Unaudited Results for the half-year ended 31.12.04

African Rainbow Minerals Limited (formerly Anglovaal Mining Limited) (Incorporated in the Republic of South Africa) (Registration number 1933/004580/06) JSE Share code: ARI and LSE Share code: AGM ISIN: ZAE000054045 ('ARM' or 'Group') UNAUDITED RESULTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2004 HIGHLIGHTS > REVENUE INCREASED BY 54% FROM R1,6 BILLION TO R2,4 BILLION > PROFIT FROM OPERATIONS INCREASED 400% FROM R125 MILLION TO R626 MILLION > HEADLINE EARNINGS INCREASED FROM A LOSS OF R1 MILLION TO A PROFIT OF R20 MILLION > CASH GENERATED FROM OPERATIONS UP 278% FROM R161 MILLION TO R608 MILLION > STRATEGIC ALLIANCE FORMED WITH LIONORE AT NKOMATI > ELIMINATION OF CROSS SHAREHOLDING BEING FINALISED COMMENTARY ARM has delivered exceptional basic and headline earnings as well as robust cash flows for the half-year ended 31 December 2004, notwithstanding a strong Rand environment. Furthermore, the growth strategy is well on track with a number of initiatives advanced: - The manganese shaft at Nchwaning and the construction of an underground chrome mine at Dwarsriver are progressing well; - ARM has secured a world-class partner in LionOre Mining International Limited (LionOre) for the Nkomati nickel mine (Nkomati) and both companies will now work closely to optimise the expansion study and project release; - The Two Rivers platinum project is awaiting final approval; - The Modikwa platinum mine (Modikwa) is well on-track to reach full production; and - A feasibility study to assess a large new iron ore mine at the Bruce, King and Mokaning properties in the Northern Cape is well underway. Following Harmony Gold Mining Company Limited's ('Harmony') intended disposal of its ARM shares, the objective of removing the ARM cross shareholding will be achieved. RESULTS REVIEW Profits from operations increased substantially, for the period ended 31 December 2004, to R626 million (R125 million). The improvement can primarily be attributed to significant increases in sales volumes of manganese as well as higher commodity prices for manganese and nickel, notwithstanding the strong Rand. The higher operating profits were partially offset by losses of R138 million from Harmony, which after taxation and finance costs, resulted in basic earnings of R240 million (R1 million-loss) and headline earnings of R20 million (R1 million-loss). ARM's investment in Harmony reduced from 20% to 16% on 30 November 2004 when Harmony increased its issued share capital. ARM equity accounted its Harmony investment up to that date, whereafter Harmony is treated as an investment and not as an associated company. Cash generated from operations increased from R161 million to R608 million and was used primarily to fund capital expenditure and to repay borrowings. The total short- and long-term borrowings reduced from R1,8 billion on 30 June 2004 to R1,6 billion on 31 December 2004. ARM's net debt to equity ratio remained at 19%. Review of operations ARM Ferrous Assmang: Headline earnings for the period increased substantially over that of last year's corresponding six months to R353 million (R4 million). The increase in headline earnings can be attributed to positive market conditions over the past six months, mainly in terms of manganese alloys prices, significant increase in sales volumes of manganese ore, and to continuing cost saving exercises at the operations. Assmang's turnover for the half-year increased by 42% to R1,9 billion (R1,3 billion) with increases being delivered by all three divisions within Assmang: ASSMANG: Iron ore Manganese Chrome SEGMENTAL division division division Total INFORMATION Rm Rm Rm Rm Half-year to 31 December 2004* Revenue 317 1 112 458 1 887 Contribution to Assmang headline earnings 7 333 13 353 Half-year to 31 December 2003* Revenue 298 633 402 1 333 Contribution to Assmang headline earnings 14 52 (62) 4 *Unaudited Sales volumes for the period under review are detailed in the table below: Assmang Six months ended Volume 31 December 2004 2003 Increase/ (tons) (tons) (decrease) Manganese ore* 767 986 662 867 16% Iron ore 2 540 595 2 493 824 2% Manganese alloys 105 272 113 452 (7%) Charge chrome 104 371 126 860 (18%) *Excluding inter-Group sales to the Cato Ridge Works ARM Platinum Modikwa: Build-up to full production remains on-track for mid-2005. As the mine is in a commissioning phase, figures are compared to the immediately preceding six months as opposed to the comparative period in the previous year. Lower grade development ore was not treated and this led to a higher head grade and increased the cash cost per ton milled. Various initiatives are being implemented on the mine to ensure that volumes are increased to reduce the cash cost per ton to the planned R300/ton at full production. Modikwa Six months ended (100% basis) 31 December 30 June 2004 2004 Increase/ (tons) (tons) (decrease) Tons milled million 1,14 1,23 (8%) tons Head grade (4E) g/t 4.35 3.85 13% Platinum in concentrate ounces 60 000 57 700 4% Cash cost R/ton 373 327 14% Capital expenditure Rm 54,2 34,2 58% Nkomati: The mine has had an excellent performance over the last six months. Nickel sales were lower as a result of a delayed shipment to a Canadian customer, but due to the strong nickel price and exceptional improvement in cash costs, the contribution to earnings was higher at R103 million (R77 million). Nkomati Six months ended 31 December 31 December 2004 2003 Increase/ (tons) (tons) (decrease) Tons milled tons 184 000 169 000 9% Nickel head grade (4E) % 1.94 1.94 - Concentrate sales tons 32 384 28 700 13% Nickel sales tons 2 272 2 440 (7%) PGM sales ounces 21 457 19 800 8% On mine cash costs R/ton 333 354 6% Cash costs (net of US$/lb 0,95 1,15 17% by-products) Nickel prices receivedUS$/ 6,34 4,94 28% lb Review of projects Two Rivers: The Two Rivers project has concluded a successful trail mining -program that has substantively validated geological and mining feasibility -parameters. As a result of this program, the orebody has been exposed to such an extent that it has improved confidence levels and effectively enhanced the project from `greenfields' status to a `brownfields' development. ARM is now in the process of finalising project approvals. Two Rivers' capital cost will be approximately R1,2 billion and is estimated to have a life of mine of 20 years at an underground production rate of 2,2 million run-of-mine tons a year. Main metal annual sales for the new mine are planned at 120 000oz of platinum, 80 000oz of palladium and about 30 000oz of rhodium. The necessary environmental and mining authorisations have all been approved by the Department of Minerals and Energy. Nkomati expansion: ARM has announced, with effect from 1 January 2005, the formation of a 50:50 unincorporated joint venture with LionOre at Nkomati in a transaction valued at US$48,5 million (approximately ZAR290 million). LionOre, a major producer of nickel globally, is the owner of the Activox technology, which is being considered for the Nkomati expansion project. ARM and LionOre will utilise their joint skills and experience to review and improve on the technical and economical feasibility of the expansion. The preparation of a trial mining pit has commenced at Nkomati to extract a bulk sample for delivery in April 2005 to LionOre's Botswana operations for metallurgical testing. This transaction is subject to certain conditions that remain to be fulfilled, including approval in terms of the South African Competitions Act and South African Exchange Control Regulations. ARM Exploration: The board has approved the appointment of advisors to embark on a process of restructuring and repositioning ARM's attractive exploration portfolio for development and growth. This includes projects in Namibia, Zambia (copper, cobalt, zinc and nickel) and in the Democratic Republic of Congo (copper and cobalt). These range from early stage exploration phase programs through to projects in feasibility stage. The review process will be completed by mid-2005. HARMONY ARM supports the offer that has been submitted by Harmony to acquire Gold Fields Limited. Arm's 16% interest in Harmony is treated as an investment from December 2004. For the five months to December 2004, on an equity accounted basis, Harmony made a loss of R138 million. DIVIDENDS ARM has very exciting capital projects and has decided not to pay dividends for the half-year, but to conserve its current cash liquidity. DIRECTORATE During the last six months, Mr AJ Wilkens was appointed chief executive officer and elected to the board and Mr WM Gule was appointed an executive director. REVIEW FOR THE REMAINDER OF THE YEAR Most commodity prices are expected to remain at similar, or slightly stronger, levels in United States Dollar terms for the remainder of the year, while the United States Dollar: South African Rand exchange rate is not expected to be materially different. ARM operations are now generating positive cash flows, from operating activities, at the prevailing exchange rate. This follows a program introduced to deliver better efficiencies and the reduction of operating costs. GROUP BALANCE SHEET as at 31 December 2004 Unaudited Unaudited Audited Half-year ended Half-year ended Year ended 31 December 31 December 30 June 2004 2003 2004 Restated* Note Rm Rm Rm ASSETS Non-current assets Tangible assets 4 903 2 438 4 674 Intangible assets 6 6 5 Deferred tax assets 37 10 7 Environmental rehabilitation trust funds 29 22 29 Investment in associate 2 - 870 4 338 Investments 3 3 261 165 3 8 206 3 511 9 056 Current assets Inventories 1 210 984 914 Trade and other 1 073 786 1 162 receivables Cash and cash 225 218 328 equivalents 2 508 1 988 2 404 Total assets 10 714 5 499 11 460 EQUITY AND LIABILITIES Capital and reserves Ordinary share capital 10 6 10 Share premium 3 496 122 3 495 Other reserves (1 169) 171 (193) Retained earnings 3 553 2 207 3 316 Shareholders' interest 5 890 2 506 6 628 in capital and reserves Minority interest 1 494 1 155 1 326 Total shareholders' 7 384 3 661 7 954 interest Non-current liabilities Long-term borrowings 4 787 - 857 Deferred tax 758 542 853 liabilities Long-term provisions 159 118 151 1 704 660 1 861 Current liabilities Trade and other 583 403 567 payables Provisions 36 32 41 Taxation 174 3 63 Overdrafts and 4 833 740 974 short-term borrowings 1 626 1 178 1 645 Total equity and 10 714 5 499 11 460 liabilities *Avgold Limited treated as an associate from 1 May 2003. GROUP INCOME STATEMENT for the half-year ended 31 December 2004 Unaudited Unaudited Audited 31 December 30 June Year ended 2004 2003 Increase/ 2004 Restated* (decrease) Note Rm Rm % Rm Revenue > 2 391 1 557 54 3 885 Cost of sales (1 618) (1 296) (25) (3 064) Gross profit 773 261 196 821 Other operating 27 21 29 73 income Other operating (167) (157) (6) (343) expenses Retrenchment cost (7) - - (23) Profit from 626 125 401 528 operations Income from 12 11 26 investments Finance costs (98) (35) (80) Loss from associate (138) (55) (120) Profit before 402 46 354 taxation and exceptional items Exceptional items 5 284 - 1 148 - Profit on disposal of discontinued - - 1 057 operations - Other exceptional 284 - 91 items Profit before > 686 46 1 502 taxation Taxation (285) (45) (291) Profit after 401 1 1 211 taxation Minority interest (161) (2) (103) Basic earnings/ 240 (1) 1 108 (loss) Additional information Headline earnings/ 20 (1) 47 (loss) > Headline earnings/ (loss) per share (cents) 10 (1) 37 Basic attributable earnings/(loss) per share (cents) 117 (1) 865 Fully diluted attributable earnings/(loss) per share (cents) 117 (1) 860 Fully diluted headline earnings per share (cents) 10 - 36 Number of shares in issue at end of period 204 391 114 128 204 208 (thousands) Weighted average number of shares in issue 204 313 113 713 128 115 (thousands) Weighted average number of shares used incalculating fully diluted earnings per share 204 619 114 583 128 876 (thousands) Net asset value per share (cents) 2 882 2 196 3 246 SEGMENTAL INFORMATION Primary segmental information Ferrous Gold Platinum metals Rm Rm Rm Half-year ended 31 December 2004 (unaudited) Revenue - 195 1 887 Cost of sales - (246) (1 227) Other operating income - - 8 Other operating expenses - (2) (100) Segment result** - (53) 568 Income from investments - 1 1 Finance cost - (52) (33) Loss from associate (138) - - Exceptional items - other - - 8 Taxation - 25 (182) Minority interest - 18 (179) Contribution to earnings (138) (61) 183 Contribution to headline (144) (61) 179 earnings Other information Consolidated total assets 3 258 2 085 4 520 Consolidated total liabilities - 862 1 705 Capital expenditure - 107 286 Amortisation and depreciation - 31 121 Half year ended 31 December 2003 (unaudited)* Revenue - - 1 333 Cost of sales - - (1 195) Other operating income - - 5 Other operating expenses - - (91) Reallocated corporate - - 32 expenditure Segment result - - 84 Income from investments - - 1 Finance cost - - (34) Loss from associate (55) - - Taxation - - (15) Minority interest - - (2) Contribution to earnings (55) - 34 Contribution to headline (55) - 34 earnings Other information Consolidated total assets 871 109 3 847 Consolidated total liabilities - - 1 573 Capital and expenditure - 34 208 Amortisation and depreciation - - 81 Year ended 30 June 2004 (unaudited) Revenue - 57 3 304 Cost of sales - (71) (2 741) Other operating income - - 22 Other operating expenses - (1) (194) Reallocated corporate - - 71 expenditure Segment result - (15) 462 Income from investments - - 2 Finance cost - (16) (52) Loss from associate (120) - - Exceptional items - (35) - Taxation - (1) (124) Minority interest - 6 (109) Contribution to earnings (120) (61) 179 Contribution to headline (137) (26) 177 earnings Other information Consolidated total assets 4 338 2 024 4 227 Consolidated total liabilities - 935 1 746 Capital expenditure - 92 493 Amortisation and depreciation - 9 168 *Avgold Limited treated as an associate from 1 May 2003. Corporate Nickel and other Total Rm Rm Rm Half year ended 31 December 2004 (unaudited) Revenue 309 - 2 391 Cost of sales (145) - (1 618) Other operating income 9 10 27 Other operating expenses (32) (40) (174) Segment result 141 (30) 626 Income from investments 1 9 12 Finance cost - (13) (98) Loss from associate - - (138) Exceptional items - other - 276 284 Taxation (39) (89) (285) Minority interest - - (161) Contribution to earnings 103 153 240 Contribution to headline 103 (57) 20 earnings Other information Consolidated total assets 535 316 10 714 Consolidated total liabilities 173 590 3 330 Capital expenditure 12 36 441 Amortisation and depreciation 13 1 166 Half-year ended 31 December 2003 (unaudited)* Revenue 224 - 1 557 Cost of sales (101) - (1 296) Other operating income 4 12 21 Other operating expenses (15) (51) (157) Reallocated corporate (2) (30) expenditure Segment result 110 (69) 125 Income from investments 1 9 11 Finance cost - (1) (35) Loss from associate - - (55) Taxation (34) 4 (45) Minority interest - - (2) Contribution to earnings 77 (57) (1) Contribution to headline 77 (57) (1) earnings Other information Consolidated total assets 250 422 5 499 Consolidated total liabilities 54 211 1 838 Capital and expenditure 5 1 248 Amortisation and depreciation 8 2 91 Year ended 30 June 2004 (unaudited) Revenue 524 - 3 885 Cost of sales (252) - (3 064) Other operating income 42 9 73 Other operating expenses (73) (98) (366) Reallocated corporate (5) (66) expenditure Segment result 236 (155) 528 Income from investments 2 22 26 Finance cost - (12) (80) Loss from associate - - (120) Exceptional items - 1 183 1 148 Taxation (77) (89) (291) Minority interest - - (103) Contribution to earnings 161 949 1 108 Contribution to headline 161 (128) 47 earnings Other information Consolidated total assets 452 419 11 460 Consolidated total liabilities 206 619 3 506 Capital expenditure 9 15 609 Amortisation and depreciation 38 2 217 *Avgold Limited treated as an associate from 1 May 2003. ** Reallocation of corporate expenditure not applied to the half-year ended 31 December 2004 results. GROUP CASH FLOW STATEMENT for the half-year ended 31 December 2004 Unaudited Audited Half-year ended Year ended 31 December 30 June 2004 2003 Increase/ 2004 Restated* decrease Rm Rm % Rm CASH FLOW FROM OPERATING ACTIVITIES Unaudited Unaudited Audited Half-year ended Half-year ended Year ended 31 December 31 December Increase/ 30 June 2004 2003 decrease Rm Rm % Rm Cash receipts 2 574 1 691 52 3 838 from customers Cash paid to suppliers and employees (1 966) (1 530) 28 (3 235) Cash generated 608 161 278 603 from operations Interest 12 11 9 24 received Interest paid (105) (35) 200 (70) Dividends 19 - - 1 received Dividends paid (13) (9) 44 (13) to minorities Taxation paid (55) (44) 25 (70) Net cash inflow from operating activities 466 84 455 475 CASH FLOW FROM INVESTING ACTIVITIES Additions to fixed assets to maintain (349) (248) 41 (472) operations Additions to fixed assets to expand (92) - (101) operations Net cash effect - - (32) of acquisitions Proceeds on disposal of fixed assets 50 - 7 Proceeds on disposal of investments - - 167 Purchase of remaining portion of Nkomati mine - - (260) Net cash (outflow)/inflow from investing (391) (248) 58 (691) activities CASH FLOW FROM FINANCING ACTIVITIES Increase in 1 43 (98) 54 shareholder funding Funding received from minority shareholders 21 20 5 42 Long-term 30 - 280 borrowings raised Long-term (94) - (127) borrowings repaid (Decrease)/ increase in short-term borrowings (136) 55 (347) 31 Net cash (outflow)/inflow from financing (178) 118 (251) 280 activities Net (decrease)/ increase in cash and cash (103) (46) 124 64 equivalents Cash and cash equivalents at beginning of 328 264 24 264 period Cash and cash equivalents at end of period 225 218 3 328 Cash generated from operations per share 298 142 110 471 (cents) *Avgold Limited treated as an associate from 1 May 2003. STATEMENT OF CHANGES IN EQUITY for the half-year ended 31 December 2004 Share Revaluation capital and of Retained premium buildings Other earnings Total Rm Rm Rm Rm Rm Half-year ended 31 December 2004 (unaudited) Balance at 30 3 505 6 (199) 3 316 6 628 June 2004 Basic - - - 240 240 earnings Share of associate other reserves - - 235 - 235 Share options 1 - - - 1 exercised Revaluation of listed investments - - (1 207) - (1 207) Other - (6) 2 (3) (7) Balance at 31 3 506 - (1 169) 3 553 5 890 December 2004 Half-year ended 31 December 2003 (unaudited) * Balance at 30 85 6 212 2 208 2 511 June 2003 Loss - - - (1) (1) Revaluation of listed investments - - (47) - (47) Share options 43 - - - 43 exercised Balance at 31 128 6 165 2 207 2 506 December 2003 Year ended 30 June 2004 (audited) Balance at 30 85 6 212 2 208 2 511 June 2003 Basic - - - 1 108 1 108 earnings Investment - - (133) - (133) sold Revaluation of listed investments - - (45) - (45) Share options 54 - - - 54 exercised Shares issued for acquisitions 3 366 - - - 3 366 Share of associate other reserves - - (235) - (235) Other - - 2 - 2 Balance at 30 3 505 6 (199) 3 316 6 628 June 2004 *Avgold Limited treated as an associate from 1 May 2003. NOTES TO THE FINANCIAL STATEMENTS for the half-year ended 31 December 2004 Unaudited Half-year Audited ended Year 31 December ended 2004 2003 30 June Restated* 2004 Rm Rm Rm 1. BASIS OF PREPARATION The financial information for the half-year ended 31 December 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. These condensed financial statements are prepared in accordance with AC 127 - interim reporting, and are prepared on the historical cost basis, except for the measurement at fair value of certain investments and certain fixed assets and loans receivable and payable. 2. INVESTMENT IN ASSOCIATE Opening balance 4 338 925 925 Movement for the period (138) (55) 3 413 Transfer to investments 4 200 - - Closing balance - 870 4,338 The investment in Avgold was treated as an associate from 1 May 2003 to 30 April 2004 being the date it was sold to Harmony. The investment in Harmony has been accounted for as an associate from the date of acquisition to 30 November 2004 which was the date when the ARM interest diluted to 16,2% following the new share issue by Harmony to certain Gold Fields shareholders. - 3. INVESTMENTS Listed Original cost 3 34 3 Transfer from associates 4 200 - - Revaluation (1 207) 131 - Realisation of unrealised profit on sale of Avgold 265 - - Total carrying amount of investments 3 261 165 3 4. BORROWINGS Long-term borrowings are held as follows: - African Rainbow Minerals Limited 212 - 215 - Assmang Limited 14 - 14 - ARM Platinum (Proprietary) Limited 561 - 628 787 - 857 Overdrafts and short-term borrowings are held as follows: - African Rainbow Minerals Limited 109 - 76 - Assmang Limited 567 740 737 - ARM Platinum (Proprietary) Limited 157 - 161 833 740 974 Total borrowings 1 620 740 1 831 Interest of R1 million was capitalised for the half-year ended 31 December 2004 (2003: R7 million). Interest of R18 million was capitalised for the year ended 30 June 2004. 5. EXCEPTIONAL ITEMS Surplus on disposal of Avgold Limited shares - - 1 075 Realisation of unrealised profit on sale of Avgold 265 - - Profit on sale of fixed assets 13 - - Surplus on disposal of Assore Limited shares - - 135 Other 6 - (62) Exceptional items as per income 284 - 1 148 statement Taxation (66) (4) (106) Minority interest (4) - (3) Profit on sale of fixed assets - - 5 Profit on sale of fixed assets in associate 6 4 9 Dilution in associate - - 8 Net exceptional items 220 - 1 061 6. HEADLINE EARNINGS Basic earnings/(loss) per income 240 (1) 1 108 statement Surplus on disposal of Avgold Limited shares - - (1 075) Surplus on disposal of Assore Limited shares - - (135) Other (6) - 62 Profit on sale of fixed assets (13) - (5) Profit on sale of fixed assets in associate (6) (4) (9) Realisation of unrealised profit on sale of Avgold (265) - - Dilution in associate - - (8) (50) (5) (62) Taxation 66 4 106 Minority interest 4 - 3 Headline earnings/(loss) 20 (1) 47 7. COMMITMENTS AND CONTINGENT LIABILITIES Commitments in respect of future capital expenditure, which will be funded from cash generated and available borrowing resources are summarised below: Approved by directors - contracted for 160 160 115 - not contracted for 326 283 330 Total commitments 486 443 445 Contingent liabilities Shareholders are advised that there have been no significant changes to the contingent liabilities of the Group as disclosed in the June 2004 annual report. Avgold Limited treated as an associate from 1 May 2003. For and on behalf of the board Patrice Motsepe Executive chairman Andre Wilkens Chief executive officer Sandton 14 February 2005 Directors: PT Motsepe (Executive chairman), RP Menell (Deputy chairman)*, AJ Wilkens (Chief executive officer), F Abbott, Dr MMM Bakane-Tuoane**, WM Gule, MW King**, AK Maditsi**, PJ Manda**, JR McAlpine**, Dr PS Sibisi**, Dr RV Simelane**, MV Sisulu**, ZB Swanepoel* (*Non-executive, **Independent non-executive). Group company secretary: RH Phillips Issued by sponsor: Deutsche Securities (SA) (Proprietary) Limited

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