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PZG
PZG
PZG - Pamodzi Gold Limited - Unaudited Condensed Consolidated Results For The
Quarter Ended 31 March 2008
Pamodzi Gold Limited
(Formerly Bema Gold South Africa (Proprietary) 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 ENDED 31 MARCH 2008
Salient Features
- Gold production increased by 35% from previous quarter
- Increased production dilutes hedged production from 36% for the December
2007 quarter down to 27% for the March 2008 quarter
- Acquisition of the Orkney and President Steyn operations concluded
- Continued focus to improve safety performance
- Visible impact of management deployed at operations
- Turnaround strategy implemented on new operations to achieve improved and
consistent performance by 4th quarter in 2008
Income statement
International Financial Reporting Standards Basis
Quarter Year
ended ended
31 March 31 December
2008 2007
(Unaudited) (Reviewed)
Continuing operations Note (R`000) (R`000)
Revenue 3 191 582 369 329
Cost of sales (198 555) (479 668)
Gross loss (6 973) (110 341)
Other income 6 665 18 576
Administration expenses (45 555) (40 795)
Foreign exchange gain/(loss) (56 189) 10 612
Revaluation of financial derivative 2 511 (76 448)
Unwinding of rehabilitation (2 170) (4 021)
provision
Finance costs (2 689) (6 255)
Finance income 542 3 439
Share based payment charge - (3 210)
Share of profit in associate - 22
Net loss before taxation (103 858) (208 421)
Taxation - (67)
Net loss after taxation (103 858) (208 488)
Basic loss per share (cents) 4 (166) (500)
Diluted loss per share (cents) 4 (166) (500)
Headline loss per share (cents) 4 (166) (500)
Balance sheet
International Financial Reporting Standards Basis
31 March 31 December
2008 2007
(Unaudited) (Reviewed)
Note (R`000) (R`000)
ASSETS
Non-current assets
Property, plant and equipment 1 216 059 747 289
Tangibles/intangibles in process of 5 319 518 -
being identified
Intangible assets 908 733
Other investments 65 583 20 622
Non-current prepayments - 27 365
Goodwill 2 004 2 004
1 604 072 798 013
Current assets
Inventories 64 004 20 053
Trade and other receivables 70 481 28 421
Deferred stripping 4 068 3 894
Cash and cash equivalents 310 -
138 863 52 368
Non-current assets held for sale 13 762 11 700
Total assets 1 756 697 862 081
EQUITY AND LIABILITIES
Capital and reserves
Share capital and premium 6 & 7 782 125 255 820
Share based payment reserve 3 210 3 210
Accumulated losses (327 572) (223 714)
Total shareholders` equity 457 763 35 316
Non-current liabilities
Long-term liabilities 10 8 346 7 982
Provisions
- Close-down and restoration costs 205 703 88 489
- Post retirement medical benefits 1 824 1 887
Deferred taxation 40 120 40 120
255 993 138 478
Current liabilities
Trade and other payables 373 587 169 270
Bank overdraft 8 163 5 236
Taxation - 1 768
Derivative financial instruments 9 506 354 454 384
Current portion of long-term 10 154 837 57 629
liabilities
1 042 941 688 287
Total liabilities 1 298 934 826 765
Total equity and liabilities 1 756 697 862 081
Statement of changes in equity
for the quarter ended 31 March 2008
International Financial Reporting Standards Basis
Share
based Accumu-
Share Share payment lated
capital premium reserve loss Total
(R`000) (R`000) (R`000) (R`000) (R`000)
Balance at 1 300 220 123 - (15 226) 205 197
January 2007
Loss for the year - - - (208 488) (208 488)
Share based payment - - 3 210 - 3 210
Shares issued 2 35 395 - - 35 397
Balance at 31 302 255 518 3 210 (223 714) 35 316
December 2007
Loss for the year - - - (103 858) (103 858)
Shares issued 50 526 255 - - 526 305
Balance at 31 March 352 781 773 3 210 (327 572) 457 763
2008
Cash flow statement
International Financial Reporting Standards Basis
Quarter Year
ended ended
31 March 31 December
2008 2007
(Unaudited) (Reviewed)
Note (R`000) (R`000)
Cash flows from operating
activities
Cash utilised by operations 8 (3 436) (63 918)
Interest received 542 3 439
Interest paid (2 689) (6 255)
Taxation paid (1 768) (3 122)
Net cash flows from operating (7 351) (69 856)
activities
Cash flows from investing
activities
Increase in other investments (660) (1 785)
Purchase of property, plant and (24 914) (67 686)
equipment
Net cash flows from investing (25 574) (69 471)
activities
Cash flows from financing
activities
Increase in short-term borrowings 31 143 50 593
Decrease in long-term borrowings (835) (7 184)
Shares issued for cash - 35 397
Net cash flows from financing 30 308 78 806
activities
Net decrease in cash and cash (2 617) (60 521)
equivalents
Cash and cash equivalents at (5 236) 55 285
beginning of period
Cash and cash equivalents at end of (7 853) (5 236)
period
Notes to the condensed consolidated financial statements for the quarter ended
31 March 2008
1. Basis of preparation and accounting policies
The condensed consolidated financial information for the quarter ended 31 March
2008 has been prepared in compliance with the South African Companies Act, No 61
of 1973, as amended, the Listings Requirement of the JSE Limited and
International Accounting Standard 34, Interim Financial Reporting. 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. The accounting policies applied in preparation of the condensed
consolidated financial information are consistent with those applied for the
period ended 31 December 2007, which comply with International Financial
Reporting Standards (IFRS).
The unaudited condensed consolidated financial results do not include all the
information and disclosures required in the annual financial statements, and
should be read in conjunction with the Group`s annual financial statements as at
31 December 2006. The Group has applied all new standards and these had no major
impact other than disclosure which will be included in the annual financial
statements.
2. Business combinations
President Steyn acquisition - 26 February 2008
Pamodzi Gold and Thistle Mining Incorporated have finalised the formal
transaction agreements ("President Steyn transaction agreements") in terms of
which Pamodzi Gold acquired the entire issued ordinary share capital of and all
claims on loan account against President Steyn Gold Mine (Free State)
(Proprietary) Limited for R233 million.
The President Steyn acquisition consideration was settled on 25 February 2008 by
Pamodzi Gold as follows:
the issuing of 9 084 066 (nine million eighty four thousand and sixty six)
Pamodzi Gold shares to Thistle and 683 491 (six hundred and eighty three
thousand four hundred and ninety one) Pamodzi Gold shares to Mindserv
(Proprietary) Limited ("President Steyn consideration shares");
the issuing of 9 259 927 (nine million two hundred and fifty nine thousand and
nine hundred and twenty seven) Pamodzi Gold shares to Clidet No 776
(Proprietary) Limited ("Clidet 776") in terms of a loan agreement between, inter
alia, Pamodzi Resources and Thistle; and a cash settlement of R3.5 million to
Mindserv.
In terms of the President Steyn transaction agreements, Thistle and/or Mindserv
shall not be entitled to dispose of the President Steyn consideration shares for
a period of up to 30 June 2008. Should Thistle and/or Mindserv wish to reduce
its exposure to Pamodzi Gold, it may approach Pamodzi Gold and request it to
place the President Steyn consideration shares on their behalf.
Pamodzi Gold assumed full control of the President Steyn business on 26 February
2008.
Orkney acquisition - 27 February 2008
The Company has finalised an agreement with Harmony Gold Limited ("Harmony")
regarding the acquisition of Harmony`s Orkney Assets - shafts 1 to 7 as a going
concern ("the Orkney business").
The purchase consideration for the Orkney business is R300 million (three
hundred million) and was settled by Pamodzi Gold through the issue of 30 000 000
(thirty million) Pamodzi Gold shares to Harmony ("Orkney consideration shares")
on 27 February 2008. Pamodzi Gold assumed full control of the Orkney business on
this date.
In terms of the Orkney transaction agreements, Harmony shall not be entitled to
dispose of the Orkney consideration shares for a period of twelve months after
the effective date of the Orkney transaction. Should Harmony wish to reduce its
exposure to Pamodzi Gold, it may approach Pamodzi Gold and request it to place
the Orkney consideration shares on their behalf.
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 March 2008 was determined only provisionally, due to the
fact that the acquisition dates were on 26 and 27 February 2008 respectively.
3. Revenue
Quarter ended Year ended
31 March 31 December
2008 2007
(Unaudited) (Reviewed)
(R`000) (R`000)
Gold sales at spot 233 713 470 707
Realised hedge loss (42 575) (102 081)
Silver sales 444 703
Revenue 191 582 369 329
4. Loss per share attributable to the equity holders
Quarter ended Year ended
31 March 31 December
2008 2007
(Unaudited) (Reviewed)
(R`000) (R`000)
Loss attributable to equity holders of (103 858) (208 488)
the Company (R`000)
Weighted average number of shares 62 617 801 41 676 644
Basic, diluted and headline loss per (166) (500)
share (cents)
5. Tangibles/intangibles in the process of being identified
Following the acquisitions accounted for the period ended 31 March 2008 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 March 2008. 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 Pamodzi
Gold Limited:
Orkney President Steyn
Operations Operations Total
(R`000) (R`000) (R`000)
Property. plant and equipment 289 719 164 698 454 417
Rehabilitation investments 27 963 16 337 44 300
Trade and other receivables - 9 967 9 967
Inventories - 29 705 29 705
Cash and cash equivalents - 6 648 6 648
Long-term liability - (1 199) (1 199)
Short-term liability - (33 294) (33 294)
Rehabilitation provision (59 760) (55 284) (115 044)
Trade creditors - (107 977) (107 977)
Accruals and provisions (25 624) (17 574) (43 198)
Total 232 298 12 027 244 325
6. Share capital and premium
50 079 011 new shares were issued in February 2008 for the purchase
considerations relating to the Orkney and President Steyn acquisitions. As a
result, the share capital and share premium as at 31 March 2008 can be
summarised as follows:
(R`000)
Share capital before new issue
Share capital 302
Shares issued 50
Total share capital as at 31 March 2008 352
Share premium before new issue
Share premium 255 518
Shares issued 526 255
Total share premium as at 31 March 2008 781 773
Total share capital and share premium as at 31 March 2008 782 125
7. Share capital - Pamodzi Gold Limited (legal parent)
31 March 2008 31 December 2007
Authorised 1 billion shares of 1 billion shares of
0.1 cent per share 0.1 cent per share
Issued 93 544 675 43 465 664
8. Cash utilised by operations
Quarter ended Year ended
31 March 31 December
2008 2007
(Unaudited) (Reviewed)
(R`000) (R`000)
Net loss before taxation (103 858) (208 421)
Adjustments for:
Amortisation 8 323 28 959
Interest paid 2 689 6 255
Interest received (542) (3 439)
Profit from associate - (22)
Share based payments - 3 210
Unwinding of rehabilitation provision 2 170 4 021
Valuation of medical liability - 400
Revaluation of financial derivative (2 511) 76 448
Unrealised foreign exchange (gain)/loss 56 189 (10 612)
Operating loss before working capital (37 540) (103 201)
changes
Working capital changes 34 104 39 283
Increase in receivables and prepayments (4 728) (25 108)
Increase in deferred stripping (174) (1 399)
Increase in trade and other payables 53 143 68 928
Increase in inventories (14 074) (2 902)
Decrease in post retirement medical (63) (236)
liability
(3 436) (63 918)
9. Derivative financial instruments
The Group`s revenues are sensitive to the ZAR/US$ exchange rate as all the
revenues are generated through gold sales, denominated in US$. Historically, the
Group entered into forward sales to establish a ZAR/US$ exchange rate in advance
for the sale of the future gold production.
As at 31 March 2008 124 500 (31/12/2007 - 133 500) ounces were outstanding on
the US$ Contingent Forwards. The gold contingent forwards revalued at 31 March
2008 amounted to R506 million liability (31/12/2007 - R454 million).
Effect of derivative financial instrument on earnings
Quarter ended Year ended
31 March 31 December
2008 2007
(Unaudited) (Reviewed)
(R`000) (R`000)
Realised hedge loss (42 575) (102 081)
Revaluation of derivatives 2 511 (76 448)
Foreign exchange gain/(loss) on (54 481) 10 612
derivatives
Loss on hedging and derivatives (94 545) (167 917)
attributable to equity holders of the
Company
Weighted average number of shares 62 617 801 41 676 644
Effect of hedging and derivatives on (151) (403)
basic and diluted loss per share
(cents)
Basic and diluted loss per shar (166) (500)
(cents) (note 4)
Basic and diluted loss per share (15) (97)
excluding hedging and derivatives
(cents)
10. Net debt position
Quarter Year
ended ended
31 March 31 December
2008 2007
(Unaudited) (Reviewed)
(R`000) (R`000)
Non-current
Kloof Gold Carried at fair value, 930 930
Mining Company calculating by
discounting future
cash flow using prime
interest rate
Finance leases Various vehicles and 7 416 7 052
assets being leased
for a period between 3
to 5 years linked
prime interest rate
8 346 7 982
Current
Kloof Gold Carried at fair value, 1 978 1 978
Mining Company calculated by
discounting future
cash flow using prime
interest rate
Short-term loan Loan is interest free 4 697 4 697
and has no terms for
repayment
Finance leases Various vehicles and 3 846 3 954
assets being leased
for a period between 3
to 5 years linked to
prime interest rate
Short-term loan Interest at prime 89 091 33 000
Revolving credit Interest rate nominal 20 000 14 000
facility annual compounded
monthly in arrears
MC Resources Interest at USD prime 35 225 -
Limited and plus 2%
Casten Holdings
Limited
154 837 57 629
Total borrowings 163 183 65 611
Cash and cash (7 853) (5 236)
equivalents
Net debt (171 036) (70 847)
Total equity 457 763 35 316
The directors are in the process of reviewing various longer-term financing
options to improve the working capital position and to fund capital projects.
11. Dividends
No dividends have been declared or paid since the incorporation of the Company.
The Company anticipates that, for the foreseeable future, earnings generated by
Pamodzi Gold and its subsidiaries will not be distributed to shareholders as
dividends but will be retained for the development of the Company and its
subsidiaries. The Directors will consider a revision to the dividend policy at
an appropriate point in time.
12. Segment reporting
East Rand West Rand Orkney
Quarter ended Operations Operations Operation
31 March 2008 (R`000) (R`000) (R`000)
Segment revenue - continuing 138 178 10 308 50 484
operations
Realised hedge loss (42 575) - -
Net segment revenue - 95 603 10 308 50 484
continuing operations
Profit/(loss) before taxation (65 184) (6 097) 11 645
Taxation - - -
Profit/(loss) after taxation (65 184) (6 097) 11 645
Presiden
Steyn
Quarter ended Operations Other Total
31 March 2008 (R`000) (R`000) (R`000)
Segment revenue - continuing 35 187 - 234 157
operations
Realised hedge loss - - (42 575)
Net segment revenue - 35 187 - 191 582
continuing operations
Profit/(loss) before taxation (17 265) (26 957) (103 858)
Taxation - - -
Profit/(loss) after taxation (17 265) (26 957) (103 858)
East Rand West Rand
Year ended Operations Operations Other Total
31 December 2007 (R`000) (R`000) (R`000) (R`000)
Segment revenue - 415 010 56 400 - 471 410
continuing
operations
Realised hedge loss (102 081) - - (102 081)
Net segment revenue 312 929 56 400 - 369 329
- continuing
operations
Profit/ (loss) from (205 062) 1 447 (4 806) (208 421)
operations before
tax
Income tax expense (1 651) 1 584 - (67)
(206 713) 3 031 (4 806) (208 488)
All revenue is derived from the sale of gold and all operations are located in
the Republic of South Africa.
OPERATING REVIEW (Unaudited)
1. Safety
Safety remains the number one priority at Pamodzi Gold. The East Rand achieved 1
million fatality free shifts in January 2008. This achievement was however short
lived and Mr Mdziki Bhevu unfortunately died in an accident in the 4K5 Alimak
ore-pass at Grootvlei number 4 shaft on 21 January 2008. Regrettably Mr Ulrich
Louw also died in a fall of ground accident in the 74NE43 wide raise at the
Orkney number 2 shaft on 3 March 2008. This tragic loss of life underscores the
ongoing need for safety to remain the key focus for every manager and employee
of the company. Once again the directors express their condolences to the
families, friends and colleagues of Mdziki and Ulrich.
Key Performance Indicators in terms of safety on the East Rand operations
Quarter ended Quarter ended Year ended
Frequency rate per million 31 March 31 December 31 December
hours worked 2008 2007 2007
Lost time injury 2.1 3.8 6.0
Reportable injury 2.5 2.3 2.7
Fatal injury 0.4 0.0 0.1
Safety and Health standards on the Orkney and President Steyn operations do not
meet the requirements of Pamodzi Gold and safety standards and practices are
being addressed as a matter of urgency.
2. Operational overview
Production
Quarter Tons Kilo-
Operation ended milled grams Ounces
East Rand 31 March 2008 490 753 656.5 21 107
31 Dec 2007 525 078 690 22 202
% variance (6.5) (4.9) (4.9)
West Rand 31 March 2008 32 150 43.9 1 412
31 Dec 2007 41 917 90 2 918
% variance (23.3) (51.2) (51.2)
Orkney 31 March 2008 57 178 204.8 6 584
(from 1 March
2008)
President Steyn 31 March 2008 49 095 146.2 4 702
(from March
2008)
31 March 2008 629 176 1 051.4 33 805
31 Dec 2007 566 995 780 25 120
TOTAL % variance 10.9 34.8 34.8
Cash
Cost
Quarter R/Kilo-
Operation ended R/Ton gram$/Ounce (R`000)
East Rand 31 March 2008 200 149 835 621
31 Dec 2007 195 148 411 685
% variance 2.6 1.0 (9.3)
West Rand 31 March 2008 423 310 077 1 284
31 Dec 2007 436 201 185 922
% variance (3.0) 54.1 39.3
Orkney 31 March 2008 563 157 156 651
(from 1 March
2008)
President Steyn 31 March 2008 938 315 003 1 305
(from March
2008)
31 March 2008 302 180 926 749
31 Dec 2007 213 154 542 713
TOTAL % variance 41.8 17.1 5.0
Operating profit/
(loss) excl. loss
Production on hedging and
Expendi- foreign
Quarter ture exchange
Operation ended (R`000) (R`000)
East Rand 31 March 2008 13 731 29 361
31 Dec 2007 16 900 2 795
% variance (18.8) -
West Rand 31 March 2008 185 (6 097)
31 Dec 2007 244 (2 740)
% variance (24.2) -
Orkney 31 March 2008 9 962 11 645
(from 1 March
2008)
President Steyn 31 March 2008 1 036 (17 265)
(from March
2008)
31 March 2008 24 914 17 644
31 Dec 2007 17 144 55
TOTAL % variance 45.3
The East Rand operations showed a decrease of only 4,9% in gold production
during a quarter that production was affected by the power restrictions imposed
in January as well as labour not returning after the seasonal December break.
Shaft call factors are improving from previous quarters and face length is
increasing allowing additional operational flexibility in the near future.
Systems have been established to ensure future production targets are achieved.
The West Rand operations were severely hampered by higher than average annual
rainfall during the quarter. The power restrictions imposed in January also
compounded the reduction in gold production for the quarter. Mining is currently
taking place from one pit making selective mining and potential blending
techniques restrictive. The development of the new No 3 pit commenced in October
2007 and first gold production was expected in this quarter. Due to the higher
rainfall and some unexpected geological variances from the geological model,
production from this pit will only commence in the next quarter.
The Orkney and President Steyn operations were taken over at the end of February
and the Pamodzi Gold culture in terms of safety and management is being
implemented.
The Orkney operations are preforming as planned. The President Steyn operations
require an injection of capital to repair infrastructure to ensure that
projected production is achieved and maintained.
3. Changes to the Board of Directors
As from 1 April 2008, H Dikgale, MR Lephondo and P Taljaard have been appointed
as non-executive directors.
4. Quarterly presentation
Additional information on the quarterly results 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
Bruma
12 May 2008
Sponsors
Rand Merchant Bank
(A division of First Rand Bank Limited)
Company Secretary
GM Chemaly
Directors
NA Ntsele 1 (Chairman) KM Steenkamp1 (Deputy Chairman) JJ du Plooy 1 JG
Proust 1 (Canadian) SP Radebe (Corporate Affairs) MB Mokgata 2 MI
Mthenjane 2 PW Steenkamp (Chief Executive Officer)
AJ Murdoch Eaton (Chief Operating Officer) (Zimbabwean)
H Dikgale 1 MR Lephondo 2 P Taljaard 2 MJ Schermers (Chief Financial Officer
(1 Non-executive 2 Independent Non-Executive)
Registered office
2nd Floor Building C
East Gate Office Park
South Boulevard
Bruma
www.pamodzigold.co.za
Date: 12/05/2008 07:00:09 Produced by the JSE SENS Department.
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