7th Feb 2007 07:40
AQUARIUS PLATINUM LIMITED
Aquarius Platinum Half Year Financial Results (31 December 2006)
Record Interim Profits up 229% and Doubling of Interim Dividend
Highlights of the half year
* Net Profit more than triples to $85.4 million (100.4 US cents per share)
* Record half year production, at 277,156 PGM ounces attributable
* Interim dividend doubles to 12 US cents per share
Operational
* On-mine production up 30% to 471,403 PGM ounces (Aquarius attributable: up 45% to 277,156 PGM ounces)
* P&SA1 at Kroondal builds momentum, production increased 3% to 238,900 PGM ounces (Aquarius attributable: 119,450 PGM ounces)
* P&SA2 at Marikana comes of age, adding 45% new production to 69,941 PGM ounces (Aquarius attributable 34,971 PGM ounces)
* New Everest Mine ramp-up boosts production to 82,908 PGM ounces
* Mimosa Mine production up 6% to 76,078 PGM ounces despite Q2 production issues (Aquariusattributable: 38,039 PGM ounces)
Financial
* Revenues more than double for the period to $330.8 million
* Average basket prices increased to $1,274 per PGM ounce in South Africa and $949 per PGM ounce in Zimbabwe
* Net profit before non cash charges up 190% at $151.8 million
* Net profit attributable to members of Aquarius (to IFRS) up 229% at $85.4 million (100.4 cents per share)
* Consolidated cash balances at period end $263.6 million, up $102 million since June 2006.
Strategic
* Completed conversion of mining rights to new order licenses approved at all South African mines
* Agreement with Bakgaga Mining to drill and conduct feasibility work at prospective PGM properties in South Africa
* Mimosa Phase IV expansion completed and Phase V expansion to 195,000 PGM ounces announced
* Purchase by Aquarius of 3.5% of South African subsidiary from BEE Partner SavCon
Commenting on the results, Stuart Murray, CEO of Aquarius Platinum said, "Thefinancial performance of Aquarius for the first six months of the 2007financial year has been aided by a strong PGM basket price which together withour increased production has seen our net profit more than triple to $85.4million compared with the same period last year. This is despite of the secondquarter challenges as we focus on mine development for longer-term benefits, inorder to continue to deliver production into the high commodity priceenvironment.Our focus in the first half of the financial year has been solidly on improvingdevelopment at all operations, and all are now on a better footing forcontinued growth and improved efficiencies in the second half of the FinancialYear and beyond. Concurrently, our cash balances have increased to $263.6million dollars, permitting the board to double the interim dividend.
Financial results: Half Year to 31 December 2006
Aquarius Platinum Limited announces consolidated earnings for the half year to31 December 2006 of $85.4 million (100.4 US cents per share), up 229% on theprevious corresponding six month period December 2005, and equivalent to 99.8%of the net profit for the financial year ended 30 June 2006.Revenues from ordinary activities for the period rose 107% to $330.8 million(comprising sales revenue of $322.3 million and interest and other income of$8.4 million) up from $159.7 million (sales revenue $157.7 million and interestand other income of $2.0 million) in the previous corresponding period (pcp).The increase in revenue has been driven by higher PGM basket prices and a 45%increase in Aquarius' attributable PGM production. PGM basket prices increased48% in South Africa, and 49% in Zimbabwe, with strong base metal prices (Nickelup 63% and Copper up 125%) which contribute approximately 33% of Mimosa'srevenue.
PGM production for the period increased 45% to 277,156 operating PGM ounces attributable to Aquarius at a total cost of production of $138.9 million, up 41%.
Amortisation and depreciation at $18.9 million (December 2005, $12.8m) was in line with the 45% increase in production over the previous corresponding period.
Net finance income for the period of $0.7 million, comprised $8.0 million in interest income and $7.3 million in interest expense. Interest expense was higher compared to the previous corresponding period due to an increase in pipeline finance which is directly related to sales revenue from PGM concentrate sales.
Aquarius' cash balances of $264 million at 31 December 2006 have grown sharply,and are expected to increase progressively in the second half of the year inthe current high commodity environment, as group production increases.The Directors have declared an interim dividend of 12 US cents per share (2005:6 US cents per share) payable on 23 March 2007 to shareholders registered on 2March 2007.
Group Financials by Operation
$ million Kroondal Marikana Everest Mimosa CTRP Corporate Total PGM ounces 119,450 34,971 82,908 38,039 1,788 - 277,156(attributable) Revenue (net of FX sales 132.6 39.8 91.3 57.7 2.6 3.9 327.9 variance) Cost of sales (47.5) (21.3) (37.6)) (16.5) (0.8) - (123.7) Depreciation & (4.9) (4.4) (4.4) (1.4) (0.1) (15.2) Amortisation Gross profit 80.2 14.1 49.3 39.8 1.7 3.9 189.0 Amortisation of fair (3.4) - - (0.4) - - (3.8) value Gross profit after FVU 76.8 14.1 49.3 39.4 1.7 3.9 185.2 Corporate admin & other (3.5) (3.5) costs Foreign currency gain/ 0.3 0.2 1.4 2.5 - 0.2 4.6 (loss) Finance charges - - (1.4) (0.6) - (5.3) (7.3) Profit/(loss) before tax 77.1 14.3 49.3 41.3 1.7 (4.7) 179.0 Tax Expense (7.5) (38.7) (46.2) Profit/(loss) after tax 77.1 14.3 49.3 33.8 1.7 (43.4) 132.8 Minority interest (47.4) (47.4) Profit/(loss) after 77.1 14.3 49.3 33.8 1.7 (90.8) 85.4 minority interest Production
Total on-mine production increased 30% to 471,403 PGM ounces. Attributable group operating production for the half year was 277,156 PGM ounces, an increase of 45% period on period. The Group's production profile will continue to increase in the second half as operational ramp-ups continue.
Production by Mine and Production by Mine attributable to Aquarius
PGMs (4E) Production by Mine Production attributable to Aquarius
Half Year ended Half Year ended Half Year ended Half Year ended Dec 2005 Dec 2006 Dec 2005 Dec 2006 Kroondal 232,537 238,900 116,269 119,450 Marikana 48,111 69,941 37,716(a) 34,971 Everest 7,111 82,908 7,111(b) 82,908 Mimosa 71,762 76,078 35,881 38,039 CTRP 2,897 3,576 1,449 1,788 Total 362,418 471,403 198,426 277,156
(a) Marikana implemented with effect from second quarter, resulting attributable production reducing by 10,395 PGM ounces for the period.
(b) Everest costs were capitalised to 31 December 2005. The mine was handed over to operations on 1 January 2006.*P&SA2 at
Foreign Exchange
The Rand proved relatively volatile through the 6 months to December 2006, averaging 7.23 for the period, despite opening and closing the period at around 7.03.
Platinum Group Metal Prices
Commodity prices through the second half remained firm consolidating on the strong gains realised over the first half. The chart below illustrates the individual prices for the 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 ETF, while rhodium closed the year firm, having peaked once again above $6,000 per ounce due to continued physical demand. Gold and palladium also maintained gains made over the period, closing the second half of the financial year at similar price levels to the start.
The Rand basket price at South African operations averaged $1,274 per PGM ounceover the second half. In Rand terms, this is equal to R9,211 per PGM ounce. In Zimbabwe, the Dollar basket price averaged $949 per PGM ounce. In addition,by-product base metals copper and nickel recorded strong prices at Mimosa, withcopper averaging $3.40/lb and nickel averaging $11.00/lb over the half year. .Financials Aquarius Platinum Limited Consolidated Income Statement For the Half Year ended 31 December 2006 $'000 Audit Reviewed Half Year Ended Year Ended Note: 31/12/06 31/12/05 30/6/06 Revenue (i) 330,774 159,706 426,569
Foreign exchange loss on sales (ii) (2,914) (2,297) 13,228 Cost of sales (including D&A) (iii) (138,822) (98,550) (223,064) Gross profit 189,038 58,859 216,733
Amortisation of fair value uplift (iv) (3,756) (3,725) (7,162) of mineral properties
Gross profit after amortisation of 185,282 55,134 209,571 fair value uplift
Corporate Admin & other operating (v) (3,574) (1,983) (8,027) costs
Finance costs (vi) (7,322) (2,324) (10,383) Foreign exchange gains/(losses) (vii) 4,598 1,207 913
Profit before tax 178,984 52,034 192,074 Income tax expense (viii) (46,175) (12,581) (51,071) Profit after tax 132,809 39,453 141,003 Minority interest (ix) (47,438) (13,538) (55,373) Net profit 85,371 25,915 85,630
Earnings per share (basic - cents) 100.39 31.50 100.87
Notes on the Consolidated Income Statement
Sales revenue increase reflects impact of increased PGM production and higher PGM basket price achieved
Reflects effects of adjusting revenue recorded at time of production at Kroondal, Marikana and CTRP to actual receipts received at the end of the four month pipeline
Increase in cost of sales is related to the 45% increase in PGM production
Relates to amortisation of purchased goodwill associated with the Kroondal, Marikana and Mimosa mines
Relates to administration costs of the Aquarius Group
Finance costs are higher to Dec '06 due to increased pipeline finance as a result of increased sales revenue, and interest on Everest mine no longer capitalised,
Reflects foreign exchange movements on net monetary assets
Income tax expense for the period for AQPSA and Mimosa
Minority interests reflect 49.5% outside equity interest of the Savannah Consortium (SavCon) and Impala Platinum Holdings Limited (Implats) in AQPSA
Aquarius Platinum Limited Consolidated Cash Flow Statement Half year ended 31 December 2006 $'000 Audit Reviewed Half year ended Year ended Note: 31/12/06 31/12/05 30/06/06 Net operating cash inflow (i) 159,026 58,701 175,531 Net investing cash outflow (ii) (25,489) (75,406) (112,880) Net financing cash outflow (iii) (36,895) 23,496 27,161 Net increase in cash held 96,642 6,791 89,812 Opening cash balance 162,425 75,251 75,251
Exchange rate movement on cash (iv) 4,496 2,912 (2,638)
Closing cash balance 263,563 84,954 162,425
Notes on the Consolidated Cash Flow Statement
Net operating cash flow includes $180 million inflow from operations, income tax paid $22 million and $0.7 million net finance income
Reflects payments for mine development and development costs
Reflects repayment of loans $23 million, proceeds of the issue of shares on exercise of employee options $1.5 million and payment of dividends of $15 million
Reflects movement of Rand against the US dollar
Aquarius Platinum Limited
Consolidated Balance Sheet At 31 December 2006 $'000 Audit Reviewed Half year ended Year ended Note: 31/12/06 31/12/05 30/06/06 Assets Cash assets 263,563 84,954 162,425 Current receivables (i) 71,245 46,098 66,721 Other current assets (ii) 27,610 22,798 19,828 Property, plant and equipment (iii) 212,140 208,811 206,626 Mining assets (iv) 279,145 270,199 247,601 Other non-current assets 8,571 460 6,994 Total assets 862,274 633,320 710,195 Liabilities Current liabilities (v) 48,237 37,089 35,463 Non-current payables (vi) 124,410 147,626 130,104 Non-current interest-bearing liabilities (vii) 34,843 44,042 45,372 Other non-current liabilities (viii) 132,813 85,811 105,419 Total Liabilities 340,303 314,568 316,358 Net assets/(liabilities) 521,971 318,752 393,837 Equity Parent entity interest 392,814 270,578 315,559 Minority interest 129,157 48,174 78,278 Total Equity 521,971 318,752 393,837
Notes on the December 06 Consolidated Balance Sheet
Reflects debtors receivable on increased PGM concentrate sales
Reflects PGM concentrate inventory
Represents fixed assets within the Group
Increase in mining assets reflects Kroondal, Marikana, Mimosa and Everest mining (mining rights)) assets
Includes tax payable ($11 million) and creditors ($37 million)
Includes non interest bearing portion of AQPSA shareholder loans (Implats $49 million and Savcon $73 million)
Includes interest bearing debt payable to RMB ($27 million), embedded lease re Everest mine $7 million.
Reflects deferred tax liabilities $91 million, provision for closure costs $41 million
OPERATIONS
AQUARIUS PLATINUM (SOUTH AFRICA) (PTY) LTD (Aquarius Platinum 50.5%)
P&SA 1 at Kroondal
Safety
The (12-month rolling average) DIIR improved to 0.93 during the half year. Kroondal achieved 1,777,521 fatality-free shifts to the end of December 2006.
Mining
Total production increased 5% to 3.5 million tons
Significant primary development completed to improve face-availability and mining flexibility
K5 Project remains ahead of schedule
Head-grade averaged 2.86 g/t for the first half
Processing
Plant processed a record 3.4 million tons
Concentrator recoveries steady at 77%
Record production of 238,902 PGM ounces, a 3% increase period on period
Revenue
The PGM basket price for the half year held strong at $1,299 per PGM ounce.
With higher production volumes, mine revenue increased to R1.9 billion for the half year (AQPSA share 50%). The on-mine cash margin for the half year to December 2006 rose to 64% compared with 53% for the first half to December 2005.
Operations
Production for the first six months increased 9% compared with the first half2006, totalling 3.5 million tons: 3.2 million tons from underground operationsand 0.3 million tons from open pit operations. Considerable undergrounddevelopment was completed during the first half. In the second quarter, someproduction was adversely impacted by downtime mechanised mining machinery. This has since been rectified with the underground contractor, Murray & RobertsCementation, by recruiting additional personnel and a revision of themaintenance, replacement and rebuild programmes. By the end of period, thestockpile was increased to 100,000 tons in preparation for the Christmas closeand to mitigate the Q3 holiday impact.Tons processed increased 5% to 3.4 million tons. The plant head grade fellslightly to 2.86g/t. for the first half for two reasons: first, theconsiderable underground development and second a planned 3-day maintenanceshutdown at both the K1 and K2 Concentrators. It is anticipated that the highrate of development that has been ongoing at Kroondal, will decrease in thesecond half and that this should result in a positive effect on the head gradeand unit cost. Nevertheless, despite the operational challenges, PGMproduction increased by 3% to a record 238,900 PGM ounces for the half year(Aquarius attributable: 119,450PGM ounces).
Operating Cash Costs
Cash costs for the first half increased to R204 per ROM ton and $396 per PGM ounce.
Kroondal: Operating Cash Costs
4E (Pt+Pd+Rh+Au) 6E 6E net of by-products (Ni& (Pt+Pd+Rh+Ir+Ru+Au) Cu) Kroondal R2,866 per PGM R 2,359 per PGE ounce R2,211 per PGE ounce ounce
Operating cash costs include ledging and primary development costs of R395 perPGM ounce (up 32% period on period), secondary development costs of R49 per PGMounce (up 11% period on period) and engineering infrastructure costs of R236per PGM ounce (up 82% period on period). Cash cost of stoping for Kroondalwere R763 per PGM ounce, 2 % increase period on period. It should be notedthat operating costs also include costs associated with the new K5 shaft of R60per PGM ounce. The K5 Shaft is in a ramp-up phase and therefore attracts highrelative unit costs at this stage.
Kroondal Operating Cash Costs Reconciliation
Rand per PGM ounce 1H (Dec 2006) 1H (Dec 2005) Variance Cash costs 2,866 2,458 17% Ledging and primary development costs (395) (299) 32% Secondary development costs (49) (44) 11% Engineering infrastructure costs (236) (129) 82% Cash cost after adjustments 2,186 1,986 10% It is expected that the unit costs will start to decrease going forward. It isanticipated that primary development will reduce in the following quarter,followed by a reduction in equipping and engineering infrastructure in thesubsequent quarter. Ensuring adequate face availability and mining flexibilityat Kroondal is key to the longer-term management of the mine and whiledevelopment has taken time the benefits are now expected to be realised.
P&SA 1 at Marikana
Safety
The (12 month rolling average) DIIR for the half year improved to 0.43 compared with 0.76 in the previous corresponding period.
Mining
The new opencast contractor continues to perform well
Underground production ramp-up progressing well, totaling 359,246 tons for the period
Open pit operations produced 722,882 tons, though bias is shifting towards underground tons
Surface stockpile totalled 196,000 tons at end of period (though largely poorer openpit material)
Processing
Marikana Dense Media Separation Plant commissioned
Record 988,000 tons processed during the quarter, a 34% increase period on period
69,941 PGM ounces produced (Aquarius attributable 34,971 PGM ounces), a 45% increase period on period
Revenue
The PGM basket price for the half year increased 48% period on period to $1,276per PGM ounce. Revenues increased nearly threefold to R580 million from R197million in the previous corresponding period. Reflecting the improvements involumes, prices and operating efficiencies, the gross margin for the first halfwas 46% compared with 14% in the previous corresponding period.
Operations
Total production for the first 6 months increased to 1.1 million tons, made up of 359,246 underground tons and 722,882 open pit tons.
The opencast mining contractor, MCC Mining (Pty) Ltd, is performing well and ismanaging costs effectively as both efficiencies and output have improved sincetheir appointment. Production in Marikana Pit B was accelerated to facilitatea box cut for the construction of a second decline shaft, an expedient way toaccess the underground ore from the opencast operations. Stormwater controlsand additional pumping capacity have been established to prepare for the localrain-season in the third quarter. As underground operations are establishedand ramp-up, it is expected that the majority of tons will be from underground.At No. 1 Shaft, 805 metres of primary development was completed during theperiod. A hybrid-mining method was successfully implemented. This hasresulted in a reduced stoping-width, thereby contributing to an increase in theplant head grade. At No. 4 Shaft 1,552 metres of primary development wascompleted during the first half. Some potholes were encountered in the maindecline ends. Infill drilling is being undertaken to determine the extent ofthe 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 surface stockpile (predominantly comprising oxidised material) was 196,000 tons at the end of the half year. During the first six months, a total of 988,000 tons were processed, a 34% increase period on period.
The plant head grade averaged 3.18g/t for the first six months. Plant recoveries increased significantly by 12% to 69%, resulting in production of 69,941 PGM ounces, up a substantial 45% increase period on period.
Operating Cash Costs
Cash costs averaged R312 per ROM ton for the period. Cash costs per PGM ouncedecreased by 5% to R4,405 period on period. Indeed cash costs in the secondquarter, decreased by 12% to R4,147 per PGM ounce compared with the firstquarter, reflecting the improving cost performance at Marikana.Marikana: Operating Costs 4E (Pt+Pd+Rh+Au) 6E 6E net of by-products (Ni& (Pt+Pd+Rh+Ir+Ru+Au) Cu) Marikana R4,405 per PGM R3,623 per PGE ounce R3,754 per PGE ounce ounce
Contractor dispute with Moolman Mining
Moolman Mining was the primary opencast mining contractor employed at theMarikana Mine from start up in May 2002 until December 2005. In December 2005,AQPSA resiled from the contract with Moolman Mining on discoveringmisrepresentations by Moolman, which induced the contract. Moolman has beenreplaced by MCC as opencast contractor and MCC has since improved productionfrom the opencast mine significantly at no additional cost over the disputedMoolmans contract rates.In April 2006, AQPSA instituted action against Moolman arising from themisrepresentation. The action includes a damages component. In May 2006,AQPSA served an application to stay the arbitration in respect of the Rise andFall claim pending the determination of the action. In September 2006, AQPSAreceived Moolmans' response in the application to stay the arbitration as wellas a plea to the action. Moolmans delivered a conditional counterclaim,comprising four components in an aggregate amount of ZAR472 million. The AQPSAlegal team is in the process of preparing a reply in the applicationproceedings and a plea to the conditional counterclaims. During the course ofthis process, AQPSA has requested further documentation from Moolmans relatingto the Marikana contract. The process of finalising the replying affidavit andinspection of documents continues and is expected to be finalised in the ThirdQuarter 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 average) DIIR for the half year improved to 0.52 compared with 1.18 in the previous corresponding period.
Mining
Underground ramp-up resulted in production rise to 810,540 tons
Opencast production was reduced to 452,811 tonnes in favour of underground production
Opencast mining extended through development of the South-West Pit adding 320,000 tons to the opencast reserve
Processing
Total 1.3 million tons processed
Significant improvement in recoveries to 72% reflecting increased underground to openpit production blend
Production ramps up to 82,908 PGM ounces
Revenue
The PGM basket price increased period on period by 34% to $1,188 per PGMounce. The strong increase in prices, combined with significantly highervolumes as the operation continues to ramp up and the positive impact of aweaker average Rand Dollar exchange rate, resulted in revenues of R652million. This is a significant contribution to group earnings compared withR31 million in the previous corresponding period when the mine was establishedand awarded operational status. Although still in a ramp-up phase, Everestachieved a 59% cash margin.
Operations
Operational ramp-up continued with opencast and underground producing a total1,263,351 tons. Through the half year, the production of underground to openpit ore shifted firmly in favour of the higher quality underground ore.The opencast mining contractor (MCC Mining) continues to perform well. In linewith the shift towards more favourable underground production, opencast miningdeclined to 452,811 tons. As the North Pit was depleted, the opencast reservewas boosted through the establishment of an extension at the South-West Pit,adding an additional 320,000 tons to the opencast reserve. The opencast ROMgrade fell over the period with more production coming from the low-grade areain the North Pit and shallow oxidised reef from the South-West Pit extension. It is anticipated that opencast grades will improve during the remainder of the2007 financial year as mining extends into the deeper areas of the South-Westpit yielding more competent reef.On-reef decline development and the establishment of stoping sections continuedduring the half year, resulting in underground production of 810,540 tons. Theunderground head grade average 2.80g/t during the first six months.
Concentrator throughput was 1.3 million tons milled for the period including stockpile consumption. At the end of the period, the surface stockpile totalled 13,743 tons.
Metallurgical recoveries improved to an average 72% for the first six monthscompared with 55% in the previous corresponding period, reflecting the largerunderground contribution in the feed blend. Looking to enhance recoveriesfurther, advanced flotation process control systems were implemented towardsthe end of the period and a reduction in oxidised material will result inimproved recoveries during the next quarter. Production for the first six months totalled 82,908 PGM ounces. It isanticipated that the ramp-up at Everest will continue through the second halfof the 2007 financial year and that full production rates are achievable in thefirst quarter of the 2008 financial year (Quarter to September 2007).
Operating Cash Costs
Cash costs for the period increased to R212 per ROM ton milled as a result ofthe higher consumption of underground production, which has not yet achievedsteady-state and the unit cost increase from higher opencast stripping ratiosduring the establishment of the South-West Pit. Consequently, cash costs perPGM ounce for the period increased by 3% to R3,234 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 R3,324* per PGM R2,735 per PGE ounce R2,714 per PGE ounce ounce
*Included in the cash cost is IFRIC-4 (determining whether an arrangement contains a lease) for R128 per PGM ounce.
Mimosa Mine (Aquarius 50%)
Safety
The 12-month rolling average DIIR deteriorated to 0.47 for the period. Regrettably, a fatality occurred during the half year 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 increased to 935,000 tons
The surface stockpile increased by 33% to 308,383 tons at the end of the period
Processing
Tons processed increased 8% to 833,000 tons period on period despite plant shutdowns
Average concentrator plant recoveries steady at 78%
Total mine production increased 6% to 76,078 ounces period on period (Aquarius attributable: 38,039 PGM ounces)
Revenue
The PGM basket price for the period averaged $949 per PGM ounce, a 49% increaseperiod on period. The average nickel price over the period averaged 63% higherat $11 per pound from and copper 125% higher at $3.40 per pound. With basemetals contributing approximately 33% of gross revenue, sales revenue for theperiod was $91 million (Aquarius attributable: 50%), a 65% increase period
onperiod.Operations
During the period mining operations hoisted 935,143 tons compared with 861,995 tons in the previous corresponding period. Tons milled during the quarter totalled 833,000 tons, with the surface stockpile at the end of the period 308,383 tons.
The average plant head grade for the period was steady at 3.66 g/t. DuringNovember, the plant underwent a planned major maintenance shut down, resultingin a budgeted production shortfall over the previous quarter. In addition,during October the plant suffered an unplanned mill breakdown due to a bearingfailure, which had been scheduled to be changed concurrently with the Novemberplanned maintenance shut down. This resulted in additional unbudgetedproduction shortfall. While the lost time resulted in a build up of thestockpile and ultimately lost production, the plant is now operating atcapacity, and no shutdowns or maintenance stoppages are envisaged for thesecond half of the year.Recoveries for the period were steady at 78%. Despite the plant shutdowns,production for the period increased 6% to 76,078 PGM ounces (Aquariusattributable: 38,039 PGM ounces. This increase is a consequence of the PhaseIV expansion project, completed during the period. In January 2007, a newPhase V expansion was announced, targeting an annual 195,000 PGM ounces, withfull production anticipated in July 2007.
Operating Cash Costs
Cash costs for the period increased to $36 per ROM ton and by 16% to $395 per PGM ounce period on period. The increase in cash costs was attributable to high Zimbabwe dollar denominated costs, mainly due to disparity between inflation rate and exchange rate and lower production throughput due to the plant shutdown.
Cash costs net of by-products were -$10 per PGM ounce, a significant windfall, even compared with $96 per PGM ounce in the previous quarter.
Mimosa Operating Costs 4E (Pt+Pd+Rh+Au) 6E 4E net of by-products (Ni, Cu& (Pt+Pd+Rh+Ir+Ru+Au) Co) Mimosa $395 per PGM $374 per PGE ounce ($10) 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.
Processing70,000 ton of feed processed
Average recoveries for the period increased to 48%
3,576 PGM ounces produce (Aquarius attributable: 1,788 PGM ounces) a 45% increase compared with the previous corresponding period
Revenue
The PGM basket price for the period increased 57% to $1,606 per PGM ounce. The CTRP enjoys a high rhodium content hence the higher basket prices achieved.
The strong basket price and weaker Rand Dollar exchange rate resulted in revenues more than doubling to R35 million (Aquarius attributable: 50%). The cash margin for the period was 78%.
Operations
The dump material project successfully commissioned during the first quarterresulted in a 68% increase in tons processed in the second quarter and 70,000tonnes for the first half in total.. Over the period the ROM grade improved37% to 4.04g/t compared with the previous corresponding period. Averagerecoveries were 45% higher at 48% period on period, however, while asubstantial improvement in throughput was experienced in the second quarter,lower recoveries resulted compared with the first quarter due to oxidisation ofdump materials. To rectify the situation, a project to reconfigure theflotation circuit has commenced.
Operating Costs
Cash costs decreased by 32% to R 2,172 per PGM ounce. The decrease in costs is a result of higher volumes.
4E (Pt+Pd+Rh+Au) 6E (Pt+Pd+Rh+Ir+Ru+Au) 6E net of by-products
CTRP R2,172 per PGM ounce R 1,510 per PGE ounce R931 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 betweenits wholly owned subsidiary Aquarius Platinum (SA) Corporate Services (Pty) Ltdand Bakgaga Mining (Pty) Ltd to drill and conduct feasibility work atprospective Platinum Group Metals (PGMs) bearing properties on South Africa'sBushveld.An initial site investigation was undertaken during September 2006 withsubsequent field mapping during October 2006. Historical exploration data forthe farms adjacent to the farms in the Bakgaga Project areas was obtained inDecember 2006. This data is currently being evaluated to determine theexploration 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 half year, on 9th January 2007, Aquarius announcedan approved low capital cost expansion to increase annual production capacityto 195,000 PGM ounces (100,000 platinum ounces in concentrate) at the MimosaPlatinum Mine in Zimbabwe.The expansion project, known as "Wedza Phase V", follows four earliersuccessful expansion projects at Mimosa and is expected to increase annual PGMproduction from 168,750 PGM ounces to 195,000 PGM ounces. The increase inmining will come from the South Hill ore body where current operations arebased, increasing throughput by 17% from 150,000 tons to 175,000 tons milledper month. The expansion will not have an impact on day-to-day operations, orhave 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 ofMinerals and Energy (DME) approved AQPSA's applications for the new ordermining rights conversions in respect of all three of its mines: Kroondal,Marikana and Everest. Consequently, AQPSA is now in full compliance with theSouth African Mineral and Petroleum Resources Development Act 2002, havingexceeded the requirement for 26% Black Economic Empowerment ownership by 2014.
Aquarius purchases 3.5% of South African subsidiary from SavCon
On 7th November 2006, Aquarius announced that an agreement was reached withBlack Empowerment partner SavCon for the acquisition by AQP of a 3.5% equityinterest in AQPSA from SavCon for a cash consideration of R342.5 million. Thetransaction represented a partial implementation of the final phase of theBlack Economic Empowerment transaction approved by shareholders in SpecialGeneral Meeting on 11 October 2004 and increased AQP's equity interest in AQPSAfrom 50.5% to 54%. Implementation requires South African DME approval as persection 9 of the AQPSA's converted mining rights.
Board of Directors
Subsequent to the end of the half year, Mr Zwelakhe Sisulu has resigned fromthe Board of Aquarius effective 6th February 2007 due to an increasing workload in South Africa. The Board wish to record their appreciation of MrSisulu's contribution as director to the Company. Mr Kofi Morna who currentlyacts as Mr Sisulu's alternate director will join the board effectiveimmediately. Mr Zwelakhe Mankazana will act as Mr Morna's alternate director.Statistics Kroondal P&SA1 Marikana P&SA2 Everest Mimosa CTRP 6 6 6 6 6 6 6 6 6 6 Unit months months months months
months months months months months months Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec 2006 2005 2006 2005 2006 2005 2006 2005 2006 2005 Safety DIIR Rate/200,000 man 0.93 0.96 0.43 0.76 0.52 1.18 0.47 0.12 0 0 hrs Revenue Gross revenue Millions 1,917 1,227 580 197 652 31 91 55 35 17 PGM basket Price $/oz 1,299 879 1,276 863
1,188 886 949 637 1,606 1,024
Gross cash margin % 64 53 47 14 59 28 72 61 78 44 Nickel Price $/lb 14.11 6.17 14.11 6.17 14.11 6.09 11.27 6.53 14.11 6.17 Copper Price $/lb 3.35 1.83 3.35 1.83 3.35 2.08 3.40 1.60 3.35 1.83 Ave R/$ rate 7.23 6.52 7.23 6.52 7.23 6.35 - 7.23 6.52 Cash Costs on-mine R/ton 204 179 312 374303 212 168 - - 111 95 Per ROM ton $/ton 28 27 43 47 29 27 36 32 15 15 R/oz 2,866 2,458 4,405 4,642 3,234 3,136 - 2,172 3,268 Per PGM (3E+Au) $/oz 396 377 609 712 447 494 395 343 300 501 R/oz 2,359 2,025 3,623 3,857 2,735 2,695 - 1,510 2,318 Per PGE (5E+Au) $/oz 326 311 501 592 378 424 374 323 209 356 Capex Current/Sustaining R'000s 124,651 33,525 25,507 6,746 71,190 - - - - - 100% $'000s 17,241 5,145 3,528 1,035 9,846 - 5,123 4,327 - - R'000s - 57,936 90,996 8,147 21,117 349,189 - - - 378 Expansion 100% $'000s - 8,891 12,586 1,250 2,921 55,026 1,453 3,581 - 58 Mining Processed Underground ROM ton '000s 3,103 2,911 343 36 809 39 935 862 - - Open Pit ROM ton '000s 255 285 645 700 456 89 - - - Total ROM ton '000s 3,358 3,195 988 736 1,265 129 935 862 70 98 Grade Plant Head g/t PGM 2.86 2.92 3.18 3.25 2.80 3.12 3.66 3.74 4.04 2.95 Recoveries % 77 78 69 62 72 55 78 78 48 33 PGM Production Platinum Ozs 143,761 138,959 42,215 30,131
46,954 4,161 38,423 36,509 2,155 1,801
Palladium Ozs 68,914 67,752 20,162 13,288
27,624 2,351 29,342 27,497 783 632
Rhodium Ozs 24,974 24,672 7,039 4,327 7,535 532 2,987 2,797 631 458 Gold Ozs 1,253 1,155 526 365 795 67 5,326 4,959 7 6 Total PGM (3E+Au) Ozs 238,902 232,537 69,941 48,111
82,908 7,111 76,078 71,762 3,576 2,897
Total PGE (5E+Au) Ozs 290,222 282,268 85,039 57,887 98,047 8,223 38,423 - 5,143 4,085 Base Metals Production Nickel Tons 230 222 121 72 113 13 1,023 1,000 2 - Copper Tons 100 98 65 41 57 5 852 832 4 - Chromite (000) Tons '000s 197 258 57 104 - - 31 30 - -
*Data reflects 100% of operations
Aquarius Platinum LimitedIncorporated in BermudaExempt company number 26290Board of DirectorsNicholas Sibley Non-executive ChairmanStuart Murray Chief Executive OfficerDavid Dix Non-executiveTim Freshwater Non-executiveEdward Haslam Non-executiveKofi Morna Non-executiveSir William Purves Non-executivePatrick Quirk Non-executiveZwelakhe Mankazana Alternate to Kofi MornaAudit/Risk Committee Sir William Purves (Chairman)David DixEdward HaslamNicholas Sibley
Remuneration/Succession Planning Committee
Edward Haslam (Chairman)Nicholas SibleyNomination Committee
The full Board comprises the Nomination Committee
Company SecretaryWilli BoehmIssued 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 BMG0440M1029Broker (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: +61 (0)8 Telephone: +27 (0)11
Telephone: +44 (0)20 7425 8000 9488 1400 286 7326 Facsimile: +44 (0)20 7425 8990 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 (1,000 kg) 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 the United Kingdom: Nick Bias BuckBias Limited + 44 (0)7887 920 530 In South Africa: Stuart Murray
Aquarius Platinum (South Platinum) (Pty) Ltd
+27 (0)11 455 2050
or visit aquariusplatinum.com
AQUARIUS PLATINUM LIMITEDRelated Shares:
AQP.L