Overview – Q2 2021 performance against prior period Q2 2020

• Safety performance – no fatal incidents in H1.
• Total PGMs production (expressed as 5E+Au metal-in-concentrate) increased by 59% (vs. Q2 2020) to 1,057,900 ounces, due to a strong recovery in production despite the ongoing effect of the Covid-19 pandemic.
• Own-managed mines PGMs production increased by 59% to 601,500 ounces, due to a strong recovery in production from all operations compared to the prior period, which was materially impacted by national lockdowns to curb the spread of Covid-19.
• Refined PGMs production (owned production, excluding tolling) increased by 233% to 1,353,700 ounces, due to operational stability following the rebuild and recommissioning of the ACP in November 2020, which performed ahead of plan.
• PGMs sales volumes (from production, excluding sales from trading) increased by 162% to 1,437,100 ounces in line with the increase in refined production, and supplemented by a drawdown from refined inventory, following robust demand.
• Full year guidance for M&C PGM production is tightened to between 4.2 - 4.4 million ounces, as a result of the lower third-party concentrate receipts and the continuing impact of Covid-19 on operations, while refined PGM production is revised up due to proven operational stability, to between 4.8 - 5.0 million ounces.

Natascha Viljoen, CEO of Anglo American Platinum, said:

“We have delivered a strong recovery in mined and refined production, though our operations continue to face ongoing constraints due to the Covid-19 pandemic as we strive to help keep our people and communities safe. Although we had no work-related fatalities in the first half of the year, we are disappointed with an increase in injuries and plans are in place to continue safety improvements and ensure a sustained turnaround.

“PGMs production increased by 59% compared to Q2 2020, with a solid performance from own-managed operations. Our refined production increased by 233%, as processing operations proved their operational stability following the rebuild and recommissioning of the ACP in November 2020. Sales volumes increased by 162% due to the increase in refined production and was supplemented by the drawdown of platinum and palladium from refined inventory, as we saw robust demand for these metals. We have tightened our M&C production guidance to between 4.2–4.4 million PGM ounces due to lower third-party concentrate receipts and the ongoing impact of Covid-19 on production. However, due to the proven operational stability of our processing operations, we have revised our refined production guidance up, to between 4.8–5.0 million PGM ounces.

While our operations have not been directly affected by the recent unrest in South Africa, we have stringent risk management procedures incorporated into our response plans. Risks to our supply chain are being monitored and we continue to work on ways to support our communities that may feel the knock-on impacts of the disruptions caused by the unrest.”

Review of the quarter

Safety

Anglo American Platinum reported no fatalities during the first half at its own-managed operations or at its non-managed joint operations.

The Total Recordable Case Frequency Rate (“TRCFR”) per million hours at managed operations disappointingly regressed to 2.93 per million hours, compared to 1.71 per million hours in the prior period. The disruption caused by Covid-19 has undoubtedly had an effect. Increasing infection rates towards the end of the quarter from the third wave in South Africa have been significant within our mining and front-line supervisory employees, leading to greater levels of absenteeism and is impacting planning. These challenges are reassessed on an ongoing basis and plans adjusted to remain effective to ensure a sustained turnaround in safety and production performance.

Total PGM production

Total PGM production increased by 59% to 1,057,900 ounces (against prior period Q2 2020), with platinum production 59% higher at 488,300 ounces, and palladium production increasing by 46% to 334,400 ounces. The improved performance was due to a strong recovery from the prior period which was materially impacted by Covid-19. The Covid-19 pandemic continues to have an impact on working conditions, but strict protocols have been maintained, limiting Covid-19 impacts in the period to 7,200 PGM lost ounces, compared to the prior period where Covid-19 impacted production by 521,600 PGM lost ounces.

PGM production from own-managed mines

Total PGM production from own-managed mines increased by 59% to 601,500 ounces (platinum production increased by 65% to 274,500 ounces, while palladium production rose by 40% to 221,700 ounces).

Mogalakwena had a solid operating performance, with PGM production increasing by 11% to 308,400 ounces (platinum increased by 12% to 131,000 ounces and palladium production increased by 11% to 142,900 ounces), owing to higher concentrator throughput, and no Covid-19 impact on production.

Amandelbult had a strong recovery, with PGM production increasing by 270% to 185,300 ounces (platinum increased by 273% to 94,400 ounces and palladium production increased by 267%, to 42,900 ounces). Despite the recovery in production, Amandelbult does continue to be impacted by higher numbers of positive Covid-19 infections, and therefore increased absenteeism as employees recover.

Mototolo PGM production increased by 194% to 59,900 ounces (platinum production increased by 191% to 27,600 ounces and palladium increased by 197% to 17,200 ounces). The increase was mainly due to the impact of Covid-19 on production in the prior period. Production was also partially offset by concentrator maintenance required to integrate new infrastructure as part of the debottlenecking project that was completed at the end of Q1 2021.

Unki PGM production increased by 53% to 47,900 ounces (platinum production increased by 55% to 21,500 ounces and palladium production increased by 55% to 18,700 ounces), owing to higher concentrator throughput and recovery, with no Covid-19 impact on production.

PGM production from joint operations (50% own-mined production and 50% purchase of concentrate)

PGM production from Joint operations increased by 112% to 215,600 ounces (platinum production increased by 114% to 97,000 ounces and palladium production increased by 113% to 63,000 ounces). The increase was mainly due to the impact of Covid-19 on production in the prior period.

Kroondal PGM production increased by 110% to 146,800 ounces (platinum and palladium production increased by 77% to 70,000 ounces and 37,200 ounces respectively).

Modikwa PGM production increased by 116% to 68,600 ounces (platinum production increased by 118% to 27,000 ounces and palladium production increased 115% to 25,800 ounces respectively).

Purchases of PGM concentrate from third parties

Purchase of PGM concentrate (POC) from third parties increased by 31% to 240,900 ounces (platinum POC increased by 22% to 116,800 ounces and palladium POC increased by 24% to 49,700 ounces). The increase was mainly due to the impact of Covid-19 on production in the prior period.

Refined PGM production

Refined PGM production (from owned production, excluding tolling) increased by 233% to 1,353,700 ounces. Refined platinum production increased by 290% to 625,800 ounces and refined palladium production increased by 190% to 427,500 ounces, with the ratio of metal in the pipeline returning to more normal ratios. The strong performance reflected the operational stability in the ACP, following the completion of the rebuild and recommissioning of the Phase A unit in November 2020. The ACP continued to perform ahead of plan and was able to smelt more tonnes from the Polokwane smelter.

The ACP Phase B rebuild is on schedule for completion in H2 2021, subject to any further Covid-19 impacts. The Phase B unit will only be switched over from the Phase A unit and recommissioned into production in Q1 2022, in line with scheduled maintenance.

Toll refined PGM production increased by 60% to 153,800 PGM ounces.

PGM sales volumes

PGM sales volumes (excluding trading) increased by 162% to 1,437,100 ounces, as a result of higher refined production, supplemented by a drawdown in platinum and palladium from refined inventory due to strong demand for the metals. Platinum sales volumes increased by 239% to 662,500 ounces and palladium sales volumes increased by 187% to 462,100 ounces.

PGM sales volumes from trading decreased 45% to 116,100 ounces, as trading activity normalised. Sales from trading activity were abnormally high in Q2 2020 to manage supply of metal to customers, following the impact of Covid-19 on production and the temporary closure of the ACP.

The Q2 2021 average realised basket price of $3,407 per PGM ounce reflects strong prices, particularly for rhodium, iridium, and ruthenium.

Full-year guidance

PGM production guidance (metal-in-concentrate) is tightened from 4.2‒4.6 million PGM ounces, to between 4.2‒ 4.4 million PGM ounces, due to lower third-party receipts and the continuing impact of rising Covid-19 infection rates on production.

Refined PGM production (excluding tolling) guidance has been tightened from 4.6–5.0 million PGM ounces, to between 4.8‒ 5.0 million PGM ounces as a result of proven operational stability in the processing assets. However, refined production is subject to rising infection rates from Covid-19, as well as potential Eskom power disruptions in the second half of the year.

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Sponsor:
Merrill Lynch South Africa (Pty) Ltd t/a BofA Securities