Message from Managing director

Welcome to Rössing Uranium’s Report to stakeholders 2016. Thank you for your interest in our mining activities. This report explains our business and the approach we take in what we do. It also outlines how we performed in the previous year as measured against our key drivers.

In the year 2016 we went through many changes, and often under less-than-favourable circumstances. But we also achieved a lot.

Two important milestones that distinguished this year were, of course, our 40th anniversary of production, and the visit of His Excellency, President Hage G Geingob to the mine. Not many companies can boast that they received visits from all three of our country’s presidents at their place of operation. At Rössing Uranium we are honoured to be able to do that.

Following on 2015 that was a challenging year for the uranium mining industry, 2016 certainly stretched our resilience and determination to survive.

In international commodity circles, 2016 is widely labelled the worst year of the past decade for the uranium industry: the spot price fell 50 per cent between January and November, at one point even hitting below US$20 per pound. To put that depreciation into perspective, the break-even cost for most uranium mines is estimated at between US$40 and US$50 per pound.

Rio Tinto's marketing strategy of entering into longterm contracts with clients certainly played a role in minimising our operational losses during 2016. The long-term price indicator also fell, but less sharply: from US$44 at the beginning of the year to US$32 at year’s end.

Increased production — we produced 1,850 tonnes of uranium oxide compared with 1,245 tonnes in 2015 — helped to counter the effects of the lower price on our cash flow.

Revenue increased by 67 per cent compared to the previous year due to higher sales volumes as result of the return to continued operations late in 2015.

This, together with the exchange rate that was in our favour most of the year, had a positive impact and we realised a net proft from normal operations of N$107 million compared with a N$385 million net loss the previous year.

Higher production volumes mean little if we cannot work safely and our people can't return home each day without injury. For that reason, safety will remain our highest priority.

We are grateful that we can report a reduction in our lost-day injuries from seven in 2015 to fve in 2016 and our potential fatal incidents from ten in 2015 to seven in 2016. Disappointingly, however, our Allinjury frequency rate deteriorated to 0.82 against a target of 0.68.

During 2017 we will stay focused on preventing fatalities by further embedding our Critical risk management (CRM) programme and will increase our drive towards ensuring all our people stay safe.

Without a strong leadership team, the Rössing Uranium 'ship' will not weather the current storms. Throughout 2016 we invested a lot of energy and resources strengthening the leadership skills of frontline supervisors.

A total of 64 supervisors went through the Management essentials for supervisors programme. In 2017 we will continue to develop staff talent and recruit the people necessary to make our team as strong as possible.

At Rössing Uranium, we place a high premium on the diversity of our workforce, as inclusion and workplace diversity improves employee morale and the motivation to work effectively and effciently. Our leadership team is now 43 per cent female, a fgure we believe is unchallenged in Namibia's mining industry. We are proud to hold a leading position in Rio Tinto in this regard.

A focus area in 2016 was the introduction of an integrated productivity model to meet production targets and to support cash-income generation. Although impressive progress was made during the year, we did not achieve all our production targets. We are aware that our margin for error and nonperformance is very small.

Looking forward, the year 2017 will be a defning one in our history and we will be remembered for the trail we are now blazing. Commensurate with our expectations, the next few years will be challenging. However, we have worked through challenging times before and over the past 40 years, we have survived. If we achieve our production and cost targets, our business will remain feasible over the short term.

Our aspirations for 2017 are a fatality-free Rössing Uranium mine with an engaged and empowered workforce. We will continue to improve our safety foundation, as our primary priorities remain to prevent harm to our people and the environment, whilst staying proftable.

Every year, as part of our continuous improvement focus, we set demanding goals for ourselves for the effcient use of water, and water conservation measures at the mine are taken seriously.

Working smarter and harder, we are confdent that we will not only survive, but thrive in the long term.

 

Werner Duvenhage
Managing director
24 April 2017