ELANDSFONTEIN

An off-take agreement with Rustenburg Platinum Mines (RPM), a wholly-owned subsidiary of Anglo Platinum Limited (AngloPlats), for the Platinum Group Metals (PGMs) concentrate to be produced from its Elandsfontein mine has been concluded.

Subsidiary Eland Platinum Mines (Pty) Ltd (Eland Mines), has signed a credit-approved term sheet with Nedbank Capital in respect of Eland Mines’ project finance facility. On 21 December 2006 EPM was awarded a mining right covering both the original Elandsfontein prospecting area, acquired from Rustenburg Platinum Mines Limited, and the contiguous ‘triangle’ land owned by the state. The granting of these rights, just nine months from the date of application, bears testimony both to the effi cacy of South Africa’s new minerals legislation and the commitment of the Department of Minerals and Energy (DME) to the growth and development of the country’s resources sector. During the six months to 31 December 2006, progress was made towards development of thethe mine. The first blast to mark the start of open-pit production took place on 18 January 2007, just 17 months after the group was established and comfortably within schedule.

The bankable feasibility study (BFS) showed that the project has robust economics and generates solid cashflows. Using a conservative case with platinum (Pt) at $950/oz, palladium (Pd) at $300/oz, rhodium (Rh) at $2,100/oz, gold (Au) at $500/oz and an exchange rate of R8.00/$, the ungeared, pre-tax discounted cash flow analysis yields a net present value (NPV) of R2 050 million at a 10% discount rate and an internal rate of return (IRR) of 27%. Based on the spot prices (20 November 2006), with Pt at $1,262/oz, Pd at $320/oz, Rh at $4 860/oz, Au at $624/oz and R7.24/$, the NPV increases to R5 618 million and the IRR to 53%.