| Tue 31 Mar 2009, 11:24 | | WEZ - Wesizwe Platinum - Extract Of the Summarised Audited Annual Financial |
|
WEZ
WEZ
WEZ - Wesizwe Platinum - Extract Of the Summarised Audited Annual Financial
Results for the Year Ended 31 December 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")
EXTRACT OF THE SUMMARISED AUDITED ANNUAL FINANCIAL RESULTS FOR THE YEAR ENDED
31 DECEMBER 2008
For inspection of the full audited annual report for the year ended
31 December 2008 refer to the Company website: www.wesizwe.com, a hard copy
will be posted to shareholders during April 2009.
HIGHLIGHTS
- The Bankable Feasibility Study on Wesizwe`s Core Frischgewaagd-Ledig
Project in March 2008, was successfully completed well ahead of initial
schedule.
- Further strategic positioning achieved through a value accretive deal
between Wesizwe Platinum Limited (Wesizwe), Anglo Platinum Limited (Anglo
Platinum) and Platinum Group Metals (RSA)(Proprietary) Limited (PTM),
giving Wesizwe 100% control of its Core Project and welcoming Anglo
Platinum as a 26% shareholder on the effective date of the transaction.
- The Core Project is technically and economically sound and Wesizwe
remains financially strong with R244 million cash on hand at the date of
this report.
- Contractors are mobilised and ready to commence construction, in line
with Wesizwe`s reviewed staged approach, as detailed in November 2008.
- Long lead items for electricity and bulk water supply, winders and shaft
sinking equipment have been secured.
- Market volatility during the course of 2008 prompted an internal review
of the March 2008 Bankable Feasibility Study. The first review confirms
the viability and strength of the Core Project at the peak cost levels
prevailing up to September 2008 and the second, to be completed at the
end of April 2009, is in progress and will assess the implications of
post-September 2008 declines in key Capex and Opex inputs.
- The results of this review are expected to be released in early May 2009
and will inform strategic decision and next steps.
- The process of the various statutory permissions to commence mining
activities was progressed during the year and will be concluded shortly.
Commenting on the release of the results, Mike Solomon, CEO of Wesizwe, said:
"Wesizwe successfully completed its exploration programme in the first quarter
of 2008. During the year the Company reinforced the underlying, extremely
attractive fundamentals of its Core Project, the Frischgewaagd-Ledig Complex
of the Pilanesberg Project. These include high head grades and very favourable
PGM (4E) basket ratios, a stable geology and a relatively shallow working
depth. These fundamentals have been confirmed by a Bankable Feasibility Study
undertaken by TWP and Murray and Roberts Cementation and a competent person`s
report on this study by The Mineral Corporation.
The strategy prior to the economic downturn had been to negotiate the terms of
the required project finance by the end of 2008 and then to undertake equity
capital raising during 2009. This sequencing was upset by the sudden crash in
the capital markets in September 2008, and the approach had to be revised.
Given the Company`s project-ready situation, the Board of Directors of the
Company elected to proceed with the Project on a phased approach whereby the
capital project will be modularised into a series of smaller project
components each with separate budgets and contracts. The company will then
raise the respective amounts of capital required on an incremental basis until
such time as the capital markets normalise. Project finance will only be
negotiated and accepted on reasonable terms while any cash raised on the basis
of new issue of shares will be contingent on share price recovery to a less
dilutive level to mitigate dilution and preserve underlying shareholder value.
Wesizwe`s approach has always been aggressive and continues to be so. The fact
that we are progressing carefully in this uncertain environment is not a sign
of this world-class Project being in distress or coming to a halt, but rather
that necessary caution is being taken in the interests of protecting
shareholder value. These measures are being taken to navigate the Company
through the storm by making sensible decisions and weighing options to this
end.
During the past year Wesizwe negotiated a highly value accretive deal with
Anglo Platinum and PTM, which will give Wesizwe 100% control of and benefit
from its Core Project, while maintaining its 26% stake in the Western Bushveld
Joint Venture. As a result of this transaction, Anglo Platinum will become the
largest single shareholder in the Company"
FUNDING AND GOING CONCERN
Wesizwe completed its exploration programme during the first quarter of 2008,
funded by means of shareholder equity funding.
Until September 2008, the Company`s Core Project was on track, as were its
capital raising efforts. However, these have been impacted significantly by
the advent of the global economic crisis.
The strategy in progress prior to the economic downturn was to negotiate the
terms of the project finance by the end of 2008 and on the back of this raise
to undertake the equity capital raised during the course of this year. Once
this was in place, the Company intended to utilise the equity for the capital
development programme and once exhausted, to draw down on the debt component
as close to cash generation as possible in order to mitigate the roll-up of
interest charges on this debt. This sequencing of course was upset by the
sudden crash in the capital markets in September 2008, and the approach had to
be revisited.
As project finance literally evaporated at that point there was little purpose
in continuing the project finance negotiations with ABSA Barclays Capital, and
these discussions have been deferred until the turmoil in the capital markets
has settled down. The planned major equity raised was also aborted as a result
of the low prevailing share prices and the reluctance of management to
unnecessarily dilute existing shareholders.
The Company has cash reserves of R244 million at the date of this report and
has negotiated and signed a term sheet with YA Global Investments, L.P. for a
three year standby equity distribution facility for R550 million. In terms of
the facility YA Global Investments, L.P. will subscribe for up to R550
million, in minimum tranches of approximately R50 million, in respect of
ordinary shares of Wesizwe Platinum Limited.
Wesizwe`s management assessed the Company`s liquidity risk as high and its
ability to raise funding as low given the current financial crisis. This
assessment led management to formulate a project budget to mitigate the
liquidity risk of the Company.
The following are the underlying principles of the budget:
- All overheads were reviewed and non-critical activities have halted and
the Company has set aside sufficient cash to meet its overheads and
obligations as they become due and payable for the next 12 months.
Management will progressively monitor Company overheads and has the
flexibility to further cut back on certain overheads should it become
necessary. The abovementioned facility is to cover any unexpected
expenses that may become due and to fund unexpected opportunities.
- Given the Company`s project-ready situation, the opportunity of
proceeding with the Project in a low-cost environment, the target to be
in production in time for the recovery of the market between 2014 and
2016, the Company has elected to proceed with the Project on a phased
basis, raising incremental amounts of capital required until such time as
the capital markets normalise, project finance can then be negotiated on
reasonable terms as share prices recover to a less dilutive level to
permit a sensible equity raise, with the following caveats:
- The capital project will be modularised into a series of smaller
project components each with a separate budget and contract;
- There should at all times be sufficient working capital in place to
fund the selected project modules as well as to ensure that the
Company has sufficient resources to ensure a three year going
concern;
- Contracts will only be signed and commissioned with the available
capital in the bank thereby avoiding any unserviceable debt traps;
and
- While commissioned project components proceed, smaller capital
amounts will be progressively sought with which to commission
further project elements.
FINANCIAL RESULTS
As an exploration and development focused entity, Wesizwe did not earn any
revenue from exploration activities during the year under review and is not
forecasting any revenue from mining activities until a mine is brought into
production on the Frischgewaagd-Ledig Complex of the Pilanesberg Project.
The Group made a net loss for the year of R27,8 million (compared to a loss of
R90,8 million for 2007), comprising administration expenses of R62,3 million,
offset by the net finance income of R34,3 million and other income of R0,2
million.
Administration expenses of R62,3 million include the following:
- Depreciation R1,5 million
- Shared-based payment expense R0,5 million
- Bonus for past services rendered R2,2 million
- Impairment charge R1,2 million
- Exploration and evaluation expense R8,2 million
- Other administration overheads R48,7 million
- Share-based payment expense relates to shares and options issued to staff
under the Long Term Incentive Plan (LTIP).
- The impairment charge of R1,2 million relates to write-off of exploration
costs of the Groblersdal and GaRankuwa Projects. Initial drilling
results indicated that the resource in these areas cannot be exploited
economically and the decision not to continue with the projects was
taken.
- Other administration overheads of R49,1 million comprise of salaries,
marketing expenses and community sustainable projects.
Capital expenditure
Capital expenditure for the year includes: intangible exploration and
evaluation expenses capitalised at R42,5 million (2007: R102,1 million); long-
lead items consisting of plant and equipment R54,5 million (2007: R28,8
million); tangible exploration and evaluation assets (engineering and
drawings) R79,0 million (2007: R43,5 million); and other property, plant and
equipment items R6,8 million (2007: R6,9 million).
Subsequent events and litigations
- Appeal of the Record of Decision (RoD)
On 16 February 2009, the Sun International Group in concert with North
West Eco Forum and the Legacy Group instituted an appeal directed to the
MEC for Agriculture, Conservation and Environment, in terms of Chapter 7
of the National Environmental Management Act, 1998 (Act No. 107 of 1998)
National Environmental Management Assessment (NEMA) regulations
(Government notice no. R385, R386 and R387 in Government Gazette of April
2006) (NEMA EIA Regulations). The appeal is against the RoD that was
granted to Wesizwe by the NWDACE, challenging certain aspects of
Wesizwe`s EIA.
As objections are part of the Environmental Impact Assessment (EIA) and
Interested and Affected Parties (IAP) process, Wesizwe believes there is
nothing unusual or unexpected about this. Outside the statutory IAP
process Wesizwe has initiated dialogue with all relevant parties in the
same consultative manner in which the Company has worked with the local
community. Wesizwe is however in possession of a positive RoD which
entitles Wesizwe to proceed with mining and has no intention of delaying
the project to accommodate these late objections.
- Acquisition of Participation Interest
On 5 December 2008 Wesizwe signed a "Sale of Participation Interest and
Prospecting Rights Agreement" and a "Disposal Agreement" with the
following parties:
- Africa Wide Mineral Prospecting and Exploration (Proprietary)
Limited (AW)
- Bakubung Minerals (Proprietary) Limited (Bakubung)
- Maseve Investments 11 (Proprietary) Limited - (Maseve)
- Platinum Group Metals (RSA) (Proprietary) Limited (PTM)
- Rustenburg Platinum Mines Limited (RPM)
In terms of the "Sale of Participation Interest and Prospecting Rights
agreement", Wesizwe will acquire 37% of RPM Prospecting Rights and 37% of its
Participation Interest in the Western Bushveld Joint Venture (WBJV)
(shareholding in the WBJV before the transaction is as follows: 37% RPM, 37%
PTM and 26% AW). Wesizwe will settle the purchase consideration by issuing
211 850 125 new Wesizwe Platinum Limited ordinary shares.
In terms of the "Disposal Agreement", Wesizwe will dispose certain Mineral
Rights and Participation Interest to its wholly owned subsidiaries, Africa
Wide and Bakubung. Africa Wide will then dispose of Mineral Rights and
Participation Interest in the WBJV to Maseve. The WBJV will then terminate.
As at 31 December 2008, the following suspensive conditions had not been
fulfilled.
- Obtaining Section 11 approval of the Mineral Petroleum Resources
Development Act (MPRDA) transfer of title and/or Ministerial Consent from
the Department of Minerals and Energy (DME) to the extent necessary for
the execution and implementation of the RPM Transaction; and
- Obtaining approval of Wesizwe`s Shareholders for the RPM Transaction.
The transaction will only be effective once above outstanding suspensive
conditions have been fulfilled.
At the date of writing this report, the accounting effects of this transaction
have not yet been determined.
SHARE CAPITAL
Authorised share capital
There was no change to the authorised share capital during the year. At 31
December 2008 the authorised share capital comprised:
2008 2007
R`000 R`000
1 000 000 000 ordinary shares of 10 10
0.001 cents
Issued share capital
A summary of the issues made during the year under review are reflected below:
Date Price per 2008 Total
share shares shares
(cents) issued issued
Opening balance at 1 January 554 829 167
2008
2008
22 April* 934 660 679 660 679
8 July** 675 30 000 000 30 000 000
*On 22 April 2008, 660 679 shares were issued to employees under the Long Term
Incentive Plan.
**On 8 July 2008, the Company issued 30 000 000 shares and received gross
proceeds of R203 million.
Unissued share capital
In terms of an ordinary resolution passed at the Company`s last annual general
meeting held on 12 August 2008, 20% of the Company`s unissued share capital
was placed under the control of the directors until the next annual general
meeting of shareholders. Shareholders` approval will be sought at the next
annual general meeting for the continued placing of 15% of unissued share
capital under the control of directors.
Balance sheets
at 31 December
GROUP COMPANY
2008 2007 2008 2007
Notes R`000 R`000 R`000 R`000
Assets
Non-current assets 1 142 827 950 172 632 673 628 801
Property, plant 95 857 36 207 10 875 5 791
and equipment
Tangible 7 122 443 43 454 - -
exploration and
evaluation assets
Intangible 6 251 559 210 226 - 1 212
exploration and
evaluation assets
Environmental 436 436 - -
deposits -
restricted cash
Other investments 10 3 800 - - -
- restricted cash
Investment in 8 668 732 659 849
equity accounted
investee
Investment in 621 798 621 798
subsidiaries
Current assets 328 181 285 409 761 512 595 403
Loans receivable 470 124 347 813
from subsidiaries
Other receivables 11 998 37 911 233 780
Cash and cash 316 183 247 498 291 155 246 810
equivalents
TOTAL ASSETS 1 471 008 1 235 581 1 394 185 1 224 204
Equity and
liabilities
Capital and 1 369 563 1 200 163 1 369 563 1 200 163
reserves
Share capital 6 6 6 6
Share premium 1 487 934 1 285 035 1 487 934 1 285 035
Share-based 57 269 62 929 57 269 62 929
payment reserve
Accumulated losses (175 646) (147 807) (175 646) (147 807)
Long-term 6 962 11 825 6 962 11 825
liabilities
Other long-term 9 6 962 11 825 6 962 11 825
liabilities
Current 94 483 23 593 17 660 12 216
liabilities
Trade and other 94 483 23 593 17 660 12 216
payables
TOTAL EQUITY AND 1 471 008 1 235 581 1 394 185 1 224 204
LIABILITIES
Income statements
for the year ended 31 December
GROUP COMPANY
2008 2007 2008 2007
Notes R`000 R`000 R`000 R`000
- - 16 818 12 537
Revenue
Other income 196 - 196 -
Administration (52 935) (108 721) (60 494) (117 175)
expenditure
Loss on sale of (7) - (7) -
non-current assets
Impairment of (1 212) - (1 212) -
capitalised
exploration and
evaluation asset
Exploration and (8 199) - (8 199) -
evaluation
expenses
Impairment of loan - - (9 256) (4 083)
to subsidiary
Loss from (62 157) (108 721) (62 154) (108 721)
operations
Finance income 34 319 17 920 34 316 17 920
Finance costs (1) (6) (1) (6)
Loss before (27 839) (90 807) (27 839) (90 807)
taxation
Income tax expense - - - -
Loss for the year (27 839) (90 807) (27 839) (90 807)
Loss per share
Basic loss per 3 (4,89) (19,17)
share (cents)
Diluted loss per 3 (4,89) (19,17)
share (cents)
Cash flow statements
for the year ended 31 December
GROUP COMPANY
2008 2007 2008 2007
Notes R`000 R`000 R`000 R`000
5 33 016 (53 992) (48 979) (21 807)
Cash flows
utilised by
operating
activities
Cash generated
/ (utilised)
by operations
Finance cost (1) (6) (1) (6)
33 015 (53 998) (48 980) (21 813)
Net cash
inflow /
(outflow) from
operating
activities
Cash flows
utilised by
investing
activities
Acquisition of (61 355) (36 224) - (5 777)
property,
plant and
equipment as a
result of
increasing
operations
Acquisition of (78 989) (43 454) (6 349) -
tangible
exploration
and evaluation
assets as a
result of
increasing
operations
Expenditure on (42 545) (102 074) - (1 212)
intangible
exploration
and evaluation
assets as a
result of
increasing
operations
Environmental (3 800) - - -
guarantee
deposit as a
result of
increasing
operations
Investment (8 884) (47 853) - -
equity
accounted
investee
Acquisition of - - - (4 083)
Africa Wide
loan accounts
Increase in - - (131 566) (251 398)
amounts owed
by Group
companies
Acquisition of - (10 217) - (10 217)
subsidiary,
net of cash
Proceeds on 195 - 195 -
disposal of
property,
plant and
equipment
Investment 34 319 17 920 34 316 17 920
income
(161 059) (221 (103 404) (254 767)
Net cash outflow 902)
from investing
activities
Cash flows from
financing
activities
Net proceeds from share 196 729 481 633 196 729 481 633
issues
Decrease in - (18 403) - (18 403)
current portion of
interest bearing
liabilities
Net cash inflow 196 729 463 230 196 729 463 230
from financing
activities
Net increase in 68 685 187 330 44 345 186 650
cash and cash
equivalents
Cash and cash equivalents 247 498 60 168 246 810 60 160
at the
beginning of the year
316 183 247 498 291 155 246 810
Cash and cash
equivalents at the
end of the year
Notes to the financial statements
for the year ended 31 December 2008
1. Basis of preparation and accounting policies
The consolidated ?nancial statements have been prepared in accordance
with International Financial Reporting Standards (IFRS) and its
interpretations adopted by the International Accounting Standards Board
(IASB) and in a manner required by the Companies Act of South Africa.
The ?nancial statements information for the year ended 31 December 2008
has been prepared on the historical cost basis except for share-based
payments and financial investments which are carried at fair values.
2. Capital commitments
Capital commitments as at 31 December 2008 amounts to R61,8 million
(2007: R Nil). This relates to Long-lead capital Items
3. Basic loss and Headline loss per share
Group Group
2008 2007
The basis of calculation of basic
loss per share is:
Attributable loss to ordinary 26 620 000 90 807 000
shareholders (Rand)
Weighted number of ordinary shares 569 795 868 473 594 696
outstanding during the year
(shares)
Basic and diluted loss per share 4,89 19,17
(cents)*
The basis of calculation of
headline loss per share is:
Attributable loss to ordinary 27 839 000 90 807 000
shareholders (Rand)
(1 219 000) -
Loss on disposal of asset (7 000) -
Impairment of exploration and (1 212 000) -
evaluation
Headline loss 26 620 000 -
Weighted number of ordinary shares 569 721 121 473 594 696
outstanding during the year
(shares)
Headline loss per share (cents) 4,67 19,17
*During the year the Group granted 1 851 306 shares under its LTIP and
SARS schemes. These shares were not taken into account for the purpose of
calculating diluted loss per share as they have an anti-dilutive effect.
4. Other notes
Dividends: No dividend was declared or proposed during the year ended
31 December 2008 (2007: R Nil).
Segmental analysis of annual results: No segmental report has been
prepared as the Company is conducting exploration activities in one
geological location, which represents only one business activity.
5. Notes to the cash flow statement
Group Group Company Company
2008 2007 2008 2007
R`000 R`000 R`000 R`000
Reconciliation of
loss for the year to
cash utilised by
operations:
Loss from operations (62 157) (108 721) (62 154) (108 721)
Adjustments for:
- depreciation 1 504 577 1 063 397
- impairment of loan 9 256 4 083
to subsidiary
- share-based payment 510 62 199 510 62 199
expense
- impairment of 1 212 - 1 212 -
exploration and
evaluation asset
- loss on disposal of 7 - 7 -
PPE
(58 924) (45 945) (50 106) (42 042)
Operating loss before
working capital
changes
Changes in working 91 940 (8 047) 1 127 20 235
capital
Decrease/(Increase) 25 914 (34 113) 547 175
in other receivables
Increase in trade and 70 889 14 241 5 443 8 235
other payables
Movement in other (4 863) 11 825 (4 863) 11 825
long term liability
Cash generated / 33 016 (53 992) (48 979) (21 807)
(utilised) by
operations
6. Intangible exploration and evaluation assets
Intangible exploration and evaluation assets comprise capitalised
exploration and evaluation expenditure on the Pilanesberg Project.
7. Tangible exploration and evaluation assets
Tangible exploration and evaluation assets comprise capitalised
engineering designs and drawings.
8. Investment in equity accounted investee
During the prior year, the Group acquired 100% of Africa Wide for R611
million (including capitalised expenses of R10 217 337 incurred on
acquisition) at 1048 cents per share. The purchase consideration was
settled by issuing 57 421 643 new Wesizwe Platinum Limited shares. The
primary asset of Africa Wide is a 26% shareholding in the WBJV. The
other parties are Anglo Platinum Limited holding 37% and Platinum Group
Metals Limited holding 37%. The effective date of the transaction was 14
September 2007. Since acquisition all exploration and evaluation
expenditure has been capitalised in accordance with the Group`s
accounting policy.
Notwithstanding the 100% acquisition of Africa Wide, the underlying
investment in the WBJV is accounted for as an investment in equity
accounted investee, using the equity method of accounting.
The assets and liabilities of Africa Wide and the fair values attributed
to these at acquisition date were as follows. The only asset at the date
of acquisition was the equity accounted investee in the WBJV.
Total
Intangible assets 808 626
Trade and other payables (38 323)
Loan accounts (4 083)
Equalisation liability* (140 236)
At acquisition (128 871)
Additional top-up (11 365)
Total assets and liabilities acquired 625 984
Deferred tax liability (234 502)
Goodwill 220 514
Consideration at acquisition date settled by 611 996
share issue
Subsequent expenditure capitalised - 2007 47 853
Total 31 December 2007 659 849
Subsequent expenditure capitalised - 2008 8 883
Total 31 December 2008 668 732
* Upon completion of a bankable feasibility study for the WBJV 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, 26% Africa Wide. Management estimate that the equalisation
liabilities, which represent equalising cash payments to be paid by
Africa Wide to the other WBJV partner(s) in future, to be R140 million as
at the effective date of the transaction and recognised as part of the
business combination.
Goodwill relates to capital and operational synergistic benefits that
will arise as the WBJV properties are next to Wesizwe`s Core Project
properties.
9. Other long-term liabilities
Long-term liabilities relate to deferred bonus commitments of R6,96
million payable in 2010.
10. Other investments
In terms of section 41 of the MPRDA, a financial provision is required by
the holder of a Prospecting Right, Mining Right or Mining Permit to
achieve the total quantum for rehabilitation and remediation of
environmental impacts and associated damage as well as closure-out for
cost.
The DME approved the Environmental Management Plan for Wesizwe and the
following amounts have been invested for closure cost purposes based on
the approved figures.
2008 2007
R`000 R`000
Capital invested 3 800 -
Return on investments - -
Total 3 800 -
11. Directorate
On 30 November 2008 L Maloney (Mrs) resigned as a director of Wesizwe and
on 1 December 2008 I Abedian (Dr), P G Gaylard (Prof), M G Mgudlwa (Mr)
and D N M Mokhobo (Mrs) were appointed to Wesizwe`s Board of Directors.
12. Disclaimer: Forward looking statements
Certain statements included in this report constitute "forward looking
statements" that are not profit forecasts or estimates in any way as
defined by the JSE Listings Requirements. Such forward looking
statements involve known and unknown risks, uncertainties and other
factors that may cause 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 platinum group metals prices, currency and the risks involved
in mining operations.
Signed on behalf of the Board
R G RAINEY M H SOLOMON
Acting Chairman Chief Executive Officer
Johannesburg
30 March 2009
Sponsors Investec Bank Limited
ENQUIRIES
Wesizwe Platinum +27 11 994 4600
Mike Solomon, CEO
College Hill +27 11 447 3030
Fred Cornet +27 83 307 8286
Ashleigh Dubbleman +27 83 225 0438
www.wesizwe.com
Johannesburg
Investment Bank and Sponsor: Investec Bank Limited
Date: 31/03/2009 11:24:00 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.
