| Thu 13 Nov 2008, 7:05 | | SIM - Simmers - Abridged Reviewed Unaudited Consolidated Interim Results |
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SIM
SIIF
SIM - Simmers - Abridged Reviewed Unaudited Consolidated Interim Results
As At 30 September 2008
Simmer & Jack Mines Limited
Incorporated in the Republic of South Africa
(Registration number 1924/007778/06)
Share code: SIM & ISIN: ZAE000006722
("Simmers" or "the Company" or "the Group")
ABRIDGED REVIEWED UNAUDITED CONSOLIDATED INTERIM RESULTS
As at 30 September 2008
SALIENT POINTS
F2009 YTD
* Grew revenue 52% from R371 million for the six months ending 30 September 2007
to R563,3 million
* Gross profit from mining activities up 103% from a loss of R31,9 million to a
profit of R934 000
* Value of total assets increased marginally by 5% from R3,7 million to R3,9
million
* Net asset value decreased 7% from R2,3 billion in September 2007 to R2 billion
* Headline loss for the comparative period widened from 10,26 cps to 17,05 cps
* Overall gold production fell marginally by 2,9% from 81 254 ounces for the
corresponding period to 78 850 ounces
* Added almost 40 000 ounces of low-cost heap leachable NI 43-101 compliant
resources at TGME, bringing the total to 163 000 resource ounces
* Mining right at Elandsdrift and Frankfort granted; production from Duke`s Hill
initiated
* Phase 1 of BGM`s Number Five shaft rehabilitation project completed
* Ezulwini gold plant commissioned; prospecting right over adjoining property
granted; uranium production delayed to Q4 F2009
* Mine Waste Solutions` gold plant expanded; mining system for Buffelsfontein
dam complex commissioned
ABRIDGED REVIEWED UNAUDITED CONSOLIDATED INTERIM RESULTS for the six months
ended 30 September 2008 - Reviewed
COMMENTS
The first six months of the 2009 financial year from 1 April to 30 September
2008 showed an increase in gold produced at all operations, with the exception
of BGM, where safety-related stoppages resulted in an 8% drop in production
compared to the same period in F2008. The gold price was 48% higher than the
corresponding reporting period in F2008, resulting in a 103% jump in gross
profit from mining activities. Total cash costs, however, increased by 37%, from
R403 million in the first half of F2008 to R549 million in the comparative
period of F2009, mainly as a result of inflationary pressure on mining
consumables, reagents and fuel, as well as a 13,3% increase in Eskom rates,
effective July 2008. A R21 million (2007: Rnil) net realisable value adjustment
on the stockpile at Ezulwini Mine and increased Aberdeen royalties, resulting
from higher gold commodity prices and an additional 606 kg of gold from MWS
(2007: nil kg), contributed towards the increase in the Group`s cost of
production. The capitalisation of revenues from Ezulwini Mine and increased
finance costs relating to higher Aberdeen royalties also impacted negatively on
the Group`s net loss before taxation. The first half of the financial year was
also marked by a significant ramp-up of operations at Ezulwini and MWS,
resulting in an increase in capital expenditure and a corresponding reduction in
cash resources and investment revenue compared to the previous period.
BUFFELSFONTEIN GOLD MINE (BGM)
In the period under review, Phase 1 of the rehabilitation of the high-grade
Number Five shaft was completed, culminating in the hoisting of ore from the
shaft. Phase 2 is underway with Phase 3 earmarked for completion by the end of
the current financial year. This is expected to significantly alter the
production profile of the mine by allowing access to large, un-mined blocks of
high-grade ore. A development project at the high-grade Number Two shaft was
initiated in the period under review, to access a large block of high-grade
ground at Kromdraai, estimated to contain some 362 000 ounces of gold. Plans to
increase production in Q2 of F2009 were unfortunately halted by a fatality at
the high-grade Number Two shaft in August 2008 which resulted in the shaft being
closed for almost two weeks. Significant work has subsequently been done in
terms of introducing additional support and safety measures, which while pushing
up the cash costs for the quarter above the forecasted range of US$800, are
designed to play a key role in preventing any future seismic-related fatalities.
TRANSVAAL GOLD MINING ESTATES (TGME )
Both TGME`s underground and surface projects are currently in a development
phase pending feasibility studies that are due for completion in March 2009. It
has been established that BIOX technology will increase recoveries at the
underground Frankfort Mine from current levels of 65% to between 75% and 80%. It
remains to test the technology on TGME`s next underground targets at Beta and
Rietfontein. Should these targets prove amenable to BIOX, it will bring 700 000
LOM resource ounces that were previously considered uneconomical, to book. The
Company is hoping to convert 400 000 of its almost 2.6 million resource ounces
(Measured, Indicated and Inferred) to reserves by March 2009. The BIOX
feasibility study is due for completion in March 2009. In the interim, mining at
Duke`s Hill was reinitiated to complement the decreased production at Frankfort.
The ore at Duke`s Hill is less refractory than at Frankfort, albeit of a lower
grade.
The surface pre-feasibility study to investigate the very significant near-
surface low-grade gold deposits in the region was completed in March 2008 and
confirmed that there was sufficient potential to achieve 200 000 surface reserve
ounces by March 2009. Recent cutbacks in exploration expenditure have resulted
in this target being revised to 87 000 ounces by the end of the financial year.
The Company still expects to define 600 000 surface reserve ounces by 2013. To
date, 163 000 compliant surface resource ounces have been defined. Of these, 100
000 ounces will be treated using four heap leach pads which are expected to
yield 80 000 ounces of gold over the next four years at an average cash
operating cost of US$266/oz. The first of these is at Elandsdrift, which was
originally anticipated to commence in June 2007. The mining right was, however,
only granted in March 2008 and the pad was commissioned in October 2008,
following the granting of a Water Use Licence. The first gold is expected in
December 2008. Elandsdrift is expected to yield a total of 5 777 ounces over 14
months.
A full analysis of the performance and prospects for BGM and TGME can be found
in the Management Discussion and Analysis for Q1 of F2009 and Q2 of F2009, on
www.simmers.co.za.
FIRST URANIUM CORPORATION (FIU)
In the period under review, Simmers` stake in FIU diluted from 65,47% to 62,3%,
as a result of FIU issuing 6,1 million First Uranium common shares to Waterpan
Mining Consortium for the acquisition of the remaining 10% interest in Ezulwini
Mining Company. Construction of the gold and uranium plant continued apace
during the period under review and the gold plant was commissioned at Ezulwini
in July this year. The uranium plant has however been further delayed from
October 2008 until the end of Q4 of F2009, due to delays on the part of the ECMP
contractor in completing certain of the drawings, which in turn resulted in
delays in the delivery of certain construction materials. At Mine Waste
Solutions (MWS), the extension and upgrade of the gold plant was completed and
the construction of the uranium plant is on track for commissioning in December
2008, with the first yellow cake expected in April 2009. MWS produced 420,49 kg
(13 519 ounces) of gold between 6 June and 30 September 2007 at an average cash
cost of R128 567/kg (US$472), compared to 630 kg (20 359 ounces) at an average
cash cost of R95 766/kg (US$382/oz). The cash costs for the current period are
in line with planned levels, due largely to the successful switch from the semi-
depleted MWS dams that needed expensive, manual loading, to hydraulic mining
operations of the Buffelsfontein complex.
Subsequent to the end of Q2 of F2009, FIU announced a gold stream transaction
with Gold Wheaton Corporation (GW) whereby GW will purchase 25% of the estimated
2,1 million ounces of the life of mine gold production from MWS, in return for
US$125 million, payable before 27 February 2009, and an ongoing payment equal to
the lesser of US$400 per ounce and the prevailing spot price.
Detailed disclosures of the interim results for First Uranium can be viewed at
www.firsturanium.com.
PROSPECTS
In addition to achieving its production targets, the Company`s focus for the
next six months is on optimising expenditure and rationalising costs. Post Q2,
the technical reports for each operation were updated and revised to take into
account increases in the costs of consumables and power, and in the case of
Simmers, reflect a slower, more selective build-up of new, accretive projects,
which are now expected to be largely funded from cash flow from operations.
Should funding be secured for these new growth projects, they will be
accelerated accordingly.
STATEMENT OF FINANCIAL POSITION
Reviewed Unaudited Audited
six six twelve
months months months
as at as at as at
30 Sep 08 30 Sep 07 31 Mar 08
as at 30 September 2008 Notes R`000 R`000 R`000
ASSETS
Non-current assets
Investment property 17 193 9 481 17 303
Property, plant and equipment 2 3 022 230 1 351 794 2 043 581
Goodwill 7 415 7 415 7 415
Financial assets 15 867 13 283 15 876
Environmental rehabilitation
trust fund 3 175 235 152 288 167 418
3 237 940 1 534 261 2 251 593
Current assets
Inventories 4 81 527 44 888 51 668
Trade and other receivables 5 169 751 106 891 130 099
Cash and cash equivalents 424 782 2 051 472 1 582 012
676 060 2 203 251 1 763 779
Non-current assets held for
sale 1 274 1 033 2 192
Total assets 3 915 274 3 738 545 4 017 564
EQUITY AND LIABILITIES
Equity
Equity attributable to owners
of the parent
Share capital 843 357 829 520 843 357
Reserves 1 378 003 942 116 1 418 872
Accumulated loss (658 721) (439 421) (509 644)
Convertible debentures -
equity 6 280 580 280 580 280 580
Equity of owners of the
parent 1 843 219 1 612 795 2 033 165
Non-controlling interest 303 010 622 689 334 169
2 146 229 2 235 484 2 367 334
LIABILITIES
Non-current liabilities
Convertible debentures - debt 6 890 583 731 860 844 963
Deferred tax 86 177 86 157 84 941
Financial liabilities 7 - 157 555 -
Environmental rehabilitation
provision 8 253 219 252 006 254 638
1 229 978 1 227 578 1 184 542
Current liabilities
Financial liabilities 7 122 650 231 147 535
Trade and other payables 9 416 416 275 252 318 153
539 066 275 483 465 688
Total liabilities 1 769 045 1 503 061 1 650 230
Total equity and liabilities 3 915 274 3 738 545 4 017 564
STATEMENT OF COMPREHENSIVE INCOME
Reviewed Unaudited Audited
six six twelve
months months months
as at as at as at
30 Sep 08 30 Sep 07 31 Mar 08
for the period ended
30 September 2008 R`000 R`000 R`000
Revenue 563 288 371 054 854 915
Cost of production (562 354) (403 028) (915 022)
Profit/(loss) from mining activities 934 (31 974) (60 107)
Other income 24 873 35 600 66 968
General administrative and overhead
expenditure (131 421) (100 589) (169 950)
Share option costs (67 218) (25 540) (78 555)
Loss before finance charges/income
and fair value adjustments (172 832) (122 503) (241 644)
Finance income 43 627 75 765 142 505
Fair value adjustments 26 573 - 39 163
Finance charges (69 522) (60 424) (139 496)
Comprehensive loss before income tax (172 154) (107 162) (199 472)
Taxation (8 082) (373) (33 098)
Comprehensive loss for the period (180 236) (107 535) (232 570)
Attributable to:
Owners of the parent (149 077) (97 461) (167 684)
Non-controlling interest (31 159) (10 074) (64 886)
(180 236) (107 535) (232 570)
Basic loss per share (cents) (17,05) (10,26) (22,05)
Diluted loss per share (cents) (15,82) (9,97) (20,67)
Refer to note 10
STATEMENT OF CASH FLOWS
Reviewed Unaudited Audited
six six twelve
months months months
as at as at as at
30 Sep 08 30 Sep 07 31 Mar 08
for the period ended
30 September 2008 R`000 R`000 R`000
Cash flows from operating
activities
Cash absorbed by operations (58 065) (30 758) (202 664)
Finance income 43 627 73 150 142 505
Finance costs (69 522) (31 605) (139 496)
Tax paid (4 340) - (5 305)
Net cash from operating activities (88 299) 10 787 (204 960)
Cash flows from investing (1 067 511) (501 877) (1 113 984)
activities
Cash flows from financing (1 419) 1 378 732 1 236 473
activities
Net effect of exchange rate
changes on cash held in foreign - - 500 653
currencies
Net (decrease)/increase in cash (1 157 230)
and cash equivalents 887 642 418 182
Cash at the beginning of the 1 582 012 1 163 830 1 163 830
period
Total cash at end of the period 424 782 2 051 472 1 582 012
STATEMENT OF CHANGES IN EQUITY
Attributable to owners of the parent
Total
for the period ended Share Share share
30 September 2008 capital premium capital Reserves
R`000 R`000 R`000 R`000
Balance at 1 April 19 280 454 829 474 109 934 326
2007
Loss for the period - - - -
Issue of shares for 454 369 901 370 355 -
cash
Share issue cost - (14 944) (14 944) -
written off against
share premium
Convertible debentures - - - -
- equity
Net movement in - - - 7 790
reserves
Non-controlling - - - -
interest movement
Total changes 454 354 957 355 411 7 790
Balance at 30 19 734 809 786 829 520 942 116
September 2007
Loss for the period - - - -
Issue of shares for 1 004 4 572 5 576 -
cash & treasury shares
Share issue cost - 8 261 8 261 -
written off against
share premium
Net movement in - - - 476 756
reserves
Non-controlling - - - -
interest movement
Total changes 1 004 12 833 13 837 476 756
Balance at 31 March 20 738 822 619 843 357 1 418 872
2008
Loss for the period - - - -
Net movement in - - - (40 869)
reserves
Total changes - - - (40 869)
Balance at 30 20 738 822 619 843 357 1 378 003
September 2008
STATEMENT OF CHANGES IN EQUITY (continued)
Attributable to equity holders
of the owners of the parent
Non-
Control-ling
interest Total
equity
Total
Conver- attribu-
tible Accumu- table to
Deben- lated owners of
for the period ture - loss the parent
ended equity
30 September 2008
R`000 R`000 R`000 R`000 R`000
Balance at 1 - (341 1 066 475 401 751 1 468 226
April 2007 960)
Loss for the - (97 (97 461) (10 074) (107 535)
period 461)
Issue of shares - - 370 355 - 370 355
for cash
Share issue cost - - (14 944) - (14 944)
written off
against share
premium
Convertible 280 580 - 280 580 - 280 580
debentures -
equity
Net movement in - - 7 790 - 7 790
reserves
Non-controlling - - - 231 012 231 012
interest movement
Total changes 280 580 (97 546 320 220 938 767 258
461)
Balance at 30 280 580 (439 1 612 795 622 689 2 235 484
September 2007 421)
Loss for the - (70 (70 223) (54 812) (125 035)
period 223)
Issue of shares - - 5 576 - 5 576
for cash &
treasury shares
Share issue cost - - 8 261 - 8 261
written off
against share
premium
Net movement in - - 476 756 - 476 756
reserves
Non-controlling - - - (233 708) (233 708)
interest movement
Total changes - (70 420 370 (288 520) 131 850
223)
Balance at 31 280 580 (509 2 033 165 334 169 2 367 334
March 2008 644)
Loss for the - (149 (149 077) (31 159) (180 236)
period 077)
Net movement in - - (40 869) - (40 869)
reserves
Total changes - (149 (189 946) (31 159) (221 105)
077)
Balance at 30 280 580 (658 1 843 219 303 010 2 146 229
September 2008 721)
1 ACCOUNTING POLICIES
1.1 General information
Simmer and Jack Mines, Limited ("the Company") and its subsidiaries (together
"the Group") mine mainly gold and uranium. The Group has mining operations in
Gauteng, North West and Mpumalanga Provinces in South Africa.
1.2 Presentation of Financial Statements
The condensed financial statements for the interim period have been prepared in
compliance with International Financial Reporting Standards ("IFRS"), the
Companies Act of South Africa and in accordance with International Accounting
Standards (IAS 34): Interim Financial Reporting. The financial statements have
been prepared on the historical cost basis, unless otherwise stated.The
principal accounting policies are consistent with those applied in the annual
financial statements for the year ended 31 March 2008.
Grant Thornton`s unmodified review report on the condensed financial statements
contained in this interim report is available for inspection at the company`s
registered office.
2 PROPERTY, PLANT AND EQUIPMENT
Reviewed Unaudited Audited
six six months twelve
months months
as at 30 as at 30 as at 31
Sep 08 Sep 07 Mar 08
Accu- Accu-
mulated Carry- mulated Carry-
depre- ing depre- ing
Cost ciation value Cost ciation value
R`000 R`000 R`000 R`000 R`000 R`000
Land and
buildings 29 515 (2 892) 26 623 37 462 (1 070) 36 392
Forestry
asset 276 - 276 - - -
Plant and
equipment 1 329 885 (132 481) 1 197 404 462 004 (118 585) 343 419
Furniture
and
fixtures 10 151 (2 479) 7 672 9 083 (2 108) 6 974
Motor
vehicles 16 328 (2 055) 14 273 5 189 (866) 4 323
Mining
assets 708 518 (80 962) 627 550 754 173 (56 894) 697 279
Computer
equipment
and
software 19 958 (6 922) 13 036 9 177 (3 901) 5 277
Decommis-
sioning
asset - - - 17 810 - 17 810
Tailings
for
Process-
sing 240 681 (7 765) 232 916 - - -
Develop-
ment
and infra-
structure
813 357 (25 311) 788 046 225 195 (20 036) 205 159
Mining
rights 51 344 (1 656) 49 688 4 243 (1 656) 2 587
Explora-
tion
costs 64 740 - 64 740 32 574 - 32 574
Total 3 284 753 (262 523) 3 022 230 1 556 (205 116) 1 351 794
919
Accu-
mulated Carry-
depre- ing
Cost ciation value
R`000 R`000 R`000
Land and 19 593 (1 243) 18 350
buildings
Forestry asset 276 - 276
Plant and
equipment 671 631 (19 523) 652 108
Furniture
and fixtures 16 799 (3 972) 12 827
Motor vehicles 9 580 (1 151) 8 429
Mining assets 657 014 (67 386) 589 628
Computer
equipment
and software 10 340 (3 523) 6 817
Decommissioning
asset 43 675 - 43 675
Tailings for
processing 241 097 (8 602) 232 495
Development
and
infrastructure
439 953 (24 495) 415 458
Mining rights 4 691 (1 656) 3 035
Exploration
costs 60 483 - 60 483
Total 2 175 132 (131 551) 2 043 581
3 ENVIRONMENTAL REHABILITATION TRUST FUND
The Group makes voluntary contributions to controlled funds that were
established to meet the cost of some of its decommissioning, restoration and
environmental rehabilitation liabilities. The use of these funds is limited to
the rehabilitation of the mines as directed by the Trustees with the Department
of Minerals and Energy`s ("DME") approval. With the provisional liquidation
process by Durban Roodepoort Deep Limited ("DRD") of BGM during 2005, the DME
issued a directive, whereby the then Buffelsfontein Rehabilitation Trust Funds
were "ringfenced" for the specific rehabilitation of BGM and the funds were then
transferred by DRD to a DME designated trust fund for this purpose. The
directive also provided that should the new owners establish a new trust, these
funds could either be transferred back to the new trust or remain in the
Department Trust Fund.
A new Buffelsfontein Environmental Rehabilitation Trust was established during
2006 and since then, BGM has been unsuccessful with their requests to the DME,
to transfer these funds back into the newly established trust.
The DME confirmed in a letter received by us on 21 May 2008 that interest earned
from investment of the funds accrues to the Department of Minerals and Energy
Rehabilitation Trust Fund for rehabilitation purposes. The DME did not confirm
the amount of interest accrued to date. Management has, however, calculated and
estimated the accrued interest based on earnings from similar investments
provided by Sanlam.
Reviewed Unaudited Audited
six six twelve
months months months
as at as at as at
30 Sep 08 30 Sep 07 31 Mar 08
for the period ended
30 September 2008 R`000 R`000 R`000
Legal opinion has been obtained
confirming that the Company is
entitled to the growth on the Trust
Fund for the purposes of the
rehabilitation of BGM. It has
instructed its attorneys to pursue
its rights in this regard. 175 235 152 288 167 418
4 INVENTORIES
Medical supplies 1 112 1 106 1 066
Consumables 34 949 15 619 22 814
Gold-in-process, Heap Leach & 46 255 28 873 28 653
Unprocessed ore (stockpiles)
82 316 45 598 52 533
Provision for obsolescence in
consumables (789) (710) (865)
81 527 44 888 51 668
The provision for obsolescence in consumables is determined by the different
Materials Management departments through scrutiny of slow moving stock reports
(no issues for 24 months), from information received from Original Equipment
Manufacturers and agents on a continuous basis as well as standardisation
approved by the Standards Committee and deteriorated stocks identified through a
process of shelf life as prescribed by suppliers and/or deterioration through
nature elements.
The movement in the provision for obsolescence in consumables has been included
in "cost of production" in the statement of comprehensive income.
Reviewed Unaudited Audited
six six twelve
months months months
as at as at as at
30 Sep 08 30 Sep 07 31 Mar 08
for the period ended
30 September 2008 R`000 R`000 R`000
5 TRADE AND OTHER RECEIVABLES
Trade and other receivables 46 488 47 080 60 617
Prepayments 6 349 5 690 3 784
VAT 116 914 54 121 65 698
169 751 106 891 130 099
6 SENIOR UNSECURED CONVERTIBLE DEBENTURES
On 3 May 2007, First Uranium Corporation ("FIU") issued senior unsecured
convertible debentures (the "Debentures") in denominations of Cdn $1 000 in the
principal amount of US$135 060 000 (Cdn$150 000 000). The interest rate on the
Debentures is 4,25% per annum. The Debentures pay interest semi-annually in
arrears on 30 June and 31 December and have a maturity date of 30 June 2012. The
Debentures are convertible at the option of the holder into common shares at any
time prior to the maturity date at an exchange price of Cdn$16,42 per share.
On or after 30 June 2010 and prior to the maturity date, the Debentures may be
redeemed by the Corporation, in whole or in part from time to time, provided
that the weighted average trading price of the Common Shares on the TSX for the
20 consecutive trading days ending five trading days prior to the date on which
notice of redemption is given, is at least 130% of the exchange price of
Cdn$16,42 per share.
FIU has the option, subject to regulatory approval, to satisfy its obligations
to repay the principal amount of the Debentures upon redemption or at maturity
by issuing and delivering that number of freely tradable Common Shares obtained
by dividing the principal amount of the Debentures by 95% of the weighted
average trading price of the Common Shares on the TSX for the 20 consecutive
trading days ending five trading days before the date fixed for the redemption
or maturity.
The equity component of the Debentures was valued on issuance at US$46 503 825
which is recorded as a separate component of shareholders` equity. The
conversion option was valued using the Black-Scholes pricing model with the
following assumptions: Expected dividend yield 0%, expected volatility 56%, risk
free interest rate 4,2% and expected life of five years.
The liability component of the Debentures is being accreted such that the
liability at maturity will equal the gross proceeds of US$135 060 000 (Cdn$150
000 000) less conversions. The amount accreted for the year ended 31 March 2008
was US$8,5 million. The cost of issuing the Debentures amounted to US$4 498 778.
As at 30 September 2008, no portion of the Debentures had been converted.
Interest paid and accrued for the year ended 31 March 2008 amounted to US$4,2
million and US$1,6 million, respectively.
7 FINANCIAL LIABILITIES
At fair value through profit or loss
Unaudited Audited
six six twelve
months months months
as at as at as at
30 Sep 08 30 Sep 07 31 Mar 08
for the period ended
30 September 2008 R`000 R`000 R`000
Aberdeen International Incorporated
("Aberdeen") 122 650 157 555 147 535
Simmers entered into an agreement with Aberdeen, a Canadian exploration and
royalty company trading on the TSX, whereby Aberdeen provided a loan facility of
US$10 million to acquire BGM.
The loan has a 3% coupon up to a gold price of US$400/oz and 2,5% thereafter. In
addition, a Net Smelter Royalty ("NSR") on BGM`s gold production is charged,
which is linked to the price of gold ranging from 0,5% NSR at US$300/oz to a
4,75% NSR at gold prices of US$750/oz or higher.
Simmers has the option of extending the term of the loan for an additional two
years with a minimum repayment of 10% of the existing principal of the loan at
the time of the extension. Aberdeen has the option to convert the debt into
Simmers shares, subject to Simmers` shareholder approval, at R0,80 per share
after the first anniversary of the loan. The loan has a three-year term.
The loan is secured by a bond over BGM`s North Plant.
The loan, royalties and options have been fair valued, taking the following
assumptions into account:
- valuation date = 30 September 2008
- redemption date = 31 December 2008
- R/US$ = R8,50 (2008: R6,88)
- share price = R2,72 (2008: R5,67) as at 30 September
- volatility = 60% (2007: 90%)
- dividend yield = 0% (2008: 0%)
- discount curves = US$ swap curve for $ cash flows and ZAR swap curve for R
valuation (on 30 September 2008)
- lifetime of royalties = 20 years
- gold price = remains at current levels (such that the interest is 2,5%)
- long term gold price = US$ 840 (2007: US$600)
The fair value calculation was performed by Mr Ranti Mothapo, a consulting
actuary and analyst, trading as the Matlotlo Group Proprietary Limited.
Dispute with Aberdeen
The dispute between the Company and Aberdeen wherein Aberdeen alleged that
Simmers was in breach of a right of first refusal held by Aberdeen to finance
Simmers` properties, was dismissed with costs in favour of the Company by the
High Court of South Africa in September 2008.
Held at amortised cost
Consolidated Mining Management - 231 -
Services Limited
The loan has prescribed and has been
written off.
122 650 157 786 147 535
8 ENVIRONMENTAL REHABILITATION PROVISION
Addi-
tion
result
ing
from
Addi- an Dis- Un-
tional acqui- count- winding Utilised
Opening Provi- sition ing of Of during
balance sion of Liabi- dis- the
R`000 R`000 Subsi- lity count year Total
diary R`000 R`000 R`000 R`000
R`000
Reconci-
liation of
environ-
mental
Rehabili-
tation
provision -
30
September
2008
Environ-
mental 254 638 - - - - (1 419) 253 219
rehabili-
tation
Reconcilia-
tion of
environmen-
tal
Rehabili-
tation
provision -
30
September
2007
Environmen-
tal ehabili- 233 672 412 19 378 - - (1 456) 252 006
tation
Reconci-
liation of
environ-
mental
Rehabili-
tation
provision -
31 March
2008
Environ-
mental 233 672 52 816 24 963 (50 983) 7 312 (13 142) 254 638
rehabili-
tation
The Group has an obligation to incur restoration, rehabilitation and
environmental costs when environmental disturbance is caused by the development
and mining activities. A provision is recognised for the present value of such
future costs.
Provision is also made for the future costs relating to the decommissioning of
the plant or other site preparation work.
It is anticipated that the cost of restoration and decommissioning will be
incurred over the life of the mine.
The environmental rehabilitation provision of TGME, Buffelsfontein and Chemwes
has been reviewed by GCS (Pty) Limited, a water environmental engineering and
science consultancy company.
The environmental rehabilitation provision for Ezulwini has been reviewed by
Johan Fourie & Associates, a consulting environmental engineering company.
The provisions are based on the estimated net cost for the respective companies
to rehabilitate their mines. On the assumption that third parties will attend to
the rehabilitation of the mines, the undiscounted costs, including VAT and 10%
contingency, are estimated at R610 million (2007: R300 million) and are in the
process of finally being agreed with the DME.
Guarantees in conjunction with Environmental Trust Funds have been put in place
for all of the abovementioned operations, except for the BGM operation. This is
due to uncertainty surrounding the confirmation of the final agreed liablity
with the DME. Once confirmation has been obtained, the existing approved
facility with Lombards will be called upon to furnish the guarantee for the
remaining shortfall.
Reviewed Unaudited Audited
six six twelve
months months months
as at as at as at
30 Sep 08 30 Sep 07 31 Mar 08
for the period ended 30 September
2008 R`000 R`000 R`000
9 TRADE AND OTHER PAYABLES
Trade and other payables 373 773 245 590 288 295
Accrued salary-related 42 643 29 662 29 858
416 416 275 252 318 153
All amounts of trade and other
payables are short-term. The carrying
values are considered to be a
reasonable approximation of fair
value.
Reviewed Unaudited Audited
six six twelve
months months months
as at as at as at
30 Sep 08 30 Sep 07 31 Mar 08
for the period ended
30 September 2008 R`000 R`000 R`000
10 HEADLINE LOSS
Reconciliation between loss and
headline loss:
Basic loss for the period (180 236) (107 535) (232 570)
Add back:
Impairment of exploration and mineral - - 1 569
resources
Impairment of property plant and - - 8 024
equipment
Valuation gain on available-for-sale - - (2 601)
investment
Disposal of property plant and - - (12 222)
equipment - gain
Reversal of impairment - - (2 360
Minority interest - - (315)
Headline loss for the period (180 236) (107 535) (240 475)
Basic loss per share (cents)* (17,05) (10,26) (22,05)
Diluted loss per share (cents)* (15,82) (9,97) (20,67)
Headline loss per share (cents)* (17,05) (10,26) (22,80)
Diluted headline loss per share
(cents)* (15,82) (9,97) (21,37)
Net asset value per share (cents)* 203,03 217,80 224,47
*Based on weighted average number of
shares in issue
Reconciliation of number of shares
issued `000 `000 `000
Reported at 1 April 1 062 031 1 004 987 1 004 987
Shares issued to Simmers Share Trust - 3 178 3 178
Shares issued for cash - 53 866 53 866
Shares issued at the end of the
period 062 031 1 062 031 1 062 031
Weighted average number of ordinary
shares in issue 1 057 088 1 047 942 1 054 616
Adjusted for:
- Share options 82 415 31 163 70 715
Weighted average number of ordinary
shares
for diluted earnings per share 1 139 502 1 079 105 1 125 331
Basic earnings per share is calculated by dividing the profit attributable to
equity holders of the Company by the weighted average number of ordinary shares
in issue during the period.
Due to a reclassification of costs and amendment in the calculation of the
diluted number of shares in prior years, the comparative earnings per share
figures have changed from those disclosed during 2007.
The comparative reported headline earnings have been restated due to the
adoption of SAICA Circular 8/2007 - Headline Earnings.
11 POST BALANCE SHEET EVENT
Aberdeen Loan
In 2006, the Company entered into a loan agreement (the "Loan Agreement") with
Aberdeen International Inc. ("Aberdeen"), a Canadian exploration and royalty
company trading on the Toronto Stock Exchange for an amount of US$10 million to
finance the purchase of BGM. The loan has a 3% coupon up to a gold price of
US$400/oz and 2,5% thereafter. In addition a Net Smelter Royalty ("NSR") on
BGM`s gold production is charged, which is linked to the price of gold ranging
from 0,5% NSR at US$300/oz to a 4,75% NSR at gold prices of US$750/oz or higher.
Simmers has the option of extending the term of the loan for an additional two
years with a minimum repayment of 10% of the existing principal of the loan at
the time of the extension. Aberdeen has the option to convert the debt into
Simmers shares, subject to Simmers` shareholder approval, at R0,80 per share
after the anniversary of the loan, which is repayable by 31 December 2008. In
the event that such shareholder approval is not obtained within a reasonable
period of time, the loan converts to a 1,0% NSR in perpetuity on gold produced
from properties held by BGM, including the BGM Tailings, which were sold to
First Uranium South Africa ("FUSA").
In a letter dated 16 October 2008, Aberdeen confirmed to Simmers that it had
elected to convert the amount of the facility outstanding into ordinary shares
of Simmers. In terms of the provisions in the Loan Agreement, the facility is
therefore no longer repayable in cash.
The Company is now following the process in terms of JSE Listings Requirements
to formally complete the circular seeking shareholder approval.
Should shareholder approval not be forthcoming, the loan converts into a 1% NSR
on BGM in perpetuity, as provided for in the Loan Agreement.
Material effect will flow to the statement of comprehensive income pending the
outcome of the vote by the shareholders depending whether or not the facility is
converted.
First Uranium Corporation
The Corporation has entered into a mandate, including a term sheet (the Debt
Transaction), with a South African financial institution (the Bank) whereby the
Bank, acting as lead, is to arrange debt financing of up to ZAR900 million
(approximately $100 million) for the Corporation. Terms and credit committee
approval for approximately one-third of the facility have been received. The
Debt Transaction is subject to certain conditions, including, the results of due
diligence being satisfactory to the Bank and any syndicate members, receipt of
required regulatory approvals, and completion of definitive documentation. On
November 5, 2008 the Corporation announced that it has signed a letter of intent
with Gold Wheaton (Barbados) Corporation (GW), a wholly-owned subsidiary of Gold
Wheaton Corporation, whereby GW will purchase 25 percent of the estimated 2.1
million ounces of the life-of-mine gold production from MWS (the Gold Stream
Transaction). Subject to certain conditions and approvals, the Gold Stream
Transaction is expected to close in late November 2008. Under the terms of the
Gold Stream Transaction, GW shall pay First Uranium:
* $125 million, as follows:
? $50 million on or before November 28, 2008 (the First Payment); and
? subject to financing, $75 million on or before February 27, 2009 (the Second
Payment);
* an ongoing payment equal to the lesser of $400 per ounce and the prevailing
spot price of gold (subject to an annual inflation adjustment of one percent,
starting in the fourth year after the First Payment).
If the Second Payment is not paid, the Gold Stream Transaction shall be reduced
to 10 percent of estimated production and appropriate credits made. Provided
that the Second Payment is paid, GW will be granted a right of first refusal on
any future gold stream transactions or similar arrangements proposed to be
entered into by First Uranium or its subsidiaries in respect of MWS or the
Ezulwini Mine. Closing of this transaction is subject to receipt of required
governmental and regulatory approvals, third-party consents, Board approvals and
acceptance by the Toronto Stock Exchange and completion of definitive
documentation.
Directors
NRG Brunette (Independent Non-executive Chairman)
BJ Njenje (Non-executive Vice-chairperson)
GT Miller (Chief Executive Officer) J de V Berry (Executive Director)
SLB Mapisa (Non-executive Director) EA Meyer (Independent Non-executive
Director)
SA Murray (Independent Non-executive Director)
M Oberholster (Non-executive Director) AX Sisulu (Non-executive Director)
KPE Wakeford (Independent Non-executive Director)
Johannesburg
13 November 2008
Sponsor
Sasfin Capital
(A division of Sasfin Bank Limited)
Date: 13/11/2008 07:05:06 Produced by the JSE SENS Department.
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