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SIM
SIIF
SIM - Simmer & Jack Mines, Limited - Abridged audited annual consolidated
financial statements
Simmer & Jack Mines, Limited
Incorporated in the Republic of South Africa
("Simmers" or "the Company" or "the Group")
(Reg number 1924/007778/06)
Share code SIM
ISIN ZAE000006722
Abridged audited annual consolidated financial statements
Salient points FY2009
Improved safety levels at all operations;
Gold production up 9% to 183 036 ounces;
Revenue up 56% from R855 million to R1,3 billion;
Gross profit of R91,8 million, as opposed to a loss of R60 million in
FY2008;
R2,6 billion profit after tax due to sale of First Uranium shares;
Commissioned the gold plant and began commissioning the uranium plant at
Ezulwini Mine;
Acquired Tau Lekoa Mine from AngloGold Ashanti;
Completed Phase One and Two of the three-phase rehabilitation of
Buffelsfontein Gold Mine`s high-grade Number Five Shaft;
Successfully built and commissioned a test-heap leach pad at Elandsdrift;
Established Mine Waste Solutions as one of the lowest-cost gold producers in
South Africa in its first full year of production;
Concluded two-year wage agreements at all operations;
Ended the year with cash and cash equivalents of R842,7 million.
Statement of financial position as at 31 March 2009
Group
2008 as
Figures in rand thousand Notes 2009 restated
Assets
Non-current assets
Investment property 33 479 22 826
Property, plant and equipment 2 720 804 2 083 578
Goodwill - 7 415
Investments in associates 2 124 404 -
Loans to group companies and
associates 3 612 -
Financial assets 14 194 15 876
Environmental rehabilitation trust
fund 138 531 167 418
3 035 024 2 297 113
Current assets
Inventories 37 951 51 668
Trade and other receivables 86 081 130 098
Reimbursive asset 81 842 -
Financial assets 2 973 -
Cash and cash equivalents 3 842 678 1 582 012
1 051 525 1 763 778
Non-current assets held for sale
1 969 2 192
Total assets 4 088 518 4 063 083
Equity and liabilities
Equity
Equity attributable to owners of the
parent
Share capital and premium 951 847 843 357
Reserves 268 962 1 424 395
Retained income/(Accumulated loss) 2 200 499 (469 647)
Convertible debentures - equity - 280 580
Equity attributable to owners of the
parent 3 421 208 2 078 685
Non-controlling interest - 334 169
3 421 208 2 412 854
Liabilities
Non-current liabilities
Convertible debentures - debt - 844 963
Deferred tax - 84 941
Finance lease obligation 3 198 -
Environmental rehabilitation
provision 200 912 254 638
Financial liabilities 4 263 827 -
467 937 1 184 542
Current liabilities
Finance lease obligation 1 277 -
Financial liabilities 4 23 267 147 535
Current tax payable 36 -
Trade and other payables 174 793 318 152
199 373 465 687
Total liabilities 667 310 1 650 229
Total equity and liabilities 4 088 518 4 063 083
Figures in 2007 as
Rand thousand Notes restated
Assets
Non-current assets
Investment property 15 004
Property, plant and
equipment 2 636 812
Goodwill -
Investments in associates -
Loans to group companies
and associates -
Financial assets 13 276
Environmental
rehabilitation trust fund 137 657
802 749
Current assets
Inventories 30 852
Trade and other
receivables 75 250
Reimbursive asset -
Financial assets -
Cash and cash equivalents 3 1 163 830
1 269 932
Non-current assets held
for sale 6 170
Total assets 2 078 851
Equity and liabilities
Equity
Equity attributable to
owners of the parent
Share capital 474 109
Reserves 939 849
Retained
income/(Accumulated loss) (296 404)
Convertible debentures -
equity -
Equity attributable to
owners of the parent 1 117 554
Non-controlling interest 401 751
1 519 305
Liabilities
Non-current liabilities
Convertible debentures -
debt -
Deferred tax -
Finance lease obligation
-
Environmental
rehabilitation provision 233 672
Financial liabilities 4 159 505
393 177
Current liabilities
Finance lease obligation -
Financial liabilities 4 13 501
Current tax payable
-
Trade and other payables
152 868
166 369
Total liabilities 559 546
Total equity and
liabilities 2 078 851
Statement of comprehensive income
for the year ended 31 March 2009
Group
Figures in Rand
thousand Notes 2009 2008
Revenue 1 336 535 854 782
Cost of
production (1 244 746) (915 022)
Gross
profit/(loss)
91 789 (60 240)
Other income 49 815 67 101
General
administrative
and overhead
expenditure (287 397) (175 509)
Share option
costs (110 363) (78 555)
Operating loss (256 156) (247 203)
Finance income 60 750 142 505
Loss from equity
accounted
investment (109 657) -
Partial disposal
of investment in
subsidiary 5 3 232 089 -
Finance charges (322 877) (139 496)
Profit/(loss)
before taxation 2 604 149 (244 194)
Taxation (12 695) (33 098)
Profit/(loss)
for the year 2 591 454 (277 292)
Other
comprehensive
income
Foreign currency
translation
differences for
foreign
operations (8 860) -
Gain on non-
current assets
held for sale 288 -
Net change of
fair value
transferred
through
profit and loss 15 532 39 163
Other
comprehensive
income for the
year net
of taxation 6 960 39 163
Total
comprehensive
income/(loss)
for the year net
of taxation 2 598 414 (238 129)
Total
comprehensive
income/(loss)
attributable to:
Owners of the
parent 2 670 146 (173 243)
Non-controlling
interest (71 732) (64 886)
2 598 414 (238 129)
Earnings per
share
Basic 250.56 -16.43
earnings/(loss)
per share 6
Diluted
earnings/(loss)
per share 6 245.12 -15.39
Statement of changes in equity
for the year ended 31 March 2009
GROUP
Convert-
ible
Figures in Share Share Other debenture
Rand thousand capital premium reserves equity
Balance at 1 April 2007 as
previously reported
19 280 454 829 934 326 -
Prior year adjustments
- - 5 523 -
Balance at 1 April 2007 as
restated 19 280 454 829 939 849 -
Total changes 1 458 367 790 484 546 280 580
Balance at 1 April 2008 as
previously reported 20 738 822 619 1 418 872 280 580
Prior year adjustments
- - 5 523 -
Balance at 1 April 2008 as
restated 20 738 822 619 1 424 395 280 580
Total changes 1 019 107 471 (1 155 533) (280 580)
Balance at 31 March 2009 21 757 930 090 268 862 -
Statement of changes in equity
for the year ended 31 March 2009
GROUP
Total
Accumulated attributable
loss)/ to Non-con-
Figures in Rand Retained owners of trolling Total
thousand income the parent interest equity
Balance at 1 April
2007 as
previously
reported (341 960) 1 066 475 401 751 1 468 226
Prior year
adjustments 45 556 51 079 - 51 079
Balance at 1 April
2007 as restated (296 404) 1 117 554 401 751 1 519 305
Total changes (173 243) 961 131 (67 582) 893 549
Balance at 1 April
2008 as
previously
reported (509 644) 2 033 165 334 169 2 367 334
Prior year
adjustments 39 997 45 520 - 45 520
Balance at 1 April
2008 as restated (469 647) 2 078 685 334 169 2 412 854
Total changes 2 670 146 1 342 523 (334 169) 1 008 354
Balance at 31
March 2009 2 200 499 3 421 208 - 3 421 208
Statement of cash flows
for the year ended 31 March 2009
Group
Figures in
Rand thousand Notes 2009 2008
Net cash from
operating
activities (510 048) (203 996)
Cash flows
from investing
activities (1 188 089) (1 114 948)
Cash flows
from financing
activities 1 072 680 1 236 473
Net effect of
exchange rate
changes on (113 877) 500 653
cash held in
foreign
currencies
Net increase
in cash and
cash
equivalents (739 334) 418 182
Cash and cash
equivalents at
the beginning
of the period 1 582 012 1 163 830
Total cash and
cash
equivalents at
end of the
period 3 842 678 1 582 012
Notes to the annual financial statements for the year ended 31 March 2009
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 financial statements have been prepared in compliance with International
Financial Reporting Standards ("IFRS"), the Companies Act of South Africa and in
accordance with International Financial Reporting Standards (IAS 34): Interim
Financial Reporting. The financial statements have been prepared on the
historical cost basis, unless otherwise stated.
These accounting policies are consistent with the previous year except for the
adoption of the new and revised standards as mentioned in note 1.4 and the
change in accounting policy note 1.3.
1.3 Changes in accounting policies
Amendment of IAS 40: Investment Property
In terms of IAS 40 on investment property, the Company is permitted to value
investment property in terms of fair value or the cost model basis. The Group
has decided to change the accounting for investment property from the cost basis
to the fair value basis (refer to note 7 for full disclosure).
1.4 The Company has decided to early adopt the following statements:
IAS 1 (Revised) Presentation of Financial
The main revisions to IAS 1 (AC 101):
-Require the presentation of non-owner changes in equity either in a single
statement of comprehensive income or in an income statement and statement of
comprehensive income.
-Require the presentation of a balance sheet at the beginning of the earliest
comparative period whenever a retrospective adjustment is made. This requirement
includes related notes.
-Require the disclosure of income tax and reclassification adjustments relating
to each component of other comprehensive income. The disclosures may be
presented on the face of the statement of comprehensive income or in the notes.
-Allow dividend presentations to be made either in the statement of changes in
equity or in the notes only.
-Have changed the titles to some of the financial statement components, where
the `balance sheet` becomes the `statement of financial position` and the `cash
flow statement` becomes the `statement of cash flows.` These new titles will be
used in International Financial Reporting Standards, but are not mandatory for
use in financial statements.
IAS 28 Investments in Associates: Consequential amendments due to IAS 27
(Amended) Consolidated and Separate Financial Statements
When an investment in an associate is reduced but significant influence is
retained, a proportionate share of other comprehensive income must be
reclassified to profit or loss.
2. Property, plant and equipment
Group 2009
Accumulated Carrying
Cost depreciation value
R`000 R`000 R`000
Land and buildings 8 020 (1 598) 6 422
Forestry asset - - -
Plant and equipment 250 958 (29 727) 221 231
Furniture and fixtures 19 466 (5 369) 14 097
Motor vehicles 1 813 (455) 1 358
Mining assets 475 246 (84 550) 390 696
Computer equipment and software 10 881 (5 734) 5 147
Decommissioning asset - - -
Tailings for processing - - -
Development and infrastructure 113 868 (36 912) 76 956
Mining rights 5 312 (1 672) 3 640
Exploration costs 1 257 - 1 257
Total 886 821 (166 017) 720 804
Group 2008
Accumulated Carrying
Cost depreciation depreciation
R`000 R`000 R`000
Land and buildings 19 593 (1 243) 18 350
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 701 150 (71 525) 629 625
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 2 219 268 (135 690) 2 083 578
Reconciliation of property, plant and equipment - Group - 2009
Group
Deconsoli-
dation of
subsidiary
Opening
balance Additions Disposals
R`000 R`000 R`000 R`000
Land and buildings 18 350 26 986 (37 486) -
Forestry asset 276 - - -
Plant and equipment 652 108 1 173 128 (1 612 065) -
Furniture and
fixtures 12 827 8 181 (3 354) -
Motor vehicles 8 429 7 835 (12 821) (76)
Mining assets 629 625 328 296 (494 125) -
Computer equipment
and software 6 817 11 285 (8 034) (36)
Decommissioning asset 43 675 - (114 102) -
Tailings for
processing 232 495 - (231 315) -
Development and
infrastructure 415 458 252 664 (611 658) -
Mining rights 3 035 45 423 (45 473) -
Exploration costs 60 483 (1 029) 11 031 -
Total 2 083 578 1 852 769 (3 159 402) (112)
Group
Derecogni-
tion Reclass-
of ification Depreciation Balance at
decommiss- and and 31 March
ioning asset transfers Impairment 2009
R`000 R`000 R`000 R`000
- - (1 428) 6 422
Land and buildings
Forestry asset - (276) - -
Plant and
equipment - 18 053 (9 993) 221 231
Furniture and
fixtures - - (3 557) 14 097
Motor vehicles - - (2 009) 1 358
Mining assets (849) (46 995) (25 256) 390 696
Computer equipment
and software - - (4 885) 5 147
Decommissioning
asset - 70 427 - -
Tailings for
processing - - (1 180) -
Development and
infrastructure - 27 088 (6 596) 76 956
Mining rights - 655 - 3 640
Exploration costs - (69 228) - 1 257
Total (849) (276) (54 904) 720 804
3. Cash and cash equivalents
Group
2009 2008
Cash and cash
equivalents consist of:
Cash on hand 10 87
Bank balances 770 055 303 564
Unit trusts 72 613 104 899
Short-term deposits - 1 173 462
842 678 1 582 012
R300 million of the
cash and cash
equivalents held by the
Group at year end is
not available for use
by the Group. An
agreement was concluded
on 17 February 2009
between the Company and
AngloGold Ashanti (AGA)
for the purchase of
price of AGA`s Tau
Lekoa mine. The full
purchase consideration
for this acquisition is
R600 million and the
effective date is the
later of 1 January 2010
or the date of
fulfillment of all the
conditions precedent.
In terms of this
agreement, an initial
irrevocable bank
guarantee amounting to
R300 million against an
equivalent cash cover
amount of R300 million
issued in favour of
AngloGold Ashanti on
the 17th of March 2009.
4. Financial liabilities
At fair value through
profit or loss
ABSA Put Option 6 735 -
The put option relates
to the CAD85 million
proceeds from the sale
of the partial First
Uranium investment
which converted to
Rands on 17 of April
2009. The call and put
strike prices were
R8.10 and R7.43
respectively. At 31
March 2009 the spot
price was R7.34.
Aberdeen International
Incorporated
("Aberdeen") 280 359 147 535
The Company entered
into an agreement with
Aberdeen, a Canadian
exploration and royalty
company trading on TSX,
whereby Aberdeen
provided a loan
facility of US$ 10
million to acquire BGM.
The loan had 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 was
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. The principal
amount of the loan was
converted into a 1% NSR
on BGM`s gold
production.
In October 2008, the
Company advised
shareholders that
Aberdeen had elected to
convert its $10 million
loan facility into
equity. Accordingly, a
circular was dispatched
to shareholders on 30
January 2009 outlining
the implications of the
conversion being
accepted or declined,
and recommending that
shareholders vote
against the conversion.
The issue was put to
the vote at a general
meeting held on 16
February 2009 at the
Company`s registered
offices, whereupon
87.1% of the voteable
shares present voted
against the issue of
shares to Aberdeen.
71.88% of the voteable
shares were represented
at the meeting.
As a consequence of
Aberdeen`s request to
convert its loan into
ordinary share capital,
the loan was converted
and therefore required
a write back (credit
/gain) to the Income
Statement amounting to
R121 million. In terms
of the Loan Agreement,
should the application
to convert the loan
into Simmers` equity be
unsuccessful, the loan
converted into a 1%
perpetual royalty. This
necessitated the
recognition of the fair
value of the 1% NSR in
terms of the
requirements of IAS 32
amounting to R277
million. The net result
of R156 million has
been accounted for as a
finance charge in the
Group`s results.
The loan is secured by
a bond over BGM`s North
Plant.
The loan, royalties and
options have been fair
valued by Mr Ranti
Mothapo, a consulting
actuary and analyst
with trading as the
Matlotlo Group
(Proprietary) Limited.
Disputes with Aberdeen
During December 2007,
Aberdeen served an
application on the
Company in which it
claimed:-
* an order declaring
that the Company acted
in breach of a loan
agreement whereby
Aberdeen loaned US$ 10
million;
* lost financing fees;
and
* damages of R68,7
million in damages for
loss of share value.
The Company opposed the
matter and filed an
answering affidavit and
the matter was argued
on 1 September 2008.
At court, Aberdeen
abandoned all of their
claims except their
claim for an order
declaring that the
Company acted in breach
of the loan agreement.
This claim was argued
and Aberdeen`s
application was
dismissed with costs.
Aberdeen subsequently
applied for leave to
appeal and this was
granted on 29 April
2009. A date for the
hearing of the appeal
has not yet been
allocated.
287 094 147 535
5. Partial disposal of investment in subsidiary
Group
Carrying value of
assets sold
Property, plant and
equipment 3 159 781 -
Environmental
rehabilitation trust
fund 46 248 -
Goodwill 7 415 -
Inventories 56 593 -
Trade and other
receivables 82 510 -
Cash and cash
equivalents 535 357 -
Convertible debentures
- equity (280 580) -
Loan payable (1 355 569) -
Other liabilities &
Deferred Tax (90 141) -
Environmental
rehabilitation
provision (142 544) -
Trade and other (324 988) -
payables
Deferred income (87 853) -
Share issue costs 209 963 -
Non-distributable
reserves (11 065) -
Parent contribution (12 637) -
Foreign Currency
Translation Reserve 18 837 -
Non-controlling
interest (762 778) -
Recycling of Excess on 168 661 -
Common Control to the
Income Statement
Total net assets sold 1 217 209 -
Recycling of Marked to (1 502 370) -
Market reserve to the
Income Statement
Cash consideration
received (700 297) -
Recognition of
Associate
Investment (2 246 631) -
Profit of partial
disposal
of subsidiary (3 232 089) -
Net cash inflow on
disposal
Cash consideration
received less foreign
exchange differences 666 282 -
6. Headline loss
Reconciliation between
earnings/(loss) and
headline loss:
Basic earnings/(loss)
for the year 2 598 414 (238 129)
Add back: - -
Non-controlling 71 732 64 886
interest
Attributable to the 2 670 146 (173 243)
owners of the parent
Impairment of
exploration and mineral
resources - 1 569
Impairment of property,
plant and equipment 505 8 024
Valuation gain on
available-for-sale
investment 1 (2 601)
Disposal of property,
plant and equipment -
gain (258) (12 222)
Reversal of impairment (1 083) (2 360)
Translation difference
of associate (8 860) -
Conversion of Aberdeen
loan and recognition of
perpetual royalty 166 872 -
Fair value adjustment -
investment property (11 063) -
Impairment of assets
337 -
Fair adjustment on held (669)
for sale assets
Partial disposal of
investment in
subsidiary (3 232 089) -
Non-controlling
interest 3 632 (315)
Headline loss for the
year (412 529) (181 148)
Basic profit/(loss) per (16.43)
share (cents)* 250.56
Diluted profit/(loss) (15.39)
per share (cents)* 245.12
Headline loss per share
(cents)* (38.71) (17.18)
Diluted headline loss
per share (cents)* (37.87) (16.10)
EBITDA per share
(cents) * (8.10) (14.14)
Net asset value per
share (cents) 307.84 195.73
* Based on weighted
average number of
shares in issue
Reconciliation of
number of shares issued `000 `000
Reported at 1 April 1 062 031 1 004 987
Shares issued to
Simmers Share Trust - 3 178
Shares issued for cash 49 337 53 866
Shares issued at 31
March 1 111 368 1 062 031
Weighted average number
of ordinary shares in
issue 1 065 681 1 054 616
Adjusted for:
- Share options 23 660 70 715
Weighted average number
of ordinary shares for
diluted earnings per
share 1 089 341 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 year.
The comparative figures for the earnings per share indicators have been restated
following a reclassification of costs and some prior year adjustments.
7. Prior year adjustments and change in accounting policy
Group
Reconciliation of equity at 1 April 2007
As Prior
previously year
reported adjustments Restated
Investment property 9 481 5 523 15 004
Property, plant and equipment 591 256 45 556 636 812
Total non-current assets 600 737 51 079 651 816
Reserves 934 326 5 523 939 849
Accumulated loss (341 960) 45 556 (296 404)
Total equity 592 366 51 079 643 445
Reconciliation of equity at 1 April 2008
As Prior
previously year
reported adjustments Restated
Investment property 17 303 5 523 22 826
Property, plant and equipment 2 043 581 39 997 2 083 578
Total non-current assets 2 060 884 45 520 2 106 404
Reserves 1 418 872 5 523 1 424 395
Accumulated loss (509 644) 39 997 (469 647)
Total equity 909 228 45 520 954 748
Reconciliation of profit or loss for 2008
As Prior
previously year
reported adjustments Restated
General administrative and
overhead expenditure (169 950) (5 559) (175 509)
Prior year adjustments
Decommissioning assets
In terms of IAS 37 and the accounting policy of the Group, the closure and
environmental costs are provided in the accounting period when the obligation
arose from the related disturbance (whether this occurs during mine development
or during the production phase). These costs are based on the net present value
of the estimated future costs to rehabilitate/restore the damage caused to date.
Where a closure and environmental obligation arises from mine development
activities, the costs should be capitalised as part of the cost of the
associated asset as a decommissioning asset. This approach has not been applied
during previous years due to information not being available to support the
raising of such an asset. New survey information became available and enabled
BGM to quantify this asset. The recognition of the decommissioning asset and its
related amortisation has been raised retrospectively from 1 April 2007.
The initial recognition of the decommissioning at 1 April 2007 amounted to R45,5
million and was capitalised to the mining assets and property, plant and
equipment fixed asset categories. An amortisation charge for this increased
asset for the 2008 financial year amounted to R5,6 million and reduced the
carrying value thereof to R40 million at the end of the 2008 financial year.
Investment property
The accounting policy on investment property provided for the carrying of
investment property on the cost model basis. In terms of the cost model basis,
the value of investment property is carried at its actual cost less
depreciation.
With the recent global movement to fair value accounting and due to the fact
that this basis will be more representative of the actual value of the Group`s
investments, a recommendation was adopted to change the accounting policy of
investment property from the cost to the fair value model basis. By changing the
accounting policy, the fair value basis will also take market related conditions
into consideration, which was not done in the past.
This change in accounting policy had the effect of increasing Transvaal Gold
Mining Estates Limited`s investment property by R5,5 million retrospectively.
8. Segment information
The Group`s mining and exploration activities are conducted mainly in
Mpumalanga, North West and Gauteng provinces, South Africa. An analysis of the
Group`s business segments, excluding intergroup transactions, is set out below.
The Group undertakes exploration activities in Mpumalanga, which are included in
the corporate and exploration segment.
2009
Figures in Rand thousand First Uranium
BGM TGME
Profit/(loss)
Revenue 902 803 86 531 347 201
Production related
depreciation
(25 297) (11 703) -
Cost of production (808 691) (123 376) (278 718)
Gross profit/(loss) 68 815 (48 549) 68 482
Other income 5 705 1 494 13 043
General administrative and (30 149) (14 375) (152 920)
overhead expenditure
Share options costs (16 511) (4 427) (42 520)
Operating loss 27 860 (65 856) (113 914)
Finance income 18 280 206 29 867
Loss from equity accounted - - -
investment
Partial disposal of - - -
investment in subsidiary
Finance charges (210 669) (394) (56 526)
Profit/(loss) before
taxation (164 528) (66 045) (140 573)
Other comprehensive income - - -
Foreign currency
translation differences for
foreign operations - - (8 860)
Gain on non-current assets
held for sale 288 - -
Net change of fair value
transferred through profit
and loss (2 224 (104) (32 871)
Total comprehensive
income/(loss) for the year (166 464) (66 148) (182 304)
Capital expenditure (95 670) (60 649) (1 565 261)
Total assets 848 599 274 603 -
Total liabilities (2 007 407) (466 089) -
Net cash flows utilised in
operations (138 646) (46 657) (90 498)
Net cash flows (utilised
in)/generated from
investing activities 133 005 42 871 (1 572 191)
Net cash generated from - 4 435 962 013
financing activities
Net effect of exchange rate
changes on cash held in
foreign currencies - - (113 877)
Net (decrease)/increase in
cash and cash equivalents (5 641) 649 (814 552)
2009
Corporate
and
Figures in Rand thousand exploration Total
Profit/(loss)
Revenue - 1 336 535
Production related depreciation - (37 001)
Cost of production 3 040 (1 207 745)
Gross profit/(loss) 3 040 91 789
Other income 29 572 49 815
General administrative and overhead
expenditure (89 953) (287 397)
Share options costs (46 905) (110 363)
Operating loss (104 246) (256 156)
Finance income 12 397 60 750
Loss from equity accounted investment (109 657) (109 657)
Partial disposal of investment in
subsidiary 3 232 089 3 232 089
Finance charges (55 288) (322 877)
Profit/(loss) before taxation 2 975 295 2 604 149
Other comprehensive income
Foreign currency translation
differences for foreign operations - (8 860)
Gain on non-current assets held for
sale - 288
Net change of fair value transferred
through profit and loss 50 731 15 532
Total comprehensive income/(loss) for
the year 3 026 026 2 611 109
Capital expenditure (131 189) (1 852 769)
Total assets 2 965 316 4 088 518
Total liabilities 3 140 806 667 310
Net cash flows utilised in operations (234 247) (510 048))
Net cash flows (utilised 208 226 (1 188 089)
in)/generated from investing
activities
Net cash generated from financing
activities 106 232 1 072 680
Net effect of exchange rate changes
on cash held in foreign currencies - (113 877)
Net (decrease)/increase in cash and
cash equivalents 80 210 (739 334)
Audit report
The annual financial statements for the year ended 31 March 2009 have been
audited by Grant Thornton. The unqualified audit report is available for
inspection at the Company`s registered office.
Posting of the annual report and date of annual general meeting
The annual report to shareholders containing the annual financial statements for
the year ended 31 March 2009 will be posted to shareholders on or about 28
August 2009. The annual general meeting of the Company will be held at the
Company`s registered office on or about 21 September 2009.
Overview
The FY2009 financial year has been marked by many challenges, not least the
crisis in the capital markets, ongoing volatility in metal prices and exchange
rates as well as inflationary pressure on mining consumables, power and fuel.
The Group has mitigated these risks by implementing optimisation programmes at
its wholly owned gold operations to focus on cash preservation and, through a
series of successful fund-raising initiatives, has sought to ensure sufficient
financial flexibility in terms of being able to accelerate its major development
projects at Ezulwini Mine and Mine Waste Solutions. As at year end, the Group
was well-positioned to enter the final phase of its development projects at
First Uranium, and to consolidate and focus on cash generation at Simmers`
wholly-owned gold operations.
Year on year, the Group increased gold production by 9%, producing 183 036
ounces (5 693kg) to create revenue of R1.3 billion, a 56% improvement on the
R854.9 million recorded from sale of gold in FY 2008. As a result of increased
volumes and an improved gold price, the Group was able to post a gross profit of
R91.8 million compared to a R60 million loss in FY 2008. The after tax profit of
R2.6 billion is primarily due to the de-consolidation of First Uranium as a
result of the sale of a portion of First Uranium shares to fund the acquisition
of Tau Lekoa from AngloGold Ashanti
On 17 February 2009, Simmers disposed of 19 600 000 shares in First Uranium in
order to raise C$90 160 000 for the acquisition of Tau Lekoa mine. This reduced
Simmers` shareholding in FIU below 50%, to 40.99%, changing the relationship
between Simmers and First Uranium from subsidiary to associate company. As a
result First Uranium has been equity accounted for as an investment in an
associate from March 2009 onwards. Prior to that, First Uranium`s results were
consolidated into the Group.
Post year-end, First Uranium concluded a second successful bought deal equity
financing agreement and as a consequence, Simmers` stake in First Uranium was
37.24% as at publication of these results.
Buffelsfontein gold mine limited (Buffels or BGM)
BGM`s reported its first profit from mining activities of R68.8 million in
FY2009, compared to a loss from mining activities of R15 million in FY2008.
Year on year, BGM`s production output fell by 3%, reflecting the challenge faced
by BGM to create sufficient face length at, or above, the mine`s average reserve
grade. The completion of the rehabilitation of the high-grade Number Five shaft
is expected to redress this issue going forward and ensure increased gold
production in the following year. Safety issues also affected BGM`s potential to
deliver the 122 000 ounces as per the FY2009 mine plan. A fatal accident in
August 2008 resulted in the closure of the high grade Number Two shaft for two
weeks. Thereafter, production at the shaft was limited to 30% of planned output
for the remainder of the third quarter to accommodate the implementation of
additional support elements in pillar areas. Number Two shaft only resumed
operating at full capacity in January 2009. These additional safety measures
have resulted in a reduction of BGM`s fatality rate from 0.17 in FY2008 to 0.07
in FY2009, compared to the South African Gold Mining Industry average of 0.25.
There were no fatalities at any of the Group`s other three operations.
The conversion of the Aberdeen loan into a perpetual royalty of 1% on BGM`s
future production meant that BGM was required to recognise the net present value
of the 1% NSR as a long-term liability in its financial statements, resulting in
a R156 million impact on BGM`s bottom line for the financial year. (See Note 4
to the Simmers Provisional AFS).
Transvaal gold mining estates limited (TGME)
Year on year, production at Transvaal Gold Mining Estates was up 18% to produce
10 970 ounces of gold (339kg), 2 030 ounces short of the 13 000 target ounces in
the FY2009 production profile. The shortfall is primarily due to the six month
hiatus between the awarding of the Mining Right at Elandsdrift in March 2008 and
the issuing of the Water Use Licence in October 2008. Had the commencement of
heap leach activities at Elandsdrift not been delayed by the Water Use Licence,
between 1 930 and 2 250 high-margin ounces (60 and 70kg) of gold would have been
added to TGME`s production profile.
Whilst surface production at Elandsdrift produced according to expectations,
underground production at Frankfort was constrained by a geological thrust fault
which eliminated the reef in the Frankfort A block, resulting in a loss of
planned available face length in the last two quarters of FY2009. This
necessitated moving the production crews to the Frankfort B Block and the fast-
tracking of the planned re-development of the Theta Mine, which was achieved in
less than two months.
Despite a 65% improvement in revenue, from R52 million to R87 million, TGME`s
loss widened from R50 million to R66 million, primarily as a result of high cash
costs in the first two quarters.
Post Q4, as a result of the currently constrained capital markets, the mine plan
has been revised to fund future growth from free-cash flow. . During FY2010,
the Elandsdrift pad will be extended in order to accommodate the remaining sand
in the river bed and a second heap leach pad to accommodate the Pilgrims Trend
Deposits will be constructed during 2010 near Pilgrim`s Rest. This will be
followed by the Hermansburg Pad in the Molototse Valley near Frankfort and the
Glynns Lydenburg Pad in Sabie. The permitting process for these additional pads
is progressing as planned.
Tau Lekoa
On 17 February 2009 the Company entered into an agreement with AngloGold Ashanti
Limited (AngloGold Ashanti) to acquire the Tau Lekoa Mine for R600 million, of
which R150 million can be offset by unhedged free cash flow generated by Tau
Lekoa in the current calendar year. The acquisition transforms Simmers from a
junior miner to a mid-tier producer, and by integrating Tau Lekoa into BGM,
ensures that both operations will benefit from regional synergies and economies
of scale, while allowing BGM to optimise its existing plant capacity with high-
grade, relatively low-cost ounces from Tau Lekoa. Additionally, Tau Lekoa`s
ability to produce robust cash flows in the first three years substantially
reduces BGM`s risk profile as it builds up to peak production levels. .
In terms of the agreement, Simmers has provided the financial guarantee required
by AngloGold Ashanti and an integration committee to facilitate the integration
of Tau Lekoa into BGM has been established. The effective date of the
transaction is 01 January 2010.
First Uranium Corporation (FIU or the Corporation)
Ezulwini Mine completed a number of milestones in FY2009, including the
completion of the rehabilitation and re-engineering of the main shaft, and the
commissioning of both its gold and uranium plants. As a result of the decision
to accelerate the rehabilitation of the main shaft, mining operations were
curtailed until the latter part of Q4. Due to the limited time available for
active mining, Ezulwini recorded reduced tonnage and higher than planned cash
costs of $1 919/oz, resulting in a gross loss of $11.1million for the year. Mine
Waste Solutions achieved 94.3% of its gold production forecast for FY2009 and
showed continued improvement in its financial results. 43 099 ounces were
produced at a cash cost of $397/oz, resulting in a gross profit from mining
activities of $19.8 million compared to $4.8 million. Year on year First
Uranium narrowed its consolidated loss from $22.3 million in FY2008 to $16.3
million.
Detailed disclosures of First Uranium`s year-end results can be viewed at
www.firsturanium.com.
Going forward
In FY2010, the Group`s focus is on the ramp up of production at all its
operations, in a safe, sustainable manner. Cash preservation remains a key
priority as the Group enters the next phase of its development projects. Mine
plans at all operations will be reviewed on an ongoing basis with the aim of
controlling the flow of capital expenditure in order to strike the right balance
between cash preservation and development in the current economic climate. In
addition, Simmers will also be focusing on regional consolidation with a view to
adding value to its wholly owned gold operations. Post year-end, Simmers raised
an additional R289 million for the purposes of financing identified potential
acquisition opportunities; or the acceleration of organic growth projects, as
well as for general corporate purposes.
Johannesburg
18 June 2009
Sponsor
Sasfin Capital
(A division of Sasfin Bank Limited)
Auditor
Grant Thornton
Date: 18/06/2009 07:05:03 Produced by the JSE SENS Department.
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