AQUARIUS PLATINUM LIMITED: Second Quarter 2013 Production Results AQUARIUS PLATINUM LIMITED Aquarius Platinum Limited Production Results to 31 December 2012 Highlights * Attributable production from operating mines increased by 2% quarter-on- quarter to 78,987 4E ounces * Average PGM basket price increased 5% for the quarter in Dollar terms * The Rand weakened against the US Dollar by 4% on average quarter-on-quarter * Transition to owner operator completed during the quarter and below budget * Rollout of revised hanging wall system completed during the quarter * Cash costs at Kroondal decreased 7% to R8,403 per PGM ounce quarter-on- quarter * Cash costs at Mimosa increased 8% to $897 per PGM ounce quarter-on-quarter * Mimosa and Government of Zimbabwe agreed commercial terms on Indigenisation and signed a term sheet Q2 2013 Operating Results Summary Kroondal Mimosa Platinum Mile 4E PGM Production Total (100% basis) 102,525 52,752 1,349 Attributable 51,262 26,376 1,349 4E Basket Price R/oz 10,901 - 10,939 $/oz 1,261 1,213 1,269 Cash Costs (4E basis) R/oz 8,403 - 7,688 $/oz 972 897 892 Cash Margin (%) 10 16 13 Stay-in-Business Capex R/oz 1,520 - - $/oz 130 171 - Commenting on the results, Jean Nel, CEO Aquarius Platinum said: The quarter under review was yet another challenging quarter during which industrial relations in South Africa remained strained and metal prices remained low. The Aquarius management team persisted with its focus on restoring operational credibility at its Kroondal mine. In this regard I am very pleased to report that both of the significant processes we committed to were completed in time and below budget, being the migration to owner operator and the implementation of the revised hanging wall support regime. The implementation of these two initiatives, combined with a focussed and motivated work force at Kroondal contributed to Kroondal's production exceeding 100 000 4E ounces for the quarter for the first time since the Dec 2010 quarter, notably at reduced on mine unit costs, down 7% for the quarter. Given the macro environment in the industry this was a pleasing performance. A special mention should go to Rob Schroder (MD: AQPSA) and Wessel Phumo (GM: Kroondal) who lead the AQPSA team. At Mimosa the solid production performance continued, but Mimosa's costs during the quarter disappointed. Mimosa management team is focussed on addressing costs having implemented a number of initiatives. The conclusion of the indigenisation agreement between Mimosa and the Government of Zimbabwe was particularly pleasing and Winston Chitando (MD: Mimosa) played a pivotal role in this regard. The satisfactory operational improvements notwithstanding, Aquarius remains acutely aware that despite the improvements, the company continued to consume cash during the quarter. The price improvements and the weakened R/$ exchange rate in January 2013 combined with the fact that the once-off costs associated with the two aforementioned processes have been completed, is expected to substantially reduce cash consumption and enable to company to start producing cash at mine level. From a PGM supply and demand perspective there seems to be consensus that both platinum and palladium will move into primary supply deficit during 2013. Whilst encouraging the increase in recycling, the continued depressed demand from the auto producers and the substantial above ground inventories renders significant further price increases unlikely. Fact remains that despite the significant operational improvements, cash generation at current spot prices remains constrained. It is against this backdrop that management continues to focus on cash preservation and operational stability and improvements. The Company is also focused on playing a positive role in terms of improving relations with the South African and Zimbabwean regulators. Ensuring all stakeholders appreciate what is required for a sustainable industry in future is critical and work in this regard continues. Production by mine Quarter ended PGMs (4E) Dec 2012 Sept 2012 % Change Dec 2011 % Change Kroondal 102,525 92,073 11 86,796 18 Mimosa 52,752 56,341 (6) 50,456 5 Platinum Mile 1,349 3,270 (59) 3,328 (59) Marikana - - - 28,809 - Everest - - - 18,712 - CTRP - 644 (100) 1,117 - Total 156,626 152,328 3 189,218 (17) Production by mine attributable to Aquarius (Operating mines) Quarter ended PGMs (4E) Dec 2012 Sept 2012 % Change Dec 2011 % Change Kroondal 51,262 46,037 11 43,398 18 Mimosa 26,376 28,171 (6) 25,228 5 Platinum Mile 1,349 3,270 (59) 3,328 (59) Total 78,987 77,478 2 71,954 10 Aquarius Group quarterly attributable production (PGM ounces) to 31 December 2012 [Please refer to www.aquariusplatinum.com for graph] Market Summary At the beginning of the quarter the PGM Rand basket price continued to rise as persistent illegal strikes triggered concerns for both future supply of PGMs and how it will impact the overall South African economy. The pessimism on supply did not last long as the basket price peaked at R12,398 per oz in mid-October (from a trough R9,525 per oz in mid-August) at which point the US$ dollar metal prices began to retreat; by the end of October, platinum and palladium were both trading at two-month lows. In November, following the conclusion of the US Presidential elections and the anticipation of a continued expansionary monetary policy, commodity prices strengthened. PGM prices were further supported by the publication of Johnson Matthey's Platinum 2012 Interim Review highlighting a global deficit in platinum as a result of reduced supply from South Africa and a decline in open-loop recycling. However, resolutions to illegal strike activity in the region, together with negative news surrounding the euro zone economy and investor nervousness over the US 'fiscal cliff' at the end of the period weighed on PGM prices and resulted in a disappointing end to a difficult quarter. The average platinum price increased by 6.6%, while palladium increased by 6.7% and rhodium decreased by 3.1% quarter on quarter. Gold rallied by 3.9% on average. Platinum closed the quarter down 8.5% at $1,539 per ounce, while palladium rose by 9.1% to $703 per ounce and rhodium fell by 1.8% to $1,080 over the same period. Gold fell 5.9% to $1,675 per ounce. Rand-Dollar exchange rate The average Rand-Dollar exchange rate weakened during the quarter, falling by 4% from R8.28 to R8.65 to the US dollar. Since then, it has traded in a narrow range to average 8.62 in the first two weeks of January. The average Rand basket price for the quarter increased by 10% quarter-on-quarter, and the spot price by 2% over the period. The US Dollar weighted average group basket price increased by 5% to $1,245 per 4E PGM ounce compared to the previous quarter. due to Rand weakness. The average South African basket price at AQPSA's operations was R10,769 per PGM ounce for the period. Subsequent to the end of the quarter, the PGM basket price has consolidated to average R10,788 per PGM ounce for the first two weeks of January. [Please refer to www.aquariusplatinum.com for graphs] Average PGM basket prices achieved at Aquarius operations Quarter ended US$ per PGM ounce (4E) Dec 2012 Sept 2012 % Change Dec 11 % Change Kroondal 1,261 1,195 6 1,262 (0) Marikana - - - 1,277 (100) Everest - - - 1,259 (100) Mimosa 1,213 1,148 6 1,303 (7) CTRP - 1,338 (100) 1,296 (100) Platinum Mile 1,269 1,272 - 1,208 5 Weighted Avg. 1,245 1,182 5 1,272 (2) Operating Review Summary (all numbers on 100% basis) AQUARIUS PLATINUM (SOUTH AFRICA) (PTY) LTD (Aquarius Platinum - 100%) P&SA 1 at Kroondal (Aquarius Platinum - 50%) * 12-month rolling average DIIR improved to 1.39 per 200,000 man hours from 1.41 in the previous quarter * Production increased to 1,727,000 tonnes from 1,410,000 tonnes * Head grade deteriorated from 2.51 g/t to 2.41 g/t * Recoveries deteriorated by 1% to 79% * Volumes processed increased to 1,669,000 tonnes * Stockpiles at the end of the quarter totalled approximately 75,000 tonnes * PGM production increased by 11% to 102,525 PGM ounces * Revenue increased by 13% to R956 million quarter-on-quarter due to improved production and an increase in the 4E Basket Price * Mining cash costs decreased by 11% to R516 per tonne, due to improved production * Unit cost per PGM ounce reduced 7% to R8,403 per PGM ounce due to improved production * Kroondal's cash margin for the period improved from 2% to 10% [Please refer to www.aquariusplatinum.com for graph] Commentary Kroondal: Production at Kroondal was 1.72 million tonnes, up 22% compared to the previous quarter The migration from contractor to owner operator, which was first announced as part of the year-end results, has been successfully completed and substantially all costs in relation to this initiative incurred. The migration has been positively received by organised labour, employees and suppliers and is one of the main reasons contributing to the increased morale amongst the workforce and contributed to the completion of a strike free quarter. Regretfully, two of Kroondal's employees were killed in separate incidents on their way to work during the quarter. The Board and Management of Aquarius express their sincere condolences to the families of the deceased. All mining sections, on all shafts, have completed training on the implementation of the revised support regime. While the Department of Mineral Resources (DMR) continued with visits to the operations, there were no Section 54 notices issued during the quarter. The number of Section 54 notices issued has reduced significantly during the course of the year due to improved communication and relationships between the Company and the DMR as well as continued focus on its policies and procedures. P&SA2 at Marikana (Aquarius Platinum - 50%) As disclosed previously, as a result of current low Rand PGM basket prices, the remaining shaft (Marikana 4 shaft) and the processing plant at Marikana have been placed on care and maintenance until further notice. Everest Mine As disclosed previously, as a result of current low Rand PGM basket prices, temporary geological problems and unstable labour relations, the Everest mine has been placed on care and maintenance until further notice. AQPSA Operating cash costs per ounce (Rand) 4E 6E 6E net of by-products (Pt+Pd+Rh+Au) (Pt+Pd+Rh+Ir+Ru+Au) (Ni&Cu) Kroondal 8,403 6,895 6,756 Capital expenditure Kroondal (R'000 unless otherwise stated) Total Per 4E oz Ongoing establishment of infrastructure 65,099 635 Project capital (K6 shaft) 50,358 491 Mobile equipment 40,382 394 Total 155,839 1,520 Kroondal mine: reconciliation of cash costs per 4E ounce Cost per 4E ounce (Rand) Q2 HY1 Total operating expenditure 10,296 10,633 Less: Ongoing capital expenditure & mobile equipment (1,029) (1,142) Project capex (K6 shaft) (491) (509) Transition costs (373) (294) On mine cash costs 8,403 8,688 The Company continues to develop the K6 shaft at Kroondal and conduct design and drill work at Everest. The K6 shaft sinking project remains on budget and is ahead of time. The Company expects to incur R90 million in capital (R45 million attributable to Aquarius) during H2 on this project, in line with budget. Work on this shaft is currently performed by a mining contractor and Aquarius is currently doing the planning to take over operational responsibility, in line with its decision to move to owner operator. Almost all other project and growth capital expenditure has been placed on hold, pending improved market conditions. The Company is continuing with the necessary maintenance capital expenditure required by its operating mines. The capital expenditure on mobile equipment is financed through a lease agreement over the life of the equipment. MIMOSA INVESTMENTS (Aquarius Platinum - 50%) Mimosa Platinum Mine * 12-month rolling average DIIR improved to 0.16 per 200,000 man hours worked * Production decreased by 5% to 600,066 tonnes, in line with forecast * Head grade improved slightly to 3.67g/t * Recoveries improved slightly to 77.8% * Volumes processed decreased by 7% to 575,638 tonnes * Stockpiles at the end of the quarter totalled approximately 123,191 tonnes * PGM production decreased by 6% to 52,752PGM ounces in line with forecast * Revenue increased by 16% to US$68 million due to improved metal prices * Mining cash costs increased by 8% to US$82 per tonne, and costs per PGM ounce by 8% to $897 * Stay-in-business capital expenditure was $171 per PGM ounce for the quarter * Mimosa's cash margin for the period decreased from 20% to 16% due to increased cost. [Please refer to www.aquariusplatinum.com for graph] Commentary The Mimosa mine continues to operate well, despite growing cost pressures which led to above expectation increases in cost. Discussions on indigenisation were concluded during the month and this culminated in the signing of a term sheet on the 14 December 2012. The term sheet sets out the key details of the indigenisation plan and paves way for the drafting of detailed agreements that will facilitate the implementation of the plan. It is envisaged that all agreements will be finalised by the end of March 2013. Operating cash costs per ounce Unit cash costs per PGM ounce (before by-product credits) were 5% higher than those achieved in the previous quarter. The higher costs were mainly due to decreased PGM production relative to Q1, the temporary increase in reagent usage, as well as costs incurred in building the ore stock pile following the fire incident in May 2012. Metal recoveries, though marginally improved from the previous quarter, are still below expected levels. The consumption of chemicals and reagents was increased, and exceeded budget, in an effort to improve recoveries and to counter lower-than-anticipated process efficiencies. Reagents will be changed as soon as existing inventory levels have been depleted by June 2013. A dedicated team has been put in place to work on an initiative to improve recoveries and other plant efficiencies by about 3% within the next 12 months. 4E 6E 4E net of by-products (Pt+Pd+Rh+Au) (Pt+Pd+Rh+Ir+Ru+Au) (Ni, Cu & Co) Mimosa 897 848 586 Capital expenditure The total capital expenditure for the second quarter amounted to $9 million. Expenditure was mainly incurred in mobile equipment, Drill Rigs and LHD; Conveyor belt extension, Down dip Development, and Housing project. TAILINGS OPERATION Platinum Mile (Aquarius Platinum - 91.7%) * Material processed decreased 66% to 389 million tonnes * Head grade increased to 0.78 g/t * Recoveries decreased to 10% * Production decreased to 1,349 PGM ounces * Cash costs increased to R7,688 per PGM ounce * Revenue was R12 million for the quarter * The cash margin for the period was 13%, an decrease from 35% in the previous quarter Commentary Platinum Mile: The results for the quarter were significantly impacted by strikes at Anglo Platinum during the months of October and November. For this reason the operation lost 13 production days in September and virtually the whole of October and November 2012. These strikes continued into early December 2012 when production commenced as per normal. Whilst the results for the quarter were impacted by these strikes, encouragingly a positive cash margin was achieved despite these trying circumstances. The recently announced restructure at Anglo Platinum is not expected to materially impact the operations of Platinum Mile as it continues to treat only tails from the Merensky concentrator whilst it is expected that Anglo Platinum will reduce UG2 production as part of its restructure. Chromite Tailings Retreatment Plant (CTRP) (Aquarius Platinum - 50%) The operation remains on care and maintenance since 6 August 2012. Operating cash costs per ounce 4E 6E 4E net of by-products (Pt+Pd+Rh+Au) (Pt+Pd+Rh+Ir+Ru+Au) (Ni, Cu& Co) Platinum Mile 7,688 6,730 6,133 CORPORATE MATTERS Issue of Shares to Support Black Economic Empowerment (BEE) Partners As previously announced, in October 2012 the Company issued and allotted 14,000,000 fully paid common shares of US$0.05 at a price per share of 41.75 pence (A$0.64) as part of a transaction intended to preserve the black economic empowerment ("BEE") credentials of Aquarius. The Board of Aquarius resolved that it was in the interests of Aquarius, and in line with its ongoing commitment to comply with the BEE and regulatory framework in South Africa, to assist the BEE Partners to preserve their remaining shareholding in Aquarius. Subsequent to the end of the quarter these shares which formed a limited guarantee and pledge provided to the BEE Partners' financiers has been released. These shares are currently held as Treasury. Aquarius' full announcement released to the market on 4 October 2012 outlining details of the transaction is available on Aquarius' website. Mimosa Indigenisation On 14 December 2012, Mimosa Investment Holdings ("Mimosa Investments"), which is held jointly in a 50:50 partnership with Impala Platinum Holdings Limited, concluded a term sheet in respect of a proposed indigenisation implementation plan ("IIP") with the Government of Zimbabwe. The term sheet provides for the key terms, subject to certain conditions precedent, of the sale by Mimosa Investments of an aggregate 51% equity ownership of Mimosa Holdings (Private) Limited ("Mimosa Holdings"), the wholly owned operating subsidiary of Mimosa Investments which owns and manages the Mimosa mine. The sale consideration for the 51% of Mimosa Holdings to the indigenous parties is US$550 million (50% attributable to Aquarius), based on an agreed fair market value for Mimosa Holdings of US$1.078 billion. Mimosa Investments will provide a vendor loan funding mechanism to facilitate the transaction which has a term of ten years. This loan will bear interest at a rate of 9% annually and will be settled through the waiver of the right to receive 90% of dividends due to the indigenous entities in favour of Mimosa Investments. Any loan balance outstanding at the end of the ten-year period will be payable in cash. Aquarius' full announcement of 14 December 2012 outlines details of the indigenisation plan and is available on Aquarius' website. Potential acquisition of the Booysendal reserve The Company remains in communication with the Department of Mining and Resources ("DMR") in South Africa in relation to the outstanding approval from the DMR required to implement this transaction. In the event of the approval being granted before the end of April 2013 by which date the agreement lapses the Company will advise shareholders accordingly. Aquarius' full announcement of 4 May 2011, outlines details of this transaction and is available on Aquarius' website. Board Changes Mr Stuart Murray resigned as director and CEO of Aquarius and executive chairman of AQPSA in October 2012. Mr Jean Nel was appointed Chief Executive Officer of the Group on 5 November 2012 and Mr Zwelakhe Mankazana, Non-executive Chairman of AQPSA. Sir William Purves retired from the AQP Board on 5 November 2012. More information on all corporate matters can be found at www.aquariusplatinum.com Statistical Information: Kroondal P&SA1 [Please refer to www.aquariusplatinum.com for statistical information] Statistical Information: Mimosa [Please refer to www.aquariusplatinum.com for statistical information] Statistical Information: Platinum Mile [Please refer to www.aquariusplatinum.com for statistical information] Aquarius Platinum Limited Incorporated in Bermuda Exempt company number 26290 Board of Directors Nicholas Sibley Non-executive Chairman Jean Nel Chief Executive Officer David Dix Non-executive Tim Freshwater Non-executive (Senior Independent Director) Edward Haslam Non-executive Kofi Morna Non-executive Zwelakhe Mankazana Non-executive Audit/Risk Committee David Dix (Chairman) Edward Haslam Kofi Morna Nicholas Sibley Remuneration/Succession Planning Committee Edward Haslam (Chairman) David Dix Zwelakhe Mankazana Nicholas Sibley Nomination Committee Edward Haslam (Chairman) Tim Freshwater Kofi Morna Willi Boehm Company Secretary Willi Boehm AQPSA Management Zwelakhe Mankazana Non-executive Chairman Jean Nel Chief Executive Officer Robert Schroder Managing Director Graham Ferreira Finance Director Wessel Phumo General Manager: Kroondal Mimosa Mine Management Winston Chitando Managing Director Herbert Mashanyare Technical Director Peter Chimboza Resident Director Fungai Makoni General Manager Finance & Company Secretary Platinum Mile Management Richard Atkinson Managing Director Paul Swart Financial Director Issued Capital At 31 December 2012, the Company had on issue: 486,851,336 fully paid common shares and 120,000 unlisted options. Substantial Shareholders 31 December 2012 Number of Shares Percentage Chase Nominees Limited 31,756,135 6.52 JP Morgan Nominees Australia Limited 29,109,414 5.98 HSBC Custody Nominees (Australia) Limited 26,873,642 5.52 Primary Australian Securities Exchange Trading Information Listing: (AQP.AX) Premium London Stock Exchange (AQP.L) ISIN number BMG0440M1284 Listing: Secondary JSE Limited (AQP.ZA) ADR ISIN number US03840M2089 Listing: Convertible Bond ISIN number XS0470482067 Broker (LSE) (Joint) Broker (ASX) Sponsor (JSE) Liberum Capital Limited Ropemaker Place, Level 12 25 Ropemaker Street, Rand Merchant Bank London Euroz Securities (A division of FirstRand Bank Level 18 Alluvion Limited) EC2Y 9LY 58 Mounts Bay Road, 1 Merchant Place Telephone: +44 (0) Perth WA 6000 Cnr of Rivonia Rd and Fredman 20 3100 2000 Telephone: +61 (0) 8 Drive, Sandton 2196 9488 1400 Johannesburg South Africa Bank of America Merrill Lynch 2 King Edward St London, EC1A 1HQ Telephone: +44 (0)20 7628 1000 Aquarius Platinum (South Africa) (Proprietary) Ltd 100% Owned (Incorporated in the Republic of South Africa) Registration Number 2000/000341/07 Unit 16, Berkley Office Park, 8 Bauhinia Street, Highveld Techno Park, Centurion, Pretoria, South Africa. Postal Address: PO Box 76575, Wendywood, 2144, South Africa Telephone: +27 (0)120012001 Facsimile: +27 (0)120012070 Aquarius Platinum Corporate Services Pty Ltd 100% Owned (Incorporated in Australia) ACN 094 425 555 Level 4, Suite 5, South Shore Centre, 85 The Esplanade, South Perth, WA 6151, Australia Postal Address: PO Box 485, South Perth, WA 6151, Australia Telephone: +61 (0)8 9367 5211 Facsimile: +61 (0)8 9367 5233 Email: email@example.com For further information please visit www.aquariusplatinum.com or contact: In the United Kingdom and South Africa: In Australia: Jean Nel Willi Boehm +27 12 001 2001 +61 (0) 8 9367 5211 Glossary A$ Australian Dollar Aquarius Aquarius Platinum Limited or AQP APS Aquarius Platinum Corporate Services Pty Ltd AQPSA Aquarius Platinum (South Africa) (Pty) Ltd ACS(SA) Aquarius Platinum (SA) Corporate Services (Pty) Ltd BEE Black Economic Empowerment BRPM Blue Ridge Platinum Mine CTRP Chrome Tailings Retreatment Operation. Consortium comprising Aquarius Platinum (SA) (Corporate Services) (Pty) Limited (ASACS), Ivanhoe Nickel and Platinum Limited and Sylvania South Africa (Pty) Ltd (SLVSA). DIFR Disabling injury frequency rate -being the number of lost-time injuries expressed as a rate per 1,000,000 man-hours worked DIIR Disabling injury incidence rate -being the number of lost-time injuries expressed as a rate per 200,000 man-hours worked DME formerly South African Government Department of Minerals and Energy DMR South African Government Department of Mineral Resources, formerly the DME Dollar United States Dollar or $ Everest Everest Platinum Mine Great A PGE bearing layer within the Great Dyke Complex in Zimbabwe Dyke Reef g/t Grams per tonne, measurement unit of grade (1g/t = 1 part per million) JORC Australasian code for reporting of Mineral Resources and Ore Reserves code JSE JSE Limited Kroondal Kroondal Platinum Mine or P&SA1 at Kroondal LHD Load haul dump machine Marikana Marikana Platinum Mine or P&SA2 at Marikana Mimosa Mimosa Mining Company (Private) Limited nm Not measured PGE(s) Platinum group elements plus gold. Five metallic elements commonly (6E) found together which constitute the platinoids (excluding Os (osmium)). These are Pt (platinum), Pd (palladium), Rh (rhodium), Ru (ruthenium), Ir (iridium) plus Au (gold) PGM(s) Platinum group metals plus gold.Aquarius reports the PGMs as (4E) comprising Pt+Pd+Rh plus Au (gold) with the Pt, Pd and Rh being the most economic platinoids in the UG2 Reef PlatMile Platinum Mile Resources (Pty) Ltd P&SA1 Pooling & Sharing Agreement between AQPSA and RPM Ltd on Kroondal P&SA2 Pooling & Sharing Agreement between AQPSA and RPM Ltd on Marikana R South African Rand Ridge Ridge Mining Limited ROM Run of mine. The ore from mining which is fed to the concentrator plant. This is usually a mixture of UG2 ore and waste. Tonne 1 Metric tonne (1,000kg) TARP Trigger Action Response Procedure UG2 Reef A PGE-bearing chromite layer within the Critical Zone of the Bushveld Complex END -0- Jan/29/2013 07:00 GMT
AQUARIUS PLATINUM LIMITED: Second Quarter 2013 Production Results
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