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PZG
PZG
PZG - Pamodzi Gold Limited - Unaudited condensed consolidated results for the
quarter and nine months ended 30 September 2007 and further cautionary
announcement
Pamodzi Gold Limited
(Formerly Bema Gold South Africa (Pty) Limited)
(Incorporated in the Republic of South Africa)
Registration number: 2002/013039/06
Share code: PZG & ISIN: ZAE000088563
("Pamodzi Gold" or "the Company")
UNAUDITED CONDENSED CONSOLIDATED RESULTS FOR THE QUARTER AND NINE MONTHS
ENDED 30 SEPTEMBER 2007 AND FURTHER CAUTIONARY ANNOUNCEMENT
Highlights
* Fatality free quarter
* Safety performance improvement
* Acquisition strategy progressing to become a
420 000 oz annualised gold producer by year-end
* Pamodzi Gold aiming at becoming a 1 million oz pa gold producer within
2 years
* Visible impact of new management deployed at current operations
* Turnaround on operations to achieve improved and consistent performance
by 1st quarter in 2008
* Pamodzi Gold obtained management control over the Orkney operations with
effect from 25 September 2007
Income statement
International Financial Reporting Standards Basis
Quarter Quarter
ended ended
30 September 30 June
2007 2007
(Unaudited) (Unaudited)
Continuing operations Note (R`000) (R`000)
Revenue 3 97 630 84 652
Cost of sales (133 581) (107 260)
Gross loss (35 951) (22 608)
Other income 4 238 2 931
Administration expenses (10 677) (8 223)
Foreign exchange gain/(loss) 11 186 9 328
Revaluation of financial (67 184) 31 445
derivative
Finance costs (1 819) (243)
Finance income 106 840
Share of profit in associate - -
Net profit/(loss) before taxation (100 101) 13 470
Taxation - -
Net profit/(loss) after taxation (100 101) 13 470
Basic earnings/(loss) per share 4 (243) 33
(cents)
Diluted earnings/(loss) per share 4 (243) 33
(cents)
Quarter 9 months 16 months
ended ended ended
31 March 30 September 31 December
2007 2007 2006
(Unaudited) (Unaudited) (Audited)
Continuing operations (R`000) (R`000) (R`000)
Revenue 90 714 272 996 38 515
Cost of sales (101 131) (341 972) (41 504)
Gross loss (10 417) (68 976) (2 989)
Other income 6 700 13 869 1 102
Administration expenses (5 999) (24 899) (6 539)
Foreign exchange gain/(loss) (15 705) 4 809 (2 271)
Revaluation of financial derivative - (35 739) -
Finance costs (118) (2 180) (2 224)
Finance income 1 190 2 136 123
Share of profit in associate - - 5
Net profit/(loss) before taxation (24 349) (110 980) (12 793)
Taxation - - (1 125)
Net profit/(loss) after taxation (24 349) (110 980) (13 918)
Basic earnings/(loss) per share (59) (270) (65)
(cents)
Diluted earnings/(loss) per share (59) (270) (65)
(cents)
Balance sheet
International Financial Reporting Standards Basis
30 September 31 December
2007 2006
(Unaudited) (Audited)
Note (R`000) (R`000)
ASSETS
Non-current assets
Property, plant and equipment 585 052 546 729
Tangibles/intangibles in process of 5 100 230 100 230
being identified
Intangible assets 534 329
Other investments 19 724 18 815
705 540 666 103
Current assets
Inventories 12 793 17 151
Trade and other receivables 21 194 30 678
Deferred stripping 6 015 2 495
Cash and cash equivalents 21 999 58 400
62 001 108 724
Non-current asset held for sale 11 700 11 700
Total assets 779 241 786 527
EQUITY AND LIABILITIES
Capital and reserves
Share capital and premium 6 & 7 257 107 220 423
Accumulated losses (126 207) (15 226)
Total shareholders` equity 130 900 205 197
Non-current liabilities
Long-term liabilities 3 239 4 381
Provisions
- Close-down and restoration costs 73 713 71 346
- Post retirement medical benefits 1 723 1 723
Deferred taxation - 1 584
78 675 79 034
Current liabilities
Trade and other payables 122 956 100 388
Bank overdraft - 3 115
Taxation 4 822 3 239
Derivative financial instruments 9 414 566 388 518
Current portion of long-term 27 322 7 036
liabilities
569 666 502 296
Total liabilities 648 341 581 330
Total equity and liabilities 779 241 786 527
Statement of changes in equity
for the nine months ended 30 Share Share Accumu-
September 2007 lated
capital premium loss Total
International Financial (R`000) (R`000) (R`000) (R`000)
Reporting Standards Basis
Balance at 1 September 2005 300 9 (1 308) (999)
Cost of business combination - 220 114 - 220 114
Loss for the period - - (13 918) (13 918)
Balance at 31 December 2006 300 220 123 (15 226) 205 197
Loss for the nine months - - (110 981) (110 981)
Shares issued 2 36 682 - 36 684
Balance at 30 September 2007 302 256 805 (126 207) 130 900
Cash flow statement
International Financial Reporting Standards Basis
Quarter Quarter
ended ended
30 September 30 June
2007 2007
(Unaudited) (Unaudited)
Note (R`000) (R`000)
Cash flows from operating activities
Cash utilised by operations 8 (13 604) (13 174)
Interest received 106 840
Interest paid (1 819) (243)
Net cash flows from operating (15 316) (12 577)
activities
Cash flows from investing activities
Increase in other investments (6) (496)
Purchase of property, plant and (18 608) (16 276)
equipment
Acquisition of Pamodzi Gold - -
Net cash flows from investing (18 614) (16 772)
activities
Cash flows from financing activities
Increase/(decrease) in short-term 20 000 2 668
borrowings
Decrease in long-term borrowings - (936)
Shares issued 36 684 -
Net cash flows from financing 56 685 1 732
activities
Net (decrease)/increase in cash and 22 755 (27 617)
cash equivalents
Cash and cash equivalents at (756) 26 861
beginning of period
Cash and cash equivalents at end of 21 999 (756)
period
Quarter 9 months 16 months
ended ended ended
31 March 30 September 31 December
2007 2007 2006
(Unaudited) (Unaudited) (Audited)
(R`000) (R`000) (R`000)
Cash flows from operating
activities
Cash utilised by operations (10 842) (37 619) (4 056)
Interest received 1 190 2 186 123
Interest paid (118) (2 180) (2 224)
Net cash flows from operating (9 770) (37 663) (6 157)
activities
Cash flows from investing
activities
Increase in other investments (408) (909) (448)
Purchase of property, plant and (15 658) (50 542) (5 648)
equipment
Acquisition of Pamodzi Gold - - 53 325
Net cash flows from investing (16 066) (51 451) 47 229
activities
Cash flows from financing
activities
Increase/(decrease) in short- (2 382) 20 286 661
term borrowings
Decrease in long-term borrowings (206) (1 142) 13 283
Shares issued - 36 684 -
Net cash flows from financing (2 588) 55 828 13 944
activities
Net (decrease)/increase in cash (28 424) (33 286) 55 016
and cash equivalents
Cash and cash equivalents at 55 285 55 285 269
beginning of period
Cash and cash equivalents at end 26 861 21 999 55 285
of period
Notes to the condensed consolidated financial statements for the quarter and
nine months ended 30 September 2007
1. Basis of preparation and accounting policies
The financial information for the quarter and nine months ended 30
September 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 Pamodzi Gold West Rand (Proprietary)
Limited ("PGWR") (Previously Impafa Resources (Proprietary) Limited) has
been identified as the acquirer for accounting purposes in accordance
with IFRS 3. The consolidated financial statements are therefore a
continuation of PGWR.
The Group prepared its financial statements under South African
Statements of Generally Accepted Accounting Practice ("SA GAAP") during
previous years. The management of the Group has decided to prepare its
consolidated financial statements in accordance with IFRS for the period
ending 31 December 2006. 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, PGWR 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").
PGWR was identified as the accounting acquirer. The transaction was
therefore accounted as a reverse acquisition ("the reverse
acquisition"). PGWR 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 PGWR 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.
3. Revenue
Quarter Quarter Quarter 9 months 16 months
ended ended ended ended ended
30 Sept 30 June 31 March 30 Sept 31 Dec
2007 2007 2007 2007 2006
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited)
(R`000) (R`000) (R`000) (R`000) (R`000)
Gold sales 118 722 104 223 111 467 334 412 42 292
at spot
Hedge loss (21 263) (19 724) (20 876) (61 863) (3 777)
Silver sales 169 153 123 446 -
Revenue 97 630 84 652 90 714 272 996 38 515
4. Profit/(loss) per share for loss attributable to the equity holders
during the period
Quarter Quarter Quarter
ended ended ended
30 Sept 30 June 31 March
2007 2007 2007
(Unaudited) (Unaudited) (Unaudited)
Profit/(loss) attributable to (100 101) 13 470 (24 349)
equity holders of the company
(R`000)
Weighted average number of 41 179 500 41 020 000 41 020 000
shares
Basic and diluted (243) 33 (59)
earnings/(loss) per share
(cents)
9 months 16 months
ended ended
30 Sept 31 Dec
2007 2006
(Unaudited) (Audited)
Profit/(loss) (110 980) (13 918)
attributable to equity
holders of the company
(R`000)
Weighted average number 41 179 500 21 419 425
of shares
Basic and diluted (270) (65)
earnings/(loss) per share
(cents)
5. 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. No
goodwill or negative goodwill has been recorded for the period ending 31
December 2006, 31 March 2007, 30 June 2007 or 30 September 2007.
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
PGWR:
(R`000)
Property. plant and equipment 546 548
Intangible assets 329
Investment in associate 172
Other investments 18 195
Trade and other receivables 24 821
Inventories 17 151
Cash and cash equivalents 56 440
Long-term liability (4 678)
Post-retirement liability (1 723)
Rehabilitation provision (70 318)
Trade creditors (65 750)
Accruals and provisions (30 091)
Derivative financial instruments (388 518)
Bank overdraft (3 115)
Taxation (3 239)
Total 96 213
6. 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 ("PGWR") immediately before the
business combination.
The cost of the business combination has been shown under share premium
in the condensed consolidated financial statements as determined under
IFRS 3, Appendix B and can be summarised as follows:
The share premium comprises the following:
(R`000)
Vending Middelvlei (fair value) 142 000
Cash subscription 75 000
Merger expenses 3 123
Total 220 123
2 445 664 shares were issued in the quarter ended 30 September 2007. As
a result, the share capital and share premium as at 30 September 2007
can be summarised as follows:
(R`000)
Share capital before new issue
Share capital as at 30 June 2007 300
Shares issued 2
Total share capital as at 30 September 2007 302
Share premium before new issue
Share premium as at 30 June 2007 220 123
Shares issued 36 682
Total share capital as at 30 September 2007 256 805
Total share capital and share premium as at 30 257 107
September 2007
7. Share capital - Pamodzi Gold Limited (legal parent)
Authorised
1 billion shares of 0,1 cent per share
Issued at 30 September 2007
43 465 664 (30/6/2007 - 41 020 000, 30/3/2007 - 41 020 000, 31/12/2006 -
41 020 000) shares of 0,1 cent per share.
2 445 664 shares were issued in the quarter ended 30 September 2007.
8. Cash utilised by operations
Quarter Quarter Quarter
ended ended ended
30 Sept 30 June 31 March
2007 2007 2007
(Unaudited) (Unaudited) (Unaudited)
(R`000) (R`000) (R`000)
Net loss before taxation (100 101) 13 470 (24 349)
Adjusted for merger costs - - -
capitalised
(100 101) 13 470 (24 349)
Adjustments for:
Amortisation 4 380 7 633 -
Interest paid 1 819 243 118
Interest received (106) (840) (1 190)
Revaluation of financial 67 184 (31 445) -
derivative
Foreign exchange (gain)/loss (11 186) (9 328) 15 705
Operating loss before working (38 010) (20 267) (9 716)
capital changes
Working capital changes 24 407 7 093 (1 126)
(Increase)/decrease in 9 277 (5 318) 5 525
receivables and prepayments
Increase in deferred stripping - (3 520) -
Increase/(decrease) in trade and 11 466 16 473 (7 887)
other payables
(Increase)/decrease in 3 664 (542) 1 236
inventories
(13 603) (13 174) (10 842)
9 months 16 months
ended ended
30 Sept 31 Dec
2007 2006
(Unaudited) (Audited)
(R`000) (R`000)
Net loss before taxation (110 980) (12 793)
Adjusted for merger costs capitalised - (9)
(110 980) (12 803)
Adjustments for:
Amortisation 12 103 1 054
Interest paid 2 180 2 224
Interest received (2 136) (123)
Revaluation of financial derivative 35 739 -
Foreign exchange (gain)/loss (4 809) -
Operating loss before working capital (67 993) (9 647)
changes
Working capital changes 30 374 5 591
(Increase)/decrease in receivables and 9 484 (1 742)
prepayments
Increase in deferred stripping (3 520) -
Increase/(decrease) in trade and other 20 052 (2 495)
payables
(Increase)/decrease in inventories 4 358 9 828
(37 619) (4 056)
9. Derivative financial instruments
The Group`s revenues are sensitive to the ZAR/US$ exchange rates as all
the revenues 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 30 September 2007 142 500 (31/6/2007 - 151 500, 31/3/2007 - 160
500, 31/12/2006 - 169 500) ounces were outstanding on the US$ Contingent
Forwards. The gold contingent forwards revalued at 30 September 2007
amounted to R415 million (30/6/2007 - R363 million, 31/3/2007 - R404
million, 31/12/2006 - R389 million). Cash flow on the payments on 15 000
ounces has been rolled to 28 March 2008 to ensure sufficient time to
develop a long-term strategy and to ease current cash flow on the
operations.
Effect of derivative financial instrument on earnings
Quarter Quarter Quarter 9 months
ended ended ended ended
30 Sept 30 June 31 March 30 Sept 2007
2007 2007 2007
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
(R`000) (R`000) (R`000) (R`000)
Hedge loss (Cash) (21 263) (19 724) (20 876) (61 863)
Revaluation of (67 184) 31 445 - (35 739)
derivatives
Foreign exchange 11 186 9 328 (15 705) 4 809
(gain)/loss on
derivatives
Adjusted profit/(loss) (77 261) 21 049 (36 581) (92 793)
excluding hedging and
derivatives
attributable to equity
holders of the company
(R`000)
Weighted average 41 179 500 41 020 000 41 020 000 41 179 500
number of shares
Effect of hedging and (187) 51 (89) (225)
derivatives on basic
and diluted
(loss)/earnings per
share
Basic and diluted (243) 33 (59) (229)
earnings/(loss) per
share
Basic and diluted (55) (18) 29 (44)
earnings/(loss) per
share excluding
hedging and
derivatives
10. 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.
Commentary
1. Operational overview for the quarter ended 30 September 2007
The West Rand operations achieved its highest gold production for the
year even though it was slightly below target. In-pit grade was lower
than expected and no alternative mining areas were available to improve
delivered grade as only one pit was operational during the quarter.
Development of the new No 3 pit commenced in October 2007. Three
additional pits have been identified from the exploration drilling and
the opening up of these will commence early in 2008. This operation
produced 99 kilograms (3 212 ounces) of gold from 41 154 tons milled at
a recovered grade of 2.43g/t, for the quarter. Total operating cost
amounted to R101 221 per kilogram ($445/oz) and revenue received of R151
562 per kilogram.
The East Rand operations showed an excellent improvement in safety
performance. A noted improvement in gold production was achieved for the
quarter with a marginal 0,8% below target. Tons milled increased 23,6%
from 406 001 tons to 501 911 tons from the previous quarter. The
recovered grade was lower as the additional tons were mainly sourced
from the lower grade surface material. Shaft call factors are improving
from previous quarters and significant improvement in development has
been achieved. Face length is increasing allowing additional operational
flexibility. Systems have been established to ensure future production
targets are achieved. For the quarter these operations produced 669
kilograms (21 511 ounces) of gold from 501 911 tons milled at a
recovered grade of 1.33g/t. Total operating cost amounted to R177 994
per kilogram ($782/oz) and revenue received before accounting for the
hedge loss amounted to R155 208 per kilogram. The hedge loss amounted to
R32 317 per kilogram. All labour and underground operations were taken
over from the underground contractors by Pamodzi Gold on 1 October 2007.
This take over resulted in a once off expense contributing R12 890 per
kilogram to the operating costs. The electricity expense was also higher
by R2 548 per kilogram as a result of the winter tariffs imposed.
Capital expenditure amounted to R18,6 million for the quarter.
2. Third quarter production target vs Actual achieved
West East Total Actual Variance
Rand Rand 3rd Q 2007 3rd Q 2007 %
Kg gold produced 110 675 785 769 -2,1
Oz gold produced 3 537 21 701 25 238 24 723 -2,1
Tons milled 36 000 425 000 461 000 543 065 +15,1
Recovered grade 3,06 1,59 1,70 1,42 -19,7
Operating 123 991 135 982 113 438 168 019 +20,0
expenses - R/kg
- $/oz $550 $604 $597 $738 +19,1
(ZAR/$) 7,00 7,00 7,00 7,08
Development 0 1 650 1 650 1 748 +5,9
metres - on reef
(Underground) - 0 1 200 1 200 1 253 +4,4
off reef
Overburden 330 000 0 330 000 345 323 +4,6
stripping - m3
The figures shown above have not been audited or reviewed by the auditors of
the Company.
3. Update on the purchase of the Orkney Assets from Harmony, the purchase
of the President Steyn Gold Mine from Thistle and further cautionary
announcement
Pamodzi Gold has taken over management control and responsibility for
the Orkney assets, including capital calls, from 25 September 2007. The
transaction is currently being delayed as a result of the mineral
conversion taking longer than expected.
Pamodzi Gold has signed a formal agreement with Thistle Mining
Incorporated ("Thistle") to acquire the President Steyn gold mine in the
Free State gold field for R250 million. The transaction was
unconditionally approved by the Competition Tribunal on 8 November 2007.
Shareholders are advised to continue to exercise caution when dealing in
their Pamodzi Gold shares until a further announcement is made.
4. Quarterly presentation
Additional information on the operational overview, the Orkney and
President Steyn acquisitions can be obtained from the quarterly
presentation made to shareholders and other interested parties available
on the Pamodzi Gold website.
Signed on behalf of the board
NA Ntsele MJ Schermers
Chairman Chief Financial Officer
Bedfordview
12 November 2007
Sponsors
Rand Merchant Bank (A division of First Rand Bank Limited
Auditors
PricewaterhouseCoopers Inc.
Directors
NA Ntsele1 (Chairman), KM Steenkamp1 (Deputy Chairman), JJ du Plooy1
JG Proust1 (Canadian), SP Radebe1, MB Mokgata2, MI Mthenjane2,
PW Steenkamp (Chief Executive Officer), AJ Murdoch Eaton (Chief Operating
Officer) (Zimbabwean), MJ Schermers (Chief Financial Officer)
(1 Non-executive 2 Independent Non-Executive)
Company Secretary
GM Chemaly
Registered office
AMR Office Park, Building 3
Concorde Road East
Bedfordview
www.pamodzigold.co.za
Date: 12/11/2007 09:05:19 Produced by the JSE SENS Department.
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