Partial right-down of Avmin’s Chambishi Metals assets

Introduction
Further to Avmin’s announcement on 18 December 2001, the Board of Directors (“the Board”) has considered a detailed analysis of the future prospects of Chambishi Metals plc (“Chambishi”) and reviewed this investment in the context of the Avmin Group (“the Group”) as a whole.

Avmin is a South African based diversified mining company with interests in the ferrous, precious and base metals sectors. Its ferrous metal assets, held in Assmang Limited (“Assmang”) include iron ore, manganese ore, ferro-manganese, chrome ore and ferro-chrome. The precious metals assets held through Avgold Limited (“Avgold”), comprise the Target and ETC gold mines, and the Company is conducting a full feasibility programme on its new platinum group metals (“PGM”) operation, Two Rivers Platinum (Pty) Limited (“Two Rivers”) in partnership with Impala Platinum Holdings Limited. Within its base metals unit, Avmin operates South Africa’s only primary nickel mine, Nkomati, and the cobalt and copper producer, Chambishi, located in Zambia.

Chambishi write-down
The Board has fully assessed the impact of the various technical problems that have been experienced at Chambishi, which relate largely to the furnace refractory lining, the furnace cooling system, and the effects of an unexpected decline of the cobalt price from US$10/lb to US$7/lb, as well as weaker economic fundamentals for base metal markets, exacerbated by the tragic events of 11 September 2001. In order to account for these changed circumstances in accordance with the Company’s commitment to prudent and conservative accounting practices, the Board has made a decision to write-down R1 538 million in relation to these assets. This amount is determined as follows:

A US$176 million write-down on the Chambishi assets; with Avmin’s shares equating to US$172 million* (R1 978 million)
Less R440 million, being the foreign exchange gain due to Avmin from Chambishi;
Resulting in a net amount of R1 538 million.
Calculated at R11,50 : US$1,00.
The residual value of US$70 million is deemed reasonable and appropriate by the Board and the Company’s independent auditors, who have verified the assumptions and the calculations.

Chambishi now focused on achieving full production
Avmin’s Board and management continue on the basis that Chambishi is viable and are committed to completing the remaining work on the project. The Company is confident that the plant will be in full production by the end of the 2002 calendar year.

Avmin’s enhanced Group value
Over the last six months, the value of the majority of assets within Avmin have been enhanced as a result of the weaker South African rand, United States dollar exchange rate and the completion of major projects, together with ongoing improvements in operating performances and strong growth possibilities in the pipeline:

Assmang � all divisions within this company, which exports the majority of its commodities, are benefiting from improved operating performances in terms of production volumes and good cost containment; the significant new ferro-chrome expansion that was officially opened today, 29 January 2002, has been commissioned on schedule and within budget and is set to benefit from the improved environment; while its new manganese shaft expansion remains on schedule for completion in 2003.
Nkomati � an improving nickel price and better than planned PGM prices are all factors contributing to value enhancements for the existing mine and has made the significant expansion project more robust.
Avgold � costs are being well contained and its major new gold mine, Target, has been commissioned ahead of schedule and within budgeted cost with lower US dollar operating costs now possible.
The value of the low-risk Two Rivers project is more robust and shows considerable upside.
In addition, 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 a small number of shares in Avgold has reduced planned gearing and interest charges. The Group balance sheet remains strong with cash on hand, as at the date of this announcement, of nearly R500 million, which is expected to increase materially by the end of the financial year.

Despite the write-down, the Board is confident that the value being created by a weaker rand and improved operating performances in its South African operations will more than offset this decrease in value.

Ebrahim Takolia
General Manager, Investor Relations