Union North Mine

(managed 85% owned)

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Adam Tendaupenyu


EQUIVALENT REFINED PLATINUM PRODUCTION
(2011: 91.5 koz)
63.7
koz

OPERATING CONTRIBUTION
(2011: R338 m)
-R165m

 

 

      2012  2011 
Safety          
   Fatalities     1 
   LTIFR     1.19  1.31 
Refined platinum production (000 oz)     69.3  98.3 
Operating contribution (Rm)     (165) 338 
Gross profit margin (%)     (22) 11 
Operating free cash flow (Rm)     (209) 339 
Net cash flow (Rm)     (240) 264 
Cash on-mine costs/tonne milled     R625  R483 
Mineral Resources inclusive of Ore Reserves          
   Merensky     7.6 Mt arrow 1.6 4E Moz 
   UG2     37.9 Mt arrow 6.9 4E Moz 
JV partner       
Bakgatla-Ba-Kgafela traditional community     (15%) 

MINE OVERVIEW

Union North Mine is situated in both the Limpopo and the North West provinces of South Africa, 15 kilometres west of the town of Northam, and forms part of the North-western Limb of the Bushveld Complex. It operates under part of a mining right covering a total of 119 square kilometres.

Union North's infrastructure consists of a vertical shaft (Richard Shaft) and of the 1S decline section. This section is serviced by another vertical shaft (Ivan Shaft), for hoisting purposes. The operating depth of the current workings is between 60 metres and 1,500 metres below surface.

The mine extracts mostly UG2 Reef ore, but also produces limited Merensky Reef ore and treats low-grade surface ore and tailings. Three-quarters of Union Mine's underground production is done conventionally (using breast stoping with strike pillars), while hybrid mining occurs at the declines.

Union North's life-of-mine (LoM) extends to 2030, and consists of a Mineral Resource (exclusive of Ore Reserves) of 4.3 4E million ounces and an Ore Reserve of 3.2 4E million ounces. The Mineral Resource and Ore Reserve reported are 85% attributable to Anglo American Platinum Limited (Anglo American Platinum ) and 15% attributable to the Bakgatla-Ba-Kgafela traditional community.

KEY ACHIEVEMENTS

  • Lost-time injury-frequency rate improved.
  • Improved immediately available Ore Reserve position.

OPERATIONAL REVIEW

Regrettably, one employee lost his life at Union North Mine during 2012. The lost-time injury-frequency rate for the mine ended down 9.1% at 1.19 compared with 1.31 in 2011.

The Union North Mine output of equivalent refined platinum ounces decreased by 30.4% to 63,700 ounces between 2011 and 2012. The tonnes milled decreased to 1.73 million tonnes, a reduction of 26% over 2011. The decrease in volumes were caused by the depletion of low-grade surface material sources of 425 kt, the expected decline in Merensky ore mining and the illegal strike which spread over from Rustenburg to Union North Mine during October 2012. The immediately available Ore Reserves ended the year at 18.8 months, some 38% higher than in 2011 following the successful execution of an aggressive drop-raising, ledging and equipping plan. Productivity decreased to 2.6 m2per operating employee, a decline of 19% from the 3.2 m2per operating employee reported in 2011.

Absolute cash on-mine costs were managed very well and decreased by 4% to R1.08 billion. Above-inflation expenses on electricity, wages and other key commodities were offset by lower expenditure on surface material sources and other savings. The cash on-mine cost per tonne milled increased by 29% to R625 per tonne owing to the depletion of low-cost surface sources and lower underground volumes. Consolidated cash operating expenses (costs after allowing for off-mine smelting and refining activities) per equivalent refined ounce rose by 35% to R18,627. The gross profit margin was -22%, down from 11% reported in 2011.

CAPITAL EXPENDITURE

Total capital expenditure decreased to R88 million in 2012 (R129 million in 2011). Stay-in-business capital expenditure amounted to R73 million (R92 million in 2011), while project capital expenditure was R15 million (R37 million in 2011).

Operating free cash flow (cash available after allowing for all direct and allocated indirect operating costs and stay-in-business capital) declined to -R209 million from R339 million in 2011.

OUTLOOK

In the Platinum Review it is proposed that Union North Mine be consolidated with Union South Mine and operations in the old declines section be stopped. Existing operations would continue prior to implementation of the Platinum Review findings.

Union South Mine

(managed 85% owned)

Philip Schoeman


EQUIVALENT REFINED PLATINUM PRODUCTION
(2011: 162.7 koz)
132.0
koz

OPERATING CONTRIBUTION
(2011: R724 m)
-R40m

 

 

      2012  2011 
Safety          
   Fatalities     1 
   LTIFR     1.08  1.31 
Refined platinum production (000 oz)     143.7  174.8 
Operating contribution (Rm)     (40) 724 
Gross profit margin (%)     (10) 15 
Operating free cash flow (Rm)     (87) 712 
Net cash flow (Rm)     (288) 438 
Cash on-mine costs/tonne milled     R884  R765 
Mineral Resources inclusive of Ore Reserves          
   Merensky     76.3 Mt arrow 15.2 4E Moz 
   UG2     135.8 Mt arrow 23.8 4E Moz 
JV partner       
Bakgatla-Ba-Kgafela traditional community     (15%) 

MINE OVERVIEW

Union South Mine is situated in both the Limpopo and the North West provinces of South Africa, 15 kilometres west of the town of Northam, and forms part of the North-western Limb of the Bushveld Complex. It operates under part of a mining right covering a total of 119 square kilometres.

Union South's infrastructure consists mainly of one vertical shaft, namely Spud Shaft, and of a declines section, consisting of three decline complexes. The operating depth of the current workings is between 100 metres and 1,500 metres below surface.

The mine extracts mostly UG2 Reef ore, but also produces limited Merensky Reef ore. Approximately 60% of the underground production at Union South Mine is done by conventional mining at Spud Shaft (using breast stoping with strike pillars), with the remainder being hybrid mining at the declines section (mechanised development with conventional breast stoping and the removal of broken ore by belts).

Union South's life-of-mine (LoM) extends to 2035, and consists of a Mineral Resource (exclusive of Ore Reserves) of 29.0 4E million ounces and an Ore Reserve of 6.5 4E million ounces. The Mineral Resource and Ore Reserve reported are 85% attributable to Anglo American Platinum Limited (Anglo American Platinum ) and 15% attributable to the Bakgatla-Ba-Kgafela traditional community.

KEY ACHIEVEMENTS

  • The mine improved the lost-time injury-frequency rate.

OPERATIONAL REVIEW

Regrettably, one employee lost his life at Union South Mine during 2012. There was, however, a significant improvement in the overall safety performance at Union South Mine with the lost-time injury-frequency rate improving by 18% to 1.08 from 1.31 in 2011.

The solid production performance of the first half of 2012 was hampered by the illegal strikes in the second half of the year and the mine's output of equivalent refined platinum ounces decreased by 19% to 132,000 ounces compared to 162,700 ounces in 2011. The tonnes milled decreased to 2.2 million tonnes, a reduction of 10.6% from 2011 (2.4 million tonnes). The immediately available Ore Reserves ended the year at 18.6 months, a decrease of 12% from the 2011 figure of 21.1 months. Productivity decreased to 4.3 m2 per operating employee per month, declining 12% from the 4.9 m2per operating employee reported in 2011.

Cash on-mine costs were managed well and increased below inflation by 3% to R1.93 billion. The cash on-mine cost per tonne milled increased by 16% to R884 per tonne owing to the lower underground volumes.

Cash operating expenses (costs after allowing for off-mine smelting and refining activities) per equivalent refined ounce rose by 26% to R16,305. The gross profit margin was -10%, down from the 15% reported
in 2011.

CAPITAL EXPENDITURE

Total capital expenditure decreased to R293 million in 2012 (R399 million in 2011). Stay-in-business capital expenditure amounted to R126 million (R190 million in 2011), while project capital expenditure was R167 million (R209 million in 2011).

Capital work in execution at the Declines (4B, 4 South, 3 South and 5 South) was stopped on 31 December 2012 owing to capital constraints, and clean-up operations will continue in the areas where already established. The remaining areas between Spud Shaft and the Declines will be extracted from Spud Shaft. A revision of 5 South Decline will be undertaken during 2013 to establish possible future extraction potential. The Union Deeps project targets the Merensky and the UG2 Reef horizons below the 27-level infrastructure serving the current Spud and Richard operations. The study process is at a concept-study phase.

Operating free cash flow (cash available after allowing for all direct and allocated indirect operating costs and stay-in-business capital) declined to -R87 million from R712 million in 2011.

OUTLOOK

In the Platinum Review it is proposed that Union South Mine be consolidated with North Mine. Existing operations would continue prior to implementation of the Platinum Review findings.