Annual Report 2001

Directors' Report

The Directors have pleasure in presenting their report, together with the financial report of Zimbabwe Platinum Mines Limited ("Zimplats" or "the Company") and the consolidated financial report of the group, being Zimplats and its controlled entities, for the year ended 30 June 2001.

Purpose of the Company

Zimplats’ main purpose is the production of platinum group metals from its reserves and resources on the Great Dyke in Zimbabwe. The company’s activities are set to move from principally exploration and evaluation to include mining and production.

Reporting Currency and Rounding of Amounts

The financial reports have been prepared in United States dollars (US$).

Zimplats is a company of a kind referred to in ASIC Class Order 98/100 dated 10 July 1998. In accordance with that Class Order, amounts in the financial report have been rounded off to the nearest thousand dollars, unless otherwise indicated.

Capital

Authorised Share Capital

The authorised share capital of the company remains unchanged since last year at 500 million ordinary shares of 10 cents each.

Issued Share Capital

No new shares were issued during the year and the issued capital remains at 88,361,820 fully paid ordinary shares of 10 cents each.

Unissued Share Capital

In terms of the Articles of Association of the company, unissued shares are under the control of the Directors.

At a general meeting of shareholders held on 28 May 2001, the Directors were authorised to allot up to 13,254,273 ordinary shares in the company to the National Investment Trust of Zimbabwe (NIT) at the average market price for the company’s shares over the last 5 days on which share sales were recorded on the ASX before the day on which the issue is made.

At the time of writing this report the NIT had not taken up the offer.

Share Option Scheme

In terms of a resolution passed at the general meeting of shareholders held on 28 May 2001, options to purchase 715,000 ordinary shares in the company were issued to Directors. Together with the 846,000 options that were already in place the total options allocated to employees and officers of the company now stands at 1,561,000. Details of the scheme are set out in note 17 of the financial statements.

Change in major shareholdings

As mentioned elsewhere in this report, Delta Gold Limited reduced its shareholding in Zimplats from 51.05% to 21.05%. The 30% shareholding was acquired by Impala Platinum Holdings Limited and Absa Bank Limited through a joint holding company.

The result is that the broad structure of the shareholding is now :

Directorate

Composition of the Board

During the year there were a number of changes in the composition of the board as shown in the table below. These changes occurred as a result of the change in the major shareholders of the company.
At the forthcoming Annual General Meeting, members will be asked to confirm the appointments to the Board of Messrs G D Povey and L I Rozman.
In terms of the Articles of Association of the company, one third of the directors, excluding the Chief Executive Officer, will retire by rotation.
The directors who retire at the next Annual General Meeting are Messrs R G Still and P M Vanderspuy. Being eligible, they offer themselves for re-election.

Details of Current Board Members

Chairman (non-executive) Still, Robert George (46)
BCom (Wits), BCom (Hons)(UCT), CTA (Wits), CA(SA)
Rob Still is a founding member of the Board of Directors and was elected Chairman on 30 March 2001. He has more than 17 years' experience in mining and mining finance and is currently the Chief Executive Officer of a titanium mineral sands project in Southern Africa.

Chief Executive Officer Pitchford, Roy Aubrey (51)
CA(Z)
Roy Pitchford has more than 20 years' senior management and executive experience in Southern Africa including 8 years in the mining industry where he was Chief Executive Officer of Cluff Resources Zimbabwe Limited and Delta Gold Zimbabwe (Private) Limited. He is a past President of the Zimbabwe Chamber of Mines.

Chief Financial Officer Sebborn, Gregory (48)
CA(Z)
Greg Sebborn has extensive senior and executive management experience in Southern Africa. He joined Zimplats in 1998 and established the accounting and administrative framework of the company. He has been intimately involved in all crucial commercial issues including negotiations with BHP, Government of Zimbabwe, Impala and Absa Bank.

Non-executive Directors

Brown, David Hugh (39)
BCom (UCT), CTA(UCT), CA(SA)

David Brown is the Finance Director of Impala Platinum Holdings Limited and was appointed to the Zimplats Board on 30 March 2001 as their representative. He has experience within the information technology and mining industries, 5 years of which was gained in Europe.

Povey, Glenn David (45)
BCom (UPE), CTA(UPE), CA(SA)

Glenn Povey was appointed to the Zimplats Board on 25 June 2001 as the Absa representative. He has more than 16 years experience in the banking and corporate finance sector and is a specialist in many areas therein. He is currently Deputy General Manager (Corporate Finance & Investment Banking) with Absa Corporate & Merchant Bank in South Africa.

Rozman, Louis Ivan (44)
BEng, MGeoscience, FAusIMM, MAICD, CP(Management)
Louis Rozman has more than 20 years experience in mining operations, joint ventures and corporate management in Australasia and Africa. He is the Chief Operations Officer of Delta Gold Limited and was appointed to the Zimplats Board on 20 July 2001.

Vanderspuy, Peter Martin (60)
BSc, MSc, FAusIMM, MCIMM

Peter Vanderspuy is a founding member of the Board and is a past Chairman and Chief Executive of both Zimplats and Delta Gold Limited. He was intimately involved with the Hartley and Ngezi projects from their inception. He has 40 years' experience in the mining industry in Australasia, Africa and North America.

Meetings of Directors

The following table sets out the number of Board meetings, including conference call meetings, held by Zimplats during the year under review, and those attended by each director whilst in office.

Directors’ Interest

Details of directors’ interests in the ordinary shares of the company are shown below:

No options were exercised during the period under review.

Corporate Governance

The Board of Directors of Zimplats fully supports the highest standards of corporate governance and is committed to the principles of openness, integrity and accountability in dealings with all stakeholders.

The Board fully recognises its responsibilities for setting the company’s strategic direction, providing the leadership to put them into effect, supervising the management of the business and reporting to the shareholders on their stewardship.

As Zimplats itself is a holding company, the Board aims to achieve its objectives by ensuring the establishment of effective Boards of Directors and Board Committees in its operational companies.

The Board consists of two executive directors and five non-executive directors - the Chairman being elected from amongst the non-executive Directors.

The Board meets, either in person or by conference call, at least four times a year, but as evidenced by the table above, has met more frequently in the past year as the level of activity has increased. This is likely to be the case again during the coming year.

Acquisitions and DisposaIs

A significant development during this past year has been the acquisition of BHP’s platinum interests in Zimbabwe at a nominal cost. This resulted in 100 percent ownership of the joint ventures between the company and BHP, and the equity in BHP companies in Zimbabwe. Details of the company’s investments are disclosed in Note 22 of the financial statements.

Safety, Health and Environmental Matters

With the company moving from exploration and investigative activities into mining and production operations, more detailed attention is being given to the development of effective safety, health and environmental policies. More detail is given in the Safety, Health and Environment Report elsewhere in this document.

Review of the Results for the year

The year to 30 June 2001 has been very significant for the Company. At the end of January 2001, the Company concluded arrangements with BHP and the Government of Zimbabwe whereby BHP’s platinum interests in Zimbabwe were acquired in their entirety for a nominal consideration.

The acquisition of these interests enabled the Company to secure both equity and debt finance for the Ngezi/SMC Project on terms which are considered appropriate, through the establishment of a project company incorporating the required assets for initial development. This has resulted in the re-classification of certain assets in the balance sheet to reflect the current position.

The Ngezi/SMC Project was initiated during the year and is currently on schedule and within budget.

Valuation of Mining Assets

As previously mentioned, BHP’s platinum interests in Zimbabwe were acquired during the year for a nominal consideration.

To the extent that certain of these assets as well as other existing assets are required for the Ngezi/SMC Project first phase development, they have been incorporated into a separate project company, Hartley management Company (Private) Limited, which is a subsidiary of the Company. This project company has been independently valued as an entity during the year by a competent expert and the valuation is reflected in the balance sheet. In the opinion of directors this is a fair value for the current phase of development.

Mining assets acquired from BHP which do not form part of the Ngezi/SMC Project first phase development are reflected at nil value.

Other mining assets are valued on a basis consistent with prior years and the values used are those that were determined by an independent expert when the Company was established in 1998. In the opinion of directors, there is no reason to consider that these values are not justified.

Post Balance Sheet Events

On 3 September 2001, Impala Platinum Holdings Limited acquired 30% of the issued shares in Hartley Management Company (Private) Limited. This company is in the process of commissioning the Ngezi/SMC Project which comprises an open cut mine at Ngezi, the transportation of ore to Selous over a distance of 77kms, and the processing of ore at the Selous Metallurgical Complex up to smelter matte stage, and the subsequent sale of the matte to Impala Refining Services Limited.

The loan agreement between Hartley Management Company (Private) Limited and Absa Bank Limited, for US$30 million project finance was finalised on 7 September 2001.

Indemnity for officers

Zimplats’ Memorandum and Articles of Association includes indemnities in favour of persons who are or have been officers of the company. To the extent permitted by law, Zimplats indemnifies every person who is or has been an officer against:

• Any liability to any person (other than Zimplats or related entities) incurred while acting in their official capacity and in good faith; and
• Costs and expenses incurred by that person in that capacity in successfully defending legal proceedings and ancillary matters.

For this purpose, ‘officer’ means any Director or Secretary of Zimplats or any of its wholly owned subsidiaries, and includes any other person who is concerned, or takes part in the management of Zimplats, or is an employee of Zimplats or any wholly owned subsidiary thereof.

Zimplats has given similar indemnities by Deed of Indemnity in favour of certain officers in respect of liabilities incurred by them whilst acting as an officer of Zimplats or of any subsidiary of Zimplats.

No claims under the abovementioned indemnities have been made against Zimplats during or since the end of the financial year.

Insurance for officers

During and since the financial year under review Zimplats has paid premiums in respect of contracts insuring persons who are or have been officers of the company against certain liabilities incurred in that capacity.

For this purpose, ‘officer’ means any Director or Secretary of Zimplats or any of its wholly owned subsidiaries, and includes any other person who is concerned, or takes part in the management of Zimplats, or is an employee of Zimplats or any wholly owned subsidiary thereof.

Under the abovementioned Deeds of Indemnity, Zimplats has undertaken to the relevant officer that it will insure them against certain liabilities incurred in their capacity as an officer.

Directors' Benefits

Since the end of the financial year, no Director of Zimplats has received, or has become entitled to receive a benefit (other than remuneration benefits referred to in the financial statements) because of a contract of the Director, a firm of which the Director is a member, or an entity in which the Director has a substantial financial interest, made during the year with either:

• Zimplats; or
• an entity that Zimplats controlled or a legal entity that was related to Zimplats when the contract was made or when the Director received, or became entitled to receive, the benefit.