Site Visit: Mogalakwena Mine and Polokwane Smelter
April 12th 2010
1 2008 Annual results
Agenda
Welcome and Introduction Overview of Platinum industry and Anglo Platinum Neville Nicolau, CEO
Presentation on Mogalakwena Mine Ted Muhajir, General Manager
Question and Answer session
Site Visit April 12th 2010
MARKET OVERVIEW
Site Visit April 12th 2010
Global platinum supply: only 4 major players extremely high geographical concentration
2009: Global platinum supply: 6,060m oz
Other 16%
Norilsk 11%
Anglo Platinum 40%
Lonmin 11%
Impala 22%
c.20% of platinum is produced as a by-product to nickel or palladium
Site Visit April 12th 2010
Unique metal market dynamics
Diverse application base Balance of elastic and inelastic applications beneficial price role from 2H08 Geographically diverse demand
% 50 45 40 35 30 25 20 15 10 5 0 Autocatalysts Jewellery (net)
*Includes Chemical, Electrical, Glass, Petroleum and Other
Industrial*
Investment
2008 2009 Site Visit April 12th 2010
Platinum market: In deficit for 10 of last 13 years
Net surplus/(deficit) 000 oz 100 1997 1998 0 -100 -200 -300 -400 -500 -600 -700 -800
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Source: Johnson Matthey, Anglo Platinum estimates
Site Visit April 12th 2010
Autocatalyst demand driver: emissions legislation
Continued tighter legislation - Euro V 2011 Continued increase in diesel car popularity cost and emissions efficiency Early voluntary particulate filter fitment Heavy duty vehicle retrofitting - high loadings Vehicle volume growth in China
Site Visit April 12th 2010
Autocatalyst demand driver: emissions legislation timetable
South Korea Euro IV (HDD) India South Korea Euro III (HDD) K-ULEV India Brazil L5 Euro 3 (national) Brazil L4 Brazil Euro III (HDD) Euro 3
(national 1)
Rest of World
India Euro IV (HDD) Brazil Euro IV (HDD)
Euro 4
(national 1)
China
Japan LTP
Euro III
(HDD) (HDD)
Euro IV
(HDD)
Japan
(HDD)
Japan
J-200
NLT
PNLT Euro 3 Euro 4 Stage IIIB
(non-road)
Russia
Euro 2
Stage IV
(non-road)
European Union
Euro 1 Tier 1 Euro 2
Euro III
(HDD)
Euro IV
(HDD)
Euro V
(HDD)
Euro VI
(HDD)
Euro 3 Tier 2
Euro 4
Euro 5
Euro 6
Tier 4 (non-road) US04
(HDD)
USA
LEV I
(CA)
US07
(HDD)
US2010
(HDD)
N-LEV
LEV II
(CA)
1990
Source: Johnson Matthey
1995
2000
2005
2010
2015 Site Visit April 12th 2010
Autocatalyst demand rebuilding
2009 Vehicle stock adjustments exacerbated poor production performance in mature markets Stimulus schemes boosted small car sales favouring palladium Chinese vehicle production growth exceptional 2010 Vehicle production forecast to increase to match sales Diesel share in Europe re-established through fleet purchases
9 2009 Financial Results
Asia delivers on platinum jewellery
Global jewellery demand Oz 000's
2500
2000 Other 1500 North Am Europe 1000 Japan China 500
0 2004 2005 2006 2007 2008 2009
Asian markets provide the volume Rest of World provides influence and style
13%
Jewellery demand 2009
8% 6% 3% China Japan Europe North Am Other
Chinese consumer demand remains firm and margins are robust Development campaign in India revitalised
10
70%
Site Visit April 12th 2010
Platinum jewellery: unique source of price support
Shock-absorber effect at differing price levels Jewellery demand: price elastic vs. Industrial demand: price inelastic Demand balance results in lower price volatility Price tension (upward pressure on price): Strong consumer demand Sophisticated marketing: PGI focus on niche and new markets High brand awareness Well-established bridal support Consumer has adjusted to higher prices over time China is different. Platinum jewellery sales in China increased by over 600,000 ounces 1H09 vs. 1H08 Unique market characteristics Majority of purchases are self-purchase or non-bridal gift Over 70% metal-only pieces (< $300) Unsaturated market retail store growth
11 Site Visit April 12th 2010
Platinum jewellery: China is different
Primary consumer demographics and behaviour Better educated urban employee between 20 and 40 Buys her own plain platinum pieces; fashion and emotion Average value of her purchase: US$250 Remained employed through global crisis Well aware of the low price opportunity; jewellery sold by weight High appeal of price dip to first time buyer; unsaturated market
Beijing retailer - May holiday
12
Shanghai retailer - Valentines day
Site Visit April 12th 2010
Investment: a growing source of visible demand
Platinum and palladium ETFs introduced in April-May 2006 by ETF Securities and Zurcher Kantonal Bank and in January 2010 in the US by ETF Securities Platinum ETF holdings currently at 947k oz, including 309k oz in US ETF Palladium ETF holdings currently at 1695k oz, including 549k oz in US ETF
Platinum ETF positions to end March 2010
1,200,000 2,500
Palladium ETF positions to end March 2010
1,800,000 1,600,000 650 600 550 500 450 400 800,000 350 600,000 400,000 200,000 300 250 200 150 Price (US$/oz)
1,000,000 2,000 Price (US$/oz) 800,000
Palladium ETF ounces
Platinum ETF ounces
1,400,000 1,200,000 1,000,000
600,000
1,500
400,000 1,000 200,000
0 2007/04/20 ETC ZKB US ETC US$/oz
500
0 2007/04/20 ETC ZKB US ETC US$/oz
13
Site Visit April 12th 2010
Palladium: Moving into a sustained production deficit
Increasing autocatalyst demand from BRIC car production and sales Palladium use in diesel catalysts: 25-30% of PGM loadings medium to longer-term Investment activity and Exchange Traded Funds continue to increase Potential for further jewellery development Overhang of Russian stockpiles remains for now Potential to move into a sustained production deficit once Russian stockpiles deplete
14 Site Visit April 12th 2010
COMPANY OVERVIEW
15
Site Visit April 12th 2010
Our Strategy
Our strategy is to maximise value by understanding and developing the market for platinum group metals, to expand our production into that opportunity and to conduct our business safely, cost-effectively and competitively
Safe, Profitable Platinum
16
Site Visit April 12th 2010
World leader in platinum production
The worlds largest primary producer of platinum, c.40% market share
2009 2008 2,387 1,319 299 4,531 2007 2,474 1,390 329 4,787
Refined production (000 oz):
Platinum Palladium Rhodium PGMs
2,452 1,361 350 4,751
Headline Earnings:
Rm US$ m
710 359
13,292 1,722
12,325 1,741
Ordinary shares in issue (m)*: Market capitalization (US$ bn): Anglo American plc shareholding:
*As at 31st December
236.8 25.6 79.7%
237.1 13.3 79.6%
236.4 35.0 76.5%
17
Site Visit April 12th 2010
Primary platinum production drives our strategy
Expansion decisions based on platinum demand growth Value and return based on rand revenue of basket of metals sold Anglo Platinum basket price: net sales revenue (all metals) per platinum ounce refined in FY09
R20,780 $2,906 R29,848 R19,748 R14,683 R15,095 $3,813 $2,268 $1,556 $1,929 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000
2009: split of gross revenue by metal
Other Nickel 5% 6% Rhodium 12% Palladium 8% Platinum Rand basket price per Pt ounce 69%
US$ Basket price per Pt ounce
5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500
2007
1H08
2H08
1H09
2H09
Ave Rand Basket price 18
Ave Dollar Basket price Site Visit April 12th 2010
South Africa Bushveld Complex and our operations
19
Site Visit April 12th 2010
Extensive high quality ore reserves and resources
Proved and probable reserves of 1,315 Mt @ 4.03 g/t: 170.5m oz (4E)
Implied life of mines: c.55 years
Measure and Indicated resource: 2,406 Mt @ 3.95 g/t: 305m oz (4E)
Implied life of mines: c.50 years
Total implied life of mines (reserves and resources): +100 years c.60% of South Africas Pt and 4E reserves
20
Site Visit April 12th 2010
Our wholly-owned mines: FY09 statistics
M2 per total Refined Pt % operating Cash operating cost per Production UG2 employee equivalent refined Pt oz Comments 110.6 133.6 56 100 40 81 64 4.2 15.6 5.5 5.4 5.4 13,297 10,647 12,659 13,972 13,118 2 shaft is a project shaft 2 shaft on care and maintenance 2 and 3 shafts on care and maintenance Mechanised mine
Mine area
Mine (Shafts) Siphumele (1, 2 & 3 shafts) Bathopele (East and Central shafts)
Rustenburg
Khomanani (1 & 2 shafts) 105.5 Thembelani (1 & 2 shafts) Khuseleka (1 & 2 shafts) TOTAL 79.3 157.0 586.0 293.8 150.1 443.9
Amandelbult
Tumela (1 & 4 shafts) Dishaba (2 shaft) TOTAL
78 47
6.1 4.4
9,245 10,291
4 shaft is a project East Upper UG2 Project
Union(1) Mogalakwena TOTAL 21
Ivan, 22 Vertical, Richard and Spud shafts 291.9 233.3 1,555.1
63 NA
4.5 1,141(2)
10,268 11,710 Platreef
(1) 85% owned (2) Tonnes mined per total employee per month
Site Visit April 12th 2010
Our Joint-Venture Operations: FY09 statistics
Cash operating cost per equivalent refined Pt oz
Mine
AP ownership
Structure 50% Royal Bafokeng Resources 50% African Rainbow Minerals 50% Xstrata
FY09 mined FY09 Other information ounces PoC* Managed by Anglo Platinum Managed by ARM Managed by Xstrata Managed by Aquarius Managed by Aquarius
% UG2
M2 per total operating employee
BRPM Modikwa Mototolo
50% 50% 50%
84.5 67.2 54.5
88.8 67.2 54.5
1 99 100
9,992 13,740 9,132
6.5 10.2 15.8 (some mechanised)
Kroondal
50%
50% Aquarius
115.8
115.8
100
10,437
12.7
Marikana
50%
50% Aquarius Managed by Anooraq Resources
45.4
19.8
100
11,037
6.2
Bokoni**
49%
51% Anooraq Resources
28.6
28.6
38
18,920
3.5
*PoC: Purchase of Concentrate; ** Formerly known as Lebowa; Ounces information to 30/06/09 only; accounted for as an Associate from 1/7/09
22
Site Visit April 12th 2010
Unique competitive advantages
Extensive high quality ore reserves Building flexibility into portfolio of long-life assets Superior market intelligence Extensive HDSA JV experience Conversion of all mining rights granted, including at project level
23
Site Visit April 12th 2010
Latest financial results: 2009 highlights
Safety: continued progress 4 month fatality-free record as at 20 January 2010 Financial results:
Headline Earnings down 95% to R710 million due to the metal price decline
Strong recovery in PGM prices since 2H09 and continued positive market outlook Operational improvement targets met:
Production of 2.4 million ounces of platinum, as planned Employee complement reduction of 15,752 since January 2009 Cash operating costs per equivalent refined platinum ounce kept essentially flat at R11,236 Mining productivity average 6.33m2 per operating employee during year, 13% improvement yr/yr Capital expenditure of R9.7 billion
Balance Sheet restructured:
Rights Offer of R12.5 billion now concluded, 2.8x over-subscribed by minority shareholders Future financial and operational flexibility secured and capacity for growth created
24 Site Visit April 12th 2010
Key opportunities and issues for Anglo Platinum
Safety: Cost management: Focus on achieving zero harm Targeting unit costs to remain flat until 2011 Three-stage process of (i) reducing employee numbers
and improving productivity, (ii) reducing overhead and allocated costs; (iii) improving efficiency of infrastructure
Declining grade and recovery: Project pipeline management:
Increased UG2 and quality of Merensky Production of metal to meet market demand Reduction in capex: R8 bn per annum for next two
years
Balance sheet management:
Successful R12.5 billion Rights Issue Resumption of dividend payments
25
Site Visit April 12th 2010
Safety
Safety is our first value
Zero is possible
26
Site Visit April 12th 2010
Solid progress towards zero-harm
Marked improvement in safety:
LTIFR down 32.5% since 2007 4Q09 fatality free, a first in the history of the Company Fatality-free shift achievements in 2010:
Dishaba Mine: 3.5 million; Tumela Mine: 4 million; Khuseleka 1 Shaft: 2 million; Khomanani 1 Shaft: 1 million
Number of fatalities 30 25 20 15 10 5 0 2007 27 2008 1Q09 2Q09 3Q09 4 6 3 0 4Q09 25 18
LTI/ 200 000 hours 2
2.03 1.74
1.5 1 0.5 0 2007 2008
1.37
2009 Site Visit April 12th 2010
Turning Anglo Platinum around: some key actions taken
Restructuring of our largest mines into smaller, more manageable units Introducing a matrix management structure at Head Office Instilling cost management into our corporate culture Matching our capex spend to our production profile Solid progress on road to zero harm
28
Site Visit April 12th 2010
Cost management being instilled across the group
Target: flat nominal cash operating costs per equivalent refined platinum ounce FY09-FY11 A three-step process to reinforce cost management: 1. Employee complement reduction and productivity improvements 2. Correct allocation of costs across mines; reduction of overhead costs and removal of overheads from shafts on care and maintenance 3. Improving efficiency of infrastructure in a high inflation environment
29
Site Visit April 12th 2010
Solid progress in meeting cost target
Rand cash operating costs per equivalent refined platinum ounce flat in 2009 versus 2008
2009: split of cash operating costs*
Sundries 14% Toll refining 1%
Utilities 8%
Labour 38%
Stores 26% Contractors 13%
*Includes On-mine costs (comprise mining and concentrating costs) smelting and refining costs
30
Site Visit April 12th 2010
FY09 saw a turning point in cost management
Cash operating unit costs essentially flat year-on-year
Cash operating costs per equivalent refined platinum ounce of R11,236 vs. R11,096 in 2008, a c.6% reduction in real terms Cash operating cost per tonne milled decreased 5% to R453 in nominal terms
Employee complement reduction:
Reduction of 724 positions in corporate and regional offices in 2009; total reduction of 1,150 since July 2008 15,752 reduction in total complement since January 2009, against initial expectation of 10,000; reduction of 18,786 since October 2008
Asset Optimisation and Supply Chain
Asset Optimisation operating profit benefit: R2,731 million Supply Chain savings: R821 million
31
Site Visit April 12th 2010
Improving our infrastructure efficiencies
Surface outcrop decline shaft access First generation vertical shaft Second and third generation shafts
Southern African Bushveld Platinum mining
Merensky reef 4-6 g/t, narrow width Short distance between reefs 40 100m UG2 reef 3-5 g/t, wide, high Chrome
Average Depth 0 1200m
Anglo Platinum typical
Impala Platinum typical
mined out reef Brownfields project Co-extraction
At Rustenburg, c.70% of employees are more than 2.5 km away from infrastructure, vs. c.30% at Impalas Lease Area
32 Site Visit April 12th 2010
Improving our infrastructure efficiencies
Improving mine development layout and design of new mining areas
Example: transition from manual to hybrid mining at Union
Shaft optimisation to fully utilise capacity and maximise low cost ounces
Examples:
Reduce activity at Union Merensky Deeps and Merenksy levels at Rustenburg Increase UG2 production close to existing shafts whilst reducing Merensky mining at a distance
Infrastructure optimization
Example: closure of Thembelani 1 shaft to route all activity through Thembelani 2 shaft, once completed
Implementing reclamation/refurbishment strategies
Examples:
Salvage and reuse of mining equipment In-sourcing of equipment repair and maintenance
33
Site Visit April 12th 2010
Moving to lower half of cost curve
34
Site Visit April 12th 2010
Asset Optimisation and Supply Chain deliver value
Asset Optimisation FY09 operating profit benefit:
R2,731 million or $332 million*
Main contributing projects:
Mogalakwena volume increases Smelter capacity improvements Labour productivity improvements Steel ball reduction in milling circuits Process chemicals reduction
Supply Chain FY09 savings:
Supply Chain savings: R821 million
Main contributing projects:
Steel balls and grinding media Tyres Mobile cranes Caustic soda
Sustainable Asset Optimisation and Supply Chain savings targets:
2010: $250m (AO), $195m (SC) 2011: $335m (AO), $349m (SC)
35
* Sustainable
savings of $233 million
Site Visit April 12th 2010
Declining grade and recovery an industry issue
Increasing proportion of UG2: lower
grade and recovery
4.5 Built up head grade % UG2 70 60 50 3.0
Increased UG2 mined vs. total output: 2004: 48% to 2009: 55%
4.0 3.5
Built-up head grade decreased from 2.5 2004: 4.16 to 2009: 3.31 g/tonne milled 2.0
1.5
40 30 20 10 0 2004 2005 2006 2007 2008 2009
Ore mix management and process recovery optimisation Focus on improving flexibility by increasing ore reserve development
1.0 0.5 0.0
36
Site Visit April 12th 2010
Project pipeline management: rigorous capital allocation management
Approved projects form pipeline of $5 billion Stay-in-business and Project capital expenditure reduced from R14 billion ($1.5b) in 2008 to R8 billion (c.$1b) per annum for 2010 and 2011
Selected Major Projects
Refined production
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
2452
Capex: $316m Capex: $1602m
Replacement projects
Thembelani 2 Shaft (120k oz) Tumela 4 Shaft (271k oz)
Growth projects
Dishaba East Upper UG2 (100k oz) Unki (65k oz) Twickenham (180k oz) Styldrift Merensky phase 1 (245k oz)
Capex: $224m Capex: $457m Capex: $800m Capex: $1621m
All production shown at 100% full ramp up and in 000 ounces per annum; dates show full production dates
37
Site Visit April 12th 2010
Balance sheet management: Successful R12.5 billion Rights Issue
R12.5 billion, equating to 24,891,473 million shares Issue price of R502.18, set at 25% discount to Theoretical Ex-Rights Price (5 February 2010) Anglo American followed its rights (79.72%) and fully underwrote the balance of the offering Pro-forma net debt post Rights Issue: R6.8 billion Reduction in pro-forma interest charge expected to be c. R800 million Dividend payments to be resumed when market conditions and the operating environment permit
Site Visit April 12th 2010
38
In summary
Fundamentally attractive market:
Strategic industrial metals
Strong demand recovery restocking, autocat demand returning, Chinese jewellery remains strong Geological concentration and scarcity of PGMs Stable industry structure well established fabricators and users concentrated supply
Performance improvement underway:
Commitment to optimising value from diverse portfolio of assets: Three high cost shafts placed on care and maintenance Additional output from lower cost operations can be flexed to keep production steady Disciplined capital allocation Rigorous cost management, including supply chain and asset optimisation initiatives
Anglo Platinum is the largest platinum producer globally:
Largest suite of mining, smelting and refining assets in industry 40% of global platinum market; 21% share of global palladium market
Strong growth prospects:
Largest resources and reserves of any PGM player Unrivalled PGM optionality through portfolio of assets and presence on all four Southern African reefs
39
Site Visit April 12th 2010
