Broker Note, Aquarius Platinum, 08/03/2007 (Seymour Pierce)

8/15/2019 Broker Note, Aquarius Platinum, 08/03/2007 (Seymour Pierce)

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Year end

30 June

Sales

(US$m)

Pre-tax

(US$m)

Normalised

net (US$m)

EPS

(US¢)

PER

(x)

DPS

(US¢)

Yield

(%)

EV/Sales

(x)

EV/EBITDA

(x)

2006A 431.5 192.1 85.6 100.9 26.9 24.0 0.9 5.1 9.52007E 648.6 349.1 143.0 169.0 16.1 59.1 2.2 3.4 5.62008E 751.0 437.3 186.0 219.7 12.4 109.9 4.0 2.9 4.6

Source: Seymour Pierce Limited full year forecasts

C o m p a n y N o t e

8 M a r c h 2 0 0 7

M e t a l s & M i n i n

g

Aquarius PlatinumGoing platinum

Aquarius Platinum has grown quickly to become the fifth largest

platinum producer in the world. The company has four operations in

South Africa and one in Zimbabwe and expects attributable production

to grow by over 50% in the next three years. With metal prices

expected to remain above long-term historic averages, Aquarius

should generate substantial cash flows enabling the company to make

acquisitions, or become a significant dividend payer. As we believethat the group’s expansion prospects are not fully reflected in the

current share price, we initiate coverage with a Buy recommendation.

Thanks to record platinum group metal output of 277,156oz and strong

metal prices, Aquarius has seen half-year profits to December 2006 triple to

US$85.4m, all but equalling the profit for the full financial year 2006. We

expect the strong financial performance to continue through the second half

of FY2007 and for FY2008 to bring further record earnings as production

increases.

Aquarius is well underway with its aggressive growth strategy at its

existing operations. This will see attributable production rise by 57% to justover 700,000oz of platinum, palladium, rhodium and gold in the next three

years.

The company has reiterated its ongoing efforts to identify a suitable

acquisition target, but opportunities within the South African platinum

sector are limited and expensive. However, ongoing strong metal prices are

changing the perspective on the value of these opportunities. If a suitable

target can not be identified, the company has pledged to return excess cash

to shareholders.

We believe that the shares still have considerable upside potential

despite the marked rise in recent months, coinciding with strong half-year numbers. We have valued the company using both our long-term forecasts

for metal prices and the current spot prices. Overall, our valuations range

between £14.29 and £21.17/share. From this range, we take £17.86/share

as our target price. BUY.

BUY

1465p

LSE AQP.L

No of shares (m) 84.57

Market cap (£m) 1,239.0

Net cash (£m) 54.13

Enterprise value (£m) 1,184.87

(%) 1m 3m 12m

FTA relative +6.4 +28.5 +102.7

12 month high/low (p) 1585.0/602.0

Next news

Q3 FY2007 production results

Business

Platinum mining in Southern Africa

www.aquariusplatinum.com

Price and price relative (2y)

AQUARIUS PL ATINUM 8/3/07

M A M J J A S O N D J F M A M J J A S O N D J F

200

400

600

800

1000

1200

1400

1600

PRICE

PRICE REL. TO FTSE ALL SHARE - PRICE INDEXSource: DATASTREAM

Source : Datastream

ContactsCharles KernotResearch Analyst020 7107 [email protected]

Asa Bridle Research Analyst020 7107 [email protected]



Aquarius Platinum 8 March 2007

Seymour Pierce Research 2

TABLE OF CONTENTS

Investment thesis 3

The facts of the case 3

Overview 3Valuation 3

Recommendation 3

Valuation 4

Valuation 4

Summary 4

Fundamental valuation 4

Relative valuation 6

Peak valuation 6

Company strategy 8Growing production 8

The strategy 8

Operations 10

Where the magic happens 10

South African production 10

Zimbabwean production 15

The PGM market 17

Where does it all go? 17

Key drivers in the PGM markets 17

Financials 21

Reality check 21

Production estimates 21

Earnings 23

Cash flow estimates 26

Balance sheet 27




3 Seymour Pierce Research

INVESTMENT THESIS

The facts of the case

In 2006, Aquarius Platinum (Aquarius) achieved attributable production

of the major platinum group elements, platinum, palladium, rhodium

and gold (3E PGE + Au) of 448,000oz. An aggressive growth strategy is

in place and in the next three years we expect output from its five

operations to increase by 57% to just over 700,000oz. Strong demand

for PGMs is expected to maintain prices above historic averages in

coming years, making Aquarius a significant generator of cash. We

value the company at £17.86/share and recommend the stock as a Buy.

Overview

Aquarius’ success is the result of its focus on a specific style of mining

operations and an intelligent partnering strategy with other major producers.

The company has tended to favour relatively small mines, which allow a high

degree of mechanisation. This is in contrast to the traditional, labour-

intensive mining seen elsewhere in the South African platinum industry.

Furthermore, the company has chosen to avoid the substantial financial and

technical barriers associated with downstream processing and sales.

Partnership agreements have been struck with both Anglo Platinum and

Impala Platinum in South Africa, which has resulted in considerable

extensions to the life of two of the company’s major operations. In South

Africa, full compliance with black economic empowerment requirements of the new Mining Act (2002) has been achieved far in advance of the

legislation’s deadlines.

Not only is the company benefiting from strong prices for its headline

products, the major PGMs and gold, but also for the minor PGMs, such as

ruthenium and iridium. The iridium price has risen by 236% since last

January, whilst ruthenium has increased ten-fold in the same period.

Furthermore, the company has notable exposure to nickel, copper and

cobalt which are also found in the orebodies.

ValuationWe have valued the company based on both our own, conservative long-

term metal price forecasts and current spot prices, and provide a range of

valuations, which would apply at differing times in the metal price cycle. We

have also compared the company to Lonmin, another London-listed PGM

producer with South African operations. We believe the key valuation range

lies between £14.29/share and £21.17/share.

Recommendation

Aquarius has a significant and growing production base in a strong suite of

metals. The company is already well on the way to building a substantial

treasury for acquisitions, exploration or dividend payment. We value thecompany at £17.86/share and initiate our coverage with a buy

recommendation.

The company favours smaller, highly

mechanised mining opportunities

Established partnerships with other major

producers have extended the lives of

operations

BEE compliance achieved

Good exposure to high valued minor PGMs

and base metals

We value the company between

£14.29/share and £21.17/share

We set a target price of £17.86 and

recommend a buy





VALUATION

Valuation

Aquarius is now a well established and significant PGM producer. The

company’s share price has increased substantially in the past twelve

months matching developments at its operations and strengthening

metal prices. We have applied three methodologies to valuing the

company, which involve both fundamental and relative valuation of the

producing assets. We have also attempted to highlight the variation in

valuation that might be expected during a PGM price cycle. Overall, our

valuations for the peak of the cycle range between £14.29/share and

£21.17/share. We take the mid-point as our target price at £17.86/share.

Summary

Assuming that 2007 will represent the peak of the current cycle, our

fundamental valuation implies a target price of £14.28p per share, which

represents a premium to the current price. Our relative valuation also implies

some upside, whilst our peak valuation, using current spot prices extended

over the longer term, gives a cycle peak value of £21.17.

Fundamental valuation

Our fundamental valuation of Aquarius looks at the value of the company

based on long term metrics. PGM prices are a key factor, and in general

terms, we expect the major PGM prices to peak in 2007 before easing to the

bottom of the current cycle in 2010. Prices should then climb steadily for theremainder of the forecast period as the next cycle begins. More detail of our

PGM and base metal price forecasts can be found later in the note, but we

regard these estimates as reasonably conservative.

Foreign exchange must be regarded as the other key factor for Aquarius,

with the majority of costs in South African Rand and Zimbabwean dollars

and metal sales in US dollars. South African producers have benefited from

a weakening of the rand in recent times, which has lowered costs in relative

terms. Our forecasts assume a continuation of this trend over the forecast

period. The hyperinflationary environment in Zimbabwe has led to a series of

devaluations against the US dollar in recent years. Future, relative

movements in the currency are hard to forecast, but we believe costs at thecompany’s Zimbabwean operations in US dollar terms should be

manageable.

The matrix below calculates the valuation of Aquarius on a number of

different bases – in order to generate indications of its peak, trough and

average share prices over the course of a platinum cycle. The multiples are

set in line with those exhibited historically. The discounted cash flow and

price/book valuations also reflect minimum levels for the shares, in order to

reflect takeover potential of the stock. It should be noted that the cash flow

model only includes those funds due to Aquarius from its South African

subsidiary as governed by its stake in the subsidiary. This is set to changeassuming the group’s BEE transaction is completed but, even though

ownership of the subsidiary is set to increase, there are likely to be more

shares in issue, reducing per share valuations back to current levels.

Our fundamental valuation is based on our

long term PGM price forecasts…

….and long term Rand-dollar exchange rate

assumptions

We offer potential valuations at various

points in the metal price cycle





South African Rand to US$ spot exchange rate

5

5.5

6

6.5

7

7.5

8

8.5

Feb 05 Apr 05 Jun 05 Aug 05 Oct 05 Dec 05 Feb 06 Apr 06 Jun 06 Aug 06 Oct 06 Dec 06 Feb 07

Z A R : U S $

Source: Datastream & South African Reserve Bank

This valuation relates solely to the earnings generating assets of Aquarius,

together with its potential for increased production and revenue generation

as a consequence of its capital expenditure programme. Development of

these assets is reflected through the use of the long-term NPV calculation.

Together with the price/book valuation, this also allows for capital costs.

Aquarius Platinum - earnings valuation matrix using forecast metals prices

Valuation

summary US$/share Multiple

Value

(US$/share) Weight

Weighted

value

(US$/share)

Peak EPS 2.20 6 13.18 10% 1.32

Peak CFPS 4.00 4 16.00 10% 1.60

Mid-cycle EPS 1.66 18 29.92 15% 4.49

Mid-cycle CFPS 3.14 12 37.66 15% 5.65

Trough EPS 1.38 11 15.19 10% 1.52

Trough CFPS 2.66 7 18.59 10% 1.86

Discounted FCF 8.0% 15.93 20% 3.19

Price to Book 4.83 1.4 6.76 10% 0.68

Average per share (US$/£) 19.15/9.82 20.30/10.41

Peak per share (US$/£) 27.84/14.28Trough per share (US$/£) 12.97/6.65

Source: Seymour Pierce Limited

As the matrix shows, there is a considerable spread in the potential valuation

based on the timing in the price cycle, from £6.65 to £14.28 at the current

peak. Hence, the calculations imply that the fundamental valuation of the

company could more than halve during a cycle trough. Clearly, given the

current strong economic backdrop we believe that such a situation is a

distant prospect.

Valuations lie between £6.65 and £14.28

per share







Aquarius Platinum - earnings valuation matrix using forecast metals prices

Valuation summary US$/share Multiple

Value

(US$/share) Weight

Weighted

value

(US$/share)

Peak EPS 2.76 6 16.56 10% 1.66Peak CFPS 4.93 4 19.71 10% 1.97

Mid-cycle EPS 2.44 18 43.84 15% 6.58

Mid-cycle CFPS 4.41 12 52.94 15% 7.94

Trough EPS 1.69 11 18.59 10% 1.86

Trough CFPS 3.26 7 22.80 10% 2.28

Discounted FCF 8.0% 27.08 20% 5.42

Price to Book 4.83 1.4 6.76 10% 0.68

Average per share (US$/£) 26.03/13.35 28.37/14.55

Peak per share (US$/£) 41.29/21.17

Trough per share (US$/£) 17.53/8.99 Source: Seymour Pierce Limited

Base metal prices

0.00

5.00

10.00

15.00

20.00

25.00

30.00

Feb 05 Apr 05 Ju n 05 Aug 05 Sep 05 Nov 05 Jan 06 Mar 06 May 06 Jul 06 Sep 06 Oct 06 Dec 06 Feb 07

N i & C

o p r i c e ( U S $ / l b )

0.00

1.00

2.00

3.00

4.00

5.00

C u

pr i c e ( U S

$ / l b )

Nickel Cobalt Copper

Source: Datastream





COMPANY STRATEGY

Growing production

Having produced just less than 450,000 oz of PGM in FY2006, and with

production set to grow to around 700,000 oz by FY2008, Aquarius has

become one of the most significant primary platinum group metal

producers in the world. The company is the fifth largest producer of

platinum in the world (260,000oz) with only Norilsk in Russia and the

other established South African producers, Anglo Platinum, Impala

Platinum and Lonmin producing more.

The strategy

Aquarius has found considerable success by focusing on relatively small,

underground and open pit operations, which allow for a high degree of

mechanisation. This has been in contrast to the ‘traditional’ approach of the

South African PGM mining operations, which has tended to focus on long-

life, labour intensive projects. The model is based on the use of key

operational contractors with Aquarius, and its operating subsidiaries,

assuming management roles. This has given Aquarius a strong track record

in project construction and budgeting. First production from the Everest mine

in 2006 on time and under budget gives the most recent example.

The company has also chosen to negate the substantial financial and

technical barriers associated with downstream processing and marketing of

PGMs. PGM-bearing concentrates produced at the company’s operations

are sold under long term contracts to major refiners, such as Impala RefiningServices (IRS). Although this precludes the company from receiving full

value for the metal it produces, the long running saga of Lonmin’s faltering

refining infrastructure suggests the decision has a very rational basis.

Black Economic Empowerment

During 2004, Aquarius completed a Black Economic Empowerment (BEE)

transaction, as required under the South African Mineral and Petroleum

Resources Development Act 2002, with an empowerment consortium of

three companies (SavCom) led by Savannah Resources (Pty) Limited.

The deal saw SavCom take a 29.5% stake in Aquarius’s South Africansubsidiary, AQPSA, for ZAR860m in cash and shareholder loans. These

funds were used in the development of the Everest mine.

Prior to the deal Aquarius held a 75% stake in AQPSA with Impala Platinum

holding the remaining 25%. The deal saw SavCom acquiring both an

existing equity interest in AQPSA from Aquarius and subscribing for new

equity in AQPSA. At the same time Impala acquired new shares in the

enlarged AQPSA to take a 20% stake, leaving Aquarius Platinum with a

50.5% stake.

Focussing on smaller PGM operations,

which allow high levels of mechanisation

The company produces concentrates only,

losing upside value, but reducing financial

exposure and operational risk

BEE compliance achieved through deal

with SavCom consortium in 2004

SavCom paid ZAR860m for a 29.5% stake

in South African operating subsidiary





The next phase of the transaction will see SavCom sell its shareholding in

AQPSA, along with cession of all claims in respect of its shareholder loans,

to Aquarius for a sizeable stake in the company. This will leave Aquarius

with an 80% holding in AQPSA as shown diagrammatically below.

There were three conditions, which needed to be fulfilled for this phase to

commence, with the conversion to ‘new order’ mining rights at Kroondal,

Marikana and Everest the most significant. This step was achieved in

October last year with the Department of Minerals and Energy granting ‘new

order’ rights on all three mines and hence implying its satisfaction with the

group’s adoption of the 2002 Act, including its BEE commitments. The

company’s chromite tailings treatment plant is not classified as a mining

operation and hence does not require BEE party involvement.

In November 2006, Aquarius began the partial implementation of the next

phase of the BEE deal by acquiring a 3.5% stake in AQPSA from SavCom

for US$46.7m. When completed, the deal will take Aquarius’s stake to 54%and SavCom down to 26%, and hence into line with the requirements of the

2002 Act and associated Mining Charter. Aquarius chose to use its

substantial cash position to fund the purchase as opposed to issuing stock

as stated in the original deal. SavCom’s expected future stake in Aquarius

was reduced accordingly to 21.68m (26%).

Aquarius Platinum – Corporate structure*

Aquarius Platinum Limited

AQP

50%

Mimosa Holdings

MIMOSA

Aquarius Platinum CorporateServices

ACS

8.4%

50%

Current 50.5%/ Interim 54%/Final 80%

Aquarius Platinum SouthAfrica

AQPSA

Current 29.5%/Interim 26%/Final 0%

Impala 20%

Final 26%

100%

Savannah BEE Consortium

SAVCON

Aquarius Platinum Limited

AQP

50%

Mimosa Holdings

MIMOSA

Aquarius Platinum CorporateServices

ACS

8.4%

50%

Current 50.5%/ Interim 54%/Final 80%

Aquarius Platinum SouthAfrica

AQPSA

Current 29.5%/Interim 26%/Final 0%

Impala 20%

Final 26%

100%

Savannah BEE Consortium

SAVCON

*Authorisation is still awaited for the November SavCom-Aquarius deal.Source: Aquarius Platinum Limited

SavCom to sell stake in subsidiary back to

Aquarius for BEE compliant stake in parent

company

Aquarius started the buy back with a

US$46.7m cash purchase of 3.5% of

AQPSA from SavCom





OPERATIONS

Where the magic happens

Aquarius has interests in four producing operations in South Africa

and one in Zimbabwe. The four operations in South Africa are located

on the Bushveld Igneous Complex (BIC) in the north of the country.

The BIC contains the single largest PGM deposit in the world. The

Zimbabwean operation is located on the southern section of the Great

Dyke, a sinuous (4-11km wide), igneous body which runs for 550km

across the country.

South African production

Mining on the BIC accounts for over 75% of the world’s platinum production,

34% of the world’s palladium and over 85% of the world’s rhodium. Total

estimated proven and probable reserves of platinum and palladium in the

BIC stand at 203.3Moz ounces and 116.1Moz, respectively. In addition to

these reserves, inferred resources were estimated at 939Moz of platinum

and 711Moz of palladium (source: Prof. G. Cawthorn, University of

Witwatersrand, South Africa). Based on Johnson Matthey’s estimated

demand for platinum and palladium demand in 2006 of 7.02Moz and

6.85Moz, respectively, this equates to 162 years and 120 years of demand.

Aquarius Platinum – Operations

Aquarius has three operations on the western limb of the BIC (Kroondal,

Marikana and the chromite tailings retreatment project) and one (Everest) on

the eastern limb, as shown on the following map.

Aquarius Platinum – Location of South African operations

Source: Johnson Matthey Plc.

The company has stakes in four producing

operations in South Africa and one in

Zimbabwe

Total Busveld Platinum reserves estimated

at 203Moz





Kroondal (50% AQPSA)

Kroondal - key recent production parameters

Processed

(Mt)

Head

grade

(g/t)

Recovery

rate

(%)

Total 3E

PGE+Au

prod (oz)

Attrib 3E

PGE+Au

prod (oz)

Costs

(US$/oz)

2006 6.04 2.89 78.3% 439,444 219,722 403

2007H1 3.36 2.86 77.5% 238,902 119,450 396

Source: Aquarius Platinum Limited

Production began at Kroondal, Aquarius’ first operating mine, in 1999. The

mine is a core asset for Aquarius, accounting for just under 50% of the

company’s attributed 447,693oz 3E PGE and gold ounces during FY2006.

The mine exploits the UG2 reef with platinum accounting for approximately

60% of total PGE output, palladium 29% and rhodium 11%.

In 2003, Aquarius extended the life of the operation by entering into a pool

and share agreement (P&SA1) with Anglo Platinum, which owns the

adjacent property. By incorporating the resources on Anglo’s land, the life of

the mine has been extended from 2008 to 2017 with all revenue, costs and

capital expenditure shared equally between the partners.

Underground operations account for over 90% of production, with five shafts

now in production. Underground mining is by mechanised bord-and-pillar.

Concentrate is treated under an off-take agreement by Impala Refining

Services (IRS). This arrangement comes to an end in 2008 when

concentrate will be treated by Anglo Platinum under the terms of P&SA1.

In 2005 a new 3Mt per annum concentrator was commissioned at the mine,

which effectively doubled Kroondal’s annual production capacity to just over

0.5Moz 3E PGE + Au per annum. The company looks set to achieve this

approximate level of production in the next financial year to June 2008.

Kroondal - Reserves (at 30 June 2006)

Orebody

(Mt)

3E PGE + Au

(g/t)

3E PGE + Au

(Moz)

Proved open pit 0.04 4.17 0.01

Proved underground 57.82 2.95 5.48

Probable underground 9.45 3.23 0.98

Total 67.31 2.99 6.47


Kroondal opened in 1999. The mine

produced 50% of the company’s

attributable 3E PGE+Au in 2006

Aquarius entered a pool and share

agreement with Anglo Platinum in 2003.

Life of mine extended to 2017





Kroondal - resources (at 30 June 2006)

Orebody

(Mt)

3E PGE + Au

(g/t)

3E PGE + Au

(Moz)

Measured 50.03 5.83 9.38

Indicated 9.26 6.16 1.83Inferred 1.42 6.12 0.28

Total 60.71 5.89 11.49


Marikana (50% AQPSA)

Marikana - Key recent production parameters

Processed(Mt)

Head

grade(g/t)

Recovery

rate(%)

Total 3E

PGE+Auprod (oz)

Attrib 3E

PGE+Au(oz) Costs(US$/oz)

2006 1.25 3.2 66.8% 85,913 56,617* 782

2007H1 0.99 3.18 69.4% 69,941 34,971 609

*P&SA2 effective from Q2 onwards.


The Marikana operation, which lies just 8km east of Kroondal on the western

limb of the BIC, became Aquarius’s second operating mine in 2002. The

project is still dominated by open pit production, but in January 2006,

underground production from Kroondal No. 4 shaft was transferred to

Marikana. Development at the operation’s original underground shaft isongoing and by Q2 2007 underground production represented 33% of the

total tonnage. As the operation proceeds, underground mining will become

the major source of ore. The ratio in the PGM basket is very similar to

Kroondal and currently sits at around 61.4% platinum, 28.5% palladium and

9.3% rhodium. The company sells its concentrate to IRS under a life of mine

off-take agreement.

As at Kroondal, life of the operation has been extended via a pool and share

agreement (P&SA2) with Anglo Platinum, which sees the two producers

share production and costs equally. The agreement came into effect in

September 2005 and production is now scheduled to run to 2024. Anglo

Platinum will refine and sell its own share of production under P&SA2. With

the increased resources coming from Anglo Platinum’s RPM property and

increased processing capacity (3Mt per annum) added via the retrofit of a

dense media separation plant at the mine concentrator, annual production at

Marikana is set to reach 250,000oz PGM.

P&SA2 with Anglo Platinum effective from

September 2005. Production to rise to

250,000oz PGM





Marikana - Reserves (at 30 June 2006)

Orebody

(Mt)

3E PGE + Au

(g/t)

3E PGE + Au

(Moz)


Probable open pit 0.88 5.58 0.16Proved underground 24.52 3.12 2.46


Total 39.13 3.22 4.04


Marikana - Resources (at 30 June 2006)

Orebody

(Mt)

3E PGE + Au

(g/t)

3E PGE + Au

(Moz)

Measured 29.77 5.05 4.83

Indicated 11.39 5.14 1.88

Inferred 3.67 3.14 0.37

Total 44.83 4.92 7.09


Everest (100% AQPSA)

Everest - Key recent production parameters

Processed(Mt)

Head

grade(g/t)

Recovery

rate(%)

Total 3E

PGE+Auprod (oz)

Attrib 3E

PGE+Au(oz)

Costs(US$/oz)

2006 1.462 3.04 67.9% 97,031 97,031 375

2007H1 1.265 2.80 72.0% 82,908 82,908 447


Everest is wholly owned by Aquarius and is the company’s only operation on

the eastern limb of the BIC. Construction began in late 2004 with first

production achieved during 2006, when the mine was brought on-line ahead

of schedule and below budget. The operation consists of an open pit and

underground workings which exploit the UG2 reef from a basin-shaped

section of the eastern limb.

The mine is planned to become an exclusively underground operation next

year, based on bord-and-pillar stoping techniques. Platinum still dominates

the PGM suite, accounting for 58% of production with palladium at 33% and

rhodium at 8%. The targeted production rate is 225,000oz PGM per annum,

with the mine expected to operate until 2016. The concentrate produced and

refined by IRS under an off-take agreement.

First production in 2006 with start up on

time and under budget

Production of 225,000 oz per year is

planned with operations running until 2016





Everest - Reserves (as at 30 June 2006)

Orebody

(Mt)

3E PGE + Au

(g/t)

3E PGE + Au

(Moz)


Probable open pit 0.17 2.86 0.02Proved underground 14.59 3.15 1.48


Total 24.56 3.12 2.47


Everest - Resources (as at 30 June 2006)

Orebody

(Mt)

3E PGE + Au

(g/t)

3E PGE + Au

(Moz)

Measured 19.05 3.76 2.30

Indicated 18.17 3.23 1.89

Inferred 6.92 2.36 0.53

Total 44.14 3.32 4.71


Chromite Tailings Retreatment Plant (50% Aquarius)

Chrome Tailings Retreatment plant - key production parameters

Processed(Mt)

Head grade(g/t)

Recovery

rate(%)

Total 3E

PGE+Auprod (oz)

Attrib 3E

PGE+Au(oz)

Costs(US$/oz)

2006 0.162 3.21 37.3% 6,234 3,117 394

2007H1 0.07 4.04 48.0% 3,576 1,788 300


Aquarius (50%) and its consortium partners, Ivanhoe Platinum and Nickel

(25%) and Sylvania South Africa (25%), have been treating dumps and

tailings streams from Kroondal and chromite mines surrounding Kroondal

since January 2005. As the feedstock has been processed by these

operations in the past, only a flotation circuit is required to produce a pgm

concentrate. The operation is relatively low cost therefore with no crushing or milling required.

The consortium plans full production of 28,000oz PGM per annum, of which

50% will be attributable to Aquarius Platinum. The project is planned to run

until 2016. This level of production looks some way off with the operation

lacking both the throughput and recovery rates at present. The company is

currently experimenting with the processing circuit to improve the recovery

rates from the various feedstocks. The concentrate is treated under off-take

agreements with Rustenburg Platinum Mines (RPM) and Impala Refining

Services (IRS).

The operation is not managed by AQPSA,

but by a second Aquarius subsidiary, ACS

Planned production of 28,000oz PGM per

annum, but experiencing problems with

recovery rates at present.





Zimbabwean production

The Great Dyke contains four significant pgm-bearing geological complexes.

The Hartley Complex is the largest, containing approximately 80% of the

Dyke’s total PGM resources, and supports the Ngezi and Hartley Platinum

mines operated by Zimplats. Aquarius’ Mimosa mine lies in the WedzaComplex on the southern section of the dyke. Johnson Matthey estimates

total platinum production from Zimbabwe’s Great Dyke at 170,000oz in 2006.

Aquarius Platinum – Location Mimosa, Zimbabwe

Mimosa

Aquarius

Other platinum mines

Mimosa

Aquarius

Other platinum mines


Mimosa (50% Aquarius)

Mimosa - Key recent production parameters

Processed

(Mt)

Head

grade

(g/t)

Recovery

rate

(%)

Total 3E

PGE+Au

prod (oz)

Attrib 3E

PGE+Au

(oz)

Costs

(US$/oz)

2006 1.713 3.71 69.7% 142,407 71,204 336

2007H1 0.935 3.66 78.0% 76,078 38,039 395


Mimosa is a 50:50 joint venture with Impala Platinum. As at Kroondal and

Marikana, extraction at Mimosa is by mechanised bord-and-pillar mining.

Concentrate is transported by road across the South African border to

Rustenburg and treated by IRS. This is the least platinum-rich of the

company’s operations, with platinum accounting for just under 51% of the

major metal mix, palladium 38%, rhodium 4% and gold 8%. The mine also

produces around 2,000t of nickel, 2,000t of copper and over 100,000lbs of

cobalt. At present, the mine is expected to have a life of at least 40 years,

giving it the longest operational life of the current portfolio.

50:50 JV with Impala Platinum. US$37m

capex has raised production capacity to

195,000 oz 4E PGE





Concentrator throughput was increased by 25% in FY2006 to 1.8Mt per

annum during the US$14m Wedza Phase IV upgrade, and has recently been

increased again to 2.1Mt per annum in the Phase V upgrade at a cost of

US$23.2m. This gives production capacity of 195,000oz PGM, which is the

long-term target production for the operation.

Operating in the current political climate of Zimbabwe clearly entails certain

challenges. At present, Zimbabwe’s administration is some way behind the

South African Government in implementation of its BEE-equivalent,

‘indigenisation’ policy. The policy is at the discussion stage, but may allow

the Government to acquire a 51% stake in certain projects, including PGM

mines such as Mimosa. 25% would be assumed without payment as soon as

the law was passed with the remaining 26% earned over a five-year period.

Interestingly, Zimplats struck a deal with the government in May last year in

which 36% of its mining claims that lie outside of its long-term mine plans

have been sold to the government for cash and an empowerment credit for

potential development by other parties. This deal also helped to secure longterm tenure over the main mining asset. A similar deal may be possible at

Mimosa, but there has yet to be a comment on the subject from either

member of the JV.

Mimosa - Reserves (as at 30 June 2006)

Orebody

(Mt)

3E PGE + Au

(g/t)

3E PGE + Au

(Moz)

Proved underground 18.52 3.71 2.21


Total 33.50 3.63 3.90


Mimosa - Resources (as at 30 June 2006)

Orebody

(Mt)

3E PGE + Au

(g/t)

3E PGE + Au

(Moz)

Measured 44.20 4.01 5.70

Indicated 26.21 3.58 3.02

Inferred 21.13 3.84 2.61

Total 91.54 3.85 11.33 Source: Aquarius Platinum Limited

Exploration

In October last year Aquarius signed a farm-in agreement with Bakgaga

Mining to conduct feasibility on its properties to the west of the Anglo

Platinum’s Lebowa mine on the eastern limb of the BIC. The licences

represent greenfield exploration, but Aquarius believes the landholding

contains approximately 2,000hectares underlain by both the Merensky and

UG2 PGM-bearing reefs. Aquarius will pay Bakgaga ZAR1.2m for existing

data and a budget for initial work has been set at ZAR2.5m. Should results

be positive, Aquarius will fund a feasibility study, estimated to cost ZAR20m.





THE PGM MARKET

Where does it all go?

Applications for PGMs span a very broad range, from cancer treatment

through catalysis to jewellery. Supply sources are limited and the small

scale of the markets makes illiquidity and price volatility very regular

features. The platinum and rhodium markets are currently close to

equilibrium in terms of physical supply and demand, whilst the

palladium market is in oversupply. We expect these conditions to

broadly continue in coming years with prices easing as part of the

greater commodity market cycle. Key drivers in the PGM markets

In its latest interim review, Johnson Matthey reports that platinum demand

set a new record in 2006 at 7.02Moz. This was driven by a 15% increase in

demand from the automotive industry for autocatalysis to 4.38Moz. In recent

years, there has been a significant shift in the demand profile for platinum

with autocatalysis surpassing jewellery as the largest application. In 2006,

net demand from the automotive industry (3.6Moz) was twice the demand for

jewellery. This is a complete reversal of the situation in 1999 and 2000.

Although, other applications such as glass making, technology and

chemical/petrochemical applications have important roles to play, it is these

major applications along with the strong commodity investment market and

production rates which will dominate the market going forward.

Major demand applications for platinum in 2006

Autocat (net)

49%

chemical

5%

Electrical

6%

Glass

5%

Jewellery

25%

Petroleum

3%

Other

7%

Source: Johnson Matthey Plc

Automotive demand for platinum is dominated by diesel vehicles. Diesel

vehicles now represent over 50% of the European light duty vehicle market

and this figure is expected to continue to grow. Elsewhere, tightening

emissions legislation is forcing manufacturers to fit platinum-bearing

catalysts to exhaust systems in both heavy and light duty trucks. With the

discrepancy in price and advancement in technology, palladium has nowbegun to make initial inroads into the diesel market. Substitution of palladium

for platinum in gasoline applications has been underway for sometime.

Automotive demand will continue todominate the markets in coming years

Growing popularity of diesel vehicles and

tightening emissions legislation driving

platinum demand

Palladium now being used in some dieselapplications





It appears likely that these substitution trends will continue wherever viable.

This may lead to a small, but significant reduction in platinum demand.

Platinum jewellery demand remains under pressure at these high price

levels as manufacturing margins are squeezed. The crucial, Chinese market

lost a further 11.2%. Palladium jewellery has replaced much of the lower-end

platinum market and this situation is expected to continue.

Rhodium demand is dominated by its use in autocatalysis and its usage is

expected to increase steadily with the growth in car production amongst the

emerging economies and the general tightening of emissions legislation

worldwide.

Amongst the minor PGMs, ruthenium has seen a considerable increase in

demand in recent times from the electronics industry, where it is used to

improve the storage capacity in some hard disks. This has lead to a marked

increase in the metal’s price. Demand for iridium has also risen, driven byincreased usage in the electrochemical and chemical industries.

Major demand applications for palladium in 2006

Autocat (net)

49%

Chemical

5%

Dental

12%

Electronics

15%

Jewellery

16%

Other

3%


Platinum jewellery demand continuing to

wane

Major demand applications for rhodium in 2006

Autocat (net)

87%

Glass5%

Other

2%Electrical

1%

Chemical

5%






Platinum production is dominated by South Africa with the country supplying

78% of global production. We believe, if major producers, such as Aquarius

can continue to make good on their expansion plans, there should be

sufficient metal available for the expected modest growth in demand in

coming years. Furthermore, expansion of platinum mining operations on theBushveld will produce additional palladium and rhodium as by products,

helping to stabilise those markets. Supply of palladium from Russia is

expected to be relatively stable around the 4Moz.

Placing this scenario against the backdrop of the commodity cycle leads us

to forecast a continuation of strong PGM prices during 2007 and 2008. The

greatest unknown at the present time must be the role of commodity

investors within the markets. Trading on the futures market such as TOCOM

and NYMEX typically has the most pronounced effect on short-term price

movement in the platinum and palladium markets. This is likely to continue

and will mean price movement is unlikely to plot a smooth curve.

Expansion in the South African PGM mining

sector will supply additional metal to the

market going forward

Platinum production by country in 2006

South Africa

78%

Russia13%

North America

5%

Others

2%

Zimbabwe

2%


Aquarius Platinum – Palladium production by country in 2006

Zimbabwe

2%

North America

11%

Others

2%

Russia

51%

South Africa

34%


We are forecasting a decline in all PGM

prices from current levels, but must expect

volatility in the short term





Seymour Pierce metal price estimates

Year end 30 June 2004 2005 2006 2007E 2008E

Platinum (US$/oz) 773 863 1,006 1,156 1,044

Palladium (US$/oz) 210 218 268 324 293

Rhodium (US$/oz) 640 1,119 3,015 5,146 5,124Ruthenium (US$/oz) 48 67 131 395 535

Iridium (US$/oz) 133 166 247 367 356

Gold (US$/oz) 410 445 604 620 485

Nickel (US$/lb) 5.30 6.42 8.57 10.64 8.62

Copper (US$/lb) 1.04 1.43 2.31 2.89 2.50

Cobalt (US$/lb) 19.02 14.92 15.15 15.30 15.45

Source: Seymour Pierce Limited estimates





FINANCIALS

Reality check

Aquarius plans to increase production by over 250,000oz (57%) in the

near term. With PGM prices expected to continue above their historic

averages in the short term, Aquarius should enjoy a substantial

increase in earnings and cash generation in coming years. The

company has only modest debt, so how the management plans to

make best use of its cash surplus is the most prominent question at

the current time. At the recent interim results, CEO Stuart Murray

clearly stated that the company was actively evaluating acquisition

opportunities, principally within South Africa. Aquarius is certainly not

alone amongst the South African platinum producers in looking for

acquisitions. Only last month, Impala Platinum tabled a 55p/share

(£297m) cash offer for Aim-listed African Platinum (Afplats),representing a 35% premium to the share price. Afplats’ main asset is

the Leeuwkop project on the western limb of the Bushveld with 92Moz

of resources. Aquarius’ previous concern has been the high

development costs of Bushveld projects, but with strong metal prices

expected to continue, the perspective on such projects appears to be

changing. If suitable projects can’t be found, the pledge has been made

to return cash to shareholders.

Production estimates

The next two years is clearly a key period for Aquarius with increased

production expected at all operations. By FY2008, the company’s long termproduction targets should have been all but achieved at the four major

mines. These targets are 505,000oz at Kroondal, 250,000oz at Marikana,

225,000oz at Everest and 195,000oz at Mimosa in Zimbabwe. We expect

this will boost production attributable to Aquarius by 57% from the 2006 level

of 448,000oz, based on its current stake in AQPSA, to 704,000oz.

The rapid expansion at Everest and Marikana will see these operations

increase their contribution in total attributable production to 32% (+10%) and

18% (+5%), respectively. In contrast the relative shares of production from

Kroondal and Mimosa will fall to 36% and 14%, respectively. However,

Kroondal will remain the most significant operation, producing more thantwice as much metal as the next largest operation, Marikana.

The relative proportions of the company’s PGM basket should show little

change over the next five years with platinum accounting for just over 59% of

total 3E production, palladium 32% and rhodium 9%. Beyond FY2008,

production from existing operations should stabilise at, or around, the target

levels as outlined above for the long term.

As production rises, costs per ounce are expected to fall significantly at all

the company’s South African operations. Marikana should see the greatest

fall corresponding with the large rise in production. We are forecasting a

modest increase in costs at Mimosa in US dollar terms, but with the hyper-inflationary environment of Zimbabwe any forecast may be subject to

change.

Attributable production to rise by 57%

All mines to move to long term targetproduction levels by FY2008

Weighted average production costs to fall





Overall, we forecast production weighted average costs will fall by 8.2%

between FY2006 and FY2008, reaching US$369/(3E PGE+Au) oz by

FY2008.

Aquarius Platinum Limited - Production estimates

Year end 30 June 2004 2005 2006 2007E 2008E

South African Production

Aquarius Platinum South Africa (AQPSA) mines

Kroondal (50% AQPSA)

Total 4E prod. (000 oz) 237.6 324.7 439.4 503.3 503.3

Attrib. 4E prod. (000 oz) 160.2 162.4 219.7 251.7 251.7

Cost (US$/oz) 315 361 379 386 336

Marikana (50% AQPSA)

Total 4E prod. (000 oz) 87.2 99.2 85.9 170.0 250.0Attrib. 4E prod. (000 oz) 87.2 99.2 56.6 85.0 125.0

Cost (US$/oz) 626 628 685 593 506

Everest (100% AQPSA)

Total 4E prod. (000 oz) 0.0 0.0 97.0 175.0 220.0

Cost (US$/oz) - - 353 404 291

AQPSA total production

Total 4E prod. (000 oz) 324.8 423.9 622.4 848.3 973.3

Attrib. 4E prod. (000 oz) 247.4 261.5 373.4 511.7 596.7

Cost (US$/oz) 398 423 417 431 369

Other South African production

Chromite Tailings Retreatment Plant (50% Aquarius)

Total 4E prod. (000 oz) 0.0 2.1 6.2 8.6 12.3

Attrib. 4E prod. (000 oz) 0.0 1.1 3.1 4.3 6.2

Cost (US$/oz) 0 376 370 290 241

Zimbabwean production

Mimosa (50% AQP)

Total 4E prod. (000 oz) 119.4 130.2 142.4 167.7 192.7

Attrib. 4E prod. (000 oz) 59.7 65.1 71.2 83.8 96.4

Cost (US$/oz)) 253 358 336 395 375

Total

Total 4E prod. (000 oz) 444.2 556.2 771.0 1,024.7 1,178.4

Attrib. 4E prod. (000 oz) 307.1 327.7 447.7 599.8 699.2

Cost (US$/oz) 359 408 402 424 369

Source: Aquarius Platinum Limited and Seymour Pierce Limited estimates





Earnings

The combination of rapidly expanding production and strong metal prices

lead us to expect FY2007 and FY2008 to be a very significant period with

respect to earnings for the company. As discussed, the company produces

metal in concentrate and as a result does not receive the full value for thecontained metal due to refining and treatment charges. In the table below we

have attempted to estimate the basket price the company will receive for

both the 3E and 5E PGE plus gold baskets in the coming years. We have

also provided estimates of the revenue that the company receives for its

base metal output, which are also subject to charges from the company’s

refining partners.

Seymour Pierce –estimates of prices received for metal in concentrate

Year end 30 June 2004 2005 2006 2007E 2008E

Full prices

Platinum (US$/oz) 773 863 1,006 1,156 1,044

Palladium (US$/oz) 210 218 268 324 293

Rhodium (US$/oz) 640 1,119 3,015 5,146 5,124

Gold (US$/oz) 410 445 604 620 485

Ruthenium (US$/oz) 48 67 131 395 535

Iridium (US$/oz) 133 166 247 367 356

Nickel (US$/lb) 5.30 6.42 8.57 10.64 8.62

Copper (US$/lb) 1.04 1.43 2.31 2.89 2.50

Cobalt (US$/lb) 19.02 14.92 15.15 15.30 15.45

Estimated received prices3E+Au basket price (US$/oz) 1,027 958

5E+Au basket price (US$/oz) 934 891

Nickel (US$/lb) 8.83 7.15

Copper (US$/lb) 2.39 2.08

Cobalt (US$/lb) 12.70 12.83


Despite a modest reduction in metal prices from their 2007 level, FY2008

should bring record financials with turnover of US$751.0m, profit before tax

of US$432.3m and attributable profit of US$186.0m.

FY2007 and FY2008 should bring

consecutive record earnings





Aquarius Platinum Limited - earnings estimates

Year end 30 June (US$m) 2004 2005 2006 2007E 2008E

Attrib. 3E+Au prod. (000 oz) 307.1 327.7 447.7 599.8 699.2

Mine Sales 175.1 210.1 417.4 634.5 750.1Other income 14.5 8.3 14.1 14.1 0.9

Turnover 189.6 218.5 431.5 648.6 751.0

Operating costs 112.6 153.8 199.5 254.3 264.5

Dep’n & Amor’n 12.2 26.5 28.8 31.2 32.5

Admin 8.6 6.0 8.1 11.1 13.2

Royalties & other 0.6 1.4 1.8 4.8 8.6

Exceptionals 5.0 0.0 0.0 0.0 0.0

PBIT 60.5 30.8 193.3 347.1 432.3

Net interest -11.5 -2.8 -1.2 2.0 5.1

Exceptional items 5.0 0.0 0.0 0.0 0.0

Profit before tax 49.0 28.1 192.1 349.1 437.3

Tax 5.7 3.4 51.1 104.7 131.2

Minorities -4.8 -3.7 -55.4 -101.4 -120.2

Attributable profit 38.6 21.0 85.6 143.0 186.0

Dividend 2.5 5.0 9.1 50.1 93.0

Retained profit 36.2 16.0 76.5 93.0 93.0

Recurrent profit 33.7 21.0 85.6 143.0 186.0

EPS (UScents) 47.18 25.32 100.86 168.98 219.74

Recurrent EPS (UScents) 41.13 25.32 100.86 168.98 219.74

DPS (UScents) 3.00 8.00 24.00 59.14 109.87


South African Royalties

As with all South African producers, the company’s South African earnings

will be liable for mineral royalties from May 2009 onwards. The company has

been paying revenue-based royalties in Zimbabwe since 2004 at the rate of

3% for precious metals and 2% for base metals. The onset of royaltypayments in South Africa coincides with the deadline for mining companies

to convert their royalty-free ‘old order’ mining rights to ‘new order’ mining

licences under the 2002 Mining Act. The industry had been hoping that the

original revenue-based model proposed in the draft legislation in 2003 would

be revised to a profit-based model. This did not prove to be the case when

new drafts were released in October last year. However, the government did

reduce rates for refined and semi-processed products in an effort to

encourage value-enhancing mineral beneficiation within South Africa. The

table below gives the rates relevant to Aquarius.

South African production royalties to start in

2009





Proposed South African mining royalties

Metal Unrefined (%) Refined (%)

PGM 6.0 3.0

Gold & Silver 3.0 1.5

Base metals 4.0 2.0

Source: South African National Treasury Dept

Although Aquarius only produces metal in concentrate, and not refined

product, we believe the company will be eligible for the lower rate. During a

recent global roadshow by the South African Department of Minerals and

Energy, senior officials implied that companies transferring material for

beneficiation within South Africa would be eligible for lower rates, assuming

an agreement can be reached with the refiner concerned. Although these

rates are yet to be set firm, as the bill has not been put before parliament, we

have applied them to the company’s revenues.

Minorities

The substantial payments to minorities relates to the other stakeholders in

AQPSA, namely SavCom (26%) and Impala Platinum (20%). As discussed

earlier, Aquarius has recently begun a transaction to exchange SavCom’s

stake in AQPSA for a significant shareholding in Aquarius. So far 3.5% of

SavCom’s holding has been acquired for US$46.7m. The deadline for the

remainder of this transaction remains unqualified in any detail and we have

not attempted to predict this in our forecasts. Naturally, attributable profit will

rise as minorities fall, but estimating the revised share base and all

associated distributions of earnings in Aquarius is extremely difficult. If the

company continues to use its growing cash pile to buy out SavCom, dilutionwill be kept to a minimum, but this will be governed ultimately by BEE

regulations.

We believe Aquarius should qualify for the

lower royalty rates





Cash flow estimates

The combination of increasing production and strong metal prices means

Aquarius has the potential to be extremely cash rich in coming years.

Operating cash flow is forecast to rise to US$446.2m in FY2008 and will

continue at a healthy rate thereafter. Best use of the funds is obviously a keystrategy point for Aquarius. The company has already stated its intention to

pay off interest-bearing loans, and we have included full payment of the

US$13.8m loan from SavCom in the FY2007 cash flow. As discussed, a

cash payment for a small percentage of SavCom’s holding in AQPSA has

also been made. Additional uses include acquisitions and exploration. To

this end the company entered a farm-in agreement with Bakgaga Mining late

last year to conduct exploration and feasibility studies over five farms on the

northern tip of the Bushveld’s western limb. We await news of any significant

acquisitions.

Aquarius Platinum Limited - Cash flow estimates


Operating profit 60.5 30.8 193.3 347.1 432.3

Dep'n and Amor’n 12.2 26.5 28.8 31.2 32.5

Other non-cash 0.0 0.0 0.0 0.0 0.0

Change in working cap 16.6 -17.8 -25.6 -31.3 -18.6

Operating cash flow 89.2 39.5 196.5 347.1 446.2

Net interest -8.4 -3.2 -2.1 2.0 5.1

Dividends -4.8 -5.0 -9.1 -50.1 -93.0

Taxation -3.7 -1.6 -32.0 -104.7 -131.2

-16.9 -9.8 -43.3 -152.8 -219.1

Net capital expenditure -28.5 -92.4 -102.9 -54.6 -30.0

Acquisitions/disposals 18.2 4.3 0.0 0.0 0.0

66.8 -53.5 59.5 189.7 290.0

Debt raised 4.6 28.1 29.1 -13.8 0.0

Shares issued 16.0 31.7 7.2 0.0 0.0

BEE Transaction 0.0 0.0 0.0 -46.7 0.0

Cash flow 82.6 1.4 86.7 79.2 197.1

Forex movements 0.0 -0.9 -2.6 0.0 0.0Cash at start of year 40.3 77.9 78.4 162.4 241.6

Cash at end of year 122.9 78.4 162.4 241.6 438.7


The key point for shareholders remains the dividend policy the company will

adopt in coming years. Dividend payouts from the other major South African

platinum producers in 2006 ranged between 32% (Lonmin) up to 93%

(Northam) of earnings attributable to ordinary shareholders. Aquarius paid

24% in comparison. Going forward, we have assumed Aquarius will increase

its dividend rate to move into line with its producing peers. A rate equivalent

to Northam’s may be too high, but a rate of 50% would place Aquarius in linewith Impala (48%, excluding special dividends). The company has pledged

to return cash to shareholders if suitable corporate projects can not be

found.

Operating cash flow expected to increase

further in FY2008

We include full payment of the SavCom

loan in the FY2007 cash flows

We assume a substantial rise in dividend

payments from FY2007 onwards





Balance sheet

Even with a much more generous dividend policy, cash generation remains

so great that there is a lack of gearing in the balance sheet going forward.

This gives an obvious opportunity for the company to better utilise its ever

strengthening asset base, either via acquisition or major corporatedevelopment. It should be remembered that a significant portion of the

group’s cash sits within AQPSA, and hence Aquarius’ effective stake is

reduced in line with its shareholding in the subsidiary. Even so, the cash pile

remains substantial. This could be considered as a nice problem to have, but

with limited acquisition opportunities available on the Bushveld, two major

mines scheduled to close by 2017 and long lead times on mine

developments, this is certainly a significant issue for management to

consider.

Aquarius Platinum Limited - balance sheet estimates


Tangible assets 361.3 409.3 461.2 484.6 482.1

Intangible assets 0.0 0.0 0.0 0.0 0.0

Fixed assets 361.3 409.3 461.2 484.6 482.1

Stocks 10.7 16.3 19.8 26.6 31.0

Trade Debtors 23.3 44.7 66.7 100.3 116.1

Cash 77.9 75.3 162.4 241.6 438.7

Other 0.0 0.0 0.0 0.0 0.0

Current assets 111.9 136.3 249.0 368.5 585.8

Short-term debt 15.6 0.0 0.0 0.0 0.0Trade creditors 19.1 25.5 32.9 41.9 43.5

Tax and other 7.1 9.9 2.6 2.6 2.6

Current liabilities 41.8 35.5 35.5 44.5 46.2

Long-term debt 59.6 140.1 130.1 130.1 130.1

Interest bearing liabilities 62.7 16.1 45.4 31.6 31.6

Deferred tax liabilities 56.9 53.8 73.3 73.3 73.3

Provisions 18.0 24.5 32.1 32.1 32.1

Non current liabilities 197.3 234.5 280.9 267.1 267.1

Net assets 234.2 275.6 393.8 541.4 754.6

Shareholders' funds 225.0 243.0 315.6 408.5 501.5

Minorities 9.2 32.6 78.3 132.9 253.1

Equity Interests 234.2 275.6 393.8 541.4 754.6




Important Notes

Our research recommendations are issued and approved for distribution within the UnitedKingdom by Seymour Pierce Limited only to market counterparties and intermediate customersas defined under the FSA rules. Our research is not directed at, may not be suitable for andshould not be relied upon by any other person. The information contained in our research iscompiled from a number of sources and is believed to be correct, but cannot be guaranteed. Itis not to be construed as an offer, invitation or solicitation to buy or sell any securities of any of the companies referred to within it. All statements made and opinions expressed are made asat the date on the face of the material and are subject to change without notice. Where pricesof securities are mentioned, these are the mid-market prices as at the close-of-business on the

business day immediately preceding the date of the research. The meanings of our researchratings, together with the proportion of our recommendations issued during the previous quarter carrying each rating, is set out on our website at www.seymourpierce.com. Seymour PierceLimited and/or its associated companies and ultimate holding company may from time-to-timeprovide investment or other services to, or solicit such business from, any of the companiesreferred to in research material. In addition, they and/or their directors and employees and/or any connected persons may have an interest in the securities of any of the companies in thereport and may from time-to-time add to or dispose of such interests. Details of the significantconflicts relating to the companies that we research are set out on our websitewww.seymourpierce.com, together with a summary of our policies for managing conflicts of interest. Seymour Pierce does not meet all of the FSA standards for managing conflicts of interest, as a result our research should not be regarded as an impartial or objectiveassessment of the value or prospects of its subject matter, though of course we will alwaysensure that it remains clear, fair and not misleading.

Seymour Pierce Limited is authorised and regulated by the Financial Services Authority, and isa member of the London Stock Exchange.

Key to material interests

1. The analyst has a personal holding of the securities issued by the company, or of derivativesrelated to such securities.

2. Seymour Pierce Limited or an affiliate owns more than 5% of the issued share capital of thecompany.

3. Seymour Pierce Limited or an affiliate is party to an agreement with the company relating tothe provision of investment banking services, or has been party to such an agreement withinthe past 12 months. Our corporate broking agreements include a provision that we will

prepare and publish research at such times as we consider appropriate.4. Seymour Pierce or an affiliate has been lead manager or co-lead manager of a publiclydisclosed offer of securities for the company within the past 12 months.

5. Seymour Pierce is a market maker or liquidity provider in the securities issued by thecompany.

6. Seymour Pierce is party to an agreement with the company relating to the production of research recommendations.

Distribution of ratingsOur research ratings are defined with reference to the amount by which we expect the absolutereturn to change over the next 12 months:

Rating Definition

Buy Absolute return expected to increase by more than 10%

Outperform Absolute return expected to increase by between 5% and 10%

Hold Absolute return expected to change by between -5% and +5%Underperform Absolute return expected to decrease by between 5% and 10%

Sell Absolute return expected to decrease by more than 10%

As at 31 December 2006 the distribution of all our published recommendations is as follows:

Rating

Proportion of

recommendations

Proportion of these provided with

investment banking services

Buy 31% 65%

Outperform 26% 20%

Hold 31% 29%

Underperform 7% 6%

Sell 2% 0%

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Broker Note, Aquarius Platinum, 08/03/2007 (Seymour Pierce)

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