25th Jan 2007 07:00
AQUARIUS PLATINUM LIMITED
Aquarius Platinum Second Quarter 2007 Financial Year Production results
P&SA2 at Marikana Comes of Age
Highlights of the Quarter
* Production by mine 232,668 PGM ounces, Aquarius attributable 136,928 PGM
ounces
* Approved new order conversion of Kroondal, Marikana and Everest mining rights
* Announced buy-back acquisition of 3.5% of South African subsidiary from BEE
partners
P&SA1 at Kroondal
* Production 117,189 PGM ounces (Aquarius attributable: 58,594 PGM ounces)
* Primary development increased by 12% to improve face availability and mining
flexibility due to challenging geology at No. 3 Shaft
* New K5 Shaft on budget and first reef tons produced one month ahead of plan
* Firm commodity prices buoy quarterly gross cash margin at 64%
P&SA2 at Marikana
* Production increased 27% to 39,077 PGM ounces (Aquarius attributable: 19,538
PGM ounces)
* Underground ramp-up advances accounting for 37% of total tons
* DMS plant commissioned and already improving operational performance and
flexibility
* Gross cash margin for the quarter increased to 50% from 43% in the previous
quarter
Everest
* Production steady at 41,191 PGM ounces
* Underground ramp-up continues accounting for 75% of total tons, despite
contractor labour challenges
* Ramp up to complete during second half, with full production output targeted
for first quarter FY 2008
* Gross cash margin for the quarter 56%
Mimosa
* Planned shutdown coupled with primary mill breakdown reduced production to
33,345 PGM ounces (Aquarius attributable: 16,672 PGM ounces)
* Wedza Phase IV optimisation completed and Phase V expansion to 190,000 PGM
ounces announced
* Mining production on track, with 7 week stockpile on surface (following plant
shutdowns)
* Gross cash margin at 68%, reflecting a strong financial performance despite
lower production
CTRP
* Production increased to 1,866 PGM ounces (Aquarius attributable: 933 PGM
ounces)
* Significant increase in feed achieved, with focus now on achieving higher
recoveries and production
* Gross cash margin for the quarter at 77%
Commenting on the results, Stuart Murray, CEO of Aquarius Platinum said, "The second quarter has delivered us some new challenges as we have focused on mine development for longer-term benefits, in order to continue to deliver production in to the sustained high commodity prices.
In South Africa, production at AQPSA increased 2%. This modest increase masks the strong turnaround being enjoyed at Marikana, and is a fair performance given the considerable development ongoing at Kroondal and Everest. In Zimbabwe, both planned and unplanned plant shut downs resulted in lower quarterly production, yet the mining operations are in particular on a stronger footing going forward, and the mills are hungry to process a sizeable surface stockpile.
Marikana deserves a special mention this quarter, for completion of its DMS plant and the ongoing and improving performance of all the mining teams there.
Production by Mine
Quarter Ended PGMs (4E)
Mar 2006 Jun 2006 Sep 2006 Dec 2006
Kroondal 107,501 99,406 121,713 117,189
Marikana 5,810 31,992 30,865 39,077
Everest 46,081 43,838 41,717 41,191
Mimosa 33,252 37,395 42,733 33,345
CTRP 1,484 1,856 1,711 1,866
Total 194,128 214,487 238,739 232,668
Production by Mine Attributable to Aquarius
Quarter Ended PGMs (4E)
Mar 2006 Jun 2006 Sep 2006 Dec 2006
Kroondal 53,751 49,703 60,856 58,594
Marikana 2,905 15,996 15,432 19,538
Everest 46,081 43,838 41,717 41,191
Mimosa 16,626 18,697 21,367 16,672
CTRP 742 928 855 933
Total 120,105 129,162 140,227 136,928
Metals Prices and Foreign Exchange
Commodity prices through the quarter remained firm consolidating on strong gains realised over calendar 2006. The chart below illustrates the individual prices for platinum, palladium, rhodium and gold. Platinum prices peaked in November at over $1,300 per ounce on news of the possible introduction of a platinum exchange traded fund (ETF) and closed the quarter at $1,119 per ounce. The rhodium price was strong towards the quarter end, closing for the quarter at $5,550 per ounce due to continued physical demand. Gold and palladium enjoyed modest increases over the quarter of 4% and 6% respectively.
The table below details the individual basket prices achieved at each operation calculated using a four-element PGM ounce (platinum, palladium, rhodium and gold). All operations continued to benefit from strong basket prices, broadly in line with the two previous quarters.
Average PGM basket prices achieved at Aquarius operations: US$ per PGM ounce(4E) Basket Prices (Financial Year Quarters) Mar 2006 Jul 2006 Sep 2006 Dec 2006 Kroondal 1,064 1,306 1,311 1,287 Marikana 1,028 1,275 1,283 1,270 Everest 964 1,162 1,199 1,179 Mimosa 750 854 958 934 CTRP 1,276 1,449 1,622 1,592
The Rand basket price at South African operations averaged R9,315 per PGM ounce over the quarter, flat when compared with the previous quarter. In Dollar terms, this is equal to $1,266 per PGM ounce. In Zimbabwe, the Dollar basket price averaged $939 per PGM ounce. In addition, by-product base metals copper and nickel recorded strong prices at Mimosa, with copper averaging 1% higher at $3.42/lb and nickel averaging 34% higher at $13.03/lb over the quarter.
The South African Rand weakened against the US Dollar over the quarter, however, averaging 7.36, which was 4% weaker than the average in the first quarter. This had a positive impact on the Rand PGM basket price, trading much of the second quarter above R9,000 per PGM ounce, and in November breaking though R10,000 per PGM for a short period.
AQUARIUS PLATINUM (SOUTH AFRICA) (PTY) LTD (Aquarius Platinum 50.5%)
P&SA 1 at Kroondal
Safety
The 12-month rolling average DIIR for the quarter improved to 0.93 from 1.02 in the previous quarter. Kroondal achieved 1,777,521 fatality-free shifts up to the end of the quarter.
Mining
* Open pit production increased to 147,089 tons, underground production
decreased to 1,513,610 tons
* Primary development increased by 12% to improve face-availability and mining
flexibility
* K5 Project remains ahead of schedule
* Head grade stable at 2.85g/t
Processing
* Plant processed 1.7 million tons
* Production decreased 4% to 117,189 PGM ounces
* Concentrator recoveries stable at 77%
Revenue
Revenue at Kroondal increased 1% to R963 million for the quarter (Aquarius share: R481 million). The increased total Rand revenue was due to the positive impact of a weakening in the average Rand Dollar exchange rate of 4% in the quarter which offset lower PGM production and a 2% reduction in the Dollar basket price to $1,287 per PGM ounce. The cash margin for the quarter was virtually unchanged at 64% compared to 65% in the previous quarter (65%).
Operations
Production totalled 1,658,754 tons. Open pit production increased 1% to 147,089 tons and underground production decreased by 8% to 1,513,610 tons. During the quarter, production was adversely impacted by excessive downtime on trackless mechanised mining machinery due to breakdowns. To rectify this situation, Murray & Roberts Cementation, the underground mining contractor, subsequently recruited additional personnel and revised maintenance, replacement and rebuild programmes. In addition, of the four operating shafts at Kroondal, the No. 3 and East Shafts encountered some geological losses due to potholing. A surface drilling programme was initiated during the quarter to upgrade the geological model and help improve planning going forward.
Tons processed declined by 2% to 1,657,967 tons, which included 107,374 tons of opencast.
Over the quarter, stockpiles increased marginally to 100,000 tons at the end of the quarter, in preparation for the Christmas close and to mitigate the Q3 holiday impact.
The head grade was flat at 2.85g/t. compared to 2.86g/t previous quarter.
It is anticipated that the high rate of development that has been ongoing at Kroondal, will decrease in the next quarter and that this should result in a positive effect on the head grade and unit cost.
Plant recoveries decreased by 1% to 77% as a result of the relatively poor quality of opencast ore processed.
PGM production decreased by 4% to 117,189 PGM oz (Aquarius attributable: 58,594 PGM ounces).
Kroondal: Metal in concentrate produced (PGM ounces)
Quarter ended Pt Pd Rh Au PGMs PGMs attributable to Aquarius
Dec 2006 70,522 33,748 12,295 624 117,189 58,594 Sep 2006 73,239 35,166 12,679 629 121,713 60,856 Jun 2006 59,057 29,194 10,649 506 99,406 49,703 Mar 2006 64,248 31,372 11,342 539 107,501 53,751
Operating Cash Costs
Cash costs increased by 7% to R211 per ROM ton reflecting both lower volumes and an increase in primary development and infrastructure costs. Consequently, cash costs per PGM ounce for the quarter increased by 8% to R2,982.
Kroondal: Operating Cash Costs
4E (Pt+Pd+Rh+Au) 6E 6E net of by-products (Ni& (Pt+Pd+Rh+Ir+Ru+Au) Cu) Kroondal R 2,982 per PGM R 2,453 per PGE ounce R 2,294 per PGE ounce ounce
Operating cash costs include ledging and primary development costs of R429 per PGM ounce (up 42% on the previous quarter), secondary development costs of R75 per PGM ounce (up 108% on previous quarter) and engineering infrastructure costs of R243 per PGM ounce (up 7% on previous quarter). Cash cost of stoping for Kroondal were R2,235 per PGM ounce, a 2% increase compared to the previous quarter. It should also be noted that operating costs also include costs associated with the new K5 shaft of R122 per PGM ounce. The K5 Shaft is in a ramp-up phase and therefore attracts high relative unit costs at this stage.
Kroondal Operating Cash Costs Reconciliation
Rand per PGM ounce Q1 (Sep 2006) Q2 (Dec 2006) Variance Cash costs 2,982 2,754 -8%
Ledging and primary development costs (429) (302) -42%
Secondary development costs (75) (36) -108%
Engineering infrastructure costs (243) (227) -7%
Cash cost after adjustments 2,235 2,189 -2%
It is expected that the unit costs will start to decrease. In the next quarter it is anticipated that primary development will reduce, followed by reduction in equipping and engineering infrastructure in the subsequent quarter. Ensuring adequate face availability and mining flexibility at Kroondal is key to the longer-term management of the mine and while development has taken time the benefits are now expected to be realised.
Project Capital Expenditure
During the quarter R93 million was spent on capital on belt extensions and infrastructure improvements.
K5 Project at KroondalMining
The appointed contractor Deilmann-Haniel (SA) (Pty) Ltd is performing satisfactorily.
During the quarter a total of 541 metres of development was completed. With the two main declines already on the reef horizon, the new 'R1' chair-lift decline began construction, completing a total 41 metres in the quarter. The excavations to transfer ore from the reef horizon to the main belt (known as ore passes) were completed and civil construction due to start in January 2007 has commenced. The No 1 ventilation shaft excavation started on schedule.
Construction
Construction both on surface and underground continued satisfactorily. The conveyors to the reef horizon were commissioned on schedule. Construction of the rail-loading facility commenced during the quarter.
Capital Cost
Of the budget of R131.1 million, R106.2 million has been committed at the end of the quarter.
P&SA2 at MarikanaSafety
The 12-month rolling average DIIR for the quarter deteriorated to 0.43 from 0.21 in the previous quarter as a result of four lost-time accidents. Codes and procedures have been reviewed and amended with the workforce being re-trained accordingly.
Mining
* Underground production for the quarter increased 11% to 188,901 tons
* Open pit production for the quarter increased 13% to 383,342 tons
* By quarter-end, the stockpile increased by 18% to 196,000 tons
Processing
* Marikana Dense Media Separation Plant commissioned
* A record 542,091 ROM tons were processed during the quarter
* Marginal 1% fall in recoveries to 69% due to a higher feed of oxidised
opencast material
* Production increased 27% to 39,077 PGM ounces (Aquarius attributable: 19,538
PGM ounces)
Revenue
The PGM basket price for the quarter averaged $1,270 per PGM ounce, 1% lower than the previous quarter. Despite this, a growth in volumes, an increase of production, and a weaker average Rand Dollar exchange rate of 7.36 resulted in a 27% increase in mine revenue to R324 million for the quarter (AQPSA share R162 million. The cash margin for the quarter rose to 50% from 43%.
Operations
Total production increased 12% to 572,243 ROM tons for the quarter, with one third coming from underground production and two thirds from open pit.
Open pit production increased by 13% to 383,342 tons. The opencast mining contractor, MCC Mining (Pty) Ltd, is performing well and is managing costs effectively as both efficiencies and output have improved since their appointment. Production in Marikana Pit B was accelerated to facilitate a box cut for the construction of a second decline shaft, an expedient way to access the underground ore from the opencast operations. Stormwater controls and additional pumping capacity have been established to prepare for the local rain-season in the third quarter.
Underground production increased by 11% to 188,901 tons. At No. 1 Shaft, 465 metres of primary development was completed. A hybrid-mining method was successfully implemented. This has resulted in a reduced stoping-width, thereby contributing to an increase in the plant head grade. At No. 4 Shaft 972 metres of primary development was completed during the quarter. Some potholes were encountered in the main decline ends. Infill drilling is being undertaken to determine the extent of the geological disturbance, resulting in a short delay in tonnage build up. Preparation of the high wall at No. 2 Shaft was completed and development of the twin-decline system has commenced.
The stockpile (predominantly comprising oxidised material) increased by 18% to 196,000 tons at the end of the quarter.
A total of 542,091 tons were processed during the quarter, a 22% increase. Of this, 202,391 tons were from underground, a 44% increase and 339,700 tons from opencast, an 11% increase.
The plant head grade improved by 6% to 3.26 g/t from 3.07 g/t. Plant recoveries decreased marginally by 1% to 69% as a result of the additional open material in the mix.
PGM production increased by 27% to 39,077 PGM ounces (Aquarius attributable: 19,538 PGM ounces).
Marikana: Metal in concentrate produced (PGM ounces)
Quarter ended Pt Pd Rh Au PGMs PGMs attributable to Aquarius
Dec 2006 23,627 11,218 3,941 291 39,077 19,538 Sep 2006 18,588 8,944 3,098 235 30,865 15,432 Jun 2006 19,036 9,531 3,162 263 31,992 15,996 Mar 2006 3,591 1,642 534 43 5,810 2,905 Operating Cash Costs
Cash cost per ROM ton decreased by 9% to R299 per ROM ton from increased production volumes generated by underground stoping activities versus development in the previous quarter.
Marikana: Operating Costs 4E (Pt+Pd+Rh+Au) 6E 6E net of by-products (Ni& (Pt+Pd+Rh+Ir+Ru+Au) Cu) Marikana R 4,147 per PGM R 3,402 per PGE ounce R 3,141 per PGE ounce ounce
The cash cost per PGM ounce decreased by 12% to R4,147 per PGM ounce. Development costs, which form part of the cash costs per PGM ounce reduced by 22% from the previous quarter to R431 per PGM ounce. Deducting the development cost, the reefing and stoping costs achieved a milestone, breaking below R4,000 at R3,716 per PGM ounce.
Marikana Pool & Share Agreement (P&SA2)
The Dense Media Separation (DMS) Plant was successfully commissioned during the quarter. This resulted in an increase in throughput. Further ramp-up and optimisation will continue.
During the quarter expansion capital expenditure of R46 million was incurred. The total expansion capital expenditure to date is R99 million (AQPSA share: 49.5 million).
Contractor dispute with Moolman Mining
Moolman Mining was the primary opencast mining contractor employed at the Marikana Mine from start up in May 2002 until December 2005. In December 2005, AQPSA resiled from the contract with Moolman Mining on discovering misrepresentations by Moolman which induced the contract. Moolman has been replaced by MCC as opencast contractor and MCC has since improved production from the opencast mine significantly at no additional cost over the disputed Moolmans contract rates.
In April 2006, AQPSA instituted action against Moolman arising from the misrepresentation. The action includes a damages component. In May 2006, AQPSA served an application to stay the arbitration in respect of the Rise and Fall claim pending the determination of the action. In September 2006, AQPSA received Moolmans' response in the application to stay the arbitration as well as a plea to the action. Moolmans delivered a conditional counterclaim, comprising four components in an aggregate amount of ZAR472 million. The AQPSA legal team is in the process of preparing a reply in the application proceedings and a plea to the conditional counterclaims. During the course of this process, AQPSA has requested further documentation from Moolmans relating to the Marikana contract. The process of finalising the replying affidavit and inspection of documents continues and is expected to be finalised in the 3rd Quarter of the 2007 financial year.
It is anticipated that legal proceedings relating to the dispute may take years to resolve.
Everest Platinum MineSafety
The 12-month rolling DIIR improved to 0.52 from 0.95 in the previous quarter, with no lost-time injuries during November and December. Safety initiatives during the period focussed on fall-of-ground prevention and materials handling.
Mining
* Underground ore production increased substantially, up 51% to 487,114tons
* Opencast operations production fell in favour of underground production to
163,130 tons
* Opencast mining extended through development of the South-West Pit adding
320,000 tons to the opencast reserve
Processing
* Plant processed 656,386 tons, an 8% increase compared to the previous quarter
* Recoveries fell to 70% from 72% in the previous quarter
* Production decreased by 1% to 41,191 PGM ounces
Revenue
Revenue at Everest increased 5% to R334 million for the quarter. The increase in revenue was due to a weaker average Rand Dollar exchange rate which offset lower production and a 2% decrease in the average PGM basket price for the quarter to $1,179 per PGM ounce. The cash margin for the quarter fell to 56%.
Operations
Operational ramp-up continued, with opencast and underground producing a total 650,244 tons, a 6% increase compared to the previous quarter, with the production balance now firmly shifting towards underground operations, now producing three quarters of all production compared to just over half in the previous quarter.
In line with the shift towards more favourable underground production, opencast mining declined to 163,130 tons. As the North Pit was depleted, the opencast reserve was boosted through the establishment of an extension at the South-West Pit, adding an additional 320,000 tons to the opencast reserve. The opencast ROM grade fell significantly from the previous quarter with more production coming from the low-grade area in the North Pit and shallow oxidised reef from the South-West Pit extension. It is anticipated that opencast grades will improve during the next quarter as mining extends into the deeper areas of the South-West pit yielding more competent reef. The opencast mining contractor (MCC Mining) continues to perform well. Opencast unit costs increased as a result of the lower production and the initial high stripping ratio in the South-West Pit extension.
On-reef decline development and the establishment of stoping sections continued during the quarter, resulting in a 51% increase in underground tonnages to 487,114 tons, a significant improvement from the previous quarter by the underground mining contractor, Shaft Sinkers Mining (Pty) Ltd. There was no recurrence of the industrial relations issues which affected output during the previous quarter and production showed consistent growth through the quarter. The underground head grade improved slightly from the previous quarter as the mining extended into thicker reef areas resulting in less dilution.
Although the percentage of underground feed increased to 74%, the grade and recovery benefit was outweighed by the low opencast grades, with the plant head grade falling to 2.79 g/t from 2.98 g/t.
Concentrator throughput was 656,386 tons milled for the period, with 6,142 tons consumed from the stockpile, which fell to 13,743 tons at the end of the quarter.
Metallurgical recoveries were adversely affected by the reduction in grade and the oxidised opencast material, dropping to 70% from 72%. Advanced flotation process control systems were implemented towards the end of the quarter and a reduction in oxidised material will result in improved recoveries during the next quarter.
Production fell 1% to 41,191 PGM ounces for the quarter.
Everest: Metal in concentrate produced (PGM ounces)
Quarter ended Pt Pd Rh Au PGMs (4E)
Dec 06 23,495 13,484 3,838 374 41,191 Sep 06 23,459 14,140 3,697 421 41,717 Jun 06 24,699 14,844 3,817 478 43,838 Mar 06 27,257 14,913 3,472 439 46,081
Operating Cash Costs
Cash costs increased by 18% to R224 per ROM ton milled as a result of the higher consumption of underground production, which has not yet achieved steady-state and the unit cost increase from higher opencast stripping ratios during the establishment of the South-West Pit. Consequently, cash costs per PGM ounce for the quarter increased by 23% to R3,573 per PGM ounce. Of this cost increase R292 per PGM ounce can be attributed to a lower grade and recovery and R230 per PGM ounce to an increase in labour and mobile mining equipment that was brought in earlier to facilitate and secure the underground ramp-up. The higher opencast stripping ratio contributed a further increase in cost of R152 per PGM ounce.
It is anticipated that unit costs will reduce as the underground volumes rampup to steady-state production and metallurgical recovery and head gradeimprovements are realised.Everest Operating Costs 4E (Pt+Pd+Rh+Au) 6E 6E net of by-products (Ni& (Pt+Pd+Rh+Ir+Ru+Au) Cu) Everest R3,573* per PGM R 3,011 per PGE ounce R 2,814 per PGE ounce ounce
*Included in the cash cost is IFRIC-4 (determining whether an arrangement contains a lease) for R129 per PGM ounce.
MIMOSA INVESTMENTS (Aquarius Platinum 50%)
Mimosa Platinum Mine
Safety
The 12-month rolling average DIIR deteriorated to 0.52 for the quarter from 0.26 in the previous quarter. Regrettably, a fatality occurred during the quarter when an Underground Team Leader was fatally injured by a fall of ground.
Mining
* Wedza Phase IV Expansion Project completed and Phase V Expansion Project
announced
* Underground production lost the gains achieved in first quarter, falling to
447,605 tons
* The surface stockpile increased by 33% to 308,383 tons at quarter-end,
despite plant shutdowns
Processing
* Plant shutdown for maintenance coupled with mill breakdown reduced tons
processed to 365,177 tons as the surface stockpile increased
* Concentrator plant recoveries fell 1% to 77%
* Total mine production decreased 22% to 33,345 PGM ounces due to maintenance
shutdowns
Revenue
The PGM basket price for the quarter decreased 2% to $939 per PGM ounce. The average nickel price over the quarter rose by 34% to $13.03 per pound from $9.71 per pound in the previous quarter. Together with a contribution from base metals of approximately 33% of gross revenue, sales revenue for the quarter totalled $44.3 million, a decrease of $2.8 million when compared to the previous quarter. The gross cash margin decreased to 68% from 76% in the previous quarter.
Operations
During the quarter mining operations hoisted 456,740 tons compared to 497,487 tons in the previous quarter. Tons milled during the quarter totalled 365,177 tons, with the balance going to the stockpile, which totaled 308,383 tons at the quarter end.
The average plant head grade improved to 3.67 g/t, compared to 3.64 g/t in the previous quarter. During November, the plant underwent a planned major maintenance shut down, resulting in a budgeted 10% production shortfall over the previous quarter. In addition, in October the plant suffered an unplanned mill breakdown due to a bearing failure, which had been scheduled to be changed concurrently with the November planned maintenance shut down. This resulted in an unbudgeted 15% shortfall against planned production. While the lost time resulted in a build up of the stockpile and ultimately lost production, the plant is now operating at capacity, and no shutdowns or maintenance stoppages are envisaged for the second half of the year.
Recoveries decreased by 1% in the quarter to 77%.
Due to the concentrator plant shut down, PGM production during the second quarter decreased to 33,345 ounces (Aquarius attributable: 16,673 ounces).
Mimosa: PGMs in concentrate produced (ounces)
Quarter ended Pt Pd Rh Au PGMs PGMs attributable to Aquarius
Dec 2006 16,810 12,856 1,316 2,363 33,345 16,672 Sep 2006 21,613 16,486 1,671 2,963 42,733 21,367 Jun 2006 18,904 14,417 1,475 2,599 37,395 18,697 Mar 2006 16,820 12,809 1,306 2,317 33,252 16,626
Mimosa: Base Metals in concentrate produced (tons)
Mine Production Attributable to Aquarius Quarter ended Ni Cu Co Ni Cu Co Dec 2006 449 377 14 225 189 7 Sep 2006 574 475 18 287 238 9 Jun 2006 506 423 15 253 211 7 Mar 2006 452 383 14 226 191 7 Operating Cash Costs
Cash costs for the quarter increased to $446 per PGM ounce, a 25% increase compared to the previous quarter's figure of $356 per PGM ounce. The increase in cash costs was attributable to high Zimbabwe dollar denominated costs, mainly due to disparity between inflation rate and exchange rate and low production throughput due to the plant shutdown.
Net of by-products, however, cash costs were negative at -$52 per PGM ounce, asignificant windfall, even compared to $11 per PGM ounce in the previousquarter.Mimosa Operating Costs 4E (Pt+Pd+Rh+Au) 6E 4E net of by-products (Ni, Cu& (Pt+Pd+Rh+Ir+Ru+Au) Co) Mimosa $446 per PGM $421 per PGE ounce ($52) per PGE ounce ounce
AQUARIUS PLATINUM (SA) CORPORATE SERVICES (PTY) LTD
Chromite Tailings Retreatment Plant (CTRP) (Aquarius Platinum 50%)
Safety
The DIIR is zero. No Lost-Time Accidents have occurred since the project commenced.
Processing
* Material processed increased 68% to 44,000tons
* Recoveries decreased to 38%
* Production increased 9% to 1,866PGM ounces
Revenue
The PGM basket price for the quarter decreased 2% to $1,592 per PGM ounce, which despite a weaker Rand Dollar exchange rate and higher production, resulted in R1 million fall in revenue to R17 million (Aquarius attributable: R8.5 million). The cash margin, though still high, fell for the quarter to 77% compared to 79% in the previous quarter.
Operations
The dump material project successfully commissioned at the end of the first quarter resulted in a 68% increase in tons processed to 44,000 tons. The ROM grade improved from 3.33g/t to 4.49g/t. While a substantial improvement, this resulted in lower recoveries of 38% due to oxidization of dump materials, yielding 1,866 PGM ounces. (Aquarius attributable: 933 PGM ounces). A project to reconfigure of the flotation circuit has commenced to improve recoveries.
Operating Costs
Cash costs decreased by 3% to R2,143 per PGM ounce. The decrease in cost is a result of higher volumes.
4E (Pt+Pd+Rh+Au) 6E (Pt+Pd+Rh+Ir+Ru+Au) 6E net of by-products
CTRP R2,143 per PGM ounce R1,459 per PGE ounce R1,384 per PGE ounce
CORPORATE MATTERS
Development of Prospective Platinum Properties in South Africa with Bakgaga Mining (Pty) Ltd
In October 2006 Aquarius announced the signing of a farm-in agreement between its wholly owned subsidiary Aquarius Platinum (SA) Corporate Services (Pty) Ltd and Bakgaga Mining (Pty) Ltd to drill and conduct feasibility work at prospective Platinum Group Metals (PGMs) bearing properties on South Africa's Bushveld.
An initial site investigation was undertaken during September 2006 with subsequent field mapping during October 2006. Historical exploration data for the farms adjacent to the farms in the Bakgaga Project areas was obtained in December 2006.
This data is currently being evaluated to determine the exploration programme going forward.
Appointment of New Broker
On 13th December, Aquarius announced the appointment of Investec Bank (UK) Limited and Morgan Stanley & Co International Limited as joint corporate brokers to Aquarius Platinum on the London Stock Exchange.
Further Expansion in Production Announced at Mimosa
Subsequent to the end of the quarter, on 9th January 2007, Aquarius announced an approved low capital cost expansion to increase annual production capacity to 195,000 PGM ounces (100,000 platinum ounces in concentrate) at the Mimosa Platinum Mine in Zimbabwe.
The expansion project, known as "Wedza Phase V", follows four earlier successful expansion projects at Mimosa and is expected to increase annual PGM production from 168,750 PGM ounces to 195,000 PGM ounces. The increase in mining will come from the South Hill ore body where current operations are based, increasing throughput by 17% from 150,000 tons to 175,000 tons milled per month. The expansion will not have an impact on day-to-day operations, or have any material impact on the life-of-mine.
Total capital cost of the expansion, which has an estimated payback period of twenty-four months, is forecast at $23.2 million. It will be funded from retained cash flows at Mimosa level.
Conversion of Mining Licenses to New Order Rights
On 24th October 2006 Aquarius announced that the South African Department of Minerals and Energy (DME) approved AQPSA's applications for the new order mining rights conversions in respect of all three of its mines: Kroondal, Marikana and Everest. Consequently, AQPSA is now in full compliance with the South African Mineral and Petroleum Resources Development Act 2002, having exceeded the requirement for 26% Black Economic Empowerment ownership by 2014.
Aquarius purchases 3.5% of South African subsidiary from SavCon
On 7th November, Aquarius announced that an agreement was reached with Black Empowerment partner SavCon for the acquisition by AQP of a 3.5% equity interest in AQPSA from SavCon for a cash consideration of R342.5 million. The transaction represented a partial implementation of the final phase of the Black Economic Empowerment transaction approved by shareholders in Special General Meeting on 11 October 2004 and increased AQP's equity interest in AQPSA from 50.5% to 54%. Implementation requires South African DME approval as per section 9 of the AQPSA's converted mining rights.
Agreement with Bakgaga Mining
On 23rd October 2006 Aquarius announced that through its wholly owned subsidiary Aquarius Platinum (SA) Corporate Services (Pty) Ltd ("ASACS") that it signed a farm-in agreement with Bakgaga Mining (Pty) Ltd to drill and conduct feasibility work at prospective Platinum Group Metals (PGMs) bearing properties on South Africa's Bushveld.
More information on all the corporate matters can be found at www.aquariusplatinum.com
Statistical Information: Kroondal P&SA1
Data reflects Current PCP % Change Current PCP +/- % 100% of mine operations Unit Quarter Quarter Quarter 6 months 6 months Year Dec 2006 Sep 2006 on to Dec to Dec on Quarter 06 05 Year Safety DIIR Rate/ 0.93 1.02 10 0.93 0.96 3 200,000 man hours Revenue Gross Revenue R'M 963 954 1 1,917 1,227 56 PGM basket Price $/oz 1,287 1,311 (2) 1,299 879 48 Gross cash % 64 65 (2) 64 53 21 margin Nickel Price $/lb 15.02 13.22 14 14.11 6.17 129 Copper Price $/lb 3.21 3.48 (8) 3.35 183.00 (98) Ave R/$ rate 7.36 7.09 4 7.23 6.52 11 Cash Costs on-mine Per ROM ton R/ton 211 197 7 204 179 14 $/ton 29 28 2 28 27 4 Per PGM oz R/oz 2,982 2,754 8 2,866 2,458 17 (3E+Au) $/oz 405 388 4 396 377 5 Per PGE (5E+Au) R/oz 2,453 2,268 8 2,359 2,015 17 $/oz 333 320 4 326 309 6 Capex Current/ R'000s 93,378 31,273 199 124,651 33,525 272 Sustaining 100% $'000s 12,687 4,411 188 17,241 5,145 235 Expansion 100% R'000s - - - - 57,936 (100) $'000s - - - - 8,891 (100) Mining Processed Underground ROM Ton 1,551 1,552 (0) 3,103 2,911 7 '000 Open Pit ROM Ton 107 148 (27) 255 285 (11) '000 Total ROM Ton 1,658 1,700 (2) 3,358 3,196 5 '000 Grade Plant Head g/t 2.85 2.86 (0) 2.86 2.92 (2) Recoveries % 77 78 (1) 77 78 (1) PGM Production Platinum Ozs 70,522 73,239 (4) 143,761 138,959 3 Palladium Ozs 33,748 35,166 (4) 68,914 67,752 2 Rhodium Ozs 12,295 12,679 (3) 24,974 24,672 1 Gold Ozs 624 629 (1) 1,253 1,155 9 Total PGM Ozs 117,189 121,713 (4) 238,902 232,538 3 (3E+Au) Total PGE Ozs 142,460 147,762 (4) 290,222 283,657 2 (5E+Au) Base Metals Production Nickel Tonnes 113 117 (3) 230 222 4 Copper Tonnes 49 51 (4) 100 98 2 Chromite (000) Tonnes 106 91 16 197 258 (24) (000)
Statistical Information: Marikana P&SA2
Data reflects 100% of Current PCP % Change Current PCP +/- % mine operations Unit Quarter Quarter Quarter 6 months 6 months Year Dec 2006 Sep 2006 on to Dec 06 to Dec 05 on Quarter Year Safety DIIR Rate/ 0.43 0.21 (51) 0.43 0.76 77 200,000 man hours Revenue Gross R'M 324 256 27 580 197 194 Revenue PGM basket $/oz 1,270 1,283 (1) 1,276 863 48 Price Gross cash % 50 43 16 47 14.0 236 margin Nickel $/lb 15.02 13.22 14 14.11 6.17 129 Price Copper $/lb 3.21 3.48 (8) 3.35 183 (98) Price Ave R/$ 7.36 7.09 4 7.23 6.52 11 rate Cash Costs on-mine Per ROM ton R/ton 299 328 (9) 312 303 3 $/ton 41 46 (12) 43 47 (8) Per PGM oz R/oz 4,147 4,734 (12) 4,405 4,642 (5) (3E+Au) $/oz 563 668 (16) 609 712 (14) Per PGE R/oz 3,402 3,906 (13) 3,623 4,403 (18) (5E+Au) $/oz 462 551 (16) 501 676 (26) Capital expenditure Current/ R'000s 22,877 2,630 770 25,507 6,746 278 Sustaining 100% $'000s 3,108 371 738 3,528 1,035 241 Expansion R'000s 45,526 45,470 0 90,996 8,147 1,017 100% $'000s 6,186 6,413 (4) 12,586 1,250 907 Mining Processed Underground ROM Ton 202 141 44 343 36 854 '000 Open Pit ROM Ton 340 305 11 645 700 (8) '000 Total ROM Ton 542 446 22 988 736 34 '000 Grade Plant Head g/t 3.26 3.07 6 3.18 3.25 (2) Recoveries % 69 70 (2) 69 62 12 PGM Production Platinum Ozs 23,627 18,588 27 42,215 30,131 40 Palladium Ozs 11,218 8,944 25 20,162 13,288 52 Rhodium Ozs 3,941 3,098 27 7,039 4,327 63 Gold Ozs 291 235 24 526 365 44 Total PGM Ozs 39,076 30,865 27 69,941 48,111 45 (3E+Au) Total PGE Ozs 47,635 37,404 27 85,039 57,887 47 (5E+Au) Base Metals Production Nickel Tonnes 66 55 20 121 72 68 Copper Tonnes 35 30 18 65 41 59 Chromite Tonnes 34 23 50 57 104 (45) (000) (000)
Statistical Information: Everest
Data reflects 100% of Current PCP % Change Current PCP +/- % mine operations Unit Quarter Quarter Quarter 6 months 6 months Year Dec 2006 Sep 2006 on to Dec 06 to Dec 05 on Quarter Year Safety DIIR Rate/ 0.52 0.95 83 0.52 1.18 127 200,000 man hours Revenue Gross R'M 334 318 5 652 31 2,003 Revenue PGM basket $/oz 1,179 1,199 (2) 1,188 886 34 Price Gross cash % 56 64 (13) 59 28 111 margin Nickel $/lb 15.02 13.22 14 14.11 6.09 132 Price Copper $/lb 3.21 3.48 (8) 3.35 208.00 (98) Price Ave R/$ 7.36 7.09 4 7.23 6.35 14 rate Cash Costs on-mine Per ROM ton R/ton 224 190 18 212 168 26 $/ton 30 27 13 29 27 9 Per PGM oz R/oz 3,573 2,899 23 3,234 3,136 3 (3E+Au) $/oz 485 409 19 447 494 (9) Per PGE R/oz 3,011 2,460 22 2,735 2,981 (8) (5E+Au) $/oz 409 347 18 378 470 (20) Capital expenditure Current/ R'000s 41,974 29,046 45 71,190 - - Sustaining 100% $'000s 5,703 4,097 39 9,846 - - Expansion R'000s 945 19,852 (95) 21,117 349,189 (94) 100% $'000s 128 2,800 (95) 2,921 55,026 (95) Mining Processed Underground ROM Ton 486 323 50 809 39 1,974 '000 Open Pit ROM Ton 170 286 (41) 456 89 412 '000 Total ROM Ton 656 609 8 1,265 128 888 '000 Grade Plant Head g/t 2.79 2.98 (6) 2.80 3.12 (10) Recoveries % 70 72 (3) 72 55 31 PGM Production Platinum Ozs 23,495 23,459 0 46,954 4,161 1,028 Palladium Ozs 13,484 14,140 (5) 27,624 2,351 1,075 Rhodium Ozs 3,838 3,697 4 7,535 532 1,316 Gold Ozs 374 421 (11) 795 67 1,087 Total PGM Ozs 41,191 41,717 (1) 82,908 7,111 1,066 (3E+Au) Total PGE Ozs 48,880 49,167 (1) 98,047 8,223 1,092 (5E+Au) Base Metals Production Nickel Tonnes 56 57 (2) 113 13 769 Copper Tonnes 29 28 4 57 5 1,040
Statistical Information: Mimosa
Data Reflects 100% of Current PCP +/- % YTD PCP +/- % Rolling
mine operations Average Quarter Quarter Quarter 6 6 Year on 12 Dec 2006 Sep 2006 on months months Year Months Quarter to Dec to Dec 06 05 Safety Unit DIIR Rate/ 0.52 0.27 (93.00) 0.47 0.15 (220.76) 0.39 200 000 man hours Revenue
Gross Revenue US$M 44 47 -6 91 55 65 149
PGM basket US$/oz 939 958 -2 949 638 49 882 Price Gross cash % 68 76 -11 72 61 19 70 margin
Nickel Price US$/lb 13 10 34 11 7 63 9 Copper Price US$/lb 3.42 3.39 1 3.40 1.60 1 2.88
Cash Costs Per Rom ton US$/ 41 33 (25) 36 32 (13) 33 ton
Per PGM ounce US$/oz 446 356 (25) 395 342 (16) 364 (3E+Au)
Per PGM ounce US$/oz (52) 11 589 (17) 98 117 40 (3E) after by-product credits
Per 6 PGM US$/oz 421 337 (25) 374 323 (16) 344 ounce (5E+Au)
Per 6 PGM US$/oz (42) 16 366 (10) 96 110 43 ounce (5E+Au) after by-product credits Capital Expenditure Current US$ ' 2,773 2,350 (18) 5,123 4,327 (18) 8,795 000s Expansion US$ ' 1,043 410 (154) 1,453 1,050 (38) 10,874 000s Mining Processed Underground RoM 448 488 (8) 935 862 8 1,786 ton '000 Grade Plant Head g/t 4 4 1 4 4 (2) 4 Recoveries % 77 78 (1) 78 78 (0) 78
PGM Production
Platinum Ozs 16,810 21,613 (22) 38,423 36,509 5 74,146 Palladium Ozs 12,856 16,486 (22) 29,342 27,496 7 56,568 Rhodium Ozs 1,316 1,671 (21) 2,987 2,797 7 5,768 Gold Ozs 2,363 2,963 (20) 5,326 4,960 7 10,242 Total Ozs 33,345 42,733 (22) 76,078 71,762 6 146,724 Base Metals Production Nickel Tons 449 574 (22) 1,023 1,000 2 1,981 Copper Tons 377 475 (21) 852 832 3 1,658 Cobalt Tons 14 18 (22) 31 30 4 60
Note: Cash Cost Per ROM ton calculated using milled tonnage
Statistical Information: Chrome Tailings Retreatment Plant
Data reflects 100% of Current PCP % Change Current PCP +/- % mine operations Unit Quarter Quarter Quarter 6 months 6 months Year Dec 2006 Sep 2006 on to Dec 06 to Dec 05 on Quarter Year Safety DIIR Rate/ 0 0 0 0 0 0 200,000 man hours Revenue Gross R'M 17 18 (6) 35 17 106 Revenue PGM basket $/oz 1,592 1,622 (2) 1,606 1,024 57 Price Gross cash % 77 79 (3) 78 44.0 77 margin Nickel $/lb 15.02 13.22 14 14.11 6.17 129 Price Copper $/lb 3.21 3.48 (8) 3.35 183 (98) Price Ave R/$ 7.36 7.09 4 7.23 6.52 11 rate Cash Costs on-mine Per ROM ton R/ton 92 144 (36) 111 95 17 $/ton 12 20 (38) 15 15 3 Per PGM oz R/oz 2,143 2,202 (3) 2,172 3,187 (32) (3E+Au) $/oz 291 311 (6) 300 489 (39) Per PGE R/oz 1,459 1,526 (4) 1,510 2,261 (33) (5E+Au) $/oz 198 215 (8) 209 347 (40) Capital expenditure Current/ R'000s - 1,159 - - - - Sustaining 100% $'000s - 166 - - - - Expansion R'000s - - - - 378 - 100% $'000s - - - - 58 - Feed Processed Feed ROM Ton 44 26 68 70 96 (27) Processed '000 Total ROM Ton 44 26 68 70 96 (27) '000 Grade Plant Head g/t 4.49 3.33 35 4.04 2.95 37 Recoveries % 38 64 (40) 48 33 45 PGM Production Platinum Ozs 1,136 1,020 11 2,155 1,801 20 Palladium Ozs 406 377 8 783 632 24 Rhodium Ozs 320 311 3 631 458 38 Gold Ozs 3 3 15 7 6 11 Total PGM Ozs 1,866 1,711 9 3,576 2,897 23 (3E+Au) Total PGE Ozs 2,742 2,469 11 5,143 4,083 26 (5E+Au) Base Metals Production Nickel Tonnes 1 1 2 - Copper Tonnes 2 2 (22) 4 - - Aquarius Platinum LimitedIncorporated in BermudaExempt company number 26290 Board 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 Patrick Quirk Non-executive Zwelakhe Sisulu Non-executive Kofi Morna Alternate to Zwelakhe Sisulu Audit/Risk Committee Sir William Purves (Chairman)David DixEdward HaslamNicholas Sibley
Remuneration/Succession Planning Committee
Edward Haslam (Chairman)Nicholas Sibley Nomination Committee
The full Board comprises the Nomination Committee
Company SecretaryWilli Boehm Issued Capital
At 31 December 2006, the Company had on issue:
84,575,558 fully paid common shares and 2,020,320 unlisted options
Substantial Shareholders 31 December 2006 Number of Shares Percentage
Impala Platinum Holdings Ltd 7,127,276 8.43 Nutraco Nominees Limited 5,877,403 6.95 Trading InformationISIN number BMG0440M1029 Broker (LSE) (Joint) Broker (ASX) Sponsor (JSE) Morgan Stanley & Co Euroz Securities Investec Bank Limited International Limited Level 14, The Quadrant 100 Grayston Drive 20 Cabot Square 1 William Street Sandown Canary Wharf Perth WA 6000 Sandton 2196 London, E14 4QW
Telephone: +44 (0) 20 7425 8000 Telephone: +61 (0)8 Telephone: +27 (0)11 Facsimile: +44 (0)20 7425 8990 9488 1400 286 7326
Facsimile: +61 (0)8 Facsimile: +27 (0)11 9488 1478 291 1066 Investec Securities Limited Investec Bank (UK) Limited 2 Gresham Street London, EC2V 7QP
Telephone: +44 (0)20 7597 5970 Facsimile: +44 (0)20 75975120 Aquarius Platinum (South Africa) (Proprietary) Ltd. 50.5% Owned (Incorporated in the Republic of South Africa) Registration Number 2000/000341/07 Block A, 1st Floor, The Great Wall Group Building 5 Skeen Boulevard, Bedfordview South Africa 2007 P O Box 1282 Bedfordview South Africa 2009 Telephone: +27 (0)11 455 2050 Facsimile: +27 (0)11 455 2095 Email: [email protected] 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 PO Box 485 South Perth, WA 6151, Australia Telephone: +61 (0)8 9367 5211 Facsimile: +61 (0)8 9367 5233 Email: [email protected] AQPSA Management Stuart 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 Abraham (Rudi) Rudolph - General Manager Kroondal Gabriel de Wet - General Manager Engineering Mimosa Mine Management Alex Mhembere - Managing Director Winston Chitando - Finance Director Herbert Mashanyare - Technical Director Peter Chimboza - Operations Director 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 DME South African Government Department of Minerals and Energy DMS Dense Media Separation Dollar United States Dollar or $ 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 Australasian code for reporting of Mineral Resources and Ore Reserves code 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), Ivanhoe Nickel and Platinum Limited 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 SavCon The Savannah Consortium. The principal Black Empowerment Investor in Aquarius Platinum 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 Z$ Zimbabwe Dollar
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 Charmane Russell Russell & Associates +27 (0)11 880 3924
or visit: www.aquariusplatinum.com
AQUARIUS PLATINUM LIMITEDRelated Shares:
AQP.L