www.assmang.co.za Annual Report 2011 www.assmang.co.za Contents 2 Group profile 2 Forward looking statements 2 Salient features 3 Administration 4 Location of operations 5 Mineral Resources and Reserves 16 Corporate governance and responsibility 17 Five-year review 18 – 55 Annual financial statements 1 Annual Report 2011 Group profile Assmang Limited (“Assmang”), a company incorporated in the Republic of South Africa (Company registration number 1935/007343/06) and its joint venture and subsidiary companies (“Group”). The company mines manganese at Black Rock Mine and iron ore at Beeshoek and Khumani mines in the Northern Cape province and chrome ore at Dwarsrivier Mine in the Mpumalanga province. The company also produces manganese alloys at its works at Cato Ridge in the KwaZulu-Natal province, and chrome alloys and manganese alloys at its works at Machadodorp in the Mpumalanga province. Cato Ridge Alloys (Proprietary) Limited, a joint venture between the company and Mizushima Ferroalloys Company Limited (40%) and Sumitomo Corporation (10%), both of Japan, produces refined ferromanganese at Cato Ridge Works. Incorporated in 1935, the Group employs 5 716 (2010: 4 892) permanent employees and operates as three divisions, namely iron ore, manganese and chrome. Assmang is controlled jointly by African Rainbow Minerals Limited and Assore Limited, which each hold 50% of the issued share capital of the company. Both shareholders are listed on the JSE Limited (“JSE”). The bulk of the Group’s production is exported to the Far East, Europe and the United States of America. In addition to the export of ore, manganese ore is also transferred to the works at Cato Ridge and Machadodorp where it is used in the production of manganese alloys. Assmang’s Dwarsrivier Chrome Ore Mine near Steelpoort supplies ore to the company’s Machadodorp Works for the production of chrome alloys. Forward looking statements Certain statements included in this report may constitute “forward looking statements”. Inevitably such forward looking statements involve known and unknown risks and uncertainties and other factors that may cause the actual results, performance or achievements of the Group to be materially different from future results, performance or achievements expressed or implied by those forward looking statements. The business of the Group is subject to fluctuations in commodity prices, exchange rates and interest rates as well as the risks involved in mining and smelting operations. While every effort is made to anticipate and counter adverse impacts of these risks on the Group’s performance, it is not possible to guarantee the outcome of future results. Salient features Year ended Year ended 30 June 30 June 2011 2010 R’000 R’000 Turnover 19 074 942 12 869 713 Profit for the year 5 786 808 2 732 222 Dividends paid 2 000 000 1 000 297 Capital expenditure 4 150 047 3 336 315 Annual Report 2011 2 Administration DIRECTORS MANAGEMENT AT THE OPERATIONS Desmond Sacco – Chairman Iron ore division A J Wilkens – Deputy Chairman W S Grobbelaar, Divisional Manager M Arnold* P Becker, Senior General Manager – Khumani G C Butler*‡ M A Oosthuizen, Senior General Manager – Beeshoek C J Cory* W Smith, Financial Manager P C Crous Manganese division A Joubert L Meyer, Divisional Manager S M Langa L S Matsimela Manganese ore P E Sacco S Letaba, Senior General Manager A D Stalker‡ M Smit, Financial Manager J C Steenkamp Manganese alloys ALTERNATE DIRECTORS Ms P Thwala, Senior General Manager A Santhilal, Financial Manager W M Gule P G W Henderson Chrome division F H Kalp J Meintjies, Divisional Manager A McAdam‡ F T Olivier Chrome ore B H van Aswegen F Uys, Senior General Manager J C Venter R Burger, Administrative Manager G R Pieterse Chrome alloys G C T Karsten A Mcleod, Senior General Manager B R Mashiane (Mrs) L R Wohlberg, Financial Manager R Avenant-Buys (Mrs) * Audit Committee AUDITORS ‡ British Ernst & Young Incorporated MANAGEMENT SERVICES African Rainbow Minerals Limited BANKERS 29 Impala Road The Standard Bank of South Africa Limited Chislehurston, 2196 ABSA Bank Limited South Africa PO Box 786136 REGISTERED OFFICE Sandton, 2146 African Rainbow Minerals Limited South Africa 24 Impala Road Telephone: +2711 779 1300 Chislehurston, 2196 Telefax: +2711 779 1318 South Africa PO Box 782058 TECHNICAL ADVISERS Sandton, 2146 African Rainbow Minerals Limited South Africa African Mining and Trust Company Limited Telephone: +2711 779 1300 Telefax: +2711 779 1318 SOLE SELLING AGENTS AND DISTRIBUTORS Ore & Metal Company Limited RESPONSIBILITY OF THE FINANCIAL STATEMENTS Assore House The financial statements are prepared under the supervision of 15 Fricker Road George Karsten, Executive Finance Illovo Boulevard, 2196 South Africa COMPANY SECRETARY Private Bag X03 African Rainbow Minerals Limited Northlands, 2116 South Africa Telephone: +2711 770 6800 Telefax: +2711 268 6440 3 Annual Report 2011 Location of operations Cr Chrome Mine Fe Iron ore Processing plant Mn Manganese City/Town FeCr Ferrochrome Export chain FeMn Ferromanganese Dwarsrivier Johannesburg Machadodorp Black Rock Nchwaning Gloria Kathu Khumani Cato Ridge Richards Bay Beeshoek Postmasburg Durban Saldanha Bay East London Cape To wn Port Elizabeth Annual Report 2011 4 Mineral Resources and Reserves COMPETENT PERSON’S REPORT ON MINERAL MEASURED AND PROVED AND RESOURCES AND MINERAL RESERVES 2011 CHROMITE INDICATED PROBABLE This report is issued as the annual update of Mineral Resources Mineral Resources Mineral Reserves and Reserves to inform shareholders and potential investors of the mineral assets held by Assmang Limited. Mt Cr2O3% Mt Cr2O3% Salient features F2011 DWARSRIVIER 48,77 39,05 33,44 35,69 Khumani Waste stripping at King progressed in preparation for production. General statement Assmang’s method of reporting Mineral Resources and Mineral Beeshoek Production mainly for the domestic market came Reserves conforms to the South African Code for Reporting from off-grade stockpiles processed through the Mineral Resources and Mineral Reserves (“SAMREC Code”) jig plant. and the Australian Institute of Mining and Metallurgy Joint Ore Nchwaning Investigations initiated to model the full package Reserves Committee Code (“JORC Code”). of the manganese seams in 0,5 metre layers. The convention adopted in this report is that Mineral Resources Gloria Measured and Indicated Mineral Resources are reported inclusive of that portion of the total Mineral Resource increased by 79% to 92,23 million tonnes at 37,8% converted to a Mineral Reserve. Resources and reserves are Mn as a result of remodelling which incorporated quoted as at 30 June 2011. External consulting firms audit the 42 new additional surface boreholes. The Inferred resources and reserves of the Assmang operations on a three- to Resource decreased to 84 million tonnes. four-year cycle basis. Dwarsrivier Surface drilling of 52 boreholes to upgrade the Underground resources are in situ tonnages at the postulated Mineral Resource confidence in the southern mining width, after deductions for geological losses. Underground portion of the mine completed. Remodelling to Mineral Reserves reflect milled tonnages, while surface Mineral commence when all assay results are received. Reserves (dumps) are in situ tonnages without dilution. Both are quoted at the grade fed to the plant. Open-pit Mineral Resources F2011 MINERAL RESOURCES/RESERVES SUMMARY are quoted as in situ tonnages and Mineral Reserves are tonnages MEASURED AND PROVED AND falling within an economic pit-shell. MANGANESE INDICATED PROBABLE The evaluation method is generally Ordinary Kriging with Mineral Resources Mineral Reserves mining block sizes ranging from 10 x 10 metres to 100 x 100 Mt Mn % Fe % Mt Mn % Fe % metres to 250 x 250 metres in the plan view. The blocks vary in thickness from 2,5 to 10 metres. The evaluation process is fully NCHWANING computerised, generally utilising the Datamine software package. No 1 Seam 126,69 44,9 8,6 106,28 44,9 8,6 The Mineral Resources and Mineral Reserves are reported on No 2 Seam 180,80 42,4 15,5 – – – a total basis regardless of the attributable beneficial interest GLORIA that Assmang has on the individual projects or mines. When the attributable beneficial interests on a mine or project is less than No 1 Seam 92,23 37,8 4,9 68,25 37,8 4,9 100%, the actual percentage of the attributable interest is specified. No 2 Seam 29,40 29,9 10,1 – – – Maps, plans and reports supporting resources and reserves are BLACK ROCK available for inspection at Assmang’s registered office and at the No 1 Seam 43,60 40,6 18,1 – – – relevant mines. No 2 Seam 26,81 38,6 19,8 – – – In order to satisfy the requirements of the Minerals and Petroleum Resources Development Act (“the Act”), Assmang’s operations will have to obtain new mining rights for all properties required MEASURED AND PROVED AND to support the planned operations over the next 30 years. The IRON ORE INDICATED PROBABLE Act was effective from 1 May 2004 and the new rights must be obtained within five years from then. Certain operations have Mineral Resources Mineral Reserves already had their conversions approved while some are still in Mt Fe % Mt Fe % various stages of application. BEESHOEK 118,97 63,75 55,13 64,04 Refer to the directors’ report for a summary of stages of completion. KHUMANI Rounding of figures may result in computational discrepancies on Bruce 226,97 64,44 196,96 64,43 the Mineral Resource and Reserve tabulations. King 376,46 64,51 348,40 64,60 5 Annual Report 2011 Mineral Resources and Reserves (continued) Definitions exploration, sampling and testing of material from locations such as The definitions of Mineral Resources and Reserves, quoted from outcrops, trenches, pits, workings and drill holes. The locations are the SAMREC Code, are as follows: spaced closely enough to confirm geological and grade continuity. A ‘Mineral Resource’ is a concentration or occurrence of material A ‘Mineral Reserve’ is the economically mineable material derived of economic interest in or on the earth’s crust in such form, quality from a Measured or Indicated Mineral Resource or both.