| Tue 3 Apr 2007, 12:17 | | WEZ - Wesizwe - Reviewed condensed provisional res |
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WEZ
WEZ
WEZ - Wesizwe - Reviewed condensed provisional results for the year ended 31
December 2006 and specific issue for cash
Wesizwe Platinum Limited
(Incorporated in the Republic of South Africa)
(Registration number 2003/020161/06)
JSE code: WEZ & ISIN: ZAE000075859
(the "Company" or "Wesizwe")
REVIEWED CONDENSED PROVISIONAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2006
AND SPECIFIC ISSUE FOR CASH
Highlights
* Pre-feasibility study completed and released.
* Bankable Feasibility Study commissioned on back of economic viability
shown in Pre-Feasibility Study.
* Drilling results positive with 23,6% of total resource in Indicated
category (2005: 0%).
* R38.2 million spend on drilling and evaluation (2005: R25.5 million).
* Successfully raised R102 million through three private placements with
public shareholders, of which 98% was with Institutional Investors.
* Capital raised will be used for further exploration and to fast-track
the Bankable Feasibility Study.
Comment
Mike Solomon, Chief Executive Officer
"2006 has been a highly successful and significant year for Wesizwe. The
company has accelerated its exploration programme to the point where we are
now generating some 10,000 metres of core per month and the graduation of the
resource from the Inferred category to the Indicated and Measured categories
is proceeding apace. In June 2006 we had sufficient information on the
structural and economic geology of the core project to revise the initial
Scoping Document produced in January 2005 and revisit the conceptual mine
design and its attendant capital and operating costs. This revisiting of the
design and costs had formed the initial target of 47 million tons and 6.7
million ounces of PGM. An Independent Engineers Report (IER) on the
redesigned mine was delivered to Wesizwe in October 2006 along with new
capital expenditure, operating expenditure and metal production estimates.
The financial models constructed on the basis of these estimates confirmed
that the project was still well within the original technical, economic and
commercial parameters laid down at the outset of the project as part of the
"reverse-engineering" approach adopted by Wesizwe.
The IER provided the impetus for the company to proceed with the Pre-
feasibility Study (PFS) which commenced November 2 last year. The PFS has
been delivered and has upgraded the levels of confidence provided by the IER
on the viability of the project. On the strength of these results the
Bankable Feasibility Study has been commissioned and this is scheduled for
completion in the first quarter of 2008.
In order to accommodate these additional activities the Wesizwe team has been
considerably strengthened with the creation of several senior posts and
appointments thereto. In November 2006, Charles Sambo, a mining engineer
with considerable mechanised mining experience as well as corporate finance
experience, was appointed as Chief Operating Officer, Manie Blignaut as
Exploration Manager and several new geologists were appointed. Nyasha
Tengawarima, formerly Senior Financial Manager of Lonmin`s South African
operations was appointed as Chief Financial Officer and assumed his post in
March 2007. More key appointments will be made in the near future.
On the financial side, a number of private placement capital raisings took
place in 2006 and the funds received as a result have placed Wesizwe in a
strong position to see the project through to the completion of the Bankable
Feasibility Study. Project costs remain highly satisfactory and are within
the cost profile originally envisaged for the project, notwithstanding budget
adjustments made to cater for the acceleration of the drilling programme and
the project development and also considering the expansion of personnel
levels to implement the upgraded level of activities.
Looking forward in 2007, the company will remain focused on the development
of its core project, the Pilanesberg Project. Wesizwe will consider new
prospects and business relationships provided they have strong synergies with
our current activities and demonstrate substantial value accretion for
Wesizwe`s shareholders. The company will continue to develop its
institutional, financial and technical capacity and will pursue the BFS with
vigour.
We look forward to as successful a year in 2007 as we have had in 2006."
Financial Review
The loss for the year amounted to R19.8 million (compared to a loss of R32.1
million for 2005). The loss for the year comprises administration expenses of
R21.1 million and depreciation of R0.1 million off-set by net finance income
of R1.4 million.
Exploration and evaluation expenses for the year amounted to R38.2 million
compared to R25.5 million in 2005. Exploration and evaluation expenses are
capitalised in accordance with IFRS 6.
As an exploration and development focused entity, Wesizwe is at present not a
cash generative business and therefore the loss stated above represents
investment in asset growth and development as opposed to operating losses as
understood in a conventional business sense. The operating expenses exclude
capitalised exploration expenditure. In this respect, it is important to note
that none of the standard financial indicators, including loss per share are
relevant for exploration companies. The most appropriate measure of the
company`s performance is the shareholder value created by the exploration
programme compared with the cost expended to achieve the value. The simplest
way to measure the value of the company, hence shareholder value, is its
market capitalisation. Market capitalisation of a company is calculated by
multiplying total number of shares in issue at that time by the prevailing
share price.
Share Capital
The issued shares of the company as at 31 December 2006 was 399,239,152
(2005: 356,366,659 shares). In common with many exploration companies, the
company raises finance for its exploration and evaluation activities in
discrete tranches. During 2006, the company issued a total of 42,872,493
shares by way of private placements with public shareholders of which 98% was
with Institutional Investors. All the shares were issued at 30 days Volume
Weighted Average (VWAP) price less 10% discount.
Subsequent Events
During January 2007, R18.4 million was repaid to Ledig Minerale Regte 909 JQ
(Pty) Ltd, which arose from the purchase of mineral rights in 2004. At
present the company has no borrowings.
On 30 January 2007, the company issued 28 million ordinary shares at R3.36
per share to raise R90 million.
Intangible exploration and evaluation assets
Wesizwe`s portfolio of exploration assets are primarily located on the
western limb of the Bushveld Igneous Complex comprising Ledig 909JQ, and
portions of the farms Frischgewaagd 96JQ, Mimosa 81JQ and Zandrivierspoort
210JP. The total area is 4,676 hectares. The properties are situated near
Rustenburg and are to the south of the Pilanesberg Game Reserve and Sun City,
and are referred to as the "Pilanesberg Project". All strategic outstanding
new order prospecting rights and title required to be granted in terms of the
Mineral and Petroleum Resources Development Act have been obtained. The need
to acquire new-order prospecting rights and title arises from all
entitlements granted in terms of the repealed Minerals Act being rescinded
and all participants within the mining industry being required to comply with
the new legislation and the Mining Charter.
Current operations
During the year under review the Company continued its existing exploration
programme on the farms Frischgewaagd and Ledig. By the end of February 2007,
Wesizwe had drilled 55 boreholes with 51 973 metres of core. The exploration
schedule for 2007 will include the remaining portions 3 and 4 of the farm
Frischgewaagd and portions 1, 2, 3, 4 and 6 of the farm Ledig that have not
as yet been explored for Merensky and UG2 reefs. There are presently 14 drill
rigs in operation on the farms Frischgewaagd and Ledig.
Note on the next phase of the exploration programme and future capital
raising
The assessment of capital requirements is a progressive process whereby the
results of any phase of the exploration programme are contingent on the
results of the previous phase. Accordingly, it would be injudicious to raise
the total capital required to take the project through to BFS at one time.
The timing of the capital raising is an important factor in mitigating the
excessive early surrender of value on the part of the original investors who
subscribed to the project at high risk pre-exploration stage and who expect
the concomitant returns. The higher returns are through the steep growth in
value from bare farmland to a SAMREC Code (South African Code for Reporting
of Mineral Resources and Reserves) qualified resource.
The budget for the Company to the end of 2007 is approximately R210 million.
This includes taking the Pilanesberg Project through to Bankable Feasibility
Study (BFS) as well as making provision for the exploration of other
properties for which Wesizwe has been or should be granted the prospecting
permits. Included in this are costs of a 3D geoseismic survey and the BFS
itself, both of which are extremely costly items. These costs will only be
incurred should the drilling programme prove successful.
Mineral resource estimates
The total Inferred mineral resources at the time of listing totalled 63,608
million tonnes at an average grade of 5,09 g/t of 4E (comprising platinum,
palladium, rhodium and gold), amounting to 10,417 million ounzes (moz), of
which 6,463 moz were attributable to Wesizwe.
Between the listing and the end of September 2006, the resource estimates
indicated and Inferred resources increased to 73,519 million tonnes at an
average grade of 5.03g/t PGM(4) ounces for the Pilanesburg Project. Wesizwe`s
attributable ounces increased by 12.6 per cent to 7,272 moz.
During this period, the resources attributed to Wesizwe were 1,478 ounces in
the Indicated category and 5,794 ounces in the Inferred category.
The table below reflects the summary results for the total Inferred and
Indicated mineral resource estimates for the Pilanesberg Project at 30
September 2006 on which the PFS was based.
Total
Farm Mineral Ore Body 4E 4E Wesizwe Wesizwe
Resource Tonne Grade Million Percentage Million
Type g/t * Ounces Ounces
Ledig Indicated Merensky 466 000 5.43 0.081 100% 0.081
Reef
Ledig Indicated UG2 Reef 355 000 5.560 0.064 100% 0.064
Total Indicated All 821 000 5.48 0.145 100% 0.145
Frischgewaagd Indicated Merensky 10 571000 5.52 1.877 50%** 0.939
Reef
Frischgewaagd Indicated UG2 Reef 5 352 000 4.58 0.789 50%** 0.394
Total Indicated All 15 923 000 5.21 2.666 50% 1.333
Sub Total Indicated All 16 744 000 5.22 2.811 53% 1.478
Ledig Inferred Merensky 7 504 000 4.83 1.164 100% 1.164
Reef
Ledig Inferred UG2 Reef 9 590 000 4.34 1.338 100% 1.338
Total Inferred All 17 095 000 4.55 2.502 100% 2.502
Frischgewaagd Inferred Merensky 14 415 000 6.64 3.077 50%** 1.539
Reef
Frischgewaagd Inferred UG2 Reef 25 265 000 4.32 3.507 50%** 1.754
Total Inferred All 39 680 000 5.16 6.585 50% 3.292
Sub Total Inferred All 56 774 000 4.98 9.087 64% 5.794
Grand Total All All 73 519 000 5.03 11.897 61% 7.272
Classes
* Platinum group element comprising platinum, palladium, rhodium and gold
** Remaining 50 per cent owned by Anglo Platinum Limited.
The resource estimates incorporate the drilling results of both the Merensky
and UG reefs located on the Pilanesberg Project farms. Both reports were
prepared in accordance with Section 12 of the Listings Requirements of the
JSE Limited the South African Code for Reporting of Mineral Resources and
Reserves ("the SAMREC Code"). Mr DR Young, a director of Mineral Corporation
Consultancy (Proprietary) Limited as the Competent Person updated his report
on Wesizwe`s Mineral Resources as at 30 September 2006. Mr Young`s
qualifications are BSc (Hons), FGSSA, FAusIMM, Pr Sci Nat and his business
address is Homestead Office Park, 65 Homestead Avenue, Bryanston 2021
Funding
In common with many exploration companies, Wesizwe is not cash generative and
finances its exploration and appraisal activities by raising capital in
discrete tranches. The funding for exploration companies is mainly by way of
equity from financial markets. The Wesizwe Board of Directors is satisfied
that the company has sufficient funds to cover its operating expenses for the
next 12 months for the following reasons:
1. The company has current cash resources of R120 million and the
additional R100 million in the Company`s transfer secretary trust account.
2. In addition the company can adjust its scale of expenditure relating to
drilling and long lead items without impacting on the viability of the next
phase of the project.
3. The budget includes provision for the pro-active ordering of long lead
items for the capital construction phase and a substantial provision for
further exploration.
4. Rescheduling of these expenditures is possible providing for a great
deal of flexibility in the budget. This flexible component is at least R60
million, but clearly Wesizwe would seek to avoid having to scale down any
activities as this would impact on the impressive momentum
that is a feature of the company`s core project.
5. In light of the support provided by investors to date, the very
satisfactory liquidity of the company and the favourable results of the
various economic and technical studies into the project, we anticipate
continued market support and with these factors juxtaposed in the company`s
current cash resources, the directors are of the opinion that the Group has
sufficient cash resources to fund its activities for the next twelve month.
Recent Capital Raising Efforts
For operational reasons, in May of 2006 Wesizwe embarked on a capital raising
venture from South African Institutions under the guidance and facilitation
of mandated advisors, Investec. Approximately R70 million was raised during
this capital raising exercise from financial institutions. Subsequent to this
capital raising exercise, it was deemed necessary to prepare for further
capital raising efforts in order to ensure that Wesizwe had sufficient funds
to meet its commitments to take its core project in the Pilanesberg through
to the completion of the Bankable Feasibility Study and to provide for new
exploration projects during 2007.
On 8 September 2006 at Wesizwe`s Annual General Meeting the shareholder body
approved a general authority to the Board of Directors to issue 15% (58
million shares) of the issued share capital for the purposes of raising share
capital by the requisite majority.
Maintenance of the HDSA ratios in Wesizwe Platinum
In the pursuit of raising capital, it is strategically important to Wesizwe
to maintain as high a level of black empowerment as possible, as its black-
owned status is important to its merger and acquisition-based growth
strategy. While the company is well above the statutory requirement of 26%
at its current status of 43%, its target is to exceed 50.1% at this stage of
its development.
As ongoing capital raising efforts serve to dilute the company`s BEE ratios,
maintaining these high levels is challenging. There are few black-owned
companies that either have the resources or the appetite to invest large sums
of cash in a non-cash generative growth business and debt has to be serviced
until such time as the operation starts generating dividends. The problem is
not unique to Wesizwe and is a challenge that is faced by all pure
exploration companies in South Africa.
In pursuing this objective Wesizwe offered 30 million of the general
authority of 58 million shares to Vunani Capital (Pty) Limited (Vunani
Capital),a black-owned financial institution. The Vunani offer was at the
same strike price as that offered to other non-BEE institutions.
Substantive negotiations commenced with Vunani Capital on 9 November 2006. On
17 November, Investec determined the strike price at R3.36 per share applying
a 10% discount to the 30 day Volume Weighted Average Price at that time. This
price was agreed to by the Board of Directors of Wesizwe on the 29 November
2006.
The balance of 28 million shares was placed with other institutions at the
above strike price raising approximately R90 million. These shares were
listed on the JSE on 31 January 2007. The strike price of R3.36 per share had
to be maintained at the same price as the Vunani Capital offer as a different
price would have prejudiced either Vunani or other investors.
On 31 January 2007 the supporting documentation for the funding was completed
and submitted to the funding institution`s investment committee which
approved the application on the 8th of February 2007. On 22 February 2007,
R100 million was transferred on behalf of Vunani Capital into the Company`s
transfer secretary trust account.
Due to the difference between the strike price and the fair value of the
shares, the JSE indicated that they would only list the shares if Wesizwe
could demonstrate the following.
1. 75% of Wesizwe shareholders present at a general meeting voting in
favour of the issue, and;
2. Obtain irrevocable undertakings from Wesizwe shareholders to vote in
favour of the issue (75% of Wesizwe Shareholders required to sign the
irrevocable).
Wesizwe management has obtained irrevocable undertakings from at least 75% of
Wesizwe shareholders to vote in favour of the issue, and is therefore
satisfied that they have obtained the required authority from Shareholders
for the issue of these shares to Vunani Capital.
The notice of the general meeting to shareholders for the specific issue of
the 30 million shares to Vunani Capital to be held on 26 April 2007 is
currently being drafted by the Company.
Prospects
The Company is satisfied with the exploration results and expenditure to
date, and has every confidence that it will achieve the targets it has set
for the coming financial year. In particular, the objective is to accelerate
the current rate of drilling on the farms Frischgewaagd and Ledig and to
advance the resource category into that of Indicated then Measured. Further
to this, the location of the Company`s Pilanesberg Project`s properties could
facilitate future consolidation within the area and the broad based black
control of our equity is a concomitant advantage.
FINANCIAL RESULTS
REVIEWED CONDENSED GROUP PROVISIONAL RESULTS FOR THE YEAR ENDED 31 DECEMBER
Balance Sheet at 31 December
2006 2005
Reviewed Audited
R R
ASSETS
Non-current assets 108,414,494 70,577,247
Property, plant and equipment 559,591 333,088
Intangible exploration and evaluation 107,854,903 70,244,159
assets
Current assets 64,401,794 18,647,743
Trade and other receivables 4,233,810 4,500,390
Cash and cash equivalents 60,167,984 14,147,353
TOTAL ASSETS 172,816,288 89,224,990
Equity and liabilities
Capital and reserves 145,060,391 65,264,884
Share capital 3,992 3,564
Share premium 201,624,098 102,029,602
Share based payment reserve 730,000 730,000
Accumulated loss (57,297,699) (37,498,282)
Non-current liabilities - 15,312,607
Long term portion of interest bearing - 15,312,607
borrowings
Current liabilities 27,755,897 8,647,499
Trade and other payables 9,352,644 5,647,499
Current portion of interest bearing 18,403,253 3,000,000
borrowings
TOTAL EQUITY AND LIABILITIES 172,816,288 89,224,990
Net asset value per share (cents) 36,33 18,89
Income statement
For the year ended 31 December
2006 2005
Reviewed Audited
R R
Revenue - -
Administration expenditure (21,069,409) (32,589,778)
Loss on sale of non-current assets (470) -
Depreciation (166,928) (81,618)
Loss from operations (21,236,807) (32,671,396)
Finance cost (875,688) (316,932)
Finance income 2,313,077 856,009
Loss before income tax expense (19,799,418) (32,132,319)
Income tax expense - -
(19,799,418) (32,132,319)
Loss for the year
Basic loss per share (cents) (5.37) (9.30)
Diluted loss per share (cents) (5.37) (9.30)
Statement of changes in equity
For the year ended 31 December
Share Share Share- Accumulated Total
capital premium based loss
payment
reserve
R R R R R
Balance at 3,344 22, 848,568 (5,365,962) 18,115,950
31 December
2004 630,000
Issue of 220 220
share capital
Premium on 88,718,258 88,718,258
issue of
share capital
Share issue (9,537,224) (9,537,224)
expenses
written off
Acquisition 100,000
of mineral
rights 100,000
Loss for the (32,132,319) (32,132,319)
year
Balance at 31 3,564 102,029,602 (37,498,281) 65,264,885
December 2005
730,000
Issue of 428 428
share capital
Premium on 102,393,232 102,393,232
issue of
share capital
Share issue (2,798,736) (2,798,736)
expenses
written off
Loss for the (19,799,418)
year (19,799,418)
3,992 201,624,098 (57,297,699)
Balance at 31 145,060,391
December 2006 730,000
Cash flow statement
For the year ended 31 December
N 2006 2005
o
t
e
s
Reviewed Audited
R R
Cash flows utilised by 4 (16,491,140) (35,071,571)
operating activities
Finance cost (875,688) (316,932)
Finance income 2,313,077 856,009
Net cash outflow from operating (15,053,751) (34,532,494)
activities
Cash flows utilised by
investing activities
Acquisition of office equipment (399,784) (296,734)
- maintenance
Acquisition of intangible (38,217,288) (25,461,141)
assets
Proceeds on disposal of fixed 5,884 -
assets
Net cash outflow from investing (38,611,188) (25,757,875)
activities
Cash flows from financing
activities
Shares issued 99,594,924 79,181,254
Increase/(decrease) in interest 90,646 (15,507,549)
bearing borrowings
Increase in loans receivable - 168,982
Net cash inflow from financing 99,685,570 63,842,687
activities
Net increase in cash and cash 46,020,631 3,552,318
equivalents
Cash and cash equivalents at the 14,147,353 10,595,035
beginning of the year
Cash and cash equivalents at the 60,167,984 14,147,353
end of the year
NOTES TO THE REVIEWED CONDENSED GROUP PROVISIONAL RESULTS FOR THE YEAR ENDED
31 DECEMBER 2006
1. Basis of preparation and accounting policies
The financial information for the year ended 31 December 2006 has been
prepared on the historical cost basis and is in accordance with the
recognition and measurement criteria of the International Financial Reporting
Standards and its Interpretations adopted by the International Accounting
Standards Board and the disclosure requirements of IAS34 - Interim Financial
Reporting. The accounting policies have been applied consistently throughout
the Group and are consistent with those for the financial year ended 31
December 2005.
The Company has elected to early adopt IFRS 6: Exploration for and Evaluation
of Assets.
2. Balance sheet
The value of the Group`s exploration and evaluation intangible assets at 31
December 2006 was 29,2 cents per share (2005: 20,3 cents per share),
calculated on the weighted average number shares of 368,754,699, (2005:
345,464,647).
There were no contingent liabilities or contingent assets for the year under
review.
3. Income statement
2006 2005
Reviewed Audited
R R
Loss for the year has been adjusted by
the following to arrive at the
headline loss
Loss for the year (19,799,418) (32,132,319)
Naboom project development expenses - 100,000
Headline Loss for the Year (19,799,418) (32,032,319)
The headline loss for the financial year 2006 was 5,37 cents (2005: 9,27
cents) calculated on a weighted number of shares of 368,754,699 (2005:
345,464,467).
The diluted headline loss for the financial year 2006 was 5,37 cents (2005:
9,27 cents) calculated on a weighted number of shares of 368,754,699 (2005:
345,464,467).
There were no dividends paid or declared.
No segmental report has been prepared as the Company is conducting
exploration activities in one location.
4. Cash flow statement
Reconciliation of net loss for the year to cash utilised by operations
2006 2005
Reviewed Audited
R R
Loss for the year (19,799,418) (32,132,319)
Adjustment for: - -
Share - based payments - 100,000
Impairment of Mineral Rights 606,544 -
Depreciation on property, plant and 166,928 81,618
equipment
Finance cost 875,688 316,932
Finance Income (2,313,077) (856,009)
Loss on disposal of equipment 470 -
Operating loss before working capital (20,462,865) (32,489,778)
changes
Changes in working capital 3,971,725 (2,581,793)
Increase /decrease) in trade and other 266,580 (4,102,570)
receivable
Increasein trade and other payables 3,705,145 1,520,777
Cash utilised by operating (16,491,140) (35,071,571)
5. Comment
During the year under review the Company allotted and issued 42.9 million
(2005: 22.0 million) ordinary shares of 0,00001 cents each, raising R102
million (2005: R88.7 million) The Company expended a total of R56 million
during the year under review (2005: R60,3 million) with R38.2 million being
spent on exploration activities and the balance R17.8 million represents
administrative expenditure. The cash on hand at 31 December 2006 amounted to
R60.2 million (2005: R14.1 million).
Finance income was R2.3 million and was offset by finance cost of R0.8
million.
6. Independent auditors` report
KPMG Inc., the company`s independent auditor, has reviewed the financial
statements contained in this provisional report and has expressed an
unmodified conclusion on the provisional financial statements. Their review
report is available inspection at the company`s registered office.
7. Directorate
On 15 September 2006 Mr DN Campbell resigned as a non-executive director and
Mr RG Rainey was appointed to the board as a non-executive director on 27
November 2006.
Signed on behalf of the board
TE Skweyiya (Mrs) MH Solomon
Chairman Chief Executive Officer
Johannesburg
3 April 2007
Sponsors
Investec Bank Limited
Directors:
TE Skweyiya(1) (Mrs) (Chairman), MH Solomon (Chief Executive Officer), RG
Rainey(2), WM Eksteen(2), L Maloney(1) (Mrs), ME Monnakgotla(1), DJ
Phologane(1), JC Williams(1)
((1) Non-executive (2) Independent non-executive)
Company secretary: RH Phillips
Registered office: Second floor, AMB Capital, 18 Fricker Road, Illovo
2196.
Investor relations enquiries to:
College Hill
Nick Williams: Cell - 083 607 0761
Telephone - + 27 11 447 3030
Wesizwe Platinum Limited
Melanie Low: Telephone - + 27 11 215 2375
Web site: http://www.wesizwe.com
Date: 03/04/2007 12:17:50 Produced by the JSE SENS Department.
