Marikana mining

In 2009 we mined 8.5 million tonnes from our conventional underground Marikana operations, a decline of 0.6 million tonnes from 2008. Around half of this decline was due to the increase in Section 54 shutdowns, as outlined above with 80% of the total tonnes lost due to Section 54 safety shutdowns in 2009 occurring at K3 and Rowland, our two largest shafts. In addition, around 0.1 million tonnes were lost at our Marikana conventional underground operations following the planned closure of a small uneconomic decline shaft and a further five half levels at Marikana during the third quarter of 2009. Finally tonnes were lost during 2009 as a direct result of disruption relating to the restructuring programme completed in March, when a total of 7,000 full time employees and contractors left the business.

Production from our mechanised and hybrid shafts increased 49% year-on-year to 1.7 million tonnes. Saffy performed extremely well, despite the multiple challenges faced by shaft management in converting from fully mechanised to hybrid mining during the year, with the shaft achieving its year end monthly hoisting target of 80,000 tonnes in September 2009. It will take a further 18 months for the full transition to hybrid mining, but we are taking the appropriate action to deliver this project safely, on time and within budget. To support us in the production ramp-up in 2010, we plan to increase the number of crews during the first half of the year. At the end of the 2009 financial year, there were 31 stoping crews at Saffy and, by April 2010, we expect to have 45 crews operating at the shaft. As a result, we expect production to continue growing towards shaft capacity of around 200,000 tonnes per month, which we aim to achieve in 2014. By that time, we anticipate Saffy’s current workforce complement of around 2,300 will have increased to approximately 4,000.

Hossy also had a good year, achieving average productivity of around 1,500 centares per month per suite of equipment at the end of the 2009 financial year, in line with our initial targets set in November 2008. During the year, production at Hossy continued to ramp-up to over 60,000 tonnes per month by September 2009, from around 20,000 tonnes in October 2008.

The improvement in productivity at Hossy shaft was a result of substantial management effort and focus to deliver an improved performance during the year. We made some important upgrades to the way we implement mechanised mining at the shaft. Firstly, we increased our focus on equipment availability, with better maintenance and quicker repair times being achieved, supported by improved mining standards and conditions. Secondly, we made improvements in the utilisation of the extra low profile equipment, focusing on improving operator and supervisors’ skills, as well as upgrading management operating systems. Thirdly, we made some significant changes to the shaft’s mining layout and, as a result, we are starting to see an increase in stoping panels per fleet and we expect that to continue in 2010. Finally, we upgraded the shaft’s infrastructure, implementing a new communication network backbone, installing new strike conveyors and constructing a new maintenance workshop at the shaft.

Costs for the 2009 financial year at our core underground conventional operations at Marikana Mining were R466 per tonne, up 14% from 2008. If we adjust for the additional tonnes lost due to Section 54’s the year on year increment would be 10%. Costs at our mechanised and hybrid operations at Marikana for the 2009 financial year were R630 per tonne, up 3% from 2008. It should be noted in this context that the wage inflation for 2009 was 12.5%. Capital expenditure during 2009 at our Marikana Mining division was R1,293 million, the majority of which was allocated to Hossy, Saffy and K4.