| Fri 5 Sep 2008, 17:00 | | WEZ - Wesizwe - Reviewed Condensed Interim Results For The Six Months Ended 30 |
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WEZ
WEZ
WEZ - Wesizwe - Reviewed Condensed Interim Results For The Six Months Ended 30
June 2008
Wesizwe Platinum Limited
(Incorporated in the Republic of South Africa)
(Registration number 2003/020161/06)
JSE code: WEZ & ISIN: ZAE000075859
(the "company" or "Wesizwe")
Highlights
Bankable Feasibility Study (BFS) of Western Bushveld Joint Venture (37% Anglo
Platinum, 37% Platinum Group Metals and 26% Wesizwe) completed and indicates a
viable mine with base case Net Present Value of R4,6 billion and Life Of Mine
of 22 years
REVIEWED CONDENSED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2008
Comment
Mike Solomon, Chief Executive Officer
"The six months since the release of the company`s 2007 Annual Financial
Statements have been significant. The period has seen the company complete its
exploration programme and metamorphose from an exploration company into a
mining company. The company`s project is technically and economically viable.
The anticipated head grades are of the highest in the industry, as is the PGM
basket. The ore body is thick, flat and structurally stable and this bodes well
for an efficient and cost effective mining regime. The base case economic
analysis at $1 125 Platinum and $4 000 Rhodium is conservative and points to a
profitable project with sound commercial and investment fundamentals. Long term
consensus forecasts are between $1 450 and $1 550 Platinum and $4 000 to $6 000
Rhodium. The project is on track to commence with capital construction in
September as planned and to ensure that this target was reached, a successful
interim capital raising of R202 million was undertaken at the height of the
market`s weakness. The interim raising was effected in order to allow the
structuring of the main capital raise to be negotiated with the syndicated lead
financial arrangers, Deutsche Bank, ABSA and the Development Bank of Southern
Africa in an unpressured fashion. This process is proceeding apace and should
be completed by the end of the year.
The Project results are good and according to plan, which again attests to
management`s positive performance. Our principal contractors, TWP, the Mineral
Corporation and the company`s team have performed excellently in delivering the
project on time to date, and are, along with Murray & Roberts, poised to
commence with the next phase of the Project.
In addition to the release of our own BFS, that of the Western Bushveld Joint
Venture (37% Anglo Platinum, 37% Platinum Group Metals and 26% Wesizwe) was
released in July and was equally positive, adding R1,2 billion to our own
base-case BFS valuation of R9,5 billion.
The year going forward looks positive. We have the financial resources and the
technical capacity to proceed with capital construction, I have every
confidence in succeeding with the capital raising programme and we will
undoubtedly weather the current market downturn and come through the other end
a stronger company."
Pilanesberg Project: Progress and timelines
The results of BFS were released on 31 March 2008. The results indicated a
positive Net Present Value of R9,5 billion and Life Of Mine of 35 years
producing an estimated 10 million ounces of PGE(4) over Life Of Mine. Phase 5
of the timelines has officially commenced and has been marked with negotiations
with Leaders Arrangers for Project Funding. It is estimated that project
funding arrangements will be finalised by end of 2008.
Phase 1 Establish Group, discovery drilling (successfully completed)
Phase 2 Establish Inferred Resource, list the company on JSE Limited
(successfully completed)
Phase 3 Move Mineral Resource from Inferred to Indicated category and embark on
Prefeasibility Study (successfully completed)
Phase 4 Move Mineral Resource from Indicated to Measured category and commission
a BFS (successfully completed)
Phase 5 Capital construction and mine development (in progress).
Wesizwe has secured all critical long lead items which are necessary to
commence capital construction and mine development.
During this reporting period, the Pilanesburg in-fill drilling programme on the
core project area to improve classification of the Resource was completed in
time for Phase 5. Since the previous reporting period, a total of 14 940 metres
of core was drilled comprising 24 motherholes and 47 deflections.
Summary of results Period under review (January 2008 to June 2008)
Metres drilled 14 490
Motherholes 24
Deflections 47
The updated mineral resources are stated in the following table:
Reef type Resource PGE(4) Pt ozs Pd ozs Rh ozs
type ozs (M) (M) (M) (M)
Merensky Reef Measured 0.902 0.579 0.244 0.042
Total Measured 0.902 0.579 0.244 0.042
Merensky Reef Indicated 3.517 2.281 0.939 0.166
UG2 Reef Indicated 3.009 1.864 0.839 0.315
Total Indicated 6.526 4.145 1.778 0.481
Merensky Reef Inferred 2.737 3.928 0748 0.134
UG2 Reef Inferred 3.327 2.069 0.910 0.340
Total Inferred 6.063 5.997 1.658 0.474
TOTAL All 13.491 10.722 3.680 0.997
Reef type Resource Au ozs Cu Ni
type (M) Tonne Tonne
(M) (M)
Merensky Reef Measured 0.005 0.004 0.011
Total Measured 0.005 0.004 0.011
Merensky Reef Indicated 0.143 0.015 0.041
UG2 Reef Indicated 0.157 0.003 0.026
Total Indicated 0.300 0.017 0.066
Merensky Reef Inferred 0.110 0.010 0.027
UG2 Reef Inferred 0.017 0.003 0.028
Total Inferred 0.128 0.014 0.055
TOTAL All 0.433 0.035 0.132
CONDENSED CONSOLIDATED BALANCE SHEET
Group Group
Six months Six months
ended June ended June
2008 2007
Reviewed Reviewed
R R
ASSETS
Non-current assets 1,025,106,610 164,897,283
Property, plant and equipment 48,114,567 7,921,002
Tangible exploration and evaluation assets 67,698,556 8,812,386
Intangible exploration and evaluation assets 240,468,134 147,727,513
Environmental deposit 436,382 436,382
Investment held to maturity - restricted 2,600,000 -
Investment in equity accounted investee 665,788,971 -
Current assets 200,292,146 177,959,042
Other receivables 6,256,119 10,981,393
Cash 194,036,027 166,977,649
TOTAL ASSETS 1,225,398,756 342,856,325
EQUITY AND LIABILITIES
Capital and reserves 1,186,075,551 330,717,030
Share capital 5,555 4,574
Share premium 1,291,205,428 394,371,844
Share-based payment reserve 63,003,163 55,030,000
Accumulated loss (168,138,595) (118,689,388)
Long-term liabilities 13,727,033 -
Long-term liabilities 13,727,033 -
Current liabilities 25,596,172 12,139,295
Trade and other payables 25,596,172 12,139,295
TOTAL EQUITY AND LIABILITIES 1,225,398,756 342,856,325
CONDENSED CONSOLIDATED INCOME STATEMENT
Group Group
Six months Six months
ended June ended June
2008 2007
Reviewed Reviewed
R R
Revenue -
Administration expenditure (33,362,647) (67,428,407)
Sundry income 140,004 -
Loss from operations (33,222,643) (67,428,407)
Finance costs paid (972) (2,000)
Investment income received 12,892,202 5,741,482
Loss before taxation (20,331,413) (61,688,925)
Income tax expense - -
Loss for the period (20,331,413) (61,688,925)
Basic loss per share (cents) (0,04) (14,25)
Diluted loss per share (cents) (0,04) (14,25)
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share
based
Share Share payment
capital premium reserve
R R R
Balance at
1 January 2007 3,992 201,624,098 730,000
Issue of share capital 582 - -
Premium on issue
of share capital - 195,445,731 -
Share-based
expenditure - - 54,300,000
Share issue expenses
written-off - (2,697,985) -
Recognised income
and expense for
the period - - -
Balance at
30 June 2007 4,574 394,371,844 55,030,000
Issue of share capital 974 - -
Premium on issue
of share capital - 901,778,250 -
Share-based
expenditure - - 7,899,355
Share issue expenses
written-off - (11,115,401) -
Recognised income
and expense for
the period - - -
Balance at
31 December 2007 5,548 1,285,034,693 62,929,355
Issue of share capital 7 - (7)
Premium on issue
of share capital - 6,170,735 (6,170,735)
Share-based
expenditure - - 6,244,550
Recognised income
and expense for
the period - - -
Balance at
30 June 2008 5,555 1,291,205,428 63,003,163
Accumulated
loss Total
R R
Balance at
1 January 2007 (57,000,463) 145,357,627
Issue of share capital - 582
Premium on issue
of share capital - 195,445,731
Share-based
expenditure - 54300,000
Share issue expenses
written-off - (2,697,985)
Recognised income
and expense for
the period (61,688,925) (61,688,925)
Balance at
30 June 2007 (118,689,388) 330,717,030
Issue of share capital - 974
Premium on issue
of share capital - 901,778,250
Share-based
expenditure - 7,899,355
Share issue expenses
written-off - (11,115,401)
Recognised income
and expense for
the period (29,117,794) (29,117,794)
Balance at
31 December 2007 (147,807,182) 1,200,162,414
Issue of share capital - -
Premium on issue
of share capital - -
Share-based
expenditure - 6,244,550
Recognised income
and expense for
the period (20,331,413) (20,331,413)
Balance at
30 June 2008 (168,138,595) 1,186,075,551
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW
Six months Six months
ended June ended June
2008 2007
Reviewed Reviewed
R R
Cash flows from operating activities 9,097,448 (17,403,406)
Finance costs paid (972) (2,000)
Net cash from/(used in) operating activities 9,096,476 (17,405,406)
Cash flows used investing activities
Acquisition of property, plant and equipment (12,614,982) (7,483,725)
Acquisition of tangible exploration and
evaluation
assets as a result of increasing operations (24,245,189) (8,812,386)
Expenditure on intangible exploration and
evaluation
assets as a result of increasing operations (30,050,300) (39,575,375)
Increase in investment equity accounted
investee (5,939,950) -
Acquisition of subsidiary, net of cash - -
Acquisition of investment held to maturity (2,600,000) -
Investment income received 12,892,202 5,741,482
Net cash used in investing activities (62,558,219) (50,130,004)
Cash flows used in financing activities
Shares issued - 192,748,328
(Decrease) in interest bearing borrowings - (18,403,253)
Net cash inflow from financing activities - 174,345,075
Net (decrease)/increase in cash and cash
equivalents (53,461,743) 106,809,665
Cash at the beginning of the period/year 247,497,770 60,167,984
Cash and cash equivalents the end of the
period/year 194,036,027 166,977,649
Funding and going concern
Wesizwe`s Board of Directors is satisfied that the Group will be able to
commence the construction phase of the project during the next twelve months
using the current cash resources as well as draw downs from the proposed
project finance facility. Wesizwe is now in advanced negotiations with a
consortium of banks with regards to project financing facility. The facility
will be a combination of equity and debt. Project finance draw downs are
expected to commence in the first quarter of 2009.
On 8 July 2008, the Group issued 30 million shares and received gross proceeds
of R202 million.
The proceeds will be used to fund early works expenditure while the project
finance facility is being finalised. As at 14 August 2008, the Group had cash
resources amounting to R360 million and expenditure to date is well within
budgeted targets.
NOTES TO THE CONDENSED INTERIM FINANCIAL RESULTS
Basis of preparation and accounting policies
The condensed interim financial information for the six months ended 30 June
2008 is prepared in accordance with the recognition, measurement, presentation
and disclosure requirements of IAS 34: Interim Financial Reporting. The
accounting policies have been applied consistently by the Group and are
consistent with those for the year ended 31 December 2007.
Financial results
As an exploration Group, Wesizwe will not earn revenue from mining activities
until such time as a mine is brought into production.
The net loss for the six months under review was R20,3 million (compared to a
loss of R61,7 million for the same period in 2007). The net loss for the period
comprises administration expenses of R26,5 million, share-based payment of
R6,2 million and depreciation of R0,5 million and is offset by net finance
income of R12,9 million. Administration expenses comprise salaries, marketing
expenses, community sustainable projects expenditure and other overheads.
The basic loss per share for the period was 0,04 cent per share (June 2007:
14,25 cents per share). The headline loss per share was 0,04 cent per share
(June 2007: 14,25 cents per share). The calculation of the basic loss per
share and headline loss per share is based on the weighted average number of
shares of 555 239 369 (June 2007: 432 839 111).
The weighted number of shares for calculating diluted earnings per share is
556 168 898 (2007: 457 407 524). The increase in shares is as a result of
929 529 shares to be issued in terms of the Long Term Incentive Plan. The
increase in shares has an anti-dilutive effect and thus the diluted loss per
share is calculated at 0,04 cent, not taking into account these shares.
The issued share capital at 30 June 2008 was 555 489 846 shares (June 2007:
457 407 524 shares).
No dividend was declared during the period ended 30 June 2008 (June 2007: Nil).
No segmental report has been produced as the Group is conducting exploration
activities in one geological location, which represents only one business
activity.
Exploration and evaluation expenses capitalised for the period under review
amounted to R30,2 million (compared to R39,6 million for the same period in
2007).
R24,2 million was spent on mine establishment costs (compared to 8,8 million
for the same period in 2007). Mine establishment costs relates to engineering
and design costs associated with capital construction of the mine. These are
reflected under tangible exploration and evaluation assets on the face of the
balance sheet.
Exploration and evaluation expenses are capitalised in accordance with IFRS 6:
Exploration for and Evaluation of Assets.
Capital commitments
On 26 March 2008 the Board approved capital expenditure of R532 million for
financial year 2008. At 30 June 2008 an amount of R33,5 million was spent on
acquisition of capital for the project. The balance of R498,5 million has not
been committed at the date of issue of this report.
Wesizwe owns 100% of Africa Wide Mineral Prospecting and Exploration (Pty) Ltd
("Africa Wide") which, in turn, holds 26% in the Western Bushveld Joint Venture
(WBJV) as its primary asset.
Once a decision to mine the WBJV has been taken the respective deemed capital
contribution of each party will be credited based on their contribution of
measured, indicated and inferred PGM ounces from the contributing properties
comprising the WBJV, determined in accordance with the SAMREC Code. The three
partners will either make equalisation payments or receive equalisation
receipts from other partners so that the percentage holding interest among the
three parties in the WBJV remains 37% Anglo Platinum Limited, 37% Platinum
Group Metals Limited and 26% Africa Wide.
Management estimated that the equalisation liabilities, which represents
equalising cash payment to be paid by Africa Wide to the other WBJV partner(s)
in future as R128,8 million as at 31 December 2007 as part of the business
contribution fair value adjustments. As at June 2008 no updated measured,
indicated and inferred mineral resource was available, thus the provision
remains unchanged. Should there be a change in resources a contingent
commitment would arise for any contribution in excess of the R128,8 million.
RECONCILIATION OF NET LOSS FOR THE PERIOD TO CASH UTILISED BY
OPERATIONS
Group Group
Six months Six months
ended June ended June
2008 2007
Reviewed Reviewed
R R
Loss from operations (33,222,643) (67,428,408)
Adjustment for:
Share based payments 6,244,550 54,300,000
Impairment - -
Depreciation 515,965 122,314
Movement in long term liability 1,901,753 -
Operating loss before working capital changes (24,560,375) (13,006,094)
Changes in working capital 33,657,823 (4,397,312)
Decrease/(Increase) in other receivables 31,655,164 (7,183,964)
Increase in trade and other payables 2,002,659 2,786,652
Cash generated/(utilised) from operations 9,097,448 (17,403,406)
The following related party transactions took place during the period under
review:
Related party Transaction type Transaction Amount
amount outstanding
R R
Asset Liability Management
(Pty) Ltd (common director Treasury services 264,108 -
with significant influence)
Bakubung Minerals (Pty) Ltd Loan advance 21,772,895 339,371,841
(wholly-owned subsidiary)
Bakubung Minerals (Pty) Ltd Management fee 6,447,019 -
(wholly-owned subsidiary)
Africa Wide Mineral Prospecting
and Exploration (Pty) Ltd Loan advance 5,939,950 53,772,809
(wholly-owned subsidiary)
The above transactions were all at arms`length. Loans advanced were used to pay
for exploration expenditure for the WBJV project.
A bonus of R2,9 million was paid to Mr M H Solomon (CEO) and R3,2 million to
Ms M Low (Senior Manager) during the period under review.
Subsequent events
On 8 July 2008 the company issued 30 million shares at a price of R6,76 per
share being the 30 day volume weighted average price less 9,63 percent
discount. The proceeds from the issue amounted to R202,8 million.
Wesizwe issued a cautionary announcement on 2 September 2008, which advised
shareholders that negotiations have been entered into for the acquisition of
37% participation interest in the Western Bushveld Joint Venture from Anglo
Platinum Limited and further rationalisation of the Pilanesberg Complex.
Independent Auditor`s report
KPMG Inc., the Group`s independent auditor, has reviewed the condensed
consolidated interim results contained in this report and has expressed an
unqualified review opinion. The report is available for inspection at the
company`s registered office.
Disclaimer: Forward looking statements
Certain statements included in this report constitute "forward looking
statements" that are not profit forecasts or statements in any way as defined
by JSE Listings Requirements. Such forward looking statements involve known and
unknown risks, uncertainties and other factors that may cause the actual
results, performance or achievements of Wesizwe, or of the platinum mining
industry, to be materially different from future results, performance or
achievements expressed or implied by those forward looking statements. Wesizwe
is subject to the effect of changes in PGM prices, currency and the risks
involved in mining operations.
5 September 2008
Sponsor: Investec Bank Limited
Date: 05/09/2008 17:00:03 Produced by the JSE SENS Department.
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