| Wed 1 Oct 2008, 7:05 | | PZG - Pamodzi Gold - Unaudited Condensed Consolidated Results For The Quarter |
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PZG
PZG
PZG - Pamodzi Gold - Unaudited Condensed Consolidated Results For The Quarter
And Six Months Ended 30 June 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
("the Company" or "PZG")
Unaudited condensed consolidated results for the quarter and six months ended
30 June 2008, announcement on the capital raising progress and salient details
of a rights issue, further cautionary announcement and announcement regarding
changes to the board of directors
- Gold production increases by 57.9% Quarter on Quarter
- Visible impact of new management deployed at current operations
- Safety first culture and delay in financing impacts results negatively
Minimum
- Funding package structure finalised and R200 million conditionally approved
- Discussion underway to convert short term debt into equity by means of a
rights issue
- Discussions underway to restructure the current hedge exposure on the East
Rand
INCOME STATEMENT
Note Quarter ended Quarter ended
30 June 2008 31 March 2008
(Unaudited) (Unaudited)
Continuing operations (R`000) (R`000)
Revenue 3 350 026 191 582
Cost of sales (463 056) (198 555)
Gross loss (113 030) (6 973)
Other income 9 384 6 665
Administration expenses (28 886) (45 555)
Foreign exchange (loss)/gain (18 628) (56 189)
Revaluation of financial derivative (7 146) 2 511
Unwinding of rehabilitation
provision (7 577) (2 170)
Finance costs (10 326) (2 689)
Finance income 1 131 542
Share based payment charge (1 405) -
Share of (loss)/profit in associate (6) -
Net loss before taxation (176 489) (103 858)
Taxation 2 849 -
Net loss after taxation (173 640) (103 858)
Attributable to:
Equity holders of the Company (173 640) (103 858)
Basic loss per share (cents) 4 (186) (166)
Diluted loss per share (cents) 4 (186) (166)
6 months ended Year ended
30 June 2008 31 December 2007
(Unaudited) (Audited)
Continuing operations (R`000) (R`000)
Revenue 541 608 369 329
Cost of sales (661 611) (479 670)
Gross loss (120 003) (110 341)
Other income 16 049 18 576
Administration expenses (74 441) (40 795)
Foreign exchange (loss)/gain (74 817) 10 612
Revaluation of financial derivative (4 635) (76 448)
Unwinding of rehabilitation provision (9 747) (4 021)
Finance costs (13 015) (6 255)
Finance income 1 673 3 439
Share based payment charge (1 405) (3 210)
Share of (loss)/profit in associate (6) 22
Net loss before taxation (280 347) (208 421)
Taxation 2 849 (67)
Net loss after taxation (277 498) (208 488)
Attributable to:
Equity holders of the Company (277 498) (208 488)
Basic loss per share (cents) (355) (500)
Diluted loss per share (cents) (355) (500)
BALANCE SHEET
Note 30 June 2008 31 December 2007
(Unaudited) (Audited)
(R`000) (R`000)
ASSETS
Non-current assets
Property, plant and equipment 1 239 061 747 289
Tangibles/intangibles in process
of being identified 5 479 879 -
Intangible assets 3 763 2 737
Other investments 77 051 20 428
Investment in associate 187 194
Non-current prepayments - 27 365
1 799 941 798 013
Current assets
Inventories 70 964 20 053
Trade and other receivables 63 449 28 421
Deferred stripping 4 528 3 894
Cash and cash equivalents 8 7 054 572
145 995 52 940
Non-current asset held for sale 2 062 11 700
Total assets 1 947 998 862 653
EQUITY AND LIABILITIES
Capital and reserves
Share capital and premium 6&7 806 284 255 820
Share based payment reserve 4 615 3 210
Accumulated losses (501 212) (223 714)
Total shareholders` equity 309 687 35 316
Non-current liabilities
Derivative financial liability 9 394 946 344 094
Long-term liabilities 10 6 127 7 982
Rehabilitation provision 223 955 88 489
Post-retirement benefits
liability 1 520 1 887
Deferred taxation 118 635 40 120
745 183 482 572
Current liabilities
Trade and other payables 579 053 169 270
Bank overdraft 8 1 440 5 808
Taxation - 1 768
Derivative financial liability 9 136 599 110 290
Current portion of long-term
liabilities 10 176 036 57 629
893 128 344 765
Total liabilities 1 638 311 827 337
Total equity and liabilities 1 947 998 862 653
STATEMENT OF CHANGES IN EQUITY for the six months ended 30 June 2008
Share based
Share capital Share premium payment reserve
(R`000) (R`000) (R`000)
Balance at 1 January 2007 300 220 123 -
Loss for the year - - -
Share based payment - - 3 210
Shares issued 2 36 682 -
Share issue transaction costs - (1 287) -
Balance at 31 December 2007 302 255 518 3 210
Loss for the period
Share based payment - - 1 405
Shares issued 50 566 155 -
Share issue transaction
costs - (15 741) -
Balance at 30 June 2008 352 805 932 4 615
Accumulated loss Total
(R`000) (R`000)
Balance at 1 January 2007 (15 226) 205 197
Loss for the year (208 488) (208 488)
Share based payment - 3 210
Shares issued - 36 684
Share issue transaction costs - (1 287)
Balance at 31 December 2007 (223 714) 35 316
Loss for the period (277 498) (277 498)
Share based payment - 1 405
Shares issued - 566 205
Share issue transaction costs - (15 741)
Balance at 30 June 2008 (501 212) 309 687
CASH FLOW STATEMENT
Note Quarter ended Quarter ended
30 June 2008 31 March 2008
(Unaudited) (Unaudited)
(R`000) (R`000)
Cash flows from operating activities
Cash utilised by operations 8 53 623 (11 792)
Interest received 1 131 542
Interest paid (10 326) (2 689)
Taxation paid - (1 768)
Net cash flows from operating
activities 44 428 (15 707)
Cash flows from investing
activities
Increase in other investments (11 650) (660)
Purchase of property, plant and equipment (43 399) (24 739)
Purchase of intangible assets (851) (175)
Proceeds from sale of assets 11 700 -
Investment in Orkney operations - -
Net cash flows from investing activities (44 200) (25 574)
Cash flows from financing activities
Increase in short-term borrowings 21 199 32 851
Decrease in long-term borrowings (2 219) (835)
Shares issued for cash - -
Transaction costs paid (5 741)
Net cash flows from financing activities 13 239 32 016
Net increase/(decrease) in cash and
cash equivalents 13 467 (9 265)
Cash acquired with acquisitions - 6 648
Cash and cash equivalents at
beginning of period (7 853) (5 236)
Cash and cash equivalents at end of period 5 614 (7 853)
6 months ended Year ended 31 December
30 June 2008 2007
(Unaudited) (Audited)
(R`000) (R`000)
Cash flows from operating activities
Cash utilised by operations 41 831 (63 553)
Interest received 1 673 3 439
Interest paid (13 015) (6 255)
Taxation paid (1 768) (3 122)
Net cash flows from operating
activities 28 721 (42 491)
Cash flows from investing activities
Increase in other investments (12 310) (1 785)
Purchase of property, plant and
equipment (68 138) (67 114)
Purchase of intangible assets (1 026) (572)
Proceeds from sale of assets 11 700 -
Investment in Orkney operations - (27 365)
Net cash flows from investing
activities (69 774) (96 836)
Cash flows from financing activities
Increase in short-term borrowings 54 050 50 593
Decrease in long-term borrowings (3 054) (7 184)
Shares issued for cash - 36 684
Transaction costs paid (5 741) (1 287)
Net cash flows from financing
activities 45 255 78 806
Net increase/(decrease) in cash
and cash equivalents 4 202 (60 521)
Cash acquired with acquisitions 6 648 -
Cash and cash equivalents at
beginning of period (5 236) 55 285
Cash and cash equivalents at end
of period 5 614 (5 236)
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE QUARTER AND
SIX MONTHS ENDED 30 JUNE 2008
1. Basis of preparation and accounting policies
The condensed consolidated financial information for the quarter and six months
ended 30 June 2008 has been prepared in compliance with the South African
Companies Act, No 61 of 1973, as amended, the Listing Requirements 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 preliminary 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 2007. 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) (Pty) Ltd
for R211 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.
Pamodzi Gold assumed full control of the President Steyn business on 26
February 2008.
Orkney acquisition - 27 February 2008:
The Company has reached 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 R345 million (three
Hundred and forty five 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 30 June 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 30 Quarter ended 31 March
June 2008 2008
(Unaudited) (Unaudited)
(R`000) (R`000)
Gold sales at spot 400 420 233 713
Realised hedge loss (51 070) (42 575)
Silver sales 676 444
Revenue 350 026 191 582
6 months ended 30 June Year ended
2008 31 December 2007
(Unaudited) (Audited)
(R`000) (R`000)
Gold sales at spot 634 133 470 707
Realised hedge loss (93 645) (102 081)
Silver sales 1 120 703
Revenue 541 608 369 329
4. Loss per share attributable to the equity holders
Quarter ended Quarter ended 31
30 June 2008 March 2008
(Unaudited) (Unaudited)
Loss attributable to equity holders of (173 640) (103 858)
the Company (R`000)
Weighted average number of ordinary 93 544 675 62 617 801
shares in issue
Basic, diluted and headline loss per (186) (166)
share (cents)
6 months ended Year ended 31
30 June 2008 December 2007
(Unaudited) (Audited)
Loss attributable to equity holders of (277 498) (208 488)
the Company (R`000)
Weighted average number of ordinary 78 081 238 41 676 644
shares in issue
Basic, diluted and headline loss per (355) (500)
share (cents)
5. Tangibles/intangibles in the process of being identified
Following the acquisitions accounted for the period ended 30 June 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 quarter or six months ended 30 June 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 Operations Free State Total
(R`000) Operations (R`000) (R`000)
Property. plant and
equipment 290 585 166 840 457 425
Rehabilitation
investments 27 963 16 337 44 300
Trade and other
receivables - 9 967 9 967
Inventories - 21 594 21 594
Cash and cash
equivalents - 6 648 6 648
Long-term liability - (1 199) (1 199)
Short term liability - (33 294) (33 294)
Rehabilitation
provision (61 479) (58 372) (119 851)
Deferred tax
liability (81 364) - (81 364)
Trade creditors - (107 977) (107 977)
Accruals and
provisions (63 194) (22 166) (85 360)
Total net assets 112 511 (1 622) 110 889
Details of the net assets acquired are as follows:
Total cost of
business combination 376 063 214 705 590 768
Less net asset value on
date of acquisition (112 511) 1 622 (110 889)
Tangibles/intangibles in
process of being identified 263 552 216 327 479 879
6. Share capital and premium
50,079,008 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 30 June 2008 can be
summarised as follows:
(R`000)
Share capital before new issue
Share capital 302
Shares issued 50
Total share capital as at 30 June 2008 352
Share premium before new issue
Share premium 255 518
Shares issued 566 155
Share issue transaction costs (15 741)
Total share capital as at 30 June 2008 805 932
Total share capital and share premium as at 30 June 2008 806 284
7. Share capital - Pamodzi Gold Limited (legal parent)
30 June 2008 31 March 2008 31 December 2007
1 billion shares 1 billion shares 1 billion shares
Authorised of 0,1 cent per of 0,1 cent per of 0,1 cent per
share share share
Issued 93 544 675 93 544 675 43 465 664
8. Cash utilised by operations
Quarter ended Quarter ended
30 June 2008 31 March 2008
(Unaudited) (Unaudited)
(R`000) (R`000)
Net loss before taxation (176 489) (103 858)
Adjustments for:
Amortisation 29 273 8 323
Interest paid 10 326 2 689
Interest received (1 131) (542)
Loss/(profit) from associate 6 -
Share based payments 1 405 -
Unwinding of rehabilitation provision 7 577 2 170
Valuation of medical liability - -
Revaluation of financial derivative 7 146 (2 511)
Unrealised foreign exchange (gain)/loss
20 336 54 481
Operating loss before working capital
changes (101 551) (39 248)
Working capital changes 155 174 27 456
Decrease/ (Increase)in receivables and 3 532 (4 728)
prepayments
Increase in deferred stripping (460) (174)
Increase in trade and other payables
Increase in inventories 167 649 46 495
Decrease in post retirement medical
liability (15 243) (14 074)
(304) (63)
53 623 (11 792)
6 months Year ended 31
ended 30 June 2008 December 2007
(Unaudited) (Audited)
(R`000) (R`000)
Net loss before taxation (280 347) (208 421)
Adjustments for:
Amortisation 36 965 28 959
Interest paid 13 015 6 255
Interest received (1 673) (3 439)
Loss/(profit) from associate 6 (22)
Share based payments 1 405 3 210
Unwinding of rehabilitation provision 9 747 4 021
Valuation of medical liability - 400
Revaluation of financial derivative 4 635 76 448
Unrealised foreign exchange (gain)/loss
74 817 (10 612)
Operating loss before working capital
changes (140 799) (103 201)
Working capital changes 182 630 66 648
Decrease/ (Increase)in receivables and (1 196) 2 257
prepayments
Increase in deferred stripping (634) (1 399)
Increase in trade and other payables
Increase in inventories 214 144 68 928
Decrease in post retirement medical
liability (29 317) (2 902)
(367) (236)
41 831 (36 553)
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 30 June 2008 115 500 (31/03/2008 - 124 500; 31/12/2007 - 133 500) ounces
were outstanding on the US$ Contingent Forwards. The gold contingent forwards
revalued at 30 June 2008 amounted to R 532 million liability (31/12/2007 - R454
million)
Effect of derivative financial instrument on earnings
Quarter ended Quarter ended
30 June 2008 31 March 2008
(Unaudited) (Unaudited)
(R`000) (R`000)
Realised hedge loss (51 070) (42 575)
Revaluation of derivatives (7 146) 2 511
Foreign exchange gain/(loss) on derivatives (18 045) (54 481)
Adjusted loss excluding hedging and
derivatives attributable to equity
holders of the Company (R`000) (76 261) (94 545)
Weighted average number of shares 93,544,675 62,617,801
Effect of hedging and derivatives on basic
and diluted loss per share (82) (151)
Basic and diluted loss per share (note 4) (186) (166)
Basic and diluted loss per share
excluding hedging and derivatives (104) (15)
6 months ended 30 Year ended
June 2008 31 December 2007
(Unaudited) (Audited)
(R`000) (R`000)
Realised hedge loss (93 645) (102 081)
Revaluation of derivatives (4 635) (76 448)
Foreign exchange gain/(loss) on derivatives (72 526) 10 612
Adjusted loss excluding hedging and
derivatives attributable to equity
holders of the Company (R`000) (170 806) (167 917)
Weighted average number of shares 78,081,238 41,676,644
Effect of hedging and derivatives on
basic and diluted loss per share (219) (403)
Basic and diluted loss per share (note 4) (355) (500)
Basic and diluted loss per share
excluding hedging and derivatives (137) (97)
10. Net debt position
31 June 2008 31 December 2007
(Unaudited) (Audited)
(R`000) (R`000)
Non current
Kloof Gold Mining Company Carried at fair value, 783 930
calculating by
discounting future
cash flow using prime
interest rate
Finance leases Various vehicles and 5 344 7 052
assets being leased
for a period between
3 to 5 years linked to
prime interest rate
Current 6 127 7 982
Kloof Gold Mining Company Carried at fair value, 2 416 1 978
calculating 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 4 704 3 954
assets being leased
for a period between
3 to 5 years linked to
prime interest rate
Short term loan Interest at prime 103 107 33 000
Revolving credit facility Interest rate nominal 26 841 14 000
annual compounded
monthly in arrears
MC Resources Limited Interest at USD 34 271 -
and Casten Holdings prime plus 2%
Limited
176 036 57 629
Total borrowings 182 163 65 611
Cash and cash equivalents 5 614 (5 236)
Net debt (176 549) (70 847)
Total equity 314 159 35 316
Please refer to note 3 in the commentary with regards the current funding
status of the Company.
The borrowings increased by 178% from R66 million as at 31 December 2007 to R182
million as at 30 June 2008. The effect on the loss per share and the headline
loss per share for the six months ended 30 June 2008 is 20.3 cents, based on the
weighted number of shares of 78 081 238 in issue.
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
Quarter ended 31 March East Rand West Rand Orkney
2008 Operations Operations Operations
(R`000) (R`000) (R`000)
Segment revenue - 138 178 10 308 50 484
continuing operations
Realised hedge loss (42 575) - -
Net segment revenue - 95 603 10 308 50 484
continuing operations
Profit/ (loss) from operations (65 184) (6 097) 11 645
before tax
Income tax expense - - -
(65 184) (6 097) 11 645
President Other Total
Steyn (R`000) (R`000)
Operations
(R`000)
Segment revenue - 35 187 - 234 157
continuing operations
Realised hedge loss - - (42 575)
Net segment revenue - 35 187 - 191 582
continuing operations
Profit/ (loss) from operations (17 265) (26 957) (103 858)
before tax
Income tax expense - - -
(17 265) (26 957) (103 858)
Quarter ended 30 June 2008
East Rand West Rand Orkney
Operations Operations Operations
(R`000) (R`000) (R`000)
Segment revenue - 145 676 10 641 128 511
continuing operations
Realised hedge loss (51 070) - -
Net segment revenue - 94 806 10 641 128 511
continuing operations
Loss from operations before (88 484) (8 275) (2 292)
tax
Income tax expense - - -
(88 484) (8 275) (2 292)
President Other Total
Steyn (R`000) (R`000)
Operations
(R`000)
Segment revenue - 116 268 - 401 096
continuing operations
Realised hedge loss - - (51 070)
Net segment revenue - 116 268 - 350 026
continuing operations
Loss from operations before (58 945) (18 493) (176 489)
tax
Income tax expense - 2 849 2 849
(58 945) (15 644) (173 640)
Six months ended 30 June East Rand West Rand Orkney
2008 Operations Operations Operations
(R`000) (R`000) (R`000)
Segment revenue - 283 854 20 949 178 995
continuing operations
Realised hedge loss (93 645) - -
Net segment revenue - 190 209 20 949 178 995
continuing operations
Profit/ (loss) from operations (153 668) (14 372) 9 353
before tax
Income tax expense - - -
(153 668) (14 372) 9 353
President Other Total
Steyn (R`000) (R`000)
Operations
(R`000)
Segment revenue - 151 455 - 635 253
continuing operations
Realised hedge loss - - (93 645)
Net segment revenue - 151 455 - 541 608
continuing operations
Profit/ (loss) from operations (76 210) (45 450) (280 347)
before tax
Income tax expense - 2 849 2 849
(76 210) (42 601) (277 498)
Year ended 31 December 2007 East Rand Operations West Rand Operations
(R`000) (R`000)
Segment revenue - continuing
operations 415 010 56 400
Realised hedge loss (102 081) -
Net segment revenue -
continuing operations 312 929 56 400
Profit/ (loss) from
operations before tax (205 062) 1 447
Income tax expense (1 651) 1 584
(206 713) 3 031
Other Total
(R`000) (R`000)
Segment revenue - continuing operations - 471 410
Realised hedge loss - (102 081)
Net segment revenue - continuing operations - 369 329
Profit/ (loss) from operations before tax (4 806) (208 421)
Income tax expense - (67)
(4 806) (208 488)
All operations are located in the Republic of South Africa and all revenue
is derived from the sale of gold.
COMMMENTARY
1. Safety
Pamodzi Gold unfortunately had 3 fatal accidents during the quarter. Mr
Motebang Mphaka was fatally struck by a fall of ground on President Steyn
number 3 shaft on 17 April 2008. Messrs Lefu Augustinus Senekane and Tokelo
Julius Mohlakoana were overcome by heat and smoke from an underground fire at
the Orkney number 2 shaft on 18 June 2008. The directors and management have
extended their condolences to the various families. Full investigations by the
Chief Operating Officer in conjunction with the relevant Department of Minerals
and Energy representatives have been conducted and the required steps have been
taken to ensure that similar accidents do not occur in the future.
Pamodzi Gold believes in a focused safety management process rather than on
individual tasks. Safety was not a key focus when Pamodzi Gold took over the
President Steyn and Orkney operations at the end of February and the Pamodzi
Gold Safety, Health and Environmental strategies were rolled out at the outset.
The robot system was immediately implemented, fundamental methodologies were
put in place and safety managers were appointed. Compliance to the Pamodzi Gold
Safety and Health standards were dismal, with the President Steyn operations
achieving only 18% of the working areas to be classified as safe. The Orkney
operations achieved only 20% of the working area as being classified safe.
Unsafe working areas at both operations were stopped. Ratings of over 85% are
being achieved and are improving continuously at both operations.
The Pamodzi Gold safety and health culture is different:
Safety is not managed to traditional mining values
Focus is on the individual at the work place - effective training is key
Safety managers, safety officers and safety representatives are empowered
Proactive and not reactive
Pamodzi Gold believes that SAFETY IS FIRST
Aspire towards best practice methodology
Continues measurement of safety performance
Pamodzi Gold intends to become the mining industry leader in terms of how
health and safety is managed and implemented.
The following table highlights the Key Performance Indicators in terms of the
industry standard frequency rates for measurement of loss:
Lost Time Reportable Fatal
Operation Injury Rate Injury Rate Injury Rate
Quarter ended 30 June 2008 3.2 2.4 0
East Rand Quarter ended 31 March 2008 2.1 2.5 0.4
Year ended 31 Dec 2007 6.0 2.7 0.1
Quarter ended 30 June 2008 0 0 0
West Rand Quarter ended 31 March 2008 0 0 0
Year ended 31 Dec 2007 0 0 0
Orkney Quarter ended 30 June 2008 6.8 9.3 0.98
(from 1 March 2008) Month ended 31 March 2008 4.5 7.5 1.5
Quarter ended 30 June 2008 2.9 5.7 0.4
President Steyn
(from 1 March 2008) Month ended 31 March 2008 7.5 4.5 0
2. Operational overview for the quarter ended 30 June 2008
Production
Tons
Operation Quarter ended
Milled Kilograms Ounces
30 June 2008 498 623 604.9 19 449
East Rand 31 March 2008 490 753 656.5 21 107
31 Dec 2007 525 078 690 22 202
30 June 2008 30 061 51 1 637
West Rand 31 March 2008 32 150 44 1 412
31 Dec 2007 41 917 90 2 918
30 June 2008 175 093 571.6 18 378
1 to 31 March 57 178 204.8 6 584
Orkney note 2008
30 June 2008 187 919 527.1 16 921
President
Steyn note 1 to 31 March 2008 49 095 146.2 4 702
30 June 2008 891 696 1 754.6 56 385
TOTAL 31 March 2008 629 176 1 051.4 33 805
31 Dec 2007 566 995 780 25 120
Cash Cost
Tons
Operation Quarter ended
Milled R/Ton R/Kilogram $/Ounce
30 June 2008 498 623 288 237 346 955
East Rand 31 March 2008 490 753 200 149 835 621
31 Dec 2007 525 078 195 148 411 685
30 June 2008 30 061 497 313 428 1 261
West Rand 31 March 2008 32 150 423 310 077 1 284
31 Dec 2007 41 917 436 201 185 922
30 June 2008 175 093 630 204 068 821
1 to 31 March 57 178 563 157 156 651
Orkney note 2008
30 June 2008 187 919 847 300 667 1 209
President
Steyn note 1 to 31 March 49 095 938 315 003 1 305
2008
30 June 2008 891 696 481 247 628 996
TOTAL 31 March 2008 629 176 302 180 926 749
31 Dec 2007 566 995 213 154 542 713
Tons Capital
Operation Quarter ended Expenditure
Milled (R`000)
30 June 2008 498 623 10 883
East Rand 31 March 2008 490 753 13 731
31 Dec 2007 525 078 16 900
30 June 2008 30 061 1 190
West Rand 31 March 2008 32 150 185
31 Dec 2007 41 917 244
30 June 2008 175 093 27 615
1 to 31 March 57 178 9 962
Orkney note 2008
30 June 2008 187 919 10 131
President
Steyn note 1 to 31 March 49 095 1 036
2008
30 June 2008 891 696 49 819
TOTAL 31 March 2008 629 176 24 914
31 Dec 2007 566 995 17 144
Note: The Orkney and President Steyn operations included only from
1 March 2008.
Certain capital expenditure has been delayed due to the required financing not
obtained in the quarter and as a result, production was affected on all the
operations. Stoppages in the areas where safety was a concern and where the
fatalities occurred also negatively affected production. Unit costs are high as
a result of the non production of gold and the unit cash cost should return to
budgeted levels as soon as gold production increases.
Once the financing has been obtained, forecasted production will increase
within six months from all operations to above 96,000 ounces per quarter with
the forecasted cash costs decreasing to below $650 per ounce. Within 12 months,
forecasted production will further increase to over 105,000 ounces per quarter
with the forecasted cash costs decreasing to below $600 per ounce.
3. Capital raising, rights offering and potential restructuring of the East Rand
Hedge
Further the cautionary announcement released on SENS on 15 August 2008,
shareholders are advised that the Company has been in discussion with a
consortium of funders ("funding consortium") regarding a capital raising of R400
million. The Industrial Development Corporation Limited ("IDC"), as the lead
funder in the funding consortium has finally approved the provision of a loan
facility for an amount of R200 million, subject to the conclusion of legal
agreements and the finalisation of the terms of the remaining R200 million
funding.
Shareholders are also advised that the Company has agreed, upon condition of the
conclusion of the R400 million funding, with a short term debt provider that
R103 million of its current exposure to Pamodzi Gold is converted into and
equity exposure. This conversion will be done by means of a rights offering
which is to be underwritten by Pamodzi Resources (Proprietary) Limited and
funded by such short term debt provider. This will result in an increase in the
black empowerment credentials of the Company.
Shareholders are further advised that the Company is in advanced discussions
with the holders of the hedge in the East Rand, to restructure the current hedge
profile.
4. Further cautionary announcement
The provision of the loan facility, the implementation of the rights offering
and the restructuring of the hedge in the East Rand will require certain
regulatory approvals from the JSE Limited, Securities Regulation Panel
and the Companies and Intellectual Properties Registration Office. Shareholders
are therefore advised to continue to exercise caution when dealing in PZG
securities, until a further announcement in this regard is made.
5. Changes to the board of directors
As announced in April 2008 and as approved by shareholders at the Annual General
Meeting held on 25 August 2008, Hartley Dikgale, Mmaphuti Rose Lephondo
(independent) and Pieter Taljaard (independent) were appointed as non-executive
directors as from 1 April 2008.
Shareholders are advised that John G Proust and Martin J Schermers have resigned
as directors from the board of the company effective 30 September 2008. John has
resigned as his current portfolio of directorships in Canada does not afford
him sufficient time to the PZG board. Michael P O`Connor, a representative of
Superior Mining South Africa (Proprietary) Limited, will replace John as a non-
executive director as from 1 October 2008.
Martin has decided not to renew his two year employment agreement that ended on
30 September 2008. He has accordingly tendered his resignation as a director of
PZG and as Chief Financial Officer. He has made this decision to pursue personal
interests. Kobus du Plooy, currently a non-executive director of PZG, will be
acting as the Financial Director of PZG until a suitable permanent replacement
is appointed.
The chairman wishes, on behalf of the board and other stakeholders, to welcome
the new directors to the board and to thank John and Martin for their
contribution to the board and the Company as a whole.
Signed on behalf of the board
NA Ntsele PW Steenkamp
Chairman Chief Executive Officer
Bruma
30 September 2008
Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Directors
NA Ntsele1 (Chairman) KM Steenkamp1 (Deputy Chairman) JJ du Plooy1, HA Dikgale1
JG Proust1 (Canadian) SP Radebe (Corporate Affairs) MB Mokgata2 MI Mthenjane2
P Taljaard2 MR Lephondo2 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
2nd Floor, Building C, East Gate Office Park, South Boulevard, Bruma
Website
www.pamodzigold.co.za
Date: 01/10/2008 07:05:11 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.
