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Aquarius Platinum Limited HY 2013 results

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Aquarius Platinum Limited HY 2013 results

Aquarius Platinum Limited HY 2013 results

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  • 1. Interim Results For the six months ended 31 December 2012 February 2013
  • 2. Disclaimer Certain forward looking statements may be contained in the presentation which include, without limitation, expectations regarding metal prices, estimates of production, operating expenditure, capital expenditure and projections regarding the completion of capital projects as well as the financial position of the company. Such statements are only predictions and are subject to inherent risks and uncertainties which could cause actual values, results, performance or achievements to differ materially from those expressed, implied or projected in any forward looking statements as a result of, among other factors, changes in economic and market conditions, changes in the regulatory environment and other business and operational risks. No representation or warranty, express or implied, is made by Aquarius that the material contained in this presentation will be achieved or prove to be correct. Except for statutory liability which cannot be excluded, each of Aquarius, its officers, employees and advisers expressly disclaims any responsibility for the accuracy or completeness of the material contained in this presentation and excludes all liability whatsoever (including in negligence) for any loss or damage which may be suffered by any person as a consequence of any information in this presentation or any error or omission there from. Aquarius accepts no responsibility to update any person regarding any inaccuracy, omission or change in information in this presentation or any other information made available to a person nor any obligation to furnish the person with any further information. 2
  • 3. Half year under review (6 months to 31 December 2012)  Aquarius’ operations experienced the most difficult period in its history………. – Industrial relations in the mining industry and in particular in platinum sector was extremely volatile – Ceased operations at two of its mines, Everest and Marikana - rendering comparative figures less useful – Parted ways with mining contractor and became owner operator at Kroondal – massive project well executed – Implemented revised hanging wall support regime – well executed – Significant changes at Board and senior management level – new team settled – Rebuild stock piles at Mimosa following the fire in May 2012 – Low metal prices prevailed during the entire period – improved only after period end – Cost increases, mainly wages and electricity, continued to escalate at above inflation Against this backdrop Kroondal improved its operational performance significantly and Mimosa continued its steady operational performance 3
  • 4. Financial Highlights (6 months to 31 December 2012)  Revenue decreased by 29% to $179 million (H1 2012: $252 million)  Mine EBITDA decreased by 24% to $22 million (H1 2012: $29 million)  Headline loss (before exceptional charges) of $56 million, (US11.82 cents per share)  Impairment charge of $127 million arising substantially from a review of the carrying value of Marikana, Ridge Mining, Platmile and other mining rights  Reported net loss of $184 million (US 38.57 cents loss per share)  Group cash balance at half-year end of $83 million 4
  • 5. Dollar Pricing Prices remained constrained….. Increased after period end Pd ($/oz) Pt, Ru & Au ($/oz) 750 2,400 700 2,200 650 2,000 600 1,800 550 1,600 500 1,400 450 1,200 1,000 Dec 11 Mar 12 Platinum Jun 12 Gold 400 Dec 12 Sep 12 Rhodium Palladium 5
  • 6. US Dollar Basket Prices SOUTH AFRICA Pt 59% Pt 51% H1 2013 $ 1,227 per PGM 4E/oz Rh 11% H2 2012 $ 1,265 per PGM 4E/oz Au 1% ZIMBABWE Pd 30% H1 2012 $ 1,369 per PGM 4E/oz Pd 38% H1 2013 $ 1,180 per PGM 4E/oz Rh 7% H2 2012 $ 1,220 per PGM 4E/oz H1 2012 $ 1,338 per PGM 4E/oz Au 4% 3.0% 7.6% 3.3% 8.8%  Growth in primary supply of PGMs diminished in current environment  Autocat, industrial and jewellery demand seems to have stabilised  Low basket price remains a challenge for producers  Consensus forecast suggests Pt and Pd will end the year in deficit 6
  • 7. Contribution to revenue All products MIMOSA AQPSA Base Metals & Chromite 1% Ir+Ru 3% Base Metals & Chromite 21% Ir+Ru 1% 4E 96% 4E 78% 7
  • 8. Rand exchange rate Some structural weakness….. Countered weak Dollar metal prices R/$ 9.00 8.80 8.60 8.40 8.20 8.00 7.80 7.60 7.40 7.20 7.00 Dec 11 Mar 12 Jun 12 Sep 12 Dec 12 8
  • 9. Price volatility continues ZAR and SA and ZIM US$ Baskets $/oz R/oz 1,450 12,500 1,400 12,000 1,350 11,500 1,300 11,000 1,250 10,500 1,200 10,000 1,150 9,500 1,100 9,000 1,050 1,000 Jan-12 Apr-12 Jul-12 SA $ Basket Zim $ Basket Oct-12 Jan-13 8,500 SA R Basket 9
  • 10. Operational Highlights (6 months ended 31 December 2012)  Operating mines increased production 8% compared to pcp despite challenging environment  Transition to owner operator completed – on time and below budget  Rollout of revised hanging wall support regime completed – on time and below budget  Mimosa and GoZ agreed commercial terms on Indigenisation and signed a term sheet  In SA average Rand basket price increased 1% to R10,388 per PGM ounce  In Zimbabwe average Dollar basket price decreased by 10% to US$1180 per PGM ounce  Weighted average on-mine unit cash costs in SA decreased by 6% in Rand terms, 10
  • 11. Production – Impact Analysis by Operation 4E oz production variance 156,465 145,381 Operating mines 240,000 220,000 200,000 215,453 215,453 180,000 156,787 160,000 156,788 140,000 120,000 100,000 H1 2012 Kroondal Marikana Everest CTRP Mimosa PlatMile H1 2013 11
  • 12. Kroondal (P&SA1 - AQP 50%) R/4E oz 4E oz 12,000 120,000 10,000 100,000 8,000 80,000 6,000 60,000 4,000 40,000 2,000 20,000 - Q3 '11 Q4 '11 Q1 '12 Q2 '12 Production Q3 '12 Cash Cost Q4 '12 Q1 '13 Q2 '13 - Price  Revenue responding to increased production  Higher production decreasing unit costs  Owner operator model starting to impact positively on production and costs  Completion of revised support system starting to reflect on efficiencies 12
  • 13. Kroondal Last 18 Month Quarterly production comparison Head Grade 105,000 100,000 95,000 90,000 85,000 80,000 75,000 70,000 65,000 60,000 2.60 2.50 2.40 g/t 4E ounce PGM Ounces 2.30 2.20 2.10 FY12 Q1 FY12 Q2 FY12 Q3 FY12 Q4 FY13 Q1 FY13 Q2 2.00 FY12 - Q1 FY12 - Q2 FY12 - Q3 FY12 - Q4 FY13 - Q1 FY13 - Q2 Recoveries Tons Processed 80.5% 1,800,000 80.0% 1,700,000 79.5% 1,600,000 1,500,000 78.5% Ton % 79.0% 78.0% 1,300,000 77.5% 1,200,000 77.0% 1,100,000 76.5% 76.0% 1,400,000 1,000,000 FY12 - Q1 FY12 - Q2 FY12 - Q3 FY12 - Q4 FY13 - Q1 FY13 - Q2 FY12 Q1 FY12 Q2 FY12 Q3 FY12 Q4 FY13 Q1 FY13 Q2 13
  • 14. Kroondal Reconciliation of cash costs per 4E ounce Rand/pgm oz Total operating expenditure 10,633 Less: Ongoing capital expenditure & mobile plant (1,142) Project capex (K6 shaft) (509) Transition costs (completed) (294) On-mine cash costs 8,688 14
  • 15. Mimosa (AQP 50%) $/4E oz 4E oz 1,600 60,000 1,400 55,000 1,200 50,000 1,000 45,000 800 40,000 600 35,000 400 200 30,000 - 25,000 Q3 '11 Q4 '11 Q1 '12 Q2 '12 Production Q3 '12 Q4 '12 Cash Cost  Q2 '13 Price Consistent good levels of production  Q1 '13 Costs escalations in period for number of reasons, well understood 15
  • 16. Mimosa cost break-down  Costs at Mimosa increased by an unacceptable 17% to $863 per PGM ounce relative to the pcp  From an operational perspective mining cost inflation at Mimosa usually follows the same trend as mining cost inflation in South Africa  During the period under review costs were distorted by the following: – – – – Surface lease fees for the 12 months from Sep 12 to Aug13 paid in Sep 12 - $1,3 million Consumable inventory write-down - $2,2 million Ore stock pile re-built after the Aug 2012 fire – $1,4 million Higher usage of reagents to counter poor spec reagents purchased from China - $1,2 million  The stock pile re-build was completed in Dec 2012 and the poor spec reagents will be depleted by the end of the FY whilst the consumable inventory write-off will not be repeated  Mimosa’s surface rental increased from $13 000 per annum to $1,3 million per annum. The Chamber of Mines are in discussions with authorities in this regard, the outcome remains uncertain  Excluding the above mentioned items, costs increased by 9% from pcp, in line with normal mining cost inflation 16
  • 17. Mimosa Indigenisation  Indigenisation term sheet was signed on 14 December 2012  The sale consideration for 51% of Mimosa Holdings to the indigenous parties is $550 million (50% attributable to Aquarius), based on an agreed fair market value for Mimosa Holdings of $1.078 billion  Mimosa Investments will provide a vendor loan funding mechanism to facilitate the transaction for a period of 10 years  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 indigenous parties  Appropriate governance measures agreed and Mimosa retains operational management control  Parties are currently drafting substantive agreements 17
  • 18. Tailings Operations CTRP (AQP 50%)   Placed on Care and Maintenance from 6 August 2012 No plans to re-commence production in short term Platinum Mile (AQP 91.7%)        Production of 4,619 PGM ounces Operations during the HY impacted by strikes at Anglo Platinum, 2,5 productions months lost EBITDA of $1.7m Cash margin for the six months of 29%, up from 16% in 2011 Unit costs reduced by 10% to R6,305 per PGM ounce Impaired $10 million following review of carrying value of asset Anglo Platinum’s restructure unlikely to have a material impact 18
  • 19. Contribution By operation 18 H1 2013: Mine EBITDA: $22m H1 2013 Attributable Production: 156,787 PGM oz 16 120,000 14 100,000 12 10 $ million 80,000 8 PGM oz 60,000 6 4 40,000 2 0 -2  20,000 Kroondal Marikana Everest Mimosa Ridge Tailings - Kroondal Mimosa Tailings Mine EBITDA = Revenue - Interest Income included in revenue - Cash Costs + FX Gain/(Loss) on Sales 19
  • 20. P&L analysis and breakdown ($m) 31-Dec-12 31-Dec-11 Change 179 252 (73) (183) (273) 90 (7) (7) - Financing costs (16) (18) 2 Foreign exchange loss (20) (91) 71 (127) - (127) (17) - (17) (1) 2 (3) 8 22 (14) (184) (113) (71) (56) (113) 57 22 29 (7) Revenue Cost of sales Administrative costs Impairment losses Closure and transition costs Other Income tax benefit Net loss after tax Headline earnings/(loss) Mine EBITDA 20
  • 21. P&L analysis and breakdown Cost of Sales ($m) 31-Dec-12 31-Dec-11 Change 152 233 81 21 32 11 Fair Value Uplift 5 5 - Royalties: Zimbabwe 5 3 (2) 183 273 90 Cost of production Amortisation & depreciation Total cost of sales 21
  • 22. P&L analysis and breakdown Impairment $m Several mining rights 85 Marikana 19 Blue Ridge 13 Platmile 10 Total impairment 127 22
  • 23. Balance sheet analysis and breakdown ($m) 31-Dec-12 30-Jun-12 Change Total non-current assets 749 890 (141) Total current assets 214 311 (97) Total assets 963 1,201 (238) Total non-current liabilities 398 411 (13) 91 113 (22) Total liabilities 489 525 (36) Net assets 474 677 (203) Shareholders equity 474 677 (203) Total current liabilities Non-current assets – decrease due to impairment charges Current assets – decrease mainly due to lower cash balance Non-current liabilities – decrease of $13m in deferred tax liabilities Current liabilitiesdecrease in trade creditors due to the closure of Marikana and Everest mines 23
  • 24. Cash flow statement analysis and breakdown ($m) 31-Dec-12 31-Dec-11 Change Net operating cash flow (38) 25 (63) Net investing cash flow (27) (69) 42 Net financing cash flow (36) (34) (2) Net operating cash flow includes: Net investing cash flow includes: Net financing cash flow includes:  Net outflow from operations of $17m  Payments for mine development and property, plant and equipment of $27m  Interest paid of $8m  Closure and transition costs of $21m  Interest received of $3m  Repayment of borrowings of $4m  Closure of foreign exchange currency contract of $24m  Income tax paid of $3m 24
  • 25. FY 2013/14 – Operational Focus  Kroondal – Continue to improve safety performance – Maintaining production stability and continue to improve industrial relations – K6 shaft capital project on time and on budget, scheduled to migrate from project to operational shaft by the end of current financial year –  Efficiencies and unit cost management a specific focus Mimosa – –  Focus on cost containment and continued production performance Following indigenisation, certain projects have been identified for evaluation, in progress Unprofitable operations (at current prices) have been placed on care and maintenance – For the duration of the current downturn, minimise costs but maintain the assets the evidence........ 25
  • 26. Kroondal has successfully transitioned ... whilst improving tonnes mined (+15%) Kroondal Tonnes Mined 27 000 Tonnes Mined 25 000 Tonnes Mined 90 day baseline Last 90 days Transition Start +15% on baseline 23 000 21 000 19 000 Industrial Action 17 000 15 000 26
  • 27. ... and ounces produced (+23%) Ounces Produced 1 600 Ounces 1 400 1 200 Ounces 90 day baseline Last 90 days Transition Start +23% on baseline 1 000 800 600 400 27
  • 28. Outlook  Metal price volatility to continue whilst cost increases will not subside  Going into wage negotiation season in South Africa with good working relationship with unions, (NUM and Solidarity) and work force, but stable regional industrial relation environment is necessary for uninterrupted operations  Focus remains on restoring operational credibility in a difficult operating environment  Cash preservation remains paramount  Completion of indigenisation agreements and compliance will be an important mile stone  Awaiting approval of Booysendal S102 submission from the Department of Mineral Resources (“DMR”) – contractually required by end of April 2013, communication with DMR and Northam continues. Shareholders will be advised of any material developments 28
  • 29. For more information please contact Anne Cully + 61(0)8 9367 5211 Aquarius Platinum Limited Janet Whitaker +27 (0)11 880 3924 Russell & Associates Email: info@aquariusplatinum.com