| Mon 12 Nov 2007, 8:54 | | FUM - First Uranium Corporation - Consolidated una |
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FUM
FIU
FUM - First Uranium Corporation - Consolidated unaudited financial statements
for the three and six months ended September 30, 2007 and September 30, 2006
First Uranium Corporation
(Continued under the laws of British Columbia, Canada)
(Registration number C0777384)
(South African registration number 2007/009016/10)
Share code: FUM ISIN: CA33744R1029
CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
for the three and six months ended September 30, 2007
and September 30, 2006
The interim consolidated financial statements contained herein have not been
audited by the Corporation`s independent auditors.
First Uranium Corporation
Consolidated Balance Sheets (unaudited)
(in United States Dollars)
September March 31
30
2007 2007
Notes US$`000 US$`000
ASSETS
Current assets
Cash and cash equivalents 254,332 138,914
Amounts receivable 5 8,190 1,713
Inventories 6 2,909 292
Receivables from related party 22 - 6,763
265,431 147,682
Non-current assets
Property, plant and equipment 7 119,077 30,954
Asset retirement funds 8 5,046 2,791
124,123 33,745
Total assets 389,554 181,427
LIABILITIES
Current liabilities
Accounts payable and accrued liabilities 10 13,090 5,702
Payable to related party 22 273 -
13,363 5,702
Non-current liabilities
Senior unsecured convertible debentures 11 98,963 -
Future tax liability 15 10,445 -
Asset retirement obligations 12 7,941 5,377
117,349 5,377
SHAREHOLDERS` EQUITY
Share capital 13 214,787 182,673
Equity portion of senior unsecured convertible 11 46,504 -
debentures
Contributed surplus 14 3,814 2,460
Accumulated deficit (6,263) (14,785)
Accumulated other comprehensive income 3 - -
258,842 170,348
Total equity and liabilities 389,554 181,427
See accompanying notes to the Consolidated Financial Statements
First Uranium Corporation
Consolidated Statements of Operations and Deficit and Other Comprehensive Income
(unaudited)
(in United Stated Dollars)
Three months Six months ended
ended
September 30 September 30
2007 2006 2007 2006
Notes US$`000 US$`000 US$`000
US$`000
Revenue 6,253 - 8,436 -
Cost of sales (5,343) - (7,598) -
Profit from mining operations 910 - 838 -
Other Income 16 897 - 897 -
Expenditures
General, consulting and (2,520) (5) (4,490) (1,377)
administrative expenditures
Stock-based compensation 14 (663) - (1,434) -
Pumping, feasibility and (721) 263 (1,068) (1,274)
rehabilitation costs
Amortization of property, plant 7 (69) - (97) -
and equipment
(3,973) 258 (7,089) (2,651)
Operating profit (loss) (2,166) 258 (5,354) (2,651)
Interest income 4,110 69 8,373 139
Interest expense (1,502) (204) (2,459) (348)
Accretion expense on convertible 11 (3,307) - (4,378) -
debentures
Foreign exchange gains 17 5,967 663 12,391 1,408
Net income (loss) before income 3,102 786 8,573 (1,452)
taxes
Provision for income taxes 15 (51) - (51) -
Net income (loss) for the period 3,051 786 8,522 (1,452)
Accumulated deficit at the (9,314) (9,095) (14,785) (6,857)
beginning of the period
Accumulated deficit at the end of (6,263) (8,309) (6,263) (8,309)
the period
Basic and diluted earnings (loss)
per common share ($) 18 0.02 0.01 0.07 (0.02)
Net income (loss) 3,051 786 8,522 (1,452)
Adjustments - - - -
Comprehensive income (loss) 3 3,051 786 8,522 (1,452)
See accompanying notes to the Consolidated Financial Statements
First Uranium Corporation
Consolidated Statements of Cash Flows (unaudited)
(in United Stated Dollars)
Three months Six months ended
ended
September 30 September 30
2007 2006 2007 2006
Notes US$`000 US$`000 US$`000 US$`000
Net income (loss) before income 3,102 786 8,573 (1,452)
taxes
Changes not affecting cash:
- Interest income 19.1 (65) (63) (97) (133)
- Interest expense 19.2 1,499 204 1,499 348
- Accretion expense on 11 3,307 - 4,378 -
convertible debentures
- Amortization on property, 631 - 959 -
plant and equipment
- Stock-based compensation 14 663 - 1,434 -
Net income (loss) after interest 9,137 927 16,746 (1,237)
and non-cash items
Movement in working capital:
- Increase in inventories (1,564) - (1,208) -
- Increase in accounts (4,418) (600) (5,231) (640)
receivable
- Decrease in net receivables 19.3 1,007 2,677 7,036 4,922
from related parties
- Increase/(decrease) in
accounts payable and accrued (4,617) 1,573 (2,446) 2,044
liabilities
Cash flows from operating (455) 4,577 14,897 5,089
activities
Additions to property, plant and 19.4 (26,604) (4,629) (41,681) (5,219)
equipment
Rehabilitation costs incurred (227) - (272) -
Net cash movement on acquisition 19.5 (61) - 1,249 -
of MWS
Cash flows from investing (26,892) (4,629) (40,704) (5,219)
activities
Issuance of senior unsecured
convertible debentures (net of 11 - - 130,561 -
issue costs)
Proceeds from shares issuance 13 342 - 342 728
(net of issue costs)
Cash flows from financing 342 - 130,903 728
activities
Net effect of exchange rate
changes on cash held in foreign 6,103 - 10,322 -
currencies
Net increase in cash and cash
equivalents for the period (20,902) (52) 115,418 598
Cash and cash equivalents at 275,234 1,210 138,914 560
beginning of the period
Cash and cash equivalents at end 254,332 1,158 254,332 1,158
of the period
See accompanying notes to the Consolidated Financial Statements
First Uranium Corporation
Notes to the Consolidated Financial Statements (unaudited)
September 30, 2007
1 NATURE OF OPERATIONS AND BASIS OF PRESENTATION
First Uranium Corporation ("First Uranium" or "the Corporation") is a Canadian
resource company focused on the development of uranium and gold projects in
South Africa and beyond. See Note 7 "Property, Plant and Equipment" for a
description of the projects. The Corporation has a primary listing on the
Toronto Stock Exchange ("TSX") and a secondary listing on the Johannesburg Stock
Exchange ("JSE"). First Uranium owns 100% of First Uranium Limited ("FUL"),
which in turn holds 100% of First Uranium (Proprietary) Limited ("FUSA") and 90%
of Ezulwini Mining Company (Proprietary) Limited ("EMC"). During the first
quarter ended June 30, 2007, First Uranium, through FUSA, acquired all the
issued and outstanding shares of Mine Waste Solutions (Proprietary) Limited and
its subsidiary, Chemwes (Proprietary) Limited (collectively "MWS"). See Note 4
"Business Acquisitions". As at September 30, 2007, Simmer and Jack Mines,
Limited ("Simmer & Jack"), a JSE listed company, owned 65.5% of First Uranium`s
common shares.
The reporting currency of the Corporation is the US dollar, and all amounts in
these financial statements are in US dollars (US$), except where otherwise
indicated.
2 SIGNIFICANT ACCOUNTING POLICIES
The unaudited interim consolidated financial statements have been prepared by
First Uranium in accordance with Canadian generally accepted accounting
principles ("Canadian GAAP") for preparation of the interim financial
statements. The preparation of the unaudited interim consolidated financial
statements is based on the same accounting policies and practices as those
disclosed in Note 1 "Nature of operations" and Note 2 "Significant accounting
policies" to the Corporation`s audited consolidated financial statements for the
year ended March 31, 2007, except for changes as described in Note 3 "Changes in
accounting policies". These unaudited interim consolidated financial statements
do not include all disclosures required by GAAP for annual financial statements,
and accordingly should be read in conjunction with the Corporation`s audited
consolidated financial statements for the year ended March 31, 2007.
2.1 Financial instruments
Transaction costs for financial assets and liabilities
For a financial asset or financial liability classified other than as held for
trading, the Corporation has added the transaction costs that are directly
attributable to the acquisition or issue of a financial asset or financial
liability to the fair value of the asset or liability established at the
recognition of the asset or liability.
2.2 Inventories
Inventories include ore stockpiles, gold in process and supplies and spares, and
are recorded at the lower of cost or net realizable value. The cost of ore
stockpiles and gold produced is determined principally by the weighted average
cost method using related production costs. Costs of gold produced inventories
include costs such as milling costs, mining costs and mine general and
administration costs but excluding transport, refining and taxes. Net realizable
value is determined with reference to current market prices. Stockpiles consist
of ore to be processed through the processing plant. The stockpiles have been
sampled and evaluated and are on surface. Spares and consumable stores are
valued at weighted average cost after appropriate impairment of redundant and
slow moving items.
2.3 Revenue recognition
Revenue from sales is recognized when significant risks and rewards of title and
ownership of the goods are transferred upon delivery to the final refiner.
Interest income is recognized on a time proportion basis, taking account of the
principal outstanding and the effective rate over the period of maturity, when
it is determined that such income will accrue to the Corporation.
2.4 Earnings or loss per share
Basic earnings or loss per share is computed by dividing earnings or loss
available to common shareholders by the weighted average number of common shares
outstanding during the period. The treasury stock method is used to calculate
diluted earnings or loss per share. Diluted earnings or loss per share is
similar to basic earnings or loss per share, except that the denominator is
increased to include the number of additional common shares that would have been
outstanding assuming that options with an average market price for the period
greater than their exercise price are exercised and the proceeds used to
repurchase common shares. In applying the treasury stock method, options with an
exercise price greater than the average quoted market price of the common shares
are not included in the calculation of diluted earnings per share, as the effect
is anti-dilutive.
3 CHANGES IN ACCOUNTING POLICIES
Effective April 1, 2007, the Corporation adopted two new accounting standards
that were issued by the Canadian Institute of Chartered Accountants ("CICA"):
- Handbook Section 1530 - Comprehensive Income
- Handbook Section 3855 - Financial Instruments - Recognition and Measurement
As provided under the standards, the comparative interim consolidated financial
statements have not been restated. There were no transitional effects and as a
result no adjustments have been recorded to deficit as at April 1, 2007.
Section 1530 - Comprehensive income
This section describes the reporting and disclosure standards with respect to
comprehensive income and its components. Comprehensive income is composed of net
income and other comprehensive income. At this time the Corporation has none of
the elements that will give rise to comprehensive income.
Section 3855 - Financial instruments - recognition and measurement
This section establishes standards for recognizing and measuring financial
assets, financial liabilities and non-financial derivatives. It requires that
financial assets and liabilities including derivatives be recognized on the
balance sheet when the Corporation becomes a party to the contractual provisions
of the financial instrument or a non-financial derivative contract. All
financial instruments should be measured at fair value on initial recognition
except for certain related party transactions. Fair value is the amount at
which an item could be exchanged between willing parties. Measurement in
subsequent periods depends on whether the financial instruments have been
classified as held for trading, available-for-sale, held-to-maturity, loans and
receivables, or other liabilities.
The Corporation designated certain financial assets and liabilities and adopted
the following new accounting policies:
Cash and cash equivalents
Cash and cash equivalents are classified as "assets available-for-sale" and are
measured at fair value at each balance sheet date. Any changes in fair value
are recognized in net income in the period in which the change arises. Fair
value is calculated using published price quotations in an active market, where
applicable. The carrying values for cash and cash equivalents at March 31 2007
approximated their fair values because of their short terms of maturity; no
adjustments were made to the opening values.
Accounts receivable and receivables from related party
These assets are classified as "loans and receivables" and are recorded at
amortized cost, which upon their initial measurement is equal to their fair
value. Subsequent measurements are recorded at amortized cost using the
effective interest rate method. The carrying values for these assets at March 31
2007 approximated their fair values because of their short terms of maturity; no
adjustments were made to the opening values.
Asset retirement funds
The asset retirement funds are classified as "assets available-for-sale" and are
measured at fair value at each balance sheet date. Any changes in fair value
are recognized in net income in the period in which the change arises. Fair
value is calculated using the quoted prices of South African equities in an
active market, with interest and dividends recognized in net income; unrealized
gains or losses are recognized in Other Comprehensive Income. Any equities
without market quotes are carried using the cost method. The carrying values for
the asset retirement funds at March 31 2007 approximated their fair values; no
adjustments were made to the opening values.
Accounts payable and accrued liabilities and payable to related party
These liabilities are classified as "other financial liabilities" and are
initially measured at their fair values. Subsequent measurements are recorded at
amortized cost using the effective interest rate method. The carrying values for
these liabilities at March 31 2007 approximated their fair values; no
adjustments were made to the opening values.
Senior unsecured convertible debentures
The sum of the carrying amounts assigned to the liability and equity components
of the convertible debenture on initial recognition is always equal to the
carrying amount that would be ascribed to the instrument as a whole. No gain or
loss arises from recognizing and presenting the components of the instrument
separately. The relative fair value method is used to determine the value of the
option directly either by reference to the fair value of a similar option, if
one exists, or by using an option pricing model. The value determined for each
component is then adjusted on a pro rata basis to the extent necessary to ensure
that the sum of the carrying amounts assigned to the components equals the
amount of the consideration received for the convertible debenture.
4 BUSINESS ACQUISITION
Acquisition of Mine Waste Solutions (Proprietary) Limited
First Uranium, through its wholly-owned subsidiary FUSA, acquired all of the
issued and outstanding shares of MWS. MWS owns and operates an existing gold
mine tailings and re-processing facility adjacent to First Uranium`s
Buffelsfontein Tailings Recovery Project in South Africa.
The MWS acquisition closed on June 6, 2007 (effective date of acquisition), at
which point First Uranium assumed management control of MWS. For accounting
purposes, net income from MWS operations of $1,866,086 for the period from April
1, 2007 to June 6, 2007 has been applied to reduce the cost of the MWS
acquisition.
A total consideration of US$32,262,765 was paid for the MWS acquisition in the
form of an issuance of 3,093,980 First Uranium common shares valued at
US$31,557,061 and US$705,704 in cash for transaction costs.
The table below sets out the preliminary allocation of the purchase price to the
assets acquired and liabilities assumed, based on preliminary estimates of fair
value. Final valuations of the assets and liabilities have not been completed.
Furthermore, the future income tax assets and liabilities are not yet complete
due to the inherent complexity associated with these valuations. The preliminary
purchase price allocation is subject to adjustments.
The acquisition was accounted for by the purchase method of accounting and the
estimated allocation of fair value to the assets acquired and liabilities
assumed as at June 6, 2007 was:
Reported at
September Reported
30, 2007 Adjustments at June
US$`000 US$`000 30, 2007
US$`000
Current assets 4,608 - 4,608
Asset retirement fund 1,950 - 1,950
Property, plant and equipment 40,430 (1,299) 41,729
Total assets acquired 46,988 (1,299) 48,287
Current liabilities 1,476 - 1,476
Lease obligations 28 - 28
Asset retirement obligation 2,777 (716) 3,493
Future tax liability 10,445 (644) 11,089
Total liabilities assumed 14,726 (1,360) 16,086
Net assets acquired 32,262 61 32,201
Current assets include cash and cash equivalents of US$1,248,531 (net of
transaction costs) (see Note 18.5).
Although the estimated allocation of fair value to the assets acquired and
liabilities assumed is subject to changes as additional information becomes
available, the final allocation is not expected to differ materially from the
estimated allocation.
The excess of the purchase consideration over the net book value of MWS of
US$35.2 million was attributed to the tailings for processing of US$29.6 million
and US$5.6 million adjustment of the fair value of property, plant and equipment
obtained with the MWS acquisition less the related future tax liability arising
on these assets.
5 AMOUNTS RECEIVABLE
September March 31
30
2007 2007
US$`000 US$`000
Trade receivables 38 99
Value Added Tax and Goods and Services Tax 7,046 1,463
Prepayments and advances 1,097 144
Deposits and guarantees 9 7
8,190 1,713
6 INVENTORIES
September March 31
30
2007 2007
US$`000 US$`000
Gold work-in-progress 1,283 -
Spares and consumables 759 292
Stockpiles 867 -
2,909 292
7 PROPERTY, PLANT AND EQUIPMENT
Accumulat Net
Cost ed carrying
September 30, 2007 US$`000 amortizat amount
ion US$`000
US$`000
Land and buildings 3,826 (17) 3,809
Mine infrastructure 14,555 - 14,555
Mining assets 36,175 - 36,175
Tailings for processing 29,642 (710) 28,932
Mining rights 28 - 28
Plant and equipment 34,727 (84) 34,643
Motor vehicles 518 (49) 469
Office furniture and equipment 108 (9) 99
Computer equipment and software 428 (61) 367
Total 120,007 (930) 119,077
Accumulat Net
Cost ed carrying
March 31, 2007 US$`000 amortizat amount
ion US$`000
US$`000
Land and buildings 863 - 863
Mine infrastructure 3,710 - 3,710
Mining assets 16,942 - 16,942
Mining rights 13 - 13
Plant and equipment 9,000 - 9,000
Motor vehicles 179 (8) 171
Office furniture and equipment 56 (1) 55
Computer equipment and software 205 (5) 200
Total 30,968 (14) 30,954
Included in the above are mining related assets with a net carrying value of
US$72.4 million (March 31, 2007: US$29.0 million) related to the Ezulwini Mine
and US$41.1 million (March 31, 2007: US$0.8 million) related to the
Buffelsfontein Tailings Recovery Project.
Included in the US$41.1 million net carrying value related to the Buffelsfontein
Tailings Recovery Project, is US$28.9 million relating to the Tailings for
processing acquired with the MWS acquisition as well as US$5.5 million
adjustment of the fair value of property, plant and equipment obtained with the
MWS acquisition (see Note 4).
As at September 30, 2007, all property, plant and equipment were owned by the
Corporation, except for motor vehicles with a net carrying value of US$17,854
which are held under capitalized lease contracts.
As at March 31, 2007, all property, plant and equipment were owned by the
Corporation.
Ezulwini Mine
The Ezulwini Mine project involves the recommissioning of an underground uranium
and gold mining operation located on the outskirts of the town of Westonaria in
Gauteng Province, South Africa. The mine, previously on care and maintenance, is
being readied for production. The development of the Ezulwini Mine includes the
rehabilitation and re-engineering of the main mine shaft through the
installation of a floating steel tower, de-stressing the area where the shaft
pillar intersects the shaft barrel, and the construction of uranium and gold
processing facilities.
EMC purchased certain surface and underground assets relating to the Ezulwini
Mine for a total consideration of US$7.8 million, effective December 22, 2006.
As part of the Ezulwini acquisition, the related environmental rehabilitation
trust fund amounting to US$2.7 million (see Note 8 - Asset retirement funds) was
transferred into the Ezulwini trust fund and EMC took over the related
environmental rehabilitation provision of US$5.1 million (see Note 12 - Asset
retirement obligations) as determined by the South African Department of
Minerals and Energy (the "DME"). The difference of US$2.4 million between the
environmental rehabilitation trust fund and the environmental rehabilitation
provision has been capitalized as part of mining infrastructure.
On December 8, 2006 the Ezulwini mining right was awarded to Simmer & Jack by
the DME. On December 20, 2006, EMC and Simmer & Jack entered into an agreement
(the "Ezulwini Mining Right Agreement") pursuant to which Simmer & Jack agreed
to take all necessary steps to obtain all ministerial approvals in order to
effect the transfer of the Ezulwini mining right from Simmer & Jack to EMC.
Buffelsfontein Tailings Recovery Project
The Buffelsfontein Tailings Recovery Project is a uranium and gold tailings
recovery operation located in the western portion of the Witwatersrand Basin.
Hydraulic mining of the tailings dams on the Buffelsfontein property will be
conducted using high pressure water cannons to slurry the tailings which will
then be pumped to processing plants for the recovery of uranium and gold.
Following the MWS acquisition (see Note 4), First Uranium commenced hydraulic
mining of two tailings dams on the MWS property. The Corporation is
constructing a pipeline between the MWS property and the Buffelsfontein property
and is also expanding the plant facilities on the MWS property.
In October 2005, Simmer & Jack purchased Buffelsfontein Gold Mines Limited
("BGM"), consisting of the Buffelsfontein and Hartebeesfontein underground gold
mines and mill (the "BGM Underground Mine"), out of provisional liquidation (the
"Buffelsfontein Liquidation Acquisition").
BGM holds an old order mining right in respect of mining gold at the BGM
Underground Mine but not for the recovery of the uranium in the tailings dams at
Buffelsfontein. On June 4, 2007 the DME granted to BGM a prospecting right with
respect to uranium and other minerals in the Buffelsfontein property and
tailings dams subject to certain conditions which are expected to be satisfied
in due course. BGM has also filed with the DME an application to convert its old
order mining right for BGM into a new order mining right. If and when this
conversion application is approved, BGM intends to file with the DME one or more
applications (which, together with the foregoing conversion application, are
collectively referred to herein as the "Buffelsfontein Conversion Application")
to: (i) amend, with effect from the date of conversion, the new order mining
right to include the authority to mine for uranium underground and for gold,
uranium and other minerals in respect of the tailings; (ii) divide the new order
mining right, if granted, into separate new order mining rights - one in respect
of the mining for gold, uranium and other minerals at the BGM Underground Mine
and the other, the Buffelsfontein Tailings Mining Right, in respect of the
mining of the gold, uranium and other minerals in the Buffelsfontein tailings
dams; and (iii) cede the Buffelsfontein Tailings Mining Right, if granted, to
MWS, a wholly-owned subsidiary of FUSA. The recognition of the BGM transaction
will only take effect when the above stated conditions precedent are met.
On December 20, 2006, FUSA, BGM and Simmer & Jack entered into an agreement (the
"Buffelsfontein Tailings and Rights Agreement") pursuant to which, among other
things: (i) BGM agreed to take all necessary steps to obtain all ministerial
approvals required for the items requested in the Buffelsfontein Conversion
Application in order to effect the transfer of the Buffelsfontein Tailings
Mining Right to FUSA as soon as possible; (ii) BGM agreed to sell to FUSA upon
FUSA`s receipt of the Buffelsfontein Tailings Mining Right, the Buffelsfontein
tailings dams as well as certain property required for construction of the
proposed processing plants, and grant to FUSA a right to the tailings arising
from BGM`s ongoing mining operations at its underground Buffelsfontein mine; and
(iii) BGM agreed to grant a servitude to FUSA for access and egress to BGM`s
property to enable FUSA, its employees, consultants, agents and subcontractors
access for purposes of constructing, servicing and operating the uranium and
gold processing plants and tailings pipelines to be built by FUSA.
The underground mines that were purchased by Simmer & Jack pursuant to the
Buffelsfontein Liquidation Acquisition do not form part of First Uranium`s
assets at the Buffelsfontein Tailings Recovery Project.
8 ASSET RETIREMENT FUNDS
September March 31
30
2007 2007
US$`000 US$`000
Balance, beginning of the period 2,791 -
Trust fund assumed on acquisition of Ezulwini - 2,686
mine
Trust fund assumed on acquisition of MWS (see 1,950 -
Note 4)
Investment income 97 82
Contributions in respect of guarantee - 103
Costs incurred - (80)
Foreign exchange differences 208 -
Balance, closing of the period 5,046 2,791
The asset retirement funds consisting of environmental rehabilitation trust
funds are under the Corporation`s control and are to be used to fund the
respective mining operation`s rehabilitation liabilities. Funds in the trust
consist primarily of cash held in interest bearing accounts, together with
investments in South African equities. An accredited South African financial
institution manages the trust funds under the direction of the trustees. The
trust deed limits the trustees` investments to institutions and investment
vehicles as referred to in section 37A of the South African Income Tax Act.
9 GUARANTEES
The following guarantees have been issued:
Guarantee
value
To Regarding US$`000
DME Ezulwini environmental 5,427
rehabilitation provision
Murray and Roberts Ezulwini shaft rehabilitation 1,445
Cementation (Pty) Ltd project
Eskom Holdings Ltd Electricity accounts 1,228
The Ezulwini rehabilitation trust funds included in the asset retirement funds
(see Note 8) have been pledged as security against the guarantees.
10 ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
September March 31
30
2007 2007
US$`000 US$`000
Trade payables 10,162 5,302
Accruals 2,928 400
13,090 5,702
The trade payables primarily relate to committed purchases for capital expansion
at the Ezulwini Mine and normal operational expenses at the Buffelsfontein
Tailings Recovery Project.
11 SENIOR UNSECURED CONVERTIBLE DEBENTURES
On May 3, 2007 First Uranium issued senior unsecured convertible debentures (the
"Debentures") in denominations of Cdn$1,000 in the principal amount of
US$135,060,000 (Cdn$150,000,000). The interest rate on the Debentures is 4.25%
per annum. The Debentures pay interest semi-annually in arrears on June 30th and
December 31st and have a maturity date of June 30, 2012. The Debentures are
convertible at the option of the holder into common shares at any time prior to
the maturity date at an exchange price of Cdn$16.42 per share.
The Debentures may not be redeemed by the Corporation prior to June 30, 2010. On
or after June 30, 2010 and prior to the maturity date, the Debentures may be
redeemed by the Corporation, in whole or in part from time to time, provided
that the weighted average trading price of the Common Shares on the TSX for the
20 consecutive trading days ending five trading days prior to the date on which
notice of redemption is provided is at least 130% of the exchange price of
Cdn$16.42.
First Uranium has the option, subject to regulatory approval, to satisfy its
obligations to repay the principal amount of the Debentures upon redemption or
at maturity by issuing and delivering that number of freely tradable Common
Shares obtained by dividing the principal amount of the Debentures by 95% of the
weighted average trading price of the Common Shares on the TSX for the twenty
consecutive trading days ending five trading days before the date fixed for the
redemption or maturity.
The equity component of the Debentures was valued on issuance at US$46,503,825
which is recorded as a separate component of shareholders` equity. The
conversion option was valued using the Black-Scholes pricing model with the
following assumptions: Expected dividend yield 0%, expected volatility 56%, risk
free interest rate 4.2% and expected life of five years.
The liability component of the Debentures is being accreted such that the
liability at maturity will equal the gross proceeds of US$135,060,000
(Cdn$150,000,000) less conversions. The amount accreted in during the three and
six months ending September 30, 2007 was US$3,307,858 and US$4,378,260
respectively. The cost of issuing the Debentures amounted to US$4,498,778.
As at September 30, 2007, no portion of the Debenture had been converted and
US$956,679 interest was paid on the Debentures on June 30, 2007. Interest
accrued for the three months ending September 30, 2007 amounted to US$1,499,222.
12 ASSET RETIREMENT OBLIGATIONS
September March
30 31
2007 2007
US$`000 US$`000
Balance, beginning of the period 5,377 -
Provision assumed on acquisition of the Ezulwini - 5,133
Mine
Provision assumed on acquisition of MWS (see Note 2,777 -
4)
Accretion expense 59 244
Rehabilitation costs (272) -
Balance, closing of the period 7,941 5,377
The environmental rehabilitation provision assumed by EMC as part of the
acquisition of the Ezulwini assets was determined by the DME as at November
2006. During March 2007 an independent review was performed by Johan Fourie &
Associates on the Ezulwini assets relating to environmental rehabilitation
provision that confirmed the provision at March 31, 2007 was sufficient.
The environmental rehabilitation provision assumed as part of the MWS
acquisition is to be partly funded by its rehabilitation trust fund (see Note
8). During April 2007, an independent valuation of the rehabilitation provision
was completed by GCS (Proprietary) Limited, a water environmental engineering
and science consultancy company. The provision was based on the estimated net
cost to rehabilitate the mine.
13 SHARE CAPITAL
Number of shares
September March September March 31
30 31 30
2007 2007 2007 2007
Ordinary shares `000 `000 US$`000 US$`000
Balance, beginning of period 121,686 87,536 206,726 4,176
Shares issued in public or - 33,350 - 201,795
private offering
Shares issued in respect of
acquisition (see Note 4) 3,094 - 31,557 -
Exercise of stock options 51 800 342 728
Contributed surplus relating
to stock options exercised - - 215 27
124,831 121,686 238,840 206,726
Less: Share issue costs - - (24,053) (24,053)
Balance, closing of period 124,831 121,686 214,787 182,673
Authorized
The authorized share capital of First Uranium consists of an unlimited number of
common shares.
Issued and outstanding
On June 1, 2006, 800,000 stock options were exercised for proceeds of
US$728,480.
During December 2006, First Uranium issued 33.35 million shares pursuant to its
initial public offering ("the Offering") at Cdn$7 per share for gross proceeds
of US$201.8 million;
On June 6, 2007, First Uranium issued 3,093,980 shares valued at US$31,557,061
relating to the acquisition of MWS (see Note 4).
During the three months ending September 30, 2007, 51,095 stock options were
exercised at an exercise price of Cdn$7 per share.
14 CONTRIBUTED SURPLUS - STOCK-BASED COMPENSATION
The Corporation maintains a stock-option plan (the "Option Plan") for employees,
officers, directors and for certain consultants who provide ongoing support to
First Uranium and its subsidiaries. Under the Option Plan, options typically are
granted for a period of up to ten years following the date of grant. The amounts
granted usually reflect the level of responsibility of the particular optionee
and his or her contributions to First Uranium.
The Board of Directors has discretion to set the terms of any vesting schedule
of each option granted. Except in specified circumstances, options are not
assignable and non-transferable, and terminate 90 days after the optionee ceases
to be employed or associated with First Uranium.
The terms of the Option Plan further provide that the price at which shares may
be issued under the Option Plan shall not be less than the volume weighted
average trading price of the shares on the TSX for the five trading days
immediately preceding the day the option is granted.
The following table details the movements of contributed surplus during the
period:
September March 31
30
2007 2007
US$`000 US$`000
Balance, beginning of period 2,460 27
Transfer to share capital surplus relating to (215) (27)
stock options exercised
Stock options granted during the period 1,569 2,460
Balance, end of period 3,814 2,460
Assumptions
The fair value of shares used to calculate the compensation expense was
determined as the share price on the grant date adjusted by the probability of
the recipients remaining employed or associated with the Corporation until the
vesting date.
For purposes of stock-based compensation, the fair values of these stock options
were estimated using the Black-Scholes option pricing model with the assumptions
used for the grants as follows:
September 30 June 30 March 31
2007 2007 2007
Expected dividend yield 0% 0% 0%
Expected volatility of the 63% 56% 85%
Corporation`s share price
Risk free interest rate - 4.75% 4.81% 3.90%
Canadian rates
Expected life 3 years 3 years 3 years
Due to the short history of First Uranium trading on the TSX, changes in the
subjective input assumptions can materially affect the fair value estimate, and
therefore, the existing model does not necessarily provide a reliable measure of
the fair value of First Uranium`s stock options.
During the 2007 fiscal year, 1,223,001 stock options were granted for a period
of 10 years following the date of the grant and are subject to vesting within 2
years from the date of grant.
During the quarter ending June 30, 2007, and the quarter ending September 30,
2007, 60,000 and 56,429 stock options were granted respectively for a period of
10 years following the date of the grant and are subject to vesting within 2
years from the date of grant.
The following table is a summary of the Corporation`s options granted under its
stock-based compensation plan:
Weighted average
Number of options exercise price
(Cdn$)
September March 31 September March
30 30 31
2007 2007 2007 2007
Outstanding options at 1,223,001 800,000 7.30 1.00
beginning of period
Granted during the period 116,429 1,223,001 7.78 7.30
Exercised during the period (51,095) (800,000) (7.00) (1.00)
Forfeited during the period (28,572) - (7.00) -
Outstanding options at end of 1,259,763 1,223,001 7.67 7.30
period
The total stock-based compensation recognized for the three and six months
ending September 30, 2007 was US$663,895 and US$1,568,976, respectively. The
stock-based compensation expense recognized in the statements of operations and
deficit was US$663,395 and US$1,433,989 for the three and six months ending
September 30, 2007 (September 30, 2006: US$nil). During the three months ending
September 30, 2007 $134,987 stock-based compensation was capitalized to the
projects. As at September 30, 2007, the aggregate unexpensed fair value of
unvested stock options granted amounted to US$278,275 (March 31, 2007:
US$2,858,354).
The following table summarizes information about the First Uranium`s outstanding
stock options at September 30, 2007:
Options outstanding Options exercisable
Weighted Weighted Weighted Weighted
Exercise Number of average average Number of average average
price options remaining exercise options remaining exercise
ranges outstanding life price exercisable life price
Cdn$ (years) (Cdn$) (years) (Cdn$)
7.00 to 1,047,477 9.22 7.04 287,956 9.22 7.05
8.99
9.00 to 152,286 9.58 9.95 50,761 9.58 9.95
11.99
12.00 to 60,000 9.66 12.87 20,000 9.66 12.87
13.99
1,259,763 9.29 7.67 358,717 9.30 7.79
15 TAXATION
Provision for income taxes
The reconciliation of income taxes attributable to operations computed at the
statutory tax rates to income tax recovery, using a statutory tax rate of 35.72%
for the three and six months ending September 30, 2007 (three and six months
ending September 30, 2007: 36.12%), is as follows:
Three months ended Six months ended
September 30 September 30
2007 2006 2007 2006
Net profit (loss) before 3,653 786 9,124 (1,452)
taxation
Income tax payable 1,305 284 3,259 (525)
(receivable) at statutory
rate
Difference between Canadian
rates and foreign 18 (95) 104 41
jurisdiction
Change in valuation allowance - - (570) -
Adjustment for future tax 3,667 (170) 4,133 417
rate difference
Permanent differences (4,939) (19) (7,087) 67
Other - - 212 -
51 - 51 -
Future tax liability
Sep 30 Mar 31
2007 2007
US$`000 US$`000
Capital assets 11,072 -
Non-capital loss carry-forwards (629) (1,602)
Share issue costs (8,399) (6,629)
Foreign resource expenses (1,273) (1,099)
Foreign exchange (3,540) (850)
(2,769) (10,180)
Less: Valuation allowance 13,214 10,180
10,445
-
As at September 30, 2007, the Corporation had non-capital losses of
approximately US$381,000 that may be applied against earnings in future years.
These losses are expected to expire in 2026.
Due to uncertainties in the Corporation`s ability to utilize its net operating
losses in all of its operations, the Corporation has provided a valuation
allowance against those future tax assets for which uncertainty exist.
16 OTHER INCOME
Three months Six months ended
ended
September 30 September 30
2007 2006 2007 2006
US$`000 US$`000 US$`000 US$`000
Other income 897 - 897 -
Other income primarily includes fees for sludge pumping services to a third
party and hostel rental income at the Ezulwini Mine.
17 FOREIGN EXCHANGE GAINS
Three months Six months ended
ended
September 30 September 30
2007 2006 2007 2006
US$`000 US$`000 US$`000 US$`000
Foreign exchange gains 5,967 663 12,391 1,408
The Corporation`s net assets are held in Canadian dollars ("Cdn$") and South
African Rand ("ZAR"), while its accounts are presented in US dollars. During
the reporting periods for FY 2008 and FY 2007, the Canadian dollar and South
African Rand both appreciated relative to the value of the US dollar. The
translation of the stronger currency assets (Cdn$ and ZAR) into US dollars for
reporting purposes resulted in the foreign exchange translation gain in the
second quarter and six months for both FY 2008 and FY 2007. The larger foreign
exchange translation gain in Q2 2008 and in the first half of FY 2008 reflects
the significant weakening of the US dollar, particularly with respect to the
Cdn$, but also relative to the ZAR.
18 BASIC AND DILUTED EARNINGS (LOSS) PER SHARE
Three months Six months ended
ended
September 30 September 30
2007 2006 2007 2006
Basic earnings (loss) per share of 0.02 0.01 0.07 (0.02)
(US$)
is calculated based on net income
(loss) for the period of (US$`000) 3,051 786 8,522 (1,452)
and a weighted average number of
shares outstanding of (`000) 122,475 87,738 122,679 97,522
Diluted earnings (loss) per share 0.02 0.01 0.07 (0.02)
of (US$)
is calculated based on net income
(loss) for the period of (US$`000) 3,051 786 8,522 (1,452)
and a diluted weighted average
number of shares outstanding of 122,714 87,738 122,739 97,522
(`000)
The impact of the Debentures issued on May 3, 2007, has been excluded from the
diluted shares computation because it was anti-dilutive for earnings per share
purposes.
19 NOTES TO THE CASH FLOW STATEMENT
19.1 Non-cash interest income
Three months Six months ended
ended
September 30 September 30
2007 2006 2007 2006
US$`000 US$`000 US$`000 US$`000
Total interest income (4,110) (69) (8,373) (139)
Add back: Cash interest income 4,045 6 8,276 6
(65) (63) (97) (133)
19.2 Non-cash interest expense
Three months Six months ended
ended
September 30 September 30
2007 2006 2007 2006
US$`000 US$`000 US$`000 US$`000
Total interest expense 1,502 204 2,459 348
Add back: Cash interest paid (3) - (960) -
1,499 204 1,499 348
19.3 Decrease in net receivables from related parties
Three months Six months ended
ended
September 30 September 30
2007 2006 2007 2006
US$`000 US$`000 US$`000 US$`000
Decrease in receivables from 890 457 6,763 1,052
related parties
Increase in payable to related 117 2,361 273 4,085
parties
Add back:
- Interest income accrued on - 63 - 133
amounts receivable
- Interest expense accrued on - (204) - (348)
amounts payable
1,007 2,677 7,036 4,922
19.4 Additions to property, plant and equipment
Three months Six months ended
ended
September 30 September 30
2007 2006 2007 2006
US$`000 US$`000 US$`000 US$`000
Total additions to property, plant (33,382) (4,629) (48,459) (5,219)
and equipment
Add back:
- Accrued capital expenditure 6,778 - 6,778 -
(26,604) (4,629) (41,681) (5,219)
19.5 Net cash movement on acquisition of MWS
Three months Six months ended
ended
September 30 September 30
2007 2006 2007 2007
US$`000 US$`000 US$`000 US$`000
Cash and cash equivalents taken
over on date of acquisition - - 1,954 -
Less: Expenses related to MWS (61) - (705) -
acquisition
(61) - 1,249 -
20 COMMITMENTS AND CONTINGENCIES
Commitments
September March 31
30
2007 2007
US$`000 US$`000
Capital commitments - Ezulwini Mine 26,171 14,836
Capital commitments - Buffelsfontein Tailings 8,577 -
Recovery Project
Total contractual obligations 34,748 14,836
The capital commitments are payable within one year.
The Corporation entered into an agreement with a third party to calcine the
yellowcake from First Uranium to produce uranium oxide packaged for dispatch to
converters as of January 2009. Either party may terminate the agreement on 18
months notice. The calciner will construct a plant with one-half of the
capacity of the plant dedicated for the processing of the First Uranium
yellowcake and a road tanker to transport the yellowcake from the First Uranium
operations to the calciner`s operations. First Uranium will pay one-half of the
construction cost of the calcining plant up to a maximum of ZAR15 million and
one-half of the cost of the tanker (together referred to as the "Loan"). The
Loan will be effective January 5, 2009 and be repaid in monthly instalments over
a seven year period commencing January 30, 2009. The Loan will bear interest at
a rate of the prime overdraft rate, as quoted by the South African Reserve Bank,
plus 2% commencing January 5, 2009. If First Uranium cancels the agreement, in
absence of a right to cancel the agreement in prescribed circumstances, First
Uranium will continue to be obligated to repay the entire Loan.
Contingencies
A loan agreement (the "Aberdeen Loan Agreement") was entered into by Simmer &
Jack with Aberdeen International Inc. ("Aberdeen") dated March 30, 2006 pursuant
to which Aberdeen provided to Simmer & Jack a loan facility in the amount of
US$10 million in respect of the financing of Simmer & Jack`s acquisition of BGM
and the BGM Underground Mine. As part of the consideration for the facility,
Simmer & Jack granted to Aberdeen a net smelter royalty on all of the gold
assets held by Simmer & Jack through BGM. The royalty as determined in the
Aberdeen Loan Agreement will be applicable to any gold produced by FUSA from
tailings acquired from BGM pursuant to the Buffelsfontein Tailings and Rights
Agreement (see Note 7) and will continue until the loan is repaid to Aberdeen,
which is expected to occur by December 31, 2008 (unless extended by Simmer &
Jack to December 31, 2010). In addition, pursuant to the Aberdeen Loan
Agreement, Aberdeen has the sole option, at any time following the one year
anniversary of the first advance there under to convert the amount of the
facility outstanding at that time into ordinary shares of Simmer & Jack at a
conversion rate of ZAR0.80, subject to the approval of Simmer & Jack`s
shareholders. In the event that such shareholder approval is not obtained within
a reasonable period of time, Aberdeen will be entitled to a 1.0% net smelter
royalty in perpetuity on gold produced by properties held by BGM, including the
Buffelsfontein Tailings Recovery Project.
On December 20, 2006, FUSA, Simmer & Jack and Aberdeen entered into an
arrangement agreement (the "Aberdeen Arrangement Agreement") pursuant to which
(i) Simmer & Jack confirmed that it will pay to Aberdeen the amount of any
royalty owing to Aberdeen under the Aberdeen Loan Agreement in respect of gold
produced from the tailings to be acquired by FUSA from BGM pursuant to the
Buffelsfontein Tailings and Rights Agreement, and (ii) FUSA confirmed that it
will pay to Simmer & Jack, immediately prior to any payment contemplated in (i)
above, an amount equal to the amount of any royalty payment to be made by Simmer
& Jack to Aberdeen in respect of gold produced from the tailings to be acquired
by FUSA from BGM pursuant to the Buffelsfontein Tailings and Rights Agreement.
Pursuant to the Buffelsfontein Tailings and Rights Agreement dated December 20,
2006 among BGM, Simmer & Jack and FUSA, in consideration for the cession of the
Buffelsfontein Tailings and Mining Right from BGM to FUSA as well as certain
servitudes, and the right to the tailings arising from future underground mining
operations by BGM at the BGM Underground Mine, FUSA agreed to pay to BGM a
royalty of 1% plus value added tax of the gross revenue earned by FUSA from the
sale of uranium, gold, sulphur and other minerals recovered from the processing
of tailings acquired by FUSA from BGM pursuant to the Buffelsfontein Tailings
and Rights Agreement.
In summary, as and when there is production from the tailings acquired from BGM
pursuant to the Buffelsfontein Tailings and Rights Agreement, FUSA will become
liable to pay: (i) to Simmer & Jack, under the Aberdeen Arrangement Agreement,
an amount equal to the royalty payable by Simmer & Jack to Aberdeen pursuant to
the Aberdeen Loan Agreement in respect of the tailings to be acquired from BGM
pursuant to the Buffelsfontein Tailings and Rights Agreement, and (ii) to BGM
the above-mentioned 1% royalty pursuant to the terms of the Buffelsfontein
Tailings and Rights Agreement.
21 FINANCIAL INSTRUMENTS
Financial risk factors
The Corporation`s activities expose it to a variety of financial risks,
including the effects of changes in debt and equity market prices, foreign
currency exchange rates and interest rates. The Corporation`s overall risk
management program focuses on the unpredictability of financial markets and
seeks to minimize potential adverse effects on the financial performance of the
Corporation. The Corporation does not hedge its exposure to foreign currency
exchange risk.
Risk management carried out by the Corporation is approved by the Board of
Directors.
(i) Foreign exchange and commodity price risk
The Corporation does not hedge its exposure to foreign currency exchange risk
nor does it hedge its exposure to commodity price fluctuation risk.
(ii) Interest rate risk
The Corporation does not hedge its exposure to interest rate risk. Deposits
attract interest at rates that vary with prime. The Corporation`s policy is to
manage interest rate risk so that fluctuations in variable rates do not have a
material impact on the statement of operations and deficit.
(iii) Credit risk
The Corporation has no significant concentrations of credit risk. The
Corporation has policies in place to ensure that sales of products and services
are made to customers with an appropriate credit history. The Corporation has
policies that limit the amount of credit exposure to any one financial
institution.
(iv) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and
marketable securities, the availability of funding through an adequate amount of
credit facilities and the ability to close out market positions. The Corporation
manages liquidity risk through an ongoing review of future commitments and
credit facilities. Cash flow forecasts are prepared and adequate utilized
borrowing facilities are monitored.
Fair value estimation
The fair value of publicly traded derivatives and trading securities is based on
quoted market prices at the balance sheet date.
In assessing the fair value of other financial instruments, the Corporation uses
a variety of methods and makes assumptions that are based on market conditions
existing at each balance sheet date. Option pricing models and estimated
discounted value of future cash flows, are used to determine fair value for the
remaining financial instruments.
The face value less any estimated credit adjustments for financial assets and
liabilities with a maturity of less than one year are assumed to approximate
their fair values. The fair value of financial liabilities for disclosure
purposes is estimated by discounting the future contractual cash flows at the
current market interest rate available to the Corporation for similar financial
instruments.
The actual disclosed values of the financial instruments all approximate the
fair values of these instruments.
22 RELATED PARTY TRANSACTIONS AND COMMITMENTS
September Mar 31
30
2007 2007
Related party balances US$`000 US$`000
FUSA amount (payable to)/receivable from Simmer (273) 5,079
& Jack
First Uranium amount receivable from Simmer & - 1,684
Jack
(273) 6,763
Three months Six months ended
ended
September 30 September 30
2007 2006 2007 2006
Related party transactions US$`000 US$`000 US$`000 US$`000
Shared services fees paid to (459) (382) (987) (806)
Simmer & Jack
Fees paid to empowerment (55) - (108) -
company
Interest paid to Simmer & Jack - (204) - (348)
by EMC
Interest received from Simmer & 57 63 57 133
Jack by FUSA
On December 20, 2006 First Uranium and Simmer & Jack entered into a shared
services agreement (the "Shared Services Agreement").
Pursuant to the terms of the Shared Services Agreement, First Uranium may retain
certain services to be provided by Simmer & Jack, including project management
and technical services, cash management and investment services, accounting,
treasury and financial services, corporate secretarial services and human
resources and staffing services, including payroll and benefits administration,
and such other services as may be required by First Uranium and which Simmer &
Jack is able and willing to provide. Subsequent to entering into the agreement,
the Corporation hired eight senior executives, including Mr. Miller, President
and Chief Executive Officer, Mr. Fisher, Executive Vice President and Chief
Operating Officer and Ms. Emma Oosthuizen, Senior Vice President and Chief
Financial Officer, and other staff, resulting in certain of these services being
no longer required to be provided by Simmer & Jack. The expense for the
financial year ending March 31, 2007 relates to such services received, together
with those provided prior to December 2006.
During the three months ending September 30, 2007, US$458,576 (September 30,
2006: US$381,678) shared services fees were charged respectively by Simmer &
Jack of which US$110,247 were capitalized, representing services provided in
respect of technical services for the Ezulwini Mine and the Buffelsfontein
Tailings Recovery Project. During the six months ending September 30, 2007,
US$986,457 (September 30, 2006: US$806,384) shared services fees were charged by
Simmer & Jack of which US$578,157 were capitalized. During the three and six
months ending September 30, 2006 US$298,322 shared services fees were
capitalized.
Prior to December 2006, the Corporation shared its premises with other companies
that had common directors and reimbursed the related companies for its
proportional share of expenses or was reimbursed by the related companies for
their proportional share of expenses. During Q2 2007, the Corporation was
charged US$598,828 for consulting services provided by related directors,
officers and consultants of the Corporation.
In addition, First Uranium has agreed to reimburse Simmer & Jack with respect to
50% of fees (to a maximum of ZAR125,000 per month) that Simmer & Jack is
required to pay to an empowerment company for consulting services regarding
transformation, human resources and occupational health and safety. BJ Njenje,
AX Sisulu and SLB Mapisa, shareholders of the empowerment company, are also
directors of Simmer & Jack.
Waterpan Mining Consortium ("Waterpan") currently holds a 10% shareholding in
EMC. On December 20, 2006, Waterpan, FUL and the Corporation entered into a
purchase agreement (the "Waterpan Purchase Agreement") pursuant to which
Waterpan agreed to sell its shares in EMC to FUL and as consideration for such
sale, First Uranium will issue 6,141,009 common shares of First Uranium to
Waterpan (the "Waterpan Shares"). The closing of the transaction is subject to
approval of the South African Reserve Bank. Pursuant to the Waterpan Purchase
Agreement, Waterpan has agreed not to sell or transfer 90% of the Waterpan
Shares for a period of two years from the date of issuance. One shareholder of
Waterpan is a director of EMC, two other shareholders of Waterpan are officers
and/or employees of First Uranium and EMC.
On September 27, 2007, the Board approved a housing loan in the amount of Cdn$1
million to the President and Chief Executive Officer of First Uranium for the
purpose of facilitating the relocation of his family to Toronto, where the
corporate office is located. The loan carries interest at 4% payable monthly in
arrears, is for a term of six years from date of closing of the purchase of a
family residence and is unsecured. The loan was advanced on October 17, 2007.
23. SEGMENTED INFORMATION
Segmented information is presented in respect of the Corporation`s business and
geographical segments. The primary format business segments, is based on the
Corporation`s management and internal reporting structure. Inter-segment
reporting is determined on an arm`s length basis.
Segment results, assets and liabilities include items directly attributable to a
segment as well as those that can be allocated on a reasonable basis.
Unallocated items comprise mainly income earning assets and revenue, interest-
bearing loans, borrowing and expenses, and corporate assets and expenses.
Segment capital expenditure is the total cost incurred during the period to
acquire segment assets that are expected to be used for more than one period.
South Africa Canada
Ezulwini Buffelsfontein
Mine Tailings
Recovery
Project* Corporate Total
Three months ended September US$`000 US$`000 US$`000 US$`000
30, 2007
Revenue - 6,253 - 6,253
Cost of sales - (5,343) - (5,343)
Profit from mining - 910 - 910
operations
Other income 897 - - 897
Expenditure
General, consulting and
administrative expenditures (516) 344 (2,348) (2,520)
Stock-based compensation (311) (78) (274) (663)
Pumping, feasibility and (362) (359) - (721)
rehabilitation costs
Amortization on property, (64) (2) (3) (69)
plant and equipment
(1,253) (95) (2,625) (3,973)
Operating profit (loss) (356) 815 (2,625) (2,166)
Interest income 101 56 3,953 4,110
Interest expense (3) - (1,499) (1,502)
Accretion expense on - - (3,307) (3,307)
convertible debentures
Foreign exchange gains (1,734) 772 6,929 5,967
(losses)
Income (loss) before income (1,992) 1,643 3,451 3,102
taxes
Provision for income taxes (25) (26) - (51)
Net income (loss) for the (2,017) 1,617 3,451 3,051
period
Total assets 90,918 65,718 232,918 389,554
Total liabilities (13,204) (15,770) (101,738) (130,712)
Capital expenditure (20,988) (5,608) (8) (26,604)
*Includes the MWS operations
South Africa Canada
Ezulwini Buffelsfontein Total
Mine Tailings
Recovery
Project Corporate
Three months ended September US$`000 US$`000 US$`000 US$`000
30, 2006
Expenditure
General, consulting and
administrative expenditure 606 (230) (381) (5)
Pumping and feasibility 436 (173) - 263
costs
Operating profit (loss) 1,042 (403) (381) 258
Interest income - 63 6 69
Interest expense (204) - - (204)
Foreign exchange gains 1,050 (214) (173) 663
(losses)
Profit (loss) before income 1,888 (554) (548) 786
taxes
Provision for income taxes - - - -
Net profit (loss) for the 1,888 (554) (548) 786
period
Total assets 5,485 1,678 1,676 8,839
Total liabilities (10,793) (344) (1,079) (12,216)
Capital expenditure (4,629) - - (4,629)
South Africa Canada
Ezulwini Buffelsfontein
Mine Tailings
Recovery
Project* Corporate Total
Six months ended September US$`000 US$`000 US$`000 US$`000
30, 2007
Revenue - 8,436 - 8,436
Cost of sales - (7,598) - (7,598)
Profit from mining - 838 - 838
operations
Other income 897 - - 897
Expenditure
General, consulting and
administrative expenditures (727) (192) (3,571) (4,490)
Stock-based compensation (311) (78) (1,045) (1,434)
Pumping, feasibility and (709) (359) - (1,068)
rehabilitation costs
Amortization on property, (90) (2) (5) (97)
plant and equipment
(1,837) (631) (4,621) (7,089)
Operating profit (loss) (940) 207 (4,621) (5,354)
Interest income 131 113 8,129 8,373
Interest expense (3) - (2,456) (2,459)
Accretion expense on - - (4,378) (4,378)
convertible debentures
Foreign exchange gains (2,379) 1,255 13,515 12,391
(losses)
Income (loss) before income (3,191) 1,575 10,189 8,573
taxes
Provision for income taxes (25) (26) - (51)
Net income (loss) for the (3,216) 1,549 10,189 8,522
period
Total assets 90,918 65,718 232,918 389,554
Total liabilities (13,204) (15,770) (101,738) (130,712)
Capital expenditure (35,338) (6,325) (18) (41,681)
*Includes the MWS operations
South Africa Canada
Ezulwini Buffelsfontein Total
Mine Tailings
Recovery
Project Corporate
Six months ended September US$`000 US$`000 US$`000 US$`000
30, 2006
Expenditure
General, consulting and
administrative expenditures (188) (486) (703) (1,377)
Pumping and feasibility (1,046) (228) - (1,274)
costs
Operating loss (1,234) (714) (703) (2,651)
Interest income - 133 6 139
Interest expense (348) - - (348)
Foreign exchange gains 2,160 (568) (184) 1,408
(losses)
Profit (loss) before income 578 (1,149) (881) (1,452)
taxes
Provision for income taxes - - - -
Net profit (loss) for the 578 (1,149) (881) (1,452)
period
Total assets 5,485 1,678 1,676 8,839
Total liabilities (10,793) (344) (1,079) (12,216)
Capital expenditure (5,219) - - (5,219)
Date: 12/11/2007 08:54:29 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
