| Transformation |
| Major strides were made this year in our transformation initiatives. These are crucial to achieving the conversion of the Company’s mining rights, given the 30 April 2009 deadline for submitting compliant applications to the regulatory authorities. |
| In September, we announced two very significant transactions that will result in the creation of two substantial HDSAmanaged
and controlled platinum producers with considerable potential for growth. These will rank in the top five
producers in the world in terms of reserves and resources. Briefly, the transactions are: |
|
| • |
the sale of 51% of the Lebowa Mine and 1% of the Ga-Phasha project to Anooraq for R3.6 billion; |
| • |
the sale to Mvelaphanda Resources of the 50% of the Booysendal project it does not already own, and of Anglo
Platinum's entire shareholding in Northam Platinum. Mvela would then sell the project to Northam in exchange
for shares, making Northam a subsidiary company. |
|
Substantial progress has been made in concluding these transactions which are expected to be completed in the first
half of 2008.
In addition, an employee share ownership plan, which will benefit all our employees who do not participate in the
Company's existing share schemes, is being established. Discussions with employee representatives are well advanced
and we expect to seek approval for the scheme from shareholders soon.
Transformation of other aspects described in the charter is well advanced. We are particularly pleased to have met
the milestones of 10% women in mining and 40% HDSAs in management by year end.
We, therefore, expect to submit our final documentation to the regulatory authorities to enable them to consider
our conversion applications by mid-year. |
| |
| Ore Reserves and Mineral Resources |
Our Ore Reserves increased from 192 million to 194 million ounces 4E (platinum, palladium, rhodium and gold)
during the year. This was mainly a result of resources being converted into reserves as a result of higher confidence
based on additional drilling and re-evaluation, less depletion from production.
In addition to the decrease in Mineral Resources associated with conversion into reserves, it was decided to exclude
ounces relating to the prospecting rights which were refused by the regulatory authorities and which are the subject
of ongoing discussions. These two factors accounted for the 85 million ounce decrease in Mineral Resources to 720
million ounces 4E. |
| |
| Projects |
In 2007 the Board approved projects totalling R10.7 billion. These included expansion and replacement mining
projects as well as process plants. Notable projects include the Rustenburg Townlands ore replacement project, the
expansion of the Base Metals Refinery, and the Mainstream Inert Grind projects at various operations.
Excellent progress was made on our projects during the year. Capital expenditure was R10.7 billion, in line with our
plans. The PPRust North expansion project is progressing on schedule and commissioning of the concentrator is
expected to be complete in the first quarter of 2008.
The inflationary pressures experienced on operating costs have started to impact on our projects and will continue
to be felt in 2008. This, coupled with a scarcity of project management skills owing to increased global project activity,
will present challenges in future. We are confident, however, that good progress will continue to be made and expect
to spend between R10.5 billion and R11.5 billion on projects in 2008. |
| |
| Operations and financial results |
We achieved record headline earnings of R12.3 billion, 3% up on 2006. While revenue improved by 19% through
higher metal prices, a reduction in production volumes and increases in operating costs eroded earnings.
Equivalent refined platinum production decreased by 167,200 ounces or 6% compared to 2006. Production was
impacted by the safety interventions at Rustenburg, which was then extended to other operations. Towards the end
of the year, we experienced production stoppages by the regulatory authorities following safety incidents. In addition,
production was challenged by shortages of skilled labour, competition for labour at all levels, strike action at joint
ventures, the unsettled labour situation associated with wage negotiations, and lower grades at Potgietersrust (now
Mogalakwena Section).
The growing inflationary pressure in the South African economy was particularly acute in the mining industry. This
resulted in wage settlements well above inflation and increased the price of essential inputs such as fuel, electricity,
tyres, steel and underground mining support supplies. Cost of sales increased by R5.0 billion or 22% compared
to 2006. |
| |
| Outlook |
Safety will remain the first priority on the management agenda for 2008 and beyond. We will continue to pursue our
goal of zero harm in our operations by implementing the enhanced safety improvement plan.
Our refined production output in 2008 is expected to be 2.40 million platinum ounces with increased production
from Mogalakwena Section, Kroondal and from other purchases, but taking account of the flooding at Amandelbult
and the expected impact of the electricity situation.
Market fundamentals for our metals are, however, still robust and favourable prices are expected for the foreseeable
future. |
| |
 |
 |
Norman Mbazima
Joint Acting Chief Executive Officer |
Duncan Wanblad
Joint Acting Chief Executive Officer |
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Johannesburg
7 February 2008 |
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