Operational Review

 

Two Rivers

 

Business summary

  • Joint venture with African Rainbow Minerals Limited
  • Two on-reef shafts
  • Concentrator plant
  • Reserves: 0.9 million attributable ounces of platinum
  • Resources (including reserves) 3.1 million attributable ounces of platinum
  • Production: 145 300 ounces of platinum in concentrate
  • Employees and contractors: 3 293

 

 

Material sustainability review

SAFETY

Two Rivers delivered an admirable fatality-free operational performance during FY2011 achieving a milestone two million fatality-free shifts in November last year.

 

Operational review

Tonnes milled improved from the previous year at 2.9 million and a small stockpile was built as underground production marginally exceeded concentrator capacity. The improved milling rate, coupled with a 2% rise in recoveries boosted platinum production to 145 300 ounces in concentrate. Unit costs increased by 13.5% to R9 615 per platinum ounce due to higher consumable costs, additional spend on redevelopment, Merensky trial mining and stockpile milling during FY2010.

Capital expenditure increased significantly in FY2011 as a result of the cash preservation programme implemented in the previous year.

Outlook

The Environmental Authorisation for the UG2 North Opencast mine was granted by the DMR in December 2010. Trial mining as part of the Merensky Reef feasibility study is in progress.

The transaction whereby Implats will dispose of portions 4, 5 and 6 of the farm Kalkfontein, as well as the area covered by the Tweefontein prospecting rights, to Two Rivers is awaiting approval from the DMR. This transaction, when completed, will increase the Group’s shareholding in Two Rivers by 4% to 49%.

The relatively short life of the operation will be extended by the acquisition of the additional Kalkfontein resources which will also enhance flexibility.

 

Two Rivers – key statistics  

      FY2011   FY2010  
REVENUE (Rm)  2 274   2 086  
Platinum      1 477   1 370  
Palladium      365   221  
Rhodium      290   375  
Nickel      64   57  
Other      78   63  
COST OF SALES    (1 651)  (1 512) 
Mining operations      (1 172)  (992) 
Concentrating operations      (225)  (201) 
Treatment charges      (15)  (14) 
Depreciation      (249)  (257) 
Change in inventory      10   (48) 
GROSS PROFIT    623   574  
Royalty expense      (11)  (2) 
PROFIT FROM OPERATIONS    612   572  
Gross margin   (%)  27.4   27.5  
Profit for the year   (Rm)  415   325  
45% attributable to Implats      185   147  
Intercompany adjustment*      46   (52) 
Share of profit in Implats Group     231   95  
SALES VOLUMES IN CONCENTRATE      
Platinum   (000oz)  145.5   140.9  
Palladium     83.7   81.6  
Rhodium     24.2   23.6  
Nickel   (t)  441.9   442.5  
PRICES ACHIEVED IN CONCENTRATE       
Platinum   ($/oz)  1 461   1 271  
Palladium      629   355  
Rhodium      1 717   2 079  
Nickel   ($/t)  21 010   16 970  
EXCHANGE RATE ACHIEVED (R/$)  6.95   7.64  
PRODUCTION       
Tonnes milled ex-mine   (000t)  2 950   2 918  
Headgrade (6E)  (g/t)  3.94   3.95  
Platinum in concentrate   (000oz)  145.3   140.9  
Palladium in concentrate     84.1   81.6  
Rhodium in concentrate     24.6   23.6  
Nickel in concentrate   (t)  443.7   442.5  
PGM in concentrate   (000oz)  307.2   296.8  
TOTAL COST (Rm)  1 397   1 193  
– per tonne milled   (R/t)  474   409  
  ($/t)  67   53  
– per PGM ounce in concentrate   (R/oz)  4 548   4 020  
   ($/oz)  647   526  
– per platinum ounce in concentrate   (R/oz)  9 615   8 467  
     ($/oz)  1 367   1 108  
– net of revenue received for other metals   (R/oz)  4 129   3 385  
   ($/oz)  587   443  
CAPITAL EXPENDITURE (Rm)  280   116  
   ($m)  40   15  
LABOUR INCLUDING CAPITAL (number)  3 293   2 733  
Own employees     756   702  
Contractors     2 537   2 031  
Note: The results in this table have been equity accounted.  
* Adjustment note: The adjustment relates to sales from Two Rivers to the Implats Group which at year-end were still in the pipeline.