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EPS
EPS
EPS - Eastern Platinum Limited - Condensed consolidated interim financial
statements of Eastern Platinum Limited September 30, 2009 (Unaudited)
EASTERN PLATINUM LIMITED
(Incorporated in Canada)
(Canadian Registration number BC0722783)
(South African Registration number 2007/006318/10)
Share Code TSX: ELR ISIN: CA 2768551038
Share Code AIM: ELR ISIN: CA 2768551038
Share Code JSE: EPS ISIN: CA 2768551038
Condensed consolidated interim financial
statements of
Eastern Platinum Limited
September 30, 2009
(Unaudited)
Eastern Platinum Limited
September 30, 2009
Table of contents
Condensed consolidated interim income statements ........................... 3
Condensed consolidated interim statements of financial position ............ 4
Condensed consolidated interim statements of changes in equity ............. 5
Condensed consolidated interim statements of comprehensive income (loss).... 6
Condensed consolidated interim statements of cash flows .................... 7
Notes to the condensed consolidated interim financial statements ........ 8-42
Eastern Platinum Limited
Condensed consolidated interim income statements
(Expressed in thousands of U.S. dollars, except per share amounts - unaudited)
Note September September
30, 2009 30, 2008
(3 months) (3 months)
(Note 15)
Revenue $ 27,365 $ 9,224
Cost of operations
Production costs 22,394 20,629
Depletion and depreciation 4,308 4,743
26,702 25,372
Mine operating earnings (loss) 663 (16,148)
Expenses
General and administrative 2,336 5,585
Share-based payments 11 109 411
2,445 5,996
Operating (loss) profit (1,782) (22,144)
Other income (expense)
Interest income 448 2,297
Finance costs (332) (701)
Foreign exchange gain (loss) 652 (28)
(Loss) profit before income taxes (1,014) (20,576)
Deferred income tax recovery (expense) 1,645 6,363
Net profit (loss) for the period $ 631 $ (14,213)
Attributable to
Non-controlling interest 4 $ (1,208) $ (3,384)
Equity shareholders of the Company $ 1,839 $ (10,829)
Earnings (loss) per share
Basic $ 0.00 $ (0.02)
Diluted $ 0.00 $ (0.02)
Weighted average number of common
shares outstanding in thousands
Basic 68 0,558 680,245
Diluted 68 7,018 680,245
September September
30, 2009 30, 2008
(9 months) (9 months)
(Note 15)
Revenue $ 77,106 $ 114,336
Cost of operations
Production costs 58,588 61,437
Depletion and depreciation 12,111 13,617
70,699 75,054
Mine operating earnings (loss) 6,407 39,282
Expenses
General and administrative 7,143 15,227
Share-based payments 444 2,240
7,587 17,467
Operating (loss) profit (1,180) 21,815
Other income (expense)
Interest income 1,437 7,981
Finance costs (1,159) (2,957)
Foreign exchange gain (loss) (795) 1,100
(Loss) profit before income taxes (1,697) 27,939
Deferred income tax recovery (expense) 3,934 (7,417)
Net profit (loss) for the period $ 2,237 $ 20,522
Attributable to
Non-controlling interest $ (3,083) $ (273)
Equity shareholders of the Company $ 5,320 $ 20,795
Earnings (loss) per share
Basic $ 0.01 $ 0.03
Diluted $ 0.01 $ 0.03
Weighted average number of common
shares outstanding in thousands
Basic 680,541 675,979
Diluted 686,112 705,249
Condensed consolidated interim statements of financial position
as at September 30 , 2009 and December 31 , 2008
(Expressed in thousands of U.S. dollars - unaudited)
September 30, December 31,
Note 2009 2008
(Note 15)
Assets
Current assets
Cash and cash equivalents $ 8,762 $ 25,806
Short-term investments 14,144 35,257
Trade receivables 24,484 9,431
Inventories 5 4,066 3,881
51,456 74,375
Property, plant and equipment 6 627,437 508,685
Refining contract 7 14,315 12,493
Other assets 8 1,983 1,017
$ 695,191 $ 596,570
Liabilities
Current liabilities
Accounts payable and accrued
liabilities $ 18,049 $ 35,003
2,086 1,726
Provisions
Current portion of finance leases 893 649
Current loans 157 2,972
21,185 40,350
Provision for environmental
rehabilitation 9 7,275 5,598
Finance leases 3,644 3,261
Deferred tax liabilities 43,506 38,826
75,610 88,035
Capital and reserves
Issued capital 11 890,062 890,049
Equity reserve 32,265 31,827
Currency translation adjustment (63,523) (169,577)
Deficit (250,446) (255,766)
608,358 496,533
Non-controlling interest 4 11,223 12,002
619,581 508,535
$ 695,191 $ 596,570
Approved by the Board and authorized for issue on November 9, 2009.
"David Cohen" "Robert Gayton"
Daid Cohen , Director Robert Gayton , Director
Condensed consolidated interim statements of changes in equity
(Expressed in thousands of U.S. dollars - unaudited)
Issued Capital Equity Currency
Shares Amount Reserve Translation
Adjustment
Balance, January
1, 2008 (Note 15) 669,031,691 $ 868,045 $ 27,428 $ -
Warrants exercised 10,824,077 21,213 - -
Stock options exercised 395,686 462 (236) -
Share-based payments - - 2,240 -
Currency translation - - - (119,671)
Net profit for the period - - - -
Non-controlling
interest for the period - - - -
Balance, September
30, 2008 (Note 15) 680,251,454 $ 889,720 $ 29,432 $ (119,671)
Warrants exercised - (60) - -
Stock options exercised 275,000 389 10 -
Share-based payments - - 2,385 -
Currency translation - - - (49,906)
Net loss for the period - - - -
Non-controlling
interest for the period - - - -
Balance, December
31 , 2008 (Note 15) 680,526,454 $ 890,049 $ 31,827 $ (169,577)
Stock options exercised 35,659 13 (6) -
Share-based payments - - 444 -
Currency translation
adjustment - - - 106,054
Net profit for the period - - - -
Non-controlling
interest for the period - - - -
Balance, September
30, 2009 680,562,113 $ 890,062 $ 32,265 $ (63,523)
Deficit Sub total
Balance, January 1, 2008 (Note 15) $ (46,385) $ 849,088
Warrants exercised - 21,213
Stock options exercised - 226
Share-based payments - 2,240
Currency translation - (119,671)
Net profit for the period 20,795 20,795
Non-controlling interest for the period - -
Balance, September 30, 2008 (Note 15) $ (25,590) $ 773,891
Warrants exercised - (60)
Stock options exercised - 399
Share-based payments - 2,385
Currency translation - (49,906)
Net loss for the period (230,176) (230,176)
Non-controlling interest for the period - -
Balance, December 31 , 2008 (Note 15) $ (255,766) $ 496,533
Stock options exercised - 7
Share-based payments - 444
Currency translation adjustment - 106,054
Net profit for the period 5,320 5,320
Non-controlling interest for the period - -
Balance, September 30, 2009 $ (250,446) $ 608,358
Non-controlling Total
Interest Share holders`
Equity
Balance, January 1, 2008 (Note 15) $ 23,133 $ 872,221
Warrants exercised - 21,213
Stock options exercised - 226
Share-based payments - 2,240
Currency translation - (119,671)
Net profit for the period - 20,795
Non-controlling interest for the period (3,896) (3,896)
Balance, September 30, 2008 (Note 15) $ 19,237 $ 793,128
Warrants exercised - (60)
Stock options exercised - 399
Share-based payments - 2,385
Currency translation - (49,906)
Net loss for the period - (230,176)
Non-controlling interest for the period (7,235) (7,235)
Balance, December 31 , 2008 (Note 15) $ 12,002 $ 508,535
Stock options exercised - 7
Share-based payments - 444
Currency translation adjustment - 106,054
Net profit for the period - 5,320
Non-controlling interest for the period (779) (779)
Balance, September 30, 2009 $ 11,223 $ 619,581
Condensed consolidated interim statements of comprehensive income (loss)
(Expressed in thousands of U.S. dollars - unaudited)
September September September September
30, 2009 30, 2008 30, 2009 30, 2008
(3 months) (3 months) (9 months) (9 months)
(Note 15) (Note 15)
Net profit (loss)
for the period $ 631 $ (14,213) $ 2,237 $ 20,522
Other comprehnsive
income (loss) -
currency translation
adjustment 24,012 (45,367) 106,054 (119,671)
Comprehensive
income (loss) $24,643 $ (59,580) $ 108,291 $ (99,149)
Attributable to
Non-controlling
interest $ (1,208) $ (3,384) $ (3 ,083) $ (273)
Equity shareholders
of the Company $ 25,851 $ (56,196) $ 111,374 $ (98,876)
Condensed consolidated interim statements of cash flows
(Expressed in thousands of U.S. dollars - unaudited)
3 months ended
September September
Note 30, 2009 30, 2008
(Note 15)
Operating activities
Net profit (loss) for the period $ 631 $ (14,213)
Adjustments to net profit for non-cash items
Depletion and depreciation 4,308 4,743
Refining contract amortization 7 354 355
Share-based payments 109 411
Interest income (448) (2,297)
Finance costs 332 701
Foreign exchange (gain) loss (652) 28
Deferred income tax (recovery) expense (1,645) (6,363)
Adjustments to net profit for cash items
Interest income received 491 2,864
Finance costs paid - (35)
Income taxes paid - -
3,480 (13,806)
Net changes in non-cash working capital items
Trade receivables (1,492) 35,806
Inventories 1,348 (832)
Accounts payable and accrued liabilities 333 6,229
3,669 27,397
Investing activities
Maturity of short-term investments 2,552 101,224
Purchase of other assets (256) (29)
Property, plant and equipment expenditures (3,930) (42,896)
Sale of property, plant and equipment - -
(1,634) 58,299
Financing activities
Common shares issued for cash,
net of share issue costs - -
Repayment of current loans - (74)
Payment of finance leases (1) 42
(1) (32)
Effect of exchange rate changes on cash
and cash equivalents 246 (7,104)
Increase (decrease) in cash and cash equivalents 2,280 78,560
Cash and cash equivalents, beginning of period 6,482 90,734
Cash and cash equivalents, end of period $ 8,762 $ 169,294
Cash and cash equivalents are comprised of:
Cash in bank $ 4,022 $ 9 ,916
Short-term money market instruments 4,740 159 ,378
$8,762 $ 169,294
9 months ended
September September
30, 2009 30, 2008
(Note 15)
Operating activities
Net profit (loss) for the period $ 2,237 $ 20,522
Adjustments to net profit for non-cash items
Depletion and depreciation 12,111 13,617
Refining contract amortization 964 1,078
Share-based payments 444 2,240
Interest income (1,437) (7,981)
Finance costs 1,159 2,957
Foreign exchange (gain) loss 795 (1,100)
Deferred income tax (recovery) expense (3,934) 7,417
Adjustments to net profit for cash items
Interest income received 1,290 7,803
Finance costs paid (11) (398)
Income taxes paid (2,422) -
11,196 46,155
Net changes in non-cash working capital items
Trade receivables (9,435) 22,457
Inventories 708 (1,188)
Accounts payable and accrued liabilities (17 020) 12,462
(14,551) 79,886
Investing activities
Maturity of short-term investments 22,647 163,604
Purchase of other assets (665) (84)
Property, plant and equipment expenditures (22,929) (101,245)
Sale of property, plant and equipment 1,552 -
605 62,275
Financing activities
Common shares issued for cash,
net of share issue costs 12 21,440
Repayment of current loans (3,065) (1,030)
Payment of finance leases (619) (3,842)
(3,672) 16,568
Effect of exchange rate changes on cash and
cash equivalents 574 (8,253)
Increase (decrease) in cash and cash equivalent (17,044) 150,476
Cash and cash equivalents, beginning of period 25,806 18,818
Cash and cash equivalents, end of period $ 8,762 $ 169,294
Cash and cash equivalents are comprised of:
Cash in bank $ 4,022 $ 9,916
Short-term money market instruments 4,740 159,378
$ 8,762 $ 169,294
1. Nature of operations
Eastern Platinum Limited (the "Company") is a platinum group metal ("PGM")
producer engaged in the mining, exploration and development of PGM properties
located in various provinces in South Africa.
Eastern Platinum Limited is a publicly listed company incorporated in Canada
with limited liability under the legislation of the Province of British
Columbia. The Company`s shares are listed on the Toronto Stock Exchange,
Alternative Investment Market, and the Johannesburg Stock Exchange.
The head office, principal address and registered and records office of the
Company are located at 1075 West Georgia Street, Suite 250, Vancouver, British
Columbia, Canada, V6E 3C9.
2. Basis of preparation
In February 2009, the British Columbia and Ontario Securities Commissions
granted the Company exemptive relief to adopt International Financial Reporting
Standards ("IFRS") with an adoption date of January 1, 2009 and a transition
date of January 1, 2008.
These condensed consolidated interim financial statements, including
comparatives, have been prepared using accounting policies consistent with
International Financial Reporting Standards ("IFRS") and in accordance with
International Accounting Standard ("IAS") 34 Interim Financial Reporting. The
disclosures concerning the transition from Canadian Generally Accepted
Accounting Principles ("GAAP") to IFRS are included in Note 15.
The preparation of financial statements requires management to make judgments,
estimates and assumptions that affect the application of policies and reported
amounts of assets and liabilities, profit and expenses. The estimates and
associated assumptions are based on historical experience and various other
factors that are believed to be reasonable under the circumstances, the results
of which form the basis of making the judgments about carrying values of assets
and liabilities that are not readily apparent from other sources. Actual
results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognized in the period in which the
estimate is revised if the revision affects only that period or in the period
of the revision and further periods if the review affects both current and
future periods.
Judgments made by management in the application of IFRS that have a significant
effect on the financial statements and estimates with a significant risk of
material adjustment in the current and following fiscal years are discussed in
Notes 3(e), 3(l), and 3(r).
The standards that will be effective or available for voluntary early adoption
in the financial statements for the year ending December 31, 2009 are subject
to change and may be affected by additional interpretation(s). Accordingly, the
accounting policies will be finalized when the first annual IFRS financial
statements are prepared for the year ending December 31, 2009.
3. Summary of significant accounting policies
The condensed consolidated interim financial statements have been prepared
under the historical cost convention, except for the revaluation of certain
financial instruments. The Company`s principal accounting policies are outlined
below:
(a) Basis of consolidation
These condensed consolidated interim financial statements incorporate the
financial statements of the Company and the entities controlled by the Company
(its subsidiaries, including special purpose entities). Control exists when the
Company has the power, directly or indirectly, to govern the financial and
operating policies of an entity so as to obtain benefits from its activities.
The financial statements of subsidiaries are included in the condensed
consolidated interim financial statements from the date that control commences
until the date that control ceases. All significant intercompany transactions
and balances have been eliminated.
Non-controlling interest in the net assets of consolidated subsidiaries are
identified separately from the Company`s equity. Non-controlling interest
consists of the non- controlling interest at the date of the original business
combination plus the non- controlling interest`s share of changes in equity
since the date of acquisition.
Special Purpose Entities ("SPE`s") as defined by the International Accounting
Standards Board ("IASB") in SIC 12 Consolidation - Special Purpose Entities are
entities which are created to accomplish a narrow and well-defined objective
(e.g. to act as a Black Economic Empowerment ("BEE") partner). SPE`s are
subject to consolidation when there is an indication that an entity controls
the SPE. The Company has determined that its investment in Gubevu Consortium
Holdings (Pty) Ltd. ("Gubevu") is a SPE that the Company controls. The accounts
of Gubevu are consolidated with those of the Company.
(b) Business combinations
Business combinations that occurred prior to January 1, 2008 were not accounted
for in accordance with IFRS 3 Business Combinations or IAS 27 Consolidated and
Separate Financial Statements in accordance with the IFRS 1 First-time Adoption
of International Financial Reporting Standards exemption discussed in Note
15(a).
Acquisitions of subsidiaries and businesses are accounted for using the
purchase method. The cost of the business combination is measured as the
aggregate of the fair values (at the date of exchange) of assets given,
liabilities incurred or assumed, and equity instruments issued by the Company
in exchange for control of the acquiree, plus any costs directly attributable
to the business combination. The acquiree`s identifiable assets, liabilities
and contingent liabilities that meet the conditions for recognition under IFRS
3 Business Combinations are recognized at their fair values at the acquisition
date, except for non-current assets (or disposal groups) that are classified as
held for sale in accordance with IFRS 5 Non-current Assets Held for Sale and
Discontinued Operations, which are recognized and measured at fair value less
costs to sell.
Goodwill arising on acquisition is recognized as an asset and initially
measured at cost, being the excess of the cost of the business combination over
the Company`s interest in the net fair value of the identifiable assets,
liabilities and contingent liabilities recognized. If the Company`s interest in
the net fair value of the acquiree`s identifiable assets, liabilities and
contingent liabilities exceeds the cost of the business combination, the excess
is recognized immediately in profit or loss.
The interest of non-controlling shareholders in the acquiree is initially
measured at the non-controlling shareholders` proportion of the net fair value
of the assets, liabilities and contingent liabilities recognized.
(c) Presentation currency
The Company`s presentation currency is the U.S. dollar ("$"). The functional
currency of Eastern Platinum Limited and its South African subsidiaries is the
Canadian Dollar and South African Rand ("ZAR"), respectively. These condensed
consolidated interim financial statements have been translated to the U.S.
dollar in accordance with IAS 21 The Effects of Changes in Foreign Exchange
Rates. These guidelines require that assets and liabilities be translated using
the exchange rate at period end, and income, expenses and cash flow items are
translated using the rate that approximates the exchange rates at the dates of
the transactions (i.e. the average rate for the period).
Subsequent to the adoption of IFRS, all resulting exchange differences are
reported as a separate component of shareholders` equity titled "Cumulative
Translation Adjustment".
(d) Foreign currency translation
In preparing the financial statements of the individual entities, transactions
in currencies other than the entity`s functional currency (foreign currencies)
are recorded at the rates of exchange prevailing at the dates of the
transactions. At each statement of financial position date, monetary assets and
liabilities are translated using the period end foreign exchange rate.
Non-monetary assets and liabilities are translated using the historical rate on
the date of the transaction. Non-monetary assets and liabilities that are
stated at fair value are translated using the historical rate on the date that
the fair value was determined. All gains and losses on translation of these
foreign currency transactions are included in the condensed consolidated
interim income statements.
(e) Measurement uncertainty
The preparation of financial statements in conformity with IFRS requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosures of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period.
Actual results could differ from those estimates. Significant accounts that
require estimates as the basis for determining the stated amounts include
accounting for doubtful accounts receivable, inventories, property, plant and
equipment, provision for environmental rehabilitations, share-based payments,
allocation of the purchase price of acquisitions and income and mining taxes.
Depreciation and depletion of property, plant and equipment assets are
dependent upon estimates of useful lives and reserve estimates, both of which
are determined with the exercise of judgement. The assessment of any impairment
of property, plant and equipment is dependent upon estimates of recoverable
amount that take into account factors such as reserves, economic and market
conditions and the useful lives of assets. Provisions for environmental
rehabilitations are recognized in the period in which they arise and are stated
as the fair value of estimated future costs. These estimates require extensive
judgement about the nature, cost and timing of the work to be completed, and
may change with future changes to costs, environmental laws and regulations and
remediation practices.
(f) Revenue recognition
Revenue is measured at the fair value of the consideration received or
receivable. The following specific criteria must be met before revenue is
recognized:
(i) Sale of goods
Revenue from the sale of platinum group and other metals is recognized when all
of the following conditions are satisfied:
the specific risks and rewards of ownership have been transferred to the
purchaser;
the Company does not retain continuing managerial involvement to the degree
usually associated with ownership or effective control over the metals sold;
the amount of revenue can be measured reliably;
it is probable that the economic benefits associated with the transaction
will flow to the entity; and
the costs incurred or to be incurred in respect of the sale can be measured
reliably.
The sale of platinum group metals is provisionally priced such that the price
is not settled until a predetermined future date based on the market price at
that time. Revenue on these sales is initially recognized (when the conditions
above are met) at the current market price. Subsequent to initial recognition
but prior to settlement, sales are marked to market at each reporting date
using the forward price for the period equivalent to that outlined in the
contract. This mark to market adjustment is recorded in revenue.
(ii) Rental income
Rental income from residential properties is recognized as other income on a
straight-line basis over the term of the lease.
(iii) Interest income
Interest income is recognized in the income statement as it accrues, using the
effective interest method.
(g) Share-based payments
The Company grants stock options to buy common shares of the Company to
directors, officers, employees and service providers. The board of directors
grants such options for periods of up to ten years, with vesting periods
determined at its sole discretion and at prices equal to or greater than the
closing market price on the day preceding the date the options were granted.
The fair value of the options is measured at grant date, using the
Black-Scholes option pricing model, and is recognized over the period that the
employees earn the options. The fair value is recognized as an expense with a
corresponding increase in equity. The amount recognized as expense is adjusted
to reflect the number of share options expected to vest.
(h) Finance costs
Finance costs comprise interest payable on borrowings calculated using the
effective interest rate method and foreign exchange gains and losses on foreign
currency borrowings.
(i) Income taxes
Income tax expense consists of current and deferred tax expense. Income tax
expense is recognized in the income statement.
Current tax expense is the expected tax payable on the taxable income for the
year, using tax rates enacted or substantively enacted at period end, adjusted
for amendments to tax payable with regards to previous years.
Deferred taxes are recorded using the statement of financial position liability
method. Under the statement of financial position liability method, deferred
tax assets and liabilities are recognized for deferred tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases. Deferred tax
assets and liabilities are measured using the enacted or substantively enacted
tax rates expected to apply when the asset is realized or the liability
settled.
The effect on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that substantive enactment occurs.
A deferred tax asset is recognized to the extent that it is probable that
future taxable profits will be available against which the asset can be
utilized. To the extent that the Company does not consider it probable that a
deferred tax asset will be recovered, it provides a valuation allowance against
the excess.
The following temporary differences do not result in deferred tax assets or
liabilities:
the initial recognition of assets or liabilities that do not affect
accounting or taxable profit
goodwill
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to set off current tax assets against current tax liabilities
and when they relate to income taxes levied by the same taxation authority and
the Company intends to settle its current tax assets and liabilities on a net
basis.
(j) Earnings (loss) per share
Basic earnings (loss) per share is computed by dividing the net earnings (loss)
available to common shareholders by the weighted average number of shares
outstanding during the reporting year. Diluted earnings (loss) per share is
computed similar to basic earnings (loss) per share except that the weighted
average shares outstanding are increased to include additional shares for the
assumed exercise of stock options and warrants, if dilutive. The number of
additional shares is calculated by assuming that outstanding stock options and
warrants were exercised and that the proceeds from such exercises were used to
acquire common stock at the average market price during the reporting periods.
(k) Comprehensive income (loss)
Comprehensive income (loss) is the change in the Company`s net assets that
results from transactions, events and circumstances from sources other than the
Company`s shareholders and includes items that would not normally be included
in net profit such as unrealized gains or losses on available-for-sale
investments, gains or losses on certain derivative instruments and foreign
currency gains or losses related to self- sustaining operations. The Company`s
comprehensive income (loss), components of other comprehensive income, and
cumulative translation adjustments are presented in the condensed consolidated
interim statements of comprehensive income (loss) and the condensed
consolidated interim statements of changes in equity.
(l) Property, plant and equipment
(i) Mining assets
Mining assets are recorded at cost less accumulated depreciation and
accumulated impairment losses. All direct costs related to the acquisition,
exploration and development of mineral properties are capitalized until the
properties to which they relate are placed into production, sold, abandoned or
management has determined there to be impairment. If economically recoverable
ore reserves are developed, capitalized costs of the related property are
reclassified as mining assets and amortized using the units-of- production
method following commencement of production. Interest on borrowings incurred to
finance mining assets is capitalized until the asset is capable of carrying out
its intended use.
Mining properties and mining and process facility assets are amortized on a
units-of-production basis which is measured by the portion of the mine`s
economically recoverable and proven ore reserves recovered during the period.
Capital work-in-progress, which is included in mining assets, is not
depreciated until the assets are ready for their intended use.
Although the Company has taken steps to verify title to the properties on which
it is conducting exploration and in which it has an interest, in accordance
with industry standards for the current stage of exploration of such
properties, these procedures do not guarantee the Company`s title. Property
title may be subject to unregistered prior agreements and non-compliance with
regulatory requirements.
(ii) Other assets
Other assets are depreciated using the straight-line method based on estimated
useful lives, which generally range from 5 to 7 years, with the exception of
residential properties and mine houses whose estimated useful lives are 50
years and office buildings whose estimated useful lives are 20 years. Land is
not depreciated.
Where an item of plant and equipment comprises major components with different
useful lives, the components are accounted for as separate items of plant and
equipment.
(ii) Other assets (continued)
Expenditures incurred to replace a component of an item of property, plant and
equipment that is accounted for separately, including major inspection and
overhaul expenditures, are capitalized. Directly attributable expenses incurred
for major capital projects and site preparation are capitalized until the asset
is brought to a working condition for its intended use. These costs include
dismantling and site restoration costs to the extent these are recognized as a
provision.
The cost of self-constructed assets includes the cost of materials, direct
labour and an appropriate portion of normal overheads.
The costs of day-to-day servicing are recognized in profit or loss as incurred.
These costs are more commonly referred to as "maintenance and repairs."
Financing costs directly associated with the construction or acquisition of
qualifying assets are capitalized at interest rates relating to loans
specifically raised for that purpose, or at the average borrowing rate where
the general pool of group borrowings is utilized. Capitalization of borrowing
costs ceases when the asset is substantially complete.
The depreciation method, useful life and residual values are assessed annually.
(iii) Leased assets
Leases in which the Company assumes substantially all risks and rewards of
ownership are classified as finance leases. Finance leases are recognized at
the lower of the fair value and the present value of the minimum lease payments
at inception of the lease, less accumulated depreciation and impairment losses.
Lease payments are accounted for as discussed in Note 3(s).
(iv) Subsequent Costs
The cost of replacing part of an item within property, plant and equipment is
recognized when the cost is incurred if it is probable that the future economic
benefits will flow to the group and the cost of the item can be measured
reliably. All other costs are recognized as an expense as incurred.
(v) Impairment
The Company`s tangible and intangible assets are reviewed for an indication of
impairment at each statement of financial position date. If indication of
impairment exists, the asset`s recoverable amount is estimated.
An impairment loss is recognized when the carrying amount of an asset, or its
cash-generating unit, exceeds its recoverable amount. A cash-generating unit is
the smallest identifiable group of assets that generates cash inflows that are
largely independent of the cash inflows from other assets or groups of assets.
Impairment losses are recognized in profit and loss for the period.
Impairment losses recognized in respect of cash-generating units are allocated
first to reduce the carrying amount of any goodwill allocated to cash-
generating units and then to reduce the carrying amount of the other assets in
the unit on a pro-rata basis.
(v) Impairment (continued)
The recoverable amount is the greater of the asset`s fair value less costs to
sell and value in use. In assessing value in use, the estimated future cash
flows are discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and the risks
specific to the asset. For an asset that does not generate largely independent
cash inflows, the recoverable amount is determined for the cash-generating unit
to which the asset belongs.
(vi) Reversal of impairment
An impairment loss is reversed if there is an indication that there has been a
change in the estimates used to determine the recoverable amount. An impairment
loss is reversed only to the extent that the asset`s carrying amount does not
exceed the carrying amount that would have been determined, net of depreciation
or amortization, if no impairment loss had been recognized. An impairment loss
with respect to goodwill is never reversed.
(m) Refining contract
The Company sells substantially all its concentrate to one customer under the
terms of an off-take or refining contract. The refining contract is amortized
over the original life of the contract, estimated to be fifteen years,
commencing in mid 2004. An evaluation of the carrying value of the contract is
undertaken whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable.
(n) Inventories
Inventories, comprising stockpiled ore and concentrate awaiting further
processing and sale, are valued at the lower of cost and net realizable value.
Consumables are valued at the lower of cost and net realizable value, with
replacement cost used as the best available measure of net realizable value.
Cost is determined using the weighted average method and includes direct mining
expenditures and an appropriate portion of normal overhead expenditure. In the
case of concentrate, direct concentrate costs are also included. Net realizable
value is the estimated selling price in the ordinary course of business, less
the estimated costs of completion and selling expenses. Obsolete, redundant and
slow moving stores are identified and written down to net realizable values.
(o) Short-term investments
Short-term investments are investments which are transitional or current in
nature, with an original maturity greater than three months.
(p) Cash and cash equivalents
Cash and cash equivalents consist of cash on hand, deposits in banks and highly
liquid investments with an original maturity of three months or less.
(q) Financial assets
Financial assets are classified into one of four categories:
fair value through profit or loss ("FVTPL");
held-to-maturity ("HTM");
available for sale ("AFS"); and,
loans and receivables.
The classification is determined at initial recognition and depends on the
nature and purpose of the financial asset.
(i) FVTPL financial assets
Financial assets are classified as FVTPL when the financial asset is held for
trading or it is designated as FVTPL.
A financial asset is classified as held for trading if:
it has been acquired principally for the purpose of selling in the near
future;
it is a part of an identified portfolio of financial instruments that the
Company manages and has an actual pattern of short-term profit-taking;
or
it is a derivative that is not designated and effective as a hedging
instrument.
Financial assets classified as FVTPL are stated at fair value with any
resultant gain or loss recognized in profit or loss. The net gain or loss
recognized incorporates any dividend or interest earned on the financial asset.
The Company has classified cash and cash equivalents as held for trading.
(ii) AFS financial assets
Short-term investments held by the Company are classified as AFS and are stated
at fair value. Gains and losses arising from changes in fair value are
recognized directly in equity in the investments revaluation reserve. To date,
these gains and losses have not been significant due to the nature of the
underlying investment. As a result, the assets` carrying values approximate
their fair values. Impairment losses, interest calculated using the effective
interest method and foreign exchange gains and losses on monetary assets, are
recognized directly in profit or loss rather than equity. When an investment is
disposed of or is determined to be impaired, the cumulative gain or loss
previously recognized in the investments revaluation reserve is included in
profit or loss for the period.
The fair value of AFS monetary assets denominated in a foreign currency is
translated at the spot rate at the statement of financial position date. The
change in fair value attributable to translation differences due to a change in
amortized cost of the asset is recognized in profit or loss, while all other
changes are recognized in equity.
(iii) Effective interest method
The effective interest method calculates the amortized cost of a financial
asset and allocates interest income over the corresponding period. The
effective interest rate is the rate that discounts estimated future cash
receipts over the expected life of the financial asset, or, where appropriate,
a shorter period.
(iii) Effective interest method (continued)
Income is recognized on an effective interest basis for debt instruments other
than those financial assets classified as FVTPL.
(iv) Held-to-maturity investments
Investments are recognized on a trade-date basis and are initially measured at
fair value, including transaction costs. The Company has classified its other
assets as held to maturity.
(v) Loans and receivables
Trade receivables, loans, and other receivables that have fixed or determinable
payments that are not quoted in an active market are classified as loans and
receivables.
Loans and receivables are initially recognized at the transaction value and
subsequently carried at amortized cost less impairment losses. The impairment
loss of receivables is based on a review of all outstanding amounts at year
end. Bad debts are written off during the year in which they are identified.
Interest income is recognized by applying the effective interest rate, except
for short-term receivables when the recognition of interest would be
immaterial.
(vi) Impairment of financial assets
Financial assets, other than those at FVTPL, are assessed for indicators of
impairment at each period end. Financial assets are impaired when there is
objective evidence that, as a result of one or more events that occurred after
the initial recognition of the financial asset, the estimated future cash flows
of the investment have been impacted.
Objective evidence of impairment could include the following:
significant financial difficulty of the issuer or counterparty;
default or delinquency in interest or principal payments; or
it has become probable that the borrower will enter bankruptcy or financial
reorganization.
For financial assets carried at amortized cost, the amount of the impairment is
the difference between the asset`s carrying amount and the present value of the
estimated future cash flows, discounted at the financial asset`s original
effective interest rate.
The carrying amount of all financial assets, excluding trade receivables, is
directly reduced by the impairment loss. The carrying amount of trade
receivable is reduced through the use of an allowance account. When a trade
receivable is considered uncollectible, it is written off against the allowance
account. Subsequent recoveries of amounts previously written off are credited
against the allowance account. Changes in the carrying amount of the allowance
account are recognized in profit or loss.
With the exception of AFS equity instruments, if, in a subsequent period, the
amount of the impairment loss decreases and the decrease relates to an event
occurring after the impairment was recognized, the previously recognized
impairment loss is reversed through profit or loss. On the date of impairment
reversal, the carrying amount of the financial asset cannot exceed its
amortized cost had impairment not been recognized.
(vii) Derecognition of financial assets
A financial asset is derecognized when:
the contractual right to the asset`s cash flows expire; or
if the Company transfers the financial asset and all risks and rewards of
ownership to another entity.
(r) Environmental rehabilitation
The Company recognizes liabilities for statutory, contractual, constructive or
legal obligations associated with the retirement of property, plant and
equipment, when those obligations result from the acquisition, construction,
development or normal operation of the assets. The net present value of future
rehabilitation cost estimates is capitalized to mining assets along with a
corresponding increase in the rehabilitation provision in the period incurred.
Discount rates using a pre-tax rate that reflect the time value of money are
used to calculate the net present value. The rehabilitation asset is
depreciated on the same basis as mining assets.
The Company`s estimates of reclamation costs could change as a result of
changes in regulatory requirements and assumptions regarding the amount and
timing of the future expenditures. These changes are recorded directly to
mining assets with a corresponding entry to the rehabilitation provision. The
Company`s estimates are reviewed annually for changes in regulatory
requirements, effects of inflation and changes in estimates.
Changes in the net present value, excluding changes in the Company`s estimates
of reclamation costs, are charged to profit and loss for the period.
The costs of rehabilitation projects that were included in the rehabilitation
provision are recorded against the provision as incurred. The cost of ongoing
current programs to prevent and control pollution is charged against profit and
loss as incurred.
(s) Leases
(i) The Company as lessor
Rental income from operating leases is recognized on a straight-line basis over
the term of the corresponding lease. Initial direct costs incurred in
negotiating and arranging an operating lease are added to the carrying amount
of the leased asset and recognized on a straight-line basis over the lease
term.
(ii) The Company as lessee
Assets held under finance leases are recognized as assets of the Company at the
lower of the fair value at the inception of the lease or the present value of
the minimum lease payments. The corresponding liability is recognized as a
finance lease obligation. Lease payments are apportioned between finance
charges and reduction of the lease obligation to achieve a constant rate of
interest on the remaining liability. Finance charges are charged to profit or
loss, unless they are directly attributable to qualifying assets, in which case
they are capitalized.
Rentals payable under operating leases are expensed on a straight-line basis
over the term of the relevant lease. Incentives received upon entry into an
operating lease are recognized straight-line over the lease term.
(t) Provisions
Provisions are recorded when a present legal or constructive obligation exists
as a result of past events where it is probable that an outflow of resources
embodying economic benefits will be required to settle the obligation, and a
reliable estimate of the amount of the obligation can be made.
The amount recognized as a provision is the best estimate of the consideration
required to settle the present obligation at the statement of financial
position date, taking into account the risks and uncertainties surrounding the
obligation. Where a provision is measured using the cash flows estimated to
settle the present obligation, its carrying amount is the present value of
those cash flows. When some or all of the economic benefits required to settle
a provision are expected to be recovered from a third party, the receivable is
recognized as an asset if it is virtually certain that reimbursement will be
received and the amount receivable can be measured reliably.
(u) Employee benefits
(i) Employee post-retirement obligations - defined contribution retirement plan
The Company`s South African subsidiaries operate a defined contribution
retirement plan for its employees. The pension plans are funded by payments
from the employees and the subsidiaries and payments are charged to profit and
loss for the period as incurred. The assets of the different plans are held by
independently managed trust funds. The South African Pension Fund Act of 1956
governs these funds.
(ii) Leave pay
Employee entitlements to annual leave are recognized as they are earned by the
employees. A provision, stated at current cost, is made for the estimated
liability at period end.
(v) Financial liabilities and equity
Debt and equity instruments are classified as either financial liabilities or
as equity in accordance with the substance of the contractual arrangement.
An equity instrument is any contract that evidences a residual interest in the
assets of an entity after deducting all of its liabilities. Equity instruments
issued by the Company are recorded at the proceeds received, net of direct
issue costs.
Financial liabilities are classified as either financial liabilities at FVTPL
or other financial liabilities.
(i) Other financial liabilities
Other financial liabilities are initially measured at fair value, net of
transaction costs, and are subsequently measured at amortized cost using the
effective interest method, with interest expense recognized on an effective
yield basis.
The effective interest method is a method of calculating the amortized cost of
a financial liability and of allocating interest expenses over the
corresponding period. The effective interest rate is the rate that exactly
discounts estimated future cash payments over the expected life of the
financial liability, or, where appropriate, a shorter period.
The Company has classified trade and other payables, short-term financial
liabilities and long-term financial liabilities as other financial liabilities.
(ii) Derecognition of financial liabilities
The group derecognizes financial liabilities when, and only when, the group`s
obligations are discharged, cancelled or they expire.
(w) Accounting standards issued but not yet effective
(i) Effective for annual periods beginning on or after July 1, 2009
IFRS 2 Share Based Payments (revised) - revision of scope
IFRS 3 Business Combinations (revised) - revision of scope and amendments to
accounting for business combinations
IAS 27 Consolidated and Separate Financial Statements (revised) - amendments
due to IFRS 3 Business Combinations revisions
IAS 38 Intangible Assets (revised) - amendments due to IFRS 3 Business
Combinations revisions and measuring the fair value of an intangible asset
acquired in a business combination
(ii) Effective for annual periods beginning on or after January 1, 2010
IFRS 8 Operating Segments (revised) - disclosure of information about segment
assets
The Company has not early adopted these revised standards and is currently
assessing the impact that these standards will have on the consolidated
financial statements.
4. Non-controlling interest
The non-controlling interests are comprised of the following:
Balance, January 1, 2008 $ 23,133
Non-controlling interests` share of profit in Barplats 2,404
Non-controlling interests` share of interest on advances to Gubevu (2,677)
Foreign exchange movement (3,623)
Balance , September 30, 2008 $ 19,237
Non-controlling interests` share of loss in Barplats (3,121)
Non-controlling interests` share of interest on advances to Gubevu (341)
Foreign exchange movement (3,773)
Balance , December 31, 2008 $ 12,002
Non-controlling interests` share of loss in Barplats (1,228)
Non-controlling interests` share of interest on a vances to Gubevu (1,855)
Foreign exchange movement 2,304
Balance, September 30, 2009 $ 11,223
5. Inventories
September 30, December 31,
2009 2008
Consumables $ 3,672 $ 3,509
Ore and concentrate 394 372
$ 4,066 $ 3,881
6. Property, plant and equipment
Mining Crocodile
plant and River Mine
equipment (a)
Cost
Balance as at January 1, 2008 $ 273,483 $ 149,618
Additions
Assets acquired 134,320 4,285
Assets acquired through business combination - 12,033
Disposals - -
Foreign exchange movement (87,635) (40,794)
Balance as at December 31, 2008 $ 320,168 $ 125,142
Additions
Assets acquired 13,786 1,415
Assets under construction capitalized 7,295 -
Disposals (1,580) -
Foreign exchange movement 79,103 30,019
Balance as at September 30, 2009 $ 418,772 $ 156,576
Accumulated depreciation and impairment losses
Balance as at January 1, 2008 $ 116,078 $ 11,932
Depreciation for the period 7,842 6,768
Impairment loss - -
Foreign exchange movement (31,017) (3,907)
Balance as at December 31, 2008 $ 92,903 $ 14,793
Depreciation for the period 8,585 3,525
Foreign exchange movement 23,031 4,657
Balance as at September 30, 2009 $ 124,519 $ 22,975
Carrying amounts
At January 1, 2008 $ 157,405 $ 137,686
At December 31, 2008 $ 227,265 $ 110,349
At September 30, 2009 $ 294,253 $ 133,601
Kennedy`s Spitzkop
Vale Project PGM Project
(b) (c)
Cost
Balance as at January 1, 2008 $ 386,353 $ 121,443
Additions
Assets acquired - 4,729
Assets acquired through business combination 53,754 -
Disposals - -
Foreign exchange movement (106,645) (24,459)
Balance as at December 31, 2008 $ 333,462 $ 101,713
Additions
Assets acquired - 365
Assets under construction capitalized - -
Disposals - -
Foreign exchange movement 81,122 14,086
Balance as at September 30, 2009 $ 414,584 $ 116,164
Accumulated depreciation and impairment losses
Balance as at January 1, 2008 $ 15,666 $ -
Depreciation for the period - -
Impairment loss 313,603 -
Foreign exchange movement (41,832) -
Balance as at December 31, 2008 $ 287,437 $ -
Depreciation for the period - -
Foreign exchange movement 70,353 -
Balance as at September 30, 2009 $ 357,790 $ -
Carrying amounts
At January 1, 2008 $ 370,687 $ 121,443
At December 31, 2008 $ 46,025 $ 101,713
At September 30, 2009 $ 56,794 $ 116,164
Mareesburg Other
property
Project plant and
(c) equipment TOTAL
Cost
Balance as at January 1, 2008 $ 28,075 $ 118 $959,090
Additions
Assets acquired 472 18 143,824
Assets acquired through business
combination 36 - 65,823
Disposals - (22) (22)
Foreign exchange movement (5,284) (21) (264,838)
Balance as at December 31, 2008 $ 23,299 $ 93 $ 903,877
Additions
Assets acquired 68 - 15,634
Assets under construction
capitalized - - 7,295
Disposals - - (1,580)
Foreign exchange movement 3,217 13 207,560
Balance as at September 30, 2009 $ 26,584 $ 106 $ 1,132,786
Accumulated depreciation and
impairment losses
Balance as at January 1, 2008 $ - $ 24 $ 143,700
Depreciation for the period - 52 14,662
Impairment loss - - 313,603
Foreign exchange movement - (17) (76,773)
Balance as at December 31, 2008 $ - $ 59 $ 395,192
Depreciation for the period - 1 12,111
Foreign exchange movement - 5 98,046
Balance as at September 30, 2009 $ - $ 65 $ 505,349
Carrying amounts
At January 1, 2008 $ 28,075 $ 94 $ 815,390
At December 31, 2008 $ 23,299 $ 34 $ 508,685
At September 30, 2009 $ 26,584 $ 41 $ 627,437
(a) Crocodile River Mine ("CRM")
The Company holds directly and indirectly 87.5% of CRM, which is located on the
eastern portion of the western limb of the Bushveld Complex. The Maroelabult
and Zandfontein sections are currently in production, while development of the
Crocette and Kareespriut sections was put on hold in the fourth quarter of 2008
until PGM prices improve.
(b) Kennedy`s Vale Project ("KV")
The Company holds directly and indirectly 87.5% of KV, which is located on the
eastern limb of the Bushveld Complex, near Steelpoort in the Province of
Mpumalanga. It comprises PGM mineral rights on five farms in the Steelpoort
Valley.
(c) Spitzkop PGM Project and Mareesburg Project
The Company holds directly and indirectly a 93.4% interest in the Spitzkop PGM
Project and a 75.5% interest in the Mareesburg Project. The Company currently
acts as the operator of both the Mareesburg Platinum Project and Spitzkop PGM
Project, both located on the eastern limb of the Bushveld Complex. The
development of these projects was put on hold in the fourth quarter of 2008
until PGM prices improve.
7. Refining Contract
During the year ended June 30, 2006, the Company acquired a 69% interest in
Barplats and assigned a portion of the excess of the purchase price over the
fair value of the identifiable intangible assets acquired to the off-take
contract governing the sales of Barplats` PGM concentrate production. The
initial value of the contract was $17,939. During the year ended June 30, 2007,
the Company acquired an additional 5% interest in Barplats resulting in an
additional allocation to the contract of $4,802 for a total aggregate value of
$22,741. During the year ended December 31, 2008, the Company acquired an
additional 2.47% interest in Barplats. The acquisition did not affect the
aggregate value of the contract. The value of the contract is amortized over
the remaining term of the contract which is 10 years.
Cost
Balance as at January 1, 2008 $ 22,741
Foreign exchange movement (4,784)
Balance as at December 31, 2008 $ 17,957
Foreign exchange movement 2,841
Balance as at September 30, 2009 $ 20,798
Accumulated depreciation
Balance as at January 1, 2008 $ 4,274
Depreciation for the period 1,353
Foreign exchange movement (163)
Balance as at December 31, 2008 $ 5,464
Depreciation for the period 964
Foreign exchange movement 55
Balance as at September 30, 2009 $ 6,483
Carrying amounts
At January 1, 2008 $ 18,467
At December 31, 2008 $ 12,493
At September 30, 2009 $ 14,315
8. Other assets
Other assets consists of a money market fund investment that is classified as
held-to-maturity and serves as security for a guarantee issued to the
Department of Minerals and Energy of South Africa in respect of the
environmental rehabilitation liability (Note 9). Changes to other assets for
the nine months ended September 30, 2009 are as follows:
Balance, January 1, 2008 $ 1,247
Additional investment -
Service fees (16)
Interest income 122
Foreign exchange movement (336)
Balance, December 31, 2008 $ 1,017
Additional investment 571
Service fees 5
Interest income 88
Foreign exchange movement 302
Balance, September 30, 2009 $ 1,983
9. Provision for environmental rehabilitation
Although the ultimate amount of the environmental rehabilitation provision is
uncertain, the fair value of these obligations is based on information
currently available, including closure plans and applicable regulations.
Significant closure activities include land rehabilitation, demolition of
buildings and mine facilities and other costs.
The liability for the environmental rehabilitation provision at September 30,
2009 is approximately ZAR 54.8 million ($7,275). The liability was determined
using an inflation rate of 5.78% (December 31, 2008 - 5.78%) and an estimated
life of mine of 14 years for Zandfontein and Maroelabult (December 31, 2008 -
14 years), and 1 year for Kennedy`s Vale (December 31, 2008 - 1 year). A
discount rate of 7.09% was used (December 31, 2008 - 7.09%). A guarantee of
$1,983 (December 31, 2008 - $1,017) has been issued to the Department of
Minerals and Energy (Note 8). The guarantee will be utilized to cover expenses
incurred to rehabilitate the mining area upon closure of the mine. The
undiscounted value of this liability is approximately ZAR121 million ($16,031).
Changes to the environmental rehabilitation provision during the nine months
ended September 30, 2009 are as follows:
Balance, January 1, 2008 $ 6,224
Revision in estimates 554
Unwinding of interest 491
Foreign exchange movement (1,671)
Balance, December 31, 2008 $ 5,598
Unwinding of interest 319
Foreign exchange movement 1,358
Balance, September 30, 2009 $ 7,275
10. Commitments
The Company has committed to capital expenditures on projects of approximately
ZAR31 million ($4,122) as at September 30, 2009.
11. Issued capital
(a) Authorized
- Unlimited number of preferred redeemable, voting, non-participating shares
without nominal or par value,
- Unlimited number of common shares with no par value.
(b) Stock options
The Company has an incentive plan (the "2008 Plan"), approved by the Company`s
shareholders at its annual general meeting held on June 4, 2008, under which
options to purchase common shares may be granted to its directors, officers,
employees and others at the discretion of the Board of Directors. Under the
terms of the 2008 Plan, 75 million common shares are reserved for issuance upon
the exercise of options. All outstanding options at June 4, 2008 granted under
the Company`s previous plan (the "2005 Plan") will continue to exist under the
2008 Plan provided that the fundamental terms governing such options will be
deemed to be those under the 2005 Plan. Upon adoption of the 2008 Plan, options
to purchase a total of 27,525,000 common shares were available for grant under
the 2008 Plan, representing 75,000,000 less the 47,475,000 outstanding options
at June 4, 2008 granted under the 2005 Plan.
Under the 2008 Plan, each option granted shall be for a term not exceeding five
years from the date of being granted and the vesting period is determined based
on the discretion of the Board of Directors. The option exercise price is set
at the date of the grant and cannot be less than the closing market price of
the Company`s common shares on the Toronto Stock Exchange on the day
immediately preceding the day of the grant of the option.
The changes in stock options during the nine months ended September 30, 2009
and year ended December 31, 2008 were as follows:
September 30, 2009
Weighted
average
Number of exercise
options price
Cdn $
Balance outstanding,
beginning of period 64,746,000 1.52
Options granted 480,000 0.49
Options exercised (64,333) 0.32
Options forfeited (5,154,167) 2.02
Balance outstanding,
end of period 60,007,500 1.47
December 31, 2008
Weighted
average
Number of exercise
options price
Cdn $
Balance outstanding,
beginning of period 46,360,000 1.94
Options granted 19,856,000 0.55
Options exercised (845,000) 1.26
Options forfeited (625,000) 1.76
Balance outstanding,
end of period 64,746,000 1.52
The following table summarizes information concerning outstanding and
exercisable options at September 30, 2009:
Remaining
Options Options Exercise Contractual
outstanding exercisable price Life (Years) Expiry date
Cdn $
6,725,000 6,725,000 1.70 1.65 May 24, 2011
250,000 250,000 1.70 2.16 November 27, 2011
19,987,500 19,987,500 1.82 2.44 March 7, 2012
18,045,000 16,201,667 0.32 4.22 December 18, 2013
60,000 20,000 0.32 4.37 February 11, 2014
400,000 400,000 0.52 4.75 June 30, 2014
13,820,000 13,183,333 2.31 8.02 October 5, 2017
90,000 60,000 2.50 8.21 December 12, 2017
460,000 440,000 3.38 8.40 February 20, 2018
170,000 130,000 3.38 8.49 March 27, 2018
60,007,500 57,397,500 4.26
(c) Share purchase warrants
The changes in warrants during the nine months ended September 30, 2009 and
year ended December 31, 2008 were as follows:
September 30, 2009
Weighted
average
Number of exercise
warrants price
Cdn$
Balance outstanding,
beginning of period 58,485,996 1.80
Warrants exercised - -
Warrants expired (58,485,996) 1.80
Balance outstanding,
end of period - -
December 31, 2008
Weighted
average
Number of exercise
warrants price
Cdn $
Balance outstanding,
beginning of period 71,248,050 1.83
Warrants exercised (10,824,077) 1.97
Warrants expired (1 ,937,977) 2.00
Balance outstanding,
end of period 58,485,996 1.80
(d) Share-based payments
The fair value of each option granted is estimated at the time of the grant
using the Black-Scholes option pricing model with weighted average assumptions
for grants as follows:
September 30, 2009 September 30, 2008
(3 months) (9 months) (3 months) (9 months)
Risk-free
interestrate N/A 1.83% N/A 3.05 %
Expected life N/A 3 years N/A 3 years
Annualized
volatility N/A 79% N/A 49%
Dividend rate N/A 0% N/A 0%
Grant date fair
value N/A Cdn$0.27 N/A Cdn $1.22
12. Related party transactions
The Company`s related parties consist of companies owned by executive officers
and directors as follows:
Nature of transactions
Andrews PGM Consulting Consulting
Buccaneer Management Inc. Management
Jazz Financial Ltd. Management
Maluti Services Limited General and administrative
Xiste Consulting Ltd. Management
The Company incurred the following fees and expenses in the normal course of
operations in connection with companies owned by key management and directors.
have been measured at the exchange amount which is determined on a cost
recovery basis.
September September
30, 2009 30, 2008
Note (3 months) (3 months)
Consulting fees (i) $ 27 $ 20
General and administrative
expenses 26 73
Managementfees 253 302
$ 306 $ 395
September September
30, 2009 30, 2008
(9 months) (9 months)
Consulting fees $ 103 $ 62
General and administrative
expenses 45 228
Managementfees 726 971
$ 874 $ 1,261
i.The Company paid fees to a private company controlled by a director of the
Company for consulting services performed outside of his capacity as a
director.
ii. Amounts due to related parties are unsecured, non-interest bearing and due
on demand. Accounts payable at September 30, 2009 included $Nil (December
31, 2008 - $35) which were due to private companies controlled by officers
of the Company.
13. Segmented information
(a) Operating segment - The Company`s operations are primarily directed towards
the acquisition, exploration and production of platinum group metals in South
Africa.
(b) Geographic segments - The Company`s assets, revenues and expenses by
geographic areas for the three and nine months ended September 30, 2009 and
September 30, 2008 are as follows:
September 30, 2009 (3 months)
South Africa Canada Total
Current assets $ 34,632 $ 16,824 $ 51,456
Property, plant and equipment 627,396 41 627,437
Refining contract 14,315 - 14,315
Other assets 1,983 - 1,983
Total assets $ 678,326 $ 16,865 $ 695,191
Property, plant and
equipment expenditures $ 3,930 $ - $ 3,930
Sale of property, plant and equipment - - -
Revenues $ 27,365 $ - $ 27,365
Production costs (2 2,394) - (22,394)
Depletion and depreciation (4,308) - (4,308)
General and administrative expenses (1,457) (879) (2,336)
Share-based payments (109) - (109)
Interest income 380 68 448
Finance costs (332) - (332)
Foreign exchange gain (loss) (6) 658 652
Loss before income taxes $ (861) $ (153) $ (1,014)
September 30, 2008 (3 months)
South Africa Canada Total
Property, plant and
equipment expenditures $ 42,896 $ - $ 42,896
Revenues $ 9,224 $ - $ 9,224
Production costs (20,629) - (20,629)
Depletion and depreciation (4,743) - (4,743)
General and administrative expenses (4,269) (1 316) (5,585)
Share based payments (417) 6 (411)
Interest income 551 1,746 2,297
Finance costs (612) (89) (701)
Foreign exchange gain (71) 43 (28)
Profit (loss) before income taxes $ (20,966) $ 390 $ (20,576)
(b) Geographic segments (continued)
September 30, 2009 (9 months)
South Africa Canada Total
Property, plant and
equipment expenditures $ 22,929 $ - $ 22,929
Sale of property, plant and
equipment 1,552 - 1,552
Revenues $ 77,106 $ - $ 77,106
Production costs (58,588) - (58,588)
Depletion and depreciation (12,111) - (12,111)
General and administrative expenses (4,574) (2,569) (7,143)
Share-based payments (351) (93) (444)
Interest income 1,150 287 1,437
Finance costs (1,159) - (1,159)
Foreign exchange loss (58) (737) (795)
Profit (loss) before income taxes $ 1,415 $ (3,112) $ (1,697)
September 30, 2008 (9 months)
South Africa Canada Total
Property, plant and
equipment expenditures $ 101,227 $ 18 $ 101,245
Revenues $ 114,336 $ - $ 114,336
Production costs (61,437) - (61,437)
Depletion and depreciation (13,617) - (13,617)
General and administrative expenses (11,227) (4,000) (15,227)
Share based payments (1,663) (577) (2,240)
Interest income 3,416 4,565 7,981
Finance costs (2,957) - (2,957)
Foreign exchange gain 1,035 65 1,100
Profit before income taxes $ 27,886 $ 53 $ 27,939
December 31, 2008
South Africa Canada Total
Current assets $ 17,658 $ 56,717 $ 74,375
Property, plant and equipment 508,648 37 508,685
Refining contract 12,493 - 12,493
Other assets 1,017 - 1,017
Total assets 539,816 56,754 596,570
For the three and nine months ended September 30, 2009 and September 30, 2008,
substantially all of the Company`s PGM production was sold to one customer.
14. Accounting estimates and judgments
(a) Useful life of assets
The Company engaged an independent third party engineering company in South
Africa to assess the life of mine ("LOM") of Barplats Mines Limited
("Barplats") in December 2007.
At December 31, 2008 the remaining LOM for Barplats was assessed at 153 months
(December 31, 2007 - 165 months). This estimate is based on proven and probable
ore reserves. The change in remaining mine life will be evaluated each year as
the reserves move to the proven and probable category.
(b) Impairment of property, plant and equipment
During the year ended December 31, 2008, the significant decline in platinum
group metal prices triggered an impairment assessment which resulted in an
impairment of $314 million on Kennedy`s Vale. Future cash flows were
discounted to present value at the weighted average cost of capital of 9%.
The foreign exchange rate utilized in the model is ZAR9.51 = US$1.00.
The average forecast prices utilized in the impairment model are:
2009 2010 2011 2012 2013 +
Platinum US$/oz 950 1,020 1,055 1,155 1,180
Palladium US$/oz 210 225 305 385 380
Rhodium US$/oz 1,000 980 2,785 2,895 2,830
Gold US$/oz 870 815 650 695 680
Iridium US$/oz 270 295 345 350 340
Ruthenium US$/oz 190 215 240 250 245
Nickel US$/tonne 13,850 15,875 16,210 16,285 15,915
Copper US$/tonne 5,180 5,550 5,505 4,265 4,170
Chrome US$/tonne 380 382 400 400 400
15. IFRS
IFRS 1 First-time Adoption of International Financial Reporting Standards sets
forth guidance for the initial adoption of IFRS. Under IFRS 1 the standards are
applied retrospectively at the transitional statement of financial position
date with all adjustment to assets and liabilities taken to retained earnings
unless certain exemptions are applied. The Company has applied the following
exemptions to its opening statement of financial position dated January 1,
2008:
(a) Business Combinations
IFRS 1 indicates that a first-time adopter may elect not to apply IFRS 3
Business Combinations retrospectively to business combinations that occurred
before the date of transition to IFRS. The Company has taken advantage of this
election and has applied IFRS 3 to business combinations that occurred on or
after January 1, 2008.
(b) Cumulative translation differences
IFRS 1 allows a first-time adopter to not comply with the requirements of IAS
21 The Effects of Changes in Foreign Exchange Rates for cumulative translation
differences that existed at the date of transition to IFRS. The Company has
chosen to apply this election and has eliminated the cumulative translation
difference and adjusted retained earnings by the same amount at the date of
transition to IFRS. If, subsequent to adoption, a foreign operation is disposed
of, the translation differences that arose before the date of transition to
IFRS will not affect the gain or loss on disposal.
(c) Share-based payment transactions
IFRS 1 encourages, but does not require, first-time adopters to apply IFRS 2
Share- based Payment to equity instruments that were granted on or before
November 7, 2002, or equity instruments that were granted subsequent to
November 7, 2002 and vested before the later of the date of transition to IFRS
and January 1, 2005. The Company has elected not to apply IFRS 2 to awards that
vested prior to January 1, 2008.
(d) IAS 27 - Consolidated and Separate Financial Statements
In accordance with IFRS 1, if a company elects to apply IFRS 3 Business
Combinations retrospectively, IAS 27 Consolidated and Separate Financial
Statements must also be applied retrospectively. As the Company elected to
apply IFRS 3 prospectively, the Company has also elected to apply IAS 27
prospectively.
IFRS 1 also outlines specific guidelines that a first-time adopter must adhere
to under certain circumstances. The Company has applied the following
guidelines to its opening statement of financial position dated January 1,
2008:
(e) Assets and liabilities of subsidiaries and associates
In accordance with IFRS 1, if a parent company adopts IFRS subsequent to its
subsidiary or associate adopting IFRS, the assets and the liabilities of the
subsidiary or associate are to be included in the consolidated financial
statements at the same carrying amounts as in the financial statements of the
subsidiary or associate. The Company`s principal operating subsidiary, Barplats
Investments Limited, adopted IFRS in 2005.
(f) Estimates
In accordance with IFRS 1, an entity`s estimates under IFRS at the date of
transition to IFRS must be consistent with estimates made for the same date
under previous GAAP, unless there is objective evidence that those estimates
were in error. The Company`s IFRS estimates as of January 1, 2008 are
consistent with its Canadian GAAP estimates for the same date.
IFRS employs a conceptual framework that is similar to Canadian GAAP. However,
significant differences exist in certain matters of recognition, measurement
and disclosure. While adoption of IFRS has not changed the Company`s actual
cash flows, it has resulted in changes to the Company`s reported financial
position and results of operations. In order to allow the users of the
financial statements to better understand these changes, the Company`s Canadian
GAAP statement of operations, statement of comprehensive income, statement of
financial position and statement of cash flows for the three and nine months
ended September 30, 2008 and the year ended December 31, 2008 have been
reconciled to IFRS, with the resulting differences explained.
(g) Revenue and interest income
The Company settles its metal sales three or five months following the physical
delivery of the concentrates.
The present value of sales revenue expected to be received in three or five
months is recognized on the date of sale. The difference between the present
value and the future value is recognized as interest revenue over the term of
settlement. In its Canadian GAAP financial statements for the year ended
December 31, 2008, the Company recorded the future value as sales revenue, as
opposed to recognizing the difference between the present value and the future
value as interest revenue over the term of settlement. The difference in the
treatment of revenue results in a timing difference in the recognition of
income and is not material to these financial statements.
(h) Property plant and equipment
Due to the adjustments to the provision for environmental rehabilitation
discussed in Note 15(j), the cost of property plant and equipment is different
in accordance with IFRS than in accordance with Canadian GAAP. As a result,
even though depreciation is calculated in the same manner, the amount of
depreciation differs.
(i) Share-based payments
IFRS
* Each tranche of an award with different vesting dates is considered a
separate grant for the calculation of fair value, and the resulting fair
value is amortized over the vesting period of the respective tranches.
* Forfeiture estimates are recognized in the period they are estimated, and
are revised for actual forfeitures in subsequent periods.
Canadian GAAP
* The fair value of stock-based awards with graded vesting are calculated as
one grant and the resulting fair value is recognized on a straight-line
basis over the vesting period.
* Forfeitures of awards are recognized as they occur.
(j) Provision for environmental rehabilitation
IFRS
* The provision for environmental rehabilitation must be adjusted for changes
in the discount rate.
Canadian GAAP
* The provision for environmental rehabilitation is not adjusted for changes
in the discount rate.
(k) Deferred tax asset/liability
IFRS
* All deferred tax assets and liabilities must be classified as non-current.
Canadian GAAP
* Deferred tax assets and liabilities can be classified as current or
non-current as appropriate.
(l) Accounts payable, accrued liabilities and provisions
IFRS - a provision is a liability of uncertain timing or amount. Provisions are
disclosed separately from liabilities and accrued liabilities and require
additional disclosure.
Canadian GAAP - Accounts payable, accrued liabilities and provisions are
disclosed on the statement of financial position as a single line item.
(m) Other comprehensive income (loss)
Other comprehensive income (loss) consists of the change in the cumulative
translation adjustment ("CTA"). Due to other IFRS adjustments, the balances
that are used to calculate the CTA are different in accordance with IFRS than
in accordance with Canadian GAAP. As a result, CTA and other comprehensive
income (loss) are different in accordance with IFRS than in accordance with
Canadian GAAP.
(n) Impairment
IFRS - If indication of impairment is identified, the asset`s carrying value is
compared to the asset`s discounted cash flows. If the discounted cash flows are
less than the carrying value, the asset is impaired by an amount equal to the
difference between the discounted cash flows and the carrying value.
Canadian GAAP - If indication of impairment is identified, the asset`s
carrying value is compared to the asset`s undiscounted cash flows. If the
undiscounted cash flows are less than the carrying value, the asset is
impaired by an amount equal to the difference between the discounted cash
flows and the carrying value.
The Company completed an impairment review of its assets at January 1, 2008 and
concluded that the assets were not impaired in accordance with IFRS. At
December 31, 2008, the carrying value of the Kennedy`s Vale mineral property
was less than the property`s undiscounted cash flows, but greater than the
property`s discounted cash flows. As a result, the mineral property was
concluded to be impaired in accordance with IFRS, but not impaired in
accordance with Canadian GAAP. An impairment of $314 million and an income tax
recovery of $87 million have been recorded relating to the Kennedy`s Vale
impairment.
(o) Presentation
The presentation of the cash flow statement in accordance with IFRS differs
from the presentation of the cash flow statement in accordance with Canadian
GAAP.
The January 1, 2008 Canadian GAAP statement of financial position has been
reconciled to IFRS as follows:
January 1 , 2008
Effect of
Note Canadian transition to IFRS
GAAP IFRS
Assets
Current assets
Cash and cash
equivalents $ 18,818 $ - $ 18,818
Short-term
investments 171,038 - 171,038
Trade
receivables (e)(g) 33,157 (597) 32,560
Inventories 6,888 - 6,888
229,901 (597) 229,304
Property, plant
and
equipment (e)(h)(j) 813,461 1,929 815,390
Refining
contract 18,467 - 18,467
Other assets 1,247 - 1,247
$ 1,063,076 $ 1,332 $ 1,064,408
Liabilities
Current
liabilities
Accounts payable
and accrued
liabilities (e)(l) $ 22,967 $ (1,460) $ 21,507
Provisions (e)(l) - 1,460 1,460
Current portion
of long-term
liability 3,837 - 3,837
Deferred tax (k) 6,416 (6,416) -
33,220 (6,416) 26,804
Provision for
environmental
rehabilitation (e)(j) 2,889 3,335 6,224
Finance leases 9,127 - 9,127
Deferred tax
liabilities (k) 143,616 6,416 150,032
188,852 3,335 192,187
Capital and
reserves
Issued capital 868,045 - 868,045
Equity reserve 27,428 - 27,428
Currency
translation
adjustment (b) 23,481 (23,481) -
Deficit (68,132) 21,747 (46,385)
850,822 (1,734) 849,088
Non-controlling
interest 23,402 (269) 23,133
874,224 (2,003) 872,221
$ 1,063,076 $ 1,332 $ 1,064,408
The Canadian GAAP income statement and statement of comprehensive income for
the three months ended September 30, 2008 have been reconciled to IFRS as
follows:
3 months ended September 30, 2008
Canadian Effect of
Note GAAP transition IFRS
to IFRS
Revenue (g) $ 9,291 $ (67) $ 9,224
Cost of operations
Production costs 20,629 - 20,629
Depletion and depreciation (h) 4,716 27 4,743
25,345 27 25,372
Mine operating loss (16,054) (94) (16,148)
Expenses
General and administrative 5,585 - 5,585
Share-based payments (i) 278 133 411
5,863 133 5,996
Operating loss (21,917) (227) (22,144)
Other income (expense)
Interest income (g) 1,975 322 2,297
Finance costs (j) (659) (42) (701)
Foreign exchange gain (28) - (28)
Loss before income taxes (20,629) 53 (20,576)
Deferred income tax
recovery 6,363 - 6,363
Net loss for the period $ (14,266) $ 53 $ (14,213)
Attributable to
Non-controlling interest $ (3,705) $ 321 $ (3,384)
Equity shareholders of
the Company $ (10,561) $ (268) $ (10,829)
3 months ended September 30, 2008
Canadian Effect of
Note transition to IFRS
GAAP IFRS
Net loss for the period $ (14,266) $ 53 $ (14,213)
Other comprehensive
loss - currency
translation adjustment (m) (45,656) 289 (45,367)
Comprehensive loss $ (59,922) $ 342 $ (59,580)
Attributable to
Non-controlling
interest $ (3,705) $ 321 $ (3,384)
Equity shareholders of
the Company $ (56,217) $ 21 $ (56,196)
The Canadian GAAP income statement and statement of comprehensive income for
the nine months ended September 30, 2008 have been reconciled to IFRS as
follows:
9 months ended September 30, 2008
Canadian Effect of
Note GAAP transition
to IFRS IFRS
Revenue (g) $ 115,842 $ (1,506) $ 114,336
Cost of operations
Production costs 61,437 - 61,437
Depletion and depreciation (h) 13,528 89 13,617
74,965 89 75,054
Mine operating earnings 40,877 (1,595) 39,282
Expenses
General and administrative 15,227 - 15,227
Share-based payments (i) 1,845 395 2,240
17,072 395 17,467
Operating profit 23,805 (1,990) 21,815
Other income (expense)
Interest income (g) 6,285 1,696 7,981
Finance costs (j) (2,821) (136) (2,957)
Foreign exchange gain 1,100 - 1,100
Profit before income taxes 28,369 (430) 27,939
Deferred income tax expense (7,417) - (7,417)
Net profit for the period $ 20,952 $ (430) $ 20,522
Attributable to
Non-controlling interest $ (1,154) $ 881 $ (273)
Equity shareholders of the
Company $ 22,106 $ (1,311) $ 20,795
9 months ended September 30, 2008
Effect of
Note Canadian transition to
GAAP IFRS IFRS
Net profit for the
period $ 20,952 $ (430) $ 20,522
Other comprehensive
loss - currency
translation adjustment (m) (119,895) 224 (119,671)
Comprehensive loss $ (98,943) $ (206) $ (99,149)
Attributable to
Non-controlling
interest $ (1 ,154) $ 881 $ (273)
Equity shareholders of
the Company $ (97,789) $ (1,087) $ (98,876)
The Canadian GAAP income statement and statement of comprehensive income for
the twelve months ended December 31, 2008 have been reconciled to IFRS as
follows:
12 months ended December 31, 2008
Effect of
Canadian transition to
Note GAAP IFRS IFRS
Revenue (g) $ 116,198 $ (1,517) $ 114,681
Cost of operations
Production costs 79,961 - 79,961
Depletion and
depreciation (h) 14,599 63 14,662
94,560 63 94,623
Mine operating earnings 21,638 (1,580) 20,058
Expenses
Impairment (n) - 313,603 313,603
General and
administrative (e) 19,411 30 19,441
Share-based payments (i) 4,290 335 4,625
23,701 313,968 337,669
Operating loss (2,063) (315,548) (317,611)
Other income (expense)
Interest income (g) 7,081 1,863 8,944
Finance costs (j) (3,551) (174) (3,725)
Foreign exchange gain (2,155) - (2,155)
Loss before income
taxes (688) (313,859) (314,547)
Deferred income tax
recovery (k) 13,623 87,808 101,431
Net profit (loss) for
the period $ 12,935 $ (226,051) $ (213,116)
Attributable to
Non-controlling
interest $ (3,429) $ (306) $ (3,735)
Equity shareholders of
the Company $ 16,364 $ (225,745) $ (209,381)
12 months ended December 31, 2008
Effect of
Note Canadian transition to
GAAP IFRS IFRS
Net profit (loss)
for the period $ 12,935 $ (226,051) $ (213,116)
Other comprehensive
loss - currency
translation
adjustment (m) (197,052) 27,475 (169,577)
Comprehensive loss $ (184,117) $ (198,576) $ (382,693)
Attributable to
Non-controlling
interest $ (3,429) $ (306) $ (3,735)
Equity shareholders
of the Company $ (180,688) $ (198,270) $ (378,958)
The Canadian GAAP statement of financial position at September 30, 2008 has
been reconciled to IFRS as follows:
September 30, 2008
Effect of
Note Canadian transition to IFRS
GAAP IFRS
Assets
Current assets
Cash and cash
equivalents $ 169,294 $ - $ 169,294
Short-term investments 2,766 - 2,766
Trade receivables (g) 5,533 (309) 5,224
Inventories 6,771 - 6,771
Future income taxes (k) 2,753 (2,753) -
187,117 (3,062) 184,055
Property, plant and
equipment (h)(j) 766,611 1,502 768,113
Refining contract 14,226 - 14,226
Other assets 1,104 - 1,104
$ 969,058 $ (1,560) $ 967,498
Liabilities
Accounts payable and
accrued
liabilities (l) $ 30,688 $ (1,203) $ 29,485
Provisions (l) - 1,203 1,203
Current portion of
finance leases 681 - 681
Current loans 3,195 - 3,195
34,564 - 34,564
Provision for
environmental
rehabilitation (j) 2,613 2,877 5,490
Capital leases 3,842 - 3,842
Deferred tax liability (k) 133,227 (2,753) 130,474
174,246 124 174,370
Capital and reserves
Issued capital 889,720 - 889,720
Equity reserve (i) 29,037 395 29,432
Currency translation
adjustment (m) (96,414) (23,257) (119,671)
Deficit (46,026) 20,436 (25,590)
776,317 (2,426) 773,891
Non-controlling
interest 18,495 742 19,237
794,812 (1,684) 793,128
$ 969,058 $ (1,560) $ 967,498
The Canadian GAAP statement of financial position at December 31, 2008 has been
reconciled to IFRS as follows:
December 31, 2008
Effect of
Note Canadian transition to
GAAP IFRS IFRS
Assets
Current assets
Cash and cash
equivalents $ 25,806 $ - $ 25,806
Short-term
investments 35,257 - 35,257
Trade receivables (g) 9,556 (125) 9,4 31
Inventories 3,881 - 3,881
Deferred tax asset (k) 1,178 (1,178) -
75,678 (1,303) 74,375
Property, plant and
equipment (h)(j)(n) 783,039 (274,354) 508,685
Refining contract 12,493 - 12,493
Other assets 1,017 - 1,017
$ 872,227 $ (275,657) $ 596,570
Liabilities
Current liabilities
Accounts payable
and accrued
liabilities (l) $ 36,729 $ (1,726) $ 35,003
Provisions (l) - 1,726 1,726
Current portion
capital leases 649 - 649
Current loans 2,972 - 2,972
40,350 - 40,350
Non-current
liabilities
Provision for
environmental
rehabilitation (j) 2,846 2,752 5,598
Capital leases 3,261 - 3,261
Deferred tax
liabilities (k) 117,234 (78,408) 38,826
163,691 (75,656) 88,035
Capital and reserves
Issued capital 890,049 - 890,049
Equity reserve (i) 31,491 336 31,827
Currency translation
adjustment (m) (173,571) 3,994 (169,577)
Deficit (51,768) (203,998) (255,766)
696,201 (199,668) 496,533
Non-controlling
interest 12,335 (333) 12,002
708,536 (200,001) 508,535
$ 872,227 $ (275,657) $ 596,570
The reconciliation of the statement of cash flows for the three months ended
September 30, 2008:
September 30, 2008 (3 months)
Effect of
Canadian transition to
Note GAAP IFRS IFRS
Operating activities
Net loss for the
period $ (14,266) $ 53 $ (14,213)
Adjustments to net
profit for non-cash
items
Depreciation (h) 4,783 (40) 4,743
Refining contract
amortization (o) - 355 355
Share-based payments (i) 278 133 411
Interest income (o) - (2,297) (2,297)
Finance costs (o) - 701 701
Foreign exchange gain 28 - 28
Deferred income tax
expense (6,363) - (6,363)
Adjustments to net
profit for cash items
Interest income
received (o) - 2,864 2,864
Finance costs paid (o) - (35) (35)
(15,540) 1,734 (13,806)
Net changes in
non-cash working
capital items
Trade receivables (g) 37,226 (1,420) 35,806
Inventories (832) - (832)
Accounts payable and
accrued
liabilities 6,229 - 6,229
27,083 314 27,397
Investing activities
Maturity of
short-term
investments (o) 101,195 29 101,224
(o) - (29) (29)
Purchase of other
assets
Property, plant and
equipment
expenditures (42,896) - (42,896)
58,299 - 58,299
Financing activities
Repayment of
short-term debt (o) 56 (130) (74)
Other long-term
liabilities (o) 1,533 (1,491) 42
1,589 (1,621) (32)
Effect of exchange
rate changes on cash
and cash equivalents (8,411) 1,307 (7,104)
Increase in cash and
cash equivalents 78,560 - 78,560
Cash and cash
equivalents,
beginning
of period 90,734 - 90,734
Cash and cash
equivalents, end of
period $ 169,294 $ - $ 169,294
The reconciliation of the statement of cash flows for the nine months ended
September 30, 2008:
September 30, 2008 (9 months)
Effect of
Canadian transition to
Note GAAP IFRS IFRS
Operating activities
Net profit for the
period $ 20,952 $ (430) $ 20,522
Adjustments to net
profit for non-cash
items
Depreciation (h) 13,761 (144) 13,617
Refining contract
amortization (o) - 1,078 1,078
Share-based payments (i) 1,845 395 2,240
Interest income (o) - (7,981) (7,981)
Finance costs (o) - 2,957 2,957
Foreign exchange gain (1,100) - (1,100)
Deferred income tax
expense 7,417 - 7,417
Adjustments to net
profit for cash items
Interest income received (o) - 7,803 7,803
Finance costs paid (o) - (398) (398)
42,875 3,280 46,155
Net changes in non-cash
working capital items
Trade receivables (g) 23,905 (1,448) 22,457
Inventories (1,188) - (1,188)
Accounts payable and
accrued
liabilities 12 ,462 - 12,462
78,054 1,832 79,886
Investing activities
Maturity of short-term
investments (o) 163,520 84 163,604
Purchase of other assets (o) - (84) (84)
Property, plant and
equipment
expenditures (101,245) - (101,245)
62,275 - 62,275
Financing activities
Common shares issued
for cash, net of
share issue costs 21,440 - 21,440
Repayment of short-term
debt (o) 348 (1,378) (1,030)
Other long-term
liabilities (o) (1,737) (2,105) (3,842)
20,051 (3,483) 16,568
Effect of exchange rate
changes on cash
and cash equivalents (9,904) 1,651 (8,253)
Increase in cash and
cash equivalents 150,476 - 150,476
Cash and cash
equivalents, beginning
of period 18,818 - 18,818
Cash and cash
equivalents, end of
period $ 169,294 $ - $ 169,294
The reconciliation of the statement of cash flows for the twelve months ended
December 31, 2008:
December 31, 2008 (12 months)
Effect of
Canadian transition to
Note GAAP IFRS IFRS
Operating activities
Net profit (loss) for
the period $ 12,935 $ (226,051) $ (213,116)
Adjustments to net
profit (loss) for
non-cash items
Depreciation (h) 14,877 (215) 14,662
Refining contract
amortization 1,353 - 1,353
Impairment (n) - 313,603 313,603
Share-based payments (i) 4,290 335 4,625
Interest income (o) - (8,944) (8,944)
Finance costs (o) 2,845 880 3,725
Foreign exchange loss (o) 5,731 (3,576) 2,155
Realized foreign
exchange gain (o) - (1,157) (1,157)
Deferred income tax
recovery (k) (13,623) (87,808) (101,431)
Adjustments to net
profit (loss) for cash
items
Interest income
received (o) - 10,028 10,028
Finance costs paid (o) - (375) (375)
28,408 (3,280) 25,128
Net changes in
non-cash working
capital items
Trade receivables (g) 10,765 3,266 14,031
Inventories 1,391 - 1,391
Accounts payable and
accrued
liabilities 12,962 - 12,962
53,526 (14) 53,512
Investing activities
Acquisitions, net of
cash acquired (39,589) - (39,589)
Maturity of short-term
investments (o) 119,318 42 119,360
Purchase of other
assets (o) - (42) (42)
Property, plant and
equipment
expenditures (143,373) - (143,373)
(63,644) - (63,644)
Financing activities
Common shares issued
for cash, net of
share issue costs 22,004 - 22,004
Repayment of
short-term debt (o) (892) 892 -
Other long-term
liabilities (o) (3,411) (898) (4,309)
17,701 (6) 17,695
Effect of exchange
rate changes on cash
and cash equivalents (595) 20 (575)
Increase in cash and
cash equivalents 6,988 - 6,988
Cash and cash
equivalents, beginning
of period 18,818 - 18,818
Cash and cash
equivalents, end of
period $ 25,806 $ - $ 25,806
16. Subsequent events
From October 1, 2009 to November 12, 2009 there were no subsequent events.
Date: 13/11/2009 08:34:03 Produced by the JSE SENS Department.
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