Contents of The Business Report - Volume 1: 1 Anglo Platinum Business Report 2003 1 Anglo Platinum Business Report 2003
Contents of The Business Report - Volume 1: 1 Anglo Platinum Business Report 2003 1 Anglo Platinum Business Report 2003
Contents of The Business Report - Volume 1: 1 Anglo Platinum Business Report 2003 1 Anglo Platinum Business Report 2003
Main features Chairmans statement Chief Executive Officers review Market review Platinum supply and demand
Jewellery Autocatalysts Industrial Fuel cells
2 4 8 12
12 13 15 16
Union Section Potgietersrust Platinums (PPRust) Lebowa Platinum Mines (Leplats) Bafokeng-Rasimone Platinum Mine (BRPM) Modikwa Platinum Mine (non-managed)
36 37 38 39 40
Overview: processing
Waterval Smelter Polokwane Smelter Rustenburg Base Metals Refiners (RBMR) Precious Metals Refiners (PMR)
41
41 42 43 44
Overview: projects
Safety Mining projects in development Processing projects in development
45
46 46 50
Other metals
Palladium Rhodium Ruthenium and iridium Nickel
16
16 17 18 18
52
52 52 55 56 65
20 20
20 21 21 21
Interests of Directors Directors remuneration Shares repurchased Share capital Dematerialization of shares (STRATE) Property Auditors Administration Subsidiary companies Holding company and ultimate holding company Remuneration report Role of the Remuneration Committee and terms of reference Membership of the Remuneration Committee Remuneration policy Other matters affecting remuneration of Directors Directors remuneration
86 86 86 87 87 87 87 87 87 87 88 88 88 88 90 91
98 104
21 22
22 22 22
Group Statistics
Total operations Total steady-state operations Rustenburg Section Amandelbult Section Union Section PPRust Leplats Ramp-up operations Project in ramp-up phase Analysis of Group capital expenditure
66
66 69 70 71 72 73 74 75 77 78
Ten-year financial review Operations Review Flowchart Location of Group operations Safety and health Mining operations Processing operations Projects Human resources Capital expenditure Outlook for 2004 Overview: mining
Rustenburg Section Amandelbult Section
24 26 28 30 30 32 32 32 33 33 34
34 35
79 80
80
Consolidated income statement 104 Segmental information 105 Consolidated balance sheet 106 Group statement of changes in equity 107 Consolidated cash flow statement 108 United States dollar equivalents 109 Notes to the consolidated financial statements 112 Annexure A: Mining property, plant, and equipment 132 Annexure B: Non-mining property, plant, and equipment 133 Annexure C: Equity compensation benefits Anglo Platinum Share Option Scheme 134 Annexure D: Investments in subsidiaries, joint ventures, associates, and other 136 Appendix 1: Anglo American Platinum Corporation Limited annual financial statements 138
81 82
82 82 82 82 82 83 84 84 85 85
Glossary of terms Directorate Management and administration Notice to members Shareholders diary Form of proxy Voting instruction form
MAIN FEATURES
Equivalent refined platinum production# increases by 8,0% Earnings adversely affected by strong rand Dividend cover maintained
Main features
Refined production: Platinum (Pt) Palladium (Pd) Rhodium (Rh) Gold (Au) PGM Cash on-mine costs Above: Award-winning piece of South African-produced platinum jewellery, from the PlatAfrika awards, sponsored by Anglo Platinum Cash on-mine costs Cash operating costs Financial highlights (R million): Gross sales revenue Gross profit on metal sales Headline earnings Net debt/(cash) Capital expenditure Gross profit margin % Rand revenue per platinum ounce 000 oz 000 oz 000 oz 000 oz 000 oz R/ton milled R/oz equivalent refined Pt# R/oz PGM refined
2003
2 307,8 1 190,9 232,5 116,1 4 161,5 253 3 497 2 409 16 508,6 3 909,9 2 091,7 6 923,0 7 423,6 23,7 7 017
2002
2 251,1 1 115,3 211,7 107,1 3 947,6 233 3 123 2 053 20 285,7 9 422,8 5 630,4 (1 443,6) 5 994,1 46,5 8 690
* Includes all operations except Bafokeng-Rasimone Platinum Mine, Rustenburg Section UG2 Project, and Modikwa, all of which were in a production ramp-up phase. # Mines production and purchases of metal in concentrate converted to equivalent refined production using Anglo Platinums standard smelting and refining recoveries.
2000 3000 Cents per share 2500 2000 1500 1000 500 500 0 0
Right: The Platinum Guild International (PGI) is currently running a platinum jewellery advertising campaign on television and in print in nine major cities in China the largest market for platinum jewellery. Anglo Platinum is the largest corporate sponsor of the PGI
00 01 02 03
Steadystate* Ramp-up
00 01 02 03
Earnings Dividends
CHAIRMANS STATEMENT
Our strategy is: To grow the market for PGMs; To expand into that growth; and To optimize value in current operations
Barry Davison Chairman
Dear Shareholder, Despite a challenging set of circumstances in 2003, the Groups strategy again proved to be robust. Worldwide demand for newly mined platinum continued its unbroken growth for the eleventh consecutive year, reaching a record high of 6,59 million ounces and vindicating our decision to embark on an expansion drive almost four years ago. We raised our platinum group metal (PGM) production by another 5,4% and, notwithstanding the revision of our expansion plans announced towards the end of the year, we will continue growing our output at an average annual rate of 8% for the next three years, thus meeting our customers need for these remarkable metals. In the face of some difficult economic conditions, the operating margin of our steady-state mines averaged 34%, down from 55% in 2002. By far the most significant contributory factor in this drop was the strengthening of the rand, and gross revenue fell by R3,8 billion to R16,5 billion. Headline earnings per share fell from 2 625 to 972 cents per share. what the extent of this recovery will be, and whether sustained. While demand for platinum, palladium, and rhodium, which are the three major PGMs, varies between these key markets, some broad trends are discernible. The growth in platinum demand continued to outstrip supply by a significant margin and for the fifth year in succession there was a substantial shortfall in platinum supply. This accounts in part for the strength in the platinum price, which increased versus the prior period by 28% in US dollar terms. The fortunes of palladium and rhodium, however, were quite the opposite: there continued to be an over-supply of both metals in international markets and their prices consequently fell by 40% and 37% respectively. Overall the basket price rose 9% in dollar terms.
CHAIRMANS STATEMENT
Importantly, we have designed sufficient flexibility into the overall expansion programme to be able to make appropriate adjustments if and when conditions change.
revenue, I would suggest that the proposed rate be revised considerably downwards and that the introduction of royalty payments follows only after the conversion of all old-order mineral rights to new mineral rights or after five years from promulgation, whichever is the later. Also, the possibility of the duplication of royalty payments under existing agreements needs to be eliminated. We await first publication of the Beneficiation Bill, and I trust that this will prove to be a piece of logical, non-punitive draft legislation that seeks to place the responsibility for beneficiation where it best lies in terms of commercial and technical expertise. I wish to emphasize that this is not necessarily with producers, who nevertheless should be encouraged to play a supporting and facilitative, rather than an operational, role. In the jewellery sector, for example, established beneficiators such as designers and fabricators logically stand to gain from the development of their sector and are best positioned to take the lead. The Group has played a major role in financially supporting such initiatives.
Corporate governance
During the year, the Group continued to consolidate its position in respect of adherence to the second King Report on Corporate Governance. Most notably, we split the roles of Chairman and Chief Executive Officer (CEO) through my vacating the latter executive position to become Non-executive Chairman. Ralph Havenstein joined us as CEO, bringing with him a wealth of experience from the petroleum and chemicals sectors, together with valuable fresh perspectives on how to take our business forward. A number of other new directors joined the Board during the year: Bongani Khumalo as an Independent Non-executive Director; Lazarus Zim as a Non-executive Director;
CHAIRMANS STATEMENT
Below: Extracts from the recent Platinum Guild Internationals worldwide jewellery campaign
Robin Mills as Executive Director: Projects; and Abe Thebyane as Executive Director: Human Resources. I am pleased to welcome each of them and am enthused by the breadth of experience, expertise, and influence they bring to our ranks. We bid farewell to Eric Ngubane and John Dreyer as Executive Directors. I extend my appreciation to both of them for their valuable contribution to the Group over what has been an exciting period of growth and join my fellow Directors in wishing them well for the future.
responsiveness to these efforts, will help limit the downside price potential of these metals. I am satisfied that our strategy remains valid. The challenges for us in 2004 are to intensify our safety campaign, to improve the performance of our steady-state and ramp-up operations, particularly in respect of costs, and to continue with our expansion programme.
Looking ahead
I am confident that the outlook for platinum in the year ahead is robust. Jewellery demand is likely to remain flat, but the growing popularity of diesel-fuelled vehicles will ensure growth in demand for platinum in autocatalysts. Overall, demand is likely to exceed supply and prices should remain firm. Our encouragement of autocatalyst manufacturers to use more palladium and rhodium, and their growing
Right: In the laboratory at the precious metals solvent extraction facility are Victor Mtotywa and Malcolm Arendse. The facility has been an important component of the expansion of the refinerys capacity
The strategic review has in no way altered indeed, it has confirmed our confidence in the robustness of current and future demand for platinum
Ralph Havenstein CEO
Dear Shareholder, It gives me great pleasure to present my first Chief Executive Officers review of Anglo Platinums performance, which is a consequence of the Groups decision to separate the roles of Chairman and CEO and of my recent appointment as the latter. the Department of Minerals and Energy. It is unfortunate that media coverage in 2003 focused on the peak of emissions rather than on our progress in bringing on-stream the new ACP Plant. We have redoubled our communication efforts and we are forging strong relationships with relevant authorities, non-governmental organizations, and the broader community, both in terms of their support for the continuous improvement for which we have striven over many years and their confidence in our ability to meet the targets we have set.
Expansion review
The Groups revised expansion programme was announced shortly before year-end. The announcement was not unanticipated, shareholders having been warned at the half-year of the possible consequences for the programme of a much stronger-thananticipated rand and hence lower rand prices for the basket of metals sold in 2003 compared to 2002. The strategic review has in no way altered indeed, it has confirmed our confidence in the robustness of current and future demand for platinum and the need to retain our long-term strategy to grow the markets for PGM products, expand production to meet increased demand, and optimize current operations. It has, however, highlighted the combined impact of: South African producer price inflation of 26% over the past three years; an overall 14% decline in the US dollar price for the basket of metals produced during the same period despite a 9% recovery over 2003; and the 50% appreciation in the value of the rand from its low of almost R13 to the US dollar in December 2001. These factors pointed to the need: to slow down the rate of implementation of some of the Groups expansion projects by between one and three years, in particular Twickenham, Der Brochen, the second
phase of the Western Limb Tailings Retreatment Project, and the Pandora Project; to continue expanding treatment, smelting, and refining projects to meet the requirements of the build-up in the mining profile; and to rationalize existing operations to protect operating margins. We target to produce 2,9 million ounces of refined platinum in 2006, which will still see us growing our production by an average annual compound rate of 8% and making a significant contribution to the worlds demand for platinum group metals (PGM). We expect that increased usage of palladium in autocatalysts and slower growth in demand for platinum in jewellery fabrication will help soften the impact of the platinum supply deficit. From a mining perspective, we retain some flexibility to adjust production from our Merensky and UG2 reserves according to changing circumstances and this, together with adequate plant capacity, will enable us to bring forward project implementation once the outlook improves. The revised expansion programme will affect neither our Black Economic Empowerment (BEE) commitments nor our ability to comply with the requirements of the Mining Charter. Indeed, we have made good progress on BEE, facilitating the purchase of 22,5% of Northam Platinum by Mvelaphanda Platinum, securing a 50:50 joint venture with African Rainbow Minerals in respect of the Modikwa Platinum Mine, and agreeing a 50:50 joint venture with Royal Bafokeng Resources. We are also in discussion with the Pelawan and Khumama consortia on the Ga-Phasha PGM Project (formerly known as the Paschaskraal JV) and Booysendal Joint Venture respectively. We have already moved a long way down the path of meaningful economic empowerment of historically disadvantaged South Africans.
Above: David Maluleke, drill-rig operator at Zwartfontein South Pit, PPRust. Holes for blasting purposes are drilled up to 30 metres deep
BEE progress
Facilitating purchase of 22,5% of Northam Platinum by Mvelaphanda 50:50 JV with African Rainbow Minerals in the Modikwa Platinum Mine 50:50 JV with Royal Bafokeng Resources (subject to conditions precedent) Discussions with Pelawan on Ga-Phasha Discussions with Khumama on Booysendal
expand operations. The Groups interestbearing borrowings increased to R7,17 billion. In light of the need to invest in expansion to take advantage of the opportunity that burgeoning PGM demand and our portfolio of quality ore reserve assets afford us, the Board has taken the decision to propose a cash dividend of 270 cents per ordinary share, with the option of reinvesting in the Companys equity. This is in addition to the interim dividend of 370 cents declared at the half-year.
A financing programme has been selected, which includes the raising of R4 billion through a rights issue and a dividend reinvestment election in respect of the final dividend for the 2003 financial year. The R4 billion is to be raised through the issue of convertible perpetual preference shares. All existing shareholders will have the opportunity to participate. Importantly, our principal shareholder, Anglo American plc, has agreed to reinvest its portion of the Groups final dividend and to take up its portion of the rights issue.
Below: Anglo Platinums billboard campaign now in its second year is one of the most recognized campaigns in the country within its sector. The theme of the campaign Turns platinum into prosperity underlines Anglo Platinums commitment to Black Economic Empowerment (BEE)
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Platinum prices are expected to remain firm due to the fundamental strength of demand for the metal. The market is experiencing historically high prices above US$800 per ounce after a strong rally from around US$600 per ounce in May 2003. The buoyant price is believed to be related partly to the weakness of the US dollar relative to the major currencies and the South African rand and partly to sustained physical offtake from all sectors, lowerthan-expected production levels, and anticipation of recovering economic growth around the world. The prices of other PGMs, including palladium and rhodium, appear rangebound, although palladium could potentially benefit from investor interest in anticipation of an increase in offtake of the metal by the automobile sector. Fundamental trends in the base metal markets, particularly nickel, are supportive of higher prices for these metals in 2004.
Notwithstanding the planned increase in volumes and the anticipation of good US dollar metal prices, earnings remain highly sensitive to the strength of the rand against the US dollar and US dollar metal prices. I extend my thanks to my fellow Executive Directors and all management and staff at Anglo Platinum for their strong commitment to the Group in 2003, and look forward to working with them in 2004.
Below: Members of the Executive Committee. Back, left to right: Mike Halhead (Technical Director), Sandy Wood (Commercial Director) Front: Dorian Emmett (Chief Operating Officer), Roeland van Kerckhoven (Finance Director), Ralph Havenstein (Chief Executive Officer), and Robin Mills (Director: Projects). On the date that this photograph was taken, Abe Thebyane had not yet joined the Group
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Recent consumer and trade surveys confirm the increasing preference for platinum bridal jewellery
MARKET REVIEW
> Platinum supply and demand
Supply Demand
5,29 5,68 5,86 6,23 5,97 6,56 6,11 6,59
Demand for platinum is either derived or created: industrial use of the metal is derived from its unique physical and chemical properties that enable its use in many varied applications, whereas jewellery demand is created and requires constant promotion and support. Platinums catalytic properties, inertness, durability, electrical conductivity, and high melting point are suited to diverse industrial applications, while its rarity, purity, strength, and beauty make it the metal of choice in jewellery. Demand for newly mined platinum* grew by an estimated 30 000 ounces in 2003 to 6,59 million ounces. Despite a 2,4% increase in newly mined supplies, the market was in deficit for the fifth consecutive year (480 000 ounces in 2003).
previous years, despite the rising platinum price. Recent consumer and trade surveys confirm the increasing preference for platinum bridal jewellery. Europe Platinum demand from jewellery fabricators in Europe rose by 3% in 2003, with strength in the UK market making up for weakness in other countries. Platinum made strong gains in the UK bridal market, resulting in a 30% growth in the volume of platinum jewellery hallmarked in 2003. Demand from Italy was flat. In Germany, platinum jewellery sales fell, but platinum bridal demand rose, highlighting the growing popularity of platinum in engagement and wedding bands. Japan Demand for platinum for the manufacture of jewellery in Japan fell by 15% in 2003. Consumer spending on luxury goods remained depressed because of weak economic conditions, while that on precious metal jewellery was 4% below that for the same period a year previously. The number of pieces sold was 17% down. The year-on-year declines affected gold more than platinum, with the number of platinum pieces sold registering a 13% decline versus golds 18%. Platinums decline was muted on account of its preferred status in the bridal market: more than 80% of wedding rings sold in Japan are made from platinum. At the lower end of the market, platinum lost market share, though mainly to white gold, thus evidencing the continued preference for white metal. Demand for new metal from manufacturers weakened, with a greater proportion of their metal being sourced from jewellery recycling. A high rate of bankruptcy in the jewellery sector resulted in increased volumes of secondary metal being supplied to the market.
* Platinum 2003, Johnson Matthey Interim Review
Jewellery
The higher platinum price had an adverse impact on the jewellery market during the year, and demand fell 13,1% to 2,45 million ounces for the year. In contrast to other applications, the jewellery industry has cheaper substitutes, such as white gold. Despite these difficulties, demand at the consumer end of the market remained surprisingly resilient. Platinums profile was raised by the launch of a new branding and advertising campaign by the Platinum Guild International during 2003. North America Demand for platinum for the fabrication of jewellery in North America rose by 5% in 2003 as platinum built on its popularity in the bridal sector. Consumer surveys conducted in this target market indicated that in 2002 platinum accounted for 38% of engagement rings priced above US$3 000, 36% of womens wedding bands priced above US$1 000, and 32% of mens wedding bands priced above US$500. These are substantially up on
2003 Supply South Africa Russia North America Others Total supply Demand Autocatalyst: gross recovery Jewellery Industrial Investment Total demand Movements in stocks
2002
4 650 4 450 950 980 285 390 225 150 6 110 5 970
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China Platinum demand for Chinese jewellery fabrication fell for the first time since this market was developed. Demand for the year was 1,2 million ounces, 19% below the 2002 level. Consumer demand was affected earlier in the year by the SARS outbreak, especially in Beijing, keeping consumers at home. The effect was temporary and demand returned after fears subsided, with a number of leading manufacturers reporting record sales in revenue terms. At the manufacturing level, margins were squeezed by higher prices, and some purchases of metal were held back until spot prices eased or retail prices could be raised. In August, platinum started trading on the Shanghai Gold Exchange. Platinum taxation was bought in line with that of gold, having previously been at a higher level. Platinum traded through the exchange is effectively free of value-added tax and the removal of this economic restraint bodes well for future growth in demand. Changes in sales legislation enabled more retailers to start stocking and selling gold. As a result, helped by its higher margins, 18-carat white gold gained some market share at the lower end. Bridal demand for platinum, however, has continued increasing in China, with the metal being seen as appropriate for the setting of diamonds and for plain wedding rings.
extent by gradual further geographical spread of autocatalyst requirements to less-developed countries. North America Sales of new vehicles in North America declined in the first eight months of 2003, but rose afterwards: sales for the year are estimated to have been equivalent to levels reached in 2002. Production of new vehicles in North America, however, was 11% down from 2002s level as imported vehicles increased their share of the market and domestic manufacturers reduced inventory levels, which were high at the beginning of 2003. Despite lower vehicle production, demand for newly mined platinum increased by 54% as low metal stocks at the start of the year necessitated purchases for consumption and to supplement inventories. Many auto-manufacturers made plans to reduce their reliance on
Below: More than 90% of new vehicles built in the world are fitted with autocatalysts
2003 Europe Japan North America Rest of the world Total Autocatalyst recovery
2002
1 370 1 260 490 430 880 570 440 380 3 180 2 640 (650) (570)
Source: Johnson Matthey
Autocatalysts
Autocatalysts using PGMs are fitted to vehicles to convert noxious exhaust emissions into less harmful gases. Legislation limiting emissions from vehicles was first promulgated in North America in the 1970s and later adopted by other regions. More than 90% of new vehicles built in the world are fitted with autocatalysts. Future growth will be driven mainly by the increasing stringency of legislation governing emissions in the major consuming countries, requiring higher loadings per vehicle, and to a lesser
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in Europe still rose by 9% owing to the growth of the diesel market share. Sales of light-duty diesel vehicles continued to climb and their share of the market for 2003 is estimated at 43%, up from 40,3% in 2002. Demand for platinum in the gasoline sector was static during the year. Automotive analysts believe that sales of all light vehicles, which have been declining since late-1999, are likely to rebound in 2004. All new vehicles in Europe must comply with EURO III legislation and will have to meet EURO IV limits in 2005. Tax benefits offered to purchasers of vehicles that are already EURO IV-compliant are encouraging manufacturers to meet the more stringent standards early. A new directive on sulphur levels in fuel has been approved, requiring the maximum amounts of sulphur in petrol and diesel to be less than 50 parts per million (ppm) from 2005. Between 2005 and 2009, this limit will decline in phases to less than 10ppm. The availability of sulphur-free fuels will enable catalytic systems to meet the future emission standards, particularly diesel standards. Furthermore, low-sulphur fuels and the fitting of autocatalysts to diesel vehicles will enable manufacturers to meet the carbon dioxide targets set for 2008. These developments will be particularly important in the case of platinum, which is more suited to diesel applications than other PGMs. Japan Demand for platinum for the manufacture of autocatalysts in Japan rose by 14% in 2003, largely because of the retrofitting of emission control devices to heavy-duty diesel vehicles. Sales of light vehicles in Japan were in line with those for the same period in 2002. Production of vehicles fell, with weak domestic demand exacerbated by a decline in exports. Successful thrifting programmes enabled auto-manufacturers to reduce their use of both platinum and palladium in the light-duty sector. In April 2002, the Central Environment Council, policy advisors to the Ministry of the Environment, announced new longterm targets for reduced vehicle emissions, which must be achieved by the end of 2005. Rest of the world Platinum autocatalyst demand in the rest of the world was 16% higher in 2003, owing to increased vehicle production in China and stricter emissions legislation. Chinese vehicle output, including cars, trucks, and
Source: PGI
palladium when its price rallied at the end of 2000 by substituting platinum for some palladium. These platinum-bearing systems are presently being fitted to new vehicles. The California Air Resources Board introduced new legislation in April. Instead of 10% of vehicles having to be zeroemission, the Board is now calling for hybrid vehicles. The revised legislation, which comes into effect in 2005, will allow manufacturers two options in order to meet their zero-emission vehicle obligations. They will be allowed to produce fewer fuel cell vehicles by 2008, provided that they produce a certain percentage of advancedtechnology partial zero-emission vehicles and partial zero-emission vehicles. Europe Sales of light vehicles in Europe were 1,5% lower than in 2002. Despite the fall in car sales, demand for platinum in autocatalysts
Europe 6,7% Japan 27,1% North America 13,3% Rest of the world 52,9%
Europe 5,7% Japan 27,7% North America 11,0% Rest of the world 55,6%
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buses, reached 4 million, up from 3,25 million in 2002; car sales were close to 2 million units. The Chinese government has mandated that all vehicles must comply with emission limits equivalent to EURO II in 2004 and the more stringent EURO IV by 2008. 30% of vehicle output consists of diesel-fuelled units, mainly for commercial vehicles; this number is expected to expand to 35% by 2005. With continuing growth in vehicle production, the rising proportion of diesels, and the adoption of more stringent emissions legislation, Chinese autocatalyst platinum demand will expand rapidly.
Industrial
Chemical Platinum catalysts are used in many chemical processes, such as the production of nitric acid, silicones, and paraxylene. The use of platinum catalysts to produce nitric acid is one of the metals oldest industrial uses. Much of the platinum demand is merely for topping up and it is only when new nitric acid capacity is constructed that demand rises significantly. The major use of nitric acid is in the fertilizer industry. Competing products and over-capacity have resulted in few new production facilities in North America and Europe and output has been low in these regions. New capacity was restricted to a few plants in Eastern Europe and Asia. Thus, demand for platinum was lower in 2003. Platinums use in the manufacture of silicones has grown over the last few years and now accounts for the largest proportion of chemical demand for platinum. It is completely consumed in the process, and demand increases directly with output. Silicones are used in the manufacture of pressure-sensitive adhesives, release liners, and waterrepellent coatings. Pressure-sensitive adhesives are used in Post-it notes, while release liners are used in re-sealable plastic bags. Water-repellent coatings have a vast array of applications, among them furniture polish and cleaning products. Platinum demand was unchanged, given no significant increase in output of these chemicals. Electrical Platinum is used in a cobalt-based alloy in computer hard disks to enhance storage capacity. Data-storage requirements of computers have increased rapidly and almost all computer hard disks now contain platinum. As data storage has increased, the number of disks per computer has
Source: PGI
decreased. This, however, has been balanced by the growing use of disks in other applications, such as games consoles, and platinum demand rose by 4% year on year. With a rise in steel output in 2003, demand for platinum thermocouples also grew. Glass Equipment used in the glass industry is made from platinum alloys because of their high melting temperature, strength, and corrosion resistance. Platinum is used in the manufacture of liquid crystal displays, cathode-ray tube displays, and optical glass, while platinum/rhodium bushings are used to manufacture glass fibre. Demand for speciality glass benefited from improved sales of personal computers. However, sales of platinum to this sector did not increase in 2003. Demand in 2001 and 2002 was boosted by construction of new capacity, which was sufficient to meet 2003s demand. The net impact was to reduce demand for newly mined platinum from 255 000 ounces in 2002 to 245 000 ounces in 2003.
2003 Supply South Africa Russia North America Others Total supply
Demand Autocatalyst: gross 3 670 3 090 recovery (410) (370) Dental 815 770 Electronics 985 750 Other 590 610 Total demand 5 650 4 850 Movements in stocks 670 400
Source: Johnson Matthey
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MARKET REVIEW > PLATINUM SUPPLY AND DEMAND > OTHER METALS
(Moz)
Petroleum Platinum is used in catalysts for the reforming and isomerization of petroleum. Demand for newly mined platinum in the petroleum sector remained unchanged in 2003, with a lack of construction of new reforming capacity. Recent developments in technology have extended the lifespan of catalysts and allowed for less platinum per catalyst. Demand therefore will only increase if capacities are expanded sufficiently to counteract these trends.
iridium, and ruthenium), gold, and base metals (nickel, copper, and cobalt sulphate). The contribution of these other metals to total revenue in 2003 was 29% (2002: 38%).
Palladium
Demand for palladium rose by 16% in 2003, to 5,65 million ounces. The rebound in demand was largely attributable to the component inventory run-down at auto and electronic companies. Palladium supplies were, however, 20% higher than in 2002, resulting in a surplus of 670 000 ounces. Supplies rose on higher shipments from Russia and South Africa. Norilsk is believed to have sold its full production of palladium in 2003. South African output of palladium is increasing relative to that of platinum, since much of its new output is sourced from the relatively palladium-rich UG2 Reef. Autocatalysts Purchases of palladium for use in autocatalysts rose strongly in 2003, largely because US auto-manufacturers inventories had been run down in 2002. The underlying use of palladium per unit has however fallen as a result of intensive thrifting programmes. The amount of palladium used in autocatalysts in the 1990s was very high compared to platinum. The technology available at the time required between three and four times more palladium per catalyst than platinum. Palladium traded at such a large discount to platinum that, even with the heavier metal content, palladium technology was still cost-effective. However, when the palladium price rose to around US$1 000/oz in 2001, automanufacturers examined ways of reducing their reliance on the metal. Palladium is an integral part of gasoline exhaust-emission control systems on account of its superior ability to convert hydrocarbons, and automanufacturers are unable to dispense with its use entirely. North America Purchases of palladium by the North American autocatalyst sector in 2003 compared with 2002 more than doubled to 1,31 million ounces. In 2002, a large proportion of vehicle manufacturers requirements were met from stock, which was consequently run down. Palladium actually used in 2003 declined as programmes implemented in 2000 and 2001 to reduce reliance on the metal through thrifting and substitution were successfully implemented.
Fuel cells
Fuel cells are electrochemical generators of electricity. As they are exceptionally efficient, they produce no noxious gases if fuelled by hydrogen. The concept of fuel cells has long been understood; it is only recently, however, that the commercial use of fuel cells has been explored. The primary driver behind research has been the desire to limit emissions as a consequence of increasingly strict regulatory controls. There are different types of fuel cells: alkaline fuel cells, which provide power on spacecraft; direct methanol fuel cells; molten carbonate fuel cells; solid oxide fuel cells; and proton-exchange membrane fuel cells (PEMFC). They all have unique properties that lend themselves to different applications. However, PEMFCs, containing platinum, are the most versatile and can be used to power anything from the smallest electronic device to vehicles. Most major automobile manufacturers are involved in fuel cell research. The PEMFC is seen as the best option for developing an emission-free vehicle that runs on hydrogen. Before the widespread commercialization of fuel cell vehicles takes hold, a number of issues will need to be resolved, including the sourcing of hydrogen and mass refuelling infrastructure. In the meantime, auto-manufacturers will launch hybrid vehicles (some with fuel cells). The first commercial market for fuel cell technology is likely to be in the portable power sector, where products are being developed. Demand for larger portable systems, particularly those used in the military, is strong, as they are not restricted in time of use as conventional batteries, have a greater power density, and are quiet in operation.
Other metals
Platinum is the largest single contributor to Anglo Platinums revenues. However, the Group also produces important amounts of the other PGMs (palladium, rhodium,
16
Europe Demand for palladium for autocatalysts fell in Europe by some 100 000 ounces, in line with a decline in sales of gasoline vehicles, which were more than 6% below levels reached the previous year. Although total light vehicle sales for the year were little changed, the continuing gains of diesel vehicles against gasoline-powered vehicles brought about the fall in sales. Japan Because of a need to replenish inventories, demand for palladium in autocatalysts rose by 4% in 2003, despite lower vehicle output. More stringent emissions legislation is necessitating higher loadings of palladium. Japanese original equipment manufacturers have traditionally used all three PGMs, and any major switching of technology in favour of one is not foreseen. Electronics Palladium demand in the electronic sector was depressed in 2001 and 2002 as a result of high component and metal inventories. These inventories have since declined and production is now being increased to meet demand. Manufacturers inventories of metal have shrunk to more realistic levels and capacity utilization has improved, resulting in an increase of palladium purchases. The largest area of palladium consumption in the electronic sector is in multi-layer ceramic capacitors (MLCC), in which a palladium/silver conductive electrode material is layered between insulating ceramic wafers. Rising prices at the beginning of 2000 led to a move towards base metal MLCC production. Nickel-based MLCCs have grown and now account for 63% of total output. This shift towards substitution, coupled with a trend towards miniaturization of components, translated into lower consumption of palladium in 2003. Palladium is used with silver to connect electronic components in hybrid integrated circuits (HIC). Thrifting strategies by component manufacturers have managed to reduce the use of palladium in HICs by up to 25%. Palladium is also used to plate connectors that link components in electronic circuitry. Although gold can be used in this application, the use of palladium requires less metal. Lead frames are used to connect integrated circuits to other electronic devices. Some manufacturers use palladium to plate the frames as an environmentally preferable
alternative to tin-lead solder. Gold can be used instead, but palladiums price advantage discourages this. Dental Palladium demand in dentistry rose by 6% in 2003, with the lower price encouraging its use in North America and Japan. Palladium is alloyed with other metals for use in dental restorations, such as crowns. In Japan, the government specifies the alloy used for subsidized dental work: kinpala, containing 20% palladium. Japan is the leading market for palladium dental alloys, and 2003 consumption was at 530 000 ounces, 25 000 ounces more than in 2002. Palladium demand increased in North America owing to the price differential with gold. In Europe, however, demand remained static because of a move to the greater use of base metal alloys and ceramics. Chemical Palladium-based catalysts are used in a vast array of bulk and speciality fine chemical production processes. Some of the bulk chemicals produced are acetaldehyde, hydrogen peroxide, oleochemicals, purified terephthalic acid (PTA), and vinyl acetate monomer. Growth in capacity for production of these chemicals in the Middle East has underpinned palladium demand recently; weaker demand for these chemicals in Japan and North America in 2003, however, caused overall demand to flatten out. Demand from the process catalyst sector rose steadily on the back of the expansion of PTA manufacturing capacity in Asia.
2003 Supply South Africa Russia North America Others Total supply Demand Autocatalyst: gross recovery Chemical Electrical Glass Other Total demand Movements in stocks 520 100 21 14 655
Rhodium
Rhodium demand was 6% higher in 2003, largely because of an increase in autocatalyst demand. Supply of rhodium grew at a greater rate because of expansions in PGM production in South Africa and an increase in shipments from Russia. The rhodium market was therefore in surplus to the extent of some 14 000 ounces for the year. Autocatalyst Demand for rhodium in the autocatalyst sector rose by 11% in 2003 on account of low pre-year inventory levels and more exacting emissions legislation. Furthermore, intense platinum and palladium thrifting programmes are in some cases achieved by the addition of more rhodium. In the USA, Tier II emission regulations will be phased in from 2004. Tier II requires significantly lower nitrous oxide emissions, necessitating an increase in rhodium on
Source: PGI
17
some vehicles. Programmes in the USA to reduce platinum and palladium content in catalysts have promoted the use of rhodium. In Japan, some auto-manufacturers are meeting legislation ahead of the 2005 deadline, which has boosted demand for rhodium in the region. In Europe, increased use of rhodium to facilitate platinum and palladium thrifting and the meeting of Euro IV standards was offset by a decline in the production of gasoline vehicles, and rhodium demand was relatively unchanged from the previous years figure. The largest growth region for rhodium was Asia. High growth in vehicle output, coupled with the widening of emissions legislation, caused a 14% increase in the use of rhodium in autocatalysts.
iridium in the manufacture of crucibles. Ruthenium and iridium have also been introduced into the fabrication of magnetic random access memory (MRAM) technology, used for electronic data storage. Supply of both ruthenium and iridium will rise as South African mining of the UG2 Reef expands, which contains higher quantities of ruthenium and iridium than the Merensky Reef.
Nickel
Market projections of deficits from 2003 to 2006 attracted relentless buying from investment funds seeking an alternative to underperforming equity markets in a weakening dollar environment. By September 2003, the price had surpassed the US$10 000/ton level after starting the year at US$7 100/ton. In 2003, support for the nickel price was driven by a strike at INCO in Canada and booming demand from Chinese stainless steel producers. Norilsk Nickels decision to sell off 60 000 tons of nickel, held on stockpile as collateral during the year, had no significant dampening effect on the price. Chinas stainless steel industry imported a net 35 800 tons of nickel in the year to July, an increase of 154% in imports against the same period in 2002. Chinas domestic nickel production meets only 60% of its demand and it looks to the rest of the world to fill the gap. However, the danger now lies in China looking to lower-content nickel stainless steel grades at current nickel prices, which were last seen 13 years ago. The outlook for the next few years remains positive, with demand likely to exceed supply. Not until 2006 will two new projects from INCO come on stream, these being the Voiseys Bay 50 000 tons per year mine in Canada and the Goro 60 000 tons per year mine in New Caledonia. In view of current underlying strength in market fundamentals, a firmer nickel price in 2004, above that of the 2003 average, appears likely.
2003 Chemical Electrochemical Electronics Other Total demand 139 102 153 67 461
Other Rhodium catalysts are used in the manufacture of bulk chemical intermediates, such as oxo-alcohols and acetic acid. Demand for rhodium in this sector declined in 2003 with a fall-off in the construction of new capacity. Other demand sectors, namely glass and nitric acid production, did not increase their consumption.
2002 10 23 21 28 82
Right: Building the ore sorting plant as part of the Rustenburg UG2 Project. The plant optically sorts waste rock from reef. It increases plant capacity by removing waste rock from the plant feed
18
FINANCE REVIEW
The operating margin of our steady-state mines averaged 34%, down from 55% in 2002
FINANCE REVIEW
Above: Miree Leslie, a process mineralogist conducting research into the characterization of PGMs at the Anglo Platinum Research Centre (ARC)
Financial performance
The average rand/US dollar exchange rate achieved on sales for 2003 was 28,2% lower than for 2002. Had the average rand/US dollar exchange rate been the same as that for 2002, gross sales revenue would have been R5,72 billion higher than the R16,51 billion recorded. Cost of sales rose by 20,3% or R2,06 billion, mainly because of increased production from ramp-up operations and inflationary cost pressures. Headline earnings declined by 62,8% to R2,09 billion. Headline earnings per share decreased by 63,0% to 972 cents per share.
Cash smelting costs increased by R269,5 million, or 42,1%, to R910,1 million due to the commissioning of the Polokwane Smelter together with the dual operation of the old converters and acid plant in tandem with the new ACP Plant to provide dual processing capacity during the ramp-up of the new plant. Cash treatment and refining costs increased by 5,9%, from R752,0 million to R796,3 million. Purchases of metal in concentrate increased by R169,7 million to R291,6 million, owing mainly to higher purchases from the Modikwa Joint Venture. Amortization of operating assets rose by R382,8 million. Amortization of smelting assets increased by 122,0% or R69,8 million as a result of bringing the Polokwane Smelter and the ACP Plant into use in 2003. Amortization of mining assets increased by R293,5 million owing to higher amortization of Modikwa and the Rustenburg UG2 Project, which were only in use for part of 2002, and a general increase in amortization charges across the operations resulting from ongoing capital expenditure. The value of metals in inventory increased by R584,9 million during 2003 as a result of higher stocks and cost increases. Other net expenditure in 2003 amounted to R269,3 million, compared with R754,7 million in 2002. This primarily reflects lower foreign exchange losses resulting from a lower appreciation of the rand than in the previous period. Profits of R157,3 million realized on commodity contracts were largely offset by costs of R111,4 million incurred as a result of the slowdown of the rate of implementation of the expansion projects.
Financial results
Gross sales revenue decreased by R3,78 billion to R16,51 billion. The decrease was caused primarily by the stronger rand (R5,72 billion), partly offset by an increase in US dollar revenues for metals sold (R1,33 billion) and higher sales volumes (R0,61 billion). The net sales revenue per platinum ounce sold (basket price) decreased by 19,3%, from R8 690 in 2002 to R7 017 in 2003. Cost of sales rose by R2,06 billion to R12,19 billion. The cash on-mine costs at steady-state operations increased by R669,6 million, or 11,7%. This reflects a higher volume of ore mined, the 9,5% annual wage increase negotiated in 2002, the cost to equalize retirement fund contribution rates across the Group, and aboveinflation increases in steel costs. In addition, the Group raised the level of expenditure in key areas such as safety, training, and health. Cash on-mine costs at ramp-up operations increased by R988,1 million owing to higher production. Unit costs at these operations will remain relatively high as they ramp up to steady-state production.
20
FINANCE REVIEW
Net interest paid during the review period amounted to R236,9 million, compared with net interest received of R155,7 million in 2002, as a result of the Group moving into a borrowed position. Interest paid is net of R200,5 million of interest on borrowings capitalized to capital projects under construction.
the issue of convertible perpetual preference shares. All existing shareholders will have the opportunity to participate. Anglo American plc has agreed to reinvest its portion of the Groups final dividend and to take up its portion of the Groups rights issue.
Capital expenditure
Capital expenditure amounted to R7,42 billion (2002: R5,99 billion). Expenditure to maintain operations increased from R2,14 billion to R3,95 billion owing to increased expenditure on projects to replace production at steadystate mines, including the Rustenburg UG2 Project. Expansion capital expenditure amounted to R3,27 billion (2002: R3,85 billion).
Dividend
The Group is committed to large capital expenditures for several years in order to increase production volumes. During this period, cash generated by operations may vary considerably, depending on short-term metal prices and the rand/US dollar exchange rate. The declaration of cash dividends will continue to be considered by the Board in conjunction with an evaluation of current and future funding requirements, and will be adjusted to levels considered appropriate at the time of the declaration. Dividends will be paid out of cash generated from operations. Accordingly, the Board has declared a final cash dividend of 270 cents per ordinary share, with the option to reinvest the dividend in the companys equity. This brings the total dividend declared for 2003 to 640 cents per ordinary share.
Financial structure
During the year ended 31 December 2003, the Group moved from a net cash position of R1,44 billion to a net debt position of R6,92 billion, a net outflow of R8,36 billion. Cash generated by operations amounted to R3,36 billion (2002: R9,62 billion). Payments consisted mainly of capital expenditure totaling R7,42 billion (2002: R5,99 billion), dividends of R2,73 billion (2002: R5,36 billion), and taxation of R1,47 billion (2002: R3,30 billion) and interest of R0,20 billion was capitalized (2002: nil). Borrowings at the end of 2003 consist primarily of short-term debt facilities. A financing programme has been selected in conjunction with external financiers and with Anglo Platinums major shareholder, Anglo American plc. The proposed financing programme includes the raising of R4 billion through a rights issue and a dividend reinvestment election in respect of the final dividend for the 2003 financial year. The R4 billion is to be raised through
Treasury
Treasury provides analyses of market trends and makes strategic recommendations to the Group Risk Committee, which in turn submits recommendations to the Executive Committee. In addition, Treasury is responsible for the Groups cash management and banking relationships, which are developed and maintained with highly rated financial institutions.
21
FINANCE REVIEW
Right: Dorothy Segoe is a Strata Control Officer in the Rock Mechanics Department at Townlands shaft in Rustenburg. Her job involves checking the stability of ground to reduce rockfalls and rockbursts. Also in the picture are Paulos Ntoi, stope team leader, and Craig Burnham, assistant electrician
critical corporate information is disseminated to all employees in a secure and controlled manner. Data warehouse: the use of the data warehouse was extended into disciplines such as Human Resources, Sales and Distribution, and Capital Projects, playing a critical role in the provision of timeous and accurate management information and enabling improved decisionmaking. e-Learning: a system, comprising virtual classrooms, computer webbased learning, and digital collaboration was developed in support of aspects such as health and safety, and adult education.
Information management
Knowledge management: Anglo Platinum improved the utilization of its intangible assets by formalizing a Knowledge Management approach. The long-term objective is to foster a culture of innovation. Learning from previous mistakes and the wider sharing of successes assists the Group in lowering the risks associated with the business and improving productivity. Executive information systems (EIS): in the interests of better decisionmaking, a comprehensive EIS has been designed and installed that provides a common database, accessible on-line to all relevant decision-makers, which provides the latest information on the performance of key parameters at Group and business unit levels. Document management: a document management system has been implemented to safeguard and manage Anglo Platinums important corporate and other operations-based documents. The system protects the organization from document-related risk and ensures compliance with increasingly stringent external regulation. Internet and intranet: the corporate intranet continues to be expanded as an important vehicle for ensuring that
22
R million Gross sales revenue Commissions paid Net sales revenue Cost of sales Cash operating costs On-mine costs Purchases of metals in concentrate Smelting costs Treatment and refining costs Amortization of operating assets Increase/(decrease) in metal inventories Transfer (from)/to metal lease liability Other costs Gross profit on metal sales Other net (expenditure)/income Market development and promotional expenditure Operating profit Net interest (paid)/received Income from associates Profit before taxation Renewals and replacements Current taxation Deferred taxation Net profit Dividends and capitalization share awards Cash flows from operating activities Cash flows (used in)/from investing activities Capital expenditure Cash flows from/(used) in financing activities Cash and cash equivalents at year-end Metal inventories Net liquid (liabilities)/assets Shareholders equity Average prices achieved, US$/oz Platinum Palladium Rhodium Average R/US$ exchange rate achieved on sales
(12 190,5) (10 129,9) (8 262,9) (6 675,8) (5 338,7) (4 815,8) (4 311,0) (2 943,1) (2 707,9) (2 341,1) (11 025,1) (8 883,9) (7 044,5) (5 871,4) (5 056,3) (4 538,1) (4 032,3) (2 849,4) (2 630,5) (2 235,3) (9 027,1) (7 369,4) (5 948,6) (4 934,6) (4 187,5) (3 787,0) (3 267,1) (2 385,7) (2 179,2) (1 936,4) (291,6) (910,1) (796,3) (1 146,6) (121,9) (640,6) (752,0) (763,8) (441,9) (654,0) (498,8) (336,9) (599,9) (395,8) (330,7) (538,1) (304,5) (264,7) (486,4) (256,5) (269,6) (495,6) (208,5) (163,2) (300,5) (168,9) (282,4) (101,6) (197,3)
584,9
109,1
45,1
100,0
239,7
236,3
(125,4)
(70,5)
6,6
(22,4)
2 731,6 1 607,0
5 362,9 6 277,9
6 087,4 9 969,9
2 457,4 7 945,7
1 013,3 2 972,6
654,7 1 438,6
356,0 849,0
289,2 580,1
269,4 557,2
206,8 671,8
(7 096,4) (5 196,3) (3 060,1) (1 623,6) (1 302,1) (1 186,1) (7 423,6) (5 994,1) (3 586,1) (1 919,7) (1 472,9) (1 460,0) 4 478,8 569,4 2 113,1 (6 950,0) 12 422,7 (5 288,0) (7 246,2) (2 413,8) 1 580,0 1 528,2* (140,6) 13 184,1 5 786,4 1 097,0* 2 992,6 12 521,6 6 122,8 1 142,1 4 774,8 11 714,1 (985,5) 2 214,5 1 042,1 1 668,9 7 196,3 (639,0) 1 529,5 802,4 1 283,8 5 551,9
7,4055
10,3101
8,5434
6,9881
6,1576
5,5835
4,6393
4,2906
3,6601
3,5572
* Restated for change in accounting policy. Refer to Principal Accounting Policies: Change in Accounting Policy. Metal inventories for 2000 and prior have not been restated.
24
2003 Ratio analysis Return on equity, % Net asset value as a % of market capitalization Gross profit margin, % After-tax operating profit as a % of average operating assets Effective tax rate, % Debt equity ratio Current ratio Rand revenue per platinum ounce sold Share performance Number of ordinary shares in issue (millions) Weighted average number of ordinary shares in issue (millions) Headline earnings per share (cents) Dividends per share (cents) Interim Final Special Market capitalization (R millions) Number of ordinary shares traded (millions) Highest price traded (cents) Lowest price traded (cents) Closing price (cents) Number of deals Value of deals (R millions) 215,1 972 640 370 270 62 789,1 97,4 35 900 19 300 29 150 73 484 26 756,3 215,4 20,2 34,2 1:1,7 0,5:1 7 017 19,8 23,7 16,3
2002
2001
2000
1999
1998
1997
1996
1995
1994
45,0
66,2
73,2
40,9
27,6
18,7
12,9
16,7
14,4
19,1 46,5
13,1 51,4
15,3 54,7
17,8 36,1
32,0 26,4
34,1 15,9
34,5 19,4
33,4 20,8
15,9 25,0
214,9
214,1
217,0
216,1
215,1
214,6
131,4
127,6
125,3
214,5 2 625 1 800 900 900 67 918,9 107,7 54 800 28 900 31 600 90 877 42 748,1
217,0 3 696 2 700 1 100 1 100 500 95 659,9 97,9 45 040 25 500 44 680 96 207 32 339,6
216,3 3 142 2 410 710 1 100 600 76 384,0 67,8 37 000 17 400 35 200 51 640 15 440,3
215,5 1 209 700 275 425 40 410,7 71,1 19 560 7 650 18 700 30 346 9 780,5
214,5 662 385 190 195 17 358,6 39,5 9 600 4 950 8 070 18 829 3 046,5
214,1 334 250 135 115 13 949,0 41,3 8 800 5 600 6 500 12 269 3 059,7
130,2 270 200 150 50 8 409,6 12,1 9 000 6 000 6 400 7 082 880,9
126,4 312 222 147 75 7 656,0 6,5 11 000 6 000 6 000 3 218 516,9
125,3 239 171 103 68 14 033,6 5,4 12 600 7 200 11 200 3 636 527,2
Financial years 1997 2003 are in accordance with International Financial Reporting Standards. Financial information published for financial years 1994 1996 is in accordance with South African GAAP and consists of the statistics for Anglo American Platinum Corporation Limited (formerly Rustenburg Platinum Holdings Limited), its subsidiaries, joint ventures, and associates. Net of 1 673 400 shares held by a wholly owned subsidiary
25
Mining
Waste
Concentrators
Milling Flotation Filtration
Tailings
Smelters
Smelting Converting (ACP Plant)
26
Ni / Cu / Co SO4 Concentrate
Cobalt sulphate
M C Plant
Magnetic concentrate leaching
Platinum
Palladium
Rhodium
Final concentrate
Ruthenium
Iridium
27
Polokwane
Limpopo Province Thabazimbi Northam Platinum Mine Union Section Bela Bela
Amandelbult Section
North West Province BRPM Styldrift Rustenburg Pretoria Kroondal PSA Pandora JV Rustenburg Section Witbank
0 25 Kilometres 50
> Legend
Bushveld Complex Upper Zone Main Zone Group interests Operation/Project Critical Zone Lower Zone
Right: Rosina Mahlatji prepares for work at PPRust where she is employed as a wheel-dozer operator
28
Above: Crushing section at Rustenburg Section. Ben Ramatla, Senior Machinery Inspector at Rustenburg UG2 Plant, checking vibration levels and doing an oil analysis
Mining operations
Total platinum delivered to the smelters, including platinum purchased from the Modikwa joint venture partners, increased by 8%, an additional 175 000 ounces refined platinum at standard recoveries. The increased output is mainly attributable to the ramp-up operations: Rustenburg UG2, Modikwa and BRPM.
3,75
Steady-state mines
The total volume from steady-state operations was in line with that for 2002 at 1,83 million equivalent refined platinum ounces. This is a notable achievement considering the ongoing replacement of Merensky ore with lowergrade UG2 ore at Rustenburg Section, Union Section, and Amandelbult Section. The proportion of UG2 tons milled increased from 28% of the total in 2002 to 32% in 2003.
0,041
30
Production increased at Union Section and PPRust. Union Section reaped the benefits of the UG2 project commissioned in 2002, with additional production from the new declines and increased plant capacity from the extension to the UG2 Plant. As well as an increase in underground production Union Section used its available plant capacity to process opencast and tailings material and its equivalent refined platinum production rose by 41 500 ounces. PPRust successfully brought the Zwartfontein South Pit into production, resulting in improved mill feed grades and an increase in equivalent refined platinum production of 27 100 ounces. At Rustenburg Section, replacement of Merensky with UG2 production continued during 2003. Equivalent refined platinum production from steady-state shafts fell by 40 200 ounces to 571 300 ounces, reflecting a decrease in available Merensky reserves. Amandelbult focused on optimizing its new UG2 mechanized sections during 2003, and on improving its ore reserves. The mine milled 6 956 000 tons in 2003, slightly lower than in 2002. Production of equivalent refined platinum fell by 32 900 ounces to pre-2002 levels because of lower grades and recoveries resulting from increased UG2 opencast production, the substitution of Merensky with UG2 production, and a shift in Merensky production from No. 1 Shaft to No. 2 Shaft, which has a slightly lower grade. Leplats production in 2003 was steady at 105 000 equivalent refined platinum ounces. Cash on-mine costs per ton milled increased by 8,6% from R233 per ton in 2002 to R253 per ton in 2003. This is higher than official inflation because of high increases in the costs of labour and steel, as well as increased safety-related expenditure. The lower grade and recovery associated with higher UG2 and surface material resulted in a 12% increase in cash on-mine costs per equivalent refined platinum ounce. In order to minimize the rate of decline of the steady-state production base, all steady-state operations ensured that they maintained their immediately available ore reserves and invested the appropriate amount of working cost and capital
expenditure in maintaining infrastructure and replacing depleted mining reserves. Notwithstanding the strength of the rand against the US dollar during 2003, operating margins at steady-state operations were robust at an average of 34,2%. Combined, these operations generated 95,8% of the Groups operating contribution in 2003.
Ramp-up mines
Equivalent refined platinum production from ramp-up operations (including purchases from Modikwa) amounted to 529 500 ounces in 2003, compared with 349 900 ounces in 2002, an increase of 179 600 ounces (51,3%). BRPM steadily improved its underground production efficiencies and volumes during 2003, with the result that far less surface material was milled. The higher grade and recoveries associated with the underground ore largely offset higher mining costs. At the end of the year, most production measures were substantially in line with design parameters, and from 2004 the mine will be reported as a steady-state operation. Full PGM production volumes and optimum cost efficiency will be achieved through incremental grade improvement. The Rustenburg UG2 Project achieved a 51% increase in tons milled in 2003, and equivalent refined platinum ounces increased by 58,3% because of more tons at an improved grade at the Waterval mine. The new plant exceeded design throughput for the year. Despite the rapid build-up, production from this operation did not achieve expectations owing to limited face availability. Accelerated development plans and mined-grade enhancement initiatives are in place, and the ore-sorting plant is being commissioned to further improve the mill feed grade and make better use of the available milling capacity. Modikwa completed its first full year of production in 2003, having commenced operations in the second half of 2002. Square metre production increased steadily during the year despite difficult geological conditions, which hampered development rates and the creation of ore reserves. Accelerated development at the mine continues and the mine is expected to be close to design parameters by the end of 2004.
Above: Modikwa Platinum Mine
31
Processing operations
The key feature of the performance of process operations in 2003 was the significant increase in smelting capacity put in place with the commissioning of the Polokwane Smelter, the Anglo Platinum Converting Process (ACP) Plant, and the Waterval Slag-cleaning Furnace. Unfortunately, this capacity brings with it a higher level of operating costs that cannot be absorbed by current levels of throughput; consequently, unit costs of smelting will fall as increased volumes from the expansion programme are achieved. Nonetheless, the capacity is now in place and the new plants are operating well. Polokwane Smelter has already achieved design recoveries and the ACP is steadily increasing throughput while significantly reducing sulphur dioxide emission levels. The base metals and precious metals refineries both delivered high-quality technical performances in 2003, and contained costs well. The commissioning activity caused a temporary build-up of some 160 000 equivalent refined platinum ounces at the end of June, which was all released by the end of the year. Permanent lock-up of metal in 2003 due to the new plants in operation and higher throughput amounted to some 52 700 equivalent refined platinum ounces. The treatment of purchased concentrate has become an important part of the Process Divisions business. More material will be purchased in future as joint venture output rises. Combined with the increase in output from the Groups mines, this may result in temporary stock build-ups. During such periods, the Group will continue to consider toll-refining and the sale of metal in near-refined product. Such sale of metal or toll-refined product is incorporated in the definition of refined product. The processing operations are well positioned to meet the Groups requirements in 2004.
decision to slow down the implementation of a number of mining projects by between one and three years, and as a result refined platinum production is now targeted to reach 2,9 million ounces in 2006. Progress on the major projects under development is discussed on pages 45 to 50 of this Report. Two new projects announced during the year are the Pooling and Sharing Agreement (PSA) with Aquarius Platinum (South Africa), a midsized PGM operation, the holding company of which is listed on the Australian and the London Stock Exchanges, and the Unki project, being undertaken with Anglo American Corporation Zimbabwe Limited. In the PSA with Aquarius Platinum (South Africa), some mining assets were pooled with effect from November 2003 and the parties will share the proceeds. The project will produce an annual 280 000 ounces of refined platinum at full production in 2006. From 2005, Anglo Platinum will also treat concentrate from the venture. The Unki project entails the development of a mine on the Zimbabwean Great Dyke, which will, at peak production, produce 58 000 ounces of refined platinum per year.
Human resources
Human resource development (HRD) remains a core component of the Groups strategy and the Groups human capital development needs are continually integrated within the business plan. During 2003, the Group focused on aligning HRD with Group strategy and optimizing the business alignment of the Anglo Platinum Development Centre (ADC). The outcomes-based education, training, and development methodology was initiated. The main external development was the preparation of the Department of Minerals and Energys requirements for conducting falls of ground competence assessments that are aligned with the National Unit Standards. The Group succeeded for the third successive year in reclaiming its full Skills Levy Fund remittance from the Mining Qualifications Authority. During 2003, Anglo Platinum developed a record number of graduates and trainees, a total of 520. The Group continued to enjoy labour stability through the maintenance of
Projects
Towards the end of the financial year, and in view of the continuing strength of the South African currency and lower rand prices for the Groups basket of metals sold, the Group undertook a critical review of its previously announced expansion plan to produce at a rate of 3,5 million ounces of refined platinum per year by the end of 2006. The outcome of this review was a
32
Capital expenditure
Capital expenditure for the year rose by 23,9% to R7,42 billion. Of this, R3,95 billion was spent on maintaining and replacing production, R3,27 billion was spent on expansion projects, and interest of R200,5 million was capitalized.
Mining cost inflation over the last few years has been considerably higher than core inflation. The cumulative effect of this, in combination with reduced revenues caused by the strong rand and lower overall PGM prices, is that operating margins have been severely eroded. Clearly the Group cannot continue to accept cost increases greater than the rate of inflation and consequently management has initiated a Group-wide cost-cutting and restructuring initiative. The short-term target of this initiative is to restrict unit cash cost increases in 2004 to the official consumer price inflation rate. In light of current market circumstances and in line with the revised expansion programme, capital expenditure will continue to be deferred without adversely affecting planned production levels.
33
OPERATIONS REVIEW > OVERVIEW: MINING > RUSTENBURG SECTION OVERVIEW: MINING Rustenburg Section
To facilitate more effective and direct management, Rustenburg Section has been split into three separate mining units: the West Mine comprising Frank, Townlands, and Paardekraal shafts; the East Mine comprising Turffontein, Bleskop, and Brakspruit shafts; and the Waterval Mine. The Rustenburg UG2 Project is expanding UG2 mining at Frank, Townlands, Paardekraal, Bleskop, and Brakspruit shafts, as well as the Waterval Mine.
Above: UG2 concentrator plant, Rustenburg Section
Costs
The cash on-mine cost per ton milled for the steady-state operations increased by 6,8%, primarily because of the benefit of the higher volumes achieved on the West Mine. The cash on-mine cost per equivalent refined platinum ounce increased by 6,0%.
Capital expenditure
Capital expenditure, at R1,55 billion, was higher than in 2002, with R1,43 billion of ongoing and replacement expenditure (including Phase 2 of the Rustenburg UG2 Project) and R112,7 million of expansion capital expenditure on Phase 1 of the Rustenburg UG2 Project.
Production
Replacement of Merensky with UG2 production continued during 2003. Equivalent refined platinum production from steady-state shafts fell by 40 200 ounces to 571 300 ounces, reflecting a decrease in available Merensky reserves. The Rustenburg UG2 Project achieved a 51% increase in tons milled, and equivalent refined platinum ounces increased by 58% owing to higher tons at an improved grade at the Waterval Mine. The new plant exceeded design throughput for the year and the ore-sorting plant is being commissioned to improve head grades and to make better use of the available milling capacity.
Outlook
Production will rise in 2004 with additional output from the UG2 Project, partly offset by lower Merensky production. Every effort will be made to optimize available Merensky in preference to UG2 reserves, which should result in a slowdown of the rate of replacement of Merensky with UG2 production. As part of a Group wide initiative, there will be a particular focus on cost control and restructuring.
> LTIFR
2000 2001 2002 2003
0,83 1,32 1,36 3,03
> FIFR
2000 2001 2002 2003
0,03 0,04 0,04 0,05
Rustenburg Section
Boschpoort 284 JQ Reinkoyalskraal 278 JQ Wildebeestfontein 274 JQ Elandsheuvel 282 JQ Boschfontein 268 JQ Beestkraal 290 JQ Klipgat 281 JQ Paardekraal 279 JQ Turffontein 302 JQ Hoedspruit 298 JQ Rustenburg Town & Townlands 272 JQ
(000 oz)
255
> Legend
Mining Licence
Townlands shaft
Waterval 307 JQ
Bleskop Shaft Boschfontein Incline shaft Brakspruit shaft Central Deep shaft Frank No 2 shaft Frank shaft Paardekraal shaft
Waterval 303 JQ
Klipfontein 300 JQ
Merensky Reef Outcrop UG2 Reef Outcrop Merensky Reef Workings UG2 Reef Workings
0 2 Kilometres 4 Brakspruit 299 JQ Kroondal 304 JQ
34
In addition to above-inflation increases in the cost of labour and steel, and higher safety-related expenditure, Amandelbult incurred extra contracting mining costs to produce tons to replace the shortfall in Merensky production. The lower grade and recovery associated with the different ore mix resulted in Amandelbult producing fewer platinum ounces in relation to tons milled, leading to an 18% increase in the cash on-mine cost per equivalent refined platinum ounce. At R2 607 per ounce, however, the unit cost was still the lowest in the Group.
Capital expenditure
Capital expenditure for the year amounted to R435 million, allocated in its entirety to maintaining and replacing production.
Outlook
Sound progress has been made on issues which affected Merensky production in 2003. Production is expected to be constant in 2004. Costs will be tightly managed in line with the Groups objective of keeping unit cost increases at the official consumer price inflation rate in 2004.
> LTIFR
2000 2001 2002 2003
0,96 2,87 6,69 7,51
Costs
Cash on-mine costs per ton milled rose by 14,2% in 2003 off an extremely low base.
> FIFR
2000 2001 2002
0,02 0,02 0,04 0,05
Amandelbult Section
Haakdoorndrift 374 KQ Langpan 371 KQ
2003
2000
Elandskuil 378 KQ Zwartkop 369 KQ Middellaagte 382 KQ Grootkuil 376 KQ
Vlakpoort 388 KQ
Schilpadsnest 385 KQ
Amandelbult 383 KQ
Middeldrift 379 KQ
Vlaknek 392 KQ
Zondereinde 384 KQ
Elandsfontein 386 KQ Moddergat 389 KQ Kopje Alleen 422 KQ Oskuil 390 KQ Goevernements Plaats 417 KQ Kaalvlakte 516 KQ Vlakplaats 427 KQ
> Legend
Mining Licence No 1 shaft
De Deur 419 KQ
Merensky Reef Outcrop UG2 Reef Outcrop Merensky Reef Workings UG2 Reef Workings
No 2 shaft
Kilometres
35
Costs
Cash on-mine costs per ton milled fell because of the relatively high volume of low-cost surface material processed. The cash on-mine cost per equivalent refined platinum ounce however increased by 9,2%, mainly as a result of the lower grades associated with the surface material.
Capital expenditure
Capital expenditure for the year amounted to R606 million. This all related to maintaining and replacing current production capacity, and included the continued development of the new declines that are part of the UG2 Project.
> LTIFR
2000 2001 2002 2003
1,31 1,26 3,48 3,17
Outlook
With good quality reserves available to replace declining production from Richard and Spud shafts, and sound infrastructure across the mine, Union Section is well positioned to maintain its current production levels in 2004. Cost control will be given top priority, and the mine intends to keep unit cost increases at or below the official consumer price inflation rate in 2004.
> FIFR
2000 2001 2002 2003
0,02 0,04 0,03 0,04
291
Union Section
Oskuil 390 KQ Kameelhoek 408 KQ Kaalvlakte 516 KQ
318
277
Nooitgedacht 406 KQ
Leeuwkopje 415 KQ
Wildebeestlaagte 411 KQ
Spitzkop 410 KQ
> Legend
Current Mining Licence Proposed Mining Licence Ivan shaft Richard shaft 22 Vertical shaft Merensky Reef Workings UG2 Reef Workings Spud shaft Merensky Reef Outcrop UG2 Reef Outcrop
Haakdoorn 6 JQ
Syferkuil 9 JQ
Nooitgedacht 11 JQ
Haakdoornfontein 12 JQ
Kilometres
36
and the cash on-mine cost per equivalent refined platinum ounce rose by 8,9%. PPRust experienced higher-than-coreinflation labour cost increases, and also incurred a higher level of safety-related expenditure.
Capital expenditure
Capital expenditure for the year of R338,7 million included the cost of the establishment of the Zwartfontein South Pit, the replacement of some haul trucks and pit mining equipment, and the establishment of infrastructure to ensure the long-term sustainable supply of water.
> LTIFR
Outlook
PPRust will continue to mine both the Sandsloot and Zwartfontein South pits in 2004, and production of equivalent refined platinum ounces is expected to be similar to the 2003 level. Costs will come under the same detailed review as at the other operations, with the objective of keeping unit cost increases at or below official consumer price inflation.
2000 2001 2002 2003 2000 2001 2002 2003
1,05 0,68 0,34 1,65
Costs
Cash on-mine costs per ton milled increased by 24,5% because of the cost incurred in opening up the Zwartfontein South Pit. However, the higher-grade material somewhat negated this increase
> FIFR
0,00 0,00 0,00 0,04
203 211
192
Zwartfontein 818 LR
Zwartfontein 814 LR Vaalkop 819 LR Sandsloot 236 KR Holmesleigh 1 KS Gezond 235 KR Tweefontein 238 KR Knapdaar 234 KR Rietfontein 2 KS Rietfontein 240 KR Hoogedoorns 233 KR
Commandodrift 228 KR
> Legend
Mining Licence Overysel Central* Zwartfontein North* Tweefontein North* Tweefontein Hill* Platreef Platreef Pit * Future Pits
0
Turfspruit 241 KR
Kilometres
37
Capital expenditure
Capital expenditure to maintain and replace production amounted to R267 million in 2003.
Outlook
Equivalent refined platinum production will be maintained in 2004. The extensive development of new mining areas will provide the opportunity of milling additional tons if plant capacity is available. Controlling unit costs will be a high focus area in 2004 and Leplats will continue to address the challenge of matching its fixedcost base with its relatively low production volume.
Costs
Cash on-mine costs per ton milled increased by 14,7%, and the cash on-mine cost per equivalent refined platinum ounce increased by 13,9%. This reflects the cost of additional expenditure incurred to maintain the level of ore reserves, increased costs of labour and steel, and higher safety-related expenditure.
> LTIFR
2000 2001 2002 2003
0,53 0,37 1,12 2,76
> FIFR
2000 2001 2002 2003
0,04 0,03 0,06 0,07
73 90 105 105
Diepsloot 4
Schoonoord 462 KS
Brakfontein 464 KS
> Legend
Mining Licence Vertical shaft Middlepunt Adits UM1 Incline UM2 Incline Merensky Reef Outcrop UG2 Reef Outcrop Merensky Reef Workings UG2 Reef Workings
0 1 2 Indie 474 KS
Zwitserland 473 KS
Kilometres
38
However, the higher grade and recovery achieved from the underground material, combined with improving mining efficiencies, largely offset the additional costs. Cash on-mine costs per equivalent refined platinum ounce rose by 1,7%.
Capital expenditure
Capital expenditure of R298 million was incurred in 2003, mainly on extensions to the shaft complex and ongoing development.
Outlook
Most production measures were in line with design parameters and, from 2004, the mine will be reported as a steady-state operation, notwithstanding that full PGM production volume and optimum cost efficiency will be achieved via incremental grade improvement. Equivalent refined platinum production is expected to exceed 200 000 ounces in 2004. The ongoing focus on underground mining practices and productivity is expected to result in improved cost efficiency in 2004, and unit cost increases should not exceed official consumer price inflation.
> LTIFR
2000 2001 2002 2003
0,84 0,59 0,58 0,29
Costs
Cash on-mine costs per ton milled increased by 15,8% because of the replacement of cheap surface operations with more expensive underground mining.
> FIFR
2000 2001 2002 2003
0,01 0,00 0,03 0,05
(000 oz)
Hartebeestspruit 88 JQ Styldrift 90 JQ
Elandsfontein 102 JQ
> Legend
Mining Licence North Incline South Incline Merensky Reef Outcrop UG2 Reef Outcrop Merenksy Reef Pit UG2 Reef Pit Merensky Reef Workings
Doornspruit 106 JQ
1 Kilometres
39
and performance management systems, with appropriate training programmes. The introduction in the last quarter of 2003 of additional experienced crews has proved beneficial.
Costs
Unit costs for 2003 were high because of ramp-up production volumes and grade, as well as the costs incurred to replace ore reserves.
Capital expenditure
Capital expenditure of R219 million in 2003 included the completion of the initial project scope.
> LTIFR
2001 2002 2003
0,28 0,41 0,77
Outlook
Production will increase significantly in 2004, and by the end of the year Modikwa is expected to be close to design parameters in terms of efficiency and throughput, with a monthly production rate equivalent to the stated capacity of 162 000 refined platinum ounces. As volumes and efficiencies improve, unit costs will come down.
> FIFR
2001 2002 2003
0,00 0,02 0,04
2002 2003
27 91
De Kom 252 KT Zwemkloof 283 KT Maandagshoek 254 KT Grootvygenboom 284 KT Garatouw 282 KT Mooihoek 256 KT
Genokakop 285 KT
Hendriksplaats 281 KT
> Legend
Mining Licence No 2 Winze North shaft decline Mid shaft decline South shaft decline Onverwacht Hill (Adits) Merensky Reef Outcrop UG2 Reef Outcrop UG2 Reef Workings
Houtbosch 323 KT
Doornbosch 294 KT
Winterveld 293 KT Soupiana 325 KT Nooitverwacht 324 KT Eerste Geluk 322 KT Goudmyn 337 KT 0 1 2 4
Kilometres
40
OPERATIONS REVIEW > OVERVIEW: PROCESSING > WATERVAL SMELTER OVERVIEW: PROCESSING Waterval Smelter Production
Waterval Smelter processes concentrate from the mines, as well as the furnace matte produced by the Mortimer and Polokwane smelters. 2003 saw the simultaneous commissioning of the ACP Plant and Slag-cleaning Furnace and the continued operation of existing plants. In the context of this highly challenging situation, Waterval Smelter performed well. Commissioning activity resulted in a temporary build-up of metal in the pipeline in the middle of the year. A focus on establishing optimum operating practices for the new equipment yielded quick results, and by year-end all excess stocks had been cleared. The ACP Plant ramp-up proceeded smoothly and it will achieve full throughput in the second half of 2004. A partial rebuild was carried out on the Pierce-Smith converters and the old acid plant was refurbished. These plants will be retained on standby until completion of the second ACP converter in 2006. beginning of 2003 and the entire cost of running the new facility was borne on working costs, while the old Pierce-Smith converters and acid plant were run in tandem with the ACP Plant for the full year. The contract to use an Xstrata furnace to process furnace slag was terminated at the beginning of the year, and this cost was replaced with that of running the new Slagcleaning Furnace. The net effect was that total cash operating costs rose by R130,6 million, or 23,8%. Platinum ounces produced by the smelter increased by 9,1%, resulting in a cash unit cost increase of 13,5%.
Capital expenditure
Capital expenditure totalled R300 million in the year, of which R78 million was for ongoing items and R222 million for expansion, including costs associated with the ACP Plant and Slag-cleaning Furnace.
2000 2001 2002 2003
> LTIFR
0,61 0,24 0,17 0,27
Outlook
2004 promises to be another challenging year. The optimization of the newly commissioned plants will be the main focus area, enabling the Waterval Smelter to achieve its sulphur dioxide emission reduction targets and to process the increased volume of mined and purchased ounces.
> FIFR
2000 2001 2002 2003
0,00 0,11 0,00 0,04
Costs
The ACP Plant moved from a commissioning to an operating phase at the
Left: The ACP Plant and acid plant at Waterval Smelter will contribute to the reduction of SO2 emissions from the smelter
41
total costs for the year were slightly higher than anticipated. Unit costs per ton treated were satisfactory and with the build-up of volumes Polokwane Smelter should make a significant contribution to the improvement of the Groups overall processing performance.
Capital expenditure
Total capital expenditure for the year amounted to R493 million, primarily consisting of expenditure associated with the initial project vote.
The Smelter performed at levels that exceeded expectations, at times running at design throughput levels in the ramp-up stage and with very good technical performance. The furnace is able to treat high chrome-bearing concentrate from the UG2 Reef both efficiently and effectively.
Outlook
In 2004, the Smelter is expected to perform at the same levels as those achieved in the second half of 2003, in line with the build-up of Eastern Limb mining output. However, its capacity is far in excess of the volumes it will receive in 2004 and optimum cost efficiency will therefore not yet be achieved.
> LTIFR
2003
0,75
Costs
With the earlier-than-expected commissioning (originally planned for May 2003),
> FIFR
2003
0,00
42
Capital expenditure
In line with the expansion review announced in 2003, the refining strategy was amended, resulting in the deferral and reduction of the capital expenditure associated with further de-bottlenecking of the BMR. This resulted in an allocation of only R83 million to capital expenditure, lower than the figure of R273 million projected in 2002. Of this amount, R28 million was committed to ongoing capital items and R55 million to expansion projects.
> LTIFR
2000 2001 2002 2003
0,62 0,59 0,30 0,07
Outlook
Based on its good performance in 2003, RBMR is well geared to meet the challenges of 2004. The appropriate infrastructure, management systems, employee relations, and motivation levels now in place should ensure continuous improvement in performance over 2003.
> FIFR
2000 2001 2002 2003
0,00 0,00 0,00 0,07
Costs
Overall cost control was well maintained, with the unit cost falling by some 4,8% in 2003.
43
Capital expenditure
The capital expenditure programme at the PMR absorbed a total of R633 million, of which R536 million was associated with the expansion, notably the Gold Solvent Extraction and Insoluble Metals plants.
Outlook
The PMR will complete its final debottlenecking phase by the end of 2005. Capacity will be adequate for all the Groups anticipated PGM refining requirements.
Costs
Costs were well controlled, with only a marginal increase in unit costs per ounce of
> LTIFR
2000 2001 2002 2003
0,00 0,12 1,03 0,54
> FIFR
2000 2001 2002 2003
0,00 0,00 0,00 0,00
44
> FIFR
2002 2003
0,00 0,02
Mining opportunities will continue to be evaluated, both for the purposes of Group expansion and replacement of depleted reserves at existing operations. Where projects have been slowed down, the additional time will be utilized to further improve knowledge of the orebody and optimize mine design. In addition, de-bottlenecking of processing capacity will continue and further processing project announcements will be made in due course.
Below: The concentrator plant at Modikwa. Modikwa completed its first full year of production in 2003
45
During the course of the year, the Modikwa JV Project and components of the Rustenburg UG2 Project were successfully handed over to Operations, and are reported on in the Overview: mining.
shafts, together with two new green-field decline mine clusters at Boschfontein. Included in this project was the expansion of the existing Waterval UG2 Concentrator from 400 000 to 800 000 tons per month. During the year under review, portal excavations commenced at the new Boschfontein declines. At the two brownfield shafts, development access to the UG2 Reef proceeded ahead of schedule and stoping operations commenced. The strategic review proposed several steps to minimize the negative impact of the prevailing economic climate. Consequently, the Boschfontein East portion of the project will be slowed down. The Boschfontein West Mine was modified to utilize some of the pre-existing Merensky Reef infrastructure in place of two of the three originally proposed declines in the cluster. The proportion of UG2 Reef that was to be accessed from Frank and Townlands shafts was reduced in favour of Merensky Reef. Mining methods at these shafts were adjusted with a view to maximizing head grade and extraction ratios. The need for the 400 000 tons per month concentrator expansion was investigated in light of a revised holistic exploitation strategy for the complete Rustenburg mineable resource. Further debottlenecking of the very successful existing plant and its possible upgrading may make the additional plant unnecessary. These studies will be finalized early in 2004 and could result in both a capital and a production change to the announced scope of the project.
Safety
Great emphasis was placed on safety in all project execution activities, inherently a high-risk area. There were no attributable fatalities and a total of 33 LTIs for the year, resulting in a low LTIFR of 0,33 per 200 000 man-hours, compared with 0,24 in 2002. The data includes both surface and underground construction activities. The Group and its contracting companies worked in partnership throughout the year to achieve a strong emphasis on safety.
The Group announced Phase 2 of the Rustenburg UG2 Project late in 2002. The original scope incorporated brown-field developments at Frank and Townlands
Styldrift (BRPM Expansion), joint venture with Royal Bafokeng Resources (RBR)
Preliminary design and project engineering work progressed well in 2003, including analysis of the three-dimensional seismic survey conducted in late 2002. These results, together with the continuing drilling programme, improved the structural geological model of the region. This aids the evaluation of the Merensky Reef mine layout and shaft-positioning options, allowing account to be taken of the synergies available from the combined joint venture properties. The finalization of all outstanding conditions precedent to the JV is expected to be concluded early in 2004.
46
Pandora Joint Venture with Lonmin Platinum, Northam, and the Bapo Ba Mogale Tribe
The Pandora Project to exploit the UG2 reserves west of Brits was signed and ratified by the participants: Anglo Platinum
47
(45%), Lonmin Platinum (45%), Northam (5%), and the Bapo Ba Mogale Tribe (5%). The Competition Board and the Competition Tribunal approved the venture. The parties will cooperate as participants in the joint venture and intend to utilize the existing infrastructure at Eastern Platinum Mine (EPM) to gain access to the mineral rights area adjacent to EPM. The capacity of the existing EPM concentrator is to be expanded by 120 000 tons per month. A new 200 000 tons per month concentrator will be constructed on the Pandora mine area, adjacent to EPM, and decline shaft systems will be installed, all of which will enable the joint venture to attain full tonnage production some six years after commencement. Steady-state production is ultimately envisaged at 230 000 ounces of refined platinum and 110 000 ounces of refined palladium per annum. The capital cost of this project when originally announced in 2002 was R2,8 billion (R3,3 billion in 2004 terms). Anglo Platinum is responsible only for its portion of the capital expenditure in the joint venture and will refine only its portion of production. The surface rights authorizations have been secured. The only statutory matter still outstanding is the consent of the Department of Minerals and Energy. The delay in obtaining authorizations, together with the current unfavourable economic environment, has resulted in a slowing down and possible re-scoping of the project. It is now envisaged that the earliest production will be in 2006. The joint venture is however investigating the potential of early production initiatives and the staged implementation of the project.
annum at full capacity, with first production expected in 2007. The total project cost is estimated at US$92 million (2004 terms). The concentrate produced by the mine will be smelted and refined by Anglo Platinum in South Africa. Anglo Platinum will hold a majority shareholding in Unki and will also manage the operations. An interim management agreement has been reached pending finalization of the venture agreements. The parties will fund the initial development phase from existing cash resources and borrowing facilities. Discussions are being held with indigenous parties with a view to their acquiring an equity interest in Unki. Excavations for the Lucillia Poort Dam were completed and civil construction progressed satisfactorily on all areas of the site. The Zimbabwe Electricity Supply Authority completed the installation of a 33-kilovolt temporary power supply at the end of the year. The Rietfontein village relocation commenced.
Above: Rustenburg Sections 400 000 tons per month UG2 Plant
Pooling and Sharing Agreement (PSA) with Aquarius Platinum (South Africa)
Anglo Platinum and Aquarius Platinum (South Africa) announced in June 2003 that agreement had been reached to mine contiguous properties on their respective Rustenburg and Kroondal lease areas. The agreement provides for the parties to pool their assets, while retaining ownership thereof, and to share the proceeds equally. Anglo Platinum will provide access to a portion of the UG2 orebody on Rustenburg Platinum Mines (RPM) lease area and Aquarius Platinum (South Africa) will provide access to its existing Kroondal Platinum Mine (KPM) lease area and infrastructure. All outstanding conditions precedent were met in 2003. The parties will utilize the existing KPM infrastructure to gain access to the RPM orebody down-dip of KPM. A new 250 000 tons per month UG2 concentrator will be constructed for completion in 2005 and additional shaft capacity will be sunk. The venture will have mineable reserves and resources totalling 69 million tons, which are expected to allow mining until 2016. Production will initially be in the order of 140 000 annual ounces of refined platinum, rising to 280 000 ounces of refined platinum and 130 000 ounces of refined palladium during 2006. Aquarius Platinum (South Africa) will continue to honour its existing KPM lease area concentrate off-take agreement with
Unki
In April 2003, Anglo Platinum and Anglo American Corporation Zimbabwe Limited announced that they were to proceed with the initial phase of the development of the Unki Platinum Project, situated near Gweru on Zimbabwes Great Dyke. The project is still subject to certain Zimbabwean and South African regulatory and fiscal approvals, and the development costs are under review in light of the economic and exchange rate environment in Zimbabwe. The project involves the development of an 85 000 tons per month mine that will include an on-site concentrator. The mine will produce concentrate containing some 58 000 ounces of refined platinum and 40 000 ounces of refined palladium per
48
Impala Refining Services Ltd; this has been fixed at a total of some 586 000 ounces of platinum in concentrate. From 2005, Anglo Platinum will also treat concentrate from the new UG2 concentrator being constructed. It is estimated that production will become fully attributable to Anglo Platinum in 2009. The capital expenditure for the establishment of the venture is expected to be in the region of R810 million (2004 terms) and will be equally funded by Anglo Platinum and Aquarius Platinum (South Africa).
Der Brochen
As a consequence of the agreement reached with Government in 2002 in terms of the MPRDA and Mining Charter, the originally proposed mining area of the project, south of the Steelpoort fault, incorporating the farms Der Brochen, Richmond, Helena, Booysendal, and Buttonshope, was restructured. A 50:50 joint venture with a BEE consortium, Khumama Platinum (Pty) Ltd (Khumama), now to be absorbed into Mvelaphanda, was established over the Booysendal and Buttonshope areas. This project is known as the Booysendal Joint Venture. The Der Brochen Platinum Mine, 100% owned by Anglo Platinum, will now exploit the Der Brochen, Richmond, and Helena areas only. A mining authorization for these farms was granted in April 2003. The project is in the conceptual design phase, and site activities are limited to exploration drilling and land management. Current economic conditions necessitate further study of this project.
Above: View from the ACP Plant at Waterval, Rustenburg
49
The capital expenditure was announced at R1,31 billion (2001 terms). Cost escalation was below the inflation rate, the final cost being some R1,45 billion in 2004 terms.
Polokwane Smelter
The smelter is now substantially complete, having been successfully commissioned in March 2003, and has performed exceptionally well. The furnace operated at design power levels (68 Megawatts) and chrome levels greater than 2% for sustained periods during the latter part of 2003.
Right: Sello Mojalefa, a technician at the Polokwane Smelter, tapping the molten matte into the casting machine
50
OPERATIONS REVIEW > REVIEW OF MINERAL RESERVES AND RESOURCES > OVERVIEW OF EXPLORATION
Anglo Platinums exploration efforts on the Bushveld Complex are directly linked to the Groups expansion
Anglo Platinum drilling for alluvial platinum in the Urals
The most important provisions of the Act for Anglo Platinum are those that provide for the transfer of the present privately held mineral rights to new-order mining rights under the Act. Anglo Platinum is ready to comply with the legislative requirements for conversion and has reached an agreement with the Government that secures new mining rights in respect of all its present mining operations and the expansions already announced.
52
OPERATIONS REVIEW > REVIEW OF MINERAL RESERVES AND RESOURCES > OVERVIEW OF EXPLORATION
budget is consumed by drilling and, in 2003, 667 kilometres of exploration diamond drilling was completed in the South African exploration areas. A large volume of chemical analysis for PGMs and base metals, as well as detailed mineralogical examination, flowed from the drilling programme. Some of the highlights in 2003 were: The JSE adoption of the SAMREC code (which embodies many of the JORC principles) for the reporting of Mineral Resources and Reserves has prompted a fundamental revision of the Anglo Platinum approach to Resource and Reserve reporting. The manner and execution of Resource estimation and classification has been revised from first principles to a more international and SAMREC-compliant format, whereby a qualifiable risk-based (confidence) approach forms the foundation of much of the classification technique. Although there are several components of Resource classification, one of the primary considerations is the influence of estimation error. Estimation methodology involves estimating values at points between datasampling points; the estimation error is based on the sampling configuration, the spatial variography of the grades, and the block support being estimated and is particular to each deposit or geological subsets thereof, which are then used to determine and plan the desired sampling density requirements. The Resource classification reflects the competent persons assessment. Refer to the definitions of Reserves and Resources for more information on the level of confidence deemed acceptable. All projects and operations have been treated appropriately in the current transition to the new procedure of classification and reporting. Achieving quantifiable classification has been one of the main drivers of the dramatic
increase in Resource drilling accomplished in recent times. Several enhancements are under consideration for the 2004 Resource estimation and conversion to Reserve process. External auditing of the entire function has verified the integrity and completeness of the transition to the new Resource reporting process. As noted above, a total of 667 kilometres of diamond drilling was achieved in the year, with up to 45 rigs worked under tight production constraints to achieve the desired drilling tempo. This is a substantial achievement in any terms and far exceeds all previously known local and international records for a single corporate entity in a similar time period. Much of this coring was directed at Resource classification, estimation, and evaluation of known and identified deposits. A substantial portion was completed in rugged and tortuous terrain, where logistical support was difficult. 2004 will see a similar level of activity, continuing the process of asset verification and quantification. During the period, a total of 1,1 million manhours were worked. Anglo Platinum has developed, in partnership with others, an effective and robust geological database and logging system. The system has permitted the electronic accumulation of data, its safe storage, and the prompt transmission of data to a central storage facility aimed at compiling, validating, and consolidating data prior to the Resource modelling process. Coupled with this, all core was successfully logged and sampled, validated, and verified. Further system enchancement will continue in 2004. A central database was invaluable in facilitating the Resource estimation process already referred to.
Conditional simulation, a risk assessment tool, was introduced. This technique enables the geologist to assess and quantify the risk for various parameters of the Resource, such as tonnage, width, grade, and content. Mining rates and a variety of financial parameters can also be incorporated, assisting in the definition of extraction viability. Assay capacity has been steadily increased to accommodate the additional drilling load, along with a commensurate enhancement of quality procedures. This will receive additional emphasis with the introduction of new internationally certified standards, coupled with continued revision of sampling quality protocols. All samples are treated in duplicate (100% replication) and 10% of all sample material is subject to external laboratory re-assay. It is believed that corporate governance is well served by this exacting and exhaustive process. The revised sampling quality protocols will assist in strengthening confidence in the Groups processes and in its Resource quantification and classification. A comprehensive geographical information system was built and implemented, aimed at addressing the IT needs of the exploration, mineral rights, corporate, and mine design teams. It provides live status reporting and scalable image compilations of the Groups assets. Further development will link the mineral rights database with other datasets (geological, geochemical, geophysical, remote sensing, legal, mineral tenure, mineralogical, and similar) to assist in prompt decision-making. Three-dimensional seismic surveys were completed on Styldrift, Amandelbult
53
OPERATIONS REVIEW > REVIEW OF MINERAL RESERVES AND RESOURCES > OVERVIEW OF EXPLORATION
Section, and Rustenburg Sections deeper Resources. These contributed significantly to confidence in their Resources, mainly in respect of structures and continuity. Benefits include enhanced information on the full 3-dimensional volume of major stratigraphic horizons, resulting in a reduction of the risk of encountering unknown large, catastrophic-type structural features, such as potholes, faults, and replacement features. The surveys add value to the delineation of Resources and further enhance confidence in Resource estimates. In accordance with long-standing procedure, many of the geological holes drilled obtain additional reef intersections dedicated to mineralogical and metallurgical testing. These are aimed at enhancing the geological understanding of reef variations (including alteration zones and effects) and provide valuable metallurgical recovery information. High-resolution aeromagnetic surveys using the new-generation Midas system were flown over the majority of Anglo Platinums properties, enhancing structural interpretations and helping achieve the objectives of safe and productive mining. The surveys also provided information relating to strategic targets and assisted with Resource targeting, in turn increasing the efficiency of future exploration or Resource information retrieval. Core scanning was introduced as part of the geological core-logging procedure, ensuring a permanent high-quality digital record of all reef intersections and their immediate hanging-wall and footwall stratigraphy. Data in this format is scaled and may be used to correlate stratigraphic horizons and layers within a project area and indeed across the Bushveld Complex. Research and development is also being applied to the core scanner, which could include spectral scanning.
represents one of North Americas premier exploration projects and is certainly one of the newest and most exciting platinumpalladium discoveries in recent years. By the end of 2003, joint venture partners Pacific North West Capital Corporation and Anglo Platinum spent nearly CDN$12 million on mineral exploration at the River Valley property. Six phases of diamond drilling (2000 to 2003) primarily tested targets developed from surface exploration, with drilling designed to test the down-dip and strike extensions of known surface mineralization. More than 83 000 metres of drilling in 410 drill holes have been completed on the property. The River Valley intrusion, a Paleoproterozoic (~2,5 billion years) rift-related layered mafic intrusion, is located about 100 road kilometres (60 kilometres direct) northeast of the city of Greater Sudbury, Ontario, Canada. Work, since it started in June 1999, has revealed the presence of potentially commercial base metal sulphideassociated PGM deposits along the northern contact of the intrusion. The River Valley property covers over 5 184 hectares (52 square kilometres) and includes eight main areas of contact-type PGM-Cu-Ni sulphide mineralization (northwest to southeast): Dana Lake (North and South), Banshee Lake, Lismers Ridge (North and South), MacDonald, Varley, Azen Creek, Jacksons Flats, and Razor. An independent evaluation (October 2002) reports in-situ Measured and Indicated Resources of 825 900 ounces of platinum, palladium, and gold (3E) with Inferred Resources of 200 600 ounces, totalling 1 026 500 ounces in 23,44 million tons. Exploration for reef-type PGM targets has not yet begun on the property; almost all of the work to date has focused on the contact environment, where the igneous complex comes into contact with the wall rocks and represents a steeply dipping contact zone. However, there are indications that reef-type mineralization may be present, adding an entirely new dimension to the potential of the property and the intrusion. The exploration drilling programme has completed in-fill drilling of the known Mineral Resource and is now focusing on new target areas along the southeast contact of the intrusion; a more than 6-kilometre strike length with potential for further Resources. Results from the deeper drilling at the Dana Lake South deposit were extremely encouraging: drill hole DL-154 returned 3,7 grams of platinum and palladium per ton over 68 metres, including 5,0 grams of platinum and palladium per ton over 47 metres,
9,7 grams of platinum and palladium per ton over 13 metres, and 19,0 grams of platinum and palladium per ton over 3 metres; this represents the highest grade and width diamond-drill intersection to date. Early results from drilling in the southeastern part of the property are encouraging, and drilling is expected to continue late into 2004. An updated Mineral Resource study is currently underway. It must be noted that River Valley is a palladium-dominant deposit and that future exploration decisions will be affected by the palladium price.
Agnew Lake
The Agnew Lake property, located about 60 kilometres west of Sudbury, Ontario, Canada, covers the Agnew Lake intrusion, which is known to host anomalous and potentially economic concentrations of PGMs. The Agnew Lake intrusion is similar in age and composition to the River Valley intrusion: both contain contact-type sulphide-associated PGMs that are primarily hosted in fragment bearing rocks occurring proximal or at the margins of the intrusions. In July 2001, Anglo Platinum entered into an agreement with Pacific North West Capital Corporation and Platinum Group Metals Ltd, whereby Anglo Platinum may earn a 49,5% interest in the Agnew Lake Project by making certain cash payments and reimbursements (which have been made) and by completing CDN$6,0 million in exploration expenditure by 31 December 2004. Anglo Platinum can increase its interest in the property to 57% by completing a feasibility study, and to 60% by arranging 100% financing of the project to commercial production. To date, Anglo Platinum has financed approximately CDN$2,5 million in exploration at Agnew Lake. By entering into this agreement, Pacific North West Capital Corporation and Anglo Platinum have substantial interests in two of the three largest layered intrusions in the immediate Sudbury area. Most exploration activities, (diamond drilling, induced-polarization and magnetometer geophysical surveys, geological surveys, and prospecting) have concentrated on the contact region of the intrusion. Exploration activities at Agnew Lake in 2003 included diamond drilling, geological mapping, prospecting, and airborne geophysical surveying using the Spectrem Air multispectral AEM system. A diamond-drilling programme, aimed at following up some of the targets produced from the Spectrem survey, is planned for 2004.
International
Anglo Platinums partners took several exciting projects forward, including the joint venture with Pacific North West Capital Corporation (principally in the River Valley area near Sudbury, Ontario, Canada) and the Russian Urals project, a relationship with Eurasia Mining plc.
Canada
River Valley The River Valley PGM-Cu-Ni project
54
OPERATIONS REVIEW > REVIEW OF MINERAL RESERVES AND RESOURCES > OVERVIEW OF EXPLORATION
Surface grab samples from the prospective 15-kilometre intrusive contact region have assayed up to 8,4 grams of platinum and palladium per ton and diamond drilling has returned anomalous intersections of PGMs, including a 1-metre intersection of 5,1 grams of platinum and palladium per ton.
Zone. This zone consists of a diffuse enrichment of PGMs that are typically found in association with base metal sulphide accumulations. There is a vertical stratigraphic relationship between the positions of the base metal and PGM peak values, which define the most desirable mining cut. This relationship characterizes the factors relevant to the success of recent Great Dyke PGM mining ventures. Resource drilling of the proposed mining footprint area continues with the purpose of improving the level of confidence for the final mine design.
55
OPERATIONS REVIEW > REVIEW OF MINERAL RESERVES AND RESOURCES > OVERVIEW OF EXPLORATION
A Competent Person is a person who is a member of the South African Council for Natural Scientific Professions (SACNASP) and/or the Engineering Council of South Africa (ECSA) and/or the South African Council for Professional Land Surveyors and Technical Surveyors (PLATO) or any other statutory South African or international body that is recognized by SAMREC. A Competent Person should have a minimum of five years experience relevant to the style of mineralization and type of deposit under consideration and to the activity that person is undertaking. If the Competent Person is estimating or supervising the estimation of Mineral Resources, the relevant experience must be in the estimation, assessment, and evaluation of Mineral Resources. If the Competent Person is estimating or supervising the estimation of Mineral Reserves, the relevant experience must be in the estimation, assessment, evaluation, and economic extraction of Mineral Reserves.
The SAMREC Code for the reporting of Reserves and Resources has been applied. This is consistent with the reporting basis used by Anglo American plc. Various Competent Persons, as defined by the SAMREC Code of Practice, have prepared the Resource and Reserve figures quoted in this Report. They were reviewed and signed off by the signatories below:
Keith Noble (Pr.Sci.Nat) General Manager: Mining & Geological Services Johannesburg 13 February 2004
Ron Hieber (Pr.Sci.Nat) Divisional Director: Resource Management & Development Johannesburg 13 February 2004 Reserves and Resources Moz 462,1 746,4 Mt 4 865,4 5 896,1 g/t 4E 4,56 4,77 Moz 712,6 904,5
Summary of changes in Reserves and Resources Reserves Mt 2002 2003 1 717,3 1 168,6 g/t 4E 4,54 4,21 Moz 250,5 158,1 Mt 3 148,1 4 727,5 Resources g/t 4E 4,57 4,91
Competent persons
Global Mineral Reserves and Resources Ron Hieber BSc (Geology), Pr. Sci. Nat. 400072/02, 31 years experience Keith Noble BSc (Geology), BSc (Hons) (Engineering), MSc (Engineering), Pr. Sci. Nat. 401336/83, 31 years experience Gordon Chunnett BSc (Hons) (Geology), Pr. Sci. Nat. 400002/88, 25 years experience Regional Mineral Resources Bruce Walters BSc (Hons) (Geology), 32 years experience Marshall Patterson BSc (Geology), GDE, 28 years experience Roger Johnson BSc (Hons), MSc (Engineering), Pr. Sci. Nat. 400022/96, 22 years experience Regional Survey Hans Kruger Frank Stevenson NHD (Mine Surveying), Government Survey Certificate of Competency, PLATO (PMS 0075), 27 years experience NHD (Mine Surveying), GDE (Mining Engineering), PLATO (PMS 0033), 14 years experience
56
OPERATIONS REVIEW > REVIEW OF MINERAL RESERVES AND RESOURCES > COMPETENT PERSONS
Amandelbult Section
Mineral Resources Quartus Snyman Mineral Reserves Johan van der Ryst Quartus Snyman Casper Nel BSc (Hons) (Geology), 13 years experience (1) Mine Managers Certificate of Competency, Association of Mine Managers of South Africa, SAIMM, 42 years experience BSc (Hons) (Geology), 13 years experience (1) Government Survey Certificate of Competency, 25 years experience (1)
Union Section
Mineral Resources Stephan Stander Paul Stevenson Iain Colquhoun Mineral Reserves Andrew Smith Jens Kerneck BSc (Hons), GDE (Mining), BCom, Pr. Sci. Nat. 400089/96, 11 years experience BSc (Geology), Dip. Prog., 26 years experience (1) BSc (Hons) (Mineral Economics), Pr. Sci. Nat. 400097/00, 20 years experience BEng (Mining Engineering), 15 years experience ND (Mine Surveying), PLATO (PMS 0057), 18 years experience
PPRust
Mineral Resources Paul Stevenson Mike Phipps Mineral Reserves Simon Buyers BSc (Geology), Dip. Prog., 26 years experience (1) BSc (Hons) (Geology), 18 years experience (1) BSc (Hons) (Mining), GDE (Mining), Pr. Eng., 8 years experience
Leplats
Mineral Resources Dietmar Nowak Ian McCutcheon Mineral Reserves Gert Booysen Clive Ackhurst MSc (Geology), Pr. Sci. Nat. 400107/03, 19 years experience BSc (Hons), 1 year experience NHD (Survey), Government Survey Certificate of Competency, PLATO (PMS 0082), 26 years experience BSc (Hons) (Mining Engineering), Mine Managers Certificate of Competency, 13 years experience
BRPM
Mineral Resources Mark Lionnet Mineral Reserves David Sharpe Ken Lomberg BSc (Hons) (Geology), 11 years experience (1) BSc (Hons), Pr. Sci. Nat. 400018/91, 15 years experience BSc (Hons), Pr. Sci. Nat. 400038/01, 13 years experience
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OPERATIONS REVIEW > REVIEW OF MINERAL RESERVES AND RESOURCES > COMPETENT PERSONS
(1) Indicates Pr. Sci. Nat. application in process (2) Indicates PLATO application in process
58
OPERATIONS REVIEW > REVIEW OF MINERAL RESERVES AND RESOURCES > BY REEF MINERAL RESERVES AND MINERAL RESOURCES BY REEF Mineral Reserves as at 31 December
Reef Category Reserves Mt 2003 2002 71,0 75,8 145,4 374,9 216,4 450,7 166,3 75,9 462,8 858,5 629,1 934,4 4,0 45,4 7,9 311,3 286,7 323,1 332,1 249,2 197,2 919,4 1 520,1 1 168,6 1 717,3 Metric Grade g/t 4E 2003 2002 5,62 5,94 6,18 5,65 6,00 5,70 4,34 4,39 4,40 4,66 4,38 4,64 3,03 3,29 3,23 2,65 2,57 2,67 2,67 4,65 4,73 4,09 4,51 4,21 4,54 Contained 4E t 2003 2002 399,4 450,5 899,0 2 119,3 298,4 2 569,8 721,7 333,5 034,0 4 000,4 755,7 4 334,0 12,0 149,5 25,5 826,1 737,6 863,6 887,1 158,6 933,6 759,0 6 857,4 917,7 7 790,9 Imperial Contained 4E Moz 2003 2002 12,8 14,5 28,9 68,1 41,7 82,6 23,2 10,7 65,4 128,6 88,6 139,3 0,4 4,8 0,8 26,6 23,7 27,8 28,5 37,3 30,0 120,9 220,5 158,1 250,5
Merensky Reef1
Platreef 1,3,4
Proved Probable Total Proved Probable Total Proved Proved stockpiles Probable Total Proved Probable Total
1 2 2
1 3 4
General: Rounding of figures may result in computational discrepancies. 4E grade reported: sum of platinum, palladium, rhodium and gold grades. Reserves: Joint venture agreements are still being finalized. Once finalized, the above statement may be affected. 1. Merensky Reef Reserves changed because of Platreef being reported separately. Historically the Platreef and the Merensky Reef reserves were combined. From 2003, these two reefs are reported separately. For comparison, the 2002 figures have been split for the purposes of this document. 2. 3,85 Mt of UG2 opencast included in Reserves. 3. Platreef stockpiles included in Reserves. Platreef is mined by open pit. 4. Merensky Reef/UG2/Platreef change in Reserves because of an improved Reserve/Resource classification: Mineral Reserve tonnage differences are mainly because of the transfer of material previously declared as Reserves to Resources (refer to Mineral Resource table).
Merensky Reef1
UG2 Reef
Platreef1
All reefs2
Measured Indicated Measured Inferred Total Measured Indicated Measured Inferred Total Measured Indicated Measured Inferred Total Measured Indicated Measured Inferred Total
and Indicated 1 1
and Indicated 1 2
and Indicated
1 and Indicated 1 3 4
General: Rounding of figures may result in computational discrepancies. 4E grade reported: sum of platinum, palladium, rhodium, and gold grades. Resources: Joint venture agreements are still being finalized. Once finalized, the above statement may be affected. 1. Merensky Reef Resources changed because of Platreef being reported separately. Historically the Platreef and the Merensky Reef Resources were combined. From 2003, these two reefs are reported separately. The 2002 figures have been split to enable comparisons to be drawn. 2. Merensky Reef/UG2/Platreef change in Resources because of an improved Reserve/Resource classification. The substantial increase in measured Mineral Resources is because of the transfer of material previously declared as Reserves to Resources. Some material previously declared as Indicated Mineral Resources was transferred to Inferred Mineral Resources following the implementation of an improved classification. The Mineral Reserves and Resources quoted are held under mining licences or prospecting permits issued or about to be issued under the Minerals Act, 1991. These must be converted into rights under the new Mineral and Petroleum Resources Development Act, 2002 (the Act), which provides for a prospecting right to be granted for a period of up to five years, renewable for a further three years. Under the Act, a mining right may be granted for up to 30 years, renewable for a further 30 years subject to the holder meeting the requirements of the Act. Anglo Platinums rights are therefore subject to their conversion into new rights under the Act and, insofar as Reserves and Resources are in excess of its requirements for the 30 years referred to, its rights are subject to renewal under the Act.
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OPERATIONS REVIEW > REVIEW OF MINERAL RESERVES AND RESOURCES > RESERVES BY OPERATION MINERAL RESERVES BY OPERATION as at 31 December 2003 South Africa
Merensky Reserves Mine Rustenburg Section1 Category Proved Probable Total Amandelbult Section2 Proved Probable Total Union Section
3
UG2 Grade g/t 4E 5,56 5,55 5,56 6,42 6,59 6,56 6,75 6,64 6,67 Reserves Mt 26,9 115,7 142,6 82,1 249,5 331,5 13,1 34,1 47,1 Grade g/t 4E 4,22 4,10 4,12 4,61 4,65 4,64 4,01 3,90 3,93
1,4 1,4
6,00 6,00
PPRust
4,0 311,3 315,2 16,5 11,5 28,1 6,7 9,0 15,7 4,51 4,39 4,46 4,94 4,75 4,83 4,8 12,8 17,6 15,4 15,4 21,5 16,7 38,2 0,7 5,5 6,1 Reserves Mt 7,9 7,9 6,26 6,05 6,07 Grade g/t 4E 3,23 3,23 0,5 9,9 10,4 4,87 4,86 4,86 4,53 4,53 3,11 3,02 3,07 4,01 4,01 4,01 1,0 1,5 2,5 4,73 4,49 4,59 15,0 7,3 22,3 4,80 5,21 4,93
Leplats
Proved Probable Total Proved Probable Total Proved Probable Total Proved Probable Total Proved Probable Total Category Proved Total
(Reported: 50%; Attributable: 50%) Northam8 (Reported: 22,5%; Attributable: 22,5%) Mine stockpile PPRust
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OPERATIONS REVIEW > REVIEW OF MINERAL RESERVES AND RESOURCES > RESERVES BY OPERATION
Africa
Metric Reserves Mine Unki, Zimbabwe
9
Imperial Contained 4E t 64,1 95,5 159,5 Contained 4E Moz 2,1 3,1 5,1
General: Merensky Reef/UG2/Platreef change in Reserves because of an improved Reserve/Resource classification: Mineral Reserve tonnage differences are mainly because of the transfer of material previously declared as Reserves to Resources. 1. 2. Merensky Reef/UG2 change in Reserves because of revised Reserve/Resource classification. Change in Merensky Reef Reserves because of revised Reserve/Resource classification. Increase in UG2 Reserves because of revised Reserve/Resource classification. Change in Reserves because of revised Reserve/Resource classification. Change in Reserves because of revised Reserve/Resource classification. 50% of BRPM (Boschkoppie 104JQ), Styldrift 90JQ, and portions of Frischgewaagd 96JQ included. Changes in the revised Reserve/Resource classification necessitated a change in the Reserves. In respect of the BRPM JV, Anglo Platinum has negotiated the terms of a JV agreement, and once binding, Anglo Platinum will receive a share in the total Reserves. Substantial increase in Reserves because of recent exploration efforts. Kroondal UG2 figures as per the Kroondal PSA, managed by Aquarius Platinum South Africa. Reserves quoted as at end-June 2003. Merensky and UG2 Resources converted to Reserves, quoted as at end-June 2003. The terms of a JV are currently being negotiated and once binding, Anglo Platinum will receive a share in the total Resources. 51% of attributable interest will apply on conclusion of a JV.
3. 4. 5.
6. 7. 8. 9.
61
OPERATIONS REVIEW > REVIEW OF MINERAL RESERVES AND RESOURCES > RESOURCES BY OPERATION MINERAL RESOURCES BY OPERATION as at 31 December 2003 South Africa
Merensky Resources Mine Rustenburg Section
1
UG2 Grade Resources g/t 4E Mt 13,1 7,2 g/t 4E 5,92 5,73 4,69 4,76 5,03 4,75 4,78 4,38 4,64 4,63
Mt
Amandelbult Section
Union Section3
PPRust4
11,9 338,9 153,6 504,4 5,6 36,6 126,3 168,4 23,9 70,4 94,2 6,9 22,9 11,8 41,6 5,3 15,4 138,7 159,4 4,6 46,7 70,8 122,0 8,9 17,2 33,5 59,6 5,08 5,27 5,33 5,31 6,10 6,48 6,38 4,11 5,17 5,33 5,04 4,36 4,52 5,13 5,05 4,60 4,94 5,07 5,00 4,58 4,52 4,26 4,38 202,0 202,0 26,7 96,1 86,8 209,6 8,1 43,5 58,4 110,0 28,2 55,2 75,7 159,1 5,72 5,72 5,57 5,33 5,60 5,48 5,95 5,90 5,91 5,91 4,60 4,01 3,98 4,10 64,7 126,2 143,0 333,8 1,7 7,9 85,7 95,3 13,2 28,7 89,4 131,3 6,20 6,28 6,22 6,24 5,24 5,19 4,91 4,94 5,44 5,35 5,31 5,33
Leplats
BRPM
Modikwa Projects7
Twickenham Platinum8
Pandora JV
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OPERATIONS REVIEW > REVIEW OF MINERAL RESERVES AND RESOURCES > RESOURCES BY OPERATION
South Africa
Merensky Resources Mine Der Brochen Project
10
UG2 Grade Resources g/t 4E 5,22 4,61 4,43 4,56 5,64 5,15 4,69 4,73 Mt 99,7 131,3 98,0 329,0 28,3 45,1 339,0 412,4 g/t 4E 4,59 4,91 5,05 4,85 5,01 4,72 4,94 4,92
Booysendal Project
10
Measured Indicated Inferred Total 17,5 17,5 6,32 6,32 23,3 23,3 4,7 22,0 71,5 98,2 4,71 4,71 4,30 4,34 4,34 4,34
Elandsfontein 440JQ12
Rooderand
13
Measured Indicated Inferred Total Resources Grade g/t 4E 1,03 1,16 1,08 13,3 13,3 Mt 140,6 78,4 219,0 5,54 5,54
14
Rustenburg Section
Africa
Metric Resources Mine Unki, Zimbabwe15 Category Measured Indicated Measured and indicated Inferred Total Mt 19,5 29,1 48,6 11,6 60,2 Grade g/t 4E 4,98 4,98 4,98 4,98 4,98 Contained 4E t 97,1 144,9 242,0 57,8 299,8 Imperial Contained 4E Moz 3,1 4,7 7,8 1,9 9,6
Americas
Metric Resources Mine River Valley, Canada
17
Imperial Grade %Ni 0,19 Contained 3E t 21,6 25,7 6,2 31,9 Contained 3E Moz 0,7 0,8 0,2 1,0
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OPERATIONS REVIEW > REVIEW OF MINERAL RESERVES AND RESOURCES > RESOURCES BY OPERATION
General: Merensky Reef/UG2/Platreef change in Resources because of an improved Reserve/Resource classification. The substantial increase in measured Mineral Resources was because of the transfer of material previously declared as Reserves to Resources. Some material previously declared as Indicated Mineral Resources was transferred to Inferred Mineral Resources following the implementation of an improved classification procedure. 1. 2. 3. Increase in Resource tonnage because of Beestekraal 290JQ portions being included. The inclusion of Goevernements Plaats 417KQ has resulted in an increase in Resources. Merensky and UG2 Resources increased due to the inclusion of Grootkuil 409KQ. A new interpretation of recent aeromagnetic data has assisted in a revision of the Merensky and UG2 Resources. A revised depth limit below surface has resulted in a change in the Resources. The inclusion of additional portions of Diamant 422KS, Umkoanesstad 419KS, and Brakfontein 464KS has resulted in an increase in the Resources. 50% of BRPM (Boschkoppie 104JQ), Styldrift 90JQ, and portions of Frischgewaagd 96JQ included. Increase in Resources because of revised Reserve/Resource classification. BRPM JV: a JV Agreement has been negotiated and once binding, Anglo Platinum will receive a share in the total Resources. Modikwa Platinum Mine JV is quoted separately from the Modikwa project. Increase in Resource tonnage because of recent exploration efforts. Twickenham Platinum Mine is quoted separately from the Ga-Phasa PGM Project JV this year. The inclusion of Balmoral 508KS has resulted in an increase in the Resources in the Twickenham Platinum Project. Ga-Phasa PGM Project: Anglo Platinum is currently negotiating the terms of a possible joint venture agreement and once binding Anglo Platinums attributable ounces will be affected. Once the joint venture is finalized and binding, Anglo Platinums attributable Resource will be ~45% of the whole of the Pandora JV.
4. 5. 6.
7. 8.
9.
10. Der Brochen Project is quoted separately from the Booysendal Project this year. Substantial increase in Mineral Resource tonnage due to recent exploration efforts. Once the joint venture is finalized and binding, Anglo Platinums attributable Resource will be ~50% of the whole Booysendal JV, inclusive of Johannesberg 45JT and Sheeprun 50JT. 100% of the Resources reported above. 11. The inclusion of portions of Elandsfontein 102JQ and Frischgewaagd 96JQ has resulted in an increase of the Resources. 12. Resource changes because of revised geological modelling. 13. The inclusion of portions of Rooderand 46JQ has resulted in an increase in the Resources. 14. Mine tailings dams Resources are not included in Mineral Resource summary. 15. Anglo Platinum is currently negotiating the terms of a possible JV agreement and once binding will receive a share in the Resources. 51% of attributable interest will apply on conclusion of a JV. 100% of the Resources reported above. 16. 50% attributable interest will apply on conclusion of a JV. 3E grade reported: sum of platinum, palladium, and gold grades. 100% of the Resources reported above. 17. 50% attributable interest. 3E grade reported: sum of platinum, palladium, and gold grades. 100% of the Resources reported above.
64
OPERATIONS REVIEW > REVIEW OF MINERAL RESERVES AND RESOURCES > DEFINITIONS
and mineral content can be estimated with a low level of confidence. It is inferred from geological evidence and assumed but not verified from geological and/or grade continuity. It is based on information gathered through appropriate techniques from outcrops, trenches, pits, workings, and drill holes that may be limited or of uncertain quality and reliability. A Mineral Resource is consistent with the Inferred Category when the risk associated with the accumulated metal estimate is greater than 20% (at a 90% confidence level). Indicated Mineral Resource: that part of a Mineral Resource for which tonnage, densities, shape, physical characteristics, grade, and mineral content can be estimated with a reasonable level of confidence. It is based on exploration, sampling, and testing information gathered through appropriate techniques from outcrops, trenches, pits, workings, and drill holes. The locations are too widely or inappropriately spaced to confirm geological and/or grade continuity but are spaced closely enough for continuity to be assumed. A Mineral Resource is consistent with the Indicated Category when the risk associated with the accumulated metal estimate is between 10% and 20% (at a 90% confidence level). Measured Mineral Resource: that part of a Mineral Resource for which tonnage, densities, shape, physical characteristics, grade, and mineral content can be estimated with a high level of confidence. It is based on detailed and reliable exploration, sampling, and testing information gathered through appropriate techniques from outcrops, trenches, pits, workings, and drill holes. The locations are spaced closely enough to confirm geological and grade continuity. A Mineral Resource is consistent with the Measured Category when the risk associated with the accumulated metal estimate is less than 10% (at a 90% confidence level). Mineral Reserve: the economically mineable material derived from a Measured and/or Indicated Mineral Resource. It is inclusive of diluting materials and allows for losses that may occur when it is mined.
Appropriate assessments, which may include feasibility studies, have been carried out, including consideration of and modification by realistically assumed mining, metallurgical, economic, marketing, legal, environmental, social, and governmental factors. These assessments demonstrate at the time of reporting that extraction is justifiable. Mineral Reserves are subdivided, in order of increasing confidence, into Probable Mineral Reserves and Proved Mineral Reserves. Probable Mineral Reserve: the economically mineable material derived from a Measured and/or Indicated Mineral Resource. It is estimated with a lower level of confidence than a Proved Mineral Reserve. It is inclusive of diluting materials and allows for losses that may occur when the material is mined. Appropriate assessments, which may include feasibility studies, have been carried out, including consideration of and modification by realistically assumed mining, metallurgical, economic, marketing, legal, environmental, social, and governmental factors. These assessments demonstrate at the time of reporting that extraction is reasonably justified. Proved Mineral Reserve: the economically mineable material derived from a Measured Mineral Resource. It is estimated with a high level of confidence, inclusive of diluting materials, and allows for losses that may occur when the material is mined. Appropriate assessments, which may include feasibility studies, have been carried out, including consideration of and modification by realistically assumed mining, metallurgical, economic, marketing, legal, environmental, social, and governmental factors. These assessments demonstrate at the time of reporting that extraction is reasonably justified. Anglo Platinums Proved Mineral Reserves are contained within the limits of the five-year mining plans of its operations, this being the area of greatest understanding and certainty pertaining to the orebody.
65
Total operations 2003 Refined production*: Platinum Palladium Rhodium Gold PGMs Nickel Copper Average market prices achieved: Platinum Palladium Rhodium Gold Nickel Copper Net sales revenue Net sales revenue Average exchange rate achieved on sales Exchange rate at year end Average market prices achieved: Platinum Palladium Rhodium Gold Nickel Copper Net sales revenue Net sales revenue Profitability statistics: Gross profit margin EBITDA Operating profit/average operating assets Return on equity Return on capital employed
the refinery.
2002
2001
2000 1 871,7 946,6 165,1 97,9 3 255,4 19,2 10,8 544 675 1 847 281 3,86 0,78 1 186 673 6,9881 7,5750 3 804 4 739 12 864 1 958 26,63 5,42 8 287 4 701 54,7 9 298,0 117,6 73,2 59,0
1999 2 022,7 1 017,2 171,7 106,9 3 521,4 19,6 10,7 377 358 894 278 2,58 0,66 709 420 6,1576 6,1547 2 317 2 206 5 553 1 726 15,82 4,08 4 366 2 586 36,1 3 582,4 49,2 45,4 41,3
000 oz 000 oz 000 oz 000 oz 000 oz 000 tons 000 tons US$/oz US$/oz US$/oz US$/oz US$/lb US$/lb US$/oz Pt sold US$/oz PGM sold R/US$ R/US$ R/oz R/oz R/oz R/oz R/lb R/lb R/oz Pt sold R/oz PGM sold % R millions % % %
2 307,8 1 190,9 232,5 116,1 4 161,5 22,1 12,9 696 198 527 366 4,07 0,77 948 526 6,6679 5 140 1 459 3 967 2 728 30,76 5,74 7 017 3 896 23,7 4 578,5 20,2 16,3 10,5
2 251,1 2 109,2 1 115,3 1 049,0 211,7 107,1 19,4 10,5 544 329 831 308 3,03 0,67 843 512 200,4 102,2 19,5 10,8 526 582 1 610 274 2,65 0,68 1 013 622 8,5434
3 947,6 3 673,6
7,4055 10,3101
8,5775 11,9610 5 567 3 403 8 683 3 247 31,92 7,08 8 690 5 281 46,5 66,3 45,0 43,1 4 531 4 936 13 410 2 425 23,14 5,80 8 654 5 318 51,4 120,0 66,2 64,0
9 376,1 12 507,4
* Refined metal produced by the refinery and appointed toll-treaters from mined material and purchased concentrate, as well as metals in product sold from
66
Total operations 2003 Operating contribution by mine: Rustenburg Section steady-state Amandelbult Section Union Section PPRust Leplats Total steady-state mines Ramp-up operations BRPM Rustenburg Section UG2 Project Modikwa Consolidated operating contribution Other costs Gross profit on metal sales Operating margin by mine: Rustenburg Section steady-state Amandelbult Section Union Section PPRust Leplats Total steady-state BRPM Rustenburg Section UG2 Project Modikwa Consolidated operating margin % 29,4 50,4 20,4 28,6 20,5 34,2 10,1 4,0 0,5 28,0 50,8 65,3 44,4 48,9 45,6 54,5 31,9 34,5 7,9 51,2 57,6 60,3 40,6 51,8 68,4 51,2 65,7 48,9 59,0 30,3 53,4 69,5 61,6 63,2 44,2 60,8 50,0 35,6 52,6 39,3 36,6 17,9 40,7 25,3 120,3 66,4 3,2 603,7 3 909,9 433,9 451,4 12,9 9 369,8 508,6 8 861,2 3 461,3 282,0 3 179,3 591,3 674,5 275,2 374,0 4,3 R millions 1 130,0 2 106,7 413,7 509,9 163,4 4 323,7 2 794,2 2 993,6 3 886,2 3 742,6 1 059,3 1 190,9 926,1 1 680,5 450,1 407,7 9 115,9 10 015,3 2 700,3 3 200,8 1 534,1 1 318,1 242,5 8 995,8 1 114,6 1 324,0 543,3 414,2 60,9 3 457,0 2002 2001 2000 1999
67
Refined production summary 2003 Refined production from mining operations: Platinum Palladium Rhodium Gold PGMs Nickel Copper Refined production from purchased metals in concentrate: Platinum Palladium Rhodium Gold PGMs Nickel Copper Total refined production *: Platinum Palladium Rhodium Gold PGMs Nickel Copper Pipeline calculation Equivalent refined platinum production ** Steady-state operations: Rustenburg Section, steady-state Amandelbult Section Union Section PPRust Leplats Ramp-up operations BRPM Rustenburg Section UG2 Project Modikwa Refined platinum production ** Mining Purchase of concentrate Platinum pipeline movement
refinery. ** Mines production of metal in concentrate converted to refined production using Anglo Platinums standard smelting and refining recoveries.
2002 2 238,5 1 103,1 210,0 106,7 3 920,6 19,4 10,5 12,6 12,2 1,7 0,4 27,0 2 251,1 1 115,3 211,7 107,1 3 947,6 19,4 10,5
000 oz 000 oz 000 oz 000 oz 000 oz 000 t 000 t 000 oz 000 oz 000 oz 000 oz 000 oz 000 t 000 t 000 oz 000 oz 000 oz 000 oz 000 oz 000 t 000 t
2 264,7 1 150,6 225,2 114,8 4 059,0 21,9 12,8 43,1 40,3 7,3 1,3 102,5 0,2 0,1 2 307,8 1 190,9 232,5 116,1 4 161,5 22,1 12,9
000 oz 000 oz 000 oz 000 oz 000 oz 000 oz 000 oz 000 oz 000 oz 000 oz 000 oz 000 oz 000 oz 000 oz 000 oz
2 360,5 1 831,0 571,3 644,7 318,2 191,8 105,0 529,5 183,5 255,0 91,0 2 307,8 2 264,7 43,1 52,7
2 185,5 1 835,6 611,5 677,6 276,7 164,7 105,1 349,9 161,5 161,1 27,3 2 251,1 2 238,5 12,6 (65,6)
* Refined metal produced by the refinery and appointed toll-treaters from mined material and purchased concentrate, as well as metals in product sold from the
68
Total steady-state operations* 2003 Refined production: Platinum Palladium Rhodium Gold PGMs Nickel Copper Production statistics and efficiency measures: Tons broken, underground mines Tons mined, open pit mine (PPRust) Tons milled Immediately available ore reserves Face advance Average number of mine employees Stoping and cleaning employee productivity UG2 mined of total output Built-up head grade Equivalent refined platinum production** Cash on-mine costs Cash on-mine costs Cash operating costs Cash operating costs Cash on-mine costs Cash on-mine costs Cash operating costs Cash operating costs Operating income statement: Net sales revenue Operating cost of sales Operating contribution Operating margin % m /employee/month
2
2002
2001
2000 1 756,7 915,5 161,2 90,9 3 082,6 18,6 10,3 19 003 30 183 23 042 14,5 8,5 38 238 36,4 27 5,08 1 758,3 199 2 605 3 116 1 776 29 377 451 257
1999 2 018,5 1 015,6 171,5 106,7 3 514,2 19,6 10,7 20 824 34 730 22 752 16,1 9,4 33 866 40,0 23 5,40 1 881,1 183 2 219 2 497 1 434 30 364 410 235 8 501,0 3 457,0 40,7
000 oz 000 oz 000 oz 000 oz 000 oz 000 tons 000 tons 000 000 000 Months m/month
1 799,1 905,5 171,2 94,5 3 214,6 18,1 10,5 20 134 48 444 25 349 16,0 9,5 34 277 37,3 32 4,86 1 831,0 253 3 497 4 304 2 409 34 463 570 319
1 918,5 1 979,0 937,6 1 004,7 176,8 90,8 16,8 9,1 20 179 39 672 24 587 15,4 10,3 34 527 37,2 28 4,91 233 3 123 3 599 2 053 22 298 343 196 192,9 96,1 18,5 10,2 21 519 29 631 24 952 14,2 8,8 37 396 37,6 28 5,06 217 2 825 3 254 1 852 25 328 378 215
3 363,0 3 478,0
% g/ton milled, 4E 000 oz R/ton milled R/oz equiv. refined Pt R/oz Pt refined R/oz PGM refined US$/ton milled US$/oz equiv. refined Pt US$/oz Pt refined US$/oz PGM refined R millions
1 835,6 1 914,5
12 637,6 16 724,4 16 971,8 14 789,0 4 323,7 34,2 9 115,9 10 015,3 54,5 59,0 8 995,8 60,8
* Includes all operations except BRPM, Rustenburg Section UG2 Project, and Modikwa, all of which were in a production ramp-up phase. ** Mines production of metal in concentrate converted to refined production using Anglo Platinums standard smelting and refining recoveries. Cost of sales excluding other costs.
69
OPERATIONS REVIEW > GROUP STATISTICS > STEADY-STATE OPERATIONS > RUSTENBURG SECTION
Rustenburg Section (100% owned) (excludes the UG2 Project) 2003 Refined production: Platinum Palladium Rhodium Gold PGMs Nickel Copper Production statistics and efficiency measures: Tons broken Tons milled Immediately available ore reserves Face advance Average number of mine employees Stoping and cleaning employee productivity UG2 mined of total output Built-up head grade Equivalent refined platinum production* Cash on-mine costs Cash on-mine costs Cash operating costs Cash operating costs Cash on-mine costs Cash on-mine costs Cash operating costs Cash operating costs Operating income statement: Net sales revenue Operating cost of sales Operating contribution Operating margin
Cost of sales excluding other costs. 2002 and 2003 exclude portions of the Brakspruit, Bleskop, and Paardekraal shafts, as well as the Waterval Mine, which were being expanded as part of the Rustenburg UG2 Project. These shafts, at a lower level of output, are included in the steady-state information for 2001 and before.
2002 655,5 272,7 43,1 39,0 6,8 3,9 7 014 7 031 17,0 10,7 14 780 39,9 2 5,31 611,5 296 3 400 3 822 2 325 28 324 365 222
2001 719,1 307,7 54,0 41,8 7,8 4,5 8 550 7 733 15,0 8,9 17 346 38,8 16 5,38 689,9 286 3 206 3 650 2 233 33 372 424 259
2000 630,8 277,3 43,6 39,4 1 028,5 7,6 4,4 7 734 7 215 16,1 8,6 17 719 36,7 15 5,32 624,7 264 3 055 3 580 2 196 38 442 518 318 5 060,6 2 700,3 53,4
1999 767,8 327,0 46,6 50,8 1 224,6 8,6 5,0 8 837 7 701 15,9 9,2 16 481 41,0 9 5,65 707,0 235 2 555 2 708 1 698 39 419 444 279 3 128,1 1 114,6 35,6
000 oz 000 oz 000 oz 000 oz 000 oz 000 tons 000 tons 000 000 Months m/month m /employee/month
2
557,3 230,0 38,5 37,2 927,9 6,0 3,7 6 360 6 511 15,6 9,9 14 540 37,2 0 5,17 571,3 316 3 604 4 366 2 623 42 478 579 348 3 845,9 1 130,0
1 077,7 1 175,6
% g/ton milled, 4E 000 oz R/ton milled R/oz equiv. refined Pt R/oz Pt refined R/oz PGM refined US$/ton milled US$/oz equiv. refined Pt US$/oz Pt refined US$/oz PGM refined R millions
* Mines production of metal in concentrate converted to refined production using Anglo Platinums standard smelting and refining recoveries.
70
OPERATIONS REVIEW > GROUP STATISTICS > STEADY-STATE OPERATIONS > AMANDELBULT SECTION
Amandelbult Section (100% owned) 2003 Refined production: Platinum Palladium Rhodium Gold PGMs Nickel Copper Production statistics and efficiency measures: Tons broken Tons milled Immediately available ore reserves Face advance Average number of mine employees Stoping and cleaning employee productivity UG2 mined of total output Built-up head grade Equivalent refined platinum production* Cash on-mine costs Cash on-mine costs Cash operating costs Cash operating costs Cash on-mine costs Cash on-mine costs Cash operating costs Cash operating costs Operating income statement: Net sales revenue Operating cost of sales Operating contribution Operating margin
Cost of sales excluding other costs.
2002 711,0 314,7 71,9 23,6 4,2 2,1 7 539 7 072 18,0 10,7 9 607 37,5 44 5,86 677,6 212 2 210 2 533 1 466 20 211 242 140
2001 679,3 299,4 73,0 23,0 4,2 2,3 7 621 7 086 18,0 9,3 9 890 39,1 36 5,68 653,7 184 1 995 2 312 1 340 21 232 268 155
2000 570,8 261,1 57,2 22,1 981,9 4,1 2,3 6 505 6 412 19,0 8,9 9 908 36,2 32 5,56 566,7 167 1 886 2 252 1 309 24 273 326 189 4 603,0 3 200,8 69,5
1999 637,7 287,5 58,1 25,3 1 119,9 4,3 2,5 6 708 6 222 21,1 9,4 8 267 41,3 29 5,86 583,5 152 1 618 1 859 1 058 25 266 305 174 2 518,0 1 324,0 52,6
000 oz 000 oz 000 oz 000 oz 000 oz 000 tons 000 tons 000 000 Months m/month m /employee/month
2
634,6 277,1 66,1 24,0 1 102,0 3,9 2,3 7 757 6 956 19,9 9,6 9 595 36,8 46 5,76 644,7 242 2 607 3 213 1 850 32 345 426 245 4 181,6 2 106,7
1 228,6 1 172,4
% g/ton milled, 4E 000 oz R/ton milled R/oz equiv. refined Pt R/oz Pt refined R/oz PGM refined US$/ton milled US$/oz equiv. refined Pt US$/oz Pt refined US$/oz PGM refined R millions
* Mines production of metal in concentrate converted to refined production using Anglo Platinums standard smelting and refining recoveries.
71
OPERATIONS REVIEW > GROUP STATISTICS > STEADY-STATE OPERATIONS > UNION SECTION
Union Section (100% owned) 2003 Refined production: Platinum Palladium Rhodium Gold PGMs Nickel Copper Production statistics and efficiency measures: Tons broken Tons milled Immediately available ore reserves Face advance Average number of mine employees Stoping and cleaning employee productivity UG2 mined of total output Built-up head grade Equivalent refined platinum production* Cash on-mine costs Cash on-mine costs Cash operating costs Cash operating costs Cash on-mine costs Cash on-mine costs Cash operating costs Cash operating costs Operating income statement: Net sales revenue Operating cost of sales Operating contribution Operating margin
Cost of sales excluding other costs.
2002 284,7 125,8 40,2 5,2 514,7 1,0 0,4 3 707 4 562 20,0 8,5 6 240 29,1 64 4,34 276,7 235 3 876 4 246 2 349 22 370 405 224
2001 280,4 122,2 42,3 4,8 505,2 1,1 0,5 3 694 4 466 16,1 7,1 6 342 29,9 60 4,40 269,5 211 3 489 3 787 2 102 24 405 439 244
2000 288,8 137,7 42,1 5,3 528,5 1,4 0,7 3 497 4 159 13,4 7,0 7 212 36,9 69 4,89 291,1 195 2 786 3 182 1 739 28 403 460 252 2 491,5 (957,4) 1 534,1 61,6
1999 333,1 155,7 47,4 5,8 604,9 1,5 0,6 3 982 3 749 14,5 7,4 5 878 35,1 75 5,38 307,3 187 2 278 2 562 1 411 31 374 420 232 1 383,6 (840,3) 543,3 39,3
000 oz 000 oz 000 oz 000 oz 000 oz 000 tons 000 tons 000 000 Months m/month m /employee/month
2
313,2 132,6 43,6 5,8 572,0 1,1 0,5 4 041 5 882 19,7 9,0 6 163 30,5 74 4,18 318,2 229 4 231 5 003 2 739 30 561 663 363 2 029,2 413,7
% g/ton milled, 4E 000 oz R/ton milled R/oz equiv. refined Pt R/oz Pt refined R/oz PGM refined US$/ton milled US$/oz equiv. refined Pt US$/oz Pt refined US$/oz PGM refined R millions
* Mines production of metal in concentrate converted to refined production using Anglo Platinums standard smelting and refining recoveries.
72
OPERATIONS REVIEW > GROUP STATISTICS > STEADY-STATE OPERATIONS > PPRUST
PPRust (100% owned) 2003 Refined production: Platinum Palladium Rhodium Gold PGMs Nickel Copper Production statistics and efficiency measures: Tons mined Stripping ratio Tons milled Immediately available ore reserves* Average number of mine employees Built-up head grade Equivalent refined platinum production** Cash on-mine costs Cash on-mine costs Cash operating costs Cash operating costs Cash on-mine costs Cash on-mine costs Cash operating costs Cash operating costs Operating income statement: Net sales revenue Operating cost of sales Operating contribution Operating margin
* Within the pit. ** Mines production of metal in concentrate converted to refined production using Anglo Platinums standard smelting and refining recoveries. Cost of sales excluding other costs.
2002 165,3 159,0 12,1 17,1 349,4 3,4 1,9 39 672 17,7 4 375 6,1 1 112 3,53 164,7 147 3 903 5 298 2 507 14 373 506 239
2001 211,1 219,8 16,4 21,2 462,9 4,2 2,2 29 631 10,9 4 270 3,5 1 095 4,38 211,4 139 2 815 3 688 1 682 16 327 428 195
2000 194,1 203,7 13,9 19,6 424,0 4,4 2,3 30 183 8,7 4 177 6,7 1 172 4,33 202,6 126 2 605 3 654 1 673 18 377 528 242 2 085,7 (767,6) 1 318,1 63,2
1999 201,1 210,2 14,9 19,7 438,4 3,9 1,9 34 730 7,9 4 059 1,3 1 174 4,59 200,6 120 2 423 3 228 1 481 20 398 530 243 1 131,5 (717,3) 414,2 36,6
000 oz 000 oz 000 oz 000 oz 000 oz 000 tons 000 tons 000 000 Months g/ton milled, 4E 000 oz R/ton milled R/oz equiv. refined Pt R/oz Pt refined R/oz PGM refined US$/ton milled US$/oz equiv. refined Pt US$/oz Pt refined US$/oz PGM refined R millions
188,9 196,9 12,5 21,4 411,0 5,7 3,2 48 444 13,0 4 465 5,3 1 124 3,99 191,8 183 4 249 5 964 2 741 24 563 790 363 1 782,6 (1 272,7) 509,9
28,6
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OPERATIONS REVIEW > GROUP STATISTICS > STEADY-STATE OPERATIONS > LEPLATS
Leplats (100% owned) 2003 Refined production: Platinum Palladium Rhodium Gold PGMs Nickel Copper Production statistics and efficiency measures: Tons broken Tons milled Immediately available ore reserves Face advance Average number of mine employees Stoping and cleaning employee productivity UG2 mined of total output Built-up head grade Equivalent refined platinum production* Cash on-mine costs Cash on-mine costs Cash operating costs Cash operating costs Cash on-mine costs Cash on-mine costs Cash operating costs Cash operating costs Operating income statement: Net sales revenue Operating cost of sales Operating contribution Operating margin
Cost of sales excluding other costs.
2002 102,0 65,4 9,5 5,9 192,6 1,4 0,8 1 919 1 547 15,6 9,0 2 788 39,4 38 4,46 105,1 285 4 197 5 027 2 663 27 401 480 254 987,9 (537,8) 450,1 45,6
2001 89,1 55,6 7,2 5,3 161,9 1,2 0,7 1 654 1 397 13,8 9,4 2 723 39,7 38 4,26 90,0 256 3 983 4 540 2 498 30 462 527 290 833,0 (425,3) 407,7 48,9
2000 72,2 35,7 4,4 4,5 119,7 1,1 0,6 1 267 1 079 12,4 9,0 2 227 35,0 18 4,26 73,2 244 3 601 4 179 2 520 35 521 604 364 548,2 (305,7) 242,5 44,2
1999 78,8 35,2 4,5 5,1 126,4 1,3 0,7 1 297 1 021 15,2 9,0 2 066 38,4 0 4,56 82,7 232 2 860 3 475 2 166 38 469 570 355 339,8 (278,9) 60,9 17,9
000 oz 000 oz 000 oz 000 oz 000 oz 000 tons 000 tons 000 000 Months m/month m /employee/month
2
105,1 68,9 10,5 6,1 201,7 1,4 0,8 1 976 1 535 16,6 9,0 2 855 40,7 39 4,61 105,0 327 4 779 5 499 2 866 43 633 729 380 798,3 (634,9) 163,4
% g/ton milled, 4E 000 oz R/ton milled R/oz equiv. refined Pt R/oz Pt refined R/oz PGM refined US$/ton milled US$/oz equiv. refined Pt US$/oz Pt refined US$/oz PGM refined R millions
20,5
* Mines production of metal in concentrate converted to refined production using Anglo Platinums standard smelting and refining recoveries.
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OPERATIONS REVIEW > GROUP STATISTICS > RAMP-UP OPERATIONS > BRPM
BRPM (100% owned, but to form part of a 50:50 JV with Royal Bafokeng Resources) 2003 Refined production: Platinum Palladium Rhodium Gold PGMs Nickel Copper Production statistics and efficiency measures: Tons broken Tons milled Immediately available ore reserves Face advance Average number of mine employees Stoping and cleaning employee productivity UG2 mined of total output Built-up head grade Equivalent refined platinum production* Cash on-mine costs Cash on-mine costs Cash operating costs Cash operating costs Cash on-mine costs Cash on-mine costs Cash operating costs Cash operating costs Operating income statement: Net sales revenue Operating cost of sales Operating contribution Operating margin
Cost of sales excluding other costs.
2002 162,1 68,2 10,5 9,4 261,5 1,7 1,0 2 159 2 491 6,7 8,9 3 267 45,3 13 4,22 161,5 284 4 382 5 045 3 127 27 418 481 298 1 358,4 (924,5) 433,9 31,9
2001 130,2 44,3 7,5 6,1 195,6 1,0 0,6 1 256 1 892 7,3 7,2 2 554 29,8 24 4,42 126,4 285 4 266 4 638 3 087 33 495 538 358 907,1 (631,9) 275,2 30,3
2000 115,0 31,1 3,9 7,0 172,8 0,6 0,5 610 1 533 3,0 5,4 1 433 15,4 9 4,61 112,2 232 3 164 3 458 2 302 34 458 500 333 748,0 (374,0) 374,0 50,0
1999 4,2 1,6 0,2 0,2 7,2 0,0 0,0 101 178 3,4 139 4 118 3 643 2 125 23 676 598 349 17,0 (12,7) 4,3 25,3
000 oz 000 oz 000 oz 000 oz 000 oz 000 tons 000 tons 000 000 Months m/month m /employee/month
2
177,6 69,1 11,2 10,8 280,9 2,0 1,3 2 681 2 481 10,3 9,3 3 457 45,4 8 4,50 183,5 329 4 456 5 221 3 301 44 590 692 437 1 186,4 (1 066,1) 120,3
% g/ton milled, 4E 000 oz R/ton milled R/oz equiv. refined Pt R/oz Pt refined R/oz PGM refined US$/ton milled US$/oz equiv. refined Pt US$/oz Pt refined US$/oz PGM refined R millions
10,1
* Mines production of metal in concentrate converted to refined production using Anglo Platinums standard smelting and refining recoveries.
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OPERATIONS REVIEW > GROUP STATISTICS > RAMP-UP OPERATIONS > MODIKWA
Modikwa Platinum Mine (50:50 JV with African Rainbow Minerals-led consortium) 2003 Refined production: Platinum Palladium Rhodium Gold PGM Nickel Copper Production statistics and efficiency measures: Tons broken Tons milled Immediately available ore reserves Face advance Average number of mine employees Stoping and cleaning employee productivity UG2 mined of total output Built-up head grade Equivalent refined platinum production* Cash on-mine costs Cash on-mine costs Cash operating costs Cash operating costs Cash on-mine costs Cash on-mine costs Cash operating costs Cash operating costs Operating income statement: Net sales revenue Operating cost of sales Operating contribution Operating margin
Cost of sales excluding other costs
2002 25,1 24,4 3,3 0,7 53,7 0,1 0,0 459 488 4,0 11,2 850 18,0 100 2,52 27,3 185 6 598 7 880 3 683 18 630 752 352 163,3 (150,4) 12,9 7,9
000 oz 000 oz 000 oz 000 oz 000 oz 000 tons 000 tons 000 000 Months m/month m /employee/month
2
86,2 80,6 14,6 2,5 204,9 0,4 0,3 1 484 1 211 2,9 14,3 1 057 19,1 100 3,23 91,0 303 8 057 9 268 3 898 40 1 068 1 228 517 616,1 (612,9) 3,2
% g/ton milled, 4E 000 oz R/ton milled R/oz equiv. refined Pt R/oz Pt refined R/oz PGM refined US$/ton milled US$/oz equiv. refined Pt US$/oz Pt refined US$/oz PGM refined R millions
0,5
* Mines production of metal in concentrate converted to refined production using Anglo Platinums standard smelting and refining recoveries.
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OPERATIONS REVIEW > GROUP STATISTICS > PROJECTS IN RAMP-UP PHASE > RUSTENBURG UG2 PROJECT
Rustenburg Section UG2 Project (100% owned) 2003 Refined production: Platinum Palladium Rhodium Gold PGMs Nickel Copper Production statistics and efficiency measures: Tons broken Tons milled Immediately available ore reserves Face advance Average number of mine employees Stoping and cleaning employee productivity UG2 mined of total output Built-up head grade Equivalent refined platinum production* Cash on-mine costs Cash on-mine costs Cash operating costs Cash operating costs Cash on-mine costs Cash on-mine costs Cash operating costs Cash operating costs Operating income statement: Net sales revenue Operating cost of sales Operating contribution Operating margin
Cost of sales excluding other costs.
2002 145,4 85,1 21,1 6,2 269,4 0,8 0,4 3 951 3 786 12,3 10,7 3 422 41,7 92 3,24 161,1 221 5 205 6 415 3 462 21 497 612 330 1 306,6 (855,2) 451,4 34,5
000 oz 000 oz 000 oz 000 oz 000 oz 000 tons 000 tons 000 000 Months m/month m /employee/month
2
244,9 135,7 35,5 8,3 461,1 1,6 0,8 7 035 5 716 11,8 11,8 4 506 41,8 93 3,38 255,0 252 5 647 6 661 3 538 33 748 883 469 1 660,3 (1 593,9) 66,4
% g/ton milled, 4E 000 oz R/ton milled R/oz equiv. refined Pt R/oz Pt refined R/oz PGM refined US$/ton milled US$/oz equiv. refined Pt US$/oz Pt refined US$/oz PGM refined R millions
4,0
* Mines production of metal in concentrate converted to refined production using Anglo Platinums standard smelting and refining recoveries.
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OPERATIONS REVIEW > GROUP STATISTICS > ANALYSIS OF GROUP CAPITAL EXPENDITURE
2003 R millions Mining: Rustenburg Section Amandelbult Section Union Section PPRust Leplats BRPM (including Styldrift) JV Modikwa JV Kroondal PSA Twickenham Pandora JV Western Limb Tailings Retreatment Unki JV Total mining Processing: Waterval Smelter Polokwane Smelter RBMR PMR Total processing Other Total capital expenditure Capitalized interest Grand total 78,3 1,3 28,4 97,0 205,0 247,1 3 952,7 222,1 491,7 54,9 536,1 1 304,8 385,4 3 270,4 300,4 493,0 83,3 633,1 1 509,8 632,5 7 223,1 200,5 7 423,6 39,6 33,6 93,8 149,1 2 140,9 20,6 3 500,6 1 434,3 434,8 605,8 338,7 266,6 254,0 166,4 112,7 43,6 52,7 2,2 736,7 33,9 597,5 0,9 1 580,2 1 547,0 434,8 605,8 338,7 266,6 297,6 219,1 2,2 736,7 33,9 597,5 0,9 5 080,8 1 898,0 607,7 290,8 420,0 213,1 102,6 256,1 7,7 Ongoing Expansion Total Ongoing
2002 Expansion 539,6 15,0 226,7 4,3 12,8 60,7 831,9 231,5 1,2 49,7 1 973,4 586,1 860,1 31,7 165,5 1 643,4 236,4 3 853,2 Total 1 147,3 305,8 646,7 217,4 115,4 316,8 839,6 231,5 1,2 49,7 3 871,4 606,7 860,1 71,3 199,1 1 737,2 385,5 5 994,1 5 994,1
78
Approval of annual financial statements Declaration by the Company Secretary Report of the independent auditors Directors Report Financial results and nature of business Listings Compliance with accounting standards Reporting in United States dollars Dividend Corporate governance Corporate code of conduct Black economic empowerment (BEE) initiatives Expansion programme Directorate Interests of Directors Directors remuneration Shares repurchased Share capital Dematerialization of shares (STRATE) Property Auditors Administration Subsidiary companies Holding company and ultimate holding company Remuneration Report Role of the Remuneration Committee and terms of reference Members of the Remuneration Committee Remuneration policy Other matters affecting remuneration of Directors Directors remuneration Principal accounting policies Consolidated financial statements Consolidated income statement Segmental information Consolidated balance sheet Group statement of changes in equity Consolidated cash flow statement United States dollar equivalent consolidated financial statements Notes to the consolidated financial statements Annexure A: Mining property, plant and equipment Annexure B: Non-mining property, plant and equipment Annexure C: Equity compensation benefits Anglo Platinum Share Option Scheme Annexure D: Investments in subsidiaries, joint ventures, associates and other Appendix 1: Annual financial statements: Anglo American Platinum Corporation Limited
80 80 81 82 82 82 82 82 82 83 84 84 85 85 86 86 86 86 87 87 87 87 87 87 88 88 88 88 90 91 98 104 104 105 106 107 108 109 112 132 133 134
136
138
79
Approval of annual financial statements for the year ended 31 December 2003
The annual financial statements, which appear on pages 82 to 141, were approved by the Board of Directors on 13 February 2004 and are signed on its behalf by:
Declaration by the Company Secretary In Terms of Section 268(G)(d) of the South African Companies Act 1973, as amended
I declare that, to the best of my knowledge, the Company has lodged with the Registrar of Companies all such returns as are required of a public company in terms of the Companies Act and that all such returns are true, correct, and up to date in respect of the financial year reported upon.
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Report of the Independent Auditors To the members of the Anglo American Platinum Corporation Limited
We have audited the Group annual financial statements and annual financial statements of Anglo American Platinum Corporation Limited set out on pages 82 to 141 for the year ended 31 December 2003. These financial statements are the responsibility of the Companys Directors. Our responsibility is to express an opinion on the financial statements based on our audit.
Scope
We conducted our audit in accordance with Statements of South African Auditing Standards. These standards require that we plan and perform the audit to obtain reasonable assurance that the financial statements are free of material misstatement. An audit includes: Examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; Assessing the accounting principles used and significant estimates made by management; and Evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
Audit opinion
In our opinion, these financial statements fairly present, in all material respects, the financial position of the Group and of the Company as at 31 December 2003 and the results of their operations and cash flows for the year then ended in accordance with International Financial Reporting Standards, as well as South African Statements of Generally Accepted Accounting Practice, and in the manner required by the Companies Act of South Africa.
Deloitte & Touche Chartered Accountants (S.A.) Registered Accountants and Auditors Johannesburg 13 February 2004
81
Listings
The abbreviated name under which the Company is listed on the JSE Securities Exchange, South Africa (JSE) is AngloPlat and the Companys JSE Clearing House Code is AMS. The Company, which is the sole listed entity for the Group, is also listed on The Stock Exchange, London. International Depositary Receipts in respect of the Companys shares are listed on the Brussels Bourse. These depositary receipts are issued by SOGSDEWAAY, the issuing company of Bank Brussels Lambert SA.
Dividend
The Companys dividend policy is to declare an interim and a final dividend in respect of each financial year. At its discretion, the Board may declare a special dividend where appropriate. Interim dividend On Tuesday 29 July 2003, the Board declared an interim cash dividend (number 101) of 370 cents per ordinary share (2002: 900 cents) to shareholders registered on Friday 29 August 2003. This dividend was paid on Wednesday 3 September 2003. Final dividend On Friday 13 February 2004, the Board declared a final cash dividend (number 102) of 270 cents per ordinary share (2002: 900 cents) (the cash dividend). In addition, the Board has proposed that shareholders be given the option to elect (the reinvestment election) to use the proceeds of the cash dividend to subscribe for new ordinary shares in Anglo Platinum (the subscription shares). The number of subscription shares to which shareholders will become entitled will be determined by the ratio that 270 cents per share multiplied by 1,05 bears to the issue price. The issue price is defined as the weighted average traded price of the ordinary shares of the Company on the JSE for the five business days ending Thursday, 4 March 2004. To the extent that shares cannot be subscribed for using the proceeds of the cash dividend, that portion of the cash dividend which is insufficient to subscribe for a whole share or an additional whole share (the cash dividend portion) will be posted to shareholders on the payment date. The subscription shares will be issued on Tuesday, 23 March 2004, and the adjusted number of shares will be listed on the JSE on that date. Documentation dealing with the subscription shares and election will be posted to shareholders around 16 February 2004. Only shareholders recorded in the register on Friday, 19 March 2004 will be entitled to receive the cash dividend and be able to make the reinvestment election.
82
The salient dates Circular incorporating a form of election posted to shareholders Election period opens at 09:00 Last day to trade to receive cash dividend and to be entitled to the reinvestment election Ordinary shares trade ex-dividend Maximum number of new ordinary shares listed on the JSE Securities Exchange South Africa (JSE) in respect of the reinvestment election Election period closes at 12:00 (see note) Record date to receive the cash dividend for the reinvestment election Dividend cheques or, where applicable, share certificates and cheques in respect of the cash dividend portion posted to certificated shareholders Safe custody accounts with the CSDP or broker credited and/or updated Results announcement published on SENS Results announcement published in the press Adjusted number of new ordinary shares listed on the JSE, on or about
Monday, 15 March Friday, 19 March Friday, 19 March Tuesday, Tuesday, Tuesday, Wednesday, Wednesday, 23 23 23 24 24 March March March March March
No dematerialization or rematerialization of share certificates may take place between Monday, 15 March 2004 and Friday, 19 March 2004, both days inclusive. Note: Dematerialized shareholders are required to notify their duly appointed CSDP or broker of their acceptance of the offer in the manner and time stipulated in the agreement governing the relationship between the shareholder and his/her CSDP or broker. Total dividends for the year The above-mentioned interim and final dividends resulted in dividends for the year totalling 640 cents per ordinary share (2002: 1 800 cents). The Board is satisfied that the capital remaining after the payment of the final dividend, together with anticipated borrowings, will be sufficient to support the current operations and to facilitate future development of the business.
83
Nothing has come to the attention of the Directors to indicate that any material breakdown in the functioning of these controls, procedures, or systems occurred during the year under review. Accordingly, the financial records may be relied upon for preparing the financial statements and maintaining accountability for assets and liabilities. In preparing the financial statements, the Group complied with International Financial Reporting Standards and used appropriate accounting policies, supported by reasonable and prudent judgements and estimates. The Directors are of the opinion that the financial statements fairly present the financial position of the Company and of the Group as at 31 December 2003 and the results of the operations and cash flow information for the year then ended. The Directors have reviewed the Groups cash flow forecast for the year to 31 December 2004 and, in the light of this review and the current financial position, they are satisfied that the Group has adequate resources to continue in operational existence for the foreseeable future. For this reason, the Group continues to adopt the goingconcern basis in preparing the annual financial statements. The Directors believe, as a result of the comprehensive structures and controls that are in place and the ongoing monitoring of the activities of executive and operational management, that the Board maintains effective control over the Groups affairs. The internal auditors and the independent external auditors concur with these statements by the Directors. The Board considers that the Company and its subsidiaries complied during the financial year in all material respects with the principles of the Code of Corporate Practices and Conduct contained in the 1994 King Committee Report on Corporate Governance (the 1994 Code). With effect from March 2002, the second King Report on Corporate Governance in South Africa (King 2) replaced the 1994 Code. Since the release of King 2, the Board has reviewed the Companys corporate governance in detail and has taken steps to ensure compliance. On 1 July 2003, Ralph Havenstein was appointed the CEO, separating this role from that of Chairman. The Board is of the view that the Company and its subsidiaries are now fully compliant with the recommendations set out in the Code of Corporate Practices and Conduct contained in King 2. Details of the Groups corporate governance structures and practices are set out in the Sustainable Development Report.
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Booysendal JV
In July 2003, Anglo Platinum and Khumama Platinum (Pty) Ltd, a BEE consortium, announced their agreement in principle to establish a 50:50 joint venture to develop the Booysendal Platinum Project on the Eastern Limb of the Bushveld Complex in Mpumalanga. The conclusion of the joint venture agreement is still subject to certain conditions, including the obtaining of the necessary regulatory and statutory consents and authorizations, as well as board approvals.
Expansion programme Expansion of mining capacity and process facilities announced in 2003
In February 2003, the Group announced that it had concluded an agreement to establish a joint venture with Cluff Mining plc (Cluff) to prospect and potentially develop the Shebas Ridge Platinum Project in the Mpumalanga Province. After certain cash payments and the issue of Cluff shares to Anglo Platinum, Anglo Platinum holds a 35% interest in the project, with the balance held by Cluff, who will continue to fund the exploration programme. Upon completion of a feasibility study and Cluff taking the decision to mine, Cluff will make a further payment of US$12,5 million to Anglo Platinum, thereby increasing Cluffs interest in the joint venture to 87,5%. When this occurs, the parties will finalize the terms for Anglo Platinum to purchase the concentrate to be produced by the mine. The conclusion of the Joint Venture Agreement is subject to certain conditions, including the obtaining of the necessary regulatory and statutory consents and authorizations. In April 2003, Anglo Platinum and Anglo American Corporation Zimbabwe Limited announced that they were to proceed with the initial phase of the development of the Unki Platinum Project, situated near Gweru on Zimbabwes Great Dyke. The project is still subject to certain Zimbabwean and South African regulatory and fiscal approvals. The project involves the development of an 85 000 tons per month mine that will include an on-site concentrator. The mine will produce concentrate containing some 58 000 ounces of refined platinum per annum at full capacity, with first production expected in 2007. The total project cost was estimated at some US$90 million (2003 terms). The concentrate produced by the mine will be smelted and refined by Anglo Platinum in South Africa. Anglo Platinum will hold a majority shareholding in Unki and will also manage the operations. Anglo Platinum and Anglo American Corporation Zimbabwe Limited will fund the initial development phase from existing cash resources and borrowing facilities. Discussions are being held with indigenous parties with a view to their acquiring an equity interest in Unki. In June 2003, Anglo Platinum and Aquarius Platinum (South Africa) announced that they had reached agreement to mine contiguous properties on their respective Rustenburg and Kroondal lease areas. The agreement provides for the parties to pool their assets, while retaining ownership thereof, and to share the proceeds equally. Anglo Platinum will provide access to a portion of the UG2 orebody on Rustenburg Platinum Mines (RPM) lease area and Aquarius Platinum (South Africa) will provide access to its existing Kroondal Platinum Mines (KPM) lease area and infrastructure. KPMs production will be expanded from 140 000 to 280 000 ounces of refined platinum per annum by utilizing the KPM infrastructure, constructing an additional 250 000 tons per month concentrator for completion in 2005, and the establishment of additional shaft capacity. The venture will have a mine life extending to 2016. The capital expenditure for establishment of the venture is expected to be in the region of R750 million (2003 terms) and will be equally funded by Anglo Platinum and Aquarius Platinum (South Africa). In December 2003, Anglo Platinum presented the results of a review of its expansion plans in light of deteriorating economic conditions, particularly those accompanying the strengthening of the rand against the US dollar. The review confirmed that current and future demand for platinum remained robust, and the Group consequently confirmed its commitment to expanding its production base. However, it announced its intention of slowing down the rate of implementation of some of its expansion projects by between one and three years. Instead of producing 3,4 million ounces of platinum in 2006, the revision of the project scheduling would result in a lower expanded production in that year of approximately 2,9 million ounces of platinum.
Directorate
Changes in the Directorate that occurred during the year are set out hereunder:
1 May 2003
Mr RG Mills was appointed Executive Director: Projects.
1 July 2003
Mr BE Davison resigned as Chief Executive Officer and remains as Non-executive Chairman of the Board. Mr R Havenstein was appointed as Chief Executive Officer. Dr BA Khumalo was appointed as an Independent Non-executive Director.
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10 November 2003
Mr PL Zim was appointed as a Non-executive Director.
31 December 2003
Mr BE Ngubane resigned as Executive Director: Human Resources. Subsequent to the end of the financial year, Mr JA Dreyer retired as an Executive Director, with effect from 1 February 2004, and Mr AM Thebyane joined as Executive Director: Human Resources, on 13 February 2004. In terms of the Articles of Association, Messrs Havenstein, Boyd, Mills, Nairn, Thebyane, Zim, and Dr Khumalo retire as Directors at the forthcoming Annual General Meeting and, being eligible, are available for re-election. The Board as it is currently constituted is set out on pages 144 and 145.
Interests of Directors
The shareholdings of the Directors and Alternate Directors in the ordinary shares of the Company as at 31 December that did not individually exceed 1% of the Companys issued share capital were: Number of shares held beneficially* 2003 Leslie Boyd Colin Brayshaw Barry Davison Dorian Emmett Mike King Bill Nairn Roeland van Kerckhoven Tom Wixley Total
* No Director had non-beneficial interests in any shares in 2003 or 2002.
In addition to the above, the Directors and their Alternates who held office on 31 December 2003 were interested in 334 371 options to acquire ordinary shares in the Company at that date, at an average price of R169,44 cents per share. Subsequent to the year-end, none of the Directors exercised any options to shares. No other material change in the aforegoing interests has taken place between 31 December 2003 and the date of this Report. Save for the Share Option Scheme, no arrangements to which the Company was a party existed at the end of the financial year, or at any time during the year, that would have enabled the Directors or their families to acquire benefits by means of the acquisition of shares in the Company. There were no contracts of significance during or at the end of the financial year in which any Directors or Alternate Directors of the Company were materially interested.
Directors remuneration
Details of Directors remuneration are set out in the Remuneration Report starting on page 88.
Shares repurchased
As a consequence of the Groups capital expansion programme, no share repurchases took place during the year under review.
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Share capital
The authorized and issued share capital of the Company as at 31 December was as follows:
Authorized
2002 and 2003 400 000 000 ordinary shares of 10 cents each R40 000 000
Issued
2002 214 933 207* ordinary shares of 10 cents each R21 493 320
*Net of 1 673 400 shares referred to above, which were purchased by the Company and transferred from the wholly owned subsidiary to the Company in August 2002 and, thereafter, cancelled and de-listed in accordance with the provisions of the Companies Act and the JSE rules.
At the Annual General Meeting, which is to be held on 30 March 2004, members will be requested to consider an ordinary resolution placing the authorized but unissued ordinary shares of the Company, other than those needed to meet the requirements of the Share Option Scheme, under the control of the Directors until the 2005 Annual General Meeting.
Property
The register of land and buildings is available for inspection at the registered office of the Company during normal business hours.
Auditors
Deloitte & Touche continued in office as auditors of Anglo American Platinum Corporation Limited and Anglo Platinum Management Services (Proprietary) Limited, and Ernst & Young continued in office as auditors of RPM, PPRust, and Leplats. At the Annual General Meeting on Tuesday, 30 March 2004, shareholders will be requested to appoint Deloitte & Touche as auditors of Anglo American Platinum Corporation Limited and to hold office for the ensuing year.
Administration
Mr Rohan Venter was appointed as Company Secretary upon the resignation of Mr Costa Mutzuris. Anglo Platinum Management Services (Proprietary) Limited continues to act as the administrative, financial, and technical adviser to the Company. Anglo American Services (UK) Limited continues in office as London Secretaries to the Company. Computershare Limited and Capita IRG plc are respectively South African and United Kingdom Registrars of the Company.
Subsidiary companies
Details of major subsidiary companies in which the Company has a direct or indirect interest are set out on pages 136 and 137. The aggregate after-tax earnings attributable to the Company from its subsidiaries were: R millions Earnings 2003 2 116,1 2002 5 471,6
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ANNUAL FINANCIAL STATEMENTS > REMUNERATION REPORT REMUNERATION REPORT Role of the Remuneration Committee and terms of reference
The Remuneration Committee (the Committee) is responsible for considering and making recommendations to the Board on: The Companys general policy on executive and senior management remuneration; The specific remuneration packages for Executive Directors of the Company including, but not limited to, basic salary, performancebased short- and long-term incentives, pensions, and other benefits; and The operation of the Companys share incentive schemes.
The Committee met five times during 2003. The Chief Executive Officer attends the Committee meetings and assists the Committee in its deliberations, except when issues relating to his own compensation are discussed. No Director is involved in deciding his or her own remuneration. In 2003, the Committee was advised by CB Corrin (Group Human Resources, Anglo American plc), the Companys Finance function, and PricewaterhouseCoopers, who were appointed by the Company with the agreement of the Committee in June 2003 to advise on the design of executive incentive schemes and assist with their implementation. The Companys auditors, Deloitte & Touche, have not provided advice to the Committee.
Remuneration policy
Principles of executive remuneration Anglo Platinums remuneration policy is formulated to attract and retain high-calibre executives and motivate them to develop and implement the Companys business strategy in order to optimize long-term shareholder value creation. It is the intention that this policy should conform to best practice standards. The policy is framed around the following key principles: Total rewards will be set at levels that are competitive within the relevant market; Total incentive-based rewards will be earned through the achievement of demanding performance conditions consistent with shareholder interests over the short, medium, and long term; Incentive plans, performance measures, and targets will be structured to operate soundly throughout the business cycle; and The design of long-term incentives is prudent and does not expose shareholders to unreasonable financial risk.
Elements of Executive Director remuneration Executive Director remuneration comprises the following four principal elements: Base salary; Annual bonus plan; Share Option Scheme; and Benefits.
The Committee seeks to ensure an appropriate balance between the fixed and performance-related elements of Executive Director remuneration, and between those aspects of the package linked to short-term financial performance and those linked to longer-term shareholder value creation. The Committee considers each element of remuneration relative to the market and takes into account the performance of the Company and the individual Executive Director in recommending quantum and design.
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The policy relating to each component of remuneration is summarized below: Base salary The base salary of the Executive Directors is subject to annual review and is set to be competitive at the median level with reference to external market practice in similar companies, which are comparable in terms of size, market sector, business complexity, and international scope. Company performance, individual performance, and changes in responsibilities are also taken into consideration when determining annual base salaries. Annual bonus plan All Executive Directors are eligible to participate in an annual bonus plan, with payment levels based on corporate and individual performance. Bonus potentials are set on an individual basis each year and have not normally exceeded 60% of base salary for the Executive Chairman (while that role existed), 60% for the Chief Executive Officer, 40% for the Chief Operating Officer, and 30% for other Directors. The bonus plan is non-contractual and not pensionable. The Committee retains the discretion to make adjustments to bonuses earned at the end of the year on an exceptional basis, taking into account both Company performance and the overall and specific contribution of individual Executive Directors to the Companys success. The performance measures for the annual bonus plan include measures of corporate (and, where applicable, divisional) performance, as well as the achievement of specific individual objectives. The corporate element is based upon stretching production and profitability targets, and is reduced by failure to achieve safety targets. The Committee reviews measures annually, after consultation with the CEO, to ensure that the measures and targets set are appropriate given the economic context and the performance expectations for the Company. It is the Committees usual policy to base 70% of each annual bonus award on the corporate or divisional measure and the remaining 30% on the defined personal key performance indicators. Share Option Scheme Options over Anglo Platinum shares were granted in March 2003 to Executive Directors, which allocation was based on performance criteria similar to those used for the annual bonus. The options are allocated at the middle market price ruling on the trading day prior to the date of allocation, vest after stipulated periods, and are exercisable up to a maximum of 10 years after the date of allocation. Retirement schemes Executive Directors participate in contributory retirement schemes established by the Group. Other benefits Executive Directors are entitled to the provision of either a car allowance or a fully expensed car, medical insurance, death and disability insurance, social club membership, and reimbursement of reasonable business expenses. The provision of these benefits is considered to be market competitive in South Africa for executive director positions. Proposals for new long-term incentive plans Following the withdrawal of the Executive Directors in 2002 from participation in long-term incentive plans provided by Anglo American plc, the Committee has developed proposals for implementation in 2004 of a range of new long-term incentive plans that embody the following elements: Executive share appreciation scheme (ESAS) It is intended that the Anglo Platinum Share Option Scheme will be replaced by a new scheme, under which Executive Directors will receive annual allocations of rights to a cash bonus that depend upon appreciation in the market value of the Companys shares. The right will normally vest after three years, subject to a performance condition to be set by the Committee, initially based on an increase in earnings per share over the vesting period. Although under present tax legislation an ESAS is preferable to a share option scheme from the Companys point of view, shareholders will also be asked to approve the establishment of a new Share Option Scheme in the event that circumstances change and the use of such an alternative scheme should prove desirable. Long-term incentive plan (LTIP) The Committee proposes in future to make awards of conditional shares annually to Executive Directors under a new plan to be known as the LTIP. These awards are discretionary and are considered on a case-by-case basis. The Committee intends to make annual awards of LTIP interests over Anglo Platinum shares with a face value of 120% of basic salary for the CEO and 100% of basic salary for the other Executive Directors. However, in exceptional circumstances and in order to accommodate changing market conditions, awards may be made to each Executive Director of up to a maximum of two times basic salary per annum. LTIP awards are subject to the achievement of stretching performance measures relating to total shareholder return (TSR) against a group of comparable companies and to an operating measure, initially return on capital employed (ROCE), over a fixed three-year period. 50% of the award for all Directors will be subject to the Group TSR measure and 50% to a Group ROCE measure. These performance conditions are selected on the basis that they clearly foster the creation of shareholder value. There is no provision for retesting should the conditions not be met at the end of the performance period.
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The Committee may amend the performance condition applying to any award, provided that the amended conditions are no less demanding and will be a fairer measure of performance or will provide a more effective incentive to the participant, and that circumstances merit such a change. At the end of each performance period, the level of performance achieved and the level of award earned will be published and be subject to external verification by the Companys auditors. The LTIP closely aligns the interests of shareholders and Executive Directors by rewarding superior shareholder and financial performance and by encouraging Executive Directors to build up a shareholding in Anglo Platinum. Deferred bonus plan In order to further encourage Directors to build up a significant personal stake in the Company, the Committee has proposed to shareholders that a portion of the Executive Directors annual bonus be taken in shares and that a share match be used. Directors will be required to defer 50% of their bonus (net of tax) and may, at the discretion of the Committee on a year-by-year basis, defer 100% of their bonus to acquire shares in Anglo Platinum. If these shares are held for three years, they will be matched by the Company on a one-for-one basis, conditional upon the Executive Directors continued employment. Use of this share match will allow Anglo Platinum to maintain competitiveness in annual bonus plan levels and encourage executives to invest in the shares of the Company, thus increasing the proportion of Executive Director rewards linked to both short-term performance and longer-term total shareholder returns. The bonus deferral and share match will also act as a retention tool and ensure that Executive Directors share a significant level of personal risk with the Companys shareholders. Executive shareholding targets Within five years of their appointment, Executive Directors are expected to acquire a holding of shares with a value of one and a half times base salary in the case of the CEO and one times base salary in the case of other Executive Directors.
Other matters affecting remuneration of Directors Sourcing of shares for share plans
It is not intended to issue any new shares to satisfy requirements in terms of the new long-term incentive plans, but rather to acquire any such shares on the open market.
External appointments
Executive Directors are not permitted to hold external directorships or offices without the approval of the Board; if approved, they may retain the fees payable from one such appointment.
Non-executive Directors
The Board, in reviewing Non-executive Directors fees annually, makes recommendations to shareholders in the light of fees payable to non-executive directors for comparable companies and the importance attached to the retention and attraction of high-calibre individuals as non-executive directors. Levels of fees are also set by reference to the responsibilities taken by the Non-executive Directors in chairing the Board and its committees.
Directors fees
For 2003, each of the Non-executive Directors received Directors fees at the rate of R60 000 per annum (2002: R50 000). The Chairman received an additional sum of R60 000 per annum (2002: R50 000). The Deputy Chairman received a fee of R90 000 per annum (2002: R75 000). Non-executive Directors who serve on the Anglo Platinum Group committees each received fees per annum as follows: Audit Committee R20 000 (2002: R10 000); Corporate Governance Committee R15 000 (2002: R10 000); Nomination Committee R15 000 (2002: R10 000); and Remuneration Committee R15 000 (2002: R5 000). The chairman of each committee received an additional R15 000 per annum (2002: R10 000), except for the chairman of the Audit Committee, who received R40 000 per annum (2002: R10 000), and the chairman of the Remuneration Committee, who received R30 000 (2002: R10 000). Details of recommended increases for 2004 are set out on page 93.
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Directors remuneration
The table below provides an analysis of the emoluments paid to Executive and Non-executive Directors of the Company. Emoluments paid by Anglo American plc to Barry Davison are only disclosed to the extent that these pertain to Anglo Platinum.
Directors fee
Committees
Executive Directors: Barry Davison* (6 months to June 2003) John Dreyer Dorian Emmett Ralph Havenstein # Robin Mills # Eric Ngubane $ Roeland van Kerckhoven Sandy Wood Alternate Directors: Mike Halhead Peter Kinver + Richard Pilkington Chris Sheppard Non-executive Directors: Leslie Boyd Colin Brayshaw * Barry Davison *++ (6 months to December 2003) Mike King Bongani Khumalo # Bill Nairn # Hixonia Nyasulu * Tony Trahar * Tom Wixley * Lazarus Zim Alternate Directors: Vincent Uren Total 20 998 526 3 140 196 4 451 990 16 776 924 583 982 20 000 20 000 1 328 889 202 636 60 000 60 000 65 000 60 000 30 000 60 000 55 667 60 000 60 000 8 315 26 667 30 000 140 000 30 000 30 000 85 000 90 000 145 000 1 596 525 90 000 30 000 60 000 82 334 90 000 200 000 8 315 1 455 761 1 293 592 1 347 979 1 564 797 148 204 137 933 179 201 126 257 195 015 239 865 282 386 193 846 1 268 960 1 798 980 2 940 350 1 809 566 1 884 900 1 512 051 1 693 701 2 413 980 1 422 248 1 437 177 1 833 367 2 067 292 1 627 692 230 746 255 140 358 248 381 819 357 388 219 784 302 123 240 717 1 046 958 346 878 573 646 567 728 249 430 387 818 368 420 13 300 964 2 207 000 65 000 2 854 755
15 596 683 3 345 874 2 371 795 1 794 565 2 302 581 4 964 233 2 236 829
Salary and benefits include cash, medical, car scheme, personal computer scheme, and entertainment allowances. Retirement benefits include provident fund, pension fund, flexi-pension, and deferred compensation. * Remuneration Committee member Audit Committee member Nomination Committee member Corporate Governance Committee member # Safety, health and environment Committee member Retired as Executive Director on 30 June 2003 $ In addition to the emoluments set out, Eric Ngubane received a severance package of R4 million + Resigned as an Alternate Director 1 August 2003 ++ 50% of salary and retirement benefits received from Anglo American South Africa has been included due to services rendered to the Company An amount of R567 728 was paid to Ralph Havenstein upon joining the Company as an enlistment incentive. Ralph was appointed 1 July 2003. Bonuses pertain to the year ended 31 December 2002 and paid in March 2003.
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The table below provides an analysis of the emoluments paid to Executive and Non-executive Directors of the Company in 2002 for the purposes of comparison to the 2003 table shown on the previous page. Emoluments paid by Anglo American plc to Barry Davison are only disclosed to the extent that these pertain to Anglo Platinum.
exercised Executive Directors: Barry Davison+ John Dreyer+ Dorian Emmett Eric Ngubane + Roeland van Kerckhoven Sandy Wood Alternate Directors: Mike Halhead Peter Kinver Richard Pilkington Chris Sheppard Non-executive Directors: Leslie Boyd # Colin Brayshaw *# Mike King # Bill Nairn + Tony Trahar *# Tom Wixley *# Alternate Directors: Vincent Uren 15 326 983 2 298 631 3 587 284 52 539 421 650 000 10 000 50 000 50 000 50 000 50 000 50 000 50 000 8 333 67 222 11 111 36 111 11 111 1 184 831 1 294 920 1 044 341 1 090 887 122 640 190 080 154 674 109 208 251 684 96 160 175 347 104 491 6 583 204 1 680 000 1 768 320 3 425 424 1 393 448 1 824 519 1 211 088 1 489 796 1 367 729 498 961 239 691 311 573 209 852 255 779 206 173 1 039 502 324 700 640 000 170 600 459 800 325 000 7 789 238 10 817 677 6 290 414 13 530 820 4 079 748 100 000 50 000 50 000 50 000 50 000 50 000
10 000
Salary and benefits include medical, car scheme, personal computer scheme, and entertainment allowances. Retirement benefits include provident fund, pension fund, flexi-pension, and deferred compensation. * Remuneration Committee member Audit Committee member # Nomination Committee member Corporate Governance Committee member + Safety, Health, and Environment Committee member Bonuses pertain to the year ended 31 December 2001 and paid in March 2002. All remuneration costs incurred by the Company and its subsidiaries have been fully disclosed in the above schedules of emoluments. The Company and its subsidiaries have made no undisclosed payments to any entity or third party, in which a Director has an interest, outside the normal course of business.
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The reason for the increase in Directors fees is the need to remain competitive in order to attract and retain Non-executive Directors of high calibre with the skills required to meaningfully contribute to the operation of the Board and its committees. In arriving at the proposed fees, cognisance was taken of market trends and the increased responsibilities of Non-executive Directors in terms of new corporate governance and JSE requirements. The Non-executive Directors do not participate in the Companys annual bonus plan, share option schemes, or long-term incentive plan. Directors service contracts It is the Companys policy that the period of notice required for Executive Directors does not exceed 12 months. In order properly to reflect their spread of responsibilities, all the Executive Directors have contracts with Anglo American Platinum Corporation Limited. None of the Non-executive Directors have a contract of employment with the Company. Their appointments are made in terms of the Companys Articles of Association and are initially confirmed at the first Annual General Meeting of shareholders following their appointment, and thereafter at three-year intervals.
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In terms of the rules of the Share Option Scheme, the aggregate number of shares that may be subject to options for the purposes of the scheme and the maximum number of options that any one participant may hold shall not exceed 5% and 0,125% respectively of the Companys issued ordinary share capital from time to time.
Share options
Executive Directors participate in the Share Option Scheme, designed to recognize the contributions of senior staff to the growth in the Companys equity. Within limits imposed by shareholders, options are allocated to Directors and senior staff in proportion to their contributions to the business. The options are allocated at the middle market price ruling on the trading day prior to the date of allocation, vest after stipulated periods, and are exercisable up to a maximum of 10 years from the date of allocation. The equity compensation benefits for Executive Directors are set out below.
23 Jun 23 Jun 01 Feb 23 Jun 23 Jun 23 Jun 23 Jun 12 Mar 12 Mar 12 Mar 12 Mar 01 Feb 01 Feb 23 Jun 01 Feb 23 Jun 01 Feb 23 Jun 23 Jun 12 Mar 12 Mar 12 Mar 12 Mar 01 01 01 01 01 Oct Oct Oct Oct Oct
01 02 03 03 04 03 04 05 06 07 08 00 01 01 02 02 03 03 04 05 06 07 08 03 04 05 06 07
John Dreyer
49 171
5 500 12 Mar 03
7 398
Dorian Emmett
51 848
7 500 12 Mar 03
94
Eric Ngubane
4 300 12 Mar 03
01 Apr 23 Jun 23 Jun 23 Jun 12 Mar 12 Mar 12 Mar 12 Mar 23 Jun 01 Feb 23 Jun 23 Jun 12 Mar 12 Mar 12 Mar 12 Mar 12 12 12 12 Mar Mar Mar Mar
02 02 03 04 05 06 07 08 02 03 03 04 05 06 07 08 05 06 07 08 02 02 02 03 03 03 03 04 04 04 05 05 06 07 08
22 483
6 400 12 Mar 03
18 883
Sandy Wood
5 900 12 Mar 03
5 900
36 646
8 300 06 Mar 03
44 946
1 000 246 6 283 6 280 1 000 247 6 284 2 000 246 12 567 493 1 660 1 660 1 660 3 320
23 Jun 14 Jul 01 Sep 01 Feb 23 Jun 14 Jul 01 Sep 23 Jun 14 Jul 01 Sep 14 Jul 06 Mar 06 Mar 06 Mar 06 Mar
Peter Kinver
17 600 07 Aug 03
Richard Pilkington
25 818
17 809 01 Aug 03
43 627
252 6 139 252 6 140 252 12 279 504 3 562 3 562 3 562 7 123 1 1 1 1 1 1 1 4 1 2 3 1 4 2 4 8 151 636 151 636 075 151 635 156 074 302 272 075 156 149 156 313
204,70 193,00 204,70 193,00 204,70 193,00 204,70 233,24 233,24 233,24 233,24 289,60 264,10 289,60 264,10 324,14 289,60 264,10 324,14 233,24 289,60 264,10 324,14 233,24 324,14 233,24 233,24
14 Jul 01 Jun 14 Jul 01 Jun 14 Jul 01 Jun 14 Jul 01 Aug 01 Aug 01 Aug 01 Aug 19 Mar 01 Aug 19 Mar 01 Aug 01 Aug 19 Mar 01 Aug 01 Aug 01 Aug 19 Mar 01 Aug 01 Aug 01 Aug 01 Aug 01 Aug 01 Aug
02 03 03 04 04 05 05 05 06 07 08 03 03 04 04 04 05 05 05 05 06 06 06 06 07 07 08
Chris Sheppard
19 307
20 781 01 Aug 03
40 088
Total
316 654
126 490
(33 900)
(74 873)
334 371
334 371
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However, participation by the Executive Directors in these Anglo American plc schemes is now restricted to the extent of any entitlement arising from previous awards or grants made under those schemes before a decision was taken that, for reasons of sound governance, the Executive Directors should not participate in any Anglo American plc schemes, including those listed above. Allocations to Barry Davison by Anglo American plc in terms of the above schemes are excluded for the reason that he is an executive director of Anglo American plc and is therefore entitled to participate in the Anglo American plc schemes. Details of his participation and allocations under the various Anglo American plc schemes appear in the Anglo American plc annual report. The following details are applicable to the Executive Directors restricted participation in the Anglo American plc schemes:
John Dreyer Dorian Emmett Robin Mills* Eric Ngubane Roeland van Kerckhoven Sandy Wood Total
9,65 13 Sep 04
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Approval
This Directors remuneration report has been approved by the Board of Directors of Anglo Platinum. Signed on behalf of the Board of Directors
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ANNUAL FINANCIAL STATEMENTS > PRINCIPAL ACCOUNTING POLICIES PRINCIPAL ACCOUNTING POLICIES Basis of preparation
The financial statements are prepared on the historical cost basis, except for certain financial instruments that are fairly valued. Significant details of the Companys and the Groups accounting policies are set out below, which are consistent with those applied in the previous year except for the change set out below. The financial statements comply with International Financial Reporting Standards of the International Accounting Standards Board, South African Statements of Generally Accepted Accounting Practice and the Companies Act in South Africa.
1.
Consolidation
The consolidated financial statements include the results and financial position of Anglo American Platinum Corporation Limited, its subsidiaries, joint ventures, and associates. The results of any subsidiaries acquired or disposed of during the year are included from the date control was acquired and up to the date control ceased to exist. Where an acquisition of a subsidiary is made during the financial year, any excess or deficit of the purchase price compared to the fair value of the attributable net identifiable assets is recognized respectively as goodwill or negative goodwill and accounted for as described in the Goodwill accounting policy note 4. All intra-Group transactions and balances are eliminated on consolidation. Unrealized profits that arise between Group entities are also eliminated.
2.
Investments in associates
An associate is an entity over which the Group exercises significant influence but does not control. These investments are accounted for using the equity method. Equity accounting involves recognizing in the income statement the reporting entitys share of the associates profit or loss for the period. The carrying amount of the investment in an associate in the balance sheet represents the Groups share of the net assets and includes goodwill or negative goodwill on acquisition. Adjustments for impairment are recorded when they occur.
3.
Joint ventures
The Groups interests in jointly controlled entities are accounted for through proportionate consolidation. Under this method, the Group includes its share of the joint ventures individual income and expenses, and assets and liabilities in the relevant components of its financial statements on a line-by-line basis. In respect of its interests in jointly controlled operations, the Group recognizes the assets that it controls and the liabilities that it incurs, as well as its share of the income that it earns and the expenses that it incurs from the jointly controlled operation.
4.
Goodwill
Goodwill is the excess of the purchase consideration over the fair value of the Groups share of the attributable net identifiable assets at the date of acquisition in a business combination. Goodwill is amortized on a straight-line basis over the lesser of the goodwills useful life or twenty years. Goodwill is assessed for impairment annually. Amortization and impairment are charged against net profit. The remaining useful life of goodwill is assessed annually. Negative goodwill is the excess of the Groups share of the fair value of the attributable net identifiable assets at the date of acquisition over the purchase consideration in a business combination.
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Negative goodwill that relates to expectations of future losses and expenses identified in the acquirers plan for the acquisition and that can be measured reliably but does not represent identifiable liabilities at the date of acquisition, is recognized as income when the future losses and expenses occur. Thereafter, the portion of negative goodwill not exceeding the fair value of acquired identifiable non-monetary assets is recognized as income on a systematic basis over the remaining weighted average useful life of the identifiable acquired depreciable/amortizable assets. Any amount of negative goodwill in excess of the fair value of the acquired identifiable non-monetary assets is recognized immediately as income.
5.
Non-mining
Non-mining assets are stated at historical cost less accumulated depreciation. Depreciation is charged on the straight-line basis over the useful lives of these assets at the following annual rates: Plant and equipment Motor vehicles Office furniture and equipment Land is not depreciated. 10% to 25% 20% to 25% 10% to 50%
Impairment
An impairment review of mining and process and non-mining assets is carried out annually by comparing the carrying amount of assets to their recoverable amounts when impairment indicators exist in relation to a cash-generating unit. The recoverable amount is the higher of value in use or net selling price. Each business unit constitutes a separate cash generating unit. Value in use of mining and process assets is determined by applying a discount rate to the anticipated pre-tax cash flows for the remaining life of mine, to a maximum of thirty years. The discount rate used is the Group's weighted average cost of capital as determined by the capital asset pricing model. The recoverable amounts of non-mining assets are determined by reference to market values. Where the recoverable amount is less than the carrying amount, the impairment, when identified, is charged against net profit to reduce the carrying amount of the affected assets to their recoverable amounts. The revised carrying amounts are amortized on a systematic basis over the remaining useful lives of such affected assets.
6.
Leases
A finance lease transfers substantially all the risks and rewards of ownership of an asset from the Group. Assets subject to finance leases are capitalized as property, plant, and equipment at fair value of the leased assets at inception of the lease, with the related lease obligation recognized at the same amount. Capitalized leased assets are depreciated over their estimated useful lives. Finance lease payments are allocated between finance cost and the capital repayment, using the effective interest rate method. Operating lease rentals are charged against operating profit on a straight-line basis over the lease term.
7. 8.
Investments
Investments in subsidiaries are reflected at cost less impairment in the Companys financial statements.
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Platinum, palladium, rhodium, and nickel are measured by dividing the mine output into total mine production cost less net revenue from sales of other metals in the ratio of the contribution of these metals to gross sales revenue. Gold, copper, and cobalt sulphate are measured at net realizable value.
Work-in-process
Work-in-process is valued at the cost of production less net revenue from sales of other metals. Work-in-process includes purchased and produced concentrate.
9.
Revenue recognition
Revenue from the sale of metals and intermediary products is recognized when the risks and rewards of ownership are transferred to the buyer. Gross sales revenue represents the invoiced amounts excluding value-added tax. Dividends are recognized when the right to receive payment is established. Interest is recognized on a time-proportional basis, which takes into account the effective yield on the asset over the period it is expected to be held. Royalties are recognized when the right to receive payment is established.
11. Provisions
A provision is recognized when there is a legal or constructive obligation as a result of a past event for which it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
12. Taxation
The charge for current tax is based on the results for the year, as adjusted for items that are exempt or disallowed. It is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date. Current and deferred tax is charged or credited to the income statement, except when it relates to items credited or charged directly to equity, in which case the taxation effect is also recognized within equity. Deferred tax is provided on the balance sheet liability method. Deferred tax assets and liabilities are measured using tax rates that are expected to apply to the period when the asset is realized and the liability is settled. Deferred tax liabilities are recognized for all taxable temporary differences. Deferred tax assets are recognized to the extent that it is probable that taxable profits will be available against which deductible temporary differences or assessed and calculated losses can be utilized. Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax asset and liabilities on a net basis.
100
Accounts receivable
Accounts receivable are stated at the gross invoice value adjusted for payments received and an allowance for doubtful debts where considered appropriate. Bad debts are written off when identified.
Borrowings
Long-term borrowings are initially recorded at the fair value of the consideration received, net of issue costs. It is subsequently measured at amortized cost using the effective interest rate method. Amortized cost is calculated taking into account any issue costs and any discount or premium on settlement. Gains and losses are recognized in net profit or loss when the liabilities are extinguished.
Accounts payable
Accounts payable are initially recorded at cost, and subsequently carried at cost less payments made. Settlement discounts are recognized in net profit when they are granted.
Derivative instruments
In the ordinary course of its operations, the Group is exposed to fluctuations in metal prices, volatility of exchange rates, and changes in interest rates. The Group engages in a number of activities to manage these risks. These activities include hedging a portion of these exposures through the use of derivative financial instruments. Forward sales contracts and option contracts are utilized for managing metal and currency exposures. The Group does not speculate, acquire, hold for, or issue derivative instruments for trading purposes. Derivatives are initially measured at cost. All forward and option contracts are marked to market at financial reporting dates and any changes in their fair values are included in other net income in the period to which they relate. Commodity contracts that are entered into and continue to meet the Groups expected purchase, sale, or usage requirements, and were designated for that purpose at their inception and are expected to be settled by delivery, are recognized in the financial statements when they are delivered into. Gains and losses arising on all other contracts not spanning a reporting interval are recognized and included in the determination of other net income at the time that the contract expires. Where the conditions in IAS39 for special hedge accounting are met, the derivative is recognized on the balance sheet as either a derivative asset or liability and recorded at fair value. In the case of cash flow hedges, the effective portion of the gains or losses on the hedging instrument is recognized in equity until the underlying transaction occurs, upon which the gains or losses are recognized in earnings.
All translation gains or losses are included in the determination of net profit.
101
Decommissioning costs
The discounted amount of estimated decommissioning costs that embody future economic benefits is capitalized as a decommissioning asset when commercial production is reached and concomitant provisions are raised. These estimates are reviewed annually and discounted using a pre-tax risk-free rate that reflects current market assessments of the time value of money. The increase in decommissioning provisions following the passage of time is charged to interest paid. Decommissioning assets are amortized on a straight-line basis over the lesser of thirty years or the expected benefit period.
Restoration costs
Changes in the discounted amount of estimated restoration costs are charged to income during the period in which such changes occur. Estimated restoration costs are reviewed annually and discounted using a pre-tax risk-free rate that reflects current market assessments of the time value of money. The increase in restoration provisions due to the passage of time is charged to net investment income.
Termination benefits
Termination benefits are charged against net profit when the Group is demonstrably committed to terminating the employment of an employee or group of employees before their normal retirement date.
Post-employment benefits
Defined contribution plans: retirement, provident, and pension funds Contributions to defined contribution plans in respect of services rendered are recognized as an expense.
102
Defined benefit plans: post-retirement medical aid liability The post-retirement medical aid liability is recognized as an expense systematically over the periods during which services are rendered using the projected unit credit method. Independent actuarial valuations are conducted at least every three years, or sooner if necessary. Actuarial gains and losses as a result of experience adjustments and/or the effects of changes in actuarial assumptions are recognized as income or expenditure systematically over the remaining service period of employees participating to the extent that it falls outside the corridor defined in IAS19. Adjustments pertaining to retired employees are recognized immediately as income or an expense.
103
ANNUAL FINANCIAL STATEMENTS > CONSOLIDATED FINANCIAL STATEMENTS > INCOME STATEMENT
Net sales revenue Cost of sales (Segmental information) Gross profit on metal sales
Other net expenditure Market development and promotional expenditure
Operating profit
Net interest (paid)/received Income from associates
215,4 215,1
214,9 214,5
2 091,9
5 740,0
104
ANNUAL FINANCIAL STATEMENTS > CONSOLIDATED FINANCIAL STATEMENTS > SEGMENTAL INFORMATION
105
ANNUAL FINANCIAL STATEMENTS > CONSOLIDATED FINANCIAL STATEMENTS > BALANCE SHEET
Assets
Non-current assets
Property, plant and equipment Capital work-in-progress Platinum Producers' Environmental Trust Investment in associates Non-current accounts receivable 11 12 13 14 16 22 493,9 14 550,8 7 249,2 113,4 484,0 96,5 5 295,7 17 18 19 2 439,6 2 286,7 569,4 27 789,6 16 192,3 10 503,1 4 941,5 89,3 557,6 100,8 5 017,6 1 819,9 1 617,7 1 580,0 21 209,9
Current assets
Inventories Accounts receivable Cash and cash equivalents
Total assets
Current liabilities
Interest-bearing borrowings Accounts payable Other financial liabilities Taxation
106
ANNUAL FINANCIAL STATEMENTS > CONSOLIDATED FINANCIAL STATEMENTS > CHANGES IN EQUITY
107
ANNUAL FINANCIAL STATEMENTS > CONSOLIDATED FINANCIAL STATEMENTS > CASH FLOW STATEMENT
108
ANNUAL FINANCIAL STATEMENTS > UNITED STATES DOLLAR EQUIVALENTS Consolidated income statement for the year ended 31 December
Supplementary information for convenience of users
2003 US$m 2002 US$m 1 936,1 (70,0) 1 866,1 (966,7) 899,4 (72,0) (25,4) 802,0 14,9 17,3 834,2 (286,1) (221,3) (103,5) (117,8) (64,8) 548,1 (511,8) 398,2 962,5 944,5 18,0 49,6 1 446,6 10,4778 214,9 214,5 255,5 250,5 254,9 250,1 171,8 85,9 85,9
2 187,5 (54,1) 2 133,4 (1 615,3) 518,1 (35,7) (34,1) 448,3 (31,4) 4,6 421,5 (144,4) (99,2) (14,4) (84,8) (45,2) 277,1 (362,0) 403,3 1 446,6 1 446,6 1 765,0 7,5467 215,4 215,1 128,9 128,8 128,6 128,6 84,8 49,0 35,8*
Operating profit
Net interest (paid)/received Income from associates
Net profit
Dividends paid in cash Exchange rate translation adjustment Accumulated profits at beginning of year as restated As previously stated Change in accounting policy translated at 2001 closing rate Repurchase of shares by Company from wholly owned subsidiary
Income statement items were translated at the average exchange rate for the year. * Proposed ordinary dividend.
109
ANNUAL FINANCIAL STATEMENTS > UNITED STATES DOLLAR EQUIVALENTS Consolidated balance sheet as at 31 December
Supplementary information for convenience of users
2003 US$m 2002 US$m
Assets
Non-current assets
Property, plant and equipment Capital work-in-progress Platinum Producers' Environmental Trust Investment in associates Non-current accounts receivable 3 373,5 2 182,2 1 087,2 17,0 72,6 14,5 794,1 365,9 342,8 85,4 4 167,6 1 887,8 1 224,5 576,1 10,4 65,0 11,8 584,9 212,1 188,6 184,2 2 472,7
Current assets
Inventories Accounts receivable Cash and cash equivalents
Total assets
Current liabilities
Interest-bearing borrowings Accounts payable Other financial liabilities Taxation
Balance sheet items have been translated at the closing exchange rate.
110
ANNUAL FINANCIAL STATEMENTS > UNITED STATES DOLLAR EQUIVALENTS Consolidated cash flow statement for the year ended 31 December
Supplementary information for convenience of users
2003 US$m 2002 US$m
7,5467
10,4778
Cash flow items were translated at the average exchange rate for the year. * Less than US$50 000.
111
Notes to the consolidated financial statements for the year ended 31 December
2003 Rm 2002 Rm
1.
> 2003
> 2002
112
ANNUAL FINANCIAL STATEMENTS > NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
2.
Cash operating costs Cash operating costs consist of the following principal categories:
On-mine* Smelting Treatment & refining Rm Rm Rm
2003
Labour Stores Utilities Contracting Sundry Toll-refining 9 027,1 3 915,7 2 619,5 588,4 942,0 961,5 191,2 252,1 220,7 60,7 185,4 910,1 273,3 259,4 52,0 2,4 102,2 107,0 796,3
2002
Labour Stores Utilities Contracting Sundry Toll-refining 7 369,4 *On-mine costs comprise mining and concentrating costs. 3 382,0 2 122,4 510,0 572,2 782,8 138,7 153,7 113,2 115,4 119,6 640,6 252,2 239,4 43,2 1,6 90,1 125,5 752,0
2003 Rm
2002 Rm
3.
4.
Other costs
Other costs consist of the following principal categories: Research Corporate costs Exploration Contributions to educational and community development Transport of metals Royalties paid Special projects Regional Services Council levies and other 203,1 144,8 91,3 54,9 38,2 21,6 14,3 35,5 603,7 151,8 124,9 139,3 62,8 39,9 31,1 24,2 17,3 591,3
113
ANNUAL FINANCIAL STATEMENTS > NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
2003 Rm
2002 Rm
5.
6.
7.
114
ANNUAL FINANCIAL STATEMENTS > NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
2003 Rm
2002 Rm
8.
Taxation
Current Deferred 449,5 639,8 1 089,3 Comprising: South African normal taxation Secondary tax on companies (STC) Foreign and withholding taxation 634,6 340,9 113,8 1 089,3 A reconciliation of the standard rate of South African normal taxation compared with that charged in the income statement is set out in the following table: South African normal taxation STC % 30,0 10,7 40,7 Foreign income Disallowed items Other Effective taxation rate (9,2) 1,1 1,6 34,2 % 30,0 7,8 37,8 (3,1) 0,3 (0,7) 34,3 2 217,4 679,2 102,3 2 998,9 1 764,1 1 234,8 2 998,9
Rm Unredeemed capital expenditure that is available for offset against future taxable income 4 922,8
Rm 759,3
9.
The calculation of diluted earnings per share, basic and headline, is based on earnings of R2 091,9 million and R2 091,7 million respectively (2002: R5 740,0 million and R5 630,4 million) and a diluted weighted average of 215 428 748 (2002: 214 932 619) ordinary shares in issue during the year.
The basis for calculating the diluted weighted average ordinary shares in issue is the weighted average number of ordinary shares in issue during the year to which is added the theoretical number of shares to be issued for no consideration based on the year-end market price. Share options that are out-of-the-money at the year end are not taken into account in the calculation of diluted earnings per share.
2003 Rm
2002 Rm
10. Dividends
Dividends paid in cash were as follows: Dividend No. 98 and special dividend Dividend No. 99 Dividend No. 100 Dividend No. 101 1 935,4 796,2 2 731,6 5 362,9 3 430,3 1 932,6
115
ANNUAL FINANCIAL STATEMENTS > NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
2003 Rm
2002 Rm
Non-mining (Annexure B) Non-mining property, plant and equipment comprise freehold land, plant, equipment, motor vehicles and office equipment. Cost Opening balance Additions at cost (Note 31) Transfer from capital work-in-progress (Note 12) Disposals Closing balance Accumulated depreciation Opening balance Charge for the year (Note 7) Disposals Closing balance Carrying amount non-mining (Annexure B) Total carrying amount 154,8 41,8 (54,8) 141,8 149,3 14 550,8 134,6 33,4 (13,2) 154,8 121,3 10 503,1 276,1 72,1 9,9 (67,0) 291,1 223,9 80,3 (28,1) 276,1
116
ANNUAL FINANCIAL STATEMENTS > NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
2003 Rm
2002 Rm
Listed investment: Northam Platinum Limited (Northam) As at 31 December 2003, the Group held 52 096 216 (2002: 52 020 516) shares in Northam representing a 22,5% interest. Northam operates a mine and processing plants on the Bushveld Complex of South Africa.
117
ANNUAL FINANCIAL STATEMENTS > NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
2003 Rm
2002 Rm
2003 Rm The summarized financial statements of JMFC for the 12 months ended 31 December are outlined below: Income statement Net loss before taxation Taxation Net loss after taxation Balance sheet Non-current assets Current assets 360,0 61,3 421,3 Non-current liabilities Current liabilities Equity 231,6 16,7 173,0 421,3 (201,7) 60,3 (141,4)
2002 Rm
118
ANNUAL FINANCIAL STATEMENTS > NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
2003 Rm
2002 Rm
17. Inventories
The amounts attributable to the different categories are as follows: Refined metals At cost At net realizable value Work-in-process at cost Total metal inventories Stores and materials at cost 866,4 821,2 45,2 1 246,7 2 113,1 326,5 2 439,6 621,6 597,7 23,9 906,6 1 528,2 291,7 1 819,9
The unissued ordinary shares (excluding shares reserved for the Share Option Scheme) are under the control of the Directors until the forthcoming Annual General Meeting. * Less than R50 000.
119
ANNUAL FINANCIAL STATEMENTS > NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
2003 Rm
2002 Rm
120
ANNUAL FINANCIAL STATEMENTS > NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
2003 Rm
2002 Rm
Aggregate earnings The aggregate earnings of employees including Directors were: Salaries, wages and other benefits Retirement benefit costs Medical aid contributions 4 518,2 374,6 89,0 4 981,8 Directors' emoluments Remuneration for Executive Directors Fees Salaries, benefits, performance-related bonuses and other emoluments Remuneration for Non-executive Directors Fees Other emoluments Paid by Company and subsidiaries Paid by subsidiaries Profit on share options exercised Directors remuneration is fully disclosed in the Remuneration Report. Termination benefits Retrenchment benefits paid and expensed Equity compensation benefits The Directors Report and Remuneration Report set out details of the Companys Share Option Scheme and Annexure C provides details of share options issued and exercised during the year by participants. The details pertaining to share options issued to and exercised by Directors during the year are disclosed in the Remuneration Report. 1,0 0,3 0,5 0,4 33,5 32,5 16,8 0,3 0,1 22,0 21,3 52,5 0,1 32,5 0,4 21,2 3 775,7 304,6 54,1 4 134,4
121
ANNUAL FINANCIAL STATEMENTS > NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
2003 Amplats Retirement Fund Amplats Mines Retirement Fund MRR Retirement Fund Amplats Group Provident Fund Amplats Officials Pension Fund 1 041 9 470 802 34 416 25 45 754 2002 Amplats Retirement Fund Amplats Mines Retirement Fund MRR Retirement Fund Amplats Group Provident Fund Amplats Officials Pension Fund Amplats Employees Pension Fund Platmed Provident Fund 483 6 944 750 35 689 23 325 44 214
* Certain members are not in the employ of the Group, while others are members of more than one fund. The above funds have provided their members with the choice of selecting an investment risk profile that best suits their individual needs. These funds currently offer the following categories of investment portfolios: Aggressive growth; Balanced growth; Conservative growth; and A specialist portfolio. A specialist portfolio consists of a fully vested guaranteed product, a money market fund, and an offshore fund. Two multi-asset managers manage the investment portfolios. In addition to the multi-asset managers, six professional asset managers from the asset management industry manage the benefit funds' investments.
Post-retirement medical aid benefits The post-retirement medical aid obligation is actuarially valued at least every three years by an independent firm of consulting actuaries, unless events like plan curtailments necessitate more regular valuations. The obligation was last valued as at 31 December 2003 using the projected unit credit method. The assumptions used in the valuation included estimates of life expectancy and long-term estimates of the increase in medical costs, appropriate discount rates, and the level of claims based on the Group's experience.
122
ANNUAL FINANCIAL STATEMENTS > NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
2003
2002
123
ANNUAL FINANCIAL STATEMENTS > NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Amounts payable under finance leases: Within one year Within two to five years Thereafter 44,4 177,7 724,3 946,4 Less : Future finance charges Present value of leasing obligations (622,1) 324,3 20,7 82,9 343,8 447,4 (311,0) 136,4 324,3 136,4 324,3 324,3 136,4 136,4
As at 31 December 2002, the Group had borrowing facilities of R2 735 million available, none of which had been utilized. The weighted average borrowing rate as at 31 December 2003 was 8,6925%. * Committed facilities are defined as the bank's obligation to provide funding until maturity of the facility, by which time the renewal of the facility is negotiated. The committed facilities are annual facilities subject to review in November and December 2004. ** Uncommitted facilities are callable on demand and will be renegotiated at various dates during 2004. Borrowing powers The borrowing powers in terms of the Articles of Association of the Company and its subsidiaries are unlimited.
124
ANNUAL FINANCIAL STATEMENTS > NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
2003 Rm
2002 Rm
36,3 36,3
Fair value of forward metal contracts designated as cash flow hedges # Changes in forward metal prices recognized in the unrealized hedging deficit Changes in exchange rate recognized in the income statement
Forward foreign exchange contracts (FECs): The fair value of FECs represent the movement between contracted rates and year-end forward rates. These movements are recognized in the income statement.
Changes in the value of forward metal contracts caused by movements in forward prices since inception of the contracts are recognized in the unrealized hedging deficit. The net amount of R164,0 million charged to the unrealized hedging deficit is made up of R234,3 million less deferred taxation of R70,3 million (Note 21). Changes in the value caused by translating the value of the forward contracts to rand are recognized in the income statement. This amounts to a charge of R11,5 million less taxation of R3,5 million.
At 31 December 2003, the Group held forward contracts to fix the US$ price of future sales relating to a nickel supply agreement. The objective is to hedge the Group against variability in future cash flows. The terms of the forward contracts are to sell 11 088 tons of nickel at US$12 540 per ton. The forward metal contracts are valued using forward metal prices that match the contractual maturity dates.
125
ANNUAL FINANCIAL STATEMENTS > NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
2003 Notes Rm
2002 Rm
126
ANNUAL FINANCIAL STATEMENTS > NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
2003 Rm
2002 Rm
32. Commitments
Mining and process property, plant and equipment Contracted for Not yet contracted for Authorized by the directors Allocated for expansion of capacity within one year thereafter Maintenance of capacity within one year thereafter Other Operating lease rentals buildings Due within one year Due within two to five years Thereafter Information technology service providers Due within one year Due within two to five years 711,5 35,6 160,5 515,4 126,6 33,4 93,2 177,7 25,1 64,5 88,1 139,4 42,9 96,5 1 800,0 11 943,4 13 743,4 7 424,8 2 844,3 4 580,5 6 318,6 3 457,9 2 860,7 2 094,3 14 850,6 16 944,9 13 913,9 5 013,9 8 900,0 3 031,0 1 570,1 1 460,9
These commitments will be funded from existing cash resources, future operating cash flows, borrowings and any other funding strategies embarked on by the Group.
The Group provided guarantees in favour of Changing Tides 166 (Proprietary) Limited, a wholly owned subsidiary of Group Five. The guarantee provides security for lease payments to Group Five by the Anglo Platinum Housing Trust (APHT). This finance lease obligation is reflected in Note 24 to these financial statements. The probability of any obligation arising under this guarantee is considered remote.
The Group provided a guarantee in favour of Nedcor Limited (Nedcor) for financing provided by Nedcor to Salene Mining (Proprietary) Limited (Salene). The Group provided the guarantee to enable Salene to put mining infrastructure in place. The guarantee is valid until 1 July 2006 or earlier, on repayment by Salene of the loan. Salene will sell all ore production from the mine to the Group. The facility granted by Nedcor to Salene is for a maximum amount of R120 million. In the event that Nedcor calls up the guarantee, the Group holds bonds over sufficient assets of Salene to make good any obligations that may be incurred. It is unlikely that the Group will incur obligations under this guarantee.
As a result of the slowdown of capital projects, contracts with certain suppliers are being renegotiated. As a result of the negotiations, certain cancellation cost may occur. The amount of this will only be known and recognized during the course of 2004.
Aquarius holds a put option to put its interest in the PSA (Note 15) to the Group in the case of termination of that relationship. The probability of the option being exercised is considered remote. The amount of such an obligation is dependent on a discounted cash flow valuation at that point in time.
127
ANNUAL FINANCIAL STATEMENTS > NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
2003
Nominal amount of forward exchange contracts (i.e. nominal amount in South African rand) Maturing within twelve months Currency United States dollar Euro British pound Australian dollar Total Rm Buy 498,4 8,7 0,7 3,7 511,5 142,2 Sell 142,2 Average rates Buy 8,3118 8,3745 11,3071 5,0357 Sell 6,7738
2002
Nominal amount of forward exchange contracts (i.e. nominal amount in South African rand) Maturing within twelve months Currency United States dollar Euro Australian dollar Canadian dollar Total Rm Buy 305,3 69,6 13,5 12,9 401,3 260,6 Sell 260,6 Average rates Buy 10,4316 9,8950 5,4675 7,0225 Sell 9,3059
The difference between the contracted rates and forward rates at year end has been recognized. (Note 27).
128
ANNUAL FINANCIAL STATEMENTS > NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Investment, liquidity risk, and interest rate risk The borrowed position of the Group exposes it to interest rate risk. Where necessary, the Group covers these exposures by means of derivative financial instruments. No such financial instruments existed at the balance sheet date.
Fluctuations in interest rates impact on the value of short-term cash investments, giving rise to interest rate risk. Other than ensuring optimum money market rates for deposits, the Group does not make use of financial instruments to manage this risk. Formal policies, procedures, and limits have been put in place for derivative instruments. The Groups cash position is set out in the table below:
Cash and cash equivalents Amount as at Period (days) less than 31 December 2003 Rm 30 569,4 Interest rate as at 31 December 2003 % 8,60 Amount as at 31 December 2002 Rm 1 580,0 Interest rate as at 31 December 2002 % 13,58
Liquidity risk is the risk that the Group will be unable to meet a financial commitment in any location or currency. This risk is minimized through the holding of cash balances and sufficient available borrowing facilities (refer Note 25). In addition, detailed cash flow forecasts are regularly prepared and reviewed by Treasury. The cash needs of the Group are managed according to its requirements.
Credit risk Credit risk arises from the risk that a counterparty may default or not meet its obligations timeously. The Group minimizes credit risk by ensuring that counterparties are banking institutions of the highest quality. Where possible, management ensures that netting agreements are in place. Counterparty limits are reviewed annually by the Executive Committee.
Trade accounts receivable involve a small group of international companies. The financial condition of these companies and the countries they operate in are regularly reviewed.
Fair value of financial instruments Carrying amount as at Type of instrument 31 December 2003 Rm Cash and cash equivalents Accounts receivable Obligations due under finance leases Accounts payable Interest-bearing borrowings 324,3 1 903,4 7 168,1 136,4 1 857,4 324,3 1 903,4 7 168,1 136,4 1 857,4 569,4 2 286,7 2002 Rm 1 580,0 1 617,7 Fair value as at 31 December 2003 Rm 569,4 2 286,7 2002 Rm 1 580,0 1 617,7
129
ANNUAL FINANCIAL STATEMENTS > NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
2003
2002
130
ANNUAL FINANCIAL STATEMENTS > NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
2003 Number of shares Anglo South Africa Capital (Proprietary) Limited Old Mutual Asset Management Geographical analysis of shareholders 159 265 366 73,94 Percentage
2002 Number of shares 143 435 706 13 200 002 66,75 6,14 Percentage
Resident shareholders held 196 039 727 shares (91,01%) (2002: 89,79%) and non-resident shareholders held 19 353 840 shares (8,99%) (2002: 10,21%) of the Companys issued share capital of 215 393 567 shares at 31 December 2003 (2002: 214 933 207).
131
ANNUAL FINANCIAL STATEMENTS > NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS > ANNEXURE A
The carrying amount of mining and process assets can be reconciled as follows: Carrying amount at beginning of year Rm 2003 Owned and leased assets Mining development and infrastructure Plant and equipment Land and buildings Motor vehicles Furniture, fittings and equipment 3 187,2 6 360,8 628,1 99,0 31,3 10 306,4 Decommissioning asset Note 11 75,4 10 381,8 1 246,3 3 096,2 763,3 89,9 16,6 5 212,3 46,3 5 258,6 (34,3) (4,5) (0,1) (14,0) (1,2) (54,1) (54,1) (332,9) (709,4) (91,0) (41,4) (5,7) (1 180,4) (4,4) (1 184,8) Note 7 2002 Mining development and infrastructure Plant and equipment Land and buildings Motor vehicles Furniture, fittings and equipment 2 148,1 4 234,7 371,5 68,6 23,0 6 845,9 Decommissioning asset Note 11 73,1 6 919,0 1 244,0 2 598,2 282,8 97,2 31,6 4 253,8 5,1 4 258,9 (6,6) (12,2) (13,5) (32,3) (32,3) (198,3) (459,9) (26,2) (53,3) (23,3) (761,0) (2,8) (763,8) Note 7 3 187,2 6 360,8 628,1 99,0 31,3 10 306,4 75,4 10 381,8 4 066,3 8 743,1 1 300,3 133,5 41,0 14 284,2 117,3 14 401,5 Additions Rm Disposals Rm Amortization Rm Carrying amount at end of year Rm
132
ANNUAL FINANCIAL STATEMENTS > NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS > ANNEXURE B
The carrying amount of non-mining assets can be reconciled as follows: Carrying amount at beginning of year Rm 2003 Owned assets Freehold land Plant and equipment Motor vehicles Office furniture and equipment Note 11 5,5 48,1 26,5 41,2 121,3 46,0 17,7 18,3 82,0 (1,3) (8,0) (2,9) (12,2) (15,8) (10,5) (15,5) (41,8) Note 7 2002 Freehold land Plant and equipment Motor vehicles Office furniture and equipment Note 11 5,5 20,8 21,5 41,5 89,3 38,7 20,5 21,1 80,3 (0,6) (6,7) (7,6) (14,9) (10,8) (8,8) (13,8) (33,4) Note 7 5,5 48,1 26,5 41,2 121,3 5,5 77,0 25,7 41,1 149,3 Additions Rm Disposals Rm Depreciation Rm Carrying amount at end of year Rm
133
ANNUAL FINANCIAL STATEMENTS > NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS > ANNEXURE C
201,20-354,63 201,20-354,63
321,97500,16 321,97500,16
312,28548,00 312,28548,00
(1) Consists of employees of the Company, JCI Limited, and Johnnic Holdings Limited.
134
ANNUAL FINANCIAL STATEMENTS > NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS > ANNEXURE C
135
ANNUAL FINANCIAL STATEMENTS > NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS > ANNEXURE D
E E A A A E L E E E I N C N F N I N J N B N E E E E A C C N K K K K K C G F A N I H B C B E N E E A F C A A, B, C, D M
136
ANNUAL FINANCIAL STATEMENTS > NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS > ANNEXURE D
Carrying amount 2003 Rm 580,7 228,6 739,0 842,2 2002 Rm 580,7 228,6 739,0 842,2
Holding company current account 2003 2002 Rm Rm 165,7 (0,5) 27,3 0,3 (577,9) (385,1) Note 6 & Note 10 115,7 835,8 14,8 17,4 983,7 Note 6
180 709 809 1 129 568 618 129 762 372 426 288 2 000 Not applicable 23 250 1 000 100 100 250 000 525 000 100 5 100 100 100 120 000 450 000 1 360 100 1 000 1 100 100 100 1 000 375 000 14 500 100 R12 451 40 000 2 50 000 200 000 100 100 1 508 000 100 100 1 000 1 000 1 000 50 000 220 100 1 000
180 709 809 1 129 568 618 129 762 372 426 288 2 000 Not applicable 23 250 1 000 100 100 250 000 525 000 100 5 100 100 100 120 000 450 000 1 360 100 1 000 1 100 100 100 1 000 375 000 14 500 100 R12 451 40 000 2 50 000 200 000 100 100 1 508 000 100 100 1 000 1 000 1 000 220 1 000
0,1
2 390,5 Note 5
2 390,6 Note 5
Nature of business A Mining B Treatment and refining C Minerals and surface rights holding D Metals trading E Financial F Recruitment G Air chartering H Medical facilities
137
Appendix 1: Anglo American Platinum Corporation Limited Income statement for the year ended 31 December
2003 Notes Operating (loss)/profit Net investment income Profit before taxation Taxation Net profit 1 2 3 Rm (2,6) 2 013,4 2 010,8 (24,7) 1 986,1 2002 Rm 867,5 4 868,2 5 735,7 (599,4) 5 136,3
138
139
2.
Profit before taxation Profit before taxation is arrived at after taking account of: Foreign exchange gains Directors' emoluments Remuneration as executive directors Remuneration as non-executive directors 1,0 0,1 0,9 866,4 0,7 0,4 0,3
3.
Taxation Current taxation for the year Comprising: Secondary tax on companies Prior year overprovision of South African normal taxation Foreign and withholding taxation 93,0 (68,3) 24,7 A reconciliation of the standard rate of South African normal taxation compared with that charged in the income statement is set out in the following table: % South African normal taxation Secondary tax on companies 30,0 4,6 34,6 Dividends received Overprovision prior year Other Effective taxation rate (30,0) (1,0) (2,4) 1,2 % 30,0 6,7 36,7 (25,5) (0,7) 10,5 381,6 170,4 47,4 599,4 24,7 599,4
4.
Dividends Dividends paid in cash were as follows: Dividend No. 98 and special dividend Dividend No. 99 Dividend No. 100 Dividend No. 101 1 935,4 796,2 2 731,6 5 362,9 3 430,3 1 932,6
5.
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Notes to the financial statements for the year ended 31 December (continued)
2003 Rm 6. Accounts receivable Other receivables and prepaid expenses Subsidiary companies' current accounts (Annexure D) 16,4 193,3 209,7 7. Cash and cash equivalents Cash and cash equivalents consist of balances with banks. Borrowing powers In terms of the Articles of Association, the Company has unlimited borrowing powers. 8. Share capital 2002 400 000 000 215 769 272 837 335 (1 673 400) 214 933 207 2003 400 000 000 214 933 207 460 360 215 393 567 Authorized Ordinary shares of 10 cents each Issued Ordinary shares of 10 cents each at 1 January Issued in terms of the Share Option Scheme Own shares purchased Balance as at 31 December 21,5 * 21,5 21,6 0,1 (0,2) 21,5 40,0 40,0 0,1 1,8 14,4 983,7 998,1 2002 Rm
The unissued ordinary shares (excluding shares reserved for the Share Option Scheme) are under the control of the Directors until the forthcoming Annual General Meeting. * Less than R50 000. 9. Non-distributable reserve General capital reserve 10. Accounts payable Other payables and accrued expenses Subsidiary companies current accounts (Annexure D) 25,6 578,4 604,0 11. Reconciliation of profit before taxation to cash from/(used in) operations Profit before taxation Adjustments for: Dividends received (Note 1) Interest received (Note 1) Working capital changes Decrease/(increase) in accounts receivable Increase/(decrease) in accounts payable (2 010,5) (2,9) (2,6) 1 374,8 788,4 586,4 1 372,2 12. Taxation paid Amount unpaid at beginning of year Current taxation provided Amount unpaid at end of year Payments made 677,9 24,7 (4,5) 698,1 806,7 599,4 (677,9) 728,2 (4 868,2) 867,5 (1 094,6) (981,7) (112,9) (227,1) 2 010,8 5 735,7 17,6 17,6 518,4
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GLOSSARY OF TERMS
Finance
After-tax operating profit as a percentage of average operating assets: net profit excluding net investment income and income from associates as a percentage of average operating assets. Average operating assets: average of the aggregate of total assets less capital work-in-progress, cash and cash equivalents, Platinum Producers Environmental Trust, and investments at the beginning and end of the financial year. Average ordinary shareholders equity: average of the aggregate of share capital, share premium, non-distributable reserves, and accumulated profits at the beginning and end of the financial year. Capital expenditure: total capital expenditure on mining and non-mining property, plant, equipment, and capital work-in-progress. Current ratio: current assets as a ratio of current liabilities. Debt equity ratio: interest-bearing borrowings, including the short-term portion payable, as a ratio of shareholders equity. Effective tax rate: current taxation, deferred taxation, and tax normalization as a percentage of profit before taxation. Gross profit margin: gross profit on metal sales expressed as a percentage of gross sales revenue. Market capitalization: number of ordinary shares in issue as at 31 December multiplied by the closing share price as quoted on the JSE Securities Exchange South Africa. Net asset value: total assets less all liabilities including deferred taxation, which equates to shareholders equity. Net asset value as a percentage of market capitalization: shareholders equity expressed as a percentage of market capitalization at close of business on 31 December. Net debt: interest-bearing borrowings, plus obligations due under finance leases, less cash and cash equivalents. Net liquid assets: accounts receivable and cash and cash equivalents less current liabilities. Rand revenue per platinum ounce sold: net sales revenue divided by platinum ounces sold. Return on average shareholders equity: net profit expressed as a percentage of average ordinary shareholders equity. ROCE (return on average capital employed): net profit as a percentage of average shareholders equity, plus average interest bearing borrowings and average other financial liabilities at the end of the year. Total assets: the sum of non-current and current assets.
Operations
Arisings: the valuable product after a stage in processing. Bench: the equivalent of a level in an underground mine, most noticeable as the step-like features in an open-pit wall. The open-pit bench height is calculated to match the rock strength, pit economics, and capabilities of the open-pit machinery. Typical bench heights in open-pit mines range from 10 to 20 metres. Best cut: the optimum stoping width for mining of the reef at prevailing metal prices and costs. Built-up head grade: the total 4E grams produced from the concentrating process from concentrate, metallics (where applicable), and tailings, divided by the total tons milled. See definition of 4E below. Concentrating: the process of separating milled ore into a waste stream (tailings) and a valuable mineral stream (concentrate) by flotation. The valuable minerals in the concentrate contain almost all the base metal and precious metal minerals; these minerals are treated further by smelting and refining to obtain the pure metals (PGMs, Ni, and Cu). Decline: a generic term used to describe a shaft at an inclination below the horizontal and usually at the same angle as the dip of the reef. Development: any tunnelling operation that has for its object either exploration or exploitation. Equivalent refined platinum production: Mines production and purchases of metal in concentrate converted to equivalent refined platinum production using Anglo Platinums standard smelting and refining recoveries. Face advance: the average distance stope faces advance per month: a measure of resource utilization.
142
GLOSSARY OF TERMS
Flotation: in the flotation process, milled ore mixed with water or pulp is passed through a series of agitated tanks. Various chemicals are added to the pulp in sequence to render the valuable minerals hydrophobic (water-repellent) and the non-valuable minerals hydrophilic (water-loving). Air is dispersed throughout the agitated tanks and rises to the surface. The hydrophobic particles attach to the rising air bubbles and are removed from the main volume of pulp as a soapy froth. In this manner, various combinations of flotation cells in series are utilized to produce a concentrated stream of valuable mineral particles, called the concentrate, and a waste pulp stream, called tailings. g/t: grams per ton, the unit of measurement of grade. One gram per ton is one part per million. Immediately available ore reserves: ground available for mining without any further development. In situ: the original, natural state of the orebody before mining or processing of the ore takes place. JORC: the Australian Institute of Mining and Metallurgy Joint Ore Reserves Committee Code. Merensky Reef: a band in the Bushveld sequence often containing economic grades of PGMs. Milling: a process for reducing broken ore to a size at which concentrating can be undertaken. Mining area: the area for which a mining authorization/permission to mine has been granted. Oxidized ore: ore that has decomposed by exposure to surface and near-surface elements. Oz: Troy ounce. Pd: palladium. PGMs: platinum group metals, six elemental metals of the platinum group nearly always found in association with each other. Some texts refer to PGE (platinum group elements). These metals are platinum, palladium, rhodium, ruthenium, iridium, and osmium. Platreef: the name of the ore mined at PPRust. Pt: platinum. Refined product/production: refined metal produced by the refinery and appointed toll-treaters from mined material and purchased concentrate, as well as metals in product sold from the refinery. Semivariogram: a geostatistical function describing in numerical terms (and represented graphically for ease of quantification) the predictability relationship between points of data at some distance from each other. This predictability constrains the confidence within which the estimation of a value (in this case the content value of a deposit) is made, and therefore an estimate of the risk is quantified. Stoping: operations directly associated with the extraction of reef. Stripping ratio: the number of units of unpayable material that must be mined to expose one unit of ore. SAMREC: the South African Mineral Resources Committee. Sweepings: the final process in stoping operations, in which the footwall is thoroughly cleaned to remove the last portion of broken ore and fines. Tailings: that portion of the ore from which most of the valuable material has been removed by concentrating and that is therefore low in value and rejected. Tailings grade: the 4E content of the tailings produced by milling and concentrating. When compared to head grade, it is a measure of the efficiency of the concentrating process. Ton: metric ton, equal to 1 000kg, unless otherwise defined. UG2: a chromite reef in the Bushveld sequence often containing economic values of PGMs. Unoxidized ore: ore that has not undergone changes/degradation by weathering close to the surface. 3E: three elements, platinum, palladium, and gold. 4E: four elements. The grade at Anglo Platinum mines is measured as the combined content of the four most valuable precious metals: platinum, palladium, rhodium, and gold.
143
through various senior and executive positions, which he has held over many years in large corporations. He was an executive director of Iscor Ltd before joining Anglo Platinum.
144
founding president of SACOB; past chairman of Business South Africa; and past president of the South Africa Foundation.
145
Human Resources
Abe Thebyane Executive Director: Human Resources Andr Geldenhuys General Manager: Human Resources Henry Kemp Group Human Resource Development Manager Henry Zondi Employee Relations Consultant Pumlani Tyali Senior Manager: Socio-economic Development
Commercial
Sandy Wood Executive Director: Commercial Tim Aiken General Manager: Marketing Peter von Zahn Business Manager: RPM Zug
Administration
Rohan Venter Company Secretary
Projects
Robin Mills Executive Director: Projects Lester Napier General Manager: Mines Expansions Nic du Toit Manager: Concentrator Projects Sean Chelius Manager: Process Projects
Technical Services
Mike Halhead Director: Technical Services Peter Charlesworth Divisional Director: Research and Development Ron Hieber Divisional Director: Resource Management and Development Mike Rogers Divisional Director: Mine Technical Services Chris Rule General Manager: Concentrator Technology Duncan Wanblad General Manager: Process Technology Deon Mocke General Manager: Supply Chain Jan Botha Manager: Group Engineering Services
Process Division
Richard Pilkington Divisional Director: Process Operations Piers Halton Divisional Advisor: Process
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Amandelbult Section
Francois Uys Business Manager PO Box 2, Chromite 0362 Telephone (014) 784-1111 Facsimile (014) 784-1230
PO Box 1341, Steelpoort 1133 Telephone (013) 230-2000 Facsimile (013) 230-2036
Financial, administrative, and technical advisors Anglo Platinum Management Services (Proprietary) Limited
Corporate and Divisional Office, Registered Office, business and postal addresses of the Secretary and Administrative Advisors: 55 Marshall Street, Johannesburg 2001 PO Box 62179, Marshalltown 2107 Telephone (011) 373-6111 Facsimile (011) 834-2379 (011) 373-5111
Union Section
Noel Williams Business Manager Private Bag 351, Swartklip 0370 Telephone (014) 786-1000 Facsimile (014) 786-0223
Waterval Smelter
Deryck Spann Business Manager PO Box 331, Kroondal 0350 Telephone (014) 591-5000 Facsimile (014) 591-5008
PPRust
Stephan Muller Business Manager Private Bag X2463, Makopane 0600 Telephone (015) 418-2000 Facsimile (015) 418-2018
Polokwane Smelter
July Ndlovu Business Manager Private Bag X9557, Polokwane Smelter 0699 Telephone (015) 299-2550 Facsimile (015) 418-3401
London Secretaries
Anglo American Services (UK) Limited 20 Carlton House Terrace, London SW1Y 5AN, England Telephone (0207) 698-8888 Facsimile (0207) 698-8755
Leplats
Dawid Stander Business Manager PO Box 1, Atok 0749 Telephone (015) 619-0044 Facsimile (015) 619-0010
Auditors to Anglo Platinum and Anglo Platinum Management Services (Proprietary) Limited
Deloitte & Touche
147
Special Business
Ordinary resolution No. 1 Placing unissued capital under the control of the Directors RESOLVED: That subject to the provisions of the Companies Act, 1973, as amended, and the Listings Requirements of the JSE, the authorized but unissued ordinary shares of 10 cents each in the capital of the Company (excluding for this purpose those ordinary shares over which the directors have been given specific authority to meet the requirements of the Anglo Platinum Share Option Scheme) be placed under the control of the Directors, who are hereby authorized at their discretion to allot and issue all or any portion of such shares upon such terms and conditions as they may determine as and when deemed fit to do so. Ordinary resolution No. 2 Approving the Non-executive Directors fees RESOLVED: that the increase of the fees payable to Non-executive Directors as described in the Remuneration Report on page 93 be approved. By order of the Board
Ordinary business
1) To receive and consider the Groups annual financial statements for the year ended 31 December 2003. 2) To re-elect Directors retiring by rotation and who have been appointed during the year and are retiring in terms of the Articles of Association and who are eligible and offer themselves for reelection as directors of the Company. Directors retiring by rotation: a) Mr L Boyd b) Mr WA Nairn Directors who have been appointed during the year: c) Mr R Havenstein d) Dr BA Khumalo e) Mr RG Mills f) Mr AM Thebyane g) Mr PL Zim
(Please see footnote)
3) To appoint Deloitte and Touche as auditors of the Company to hold office for the ensuing year.
148
Reports:
Interim Report for the half-year to 30 June 2004 published Preliminary Report for the year to 31 December 2004 published Annual Report for year to 31 December 2004 released Annual General Meeting (2004 year) July 2004 February 2005 February 2005 March 2005
Dividends:
Interim Final Declared July 2004 Payable September 2004 Declared February 2005 Payable March 2005 Shareholders are reminded to notify the South African or the United Kingdom Registrars of any change of address.
Registered Office
55 Marshall Street Johannesburg, 2001 (PO Box 62179, Marshalltown, 2107)
London Secretaries
Anglo American Services (UK) Limited 20 Carlton House Terrace London SW1Y 5AN England
149
150
For use ONLY by shareholders who have not dematerialized their shares, Central Securities Depository Participants (CSDP) nominee companies, brokers nominee companies, and shareholders who have dematerialized their shares and who have elected own-name registration in the sub-register through a CSDP or broker at the Annual General Meeting of shareholders to be held on the ground floor, 44 Main Street, Johannesburg on Tuesday, 30 March 2004, at 14:00. Shareholders who have dematerialized their shares and not elected own-name registration in the sub-register through a CSDP or broker must NOT complete this form of proxy and must provide their CSDP or broker with their voting instructions, in terms of the custody agreement entered into between such shareholders and the CSDP or broker. Shareholders who have not dematerialized their shares, or have dematerialized their shares and have elected own-name registration in the sub-register through a CSDP or broker must complete this form of proxy and return it to the registrars of Anglo Platinum, Computershare Limited in South Africa, or Capita IRG plc in the United Kingdom, so as to be received by not later than 14:00 on Friday, 26 March 2004. I/We
(name in block letters please)
of Telephone:
(home) (area code and number)
Telephone:
(work) (area code and number)
being the holder/s or custodian of (see note 1): 1. 2. 3. The Chairman of the Annual General Meeting
as my/our proxy to attend and speak for me/us and on my/our behalf at the Annual General Meeting of the Company and at any adjournment thereof, and to vote or abstain from voting as indicated below on the resolutions to be considered at the said meeting in respect of the shares registered in my/our name(s) in accordance with the following instructions (see note 2): ORDINARY BUSINESS 1. To adopt the Groups annual financial statements for the year ended 31 December 2003 2. (a) To re-elect Mr L Boyd as a Director of the Company (b) To re-elect Mr WA Nairn as a Director of the Company (c) To re-elect Mr R Havenstein as a Director of the Company (d) To re-elect Dr BA Khumalo as a Director of the Company (e) To re-elect Mr RG Mills as a Director of the Company (f) To re-elect Mr AM Thebyane as a Director of the Company (g) To re-elect Mr PL Zim as a Director of the Company 3. To appoint Deloitte & Touche as auditors of the Company to hold office for the ensuing year SPECIAL BUSINESS 4. Ordinary Resolution No. 1: to authorize the Directors to allot and issue the unissued ordinary shares 5. Ordinary Resolution No. 2: to approve the increase in Non-executive Directors fees For Against Abstain
Please indicate with an X in the spaces above how you wish your votes to be cast. If no indication is given, the proxy will vote or abstain at his discretion. Any member of the Company entitled to attend and vote at the meeting may appoint a proxy or proxies to attend, speak, and vote in his stead. A proxy need not be a member of the Company. Every person present and entitled to vote at an Annual General Meeting shall, on a show of hands, have one vote only, but in the event of a poll, every share shall have one vote. Please read the notes appearing on the reverse hereof Signed at Signature(s) on Assisted by me 2004
NOTES
11 A shareholder may insert the name of a proxy or the names of two alternative proxies of the shareholders choice in the space(s) provided, with or without deleting the words the Chairman of the Annual General Meeting, but any such deletion must be signed in full by the shareholder. The person whose name appears first on the form of proxy and has not been deleted and who is present at the Annual General Meeting will be entitled to act as proxy to the exclusion of those whose names follow. In the event that no names are indicated, the Chairman of the Annual General Meeting shall exercise the proxy. 12 A shareholders instructions to the proxy must be indicated by the insertion of an X in the appropriate box provided. Failure to comply with the above will be deemed to authorize the proxy to vote or to abstain from voting at the Annual General Meeting as he/she deems fit in respect of all the shareholders votes exercisable thereat. Where the proxy is the Chairman, such failure shall be deemed to authorize the Chairman to vote in favour of the resolutions to be considered at the Annual General Meeting in respect of all the shareholders votes exercisable thereat. 13 In order to be effective, completed proxy forms must reach the Companys South African Registrars, Johannesburg, not less than 48 hours before the time appointed for the holding of the meeting, or the offices of the United Kingdom Registrars not less than 48 hours before the time appointed for the holding of the meeting. 14 The completion and lodging of this form of proxy shall in no way preclude the shareholder from attending, speaking, or voting in person at the Annual General Meeting to the exclusion of any proxy appointed in terms hereof. 15 Should this form of proxy not be completed and/or received in accordance with these notes, the Chairman may accept or reject it, provided that in respect of its acceptance the Chairman is satisfied as to the manner in which the shareholder wishes to vote. 1 6.1 Documentary evidence establishing the authority of a person signing this form of proxy in a representative or other legal capacity (such as a power of attorney or other written authority) must be attached to this form of proxy unless previously recorded by the Companys Registrars or waived by the Chairman of the Annual General Meeting. 6.2 The Chairman shall be entitled to decline to accept the authority of a person signing the proxy form: 6.2.1 6.2.2 Under a power of attorney, or On behalf of a company unless that persons power of attorney or authority is deposited at the offices of the Companys South African Registrars or the United Kingdom Registrars not less than 48 hours before the meeting. 17 Where shares are held jointly, all joint holders are required to sign the form of proxy. 18 His/her parent or guardian must assist a minor unless the relevant documents establishing his/her legal capacity are produced or have been registered by the Companys South African or United Kingdom Registrars. 19 Any alteration or correction made to this form of proxy must be signed in full and not initialled by the signatory/ies. 10 On a show of hands, every shareholder present in person or represented by proxy shall have only one vote, irrespective of the number of shares he/she holds or represents. 11 On a poll, every shareholder present in person or represented by proxy shall have one vote for every share held by such shareholder. 12 A resolution put to vote shall be decided by a show of hands, unless before or on the declaration of the results of the show of hands, a poll shall be demanded by any person entitled to vote at the Annual General Meeting.
VOTING INSTRUCTION FORM only for use by members who have dematerialized their Anglo Platinum shares through STRATE
For use in respect of the Annual General Meeting of the Company to be held on the ground floor, 44 Main Street, Johannesburg on Tuesday, 30 March 2004, at 14:00. Members who have already dematerialized their Anglo Platinum shares may use this form to advise their CSDP or broker of their voting instructions on the proposed resolutions in the spaces provided below. However, should such members wish to attend the Annual General Meeting in person, then they will need to request their CSDP or broker to provide them with the necessary authority in terms of the custody agreement entered into between the dematerialized shareholder and the CSDP or broker. Members who have dematerialized their shares and have elected own-name registration must not use this voting instruction form but must use the form of proxy attached. I/We
(name in block letters please)
of
being a member(s) of the Company, who has/have dematerialized my/our shares in Anglo Platinum, do hereby indicate in the spaces provided below to my/our CSDP/broker my/our voting instructions on the resolutions to be proposed at the Annual General Meeting of the Company to be held at 14:00 on Tuesday, 30 March 2004.
Voting Instruction:
ORDINARY BUSINESS 1. To adopt the Groups annual financial statements for the year ended 31 December 2003 2. (a) To re-elect Mr L Boyd as a Director of the Company (b) To re-elect Mr WA Nairn as a Director of the Company (c) To re-elect Mr R Havenstein as a Director of the Company (d) To re-elect Dr BA Khumalo as a Director of the Company (e) To re-elect Mr RG Mills as a Director of the Company (f) To re-elect Mr AM Thebyane as a Director of the Company (g) To re-elect Mr PL Zim as a Director of the Company 3. To appoint Deloitte & Touche as auditors of the Company to hold office for the ensuing year SPECIAL BUSINESS 4. Ordinary resolution No.1: to authorize the Directors to allot and issue the unissued ordinary shares 5. Ordinary resolution No.2: to approve the increase in Non-executive Directors fees For Against Abstain
Notes:
1. Please indicate in the appropriate spaces above the number of votes to be cast. Each share carries the right to one vote. 2. All the votes need not be exercised and neither need all votes be cast in the same way, but the total of the votes cast and in respect of which abstention is directed may not exceed the total of the votes exercisable. 3. Any alteration or correction made to this voting instruction form must be signed in full by the signatory/ies. 4. When there are joint holders of shares, all joint holders must sign the voting instruction form. 5. Completed voting instruction forms should be forwarded to the CSDP or broker through whom the Anglo Platinum shares have been dematerialized. Members should contact their CSDP or broker with regard to the cut-off time for lodging of voting instruction forms. 6. This voting instruction form is only for use by members with dematerialized shareholdings via STRATE. Registered members and those with shares held in CREST should use the proxy form attached.
Signed at Signature(s)
on Assisted by me
2004