Gross sales revenue decreased by R5.4 billion or 22% to R19.53 billion. R4.33 billion of the decrease in gross revenue was due to lower sales volumes and R1.11 billion was due to lower average realised prices. Refined platinum sales for the six months ended 30 June 2012 decreased by 21% to 967,400 ounces compared to the first half of 2011. This was due to lower refined platinum production volume, which declined by 13% as a result of operational difficulties experienced upon the restart of the converter plant post annual maintenance. Although we experienced challenges in our processing operations, the performance of our underground mines improved. Equivalent refined platinum production increased by 1% year-on-year to 1.18 million ounces in the first half of 2012 while labour productivity improved by 11% to 6.54m2 over the same period.

Acting Chief Executive Officer (CEO) Bongani Nqwababa said: “While we are not content with the financial performance, we are satisfied to report an improved operational performance, particularly from our underground mines. Against the backdrop of operational and equipment challenges at the converter plant, potential labour unrest linked to the formation of a new union, safety related stoppages and operational difficulties at Amandelbult concentrators, we have increased our equivalent refined platinum production and improved our labour productivity during the first half of 2012. Our low cost operations, Mogalakwena and Unki, continue to deliver strong operational performances.

I am, however, deeply saddened that 5 of our employees lost their lives during the first half of 2012. We extend our sincerest condolences to their families, friends and colleagues. We wish to assure everyone involved that we regularly remember those who have died at work and work hard to ensure that we learn from every death. We have thoroughly investigated each fatality, to ensure that we will prevent the same type of incident in future. We are continuing to work with Government and our workforce to implement more effective means of addressing major risks and non-compliance to standards. The journey to zero harm remains our key strategic objective.”

Anglo American Platinum believes that global platinum supply is likely to exceed demand in the short term. There is, however, potential for further reduced supply from South Africa, possibly coupled with improved sentiment and increased investment demand, which could move the market into balance. The current depressed price has reduced operating margins and consequently capital investment in sustaining current and increasing future production has reduced significantly. While the market may be in surplus in the short term, we believe that global demand growth will not be matched by supply growth with material deficits likely in the medium to long term. Anglo American Platinum, with its superior asset base in terms of extent and reef type, is well positioned to adjust project prioritisation and scheduling to match future demand.

Acting CEO Bongani Nqwababa said: “Although we believe that the longer term supply demand outlook for the platinum business remains attractive, the short term operating environment remains difficult. The rand basket price is under pressure due to the weaker global economic environment, mining inflation has remained well above the South African consumer price index, labour unrest linked to the formation of a new union has presented new challenges and safety related stoppages remain a challenge for some of our peers.

While the portfolio review, aimed at delivering superior returns through the cycle, is continuing and will be completed by the end of the year, Anglo American Platinum management is targeting a number of areas of short-term action in response to market conditions. We have taken swift and disciplined measures to preserve our balance sheet position in light of the challenging environment. We, together with our joint venture partner, have placed Marikana mine on care and maintenance. We have also reduced our capital expenditure target for 2012 by a further R700 million to up to R7.3 billion (from an original R9.0 billion). In order to ensure organisational effectiveness and efficiency, the company has also embarked on a programme to review overhead structures and costs across the entire organisation. Our safety improvement plan will ensure that we continue to demonstrate improvements on our journey to zero harm.”

Our review of our marketing and commercial strategy has identified numerous opportunities to better match our product offering to the needs of current and potential customers. We expect to see incremental benefits develop over the next 2 years.

In February, we guided the market that we would be targeting reduced refined production levels of between 2.5 and 2.6 million ounces of platinum for 2012, dependent on market conditions, and down from previous guidance of 2.7 million ounces of platinum. As a result of further market deterioration, we are reducing our refined production target for 2012 further to between 2.4 and 2.5 million platinum ounces, but will continue to monitor market conditions closely with a view to reacting to further soft market demand or take advantage of any upturns in demand in the short-term.

As highlighted in February, the unit cost guidance for 2012, of between R14, 000 and R14, 500 per equivalent refined platinum ounce, was based on production levels of 2.6 million ounces of platinum. Given the high fixed cost nature of the business and ongoing input cost inflation, offset by cost-cutting efforts by management highlighted above, we believe that unit cash costs for the full year will be able to be contained to R15,000 per equivalent refined platinum ounce, taking into account the lower production levels guided above.

Johannesburg, South Africa
23 July 2012