2007 Annual Results Presentation 11 February 2008 1 2007 Annual - - PowerPoint PPT Presentation

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2007 Annual Results Presentation 11 February 2008 1 2007 Annual - - PowerPoint PPT Presentation

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2007 Annual Results Presentation 11 February 2008 1 2007 Annual results Highlights Norman Mbazima Record headline earnings of R12.3 billion, up 2.8% Higher metal prices supported by strong market fundamentals Equivalent

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SLIDE 1

1 2007 Annual results

2007 Annual Results Presentation

11 February 2008

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SLIDE 2

2 2007 Annual results

Highlights – Norman Mbazima

  • Record headline earnings of R12.3 billion, up 2.8%
  • Higher metal prices supported by strong market fundamentals
  • Equivalent refined platinum production down 6.3% at 2.47 million ounces
  • Refined platinum production at 2.47 million ounces – sales of 2.48 million ounces
  • Landmark BEE transactions further enhance transformation of the South African

mining sector

  • Positive developments to the Royalty Bill
  • 1 times dividend cover maintained with a final dividend of R23.00 per ordinary

share declared

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SLIDE 3

3 2007 Annual results

Higher metal prices

  • Average basket price achieved per Pt ounce sold up 31% at R18,167
  • Advanced stage of negotiations to reach market related price on rhodium sales

2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 20,000 2003 2004 2005 2006 2007 R / Pt oz 400 600 800 1,000 1,200 1,400 1,600 $ / oz

Rand basket price (R/Pt oz sold) US$ platinum price ($ / oz)

12.6% 619 697 Gold/oz * Subject to contractual arrangements 3.2% 6.822 7.043 R/US$ 27.0% 2,030 2,579 Basket/Pt oz 58.7% 10.74 17.04 Nickel/lb 22.6% 3,542 4,344 Rhodium/oz* 11.3% 319 355 Palladium/oz 14.2% 1,140 1,302 Platinum/oz % change 2006 2007 Realised metal Prices US$

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SLIDE 4

4 2007 Annual results

Strong market fundamentals

  • Strong demand, slower than

anticipated supply growth and a weak US dollar all supportive of higher prices

  • Continued strong demand from auto

and industrial sectors

  • Chinese jewellery still resilient at

higher price levels

Platinum

  • Substantial growth in auto demand
  • Investment activity and Exchange

Traded Funds continue to support prices

  • Potential for further jewellery

development

Palladium

200 400 600 800 1,000 1,200 1,400 1,600 1,800 Feb-01 Feb-02 Feb-03 Feb-04 Feb-05 Feb-06 Feb-07 $ / oz 2001 2005 2004 2003 2002 2006 2007 100 200 300 400 500 600 700 800 900 Feb-01 Feb-02 Feb-03 Feb-04 Feb-05 Feb-06 Feb-07 $ / oz 2001 2005 2004 2003 2002 2006 2007

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SLIDE 5

5 2007 Annual results

Strong market fundamentals (cont.)

  • Tight market with reduced liquidity
  • Stable auto demand
  • Chemical demand firm
  • Thrifting in glass sector continues
  • Price pressure from slower supply

growth

Rhodium

  • The hard disk sector remains a key

driver of ruthenium demand

  • Reduced price volatility as demand

increasingly satisfied from recycled metal

Ruthenium

1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 Feb-02 Feb-03 Feb-04 Feb-05 Feb-06 Feb-07 $ / oz 2005 2004 2003 2002 2006 2007 100 200 300 400 500 600 700 800 900 1,000 Feb-02 Feb-03 Feb-04 Feb-05 Feb-06 Feb-07 $ / oz 2005 2004 2003 2002 2006 2007

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SLIDE 6

6 2007 Annual results

Financial highlights

  • Record earnings with headline earnings up 2.8% at R12.3 billion
  • Average shares in issue up 7.3% on preferences share conversions and dividend

re-investments

  • Headline earnings per ordinary share down 2.5% to 5,239 cents
  • Cash generated from operations of R20.7 billion, an increase of 12% over 2006
  • Net debt position of R3.88 billion
  • Capital expenditure up 63% to R10.7 billion, in line with forecast
  • Full year dividends per ordinary share of R52.00 per share with 1 times dividend

cover maintained

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SLIDE 7

7 2007 Annual results

Financial performance

28.6% 34.4% Effective tax rate % 42.2% 40.7% Gross profit margin (%) 15% 16,624 19,097 Gross profit on metal sales 3% 11,993 12,325 Headline earnings 188% 4,413 (3,876) Net (debt) / cash 3% 5,374 5,239 Headline earnings per share (cents) 70% 67% ROCE (%)

  • 2%

5,300 5,200 Full year ordinary dividends (cents) 19% 39,155 46,616 Net sales revenue Change 2006 2007 R million Year ended 31 December

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SLIDE 8

8 2007 Annual results

Headline earnings

  • Headline earnings increased by 2.8% …
  • 12,325

11,993 5,378 724 (800) (1,671) (1,776) (1,066) (255) (202)

  • 2,000

4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 20,000 2006 Price Exchange Inflation Volume Cash cost Interest & Tax Non-cash cost Other 2007

R million

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SLIDE 9

9 2007 Annual results

Price variance

  • … the largest contributor to the increase is price …

1,756 207 1,218 921 1,165 111

Platinum Palladium Rhodium Ruthenium Nickel Other

December 2006 55% 9% 22% 9% 5%

December 2007 50% 24% 10% 8% 8%

Gross revenue per metal

11,993 5,378

  • 2,000

4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 20,000 2006 Price

R million

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SLIDE 10

10 2007 Annual results

Exchange rate variance

  • … followed by exchange rate

Average exchange rate has weakened 3% in 2007 contributing R724 million to headline earnings

5.0 6.0 7.0 8.0

R / US$ Exchange rate Ave rate achieved 2007 2006 2005 Ave: 7.04 Ave: 6.82 Ave: 6.39

11,993 724 5,378

  • 2,000

4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 20,000 2006 Price Exchange

R million

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SLIDE 11

11 2007 Annual results

Volume variance

  • Increase in earnings offset by a decline in volumes

Largest contributor to the volume decline is Rustenburg, off-set by increased ounces from Mototolo

11,993 5,378 724 (800) (1,671)

  • 2,000

4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 20,000 2006 Price Exchange Inflation Volume

R million

  • 200
  • 150
  • 100
  • 50

50 100 Equivalent refined platinum ounces Potgietersrust (28) Mototolo 82 Other (10) Amandelbult (19) BRPM (24) Rustenburg (168)

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SLIDE 12

12 2007 Annual results

Cash cost increases

  • 1,000
  • 800
  • 600
  • 400
  • 200

200 R million

Contractors (206) Support, steel balls, chemicals (273) Tyres (137) Fuel (89) Labour (770) Other 99 Purchase of metals (400)

  • Cash costs have increased by R1.78 billion
  • Labour and contract labour costs comprise some 55% of the increase

11,993 5,378 724 (800) (1,671) (1,776)

  • 2,000

4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 20,000 2006 Price Exchange Inflation Volume Cash cost

R million

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SLIDE 13

13 2007 Annual results

Unit cost variance

  • Increased labour cost not yet matched by commensurate increase in production

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

6.5% 5.4% 1 0.2% 2.0% 2.2% 1 .6% 1 .3% 1 .6% 30.9% 5.8%

  • 3.0%

33.8% 2.0% 5.7% 41 .4% Inflation Volumes Labour & contract labour Steelballs, chemicals & support Engineering stores Tyres & fuel Equipment hire & maintenance Other M ining & treatment cash cost / ton milled Grade & ore mix Process improvement Cash

  • perating

cost / equiv. refined Pt

  • z

Pipeline movement Polokwane refined effect Cash

  • perating

cost / refined Pt

  • z

% increase

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SLIDE 14

14 2007 Annual results

Mining operating margin

  • Mining margins remain robust

A S 4, 1 %

Gross profit %

Excluding purchase of concentrate Refined Pt Oz (000’s)

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 55% 60% 65% 70%

  • 150

300 450 600 750 900 1,050 1,200 1,350 1,500 1,650 1,800 1,950 2,100 2,250 WLTR 44.7% LPM 39.1% BRPM 50.1% MOT 57.4% KPM 61.3% MRK 40.7% MDK 37.4% RS 44.3% PPL 45.7% US 47.7% 2007 Group average - 49.8% AS 61.2% 2006 Group average - 51.9%

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SLIDE 15

15 2007 Annual results

Net cash flow

  • Strong cash generation to fund capital expenditure and dividends to shareholders

4,413 (3,876) (12,658) (6,437) 794 20,665 (10,653) (6,000) (3,000) 3,000 6,000 9,000 12,000 15,000 18,000 21,000 24,000 27,000 2006 Net cash Cash from

  • perations

Tax & interest Dividends Capex Other 2007 Net debt

R million

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SLIDE 16

16 2007 Annual results

Distributions

Dividend per share (R)

6.40 7.35 11.80 53.00 52.00 2003 2004 2005 2006 2007

  • R24.4 billion in dividends to ordinary shareholders in 2006 and 2007
  • 1 times dividend cover ratio maintained with a final distribution of R5.4 billion

Total dividend distribution (R billion)

1.4 1.6 2.6 12.1 12.3 2003 2004 2005 2006 2007

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SLIDE 17

17 2007 Annual results

1% Ga-Phasha 51% Lebowa 50% Booysendal 22.4% Northam 1.5% Anglo Platinum

Anooraq R3.6 billion Mvela Resources R4.0 billion Employees R3.3 billion

Two HDSA managed and controlled PGM producers and empowered employees

Meaningful and sustainable BEE

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SLIDE 18

18 2007 Annual results

Meaningful and sustainable BEE (cont.)

  • Creation of the two major HDSA managed and controlled PGM producers
  • Largest employee share ownership initiative by value in the South African mining

sector to-date

  • Broad based transactions with community, women and employee representation

reflect Anglo Platinum’s commitment to transformation and broad-based BEE

Post transaction attributable reserves & resources

75 150 225 Aquarius ARM Northam Lonmin Lebowa Holdco Impala miliion 4E oz

  • Mvela transaction terms

revised - close in 1st half 2008

  • Anooraq - close in 1st half

2008

Note: excludes non South African reserves and resources

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SLIDE 19

19 2007 Annual results

Operational overview

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SLIDE 20

1 2007 Annual results

Major shift in safety

  • Safety is a core value and the overriding priority
  • Safety record unacceptable with a deterioration in the number of fatalities to 25 in

2007 (2006: 18), in particular Rustenburg

  • All mines stopped on a phased basis as an immediate intervention to improve safety
  • Reduction in lost time injuries with LTIFR dropping from 2.52 to 2.03

5 10 15 20 25 30

2003 2004 2005 2006 2007

Fatalities Group excl Rustenburg Rustenburg 1 1.2 1.4 1.6 1.8 2 2.2 2.4 2.6 2.8 2003 2004 2005 2006 2007 LTIFR Rustenburg Group excl Rustenburg

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SLIDE 21

2 2007 Annual results

Major shift in safety (cont.)

18 7 Fatalities 1st half 2007 2nd half 2007

  • Wide stakeholder engagement across the organisation

led to development of an Enhanced Safety Improvement Plan

  • Process to create a culture in which safety standards

are rigidly adhered to

  • Significant resources have been allocated to focus on

leadership, systems and technical components of safety – early improvement visible at all operations

  • 2nd half performance improved with managed
  • perations LTIFR dropping from 2.37 to 1.71 and

fatalities down from 18 to 7

2.37 1.71 LTIFR 1st half 2007 2nd half 2007

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SLIDE 22

3 2007 Annual results

Operations performance

1194

  • Equivalent refined platinum production from mining operations decreased by

167,200 ounces

2,639 82 17 3 (6) 2,471 10 (168) (28) (24) (19) (18) (11) (7)

2,000 2,250 2,500 2,750 3,000 2006 Mototolo Purchases Marikana Twickenham Rustenburg PPRust BRPM Amandelbult Modikwa Lebowa Union Kroondal 2007

(000's oz)

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SLIDE 23

4 2007 Annual results

Operations performance (cont.)

  • Increased ounces from Mototolo, Marikana, Twickenham and purchases
  • UG2% of tons milled increased to 59% in 2007, from 54%
  • IMA decreased 9% to 14.3 months in 2007
  • Efficiency further reduced by wage

negotiations and strike action

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SLIDE 24

5 2007 Annual results

Operations performance (cont.)

Rustenburg

  • Equivalent refined production down 20%, impacted by

safety interventions and labour related issues

  • Increase in fatalities to 16 led to suspension of

production on a staggered basis

  • 50% of employees were contractors
  • IMA down to 11.8 months due to reduction of

development activity

  • UG2 output increased to 69% reducing grades by 7%
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SLIDE 25

6 2007 Annual results

Operations performance (cont.)

  • Equivalent refined platinum production down 15% due to lower grade and

reduced tonnes milled

  • Greater than expected portion of oxidised material encountered at PPRust North

pit impacting grades

Potgietersrust (Mogalakwena)

  • Tons mined increased 33% due to

increased topsoil removal and oxidised material at PPRust North

  • Commissioning of the new 600,000 tonne

per month concentrator has commenced

  • Community relocation commenced in July

2007 with 640 families relocated to-date

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SLIDE 26

7 2007 Annual results

Operations performance (cont.)

  • Despite increased tons milled Amandelbult equivalent refined production down

3%, impacted by increase in UG2% and low grades on Merensky horizon

  • Union improved IMA to 19.7 months, an increase of 23%
  • Both Lebowa and Modikwa IMA increased to 13.6 and 15.6 months respectively
  • Strike action impacted production at Modikwa, Bafokeng-Rasimone and Kroondal
  • Marikana and Mototolo added new production in 2007, increasing 10,400 and

82,400 ounces respectively

Other mines

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SLIDE 27

8 2007 Annual results

Operational initiatives

  • Action plans in place to achieve improved safety and production efficiencies:

– ‘Transformation to zero’ safety initiative piloted at Amandelbult – Rationalisation of labour mix to obtain improved efficiencies – Structured retention initiatives and focussed recruitment drive – Strengthened training initiatives and structures – Increase IMA through accelerated primary development

  • Success to-date includes:

– Improvement in LTIFR in second half of 2007 – Engineering and artisan vacancies reduced – 5% reduction in contract labour force

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SLIDE 28

9 2007 Annual results

Process performance

1345 1194

  • Concentrator recoveries up despite a 5% increase in UG2 milled
  • Polokwane waffle coolers fully replaced in August 2007
  • Waterval furnace 1 rebuild completed with full production achieved in June 2007
  • Cooling water failure at Waterval slag cleaning furnace

– Furnace rebuild and upgrade completed in August 2007 – Excess stocks reduced to normal levels by year end

  • BMR expansion project underway – full capacity scheduled for end 2010
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SLIDE 29

10 2007 Annual results

Capital approvals and spend

1345 1194

  • R10.7 billion of capital expenditure approved in 2007:

– R1.9 billion Base Metals Refinery expansion – 33 ktpa nickel by end 2010 – R1.0 billion Townlands ore replacement – 70,000 platinum ounces pa by 2014 – R1.4 billion Mainstream Inert Grind projects – improve PGM recovery in the concentrators

  • R10.7 billion capital expenditure in 2007:

– R5.2 billion on expansion – R5.1 billion to maintain operations – R275 million capitalised interest

  • R5.9 billion Twickenham expansion

approved in 2008 – 180,000 ounces pa

1 3 5 7 9 11 13 2003 2004 2005 2006 2007 2008 (f) R billion Ongoing Expansion Interest

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SLIDE 30

11 2007 Annual results

Projects progress

1345 1194

  • PPRust North project mill commissioning commenced and to be completed in the

1st quarter of 2008 with mine expected to reach full capacity in 2009

  • Waterval retrofit 620 ktpm – on track, mill 2 was hot commissioned in October

2007

  • Paardekraal 2 shaft to replace 120,000 platinum ounces by 2015 progressing
  • BRPM phase 2 project – at 1,850m (of 2,600m)
  • Lebowa Merensky declines – at 1,800m (of 2,400m)
  • Amandelbult East Upper UG2 project on schedule to produce 100,000 Pt ounces

by 2012

  • Mototolo is in ramp up phase and achieved 197,000 tonnes production in October

2007

  • Marikana continues to ramp up at a slower pace than anticipated
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SLIDE 31

12 2007 Annual results

Growth in production

Refined platinum production

1,000 1,500 2,000 2,500 3,000 2003 2004 2005 2006 2007 2008 (000's) Actual Forecast

  • Positive view of long term demand growth
  • Harder to achieve 5% target due to 2007

shortfall

  • Anglo Platinum planned compound annual

average growth of 5% remains in place

  • Electricity supply growth key to production

growth

Equivalent refined platinum production

1,000 1,500 2,000 2,500 3,000 2003 2004 2005 2006 2007 2008 (000 oz) Actual Forecast

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SLIDE 32

13 2007 Annual results

Growth in refined production

  • Growth will mainly be from Potgietersrust, with increased purchases from Kroondal

and Eland Platinum

  • Conclusion of Aquarius-Kroondal off-take agreement with Impala in 2008 to

increase refined production

  • Stabilisation of 2007 issues at existing operations present some upside
  • Key risks remain:
  • Production stoppages related to safety
  • Ongoing skills shortages
  • Constrained electricity supply and the impact on production and expansion projects
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SLIDE 33

14 2007 Annual results

Electricity supply constraint

  • Anglo American and Anglo Platinum

task teams in place

  • Close liaison with Eskom and

Departments of Minerals and Energy and Public Enterprises

  • Detailed options under examination –

some flexibility due to processing capacity

Power consumption 41% 28% 31% Mining Concentrating Smelting & refining

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SLIDE 34

15 2007 Annual results

Production outlook

2,400 30 120 2,550 2,474 60 136 2,000 2,100 2,200 2,300 2,400 2,500 2,600 2,700 2,800 2007 Growth (PPL, KPM & purchases) Amandelbult flood loss 2008 - pre electricity impact Electricity loss to- date Potential electricity impact 2008 - post electricity impact Refined Pt ounces (000')

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SLIDE 35

16 2007 Annual results

  • Safety remains an overriding priority
  • Progress made in embedding new safety culture and stabilising skills issues
  • Focus in 2008 will be on growth and increasing operational efficiencies
  • Growth in Anglo Platinum refined platinum production (compound average)

expected at 5% per annum

  • Impact of constrained electricity supply by Eskom on production and expansions

projects remains a concern

  • 2008 capital expenditure target of R10.5 billion to R11.5 billion
  • Markets remain robust and supportive of higher prices within current supply

scenario

Summary

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SLIDE 36

17 2007 Annual results

Questions

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SLIDE 37

18 2007 Annual results

2007 Annual Results Presentation

11 February 2008