11th Aug 2005 08:42
AQUARIUS PLATINUM LIMITEDANNUAL RESULTS: 30 JUNE 200511 August 2005 ANNUAL RESULTS: 30 JUNE 2005 Expanding production profile continues to deliver Earnings Growth * Net Profit $20.95 million, cash profit $47.5 million * Full Year Dividend increased to US 8 cents per share * Record group production: 327,669 PGM ozs * Secure and funded projects to deliver growth: FY 2006: 500,000 PGM ozs Highlights of the year:Operational * Group attributable production up 7% to 327,669 PGM ounces (2004: 307,063 PGM ounces) * Kroondal production record as expansion ramps up production * Marikana improvement in second half * Mimosa continues a consistent strong performance * CTRP commissioned, already operating profitably * Everest on track for hot commissioning in December 2005 Financial * Revenue increased 14% to $222.3 million * Net profit after tax "cash basis" up 4% to $47.5 million (US 57 cents per share) * Accounting net profit (to IFRS) of $20.95 million (25.3 cents per share) following 149% increased earnings over first half year's earnings ($6 million) to December 2004. The result for the year is not comparable with the previous year which included $10.9 million profit on sale of assets. * Cash balance remains strong at $75.3 million * Interest bearing debt reduced to $16 million, down from $78.2 million in 2004 * US 5 cents per share final dividend declared, payable on 7 October 2005, (2004: US 3 cents). Total 2005 dividend (interim and final) up 33% to US 8 cents (2004: US 6 cents) Strategic * Black Economic Empowerment (BEE) transaction completed in October 2004, R860 million banked * Kroondal P&SA expansion commissioned 3 months ahead of schedule * Chrome Tailings Retreatment Plant (CTRP) commenced production in January 2005 * Board strengthened with the appointment of Zwelakhe Sisulu as a non-executive director * Subsequent to year end, a Pool & Share Agreement at Marikana (P&SA 2) announced, extending life of mine by 10 years Aquarius announces consolidated earnings for the year to 30 June 2005 of $20.95million (US 25.3 cents per share) following a strong second half result of$14.95 million. The second half saw PGM production increase by 25% over thefirst half as the Group's expanding production profile commenced delivery ofnew PGM ounces.Profit for the year included $3.1 million from the sale to Implats of a 2%interest in AQPSA in October 2004 at the conclusion of the BEE transaction.Cash earnings (before depreciation and amortisation) were $47.5 million. Theresult for the year is not comparable with the previous year, which included aprofit of $10.9 million from the sale of the Waterval mineral rights.As outlined in the table below, this year's performance has shown animprovement in the second half of the year as the Group's expansion programcommenced production. This is attributable to improved production and financialperformance across the group, notably as the Kroondal P&SA entered productionand continues to ramp-up in to the 2006 financial year. The Kroondal operation,which produced 324,730 PGM ounces this year, is on track (following thesuccessful commissioning of the P&SA concentrator in March 2005) to produce505,000 PGM ounces in FY 2006; 50% of which is attributable to Aquarius. 1H 2005 2H 2005 FY 2005 Net Profit After Tax & Outside Equity $6.00 m $14.95 m $20.95 mInterests PGM Production (ounces) 145,714 181,955 327,669The Directors have declared a final dividend of 5 cents (2004: 3 cents) pershare payable on7 October 2005 to shareholders registered on 16 September 2005. This brings thetotal dividend payable for the year ended 30 June 2005 to US 8 cents, anincrease of 33% over last year.Commenting on the results, Stuart Murray, CEO of Aquarius said, "I believe thatthe 2005 financial year is one of considerable progress. First of all, thegroup has delivered firm operating results, and second, an active year on thecorporate front has positioned the group securely to deliver superior growth.Results for the financial year are firm, despite challenging economiccircumstances in both South Africa and Zimbabwe. Attributable production hasincreased 7%, yet actual production by mine increased 25%. This pattern isexpected to continue, with the group forecasting production to increasesignificantly in 2006 to 500,000 PGM ounces attributable to Aquarius.It has been a very busy year too on the corporate front. At AQPSA we havecompleted a well received BEE transaction, and banked R860 million. Proceedsfrom the transaction, combined with firm operating cash flows, have been put togood use, with plans completed or underway to increase production at alloperations and construct the new Everest Mine.The second half of the 2005 financial year showed the first signs of thisstrategy to deliver growth, as production, costs and indeed the bottom line allsuggest significant scope to improve in the near future. I believe that thispotential is unique to Aquarius and our innovative strategies to grow theCompany, notably at a time when the economic outlook for the industry isimproving, and position us well to deliver superior growth." Aquarius Group Attributable Annual Production (PGM ounces) Production of PGMs attributable to shareholders of Aquarius increased 7% to327,669 PGM ounces from 307,063 ounces, with all mines achieving increasedproduction over the previous period. Of particular significance was thecommissioning of the second concentrator at Kroondal as part of the P&SAexpansion, three months ahead of schedule in March 2005. This concentrator ison track to increase Kroondal's production to 505,000 PGM ounces per annum inFY 2006; of which 50% is attributable to Aquarius.Revenue for the year, net of currency adjustments, was $225 million, anincrease of 17% over the previous year.Interest of $9.8 million was charged to the P&L during the year. This includeda non cash component of $1.9 million relating to the movement in the netpresent value of the Marikana and Kroondal rehabilitation provisions.Depreciation increased to $19.7 million from $12.2 million due to capitalexpenditure on the respective developments and expansions at Kroondal andMarikana. Amortisation arising from the fair value uplift at Kroondal at $6.7million was $1.7 million higher due to increased production at the mine and anadjustment to the Marikana ore reserve to reflect the decrease in recoveries.The US Dollar was 10% weaker against the Rand during the year at an averageexchange rate of R6.17 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 R6.67 to the US Dollar. This shift is positive as the Company'sSouth African operations incur costs in Rand and revenues in US Dollars.Cash costs at Kroondal were well controlled, increasing by 8% to R2,311 per PGMounce compared to the previous year. This is particularly credible as theKroondal operating costs include R198 per PGM ounce of P&SA decline developmentcosts. In US Dollar terms cash costs rose 21%, reflecting the weakness of theUS Dollar during the year. In addition to the above, $1.8 million was spent onrehabilitation of the previously mined open cast areas to reduce final closurecosts.Marikana has underperformed during the year and was impacted by poor contractorperformance and difficult mining in parts of the ore body. Excessive internalwaste dilution and a greater overburden than anticipated in the feasibilitystudy contributed to the lower than expected PGM ounces produced during theyear resulting in unit costs of R4,035 per PGM ounce. In US Dollar terms cashcosts rose 11% reflecting the weakness of the US Dollar during the year.Marikana's performance was characterised by a very poor first half which sawcash costs average R4,699 per PGM ounce on production of 45,713 PGM ounces anda much improved second half which saw operating costs reduce from R4,699 toR3,030 per PGM ounce on increased production of 53,448 PGM ounces. Theimprovement in the second half is a result of deeper ore being mined and higherplant recoveries of 65% achieved.Operating costs at the Mimosa Mine increased in US Dollar terms to $358 per PGMounce, and $141 per PGM ounce after by-product credits. The increase in cashcosts is predominantly attributed to the impact of high inflation and a "fixed"foreign exchange rate. The Mimosa Mine experienced fluctuating exchange ratestowards the end of the year as a result of revised government exchange controlprocedures. In May 2005, the Reserve Bank of Zimbabwe depreciated theZimbabwean currency by some 45% to approximately 9,000 Zimbabwean Dollars tothe US Dollar. Subsequent to year end, the Reserve Bank of Zimbabwe furtherdepreciated the Zimbabwean Dollar to 17,500 Zimbabwean Dollars to the USDollar.PGM prices in US Dollar terms continued to perform well during the year as awhole. Platinum, rhodium and gold closed the financial year stronger, with therhodium price in particular performing well, having doubled through the period.Looking to platinum, management believes that continued supply-side constraintsdue to higher South African costs associated with a strong rand have continuedto hamper new production. Demand, however, has continued to be strong, notablyfor platinum autocatalysts and this has resulted in a continued platinumsupply-deficit and historically high prices. The palladium price has continuedto fall, losing some $30 over the year to close at $183 per ounce.It should be noted however, that Aquarius mines a basket of platinum groupmetals: platinum, palladium, rhodium and gold, referred to as 4PGE. Thesemetals occur in different ratios in South Africa and Zimbabwe, and when pricedaccordingly, provide a PGM basket price, one of the principal revenue drivers.With the sustained high prices of platinum and gold, and the strong increasesin rhodium the South African PGM the average basket prices for the yearincreased 11% in US Dollar terms to $711 per PGM ounce. Due to the weaker USDollar which depreciated by 10% against the Rand over the year, the PGM basketprice was R4,392 in local currency terms, marginally up from the previous year.In Zimbabwe, despite a higher ratio of palladium in the basket, the average PGMbasket price for the year increased 10% to $590 PGM ounce.Cash balancesAquarius Group cash balances at 30 June 2005 were $75.3 million, a decrease of$2.7 million. Major factors other than mine operations that impacted on themovement in cash during the year were:Net proceeds from BEE transaction $133 million Investec/ABSA and other loan repayments and deposit ($ 71offset million) Interest expense ($ 8 million) Interest income $7 million Dividends paid ($5 million) Capital expenditure ($91 million)Group DebtIn December 2004, AQPSA signed an addendum to the current debt facilityagreement with Investec / ABSA to create an innovative cash balance managementoffset mechanism in respect of its existing term debt facility. Under thisaddendum, AQPSA is permitted to deposit its cash (up to the outstanding balanceof the debt facility) in order to reduce its interest expense for the period.This was done because the prevailing interest rate on the loan is about 3%higher than the rate that could be earned by placing the funds on deposit. Inaddition to two loan repayments made during the year totalling R63 million anadditional R320 million was deposited into the debt facility as per the depositoffset agreement with Investec/ABSA. This has effectively reduced the interestexpense charge to the Group and reduced the balance of the amount owing toInvestec/ABSA to R2.5 million at 30 June 2005. The R320 million may be redrawnas required.Group interest bearing debt at 30 June 2005 comprises: * Investec/ABSA $ 0.4 million * Savcon Long term debt: $14.9 million Review of Group's debt facilitiesThe Company is currently in the process of evaluating various proposalsreceived in regard to replacing the current debt facility with a moreappropriate funding package.Financials Aquarius Platinum Limited Consolidated Income Statement Year ended 30 June 2005 $'000 Half year ended Year ended 30/06/05 31/12/04 30/6/05 30/6/04 Aquarius PGM Production 181,955 145,714 327,669 307,063(attributable ounces) Note: Revenue (i) 123,565 98,762 222,327 194,850 Foreign exchange gain/ (ii) 4,491 (1,694) 2,797 (2,975)(loss) Cost of Sales (iii) (91,848) (83,088) (174,936) (125,420) Gross Profit 36,208 13,980 50,188 66,455 Amortisation of fair value (iv) (4,146) (2,599) (6,745) (4,951)uplift of mineral properties Gross profit after 32,062 11,381 43,443 61,504amortisation of fair value uplift Admin & other operating (v) (2,587) (3,389) (5,976) (8,619)costs Other FX movements (vi) (1,911) 2,395 484 (3,094) Finance costs (vii) (3,704) (6,185) (9,889) (10,661) Profit before tax 23,860 4,202 28,062 39,130 Income tax expense (4,559) 1,113 (3,446) (5,674) Profit after tax 19,301 5,315 24,616 33,456 Minority interest (viii) (4,353) 687 (3,666) (4,752) Net profit 14,948 6,002 20,950 28,704 EPS (basic - cents) 18.04 7.28 25.32 35.07Notes on the June 2005 Consolidated Income Statement(i) Sales revenue is higher due to increased PGM ounces (20,606 ounces) andhigher basket prices.(ii) Foreign exchange variances caused by the difference between revenuerecorded at time of production to cash received at the end of the four monthpipeline.(iii) Cost of sales is higher due to increased production, Marikana costs andhigh inflation in Zimbabwe against a fixed exchange rate.(iv) Amortisation of fair value uplift of mineral properties is up due toincreased Kroondal production and an adjustment to the Marikana ore reserve toreflect the decrease in recoveries to 64%.(v) Administration and other costs are lower due to the reallocation of certain"other" costs into cost of sales.(vi) Reflects foreign exchange movements on net monetary assets.(vii) Finance costs were higher in the first half on Zimbabwean working capitaldebt and lower in the second half on reduced Zimbabwean debt and the impact ofthe R320 million deposited into the deposit offset account as part of theInvestec debt facility with AQPSA.(viii) Reflects profit of AQPSA attributable to minority interests (Savcon andImplats 49.5%). Aquarius Platinum Limited Consolidated Cash flow Statement Year ended 30 June 2005 $'000 Half year ended Financial year ended 30/06/05 31/12/04 30/06/05 30/06/04 Note: Net operating cash inflow (i) 21,580 9,878 31,458 54,365 Net investing cash outflow (ii) (51,305) (36,847) (88,152) (10,380) Net financing cash outflow (iii) (21,524) 76,445 54,921 15,786 Net increase (decrease) in (51,249) 49,476 (1,773) 59,771cash held Opening cash balance 136,550 77,942 77,942 16,996 Exchange rate movement on (iv) (10,050) 9,132 (918) 1,175cash Closing cash balance 75,251 136,550 75,251 77,942Notes on the June 2005 Consolidated Cash flow Statement(i) Net operating cash flow includes $32.0 million inflow from operations, $1.6million tax paid and $1 million net finance costs. Net decrease from FY 2004was due to pipeline drawdown in FY2004 of $16 million and increased miningcosts at Marikana and Mimosa in FY 2005.(ii) Reflects payments for mine development and development costs ($90.3million), proceeds from sale of assets ($4.7 million), mine-site rehabilitation($1.8 million).(iii) Reflects net proceeds from issue of shares ($31.8 million), proceeds fromSavcon BEE loan ($97.4 million), repayment of loans including Investec ($71.0million), proceeds from repayment of share plan loans $1.7 million and paymentof dividends of $4.9 million.(iv) Reflects movement of Rand against the $US. Aquarius Platinum Limited Consolidated Balance Sheet At 30 June 2005 $'000 Financial year ended Note: 30/06/05 30/06/04 Assets Cash assets 75,251 77,942 Current receivables (i) 44,695 23,262 Other current assets (ii) 16,312 10,736 Non-current receivables (iii) 2,928 4,627 Mining assets (iv) 408,765 356,509 Other non-current assets 541 150 Total assets 548,492 473,226 Liabilities Current liabilities (v) 35,480 41,766 Non-current payables (vi) 150,735 59,600 Non-current interest-bearing (vii) 16,037 62,716liabilities Other non-current liabilities (viii) 78,315 74,947 Total Liabilities 280,567 239,029 Net assets 267,925 234,197 Equity Parent entity interest 235,352 224,975 Minority interest 32,573 9,222 Total Equity 267,925 234,197Notes on the June 2005 Consolidated Balance Sheet(i) Reflects debtors receivable on PGM concentrate sales. Increase reflectsdebtors from new Kroondal concentrator commissioned in March 2005(ii) Reflects PGM concentrate inventory.(iii) Reduction reflects Aquarius share plan loans repaid.(iv) Increase in mining assets reflects Mimosa mining assets, Marikana plant,Kroondal expansion and Everest expansion.(v) Includes tax payable ($9.6 million) and creditors ($25.9 million).(vi) Includes BEE deferred settlement proceeds ($10.6 million) and non interestbearing portion of AQPSA shareholder debt (Implats $62.7 million and Savcon$77.5 million).(vii) Includes interest bearing debt payable to Investec ($0.3 million), Savcon($15.0 million) and other ($0.7 million).(vii) Reflects deferred tax liabilities $53.8 million, provision for closurecosts $24.5 million.CorporateBoardIn February the Company strengthened the Board with the appointment of MrZwelakhe Sisulu as a non-executive Director. Mr Sisulu is the Chairman ofSavannah Resources (Pty) Ltd, the lead partner in the Savannah Consortium,Aquarius Platinum's Black Economic Empowerment partner.Black Economic Empowerment (BEE)The BEE transaction announced to shareholders on 26th July 2004 and approved byshareholders in Special General Meeting on 11th October 2004 was formallyconcluded with the receipt of R860 million in cash by the Aquarius Group on the29th October 2004.The transaction has two key components, the first of which is now completed.This saw the BEE consortium, led by Savannah Resources (Pty) Limited, subscribefor a 29.5% shareholding in the enlarged share capital of AQPSA. ConcurrentlyImpala Platinum Holdings Limited (Impala) acquired an additional holding inAQPSA from Aquarius to increase their shareholding to 20% in AQPSA followingthe dilution resulting from the issue of the new shares in AQPSA to the BEEconsortium. At this time, the shareholdings in AQPSA are as follows: * 50.5% interest by AQP * 29.5% by the Savannah consortium * 20% held by Impala The consideration paid by Impala amounted to R71.5 million, which was settledby the cession of R71.5 million of interest bearing loan account to Aquarius.At the time of the BEE transaction, AQPSA had an interest bearing loan of overR93 million (both principal and accumulated interest) to Impala. Followingcession of R71.5 million of the loan to Aquarius, AQPSA settled the outstandingbalance of the loan in cash.The final component of the transaction will in time and subject to theconditions detailed in the notice of meeting to shareholders of 17th September2004, see the Savannah consortium's 29.5% holding in AQPSA be exchanged for24,599,542 new Aquarius shares. Following this exchange, Aquarius will hold 80%of AQPSA and Savannah consortium constituent members will hold approximately23% of the enlarged share capital of Aquarius.JSE Securities Exchange South AfricaIn December 2004, the Company announced its listing on the JSE SecuritiesExchange South Africa (JSE). Aquarius Platinum is the first foreign listedcompany to list on the JSE under the relaxed exchange control regulations. Thenew listing means that Aquarius' shares are traded on the Australian, Londonand Johannesburg Exchanges in addition to a sponsored Level 1 ADR program inthe United States.ProjectsAquarius remains on track to produce its strategic target of 600,000 ounces,attributable to Aquarius.In South Africa the Kroondal Pool and Share Agreement (P&SA1) is alreadydelivering new production ounces and ahead of schedule to deliver 505,000 PGMounces (50% attributable to Aquarius) a year, with a significant life extensionto 2017.The Marikana Pool & Share Agreement (P&SA2) announced in July 2005 will see themine produce 250,000 PGM ounces (50% attributable to Aquarius), with asignificant life extension to 2024.The Everest Mine is under construction and scheduled to be commissioned inDecember 2005, rapidly ramping up production in 2006 to a targeted 225,000 PGMounce a year over the project's 10 year life of mine.The CTRP is also ramping production, towards a stated 28,000 PGM ounces (50%attributable to Aquarius) a year.In Zimbabwe, the Mimosa Mine will commence a small scale expansion to increaseproduction some 30% to 70,000 PGM ounces.The targeted production demonstrates three positive strategic shifts in theAquarius production profile: 1. An almost doubling of production to 600,000 PGM ounces 2. Significant life extension of operations at Kroondal and Marikana 3. Innovative expansion through pool and share transactions, in an industry where new assets are limited 4. Exercising production growth where costs (expansion and production) are some of the lowest in the industry The table below details individual mine production for the 2005 financial yearend against the targeted and attributable mine production.PGMs (4E) Production Targeted Production Targeted Year Ended 2005 Attributable Production Kroondal 324,730 505,000 252,500 Marikana 99,161 250,000 125,000 Everest - 225,000 225,000 Mimosa 130,167 162,500 81,250 CTRP 2,117 28,000 14,000 Total 556,175 1,170,500 697,750Pool and Share AgreementsKroondalThe Kroondal Pool & Share Agreement (P&SA1) entered production during the year,with first new production delivered in March 2005. The mine is now rampingproduction towards an annual target of 505,000 PGM ounces (Aquariusattributable 50%).The new operation sees a new decline at Kroondal to access additional orereserves pooled by P&SA1 partner Anglo American Platinum. A new concentratorwas also constructed in record time and commissioned three months ahead ofschedule and within budget.AQPSA's commitments on the P&SA1 expansion project totalled R314m at the end ofthe financial year with R278m paid. The expected final cost to AQPSA isestimated at R358m, under the R375 originally announced (R750 million in total,50% attributable to each partner).MarikanaAlthough a post year end event, the Company announced a significant transactionin July 2005 to create a Pool & Share Agreement at the Marikana Mine (P&SA2).The P&SA2 is targeted to come in to effect in September 2005 and will see themine increase production to 250,000 PGM ounces (Aquarius attributable 50%)while extending the life of mine by 12 years to 2004. Utilising consensusmacroeconomic data it is expected that P&SA2 will add some R1.6 billion ($265million) to the net present value of the partners' investment.Aquarius has recognised for some time that the best way to add value to itsproblematic Marikana operation is to replicate the successes emanating from P&SA1. It is forecast that significant synergies will be achieved as the enhancedMarikana operation will increase its mining life and mining flexibility in acost-effective manner in terms of both capital expenditure and operating costs.Operations will gradually change from a focus on large-scale opencast mining tounderground mining. This transition to primarily underground operations willtake around 18 months, although significant opencast operations will continuefor as long as they achieve reasonable cash margins.Mine OperationsOn mine financial Kroondal Marikana Mimosa CTRP performances: PGM ounces (attributable) 162,365 99,161 66,084 1,059 Revenue (net of FX variance $103.1 $59.8 million $49.2 $0.7on sales) million million million Cash Costs Rand per PGM R2,311 R4,035 nm Nmounce Cash costs ($) per PGM $375 $654 $358 $367ounce Gross margin 40% (10%) 60% 38% EBITDA $40.8 million ($4.3 $21.1 $0.3 * million)* million million* Kroondal and Marikana figures are before outside equity interestDepreciation and $9.3 million $14.3 million $2.8 $0.1amortisation million millionAQUARIUS PLATINUM (SOUTH AFRICA) (PTY) LTD (Aquarius Platinum 50.5%)Kroondal Platinum MineSafetyThe DIIR rate improved to 0.75 from 1.66 in the previous year, a credibleimprovement in safety performance both at mining operations and during a periodof intense construction associated with the P&SA.ProductionKroondal achieved record production of 324,730 PGM ounces for the year, anincrease of 37% on the previous year. The year's production is characterised byincreased production as the P&SA enters full operational status, and the mineis on track to produce 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 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 2002 133,238 60,682 22,102 1,274 217,296 217,296*Reflects P&SA effective November 2003 (4 months production at 100% & 8 monthsproduction at 50%)**Reflects full impact of P&SA (12 months production at 50%)Production resulted from 4,240,000 ROM tons: 3,974,000 from undergroundoperations and 266,000 ROM tons from open pit operations. The average headgrade over the period was constant at 3.04g/t with recoveries improvingmarginally to 79%.Cash costs at Kroondal increased 8% to R2,311 per PGM ounce compared to theprevious year. This increase, which is in line with the local inflation rate,is commendable given that the mines operating costs for the year include R198per PGM ounce of P&SA development costs. On an adjusted basis, cash costs(after allowing for development costs) for the year was R2,113 per PGM ounce.As the P&SA enters full production mode, cash cost are expected to trend down.The average achieved PGM basket price per ounce for the year was $711, notablyincreasing throughout the year to average $745 in the fourth quarter.Marikana Platinum MineSafetyThe Marikana Mine reported an improved DIIR of 0.81 for the year. A small butsignificant improvement of 5% on the previous year, notably as in the fourthquarter the Mine reported a DIIR of zero.ProductionProduction for the year was 99,161 PGM ounces as the mine continued to build upproduction. Production resulted from 1,515,000 ROM tons from open pitoperations. The average grade over the period was marginally lower at 3.60 g/t,though recoveries improved to 57% for the year compared to 49% the previousyear. Notably recoveries of 65% were achieved in the second half of the year.Cash costs for the period were R4,035 per PGM ounce, equal to $654 per PGMounce. Costs did trend downwards, to R3,578 ($565) per PGM ounce in the fourthquarter. The average achieved PGM basket price per ounce for the year was $713.Performance at the Marikana Mine has continued to disappoint. However,improvements into the second half suggest that good progress is being made.Pool & Share Agreement (P&SA2)In July 2005 Aquarius announced a Pool & Share Agreement for the Marikana Mine,similar to the successful P&SA at Kroondal. The P&SA2, subject to certainsuspensive conditions and regulatory approvals being met, is targeted to comeinto effect in September 2005.The total capital cost of P&SA2 is estimated at R228 million, to be sharedequally by both parties. AQPSA will fund its portion from current cash flowsand existing debt facilities.It is forecast that significant synergies will be achieved as the enhancedMarikana operation will increase its mining life and mining flexibility in acost-effective manner in terms of both capital expenditure and operating costs.Over 18 months, operations will gradually change from a focus on large-scaleopencast mining to underground mining. Utilising consensus macroeconomic datait is expected that P&SA2 will add some R1.6 billion ($265 million) to the netpresent value of the partners' investment.Marikana Mineable Reserves and Production Attributable to AQPSA Before andAfter P&SA2 PRE - P&SA2 POST - P&SA2 Mineable reserves (ROM tons) 12.7 million 21.9 million Mineable reserves (PGMs 4E) 1.29 million ounces 2.20 million ounces Annual Production (ROM tons) 1.6 million 1.5 million Planned Annual Production (PGMs 4E) 120,000 ounces 125,000 ouncesWhen the P&SA becomes effective at the end of September, as at Kroondal,Aquarius' initial attributable production at Marikana will be shared.Attributable production will be built back up to 125,000 PGM ounces per annumwithin 18 months through an expansion of the Marikana metallurgical facility.The impact of P&SA2 on group earnings is expected to be positive for thecurrent financial year and significantly accretive thereafter as the fullbenefits of P&SA2 accrue. This improvement is due to increased plantthroughput, lower unit costs of underground mining, higher PGM recoveries fromunderground UG2 ore and lower amortisation charges.Contractor disputeIn June 2005, Grinaker-LTA Limited trading as Moolman Mining (South Africa)requested a postponement of the arbitration. This was requested to enable anaudit to be conducted from inception up until the end of March 2005 on the costelements and expenditure incurred which formulate the rise and fallcalculation.The audit is currently being conducted by KPMG and assisted by independentauditing experts representing Moolman Mining South Africa and AQPSArespectively. It is anticipated that the audited report will be availableduring the next quarter, after which the parties will agree on a way forward.Everest Platinum MineSafetyThe DIIR for the quarter to June 2005 rose to 0.39 from zero in the previousquarter as a result of two lost time injuries occurring during the period.MiningAhead of underground mining, small scale open cast mining is planned to provideinitial feedstock. During the quarter, the opencast North Pit was established,with opencast mining continuing from the South Pit. Opencast mining is onschedule, with a total of 599,385m3 of waste moved and 56,580 tons of reefproduced. The decline development commenced in April 2005 as scheduled, and isahead of programme with a system advance of 135 metres against the 99 metreprogramme advance. The decline conveyor and first underground tip wassuccessfully commissioned during the period.ProgressThe Everest construction programme is proceeding as planned. Civil constructionand erection of steel structures are ongoing and piping, electrical andinstrumentation and tailings dam construction commenced during the period.Engineering, design and procurement activities are proceeding in parallel andproject execution is on track for hot commissioning during December 2005.Everest expects to mine and process 250,000 tons per month of UG2 ore toproduce 225,000 PGM ounces per annum at steady state, with full production tobe attained in 2006.Everest Mine Development (end June 2005)The Everest capital budget is R819 million, including a R33 million allowancefor escalation. The Everest project capital expenditure commitments were R533million at the end of the quarter, with capital expenditure paid to date ofR223 million.MIMOSA INVESTMENTSMimosa Mine (Aquarius 50%)SafetyThe DIIR for the year improved to 0.31, compared to 0.52 for the previous year.ProductionPGM production for the year increased 9% to 130,167 ounces (Aquariusattributable 65,084 ounces). ROM tonnes increased 7% to a milled tonnage of1,432,000 tons. With grade slightly lower at 3.69 g/t it was improvedrecoveries of 1.4% to 77% that assisted in boosting production.Cash costs per ounce for the year were $358 per PGM ounce. After by-productcredits cash costs per ounce were $141 per PGM ounces.Increases in cash costs are attributed to a fiscal regime, which despite highinflation, maintained a "fixed" exchange rate regime rapidly depreciatingcurrency until May 2005. In May, and subsequently in July also, the Z$ wasdevalued further taking the exchange rate to Z$17,500 to 1 US Dollar. Inconjunction with the devaluation of the Z$ to Z$17,500 the Export IncentiveScheme has been cancelled. The anticipated effect is near neutral on earnings.Expansion PotentialMimosa mine has completed technical work for the Wedza Phase IV upgrade toincrease concentrator throughput by 25% by June 2006. The project will befunded by Mimosa's own cash resources and a debt facility that is currentlybeing negotiated.IndigenisationNegotiations are on going with regard to the indigenisation of 15% of Mimosa'sshareholding.AQUARIUS PLATINUM (SA) CORPORATE SERVICES (PTY) LTDChromite Tailings Retreatment Plant (CTRP) (Aquarius Platinum 50%)SafetyThe Plant recorded a DIIR of zero for the quarter and the year.OperationsAs the project continues to steadily ramp up, PGM production during its first 6months of operations totalled 2,117 PGM ounces (Aquarius attributable 1,056 PGMounces).The ability of the CTRP plant to process the designed tonnages has beenrestricted by excessive water feeding the plant via the tailings streamsreceived from the chrome mine. Cyclones will be installed during the nextquarter to remove the excess water, thereby increasing the ability to reach thedesigned dry solids throughput. Cash costs at the CTRP continue to decrease asthe plant reaches steady state production. The PGM basket price increased to$834 per PGM ounce. This is higher than the other operations due to a higherrhodium content in the concentrate.Statistical InformationPer PGM ouncePer PGM ounce after by-product credit Unit Kroondal Marikana Mimosa CTRP Year ended Year ended Year ended Year ended June June June June June June June June 2005 2004 2005 2004 2005 2004 2005 2004 Safety DIIR Rate/ 0.75 1.66 0.81 0.85 0.31 0.52 0 - 200,000 man hours Revenue Gross revenue R'M 1,250 869 364 334 $83.8 $72 1.3 - PGM basket $/oz 711 599 713 627 590 538 834 - Price Gross cash % 40 52 (10) (5) 60 66 37.5 - margin Nickel Price $/lb 6.92 5.56 6.92 5.56 6.52 5.57 - - Copper Price $/lb 1.43 1.06 1.43 1.06 1.23 0.95 - - Ave R/$ rate 6.17 6.86 6.17 6.86 - - - - Cash Costs Per ROM ton R/ton 177 156 264 235 - - - - $/ton 29 23 43 34 33 23 13.67 - R/oz 2,311 2,132 4,035 4,031 - - - - $/oz 375 311 654 588 358 252 367 - R/oz 2,173 1,987 3,827 3,927 - - - - $/oz 352 290 620 572 141 56 - - Capex Current 100% R `000s 20,521 28,894 19,362 6,442 - - - - $ ` 000s 3,326 4,212 3,138 939 13,672 9,287 - - Expansion 100% R `000s 462,374 91,805 - - - - - - $ `000s 74,939 13,383 - - 1,108 4,257 - - Mining Processed Underground ROM ton 3,974 2,862 - - 1,432 1,334 - - '000 Open Pit ROM ton 266 277 1,515 1,493 - - - - '000 Total ROM ton 4,240 3,139 1,515 1,493 1,432 1,334 - - '000 Plant Head g/t 3.04 3.07 3.60 3.70 3.69 3.71 2.71 - Recoveries % 79 77 57 49 77 76 42 - PGM & Base Metal Production Platinum Ozs 194,290 143,408 63,868 57,774 66,742 61,422 1,321 - Palladium Ozs 93,984 68,223 26,413 22,598 49,259 44,697 439 - Rhodium Ozs 34,916 24,913 8,061 6,062 5,156 5,036 353 - Gold Ozs 1,540 1,081 819 742 9,010 8,234 4 - 4PGE Total Ozs 324,730 237,625 99,161 87,176 130,167 119,389 2,117 - Nickel Tons 314 206 133 86 1,895 1,708 - - Copper Tons 141 94 73 50 1,563 1,402 - - Chromite (000) Tons 461 256 247 106 56 52 - - (000) Data reflects 100% of operations.Note: CTRP operation commenced production of concentrate in late January 2005Aquarius Platinum LimitedIncorporated in BermudaExempt company number 26290Board of Directors Nicholas Sibley Non-executive Chairman Stuart Murray Chief Executive Officer Sir William Purves Senior Independent Non-executive Director David Dix Non-executive Edward Haslam Non-executive Catherine Markus Non-executive Patrick Quirk Non-executive Zwelakhe Sisulu Non-executive Audit/Risk CommitteeSir William Purves (Chairman)David DixEdward HaslamNicholas SibleyRemuneration/Succession Planning CommitteeEdward Haslam (Chairman)Catherine MarkusNicholas SibleyNomination CommitteeThe full Board comprises the Nomination CommitteeSenior Independent non-executive directorSir William PurvesCompany SecretaryWilli BoehmIssued CapitalAt 30 June 2005, the Company had on issue:82,753,892 fully paid common shares3,794,626 unlisted optionsSubstantial Shareholders 30 June 2005 Number of Shares Percentage Impala Platinum Holdings Ltd 7,141,966 8.63 % J P Morgan Nominees Australia Limited 6,072,196 7.34 % Chase Nominees Limited (FISL) 5,691,676 6.88 % National Nominees Limited 4,446,210 5.37 % Broker (LSE)Williams de Broƒ« Plc6 BroadgateLondon EC2M 2RPTelephone: +44 (0)20 7588 7511Facsimile: +44 (0)20 7588 8860Broker (ASX)Euroz SecuritiesLevel 14, The Quadrant1 William StreetPerth WA 6000Telephone: +61 (0)8 9488 1400Facsimile: +61 (0)8 9488 1478Sponsor (JSE)Nedbank Capital135 Rivonia RoadSandown, Sandton 2196Telephone: +27 (0)11 294 3601Facsimile: +27 (0)11 294 8602Aquarius 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 Australia South Africa 2007 PO Box 485 P O Box 1282 South Perth, WA 6151, Australia Bedfordview South Africa 2009 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] AQPSA Management Stuart Murray - Executive Chairman Gert Ackerman - Managing Director Ayanda Khumalo - Finance Director Neil Collett - General Manager P&SA Project Graham Ferreira - General Manager Finance & Company Secretary Hugo Hƒ¶ll - 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 Management Alex Mhembere - Managing Director Winston Chitando - Finance Director Herbert Mashanyare - Technical Director Peter Chimboza - General Manager 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 Dyke A PGE bearing layer within the Great Dyke Complex in Zimbabwe 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 LHD Load Haul Dump machine Marikana Marikana Platinum Mine Mimosa Mimosa Mining Company (Private) Limited NOSA National Occupational Safety Association PGE(s) (6E) Platinum Group Elements. Six metallic elements commonly found together which constitute the platinoids. These are Pt (platinum), Pd (palladium), Rh (rhodium), RU (ruthenium), Ir (iridium) and Os (osmium) PGM(s) (4E) Platinum Group Metals. Aquarius reports the composite grade comprising Pt+Pd+Rh+Au (gold), the Pt, Pd and Rh being the most economic platinoids in the UG2 Reef. P&SA Pooling & Sharing Agreement between KPM and RPM Ltd R South African Rand RK1 Consortium comprising Aquarius Platinum (SA) (Corporate Services) (PtRelated Shares:
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