| Tue 30 Mar 2010, 16:01 | | PLN - Platmin Limited - Consolidated Financial Statements for the ten months |
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PLN
PLN
PLN - Platmin Limited - Consolidated Financial Statements for the ten months
ended December 31, 2009
Platmin Limited
Incorporated in the accordance with the laws of Canada
Registration number: 610178-0
Share code on TSX: PPN
Share code on AIM: PPN
Share code on JSE: PLN
ISIN: CA72765Y1097
Consolidated Financial Statements for the ten months ended December 31, 2009
(Expressed in United States dollars, unless otherwise stated)
Platmin Limited
(A development stage company)
Management`s responsibility for financial reporting
The accompanying consolidated financial statements of Platmin Limited were
prepared by management in accordance with International Financial Reporting
Standards ("IFRS"). Management acknowledges responsibility for the preparation
and presentation of the consolidated financial statements, including
responsibility for significant accounting judgments and estimates and the
choice of accounting principles and methods that are appropriate to the
Companys circumstances. The significant accounting policies of the Company are
summarized in Note 5 to the consolidated financial statements.
Management has established systems of internal control over the financial
reporting process, which are designed to provide reasonable assurance that
relevant and reliable financial information is produced.
The Board of Directors is responsible for reviewing and approving the
consolidated financial statements and for ensuring that management fulfils its
financial reporting responsibilities. An Audit Committee assists the Board of
Directors in fulfilling this responsibility. The members of the Audit
Committee are not officers of the Company. The Audit Committee meets with
management as well as with the independent auditors to review the internal
controls over the financial reporting process, the consolidated financial
statements and the auditors report. The Audit Committee also reviews the Annual
Report to ensure that the financial information reported therein is consistent
with the information presented in the financial statements. The Audit
Committee reports its findings to the Board of Directors for its consideration
in approving the consolidated financial statements for issuance to the
shareholders.
Management recognizes its responsibility for conducting the Companys affairs in
compliance with established financial standards, and applicable laws and
regulations, and for maintaining proper standards of conduct for its
activities.
Thomas Graham Dale Wayne Gregory Koonin
Chief Executive Officer Chief Financial Officer
March 31, 2010
Audit report
The unqualified audit report issued by PricewaterhouseCoopers LLP can be viewed
on www.sedar.com
Consolidated statement of financial position
as on December 31, 2009
(Expressed in U.S. dollars, unless otherwise stated)
Dec 31, Feb 28, Mar 1,
2009 2009 2008
Notes $000 $000 $000
ASSETS
Non-current assets
Mining assets 6 43,454 30,097 32,279
Intangible assets 7 9,348 5,630 22
Property, plant and equipment 8 422,471 187,843 23,032
Loans receivable 9 50 35 14,680
Cash investments and guarantees 10.2 7,163 2,497 2,683
Total non-current assets 482,486 226,102 72,696
Current assets
Inventories 11 9,849 6,943 -
Accounts and other receivables 12 28,452 8,506 3,897
Cash and cash equivalents 10.1 29,375 127,950 90,457
Total current assets 67,676 143,399 94,354
TOTAL ASSETS 550,162 369,501 167,050
EQUITY AND LIABILITIES
Equity attributable to owners
of the parent
Share capital 13 425,535 366,180 192,116
Accumulated deficit (35,002) (27,360) (34,229)
Other components of equity 82,587 (29,939) 3,068
473,120 308,881 160,955
Non-controlling interests 14 (20,091) (16,618) 82
Total equity 453,029 292,263 161,037
Non-current liabilities
Long-term borrowings 15 3,817 2,121 1,388
Finance lease liability 16 12,282 - -
Decommissioning and
rehabilitation provision 17 52,744 12,791 1,461
Total non-current liabilities 68,843 14,912 2,849
Current liabilities
Trade payables and accrued
liabilities 18 22,144 23,574 3,164
Revolving commodity facility 19 5,854 - -
Current portion of finance
lease liability 16 292 - -
Current portion of long-term
borrowings 20 - 38,752 -
Total current liabilities 28,290 62,326 3,164
Total liabilities 97,133 77,238 6,013
TOTAL EQUITY AND LIABILITIES 550,162 369,501 167,050
NATURE OF OPERATIONS AND GOING
CONCERN 1
CONTINGENCIES AND COMMITMENTS 25
The accompanying notes are an integral part of the consolidated financial
statements
Consolidated statement of income
for the period ended December 31, 2009
(Expressed in U.S. dollars, unless otherwise stated)
For the periods ended
Dec 31, Feb 28,
2009 2009
Notes $ 000 $ 000
General expenses 22 (13,693) (22,230)
Other income 22 3,233 15,255
Finance costs (655) (2,856)
Loss before taxation 22 (11,115) (9,831)
Income tax expense 21 - -
LOSS FOR THE PERIOD (11,115) (9,831)
(Loss) / income attributable to:
Owners of the parent (7,642) 6,869
Non-controlling interest (3,473) (16,700)
(11,115) (9,831)
Loss per share (in currency units)
attributable to owners of the parent:
Basic and diluted 23 (0.02) 0.04
The accompanying notes are an integral part of the consolidated financial
statements
Consolidated statement of comprehensive income
for the period ended December 31, 2009
(Expressed in U.S. dollars, unless otherwise stated)
For the periods ended
Dec 31, Feb 28,
2009 2009
Notes $ 000 $ 000
Loss for the period (11,115) (9,831)
Other comprehensive income (net of tax) (109,688) 38,114
Exchange differences on translation from
functional to presentation currency (109,688) 38,114
Income tax relating to components of other
comprehensive income - -
TOTAL COMPREHENSIVE (LOSS) / INCOME FOR
THE PERIOD (120,803) 28,283
Total comprehensive (loss) / income
attributable to:
Owners of the parent (117,330) 44,983
Non-controlling interest (3,473) (16,700)
(120,803) 28,283
The accompanying notes are an integral part of the consolidated financial
statements
Consolidated statement of changes in shareholders` equity
for the period ended December 31, 2009
(Expressed in U.S. dollars, unless otherwise stated)
Equity attributable to the shareholders
Share
Based
Share Payment
Capital Deficit Reserve Warrants
$ 000 $ 000 $ 000 $ 000
Balance at February 29, 2008 192,116 (34,229) 3,068 -
Shares issued 174,037 - - -
Profit / (loss) for the period - 6,869 - -
Stock based compensation - - 4,288 -
Fair value of options
exercised 27 - (27) -
Currency translation
adjustment - - - -
Fair value of warrants issued - - - 846
Balance at February 28, 2009 366,180 (27,360) 7,329 846
Shares issued 59,355 - - -
Loss for the period - (7,642) - -
Stock based compensation - - 2,838 -
Currency translation
adjustment - - - -
Fair value of warrants issued - - - -
Balance at December 31, 2009 425,535 (35,002) 10,167 846
Foreign
Currency Non-
Translation controlling Total
Reserve Subtotal interest Equity
$ 000 $ 000 $ 000 $ 000
Balance at February 29, 2008 - 160,955 82 161,037
Shares issued - 174,037 - 174,037
Profit / (loss) for the period - 6,869 (16,700) (9,831)
Stock based compensation - 4,288 - 4,288
Fair value of options exercised - - - -
Currency translation
adjustment (38,114) (38,114) - (38,114)
Fair value of warrants issued - 846 - 846
Balance at February
28, 2009 (38,114) 308,881 (16,618) 292,263
Shares issued - 59,355 - 59,355
Loss for the period - (7,642) (3,473) (11,115)
Stock based compensation - 2,838 - 2,838
Currency translation
adjustment 109,688 109,688 - 109,688
Fair value of warrants issued - - - -
Balance at December
31, 2009 71,574 473,120 (20,091) 453,029
The accompanying notes are an integral part of the consolidated financial
statements
Consolidated statement of cashflows
for the period ended December 31, 2009
(Expressed in U.S. dollars, unless otherwise stated)
For the periods ended
Dec 31, Feb 28,
2009 2009
Notes $ 000 $ 000
Cash flows from operating activities
Cash receipts from customers 12,136 -
Cash paid to suppliers and employees (116,553) 16,941
Cash (utilized in) / generated from operations (104,417) 16,941
Interest received / (paid) 3,069 (3,440)
Income taxes paid (16) -
Net cash (used in) / generated from
operating activities (101,364) 13,501
Cash flows from investing activities
Purchase of property, plant and equipment (55,162) (182,587)
Proceeds from sale of property, plant and equipment - 20
Additions to intangible assets (1,638) (6,461)
Increase in rehabilitation investment (3,170) (555)
Increase in deferred exploration expenses (2,404) (6,739)
Net cash used in investing activities (62,374) (196,322)
Cash flows from financing activities
(Decrease) / Increase in loans payable (48,858) 41,192
(Decrease) in finance lease liability (1,361) -
Increase in revolving commodity facility 5,270 -
Realised foreign exchange gains on
settlement of FECs 19,411 -
Decrease in loans receivable - 12,937
Proceeds from issue of shares 59,640 197,611
Net cash generated from financing activities 34,102 251,740
Net (decrease) / increase in cash and
cash equivalents (129,636) 68,919
Net foreign exchange differences 31,061 (31,426)
Cash and cash equivalents at the
beginning of the period 10.1 127,950 90,457
Cash and cash equivalents at the end of
the period 10.1 29,375 127,950
The accompanying notes are an integral part of the consolidated financial
statements
Notes to the consolidated financial statements
for the period ended December 31, 2009
(Expressed in U.S. dollars, unless otherwise stated)
1. Nature of operations and going concern
Platmin Limited (the "Company") and its subsidiaries (the "Group") is a
development stage Natural Resources Group engaged in the acquisition,
exploration and development of Platinum Group Elements ("PGE") properties in
the Republic of South Africa.
The Company was incorporated under the Canada Business Corporation Act on May
29, 2003. The Company has continued as a company under the Business
Corporations Act of British Columbia, Canada effective April 1, 2009. Its
Common Shares are listed on the Toronto Stock Exchange ("TSX") and the
Alternative Investment Market ("AIM") of the London Stock Exchange. The Company
trades under the symbol "PPN" on both exchanges. On July 22, 2009, the Company
listed on the Johannesburg Securities Exchange Limited ("JSE") with the symbol
"PLN".
These consolidated financial statements have been prepared using International
Financial Reporting Standards ("IFRS") applicable to a going concern, which
contemplates the realization of assets and settlement of liabilities in the
normal course of business as they become due.
The consolidated financial statements are for a period of 10 months, ending
December 31, 2009. The Group changed its financial year end from the last day
of February in each calendar year to the last day of December, effective for
the period ending December 31, 2009. The change in the financial year end from
the end of February to December is being made for the purpose of streamlining
the Companys financial reporting and bringing the Companys financial year end
in line with the financial year ends of other companies in its industry. As a
result of the change in year end, t he amounts presented are not entirely
comparable with the comparative amounts.
For the ten months ended December 31, 2009 the Group incurred a loss of US$
11.115 million and as at December 31, 2009 had an accumulated deficit of
US$35.002 million. There are approximately US$16.446 million (ZAR121.184
million) in existing development commitments for completion of the Pilanesberg
projects Pilanesberg Platinum Mines ("PPM") as at December 31, 2009. The Group
is dependent on the successful completion of PPM to generate cash flows in
order to fund its operations and pay debt as it becomes due. Such circumstances
may lend to substantial doubt as to the ability of the Group to meet its
obligations as they become due and accordingly the appropriateness of the use
of the accounting principles applicable to a going concern.
The Group raised US$59.355 million in capital by way of a private placement
during May 2009 and had US$29.375 million in cash and cash equivalents at
December 31, 2009 to fund development activities and meet its contractual
obligations.
The Company`s financing efforts to date, while substantial, may not be
sufficient in and of themselves to enable the Company to fund all aspects of
its operations when taking into consideration fore casted revenue streams based
upon planned production. Management expects that the Company will be able to
secure the necessary financing to meet the Companys requirements on an ongoing
basis. Nevertheless, there is no assurance that these initiatives will be
successful or sufficient. If the going concern assumption were not appropriate
for these consolidated financial statements, then adjustments to the carrying
values of the assets and liabilities, the reported expenses and the statement
of financial position classifications, which could be material, may be
necessary.
2. Statement of compliance
The Group has adopted IFRS for the 10 months period ending December 31, 2009.
These are the Groups first IFRS consolidated annual financial statements.
The Groups consolidated annual financial statements were prepared in accordance
with Canadian Generally Accepted Accounting Principles ("Canadian GAAP") until
February 28, 2009. Canadian GAAP differs in some areas from IFRS. In preparing
the Groups consolidated annual financial statements for the ten months ended
December 31, 2009, management have recorded transition adjustments on applying
IFRS as disclosed in note 5.
Reconciliations, descriptions and explanations of how the transition to IFRS
has affect ed the reported financial position, financial performance and cash
flows of the Group are provided in note 28. This note includes reconciliations
of equity and comprehensive income or loss for comparative periods reported
under Canadian GAAP to those reported for those periods under IFRS.
The financial statements are presented in US dollars, rounded to the nearest
thousand.
The policies set out below have been consistently applied to all the periods
presented and by all companies within the Group.
3. Basis of presentation
The consolidated financial statements have been prepared by the Group in
accordance with IFRS. The preparation of these financial statements is based on
accounting policies and practices in accordance with IFRS and should not be
compared to those used in the preparation of the audited annual consolidated
financial statements, as the annual consolidated financial statements were
prepared under accounting policies and practices in accordance with Canadian
GAAP.
4. Explanation of transition to IFRS
As stated in note 2, these are the Groups first annual consolidated financial
statements prepared in accordance with IFRS.
The accounting policies adopted under IFRS have been applied in preparing the
consolidated financial statements for the ten months ended December 31, 2009,
the financial statements for the year ended February 28, 2009 and the
preparation of an opening IFRS statement of financial position at March 1, 2008
(the Groups IFRS transition date). The Groups IFRS adoption date is March 1,
2009.
In preparing its opening IFRS statement of financial position, the Group has
applied the mandatory exemptions and certain of the optional exemptions from
full retrospective application of IFRS. The Group has adjusted amounts
previously reported in financial statements and interim reports prepared in
accordance with its previous basis of accounting, Canadian GAAP.
A summary of the Groups accounting policies following the adoption of IFRS ,
mandatory exceptions and exemptions elected under IFRS 1 - First time adoption
of IFRS is contained in note 5.
An explanation of how the transition from Canadian GAAP to IFRS has affected
the Groups financial position and performance is set out in the tables in note
28 and the notes accompanying them.
5. Significant accounting policies following adoption of IFRS 1 - First time
adoption of IFRS
Basis of consolidation
The consolidated financial statements comprise the accounts of Platmin, the
parent company and its controlled subsidiaries, after the elimination of all
material intercompany balances and transactions.
The purchase method of accounting is used to account for the acquisition of
subsidiaries by the Group. The cost of an acquisition is measured as the fair
value of the assets given, equity instruments issued and liabilities incurred
or assumed at the date of exchange, plus costs directly attributable to the
acquisition. Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are measured initially a t their
fair values at the acquisition date, irrespective of the extent of any non
-controlling interest. The excess of the cost of acquisition over the fair
value of the Groups share of the identifiable net assets acquired is recorded
as goodwill. If the cost of acquisition is less than the fair value of the net
assets of the subsidiary acquired, the difference is recognised directly in the
statement of income and comprehensive income.
Subsidiaries
Subsidiaries are all entities (including special purpose entities) over which
the group has the power to govern the financial and operating policies
generally accompanying a shareholding of more than one half of the voting
rights. The existence and effect of potential voting rights that are currently
exercisable or convertible are considered when assessing whether the group
controls another entity. Subsidiaries are fully consolidated from the date on
which control is transferred to the group until the date on which control
ceases.
The accounts of subsidiaries are prepared for the same reporting period as the
parent entity, using consistent accounting policies. Inter-company
transactions, balances and unrealised gains on transactions between Group
companies are eliminated. Unrealised losses are also eliminated. Accounting
policies of subsidiaries have been changed where necessary to ensure
consistency with the policies adopted by the Group. A list of subsidiaries
appears in Note 24.
Transactions and non-controlling interest
The group treats transactions with non-controlling interests as transactions
with equity owners of the group. For purchases from non-controlling interests,
the difference between any consideration paid and the relevant share acquired
of the carrying value of net assets of the subsidiary is recorded in equity.
Gains or losses on disposals to non - controlling interests are also recorded
in equity.
Business combinations
The acquisition method of accounting is used to account for business
combinations by the group. The consideration transferred for the acquisition of
a business is the fair values of the assets transferred, the liabilities
incurred and the equity interests issued by the group. The consideration
transferred includes the fair value of any asset or liability resulting from a
contingent consideration arrangement. Acquisition-related costs are expensed as
incurred. Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are measured initially at their
fair values at the acquisition date. On an a cquisition-by-acquisition basis,
the group recognises any non-controlling interest in the acquiree either at
fair value or at the non-controlling interests proportionate share of the
acquirees net assets. Subsequently, the carrying amount of non-controlling
interest is the amount of the interest at initial recognition plus the
non-controlling interest`s share of the subsequent changes in equity. Total
comprehensive income is attributed to non-controlling interest even if this
results in the non-controlling interest having a deficit balance.
The excess of the consideration transferred, the amount of any non-controlling
interest in the acquiree and the acquisition-date fair value of any previous
equity interest in the acquiree over the fair value of the identifiable net
assets acquired is recorded as goodwill. If this is less than the fair value of
the net assets of the subsidiary acquired in the case of a bargain purchase,
the difference is recognised directly in the statement of comprehensive income.
The Group has made an election in terms of IFRS 1 to apply the requirements of
IFRS 3 (Revised) - Business Combinations to all business combinations with
effective dates on or after March 1, 2008. The classification and accounting
treatment of business combinations with effective dates prior to March 1, 2008
has not been reconsidered.
Common control transactions - premium and discount arising on subsequent
purchase from or sales to non controlling interests in subsidiaries
Following the presentation of non-controlling interests in equity any increases
and decreases in ownership interests in subsidiaries without a change in
control are recognized as equity transactions in the consolidated financial
statements.
Accordingly, any premium or discount on subsequent purchases of equity
instruments from or sales of equity instruments to minority interests are
recognized directly in equity of the parent shareholder.
Under Canadian GAAP, the Company previously recognized a premium on subsequent
purchases of equity instruments from non-controlling interests as goodwill, and
a premium or discount on subsequent disposal of equity instruments to
non-controlling interests were taken to profit or loss as a capital item in the
statement of income and comprehensive income.
Functional and presentation currency
Items included in the financial statements of each of the Groups entities are
measured using the currency of the primary economic environment in which the
entity operates ("the functional currency"). The Groups functional currency, as
determined at the transition date of March 1, 2008, is the South African Rand
("ZAR"). The consolidated financial statements are presented in US Dollars
("USD") which is the Groups presentation currency for purposes of dual listing
and foreign shareholders.
Translation of transactions and balances
Foreign currency transactions are translated into the functional currency using
the exchange rates prevailing at the dates of the transactions or valuation
where items are remeasured. Foreign exchange gains and losses resulting fro m
the settlement of such transactions and from the translation at period end
exchange rates of monetary assets and liabilities denominated in foreign
currencies are recognized in the statement of income and comprehensive income.
Foreign exchange gains and losses that relate to borrowings and cash and cash
equivalents are presented in the statement of income and comprehensive income
within ,,finance income or cost. All other foreign exchange gains and losses
are presented on a net basis in the statement of income and comprehensive
income within Other Income.
Group companies
The results and financial position of all the Group entities (none of which has
the currency of a hyper-inflationary economy) that have a functional currency
different from the presentation currency are translated into the presentation
currency as follows:
- assets and liabilities for each statement of financial position presented are
translated at the closing rate at the date of that financial period end;
- equity transactions are translated using the exchange rate at the date of the
transaction; and
- all resulting exchange differences are recognized as a separate component of
equity.
On consolidation, exchange differences arising from the translation of
functional to presentation, and of borrowings and other currency instruments
designated as hedges of such investments, are taken to shareholders equity.
Goodwill and fair value adjustments arising on the acquisition of a foreign
entity are treated as assets and liabilities of the foreign entity and
translated at the closing rate.
IAS 21 - The effects of Changes in Foreign Exchange Rates differs from the
Canadian GAAP equivalent, applied by the Group until February 28, 2009. IAS 21
requires an entity to measure its assets, liabilities, revenue and expenses in
its functional currency. It has been determined that as at the transition date
of March 1, 2008, the South African Rand ("ZAR") was the functional currency of
all entities in the Group. Prior to the adoption of IFRS, the functional
currency of Platmin Limited and Platmin Resources Limited (BVI) was the US
Dollar ("USD").
Under IAS 21, the assets and liabilities of the Group are translated from the
Groups functional currency (ZAR), to the presentation currency at the reporting
date. The income and expenses are translated to the Groups presentation
currency, which is USD at the dates of the transactions. Foreign currency
differences are recognized directly in other comprehensive income within the
foreign currency translation reserve.
Exploration and evaluation assets and development expenditure
Exploration and evaluation costs, including the cost of acquiring licenses, are
capitalized as exploration and evaluation assets on a project-by-project basis
pending determination of the technical feasibility and the commercial viability
of the project. The capitalized costs are presented as either tangible or
intangible exploration and evaluation assets according to the nature of the
assets acquired. Capitalised costs include costs directly related to
exploration and evaluation activities in the area of interest. General and
administrative costs are only allocated to the asset to the extent that those
costs can be directly related to operational activities in the relevant area of
interest. W hen a license is relinquished or a project is abandoned, the
related costs are recognized in profit and loss immediately.
Exploration and evaluation assets are assessed for impairment if (i) sufficient
data exists to determine technical feasibility and commercial viability, and
(ii) fact and circumstances suggest that t he carrying amount exceeds the
recoverable amount (see impairment).
The technical feasibility and commercial viability of extracting a mineral
resource is considered to be determinable when proven reserves are determined
to exist, the rights of tenure are current and it is considered probable that
the costs will be recouped through successful development and exploitation of
the area, or alternatively by sale of the property. Upon determination of
proven reserves, intangible exploration and evaluation asset s attributable to
those reserves are first tested for impairment and then reclassified from
exploration and evaluation assets to a separate category within tangible
assets. Expenditure deemed to be unsuccessful is recognised in profit or loss
immediately.
Upon transfer of "Exploration and evaluation costs" into "Mine development",
all subsequent expenditure on the construction, installation or completion of
infrastructure facilities is capitalised within "Mine development". After
production starts, all assets included in "Mine development" are transferred to
"Producing Mines".
Mining properties
When further development expenditure is incurred in respect of a mining
property after the commencement of production, such expenditure is carried
forward as part of the mining property when it is probable that additional
future economic benefits associated with the expenditure will flow to the
entity. Otherwise such expenditure is classified as a cost of production.
Depreciation is charged using the units-of-production method, with separate
calculations being made for each area of interest. The units of production
basis results in a depreciation charge proportional to the depletion of proven
and probable reserves.
Mining properties are tested for impairment in accordance with the policy for
impairment as set out below.
Intangible assets
Intangible assets that are acquired by the Group are stated at cost less
accumulated amortization and impairment losses.
Amortization is charged to profit and loss on a straight line basis over the
estimated useful lives of the intangible assets.
The estimated useful life for the water rights is 16 years.
Property, plant and equipment
Property, plant and equipment are stated at historical cost less accumulated
depreciation and accumulated impairment losses.
Subsequent costs are included in the assets carrying amount or recognized as a
separate asset, as appropriate, only when it is probable that future economic
benefits associated with the item will flow to the Group and the cost of the
item can be measured reliably. The carrying amount of the replaced part is
derecognized. All other repairs and maintenance are charged to the statement of
income and comprehensive income during the financial period in which they are
incurred.
Gains and losses on disposals are determined by comparing the proceeds with the
carrying amount and are recognized within ,,Other (expense) and income in the
statement of income and comprehensive income.
Upon completion of mine construction, the assets are transferred into property,
plant and equipment.
Depreciation and amortization are calculated on a straight-line method to
write off the cost of the assets to their residual values over their estimated
useful lives. The depreciation and amortization rates applicable to each
category of property, plant and equipment are as follows:
Useful life
Asset category (years)
Vehicles 5
Computer equipment 3
Computer software 2
Office equipment 6
Furniture and fittings 6
Other equipment 5
Buildings 20
Leasehold improvements 5
Plant construction Units of production
Exploration and evaluation assets (available for use) Units of production
Where parts (components) of an item of property, plant and equipment have
different useful lives or for which different depreciation rates are
appropriate, they are accounted for as separate items of property, plant and
equipment.
Estimates of residual values and useful lives of all assets are assessed
annually.
The Group measures the estimated residual value of an item of property, plant
and equipment as the amount the Group estimates it would receive currently from
the asset if the asset were already of the age and in the condition expected at
the end of its useful live.
The Group has assessed the useful lives and residual values of all individual
components of property, plant and equipment and no adjustments were required to
the carrying values of items at the date of transition.
Deferred stripping costs
Stripping costs comprise the removal of overburden and other waste products
from a mine.
Stripping costs incurred in the development of a mine before production
commences are capitalised as part of the cost of constructing the mine and
subsequently amortised over the life of the mine on a units of production
basis.
Stripping costs incurred during the production stage of a mine are deferred
when this is considered the most appropriate basis for matching the costs
against the relevant economic benefits. The amount deferred is based on the
waste-to-ore ratio (called a "Stripping ratio") which is calculated by dividing
the tonnage of waste mined by the quantity of ore mined. Stripping costs
incurred in a period are deferred to the extent that the current period ratio
exceeds the expected life-of-mine ratio. Such deferred costs are then charged
to the statement of income and comprehensive income to the extent that, in
subsequent periods, the current ratio falls below the life-of-mine ratio. The
life-of-mine stripping ratio is calculated based on proven and probable
reserves. Any changes to the life-of-mine ratio are accounted for
prospectively.
Where a mine operates more than one open pit that are regarded as se parate
operations for the purpose of mine planning, stripping costs are accounted for
separately by reference to the ore from each separate pit. If, however, the
pits are highly integrated for the purpose of the mine planning, the second and
subsequent pit s are regarded as extensions of the first pit in accounting for
stripping costs. In such cases, the initial stripping, (i.e., overburden and
other waste removal) of the second and subsequent pits is considered to be
production phase stripping relating to t he combined operation.
Deferred stripping costs are included as part of "Mining properties". These
form part of the total investment in the relevant cash generating units, which
are reviewed for impairment if events or changes of circumstance indicate that
the carrying value may not be recoverable.
Leased assets
Leases in terms of which the Group assumes substantially all the risks and
rewards of ownership are classified as finance leases. Upon initial recognition
the leased asset is measured at an amount equal to the lower of its fair value
and the present value of the minimum lease payments. Subsequent to initial
recognition, the asset is accounted for in accordance with the accounting
policy applicable to that asset.
The Group has made an election in terms of IFRS 1 to apply the transitional
provisions in IFRIC 4 - Determining whether an Arrangement contains a Lease,
therefore determining if any arrangement existed at the transition date.
Other leases are operating leases and the leased assets are not re cognized on
the Group`s statement of financial position.
Impairment of assets
The carrying amount of the Groups assets (which include Property, plant and
equipment, exploration and evaluation assets, mineral rights and properties and
intangible assets) is reviewed at each reporting date to determine whether
there is any indication of impairment. If such indication exists, the
recoverable amount of the asset is estimated in order to determine the extent
of the impairment loss. An impairment loss is recognized whenever the carrying
amount of an asset or its cash generating unit exceeds its recoverable amount.
Impairment losses are recognized in the statement of income and comprehensive
income.
The recoverable amount of assets is the greater of an assets fair value less
cost 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 the current market assessments of the time value of money and the
risks specific to the asset. For an asset that does not generate cash inflows
largely independent of those from other assets, the recoverable amount is
determined for the cash-generating unit to which the asset belongs.
An impairment loss is only reversed if there is an indication that the
impairment loss may no longer exist and there has been a change in the
estimates used to determine the recoverable amount, however, not to an amount
higher than the carrying amount that would have been determined had no
impairment loss been recognized in previous years.
Assets that have an indefinite useful life are not subject to amortisation and
are tested annually for impairment.
Inventory
Inventories are measured at the lower of cost and net realisable value. The
cost of inventories includes expenditure incurred in acquiring the inventories,
production or conversion costs and other costs incurred in bringing them to
their existing location and condition.
In the case of manufactured inventories and work in progress, cost includes an
appropriate share of production overheads based on normal operating capacity.
Net realisable value is the estimated selling price in the ordinary course of
business, less the estimated costs of completion and selling expenses.
Financial assets
The Group classifies its financial assets in the following categories: at fair
value through profit or loss, loans and receivables, and available for sale.
The classification depends on the purpose for which the financial assets were
acquired. Management determines the classification of its financial assets at
initial recognition.
Regular purchases and sales of financial assets are recognised on the trade
-date - the date on which the group commits to purchase the asset.
Loans and receivables are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. They are
included in current assets, except for maturities greater than 12 months after
the end of the reporting period. These are classified as non-current assets.
The Groups loans and receivables comprise ,,Loans receivable, ,,Cash inv
estments and guarantees, ,,Accounts and other receivables and ,,Cash and cash
equivalents in the statement of financial position.
Financial assets are derecognized when the rights to receive cash flows from
the investments have expired or have been transferred and the Group has
transferred substantially all risks and rewards of ownership.
The Group assesses at each reporting date whether there is objective evidence
that a financial asset or a Group of financial assets is impaired.
Loans receivable
Loans receivable are recognized initially at fair value and subsequently
measured at amortized cost using the effective interest method, less provision
for impairment.
Cash investments and guarantees
Cash investments and guarantees include cash and term deposits with an original
maturity of more than twelve months.
Accounts receivables
Accounts receivables are recognized initially at fair value and subsequently
measured at amortized cost using the effective interest method, less provision
for impairment.
A provision for impairment of accounts receivables is established when there is
objective evidence that the Group will not be able to collect all amounts due
according to the original terms of the receivables. Significant financial
difficulties of the debtor, probability that the debtor will enter bankruptcy
or financial reorganization, and default or delinquency in payments (more than
60 days overdue) are considered indicators that the accounts receivable is
impaired. The amount of the provision is the difference between the assets
carrying amount and the present value of estimated future cash flows,
discounted at the original effective interest rate. The carrying amount of the
asset is reduced through the use of an allowance account, and the amount of the
loss is recognized in the statement of income and comprehensive income.
When an accounts receivable is uncollectible, it is written off against the
allowance account for accounts receivables.
Subsequent recoveries of amounts previously written off are credited against in
the statement of income and comprehensive income.
Cash and cash equivalents
Cash and cash equivalents include cash and term deposits with an original
maturity of three months or less.
Trade payables
Trade payables are obligations to pay for goods or services that have been
acquired in the ordinary course of business from supplies. Accounts payable are
classified as current liabilities if payment is due within one year or less. If
not, they are presented as non-current liabilities.
Trade payables are recognized initially at fair value and subsequently measured
at amortized cost using the effective interest method.
Borrowings
Borrowings are recognized initially at fair value, net of transaction costs
incurred. Borrowings are subsequently stated at amortized cost; any difference
between the proceeds (net of transaction costs) and the redemption value is
recognized in the statement of income and comprehensive income over the period
of the borrowings using the effective interest method.
Fees paid on the establishment of loan facilities are recognized as transaction
costs of t he loan to the extent that it is probable that some or all of the
facility will be drawn down. In this case, the fee is deferred until the draw
-down occurs. To the extent there is no evidence that it is probable that some
or all of the facility will be drawn down, the fee is capitalized as a
pre-payment for liquidity services and amortized over the period of the
facility to which it relates.
Borrowings are classified as current liabilities unless the Group has an
unconditional right to defer settlement of t he liability for at least 12
months after the reporting date.
Provisions
Provisions for environmental restoration, restructuring costs and legal claims
are recognized when: the Group has a present legal or constructive obligation
as a result of past events; it is probable that an outflow of resources will be
required to settle the obligation; and the amount has been reliably estimated.
Provisions are not recognized for future operating losses.
Provisions are measured at the present value of the expenditures expected to be
required to settle the obligation using a pre-tax rate that reflects current
market assessments of the time value of money and the risks specific to the
obligation. The increase in the provision due to passage of time is recognized
as interest expense.
An obligation to incur decommissioning and rehabilitation costs occurs when an
environmental disturbance is caused by exploration, evaluation, development or
ongoing production. Costs are estimated on the basis of a formal closure plan
and are subject to regular review.
Decommissioning and site rehabilitation costs arising from the installation of
plant and other site preparation work, discounted to their present value, are
provided when the obligation to incur such costs arises and are capitalized
into the cost of the related asset. These costs are charged against profits
through depreciation of the asset and unwinding of the discount on the
provision. Depreciation is included in operating costs while the unwinding of
the discount is included as a financing cost. Changes in the measurement of a
liability relating to the decommissioning or site rehabilitation of plant and
other site preparation work are added to, or deducted from, the costs of the
related asset.
The costs for the restoration of site damage, which arises during production,
are provided at their net present values and charged against their operating
profit as extraction progresses. Changes in the measurement of a liability
which arises during production are charged against operating profit.
The discount rate used to measure the net present value of the obligations is
the pre-tax rate that reflects the current market assessments of the time
value of money and the risks specific to the obligation.
In accordance with the Groups policy and applicable legal requirements, a
provision for decommissioning liabilities is recognized when the asset is
installed and rehabilitation liabilities are recognized when the land is
disturbed.
Changes in estimated decommissioning and rehabilitation liabilities that
occurred before the transition to IFRS have been adjusted for at the transition
date on a net basis in accordance with the provisions of IFR IC 1 and the
applicable exemptions under IFRS 1.
Share based payment transactions
Equity settled
The fair value of share options under the employee share incentive schemes and
other equity instruments granted to Group employees is recognised as an
employee expense with a corresponding increase in equity. The fair value is
measured at grant date and expensed over the period during which the employee
becomes unconditionally entitled to the equity instruments. The total amount to
be expensed is determined by reference to the fair value of the options
granted, excluding the impact of any non-market service and performance
vesting conditions. Non-market vesting conditions are included in assumptions
about the number of options that are expected to vest.
The fair value of the instruments granted is measured using generally accepted
valuation techniques, taking into account the terms and conditions upon which
the instruments are granted. At each reporting date, the entity revises its
estimates of the number of options that are expected to vest based on the non
-marketing vesting conditions. It recognises the impact of the revision to
original estimates, if any, in the statement of income and comprehensive
income, with a corresponding adjustment to equity. The proceeds received, net
of any directly attributable transaction costs, are credited to share capital
when the options are exercised.
This accounting policy has been applied to all equity instruments granted after
November 7, 2002 that has not yet vested at January 1, 2005. The increase in
equity arising from vested share options was credited to common shares when
options were exercised under the Groups previous accounting policies. Refer to
note 28(c) for the adjustment made to equity in order to comply with IFRS.
Income taxes
The income tax expense for the period comprises current and deferred taxation.
Taxation is recognised in the statement of income and comprehensive income,
except to the extent that it relates to items recognised directly in equity.
Current taxation
Current tax is the expected tax payable on the taxable income for the period,
using tax rates enacted or substantively enacted at the reporting date in
countries where the companys subsidiaries operate and generate taxable income.
Management periodically evaluates positions taken in tax returns with respect
to situations in which applicable tax regulation is subject to interpretation.
It establishes provisions where appropriate on the basis of amount expected to
be paid to tax authorities.
Deferred taxation
Deferred taxation is recognised using the liability method, on temporary
differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for taxation purposes.
However, the deferred taxation is not recognised for if it arises from initial
recognition of an asset or liability in a transaction other than a business
combination that at the time of the transaction affects neither accounting nor
taxable profit or loss. Deferred taxation is determined using tax rates (and
laws) that have been enacted or substantially enacted by reporting date and are
expected to apply when the related deferred taxation asset is realised or the
deferred taxation liability is settled.
Deferred tax assets and liabilities are offset if there is a legally
enforceable right to offset current tax liabilities and assets, and they relate
to income taxes levied by the same tax authority on the same taxable entity, or
on different tax entities, but they intend to settle current tax liabilities
and assets on a net basis or their tax assets and liabilities will be realised
simultaneously.
A deferred tax asset is recognised to the extent that it is probable that
future taxable profits will be available against which the temporary difference
can be utilised. Deferred tax assets are reviewed at each reporting date and
are reduced to the extent that it is no longer probable that the related tax
benefit will be realised.
Additional income taxes that arise from the distribution of dividends are
recognised at the same time that the liability to pay the related dividend is
recognised.
Deferred income tax is provided on temporary differences arising on investments
in subsidiaries and associates, except where the timing of the reversal of the
temporary difference is controlled by the Group and it is probable that the
temporary difference will not reverse in the foreseeable future.
Revenue
Revenue comprises the fair value of the consideration received or receivable
for the sale of goods and services in the ordinary course of the Groups
activities. Revenue is shown net of value-added tax, returns, rebates and
discounts and after eliminating sales within the Group.
The Group recognises revenue when the amount of revenue can be reliably
measured, it is probable that future economic benefits will flow to the entity
and when specific criteria have been met for each of the Groups activities as
described below. The amount of revenue is not considered to be reliably
measurable until all contingencies relating to the sale have been resolved.
The Group bases its estimates on historical results, taking into consideration
the type of customer, the type of transaction and the specifics of each
arrangement.
Revenue from the sale of goods is recognized when the significant risks and
rewards of ownership have been transferred to the buyer. Revenue is not
recognized if there are significant uncertainties regarding recovery of the
consideration due.
Finance income
Finance income is recognized on the time proportion basis, taking account of
the investment balances outstanding and the effective rate over the period to
maturity.
Borrowing costs
Borrowing costs are recognized as an expense in the period in which they are
incurred, except to the extent that they are directly attributable to the
acquisition or construction of assets that necessarily take a substantial
period to prepare for their intended use or sale ("qualifying assets").
Borrowing costs directly attributable to the acquisition, construction or
production of a qualifying asset is capitalized as part of the cost of that
asset in accordance with the transitional provisions of IAS 23 - Borrowing
costs (revised) and IFRS 1 from January 1, 2009.
Accounting estimates
The preparation of financial statements in accordance with IFRS requires
management to make estimates and assumptions that affect the amounts reported
in the consolidated financial statements and notes to the consolidated
financial statements. These estimates are based on managements best knowledge
of current events and actions that the Group may undertake in the future.
Significant estimates include those related to the recoverability of the
carrying value of mineral exploration properties and deferred exploration
expenses, the fair value estimate s of options issued, the fair value of asset
retirement obligations and contingent liabilities. Actual results may differ
from those estimates.
Segment information
The executive committee reviews the Groups internal reporting in order to
assess performance and allocate resources.
Management has determined the operating segments based on these reports.
New and amended accounting standards
As this is the Groups first set of financial statements under IFRS, the Group
has applied all new standards and interpretations with reference to IFRS 1 -
First time adopters of IFRS which were effective for the first time for IFRS
reporters for annual periods commencing on or after January 1, 2009.
Accounting standards and interpretations issued but not yet effective Standard
and interpretations early adopted
Certain accounting standards and interpretations are in issue which are not
required to be adopted for the current reporting period. As at the date of
these financial statements the following standards and interpretations were in
issue but not yet effective and have been early applied by the Group to this
set of financial statements:
Standard / Interpretation Details of amendment
IFRS 3 (Revised) - Business Amendments to accounting for business
combinations combinations.
IAS 27 - Consolidated and Consequential amendments from changes to
separate financial statements, IFRS 3 (Revised).
IAS 28 - Investment in Consequential amendments from changes to
associates IFRS 3 (Revised).
IAS 31 - Interest in joint Consequential amendments from changes to
ventures IFRS 3 (Revised).
IFRS 2 - Share based Clarification of the scope of IFRS 2 and IFRS
payments 3 (Revised). This amendment clarifies that
business combinations as defined in IFRS 3
(Revised) are outside of the scope of IFRS2.
IAS 38 - Intangible assets Consequential amendments from changes to
IFRS 3. These amendments clarify that:
- an intangible asset that is separable only
together with a related contract, identifiable
asset or liability is recognised separately
from goodwill together with the related item;
and
- complementary intangible assets with
similar useful lives may be recognised as a
single asset.
The amendment also describe valuation
techniques commonly used when measuring the
fair value of intangible assets acquired in a
business combination for which no active
market exists.
IFRIC 9 - Reassessment of The IASB amended the scope of IFRIC 9 so that
Embedded derivates. embedded derivatives in contracts acquired in
business combinations as defined in IFRS 3
(Revised), joint venture formations and
common control transactions remain outside
the scope of IFRIC 9.
All the above mentioned standards are all only effective for periods beginning
on or after July 1, 2009. The early adoption of these standards had the
following impact on the Groups financial statements:
IAS 27 previously required that the non-controlling interest be calculated by
only attributing the total comprehensive income to the non-controlling
interests only if this will not result in the non-controlling interests having
a deficit balance.
IAS 27 now requires an attributing of the total comprehensive income to the
parent and the non-controlling interests even if this results in the
non-controlling interest having a deficit balance.
The impact of this early application of IAS 27, resulted in accumulated losses
of US$20.173 million (Feb 28, 2009:
US$16.700 million) being attributed to the non-controlling interests.
No other impact was made to the Groups financial statements.
Standard and interpretations issued and not yet adopted
Certain accounting standards and interpretations are in issue which are not
required to be adopted for the current reporting period. As at the date of
these financial statements the following standards and interpretations were in
issue but not yet effective:
- Which will be effective for the financial year ending December 31, 2010:
Standard / Assessed impact on
Interpretation Details of amendment results
IFRS 1 - First-time Amendments relating to oil and The Group has already
Adoption of gas assets and determining adopted IFRS. No
International Financial whether an arrangement contains impact is assessed.
Reporting Standards a lease.
IFRS 2 - Share The IASB amended IFRS 2 to The Group has no
based payments require an entity receiving trans-actions of
goods or services (receiving this nature. No
entity) in either an impact is assessed.
equity-settled or a
cash-settled share-based
payment transaction to account
for the transaction in its
separate or individual financial
statements. This principle even
applies if another group entity
or shareholder settles the
transaction settling entity) and
the receiving entity has no
obligation to settle the payment.
IFRS 5 - Non-current A plan to sell the controlling
Assets Held for Sale interest in a subsidiary. These The Group neither
Operationsand amendments (1) specify that: previously did, nor
Discontinued - if an entity is committed to plans at reporting
a plan to sell a subsidiary, date to engage in
then it would classify all of such a transaction.
that subsidiarys assets and No impact is
liabilities as held for sale assessed.
when the held for sale criteria
in paragraphs 6 to 8 of IFRS 5
are met; this applies
regardless of the entity
retaining an interest (other
than control) in the
subsidiary; and
- disclosures for discontinued
operations are required by the
parent when a subsidiary meets
the definition of a
discontinued operation.
The amendments (1) clarify that The Group does not
the required disclosures for have any such
non-current assets (or operations. No
disposal groups) classified impact is assessed.
as held for sale or discontinued
operations are specified
in IFRS 5.
IAS 1 - Presentation The amendments clarify that the
of financial classification of the liability The Group does not
statements component of a convertible have any such
instrument as current or non - instruments at
current is not affected by reporting date.
terms that could, at the No impact is
option of the holder of the assessed. The
instrument, result in impact of any
settlement of the liability by possible future
the issue of equity instruments. instruments will be
assessed as they
IAS 7 - Statement of The amendments clarify that The Group will
cash flows only expenditures that result in revisit all such
the recognition of an asset cash flows. No
can be classified as a cash flow impact is expected.
from investing activities.
IAS 17 - Leases Classification of leases of The Group only as
land and buildings. The IASB one operating lease
deleted guidance stating that relating to a
a lease of land with an indefinite building only.
economic life normally is No impact is
classified as an operating lease, expected.
unless at the lease term title
is expected to pass to the
lessee.
Leases which include both the
land and the buildings should
be determined based on the
classification of each element
based on paragraphs
7-13 of IAS 17.
IAS 36 - Impairment The amendments (1) clarify that The Group does not
of assets the largest unit to which good- have any goodwill.
will should be allocated is No impact is
the operating segment level as expected.
defined in IFRS 8 before
applying the aggregation
criteria of IFRS 8.
IAS 39 - Financial Clarification of 2 hedge
instruments: accounting issues: The Group does not
Recognition and (1) Inflation in a financial apply hedge
Measurement hedge item accounting. No
(2) A one-sided risk in a impact is expected.
hedged item
The amendments (1): The Group does not
have any of these
instruments in
place. No impact is
expected.
- provide additional guidance
on determining whether loan
prepayment penalties result
in an embedded derivatives;
- clarify that the scope
exemption in IAS 39 paragraph
2(g) is restricted to forward
contracts, i.e., not options,
between an acquirer and a selling
shareholder to buy or sell an
acquiree that will result in
a business combination at a
future acquisition date within
a reasonable period normally
necessary to obtain any required
approvals and to complete the
transaction; and
- clarify that the gains or losses
on a cash flow hedge should be
reclassified from other
comprehensive income to profit
or loss under certain conditions.
IFRIC 16 The amendments (1) remove the The Group does not
(amendment) - restriction that prevented a hedge any foreign
Hedges of a net hedging instrument from being operations. No
investment in a held by a foreign operation that impact is expected.
foreign operations itself is being hedged.
IFRIC 17 - This interpretation (1) provides The Group does not
Distributions of non- guidance in respect of distri - have a history of
cash assets to butions of non-cash assets to distributions to
owners (1) owners acting in their capacity owners, nor is any
as owners. Distributions within envisaged in the
the scope of IFRIC 17 are near future.
measured at the fair value of No impact is
the assets to be distributed. Any expected.
gain or loss on settlement of
the liability for the dividend
payable is recognised in profit
or loss. The scope of IFRS 5
was also expanded to include
these distributions.
IFRS 1 - First-time Amendment relieves first-time The Group has
Adoption of adopters of IFRSs from already adopted
International Financial providing the additional IFRS. No impact is
Reporting Standards disclosures introduced through expected.
Amendments to IFRS 7 in
March 2009
IAS 24 - Related The revised IAS 24 Related The Group is
Party Disclosures Party Disclosures amends the assessing the
definition of a related party impact of these
and modifies certain related party amendments.
disclosure requirements for
government-related entities.
IAS 32 - Financial Accounting for rights issues
Instruments: (including rights, options or The Group does
Presentation warrants) that are denominated not currently
in a currency other than the have any rights
functional currency of the issuer issued. No impact
is expected.
The IASB amended IAS 32 to The impact of
allow rights, options or warrants any possible
to acquire a fixed number of future
the entitys own equity instruments will
instruments for a fixed amount be assessed as
of any currency to be classified they arise.
as equity instruments provided
the entity offers the rights,
options or warrants pro rata to
all of its existing owners of the
same class of its own non-derivative
equity instruments.
IFRIC 14 (amended) These amendments remove unintended The Group does
- Limit on Defined consequences arising not currently
Benefit Assets, from the treatment of have any Defined
Minimum Funding prepayments where there is a Benefit Assets
Requirements and minimum funding requirement. in place. No
their interaction and These amendments result in impact is
prepayments of contributions in expected.
certain circumstances being
recognised as an asset rather
than an expense.
The impact of
any possible
future
IAS 19 - Employee instruments will
benefits be assessed as
they arise.
IFRIC 19 - This interpretation provides The Group does
Extinguishing guidance on the accounting for not currently
Financial Liabilities debt for equity swaps. have any debt for
with Equity equity swaps in
instruments place. No impact
is expected.
The impact of any
possible future
instruments will
be assessed as
they arise.
- Which will be effective for the financial year ending December 31, 2013:
Standard / Assessed impact
Interpretation Details of amendment on results
IFRS 9 - Financial New standard that forms the The Group is
Instruments first part of a three-part project currently
to replace IAS 39 - Financial impact of the
Instruments: Recognition and new standard.
reviewing the potential
Measurement
Exemptions from full retrospective application:
A number of optional exemptions from full retrospective application are
available to the Group upon adoption of IFRS.
The impact of all these optional exemptions on the Group is listed below.
The Group has applied the following exemptions:
Exemption Application of exemption
Share-based payment The Group has elected to apply the share-based
transaction exemption payment exemption. It applied IFRS 2 from
March 1, 2008 to those options that were
issued after November 7, 2002 but that have
not vested by March 1, 2008.
Business Combinations The Group has applied the business combinations
exemption exemption in IFRS 1. It has not restated
business combinations that took place prior
to the March 1, 2008 transition date.
Decommissioning liabilities The Group recognizes a provision in respect of
included in the cost of environmental liabilities relating to
property, plant and equipment contamination caused to land from the
exemption installation of assets and from its production
processes. The exemption provided in IFRS 1
from the full retrospective application
of IFRIC 1 has been applied to determine the
adjustment required to Property, Plant and
Equipment in respect of the obligation to
decommission existing production facilities.
The application of this exemption is detailed
in note 28(d).
Exemptions from full retrospective application:
The Group has not applied the following exemptions:
Exemption Reason for not applying the exemption
Cumulative translation There was no cumulative translation
differences exemption differences previously recorded under Canadian
GAAP.
Employee benefits exemption The Group has no defined benefit plans;
this exemption is not applicable.
Fair value as deemed cost The Group has elected not to measure any
exemption items of property, plant and equipment at
fair value as at March 1, 2008; this
exemption is not applicable.
Assets and liabilities of This exemption is not applicable, as the use
subsidiaries, associates and of the exemption is made at the level of
joint ventures exemption the subsidiary, associate or joint venture
that adopts IFRS later than its parent
company.
Exemption from restatement The Group has no hedging relationships or
of comparatives for IAS 32 derivatives; this exemption is not
and IAS 39 applicable.
Fair value measurement of The Group has not applied the exemption
financial assets or liabilities offered by the revision of IAS 39 on the
at initial recognition initial recognition of the financial
instruments measured at fair value through
profit and loss where there is no active
market. This exemption is therefore not
applicable.
Designation of financial The Group has no securities classified as
assets and financial available-for-sale investments or as financial
liabilities exemption assets at fair value through profit and loss;
this exemption is not applicable.
Compound financial The Group has not issued any compound
instruments exemption instruments; this exemption is not
applicable.
Insurance contracts The Group does not issue insurance contracts;
exemption this exemption is not applicable.
The Group has applied the following mandatory exceptions from retrospective
application:
Exception Description Applicability
of exception to the Group
Derecognition of financial Financial assets and The application of
assets and liabilities liabilities derecognized this exemption has
exception before March 1, 2008 are no impact on the
not re-recognized under IFRS. Group.
The application of the
exemption from restating
comparatives for IAS 32 and
IAS 39 means that the
Group recognized from
March 1, 2009 any
financial assets and
financial liabilities
derecognized since
March 1, 2008 that does
not meet the IAS 39
derecognition criteria.
Management did not choose
to apply the IAS 39
derecognition criteria to
an earlier date.
Hedge accounting exception The Group has never applied This exemption is
hedge accounting. not applicable.
Estimates exception Estimates under IFRS at No adjustments for
March 1, 2008 should be estimates have been
consistent with estimates made.
made for the same date
under previous GAAP, unless
there is evidence that
those estimates were in error.
Non-controlling interest Management applies IAS 27 No adjustment was
prospectively from required.
March 1, 2008. Total
comprehensive income is attri-
buted to the owners of the
parent and the non-controlling
interests even if this
results in the non-controlling
interests having a deficit
balance.
6. Mining assets
Comprising exploration and evaluation assets, mineral properties and mineral
rights acquired as follows:
As at Dec 31, As at Feb 28, As at Mar 1,
2009 2009 2008
$ 000 $ 000 $ 000
Exploration and evaluation
assets 36,652 25,078 25,591
Mineral properties acquired 3,945 2,911 3,880
Mineral rights acquired 2,857 2,108 2,808
Balance at the end of the
period 43,454 30,097 32,279
Reconciliation of mining assets:
Exploration & Mineral
evaluation properties Mineral rights
assets acquired acquired TOTAL
$000 $000 $ 000 $ 000
Balance as at
Mar 1, 2008 25,591 3,880 2,808 32,279
Additions 6,897 - 1 6,898
Impairment of
mining assets - - - -
Foreign exchange
variance (7,410) (969) (701) (9,080)
Balance as at
Feb 28, 2009 25,078 2,911 2,108 30,097
Additions 2,593 - - 2,593
Impairment of
mining assets - - - -
Foreign exchange
variance 8,981 1,034 749 10,764
Balance as at
Dec 31, 2009 36,652 3,945 2,857 43,454
7. Intangible assets
As at Dec 31, As at Feb 28, As at Mar 1,
2009 2009 2008
$ 000 $ 000 $ 000
Water pipeline 8,479 5,389 -
Computer software 869 241 22
Balance at the end of the
period 9,348 5,630 22
Reconciliation of
intangible assets:
Water Computer
pipeline software TOTAL
$ 000 $ 000 $ 000
Balance as at Mar 1, 2008 - 22 22
Additions during the year 5,389 344 5,733
Amortization for the year - (138) (138)
Foreign exchange variance - 13 13
Balance as at Feb 28, 2009 5,389 241 5,630
Additions during the period 1,176 644 1,820
Amortization for the period - (93) (93)
Foreign exchange variance 1,914 77 1,991
Balance as at Dec 31, 2009 8,479 869 9,348
PPM entered into an agreement with The Board of Magalies Water (a State-owned
water board operating under the Water Services Act, Number 108 of 1997 as
amended, "Magalies Water") and other parties to build a water pipeline and
related infrastructure from the Vaalkop Water Treatment Works to the mine
located at Tuschenkomst. Upon completion, the ownership of the water pipeline
and related infrastructure will remain with Magalies Water; however, PPM will
have a right to use the water through the pipeline for the entire life of mine.
8. Property, plant and equipment
Plant
construction
and mine Land and
development buildings Other
$ 000 $ 000 $ 000
COST
Balance as at March 1, 2008 22,630 - 746
Additions 169,397 721 587
Disposals - - (47)
Foreign exchange movement (5,648) - (187)
Balance as at February 28, 2009 186,379 721 1,099
Additions 155,246 48 410
Foreign exchange movement 66,164 256 390
Balance as at December 31, 2009 407,789 1,025 1,899
ACCUMULATED DEPRECIATION
Balance as at March,1 2008 - - 344
Depreciation for the period - - 138
Foreign exchange movement - - (126)
Balance as at February 28, 2009 - - 356
Depreciation for the period - - 237
Foreign exchange movement - - 166
Balance as at December 31, 2009 - - 759
CARRYING AMOUNTS
At March 1, 2008 22,630 - 402
At February 28, 2009 186,379 721 743
At December 31, 2009 407,789 1,025 1,140
Leased
assets TOTAL
$ 000 $ 000
COST
Balance as at March 1, 2008 - 23,376
Additions - 170,705
Disposals - (47)
Foreign exchange movement - (5,835)
Balance as at February 28, 2009 - 188,199
Additions 12,031 167,735
Foreign exchange movement 960 67,770
Balance as at December 31, 2009 12,991 423,704
ACCUMULATED DEPRECIATION
Balance as at March,1 2008 - 344
Depreciation for the period - 138
Foreign exchange movement - (126)
Balance as at February 28, 2009 - 356
Depreciation for the period 428 665
Foreign exchange movement 46 212
Balance as at December 31, 2009 474 1,233
CARRYING AMOUNTS
At March 1, 2008 - 23,032
At February 28, 2009 - 187,843
At December 31, 2009 12,517 422,471
Note 16
Included in the plant construction and mine development is a total of US$78.491
million (Feb 28, 2009: US$14.657 million) relating to stripping costs which are
capitalized as part of the mine development at PPM.
9. Loans receivable
As at Dec 31, As at Feb 28, As at Mar 1,
2009 2009 2008
$ 000 $ 000 $ 000
Tafida Investments (Pty) Ltd 3 2 3
Defacto Investments 275 (Pty) Ltd 47 33 30
Moepi Capital - - 14,647
Balance at the end of the period 50 35 14,680
These loans bear no interest and have no fixed terms of repayment.
10. Cash, cash investments and guarantees
10.1 Cash and cash equivalents
As at Dec 31, As at Feb 28, As at Mar 1,
2009 2009 2008
$ 000 $ 000 $ 000
29,375 88,883 90,457
Cash at bank and on hand
Restricted cash - cash on collateral - 39,067 -
Total cash and cash equivalents 29,375 127,950 90,457
Cash at banks earns interest at a floating rate based on daily bank deposit
rates. Cash is deposited at highly reputable financial institutions of a high
quality credit standing within the Republic of South Africa and their foreign
affiliates in the United Kingdom. The fair value of cash and cash equivalents
equates the values as disclosed in this note.
Cash placed on deposit as collateral against the bridge loan at the Standard
Bank of South Africa Limited was used to settle the bridge loan facility on
August 31, 2009. Refer to note 20 for more disclosure on the bridge loan
facility.
For the purpose of the consolidated statement of cash flows, cash and cash
equivalents comprise only the cash at bank and on hand line-item is disclosed
for each period end above.
10.2 Cash investments
Cash investments were made relating to certain guarantees required by the
Republic of South Africas Department of Mineral Resources ("DMR"), formerly
known as the Department of Minerals and Energy ("DME"), and ESKOM Holdings
Limited ("ESKOM"), the South African state utility supplier, of which the
details are as follows:
Rehabilitation guarantees
The DMR requires rehabilitation guarantees for all prospecting and mining
rights. These rehabilitation guarantees primarily relates to the mining rights
for the Pilanesberg and Mphahlele Projects. These guarantees have been provided
to the DMR on an insurance basis with a portion of the total guarantee being
paid over in a separate bank account controlled by the Group and ceded in
favour of the Insurance company.
ESKOM guarantees
On June 17, 2008 a guarantee of US$8.4 million (ZAR84.9 million), underwritten
by an insurance backed guarantee issued by Lombard Insurance Company Limited
("Lombard Insurance") was provided to ESKOM to order critical long lead time
material for the construction of the electrical substation at the Pilanesberg
Project. Lombard Insurance required cash collateral on a portion of the total
amount which has been paid over in a separate bank account controlled by the
Group and ceded in favour of Lombard Insurance.
As at Dec 31, As at Feb 28, As at Mar 1,
2009 2009 2008
$ 000 $ 000 $ 000
Pilanesberg rehabilitation
guarantee 1,794 868 532
Mphahlele rehabilitation
guarantee 1,661 1,029 -
Other guarantees 621 600 2,151
ESKOM guarantee 3,087 - -
Balance at the end of the period 7,163 2,497 2,683
The cash deposits have been placed on fixed investment accounts at reputable
financial institutions within the Republic of South Africa. Interest is earned
on a floating interest rate basis. The fair value of the cash investment
equates the values as disclosed in these financial statements.
11. Inventories
As at Dec 31, As at Feb 28, As at Mar 1,
2009 2009 2008
$ 000 $ 000 $ 000
Ore stockpiled at cost 4,323 6,943 -
Work in progress at cost 3,154 - -
Consumables at cost 2,372 - -
Balance at the end of the
period 9,849 6,943 -
12. Accounts and other receivables
As at Dec 31, As at Feb 28, As at Mar 1,
2009 2009 2008
$ 000 $ 000 $ 000
Accounts receivable (a) 19,202 - -
Other receivables (b) 9,250 8,506 3,897
Balance at the end of the
period 28,452 8,506 3,897
a) Accounts receivable
Accounts receivable are due from Northam Platinum Limited. None of the amounts
are past due or impaired.
b) Other receivables
Other receivables are non-interest bearing and due within twelve months.
Included in other receivables are:
an amount of USD6.513 million (Feb 2009: USD4.697 million) due from the South
African Revenue Services ("SARS") relating to Value Added Tax ("VAT");
an amount of USD2.064 million (Feb 2009: USD3.534 million) relating to monies
owing from other parties in connection with the building of the water pipeline
infrastructure (refer to note 7).
13. Share capital
a) Common shares authorized
The Company has an unlimited number of common shares with no par value.
b) Common shares issued
Number of Amount
Movement during the year ended February 28, 2009 shares $000
Balance, March 1, 2008 111,537,048 192,116
Common shares issued 258,416,038 174,037
Exercise of options 49,714 -
Fair value of options exercised - 27
Balance, February 28, 2009 370,002,800 366,180
Movement during the period ended December 31, 2009
Balance, March 1, 2009 370,002,800 366,180
Common shares issued 75,015,552 59,355
Balance, December 31, 2009 445,018,352 425,535
On May 15, 2009, Platmin engaged GMP Securities Europe LLP to conduct a
brokered private placement of common shares of the Company. In terms of the
placement, 75,015,552 common shares were issued for a consideration of
US$59.355 million, net of brokerage and legal fees.
c) Share options
The Board of Directors adopted a resolution dated May 3, 2005, which
established a share option plan (the "2005 Stock Option Plan"), pursuant to
which options may be granted to directors, officers, employees and persons
providing ongoing and contract services to the Group. The purpose of the Plan
is to attract persons by offering to such persons the opportunity to acquire
(or to increase) an equity interest in the Company through the purchase of
shares under the Plan. Subject to adjustment made in the case of a share split
of the issued common shares of the Group, the aggregate number of common shares
that may be issuable pursuant to options granted under the Plan is fixed at a
maximum of 9% of the outstanding common shares of the Group from time to time
and shall be calculated on an as-needed basis.
Prior to the establishment of the Plan, options were issued to directors and
employees, at the discretion of management, to compensate for services
provided. This 2005 Stock Option Plan was re-approved in accordance with its
terms at the Annual General Meeting held on June 26, 2008.
The Board of Directors adopted a resolution dated June 24, 2007, which
established a stock option plan (the "2007 Stock Option Plan"), pursuant to
which options may be granted to directors, officers, employees and persons
providing ongoing and contract services to the Group. The purpose of the Plan
is to attract persons by offering to such persons the opportunity to acquire
(or to increase) an equity interest in the Group through the purchase of
shares under the Plan. The maximum number of common shares reserved for
issuance under the 2007 Stock Option Plan is 2,500,000 common shares. No stock
options have been granted under the 2007 Stock Option Plan.
The changes in stock options during the ten months ended December 31, 2009 and
year ended February 28, 2009 were as follows:
Weighted
Number of average
options exercise price
$
Movement during the year ended February 28,
2009
Options outstanding, March 1, 2008 4,461,900 5.29
Options granted 847,000 5.77
Options exercised (60,000) (0.54)
Options forfeited (617,167) (8.64)
Options outstanding, February 28, 2009 4,631,733 4.98
Options exercisable, February 28, 2009 2,745,466 3.50
Movement during the period ended December 31,
2009
Options outstanding, March 1, 2009 4,631,733 4.98
Options granted 3,300,000 1.28
Options outstanding, December 31, 2009 7,931,733 3.44
Options exercisable, December 31, 2009 4,634,432 3.23
As at December 31, 2009, 1,701,799 options will vest within the next year and
1,595,501 options will vest during the 2011 financial year.
As at December 31, 2009 the following options were exercisable and outstanding:
Exercisable
Exercise Number of
price options
Expiry date Currency $
November 3, 2010 USD 1.20 250,000
December 6, 2010 USD 1.20 1,460,000
September 18, 2011 CAD 4.40 75,000
June 1, 2012 CAD 6.75 570,000
August 28, 2012 CAD 7.40 100,000
November 7, 2012 CAD 9.40 113,600
January 14, 2013 CAD 9.08 350,333
January 21, 2013 CAD 8.53 133,333
April 25, 2013 CAD 7.16 70,000
June 23, 2013 CAD 6.57 66,500
June 30, 2013 CAD 7.16 66,666
September 23, 2013 CAD 3.06 48,000
September 30, 2013 CAD 3.08 31,000
December 15, 2013 CAD 1.35 1,300,000
Weighted average 3.23 4,634,432
Outstanding
Exercise Number of
price options
Expiry date $
November 3, 2010 1.20 250,000
December 6, 2010 1.20 1,460,000
September 18, 2011 4.40 75,000
June 1, 2012 6.75 570,000
August 28, 2012 7.40 150,000
November 7, 2012 9.40 170,400
January 14, 2013 9.08 976,000
January 21, 2013 8.53 133,333
April 25, 2013 7.16 210,000
June 23, 2013 6.57 200,000
June 30, 2013 7.16 200,000
September 23, 2013 3.06 144,000
September 30, 2013 3.08 93,000
December 15, 2013 1.35 3,300,000
Weighted average 3.44 7,931,733
14. Non-controlling interest
The non-controlling interests are comprised of the following:
$ 000
Balance as at March 1, 2008 82
Non-controlling interests share of losses in
Boynton Investments (Pty) Ltd (16,318)
Non-controlling interests share of losses in
Mahube Mining (Pty) Ltd (332)
Non-controlling interests share of losses in
Taung Platinum Exploration (Pty) Ltd (44)
Non-controlling interests share of losses in
Sengani Family Mining and Exploration (Pty) Ltd (6)
Balance as at February 28, 2009 (16,618)
Non-controlling interests share of losses in
Boynton Investments (Pty) Ltd (3,095)
Non-controlling interests share of losses in
Mahube Mining (Pty) Ltd (337)
Non-controlling interests share of losses in
Taung Platinum Exploration (Pty) Ltd (36)
Non-controlling interests share of losses in
Sengani Family Mining and Exploration (Pty) Ltd (5)
Balance as at December 31, 2009 (20,091)
15. Long-term borrowings
As at Dec 31, As at Feb 28, As at Mar 1,
2009 2009 2008
$ 000 $ 000 $ 000
Corridor Mining
Resources (Pty) Ltd (a) 3,794 2,106 1,371
Perilya Exploration
(Pty) Ltd (b) 23 15 17
3,817 2,121 1,388
Corridor Perilya
Mining (a) Exploration (b) TOTAL
$ 000 $ 000 $ 000
Balance as at Mar 1, 2008 1,371 17 1,388
Increases during the year 851 - 851
Interest for the year 254 3 257
Foreign exchange variance (370) (5) (375)
Balance as at Feb 28, 2009 2,106 15 2,121
Increases during the period 560 - 560
Interest for the period 297 2 299
Foreign exchange variance 831 6 837
Balance as at Dec 31, 2009 3,794 23 3,817
a) Corridor Mining Resources (Pty) Ltd
Corridor Mining Resources (Pty) Ltd is a wholly owned subsidiary of Limpopo
Economic Development Enterprise ("LimDev"), an agency of the Limpopo Provincial
Government, Republic of South Africa.
The long-term loan bears interest at South African prime rate until otherwise
agreed by the shareholders. The loan is to be repaid from the proceeds
generated by the Mphahlele project in Tameng Mining and Exploration (Pty) Ltd,
a subsidiary of Mahube Mining (Pty) Ltd. The increase in the loan amount
payable is due to the increase in exploration activities and costs incurred in
the preparation of a bankable feasibility study for this project.
b) Perilya Exploration (Pty) Ltd
Perilya Exploration (Pty) Ltd (formerly known as Ranger Minerals (Pty) Ltd) is
a wholly owned subsidiary of Perilya Limited and registered in the Commonwealth
of Australia.
The long-term loan bears interest at South African prime overdraft rate plus 2%
until otherwise agreed by the shareholders, and will be repaid from profits.
The loan is used by Defacto Investments 275 (Pty) Ltd to fund exploration
activities.
16. Finance lease liability
ESKOM Holdings Limited ("ESKOM", the South African state utility supplier)
designed and built an electrical installation adjacent to the Pilanesberg Mine
to produce the required electricity and ESKOM maintains ownership and control
over all significant aspects of operating the facility. Each month, the
Pilanesberg Mine will pay a fixed capacity charge and a variable charge based
on actual electricity consumed. These payments attract interest at the South
African prime overdraft rate plus 2%.
The arrangement with ESKOM, entered into during the period under review meet
these requirements of IFRIC 4 - Arrangements containing a lease, and therefore
constitutes a lease and falls within the scope of IAS 17 - Leases and is
further classified as a finance lease due to the sub-station being constructed
exclusively for the use of PPM. An asset (the electrical installation) is
explicitly identified in the arrangement and fulfilment of the arrangement is
dependent on the electrical installation.
Reconciliation between the total minimum lease payments and their present
value:
Up to More than
1 year 1 to 5 years 5 years Total
$ 000 $ 000 $ 000 $ 000
Minimum lease payments 1,846 7,383 18,764 27,993
Finance cost (1,554) (5,767) (8,098) (15,419)
Present value 292 1,616 10,666 12,574
17. Decommissioning and rehabilitation provision
As at As at As at
Dec 31, Feb 28, Mar 1,
2009 2009 2008
$ 000 $ 000 $ 000
Balance at the beginning of the period 12,791 1,461 -
Increase in liability for the period 36,272 11,629 1,461
Unwinding of interest (Accretion) 426 65 -
49,489 13,155 1,461
Effect of exchange rate changes 3,255 (364) -
Balance at the end of the period 52,744 12,791 1,461
The Pilanesberg Mine is currently in the commissioning phase and the estimate
represents the current cost of environmental liabilities as at the respective
period end. An annual estimate of the quantum of closure costs is necessary in
order to fulfil the requirements of the DMR, as well as meeting specific
closure objectives outlined in the mines Environmental Management Programme.
Although the ultimate amount of the asset retirement obligation is uncertain,
the fair value of the obligation is based on information that is currently
available. The estimated undiscounted liability for the asset retirement
obligation at December 31, 2009 is US$70.8 million (February 28, 2009: US$17.5
million; March 1, 2008: US$2.5 million). This estimate includes costs for the
removal of all current mine infrastructure and the rehabilitation of all
disturbed areas to a condition as described in the mines Environmental
Management Programme. The asset retirement obligation has been determined using
a discount rate of 8.6% and an inflation rate of 6% over a period of 1 2 years.
18. Trade payables and accrued liabilities
As at Dec 31, As at Feb 28, As at Mar 1,
2009 2009 2008
$ 000 $ 000 $ 000
Trade payables 18,518 18,519 2,769
Amounts due to related
parties (note 24) - - -
Taxes - - -
Accrued expenses 3,626 5,055 395
Balance at the end of the
period 22,144 23,574 3,164
19. Revolving commodity facility
On October 9, 2009, the Company signed a definitive agreement with Investec
Bank Limited ("Investec") to provide a twelve month renewable revolving
commodity finance facility of up to ZAR400 million (US$54.420 million at an
exchange rate of ZAR7.35: US$1.00) for working capital purposes.
In terms of this facility Investec will finance up to 91% of PPMs platinum,
palladium, gold, copper and nickel deliveries to Northam Platinum Limited. This
facility bears interest at the Johannesburg Interbank Lending Rate ("JIBAR")
plus 3.0% and is repaid within 2 to 3 months upon which the funds are again
available for draw-down.
As at Dec 31, As at Feb 28, As at Mar 1,
2009 2009 2008
$ 000 $ 000 $ 000
Balance at the beginning
of the period - - -
Increase in liability for
the period 5,913 - -
Interest accrued (53) - -
5,860 - -
Effect of exchange rate changes (6) - -
Balance at the end of the period 5,854 - -
20. Current portion of long-term borrowings
As at Dec 31, As at Feb 28, As at Mar 1,
2009 2009 2008
$ 000 $ 000 $ 000
Balance at the beginning
of the period 38,752 - -
Bridge loan facility - 45,518 -
Interest on bridge loan facility 2,053 4,243 -
Settlement of bridge loan
facility (51,987) - -
(11,182) 49,761 -
Effect of exchange rate changes 11,182 (11,009) -
Balance at the end of the period - 38,752 -
On May 14, 2008, PPM signed a US$35 million (ZAR350 million) bridge financing
facility with Standard Bank of South Africa Limited ("Standard Bank"). The term
of the bridge loan facility was initially for the period of four months to
August 2008 and was subsequently extended to August 31, 2009. At the outset,
the facility incurred interest at the JIBAR plus 3.0%. From March 1, 2009 to
August 31, 2009, PPM provided cash collateral to Standard Bank of US$49.870
million (ZAR387.800 million) as security against the loan. This resulted in a
reduction in the interest rate to JIBAR plus 0.5%, The Company earned interest
at JIBAR plus 0.1% on cash collateral, bringing the net finance cost on the
loan to 0.4%.
The bridge loan facility has been used to fund the development and const
ruction of the Pilanesberg Mine. The bridge loan facility was repaid in full on
August 31, 2009.
In connection with this facility, the Company issued 300,000 warrants
exercisable at $6.95 per common share from September 15, 2008 until expiry of
the warrants on May 14, 2011.
The Company has classified this facility as held to maturity and the fair value
of the warrants of US$846,238 has been treated as a cost of the loan
transaction and has been amortized to net income using the effective interest
method over the facility term.
21. Income tax expense
Income tax rates
The South African taxation rate remained unchanged at 28%. The statutory tax
rate in Canada is 33%. The Groups effective tax rate in the period ended
December 31, 2009 was 0% (February 28, 2009: 0%). A reconciliation of income
tax expense applicable to profit / (loss) from operating activities before
income tax at the statutory income tax rate to income tax expenses at the
groups effective rate at period end is as follows:
For the periods ended For the periods ended
Dec 31, Feb 28, Dec 31, Feb 28,
2009 2009 2009 2009
$ 000 $ 000 % %
Corporate tax rate (3,668) (3,284) (33.0) (33.4)
Tax effects of:
- Expenses not deductible for
tax purposes 2,857 (1,170) 25.7 (11.9)
- Tax losses for which no
deferred income tax asset was
recognised 2,698 5,068 24.3 51.6
- Benefit of losses not
previously recognised (2,776) (934) (25.0) (9.5)
Foreign income tax allowances
and rate differentials 889 320 8.0 3.2
Effective tax rate 0 0 0.0 0.0
South Africa
As at the periods ended, the group had not recognised the following temporary
differences and tax losses:
As at Dec 31, As at Feb 28, As at Mar 1,
2009 2009 2008
$ 000 $ 000 $ 000
Unredeemed capital
expenditure available for
utilisation against future
mining taxable income 1,158 584 429
Foreign exchange and
provisions (59,664) 40,807 6,465
Tax losses carried forward
utilisable against taxable
income 116,917 25,413 14,706
58,411 66,804 21,600
The unrecognised deferred
tax at the period end is 16,355 18,705 6,264
The South African losses do not have an expiry date
Canada
As at the periods ended, the group had not recognised the following temporary
differences and tax losses:
As at Dec 31, As at Feb 28, As at Mar 1,
2009 2009 2008
$ 000 $ 000 $ 000
Share issue costs 6,734 7,155 7,438
Tax losses carried forward
utilisable against taxable
income 4,216 13,538 12,938
10,950 20,693 20,376
The unrecognised deferred
tax at the period end is 2,738 6,001 5,909
The Canadian losses carried forward expire in various fiscal years, as
indicated in the following table:
US$ 000
2018 4,217
4,217
22. Loss before taxation
For the periods ended
Dec 31, Feb 28,
2009 2009
$ 000 $ 000
Included in the general expenses are the following :
Share based payments expense (2,792) (4,469)
Employee expenses (5,772) (5,063)
Audit fees (441) (112)
Consulting and professional fees (501) (8,643)
Depreciation (330) (276)
General and administration expenses (3,857) (3,667)
(13,693) (22,230)
Included in other income are the following:
Other income 17 5
Foreign exchange gain / (loss) 3,216 15,250
3,233 15,255
23. (Loss) / earnings per share attributable to owners of the parent
For the periods ended
Dec 31, Feb 28,
2009 2009
$ 000 $ 000
Basic (loss) / earnings per share (0.02) 0.04
Basic (loss) / earnings per share is calculated by
dividing the net (loss) / profit for the period/ year
attributable to owners of the parent by the weighted
average number of ordinary shares outstanding during
the period/ year
Reconciliations:
Net (loss) / profit used in calculating basic earnings
per share attributable to owners of the parent (USD000) (7,642) 6,869
Weighted average number of shares used in the
calculation of basic earnings per share (`000) 430,015 163,931
There are no reconciling items between (loss) / earnings and headline (loss) /
earnings and therefore (loss) / earnings per share and headline (loss) /
earnings per share is the same.
Due to the Group reporting a loss for the period ending December 31, 2009 the
diluted (loss) / earnings per share is equal to the basic (loss) / earnings per
share.
24. Related party disclosures
Compensation of Directors and key management personnel of the group:
For the periods ended
Dec 31, Feb 28,
2009 2009
$ 000 $ 000
Compensation of directors:
Short-term benefits 1,424 977
Share-based payments 572 249
1,996 1,226
Compensation of key management personnel:
Short-term benefits 609 856
Share-based payments 687 1,527
1,296 2,383
Total remuneration of directors and key management
personnel of the Group 3,292 3,609
Share options outstanding and exercisable are as follows:
Options Exercise Remaining
exercisable price Expiring date life
Number C$/US$ Days
Executive directors
2,000,000 C$1.35 Dec 31, 2013 730
860,000 US$1.20 Dec 6, 2010 340
Non-executive directors
252,000 US$8.91 Jan 14, 2013 379
200,000 US$1.20 Dec 6, 2010 340
Key management personnel
1,300,000 C$1.35 Dec 31, 2013 730
170,400 C$9.40 Nov 7, 2012 311
266,500 C$9.08 J an 14, 2013 379
93,000 C$3.08 Sep 20, 2013 638
600,000 C$6.75 J un 30, 2013 546
150,000 C$4.40 Sep 18, 2011 250
Black Scholes option pricing Valuation
Total
maturity Expected Risk free
time volatility rate
Years % % CAD USD
2.08 76% 1.43% 0.69 0.66
4.00 100% 3.50% 0.47 0.45
4.00 71% 3.5% 3.40 3.33
4.00 100% 3.5% 0.47 0.45
2.08 76% 1.43% 0.69 0.66
3.00 74% 4.24% 4.10 4.41
4.00 71% 3.50% 3.40 3.33
3.00 77% 3.03% 1.60 1.54
3.00 66% 4.50% 4.68 4.96
2.00 100% 3.50% 0.29 0.30
A dividend yield of 0% has been applied as the Company has no history of
dividends and no dividends will be paid in the foreseeable future.
During the year none of the options listed above were exercised, and no
consideration was received by the Group.
Controlled entities
Details of controlled entities are as follows:
Dec 31, Feb 28, Mar 1,
2009 2009 2008
% % %
Platmin Resources Ltd. 100.0 100.0 100.0
Boynton Investments (Pty) Ltd. ("Boynton") 72.4 72.4 72.4
Boynton Platinum (Pty) Ltd. 72.4 72.4 72.4
Boynton Platinum (Pty) Ltd. (East) 72.4 72.4 72.4
Born Free Investments 144 (Pty) Ltd. 72.4 72.4 72.4
Born Free Investments 330 (Pty )Ltd. 35.5 35.5 35.5
Bubesi Investments (Pty) Ltd. ("Bubesi") 72.4 72.4 72.4
Crowned Cormorant Investments 13 (Pty) Ltd. 72.4 72.4 72.4
Crowned Cormorant Investments 16 (Pty) Ltd. 72.4 72.4 72.4
Dream World Investments 226 (Pty) Ltd. 35.5 35.5 35.5
Dream World Investments 249 (Pty) Ltd. 72.4 72.4 72.4
Eagle Creek Investments 55 (Pty) Ltd. 72.4 72.4 72.4
Eagle Creek Investments 86 (Pty) Ltd. 72.4 72.4 72.4
Intrax Investments 255 (Pty) Ltd. 72.4 72.4 72.4
Isandlwana Mining and Exploration (Pty) Ltd. 72.4 72.4 72.4
Keenan Investments (Pty) Ltd. 72.4 72.4 72.4
Mahube Mining (Pty) Ltd. ("Mahube") (1) 57.2 57.2 57.2
Midnight Masquerade Properties 170 (Pty) Ltd. 72.4 72.4 72.4
New Line Investments 77 (Pty) Ltd. 72.4 72.4 72.4
Pilanesberg Platinum Mines (Pty) Ltd ("PPM") 72.4 72.4 72.4
Private Preview Investments 39 (Pty) Ltd.
("Private Preview") 72.4 72.4 72.4
Sengani Family Mining and Exploration
(Pty) Ltd. ("Sengani") 35.5 35.5 35.5
Setseka Mining (Pty) Ltd. ("Setseka") 34.0 37.9 39.2
Tafida Investments (Pty) Ltd. 18.1 18.1 18.1
Taung Minerals (Pty) Ltd. ("Taung
Minerals") 72.4 72.4 72.4
Taung Platinum Exploration (Pty) Ltd.
("Taung Platinum") 29.0 29.0 37.9
Ubkhosi Mining and Exploration (Pty) Ltd. 72.4 72.4 72.4
Versatex Trading 346 (Pty) Ltd. 72.4 72.4 72.4
West Dunes Properties 115 (Pty) Ltd. 72.4 72.4 72.4
5 Brothers Mining (Pty) Ltd. 72.4 72.4 72.4
8 Mile Investments49 (Pty) Ltd. 72.4 72.4 72.4
(1) Mahube owns 95% (Feb 28, 2009: 100%) of Tameng Mining and Exploration (Pty)
Ltd ("Tameng")
All companies, with the exception of Platmin Resources Limited, are registered
within the Republic of South Africa. Platmin Resources is registered in the
British Virgin Islands. The type of shareholding held in all companies, are
ordinary.
Transactions within the Group
During the financial period, unsecured loan advances were made by subsidiaries
within the Group and between subsidiaries and the parent entity. Certain such
loans carried a discounted rate of interest. Intra-entity loan balances have
been eliminated in the financial statement of the Group.
25. Contingencies and commitments
The Company has guaranteed the rehabilitation of numerous exploration targets.
As at December 31, 2009, the total guarantees held by a bank were US$5,369,120
(February 29, 2009 - US$2,489,914).
Boynton has entered into an agreement with Impala Platinum Limited ("Impala")
for the right of first refusal to purchase PGM concentrate produced by Boynton
from the properties, Ruighoek 169JP, Vogelstruisnek 173JP and Palmietfontein
208JP. Should Boynton elect not to accept the terms proposed by Impala, a
break fee of US$2,089,573 in aggregate will be payable to Impala.
Boynton has an obligation, which cannot be quantified, pro rata to its
shareholding in Mahube to provide funding to Tameng to undertake the necessary
exploration and development on the Mphahlele project. The consequence of not
contributing accordingly, results in dilution of Boyntons shareholding.
Boynton has entered into an agreement with Codoca Beleggings Closed
Corporation ("Codoca"); where Codoca will transfer its mineral rights to
Boynton. A deposit of US$203,569 (ZAR1.5 million) was paid to Codoca.
The remaining balances are due to be paid by Boynton when the following
requirements are met:
A payment of 50% of the balance of the consideration amount within 30 days of
being notified by the DMR that a prospecting right, in terms of the Mineral and
Petroleum Resources Development Act, Number 28 of 2002 ("MPRDA"), has been
granted and issued to Boynton, enabling and entitling Boynton to commence
prospecting activities and also in respect of Codoca`s undivided share in
the mineral rights. The remaining balance for this , less the deposit,
will be US$2 17,1 41 (ZAR 1.6 mill ion).
Furthermore, payment of remaining balance of the consideration amount within
30 days of being notified by the DMR that a mining right in terms of the MPRDA
has been granted and issued to Boynton, enabling and entitling Boynton to
commence mining activities and also in respect of Codoca`s undivided share in
the mineral rights. The remaining balance for this, less the deposit, will be
US$ 217,141 (ZAR1.6 million).
A notarial prospecting contract was entered into on April 28, 2005 between
Boynton and Sephaku Development (Pty) Ltd ("Sephaku"), BHP Billiton SA Limited
("BHP") and Samancor Limited ("Samancor") with respect to the properties; Annex
Grootboom 335KT ("Annex Grootboom") and Scheiding 407KS ("Scheiding"). In terms
of the agreement, Samancor as the holder of certain old order rights pertaining
to Annex Grootboom and Scheiding was obligated to apply for conversion of these
rights under the provisions of the MPRDA. Subsequent to a conversion being
granted, Samancor is obligated in terms of the agreement to transfer the rights
to PGMs and all metals and minerals mineralo gically associated therewith on
Annex Grootboom and Scheiding (the "PGM rights"), to BHP.
Samancor lodged an application for conversion of the mining licence in December
2006. In terms of the same agreement, Sephaku was appointed to carry out
exploration activities on Annex Grootboom and Scheiding on a contract basis.
In terms of the agreement, Sephaku has the right to, within one month of the
completion of a Bankable Feasibility Study on Annex Grootboom, acquire from BHP
the PGM Rights for cash consideration of US$8.00 per resource ounce as
determined in a Bankable Feasibility Study in accordance with the South African
Mineral Resource Committees ("SAMREC") Code.
Sephaku has subsequently assigned all of its rights and obligations in terms of
the aforementioned contract to Boynton.
In respect of a joint venture agreement with Western Platinum Limited , a
subsidiary of Lonmin plc ("Lonmin JV"), Lonmin will contribute a maximum of
US$627 per hectare towards mineral rig hts existing under the joint venture and
towards any additional mineral rights included later. Any costs beyond US$627
per hectare will be shared equally between Lonmin and Boynton.
PPM entered into an agreement with engineering firm, Dowding Reynard and
Associates Engineering (Pty) Ltd, to implement the design and construction
phase of the project. The total estimated value determined during the Bankable
Feasibility Study ("BFS") of the project was ZAR1.5 billion which equated to
US$203.6 million at an estimated exchange rate of ZAR7.20 at the time of the
BFS. The remaining value with regards to this agreement as at December 31, 2009
is ZAR121.184 million which equates to US$16.446 million at the closing rate of
ZAR7.3685.
PPM also entered into a number of agreements with various suppliers to render
services associated with the operating of the mine. The remaining value with
regards to this agreements as at December 31, 2009 is ZAR3.594 billion which
equates to US$487.763 million at the closing rate of ZAR7.3685.
26. Events after the reporting period
On March 22, 2010, a subsidiary of Platmin entered into a ZAR191 million short
term lending facility (the equivalent of US$26 million at an exchange rate of
ZAR7.38 to the US dollar) with Pallinghurst Resources Limited ("Pallinghurst").
As at March 30, 2009, the first tranche of ZAR95.5 million had been drawn
against this facility.
On March 29, 2010 the Company entered into an agreement with a subsidiary of
Temasek Holdings (Private) Limited ("Temasek") which will purchase from the
Company a US$100 million non-interest bearing secured Convertible Debenture.
The Convertible Debenture has a maturity date of December 31, 2010 and is
convertible at a price of US$1.215 per common share (being an effective price
of C$1.25). At closing US$100 million will be deposited and held in a cash
collateralized account. In the event the Convertible Debenture is not converted
in full prior to the maturity date, the principal amount will be returned to
Temasek. The Convertible Debenture may only be converted in full and upon
conversion, at which time, it is convertible into a total of 82,304,526 shares
of Platmin.
Prior to closing, Temasek and Platmin will enter into an Investor Rights
Agreement by which Platmin will agree to appoint a nominee to its board of
directors at its annual general meeting of shareholders to be held later this
year. If the Convertible Debenture is not converted in full, Temasek will lose
this board nominee right.
Given its significant investment in the Company, Platmin`s largest shareholder
group, the Pallinghurst Investor Consortium ("Pallinghurst"), will be offered
the opportunity to subscribe for an additional US$30 million principal amount
of the Convertible Debenture on the same terms as Temasek. If converted in
full, a total of 24,691,358 shares will be issued to Pallinghurst.
Funds raised will be used by the Company for working capital, to complete the
build-up to full production at the Pilanesberg Platinum Mine (PPM), to pursue
a number of growth and acquisition opportunities, and to further develop the
company`s Eastern Limb projects.
27. Financial risk management
The Group is exposed to certain financial risks in the normal course of its
operations:
Market risk (including foreign exchange/ currency risk, commodity price risk,
interest rate risk);
Liquidity risk; and
Credit risk.
This note presents information about the Groups financial risk management
framework, objectives, policies and processes for measuring and managing risk,
the Groups exposure to these financial risks, and the Groups management of
capital.
Furthermore, quantitative disclosures are included throughout these
consolidated financial statements.
a) Financial risk management framework, objectives and policies
The Board of Directors has overall responsibility for the establishment and
oversight of the Groups risk management framework. The Groups Executive is
responsible for developing and monitoring the Groups risk management policies.
The Groups executive reports regularly to the Board of Directors on its
activities.
The Groups risk management policies are established to identify and analyse
the risks faced by the Group, to set appropriate risk limits and controls, and
to monitor risks and adherence to limits. Risk management policies and systems
are reviewed regularly to reflect changes in market conditions and the Groups
activities. The Group, through its training and management standards and
procedures, aims to develop a disciplined and constructive control environment
in which all employees understand their roles and obligations.
The Group Audit Committee oversees how management monitors compliance with the
Groups risk management policies and procedures, and reviews the adequacy of the
risk management framework in relation to the risks faced by the Group.
Group Treasury risk
The Group monitors its forecast financial position on a regular basis. The
Groups Executive meets regularly and considers cash flow projections for the
following 12 months in detail, taking into consideration the impact of market
conditions including commodity prices and foreign exchange rates. The Groups
Executive also receives reports from independent exchange consultants and
receives presentations from advisors on current and forecast economic
conditions.
The Groups forecast financial risk position with respect to key financial
objectives and compliance with treasury practice are regularly reported to the
Board.
From time to time, the Group does use derivative financial instruments to hedge
certain identified risk exposures, as deemed necessary by the Groups Executive.
The Group doe s not acquire, hold or issue derivative instruments for trading
purposes.
The Groups objectives, policies and processes for managing risks arising from
financial instruments have not changed from the previous financial year.
b) Market risk
i) Foreign exchange (Currency) risk
The group operates internationally and is exposed to foreign exchange risk
arising from various currency exposures, primarily with respect to the United
States Dollar ("US Dollar"). The groups functional currency is the South
African Rand ("SA Rand").
Foreign exchange risk arises from future commitments, assets and liabilities
that are denominated in a currency that is not the functional currency. Most of
the companys purchases are denominated in SA Rand. However, certain initial
capital items during the plant construction phase as well as long lead-capital
items are denominated in US Dollars, Euros or Australian Dollars. These have to
be acquired by the South African operating comp any due to the South African
Reserve Banks Foreign Exchange Control Rulings. This exposed the South African
subsidiary companies to changes in the foreign exchange rates.
The Groups cash deposits are largely denominated in US Dollar and SA Rand. A
foreign exchange risk arises from the funds deposited in US Dollar which will
have to be exchanged into the functional currency for working capital purposes.
Furthermore, the international commodity market is predominately priced in US
Dollars which exposes the Groups cash flows to foreign exchange currency risks.
Currently there are no formal foreign exchange hedge programmes or policies in
place.
During the period under review, the Group has entered into a number of
derivative instruments which may be considered to hedge the position of the
Group against the risks identified above. These include forward sale contracts
as well as forward exchange contracts. The use of these derivative instruments
were as follows:
Capital raisings were conducted in US Dollars or UK Pounds Sterling, whilst the
majority of the Groups cash flows are in SA Rand. Due to the volatility in the
SA Rand against these currencies, management took a decision to hedge these
funds based on the Groups expected monthly cash flow. A total profit of
US$19.500 million (ZAR159.611 million) was realised.
During the plant construction phase, a number of capital items were denominated
in currencies other than the SA Rand. These future expected cash flows were
hedged on an ad-hoc basis as deemed appropriate or required by the supplier. A
net loss of US$0.227 million (ZAR1.860 million) was realised.
At financial period end, no forward sale contracts or forward exchange
contracts were outstanding.
The following significant exchange rates were applied during the reporting
period:
Average rate Reporting date spot rate
10 months 12 months
ended ended Dec 31, Feb 28,
Dec 31, 2009 Feb 28, 2009 2009 2009
US Dollar 1 = SA Rand 8.1850 8.7031 7.3685 9.9845
UK Pound Sterling 1 =
SA Rand 12.8926 15.1850 11.8788 14.2384
At financial period end, the financial instruments exposed to foreign currency
risk movements are as follows:
Presented
Balances as on Dec 31, 2009 US$ `000 US$ `000 ZAR `000
Financial assets
Loans receivable 50 - 368
Cash investments and guarantees 7,163 - 52,778
Accounts and other receivables 28,452 - 209,649
Cash and cash equivalents 29,375 1,703 186,084
Total financial assets 65,040 1,703 448,879
Financial liabilities
Long-term borrowings 3,817 - 28,126
Trade payables and accrued liabilities
(1) 22,144 198 161,516
Revolving commodity facility 5,854 - 43,137
Total financial liabilities 31,815 198 232,779
(1) An insignificant amount of payables were denominated in other currencies.
Presented
Balances as on Feb 28, 2009 US$ `000 US$ `000 ZAR `000
Financial assets
Loans receivable 35 - 352
Cash investments and guarantees 2,497 - 24,931
Accounts and other receivables 8,506 - 84,960
Cash and cash equivalents (1) 127,950 61,982 656,978
Total financial assets 138,988 61,982 767,221
Financial liabilities
Long-term borrowings 2,121 - 21,182
Trade payables and accrued liabilities
(2) 23,574 2,796 207,475
Total financial liabilities 25,695 2,796 228,657
(1) An insignificant amount of cash and cash equivalents were denominated in
other currencies.
(2) An insignificant amount of payables were denominated in other currencies.
The following table summarises the sensitivity of financial instruments held at
balance date to movements in the exchange rate of the SA Rand to the US Dollar,
with all other variables held constant. The US Dollar denominated instruments
have been assessed using the sensitivities indicated in the table. These are
based on reasonably possible changes, over a financial period, using the
observed range of actual historical rates for the preceding two-year period.
Dec 31, Feb 28,
2009 2009
Impact on profit/equity (pre-tax gain/(loss)) US$ `000 US$ `000
Judgements on reasonable possible movements
US$/ZAR increase by 30% 4,995 16,867
US$/ZAR decrease by 20% 5,411 18,273
ii) Commodity price risk
Commodity price risk arises from the possible adverse effect on current and
future earnings due to fluctuations in commodity prices, in particular the
price of platinum group metals ("PGMs"). Most of these prices are determined
in US Dollars and are internationally determined in the open market. The Group
regularly measures exposure to commodity price risk by stress testing the
Groups forecast financial position to changes in PGM prices. The Group reviews
it exposure with reference to the basket price for the following 4 metals:
Platinum, Palladium, Rhodium and Gold (commonly referred to in the platinum
mining industry as the "4E basket price")
The Group does not actively hedge future commodity prices against price
fluctuations. The Pilanesberg operation recognises revenue at the month end
during which deliver y of concentrate has occurred at the months average
commodity price for the contained metal. The revenue is revalued at each month
end to the latest commodity price averages until such time that the commodity
is determined under the Sale and Treatment Agreement entered into with Northam
Platinum Limited. These fair value adjustments are set off against revenue, as
this is the mining industry standard. The total fair value adjustments amounted
to a profit of US$1.025 million.
During the period, the Group entered into a Revolving Commodity Facility with
Investec (please refer to note 19 for details on this facility). In terms of
this facility, Investec will finance up to 91% of PPMs platinum, palladium,
gold, copper and nickel deliveries to Northam in the month following the
delivery month. This facility is repaid within 2 to 3 months. The respective
commodity prices are determined and fixed upon each drawdown in SA Rand and any
fluctuations in the commodity prices or SA Rand/US Dollar exchange rate are
hedged in terms of a swap agreement.
Under this agreement, the Group agrees to swap a fixed amount on maturity date
of the respective drawdown with the variable amount realised on the commodity
and currency markets. The fair value adjustments arising from this are set off
against revenue, as this is the mining industry standard. The total fair value
adjustments amounted to a loss of US$0.173 million.
The following 4E basket prices were applied during the reporting period:
Average for the
10 months Data for the
ended month of
Dec 31, 2009 Dec 31, 2009
4E basket price in US Dollar 1,100 1,273
8.1850 7.4841
US Dollar 1 = SA Rand
4E basket price in SA Rand 9,004 9,527
(No comparative information is available as the first concentrate delivery only
commenced during April 2009.) The financial instruments exposed to movements in
commodity prices (in USD) are as follows:
Gross amount
Presented exposed
Balances as on Dec 31, 2009 US$ `000 US$ `000
Accounts and other receivables 28,452 18,636
Revolving commodity facility (5,854) (5,854)
Total financial instruments 22,598 12,782
Balances as on Feb 28, 2009
Accounts and other receivables 8,506 -
Revolving commodity facility - -
Total financial instruments 8,506 -
The following table summarises the sensitivity of financial instruments held at
balance date to movements in the relevant forward commodity price, with all
other variables held constant. The sensitivities are based on reasonably
possible changes, over a financial period, using observed ranges of actual
historical rates.
Dec 31, Feb 28,
2009 2009
Impact on profit/equity (pre-tax gain/(loss)) US$ `000 US$ `000
Judgements on reasonable possible movements
Increase by 35% in 4E basket price - -
Decrease by 3% in 4E basket price - -
No impact would have realised on profit/equity (on a pre-tax basis), as the
revenue is being capitalised. PPM has not yet reached desired production levels
and all costs and revenues are off-set against the Mine development asset
(refer note 8 and 5 for accounting policies).
iii) Interest rate risk
Interest rate risk is the risk that the Groups financial position will be
adversely affected by movements in interest rates.
The Groups main interest rate risk arises from short-term loans with interest
charges based on the Johannesburg Interbank Acceptance Rate ("JIBAR"). Floating
rate debt exposes the Group to cash flow interest rate risk. The long - term
loans bear interest at an interest rate linked to the South African prime
overdraft rate. Cash holdings are subject to interest rate risk in the country
in which they are held on deposit. All other financial assets and liabilities
in the form of receivables, payables and provisions, is non-interest bearing.
The Group currently does not engage in any hedging or derivative transactions
to manage interest rate risk. In conjunction with external advice, management
consideration is given on a regular basis to alternative financing structures
with a view to optimising the Groups funding structure.
The financial instruments exposed to movements in variable interest rates are
as follows:
Presented
Balances as on Dec 31, 2009 US$ `000
Loans receivable Non-interest bearing 50
Cash investments and guarantees Cash deposited at
institutions (1) reputable financial 7,163
Cash and cash equivalents Cash on hand at reputable
financial 29,375
Total financial assets institutions (1) 36,588
Long-term borrowings Interest at SA prime overdraft 3,817
Interest at SA prime + 2%
Revolving commodity facility Fixed at Interest at JIBAR + 3% 5,854
Total financial liabilities 9,671
Exposed to
movements
Balances as on Dec 31, 2009 US$ `000
Loans receivable Non-interest bearing -
Cash investments and guarantees Cash deposited at
institutions (1) reputable financial 7,163
Cash and cash equivalents Cash on hand at reputable
financial 29,375
Total financial assets institutions (1) 36,538
Long-term borrowings Interest at SA prime overdraft 3,794
Interest at SA prime + 2% 23
Revolving commodity facility Fixed at Interest at JIBAR + 3% -
Total financial liabilities 3,817
(1) Cash investments and guarantees as well as cash and cash equivalents are
exposed to movements in US Dollars, GB Pound Sterling and SA Rand cash deposit
rates.
iii) Interest rate risk
Presented
Balances as on Feb 28, 2009 US$ `000
Loans receivable Non-interest bearing 35
Cash investments and guarantees Cash deposited at
reputable financial 2,497
institutions (1)
Cash and cash equivalents Cash on hand at reputable
financial 127,950
Total financial assets institutions (1) 130,482
Long-term borrowings Interest at SA prime
overdraft 2,121
Interest at SA prime + 2%
Revolving commodity facility Fixed at Interest at JIBAR
+ 3% -
Total financial liabilities 2,121
Exposed to
movements
Balances as on Feb 28, 2009 US$ `000
Loans receivable Non-interest bearing -
Cash investments and guarantees Cash deposited at
reputable financial 2,497
institutions (1)
Cash and cash equivalents Cash on hand at reputable
financial 127,950
Total financial assets institutions (1) 130,447
Long-term borrowings Interest at SA prime
overdraft 2,106
Interest at SA prime + 2% 15
Revolving commodity facility Fixed at Interest at JIBAR
+ 3% -
Total financial liabilities 2,121
(1) Cash investments and guarantees as well as cash and cash equivalents are
exposed to movements in US Dollars, GB Pound Sterling and SA Rand cash deposit
rates.
The following table summarises the sensitivity of the financial instruments
held at reporting date, following a movement in variable interest rates, with
all other variables held constant. The sensitivities are based on reasonably
possible changes over a financial period, using the observed range of actual
historical rates.
Dec 31, Feb 28,
2009 2009
Impact on profit/equity (pre-tax gain/(loss)) US$ `000 US$ `000
Judgements on reasonable possible movements
Increase of 1% in prime overdraft 51 109
Decrease of 0.5% in prime overdraft (25) (54)
The impact is calculated on the net financial instruments exposed to variable
interest rates as at reporting date and does not take into account any
repayments of long or short-term borrowing.
c) Liquidity risk
The liquidity position of the Group is managed to ensure sufficient liquid
funds are available to meet financial commitments in a timely and cost
effective manner. The Groups Executive continually reviews the liquidity
position including cash flow forecasts to determine the forecast liquidity
position and maintain appropriate liquidity levels.
All excess cash is held by the Company or the South African operating company,
Boynton. The Company invests excess funds in a 32 day deposit account and
Boynton keeps excess funds in a current account. Cash is deposited at highly
reputable financial institutions of high quality credit standing within the
Republic of South Africa and their foreign affiliates in the United Kingdom.
The concentration of cash balances on hand in geographical areas was as
follows:
United Republic of
Presented Kingdom South Africa
Balances as on Dec 31, 2009 US$ `000 US$ `000 US$ `000
Cash and cash equivalents (1) 29,375 4,122 25,254
Total financial liabilities 29,375 4,122 25,254
Balances as on Feb 28, 2009
Cash and cash equivalents 127,950 62,151 65,799
Total financial liabilities 127,950 62,151 65,799
(1) Included in the US$25.254 million within the Republic of South Africa,
US$0.846 million (3%) is kept on hand in the Companys South African branchs
bank account. These funds require the approval of the South African Reserve
Bank prior to being available within the Republic.
The contractual maturity analysis of payables at the reporting date was as
follows:
Less than
Presented 6 months
Balances as on Dec 31, 2009 US$ `000 US$ `000
Long-term borrowings (1) 3,817 -
Trade payables and accrued liabilities 22,144 22,144
Revolving commodity facility (1) 5,854 5,854
Total financial liabilities 31,815 27,998
Balances as on Feb 28, 2009
Long-term borrowings (1) 2,121 -
Trade payables and accrued liabilities 23,574 23,574
Total financial liabilities 25,695 23,574
Between Greater than
6 - 12 months 12 months
Balances as on Dec 31, 2009 US$ `000 US$ `000
Long-term borrowings (1) - 3,817
Trade payables and accrued liabilities - -
Revolving commodity facility (1) - -
Total financial liabilities - 3,817
Balances as on Feb 28, 2009
Long-term borrowings (1) - 2,121
Trade payables and accrued liabilities - -
Total financial liabilities - 2,121
(1) Refer to notes 15 and 19 for the repayment obligations for borrowings.
d) Credit risk
Credit risk is the risk that a contracting entity will not complete its
obligation under a financial instrument that will result in a financial loss
to the Group. The carrying amount of financial assets represents the maximum
credit exposure.
Receivables balances are monitored on an ongoing basis with the result that the
Groups exposure to bad debts is not significant. The Groups credit risk is
limited to the carrying value of its financial assets.
At balance date there is a significant concentration of credit risk represented
in the cash and accounts receivables balance. With respect to accounts
receivables, this is due to the fact that the majority of sales are made to one
customer, being Northam Platinum Limited, as per contractually agreed terms.
The customer has complied with all contractual sales terms and has not at any
stage defaulted on amounts due. The Group manages its credit risk by
predominantly dealing with counterparties with a positive credit rating.
The maximum exposure to credit risk was as follows:
Dec 31, Feb 28,
2009 2009
Balances as on US$ `000 US$ `000
Loans receivable 50 35
Cash investments and guarantees 7,163 2,497
Accounts and other receivables 28,452 8,506
Cash and cash equivalents 29,375 127,950
Total financial assets 65,040 138,988
The ageing of receivables at the reporting date was as follows:
Less than Between
Balances as on Presented 1 month 1 - 2 months
Dec 31, 2009 US$ `000 US$ `000 US$ `000
Loans receivable 50 - -
Accounts and other receivables 28,452 19,202 9,250
Total financial assets 28,502 19,202 9,250
Balances as on
Feb 28, 2009
Loans receivable 35 - -
Accounts and other receivables 8,506 - 8,506
Total financial assets 8,541 - 8,506
Between Greater than
Balances as on 3 - 12 months 12 months
Dec 31, 2009 US$ `000 US$ `000
Loans receivable - 50
Accounts and other receivables - -
Total financial assets - 50
Balances as on
Feb 28, 2009
Loans receivable - 35
Accounts and other receivables - -
Total financial assets - 35
e) Capital management
The Groups Corporation office is responsible for capital management. This
involves the use of corporate forecasting models, which facilitates analysis of
the Groups financial position including cash flow forecasts to determine the
future capital management requirements. Corporate office monitors gearing.
Capital management is undertaken to ensure a secure, cost effective supply of
funds to ensure the Groups operating and capital expenditure requirements are
met. The mix of debt and equity is regularly reviewed. The Group does not have
a target debt/equity ratio, but has a policy of maintaining a flexible
financing structure so as to be able to take advantage of new investment
opportunities that may arise. Net debt is calculated as total borrowings
(including the current and non-current borrowings as reported on the Statement
of Financial Position). Total capital is calculated as the total equity (as
reported) plus net debt.
Dec 31, Feb 28,
2009 2009
US$ `000 US$ `000
Long term borrowings 3,817 2,121
Revolving commodity facility 5,854 -
Current portion of long-term borrowings - 38,752
Net debt 9,671 40,873
Total equity 453,029 292,263
Total capital 462,700 333,136
Gearing ratio 2% 12 %
No dividends were paid during the reporting period. The Board maintains a
policy of balancing returns to shareholders with the need to fund growth.
f) Financial assets and liabilities by category
The accounting policies for financial instruments have been applied to the line
items below:
Dec 31, Feb 28,
2009 2009
All classified as loans and receivables (1) US$ `000 US$ `000
Loans receivable 50 35
Cash investments and guarantees 7,163 2,497
Accounts and other receivables 28,452 8,506
Cash and cash equivalents 29,375 127,950
Total financial assets 65,040 138,988
(1) None of the Groups financial assets have been categorised as assets through
profit or loss, derivatives used for hedging or available for sale assets.
Dec 31, Feb 28,
All classified as liabilities at fair value through 2009 2009
profit or loss (1) US$ `000 US$ `000
Long term borrowings 3,817 2,121
Trade payables and accrued liabilities 22,144 23,574
Revolving commodity facility 5,854 -
Total financial liabilities 31,815 25,695
(1) None of the Groups financial liabilities have been categorised as
derivatives used for hedging or available for sale liabilities.
g) Fair value of financial assets and liabilities
The fair value of a financial asset or a financial liability is the amount at
which the asset could be exchanged or liability settled in a current
transaction between willing parties in an arms length transaction. The fair
values of the Groups financial assets and liabilities approximate their
carrying values, as a result of their short maturity or because they carry
floating rates of interest.
All financial assets and liabilities recorded in the financial statements
approximate their respective net fair values.
28. Segmented information
Management has determined the operating segments based on the reports reviewed
by the executive committee that are used to make strategic decisions.
The committee considers the business from an operating perspective. The Group
operates in one geographic segment, the Republic of South Africa. The operating
segments comprise the following:
- Mining operation: The Pilanesberg Mine is currently in an advanced
development and build-up stage. This mine is involved in the mining and
processing of platinum group elements.
- Development and exploration operations: The Group is engaged in a number of
other development and exploration projects within the Republic of South Africa.
- Administrative operations: The Group administration is done at the local
corporate office based in Centurion, the Metropolitan City of Tshwane in the
Republic of South Africa.
Although the development and exploration as well as administrative operations
do not meet the quantitative thresholds required by IFRS 8 - Segment reporting,
management has concluded that these segments should be reported, as it is
closely monitored by the executive committee. The development and exploration
segment is earmarked as the growth area for the Group.
The committee assesses the performance of the operating segments as follows:
- Mining: based on an adjusted earnings before interest, taxation, depreciation
and amortisation ("EBITDA") prior to the capitalising of the costs per the
accounting policies;
- Development and exploration: based on the additions to non-current assets and
viability; and
- Administrative: based on an adjusted EBITDA.
The chief operating decision maker ("CODM") at reporting date was Mr. Thomas
Graham Dale, the Chief Executive Officer of the Group.
The segment information provided to the committee for the reportable segments
for the period ended December 31, 2009 is as follows:
Development and
Mining exploration
Dec Feb Dec Feb
Amounts in $ `000 2009 2009 2009 2009
Reportable items in the
Statement of Comprehensive
Income
External revenues 29,422 - - -
Intersegment revenue - - - -
Depreciation and
amortisation (153) (80) (1) (3)
Income tax expense - - - -
Adjusted EBITDA (55,320) (35,671) - -
Administration Consolidated
Dec Feb Dec Feb
Amounts in $ `000 2009 2009 2009 2009
Reportable items in the
Statement of Comprehensive
Income
External revenues - - 29,422 -
Intersegment revenue - - - -
Depreciation and
amortisation (175) (194) (330) (276)
Income tax expense (16) - (16) -
Adjusted EBITDA (11,568) (19,574) (66,888) (55,245)
The revenue from external parties reported to the committee is measured in
accordance with IFRS. No revenue is recorded in the Consolidated statement of
income and comprehensive income as the Pilanesberg Mine has not yet reached
commercial production (consistent with the accounting policies of the Group).
All revenues reported were from a single customer, being Northam Platinum
Limited.
A reconciliation of adjusted EBITDA to total comprehensive (loss)/income for
the period is provided as follows:
Consolidated
Dec Feb
2009 2009
$`000 $`000
Total EBITDA for reportable segments (66,888) (55,245)
Revenues offset against the cost of the plant
construction (29,422) -
Mining costs offset against the cost of the plant
construction 82,980 33,296
Total EBITDA per Consolidated statement of income
and comprehensive income (13,330) (21,949)
Foreign exchange gains 3,216 15,250
Depreciation (330) (276)
Finance costs (net) (655) (2,856)
Loss before taxation (11,099) (9,831)
Income tax expense (16) -
Exchange differences on translating from functional
currency to presentation currency (109,688) 38,114
Total comprehensive (loss)/income for the period (120,803) 28,283
The segment information provided to the committee for the reportable segments
for the period ended December 31, 2009 is as follows:
Development and
Mining exploration
Dec Feb Dec Feb
Amounts in $ `000 2009 2009 2009 2009
Reportable items in the
Statement of Financial
Position
Total assets 486,680 221,459 10,571 11,241
Additions to non-
current assets 170,232 176,685 1,172 6,130
Total liabilities 91,141 71,554 4,640 2,208
Administration Consolidated
Dec Feb Dec Feb
Amounts in $ `000 2009 2009 2009 2009
Reportable items in the
Statement of Financial
Position
Total assets 52,911 136,801 550,162 369,501
Additions to non-
current assets 744 522 172,148 183,336
Total liabilities 1,352 3,467 97,133 77,238
The amounts provided to the committee with respect to total assets are measured
in a manner consistent with that of the financial statements. These assets are
allocated based on the operations of the segment. There were no impairments
during the current or prior reportable periods.
Additions to non-current assets include all additions to Mining assets,
Intangible assets and Property, Plant and Equipment (refer to notes 6, 7 and
8).
The amounts provided to the committee with respect to total liabilities are
measured in a manner consistent with that of the financial statements. These
assets are allocated based on the operations of the segment.
29. IFRS 1 reconciliation
Reconciliation of assets, liabilities and equity
As at March 1, 2008
Canadian Effect of
Note GAAP transition IFRS
ASSETS
Non-current assets
Property, plant and equipment 28 (b) 24,425 (1,371) 23,054
Mineral rights 28 (b) 3,132 (324) 2,808
Intangible assets 28 (b) - - -
Exploration and evaluation
assets 28 (b) 27,132 (1,541) 25,591
Mineral properties 28 (b) 4,619 (739) 3,880
Loans due from related
parties 14,680 - 14,680
Rehabilitation investments (i) 544 (544) -
Cash investments (i) - 2,683 2,683
Total non-current assets 74,532 (1,836) 72,696
Current assets
Inventories 28(b) - - -
Accounts and other
receivables 3,897 - 3,897
Restricted cash (i) 4,408 (4,408) -
Cash and cash equivalents (i) 88,188 2,269 90,457
Total current assets 96,493 (2,139) 94,354
TOTAL ASSETS 171,025 (3,975) 167,050
As at February 28, 2009
Canadian Effect of
GAAP transition IFRS
ASSETS
Non-current assets
Property, plant and equipment 214,705 (26,621) 188,084
Mineral rights 3,132 (1,024) 2,108
Intangible assets 6,162 (773) 5,389
Exploration and evaluation assets 34,062 (8,984) 25,078
Mineral properties 4,619 (1,708) 2,911
Loans due from related parties 35 - 35
Rehabilitation investments 879 (879) -
Cash investments - 2,497 2,497
Total non-current assets 263,594 (37,492) 226,102
Current assets
Inventories 7,962 (1,019) 6,943
Accounts and other receivables 8,506 - 8,506
Restricted cash 40,685 (40,685) -
Cash and cash equivalents 88,883 39,067 127,950
Total current assets 146,036 (2,637) 143,399
TOTAL ASSETS 409,630 (40,129) 369,501
(i) Certain reclassifications have been made on the cash and cash equivalents
on the statement of financial position.
Previously cash was classified as cash and cash equivalents, restricted cash
and rehabilitation investments. The Group has now classified these as either
cash and cash equivalents or cash investments. The net effect of these
reclassifications is US$(nil).
As at March 1, 2008
Canadian Effect of
Note GAAP transition IFRS
SHAREHOLDER`S EQUITY
Share capital (ii) 192,116 - 192,116
Share-based payment reserve (ii) 3,068 - 3,068
Foreign currency translation
reserve (ii) - - -
Accumulated loss (ii) (30,169) (4,060) (34,229)
Non-controlling interest (ii) - 82 82
Total equity (ii) 165,015 (3,978) 161,037
LIABILITIES
Non-current liabilities
Borrowings 1,388 - 1,388
Provision for closure cost 28(d) 1,461 - 1,461
Total non-current liabilities 2,849 - 2,849
Current liabilities
Trade and other payables 3,161 3 3,164
Borrowings 28(b) - - -
Total current liabilities 3,161 3 3,164
TOTAL EQUITY AND LIABILITIES 171,025 (3,975) 167,050
As at February 28, 2009
Canadian Effect of
GAAP transition IFRS
SHAREHOLDER`S EQUITY
Share capital 366,180 - 366,180
Share-based payment reserve 8,175 - 8,175
Foreign currency translation
reserve - (38,114) (38,114)
Accumulated loss (41,187) 13,827 (27,360)
Non-controlling interest - (16,618) (16,618)
Total equity 333,168 (40,905) 292,263
LIABILITIES
Non-current liabilities
Borrowings 2,121 - 2,121
Provision for closure cost 12,015 776 12,791
Total non-current liabilities 14,136 776 14,912
Current liabilities
Trade and other payables 23,574 - 23,574
Borrowings 38,752 - 38,752
Total current liabilities 62,326 - 62,326
TOTAL EQUITY AND LIABILITIES 409,630 (40,129) 369,501
(ii) Kindly refer to the Reconciliation of Equity presented on page 63.
Reconciliation of loss and comprehensive loss
Canadian
Note GAAP
Revenue -
Cost of Operations -
Mine operating earnings -
Expenses 21,030
Operating (loss) (21,030)
Other (expenses) / income 12,937
Finance costs (2,925)
Loss before taxation (11,018)
Income tax expense -
LOSS FOR THE PERIOD (11,018)
Other comprehensive income:
Exchange differences on translation from functional to
presentation
currency 28(b) -
Income tax relating to components of other comprehensive
income -
Other comprehensive income for the year, net of tax -
TOTAL COMPREHENSIVE (LOSS) / INCOME FOR THE PERIOD (11,018)
Profit / (loss) attributable to:
Owners of the parent
Non-controlling interest
Total comprehensive income attributable to:
Owners of the parent
Non-controlling interest
Earnings per share (in currency units):
Basic and diluted
12 months ended
February 28, 2009
Effect of
transition IFRS
Revenue - -
Cost of Operations - -
Mine operating earnings - -
Expenses 924 21,954
Operating (loss) (924) (21,954)
Other (expenses) / income 2,042 14,979
Finance costs 69 (2,856)
Loss before taxation 1,187 (9,831)
Income tax expense - -
LOSS FOR THE PERIOD 1,187 (9,831)
Other comprehensive income:
Exchange differences on translation from functional
to presentation
currency 38,114 38,114
Income tax relating to components of other
comprehensive income - -
Other comprehensive income for the year, net of tax 38,114 38,114
TOTAL COMPREHENSIVE (LOSS) / INCOME FOR THE PERIOD 39,301 28,283
Profit / (loss) attributable to:
Owners of the parent 6,869
Non-controlling interest (16,700)
Total comprehensive income attributable to: (9,831)
Owners of the parent 44,983
Non-controlling interest (16,700)
Earnings per share (in currency units): 28,283
Basic and diluted 0.04
The following reconciliation provides a quantification of the effect, after
taxation, of the transition to IFRS:
As at
transition For the
date year ended
Mar 1, Feb 28,
2008 2009
Reconciliation of equity Notes $`000 $`000
Equity previously reported under Canadian
GAAP 165,015 333,168
Items separately disclosed in the
shareholders equity 28(a)
- Non-controlling interest, previously
disclosed within
accumulated deficit 28(a) 82 (16,618)
- Foreign currency translation reserve
deemed zero on
translation date and subsequent transfers 28(b) - (38,114)
- Adjustment to accumulated deficit:
Foreign currency translation
differences arising from the translation of
transactions recorded
in a different currency than the functional
currency. 28(b) - (2,791)
- Adjustment to accumulated deficit due to
separate disclosure
of above items (total of the above) 28(a) (82) 57,523
Subtotal after above 165,015 333,168
Adjustment upon adoption of IFRS
- Differences arising from applying the
closing rate for all
reporting periods to non-monetary assets 28(b) (3,975) (40,129)
- Differences arising from applying the
closing rate for all
reporting periods to non-monetary liabilities28(d) (3) (294)
- Difference due to a different discount
rate being applied to the
decommissioning and rehabilitation provision 28(d) - (482)
Equity reported under IFRS 161,037 292,263
Reconciliation of cashflows
Canadian
Notes GAAP
Cash flows from operating activities
Cash receipts from customers -
Cash paid to suppliers and employees 28(b) (2,167)
Cash (utilized in) / generated from operations (2,167)
Interest received / (paid) 28(b) (2,791)
Income taxes paid -
Net cash (used in) / generated from operating activities (4,958)
Cash flows from investing activities
28(b);
Purchase of property, plant and equipment (iv) (180,327)
Proceeds from sale of property, plant and equipment 20
Additions to intangible assets (iv) (5,389)
Increase in rehabilitation investment 28(b) (335)
Increase in restricted cash (iii) (39,067)
Increase in deferred exploration expenses 28(b) (6,930)
(232,028)
Net cash used in investing activities
Cash flows from financing activities
Increase in loans payable 28(b) 34,321
Decrease in loans receivable 28(b) 14,645
Proceeds from issue of shares 28(b) 174,037
223,003
Net cash generated from financing activities
Net (decrease) / increase in cash and cash equivalents (v) (13,983)
Net foreign exchange differences 28(b) 12,409
Cash and cash equivalents at the beginning of the
period 90,457
Cash and cash equivalents at the end of the period (iii) 88,883
12 months ended February 28, 2009
Effect of
transition IFRS
Cash flows from operating activities
Cash receipts from customers - -
Cash paid to suppliers and employees 19,108 16,941
Cash (utilized in) / generated from operations 19,108 16,941
Interest received / (paid) (649) (3,440)
Income taxes paid - -
Net cash (used in) / generated from operating
activities 18,459 13,501
Cash flows from investing activities
Purchase of property, plant and equipment (2,260) (182,587)
Proceeds from sale of property, plant and equipment - 20
Additions to intangible assets (1,072) (6,461)
Increase in rehabilitation investment (220) (555)
Increase in restricted cash 39,067 -
Increase in deferred exploration expenses 191 (6,739)
35,706 (196,322)
Net cash used in investing activities
Cash flows from financing activities
Increase in loans payable 6,871 41,192
Decrease in loans receivable (1,708) 12,937
Proceeds from issue of shares 23,574 197,611
28,737 251,740
Net cash generated from financing activities
Net (decrease) / increase in cash and cash
equivalents 82,902 68,919
Net foreign exchange differences (43,835) (31,426)
Cash and cash equivalents at the beginning of the
period - 90,457
Cash and cash equivalents at the end of the period 39,067 127,950
(iii) Certain reclassifications have been made on the cash and cash equivalents
on the statement of financial position.
Previously cash was classified as cash and cash equivalents, restricted cash
and rehabilitation investments. The Group has now classified these as either,
cash and cash equivalents or cash investments. The net effect of these
reclassifications is US$(nil).
(iv) Certain reclassifications have been made between property, plant and
equipment and intangible assets. Previously computer software was classified as
property, plant and equipment. The Group has now classified these as intangible
assets. The net effect of these reclassifications is US$(nil).
(v) Kindly refer to the reconciliation of cash and cash equivalents presented
on page 65.
The following reconciliation provides a quantification of the effect, after
taxation, of the transition to IFRS:
Year ended Feb 28,
2009
Reconciliation of income and comprehensive income for
the period $`000
Loss for the period attributable to equity holders of
parent previously reported under
Canadian GAAP (11,018)
Retrospective application of previous Canadian GAAP
accounting policy changes and restatements
- Profit on dilution of shares included in loss, now
accounted for in equity (4,549)
Adjustment upon adoption of IFRS
- Differences due to translation from re-assessment
of functional currency 5,736
Profit/(loss) for the period attributable to equity
holders of parent reported under IFRS (9,831)
Restatement of statement of cash flows from Canadian
GAAP to IFRS
The following reconciliation provides a quantification
of the effect of the transition to IFRS:
Year ended Feb 28,
2009
Reconciliation of cash flow movements for the period $`000
Cash and cash equivalents reported under Canadian GAAP 88,883
Adjustment upon adoption of IFRS
- Reclassification of restricted cash to cash and
cash equivalents 39,067
- Differences due to translation of the cash flow
statement prepared in the functional currency to
the presentation currency at the average rate for the
period on:
- Operating activities 18,459
- Investing activities (3,361)
- Financing activities 28,737
- Net foreign exchange differences (43,835)
Cash and cash equivalents reported under IFRS 127,950
Notes to reconciliation
IFRS 1 - First-time Adoption of International Financial Reporting Standards
("IFRS") 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 earning unless certain exemptions are applied. The Group has applied
the following exemptions to its opening statement of financial positions dated
March 1, 2008:
a) Basis of Consolidation and Business Combinations
The Group has adopted IAS27 (Revised) - Consolidated and Separate Financial
Statements in accordance with the transitional provisions of IFRS 1.
As a result, for the financial year ended February 28, 2009, shareholders
equity will remain unchanged. However; for the financial year ending February
28, 2009 US$16.618 million of losses (February 28, 2008: US$0.082 million of
profits) will be re-allocated from accumulated deficit to non-controlling
shareholders interest in order to comply with the disclosure requirements in
IAS 27 (Revised).
b) Functional and presentation currency
IFRS requires that the functional currency of each entity in the consolidated
Group be determined separately in accordance with the indicators as per IAS 21
- Foreign exchange and should be measured using the currency of the primary
economic environment in which the entity operates ("the functional currency").
The groups functional currency is the South African rand ("ZAR"). The
consolidated financial statements are presented in United States dollars
("USD") which is the groups presentation currency.
Under IFRS, the results and financial position of all the group entities (none
of which has the currency of a hyper - inflationary economy) that have a
functional currency different from the presentation currency are translated
into the presentation currency as follows:
- assets and liabilities for each statement of financial position presented are
translated at the closing rate at the reporting date;
- income and expenses for each statement of income and comprehensive income are
translated at average exchange rates (unless this average is not a reasonable
approximation of the cumulative effect of the rates prevailing on the
transaction dates, in which case income and expenses are translated at the rate
on the dates of the transactions);
- equity transactions are translated using the exchange rate at the date of the
transaction; and
- all resulting exchange differences are recognized as a separate component of
equity.
Under IFRS, the cash flow statement of the group must be prepared in the
functional currency and then translated to the presentation currency at the
exchange rates at the date of the cash flows or an average rate in line with
the income statement treatment. As a result of this application, the cash flows
from operating, investing and financing activities increased with US$43.835
million with a corresponding adjustment to net foreign exchange differences.
As a result of the application of the translation rules contained in IAS 21,
for the year ending February 28, 2009, non- monetary assets, which includes
property, plant and equipment, mineral rights, intangible assets, exploration
and evaluation assets, mineral properties as well as inventory, will decrease
by US$40.129 million (February 28, 2008: US$3.975 million) with a corresponding
adjustment to the foreign currency translation reserve.
c) Share-based payment transactions
The fair value of share options under the employee share incentive schemes and
other equity instruments granted to Group employees is recognised as an
employee expense with a corresponding increase in equity. The fair value is
measured at grant date and expensed over the period during which the employee
becomes unconditionally entitled to the equity instruments. The total amount to
be expensed is determined by reference to the fair value of the options
granted, excluding the impact of any non-market service and performance
vesting conditions. Non-market vesting conditions are included in assumptions
about the number of options that are expected to vest.
The fair value of the instruments granted is measured using the Black-Scholes
option pricing formula, taking into account the terms and conditions upon which
the instruments are granted. At each reporting date, the entity revises its
estimates of the number of options that are expected to vest based on the non
-marketing vesting conditions. It recognises the impact of the revision to
original estimates, if any, in the statement of income and comprehensive
income, with a corresponding adjustment to equity. The proceeds received net
of any directly attributable transaction costs are credited to share capital
(nominal value) and share premium when the options are exercised.
This accounting policy has been applied to all equity instruments granted after
November 7, 2002 that has not yet vested at January 1, 2005.
As under IFRS 2, Canadian GAAP also requires the Company to measure stock
-based compensation related to stock - options granted to employees at the fair
value of the options on the date of grant and to recognize such expense over
the vesting period of the option.
d) Decommissioning and rehabilitation provision
Under Canadian GAAP, asset retirement obligations are measured at fair value,
incorporating market assumptions and discount rates based on the entitys
credit-adjusted risk-free rate. Adjustments are made to asset retirement
obligations for changes in the timing or amount of the cash flows and the
unwinding of the discount. However, changes in discount rates alone do not
result in a re-measurement of the provision. Changes in estimates that decrease
the liability are discounted using the discount rate applied upon initial
recognition of the liability while changes that increase the liability are
discounted using the current discount rate.
IFRS requires decommissioning provisions to be measured based on managements
best estimate of the expenditures that will be made and adjustments to the
provision are made in each period for changes in the timing or amount of cash
flow, changes in the discount rate, and the accretion of the liability to fair
value (unwinding of the discount).
Furthermore, the estimated future cash flows should be discounted using the
current rates.
As a result, for the year ended February 28, 2009, the decommissioning
provision will increase by US$775,485 (US$293,686 in translating the provision
at the reporting period closing spot rate and US$481,799 due to the revision of
the discount rate) with an increase of US$894,170 to the decommissioning asset
(US$4 18,277 in translating the asset at the reporting period closing spot rate
and US$475,893 due to the revision of the discount rate). The remaining
US$118,685 represents the accretion of the liability which decreases retained
earnings (US$124,591 in translating the asset at the reporting period closing
spot rate and US$(5,905) due to the revision of the discount rate).
Date: 30/03/2010 16:01:01 Produced by the JSE SENS Department.
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