Avmin and Chambishi Metals update

In its results for the year ended 30 June 2001, published on 30 August 2001, Anglovaal Mining Limited (Avmin) informed shareholders that the results for the year ending 30 June 2002 are not expected to show an improvement over those for 2001.

The Board of Directors believes that shareholders should be aware of the following:

• Recent weakness of the South African Rand against the United States Dollar will have a positive impact on the contributions from Assmang Limited and the Nkomati nickel mine; and
• Avmin’s strategy of strengthening its balance sheet through the disposal of its investment in Iscor Limited, and shares in Assore Limited as well as small quantities of Avgold Limited shares will reduce envisaged interest charges.

However, Avmin’s cobalt and copper producer, Chambishi Metals plc will not reach full production as expected in the first half of the 2002 calendar year. The furnace, which is operating at approximately 50 per cent of capacity, will be taken off-line in January 2002 to replace a small section of the refractory brick lining. Furthermore, Hatch, Canada, has been contracted to re-design the cooling system and this will result in the furnace being down in June and July 2002 to install the new cooling system. Although it is expected that the furnace will continue to operate at 50 per cent capacity prior to this shutdown and coupled with lower than expected cobalt prices being received, the contribution from Chambishi Metals to Avmin’s earnings will be negative.

The positive effect on earnings from a weaker rand and a lower interest charge may therefore not offset the reduction from Chambishi Metals. The Board remains of the opinion that Avmin’s headline earnings may not match those of the 2001 financial year.

In addition, the Board is considering an impairment charge on the Chambishi Metals assets. The total capital investment to date for Chambishi Metals is US$260 million, which includes the acquisition cost. After a comprehensive review has been submitted, the Board will make a decision before the end of February 2002 as to whether an impairment charge is appropriate and, if so, at what quantum. Shareholders will be informed accordingly.

Julian Gwillim
General Manager, Investor Relations