“Enhanced shareholder returns will best be obtained by focusing on strategic interventions that will optimise performance

 

The past year was one of mixed performance. Production in the first half was impacted by a fatal incident resulting in a number of safety stoppages and operations were also affected by an unprotected labour stoppage. During the second half of the year the mine met expectations.

Implats’ strategic plan announced in February 2015 outlined an option to seek value through a possible disposal of Marula. Following a thorough assessment its was resolved that enhanced shareholder returns would best be obtained by focusing on strategic interventions that would optimise performance, including a reduction in operating costs and optimising output to 90 000 platinum ounces per annum. Consequently, the formal disposal process was terminated.

Manufactured capital

Safety

Marula remains committed to achieving the Group’s vision of zero harm and is working hard to improve safety performance rates. The total injury frequency rate improved to 24.96 (2014: 28.59) per million man-hours worked. Regrettably, an employee suffered fatal injuries at work in September 2014.

Operational performance

Tonnes milled decreased by 7.4% from the previous year to 1.66 (2014: 1.79) million largely due to the safety and labour stoppages experienced in the first half of the year. Pleasingly, operational performance has improved in the second half and exceeded planned targets on a number of parameters during this period. Head grade remained flat at 4.19g/t, while concentrator recoveries improved from 85.4 to 86.4%. Platinum in concentrate production of 73 600 ounces was 6.2% lower in line with the lower milled tonnage.

Labour efficiencies were also impacted by the work stoppages and ended lower over the year despite an improved performance in the second half in line with improved ore reserve flexibility.

Human capital

Labour relations

Labour relations were challenging during the year and a dispute with employees led to a work stoppage in the first quarter of the year resulting in an effective loss of one week’s worth of production. AMCU has since been recognised as the dominant union with more than 60% of Marula employees as signed-up members – the NUM was historically the representative union at this operation. Wage negotiations with AMCU were settled amicably near year end and discussions to bring wages at Marula in line with those at Impala’s Rustenburg operations are ongoing.

Health

During the year the number of TB cases reduced from 41 reported in 2014 to 20 in 2015 due to increased levels of surveillance and testing. The number of employees enrolling for voluntary HIV/Aids counselling and treatment continued to rise and for the year was 698 (2014: 566) people. This is an indication of the ongoing success of the occupational and non-occupational health clinic that opened in 2012 and which is seen as a major benefit to the community surrounding the mine.

Training

Human resource development continued to focus on employee training (including basic adult education and training) and increased by 16%. Literacy levels remained at 91% compared to the previous year.

Social and relationship capital

Marula’s relationship-building initiatives with its immediate labour sourcing community have received considerable attention over the last year. The success of the community-owned Makgomo Chrome plant at Marula has assisted in this regard and a total dividend of R32 million was paid by Makgomo Chrome in 2015. However, further relationship building and engagement with the communities situated further from the mine is required following the repeated damage done to the Lebatelo water line, the mine’s only water supply.

Natural capital

Marula has retained its ISO 14001 environmental certification. The implementation of its environmental management programme, as defined by the Mining Charter, were successfully implemented, save for the financial provision, which has been submitted to the DMR. Approval feedback on the operation’s waste licence certificate is imminent. Marula’s water handling and run-off facilities were improved during the year, with a focus on dam control to optimise the management of operational capacity and to improve freeboard compliance. No discharges occurred for the period under review. Level 3* environmental incidents dropped to four (2014: six) and Marula is on track to achieve its zero level 3 environmental incident target for 2016.

* Incident that contains limited non-conformances or non-compliances. These non-compliances are those that result in on-going, but limited environmental impact.

Mineral resources and reserves

For more detail refer to the “Mineral resource and mineral reserve statement 2015” available at www.implats.co.za.

There has been no update in the Marula Merensky Reef mineral resource since the previous budget. However, the UG2 Reef mineral resource increased due to the addition of the area recently acquired from the adjacent Modikwa Mine (the so-called Driekop area A). The Marula UG2 mineral reserve has been impacted by the addition of level 5 into the mineral reserves and also by the conversion of certain conventional levels to a hybrid mining method.

		Mineral resources inclusive of reserves			2015				2014
			Orebody	Category	Tonnage   Mt	6E   Grade	Pt   Moz	Pt   Attr   Moz	Tonnage   Mt	6E   Grade	Pt   Moz	Pt   Attr   Moz
	Marula (73% attributable)		Merensky	Measured	34.3	4.55	2.7	2.0	34.3	4.55	2.7	2.0
				Indicated	7.7	4.54	0.6	0.4	7.7	4.54	0.6	0.4
				Inferred	9.9	4.46	0.8	0.6	9.9	4.46	0.8	0.6
			UG2	Measured	34.0	10.17	4.2	3.1	30.1	10.16	3.7	2.7
				Indicated	14.2	10.38	1.8	1.3	12.4	10.33	1.6	1.1
				Inferred	7.6	10.61	1.0	0.7	6.1	10.57	0.8	0.6
			Total		107.7	7.51	11.1	8.1	100.4	7.30	10.1	7.4

		Mineral reserves			2015				2014
			Orebody	Category	Tonnage   Mt	6E   Grade	Pt   Moz	Pt   Attr   Moz	Tonnage   Mt	6E   Grade	Pt   Moz	Pt   Attr   Moz
	Marula (73% attributable)		UG2	Proved	3.0	4.67	0.2	0.1	3.1	4.69	0.2	0.1
				Probable	27.0	4.47	1.5	1.1	22.0	4.81	1.3	0.9
			Total		30.0	4.49	1.6	1.2	25.1	4.80	1.5	1.1

The key features of the above updated statements are:

• The Marula UG2 Reef mineral resource estimate increased by 9% to 11.1 million platinum ounces due to the inclusion of the additional area
• The Marula UG2 Reef mineral reserve estimate increased by 12% due to 1.6 million platinum ounces due to the conversion of Clapham 5 level to the mineral reserve category.

Financial capital

Unit costs per platinum ounce in concentrate rose to R22 582 (2014: R19 860), negatively impacted by the lower production volumes. Capital expenditure decreased by 9.9% due to cash preservation and amounted to R145 (2014: R161) million.

Outlook

The optimisation of Marula’s existing infrastructure over the past few years as well as the improved available mining face provides a solid foundation to reach output to 90 000 ounces of platinum in the next few years, improving the financial position of the mine.