20120209 aqp h1 2012 presentation final

Interim Results For the six months

ended 31 December 2011

Stuart Murray 9 February 2012

Disclaimer

Certain forward looking statements may be contained in the presentation which include, without limitation, expectations regarding metal prices, estimates of production, operating expenditure, capital expenditure and projections regarding the completion of capital projects as well as the financial position of the company. Such statements are only predictions and are subject to inherent risks and uncertainties which could cause actual values, results, performance or achievements to differ materially from those expressed, implied or projected in any forward looking statements as a result of, among other factors, changes in economic and market conditions, changes in the regulatory environment and other business and operational risks. No representation or warranty, express or implied, is made by Aquarius that the material contained in this presentation will be achieved or prove to be correct. Except for statutory liability which cannot be excluded, each of Aquarius, its officers, employees and advisers expressly disclaims any responsibility for the accuracy or completeness of the material contained in this presentation and excludes all liability whatsoever (including in negligence) for any loss or damage which may be suffered by any person as a consequence of any information in this presentation or any error or omission there from. Aquarius accepts no responsibility to update any person regarding any inaccuracy, omission or change in information in this presentation or any other information made available to a person nor any obligation to furnish the person with any further information.

February 2012 Interim Results for the six months ended 31 December 2011 2

Financial Highlights

• Revenue decreased by 25% to US$252.4 million; volumes, prices, sales adjustments

• Mine EBITDA decreased by 69% to US$29.0 million; lower revenues, higher costs

• Reported net income impacted by US$91.2 million non-cash foreign exchange loss

• Arising substantially from the revaluation of intercompany loans within the Group

• Resulting in:

• Net loss of US$113.5 million

• Loss per share of 24.31 US cents

• Group cash balance at half-year end of $230.1 million

February 2012 Interim Results for the six months ended 31 December 2011 3

(Six months to 31 December 2011)

Operational Highlights

• Group attributable production decreased by 14% to 215,453 PGM ounces

• US Dollar PGM prices stable over period, but weakened during Q2

• Due to deteriorating macroeconomic conditions

• Resulting in negative sales adjustments and return of pipeline advances

• The Rand weakened by 7% on average against the US Dollar

• Stable average US Dollar PGM Basket Price, while average Rand Basket Price increased by 5%

• Production in SA down due to (industry-wide) increase in ‘Section 54’ safety stoppages

• Production at P&SAs further impeded by implementation issues relating to new support installation

• Everest suffered a two week strike and ongoing poor industrial relations

• Ground conditions remain an issue

• On-mine unit cash costs in SA rose by 35% in Rand terms, largely due to lower production

• Mimosa performed strongly again, continuing to produce at capacity

• Operations at Blue Ridge remained suspended for the entire six month period

4

(Six months to 31 December 2011)

February 2012 Interim Results for the six months ended 31 December 2011

Production – Impact Analysis by Operation

5

4E oz production variance y-o-y


250,972

215,453

100,000

120,000

140,000

160,000

180,000

200,000

220,000

240,000

260,000

H1 2011 Kroondal Marikana Everest Blue Ridge Mimosa CTRP Platinum Mile H1 2012

New support installation, section 54s Strike, poor

ground conditions, section 54s

Operations suspended

Strong performance

Increased ownership

Production Profile

6

SA issues take toll

February 2012

-

50,000

100,000

150,000

200,000

250,000

300,000

Dec-09 Jun-10 Dec-10 Jun-11 Dec-11

Everest Blue Ridge Platinum Mile CTRP Mimosa Marikana Kroondal

Interim Results for the six months ended 31 December 2011

Dollar Pricing

7

Volatile and falling

February 2012

400

450

500

550

600

650

700

750

800

850

900

1,000

1,200

1,400

1,600

1,800

2,000

2,200

2,400

Jan 11 Apr 11 Jul 11 Sep 11 Dec 11

Platinum Gold Rhodium Palladium

Pt, Ru & Au ($/oz) Pd ($/oz)


1,173 1,338

H1 '11 H1 '12

1,378 1,373

H1 '11 H1 '12

US Dollar Basket Prices

8

Stable period-on-period average prices (but negative price adjustments in Q2)

SOUTH AFRICA ZIMBABWE

Ir/Ru Ni/Cu Cr2O3 Ir/Ru Ni/Cu/Co

February 2012

60% 51%

29% 38%

10% 7%

South Africa Zimbabwe

Platinum Palladium Rhodium Gold

By-products

Primary products

14% (0%)


Rand exchange rate

9

Finally some currency relief ……. but temporary………

February 2012

6.50

7.00

7.50

8.00

8.50


R/$


Rand revenues falling despite exchange rate

10

ZAR and US$ SA Baskets and ZAR/US$ rebased to 100

February 2012

70

80

90

100

110

120

130

140

Jan 11 Mar 11 May 11 Jul 11 Sep 11 Nov 11

SA 4E Basket Price ($) SA 4E Basket Price (R) Rand


9,000

9,500

10,000

10,500

11,000

11,500

12,000

1,050

1,150

1,250

1,350

1,450

1,550

1,650

1,750


SA $ Basket Zim $ Basket SA R Basket

$/oz R/oz$/oz R/oz

Price volatility hampers investment decisions

11

ZAR and SA and ZIM US$ Baskets


Kroondal

• Kroondal produced below capacity during H1 2012 • Partly due to manual installation of new hangingwall support, leading to delays in the blasting cycle

• Now largely resolved - phased approach and locally-made rock drills for hangingwall support installation • Exacerbated by unsatisfactory contractor arrangements – exaggerates fixed costs to detriment of unit costs

• Renegotiating contractor arrangements • Only remaining threat to production is industry-wide increase in ‘section 54’ stoppages

• Dialogue ongoing with Inspectorate of Mines regarding this situation

12

(P&SA1 - AQP 50%)

1 Mine EBITDA is attributable, i.e. 50% of total. All other numbers are on a 100% basis 2 Capex figures are total capex, i.e. both stay-in-business and expansion capex included

230,019 175,704

H1 '11 H1 '12 Production (4E oz)

2,056 1,409

H1 '11 H1 '12

Revenue (Rm)

5,757 8,459

H1 '11 H1 '12

Cash Costs (R/oz)

37.6 7.9

H1 '11 H1 '12

Mine EBITDA ($m)1

36% -6%

H1 '11 H1 '12

Cash Margin (%)

678 1,346

H1 '11 H1 '12

Capex (R/oz)2

(24%)

(32%)

47%

(79%)

(116%)

99%


3,000

4,000

5,000

6,000

7,000

8,000

9,000

FY11 - H1 Volume Grade Recoveries Mining Processing Utilities Admin FY12 - H1

Cash cost analysis – an example

13

Kroondal – increases in costs by category

February 2012

Reversible


Marikana

14

(P&SA1 - AQP 50%)


60,587 54,802


561 451

H1 '11 H1 '12

Revenue (Rm)

8,026 9,800

H1 '11 H1 '12

Cash Costs (R/oz)

1.6 -2.3

H1 '11 H1 '12

Mine EBITDA ($m)1

13% -19%

H1 '11 H1 '12

Cash Margin (%)

1,561 1,557

H1 '11 H1 '12

Capex (R/oz)2

(10%)

(20%)

22%

(244%)

(244%)

(0%)

February 2012

• Marikana also produced below capacity during H1 2012, and ramp-up slowed • Largely due to the same issues faced by Kroondal

• Same mitigants now in place • As with Kroondal, only remaining threat to production is industry-wide increase in ‘section 54’ stoppages

• Dialogue ongoing with Inspectorate of Mines regarding this situation • Two shafts at Marikana are in ramp-up, and as such are uneconomic at current prices


Everest

• Ramp-up slowed by thicker-than-anticipated oxide zone first encountered in Q4 ‘11 • Everest now being optimised to produce at a lower level for the next 12-18 months

• While shallower mining, poor ground conditions and challenging economic environment persist • While Hoogland open pit mining authorisation and s102 consent for Booysendal South remain outstanding

• Additional negative impacts on production caused by: • Section 54 stoppages and maintenance problems in Q1 ‘12 – 36 shifts lost • Dispute between union and contractor in Q2 ‘12 – two and a half weeks lost to resulting strike

• Contractor and industrial relations issues are temporary and are being resolved

15

(AQP 100%)

1 Capex figures are total capex, i.e. both stay-in-business and expansion capex included

45,561 41,787


457 353

H1 '11 H1 '12

Revenue (Rm)

7,879 10,311

H1 '11 H1 '12

Cash Costs (R/oz)

11.6 -8.3

H1 '11 H1 '12

Mine EBITDA ($m)

21% -22%

H1 '11 H1 '12

Cash Margin (%)

2,975 1,501

H1 '11 H1 '12

Capex (R/oz)1

(8%)

(23%)

31%

(172%)

(202%)

(50%)


Mimosa

• Mimosa continues to produce at or above capacity, and cost control initiatives have contained cost increases • Political and regulatory issues intensifying

• Royalties on gold and PGMs doubled – now highest globally • Ground rents increased by 50,000% from January 2012 - now material cost • Community Trust formed, to form indivisible part of full indigenisation solution • Negotiations with Zimbabwe government relating to Indigenisation Plan continues

• Electricity supply interruptions increasing significantly

16

(AQP 50%)


101,156 104,254


145 146

H1 '11 H1 '12

Revenue (Rm)

623 726

H1 '11 H1 '12

Cash Costs (R/oz)

40.6 34.3

H1 '11 H1 '12

Mine EBITDA ($m)1

56% 52%

H1 '11 H1 '12

Cash Margin (%)

295 315

H1 '11 H1 '12

Capex (R/oz)2

3%

1%

18%

(16%)

(7%)

7%


Tailings Operations

17

CTRP (AQP 50%)

• Production of 1,769 PGM ounces; 885 PGM ounces attributable to Aquarius

• Plant EBITDA of ($0.8m) loss

• Cash margin for the period of (168%), down from 20% in H1 ‘11

• Unit costs were up 128% at R13,087 per PGM ounce

• Plant modifications and upgrades were completed in the second quarter of FY ‘12 and throughput and recoveries showed a steady increase in the final months of the period under review

• It is expected that the operation will again operate profitably from the third quarter of FY2012 onwards

Platinum Mile (AQP 100%1)

• Production of 6,415 PGM ounces, 5,402 attributable to Aquarius1

• Plant EBITDA of ($0.2m) loss

• Cash margin for the period of 16%, down from 31% in H1 ‘11

• Unit costs were up 23% at R7,019 per PGM ounce

• Volumes, grades and recoveries remained fairly constant year-on-year

• Lower basket prices impacted negatively on cash margins but the operation is running profitably

• Feasibility study to evaluate the viability of pumping Kroondal tailings to be treated at the operation has commenced


1 AQP now indirectly owns 91.7% of Platinum Mile, and as a result it was consolidated in the AQP accounts from September 2011

Contribution

• Mine EBITDA = Revenue - Interest Income - Cash Costs + FX Gain (Loss) on Sales

18

By operation


Kroondal 41%

Marikana 13%

Everest 19%

Mimosa 24%

Tailings 3%

H1 ‘12 attributable production: 215,453 PGM ounces

0

5

10

15

20

25

30

35

40

45

Mimosa Kroondal Everest Marikana Tailings Total

H1 ‘12 Mine EBITDA: US$29.0m

P&L analysis and breakdown

19

($m) 31-Dec-11 31-Dec-10 Change Revenue 252.4 336.2 (83.8) Cost of sales (273.0) (241.3) (31.7) Administrative costs (7.4) (8.1) 0.7 Financing costs (17.6) (15.4) (2.2) Foreign exchange (loss)/gain (91.3) 66.2 (157.5) Settlement of contractor dispute - (7.8) 7.8 Other 1.1 0.3 0.8 Income tax benefit/(expense) 22.2 (35.8) 58.0 Net (loss)/profit after tax (113.5) 94.3 (207.8) Headline (Loss)/Earnings (113.8) 94.2 (208.0) Mine EBITDA 29.0 93.1 (64.1)



20

Revenue

($m) 31-Dec-11 31-Dec-10 Change

Revenue from concentrate sales 273.5 311.8 (38.3)

PGM sales adjustments (24.7) 16.5 (41.2)

Interest income 3.6 7.8 (4.2)

Revenue 252.4 336.2 (83.8)



21

Cost of Sales

* MPRDA royalties (SA) included in taxation


Amortisation & depreciation 31.5 22.1 (9.4)

Fair Value Uplift 4.9 5.7 0.8

Cost of production 233.3 210.9 (22.4)

Royalties: Zimbabwe (attributable 50%) 3.2 2.6 (0.6)

Royalties: SA Commercial * 0.1 - (0.1)

Total cost of sales 273.0 241.3 (31.7)



22

Financing Costs


Interest paid on borrowings (coupon on convert, etc) 9.5 7.1 2.4

Accretion of interest on convertible bond 5.0 4.8 0.2

Accretion of mine-site rehab liability (unwinding of AQPSA’s provision) 2.6 3.1 (0.5)

Pipeline finance 0.5 0.4 (0.1)

Financing costs 17.6 15.4 2.2


-140

-120

-100

-80

-60

-40

-20

0

FX loss on AQP Group loans

FX loss on cash assets

FX loss on pipeline FX loss - other FX gain on sales Total FX loss


23

Foreign Exchange ($m)

Non cash Cash



24

Income Tax Expense


South African Corporate tax (credit) – income tax 1.0 (0.8) 1.8

South African Corporate tax (credit) – MPRDA royalty (0.6) 2.4 (3.0)

Zimbabwe Corporate tax 7.0 8.8 (1.8)

Movement in Zimbabwe deferred tax 3.1 3.0 0.1

Movement in South African deferred tax (incl. Ridge) (32.7) 22.4 (55.1)

Income tax expense/(credit) (22.2) 35.8 (58.0)


Balance sheet analysis and breakdown

25

($m) 31-Dec-11 31-Dec-10 Change Total non-current assets 886.8 1,009.5 (122.7) Total current assets 370.4 546.4 (176.0) Total assets 1,257.3 1,555.9 (298.6) Total non-current liabilities 442.6 500.6 (58.0) Total current liabilities 105.6 110.0 (4.4) Total liabilities 548.2 610.2 (62.0) Net assets 709.0 945.7 (236.7) Shareholders equity 709.0 945.7 (236.7)

Cash & cash equivalents – decrease in cash balance resulting from investing activities and dividends paid

Non-current liabilities – decrease due to $52m decrease in deferred tax liability, $19m decrease in mine closure rehab provision, offset by $13m increase in finance leases

Non-current assets – decrease due to impairment of Ridge assets, foreign exchange movements and amortisation charged


Cash flow statement analysis and breakdown

26


Net operating cash flow 24.9 53.6 (28.7)

Net investing cash flow (69.2) (59.4) (9.8)

Net financing cash flow (34.3) (32.3) (2.0)

Net financing cash flow includes:

• Interest paid of $9m

• Dividends paid of $19m

Net operating cash flow includes:

• Net inflow from operations of $27m

• Income tax paid of $7m

Net investing cash flow includes:

• Payments for mine development and property, plant and equipment of $42m

• Acquisition of Platinum Mile Resources of $12m

• Deposit for Booysendal mineral acquisition of $15m


Outlook

• Supply • supply is constrained as cost, capital and regulatory pressures are mounting • overproduction relative to fundamental demand since GFC remains • but limited supply-side response possible to any increase in demand

• Demand • light vehicle manufacturing still recovering in US and Japan, slowing in Europe • shifting to Asian focus • heavy duty vehicle market is growing

• Tighter regulation • more vehicles, new countries

• Aquarius • overcome challenges relating to new safety support methodologies • fixing problems with contractors • focus on efficiency and cash conservation until environment improves • No interim dividend declared

27

Fundamentals are good – but all bets are off until

macroeconomic certainty returns


For more information please contact:

• Gavin Mackay

• Tel: +44 (0) 7909 547 042 • Email: [email protected]


Business

20120209 aqp h1 2012 presentation final