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Article Excerpt
Original Source: FD (FAIR DISCLOSURE) WIRE
OPERATOR: Good morning. And welcome to the Aquarius Platinum's annual results conference call. All participants will be in listen-only mode. There will be an opportunity for you to ask questions at the end of today's presentation. (OPERATOR INSTRUCTIONS). Please note that this conference is being recorded. At this time I'd like to turn the conference over to Stuart Murray. Please go ahead sir.
STUART MURRAY, EXECUTIVE CHAIRMAN, AQUARIUS PLATINUM LTD: Good day ladies and gentlemen. Thank you Ari. Welcome on this fairly chilly Johannesburg morning to our annual results for the full year to June 30, 2007. Those of you that have, I hope, been able to download the presentation and the results announcement and therefore, I'll take it as read that you have those. But it gives me great pleasure to announce a very significant increase in net profit for the Group, up to a new record number of $187.2m or $2.18 per share. On the back of very healthy platinum group metal prices, a slightly improved Rand-Dollar scenario for miners down in this part of the world and, notably, an almost 20% increase in production over the year.
Turning to the presentation, I think most of you are probably au fait with what the Group is, a quick recap. Aquarius Platinum Limited is a Bermuda domiciled company listed -- primarily listed on ASX and secondary listed on the main board in London, and the main board of the Jo'burg exchange.
Four major mining operations and a Tailings re-treatment project and currently a project in very early exploration called Bakgaga.
What I'd like to do is turn to page four and just cover the highlights. Production increased, as I said, about 20% across -- in the Group, despite the fact that we have had a tough year in -- at all the operations. Despite I think the hard work of management we have had labor disputes, labor interruptions for the first time in the company's history. I think it's a signal of the climate on industrial relations climate down here in South Africa but we have seen our way through it. And we are working our way through the relationship with our contractors in what is basically a new issue for them, and a new issue for us, because the contract-mining model limits our intervention on the industrial relations frontier in South Africa.
In Zimbabwe, a great performance from Mimosa, albeit we had some unexpected breakdowns, the primary mill in the second quarter and the tertiary crusher in the third quarter. I was at Mimosa on Monday and I firmly believe that these matters are behind us. The mine has bought critical spares, has the critical spares in place. But I think it's worth noting that what would ordinarily be a simple breakdown in a South African mine is -- can become quite a major logistical enterprise when you break down in Zimbabwe and you find that you have to ship your crusher to South Africa. So, as a result, even though production is up a pleasing 20%, we did probably miss out on some 40,000 ounces of production across the year, as a combination of the issues I've just mentioned.
That said, we're in a great platinum group metal price environment and the numbers speak for themselves. And this has led through to a more than doubling of net profit.
On the dividend front, we increased the dividend 75% for the year to a full $0.42 or $0.30 for the final. I have noted one or two analysts complaining about the miserly pay out. But I think those analysts should just take cognizance of the almost $50m that the Group spent on buying back or raising it's equity participation in the South African subsidiary and it's -- this was an effective buyback. That $50m was in fact a buyback of some 2m AQP shares due to be issued in terms of the [back] impairment situation. And that $50m would have otherwise come out as dividend had it not been utilized for the buyback.
I think a highlight of the year was the conversion of the South African mining rights. I have to say it's complicated. It's laborious, it's quite bureaucratic -- but it is a necessary process that every miner has to go through. And it gives me great pleasure that we are at the forefront of this process as an investor in South Africa.
Moving on, page five, prices. I think the prices speak for themselves. Nice rises on all of our metals, and aided and abetted through the year by a stunning run up in the rhodium price, plus a wonderful run up in the ruthenium price, albeit that it has dipped back in the last quarter. And in Zimbabwe, where we get significant nickel credit from the Mimosa mine, the run up to $50,000 nickel in the last quarter, certainly led to some very pleasing numbers.
I think it's worth noting, it has been the -- despite all the volatility and the difficulties in the recent weeks, with the share price of miners in general and platinum miners in particular. This morning at our Kroondal flagship mine the basket price is a very sound $1485 per PGM ounce, translating through to ZAR10470 per ounce. That number is basically still sitting at around 95%, 96% of the record high that the Group has ever seen for the PGM basket in Rand terms. And therefore I think the volatility in the share prices is definitely being driven by factors well beyond that of the fundamentals of the business, which I have to say are quite sound.
Moving on to page six, the translation of the basket price platform of the ratios that we receive for our metals that you see on page seven.
On page seven I think gratifying run ups, 30%-odd run up in the basket price in South Africa and 20%-odd in Zimbabwe where the mine is a little more palladium rich and rhodium poor, relative to its' South African cousins.
In South Africa the basket bolstered by good ruthenium performance and in Zimbabwe by stunning nickel and copper performance. As a result the four main elements that we -- comprise the baskets would have made up around 91%, 92% of revenue in South Africa. And for the last quarter we saw an onward mass of 40% of revenue at Mimosa coming from the base metal credits.
Moving on to page eight, the Rand-Dollar, it's fair to say this has been all over the show this year and driven by a myriad of factors, which I'm sure the economists can -- would spend a lot of time telling you what and why for. Albeit that I think the euphoria...
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