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Corporate profile & highlights FY2006

Miners at Two Rivers

Profile and highlights

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Corporate profile

African Rainbow Minerals Limited (ARM) is a leading, niche diversified mining and minerals company, based in Johannesburg, South Africa, with excellent long-life low-cost assets in key commodities. The company owns and operates its assets and exercises a strategic influence on the boards of those companies in which it has an interest. ARM's unique management style is supported by experience and a focus on entrepreneurship, which adds significant value to its business. An integral part of ARM's business is the forging of partnerships with key players in the various sectors to ensure that ARM is at the forefront of technological development and global practices, and has access to key markets and to value-generating growth opportunities.

ARM in its current form was formed in May 2004, to explore, develop, operate and hold significant interests in the South and southern African mining industry. The company has five areas of interest, namely:

ARM's history though goes back much further, to 1933 when the Anglo-Transvaal Consolidated Investment Company Limited was incorporated as a mining, finance and industrial holding company. That group was unbundled in 1998, allowing Anglovaal Limited to focus on its core mining operations through Anglovaal Mining Limited (Avmin).

In 1994, ARM Executive Chairman Patrice Motsepe started Future Mining, a contract mining company which, following a series of acquisitions of gold interests from Anglo American Corporation of South Africa Limited, led to the formation of ARMgold. The gold assets of ARMgold Limited were listed in May 2002, while the platinum assets were bolstered with the development of Modikwa Platinum in a joint venture with Anglo Platinum Limited in 2001.

In May 2003, ARMgold merged with Harmony to create the world's sixth largest gold company and, in May 2004, a range of indivisible transactions involving certain interests of Avmin, ARMgold and Harmony resulted in the formation of two entities – Harmony Gold in its current form and ARM.

In November 2005, ARM listed TEAL Exploration & Mining Incorporated (TEAL), on the Toronto Stock Exchange and later on the JSE Limited, into which ARM's non-South African exploration portfolio was injected. This exploration portfolio includes copper projects in Zambia, a copper-cobalt project in the Democratic Republic of Congo (DRC) and a gold project in Namibia.

The formation of ARM Coal, the company's new coal investment, was announced in February 2006.ARM Coal holds a 20 percent interest in the existing coal operations of Xstrata Coal South Africa, and a 51 percent interest in an unincorporated joint venture which holds the Goedgevonden project. Subsequent to the financial year-end, the ARM Board approved the exercise of the option to acquire an additional 10 percent, directly, in Xstrata Coal South Africa, for R400 million by 1 September 2006.

Throughout this report, $ refers to US$. The dollar equivalents throughout this report in brackets (provided for convenience purposes only) are translated at the year-end rate of R7.16.

African Rainbow Minerals Limited (ARM) is a niche, diversified South African mining company with excellent long-life, low-cost operating assets in key commodities. ARM owns ferrous and base metals, platinum and coal operations and holds a significant interest in the gold mining sector through its shareholding in Harmony. ARM subsidiary, TEAL houses ARM's non-South African exploration portfolio.

ARM is listed on the JSE Limited in Johannesburg, South Africa, and had a market capitalisation of approximately R10 billion ($1.4 billion) as at 30 June 2006.

ARM Platinum


ARM Platinum has interests in the following platinum and nickel operations: Modikwa Platinum, a 50:50 joint venture with Anglo Platinum, the Two Rivers Platinum Mine, (55 percent interest) with partner Implats, and the Nkomati Nickel mine, a 50:50 joint venture with LionOre. ARM also has a 50 percent interest in the Nkomati Nickel Expansion Project and 90% in the Kalplats PGM Exploration Project.

During FY2006, the platinum and nickel operations contributed R227 million towards group earnings, an increase of 89 percent on the previous year and accounted for 38 percent of group earnings. The surge in the prices of PGMs and nickel as well as strong demand for these metals contributed substantially to the strong performance of this division during the current financial year.

ARM Ferrous


Through its 50 percent holding in Assmang, ARM Ferrous produces, for both local and international markets, manganese and iron ore from its mines in the Northern Cape and chromite ore from its mine at Dwarsrivier in Mpumalanga. ARM Ferrous also produces charge chrome from its smelter in Machadodorp, Mpumalanga and ferromanganese from its smelter in Cato Ridge, KwaZulu-Natal. Most of the company's alloy production is exported.

During FY2006, attributable profits from ARM Ferrous amounted to R341 million, accounting for 57 percent of group earnings. The division continued to benefit from the strong demand being experienced for commodities globally. Revenues from iron ore sales were especially strong.

ARM Coal


In February 2006,ARM entered into an agreement with Xstrata plc for the establishment of ARM Coal in which ARM has 51 percent and Xstrata 49 percent respectively. In turn, ARM Coal will have a 20 percent equity-based participation interest in the existing coal operations of Xstrata South Africa and a 51 percent interest in the unincorporated joint venture holding the Goedgevonden Coal Project.

Subsequent to year-end, the ARM board has approved the exercise of an option held by ARM to acquire a further 10 percent in Xstrata's South African coal operations, directly, for R400 million as from 1 September 2006.



TEAL, a mineral development and exploration company, which was listed on the Toronto Stock Exchange in November 2005 and the JSELimited in April 2006, houses ARM's non-South African exploration portfolio. It includes exploration projects in Zambia (the Konkola North and Mwambashi Copper Projects), the Democratic Republic of the Congo (DRC) (the Kalumines Copper-Cobalt Project) and Namibia (the Otjikoto Gold Project). Each of these projects is being progressed towards feasibility and development decisions while other development opportunities in southern and central Africa are simultaneously being sought.

TEAL's total resource comprises 15 billion pounds of copper at an average grade of above 2.65 percent.

Harmony - Gold


ARM has a 16 percent shareholding in Harmony, the fifth largest gold producer in the world and the third largest gold producer in South Africa.

Harmony produced 74 242 kilograms of gold during the 2006 financial year which equates to 2 386 million ounces. Harmony continues to invest in major projects likely to come on stream over the next few years, with production expected to grow to 3.5 million ounces.

Total asset value (June 2006)
Total asset value (June 2006)
Contribution to earnings
Contribution to earnings

South African operations Enlarge map
Exploration and development prospects Enlarge map
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® 2006 African Rainbow Minerals Limited