20120209 aqp h1 2012 presentation final

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20120209 aqp h1 2012 presentation final

  1. 1. Interim Results For the six monthsended 31 December 2011 Stuart Murray 9 February 2012
  2. 2. DisclaimerCertain forward looking statements may be contained in the presentation which include, withoutlimitation, expectations regarding metal prices, estimates of production, operating expenditure,capital expenditure and projections regarding the completion of capital projects as well as thefinancial position of the company. Such statements are only predictions and are subject to inherentrisks and uncertainties which could cause actual values, results, performance or achievements todiffer materially from those expressed, implied or projected in any forward looking statements as aresult of, among other factors, changes in economic and market conditions, changes in theregulatory environment and other business and operational risks.No representation or warranty, express or implied, is made by Aquarius that the material containedin this presentation will be achieved or prove to be correct. Except for statutory liability whichcannot be excluded, each of Aquarius, its officers, employees and advisers expressly disclaims anyresponsibility for the accuracy or completeness of the material contained in this presentation andexcludes all liability whatsoever (including in negligence) for any loss or damage which may besuffered by any person as a consequence of any information in this presentation or any error oromission there from. Aquarius accepts no responsibility to update any person regarding anyinaccuracy, omission or change in information in this presentation or any other information madeavailable to a person nor any obligation to furnish the person with any further information.Interim Results for the six months ended 31 December 2011 February 2012 2
  3. 3. Financial Highlights(Six months to 31 December 2011)• Revenue decreased by 25% to US$252.4 million; volumes, prices, sales adjustments• Mine EBITDA decreased by 69% to US$29.0 million; lower revenues, higher costs• Reported net income impacted by US$91.2 million non-cash foreign exchange loss • Arising substantially from the revaluation of intercompany loans within the Group • Resulting in: • Net loss of US$113.5 million • Loss per share of 24.31 US cents• Group cash balance at half-year end of $230.1 millionInterim Results for the six months ended 31 December 2011 February 2012 3
  4. 4. Operational Highlights(Six months to 31 December 2011)• Group attributable production decreased by 14% to 215,453 PGM ounces• US Dollar PGM prices stable over period, but weakened during Q2 • Due to deteriorating macroeconomic conditions • Resulting in negative sales adjustments and return of pipeline advances• The Rand weakened by 7% on average against the US Dollar• Stable average US Dollar PGM Basket Price, while average Rand Basket Price increased by 5%• Production in SA down due to (industry-wide) increase in ‘Section 54’ safety stoppages• Production at P&SAs further impeded by implementation issues relating to new support installation• Everest suffered a two week strike and ongoing poor industrial relations• Ground conditions remain an issue• On-mine unit cash costs in SA rose by 35% in Rand terms, largely due to lower production• Mimosa performed strongly again, continuing to produce at capacity• Operations at Blue Ridge remained suspended for the entire six month periodInterim Results for the six months ended 31 December 2011 February 2012 4
  5. 5. Production – Impact Analysis by Operation4E oz production variance y-o-y 260,000 250,972 240,000 Strong Increased performance ownership 220,000 215,453 New support installation, 200,000 section 54s Strike, poor ground Operations conditions, suspended section 54s 180,000 160,000 140,000 120,000 100,000 H1 2011 Kroondal Marikana Everest Blue Ridge Mimosa CTRP Platinum Mile H1 2012Interim Results for the six months ended 31 December 2011 February 2012 5
  6. 6. Production ProfileSA issues take toll 300,000 250,000 200,000 150,000 100,000 50,000 - Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Everest Blue Ridge Platinum Mile CTRP Mimosa Marikana KroondalInterim Results for the six months ended 31 December 2011 February 2012 6
  7. 7. Dollar PricingVolatile and falling Pt, Ru & Au ($/oz) Pd ($/oz) 900 2,400 850 2,200 800 750 2,000 700 1,800 650 1,600 600 550 1,400 500 1,200 450 1,000 400 Jan 11 Apr 11 Jul 11 Sep 11 Dec 11 Platinum Gold Rhodium PalladiumInterim Results for the six months ended 31 December 2011 February 2012 7
  8. 8. US Dollar Basket PricesStable period-on-period average prices (but negative price adjustments in Q2) SOUTH AFRICA ZIMBABWE (0%) 14% 1,378 1,373 1,338 1,173 H1 11 H1 12 H1 11 H1 12 By-products Ir/Ru Ni/Cu Cr2O3 Ir/Ru Ni/Cu/Co 10% 7% 29% 38% Primary products 60% 51% South Africa Zimbabwe Platinum Palladium Rhodium GoldInterim Results for the six months ended 31 December 2011 February 2012 8
  9. 9. Rand exchange rateFinally some currency relief ……. but temporary……… R/$ 8.50 8.00 7.50 7.00 6.50 Jan 11 Apr 11 Jul 11 Sep 11 Dec 11Interim Results for the six months ended 31 December 2011 February 2012 9
  10. 10. Rand revenues falling despite exchange rateZAR and US$ SA Baskets and ZAR/US$ rebased to 100 140 130 120 110 100 90 80 70 Jan 11 Mar 11 May 11 Jul 11 Sep 11 Nov 11 SA 4E Basket Price ($) SA 4E Basket Price (R) RandInterim Results for the six months ended 31 December 2011 February 2012 10
  11. 11. Price volatility hampers investment decisionsZAR and SA and ZIM US$ Baskets $/oz R/oz 1,750 12,000 1,650 11,500 1,550 11,000 1,450 10,500 1,350 10,000 1,250 1,150 9,500 1,050 9,000 Jan 11 Apr 11 Jul 11 Sep 11 Dec 11 SA $ Basket Zim $ Basket SA R BasketInterim Results for the six months ended 31 December 2011 February 2012 11
  12. 12. Kroondal(P&SA1 - AQP 50%) H1 12 175,704Production (4E oz) (24%) H1 11 230,019 H1 12 1,409 Revenue (Rm) H1 11 (32%) 2,056 H1 12 8,459Cash Costs (R/oz) 47% H1 11 5,757 H1 12 7.9 (79%)Mine EBITDA ($m)1 H1 11 37.6 H1 12 -6% Cash Margin (%) (116%) H1 11 36% H1 12 1,346 Capex (R/oz)2 99% H1 11 678• Kroondal produced below capacity during H1 2012• Partly due to manual installation of new hangingwall support, leading to delays in the blasting cycle • Now largely resolved - phased approach and locally-made rock drills for hangingwall support installation• Exacerbated by unsatisfactory contractor arrangements – exaggerates fixed costs to detriment of unit costs • Renegotiating contractor arrangements• Only remaining threat to production is industry-wide increase in ‘section 54’ stoppages • Dialogue ongoing with Inspectorate of Mines regarding this situation 1 Mine EBITDA is attributable, i.e. 50% of total. All other numbers are on a 100% basis 2 Capex figures are total capex, i.e. both stay-in-business and expansion capex includedInterim Results for the six months ended 31 December 2011 February 2012 12
  13. 13. Cash cost analysis – an exampleKroondal – increases in costs by category 9,000 8,000 7,000 6,000 5,000 Reversible 4,000 3,000 FY11 - H1 Volume Grade Recoveries Mining Processing Utilities Admin FY12 - H1Interim Results for the six months ended 31 December 2011 February 2012 13
  14. 14. Marikana(P&SA1 - AQP 50%) H1 12 54,802Production (4E oz) (10%) H1 11 60,587 H1 12 451 Revenue (Rm) H1 11 (20%) 561 H1 12 9,800Cash Costs (R/oz) 22% H1 11 8,026 H1 12 -2.3 (244%)Mine EBITDA ($m)1 H1 11 1.6 H1 12 -19% Cash Margin (%) (244%) H1 11 13% H1 12 1,557 Capex (R/oz)2 (0%) H1 11 1,561 • Marikana also produced below capacity during H1 2012, and ramp-up slowed • Largely due to the same issues faced by Kroondal • Same mitigants now in place • As with Kroondal, only remaining threat to production is industry-wide increase in ‘section 54’ stoppages • Dialogue ongoing with Inspectorate of Mines regarding this situation • Two shafts at Marikana are in ramp-up, and as such are uneconomic at current prices 1 Mine EBITDA is attributable, i.e. 50% of total. All other numbers are on a 100% basis 2 Capex figures are total capex, i.e. both stay-in-business and expansion capex includedInterim Results for the six months ended 31 December 2011 February 2012 14
  15. 15. Everest(AQP 100%) H1 12 41,787Production (4E oz) (8%) H1 11 45,561 H1 12 353 Revenue (Rm) H1 11 (23%) 457 H1 12 10,311Cash Costs (R/oz) 31% H1 11 7,879 H1 12 -8.3 (172%)Mine EBITDA ($m) H1 11 11.6 H1 12 -22% Cash Margin (%) (202%) H1 11 21% H1 12 1,501 Capex (R/oz)1 (50%) H1 11 2,975 • Ramp-up slowed by thicker-than-anticipated oxide zone first encountered in Q4 ‘11 • Everest now being optimised to produce at a lower level for the next 12-18 months • While shallower mining, poor ground conditions and challenging economic environment persist • While Hoogland open pit mining authorisation and s102 consent for Booysendal South remain outstanding • Additional negative impacts on production caused by: • Section 54 stoppages and maintenance problems in Q1 ‘12 – 36 shifts lost • Dispute between union and contractor in Q2 ‘12 – two and a half weeks lost to resulting strike • Contractor and industrial relations issues are temporary and are being resolved 1 Capex figures are total capex, i.e. both stay-in-business and expansion capex includedInterim Results for the six months ended 31 December 2011 February 2012 15
  16. 16. Mimosa(AQP 50%) H1 12 104,254Production (4E oz) 3% H1 11 101,156 H1 12 146 Revenue (Rm) H1 11 1% 145 H1 12 726Cash Costs (R/oz) 18% H1 11 623 H1 12 (16%) 34.3Mine EBITDA ($m)1 H1 11 40.6 H1 12 52% Cash Margin (%) (7%) H1 11 56% H1 12 315 Capex (R/oz)2 7% H1 11 295 • Mimosa continues to produce at or above capacity, and cost control initiatives have contained cost increases • Political and regulatory issues intensifying • Royalties on gold and PGMs doubled – now highest globally • Ground rents increased by 50,000% from January 2012 - now material cost • Community Trust formed, to form indivisible part of full indigenisation solution • Negotiations with Zimbabwe government relating to Indigenisation Plan continues • Electricity supply interruptions increasing significantly 1 Mine EBITDA is attributable, i.e. 50% of total. All other numbers are on a 100% basis 2 Capex figures are total capex, i.e. both stay-in-business and expansion capex includedInterim Results for the six months ended 31 December 2011 February 2012 16
  17. 17. Tailings OperationsCTRP (AQP 50%) Platinum Mile (AQP 100%1)• Production of 1,769 PGM ounces; • Production of 6,415 PGM ounces, 885 PGM ounces attributable to Aquarius 5,402 attributable to Aquarius1• Plant EBITDA of ($0.8m) loss • Plant EBITDA of ($0.2m) loss• Cash margin for the period of (168%), • Cash margin for the period of 16%, down from 20% in H1 ‘11 down from 31% in H1 ‘11• Unit costs were up 128% at R13,087 per • Unit costs were up 23% at R7,019 per PGM ounce PGM ounce• Plant modifications and upgrades were • Volumes, grades and recoveries remained fairly completed in the second quarter of FY ‘12 and constant year-on-year throughput and recoveries showed a steady increase in the final months of the period under • Lower basket prices impacted negatively on review cash margins but the operation is running profitably• It is expected that the operation will again operate profitably from the third quarter of • Feasibility study to evaluate the viability of FY2012 onwards pumping Kroondal tailings to be treated at the operation has commenced 1 AQP now indirectly owns 91.7% of Platinum Mile, and as a result it was consolidated in the AQP accounts from September 2011Interim Results for the six months ended 31 December 2011 February 2012 17
  18. 18. ContributionBy operation H1 ‘12 attributable production: H1 ‘12 Mine EBITDA: US$29.0m 215,453 PGM ounces Tailings 3% 45 40 35 30 Mimosa 24% Kroondal 41% 25 20 15 Everest 19% 10 Marikana 5 13% 0 Mimosa Kroondal Everest Marikana Tailings Total• Mine EBITDA = Revenue - Interest Income - Cash Costs + FX Gain (Loss) on SalesInterim Results for the six months ended 31 December 2011 February 2012 18
  19. 19. P&L analysis and breakdown ($m) 31-Dec-11 31-Dec-10 Change Revenue 252.4 336.2 (83.8) Cost of sales (273.0) (241.3) (31.7) Administrative costs (7.4) (8.1) 0.7 Financing costs (17.6) (15.4) (2.2) Foreign exchange (loss)/gain (91.3) 66.2 (157.5) Settlement of contractor dispute - (7.8) 7.8 Other 1.1 0.3 0.8 Income tax benefit/(expense) 22.2 (35.8) 58.0 Net (loss)/profit after tax (113.5) 94.3 (207.8) Headline (Loss)/Earnings (113.8) 94.2 (208.0) Mine EBITDA 29.0 93.1 (64.1)Interim Results for the six months ended 31 December 2011 February 2012 19
  20. 20. P&L analysis and breakdownRevenue ($m) 31-Dec-11 31-Dec-10 Change Revenue from concentrate sales 273.5 311.8 (38.3) PGM sales adjustments (24.7) 16.5 (41.2) Interest income 3.6 7.8 (4.2) Revenue 252.4 336.2 (83.8)Interim Results for the six months ended 31 December 2011 February 2012 20
  21. 21. P&L analysis and breakdownCost of Sales ($m) 31-Dec-11 31-Dec-10 Change Amortisation & depreciation 31.5 22.1 (9.4) Fair Value Uplift 4.9 5.7 0.8 Cost of production 233.3 210.9 (22.4) Royalties: Zimbabwe (attributable 50%) 3.2 2.6 (0.6) Royalties: SA Commercial * 0.1 - (0.1) Total cost of sales 273.0 241.3 (31.7) * MPRDA royalties (SA) included in taxationInterim Results for the six months ended 31 December 2011 February 2012 21
  22. 22. P&L analysis and breakdownFinancing Costs ($m) 31-Dec-11 31-Dec-10 Change Interest paid on borrowings (coupon on convert, etc) 9.5 7.1 2.4 Accretion of interest on convertible bond 5.0 4.8 0.2 Accretion of mine-site rehab liability (unwinding of AQPSA’s provision) 2.6 3.1 (0.5) Pipeline finance 0.5 0.4 (0.1) Financing costs 17.6 15.4 2.2Interim Results for the six months ended 31 December 2011 February 2012 22
  23. 23. P&L analysis and breakdownForeign Exchange ($m) 0 -20 -40 -60 -80 -100 -120 Non cash Cash -140 FX loss on AQP FX loss on cash FX loss on pipeline FX loss - other FX gain on sales Total FX loss Group loans assetsInterim Results for the six months ended 31 December 2011 February 2012 23
  24. 24. P&L analysis and breakdownIncome Tax Expense ($m) 31-Dec-11 31-Dec-10 Change South African Corporate tax (credit) – income tax 1.0 (0.8) 1.8 South African Corporate tax (credit) – MPRDA royalty (0.6) 2.4 (3.0) Zimbabwe Corporate tax 7.0 8.8 (1.8) Movement in Zimbabwe deferred tax 3.1 3.0 0.1 Movement in South African deferred tax (incl. Ridge) (32.7) 22.4 (55.1) Income tax expense/(credit) (22.2) 35.8 (58.0)Interim Results for the six months ended 31 December 2011 February 2012 24
  25. 25. Balance sheet analysis and breakdown ($m) 31-Dec-11 31-Dec-10 Change Total non-current assets 886.8 1,009.5 (122.7) Total current assets 370.4 546.4 (176.0) Total assets 1,257.3 1,555.9 (298.6) Total non-current liabilities 442.6 500.6 (58.0) Total current liabilities 105.6 110.0 (4.4) Total liabilities 548.2 610.2 (62.0) Net assets 709.0 945.7 (236.7) Shareholders equity 709.0 945.7 (236.7) Non-current assets – Cash & cash equivalents – Non-current liabilities – decrease due to impairment decrease in cash balance decrease due to $52m of Ridge assets, foreign resulting from investing decrease in deferred tax exchange movements and activities and dividends paid liability, $19m decrease in amortisation charged mine closure rehab provision, offset by $13m increase in finance leasesInterim Results for the six months ended 31 December 2011 February 2012 25
  26. 26. Cash flow statement analysis and breakdown ($m) 31-Dec-11 31-Dec-10 Change Net operating cash flow 24.9 53.6 (28.7) Net investing cash flow (69.2) (59.4) (9.8) Net financing cash flow (34.3) (32.3) (2.0)Net operating cash flow includes: Net investing cash flow includes: Net financing cash flow includes:• Net inflow from operations • Payments for mine development • Interest paid of $9m of $27m and property, plant and equipment • Dividends paid of $19m of $42m• Income tax paid of $7m • Acquisition of Platinum Mile Resources of $12m • Deposit for Booysendal mineral acquisition of $15mInterim Results for the six months ended 31 December 2011 February 2012 26
  27. 27. Outlook• Supply • supply is constrained as cost, capital and regulatory pressures are mounting • overproduction relative to fundamental demand since GFC remains • but limited supply-side response possible to any increase in demand• Demand • light vehicle manufacturing still recovering in US and Japan, slowing in Europe • shifting to Asian focus • heavy duty vehicle market is growing Fundamentals are good –• Tighter regulation but all bets are off until macroeconomic certainty returns • more vehicles, new countries• Aquarius • overcome challenges relating to new safety support methodologies • fixing problems with contractors • focus on efficiency and cash conservation until environment improves • No interim dividend declaredInterim Results for the six months ended 31 December 2011 February 2012 27
  28. 28. For more information please contact:• Gavin Mackay • Tel: +44 (0) 7909 547 042 • Email: gavin.mackay@aquariusplatinum.comInterim Results for the six months ended 31 December 2011 February 2012

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