| Thu 19 Nov 2009, 7:05 | | SIM - Simmer And Jack Mines Limited - Abridged reviewed interim group financial |
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SIM
SIIF
SIM - Simmer And Jack Mines Limited - Abridged reviewed interim group financial
statements of Simmer And Jack Mines, Limited
SIMMER AND JACK MINES LIMITED
(Registration number 1924/007778/06)
Incorporated in the Republic of South Africa
ISIN number: ZAE000006722
JSE Share code: SIM
("Simmers" or the "Company")
ABRIDGED REVIEWED INTERIM GROUP FINANCIAL STATEMENTS OF SIMMER AND JACK MINES,
LIMITED
Key financial points:
* Headline loss per share narrowed from 14,23 cents per share to 12,81 cents per
share
* Net asset value up from ZAR2,2 billion to ZAR3,6 billion
* Production increased 5% to 66 295 oz or 2 062 kg (FY2009: 62 880 oz or 1 956
kg)
* Total cash costs rose 17% to ZAR542 million (FY2009: ZAR464 million)
* Revenue up 16% to ZAR499 million (FY2009: ZAR428 million)
* Operating loss ZAR65 million
* Cash and cash equivalents of ZAR787 million (excludes ZAR160 million credit
facility granted to FIU)
Operational developments
* Rationalisation process completed at Transvaal Gold Mining Estates Limited
("TGME") and Buffelsfontein Gold Mines Limited ("BGM")
* Two key capital projects completed on schedule and within budget at BGM
* Cost-saving synergies identified with Tau Lekoa
* Scoping study on Weltevreden complete
Post period end
* Rehabilitation of BGM`s high grade number five shaft complete
* DMR grants amendment to second surface project at TGME
The first six months of the 2010 financial year were characterised by dramatic
cost increases and a volatile gold price. Despite a 5% increase in gold
production, from 62 880 ounces (1 956 kg) to 66 295 ounces (2 062 kg), mounting
cash costs impacted operating margins. Cash costs rose by 17% owing to above
inflation related increases in the costs of power, labour, contractors and
mining consumables.
Financial comparisons between Q2 FY2010 and Q2 FY2009 are no longer analogous
owing to Simmers` stake in FIU having been diluted to 37,24% in FY2010. This
changed the relationship from that of a subsidiary to an associate company,
triggering a change in accounting disclosures.
The Group remains vulnerable to high cash costs by virtue of being in a
development cycle and not yet at steady state production levels. During the
latter part of the period, rationalisation programmes were completed at both BGM
and TGME to control costs by eliminating uneconomic ounces and reducing
overheads.
At BGM, which currently accounts for 93% of Simmers` gold production, additional
volumes from both Tau Lekoa and Number five shaft will help stabilise cash costs
and improve margins. Together, these new sources will double BGM`s current
annual production over the next three years.
The Group`s 37,24% investment in FIU is currently ascribed a value of ZAR2,2
billion. Given the 44% production ramp-up that took place at FIU in Q2 FY2010,
the value of this investment is expected to increase substantially. Until such
time as these volumes materialise out of both Simmers and First Uranium,
however, the Simmers share price will continue to reflect the high levels of
risk inherent in bringing development projects to market in a volatile
environment.
Vulisango dispute
In September 2009 a dispute between Simmers and its empowerment partner,
Vulisango Holdings Limited, led to the resignation of three Vulisango nominees
and Mr Kevin Wakeford from the Simmers board, following unresolved conflicts of
interests and breaches of confidentiality. The nominations committee is actively
in the process of filling the vacant seats on the board and aims to
substantially increase the ratio of independent non-executive directors. Mr
Stuart Murray`s resignation was received prior to the resignation of the
Vulisango directors and is unrelated to the conflict.
On 13 November 2009, Simmers received a notice from the joint provisional
liquidators of Xelexwa Investment Holdings (Pty) Limited (in liquidation) and a
letter on a Vulisango letterhead signed by the CEO of Vulisango, whereby they
requested Simmers to convene an extraordinary general meeting of Simmers
shareholders for the purpose of proposing the appointment of eight new directors
to the Simmers board of directors and the removal of four of the current six
Simmers board members. The company is reviewing the notice and shareholders will
be informed of any developments in due course.
BUFFELSFONTEIN GOLD MINE (BGM)
The recent completion of three critical Capex projects designed to streamline
costs and boost high-grade production combined with the merger of Tau Lekoa
alters the risk profile of this operation. BGM performed significantly better
than its peers and is expected to move down the cost curve once the benefits of
the rationalisation process (initiated in August 2009) flow through.
Cash costs are expected to fall from US$1 024/oz and ZAR257 670/kg to around
US$956/oz and ZAR242 857/kg in Q3 FY2010, assuming an exchange rate of ZAR7,90
to the US dollar. The full impact of the rationalisation process as well as the
integration of Tau Lekoa will only be felt in the latter part of the fourth
quarter with cash costs of between ZAR202 000/kg (US$795/oz) and ZAR212 000/kg
(US$834/oz) expected for Q4 FY2010, assuming an exchange rate of ZAR7,90 to the
US dollar.
TAU LEKOA
The integration of Tau Lekoa with BGM is progressing as planned.
The synergistic benefits of running Tau Lekoa through BGM are expected to reduce
total costs at Tau Lekoa by approximately 20% - approximately ZAR100 million per
annum.
WELTEVREDEN
Phase One of the development of the Weltevreden resource, a shallow, up-dip
extension of Tau Lekoa, has commenced. Development of this 2,3 million ounce
resource will significantly extend the life of the Tau Lekoa operation to 2024.
A scoping report has been completed and a pre-feasibility study is on track for
completion in Q3 FY2010.
TRANSVAAL GOLD MINING ESTATES (TGME)
The complexity of the permitting process led to the temporary suspension of
underground production at TGME in July 2009. Following the success of
Elandsdrift, the Group`s first test heap leach pad, TGME`s focus is currently on
the development of other low-cost surface resources in the area. The second such
target is a heap leach pad to test the characteristics of the Pilgrim`s Trend
Deposit. An amendment to TGME`s Environmental Management Programme was recently
approved by the Department of Mineral Resources and construction is expected to
commence by the end of November 2009.
Production for Q3 FY2010 will be from surface sources only and is expected to be
between 2 890 ounces (90kg) and 3 215 ounces (100kg) at a cash cost of between
US$925/oz and US$945/oz (ZAR235 000/kg and ZAR240 000/kg).
FIRST URANIUM CORPORATION (FIU)
The interim results for First Uranium can be viewed at www.firsturanium.com.
PROSPECTS
The Group`s focus for the next six months is on controlling costs and preserving
capital in the face of an increasingly volatile operating environment. In
response to the crisis in the South African mining industry precipitated by the
strong rand and rising power costs, Simmers has completed rationalisation
programmes at BGM and TGME. These initiatives will be further boosted following
the integration of Tau Lekoa mine. Phase One of the pre-feasibility study on the
Weltevreden resource is on track and development could commence as early as
April 2010. TGME, is focusing on low-cost, low-risk projects. At First Uranium,
the focus remains on production ramp-up of gold and uranium at Ezulwini Mine,
and the completion of the first two uranium modules at Mine Waste Solutions.
WEBCAST
A webcast featuring a presentation of the Group`s interim results for the six
months ended 30 September 2009 will commence at 3 pm Central African time (CAT)
and 8 am Eastern Standard time (EST), today, Thursday, 19 November 2009. This
will be followed by a question and answer (Q&A) session.
A teleconference facility for both the webcast and Q&A will also be available -
please see the details below.
Webcast:
Please log on to www.simmers.co.za at 3 pm CAT and 8 am EST, today, Thursday, 19
November 2009, where the presentation and Q&A may be followed online.
Conference call:
The dial in for call participants are as follows:
Johannesburg (Telkom): 011 535 3600
South Africa Toll-free: 0 800 200 648
UK Toll-free: 0 800 917 7042
Australia Toll-free: 1 800 350 100
Canada Toll-free: 1 866 605 3852
USA Toll-free: 1 800 860 2442
Other: +27 11 535 3600
Playback numbers: playback code 2544#
Johannesburg: 011 305 2030
UK Toll-free: 0 808 234 6771
AU Toll-free: 1 800 091 250
USA: 1 412 317 0088
Other: +27 11 305 2030
If you have any queries please do not hesitate to contact:
Iris Pilane / Zubeir Shah (Brunswick): +27 11 502 7400
Gail Strauss (Simmers): +27 11 830 0390
STATEMENT OF FINANCIAL POSITION
as at 30 September 2009
Reviewed six
months as at
30 Sep 09
Figures in Rand thousand Notes
ASSETS
Non-current assets
Investment property 34,004
Property, plant and equipment 2 783,942
Goodwill -
Investments in subsidiaries -
Investment in associates 3 2,078,801
Financial assets 14,186
Environmental rehabilitation trust fund 4 145,058
3,055,991
Current assets
Loans to associates 5 167,032
Inventories 6 33,582
Trade and other receivables 7 73,365
Reimbursive asset 8 81,842
Financial assets -
Cash and cash equivalents 787,423
1,143,244
Non-current assets held for sale 1,489
Total assets 4,200,724
EQUITY AND LIABILITIES
Equity
Equity attributable to owners of the parent
Share capital and premium 1,231,117
Reserves 303,181
Retained income/(accumulated loss) 2,076,676
Convertible debentures - equity -
Equity attributable to owners of the parent 3,610,974
Non-controlling interest 1
3,610,975
LIABILITIES
Non-current liabilities
Convertible debentures - debt -
Deferred tax -
Finance lease obligation 6,033
Environmental rehabilitation provision 9 205,748
Financial liabilities 10 219,135
430,916
Current liabilities
Finance lease obligation 2,806
Financial liabilities 10 13,775
Current tax payable 36
Trade and other payables 11 142,216
158,833
Total liabilities 589,749
Total equity and liabilities 4,200,724
Reviewed six Audited twelve
months as at months as at
30 Sep 08 Restated 31 Mar 09
Figures in Rand thousand
ASSETS
Non-current assets
Investment property 17,193 33,479
Property, plant and equipment 3,065,665 720,804
Goodwill 7,415 -
Investments in subsidiaries - -
Investment in associates - 2,124,404
Financial assets 15,867 14,194
Environmental rehabilitation trust fund 175,235 138,531
3,281,375 3,031,412
Current assets
Loans to associates - 3,612
Inventories 81,527 37,951
Trade and other receivables 169,751 86,081
Reimbursive asset - 81,842
Financial assets - 2,973
Cash and cash equivalents 424,782 842,678
676,060 1,055,137
Non-current assets held for sale 1,274 1,969
Total assets 3,958,709 4,088,518
EQUITY AND LIABILITIES
Equity
Equity attributable to owners of the parent
Share capital and premium 843,358 951,847
Reserves 1,383,526 268,862
Retained income/(accumulated loss) (620,810) 2,200,499
Convertible debentures - equity 280,580 -
Equity attributable to owners of the
parent 1,886,654 3,421,208
Non-controlling interest 303,010 -
2,189,664 3,421,208
LIABILITIES
Non-current liabilities
Convertible debentures - debt 890,583 -
Deferred tax 86,177 -
Finance lease obligation - 3,198
Environmental rehabilitation
provision 253,219 200,912
Financial liabilities - 263,827
1,229,979 467,937
Current liabilities
Finance lease obligation - 1,277
Financial liabilities 122,650 23,267
Current tax payable - 36
Trade and other payables 416,416 174,793
539,066 199,373
Total liabilities 1,769,045 667,310
Total equity and liabilities 3,958,709 4,088,518
STATEMENT OF COMPREHENSIVE INCOME
for the period ended 30 September 2009
Reviewed six
months ended
30 Sep 09
Figures in Rand thousand Notes
Revenue 498,528
Cost of production (563,718)
Gross (loss)/profit (65,190)
Other income 5,106
General administrative and overhead expenditure (47,485)
Restructuring costs (3,089)
Share option costs (18,103)
Operating loss (128,761)
Finance income 91,069
Loss from equity accounted investment (45,530)
Partial disposal of investment in subsidiary -
Finance charges (41,433)
(Loss)/profit before taxation (124,655)
Taxation -
(Loss)/profit for the period (124,655)
Other comprehensive income -
Foreign currency translation differences for
foreign operations
(Loss)/gain on non-current assets held for sale (267)
Net change of fair value transferred through
profit and loss 964
Other comprehensive income for the period, net of
taxation 697
Total comprehensive (loss)/income for the period (123,958)
Total comprehensive (loss)/income attributable to:
Owners of the parent (123,958)
Non-controlling interest -
Earnings per share
Basic (loss)/earnings per share 12 (10.57)
Diluted (loss)/earnings per share 12 (10.70)
Reviewed six Audited twelve
months ended months ended
30 Sep 08 Restated 31 Mar 09
Figures in Rand thousand
Revenue 563,288 1,336,535
Cost of production (563,590) (1,244,746)
Gross (loss)/profit (302) 91,789
Other income 9,503 49,815
General administrative and overhead
expenditure (118,375) (287,397)
Restructuring costs - -
Share option costs (64,895) (110,363)
Operating loss (174,069) (256,156)
Finance income 43,627 60,750
Loss from equity accounted investment - (109,657)
Partial disposal of investment in
subsidiary - 3,232,089
Finance charges (69,522) (322,877)
(Loss)/profit before taxation (199,964) 2,604,149
Taxation (8,082) (12,695)
(Loss)/profit for the period (208,046) 2,591,454
Other comprehensive income
Foreign currency translations
differences for foreign operations - (8,860)
(Loss)/gain on non-current assets
held for sale - 288
Net change of fair value transferred
through profit and loss 25,724 15,532
Other comprehensive income for the
period, net of taxation 25,724 6,960
Total comprehensive (loss)/income
for the period (182,322) 2,598,414
Total comprehensive (loss)/income
attributable to:
Owners of the parent (151,163) 2,670,146
Non-controlling interest (31,159) (71,732)
Earnings per share (182,322) 2,598,414
Basic (loss)/earnings per share (14.23) 250.56
Diluted (loss)/earnings per share (13.07) 245.12
STATEMENT OF CHANGES IN EQUITY
for the period ended 30 September 2009
GROUP Attributable to owners of the parent
Figures in Rand thousand
Share capital Share premium Other reserves
Balance at 1 April 2008
as restated 20,738 822,619 1,424,395
Comprehensive loss for
the period - - -
Net movement in reserves - - (40,869)
Total changes - - (40,869)
Balance at 30 September
2008 as restated 20,738 822,619 1,383,526
Comprehensive profit for
the period - - -
Issue of shares for cash 986 109,528 -
Treasury shares movement 33 2,265 -
Share issue cost written
off against share premium - (4,322) -
Net movement in reserves - - (1,114,664)
Transfer on
deconsolidation of subsidiary - - -
Total changes 1,019 107,471 (1,114,664)
Balance at 31 March 2009 21,757 930,090 268,862
Comprehensive loss for
the period - - -
Issue of shares for cash 2,199 277,071 -
Share based payments - - 34,319
Total changes 2,199 277,071 34,319
Balance at 30 September 2009 23,956 1,207,161 303,181
GROUP Attributable to owners of the parent
Figures in Rand thousand
Convertible Accumulated Total
debenture - (loss)/Retained attributable to
equity income owners of the
parent
Balance at 1 April
2008 as restated 280,580 (469,647) 2,078,685
Comprehensive loss
for the period - (151,163) (151,163)
Net movement in reserves - - (40,869)
Total changes - (151,163) (192,032)
Balance at 30
September 2008 as
restated 280,580 (620,810) 1,886,653
Comprehensive profit
for the period - 2,821,309 2,821,309
Issue of shares for cash - - 110,514
Treasury shares movement - - 2,298
Share issue cost
written off against
share premium - - (4,322)
Net movement in reserves - - (1,114,664)
Transfer on
deconsolidation of
subsidiary (280,580) - (280,580)
Total changes (280,580) 2,821,309 1,534,555
Balance at 31 March 2009 - 2,200,499 3,421,208
Comprehensive loss
for the period - (123,958) (123,958)
Issue of shares for cash - - 279,271
Share based payments - 135 34,454
Total changes - (123,823) 189,767
Balance at 30 September 2009 - 2,076,676 3,610,975
GROUP
Figures in Rand thousand Non-controlling Total equity
interest
Balance at 1 April 2008 as restated 334,169 2,412,854
Comprehensive loss for the period (31,159) (182,322)
Net movement in reserves - (40,869)
Total changes (31,159) (223,191)
Balance at 30 September 2008 as restated 303,010 2,189,663
Comprehensive profit for the period (40,573) 2,780,736
Issue of shares for cash - 110,514
Treasury shares movement - 2,298
Share issue cost written off against share
premium - (4,322)
Net movement in reserves - (1,114,664)
Transfer on deconsolidation of subsidiary (262,437) (543,017)
Total changes (303,010) 1,231,545
Balance at 31 March 2009 - 3,421,208
Comprehensive loss for the period - (123,958)
Issue of shares for cash - 279,271
Share based payments - 34,454
Total changes - 189,767
Balance at 30 September 2009 - 3,610,975
STATEMENT OF CASH FLOWS
for the period ended 30 September 2009
Reviewed six Reviewed six Audited twelve
months ended months ended months ended
30 Sep 09 30 Sep 08 Restated 30 Mar 09
Figures in Rand thousand
Cash flows from
operating activities
Cash absorbed by
operations (131,367) (58,065) (236,055)
Finance income 91,069 43,627 60,750
Finance charges (41,433) (69,522) (322,877)
Tax paid - (4,340) (11,866)
Net cash from
operating activities (81,731) (88,300) (510,048)
Cash flows from
investing activities (87,387) (1,067,511) (1,188,089)
Cash flows from
financing activities 113,863 (1,419) 1,072,680
Net effect of
exchange rate
changes on cash
held in foreign
currencies - - (113,877)
Net decrease in
cash and cash
equivalents (55,255) (1,157,230) (739,334)
Cash and cash
equivalents at the
beginning of the
period 842,678 1,582,012 1,582,012
Total cash and cash
equivalents at end
of the period 787,423 424,782 842,678
NOTES TO THE INTERIM FINANCIAL STATEMENTS
for the period ended 30 September 2009
1. Accounting policies
1.1 General information
Simmers and its subsidiaries (together the "Group") are engaged in exploration
and mining activities, mainly gold and uranium. The Group has mining operations
in
Gauteng, North West and Mpumalanga Provinces in South Africa.
1.2 Presentation of Financial Statements
The financial statements have been prepared in compliance with International
Financial Reporting Standards ("IFRS") and the Companies Act of South Africa
and in accordance with International Accounting Standards (IAS 34): Interim
Financial Reporting. The financial statements have been prepared on the
historical cost basis, unless otherwise stated.
1.3 The financial statements have been reviewed by the Company`s auditors, Grant
Thornton. It is available for inspection at the Company`s registered office.
These accounting policies are consistent with the previous period.
2. Property, plant and equipment
Reviewed six months ended 30 Sep 09
Accumulated Carrying value
Cost depreciation
R`000 R`000 R`000
Land and buildings 8,192 (1,784) 6,408
Forestry asset - - -
Plant and equipment 191,290 (35,381) 155,909
Furniture and fixtures 20,597 (7,033) 13,564
Motor vehicles 1,813 (541) 1,272
Mining assets 25,781 (8,358) 17,423
Computer equipment and software 11,281 (6,404) 4,877
Tailings for processing - - -
Development and infrastructure 629,461 (128,415) 501,046
Mining rights 5,743 (1,672) 4,071
Exploration costs 79,372 - 79,372
Total 973,530 (189,588) 783,942
Reviewed six months ended 30 Sep 08
Cost Accumulated Carrying value
depreciation
R`000 R`000 R`000
Land and buildings 35,038 (2,892) 32,146
Forestry asset 276 - 276
Plant and equipment 1,371,050 (132,481) 1,238,569
Furniture and fixtures 10,151 (2,479) 7,672
Motor vehicles 16,328 (2,055) 14,273
Mining assets 705,265 (80,962) 624,303
Computer equipment and
software 19,958 (6,922) 13,036
Tailings for processing 240,681 (7,765) 232,916
Development and infrastructure 813,357 (25,311) 788,046
Mining rights 51,344 (1,656) 49,688
Exploration costs 64,740 - 64,740
Total 3,328,188 (262,523) 3,065,665
Audited twelve months ended 31 Mar 09
Cost Accumulated Carrying value
depreciation
R`000 R`000 R`000
Land and buildings 8,020 (1,598) 6,422
Forestry asset - - -
Plant and equipment 172,899 (29,727) 143,172
Furniture and fixtures 19,466 (5,369) 14,097
Motor vehicles 1,813 (455) 1,358
Mining assets 19,244 (7,357) 11,887
Computer equipment and software 10,881 (5,734) 5,147
Tailings for processing - - -
Development and infrastructure 575,144 (114,105) 461,039
Mining rights 5,312 (1,672) 3,640
Exploration costs 74,042 - 74,042
Total 886,821 (166,017) 720,804
Certain of the assets for the year ended 31 March 2009 have been reclassified.
3. Investment in associate
Name of company % holding 30 % holding 2009 % holding 2008
September 2009
% % %
Associate
First Uranium Corporation 37.24% 40.99% n/a
Name of company Carrying Carrying Carrying
amount amount amount
30 September 2009 30 September 2008 31 March 2009
R`000 R`000 R`000
Associate
First Uranium Corporation 2,078,801 - 2,124,404
2,078,801 - 2,124,404
As at 30 September 2009 the market value of the investment was R1,2 billion.
4. Environmental rehabilitation trust fund
The Group makes contributions to controlled funds that were established to meet
the cost of some of its decommissioning, restoration and environmental
rehabilitation liabilities. The use of these funds is limited to the
rehabilitation of the mines as directed by the Trustees with the Department of
Mineral and Resources`s ("DMR") approval.
With the provisional liquidation process by DRD Gold Limited ("DRD") of BGM
during 2005, the DMR issued a directive, whereby the then Buffelsfontein
Rehabilitation Trust Funds were "ring fenced" for the specific rehabilitation
of BGM and the funds were then transferred by DRD to a DMR designated trust
fund for this purpose. The directive also provided that should the new owners
establish a new trust, these funds could either be transferred back to the new
trust or remain in the DMR`s trust fund.
A new Buffelsfontein Environmental Rehabilitation Trust was established during
2006 and since then, BGM has been unsuccessful with its requests to the DMR, to
transfer these funds back into the newly established trust.
The DMR confirmed in a letter received by us on 21 May 2008 that interest
earned from investment of the funds accrues to the Department of Mineral and
Resources Rehabilitation Trust Fund for rehabilitation purposes. The DMR did not
confirm the amount of interest accrued to date. Management has however
calculated and estimated the accrued interest based on earnings from similar
investments provided by Sanlam.
The DMR confirmed in a letter received by us on 17 December 2008 that the
Department will consider the relinquishment of the funds back to the Company
pending the furnishing of certain information to the DMR. This information has
now been submitted to the DMR.
Legal opinion has been obtained confirming that the company is entitled to the
growth on the Trust Fund for the purposes of the rehabilitation of BGM.
Reviewed six Reviewed six Audited twelve
months ended months ended months ended
30 Sep 09 30 Sep 08 Restated 31 Mar 09
R`000 R`000 R`000
145,058 175,235 138,531
5. Loans to Group companies
Associates
First Uranium
Corporation 4,358 - 3,612
The loan is
unsecured, bears
interest at prime
and has no fixed
repayment terms.
First Uranium
Corporation 162,674 - -
Unsecured loan
bearing interest at
JIBAR + 7 % and is
repayable
in full in August
2010 with interest
payable quarterly
in arrears
167,032 - 3,612
Reviewed six Reviewed six Audited twelve
months ended months ended months ended
30 Sep 09 30 Sep 08 Restated 31 Mar 09
R`000 R`000 R`000
6. Inventories
Medical supplies 1,146 1,112 1,184
Consumables 19,058 34,949 18,157
Gold-in-process,
Heap Leach &
Unprocessed ore
(stockpiles) 13,378 46,255 18,610
33,582 82,316 37,951
Provision for
obsolescence in
consumables - (789) -
33,582 81,527 37,951
The provision for obselescence in consumables is determined by the different
Materials Management departments through scrutiny of slow moving stock reports
(no issues for 24 months), from information received from Original Equipment
Manufacturers and agents on a continuous basis as well as standardisation
approved by the Standards Committee and deteriorated stocks identified through
a process of shelf life as prescribed by suppliers and/or deterioration through
nature elements.
The movement in the provision for obselescence in consumables has been included
in `cost of production` in the income statement.
7. Trade and other receivables
Reviewed six Reviewed six Audited twelve
months ended months ended months ended
30 Sep 09 30 Sep 08 Restated 31 Mar 09
R`000 R`000 R`000
Trade and other receivables 45,667 46,488 51,508
Prepayments 5,043 6,349 8,458
VAT 22,655 116,914 26,115
73,365 169,751 86,081
8. Reimbursive asset
On 20 December 2006, First Uranium (Pty) Ltd ("FUSA") entered into an agreement
to acquire a11 surface tailings ("Buffelsfontein Tailings") from BGM, a
subsidiary of Simmers ("the Buffelsfontein Tailings and Rights Agreement"). It
was originally contemplated that the transaction would be recognized on the
satisfaction of the conditions precedent in the Buffelsfontein Tailings and
Rights Agreement.
While the conditions have not yet been satisfied, Mine Waste Solutions ("MWS")
commenced processing the material from the Buffelsfontein Tailings in December
2007. All the benefits thereof accrued to MWS, and consequently, MWS assumed the
asset retirement obligation related to the Buffelsfontein Tailings.
As the DMR has not yet approved the transfer of the mining rights to MWS, the
liability still resides with BGM.
The reimbursive asset and liability will be offset against each other once the
transfer of the mining right has been approved by the DMR.
Reviewed six Reviewed six Audited twelve
months ended months ended months ended
30 Sep 09 30 Sep 08 Restated 31 Mar 09
R`000 R`000 R`000
81,842 - 81,842
9. Environmental rehabilitation provision
Reviewed six Reviewed six Audited twelve
months ended months ended months ended
30 Sep 09 30 Sep 08 Restated 31 Mar 09
R`000 R`000 R`000
Reconciliation of
environmental
rehabilitation provision
Opening Balance 200,912 254,638 254,638
Adjustment of provision - - 21,108
Deconsolidation of subsidiary - - (142,544)
Recognition of
reimbursive liability - - 81,842
Transferred - - (5,080)
Utilised during the year (226) (1,419) (9,018)
Discounting of liability - - (22,280)
Unwinding of discount 5,062 - 22,246
Balance at the end
of the year 205,748 253,219 200,912
The Group has an obligation to incur restoration, rehabilitation and
environmental costs when environmental disturbance is caused by development and
mining activities. A provision is recognised for the present value of such
future costs.
Provision is also made for the future costs relating to the decommissioning of
the plant or other site restoration work.
It is anticipated that the cost of restoration and decommissioning will be
incurred over the life of the mine and that the Group will attend to the
rehabilitation itself.
The environmental rehabilitation provision of TGME and BGM has been reviewed by
GCS (Proprietary) Limited, a water, environmental engineering and science
consultancy company.
The provisions are based on the estimated net cost for the respective companies
to rehabilitate their mines. On the assumption that third parties will attend
to the rehabilitation of the mines, the undiscounted costs, including VAT and
10% contingency, are estimated at R331 million (2009: R175 million) and are in
the process of finally being agreed with the DMR.
Guarantees in conjunction with Environmental Trust Funds have been put in place
for all of the abovementioned operations, except for the BGM operation. This is
due to uncertainty surrounding the confirmation of the final agreed liablity
with the DMR. Once confirmation has been obtained, the existing approved
facility with Lombards will be called upon to furnish the guarantee for the
remaining shortfall.
Reviewed six Reviewed six Audited twelve
months ended months ended months ended
30 Sep 09 30 Sep 08 Restated 31 Mar 09
R`000 R`000 R`000
10. Financial liabilities
Aberdeen
International
Incorporated
("Aberdeen") 232,910 122,650 280,359
The Company entered into an agreement with Aberdeen, a Canadian exploration and
royalty company trading on TSX, whereby Aberdeen provided a loan facility of
US$ 10 million to acquire BGM.
The loan had a 3% coupon up to a gold price of US$400/oz and 2.5% thereafter.
In addition a Net Smelter Royalty ("NSR") on BGM`s gold production was charged,
which was linked to the price of gold ranging from 0.5% NSR at US$300/oz to a
4.75% NSR at gold prices of US$750/oz or higher. The principal amount of the
loan was converted into a 1% NSR on BGM`s gold production.
In October 2008, the Company advised shareholders that Aberdeen had elected to
convert its $10 million loan facility into equity. Accordingly, a circular was
dispatched to shareholders on 30 January 2009 outlining the implications of the
conversion being accepted or declined, and recommending that shareholders vote
against the conversion. The issue was put to the vote at a general meeting held
at the Company`s registered office on 16 February 2009, whereupon 87.1% of the
voteable shares present voted against the issue of shares to Aberdeen. 71.88% of
the voteable shares were represented at the meeting.
The loan is secured by a bond over BGM`s North Plant.
The loan, royalties and options have been fair valued by Mr Ranti Mothapo, a
consulting actuary and analyst with the Matlotlo Group (Proprietary) Limited.
Disputes with Aberdeen
During December 2007, Aberdeen served an application on the Company in which it
claimed:-
* an order declaring that the Company acted in breach of a loan agreement
whereby Aberdeen loaned US$ 10 million;
* lost financing fees; and
* damages of R68.7 million in damages for loss of share value.
The Company opposed the matter and filed an answering affidavit and the matter
was argued on 1 September 2008. At court, Aberdeen abandoned all of their
claims except their claim for an order declaring that the Company acted in
breach of the loan agreement.
This claim was argued and Aberdeen`s application was dismissed with costs.
Aberdeen subsequently applied for leave to appeal and this was granted on 29
April 2009. The matter will in all probability be heard during 2010 in the
Supreme Court of Appeal of South Africa.
On 11 July 2009 Aberdeen served a new summons on Simmers in which it claimed:-
* rectification of the agreement to suit Aberdeen`s interpretation of the
agreement, together with repayment of the US$10 million loan;
* US$1 310 825.25 for the graduated royalty for the period of 16 October 2008 to
31 December 2008 (the date of the conversion notice);
* interest in the amount of US$52 595.63 on the loan amount for the period of 16
October 2008 to 31 December 2008.
Simmers is defending all of the claims.
232,910 122,650 287,094
Current portion 13,775 122,650 23,267
Non-current portion 219,135 - 263,827
232,910 122,650 287,094
11. Trade and other payables
Trade and other
payables 102,200 373,773 149,115
Accrued salary
related 40,016 42,643 25,678
142,216 416,416 174,793
Reviewed six Reviewed six Audited twelve
months ended months ended months ended
30 Sep 09 30 Sep 08 Restated 31 Mar 09
R`000 R`000 R`000
12. Headline loss
Reconciliation
between (loss) /
earnings and
headline loss:
Basic (loss) /
earnings for the period (123,958) (182,322) 2,598,414
Add back:
Non-controlling interest - 31,159 71,732
Attributable to the
owners of the parent (123,958) (151,163) 2,670,146
Impairment of
property, plant and equipment - - 505
Valuation gain on
available-for-sale investment - - 1
Disposal of property,
plant and equipment - gain - - (258)
Reversal of impairment - - (1,083)
Translation
difference of associate (41,258) - (8,860)
Conversion of
Aberdeen loan and
recognition of
perpetual royalty - - 166,872
Fair value
adjustment -
investment property (482) - (11,063)
Impairment of assets - - 337
Fair value
adjustment on held
for sale assets - - (669)
Partial disposal of
investment in subsidiary - - (3,232,089)
Non-controlling interest 15,364 - 3,632
Headline loss for
the period (150,333) (151,163) (412,529)
Basic profit /
(loss) per share (cents)* (10.57) (14.23) 250.56
Diluted profit /
(loss) per share (cents)* (10.70) (13.07) 245.12
Headline loss per
share (cents)* (12.81) (14.23) (38.71)
Diluted headline
loss per share (cents)* (12.97) (13.07) (37.87)
Net asset value per
share (cents)* 295.66 206.18 307.84
* Based on weighted
average number of
shares in issue
Reconciliation of
number of shares issued `000 `000 `000
Reported at 1 April 1,111,368 1,062,031 1,062,031
Shares issued for cash 109,950 - 49,337
Shares issued at
end of period 1,221,318 1,062,031 1,111,368
Weighted average
number of ordinary
shares in issue 1,173,252 1,062,031 1,065,681
Adjusted for:
- Share options (14,259) 94,567 23,660
Weighted average
number of ordinary
shares for diluted
earnings per share 1,158,993 1,156,599 1,089,341
Basic earnings per share is calculated by dividing the profit attributable to
equity holders of the Company by the weighted average number of ordinary shares
in issue during the period.
Due to a reclassification of costs and prior year adjustments, the comparative
Earnings per Share figures have changed from those disclosed during 2008.
Johannesburg
19 November 2009
Transfer secretaries
South Africa
Computershare Investor Services (Pty) Ltd
Ground Floor, 70 Marshall Street, Johannesburg, 2001, Republic of South Africa
United Kingdom
Capita Registrars
The Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4TU, United Kingdom
Auditors
Grant Thornton
Registered Office
5 Press Avenue, Selby, Johannesburg, 2025, Republic of South Africa
Sponsor
Macquarie First South Advisers, The Place, 1 Sandton Drive, South Wing, Sandown,
2146
Date: 19/11/2009 07:05:23 Produced by the JSE SENS Department.
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