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WGR
WGR
WGR - Wits Gold - Unaudited financial results for the six months ended 31 August
2009
Witwatersrand Consolidated Gold Resources Limited
(`Wits Gold` or `the Company`)
Incorporated in the Republic of South Africa
(Registration number 2002/031365/06)
JSE share code: WGR
ISIN: ZAE000079703
TSX share code: WGR
CUSIP number: S98297104
UNAUDITED FINANCIAL RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2009
Financial results for the six months ended 31 August 2009
The financial information herein is presented in South African Rand (R).
According to the Bank of Canada noon rate, the exchange rate, in effect as of
20 November 2009, was CAD $1.00 = R7.09.
The exchange rates, based on the Bank of Canada noon rate, in effect as of 31
August 2008, 28 February 2009 and 31 August 2009 were as follows:
31 August 2008 CAD $1.00 = R7.25
28 February 2009 CAD $1.00 = R7.95
31 August 2009 CAD $1.00 = R7.10
CONDENSED INCOME STATEMENT
for the six months ended 31 August 2009
Six months ended Year ended
31 August 31 August 28 February
2009 2008 2009
(Unaudited) (Unaudited) (Audited)
R R R
Revenue - - -
Operating loss (7 897 551) (8 765 124) (18 232 838)
Profit on disposal of
non-current assets - - 14 585
Net finance income 4 409 583 8 073 436 15 411 414
Sundry income 4 666 4 320 4 320
Fair value gain on financial asset - 245 152 245 152
Interest expense - - (34 592)
Loss for the period before
taxation (3 483 302) (442 216) (2 591 959)
Taxation 320 460 (733 016) (1 031 979)
Loss for the period (3 162 842) (1 175 232) (3 623 938)
Loss per share and diluted
loss per share and headline
loss per share
Weighted average number of
shares in issue 27 712 758 27 478 559 27 581 457
Basic and headline loss per
share (cents) (11.41) (4.28) (13.14)
Diluted weighted average
number of shares in issue 27 837 758 27 478 559 27 706 457
Diluted basic and headline
loss per share (cents) (22.05) (4.28) (20.26)
CONDENSED BALANCE SHEET
as at 31 August 2009
As at As at
31 August 31 August 28 February
2009 2008 2009
(Unaudited) (Unaudited) (Audited)
R R R
Assets
Non-current assets 98 996 745 65 048 992 86 751 487
Current assets 97 983 522 142 770 145 118 571 960
Total assets 196 980 267 207 819 137 205 323 447
Equity and liabilities
Capital and reserves 190 832 290 197 125 992 192 999 070
Non-current liabilities - 659 508 -
Current liabilities 6 147 977 10 033 637 12 324 377
Total equity and liabilities 196 980 267 207 819 137 205 323 447
CONDENSED CASH FLOW STATEMENT
for the six months ended 31 August 2009
Six months ended Year ended
31 August 31 August 28 February
2009 2008 2009
(Unaudited) (Unaudited) (Audited)
R R R
Cash flows from operating
activities
Cash utilised in
operating activities (11 366 568) (9 608 100) (15 345 709)
Taxation paid (1 103 369) (4 322) (4 322)
Net finance income 4 409 583 8 073 436 15 376 822
Net cash (utilised
in)/generated by
operating activities (8 060 354) (1 538 986) 26 791
Cash flows from investing
activities
Net cash (utilised in)/
generated by investing
activities (12 119 017) 220 474 (25 426 796)
Cash flows from financing
activities
Net cash generated by
financing activities - 6 346 848 6 395 071
(Decrease)/Increase in cash
and cash equivalents (20 179 371) 5 028 336 (19 004 934)
Cash and cash equivalents at
beginning of period 117 063 136 136 068 070 136 068 070
Cash and cash equivalents at
end of period 96 883 765 141 096 406 117 063 136
STATEMENT OF CHANGES IN EQUITY
for the six months ended 31 August 2009
Equity-
settled
share-
Ordinary based
share Share payment
capital premium reserve
R R R
Balance at
29 February 2008 (Audited) 272 909 179 582 518 14 998 351
Loss for the period - - -
Equity-settled share-based payments - - 1 373 226
Issue of share capital 6 000 6 364 000 -
Qualifying costs of share issue - (23 151) -
Balance at 31 August 2008
(Unaudited) 278 909 185 923 367 16 371 577
Balance at 28 February 2009
(Audited) 278 909 185 971 589 17 849 857
Loss for the period - - -
Equity-settled
share-based payments - - 990 658
Deferred taxation on revaluation - - -
Balance at 31 August 2009
(Unaudited) 278 909 185 971 589 18 840 515
Revaluation
reserve, Accu-
land and mulated
buildings loss Total
R R R
Balance at 29 February 2008
(Audited) 4 392 300 (8 664 929) 190 581 149
Loss for the period - (1 175 232) (1 175 232)
Equity-settled share-based payments - - 1 373 226
Issue of share capital - - 6 370 000
Qualifying costs of share issue - - (23 151)
Balance at 31 August 2008
(Unaudited) 4 392 300 (9 840 161) 197 125 992
Balance at 28 February 2009
(Audited) 1 187 582 (12 288 867) 192 999 070
Loss for the period - (3 162 842) (3 162 842)
Equity-settled share-based payments - - 990 658
Deferred taxation on revaluation 5 404 - 5 404
Balance at 31 August 2009
(Unaudited) 1 192 986 (15 451 709) 190 832 290
OVERVIEW
The Company is involved in the mineral exploration industry and does not
generate any operating income. Mineral exploration is highly speculative due to
a number of significant risks, including the possible failure to discover
mineral deposits that are sufficient in quantity and quality to justify the
completion of feasibility studies. Currently Wits Gold has completed a Pre-
Feasibility Study over its Bloemhoek project, however, additional work will be
required to be undertaken before a decision will be made to initiate a
Definitive Feasibility Study. Despite the historic exploration work on the
Company`s remaining Prospecting Rights, no other known bodies of commercial ore
or economic deposits have been determined. Additional work will be required in
order to determine if any economic deposits occur on these properties.
The Company has previously been able to raise sufficient capital from its
shareholders to fund its operating and exploration requirements. If the
Company`s current exploration programmes and studies are successful, additional
financing will be required to complete further feasibility studies as well as to
develop any mineral properties identified in order to bring them into commercial
production. The longer term exploration of the Company`s Prospecting Rights is
also dependent upon the Company`s ability to obtain additional financing through
the joint venturing of projects, debt financing, equity financing or other
means.
During the six-month period under review, Wits Gold did not issue any additional
shares.
The Wits Gold Annual General Meeting was held in Johannesburg on 24 July 2009.
Two directors, Dr Marc Watchorn and Mr Adam Fleming, were re-appointed by the
shareholders, following their retirement by rotation.
BASIS OF PREPARATION
The interim condensed financial statements for the six months ended 31 August
2009 are unaudited and have not been reviewed by our auditors. They have been
prepared in accordance with IAS 34 - Interim Financial Reporting and in
compliance with the Listings Requirements of the JSE Limited.
The financial information has been prepared on the basis of the recognition and
measurement requirements of International Financial Reporting Standards (IFRS).
The accounting policies of the Company have been consistently applied and these
financial statements should be read in conjunction with the annual report for
the year ended 28 February 2009.
The Company identified only one business segment, being exploration within South
Africa.
INTERIM OPERATIONS
The operating loss for the six months under review decreased by R0.9 million
when compared to the first six months of the prior year. The decrease in
operating loss results mainly from a decrease in consulting fees (R0.4 million),
and in employee share-based payment expenses (R0.9 million) offset by an
increase in staff salaries (R0.3 million).
The loss before taxation increased by R3 million due mainly to decreases in
interest received (R3.7 million) and in the fair value gain on financial assets
(R0.2 million) offset by the decrease in operating loss mentioned above.
The Company spent R12.2 million (2008 - R13.4 million) on intangible exploration
assets.
DIVIDEND
No dividend has been declared for the period under review (31 August 2008 -
Nil).
COMMITMENTS
The Company`s commitments amount to R29.5 million (2008 - R44.7 million), of
which R24.8 million (2008 - R44.1 million) is in respect of exploration
activities. The net decrease results from the completion of various drilling
projects.
EVENTS SUBSEQUENT TO THE REVIEW PERIOD
No material events have occurred since the accounting date and the date of this
report.
TOTAL MINERAL RESOURCES
Wits Gold currently holds legal title to 13 Prospecting Rights covering 102
512ha in the southern Free State, Potchefstroom and Klerksdorp goldfields. None
of these assets are presently in production and the directors are not aware of
any legal proceedings or any other material conditions that may impact on the
Company`s ability to continue with its exploration activities. The contained
Mineral Resources are currently reflected as being fully attributable to Wits
Gold. However, over certain properties of the southern Free State, Harmony has
an option to acquire a 40% interest in any future mine following the completion
of a Definitive Feasibility Study (DFS). Similar 40% clawback options apply to
some of the Potchefstroom Prospecting Rights where Gold Fields and AngloGold
Ashanti are the interested parties. In the Klerksdorp area, Gold Fields holds an
option to a 40% participation on conclusion of a DFS.
As part of the environmental management plan (EMP), the Company has lodged bank
guarantees totalling R215 000 with the Department of Mineral Resources (DMR).
This amount has been accepted for the work programmes proposed over the 13
Prospecting Rights granted to Wits Gold. EMP compliance will be monitored on an
ongoing basis for the duration of the Prospecting Rights.
During the past eight months, the Company has commissioned independent
geological reviews of the Beisa North and De Bron projects, both of which are
located in the southern Free State. In the Potchefstroom goldfield, Wits Gold
has been granted uranium Variation Rights to accompany the rights held for gold.
Consequently a revised Mineral Resource Estimate has been conducted to include
uranium. All of the technical reports resulting from these studies are filed on
the website www.sedar.com. These contain Mineral Resource Estimates compliant
with the NI 43-101 and SAMREC reporting codes. A summary of the Company`s total
Mineral Resources is tabulated below. These Mineral Resources are inclusive of
the Company`s Mineral Reserves.
Indicated gold resources
Tonnes Grade
Goldfield (millions) (g/t) (Moz)
SOFS 103.3 6.0 19.9
Potchefstroom - - -
Klerksdorp - - -
Total 103.3 6.0 19.9
Inferred gold resources
Tonnes Grade
Goldfield (millions) (g/t) (Moz)
SOFS 111.6 4.6 16.5
Potchefstroom 333.6 7.1 75.8
Klerksdorp 85.1 14.5 39.5
Total 530.3 7.8 131.8
Inferred uranium resources
Tonnes Grade
Goldfield (millions) (kg/t) (Mlb)
SOFS 211.1 0.225 104.5
Potchefstroom 250.0 0.300 163.6
Klerksdorp - - -
Total 461.1 0.265 268.1
A review of exploration data for the Beisa North area was undertaken by
ExplorMine Consulting where the principal target is the Beisa Reef.
During the period 1982 to 1984 this carbon-rich conglomerate was exploited for
uranium and by-product gold on the adjacent Beisa Mine by Gencor. At Beisa
North, an Inferred Mineral Resource has been estimated to a depth of 2 500m
below surface. This comprises 27.9Mt at 0.78kg/t U3O8 (47.84Mlbs), at a cut-off
of 50cm.kg/t with an additional 1.72g/t Au (1.55Moz).
Following the completion of the Company`s recent drilling programme in the De
Bron area, Snowden Mining Industry Consultants ("Snowden") reviewed the
project`s gold resources above a 300cm.g/t cut-off. This estimate, reported in
an NI43-101 technical document dated 19 June 2009, outlined an Indicated
Resource on the Beatrix, Kalkoenkrans, B and Leader Reefs of 23.2Mt at 5.2g/t Au
(3.85Moz). This represents a substantial (41%) increase in the Indicated
Resources, whilst the Inferred Resource decreased by 27% to 9.4Mt at 5.3g/t Au
(1.58Moz).
On 15 December 2008, the Company was granted the uranium Variation Rights over
44 658ha in the Potchefstroom goldfield to complement the gold rights already
held. Snowden has subsequently completed an estimate of the uranium resources
within this area. Since uranium has been a by-product of gold mining in the
adjacent areas, the uranium resource was only reported where gold values exceed
the 300cm.g/t and 600cm.g/t cut-offs as applied for narrow and wider reefs
respectively, and to a maximum depth of 5 000m. Snowden, in an NI 43-101
document dated 29 October 2009, estimated an Inferred Resource of 250.0Mt at
0.3kg/t U3O8, containing 163.6Mlb uranium.
BLOEMHOEK PRE-FEASIBILITY STUDY AND MINERAL RESERVES
During September 2009, the Company completed a Pre-Feasibility Study ("PFS") on
its Bloemhoek project adjacent to Beatrix gold mine in the southern Free State.
This PFS was undertaken by Turnberry Projects (Pty) Limited and is detailed in a
NI 43-101 document filed on www.sedar.com. This study has illustrated that
mining is both technically and economically viable at Bloemhoek and has resulted
in the conversion of Indicated Mineral Resources into a Probable Mineral Reserve
of 31.6Mt at a plant head grade of 5.33g/t Au (5.4Moz). The application of the
appropriate modifying factors to convert these resources to reserve status is
illustrated in the table below:
Mt Au (g/t) Tonnes Au Moz Au
Indicated Mineral Resource 39.9 7.2 286.2 9.2
Less geological discounts
Mineral Resource 39.2 7.2 282.5 9.1
Less no-design blocks*
Mineable Resource 28.1 7.5 212.2 6.8
Less design and mining losses
Mineable Resource 24.5 7.7 187.5 6.0
Diluted Mineable Resource 31.6 5.9 187.5 6.0
Less Mine Call losses
Probable Mineral Reserve 31.6 5.3 168.8 5.4
*Small, remote or low-grade fault blocks not considered for mining.
The PFS considered a number of alternative shaft positions and mine sizes that
provided the basis to evaluate the optimum financial return from exploiting this
ore body. The table below summarises these results which, at a constant exchange
rate of R8/US$, indicate that the project is highly geared to fluctuations in
the US$ gold price.
Gold Price US$800/oz US$975/oz US$1 250/oz US$1 500/oz
Pre-Tax IRR 12.2% 19.1% 27.1% 32.9%
NPV (5%) R2 584m R5 957m R11 255m R16 073m
(US$323m) (US$745m) (US$1 407m) (US$2 009m)
The PFS also included a preliminary assessment at scoping level that considered
the potential benefit of upgrading selected Inferred Mineral Resources to
Indicated Mineral Resources. It was concluded that by additional drilling, it
may be possible to increase the Probable Mineral Reserves to 32.2Mt, at an
average grade of 5.7g/t (5.9Moz). At a gold price of US$975/oz, an exchange rate
of R8.00/US$, and a State Royalty of 1.5% on revenue, this would have the effect
of increasing the IRR to 22.8% and the NPV (5%) to R7 753 million (US$969
million).
EXPLORATION
The Company is actively conducting exploration in all three goldfields where it
holds Prospecting Rights. The current emphasis is at Bloemhoek and De Bron in
the southern Free State, where the objective is to move these projects towards a
development decision. Considering the above possible benefits of converting the
Inferred Resources to Indicated Resources, a drilling programme is planned at
Bloemhoek for early 2010. At De Bron, a Scoping Study is planned to investigate
the viability of establishing a shallow (500m to 1 200m), multi-reef mining
operation.
Following the confirmation of low grade mineralisation in the Carbon Leader
during drilling to the immediate west of the Carletonville goldfield, the
Company has shifted attention southwards to the Boskop project. An in-house
review of the geological structure of Boskop has defined a significant area
where the Carbon Leader and Middelvlei Reefs may be preserved at moderate depths
of between 1 600m and 2 500m below surface. A drilling programme to test this
model is planned for 2010.
Within the Klerksdorp goldfield, borehole WDS1 in the Kromdraai project has
temporarily been suspended due to equipment limitations. The borehole is
currently at 3 700m below surface and expected to resume drilling in December
2009. The target is high-grade Vaal Reef at a depth of 3 800m below surface.
Information concerning the geology, mineral occurrences, nature of
mineralisation, rock types, quality assurance and quality control measures
applied, geological controls, sampling data, analytical or testing procedures,
the names of analytical laboratories used and the key assumptions, parameters
and methods used to estimate the Mineral Resources at the Company`s various
projects are communicated in the Company`s filed NI 43-101 compliant Independent
Technical Reports dated June and October 2009, which can be viewed at
www.sedar.com.
The Company`s Exploration Manager, Mr Dirk Muntingh, the Company`s Competent
Person, is responsible for the technical material in this release. Mr Muntingh
(M.Sc. Geology) is a registered Professional Natural Scientist ("Pr.Sci.Nat.")
with the South African Council for Natural Scientific Professionals ("SACNASP")
and has 17 years of experience in gold exploration. The technical content of
this release has been compiled by Mr Muntingh and he has issued a written
statement that the information disclosed above is SAMREC compliant.
Wits Gold`s board of directors is of the opinion that the Company currently has
sufficient funds to finance its commitments to the DMR for approximately the
next two and a half years.
For and on behalf of the board
Adam Fleming Marc Watchorn
Chairman CEO
Johannesburg
25 November 2009
Business and registered office
12th Floor, 70 Fox Street, Johannesburg, 2001
PO Box 61147, Marshalltown, 2107
Tel: (011) 832 1749
Fax: (011) 838 3208
Directors
Mr Adam Fleming (Chairman)*, Prof Taole Mokoena (Deputy Chairman)*,
Dr Humphrey Mathe (Director)*, Mrs Gayle Wilson (Director)*, Dr Marc Watchorn
(Chief Executive Officer), Mr Derek Urquhart (Chief Financial Officer)
*Non-executive
Company secretary
Mr Brian Dowden
7 Pam Road, Morningside Ext 5
Sandton, Johannesburg, 2057
PO Box 651129, Benmore, 2010
South Africa
Transfer secretaries
JSE: Link Market Services SA (Pty) Limited
TSX: CIBC Mellon Trust Company
Sponsor
PricewaterhouseCoopers
Corporate Finance (Pty) Limited
2 Eglin Road, Sunninghill, 2157
Private Bag X37, Sunninghill, 2157
South Africa
www.witsgold.com
Date: 25/11/2009 07:05:03 Produced by the JSE SENS Department.
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