| Mon 14 May 2007, 9:55 | | PZG - Pamodzi Gold Limited - Unaudited Condensed C |
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PZG
PZG
PZG - Pamodzi Gold Limited - Unaudited Condensed Consolidated Results
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")
Highlights
Creating critical mass of 350 000 oz annualised gold production
Target of 1 million oz per annum gold producer in 2 years
New management deployed at current operations
Action plan established to improve production on current operations within 12
months
Orkney acquisition progressing as expected
UNAUDITED CONDENSED CONSOLIDATED RESULTS
for the quarter ended 31 March 2007 and further cautionary announcement
INCOME STATEMENT
for the quarter ended 31 March 2007
Quarter 16 months
ended ended
31 March 31 December
2007 2006
(Unaudited) (Reviewed)
Continuing operations Note R`000 R`000
Revenue 3 90 714 38 515
Cost of sales (101 131) (41 504)
Gross loss (10 417) (2 989)
Other income 6 700 1 102
Administration expenses (5 999) (6 539)
Other expenses 4 (15 705) (2 271)
Finance costs (118) (2 224)
Finance income 1 190 123
Share of profit in associate - 5
Net loss before taxation (24 349) (12 793)
Taxation - (1 125)
Net loss after taxation (24 349) (13 918)
Basic loss per share (cents) 5 (59) (65)
Diluted loss per share 5 (59) (65)
(cents)
BALANCE SHEET
as at 31 March 2007
31 March 31 December
2007 2006
(Unaudited) (Reviewed)
Note R`000 R`000
ASSETS
Non-current assets
Property, plant and 574 087 558 429
equipment
Tangibles/intangibles in 6 100 230 100 230
process of being identified
Intangible assets 329 329
Other investments 19 223 18 815
693 869 677 804
Current assets
Inventories 15 915 17 151
Trade and other receivables 25 155 29 478
Deferred stripping 2 495 2 495
Cash and cash equivalents 26 861 58 400
70 426 107 524
Total assets 764 295 785 328
EQUITY AND LIABILITIES
Capital and reserves
Share capital and premium 7 & 8 220 423 220 423
Accumulated losses (39 575) (15 226)
Total shareholders` equity 180 848 205 197
Non-current liabilities
Long-term liabilities 4 175 4 175
Provisions
- Close-down and restoration 72 116 70 318
costs
- Post retirement medical 1 723 1 723
benefits
Deferred taxation 1 584 1 584
79 598 77 800
Current liabilities
Trade and other payables 91 800 101 907
Bank overdraft - 3 115
Taxation 3 239 3 239
Derivative financial 9 404 156 388 518
instruments
Current portion of long-term 4 654 5 553
liabilities
503 849 502 331
Total liabilities 583 447 580 131
Total equity and liabilities 764 295 785 328
STATEMENT OF CHANGES IN EQUITY
for the quarter ended 31 March 2007
Accumu-
Share Share lated
capital premium loss Total
R`000 R`000 R`000 R`000
Balance 1 300 9 (1 308) (999)
September 2005
Cost of business - 220 114 - 220 114
combination
Loss for the - - (13 918) (13 918)
period
Balance at 31 300 220 123 (15 226) 205 197
December 2006
Loss for the - - (24 349) (24 349)
period
Balance at 31 300 220 123 (39 575) 180 848
March 2007
CASH FLOW STATEMENT
for the quarter ended 31 March 2007
Quarter 16 months
ended ended
31 March 31 December
2007 2006
(Unaudited) (Reviewed)
Note R`000 R`000
Cash flows from operating
activities
Cash utilised by operations 10 (14 331) (4 258)
Interest received 1 190 123
Interest paid (118) (2 224)
Net cash flows from operating (13 259) (6 359)
activities
Cash flows from investing
activities
Increase in other investments (408) (448)
Purchase of property, plant (15 658) (5 446)
and equipment
Acquisition of Pamodzi Gold - 53 325
Net cash flows from investing (16 066) 47 431
activities
Cash flows from financing
activities
(Decrease)/increase in short- (899) 661
term borrowings
Increase in long-term 1 800 13 283
borrowings
Net cash flows from financing 901 13 944
activities
Net (decrease)/increase in (28 424) 55 016
cash and cash equivalents
Cash and cash equivalents at 55 285 269
beginning of period
Cash and cash equivalents at 26 861 55 285
end of period
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS FOR THE QUARTER ENDED 31 MARCH 2007
1. Basis of preparation and accounting policies
The financial information for the quarter ended 31 March 2007 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 comparative financial statements cover the 16 months 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. 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 from the period ending 31 December 2006. 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.
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").
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 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 ended 31 December 2006 was determined only provisionally, due to the
fact that the acquisition date was on 11 December 2006. A full purchase price
allocation will be performed within 12 months of the acquisition date. No
goodwill or negative goodwill has been recorded for the period ended 31 December
2006 or 31 March 2007.
3. Revenue
Quarter 16 months
ended ended
31 March 31 December
2007 2006
(Unaudited) (Reviewed)
R`000 R`000
Gold sales at spot 111 590 42 292
Hedge loss (20 876) (3 777)
Revenue 90 714 38 515
4. Other expenses
An amount of R15,705 million represents a foreign exchange loss and is included
as other expenses for the quarter ended 31 March 2007.
5. Loss per share for loss attributable to the equity holders during the period
Quarter 16 months
ended ended
31 March 31 December
2007 2006
(Unaudited) (Reviewed)
R`000 R`000
Loss attributable to equity holders (24 349) (13 918)
of the company (R`000)
Weighted average number of shares 41 020 000 21 419 425
Basic and diluted loss per share 59 65
(cents)
6. Tangibles/intangibles in the process of being identified
Following the reverse acquisition accounted for the period ended 31 December
2006, no purchase price allocation has been performed at date of this report.
This will be performed before the next year end. Currently the difference
between cost of the combination and carrying amounts of assets and liabilities
has been recorded as "Tangibles/intangibles in the process 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
Invntories 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
7. 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:
R`000
The share premium comprises the following
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).
8. Share capital - Pamodzi Gold Limited (legal parent)
Authorised
1 billion shares of 0,1 cent per share
Issued at 31 March 2007 and 31 December 2006
41 020 000 shares of 0,1 cent per share
No shares were issued during the quarter under review.
9. Derivative financial instruments
The Group`s revenues are sensitive to the ZAR/US$ exchange rates as all the
revenue are generated by gold sales, denominated in US$. Historically, the Group
entered into forward sales to establish a ZAR/US$ exchange rate in advance for
the sale of the future gold production.
As at 31 March 2007 160 500 (31/12/2006 - 169 500) ounces were outstanding on
the US$ Contingent Forwards. The gold contingent forwards revalued at 31 March
2007 amounted to R404 million (31/12/2006 - R389 million).
The hedge loss for the quarter amounted to R20 876 million or 52,2 cents per
share.
10. Cash flow statement
Quarter 16 months
ended ended
31 March 31 December
2007 2006
(Unaudited) (Reviewed)
R`000 R`000
Net loss before taxation (24 349) (12 794)
Adjusted for merger costs - (9)
capitalised
(24 349) (12 803)
Adjustments for:
Amortisation - 859
Interest paid 118 2 224
Interest received (1 190) (123)
Operating loss before working (25 421) (9 843)
capital changes
Working capital changes 11 090 5 585
(Increase)/decrease in 4 323 (1 742)
receivables and prepayments
Increase in derivative 15 638 -
financial instrument
Increase in deferred stripping - (2 495)
Increase/(decrease) in trade (10 107) 9 822
and other payables
Decrease in inventories 1 236 -
(14 331) (4 258)
11. 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.
COMMMENTARY
1. Operational overview for the quarter ended 31 March 2007
The West Rand operations performed better than expected in terms of gold
production. This was due to the higher black reef grades mined. The second
opencast pit was brought into production and exploration drilling on the
Witwatersrand reefs is continuing. These operations produced 77 kilograms (2 468
ounces) of gold from 20 913 tons milled at a recovered grade of 3.69g/t. Total
operating cost amounted to R123 183 per kilogram ($532/oz) and revenue received
of R151 390 per kilogram. Capital expenditure amounted to R109 000 for the
quarter.
The East Rand operational results were worse than expected in terms of gold
output mainly due to the shortage of mineable face length and labour shortages
after the December break. Systems have been established to ensure future
production targets are achieved within the next 12 months. Capital has been
deployed to increase development to ensure availability of sufficient mineable
face length. These operations produced 661 kilograms (21 267 ounces) of gold
from 456 080 tons milled at a recovered grade of 1.45g/t. Total operating cost
amounted to R127 911 per kilogram ($551/oz) and revenue received before
accounting for the hedge loss amounted to R151 121 per kilogram. The hedge loss
amounted to R31 582 per kilogram. Capital expenditure amounted to R15,5 million
for the quarter.
Graham Chamberlain has been appointed as Manager East Rand Operations as from 1
May 2007. Graham has 25 years` mining experience with Anglo American.
2. Update on cautionary announcement made on 24 April 2007 regarding the
purchase of the Orkney Assets from Harmony
The finalisation of the formal agreement is progressing as expected. All other
documentation required to submit to the authorities and other relevant
stakeholders is being completed.
The Orkney assets are expected to produce about 150 000oz per annum and have an
expected eight year life of mine.
Shareholders are advised to continue to exercise caution when dealing in their
Pamodzi Gold shares until a further announcement is made.
3. Quarterly presentation
Additional information on the operational overview and the Orkney acquisition
can be obtained from the quarterly presentation made to shareholders and other
interested parties available on the Pamodzi Gold website.
4. Second quarter production target
West East Total Actual Variance
Rand Rand 2nd Q 2007 1st Q 2007
Kg Gold Produced 106 710 816 738 +10,6%
Oz Gold Produced 3 408 22 826 26 234 23 726
Tons Milled 36 000 391 449 427 449 476 993 -10,4%
Recovered grade 3,41 1,81 1,91 1,55 +23,2%
Operating
expenses
- R/Kg 123 991 135 982 134 424 127 377 +5,5%
- $/oz $550,93 $604,24 $597,32 $549.53 +8,7%
(ZAR/$7,00)
(ZAR/$ 7,21)
Development
metres
underground
on reef 0 1 375 1 375 1 180 +16,5%
off reef 0 1 100 1 100 804 +36,8%
Overburden 312 000 0 312 000 296 404 +5,3%
stripping - m3
The figures shown above have not been audited or reviewed by the auditors of the
Company.
5. Change of Chief Executive Officer
As from 1 June 2007 Ken Steenkamp will step down as CEO and become Non-Executive
Deputy Chairman and will initially be responsible for strategy and business
development.
Peter William Steenkamp has been appointed as CEO from 1 June 2007. Peter holds
a Bachelor of Science in Engineering degree and has 22 years gold mining
experience with Anglo, ARMGold and Harmony. His most recent previous three
positions, all with Harmony, included Mine Manager, Chief Operating Officer (SA
Operations) and Executive Corporate Development.
Signed on behalf of the board
NA Ntsele MJ Schermers
Chairman Chief Financial Officer
Bedfordview
14 May 2007
Company Secretary
GM Chemaly
Registered office
AMR Office Park, Building 3
Concorde Road East Bedfordview
Directors
NA Ntsele(1) (Chairman), JJ du Plooy(1), JG Proust(1) (Canadian),
SP Radebe(2), MB Mokgata(2), MI Mthenjane(2), KM Steenkamp (Chief Executive
Officer), AJ Murdoch Eaton (Chief Operating Officer) (Zimbabwean), MJ Schermers
(Chief Financial Officer)
((1) Non-executive (2) Independent Non-Executive)
Sponsors
RAND MERCHANT BANK
(A division of First Rand Bank Limited
WWW.PAMODZIGOLD.CO.ZA
Date: 14/05/2007 09:55:01 Produced by the JSE SENS Department.
