| Fri 13 Apr 2007, 16:01 | | PZG - Pamodzi Gold - Reviewed Condensed Consolidat |
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PZG
PZG
PZG - Pamodzi Gold - Reviewed Condensed Consolidated Results For The Period
Ended 31 December 2006 And Cautionary Announcement
Pamodzi Gold Limited
(Formerly Bema Gold South Africa (Pty) Limited)
(Incorporated in the Republic of South Africa)
Registration number: 2002/013039/06
Share code: PZG ISIN: ZAE000088563
("Pamodzi Gold" or "the Company")
REVIEWED CONDENSED CONSOLIDATED RESULTS FOR THE PERIOD ENDED 31 DECEMBER 2006
AND CAUTIONARY ANNOUNCEMENT
Highlights
Successful merger and listing on 11 December 2006
R432 million debt waived or converted to equity before listing
Production ounces, near production ounces and blue sky potential
contiguous to its existing operations.
Black empowerment vehicle created to consolidate the junior gold mining
sector in South Africa
COMMENTS
1. Group operations
The Group owns and operates Nigel Gold Mine, Grootvlei Gold Mine and
Consolidated Modderfontein Gold Mine on the East Rand and the Middelvlei Mine
on the West Rand of the Gauteng Province in South Africa.
2. Group structure
To ensure continuity with the Pamodzi brand, Petrex (Pty) Limited and Impafa
Resources (Pty) Limited were changed to Pamodzi Gold East Rand (Pty) Limited
and Pamodzi Gold West Rand (Pty) Limited respectively.
3. Directors
On 8 November 2006, Mr KM Steenkamp and Mr AJ Murdoch Eaton were appointed as
executive directors and Mr NA Ntsele, Mr JJ du Plooy, Mr DR Stansbury, Mr JG
Proust, Ms SP Radebe, Dr MB Mokgata and Mr MI Mthenjane were appointed in a
non-executive capacity. On the same date Mr PJL Mabena, Mr CT Johnson and Mr A
Brown resigned as directors of the Company. Mr MJ Schermers remained as an
executive director and Mr RR Richer remained in a non-executive capacity.
Mr DR Stansbury and Mr RR Richer have resigned as directors after year end on
16 March 2007.
4. Reserves and resources
Pamodzi Gold`s reserves and resources are indicated in the tables below. This
information is extracted from the Competent Person`s Report dated 20 September
2006:
Mineral resources
Tons Gold
Total (Mt) (g/t) (`000 oz) (tons)
Measured 32,23 3,79 3 925 122,08
Indicated 3,84 4,47 551 17,16
Total M&I 36,07 3,86 4 476 139,24
Inferred 24,14 4,84 3 755 116,80
Notes:
Mineral resources are inclusive of the mineral reserve figures
1kg = 32.15076 oz. troy
All figures are in metric tons
Resource Cut-Off: Black Reef: 0.3g/t cut-off was used to delineate the
resource
MVR: 0.1g/t cut-off was used to delineate the resource
VCR: 0.2g/t cut-off was used to delineate the resource
Pamodzi Gold East Rand resource includes all blocks above 2g/t,
including pillars
Excludes all blocks that have had their availability classified as
"abandoned" and "underwater"
No other restrictions have been imposed on the resources
All shafts resources have been shown. i.e. all ground within the mineral
lease area
The effective date: Black Reef: 5 June 2005 (At the effective date of
this report no mining has taken place)
MVR, VCR and Pamodzi Gold East Rand: 31 July 2006
Mineral reserves
Tons Gold
Total (Mt) (g/t) (`000 oz) (tons)
Proven 4,04 4,06 527,64 16,41
Probable 1,28 3,80 156,45 4,87
Total Reserve 5,32 4,00 684,10 21,28
Notes:
100% of measured and indicated resources were converted into mineral
reserves at Middelvlei Mine
Numbers in table above reported as delivered to mill prior to plant
recovery
The maximum mining depth used in optimiser model: Black reef: 117m and
MVR: 156m
Average stripping ratio (Waste: ore): Black reef: 25,79:1 and Main Reef:
11,94:1
- The effective date is: 31 July 2006
- Prices used: Black Reef and Pamodzi Gold East Rand Mines - ZAR115 000/kg
and MVR - ZAR110 000/kg Dilution factors applied
- Unintentional unpay blocks not included in mineral reserves
- The LOM plan was scheduled monthly to 2014
- Only mineral resources from the measured and indicated categories in the
LOM plan have been converted to mineral reserves and exclude:
- Planning from inferred resources
- Planned unpay
- Not in Resource ("NIR") blocks
- Resource not Classified ("RNC") blocks
- Overplanning within resource blocks
5. Trading update on the 1st quarter for 2007
Shareholders are advised that the operational results of the Company for the
1st quarter of 2007 will be less favourable than initially forecast by the
board and management. Gold production on the East Rand operations was 30% lower
than originally forecast, this was mainly due to labour shortages after the
December break and the unavailability of mineable face length as a result of
overdue development not done previously.
6. Cautionary announcement
Shareholders are advised that the Company issued a cautionary announcement on
29 March 2007, which stated that the Company has entered into negotiations
which, if successfully concluded, could have a material effect on the price at
which the Company`s securities trade on the JSE. Accordingly shareholders are
advised to exercise caution when dealing in the Company`s securities until a
further announcement is made.
Message from the chairman - Ndaba Ntsele
The first black controlled and owned junior gold mining company was created on
11 December 2006 with the listing of Pamodzi Gold on the JSE. This listing
launched a new chapter in the history of junior gold mining in South Africa as
well as achieving a life long personal dream.
It is envisaged that Pamodzi Gold will be the vehicle used to consolidate the
South African junior gold mining sector. I believe that Pamodzi Gold is well
positioned to generate significant deal flow as a result of the listing based
on, inter alia: the combination of its HDSA owned status, its access to capital
and the quality of its management team. Pamodzi Gold has identified attractive
acquisition targets and intends to pursue a number of transactions in the next
two years.
Pamodzi Gold`s portfolio comprises production ounces, near production ounces
and blue sky potential contiguous to its existing operations.
For the purposes of the Pamodzi Gold management, this report is of historical
value only as the Pamodzi Gold management team only took control of the Group
after the listing on 11 December 2006.
I deeply regret that three of our employees lost their lives in work related
accidents during 2006. The safety of our employees remains a key focus of
management attention and resources. With the management takeover safety has
received top priority and all the safety practices have been reviewed and
adjusted where required. Management will continue to explore technical
solutions to mining risks and to promote safe employee behaviour designed to
improve workplace safety.
Another key challenge which management will need to address is the health of
our employees and the communities in which they live.
The current mining operations are challenging and it is Pamodzi Gold`s vision
to increase the current production levels by way of exploration on surface and
selective underground development to increase mineable face length to ensure
long-term sustainability. Unfortunately, underground development on the East
Rand operations has previously not been done in accordance with planning and
will require additional capital expenditure in the 2007 financial year. The
board is also pleased to announce that a new mine manager for the East Rand
operations has been appointed from 1 May 2007.
A further challenge that was identified is the hedge (contingent forwards) and
the board and management are actively reviewing the current position.
The current board and management are however confident that the operational
issues can be resolved and the operations will be cash positive under current
economic conditions from the 2008 financial year onwards.
Signed on behalf of the board
NA Ntsele MJ Schermers
Chairman Chief Financial Officer
Bedfordview
13 April 2007
INCOME STATEMENT
for the period ended 31 December 2006 16 months 12 months
31/12/2006 31/8/2005
Continuing operations Note R`000 R`000
Revenue 38 515 -
Cost of sales (41 504) -
Gross loss (2 989) -
Other income 1 102 -
Administration expenses (6 539) -
Other expenses (2 271) (78)
Finance costs (2 224) (551)
Finance income 123 -
Share of profit in associate 5 -
Net loss before taxation (12 793) (629)
Taxation (1 125) (609)
Net loss after taxation (13 918) (1 238)
Basic loss per share (cents) 3 (65) (0,6)
Diluted loss per share (cents) 3 (65) (0,6)
BALANCE SHEET
as at 31 December 2006 31/12/2006 31/8/2005
Note R`000 R`000
ASSETS
Non-current assets
Property, plant and equipment 558 429 6 737
Tangibles/intangible in process of being
identified 4 100 230 -
Intangible assets 329 -
Other investments 18 815 -
677 804 6 737
Current assets
Inventories 17 151 -
Trade and other receivables 29 478 9
Deferred stripping 2 495 -
Cash and cash equivalents 58 400 269
107 524 278
Total assets 785 328 7 015
EQUITY AND LIABILITIES
Capital and reserves
Share capital and premium 5&6 220 423 309
Accumulated losses (15 226) (1 308)
Total shareholders` equity 205 197 (999)
Non-current liabilities
Long-term liabilities 4 175 7 177
Provisions
- Close-down and restoration costs 70 318 -
- Post retirement medical benefits 1 723 -
Deferred taxation 1 584 609
77 800 7 786
Current liabilities
Trade and other payables 101 907 14
Bank overdraft 3 115 -
Taxation 3 239 -
Derivative financial instruments 8 388 518 -
Current portion of long-term liabilities 5 553 214
502 331 228
Total liabilities 580 131 8 014
Total equity and liabilities 785 328 7 015
STATEMENT OF CHANGES IN EQUITY
for the period ended 31
December 2006 Share Share Accumulated
capital premium loss Total
R`000 R`000 R`000 R`000
Balance at 1 September 2004 300 9 (69) 240
Loss for the year - - (1 239) (1 239)
Balance at 31 August 2005 300 9 (1 308) (999)
Balance at 1 September 2005 300 9 (1 308) (999)
Cost of business
combination - 220 114 - 220 114
Loss for the period - (13 918) (13 918)
Balance at 31 December 2006 300 220 123 (15 226) 205 197
CASH FLOW STATEMENT
for the period ended 31 December 2006 16 months 12 months
31/12/2006 31/08/2005
Note R`000 R`000
Cash flows from operating activities
Cash receipts from customers 21 483 -
Cash paid to suppliers and employees (25 741) (78)
Cash utilised by operations 7.1 (4 258) (78)
Interest received 123 -
Interest paid (2 224) (149)
Net cash flows from operating activities (6 359) (227)
Cash flows from investing activities
Increase in other investments (448) -
Purchase of property, plant and equipment (5 446) (6 833)
Acquisition of Pamodzi Gold 7.2 53 325
Net cash flows from investing activities 47 431 (6 833)
Cash flows from financing activities
Increase in short-term borrowings 661 -
Increase/(decrease) in long-term
borrowings 7.3 13 283 7 319
Net cash flows from financing activities 13 944 7 319
Net increase in cash and cash equivalents 55 016 259
Cash and cash equivalents at beginning of
period 269 10
Cash and cash equivalents at end of
period 55 285 269
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIOD ENDED
31 DECEMBER 2006
1. Basis of preparation and accounting policies
The financial information for the period ended 31 December 2006 has been
prepared in accordance with the recognition and measurement criteria of the
International Financial Reporting Standards ("IFRS") and its interpretations
adopted by the International Accounting Standards Board. The financial
statements have been prepared under the historical cost convention, as modified
by financial assets and financial liabilities (including derivative
instruments) at fair value through profit and loss. The accounting policies
have been consistently applied to all the periods presented, unless otherwise
stated.
The financial statements cover the 16 month period ended 31 December 2006, due
to the fact that Impafa Resources (Proprietary) Limited ("Impafa") has been
identified as the acquirer for accounting purposes in accordance with IFRS 3.
In addition, the comparative figures represent only Impafa`s results for the 12
months ending as at 31 August 2005. The consolidated financial statements are
therefore a continuation of Impafa. As at 31 August 2005, the total liabilities
of Impafa exceeded its total assets by R999 (R`000) and the holding company at
that time subordinated its loan of R2 064 (R`000) in favour of other creditors
of Impafa until Impafa"s assets, fairly valued, exceed its liabilities.
Accordingly, the financial statements are prepared on the basis of accounting
policies applicable to a going concern.
The Group prepared its financial statements under South African Statements of
Generally Accepted Accounting Practice ("SA GAAP") during previous years. The
management of the Group has decided to prepare its consolidated financial
statements in accordance with IFRS for the period ending 31 December 2006. As
the Group publishes comparative information in its financial statements, the
date for transition to IFRS is 1 September 2004 (relating to Impafa), which
represents the start of the earliest period of comparative information ot be
presented. The Group has restated information previously published under SA
GAAP to the equivalent basis under IFRS. This restatement follows the
guidelines set out in IFRS 1 - First-time Adoption of International Financial
Reporting Standards.
The Group has applied the mandatory exceptions and certain of the optional
exemptions from full retrospective application of IFRS. The adoption of IFRS
has resulted in a restatement of non-interest bearing loan, as well as
property, plant and equipment to reflect the loan and property, plant and
equipment at fair value. As a result of the impuuted interest on the non-
interest bearing loan, the retained earnings was restated with Rnil at the date
of transition and R401 734 for the year ending 31 August 2005.
2. Business combination and consolidation
Bema Gold South Africa (Proprietary) Limited ("Bema SA") concluded an agreement
on 9 October 2006 with Pamodzi Resources (Proprietary) Limited ("PR"),
Middelvlei Gold Investments (Proprietary) Limited ("MGI") and Bema Gold
Corporation, whereby MGI exchanged its wholly owned subsidiary, Impafa to the
value of R208 million in exchange for 103 new shares to be issued in Bema
SA. The agreement furthermore entitled PR to subscribe for a further 44 shares
at a subscription price of R75 million ("the transaction").
The agreement contained a number of conditions precedent that have been
fulfilled. The conditions precedent that financially affected Bema SA going
forward were that Bema Gold Corporation and Chimera Mines and Minerals
("Chimera") (the previous shareholders) waived their long-term liabilities to
the value of R119 million and R169 million respectively. Chimera subscribed for
an additional 5 shares for a subscription price of R10 million in the Company.
A further condition precedent was that the Company and Bema Gold Corporation
reach agreement with Standard Bank London ("SBL") and Standard Bank South
Africa ("SBSA") whereby SBL and SBSA subscribed for 41 shares in Bema SA for a
subscription price of R133,7 million in the exchange for the forgiveness of
loans to the value of R133,7 million.
The agreement also contained a resolutive condition that PR obtained the R75
million funding and that the Company be listed on the JSE Limited ("JSE") by 11
December 2006. The exchange transaction and subscription included a premium of
R84 million on the basis that PR and MGI are Historically Disadvantaged
Individual companies.
From the date of the conclusion of the agreement, Bema SA changed its name to
Pamodzi Gold Limited, increased its authorised share capital, became a public
company, finalised a pro-rata capitalisation issue to all shareholders of 140
shares per share held and listed its shares on the JSE on 11 December 2006.
Thus all conditions have been met on 11 December 2006, which is the acquisition
date of the business combination.
Impafa was identified as the accounting acquirer. The transaction was therefore
accounted as a reverse acquisition ("the reverse acquisition").
Impafa held more than half of the voting rights (50,17%).
As a result of the reverse acquisition, the comparative consolidated balance
sheet as at 31 August 2005 represents the balance sheet of Impafa (the acquirer
in terms of IFRS 3). The comparative consolidated income statement is also that
of Impafa for the year ended 31 August 2005. The income statement for the 16
months ended 31 December 2006 is the consolidated income statement of Impafa
for the total 16 months consolidated with the operational results of the legal
parent company, Pamodzi Gold Limited and its subsidiaries, for the period 11 to
31 December 2006.
As disclosed under the heading "Tangibles/intangibles in the process of being
identified" the accounting of the business combination that was effected during
the period was determined only provisionally, due to the fact that the
acquisition date was on 11 December 2006. A full purchase price allocation
("PPA") will be performed within 12 months of the acquisition date. No goodwill
or negative goodwill has been recorded for the year ending 31 December 2006.
Included in the consolidated net loss for the Group, an amount of R 7,395
million relates to Pamodzi Gold Limited.
3. Loss per share for loss attributable to the equity holders during the
period
16 months 12 months
31/12/2006 31/08/2005
Loss attributable to equity holders of the
Company (R`000) (13 918) (1 239)
Weighted average shares 21 419 425 20 580 000
Basic and diluted loss per share - cents 65 0.6
For the purpose of calculating the weighted average number of shares the number
of ordinary shares outstanding from the beginning of the period to the
acquisition date were deemed to be the number of ordinary shares issued
(adjusted for the capitalisation issue) by the legal parent (Pamodzi Gold) to
the owners of the legal subsidiary (Impafa) and the number of ordinary shares
outstanding from the acquisition date to the end of that period shall be the
actual number of ordinary shares of the legal parent outstanding during that
period. The comparative weighted average number of shares is calculated as the
number of ordinary shares issued (adjusted by capitalisation issue) by the
legal parent (Pamodzi Gold) to the owners of the legal subsidiary (Impafa).
4. Tangibles/Intangibles in the process of being identified
Following the reverse acquisition accounted for above, no PPA has been
performed at date of this report, This will be performed within the next 12
months. Currently the difference between cost of the combination and carrying
amounts of assets and liabilities has been recorded as "Tangibles/intangibles
in the prcess of being identified".
The following is a summary of the assets and liabilities acquired by Impafa:
R`000
Property, plant and equipment 546 548
Intangible assets 329
Investment in associate 172
Other investments 18 195
Trade and other receivables 24 821
Inventories 17 151
Cash and cash equivalents 56 440
Long-term liability (4 678)
Post-retirement liability (1 723)
Rehabilitation provision (70 318)
Trade creditors (65 750)
Accruals and provisions (30 091)
Derivative financial instruments (388 518)
Bank overdraft (3 115)
Taxation (3 239)
Total 96 213
5. Share capital and premium
As a result of the business combination being accounted for as a reverse
acquisition, the amount recognised as issued equity instruments in these
condensed consolidated financial statements is the issued share capital
(R300 000) of the legal subsidiary ("Impafa") immediately before the business
combination.
The cost of the business combination has been shown under share premium in the
condensed consolidated financial statements as determined under IFRS 3,
Appendix B and can be summarised as follows:
The share premium comprises the following: R`000
Vending Middelvlei (fair value) 142 000
Cash subscription 75 000
Merger expenses 3 123
Total 220 123
Total share capital and share premium amounts to R220 423 (R`000).
6. Share capital - Pamodzi Gold Limited (legal parent)
At the time of its incorporation, Pamodzi Gold had an authorised share capital
of 1 000 shares of R1 each, and from the date of incorporation (31 May 2002) to
31 July 2006, 100 shares were issued.
The authorised share capital of Pamodzi Gold was increased from 1 000 shares of
R1 each to 1 000 000 000 shares of 0,1 cent on 29 September 2006.
The Company undertook a pro-rata capitalisation issue to all shareholders of
140 shares per share on 27 November 2006.
Prior to the public offering and listing, a total of 41 020 000 ordinary shares
were issued and can be summarised as follows:
Chimera 14 700 000
MGI 14 420 000
Lenders 5 740 000
Pamodzi Resources 6 160 000
Total issued shares before listing 41 020 000
On 6 December 2006 8 210 000 of the 41 020 000 ordinary shares were placed by
way of a private placement to individual shareholders.
The Company has not effected any repurchase of Pamodzi Gold shares since the
incorporation of the Company.
7. Cash flow statement
7.1 Cash generated from operations
16 months 12 months
31/12/2006 31/08/2005
R`000 R`000
Net loss before taxation (12 794) (629)
Adjusted for merger costs capitalised (9) -
(12 803) (629)
Adjustments for
Amortisation 859 -
Interest paid 2 224 551
Interest received (123) -
Operating loss before working capital changes (9 843) (78)
Working capital changes 5 585 -
(Increase)/decrease in receivables and prepayments (1 742) 9
Increase in deferred stripping (2 495) -
Increase/(decrease) in trade and other payables 9 822 (9)
(4 258) (78)
7.2 Reverse acquisition of Pamodzi Gold by Impafa
Except for the cash taken over, this transaction has been excluded from the
cash flow statement, as it did not result in an exchange for cash
31/12/2006
R`000
Cash taken over from Pamodzi Gold 53 325
7.3 Long-term borrowings
Included in long-term borrowings is an amount of R16 285 (R`000) which was
received by Impafa from their previous shareholder. The long-term loan has been
taken over by Panodzi Gold as part of the business combination. This loan has
been eliminated on consolidation.
8. Derivative financial instruments
The Group`s revenues are sensitive to the ZAR/US$ exchange rates as all the
revenue is generated by gold sales, dominated in US$. The Group enters into
forward sales to establish a ZAR/US$ exchange rate in advance for the sale of
the future gold production.
Pamodzi Gold East Rand (Pty) Limited sells gold forwards to Standard Bank at
the strike price for the 116 months (26 November 2002 to 29 June 2012) in a
maximum total volume of 308 000 at $350 per ounce.
As at 31 December 2006 169 500 ounces were outstanding on the US$ Contingent
Forwards. The gold contingent forwards revalued at year-end amounted to R388
518 (R`000).
9. Dividends
No dividends have been declared or paid since the incorporation of the Company.
The Company anticipates that, for the foreseeable future, earnings generated by
Pamodzi Gold and its subsidiaries will not be distributed to shareholders as
dividends but will be retained for the development of the Company and its
subsidiaries. The directors will consider an appropriate dividend policy at an
appropriate point in time.
10. Audit review opinion
PricewaterhouseCoopers Inc., the Company`s independent auditor, has reviewed
the condensed consolidated financial statements. The unmodified review report
is available for inspection at the Company`s registered office.
Sponsors
Rand Merchant Bank (A division of First Rand Bank Limited
Auditors
PricewaterhouseCoopers Inc.
Directors
NA Ntsele1 (Chairman) JJ du Plooy1 JG Proust1 (Canadian) SP Radebe2
MB Mokgata2 MI Mthenjane2 KM Steenkamp (Chief Executive Officer)
AJ Murdoch Eaton (Chief Operating Officer) (Zimbabwean)
MJ Schermers (Chief Financial Officer)
(1 Non-executive 2 Independent Non-Executive)
Company Secretary
GM Chemaly
Registered office
AMR Office Park, Building 3
Concorde Road East
Bedfordview
WWW.PAMODZIGOLD.CO.ZA
Date: 13/04/2007 16:01:44 Produced by the JSE SENS Department.
