Managed mines

MANAGED MINES

WITH THE FUTURE IN MIND

RUSTENBURG MINES

Merensky Reef map – showing workings for Khuseleka, Thembelani, Khomanani and Siphumelele mines. 17004 UG2 Reef map – showing workings for Bathopele, Khuseleka, Thembelani, Khomanani and Siphumelele mines. 17013


BATHOPELE MINE


BATHOPELE MINE

(MANAGED – 100% OWNED)

Dawie van Aswegen

Dawie van Aswegen

 

 20122011
Safety  
Fatalities02
LTIFR0.790.84
Refined platinum production (000 oz)115.7118.3
Operating contribution (Rm)(32)548
Gross profit margin (%)(10)17
Operating free cash flow (Rm)(104)434
Net cash flow (Rm)(262)254
Cash on-mine costs/tonne milledR623R558
Mineral Resources inclusive of Ore Reserves  
Merensky2.1 Mt → 0.2 4E Moz
UG247.3 Mt → 5.3 4E Moz

MINE OVERVIEW

The Bathopele Mine is situated in the province of North West in South Africa, near the town of Rustenburg and within the Western Limb of the Bushveld Complex. The mine operates under a mining right covering a total area of 17 square kilometres. The current infrastructure consists primarily of two decline shafts, namely East and Central shafts. Development of the West shaft, which is accessed underground from Central shaft, commenced during January 2011. It is a trackless mechanised operation that mines the UG2 horizon exclusively at a current depth varying between 40 metres and 350 metres below surface using low-profile (LP) and extra-low-profile (XLP) equipment suites. The mining layouts applied are bord and pillar in the LP section and breast mining in the XLP section. The XLP mining section contributed 11% of the m2 produced. Bathopele’s life-of-mine (LoM) extends to 2026. The current LoM plan consists of a Mineral Resource (exclusive of Ore Reserves) of 0.5 4E million ounces and an Ore Reserve of 3.8 4E million ounces.

KEY ACHIEVEMENTS

  • One and a half year (579 days) fatality-free and 977,000 fatality-free shifts achieved during 2012
  • A year-on-year improvement of 22% in decline barrel development

OPERATIONAL REVIEW

The lost-time injury-frequency rate improved marginally to 0.79 in 2012 from 0.84 in 2011. Equivalent refined platinum ounces decreased to 108,700 ounces, down by 3.4% compared with 2011. The mine achieved 15% higher production of platinum ounces in the first half of 2012 compared with 2011. However, this performance was eroded in the second half of 2012 by two strike-related stoppages, namely a miner strike in July and the unprotected illegal strike in September lasting through to mid-November. The 4E built-up head grade declined to 2.85 g/t, down 7.5% on 2011 mainly owing to increased on-reef decline barrel development and lower grade areas mined as the mine progressed through the Hex River fault. The immediately available Ore Reserves were 14.1 months at 31 December 2012, an increase of 0.4 months over the figure for 2011. Labour productivity, which was up 13% year-on-year in the first half of 2012, decreased substantially over the second half of the year as a result of the unprotected industrial action and ended the year 6.1% lower compared with 2011 at 12.3 m2 per operating employee. At R1.57 billion, cash on-mine costs were 15.7% up on those for 2011. Inflationary increases of 16% on electricity, 9% on labour and 15% on key input commodity items, combined constituting 80% of the total cost base of Bathopele, were primarily driving cost increases. The cash on-mine cost per tonne milled rose by 11.6%. Bathopele was able to mill some tonnes through the strike period owing to it feeding directly into the concentrator through a conveyor belt feed system. The cash operating expenses (the costs after allowing for off-mine smelting and refining activities) per equivalent refined ounce, however, increased by 20% year-on-year, to R15,804 owing to marginal lower volume, lower grade and higher operating costs. The gross profit margin of the operation was -10%, down from 17% in 2011.

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CAPITAL EXPENDITURE

Total capital expenditure increased by 16.7% to R404 million in 2012 (R346 million in 2011). Stay-in-business capital expenditure amounted to R263 million (R193 million in 2011), while project capital expenditure, mainly on Bathopele Phase 4, ended the year at R141 million (R153 million in 2011). The Bathopele Phase 4 and Phase 5 projects progressed to 88% and 6% completion respectively and was also impacted by the industrial action causing a decline in development rates. Both projects ended the year without any lost-time injuries. Development of Phase 4 is scheduled for completion in the second quarter of 2015. No cost overruns are anticipated. Operating free cash flow (cash available after allowing for all direct and allocated indirect operating costs and stay-in-business capital) declined to -R104 million from R434 million in 2011.

OUTLOOK

Bathopele Mine will not be impacted by the Platinum Review. The mine is expected to return to equivalent refined platinum ounce production levels of between 115 koz to 130 koz in 2013.


KHOMANANI MINE


KHOMANANI MINE

(MANAGED – 100% OWNED)

Daan Breet

Daan Breet

 

 20122011
Safety  

Fatalities

12

LTIFR

1.321.49
Refined platinum production (000 oz)102.8102.2
Operating contribution (Rm)(167)234
Gross profit margin (%)(17)5
Operating free cash flow (Rm)(202)64
Net cash flow (Rm)(273)20
Cash on-mine costs/tonne milledR1,215R1,055
Mineral Resources inclusive of Ore Reserves  
Merensky10.5 Mt → 2.1 4E Moz
UG253.7 Mt → 8.2 4E Moz

MINE OVERVIEW

The Khomanani mine is situated within the Western Limb of the Bushveld Complex, near the city of Rustenburg in the province of North West in South Africa. The mine operates under a mining right covering a total area of 42 square kilometres.

The current mine infrastructure consists of two operating shaft complexes, namely Khomanani 1 shaft, from which the UG2 Reef is mined; and Khomanani 2 shaft, from which the deeper Merensky is exploited. Khomanani 2 shaft serves solely as a men-and-materials shaft, with all Merensky ore conveyed via an interconnecting rail system to Khomanani 1 shaft, whence all the Merensky and UG2 ore is hoisted. The Merensky ore is mined using a conventional scattered-breast mining method, while the UG2 ore is mined via an improved on-reef semi-mechanised hybrid system. This entails making use of conventional hand-held drilling machines and winches in the stope workings, but with drill rigs, load-haul-dump machines and belts in the development excavations. This mining method facilitates a higher level of production. The operating depth for the current workings is between 635 metres and 1,245 metres below surface.

Khomanani’s life-of-mine (LoM) currently extends to 2027. The current LoM plan comprises a Mineral Resource (exclusive of Ore Reserves) of 5.4 4E million ounces (both Merensky and UG2 reefs) and an Ore Reserve of 3.6 4E million ounces.

KEY ACHIEVEMENTS

  • One million fatality-free shifts achieved on 6 August 2012.

OPERATIONAL REVIEW

Regrettably one employee lost his life at Khomanani Mine on 19 December 2012. The lost-time injury-frequency rate improved 11.4% to 1.32 in 2012 compared with 1.49 achieved in 2011.

Equivalent refined platinum ounces decreased to 96,600 ounces, down by 0.6%. This essentially flat year-on-year performance was achieved in spite of the unprotected strike action during the second half of 2012, emphasising the very good performance this mine had during the first half of 2012 compared with 2011. The 4E built-up head grade was marginally up on 2011 at 4.35 g/t, while immediately available Ore Reserves ended the year at 18.2 months; marginally lower than the 19.0 months recorded for 2011. Productivity for the year was 5.4 m2 per operating employee, down 7% versus the 2011 figure.

At R1.59 billion, cash on-mine costs were 13% up on those for 2011 as a result of inflationary increases in excess of CPI on electricity, labour and key input commodity items. The higher costs and lower tonnage resulted in the cash on-mine cost per tonne milled increasing by 15% year-on-year, while cash operating expenses (costs after allowing for off-mine smelting and refining activities) per equivalent refined ounce increased by 14%, to R17,938. The gross profit margin of the mine declined to -17% in 2012 from 5% in 2011.

CAPITAL EXPENDITURE

Total on-mine capital expenditure decreased to R187 million in 2012 (it was R205 million in 2011). Stay-in-business capital expenditure was R132 million (R185 million in 2011), while project capital expenditure amounted to R55 million (R20 million in 2011).

The Khomanani UG2 development project between 23 and 27 levels was stopped as a result of the current capital constraints.

Operating free cash flow (cash available after allowing for all direct and allocated indirect operating costs and stay-in-business capital) declined to -R202 million from R64 million in 2011.

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OUTLOOK

In the Platinum Review it is proposed that Khomanani Mine operations be placed under long-term care and maintenance. It is anticipated that the Mineral Resources in the current Khomanani Mine area will be extracted from both the Thembelani and Siphumelele mine’s complexes. Existing operations would continue prior to implementation of any care and maintenance programme.


THEMBELANI MINE


THEMBELANI MINE

(MANAGED – 100% OWNED)

Chris Moller

Chris Moller

 

 20122011
Safety  
Fatalities02
LTIFR2.412.04
Refined platinum production (000 oz)86.5106.4
Operating contribution (Rm)(318)396
Gross profit margin (%)(28)12
Operating free cash flow (Rm)(249)309
Net cash flow (Rm)(573)(162)
Cash on-mine costs/tonne milledR1,256R933
Mineral Resources inclusive of Ore Reserves  
Merensky36.8 Mt  6.8 4E Moz
UG2104.1 Mt  15.6 4E Moz

MINE OVERVIEW

The Thembelani Mine is situated in the province of North West in South Africa, near the town of Rustenburg. It forms part of the Western Limb of the Bushveld Complex and operates under a mining right covering a total area of 31 square kilometres.

The mine’s current infrastructure consists primarily of one vertical shaft system (Thembelani No 1 shaft), which transports rock, men and material. Mining occurs on both the Merensky Reef and the UG2 Reef horizons. The predominant mining layout is conventional scattered breast mining with strike pillars. The operating depth for the current workings is between 400 metres and 900 metres below surface.

Thembelani’s life-of-mine (LoM) extends to 2037 for currently approved projects, although several projects in study phase could extend the LoM to beyond 2045. The current LoM plan consists of a Mineral Resource (exclusive of Ore Reserves) of 16.2 4E million ounces and an Ore Reserve of 4.9 4E million ounces.

KEY ACHIEVEMENTS

  • Thembelani Mine achieved 1.6 million fatality-free shifts (640 days) and five years without a fall-of-ground fatality at the end of December 2012.

OPERATIONAL REVIEW

The lost-time injury frequency rate deteriorated 18.1% to 2.41 in 2012. The rate did, however, improve by 13% from 2.78 at the end of June 2012. Safety remains a key focus and management action plans are in place to further improve safety performance at this operation.

Equivalent refined platinum ounces decreased by 19.8% to 81,200 ounces, down from 101,200 ounces in 2011. The mine produced similar ounces in the first half of 2012 compared with 2011, but was hit hard by the miner strike and then by the illegal strike in September. The 4E built-up head grade improved 2% year-on-year to 4.45 g/t and significant development achievements resulted in the mine increasing its immediately available Ore Reserves to 29.2 months, up 130% from 2011. At 4.7 m2 per operating employee, productivity decreased 25.4% to that achieved in 2011.

Cash on-mine costs increased by 8.1%, to R1.49 billion. The increase in costs was the result of the inflationary pressures related to wages and electricity. The cash on-mine cost per tonne milled rose by 35% to R1,256 per tonne. Cash operating expenses (the costs after allowing for off-mine smelting and refining activities) per equivalent refined ounce increased by 34% to R19,787. The gross profit margin of the mine declined to -28% in 2012 from 12% in 2011.

CAPITAL EXPENDITURE

Total capital expenditure decreased to R372 million in 2012 (it was R533 million in 2011). Stay-in-business capital expenditure amounted to R62 million (R86 million in 2011), while project capital expenditure was R310 million (R447 million in 2011).

The Thembelani replacement project consists of the No 2 main shaft for men and material and a ventilation shaft. Given the current global uncertainty, development of the shaft has been stopped at 33 Level and the shaft has been put on care and maintenance. Further option studies will be conducted during this period to define the optimal configuration for extraction below the current shaft bottom. As a result of this decision, Thembelani 2 shaft project capital expenditure to date of R2.2 billion was written down in the current financial year. Further details on the capital writedown are detailed on page 196 of this report.

Capital development on 21 to 25 Level, which formed part of the UG2 ore replacement projects (ORPs), were suspended in December 2012 as a result of capital constraints.

Operating free cash flow (cash available after allowing for all direct and allocated indirect operating costs and stay-in-business capital) declined to -R249 million from R309 million in 2011.

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OUTLOOK

In the Platinum Review it is proposed that mining operations at Thembelani are optimised to include Mineral Resources from both Khomanani and Khuseleka mines. Footprint expansion is likely to bring cost benefits through scale optimisation and concentration of activities and increased production.


KHUSELEKA MINE


KHUSELEKA MINE

(MANAGED – 100% OWNED)

Zweli Ndese

Zweli Ndese

 

 20122011
Safety  
Fatalities20
LTIFR2.021.65
Refined platinum production (000 oz)133.4133.0
Operating contribution (Rm)(228)341
Gross profit margin (%)(18)7
Operating free cash flow (Rm)(187)204
Net cash flow (Rm)(378)(36)
Cash on-mine costs/tonne milledR1,010R916
Mineral Resources inclusive of Ore Reserves  
Merensky10.2 Mt  2.0 4E Moz
UG266.8 Mt  10.2 4E Moz

MINE OVERVIEW

The Khuseleka Mine is situated within the Western Limb of the Bushveld Complex, near the city of Rustenburg in the province of North West in South Africa. The mine operates under a mining right covering a total area of 26 square kilometres.

Current mine infrastructure comprises two operating shaft complexes, namely Khuseleka 1 and Khuseleka 2. Khuseleka 1 comprises a vertical and sub-decline shaft system for the exploitation of UG2 and Merensky ore, while Khuseleka 2 extracts the shallow UG2 and Merensky ore in the north-western sector of the lease area through an incline shaft system. The operating depth for the current workings is between 300 metres and 1,000 metres below surface.

Mining on both the Merensky and the UG2 Reef horizons at Khuseleka Mine is via conventional scattered breast stoping with strike pillars. Khuseleka’s life-of-mine (LoM) extends to 2036. The current LoM plan consists of a Mineral Resource (exclusive of Ore Reserves) of 1.9 4E million ounces and an Ore Reserve of 7.0 4E million ounces.

KEY ACHIEVEMENTS

Maintaining equivalent refined output to that achieved in 2011.

OPERATIONAL REVIEW

Regrettably two employees lost their lives at Khuseleka Mine during 2012. The lost-time injury-frequency rate (LTIFR) increased to 2.02, up by 22.4% from 2011 (1.65). To counter this unsatisfactory safety performance we have made management changes following the fatalities and implemented initiatives and systems to ensure that the employees respond appropriately to high risk conditions. We had also developed a detailed safety management plan to improve the safety performance of the mine.

Khuseleka Mine increased its output of equivalent refined production in the first half of 2012 by 32% over the same period in 2011 owing to the successful ramp-up of Khuseleka 2 shaft. However, the work stoppages caused by illegal strikes in the second half of the year eroded this strong performance substantially and the mine produced 125,300 equivalent refined platinum ounces for the year, 1% below that in 2011. Immediately available Ore Reserves of 32.5 months at the end of December 2012, albeit lower compared with 2011, remained very healthy. Tonnes milled increased by 2.3% to 2.1 million tonnes owing to the mining and treatment of 200 kt opencast sources, while the 4E built-up head grade increased by 4.2% to 3.96 g/t (3.80 g/t). Productivity decreased by 20% to 4.9 m² per operating employee as a result of lower volumes.

Cash on-mine costs increased by 12.6% to R2.1 billion owing to the ramp-up costs for Khuseleka 2, new opencast mining and to above-CPI mining inflation primarily on employment and electricity costs. Cash on-mine costs per tonne milled rose by 10.3% to R1,010 per tonne, while cash operating expenses (the costs after allowing for off-mine smelting and refining activities) per equivalent refined ounce rose to R18,236, an increase of 14% on the 2011 figure. The gross profit margin of the mine declined to -18% in 2012 from 7% in 2011.

CAPITAL EXPENDITURE

Total capital expenditure reduced to R251 million in 2012 (R337 million in 2011). Stay-in-business capital expenditure was R80 million (R127 million in 2011), while project capital expenditure amounted to R171 million (R210 million in 2011).

The Khuseleka ore replacement project (KORP) was approved in March 2007. The scope of the project consists of Ore Reserve development to access the Merensky Reef (between 25 Level and 28 Level) and the UG2 Reef (between 18 level and 28 level); associated project infrastructure to facilitate the mining of these Merensky and UG2 Resources; three raise bored ventilation shafts; and a surface refrigeration plant. The overall project is currently 82% complete.

Merensky Reef access development is 100% complete, while UG2 Reef access development is 72% complete with surface and underground infrastructure being 99% and 64% completed respectively. Project implementation progressed well during the first half of 2012, but was significantly impacted by the illegal strike action during the second half of 2012. Project execution was halted in December 2012 owing to capital constraints.

Operating free cash flow (cash available after allowing for all direct and allocated indirect operating costs and stay-in-business capital) declined to -R187 million from R204 million in 2011.

1980319818

OUTLOOK

In the Platinum Review it is proposed that Khuseleka Mine operations be placed under long-term care and maintenance. It is anticipated that the Mineral Resources in the current Khuseleka 1 shaft area will be extracted from Thembelani Mine. Existing operations would continue prior to implementation of any care and maintenance programme.


SIPHUMELELE MINE


SIPHUMELELE MINE

(MANAGED – 100% OWNED)

Patrick Morutlwa

Patrick Morutlwa

 

 20122011
Safety  
Fatalities00
LTIFR2.492.61
Refined platinum production (000 oz)83.4100.9
Operating contribution (Rm)(56)381
Gross profit margin (%)(12)12
Operating free cash flow (Rm)(34)257
Net cash flow (Rm)(133)190
Cash on-mine costs/tonne milledR1,049R827
Mineral Resources inclusive of Ore Reserves  
Merensky23.0 Mt  5.1 4E Moz
UG277.7 Mt  12.4 4E Moz

MINE OVERVIEW

The Siphumelele Mine is situated in the North West province of South Africa, near the town of Rustenburg and within the Western Limb of the Bushveld Complex. The mine operates under a mining right covering a total area of 43 square kilometres.

The mine’s current infrastructure consists of one shaft system (a surface vertical shaft and decline system) for rock, men, material, services and ventilation. Mining at Siphumelele takes place on the Merensky Reef horizon, but the mine currently also processes limited quantities of low-grade, surface-rock dump material. The UG2 Reef is currently in the process of being accessed from the existing infrastructure, with stoping operations due to commence in the first quarter of 2014. The predominant mining layout is conventional breast stoping with strike pillars. Operating depth for the current workings is between 600 metres and 1,350 metres below surface.

Siphumelele LoM extends to 2030 for currently approved projects, although in study phase could extend LoM to beyond 2045.

The current LoM plan consists of a Mineral Resource (exclusive of Ore Reserves) of 12.9 4E million ounces and an Ore Reserve of 3.80 4E million ounces.1

KEY ACHIEVEMENTS

  • No fatalities for 2012.
  • 1.9 million fatality-free shifts (924 days)
  • 2.9 million fall-of-ground fatal-free shifts.
  • Improved lost-time injury- frequency rate.

OPERATIONAL REVIEW

Siphumelele Mine has recorded two and a half years with no fatalities. The lost-time injury-frequency rate decreased 4.6% to 2.49 compared with that for 2011.

Equivalent refined platinum ounce production for the year decreased by 18% to 78,300 ounces following a strong start in the first half of 2012 which saw production increasing by 8% year-on-year. Production on the mine was negatively affected by the illegal strikes in the second half of 2012. Tonnes milled decreased by 21% to 1,1 million tonnes owing to the strike impact on underground volumes and some 145 kt less low-grade surface ore sources milled. The underground 4E built-up head grade decreased by 3% to 5.43 g/t, but the surface material volume treated grade increased by 5.4% to give an overall grade increase of 2% to 3.93 g/t. The immediately available Ore Reserves ended the year on 19.8 months, an increase of 7.6% compared with 2011. Productivity decreased by 18.8% to 3.9 m2 per operating employee for 2012.

Cash on-mine costs were very well controlled and were flat year-on-year at R1.2 billion. Operational cost savings were mainly achieved as a result of lower surface material treated and stringent cost controls implemented. The lower volumes did, however, impact unit costs and consequently the cash on-mine cost per tonne milled increased by 26.8% to R1,049 per tonne milled, while cash operating expenses (costs after allowing for off-mine smelting and refining activities) per equivalent refined ounce increased by 23% to R16,603.

The gross profit margin of the mine declined to -12% in 2012 from 12% in 2011.

CAPITAL EXPENDITURE

Total capital expenditure decreased to R149 million in 2012 (R187 million in 2011). Stay-in-business capital expenditure amounted to R63 million (R144 million in 2011), while project capital expenditure was R86 million (R43 million in 2011).

The feasibility study for the deepening project on the Merensky shaft was delayed as a consequence of the review of priorities that accompanied recent economic forecasts and the consequent unavailability of capital. Currently the project is only scheduled to commence in 2030.

Owing to the above review the project work has concentrated on exploiting mining opportunities on the UG2 ore body from 21 to 24 levels, which is part of the Rustenburg UG2 strategy. The project involves developing haulages and cross-cuts from the current Merensky infrastructure in order to access this ore body. Capital development was stopped in December 2012 owing to capital constraints. Study work may be resumed in the future in order to determine an optimal extraction strategy for the UG2 and remaining Merensky.

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OUTLOOK

Siphumelele is expected to return to equivalent refined platinum ounce production levels of around 95 koz of platinum ounces in 2013 while focusing on further improving its safety performance in line with that achieved by other similar Amplats operations.

In the Platinum Review it is proposed that mining operations at Siphumelele are optimised to include Mineral Resources from Khomanani Mine. Footprint expansion is likely to bring cost benefits through scale optimisation and concentration of activities.

1 Siphumelele 2 and 3 Ore Reserves and Mineral Resources are not included in this section.


TUMELA MINE


TUMELA MINE

(MANAGED – 100% OWNED)

Tom van den Berg

Tom van den Berg

 

 20122011
Safety  
Fatalities01
LTIFR1.561.60
Refined platinum production (000 oz)221.8284.4
Operating contribution (Rm)2181,481
Gross profit margin (%)(2)21
Operating free cash flow (Rm)(261)1,365
Net cash flow (Rm)(369)1,264
Cash on-mine costs/tonne milledR958R708
Mineral Resources inclusive of Ore Reserves  
Merensky151.2 Mt  37.8 4E Moz
UG2315.9 Mt  56.5 4E Moz

MINE OVERVIEW

The Tumela Mine is situated in the province of Limpopo in South Africa, between the towns of Northam and Thabazimbi, and forms part of the North-western Limb of the Bushveld Complex. The mine operates under a mining right covering a total area of 110 square kilometres.

The current working mine infrastructure consists of three vertical and four decline shaft systems to transport rock, workers and material. The mining occurs on both the Merensky Reef and the UG2 Reef horizons, and the mine is subdivided into two production areas, namely the Tumela lower mine and the Tumela upper mine. The predominant mining layout is conventional scattered breast mining with strike pillars. The operating depth for the current workings is between 180 metres and 895 metres below surface.

Tumela’s life-of-mine (LoM) extends to 2034, although projects in study could extend the LoM to beyond 2050. It consists of a Mineral Resource (exclusive of Ore Reserves) of 82.3 4E million ounces and an Ore Reserve of 9.4 4E million ounces.

KEY ACHIEVEMENTS

  • Tumela Mine achieved 2 million fatality-free shifts on 7 November.
  • Tumela’s upper mine achieved 2 million fatality-free shifts on 17 September.
  • Tumela’s lower mine achieved 1 million fatality-free shifts on 3 December.

OPERATIONAL REVIEW

Tumela Mine had no fatalities during 2012 and total injuries reduced to 155, a 24% year-on-year improvement. The lost-time injury-frequency rate improved marginally by 2.5% to 1.56 in 2012.

Equivalent refined platinum ounces decreased by 17.8% to 217,100 ounces in 2012. The mine had a difficult production year and the first half of 2012 showed a decline of 20% in production of equivalent refined ounces over the same period in 2011 mainly as a result of the depletion of low-grade surface sources and concentrator ounce lock-ups resulting from operational challenges at the Amandelbult concentrators. These challenges were resolved during quarter three and the production was increasing steadily, however, the illegal strikes which started in September 2012 in Rustenburg spread over to Tumela and employees went on strike on 4 October 2012 until mid-November 2012, resultantly disrupting any possible chance of production recovery in the second half of 2012. The tonnes milled decreased by 22% to 3.29 million tonnes, while the 4E built-up head grade increased by 5.4% to 4.12 g/t, as the result of resolving the concentrator challenges and a decrease in treating of low-grade surface material. The immediately available Ore Reserves ended the year on 26.1 months, 7.8% lower from the 2011 levels of 28.3 months but substantially above a required 18.0 month target. Productivity declined to 4.2 m2 per operating employee, from 5.2 m2 per operating employee in 2011.

Cash on-mine costs increased 6% to R3.16 billion in 2012 which reflects strong cost control management in light of the above-CPI inflation increases on labour, electricity and key input commodities. The lower volumes produced as a result of the factors mentioned impacted unit costs adversely and the cash on-mine cost per tonne milled increased by 35% to R958, while the cash operating expenses (costs after allowing for off-mine smelting and refining activities) per equivalent refined ounce increased by 28%, to R15,778.

The gross profit margin of the operation was
-2%, down from 21% in 2011.

CAPITAL EXPENDITURE

Total capital expenditure increased to R303 million in 2012 (R293 million in 2011). Stay-in-business capital expenditure was R230 million (R256 million in 2011), while project capital amounted to R73 million (R37 million in 2011).

The Tumela 4 shaft project was deferred in October 2008 following the global financial crisis. Evaluation of extraction options for Mineral Resources associated with the 4 Shaft area, and deeper areas below Tumela 1 Shaft have been concluded and are currently in concept study phase. Initial capital investment in Tumela 4 shaft surface infrastructure amounting to R0.6 billion has been written down in 2012. Further details on the capital writedown are depicted on page 196 of this report.

Operating free cash flow (cash available after allowing for all direct and allocated indirect operating costs and stay-in-business capital) declined to -R261 million from R1.36 billion in 2011.

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OUTLOOK

Tumela Mine will not be impacted by the Platinum Review. The operation is expected to improve its safety performance in 2013 while returning to previous equivalent refined platinum ounce production levels of around 260 koz to 280 koz per annum.


DISHABA MINE


DISHABA MINE

(MANAGED – 100% OWNED)

JJ Joubert

JJ Joubert

 

 20122011
Safety  
Fatalities01
LTIFR0.901.94
Refined platinum production (000 oz)148.4161.9
Operating contribution (Rm)351701
Gross profit margin (%)616
Operating free cash flow (Rm)47655
Net cash flow (Rm)18592
Cash on-mine costs/tonne milledR1,040R966
Mineral Resources inclusive of Ore Reserves  
Merensky46.3 Mt  10.4 4E Moz
UG2139.1 Mt  24.6 4E Moz

MINE OVERVIEW

The Dishaba Mine is situated in the province of Limpopo in South Africa, between the towns of Northam and Thabazimbi, and forms part of the North-western Limb of the Bushveld Complex. The mine operates under a mining right covering a total area of 31 square kilometres.

The mine’s infrastructure consists of one vertical shaft, one raise bore and four decline shafts. Dishaba mines on both the Merensky and the UG2 Reef horizons, and the mining layout is scattered breast mining with strike pillars. The operating depth for the current workings is between 30 metres and 1,250 metres below surface.

Dishaba’s life-of-mine (LoM) extends to approximately 2058, and consists of a Mineral Resource of 14.4 4E million ounces (exclusive of Ore Reserves) and an Ore Reserve of 15.2 4E million ounces.

KEY ACHIEVEMENTS

  • The mine achieved 2.6 million fatality-free shifts (718 days) at the end of 2012. Significant improvement in the lost-time injury-frequency rate.
  • Successful implementation of a revised underground support regime.

OPERATIONAL REVIEW

The mine made significant strides in safety during 2012 with the mine achieving zero fatalities and improving its lost-time injury-frequency rate with 53%. These successes can be ascribed to improved systems and initiatives implemented to reduce employee risk behaviour, supported by an enhanced underground support regime and good communication with employees.

Dishaba Mine produced 145,200 equivalent refined platinum ounces for 2012, some 3.4% below the figure achieved in 2011. The mine started the first half of 2012 very strong and production exceeded 2011 six-month delivery by 9%. This performance was eroded by the illegal strikes which started in Rustenburg in September 2012, spreading over to Dishaba in October 2012. The immediately available Ore Reserves were at 17.5 months, compared with 19.1 months in 2011, while the 4E built-up head grade improved 1% to 4.82 g/t. Productivity decreased by 2.1%, to 4.7 m² per total operating employee.

Cash on-mine costs were controlled in line with overall inflation and increased by 7% to R1.93 billion. The cash on-mine cost per tonne milled rose by 7.7% to R1,040, while cash operating expenses (costs after allowing for off-mine concentrating, smelting and refining activities) per equivalent refined ounce increased by 11%, to R14,606.

The gross profit margin of the operation was 6%, down from 16% in 2011.

CAPITAL EXPENDITURE

Total capital expenditure decreased by 18% to R130 million in 2012 (it was R158 million in 2011). On-mine stay-in-business capital expenditure amounted to R125 million (R132 million in 2011), while project capital expenditure was R5 million (R26 million in 2011).

The backfill project which began in 2004, but deferred in 2008, recommenced in 2011 and has now progressed through the feasibility study into the approval stages. Poor ground conditions at 18 Level and lower on the Merensky Reef horizon require backfilling before mining can be executed safely. Although it was anticipated that R150 million would have been spent in 2013, this project was deferred as a result of capital constraints.

Operating free cash flow (cash available after allowing for all direct and allocated indirect operating costs and stay-in-business capital) declined to R47 million from R655 million in 2011.

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OUTLOOK

Dishaba Mine will not be impacted by the Platinum Review. The operation is expected to produce between 150 koz and 165 koz of platinum in 2013.


UNION NORTH MINE


UNION NORTH MINE

(MANAGED – 85% OWNED)

Adam Tendaupenyu

Adam Tendaupenyu

 

 20122011
Safety  
Fatalities11
LTIFR1.191.31
Refined platinum production (000 oz)69.398.3
Operating contribution (Rm)(165)338
Gross profit margin (%)(22)11
Operating free cash flow (Rm)(209)339
Net cash flow (Rm)(240)264
Cash on-mine costs/tonne milledR625R483
Mineral Resources inclusive of Ore Reserves  
Merensky7.6 Mt 1.6 4E Moz
UG237.9 Mt 6.9 4E Moz
JV partner 
Bakgatla-Ba-Kgafela traditional community(15%)

MINE OVERVIEW

Union North Mine is situated in both the Limpopo and the North West provinces of South Africa, 15 kilometres west of the town of Northam, and forms part of the North-western Limb of the Bushveld Complex. It operates under part of a mining right covering a total of 119 square kilometres. Union North’s infrastructure consists of a vertical shaft (Richard Shaft) and of the 1S decline section. This section is serviced by another vertical shaft (Ivan Shaft), for hoisting purposes. The operating depth of the current workings is between 60 metres and 1,500 metres below surface. The mine extracts mostly UG2 Reef ore, but also produces limited Merensky Reef ore and treats low-grade surface ore and tailings. Three-quarters of Union Mine’s underground production is done conventionally (using breast stoping with strike pillars), while hybrid mining occurs at the declines. Union North’s life-of-mine (LoM) extends to 2030, and consists of a Mineral Resource (exclusive of Ore Reserves) of 4.3 4E million ounces and an Ore Reserve of 3.2 4E million ounces. The Mineral Resource and Ore Reserve reported are 85% attributable to Anglo American Platinum Limited (Amplats) and 15% attributable to the Bakgatla-Ba-Kgafela traditional community.

KEY ACHIEVEMENTS

  • Lost-time injury-frequency rate improved.
  • Improved immediately available Ore Reserve position.

OPERATIONAL REVIEW

Regrettably, one employee lost his life at Union North Mine during 2012. The lost-time injury-frequency rate for the mine ended down 9.1% at 1.19 compared with 1.31 in 2011. The Union North Mine output of equivalent refined platinum ounces decreased by 30.4% to 63,700 ounces between 2011 and 2012. The tonnes milled decreased to 1.73 million tonnes, a reduction of 26% over 2011. The decrease in volumes were caused by the depletion of low-grade surface material sources of 425 kt, the expected decline in Merensky ore mining and the illegal strike which spread over from Rustenburg to Union North Mine during October 2012. The immediately available Ore Reserves ended the year at 18.8 months, some 38% higher than in 2011 following the successful execution of an aggressive drop-raising, ledging and equipping plan. Productivity decreased to 2.6 m2 per operating employee, a decline of 19% from the 3.2 m2 per operating employee reported in 2011. Absolute cash on-mine costs were managed very well and decreased by 4% to R1.08 billion. Above-inflation expenses on electricity, wages and other key commodities were offset by lower expenditure on surface material sources and other savings. The cash on-mine cost per tonne milled increased by 29% to R625 per tonne owing to the depletion of low-cost surface sources and lower underground volumes. Consolidated cash operating expenses (costs after allowing for off-mine smelting and refining activities) per equivalent refined ounce rose by 35% to R18,627. The gross profit margin was -22%, down from 11% reported in 2011.

CAPITAL EXPENDITURE

Total capital expenditure decreased to R88 million in 2012 (R129 million in 2011). Stay-in-business capital expenditure amounted to R73 million (R92 million in 2011), while project capital expenditure was R15 million (R37 million in 2011). Operating free cash flow (cash available after allowing for all direct and allocated indirect operating costs and stay-in-business capital) declined to -R209 million from R339 million in 2011.

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OUTLOOK

In the Platinum Review it is proposed that Union North Mine be consolidated with Union South Mine and operations in the old declines section be stopped. Existing operations would continue prior to implementation of the Platinum Review findings.

UNION SOUTH MINE

UNION SOUTH MINE

(MANAGED – 85% OWNED)

Philip Schoeman

Philip Schoeman

 

 20122011
Safety  
Fatalities11
LTIFR1.081.31
Refined platinum production (000 oz)143.7174.8
Operating contribution (Rm)(40)724
Gross profit margin (%)(10)15
Operating free cash flow (Rm)(87)712
Net cash flow (Rm)(288)438
Cash on-mine costs/tonne milledR884R765
Mineral Resources inclusive of Ore Reserves  
Merensky76.3 Mt 15.2 4E Moz
UG2135.8 Mt 23.8 4E Moz
JV partner 
Bakgatla-Ba-Kgafela traditional community(15%)

MINE OVERVIEW

Union South Mine is situated in both the Limpopo and the North West provinces of South Africa, 15 kilometres west of the town of Northam, and forms part of the North-western Limb of the Bushveld Complex. It operates under part of a mining right covering a total of 119 square kilometres. Union South’s infrastructure consists mainly of one vertical shaft, namely Spud Shaft, and of a declines section, consisting of three decline complexes. The operating depth of the current workings is between 100 metres and 1,500 metres below surface. The mine extracts mostly UG2 Reef ore, but also produces limited Merensky Reef ore. Approximately 60% of the underground production at Union South Mine is done by conventional mining at Spud Shaft (using breast stoping with strike pillars), with the remainder being hybrid mining at the declines section (mechanised development with conventional breast stoping and the removal of broken ore by belts). Union South’s life-of-mine (LoM) extends to 2035, and consists of a Mineral Resource (exclusive of Ore Reserves) of 29.0 4E million ounces and an Ore Reserve of 6.5 4E million ounces. The Mineral Resource and Ore Reserve reported are 85% attributable to Anglo American Platinum Limited (Amplats) and 15% attributable to the Bakgatla-Ba-Kgafela traditional community.

KEY ACHIEVEMENTS

  • The mine improved the lost-time injury-frequency rate.

OPERATIONAL REVIEW

Regrettably, one employee lost his life at Union South Mine during 2012. There was, however, a significant improvement in the overall safety performance at Union South Mine with the lost-time injury-frequency rate improving by 18% to 1.08 from 1.31 in 2011. The solid production performance of the first half of 2012 was hampered by the illegal strikes in the second half of the year and the mine’s output of equivalent refined platinum ounces decreased by 19% to 132,000 ounces compared to 162,700 ounces in 2011. The tonnes milled decreased to 2.2 million tonnes, a reduction of 10.6% from 2011 (2.4 million tonnes). The immediately available Ore Reserves ended the year at 18.6 months, a decrease of 12% from the 2011 figure of 21.1 months. Productivity decreased to 4.3 m2 per operating employee per month, declining 12% from the 4.9 m2 per operating employee reported in 2011. Cash on-mine costs were managed well and increased below inflation by 3% to R1.93 billion. The cash on-mine cost per tonne milled increased by 16% to R884 per tonne owing to the lower underground volumes. Cash operating expenses (costs after allowing for off-mine smelting and refining activities) per equivalent refined ounce rose by 26% to R16,305. The gross profit margin was -10%, down from the 15% reported in 2011.

CAPITAL EXPENDITURE

Total capital expenditure decreased to R293 million in 2012 (R399 million in 2011). Stay-in-business capital expenditure amounted to R126 million (R190 million in 2011), while project capital expenditure was R167 million (R209 million in 2011). Capital work in execution at the Declines (4B, 4 South, 3 South and 5 South) was stopped on 31 December 2012 owing to capital constraints, and clean-up operations will continue in the areas where already established. The remaining areas between Spud Shaft and the Declines will be extracted from Spud Shaft. A revision of 5 South Decline will be undertaken during 2013 to establish possible future extraction potential. The Union Deeps project targets the Merensky and the UG2 Reef horizons below the 27-level infrastructure serving the current Spud and Richard operations. The study process is at a concept-study phase. Operating free cash flow (cash available after allowing for all direct and allocated indirect operating costs and stay-in-business capital) declined to -R87 million from R712 million in 2011.

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OUTLOOK

In the Platinum Review it is proposed that Union South Mine be consolidated with North Mine. Existing operations would continue prior to implementation of the Platinum Review findings.

MOGALAKWENA MINE

MOGALAKWENA MINE

(MANAGED – 100% OWNED)

James Morotoba

James Morotoba

 

 20122011
Safety  
Fatalities10
LTIFR0.670.49
Refined platinum production (000 oz)304.8312.8
Operating contribution (Rm)2,2013,413
Gross profit margin (%)2135
Operating free cash flow (Rm)1,1982,679
Net cash flow (Rm)8022,334
Cash on-mine costs/tonne milledR315R254
Mineral Resources inclusive of Ore Reserves  
Platreef3,533 Mt 264.9 4E Moz

MINE OVERVIEW

The Mogalakwena Mine is situated 30 kilometres north-west of the town of Mokopane in the province of Limpopo. It operates under a mining right covering a total area of 137 square kilometres. The current infrastructure consists of four open pits, namely the Sandsloot, Zwartfontein, Mogalakwena Central and Mogalakwena North pits. The mining method is open-pit truck and shovel, and the current pit depths vary from 110 metres (Mogalakwena North) to 245 metres (Sandsloot). The ore is milled at the new fully operational North Concentrator and at the older South Concentrator. Mogalakwena’s life-of-mine (LoM) extends well beyond 2060. The current LoM plan consists of an Ore Reserve of 89.1 4E million ounces and a Mineral Resource of 171.7 4E million ounces (exclusive of Ore Reserves).

KEY ACHIEVEMENTS

  • Strong immediately mineable Ore Reserve position of 71 months established.

OPERATIONAL REVIEW

Mogalakwena Mine had a single fatality during 2012. Overall, Mogalakwena had a very challenging year in terms of safety with an increase in the lost-time injury-frequency rate of 37% to 0.67 from 0.49 in 2011. The mine has intensified its safety programme and some good improvements were noted during the last quarter of 2012. Equivalent refined platinum ounces decreased 2% to 300,200 ounces in 2012. The reduced production was mainly as a result of 3% lower volume throughput in the concentrators and a 3% decline in the 4E built-up head grade caused by the lower tonnes mined from the higher grade Sandsloot pit. The concentrator recovery improved by 5% year-on-year. A technical decision was taken during 2012 to stop mining the Sandsloot pit for safety reasons. Further technical work is required to establish if mining Cut 6 and below is feasible, which will be conducted during 2013. Cash on-mine costs increased by 20% to R3.30 billion owing to inflationary increases above CPI on electricity, wages, explosives, tyres and diesel exacerbated by:

  • R164 million less capitalised waste stripping incurred compared with 2011
  • acceleration of R98 million deferred waste stripping expenses for the Sandsloot pit, now stopped
  • unexpected R142 million incurred on truck, shovel and drill repairs

Cash on-mine cost/tonne milled increased 24% to R315 per tonne. Cash operating expenses (costs after allowing for off-mine smelting and refining activities) per equivalent refined ounce increased to R15,464, some 22% higher than 2011. The gross profit margin declined to 21% from 35% reported in 2011.

CAPITAL EXPENDITURE

Total capital expenditure decreased to R1,171 million in 2012 (from R1,251 billion in 2011). Stay-in-business capital expenditure was R561 million (R596 million in 2011); while capital waste stripping came in at R399 million (R563 million in 2011) and project capital expenditure at R211 million (R92 million in 2011). Capital projects at Mogalakwena Mine are largely focused on the Mogalakwena North Concentrator de-bottlenecking studies, the finalisation of infrastructure implementation associated with the Mogalakwena North Expansion Project, as well as closing out on the community relocation projects. Project close-out on Mogalakwena North Expansion Project, infrastructural development and village relocation is planned for 2013 and project implementation approval for the Mogalakwena North Concentrator de-bottlenecking is targeted for 2013. It is also anticipated that Mogalakwena will start replacing its aging hydraulic shovel fleet with rope shovels from 2013 onwards. Operating free cash flow (cash available after allowing for all direct and allocated indirect operating costs and stay-in-business capital) declined to R1.2 billion from R2.7 billion in 2011.

1976319765

OUTLOOK

Mogalakwena Mine will not be impacted by the Platinum Review. The operation is expected to improve its safety performance and increase equivalent refined platinum output to between 310 koz and 315 koz in 2013.

UNKI PLATINUM MINE

UNKI PLATINUM MINE

(MANAGED – 100% OWNED)

Walter Nemasasi

Walter Nemasasi

 

 20122011
Safety  
Fatalities01
LTIFR0.090.18
Refined platinum production (000 oz)64.650.8
Operating contribution (Rm)176287
Gross profit margin (%)523
Operating free cash flow (Rm)54135
Net cash flow (Rm)(245)(195)
Cash on-mine costs/tonne milledR622R509
Mineral Resources inclusive of Ore Reserves  
MSZ246.1 Mt 34.0 4E Moz

MINE OVERVIEW

The operations of Unki Mines (Pvt) Limited are situated on the Great Dyke of Zimbabwe, approximately 60 kilometres south-east of Gweru. The mine is a mechanised, trackless board-and-pillar underground operation. A twin decline shaft system provides access to the underground workings for personnel and material, and also serves to convey ore. Both decline shafts are now 1,620 metres from portal on surface. Ten mining sections have been established, with strike belts transferring ore directly onto the main decline shaft conveyor. Run-of-mine ore is processed at the 120,000 tonne-per-month concentrator plant on site. The life-of-mine (LoM) of the current operations at Unki East extends to 2041, although projects in study could extend LoM to beyond 2055. Unki Mine’s Mineral Resource (exclusive of Ore Reserves) stands at 26.0 4E million ounces, while its Ore Reserve stands at 6.5 4E million ounces.

KEY ACHIEVEMENTS

  • Improved safety performance with zero fatalities for 2012 and 634 days fatality free.
  • Increase in equivalent refined platinum ounces production.
  • The mine achieved a first place in the Association of Mine Managers of Zimbabwe (AMMZ) National SHE Audit Award for 2012 and retained the OHSAS 18001 and ISO 14001 certification.

OPERATIONAL REVIEW

There were no fatalities at Unki during 2012. The lost-time injury-frequency-rate improved significantly from 2011 recording a 50% improvement to 0.09. The mine had only two lost-time injuries for the entire year. Equivalent refined platinum production increased by 20% year-on-year to 62,100 ounces in 2012. Tonnes milled increased to 1.5 million, up 20% year-on-year, while the 4E built-up head grade declined by 6% to 3.43 g/t as a result of establishing mining infrastructure requiring an increase in mining width. Productivity was 12.6 m2 per operating employee for the year, up 17% from 10.8 m2 per operating employee reported in 2011. Cash on-mine costs were R955 million for the year, up 46% on 2011 owing to mining inflation, increase in volumes mined and R94 million more pre-production non-recurring ore stockpile costs expensed, resulting in cash on-mine cost of R622 per tonne milled. The cash operating expenses (the costs after allowing for off-mine smelting and refining activities) per equivalent refined ounce for the year was R18,819 per ounce. The gross profit margin declined to 5% from 23% reported in 2011.

CAPITAL EXPENDITURE

Total capital expenditure increased by 31% from R345 to R453 million in 2012. Stay-in-business capital expenditure amounted to R183 million (R45 million in 2011), while project capital expenditure ended the year at R270 million (R301 million in 2011). Remaining project work currently in progress includes primarily the construction of the mine-employee housing complex in Shurugwi. Construction work for the current phase is scheduled for completion in 2015. With the current operations now properly established, studies are in progress to determine the optimal expansion of the mine, to a level that would significantly contribute to the Company’s strategy to lower its operating cost base while at the same time exploiting the opportunity to expand its production from the world’s second-largest known economic platinum resource. Operating free cash flow (cash available after allowing for all direct and allocated indirect operating costs and stay-in-business capital) declined to R54 million from R135 million in 2011.

2002120036

OUTLOOK

Unki Mine will not be impacted by the Platinum Review. The operation is expected to maintain its current production level for the immediate future.

UNKI INDIGENISATION IMPLEMENTATION PLAN APPROVED

Unki Concentrator plant, Zimbabwe

Unki Concentrator plant, Zimbabwe

On 2 November 2012, Anglo American Platinum Limited (Amplats) announced the approval of the proposed 51% indigenisation implementation plan at Unki Mines (Pvt) Limited by the Zimbabwean Minister of Youth Development, Indigenisation and Empowerment. This transaction is the culmination of the originally envisaged process to develop Unki Mine in partnership with the people of Zimbabwe.

The proposed transaction will be facilitated through a notional vendor financing structure and includes the following shareholding structure:

• A 10% equity ownership transaction with a trust established for the benefit of the community neighbouring Unki’s operations.

• A 10% equity ownership transaction with a trust to be established for the benefit of all full-time employees at Unki.

• A 10% equity ownership transaction with a consortium of strategic equity partners.

• A 21% equity ownership transaction with the National Indigenisation and Economic Empowerment Fund.

The disposal of equity under the indigenisation implementation plan will be undertaken at a market-related valuation of Unki adjusted for debt, and is subject to the requisite Amplats board and statutory approvals, as may be required. The acquisition price will be repaid from future dividends and Amplats intends to implement the indigenisation plan by 30 June 2013. The expected economic cost to Amplats of the empowerment plan is US$59.3 million, which equates to 12.9% of the enterprise value of Unki Mine at the date of transaction.

Speaking in response to the November 2012 development, the chairman of Unki Mines (Pvt) Limited, July Ndlovu, commented that “Anglo American Platinum continues to contribute significantly to the upliftment of its host communities and its employees in South Africa, and will leverage this experience to ensure the successful and seamless implementation of this transaction in Zimbabwe.”

The Government of Zimbabwe has also agreed to ensure that the Company will receive payment of the amount of $142 million due to it for the cession, in March 2008, of the Kironde and Bougai mineral right claims. This payment will be in lieu of empowerment credits due to it as per the 2008 cession-of-claims agreement, and is in addition to the amounts that will be receivable in respect of the disposal of the 51% equity in Unki.

According to July Ndlovu, the final success of the Zimbabwean indigenisation transaction would be “dependent on further engagement and consultation with affected stakeholders.” Consequently, the transaction formed part of “an ongoing engagement programme with the Government of Zimbabwe, Unki’s host communities, employees and other key stakeholders.”