| Wed 30 Sep 2009, 9:36 | | WEZ - Wesizwe Platinum Limited - Reviewed Condensed Consolidated Results For The |
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WEZ
WEZ
WEZ - Wesizwe Platinum Limited - Reviewed Condensed Consolidated Results For The
Six Months Ended 30 June 2009
Wesizwe Platinum Limited
(Incorporated in the Republic of South Africa)
(Registration number 2003/020161/06)
JSE code: WEZ & ISIN: ZAE000075859
(the "Company" or "Wesizwe")
REVIEWED CONDENSED CONSOLIDATED RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2009
Highlights
- Appeal of the Record of Decision by Legacy Hotels and Resorts
(Proprietary) Limited, Legacy Group Holdings (Proprietary) Limited,
Pilanesberg Resorts (Proprietary) Limited, Bakubung Shareblock
(Proprietary) Limited and Kwa Maritane Residents Association, dismissed by
the MEC for Agriculture, Conservation and Environment
- Shareholders overwhelmingly supported the acquisition of 37% participation
interest and mineral rights from Rustenburg Platinum Mine Limited at a
General Meeting of shareholders held on 26 June 2009, the deal will only be
effective once the last suspensive condition, which is obtaining Section 11
approval from the Minister of Mineral Resources is fulfilled.
Chief Executive Officer`s Report for the June 2009 Interim Financial Results
Project Status
The six months ended June 2009 have been, on the one hand, an extraordinary
period for Wesizwe, and on the other very frustrating. The company`s
performance from a project perspective had, until the advent of the economic
downturn been exceptional, with management delivering what is a superb project a
year ahead of schedule. Geologically, technically and economically, the
Frischgewaagd Ledig Core Project is one of the best in the industry, with high
head grades, an exceptional basket of metals and a flat-lying, thick and
structurally stable ore body. The commencement of capital construction,
originally scheduled for the first or second quarter of 2009, has inevitably
been negatively impacted upon by the global economic recession.
In the period under review, two revisions of the Bankable Feasibility Study have
been made in order to assess the impact of the highly volatile movement in
commodity pricing and contracting environment on the project. These results are
being assessed at the time of writing of this report, and will be released once
management are satisfied with the results of the studies.
With the collapse in stock market prices generally, but in the exploration
sector more specifically, the company found itself in a situation where it has
an oven-ready project - fully explored, bankable feasibility study and final
engineering design at an advance d stage with contractors waiting in the wings -
and accessibility to funding extremely constrained in the midst of the
recessionary environment.
Project funding
The September 2008 meltdown brought with it an evaporation of project finance,
the consequence of which some nine months of negotiation with our lead financial
advisors ABSA and the DBSA faltered. The company was caught between scarce
project finance which, where it was available was extremely expensive and came
with very onerous terms and conditions for lending, and low share prices which
made equity finance highly dilutive. With this conundrum of wishing to advance
the project on the one hand, but to conserve cash resources and shareholder
value on the other, management was forced to review the entire approach to
funding the project. After considering several options, management recommended
to the board that the project construction commencement be deferred until such
time the company has obtained sufficient funding.
On 21 September 2009, the board resolved that commencement of the project be
deferred until such time the company has obtained sufficient funding for project
construction. However, certain activities relating to the Environmental Impact
Assessment, negotiations with Eskom for permanent power, negotiations with
Magalies Water Board for permanent water supply and other legislative processes
will continue.
Regulatory issues
A prerequisite for the mining permission was the granting of a positive Record
of Decision ("ROD") in respect of the project`s Environmental Impact Assessment
("EIA") in terms of the requirements of the National Environmental Management
Act ("NEMA"). This was received from the North West Province Department of
Agriculture, Conservation and Environment ("NW DACE") in November 2008, but was
the subject of an appeal by Sun International, Legacy Hotels and the North West
Eco Forum.
While we are delighted that the appeals were rejected by the MEC for
Agriculture, Conservation, Environment, and Development, our stance is
nevertheless that the appellants had legitimate concerns that motivated the
appeals and that the appeal process is a necessary and responsible part of the
granting of a mining licence. In this spirit, despite the fact that the North
West Government has ruled in Wesizwe`s favour, management will not only continue
to interact with the appellants and other interested stakeholders but will
involve them in the environmental planning aspects of the project.
Corporate Action
This reporting period has seen the conclusion of the transaction for the
acquisition of the outstanding share of the Frischgewaagd 11 and Frischgewaagd
3&4 farms from Anglo Platinum and the Western Bushveld Joint Venture ("WBJV") to
give Wesizwe 100% control of its core project, a key element of the mining
licence. This transaction was completed during the period under review with all
but one of the conditions precedent being fulfilled, the most notable of which
was the 99% majority vote by shareholders approving the transaction at the
General Meeting held on 26 June 2009.
The only condition precedent outstanding is the Section 11 approval for the deal
from the Minister of Mineral Resources, anticipated to be received in the very
near future.
The finalisation of the transaction will clear the way for capital development
to proceed.
Conclusion
Development of the Frischgewaagd Ledig Core Project will not commence until such
time as management are satisfied that the prevailing economic conditions are
favourable to the development of shareholder value in the project. This
decision is contingent on the availability of cost effective funding options and
attractive contracting facilities. Should management be of the opinion that any
of these factors will have a negative impact on project NPV, it will continue to
defer the project until conditions are satisfactory.
Management has created value which value will not dissipate. The project life
of mine is 35 years, and there is no sense in "throwing the baby out with the
bathwater" in proceeding with the project for short term market perception but
to the detriment of longer term shareholder value.
Management will continue to examine funding options as well as corporate action
with a view to enhancing shareholder value. In the interim it is imperative for
shareholders to appreciate that the project is strong and the company is
healthy. Wesizwe will emerge from this recession a stronger entity.
MH Solomon
30 September, 2009
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Group Group
Six months Six months
ended June ended June
2009 2008
Reviewed Reviewed
R`000 R`000
ASSETS
1 194 419 1 025 107
Non-current assets
Property, plant and equipment 124 565 48 115
Tangible exploration and evaluation 134 457 67 699
assets
Intangible exploration and 261 151 240
evaluation assets 468
Environmental deposit 436
436
Other investments 5 078 2 600
Investment in equity accounted 668 732 665 789
investee
215 205 200
Current assets 292
Other receivables 4 258 6 256
Restricted cash 27 780 23 613
Cash and cash equivalents 183 167 170 423
1 409 624 1 225 399
TOTAL ASSETS
EQUITY AND LIABILITIES
Capital and reserves 1 355 349 1 186 076
Share capital 6 6
Share premium 1 487 934 1 291 205
Share-based payment reserve 57 981 63 003
Accumulated comprehensive loss (190 572) (168 138)
Non-current liabilities
Other non-current liabilities - 13 727
Current liabilities
Trade and other payables 54 275 25 596
TOTAL EQUITY AND LIABILITIES 1 409 624 1 225 399
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Group Group
Six months Six months
ended June ended June
2009 2008
Reviewed Reviewed
R`000 R`000
Revenue - -
Administration expenditure (26 890) (33 362)
Sundry income 95 140
Profit on sale of property, plant and 49 -
equipment
Exploration and evaluation expenses (353) -
(27 099) (33 222)
Loss from operations
- (1)
Finance costs paid
Investment income received 12 173 12 892
Loss before taxation (14 926) (20
331)
Income tax expense -
-
(14 926) (20
Total comprehensive loss for the 331)
period
(2,55)
Basic loss per share (cents) (3,66)
Diluted loss per share (cents)
(2,55) (3,66)
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share-based Accum-
Share Share Payment ulated
Capital Premium Reserve Loss Total
R`000 R`000 R`000 R`000 R`000
Balance at 1 January 1 285 035 62 929 (147 1 200
2008 6 807) 162
Share-based payment - - 6 244 - 6 244
expenditure
Issue of share * 6 170 (6 170) - -
capital
Total comprehensive - - - (20 (20
loss for the period 331) 331)
Balance at 30 June 6 1 291 205 63 003 (168 1 186
2008 138) 075
Issue of share 202 500 - - 202 501
capital *
Share issue expenses - (5 771) - - (5 771)
written-off
Share-based payment - - (6 244) - (6 244)
reversal
Share-based payment - - 510 - 510
expenditure
Total comprehensive - - - (7 508) (7 508)
loss for the period
Balance at 31 1 487 934 (175 1 369
December 2008 6 57 269 646) 563
Share-based payment - - 712 - 712
expenditure
Total comprehensive - - - (14 926) (14 926)
loss for the period
Balance at 30 June 6 1 487 934 57 981 (190 1 355
2009 572) 349
*Amount below one thousand
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW
Six
months Six
ended months
June 2000 ended
Reviewed June
R`000 2008
Reviewed
R`000
Cash flows from operating activities (65 048) 9 097
-
Finance cost (1)
(65 048) 9 096
Cash (utilised) / generated from
operations
Cash flows utilised by investing
activities
(29 554)
Acquisition of property plant and (12 615)
equipment as a result of increasing
operations
(12 014) (24 245)
Acquisition of tangible exploration
and evaluation assets as a result of
increasing operations
(9 592) (30 050)
Expenditure on intangible exploration
and evaluation assets as a result of
increasing operations
- (5 940)
Investment in equity accounted
investee
(1 279) (2 600)
Environmental guarantee deposit as a
result of increasing operations
Proceeds on disposal of property, 78 -
plant and equipment
12 892
Investment income 12 173
(40 188)
Net cash outflow from investing (62 558)
activities
(105 236)
Net decrease in cash and cash (53 462)
equivalents
316 183 247 498
Cash and cash equivalents at the
beginning of the period
Cash and cash equivalents at the end of
the period 210 947 194 036
Cash and cash equivalents 183 167 170 423
Restricted cash 27 780 23 613
Pilanesberg Platinum Project: Progress
On 21 September 2009, the board resolved that commencement of the project be
deferred until such time that the company has obtained sufficient funding for
project construction.
A review of the Bankable Feasibility Study ("BFS") to take into consideration
the change in economic parameters due to the global financial crisis is still in
progress.
During the first quarter of 2009, Eskom installed 2MVA temporary power supply on
the Pilanesberg core project area.
Negotiations for installation and funding of permanent power are
continuing. Eskom confirmed that they will be supplying Wesizwe with permanent
power.
Discussions for the renewal of the current temporary water supply with Magalies
Water Board and the setting up of the Special Purpose Vehicle (SPV) with other
mining companies and Magalies Water Board for permanent water supply are in
progress.
Funding and going concern
On 21 September 2009, the board resolved that commencement of the project be
deferred until such time as the company has obtained sufficient funding for
project construction. Activities relating to the Environmental Impact
Assessment, negotiations with Eskom for permanent power, negotiations with
Magalies Water Board for permanent water supply and other legislative processes
will continue.
Currently the Company has cash reserves of R119,5million on hand and with the
board decision on the 21 September 2009 to defer all major project activities
until enough funding has been secured, the monthly cash utilisation of the
company will be approximately R5,0million.This will cover Wesizwe`s overheads
for the period of twenty one months which gives sufficient time to raise
adequate funds for projection construction. Currently Wesizwe is in negotiations
with various funders and some of these negotiations are at advanced stages. In
addition the company has signed a three year standby equity distribution
facility for R550 million with YA Global Investments,LP entitling Wesizwe to
draw down cash as determined by the board in exchange for ordinary shares in
Wesizwe.
The Directors of Wesizwe are of the opinion that the cash resources at the date
of this report, amounting to R119,5 million, are sufficient to fund the
activities of the Company for at least a year.
NOTES TO THE CONDENSED CONSOLIDATED RESULTS FOR THE SIX MONTHS ENDED JUNE 2009
Basis of preparation and accounting policies
The condensed consolidated financial information for the six months ended 30
June 2009 has been prepared in accordance with IAS 34: Interim Financial
Reporting. The accounting policies have been applied consistently throughout the
Group and are consistent with those for the year ended 31 December 2008.
Adoption of new and revised Accounting Standards
The Group has adopted the new and revised Standards and Interpretations issued
by the International Accounting Standard Board (IASB) that are relevant to its
operations and those effective for the current reporting period being, IAS1 :
Presentation of Financial Statements and IFRS 8: Operating Segments.
Financial results
As an exploration Group, Wesizwe will not earn revenue from mining activities
until such time as a mine is brought into production.
The comprehensive loss for the six months under review was R14,9 million
(compared to a loss of R20,3 million for the same period in 2008). The total
comprehensive loss for the period comprises total expenses of R27,1 million,
offset by the net finance income of R12,1 million and other sundry income of
R0,1million.
Total expenses of R 27,1 million include the following:
- Depreciation - R0,8 million
- Exploration and evaluation expenses - R0,3 million
- Other administrative overheads - R2,7 million
- Share Based payment expenditure - R0,7 million
- Consulting and professional fees - R2,3 million
- Directors expenses - R2,5 million
- Salaries and bonuses- R4,7 million
- Marketing expenses and investor relations - R9,2 million
- Community sustainability projects - R 3,9 million
The basic loss per share for the period was 2,55 cents per share (June 2008:
3,66 cents per share). The headline loss per share was 2,56 cents per share
(June 2008: 3,66 cents per share).
No dividend was declared during the period ended 30 June 2009 (June 2008: Nil).
The information reported in these results is the same as those reported to the
Chief Operating decision maker.
Capital Expenditure includes: intangible exploration and evaluation expenses
capitalised R9,5 million; long-lead items consisting of plant and equipment
R29,0 million; tangible exploration and evaluation expenses (engineering and
drawings) R11,9 million and other property, plant and equipment items R0,5
million.
Exploration and evaluation expenses are capitalised in accordance with IFRS 6:
Exploration for and Evaluation of Mineral Resources.
The total number of shares in issue at 30 June 2009 was 585 489 846 (30 June
2008: 555 489 846).
Capital commitments
In 2008 the company signed a letter of commitment with Murray and Roberts
Cementation (Proprietary) Limited to acquire long-lead capital items for mine
construction. The total amount committed was R61,8 million later revised to
R55,0 million. At the date of writing this report, a total of R52,0 million has
been paid towards this commitment. The balance of R3,0 million will be paid
before 31 December 2009.
LOSS PER SHARE
Group Group
Six months Six months
ended June ended June
2009 2008
Reviewed Reviewed
The basis of calculation of basic loss
per share is:
Attributable loss to ordinary 14 926 164 20 331 413
shareholders (Rand)
Weighted number of ordinary shares
outstanding during the period (shares) 585 489 846 555 489 846
Basic and diluted loss per share (cents) 2,55 3,66
The basis of calculation of headline loss
per share is:
Attributable loss to ordinary 14 926 164 20 331 413
shareholders (Rand)
Profit on sale of property, plant and 48 871 -
equipment
Taxation - -
Headline loss 14 975 035 20 331 413
Weighted number of ordinary shares
outstanding during the period (shares) 585 489 846 555 489 846
Headline loss per share (cents) 2,56 3,66
RECONCILIATION OF LOSS FOR THE PERIOD TO CASH FLOWS FROM OPERATING ACTIVITIES
Group
Six months
ended June
2009
Reviewed
R`000
Group
Six months
ended June
2008
Reviewed
R`000
Loss from operations (27 099) (33 222)
Adjustment for:
Share based payment expenditure 712 6 244
Depreciation 817 516
Profit on sale of property, plant
and equipment (49) -
Operating loss before working (25 619) (26 462)
capital changes
Changes in working capital (39 429) 35 559
Decrease in other receivables 7 740 31 655
(Decrease) / increase in trade and (40 207) 2 002
other payables
Movement in non-current liability (6 962) 1 902
Cash flows from operating (65 048) 9 097
activities
EVENTS AFTER THE BALANCE SHEET DATE
- Appeal of the Record of Decision ("RoD")
On 16 February 2009, Legacy Hotels and Resorts (Proprietary) Limited,
Legacy Group Holdings (Proprietary) Limited, Pilanesberg Resorts
(Proprietary) Limited, Bakubung Shareblock (Proprietary) Limited and Kwa
Maritane Residents Association instituted an appeal directed to the MEC for
Agriculture, Conservation and Environment, in terms of Chapter 7 of the
National Environmental Management Act, 198 (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 NW Department of Agriculture, Conservation and Environment,
challenging certain aspects of Wesizwe`s Environmental Impact Assessment.
Appeal of Record of Decision was dismissed by the NW Department of
Agriculture, Conversation and Environment on 22 July 2009.
- Acquisition of 37% Participation Interest and Minerals Rights from
Rustenburg Platinum Mine Limited
At a General meeting of shareholders held on 26 June 2009, the shareholders
voted in favour of the acquisition of 37% Participation Interest and
Mineral Rights in Western Bushveld Joint Venture from Rustenburg Platinum
Mine Limited.
As at 30 June 2009, the following suspensive condition 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 DME to the extent necessary for the execution and
implementation of the transaction.
The transaction will only be effective once the above suspensive condition
has been fulfilled.
- Results of Annual General Meeting
At the Annual General Meeting of members held on 12 August 2009 the
resolutions regarding the approval of annual financial statements and re-
appointment of the auditors were passed, as were the resolutions regarding
the authority of directors to control the unissued shares. With respect to
the election of directors Mrs Mokhobo, Messrs. Mgudlwa and Eksteen and Prof
Gaylard were not re-elected as directors. Dr I Abedian, Messrs.
Monnakgotla and Phologane were re-elected to the Board.
INDEPENDENT REVIEW
The condensed consolidated statement of financial position at 30 June 2009 and
related condensed consolidated statements of comprehensive income, statements of
changes in equity and cash flow for the period have been reviewed by KPMG Inc.
Their unmodified review report is available for inspection at the Company`s
registered office.
30 September 2009
Sponsor: Investec Bank Limited
Date: 30/09/2009 09:36:01 Produced by the JSE SENS Department.
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