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Operational reviews
ARM Platinum

Thando Mkatshana
Chief executive – ARM Platinum

Key features for F2024

Decline in average realised US dollar PGM prices

162% decrease in headline earnings

Two Rivers Mine Merensky project placed on care and maintenance

Improved grade at Modikwa Mine supported increased production volumes

Conserving cash at Bokoni Mine while ramping up production in phased and measured manner

Significant points

• Sharp decline in palladium and rhodium prices
• Above-inflation electricity cost increases at Two Rivers Mine
• Modikwa production volumes supported by improved grade.

• Regrettably, fatality at Bokoni Mine
• Committed to maintaining a safe and healthy work environment for all employees and contractors.

Structure

PGM production process

Financial performance

ARM Platinum headline earnings decreased by 162% to a headline loss of R910 million (F2023: R1.5 billion earnings), largely due to the sharp decline in PGM prices in F2024 and above-inflation increases in unit cash costs.

• Modikwa Mine reported a 115% decline in headline earnings to R121 million loss (F2023: R819 million earnings), largely driven by a 35% decrease in the average basket price and a 6% increase in unit cash costs (rand per 6E PGM ounce)
• Two Rivers Mine reported an 87% decline in headline earnings to R168 million (F2023: R1.3 billion). The decrease was mainly due to a 33% decline in the average basket price and a 17% increase in unit cash costs (rand per 6E PGM ounce). The above-inflation increase in unit costs results from increased milling of Merensky ore. The Merensky ore arose out of the development of the Merensky shaft and came at a higher cost than UG2 ore
• Nkomati Mine reported an 86% increase in headline losses to R391 million (F2023: R210 million headline loss). This was driven mainly by an increase in the provision for rehabilitation in F2024 due to higher water management costs arising from the water treatment plant. The mine was placed on care and maintenance on 15 March 2021. ARM and its jointventure partner have concluded a sale agreement
• Bokoni Mine reported a headline loss of R566 million (F2023: R406 million loss) driven mainly by the mine ramping up to its first PGM ounce production. Bokoni’s results were included for 10 months in F2023, following its acquisition on 1 September 2022, compared to the 12 months included in F2024.

Operational performance

Modikwa Mine

Volumes

Tonnes milled decreased 4%. However, the grade improved by 6% owing to increased off-reef development, resulting in a 1% improvement in production volumes to 289 751 6E PGM ounces (F2023: 285 910 6E PGM ounces).

Unit costs

Unit cash costs were up 6% to R18 837 per 6E PGM ounce (F2023: R17 728 per 6E PGM ounce) and 12% higher on a rand/tonne basis at R2 270 (F2023: R2 021) owing to the reduction in tonnes milled.

Two Rivers Mine

Volumes

Tonnes milled were 1% lower than F2023. The UG2 grade remains a constraint due to the split reef at 3.1g/t while Merensky grade was lower at 2.1g/t as the operation was developing to open more ground. PGM production volumes declined 1% to 291 408 6E PGM ounces (F2023: 295 441 6E PGM ounces). Following accelerated development of the declines, mining flexibility is expected to improve.

Unit costs

Two Rivers Mine unit cash costs increased 16% to R1 282 per tonne milled (F2023: R1 105 per tonne). The rand per 6E PGM ounce cash cost rose 17% to R15 589 per ounce (F2023: R13 376 per ounce), owing to milling Merensky ore, which is at a lower grade than UG2, resulting in lower ounces produced. Various cash preservation and cost-saving initiatives have been implemented at Two Rivers Mine, including rightsizing the labour complement.

Bokoni Mine

Progress to date

The current priority is to conserve cash while ramping up production in a phased and measured manner given depressed commodity prices. This approach will maximise the use of Bokoni Mine’s existing surface and concentrator plant infrastructure, reducing capital costs. Subsequent to year end, the construction of a chrome recovery plant was approved by the board.

Nkomati Mine

Nkomati Mine has been on care and maintenance since F2021.

ARM and Norilsk Nickel Africa Proprietary Limited concluded a sale agreement that provides for ARM to acquire Norilsk Nickel Africa’s 50% participation interest in Nkomati Mine for cash of R1 million. The transaction is subject to certain conditions precedent, with the main outstanding condition precedent being official consent in terms of section 11 of the Mineral and Petroleum Resources Development Act 28 of 2002.

At 30 June 2024, the estimated undiscounted rehabilitation costs attributable to ARM were determined to be R1 191 million (30 June 2023: R932 million) excluding VAT. The increase in the undiscounted liability of R259 million is attributed mainly to the provision for the water treatment plant.

The discounted rehabilitation costs attributable to ARM were determined to be R1 119 million (30 June 2023: R802 million).

At 30 June 2024, R137 million (attributable to ARM) in cash and financial assets was available to fund rehabilitation obligations for Nkomati Mine. The resulting attributable shortfall in discounted rehabilitation costs of R982 million is expected to be funded by ARM.

Nkomati Mine’s estimated rehabilitation costs continue to be reassessed as engineering designs evolve and new information becomes available.