Avmin Interim Results for the period ended 31 December 2002

27 February 2002

Anglovaal Mining reports 239 per cent rise in headline earnings.
Anglovaal Mining (Avmin) reported a 239 per cent increase in headline earnings for the six months ended 31 December 2002 compared to the 2001 comparative period. Headline earnings was R105 million (R31 million), which equates to headline earnings per share of 94 cents (28 cents).

A major determinant of Avmin’s financial performance was the strengthening of the rand/US dollar exchange rate, which adversely affected rand revenue of US dollar priced products but on the other hand generated significant exchange gains on borrowings denoted in US dollars.

“The results reflect our collective efforts to address and resolve many of the issues that affected Avmin’s financial performance last year,” said Avmin Chairman, Rick Menell.

“We are coming to the end of a major capital spending phase. While we continue to invest in attractive new projects, we are focusing sharply on bringing our recently completed projects to full account and on the drivers of Avmin’s financial performance.”

Avmin’s results were bolstered by positive developments at all of its divisions. Profit from operations increased 76 per cent to R392 million (R223 million).

Assmang Limited – Avmin’s 50,3 per cent held manganese, chrome and iron ore producer � reported a 14 per cent increase in headline earnings to R138 million as sales volumes increased and higher US dollar prices were received for manganese alloys.

The Nkomati nickel mine � 75 per cent owned by Avmin � posted another set of good results attributable to the higher nickel price and a good operating performance. Sales achieved increased to 2 620 tons (1 880 tons) of nickel, 1 670 tons (1 380 tons) of copper, 33 tons(26 tons) of cobalt and 19 040 (16 940) of platinum group metals.

Chambishi � the cobalt/copper operation owned 90 per cent by Avmin � is now running at planned production levels following the commissioning of the redesigned furnace. Cobalt production increased 43 per cent to 2 200 tons during the period, of which 1 300 tons (300 tons) were for Chambishi’s own account. Copper production increased to 5 300 tons (6 400 tons), of which 610 tons (240 tons) were from Chambishi’s own metal.

“The planned refurbishment of the furnace at Chambishi in August / September 2002 adversely affected Chambishi’s financial results. However, after the issues affecting production were successfully dealt with, Chambishi reached full production levels in December 2002, and we expect the operation to maintain planned production levels,” said Rick Menell.

Avmin’s 56 per cent held gold operation, Avgold Limited (Avgold), showed an improvement as its Target mine attained full production and as it benefited from a foreign exchange gain on the US$35 million of borrowings following the strengthening of the rand/US dollar exchange rate. Avgold is concluding an agreement to sell its ETC assets for R300 million to a consortium that includes a significant Black Economic Empowerment component. Target’s Life of Mine plan was increased to 18 years from the previous 13 years.

Two Rivers Platinum (Proprietary) Limited (Two Rivers) signed a memorandum of understanding with a Black Economic Empowerment consortium, to be managed by TISO Capital (Proprietary) Limited, to acquire up to 25 per cent of Two Rivers. The Two Rivers and TISO consortium shareholders’ agreement will, when fully implemented, result in Avmin holding 41,3 per cent of the venture.

Avmin’s organic growth initiatives and new projects � Nchwaning III manganese mine; Nkomati nickel expansion; Two Rivers platinum mine; High performance alloys plant (mainly nickel-based) and Northern Free State (goldfield) � will position the Group for strong growth in the future.

“Avmin’s project pipeline will ensure that the Group continues to pursue attractive investments in all its strategic operational areas.

“Following the release of the Mining Charter’s scorecard it is evident that the legislation will have a significant effect on all aspects of the mining industry in South Africa. Avmin is well positioned for the Mining Charter � having already concluded two significant empowerment transactions recently,” concluded Rick Menell.

Ebrahim Takolia
General Manager, Investor Relations