Rössing Uranium - Making progress
Report to Stakeholder 2014
(18 May 2015)

Presentation - Launch of Rössing Uranium Report to Stakeholders 2014

Rössing Uranium's Managing Director, Werner Duvenhage, displaying the 2014 Report to Stakeholders at the launch of the report in Windhoek on 18 May 2015.



Monday 18 May 2015, 16:30, Windhoek

Members of the Media

It gives me great pleasure to be here today and talk to you about Rössing Uranium, at the time of the launch of our Report to Stakeholders 2014. We have been a feature of the Namibian economy for close to 40 years and therefore I believe that Rössing is well versed in the nation's mining business and has made significant contributions to the development of Namibia.

SLIDE 2 Discussion points

Today I would like to cover with you the following topics:

  • Rössing in the context of the Rio Tinto Group
  • Uranium market conditions
  • The company's performance in 2014, and
  • Our corporate social investment and the broader contribution of Rössing Uranium to the Namibian economy

SLIDE 3 part of Rio Tinto

Let me first place Rössing within the context of Rio Tinto. Rössing is a Rio Tinto Group company which is one of the largest diversified global mining businesses with operations across Africa and the globe. This slide shows the Africa operations.

Rio Tinto has been in business for more than 140 years.

Operating in more than 40 countries across the world, we are strongly represented in Australia and North America, and also have significant businesses in Asia, Europe, Africa and South America.

With this global presence, Rio Tinto is in the fore in the production of aluminium, iron ore, copper, diamonds and minerals.

SLIDE 4 Making progress

Given the downturn in commodity prices and the volatility in the global economy, Rio Tinto has committed to its shareholders to extract greater shareholder value. This means driving down operational costs, critically reviewing all capital spend and projects, as well as continually reviewing the portfolio of businesses within the group.

In the history of Rössing, 2014 will undoubtedly be remembered as a tough year in which a number of operational changes were made to ensure progress was made in securing the mine's future.

In our 39-year history, there have been times when we have experienced similarly challenging periods. We are looking beyond the current difficult times, therefore, and we remain positive. We are proud of our progress towards securing our long-term future for the benefit of our stakeholders in particular, as well as Namibia in general.

In 2015 we will be celebrating our 40-years in the mining of uranium.

SLIDE 5 - Uranium market

The challenging times currently experienced in our industry is mainly because of global influences. It was a tough year because the uranium price continued to decline globally, putting substantial pressure on our business, with the average uranium spot market price at US$33/lbs, much lower than the US$38/lbs average in 2013.

The 2011 tsunami in Japan and its impact on the Fukushima nuclear plant still continued to plague the uranium market in 2014, with excess supply causing a decline in market prices. Nuclear plants in Japan remained off-line for most of the year. Supply has increased over the three years since the Fukushima incident. This is a recipe for continued weak prices in the near term. Utilities are holding large stocks in all forms, which defer their need to buy for one to three years on average.

However, the long-term outlook for the nuclear industry remains encouraging as a number of new mines are expected to enter production in the next couple of years, but the industry will need new mines to be developed in the next five years in order to meet the demand later this decade and in the post-2020 period.

SLIDE 6 Business performances

At Rössing we had to embark on a curtailed operational plan that involved moving to a non-continuous operation in the mining and processing areas,

with the objective of producing only enough uranium to meet our long-term sales commitments.
We also embarked on an organisational redesign exercise. This changed our 7-day, 24-hour operation to a 5-day, 24-hour operation, and a decision to reduce our workforce.

Despite the challenges, we are particularly proud that our workforce has shown resilience, commitment and creativity in respect of overcoming these issues.

Our cash-generation projects motivated all employees to come up with cost- and time-saving initiatives - during the year the ideas derived from our employees allowed us to save N$149 million.

With the curtailed operations we produced 1,543 tonnes of uranium oxide, down from 2,409 tonnes in 2013, which accounts for about 2.3% of the world production of primary produced uranium.

The impact of lower prices and the lower production figures, strained our revenue which reduced by 19 per cent compared to the previous year, and in turn led to a net loss after tax of N$91 million, while we reported a net profit of N$32 million in 2013, but losses in 2012, 2011 and 2010. Our turnover in 2014 was N$2.4 billion, down from N$2.9 billion in 2013.
Rössing has a strong sales portfolio, with a healthy mix of long-term and short-term price exposures, which assists to strengthen our competitive position.

Positioning Rössing to withstand short- and medium economic challenges has become part of the daily business of the operation and the pressure remains to drive operating costs to remain competitive.
After the leach tank failure in December 2013, the first quarter of 2014 saw operations gradually being resumed. The tank has been returned to full production.

As we entered 2015, the mine sustained an incident that impacted us in the first quarter of this year. A fire broke out at our Final Product Recovery plant. No employees were injured during the incident and there were no uranium spills in the area, and none of the uranium drummed and stored outside the plant was affected. As only part of the plant was affected, we continued with uranium production.

SLIDE 7 Business prospects

We are continuously reviewing our business operations to come up with feasible survival options. What we foresee is that with the input from all employees, we will have to come up with initiatives that would see us through this difficult period.

You can read in our Report to Stakeholders about case studies of cost saving initiatives from our employees. One such project is the compressor optimization; another about our tailings storage facility water extraction project; and the Tulip-plug project that is saving millions with blasting in our open pit, or our haul truck payload management project where Paulina Kapitango, a female graduate mining engineer is leading the work.

To our credit, we have an excellent supply of uranium bearing ore from our open pit, a number of sales contracts running beyond 2017 and also a reliable infrastructure in place such as water and electricity supply, transport links, and excellent standing in the community in which we operate.

SLIDE 8 Our employees

Rössing now has a personnel complement of 900 employees of whom 98% are Namibians. Our strategic focus continues to be on training and developing of employees, and addressing skills shortages. We have invested more than N$50 million in training and development over the past five years. The company continues to invest in its human capital by offering a wide range of improvement and leadership development programmes, and capitalises on Rio Tinto's exchange and secondment programmes.

SLIDE 9 Our HSE best practices

As always safety is the most important matter to us and the mine's HSE practices are recognised as complying with international best standards. Our goal remains the solid establishment and maintenance of an injury- and illness-free workplace, where everyone is healthy and goes home safely each day.

Our safety performance in 2014 was better than the previous year, and it did not exceed our target for the year.

SLIDE 10 Our HSE best practices

The National Radiation Protection Authority (NRPA) approved Rössing's Radiation Management Plan in 2010. Since the approval we have continuously reviewed and updated the plan in consultation with the NRPA, and audits conducted by the NRPA against the Radiation Management Plan in 2011, 2012, 2013 and 2014 found Rössing to be in full compliance with the national regulations.

The results of our Occupational Radiation Monitoring Programme are summarised in the graph on the slide, which shows the average occupational radiation dose per person for the three main radiation exposure pathways - external, inhalation of radon progeny, and inhalation of radioactive dust. The average exposure doses in all Similar Exposure Groups (SEGs) are not only

below the regulatory dose limit of 20 mSv per year, they are also below the Rio Tinto standard of 5 mSv per year.
You may recall that last year I mentioned that we have embarked on a wide-scale scientific study on the health of our employees and that the first steps to design the scope of the study were planned.

In 2014 we commissioned and completed the scoping process for such a health study. A subsequent scoping report was compiled by SENES (specialists in Energy, Nuclear and Environmental Sciences) Consultants, which is a Netherlands based company.

The scoping study set out to determine which epidemiological study designs were appropriate and feasible in Namibia to understand the potential impact, if any, of occupational radiation exposure at Rössing on workers' health, making use of our detailed medical and radiation exposure records that date back to when the mining operations first began.
The process of identifying a suitable external service provider with the required credentials for the execution of the study started early this year and is expected to be completed in 2016.

SLIDE 11 Our value addition

Rössing is a major player in the Namibian economy, with significant contributions in sourcing of goods and services, taxes, training, development as well as community investment.

Our spending in Namibia is significant, which leads to a long chain of value addition throughout the economy.

SLIDE 12 Our neighbouring communities

Rössing remains a responsible corporate citizen with corporate social responsibility programmes extending into the work of the Rössing Foundation, providing support in the fields of the environment, education, health and recreation for more than 30 years. Over the past five years, more than N$152 million was invested in social investment programmes.
The Rössing Foundation's annual report will be made available soon and I encourage you to visit its website for information on the significant work done by the Rössing Foundation.

SLIDE 13 Closing message

The long-term future for uranium remains encouraging: the market price for uranium is expected to rise in line with an expected increase in demand as utilities look to secure fuel for their 2017 to 2023 needs.
As we work our way through the current challenges of our business environment, I am confident that Rössing will continue to be a major supplier other stakeholders.

I commend the Rössing Stakeholders Report for 2014 to you which is also available on our website www.rossing.com.


Werner Duvenhage
Managing Director
Rössing Uranium Limited