Final Results

African Rainbow Minerals Limited (Formerly Anglovaal Mining Limited ('Avmin')) (Incorporated in the Republic of South Africa) (Registration number 1933/004580/06) JSE Share code: ARI LSE Share code: AGM ISIN: ZAE000054045 ('ARM' or the 'Company') REVIEWED RESULTS for the year ended 30 June 2004 HIGHLIGHTS * BASIC EARNINGS FOR THE YEAR R1,4 BILLION (FY 2003: R191 MILLION LOSS) * STRONG SECOND HALF PERFORMANCES FROM NICKEL AND FERROUS OPERATIONS * PROFIT FROM OPERATIONS H2: R409 MILLION (H1: R5 MILLION LOSS) * SUBSTANTIALLY STRONGER BALANCE SHEET * GROUP RESTRUCTURED TO REFLECT NEW FOCUS * GROWTH STRATEGY FORMULATED * GOOD PROGRESS WITH IN-HOUSE PROJECTS BALANCE SHEET at 30 June Reviewed Audited 2004 2003 Rm Rm ASSETS Non-current assets Tangible assets 4 674 4 786 Intangible assets 5 6 Deferred tax assets 7 12 Environmental rehabilitation trust 29 45 funds Investments 4 606 215 9 321 5 064 Current assets Inventories 914 896 Trade and other receivables 1 162 936 Deposits and cash 328 265 2 404 2 097 Total assets 11 725 7 161 EQUITY AND LIABILITIES Capital and reserves Ordinary share capital 10 6 Share premium 3 495 79 Reserves (193) 218 Retained earnings 3 568 2 208 Shareholders' interest in capital and 6 880 2 511 reserves Minority interest 1 326 2 451 Total shareholders' interest 8 206 4 962 Non-current liabilities Long-term borrowings 857 - Deferred tax liabilities 866 519 Long-term provisions 151 153 Non-hedge derivatives - 103 1 874 775 Current liabilities Trade and other payables 567 521 Provisions 41 39 Taxation 63 42 Overdrafts and short-term borrowings 974 822 1 645 1 424 Total equity and liabilities 11 725 7 161 CASH FLOW STATEMENT for the year ended 30 June Reviewed Audited 2004 2003 Rm Rm CASH FLOW FROM OPERATING ACTIVITIES Cash receipts from customers 4 474 5 009 Cash paid to suppliers and employees (3 693) (4 160) Cash generated from operations 781 849 Interest received 25 80 Interest paid (74) (180) Dividends received 1 3 Dividends paid (13) (21) Taxation paid (82) (101) Net cash inflow from operating activities 638 630 CASH FLOW FROM INVESTING ACTIVITIES Additions to fixed assets to maintain (475) (420) operations Additions to fixed assets to expand (184) (132) operations Net cash effect of acquisitions (32) - Cash disposed of with sale of Avgold (1) - Proceeds on disposal of fixed assets 19 8 Proceeds on disposal of investments 167 - Purchase of remaining interest in Nkomati (260) - Proceeds from sale of ETC mine - 252 Net cash effect of sale of Chambishi - (67) Proceeds on dilution of interest in investment in subsidiaries - 564 Net cash inflow/(outflow) from investing activities (766) 205 CASH FLOW FROM FINANCING ACTIVITIES Increase in shareholder funding 54 17 Funding received from minority shareholders 63 11 Long-term borrowings raised 280 - Long-term borrowings repaid (127) (901) Decrease in short-term borrowings (79) (476) Net cash inflow/(outflow) from financing activities 191 (1 349) Net increase/(decrease) in cash and cash equivalents 63 (514) Cash and cash equivalents at beginning of 265 779 year Cash and cash equivalents at end of year 328 265 Cash generated from operations per share 610 758 (cents) INCOME STATEMENT Unaudited Unaudited Reviewed Audited Six months Year ended ended 30 June 31 December 30 June 30 June 2004 2003 2004 2003 Rm Rm Rm Rm Revenue 2 525 2 004 4 529 4 896 Cost of sales (1 972) (1 681) (3 653) (3 882) Gross profit 553 323 876 1 014 Other operating income 53 23 76 424 Other operating (191) (167) (358) (779) expenses Retrenchment costs (23) - (23) (35) Profit/(loss) on non-hedge Derivatives 17 (184) (167) (103) Profit/(loss) from 409 (5) 404 521 operations Income from 14 12 26 83 investments Finance costs (46) (38) (84) (180) Loss from associates (67) - (67) - Profit/(loss) before taxation and exceptional items 310 (31) 279 424 Exceptional items 1 415 4 1 419 (388) Profit/(loss) before Taxation 1 725 (27) 1 698 36 Taxation (260) (49) (309) (147) Profit/(loss) for the 1 465 (76) 1 389 (111) period Minority interest (104) 75 (29) (80) Basic earnings/(loss) 1 361 (1) 1 360 (191) ADDITIONAL INFORMATION Headline earnings 48 (1) 47 197 Headline earnings per share (cents) 34 (1) 37 176 Basic earnings/ (attributable loss) per share 951 (1) 1 062 (170) (cents) Fully diluted earnings / (attributable loss) per share (cents) 1 055 (169) Number of shares in issue at end of period (thousands) 204 208 114 128 204 208 112 602 Weighted average number of shares in issue (thousands) 142 991 113 713 128 115 112 046 Net asset value per share (cents) 3 369 2 196 3 369 2 230 NOTES TO THE FINANCIAL STATEMENTS HEADLINE EARNINGS Basic earnings per income statement 1 361 (1) 1 360 (191) - Loss on sale of Chambishi 18 - 18 649 - Profit on sale of Avgold (1 342) - (1 342) (241) - Surplus on disposal of (135) - (135) (20) investments and mineral rights - Impairment of immovable 45 - 45 - properties - Other (18) (4) (22) - (71) (5) (76) 197 - Taxation 116 4 120 4 - Minority interest 3 - 3 (4) Headline earnings 48 (1) 47 197 EXCEPTIONAL ITEMS Surplus on disposal of Avgold 1 342 - 1 342 241 shares Surplus on disposal of Assore 135 - 135 - shares Impairment on immovable properties (45) - (45) - Loss on disposal of Chambishi (18) - (18) (649) Other 1 4 5 20 Exceptional items per income statement 1 415 4 1 419 (388) Taxation (116) (4) (120) (4) Minority interest (3) - (3) 4 Profit on sale of fixed assets 5 - 5 - Associate dilution and exceptional 12 - 12 - Net exceptional items 1 313 - 1 313 (388) STATEMENT OF CHANGES IN EQUITY for the year ended 30 June Share Foreign Reval capital currency Revaluation Retained Group and translation surplus Other Total premium earnings Rm Rm Rm Rm Rm Rm Balance at 68 (42) 141 11 2 401 2 579 30 June 2002 Loss - - - - (191) (191) Revaluation of listed investments - - 39 - - 39 Translation of foreign subsidiary - 24 - - - 24 Reversal of derivative instruments - - - 26 - 26 Realisation of reserve on disposal - 18 - - - 18 of Chambishi Share 17 - - - - 17 options exercised Transfer to insurance contingency - - - 2 (2) - reserve Other - - 1 (2) - (1) Balance at 85 - 181 37 2 208 2 511 30 June 2003 Basic - - - - 1 360 1 360 earnings Investment sales and revaluations - - (178) - - (178) Share 54 - - - - 54 options exercised Shares issued for acqusitions 3 366 - - - - 3 366 Other - - - 2 - 2 Share of - - - (235) - (235) associate Balance at 3 505 - 3 (196) 3 568 6 880 30 June 2004 BASIS OF PREPARATION AND ACCOUNTING POLICIES The financial information for the half-year and year ended 30 June 2004 has been prepared adopting the same accounting policies used in the most recent annual financial statements which are in accordance with South African Statements of Generally Accepted Accounting Practice and International Financial Reporting Standards. The accounting policies are consistent with the year ended 30 June 2003. These condensed financial statements are prepared on the historical cost basis except as otherwise indicated in the accounting policies. The condensed balance sheets, income statements, cash flow statements and statements of changes in shareholders' equity, have been reviewed by Ernst & Young. Their unqualified review report is available for inspection at the Company's registered office. SEGMENTAL INFORMATION Primary segmental information Business segments For reporting purposes, the Group is presently organised into the following commodity segments. Corporate Ferrous and Copper/ Gold Platinum Nickel metals other Cobalt Total Rm Rm Rm Rm Rm Rm Rm Year to 30 June 2004 Revenue External 644 57 524 3 304 - - 4 529 revenue Cost of (589) (71) (252) (2 741) - - (3 653) sales Other operating income 2 - 42 22 10 - 76 Other operating expenses (182) (1) (73) (194) (98) - (548) Reallocated corporate expenditure - - (5) 71 (66) - - Segment (125) (15) 236 462 (154) - 404 result Income from investments 1 - 2 2 21 - 26 Finance cost (4) (16) - (52) (12) - (84) Loss from (67) - - - - - (67) associate Exceptional 4 (35) - - 1 450 - 1 419 items Taxation (4) (1) (77) (124) (103) - (309) Minority 73 6 - (108) - - (29) interest Contribution (122) (61) 161 180 1 202 - 1 360 to basic earnings Contribution (135) (26) 161 178 (131) - 47 to headline earnings Other information Consolidated - 1 961 248 4 056 5 017 - 11 282 total operating assets Intangibles - 63 204 171 5 - 443 and mineral rights Consolidated - 2 024 452 4 227 5 022 - 11 725 total assets Consolidated - 983 206 1 746 584 - 3 519 total liabilities Capital 86 92 9 493 15 - 695 expenditure Amortisation 193 9 42 168 3 - 415 and depreciation Primary segmental information Year to 30 June 2003 Revenue External 1 000 - 377 2 905 - 614 4 896 revenue Cost of sales (863) - (198) (2 247) - (574) (3 882) Other operating 67 - 19 13 293 32 424 income Other operating (130) - (48) (281) (342) (116) (917) expenses Reallocated - - (1) 49 (53) 5 - corporate expenditure Segment result 74 - 149 439 (102) (39) 521 Income from 13 1 3 1 65 - 83 investments Finance cost (58) - - (57) (18) (47) (180) Exceptional 7 - - - (345) (50) (388) items Taxation (9) (1) (44) (130) 61 (24) (147) Minority 1 - - (101) - 20 (80) interest Contribution to 28 - 108 152 (339) (140) (191) earnings Contribution to 26 - 108 152 6 (95) 197 headline earnings Other information Consolidated 2 476 64 227 3 451 619 - 6 837 total operating assets Intangibles and 143 - - 176 5 - 324 mineral rights Consolidated 2 619 64 227 3 627 624 - 7 161 total assets Consolidated 383 2 54 1 338 422 - 2 199 total liabilities Capital 124 30 30 338 1 29 552 expenditure Amortisation 187 - 18 142 1 39 387 and depreciation COMMENTARY FOR ANNUAL RESULTS 'It has been a year of fundamental change. We have successfully concluded the ARMI/Avmin/ Harmony agreement announced on 13 November 2003. We are now implementing the changes and improvements which transactions of this nature bring about. ARM is now in a position to focus on maximising the value of its existing operations and in-house projects, where there are prospects for growth and attractive financial returns, and to focus on rolling out its growth strategy.' GROWTH STRATEGY The ultimate aim of ARM's growth strategy is the creation of shareholder wealth. This strategy has four basic tenets: • Operational excellence - This will be achieved by being a low cost producer and continuous increased efficiency, culminating in strong organic growth. • Maximising value in existing projects - This can be achieved by establishing the most efficient manner in which to maximise value from existing projects, and may include strategic partnerships. • Acquisitive growth through smart deals - ARM's credentials as an empowered company and access to capital will present many acquisition opportunities. The potential for 'smart' deals within the Group's focus areas therefore exists. • Optimise corporate structure - This will involve addressing the low liquidity levels of ARM's shares, the complex shareholding structure and direct access to cash flows. MANAGEMENT TEAM The executive management team at ARM have considerable experience over a wide range of commodities and operations. Chief Executive Officer Patrice Motsepe leads the Company. He is supported by Frank Abbott, Financial Director, Jan Steenkamp, Chief Executive of the ferrous metals division and André Wilkens, Chief Executive of the platinum division. FINANCIAL REVIEW Arising from the transactions which have occurred during the year comparisons to the previous year's results will be difficult and should be reviewed on an entity basis. The ARM group results to June 2004 are impacted by the following transactions: • Disposals - Chambishi (effective 30 June 2003) - Avgold Limited ('Avgold') (effective 30 April 2004) • Acquisitions - Harmony Gold Mining Company Limited ('Harmony') - accounted for as an associated company from 1 May 2004 - Nkomati Mine - (remaining 25% effective 1 February 2004) - ARM Platinum (effective 1 May 2004) The average rand/US dollar exchange rate for the year strengthened by 24 percent from R9,04/$ to R6,90/$. This had a significant impact on results for the year at all operations. The group achieved much better results for the second six months of the financial year, with operating profit increasing substantially to R409 million (six months to 31 December 2003: R5 million loss). This increase was largely due to the solid performances from the nickel and ferrous metals operations. Cash flow generated from operating activities was R638 million (R630 million). The balance sheet has been strengthened following the acquisitions of Harmony, ARM Platinum and 25 percent of Nkomati, resulting in total assets increasing to R11,7 billion (R7,2 billion). The Group's long-term borrowings increased to R857 million as a result of the acquisition of Nkomati for R260 million and debt assumed on the acquisition of ARM Platinum. OPERATIONS REVIEW GOLD HARMONY The gold division's primary asset is a 19,8 percent stake in Harmony. The impact of the strength of the rand clouded what can be described as a difficult but rewarding twelve months for Harmony. Harmony continued to show an increase in gold produced, increasing by 11 percent from 3,0 million ounces to over 3,3 million ounces, year-on-year. Harmony's revenue in R/kg terms decreased by 12 percent from R96 663/kg to R85 219/kg. As a result of the growth in production, Harmony managed to sustain revenue levels of R8,8 billion (R9,0 billion - for the year ended 2002/03). A 24 percent increase in actual working costs following a nine percent increase in underground tonnages and a 12 percent increase in cost per tonne resulted in a net cash operating profit of R580 million compared to the R2,4 billion previously reported. Cash operating profit margins decreased from 26 percent to seven percent. Harmony declared a final dividend of 30 cents per share. Avgold For the first 10 months of the financial year Avgold was a subsidiary of ARM. During the 10 months to 30 April 2004 Target milled 877 925 tonnes of ore at a yield of 10 g/t. The cash cost was R42 777/kg, or US$196/oz. Capital expenditure was R82 million. Revenue during the 10 months to 30 April 2004 was R644 million and gross profit was R55 million. ARM PLATINUM ARM Platinum consists of two operating mines, Modikwa Platinum Mine and Nkomati Mine, and three projects, Two Rivers Platinum, Kalplats Exploration and the Nkomati expansion. Modikwa Platinum Mine Although significant progress has been made, Modikwa remains in a build-up phase to full production; which should be achieved by early 2005. Annualising the figures from the last quarter, the mine has achieved a significant improvement in production tonnage and has achieved 70 percent of full platinum production. The operating cash costs reduced to approximately R300/t. Nkomati Mine ARM acquired the remaining 25 percent of Nkomati from Anglo Operations Limited, a subsidiary of Anglo American plc, for R260 million. The effective date of the transaction was 1 February 2004. Accordingly, 75 percent of Nkomati's results are consolidated from 1 July 2003 to 31 January 2004 and 100 percent from 1 February 2004 to 30 June 2004. The mine treated a total of 344 000 tonnes (292 000 tonnes) of ore, producing 56 800 tonnes (55 300 tonnes) of concentrate at an average nickel grade in concentrate of 9,82 percent (9,96 percent). The mine has been consistently operating above its maximum design capacity at an average of 29 000 tonnes of run-of-mine ore per month and the objective is to maintain the overall nickel grade, while minimising costs. Nkomati continues to optimise the exploitation of the various ore bodies and 17 percent of the total run-of-mine ore was comprised of MMZ ore (disseminate sulphides). Excluding nickel, other metals contributed 29 percent (35 percent) of the mine's total revenue, making the mine the lowest cost producer in its sector. The mine's revenue for the year increased by 22 percent to R611 million (R503 million), despite the strengthening of the rand, as a result of the stronger US dollar nickel price and record levels of nickel production during the year. Year-on-year unit cash operating costs increased from R344/t to R361/t or 4,9 percent, which is less than inflation. Cost of sales increased 11 percent to R287 million (R260 million) as a result of the increased production. The focus on cost minimisation and efficiency at the mine during the year resulted in significant productivity improvements - operating profit increased 35 percent to R319 million (R236 million). Profit before tax increased 50 percent to R304 million (R203 million). Nkomati 2004 2003 Cash operating profit R million 346 260 Tonnes treated ('000) 344 292 Grade (% nickel) 2,02 2,38 On-mine cash cost tonnes treated (R/tonne) 361 344 Market sales Nickel tonnes 4 920 4 900 Copper tonnes 2 830 3 300 Cobalt tonnes 81 62 PGMs oz 36 360 39 000 Two Rivers Platinum Trial mining is currently underway and 60 000 tonnes of ore has been mined and stockpiled. The objective of the trial mining is to move the project risk from greenfields to brownfields. All the feasibility assumptions have been confirmed and a 4,7 g/t 6E stoping grade has been achieved. Kalplats PGM Project ARM Platinum and Platinum Australia Limited have signed a Memorandum of Understanding to participate as joint venture partners to determine through further exploration and feasibility studies whether or not the application of the Panton Process, a patented PGM recovery process, can enhance the recovery of PGMs at the Kalplats PGM Project. ARM FERROUS The operations of ARM Ferrous, which are held through Assmang Limited ('Assmang'), are grouped into three divisions: Manganese, Chrome and Iron ore. Assmang's revenue for the year ended 30 June 2004 rose by 13,8 percent to R3 304,5 million. Attributable earnings increased by 7,1 percent to R218,3 million (R203,8 million), equivalent to R61,50 a share. Headline earnings increased by 4,9 percent to R213,8 million (R203,8 million). Contributions to attributable earnings by the three divisions, before deducting secondary tax on companies, amounted to R235,4 million (R285,1 million) from the manganese division, R11,1 million (R58,6 million) from the iron ore division and a loss of R24,9 million (R134,5 million - loss) from the chrome division. The rand/US dollar exchange rate continued to be the key determinant of Assmang's performance during the year. An average of R6,77 to the US dollar was realised on export proceeds compared to R8,97 for the previous year. Production volumes across all commodities increased in comparison to the previous year, details of which are included in the table below. Assmang 2004 2003 000 metric tonnes Product sales Iron ore 5 500 5 300 Manganese ore (excluding deliveries to the Cato Ridge alloy operation) 1 400 1 200 Manganese alloys 218 197 Charge Chrome 295 244 Capital expenditure R million 493 338 EXPLORATION ARM's new business development and exploration team has identified and acquired a portfolio of quality exploration development assets in southern Africa, comprising gold, copper/cobalt, zinc, nickel, magnesite and fluorspar. The project maturity scale ranges from early stage to advanced pre-feasibility. SAFETY AND HEALTH ARM's commitment to safety is reflected in the significant improvement in safety statistics at ARM operations during the year. The Lost Day Injury Frequency Rate for the year declined to 4,2 cases per million man hours worked (2003: 7,8 cases per 1 million man hours worked). Regrettably, two people lost their lives during the year. The Board, management and employees of ARM extend their condolences to the bereaved families and friends. During the year Nkomati Mine achieved 8 000 fatality-free production shifts and 10 years without a fatality. DIVIDENDS We are in a capital growth phase and therefore the Board does not consider it appropriate to declare a dividend for the year ended 30 June 2004. DIRECTORATE The ARM Board has been reconstituted: Executive directors PT Motsepe - Chairman and Chief Executive Officer F Abbott - Financial Director Non-executive directors RP Menell - Deputy Chairman ZB Swanepoel Independent non-executive directors Dr MMMM Bakane-Tuoane MW King AK Maditsi PJ Manda JR McAlpine Dr PS Sibisi Dr RV Simelane MV Sisulu PT Motsepe Chairman and Chief Executive Officer F Abbott Johannesburg Financial Director 17 August 2004 African Rainbow Minerals Limited ('ARM' or the 'Company') Formerly Anglovaal Mining Limited ('Avmin') Registration number 1933/004580/06 Incorporated in the Republic of South Africa, JSE Securities Exchange South Africa Share code: ARI ISIN: ZAE000054045 and London Stock Exchange plc Share code: AGM Registered office ARM House 29 Impala Road Chislehurston Sandton 2146 PO Box 786136 Sandton 2146 Tel +27 11 779 1300 Fax +27 11 779 1312 For further information Ebrahim Takolia (General Manager Investor Relations) Tel +27 11 779 1300 e-mail ir.admin@arm.co.za Group Company Secretary: RH Phillips

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