kroondal was transferred to Marikana, and as anticipated,resulted in new underground production for Marikana in the second half of thefinancial year.Marikana: Metal in concentrate produced (PGM ounces)Year Ended Pt Pd Rh Au PGMs (4E) PGMs (4E) attributable to Aquarius 2006 52,757 24,461 8,023 671 85,912 56,617* 2005 63,868 26,413 8,061 819 99,161 99,161 2004 57,774 22,598 6,062 742 87,176 87,176 2003 20,042 6,787 1,044 273 28,146 28,146*Reflects impact of P&SA (effective Q2 2006Production resulted from 1,250,000 ROM tons from open pit operations. Theaverage grade over the period was marginally lower at 3.60 g/t, thoughrecoveries improved to 57% for the year compared to 49% the previous year.Notably recoveries of 65% were achieved in the second half of the year.Production resulted from 1,250,000 ROM tons: 1,072,000 from open pit operationsand 178,000 ROM tons from underground operations. Looking forward, it isanticipated that the balance will shift in favour of lower cost undergroundtons. The head-grade over the period averaged 11% lower compared to previousyear at 3.2 g/t. Recoveries improved significantly to average 67%, compared tothe previous year average of 57%. This improvement was particularly marked inthe final quarter of the 2006 financial year, with an average quarterlyrecovery rate of 75%.RevenueThe average PGM basket price for the year increased 41% to $1,007 per PGMounce. Over the year, however, the PGM basket rose steadily, averaging $1,275per PGM ounce in the final quarter. This resulted in mine revenue of R520million for the year (Aquarius share: R337.4 million). The cash margin for theyear rose to 16% from negative 10% in the 2005 financial year.Operating CostsCash cost per ROM ton increased by to R348 per ton due to lower volumes.Consequently, cash costs per PGM ounce for the year increased 26% to R4,980.During the year Marikana underwent considerable change to focus on establishingand producing from underground operations. This strategy showed promised in thefourth quarter when operating costs reduced substantially to average R324 perROM ton, and US$673 per PGM ounce, a 38% and 49% reduction respectively.Marikana: Operating Costs Rand (4E) per ounce Rand (6E) per ounce Rand (6E) per ounce (Pt+Pd+Rh+Au) (Pt+Pd+Rh+Ir+Ru+Au) net of by-products (Ni&Cu) FY 2006 4,980 4,125 3,975(Average) Everest PlatinumSafetyDuring the first six months as an operating mine, Everest reported a DIIR of0.73. Regrettably on 17th October 2005 an assistant pipe fitter suffered fatalinjuries when he fell from a steel structure eight metres high. The Departmentof Minerals and Energy issued its investigation report the following quarter,concluding that the deceased had failed to secure himself appropriatelyalthough he had been provided with a safety harness and been trained in the useof a safety harness.ProductionIn the six months to June 2006, Everest produced 97,031 PGM ounces.Everest: Metal in concentrate produced (PGM ounces)Year Ended Pt Pd Rh Au PGMs (4E) PGMs (4E) attributable to Aquarius 2006 56,118 32,108 7,821 984 97,031 97,031Production resulted from 1,462,000 ROM tons: 471,000 from undergroundoperations where production is ramping up and 991,000 ROM tons from open pitoperations established as a short-term ore source during operational ramp-up.The head-grade over the period averaged 3.04g/t. Recoveries were 68% over thesix months, though trending better over the period to 72% in the final quarter.RevenueEverest was constructed in record time for a platinum mine and indeed ahead ofAquarius's tight schedule and below budget. This rapid development aided bybuoyant PGM prices resulted in Everest being converted to operational statusearly, as of 1 January 2005. Consequently, even though Everest's earlyperformance has been strong, it should still be recognised in the context of anoperation in the early days of operational ramp up.The average PGM basket price for the six months was $1,037 per PGM ounce. Thisresulted in mine revenue of R550 million for the six months (Aquarius share:100%). The cash margin for the six months was 61%.Operating CostsCash costs per ROM ton averaged R161 per ton and R2,390 per PGM ounce.Everest: Operating Costs Rand (4E) per ounce Rand (6E) per ounce Rand (6E) per ounce (Pt+Pd+Rh+Au) (Pt+Pd+Rh+Ir+Ru+Au) net of by-products (Ni& Cu) FY 2006 2,390 2,057 1,955Capital CostAt year end capital expenditure commitments totalled R672 million with capitalexpenditure spent to date of R648 million.MIMOSA INVESTMENTS (Aquarius Platinum 50%)Mimosa Platinum MineSafetyThe DIIR for the year improved marginally to 0.28 from 0.31 for the previousyear.ProductionPGM production for the year increased 8% to 142,407 ounces (Aquariusattributable 71,204 ounces).Mimosa: Metal in concentrate produced (PGM ounces)Year Ended Pt Pd Rh Au PGMs (4E) PGMs (4E) attributable to Aquarius 2006 72,232 54,722 5,577 9,876 142,407 71,204 2005 66,742 49,259 5,156 9,010 130,167 65,084 2004 61,422 44,697 5,036 8,234 119,389 59,697 2003 36,029 25,450 2,844 4,717 69,040 34,520ROM tonnes increased 20% to a milled tonnage of 1,713,000 tons. Marginalimprovements in annual average grade to 3.71g/t and at 78% with increasedproduction boosted production.RevenueThe average PGM basket price for the year was 21% higher at $713 per PGM ounce.This resulted in mine revenue of US$113 million (Aquarius share: 50%). The cashmargin for the year was 64%.Operating CostsCash costs per ounce for the year reduced by 6% to $336 per PGM ounce. Afterby-product credits cash costs per ounce were 29% lower at $100 per PGM ounce.Mimosa: Operating Costs US$ (4E) per ounce US$ (6E) per ounce US$ (6E) per ounce (Pt+Pd+Rh+Au) (Pt+Pd+Rh+Ir+Ru+Au) net of by-products (Ni& Cu) FY 2006 336 318 100Wedza Phase IV UpgradeThe Wedza Phase IV upgrade project was completed and commissioned two monthsahead of target and on budget. Optimisation work in terms of metal recoveryrates is in progress.AQUARIUS PLATINUM (SA) CORPORATE SERVICES (PTY) LTD (Aquarius Platinum 50%)Chromite Tailings Retreatment Plant (CTRP)SafetyThe Plant recorded a DIIR of zero for the year and the previous year.ProductionPGM production for the year increased nearly three-fold to 6,234 PGM ounces(Aquarius attributable 3,117 PGM ounces).CTRP: Metal in concentrate produced (PGM ounces)Year Ended Pt Pd Rh Au PGMs (4E) PGMs (4E) attributable to Aquarius 2006 3,799 1,378 1,044 13 6,234 3,119 2005 1,321 439 353 4 2,117 1,059RevenueThe PGM basket price for the year increased by an average 45% to $1,207 per PGMounce. Reflecting increased production and basket prices, revenue increased toR43 million (Aquarius attributable R21.4 million). The cash margin for the yearincreased to 63% from 37.5%.OperationsOver the year recoveries and production improved markedly. During the fourthquarter, only current arisings from the Kroondal Chrome Mine were fed to theCTRP. Consistent and stable operation was achieved and recoveries rose to 68%against 51% in the previous quarter.A project to add dump material from the Kroondal Chrome Mine to the CTRP feedis progressing well, and scheduled to complete in August 2007 at a cost ofapproximately R2 million. With an increase in feed planned for the 2007financial year, it is anticipated that PGM production will continue toincrease.CTRP: Operating Costs Rand 4E per ounce Rand 6E per ounce Rand 6E per ounce (Pt+Pd+Rh+Au) (Pt+Pd+Rh+Ir+Ru+Au) net of by-products (Ni& Cu) FY 2006 2,507 1,766 1,730Per PGM (3E+Au)Per PGE (5E+Au)Expansion 100%Statistical 100% of Kroondal P&SA1 Marikana P&SA2Information Operations Unit 12 months 12 months 12 months 12 months Jun 2006 June 2005 Jun 2006 June 2005 Safety DIIR Rate/200,000 man 0.96 0.75 0.31 0.81 hours Revenue Gross revenue R m in SA / $m 2,742 1,250 520 364 in Zim PGM basket Price $/oz 1,033 711 1,007 713 Gross cash margin % 59 40 16 (10.0) Nickel Price $/lb 7.02 6.92 7.02 6.92 Copper Price $/lb 2.29 1.43 2.29 1.43 Ave R/$ rate 6.37 6.17 6.37 6.17 Cash Costs on mine Per ROM ton R/ton 187 177 348 264 $/ton 29 29 55 43 R/oz 2,565 2,311 4,980 4,035 $/oz 403 375 782 654 R/oz 2,111 1,904 4,125 3,393 $/oz 331 309 648 620 Capex Current/Sustaining R'000s 65,673 20,521 8,521 19,362100% $'000s 10,309 3,326 1,338 3,138 R'000s 66,732 462,374 81,321 - $'000s 10,476 74,939 12,766 - Mining Processed Underground ROM ton `000s 5,639 3,974 178 - Open Pit ROM ton `000s 403 266 1,072 1,515 Total ROM ton `000s 6,041 4,240 1,250 1,515 Grade Plant Head g/t PGM 2.89 3.04 3.20 3.60 Recoveries % 78 79 67.00 57 PGM Production Platinum Ozs 262,263 194,290 52,757 63,868 Palladium Ozs 128,318 93,984 24,461 26,413 Rhodium Ozs 46,663 34,916 8,023 8,061 Gold Ozs 2,201 1,540 671 819 Total PGM (3E+Au) Ozs 439,444 324,730 85,912 99,161 Total PGE (5E+Au) Ozs 534,069 394,222 103,615 117,908 Base Metals Production Nickel Tons 435 314 146 133 Copper Tons 191 141 84 73 Chromite (000) Tons `000s 447 461 135 247Per PGM (3E+Au)Per PGE (5E+Au)Expansion 100%Statistical 100% of Mimosa CTRPInformation Operations Unit 12 months 12 months 12 months 12 months Jun 2006 June 2005 Jun 2006 June 2005 Safety DIIR Rate/200,000 0.28 0.31 0 0 man hours Revenue Gross revenue R m in SA / $m 113 84 42.5 8.5 in Zim PGM basket Price $/oz 713 590 1,207 834 Gross cash margin % 64 60 63 37.5 Nickel Price $/lb 6.64 6.51 7.02 7.41 Copper Price $/lb 2 1 229 1.53 Ave R/$ rate - - 6.37 6.29 Cash Costs on mine Per ROM ton R/ton - - 96 86 $/ton 31 33 15 14 R/oz - - 2,507 2,308 $/oz 336 357 394 367 R/oz - - 1,766 1,660 $/oz 318 339 277 264 Capex Current/ R'000s - - 950 -Sustaining 100% $'000s 7,999 13,672 149 - R'000s - 23,122 $'000s 10,471 1,108 - 3,676 Mining Processed Underground ROM ton `000s 1,713 1,432 Open Pit ROM ton `000s - - Total ROM ton `000s 1,713 1,432 162 56 Grade Plant Head g/t PGM 3.71 3.69 3.21 2.71 Recoveries % 78 77 40 42 PGM Production Platinum Ozs 72,232 66,742 3,799 1,321 Palladium Ozs 54,722 49,259 1,378 439 Rhodium Ozs 5,577 5,156 1,044 353 Gold Ozs 9,876 9,010 13 4 Total PGM (3E+Au) Ozs 142,407 130,167 6,234 2,117 Total PGE (5E+Au) Ozs - - 8,851 2,940 Base Metals Production Nickel Tons 1,958 1,895 4 1 Copper Tons 1,638 1,563 2 2 Chromite (000) Tons `000s (Cobalt (Cobalt - - 59) 56) Aquarius Platinum LimitedIncorporated in BermudaExempt company number 26290Board of DirectorsNicholas Sibley Non-executive Chairman Stuart Murray Chief Executive Officer David Dix Non-executive Timothy Freshwater Non-executive Edward Haslam Non-executive Sir William Purves Non-executive (Senior Independent Director) Patrick Quirk Non-executive Zwelakhe Sisulu Non-executive Audit/Risk CommitteeSir William Purves (Chairman)David DixEdward HaslamNicholas SibleyRemuneration/Succession Planning CommitteeEdward Haslam (Chairman)Nicholas SibleyNomination CommitteeThe full Board comprises the Nomination CommitteeCompany SecretaryWilli BoehmAQPSA ManagementStuart Murray Executive Chairman Gert Ackerman Managing Director Ayanda Khumalo Finance Director Anton Wheeler Operations Director Graham Ferreira General Manager Finance & Company Secretary Hugo HĦll General Manager Everest Robert Mallinson General Manager Marikana Gordon Ramsay General Manager Projects Dave Starley General Manager Kroondal Gabriel de Wet General Manager Engineering Mimosa Mine ManagementAlex Mhembere Managing Director Winston Chitando Finance Director Herbert Mashanyare Technical Director Peter Chimboza Operations Director Issued CapitalAt 30 June 2006, the Company had on issue:84,348,225 fully paid common shares2,343,105 unlisted optionsSubstantial Shareholders 30 June 2006 Number of Shares Percentage Impala Platinum Holdings Ltd 7,127,276 8.63 Nutraco Nominees Limited 5,242,250 6.25 National Nominees Limited 4,541,671 5.42Broker (LSE) Broker (ASX) Sponsor (JSE) Evolution Securities Ltd Euroz Securities Investec Bank Limited 100 Wood Street Level 14, The Quadrant 100 Grayston Drive London EC2V 7AN 1 William Street, Perth WA Sandown Sandton 2196 6000 Telephone: +44 (0)20 7071 Telephone: +27 (0)11 286 4330 Telephone: +61 (0)8 9488 7326 1400 Facsimile: +44 (0)20 7071 Facsimile: +27 (0)11 291 4451 Facsimile: +61 (0)8 9488 1066 1478 Aquarius Platinum (South Africa) Aquarius Platinum Corporate Services (Proprietary) Ltd Pty Ltd 50.5% Owned 100% Owned (Incorporated in the Republic of South (Incorporated in Australia) Africa) ACN 094 425 555 Registration Number 2000/000341/07 Level 4, Suite 5, South Shore Centre,Block A, 1st Floor, The Great Wall Group Building 85 The Esplanade, South Perth, WA 6151, 5 Skeen Boulevard, Bedfordview 2007 Australia South Africa PO Box 485 P O Box 1282 South Perth, WA 6151 Bedfordview 2009 Australia South Africa Telephone: +61 (0)8 9367 5211 Telephone: +27 (0)11 455 2050 Facsimile: +61 (0)8 9367 5233 Facsimile: +27 (0)11 455 2095 Email: [email protected] Email: [email protected] For further information, please contact:In Australia: Willi Boehm Aquarius Platinum Corporate Services Pty Ltd +61 (0)8 9367 5211 In United Kingdom: Nick Bias BuckBias Limited + 44 (0)7887 920 530 Alex Buck BuckBias Limited +44 (0)7392 740 452 In South Africa: Stuart Murray Aquarius Platinum (South Platinum) (Pty) Ltd +27 (0)11 455 2050 or visit: www.aquariusplatinum.com GlossaryA$ Australian Dollar Aquarius Aquarius Platinum Limited ABET Adult Basic Education Training programme APS Aquarius Platinum Corporate Services Pty Ltd AQPSA Aquarius Platinum (South Africa) Pty Ltd ASACS Aquarius Platinum (SA) (Corporate Services) (Pty) Limited CTRP Chromite Ore Tailings Retreatment Operation DIFR Disabling Injury Incidence 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 EMPR Environmental Management Programme Report 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 code Australasian code for reporting of Mineral Resources and Ore Reserves JSE JSE Securities Exchange South Africa 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 NOSA National Occupational Safety Association 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 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 RK1 Consortium comprising Aquarius Platinum (SA) (Corporate Services) (Pty) Limited (ASACS), GB Mining and Exploration (SA) (Pty) Limited (GB) and Sylvania South Africa (Pty) Ltd (SLVSA) 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 RPM Rustenburg Platinum Mines Limited TKO TKO Investment Holdings Limited Ton 1 Metric tonne (1,000kg) UG2 Reef A PGE bearing chromite layer within the Critical Zone of the Bushveld Complex $ United States Dollars Z$ Zimbabwe Dollar ENDAQUARIUS PLATINUM LIMITEDRelated Shares:
AQP.L