| Fri 15 Jun 2007, 9:23 | | SIM - Simmer & Jack Mines Limited - Reviewed Provi |
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SIM
SIIF
SIM - Simmer & Jack Mines Limited - Reviewed Provisional Results For the year
ended 31 March 2007
SIM - Simmers - Trading Statement
Simmer and Jack Mines, Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1924/007778/06)
Share code: SIM ISIN: ZAE000006722
("Simmers" or "the Company")
Simmer & Jack Mines Limited
Reviewed Provisional Results
For the year ended 31 March 2007
* 101% increase in Measured, Indicated and Inferred attributable gold ounces
* 314% increase in Measured, Indicated and Inferred attributable uranium pounds
* One million fatality-free shifts achieved at Buffelsfontein Underground Mine
* Consolidated cash balance of R1,1 billion
* Buffelsfontein underground operation carries a net present value of R2,372
billion
* Independent NI 43-101 technical reports and valuations completed for gold
operations
* Surface exploration results continue to confirm low-cost heap leach potential
in Mpumalanga
R350 million raised for accretive gold projects during June 2007
* Uranium assets listed on the Toronto Stock Exchange and JSE Limited as First
Uranium (TSX: FIU; JSE: FUM)
* Exploration permit application for 20 km of strike length adjacent to FIU`s
Ezulwini Mine accepted
* FIU`s Buffelsfontein and Ezulwini mines ahead of schedule; production fast-
tracked
* FIU raised gross proceeds of CAD$150 million during May 2007 through issue of
senior unsecured convertible debentures
Comments
The highlight of the period under review was the creation of a separate listed
entity to house Simmer & Jack`s (Simmers`) uranium interests. This culminated in
the successful listing of First Uranium Corporation (FIU) on the Toronto Stock
Exchange in December 2006. Gross proceeds of CAD$233 million (Canadian dollars)
were raised without Simmers relinquishing its controlling stake in the newly
formed gold and uranium company. As at year-end, First Uranium was a 67,2%-held
subsidiary of Simmers.
The net asset value (NAV) of the Group increased from R177 million to R1,5
billion, largely as a result of the successful IPO. Working capital increased
from R27 million to R1,1 billion. Independent NI 43-101 and SAMREC-compliant
technical reports have confirmed the gold valuations as follows: Buffelsfontein
Underground Mine, including Five Shaft, as having an NPV of R2,372 billion using
a nominal discount rate of 15,23%, an average life of mine gold price of US$629
per ounce and an exchange rate of R7,51 to the US dollar. The independent
technical report for Transvaal Gold Mining Estates (TGME) confirmed a fair
market value (SAMVAL) of R192,5 million.
Gold sales increased from R200 million to R603 million, mainly as a result of it
being Buffelsfontein`s first full year of underground operations. Despite this,
the Company`s results have been negatively affected by poor metallurgical
recoveries at TGME, and lack of face length at its Buffelsfontein operation.
The loss from operations is mainly as a result of:
* expensing of employee share options of R62 million. Of this, R45 million
relates to the August 2005 allocation that was approved at the AGM on 29
September 2006. The balance of R17 million relates to share option costs for
First Uranium employees;
* impairment at TGME of R19 million as a result of cessation of operations as
Duke`s Hill and Clewer mines;
* employee costs of R33 million, excluding operational salaries and wages;
* R26 million depreciation; and
* increase in rehabilitation provision of R13 million.
The results reflect a mining company in an aggressive growth phase in which
major investment into infrastructure is being conducted and this will ensure
long-term sustainability and create strong future economic benefits.
Consolidated capital expenditure, including acquisitions, expenditures,
exploration and development, amounted to R339 million.
Interest received increased from R5 million to R36 million. Fair value
adjustments on the Aberdeen loan decreased from R63 million to R18,2 million.
Interest and royalty payments increased from R6 million to R23 million as a
result of the increase in royalty payments on the back of increased production
at Buffelsfontein.
Post-year-end, a successful capital raising project grossed R350 million, which
has been earmarked for the reopening of the high-grade Five Shaft at
Buffelsfontein Underground Mine, and to fast-track exploration and development
of surface mining in Mpumalanga.
OPERATIONS REVIEW
Buffelsfontein Underground Mine (Buffels)
The 2006 financial year marked the first full year of underground operations at
Buffelsfontein. As a result the Company has increased its understanding of the
mining conditions, specifically with respect to face length losses as well as
having a better appreciation for the significant potential of the resource. The
damage caused by the 8-month liquidation period prior to the Company resuming
operations at Buffelsfontein was severe; access ways had became inaccessible
necessitating a re-establishment programme that continued well into the second
half of the financial year. Face length availability was further affected by
losses sustained due to seismicity and geological complexity, particularly in
the third quarter. Face length during the last two quarters decreased by 22%,
compared to the first six months of the year, resulting in an 18,7% drop in
underground production.
The 22% loss in face length correlates with the 24,2% increase in unit cash cost
per kilogramme as a result of the mine`s large fixed-cost structure; an increase
in expenditure required to create face length and lower gold production.
To counter the impact of face length losses, the Company focused on face-length
recovery in favour of a short-term harvesting strategy, with the aim of
realising the full potential of the resource. As a result, there was a 55%
increase in linear metres opened up, from 13,04 kilometres to 20,21 kilometres
as compared to the six-month period from September 2006. Development has also
shown a 74% increase for the same period. This strategy is now bearing fruit and
is reflected in the forecast face length of 1 820 metres for Q1 of F2007/8, an
increase of 20% on the March quarter (Q4).
Buffels produced 4 082 kilogrammes (131 240 ounces) at a cash cost of R134
663/kg ($593/oz). On 29 March 2007, the mine achieved one million fatality-free
shifts over a 10-month period.
In order to optimise the underground grade delivery, a decision was made to
reopen the abandoned high-grade Five Shaft. Following an independent risk
assessment, rehabilitation of the Five Shaft main barrel commenced in September
2006. The Five Shaft project has since been accepted as a compliant reserve,
thereby adding 700 000 ounces to the mine`s previous reserves at a capital cost
of US$33 per reserve ounce. Production at Five Shaft will commence in the
current financial year and is expected to deliver 12 000 ounces by March 2008 at
a cash cost of US$378 per ounce. The Five Shaft project will result in an 11,29%
increase in total life-of-mine ounces, from 4,544 million ounces to 5,057
million ounces.
An independent technical report conducted in the period under review resulted
post-year-end in the publication of the first independent N1 43-101 valuation of
Buffelsfontein Underground Mine.
TGME
As anticipated, the Duke`s Hill and Clewer mines have come to the end of their
productive life and final clean-up and reclamation is under way. Despite the
fact that the adjacent Duke`s Hill upper portal exploration development has been
temporarily stopped, it will be restarted in the course of the new financial
year to access and prospect the mining area adjacent to Duke`s Hill Mine.
The mechanisation of Frankfort Mine, established to replace the Duke`s Hill and
Clewer mines, has positioned the mine as a highly efficient, safe and low-cost
underground operation. Results, however, have been marred by the inability of
the current metallurgical facility to recover sufficiently high percentages of
gold from the Frankfort ore. The metallurgical characteristics of the deeper
Frankfort ore have proved significantly more refractory (40% refractory gold),
which were not detected in the initial test-work. The mine`s technical team is
confident that prudent upgrades of the metallurgical facility will allow
recoveries to improve from their current 45% level to between 60% and 70% in the
medium term. In order to achieve long-term acceptable recoveries, laboratory
tests have been conducted on the Frankfort ore to determine the potential
recoveries using BIOX (biological oxidation), roasting and high-pressure
oxidation processes. Initial results indicate that BIOX will yield the best
recoveries, and further test work on the BIOX process and the cost implications
thereof have been initiated and are expected to be completed by December 2007.
As a result of the metallurgical challenges, it has been decided to delay the
development of further underground targets until such time as a cost-effective
metallurgical solution has been found. Due to the poor recoveries at Frankfort,
as well as the depletion of the Duke`s Hill and Clewer operations, production
for TGME was a disappointing 268 kilogrammes(8 620 ounces) at a cash cost of
R205 838/kg ($907/oz).
The Group has made a strategic decision to refocus capital expenditure from
underground projects to higher-return, lower-risk surface mining opportunities.
While production at Frankfort Mine will continue, plans to develop Beta Mine and
the underground resource at Rietfontein Mine have been put on hold pending the
roll-out of surface mining plans.
TGME exploration
The Company continued its extensive exploration programme with the following
objectives:
* To define heap leach targets in the near surface oxide zones in the Pilgrim`s
Rest/Sabie goldfields.
* To define the deeper feeder systems of the surface gold occurrences in that
area.
During the period under review, the Company invested R11 million in geophysical
studies, surface mapping, surface soil geochemical sampling and drilling. During
Q3 and Q4 of F2006, 7 090 metres of diamond core drilling and 3 500 metres of
reverse circulation drilling have been conducted at the DG2, DG1 and the
Molototse Valley Exploration project sites. Resource modelling and open pit mine
designs based on the results from these drill campaigns are ongoing as part of
the prefeasibility study.
Subsequent to 31 March 2007, extensive auger drilling work has been conducted on
the 2,5 million tonnes of historical tailings dams available in the area.
Independent third parties are currently executing the resource modelling of
these results, as well as conducting leach column metallurgical test work on
samples obtained from the dumps.
In the year under review, 15 targets have been identified and a test heap leach
pad constructed. While these initial targets are defined as test projects, they
have the potential to deliver 1 million ounces of mineable resources down to a
depth of 10 metres below surface. A prefeasibility study is expected to be
completed at the end of March 2008, and the bankable feasibility study by March
2009. Should the feasibility prove successful, production could peak at a rate
of 250 000 ounces per annum by F2011 at a total capital and operating cost of
$240 per ounce, assuming an exchange rate of R7,40 to the US$.
The sheer scale of the project and the fact that gold production can only begin
once the prospecting rights have been converted to mining rights, have resulted
in unit operating costs rising significantly. Unit operating costs are expected
to reduce in Q4 of F2007 to $400/oz once the test heap leach pad at Elandsdrift
comes on stream. A public participation process is under way to facilitate the
development of world-class environmental management programmes with the aim of
ensuring that heap leach technology is introduced responsibly into the area and
is able to contribute to the sustainable economic development of the region.
FIRST URANIUM CORPORATION
In the past year, Simmers listed its uranium assets on the Toronto Stock
Exchange; raised sufficient capital to ensure the completion of its two key
uranium projects, namely the Buffelsfontein Tailings project and its flagship
mine at Ezulwini, and completed a secondary listing on the JSE. Post-year-end,
First Uranium announced the successful acquisition of Mine Waste Solutions
(MWS), a neighbouring gold tailings recovery operation. This will enable First
Uranium to begin gold production one year ahead of schedule, as well as
establishing a lower cost for its first gold plant module and allow it to begin
the first phase of uranium production at double the planned rate. As a result of
the acquisition, Simmers` share of First Uranium dropped from 67,2% to 65,49%.
Post-year-end, First Uranium raised a further CAD$150 million when it completed
a private placement of senior unsecured convertible debentures, due 30 June
2012.
First Uranium has applied for prospecting rights on contiguous properties to the
north-east and south-east of its Ezulwini underground uranium and gold mine. The
application has been accepted by the Department of Minerals and Energy pending
the acceptance of an environmental management plan.
Detailed disclosures of the results for First Uranium can be viewed
atwww.firsturanium.com.
MINERAL RESOURCES & MINERAL RESERVES
Material changes to the Group`s total Resources and Reserves compared to 31
March 2006, are as follows:
* Total attributable ounces of gold in the Measured, Indicated and Inferred
resource category increased by 101% from 19,563 million ounces to 39,305 million
ounces.
* Total attributable pounds of uranium in the Measured, Indicated and Inferred
resource category increased by 314% from 45,806 million pounds to 189,595
million pounds.
BUFFELSFONTEIN UNDERGROUND MINE
* Reserve ounces increased from 4,012 million ounces to 4,820 million ounces
due to the inclusion of Five Shaft in the new life of mine plan.
TGME
* Reserves decreased from 0,61 million ounces to 0,032 million ounces. This was
due to the down grade of reserves into the resource category based on new
information.
* For the same reason the total resource of TGME decreased from 3,177 million
ounces of gold to 2,604 million ounces of gold.
FIRST URANIUM (ATTRIBUTABLE)
There has been a significant increase in resources attributable to Simmers as a
result of the establishment of First Uranium Corporation of which Simmers, post
year end, has a 65,9% holding. The following summary reflects attributable
ounces added to the consolidated Simmers Resource base:
Ezulwini Mine
* 1,150 million ounces of gold and 4,014 million pounds of uranium in the
Measured and Indicated Resource category.
* 19,067 million ounces of gold and 129,485 million pounds of uranium in the
Inferred Resource category
Buffelsfontein Tailings Recovery Project:
* Total attributable Measured Indicated and Inferred Resources changed from
1,973 million ounces of gold and 29,925 million pounds of uranium to 1,94
million ounces of gold and 31,396 million pounds of uranium for the following
reasons:
* Simmers` holding in First Uranium`s Buffelsfontein`s Tailing Project
decreased from 70% to 59,39%
* The acquisition of Mine Waste Solutions
The consolidated Resource and Reserve Statement for the Group is available on
www.simmers.co.za, under Resources and Reserves.
PROSPECTS
The Company continues along an aggressive growth path with the development of
Five Shaft at Buffelsfontein and the potential to turn the exploration programme
in the Molototse Valley into a bankable feasibility study presenting significant
growth opportunities.
On the uranium front, First Uranium is pursuing its own growth strategy by
conducting an expansion feasibility study in addition to the application for
prospecting rights contiguous to Ezulwini. If the anticipated results are
achieved, this could greatly enhance the measured and indicated mineral
resources of that company. The F2007/8 will provide an opportunity to
consolidate these developments, allowing the benefits to flow through in
F2008/9.
The Group continues to recruit new staff for the growing portfolio of
construction and development projects under the guidance of its Vice-President
for Transformation and is pleased to report that it has been successful in
filling vacancies with highly competent individuals in line with long-term
employment equity and black economic empowerment requirements.
By order of the Board
A Townsend
Secretary
15 June 2007
Incorporated in the Republic of South Africa (Registration number
1924/007778/06) Share code SIM ("Simmers" or "the Company" or "the Group")
Transfer secretaries
South Africa Computershare Investor Services 2004 (Pty) Limited Ground Floor
70 Marshall Street Johannesburg 2001 Republic of South Africa United
Kingdom Capita Registrars The Registry 34 Beckhenham Road Beckenham
Kent BR3 4TU United Kingdom
Auditors Grant Thornton
Registered office 5 Press Avenue Selby Johannesburg 2025 Republic of South
Africa
Sponsor Sasfin Capital A division of Sasfin Bank Limited Sasfin Place
North Block 13 - 15 Scott Street Waverley Johannesburg 2090 Republic of
South Africa
Directors NRG Brunette (Independent Non-executive Chairman) BJ Njenje (Non-
executive Vice-chairperson) GT Miller (Chief Executive Officer) J de V Berry
(Executive Director) DH Brown (Independent Non-executive Director) KPE
Wakeford (Independent Non-executive Director) AX Sisulu (Non-executive
Director) SLB Mapisa (Non-executive Director)
Auditors` review report is available for inspection at the Company`s registered
office.
Consolidated Balance Sheet at 31 March 2007
Notes 2007 2006
R`000 R`000
Assets
Non-current assets
Investment property 9 481 19 494
Property, plant and equipment 2 591 256 297 904
Financial assets 3 13 276 10 458
Environmental rehabilitation trust fund 4 137 657 109 686
751 670 437 542
Current assets
Inventories 5 30 852 11 512
Trade and other receivables 6 56 605 41 106
Cash and cash equivalents 7 1 163 830 23 050
1 251 287 75 668
Non-current assets held for sale 2 6 170 25 403
2 009 127 538 613
Equity and Liabilities
Equity
Share capital 474 109 308 873
Reserves 942 418 26 361
Accumulated loss (350 052) (160 330)
Minority interest 401 751 2 313
1 468 226 177 217
Liabilities
Non-current liabilities
Financial liabilities 8 159 505 129 976
Environmental rehabilitation liability 9 233 672 182 995
393 177 312 971
Current liabilities
Financial liabilities 8 13 501 231
Trade and other payables 10 134 223 48 194
147 724 48 425
Total Liabilities 540 901 361 396
Total Equity and Liabilities 2 009 127 538 613
Reconciliation of number of shares issued `000 `000
Reported at 1 April 2006 872 652 224 942
Shares issued to Simmers Shares Trust 29 985 20 290
Shares issued in terms of rights issue - 516 242
Shares issued for cash 102 350 111 178
Shares issued at 31 March 2007 1 004 987 872 652
Weighted average number of shares 970 051 678 514
Consolidated Income Statement for the year ended 31 March 2007
Notes 2007 2006
R`000 R`000
Revenue 11 602 947 200 348
Cost of production (640 118) (255 484)
Gross loss (37 171) (55 136)
Other income 40 961 38 133
Operating expenses (187 880) (53 844)
Operating loss (184 090) (70 847)
Investment revenue 12 36 135 4 787
Fair value adjustments (20 946) (63 260)
Unrealised gain on acquisition of - 1 203 554
subsidiary
Goodwill arising on acquisition written - (1 066 787)
off
Gains on disposal of non-current assets 2 591 -
held for sale
Finance costs (23 410) (5 793)
(Loss) / Profit before taxation (189 720) 1 654
Taxation (2) (1)
(Loss) / Profit for the period (189 722) 1 653
Attributable to:
Equity holders of the parent (181 630) 1 653
Minority interest (8 092) -
(189 722) 1 653
Reconciliation between profit / (loss)
and headline loss
Basic (loss) / profit for the year (189 722) 1 653
Add back:
Profit / (loss) on disposal of 3 967 (3 522)
subsidiary
Unrealised gain on acquisition of - (1 203 554)
subsidiary
Goodwill on acquisition written off - 1 066 787
Fair value adjustment on loan 20 946 63 260
Headline loss for the year (164 809) (75 376)
(Loss) / profit per share (cents)* (19.56) 0.24
Diluted (loss) / profit per share (20.36) 0.24
(cents)*
Headline loss per share (cents)* (16.99) (11.11)
Diluted headline loss per share (cents)* (17.69) (11.02)
Net asset value per share (cents)* 151.36 26.12
* Based on weighted average number of
shares in issue
Consolidated Cash Flow Statement for the year ended 31 March 2007
Notes 2007 2006
R`000 R`000
Cash utilised in operations (122 (121
084) 250)
Interest income 12 36 135 4 787
Finance costs (23 (5 793)
410)
Cash flows from investing activities (298 (60
023) 621)
Cash flows from financing activities 1 548 205 405
162
Total cash movement for the period 1 140 22 528
780
Cash at the beginning of the period 7 23 050 522
Total cash at the end of the period 7 1 163 23 050
830
Statement of changes in equity
Attributable to equity holders of the parent
Share Share Total Shares in
capital premium share Simmer and
R`000 R`000 capital Jack Mines
R`000 Limited
Share
Trust
R`000
Balance at 1 April 2005 4 499 108 729 113 228 (3 577)
Changes in equity
Profit for the year - - - -
Issue of shares for cash 2 224 70 530 72 754 -
Treasury shares movement 405 31 634 32 039 (31 840)
Net movement in other
reserves 10 325 120 078 130 403 (4 134)
Minority interest - - - -
movements
Balance at 01 April 2006 17 453 330 971 348 424 (39 551)
Changes in equity
Loss for the year - - - -
Issue of shares for cash 2 047 149 381 151 428 -
Treasury shares movement 666 41 120 41 786 (19 688)
Net movement in other
reserves - (8 290) (8 290) -
Minority interest - - - -
movement
Total changes 2 713 182 211 184 924 (19 688)
Balance at 31 March 2007 20 166 513 182 533 348 (59 239)
Statement of changes in equity (continued)
Attributable to equity holders of the parent
Reserves Accumu- Minority Total
R`000 lated interest equity
loss R`000 R`000
R`000
Balance at 1 April 2005 4 230 (161 983) 1 (48 101)
Changes in equity
Profit for the year - 1 653 - 1 653
Issue of shares for cash - - - 72 754
Treasury shares movement - - - 199
Minority net movement in
other reserves 22 131 - 5 835 154 235
Minority interest - - (3 523) (3 523)
movements
Balance at 01 April 2006 26 361 (160 330) 2 313 177 217
Changes in equity
Loss for the year - (181 630) (8 092) (189 722)
Issue of shares for cash - - - 151 428
Treasury shares movement - - - 22 098
Net movement in other
reserves 916 057 - (1 954) 905 813
Minority interest - (8 092) 409 484 401 392
movement
Total changes 916 057 (189 722) 399 438 1 291 009
Balance at 31 March 2007 942 418 (350 052) 401 751 1 468 226
Notes to the Financial Statements for the year ended 31 March 2007
Accounting Policies
Presentation of Financial Statements
The accounting policies and method of calculations are consistent with those
used in the previous annual financial statements
Bases of preparation.
The annual financial statements have been prepared in accordance with
International Financial Reporting Standards
Property, plant and equipment
2007 2006
Cost Accumula Carryin Cost Accumula Carryin
R`000 ted g value R`000 ted g value
deprecia R`000 deprecia R`000
tion tion
R`000 R`000
Land and buildings 13 646 (221) 13 425 7 604 (221) 7 383
Plant and machinery 132 765 (5 090) 127 675 41 457 (1 657) 39 800
Furniture and 5 883 (1 426) 4 457 2 608 (288) 2 320
fixtures
Motor vehicles 2 239 (177) 2 062 87 (38) 49
Mining assets 388 376 (36 868) 351 508 213 568 (6 174) 207 394
IT equipment 4 771 (1 701) 3 070 1 369 (369) 1 000
Development and 73 163 (19 214) 53 949 45 659 (10 630) 35 029
infrastructure
Mining rights 4 212 (2 034) 2 178 2 854 (2 034) 820
Decommissioning 17 808 - 17 808 - - -
asset
Exploration costs 15 124 - 15 124 4 109 - 4 109
Total 657 987 (66 731) 591 256 319 315 (21 411) 297 904
Reconciliation of property, plant and equipment 2007
Opening Additions Disposals Depreciation Total
balance R`000 R`000 and R`000
R`000 Impairment
R`000
Land and 7 383 6 042 - - 13 425
buildings
Plant and 39 800 91 308 - (3 433) 127 675
machinery
Furniture and 2 320 3 275 - (1 138) 4 457
fixtures
Motor vehicles 49 2 231 (79) (139) 2 062
Mining assets 207 394 174 808 - (30 694) 351 508
IT equipment 1 000 3 402 - (1 332) 3 070
Development and 35 029 27 504 - (8 584) 53 949
infrastructure
Mining rights 820 1 358 - - 2 178
Decommissioning - 17 808 - - 17 808
asset
Exploration 4 109 11 015 - - 15 124
costs
Total 297 904 338 751 (79) (45 320) 591 256
Reconciliation of property plant and equipment 2006
Opening Additions Additions Transfer Depre- Total
balance R`000 through to ciation R`000
R`000 business investmen R`000
combina- t
tions propertie
R`000 s
R`000
Land and 897 - 26 188 (19 494) (208) 7 383
buildings
Plant and 5 048 12 107 23 528 - (883) 39 800
machinery
Furniture 131 785 1 633 - (229) 2 320
and
fixtures
Motor 62 - - - (13) 49
vehicles
Mining 2 035 32 444 178 783 - (5 868) 207 394
assets
IT 139 10 1 210 - (359) 1 000
equipment
Developme 23 745 18 175 - - (6 891) 35 029
nt and
infrastru
cture
Mining 223 826 - - (229) 820
rights
Explorati - 4 109 - - - 4 109
on costs
Total 32 280 68 456 231 342 (19 494) (14 680) 297 904
TGME pledged land and buildings with a carrying value of R731 000 (2006: R731
000) as security for the borrowing of facilities of Simmers, its holding
company, and for the guarantees provided to Eskom.
Certain plant at Buffelsfontein has been encumbered as result of a long term
loan.
Non-current assets
The non-current assets held for sale amounting to R6,170m (2006 - R25 403)
consist of residential houses in Stilfontein. These houses are held at their
carrying value and are to be sold within the next 12 months.
Simmer and Jack Mines, Limited Group Financial Statements
(Registration number 1924/007778/06)
Notes to the Financial Statements for the year ended 31 March 2007
2007 2006
R`000 R`000
Financial Assets
Available for sale
Unlisted shares - Rand Mutual Assurance 2 12
Company 115 (2006: 596) shares 13 274 10 106
Unlisted shares - Rand Refinery Limited 24 004
shares
Valuation as per Rand Refinery Limited
director`s valuation. - 340
Loans and receivables
TEBA Limited
Total other financial assets 13 276 10 458
Environmental rehabilitation trust fund
The use of these funds is limited to the 137 657 109 686
rehabilitation of the mines as directed by the
trustees
Inventories
Unprocessed ore 7 339 -
Medical supplies 945 950
Consumables 10 069 5 995
Heap leach 8 164 -
Gold-in-process 5 045 4 567
31 562 11 512
Inventories (write-downs) (710) -
30 852 11 512
Trade and other receivables
Trade receivables 25 616 16 201
Prepayments 4 323 131
Deposits 544 1 017
VAT 16 474 18 410
Other receivables 9 503 5 347
56 460 41 106
Cash and cash equivalents
Cash and cash equivalents consist of:
Cash on hand 10 34
Bank balances 1 163 520 22 716
Short-term deposits 300 300
1 163 830 23 050
Financial liabilities
159 505 129 565
Aberdeen International Incorporated
("Aberdeen")
Simmers entered into an agreement with
Aberdeen a Canadian exploration and royalty
company trading on TSX, whereby Aberdeen
provided a loan facility of US$ 10 million to
acquire Buffelsfontein. The loan has a 3%
coupon up to a gold price of US$400/oz and
2.5% thereafter. In addition a Net Smelter
Return ("NSR") on Buffelsfontein`s gold
production is charged, which is linked to the
price of gold ranging from 1.5% NSR at
US$450/oz to a 5% NSR at gold prices of
US$700/oz or higher. Simmers has the option of
extending the term of the loan for an
additional two years with a minimum repayment
of 10% of the existing principal of the loan
at the time of the extension. Aberdeen has the
option to convert the debt into Simmers
shares, subject to Simmers shareholders`
approval, at R0.80 per share after the first
anniversary of the loan. The loan has a three
year term. The loan is secured by a bond over
Buffelsfontein`s North Plant.
Royalties paid = R 20 380 217
Interest paid = R 1 576 260
Simmer and Jack Mines, Limited Group Financial Statements
(Registration number 1924/007778/06)
Notes to the Financial Statements for the year ended 31 March 2007
2007 2006
R`000 R`000
Financial liabilities (continued)
The loan, royalties and options have been fair
valued, taking the following assumptions into
account
valuation date = 31 March 2007
redemption date = 31 December 2008
R/US$ = 7.24
share price = R6.25 as at 31 March 2007
volatility = 90%
dividend yield = 0%
discount curves = US$ swap curve for $ cash
flows and ZAR swap curve for R valuation (on
31 March 2007)
lifetime of royalties = 20 years
gold price = remains at current levels (such
that the interest is 2.5%)
long-term gold price = US$600
Consolidated Mining Management Services 231 231
Limited
The amount owing is unsecured, bears no
interest and has no fixed term of repayment.
- 411
Mining Reclamation & Support (Proprietary)
Limited
Held at amortised cost 13 270 -
Lion Capital Group AG
The loan is unsecured, bears interest at the
prime rate and is repayable in the 2008
financial year. This loan is with a related
party, Mr J-P Schumacher who has an interest
in Lion Capital and is a director of Simmer &
Jack.
173 006 130 207
Environmental rehabilitation provision
Opening balance 182 995 1 000
Addition as a result of acquisition of 37 568
subsidiary 1 995
Additional provision 13 109
180 000
Closing balance 233 672 182 995
The environmental rehabilitation provision of both TGME and
Buffelsfontein have been reviewed by GCS (Proprietary) Limited, a water
environmental engineering and science consultancy company. The
provisions are based on the estimated cost, before salvages, for the
respective companies to rehabilitate their mines. On the assumption that
third parties will attend to the rehabilitation of the mines, the cost
after deducting salvages, are estimated at R 261 million (2006: R 292
million). (Subject to confirmation by the DME.)
The environmental rehabilitation provision for Ezulwini has been
reviewed by Johan Fourie & Associates, a consulting environmental
engineering company. The provision is based on the estimated total cost
to rehabilitate the mine.
Trade and other payables
Trade payables 98 491 35 999
Other payables 35 738 12 195
134 229 48 194
Revenue
Sale of gold 602 947 200 348
Interest revenue
Growth in rehabilitation trust fund 7 645 2 178
Banks 28 490 2 609
36 135 4 787
Share price
Cents per share 625 157
Percentage increase 298% Base
price
Date: 15/06/2007 09:23:39 Produced by the JSE SENS Department.
