Results for the six months ended 31 December 2000 Earnings up 92%

1 March 2001

Earnings increase by 92% to R146 million
Headline earnings increase 38% to R134 million
Assmang earnings increase by 194% to R106 million million
Nkomati’s profit before tax up 198% to R137 million
Chambishi Metals’ commissioning process well underway
Target gold mine ahead of schedule and significant new resources identified
Johannesburg, 1 March 2001: A strong operating performance from the ferrous metals division and the Nkomati mine, coupled with a weak South African rand, increased Anglovaal Mining Limited’s (Avmin) earnings by 92 per cent to R146 million (31 December 1999: R76 million) for the half-year ended 31 December 2000, despite average commodity prices for most products being lower in US dollar terms. It should be kept in mind that earnings for the six months ended 31 December 1999 included diamond royalty income from The Saturn Partnership that was sold during the second half of the last financial year.

Headline earnings, which excludes the surplus from the sale of investments during the period, rose to R134 million (R97 million). Earnings per share rose 88 per cent to 135 cents (72 cents per share) and headline earnings per share were higher at 124 cents (91 cents per share).

Review of operations
Supported by a favourable US$-rand exchange rate and a stringent cost control programme, The Associated Manganese Mines of South Africa Limited (Assmang) reported a 194 per cent increase in earnings to R106 million (R36 million) for the period. With higher unit sales prices and lower costs, margins were an important feature of Assmang’s performance. Net operating profit more than doubled to R233 million (R111 million). Sales volumes of manganese ore rose to (0,6 million tons (0,5 million tons), but iron ore sales declined to 1,8 million tons (2 million tons). Sales of manganese alloys decreased slightly to 85 000 tons from 88 000 tons, while chrome alloys were lower at 45 000 tons (49 000 tons).

The new Dwarsrivier opencast chrome mine and beneficiation plant has been commissioned and the supply of ore to its chrome alloys division has commenced. The new R517 million shaft complex at the Nchwaning manganese mine is on track for its scheduled opening in late 2003. It is anticipated that this strong performance is expected to continue with second half results to 30 June 2001 likely to match those of the first half.

The Nkomati nickel mine had an exceptionally good half-year with final sales tonnages of 2 292 tons (1 710 tons) of nickel and 1 284 tons (882 tons) of copper. The increased mining tonnages, a weaker South African rand and strong platinum group metal (PGM) prices (Nkomati sold about 18 670 ounces of PGMs during the period) all resulted in Nkomati’s profit before taxation surging to R137 million (R46 million). Nkomati has now achieved full tax paying status and its total earnings amounted to R96 million (R32 million).

An initial feasibility study on expanding the current Nkomati mine complex by the open pit mining of

150 000 and then 200 000 tons per month was completed last year. The joint venture partners have reviewed this study favourably, but have asked the project team to investigate increasing the underground mining tonnages to 75-80 000 tons per month in addition to the open pit tonnages. This revised study is expected in September 2001.

The Chambishi Metals Plc toll-refining business experienced a difficult half-year. This was mainly due to lower concentrate grades and quantities of feed material from third parties. The plant produced 1 500 tons (976 tons) of cobalt and 5 840 tons (3 580 tons) of copper for its clients. Chambishi Metals received an average cobalt price of US$11,47/lb for the period and the plant reported a net operating loss after taxation of R21 million (nil) for the half-year.

Chambishi Metals has virtually completed the new and expanded facility to treat its 20 million ton surface slag deposit. Commissioning of the feed preparation plant commenced in October 2000. By the end of January 2001 the first alloy was tapped from the furnace. The remaining construction and commissioning activities focussed on the downstream leach plant are on schedule, with the first saleable metal production from slag due in March 2001.

A higher gold price and well maintained costs helped reverse Avgold Limited’s R23 million headline earnings loss in the six months ended 31 December 1999 into a R11,5 million profit for the comparable six months in 2000. Gold sales from operations, now being derived exclusively from the ETC mining complex, totalled 1 432kg (3 527kg) at a cash cost of US$249/oz (US$296/oz). During the last quarter of the six months period, Avgold achieved a cash cost of US$222/oz, a trend that is continuing into the second half of the year. The average rand gold price received for the period was higher at R73 129/kg (R60 787/kg), or US$314/oz (US$310/oz). The rate of development advance by mine crews at the new Target mine continues ahead of schedule and plan.

Avgold successfully completed a rights issue at the end of October 2000 to provide R500 million of funding for the new Target mine. The remaining funds required for the completion of Target will be financed by a five-year facility of R700 million made available in US dollars and rands, which has been signed.

The indicated and inferred total resource of the Paradise area, some 500m to the north of Target, is now 13,8 million ounces (from a previous calculation of 7,2 million ounces) at an average grade of 10.02g/t (previously 7.37g/t). The main increase is in the Elsburg Reefs, which are within 2 500m of surface. These results suggest that the Eldorado Fan extends further north than previously anticipated. A pre-feasibility study has been completed on this area to assess the viability of increasing Target’s production from 350 000 ounces of gold a year to 500 000 ounces. An important feature of this is that Target’s life of mine could extend from the current 13 years to over 40 years.

Acquisition of ISCOR shares
During December 2000 and January 2001, Avmin acquired a total of 35 293 300 (13,7 per cent) ordinary shares in Iscor Limited for a cash consideration of R490,6 million, which was funded from existing cash resources. An alliance has been formed with the Industrial Development Corporation of South Africa Limited to pursue strategies for unlocking value in Iscor.

Prospects for the remainder of the year
Operating results for the current half-year to 30 June 2001 are expected to show a slight improvement over the first six months period. This will be due to continued strong performances from the ferrous metals division and the Nkomati mine, maintaining the positive momentum of Avgold’s ETC mine, and the commissioning to full production, over the next few months, of the new facility at Chambishi Metals. However, overall earnings over the current six months to 30 June 2001 are expected to be slightly reduced due to lower interest earnings.

Julian Gwillim
General Manager, Investor Relations