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EPS
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EPS - Eastern Platinum Limited - Consolidated financial statements of Eastern
Platinum Limited December 31, 2009 and 2008
EASTERN PLATINUM LIMITED
(Incorporated in Canada)
(Canadian Registration number BC0722783)
(South African Registration number 2007/006318/10)
Share Code TSX: ELR ISIN: CA 2768551038
Share Code AIM: ELR ISIN: CA 2768551038
Share Code JSE: EPS ISIN: CA 2768551038
Consolidated financial statements of
Eastern Platinum Limited
December 31, 2009 and 2008
Table of contents
Consolidated income statements .............................................. 3
Consolidated statements of comprehensive income (loss) ...................... 4
Consolidated statements of financial position ............................... 5
Consolidated statements of changes in equity................................. 6
Consolidated statements of cash flows ....................................... 7
Notes to the consolidated financial statements............................ 8-54
Deloitte & Touche LLP
2800 - 1055 Dunsmuir Street
4 Bentall Centre
P.O. Box 49279
Vancouver BC V7X 1P4
Canada
Tel: 604-669-4466
Fax: 604-685-0395
www.deloitte.ca
Auditors` Report
To the Shareholders of
Eastern Platinum Limited
We have audited the consolidated statements of financial position of Eastern
Platinum Limited ("the Company") as at December 31, 2009, 2008 and January 1,
2008 and the consolidated statements of income, comprehensive income (loss),
changes in equity and cash flows for the years ended December 31, 2009 and
2008. These consolidated financial statements are the responsibility of the
Company`s management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with Canadian generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining, on atest basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of the Company as at December 31,
2009, 2008 and January 1, 2008 and the results of its operations and its cash
flows for the years ended December 31, 2009 and 2008 in accordance with
International Financial Reporting Standards as issued by the International
Accounting Standards Board.
Chartered Accountants
March 24, 2010
Eastern Platinum Limited
Consolidated income statements
(Expressed in thousands of U.S. dollars, except per share amounts)
Year ended Year ended
Note December 31 , De cember 31,
2009 2008
(Note 25)
Revenue $ 111,365 $ 114,681
Cost of operations
Production costs 82,839 79,961
Depletion and
depreciation 8 17,154 14,662
99,993 94,623
Mine operating earnings 11,372 20,058
Expenses
Impairment 8 - 297,285
General and
administrative 10,528 19,441
Share-based payments 17 582 4,625
11,110 321,351
Operating profit (loss) 262 (301,293)
Other income (expense)
Interest income 1,786 8,944
Finance costs 19 (1,691) (3,725)
Foreign exchange loss (758) (2,155)
Loss before income taxes (401) (298,229)
Deferred income tax
recovery 15 1,623 85,113
Net profit (loss) for
the year $ 1,222 $ (213,116)
Attributable to
Non-controlling interest 18 $ (4,428) $ (3,735)
Equity shareholders of
the Company 5,650 (209,381)
Net profit (loss) for
the year $ 1,222 $ (213,116)
Earnings (loss) per share
Basic 20 $ 0.01 $ (0 .31)
Diluted 20 $ 0.01 $ (0 .31)
Weighted average number
of common shares
outstanding in thousands
Basic 20 680,577 677,117
Diluted 20 687,790 677,117
See accompanying notes to the consolidated financial statements
Eastern Platinum Limited
Consolidated statements of comprehensive income (loss)
(Expressed in thousands of U.S. dollars)
December 3 1, December 31,
2009 2008
(Note 25)
Net profit (loss) for the year $ 1,222 $ (213,116)
Other comprehensive income (loss)
Exchange differences on translating
foreign operations 116,678 (169,577)
Exchange differences on translating
non-controlling interest 2,467 (7,396)
Comprehensive income (loss) $ 120,367 $ (390,089)
Attributable to
Non-controlling interest $ (1,961) $ (11,131)
Equity shareholders of the Company $ 122,328 $ (378,958)
See accompanying notes to the consolidated financial statements
Eastern Platinum Limited
Consolidated statements of financial position
as at December 31, 2009 and 2008, and January 1, 2008
(Expressed in thousands of U.S. dollars)
December 31, December 31, January 1,
Note 2009 2008 2008
(Note 25) (Note 25)
Assets
Current assets
Cash and cash
equivalents $ 7,249 $ 25,806 $ 18,818
Short-term
investments 14,409 35,257 171,038
Trade and other
receivables 6 29,138 9,431 32,560
Inventories 7 4,825 3,881 6,888
55,621 74,375 229,304
Non-current assets
Property, plant and
equipment 8 634,778 505,473 815,390
Refining contract 9 14,169 12,493 18,467
Other assets 10 2,282 1,017 1,247
$ 706,850 $ 593,358 $ 1,064,408
Liabilities
Current liabilities
Accounts payable and
accrued
liabilities 11 $ 22,919 $ 36,729 $ 22,967
Current portion of
finance leases 12 926 649 748
Current loans 13 - 3,219 3,837
23,845 40,597 27,552
Non-current
liabilities
Provision for
environmental
rehabilitation 14 8,152 5,598 6,224
Finance leases 12 2,850 3,014 5,057
Loans 13 - - 3,322
Deferred tax
liabilities 15 42,491 35,614 150,032
77,338 84,823 192,187
Equity
Issued capital 17 890,150 890,049 868,045
Equity-settled
employee benefits
reserve 32,336 31,827 27,428
Currency translation
adjustment (52,899) (169,577) -
Deficit (250,116) (255,766) (46,385)
Capital and reserves
attributable to
equity shareholders
of the Company 619,471 496,533 849,088
Non-controlling
interest 18 10,041 12,002 23,133
629,512 508,535 872,221
$ 706,850 $ 593,358 $ 1,064,408
Approved and authorized for issue by the Board on March 24, 2010.
"David Cohen" "Robert Gayton"
David Cohen, Director Robert Gayton, Director
See accompanying notes to the consolidated financial statements
Eastern Platinum Limited
Consolidated statements of changes in equity
(Expressed in thousands of U.S. dollars, except number of shares)
Issued capital Equity- Currency
Shares Amount settled translation
employee adjustment
benefits
reserve
Balance, January 1 ,
2008
(Note 25) 669,031,691 $ 868,045 $ 27,428 $ -
Warrants exercised 10,824,077 21,153 - -
Stock options
exercised 670,686 851 (22 6) -
Share-based payments - - 4,625 -
Comprehensive loss - - - (169,577)
Balance, December 31,
2008 (Note 25) 680,526,454 $ 890,049 $ 31,827 $ (169,577)
Stock options
exercised 366,871 101 (73) -
Share-based payments - - 582 -
Comprehensive income - - - 116,678
Balance, December 31,
2009 680,893,325 $ 890,150 $ 32,336 $ (52,899)
Deficit Capital and Non-controlling Equity
reserves interest
attributable to
equity
shareholders
of the parent
Balance,
January 1
, 2008
(Note 25) $ (46,385) $ 849,088 $ 23,133 $ 872,221
Warrants
exercised - 21,153 - 21,153
Stock
options
exercised - 625 - 625
Share-based
payments - 4,625 - 4,625
Comprehensive
loss (209,381) (378,958) (11,131) (390,089)
Balance,
December
31,
2008
(Note 25) $ (255,766) $ 496,533 $ 12,002 $ 508,535
Stock
options
exercised - 28 - 28
Share-based
payments - 582 - 582
Comprehensive
income 5,650 122,328 (1,961) 120,367
Balance,
December
31,2009 $ (250,116) $ 619,471 $ 10,041 $ 629,512
See accompanying notes to the consolidated financial statements
Eastern Platinum Limited
Consolidated statements of cash flows
(Expressed in thousands of U.S. dollars)
Year ended Year ended
December 31, December 31,
Note 2009 2008
(Note 25)
Operating activities
Loss before income taxes $ (401) $ (298,229)
Adjustments to net profit for
non-cash items
Depletion and depreciation 8 17,154 14,662
Refining contract amortization 9 1,332 1,353
Impairment 8 - 297,285
Share-based payments 17 582 4,625
Interest income (1,786) (8,944)
Finance costs 19 1,691 3,725
Foreign exchange loss 758 2,155
Environmental expense 301 -
Net changes in non-cash working
capital items
Trade receivables (13,169) 14,031
Inventories 22 1,391
Accounts payable and accrued
liabilities (15,135) 12,962
Cash (utilized in) generated from
operations (8,651) 45,016
Adjustments to net profit for cash
items
Realized foreign exchange gain - (1,157)
Interest income received 1,855 10,028
Finance costs paid (69) (375)
Acquisition related dividend taxes
paid (2,422) -
Net operating cash flows (9,287) 53,512
Investing activities
Acquisitions, net of cash acquired 5 - (39,589)
Maturity of short-term investments 22,647 119,360
Purchase of other assets (929) (42)
Property, plant and equipment
expenditures (28,955) (143,373)
Sale of property, plant and
equipment 1,552 -
Net investing cash flows (5,685) (63,644)
Financing activities
Common shares issued for cash, net
of share
issue costs 32 22,004
Repayment of current loans (3,065) -
Payment of finance leases (1,223) (4,309)
Net financing cash flows (4,256) 17,695
Effect of exchange rate changes on
cash
and cash equivalents 671 (575)
(Decrease) increase in cash and
cash equivalents (18,557) 6,988
Cash and cash equivalents,
beginning of year 25,806 18,818
Cash and cash equivalents, end of
year $ 7,249 $ 25,806
Cash and cash equivalents are
comprised of:
Cash in bank $ 7,249 $ 9,123
Short-term money market instruments - 16,683
$ 7,249 $ 25,806
See accompanying notes to the consolidated financial statements
Eastern Platinum Limited
Notes to the consolidated financial statements - years ended December 31, 2009
and 2008
(Expressed in thousands of U.S. dollars, except number of shares and per share
amounts)
1. Nature of operations
Eastern Platinum Limited (the "Company") is a platinum group metal
("PGM") producer engaged in the mining, exploration and development of
PGM properties located in various provinces in South Africa.
Eastern Platinum Limited is a publicly listed company incorporated in
Canada with limited liability under the legislation of the Province of
British Columbia. The Company`s shares are listed on the Toronto Stock
Exchange, Alternative Investment Market, and the Johannesburg Stock
Exchange.
The head office, principal address and records office of the Company are
located at 1075 West Georgia Street, Suite 250, Vancouver, British
Columbia, Canada, V6E 3C9. The Company`s registered address is 1055 West
Georgia Street, Suite 1500, Vancouver, British Columbia, Canada, V6E
4N7.
2. Basis of preparation
In February 2009, the British Columbia and Ontario Securities
Commissions granted the Company exemptive relief to adopt International
Financial Reporting Standards ("IFRS") with an adoption date of January
1, 2009 and atransition date of January 1, 2008.
These consolidated financial statements, including comparatives, have
been prepared using accounting policies in compliance with International
Financial Reporting Standards ("IFRS") as issued by the International
Accounting Standards Board ("IASB"). The disclosures concerning the
transition from Canadian Generally Accepted Accounting Principles
("GAAP") to IFRS are included in Note 25.
The preparation of financial statements requires management to make
judgments, estimates and assumptions that affect the application of
policies and reported amounts of assets and liabilities, and revenue and
expenses. The estimates and associated assumptions are based on
historical experience and various other factors that are believed to be
reasonable under the circumstances, the results of which form the basis
of making the judgments about carrying values of assets and liabilities
that are not readily apparent from other sources. Actual results may
differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognized in the period in
which the estimate is revised if the revision affects only that period
or in the period of the revision and further periods if the review
affects both current and future periods.
Judgments made by management in the application of IFRS that have a
significant effect on the financial statements and estimates with a
significant risk of material adjustment in the current and following
fiscal years are discussed in Notes 3(l), 3(v), and 3(w).
3. Summary of significant accounting policies
The consolidated financial statements have been prepared under the
historical cost convention, except for the revaluation of certain
financial instruments. The Company`s principal accounting policies are
outlined below:
(a) Basis of consolidation
These consolidated financial statements incorporate the
financial statements of the Company and the entities controlled
by the Company (its subsidiaries, including special purpose
entities). Control exists when the Company has the power,
directly or indirectly, to govern the financial and operating
policies of an entity so as to obtain benefits from its
activities. The financial statements of subsidiaries are
included in the consolidated financial statements from the date
that control commences until the date that control ceases. All
significant intercompany transactions and balances have been
eliminated.
Non-controlling interest in the net assets of consolidated
subsidiaries are identified separately from the Company`s
equity. Non-controlling interest consists of the non-
controlling interest at the date of the original business
combination plus the non- controlling interest`s share of
changes in equity since the date of acquisition.
Special Purpose Entities (``SPE`s``) as defined in SIC 12
Consolidation - Special Purpose Entities are entities which are
created to accomplish a narrow and well-defined objective (e.g.
to act as a Black Economic Empowerment ("BEE") partner). SPE`s
are subject to consolidation when there is an indication that an
entity controls the SPE.
The Company has determined that its investment in Gubevu
Consortium Investment Holdings (Pty) Ltd. ("Gubevu") is a SPE
that the Company controls. The accounts of Gubevu are
consolidated with those of the Company.
(b) Business combinations
Business combinations that occurred prior to January 1, 2008
were not accounted for in accordance with IFRS 3 Business
Combinations in accordance with the IFRS 1 First- time Adoption
of International Financial Reporting Standards exemption
discussed in Note 25(a).
Acquisitions of subsidiaries and businesses on, or after,
January 1, 2008 are accounted for using the purchase method. The
consideration for each acquisition is measured as the aggregate
of the fair values (at the date of exchange) of assets given,
liabilities incurred or assumed, and equity instruments issued
by the Company in exchange for control of the acquiree, plus any
costs directly attributable to the business combination. The
acquiree`s identifiable assets, liabilities and contingent
liabilities that meet the conditions for recognition under IFRS
3 Business Combinations are recognized at their fair values at
the acquisition date, except for non-current assets (or disposal
groups) that are classified as held for sale in accordance with
IFRS 5 Non- current Assets Held for Sale and Discontinued
Operations, which are recognized and measured at fair value less
costs to sell.
Goodwill arising on acquisition is recognized as an asset and
initially measured at cost, being the excess of the cost of the
acquisition over the Company`s interest in the net fair value of
the identifiable assets, liabilities and contingent liabilities
recognized. If the Company`s interest in the net fair value of
the acquiree`s identifiable assets, liabilities and contingent
liabilities exceeds the cost of the acquisition, the excess is
recognized immediately in profit or loss.
The interest of non-controlling shareholders in the acquiree is
initially measured at the non-controlling shareholders`
proportion of the net fair value of the assets, liabilities and
contingent liabilities recognized.
(c) Presentation currency
The Company`s presentation currency is the U.S. dollar ("$").
The functional currencies of Eastern Platinum Limited and its
South African subsidiaries are the Canadian Dollar and South
African Rand ("ZAR"), respectively. These consolidated financial
statements have been translated to the U.S. dollar in accordance
with IAS 21 The Effects of Changes in Foreign Exchange Rates.
This standard requires that assets and liabilities be translated
using the exchange rate at period end, and income, expenses and
cash flow items are translated using the rate that approximates
the exchange rates at the dates of the transactions (i.e. the
average rate for the period).
Subsequent to the adoption of IFRS, all resulting translation
differences are reported as aseparate component of
shareholders` equity titled "Cumulative Translation Adjustment".
(d) Foreign currency translation
In preparing the financial statements of the individual
entities, transactions in currencies other than the entity`s
functional currency (foreign currencies) are recorded at the
rates of exchange prevailing at the dates of the transactions.
At each statement of financial position date, monetary assets
and liabilities are translated using the period end foreign
exchange rate. Non-monetary assets and liabilities are
translated using the historical rate on the date of the
transaction. Non-monetary assets and liabilities that are stated
at fair value are translated using the historical rate on the
date that the fair value was determined. All gains and losses on
translation of these foreign currency transactions are included
in the consolidated income statements.
(e) Revenue recognition
Revenue is measured at the fair value of the consideration
received or receivable. The following specific criteria must be
met before revenue is recognized:
(i) Sale of goods
Revenue from the sale of platinum group and other metals
is recognized when all of the following conditions are
satisfied:
the Company does not retain continuing managerial
involvement to the degree usually associated with
ownership or effective control over the metals sold;
the amount of revenue can be measured reliably;
it is probable that the economic benefits associated
with the transaction will flow to the Company; and
the costs incurred or to be incurred in respect of
the sale can be measured reliably.
The sale of platinum group metals is provisionally
priced such that the price is not settled until a
predetermined future date based on the market price at
that time. Revenue on these sales is initially
recognized (when the conditions above are met) at the
current market price. The difference between the present
value and the future value of the current market price
is recognized as interest income over the term of
settlement. Subsequent to initial recognition but prior
to settlement, sales are marked to market at each
reporting date using the forward price for the period
equivalent to that outlined in the contract. This mark
to market adjustment is recorded in revenue.
(ii) Rental income
Rental income from residential properties is recognized
on astraight-line basis over the term of the lease.
(iii) Interest income
Interest income is recognized in the income statement as
it accrues, using the effective interest method.
(f) Share-based payments
The Company grants stock options to buy common shares of the
Company to directors, officers and employees. The board of
directors grants such options for periods of up to ten years,
with vesting periods determined at its sole discretion and at
prices equal to or greater than the closing market price on the
day preceding the date the options were granted.
The fair value of the options is measured at grant date, using
the Black-Scholes option pricing model, and is recognized over
the period that the employees earn the options.
The fair value is recognized as an expense with a corresponding
increase in equity.
The amount recognized as expense is adjusted to reflect the
number of share options expected to vest.
(g) Finance costs
Finance costs comprise interest payable on borrowings calculated
using the effective interest rate method and foreign exchange
gains and losses on foreign currency borrowings.
(h) Income taxes
Income tax expense consists of current and deferred tax expense.
Income tax expense is recognized in the income statement.
Current tax expense is the expected tax payable on the taxable
income for the year, using tax rates enacted or substantively
enacted at period end, adjusted for amendments to tax payable
with regards to previous years.
Deferred tax assets and liabilities are recognized for deferred
tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Deferred tax assets
and liabilities are measured using the enacted or substantively
enacted tax rates expected to apply when the asset is realized
or the liability settled.
The effect on deferred tax assets and liabilities of a change in
tax rates is recognized in income in the period that substantive
enactment occurs.
A deferred tax asset is recognized to the extent that it is
probable that future taxable profits will be available against
which the asset can be utilized. To the extent that the Company
does not consider it probable that a deferred tax asset will be
recovered, the deferred tax asset is reduced.
The following temporary differences donot result in deferred
tax assets or liabilities:
the initial recognition of assets or liabilities, not
arising in a business combination, that does not affect
accounting or taxable profit
goodwill
investments in subsidiaries, associates and jointly
controlled entities where the timing of reversal of the
temporary differences can be controlled and reversal in
the foreseeable future is not probable.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to set off current tax assets against
current tax liabilities and when they relate to income taxes
levied by the same taxation authority and the Company intends to
settle its current tax assets and liabilities on a net basis.
(i) Earnings (loss) per share
Basic earnings (loss) per share is computed by dividing the net
earnings (loss) available to common shareholders by the weighted
average number of shares outstanding during the reporting
period. Diluted earnings (loss) per share is computed similar to
basic earnings (loss) per share except that the weighted average
shares outstanding are increased to include additional shares
for the assumed exercise of stock options and warrants, if
dilutive. The number of additional shares is calculated by
assuming that outstanding stock options and warrants were
exercised and that the proceeds from such exercises were used to
acquire common stock at the average market price during the
reporting periods.
(j) Comprehensive income (loss)
Comprehensive income (loss) is the change in the Company`s net
assets that results from transactions, events and circumstances
from sources other than the Company`s shareholders and includes
items that are not included in net profit such as unrealized
gains or losses on available-for-sale investments, gains or
losses on certain derivative instruments and foreign currency
gains or losses related to self-sustaining operations.
The Company`s comprehensive income (loss), components of other
comprehensive income, and cumulative translation adjustments are
presented in the consolidated statements of comprehensive income
(loss) and the consolidated statements of changes in equity.
(k) Property, plant and equipment
(i) Mining assets
Assets owned, mineral properties being depleted, and
mineral properties not being depleted are recorded at
cost less accumulated depreciation and accumulated
impairment losses. All direct costs related to the
acquisition, exploration and development of mineral
properties are capitalized until the properties to which
they relate are ready for their intended use, sold,
abandoned or management has determined there to be
impairment. If economically recoverable ore reserves are
developed, capitalized costs of the related property are
reclassified as mineral properties being depleted and
amortized using the units-of-production method following
commencement of production. Interest on borrowings
incurred tofinance mining assets is capitalized until
the asset is capable of carrying out its intended use.
Mining properties and mining and process facility assets
are amortized on a units-of-production basis which is
measured by the portion of the mine`s proven and probable
ore reserves recovered during the period. Capital work-
in-progress, which is included in mining assets, is not
depreciated until the assets are ready for their intended
use.
Although the Company has taken steps to verify title to
the properties in which it has an interest, in accordance
with industry standards for properties in the exploration
stage, these procedures donot guarantee the Company`s
title.
Property title may be subject to unregistered prior
agreements and non- compliance with regulatory
requirements.
(ii) Residential properties and other property, plant and
equipment
Residential properties and other property, plant and
equipment are recorded at cost less accumulated
depreciation and impairment losses. These assets are
depreciated using the straight-line method based on
estimated useful lives, which generally range from 5 to 7
years, with the exception of residential properties and
mine houses whose estimated useful lives are 50 years and
office buildings whose estimated useful lives are 20
years. Land is not depreciated.
Where an item of plant and equipment comprises
significant components with different useful lives, the
components are accounted for as separate items of plant
and equipment.
Expenditures incurred to replace a component of an item
of property, plant and equipment that is accounted for
separately, including major inspection and overhaul
expenditures, are capitalized. Directly attributable
expenses incurred for major capital projects and site
preparation are capitalized until the asset is brought to
a working condition for its intended use. These costs
include dismantling and site restoration costs to the
extent these are recognized as a provision.
The cost of self-constructed assets includes the cost of
materials, direct labour and an appropriate portion of
normal overheads.
The costs of day-to-day servicing are recognized in
profit or loss as incurred.
These costs are more commonly referred to as "maintenance
and repairs."
Financing costs directly associated with the construction
or acquisition of qualifying assets are capitalized at
interest rates relating to loans specifically raised for
that purpose, or at the weighted average borrowing rate
where the general pool of group borrowings is utilized.
Capitalization of borrowing costs ceases when the asset
is substantially complete.
The depreciation method, useful life and residual values
are assessed annually.
(iii) Leased assets
Leases in which the Company assumes substantially all
risks and rewards of ownership are classified as finance
leases. Assets held under finance leases are recognized
at the lower of the fair value and the present value of
the minimum lease payments at inception of the lease,
less accumulated depreciation and impairment losses.
Lease payments are accounted for as discussed in Note
3(r).
(iv) Subsequent Costs
The cost of replacing part of an item within property,
plant and equipment is recognized when the cost is
incurred if it is probable that the future economic
benefits will flow to the group and the cost of the item
can be measured reliably. The carrying amount of the
part that has been replaced is expensed.
All other costs are recognized as an expense as incurred.
(v) Impairment
The Company`s tangible and intangible assets are
reviewed for indications of impairment at each statement
of financial position date. If indication of impairment
exists, the asset`s recoverable amount is estimated.
An impairment loss is recognized when the carrying
amount of an asset, or its cash-generating unit, exceeds
its recoverable amount. A cash-generating unit is the
smallest identifiable group of assets that generates
cash inflows that are largely independent of the cash
inflows from other assets or groups of assets.
Impairment losses are recognized in profit and loss for
the period.
Impairment losses recognized in respect of
cash-generating units are allocated first to reduce the
carrying amount of any goodwill allocated to cash-
generating units and then to reduce the carrying amount
of the other assets in the unit on a pro-rata basis.
The recoverable amount is the greater of the asset`s
fair value less costs to sell and value in use. In
assessing value in use, the estimated future cash flows
are discounted to their present value using a pre-tax
discount rate that reflects current market assessments
of the time value of money and the risks specific to the
asset. For an asset that does not generate largely
independent cash inflows, the recoverable amount is
determined for the cash-generating unit to which the
asset belongs.
(vi) Reversal of impairment
An impairment loss is reversed if there is an indication
that there has been a change in the estimates used to
determinethe recoverable amount. An impairment loss is
reversed only to the extent that the asset`s carrying
amount does not exceed the carrying amount that would
have been determined, net of depreciation or
amortization, if no impairment loss had been recognized.
An impairment loss with respect to goodwill is never
reversed.
(l) Refining contract
The Company sells substantially all its concentrate to one
customer under the terms of an off-take or refining contract.
The refining contract is amortized over the original life of the
contract, estimated to be fifteen years, commencing in mid 2004.
An evaluation of the carrying value of the contract is
undertaken whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable.
(m) Inventories
Inventories, comprising stockpiled ore and concentrate awaiting
further processing and sale, are valued at the lower of cost and
net realizable value. Consumables are valued at the lower of
cost and net realizable value, with replacement cost used as the
best available measure of net realizable value. Cost is
determined using the weighted average method and includes direct
mining expenditures and an appropriate portion of normal
overhead expenditure. In the case of concentrate, direct
concentrate costs are also included. Net realizable value is the
estimated selling price in the ordinary course of business, less
the estimated costs of completion and selling expenses.
Obsolete, redundant and slow moving stores are identified and
written down tonet realizable values.
(n) Short-term investments
Short-term investments are investments which are transitional or
current in nature, with an original maturity greater than three
months.
(o) Cash and cash equivalents
Cash and cash equivalents consist of cash on hand, deposits in
banks and highly liquid investments with an original maturity of
three months or less.
(p) Financial assets
Financial assets are classified into one of four categories:
fair value through profit or loss ("FVTPL");
held-to-maturity ("HTM");
available for sale ("AFS"); and,
loans and receivables.
The classification is determined at initial recognition and
depends on the nature and purpose of the financial asset.
(i) FVTPL financial assets
Financial assets are classified as FVTPL when the
financial asset is held for trading or it is designated
as FVTPL.
A financial asset is classified as held for trading if:
it has been acquired principally for the purpose of
selling in the near future;
it is a part of an identified portfolio of
financial instruments that the Company manages and
has an actual pattern of short-term profit-taking;
or
it is a derivative that is not designated and
effective as a hedging instrument.
Financial assets classified as FVTPL are stated at fair
value with any resultant gain or loss recognized in
profit or loss. The net gain or loss recognized
incorporates any dividend or interest earned on the
financial asset. The Company does not have any assets
classified as FVTPL financial assets.
(ii) HTM investments
HTM investments are recognized on a trade-date basis and
are initially measured at fair value, including
transaction costs. The Company does not have any assets
classified as HTM investments.
(iii) AFS financial assets
Short-term investments and other assets held by the
Company are classified as AFS and are stated at fair
value. Gains and losses arising from changes in fair
value are recognized directly in equity in the
investments revaluation reserve. To date, these gains
and losses have not been significant due to the nature
of the underlying investment. As a result, the assets`
carrying values approximate their fair values.
Impairment losses, interest calculated using the
effective interest method and foreign exchange gains and
losses on monetary assets, are recognized directly in
profit or loss rather than equity. When an investment is
disposed of or is determined to be impaired, the
cumulative gain or loss previously recognized in the
investments revaluation reserve is included in profit or
loss for the period.
The fair value of AFS monetary assets denominated in a
foreign currency is translated at the spot rate at the
statement of financial position date. The change in fair
value attributable to translation differences on
amortized cost of the asset is recognized in profit or
loss, while other changes are recognized in equity.
(iv) Loans and receivables
Trade receivables, loans, and other receivables that
have fixed or determinable payments that are not quoted
in an active market are classified as loans and
receivables.
Loans and receivables are initially recognized at the
transaction value and subsequently carried at amortized
cost less impairment losses. The impairment loss of
receivables is based on a review of all outstanding
amounts at period end. Bad debts are written off during
the year in which they are identified. Interest income
is recognized by applying the effective interest rate,
except for short-term receivables when the recognition
of interest would be immaterial.
(v) Effective interest method
The effective interest method calculates the amortized
cost of a financial asset and allocates interest income
over the corresponding period. The effective interest
rate is the rate that discounts estimated future cash
receipts over the expected life of the financial asset,
or, where appropriate, a shorter period, to the net
carrying amount on initial recognition.
Income is recognized on an effective interest basis for
debt instruments other than those financial assets
classified as FVTPL.
(vi) Impairment of financial assets
Financial assets, other than those at FVTPL, are
assessed for indicators of impairment at each period
end. Financial assets are impaired when there is
objective evidence that, as a result of one or more
events that occurred after the initial recognition of
the financial asset, the estimated future cash flows of
the investment have been impacted.
Objective evidence of impairment could include the
following:
significant financial difficulty of the issuer or
counterparty;
default or delinquency in interest or principal
payments; or
it has become probable that the borrower will
enter bankruptcy or financial reorganization.
For financial assets carried at amortized cost, the
amount of the impairment is the difference between the
asset`s carrying amount and the present value of the
estimated future cash flows, discounted at the financial
asset`s original effective interest rate.
The carrying amount of all financial assets, excluding
trade receivables, is directly reduced by the impairment
loss. The carrying amount of trade receivables is
reduced through the use of an allowance account. When a
trade receivable is considered uncollectible, it is
written off against the allowance account. Subsequent
recoveries of amounts previously written off are
credited against the allowance account. Changes in the
carrying amount of the allowance account are recognized
in profit or loss.
With the exception of AFS equity instruments, if, in a
subsequent period, the amount of the impairment loss
decreases and the decrease relates to an event occurring
after the impairment was recognized, the previously
recognized impairment loss is reversed through profit or
loss. On the date of impairment reversal, the carrying
amount of the financial asset cannot exceed its
amortized cost had impairment not been recognized.
(vii) Derecognition of financial assets
A financial asset is derecognized when:
the contractual right to the asset`s cash flows
expire; or
if the Company transfers the financial asset and
substantially all risks and rewards of ownership to
another entity.
(q) Environmental rehabilitation
The Company recognizes liabilities for statutory, contractual,
constructive or legal obligations associated with the retirement
of property, plant and equipment, when those obligations result
from the acquisition, construction, development or normal
operation of the assets. The net present value of future
rehabilitation cost estimates arising from the decommissioning
of plant and other site preparation work is capitalized to
mining assets along with a corresponding increase in the
rehabilitation provision in the period incurred. Discount rates
using a pre-tax rate that reflect the time value of money are
used to calculate the net present value. The rehabilitation
asset is depreciated on the same basis as mining assets.
The Company`s estimates of reclamation costs could change as a
result of changes in regulatory requirements, discount rates and
assumptions regarding the amount and timing of the future
expenditures. These changes are recorded directly to mining
assets with a corresponding entry to the rehabilitation
provision. The Company`s estimates are reviewed annually for
changes in regulatory requirements, discount rates, effects of
inflation and changes in estimates.
Changes in the net present value, excluding changes in the
Company`s estimates of reclamation costs, are charged to profit
and loss for the period.
The net present value of restoration costs arising from
subsequent site damage that is incurred on an ongoing basis
during production are charged to the income statement in the
period incurred.
The costs of rehabilitation projects that were included in the
rehabilitation provision are recorded against the provision as
incurred. The cost of ongoing current programs to prevent and
control pollution is charged against profit and loss as
incurred.
(r) Leases
(i) The Company as lessor
Rental income from operating leases is recognized on a
straight-line basis over the term of the corresponding
lease. Initial direct costs incurred in negotiating and
arranging an operating lease are added to the carrying
amount of the leased asset and recognized on a
straight-line basis over the lease term.
(ii) The Company as lessee
Assets held under finance leases are recognized as
assets of the Company at the lower of the fair value at
the inception of the lease or the present value of the
minimum lease payments. The corresponding liability is
recognized as a finance lease obligation. Lease
payments are apportioned between finance charges and
reduction of the lease obligation to achieve a constant
rate of interest on the remaining liability. Finance
charges are charged to profit or loss, unless they are
directly attributable to qualifying assets, in which
case they are capitalized.
Operating lease payments are expensed on a
straight-line basis over the term of the relevant
lease. Incentives received upon entry into an operating
lease are recognized straight-line over the lease term.
(s) Provisions
Provisions are recorded when a present legal or constructive
obligation exists as a result of past events where it is
probable that an outflow of resources embodying economic
benefits will be required to settle the obligation, and a
reliable estimate of the amount of the obligation can be made.
The amount recognized as a provision is the best estimate of the
consideration required to settle the present obligation at the
statement of financial position date, taking into account the
risks and uncertainties surrounding the obligation. Where a
provision is measured using the cash flows estimated to settle
the present obligation, its carrying amount is the present value
of those cash flows. When some or all of the economic benefits
required to settle a provision are expected to be recovered from
a third party, the receivable is recognized as an asset if it is
virtually certain that reimbursement will be received and the
amount receivable can be measured reliably.
(t) Employee benefits
(i) Employee post-retirement obligations - defined
contribution retirement plan
The Company`s South African subsidiaries operate a
defined contribution retirement plan for its employees.
The pension plan is funded by payments from the
employees and the subsidiaries and payments are charged
to profit and loss for the period as incurred. The
assets of the different plans are held by independently
managed trust funds. The South African Pension Fund Act
of 1956 governs these funds.
(ii) Leave pay
Employee entitlements to annual leave are recognized as
they are earned by the employees. A provision, stated at
current cost, is made for the estimated liability at
period end.
(u) Financial liabilities and equity
Debt and equity instruments are classified as either financial
liabilities or as equity in accordance with the substance of the
contractual arrangement.
An equity instrument is any contract that evidences a residual
interest in the assets of an entity after deducting all of its
liabilities. Equity instruments issued by the Company are
recorded at the proceeds received, net of direct issue costs.
Financial liabilities are classified as either financial
liabilities at FVTPL or other financial liabilities.
(i) Other financial liabilities
Other financial liabilities are initially measured at
fair value, net of transaction costs, and are
subsequently measured at amortized cost using the
effective interest method, with interest expense
recognized on an effective yield basis.
The effective interest method is a method of calculating
the amortized cost of a financial liability and of
allocating interest expenses over the corresponding
period. The effective interest rate is the rate that
exactly discounts estimated future cash payments over
the expected life of the financial liability, or, where
appropriate, a shorter period, to the net carrying
amount on initial recognition.
The Company has classified trade and other payables,
short-term financial liabilities and long-term financial
liabilities as other financial liabilities.
(ii) Derecognition of financial liabilities
The Company derecognizes financial liabilities when, and
only when, the Company`s obligations are discharged,
cancelled or they expire.
(v) Critical accounting estimates
Critical accounting estimates are estimates and assumptions made
by management that may result in material adjustments to the
carrying amount of assets and liabilities within the next
financial year.
(i) Impairment of property, plant and equipment
Please refer to Note 8(d).
(ii) Rehabilitation provision
The future value of the provision for environmental
rehabilitation was determined using an inflation rate of
7.00% (December 31, 2008 - 5.78%) and an estimated life
of mine of 18 years for Zandfontein and Maroelabult
(December 31, 2008 - 14 years), 1 year for Kennedy`s
Vale (December 31, 2008 - 1 year) and 26 years for
Spitzkop. A provision for environmental rehabilitation
was not recognized for Spitzkop as at December 31, 2008.
The provision has been discounted to present value at a
discount rate of 8.39% (December 31, 2008 - 7.09%).
(w) Critical accounting judgments
Critical accounting judgements are accounting policies that have
been identified as being complex or involving subjective
judgments or assessments.
(i) Determination of functional currency
In accordance with IAS 21 The Effects of Changes in
Foreign Exchange Rates, management determined that the
functional currencies of Eastern Platinum Limited and
its South African subsidiaries are the Canadian Dollar
and South African Rand ("ZAR"), respectively.
(ii) Useful life of assets
The Company engaged an independent third party
engineering company in South Africa to assess the life
of mine ("LOM") of Barplats Mines Limited ("Barplats")
in December, 2009. At December 31, 2009 the remaining
LOM for Barplats was assessed at 211 months (December
31, 2008 - 171 months) based on proven and probable ore
reserves. The change in remaining mine life will be
evaluated each year as the reserves move to the proven
and probable category.
(iii) Depreciation rates
The estimated maximum useful lives of property, plant
and equipment are:
Mining assets owned
Underground and other assets Life of mine
Mine houses 50 years
Office buildings 20 years
Plant Life of mine
Computer equipment 3 years
Mining assets leased 5 years
Mineral properties being depleted Life of mine
Residential properties 50 years
Properties and land 50 years
(x) Accounting standards issued but not yet effective
(i) Effective for annual periods beginning on or after July
1, 2009
IFRS 2 Share Based Payments (revised) - revision
of scope
IFRS 3 Business Combinations (revised) - revision
of scope and amendments to accounting for business
combinations
IAS 27 Consolidated and Separate Financial
Statements (revised) - amendments due to IFRS 3
Business Combinations revisions
IAS 38 Intangible Assets (revised) - amendments
due to IFRS 3 Business Combinations revisions and
measuring the fair value of an intangible asset
acquired in a business combination
(ii) Effective for annual periods beginning on or after
January 1, 2010
IFRS 8 Operating Segments (revised) - disclosure
of information about segment assets
(iii) Effective for annual periods beginning on or after
January 1, 2011
IAS 24 Related Party Disclosures (revised) -
clarification of the definition of a related party
(v) Effective for annual periods beginning on or after
January 1, 2013
IFRS 9 Financial Instruments (new) - partial
replacement of IAS 39. All of IAS 39 is expected
to be replaced in its entirety by the end of 2010
The Company has not early adopted these revised standards and is
currently assessing the impact that these standards will have on
the consolidated financial statements.
4. Subsidiaries and associates
(a) Subsidiaries
Details of the Company`s subsidiaries at December 31, 2009
are as follows:
Place of
incorporation
Name of subsidiary Principal activity and operation
Eastern Platinum Holdings Limited Holding company BVI (i)
Eastplats Holdings Limited Holding company BVI (i)
Eastplats Acquisition Co. Ltd. Holding company BVI (i)
Eastplats International Incorporated Holding company Barbados
Royal Anthem Investments 134 (Pty) Ltd. Holding company South Africa
Spitzkop Joint Venture Mining South Africa
Barplats Investments Limited Mining South Africa
Spitzkop Platinum (Pty) Ltd. Mining South Africa
Mareesburg Joint Venture Mining South Africa
Lion`s Head Platinum (Pty) Ltd. Holding company South Africa
Gubevu Consortium Investment Holdings
(Pty) Ltd. (ii) Holding company South Africa
Proportion of ownership interest and
voting power held
December 31, December 31, January 1,
Name of subsidiary 2009 2008 2008
Eastern Platinum Holdings
Limited 100% 100% 1 00%
Eastplats Holdings Limited 100% 100% 1 00%
Eastplats Acquisition Co. Ltd. 100% 100% 1 00%
Eastplats International
Incorporated 100% 100% 1 00%
Royal Anthem Investments 134
(Pty) Ltd. 100% 100% 1 00%
Spitzkop Joint Venture 93.37% 93 .37% 93.37 %
Barplats Investments Limited 87.49% 87 .49% 85.02 %
Spitzkop Platinum (Pty) Ltd. 86.74% 86 .74% 86.74 %
Mareesburg Joint Venture 75.5% 75 .5 % 7 5 .5%
Lion`s Head Platinum (Pty) Ltd. 51 % 51% 51%
Gubevu Consortium Investment
Holdings (Pty) Ltd. (ii) 49.99% 49 .99% 42.39 %
(i) British Virgin Islands ("BVI")
(ii) The Company has determined that its investment in
Gubevu Consortium Investment Holdings (Pty) Ltd.
is a Special Purpose Entity.
(b) Associates
Details of the Company`s associates at December 31, 2009 are
as follows:
Place of
incorporation
Name of associate Principal activity and operation
Afrimineral Holdings (Pty) Ltd. Holding company South Africa
Proportion of ownership interest and
voting power held
December 31, December 31, January 1,
Name of associate 2009 2008 2008
Afrimineral Holdings
(Pty) Ltd. 49% 49 % 49%
See accompanying notes to the consolidated financial statements
Eastern Platinum Limited
Notes to the consolidated financial statements - years ended December 31, 2009
and 2008
(Expressed in thousands of U.S. dollars, except number of shares and per share
amounts)
5. Acquisitions
(a) Acquisitions during the year ended December 31, 2008
On December 8, 2008 the Company acquired a further 2.47% of
Barplats Investments Limited ("Barplats") to increase its
direct and indirect interest to 87.49%. Of the 2.47%
interest, the Company acquired 0.99% directly from Barplats
through the acquisition of 12,155,814 shares issued from
Barplats` treasury in exchange for net cash of $6,422. This
increased the Company`s direct ownership in Barplats from 74%
to 74.99%. The Company acquired the other 1.48% indirectly
from Gubevu through the acquisition of 1,519 shares in Gubevu
in exchange for net cash of $33,167. This increased the
Company`s direct ownership in Gubevu from 42.39% to 49.99%,
and the Company`s indirect ownership in Barplats from 11.02%
to 12.50%.
Following these acquisitions, the Company owns directly and
indirectly 87.49% of Barplats, a PGM producing company in
South Africa.
Purchase price
Acquisition of 2.47% interest in Barplats
Cash $ 39,589
Net assets acquired $ 39,589
Property, plant and equipment 39,589
$ 39,589
6. Trade and other receivables
Trade and other receivables are comprised of the following:
December 31, December 31, January 1,
2009 2008 2008
Trade receivables $ 25,839 $ 1,450 $ 27,690
Allowance for doubtful debts (74) (85) (111)
25,765 1,365 27,579
Other receivables 2,316 8,066 4,981
Current tax receivable 1,057 - -
$ 29,138 $ 9,431 $ 32,560
(a) Aging of past due, but not impaired
The average credit period of PGM sales is 4 months. The
Company has the right to request up to a 90% advance on
payment, payable 1 month subsequent to sale. The Company has
financial risk management policies in place to ensure that
all receivables are received within the pre-agreed credit
terms.
Included in trade and other receivables are receivables with
a carrying value of $276 (December 31, 2008 - Nil; January 1,
2008 - $1,201) that are past due but have not been provided
for. For the years ended December 31, 2009 and 2008,
substantially all of the Company`s PGM production was sold to
one customer and there was no significant change in the
credit quality of this customer over that time. The past due
amounts are considered recoverable.
December 31, December 31, January 1,
2009 2008 2008
Less than 6 months $ 276 $ - $ -
6 months to less than 7 months - - 152
7 months to less than 8 months - - 751
8 months and greater - - 298
$ 276 $ - $ 1,201
(b) Movement in the allowance for doubtful debts
December 31, December 31,
2009 2008
Opening balance $ 85 $ 111
Impairment losses recognized
on receivables 42 10
Amounts written off during the
year as uncollectible (26) -
Amounts recovered during the year (43) (7)
Foreign exchange translation gains
and losses 16 (29)
Closing balance $ 74 $ 85
(c) Aging of impaired trade receivables
December 31, December 31, January 1,
2009 2008 2008
Less than 4 months 6 1 4
Greater than 4 months 68 84 107
$ 74 $ 85 $ 111
At December 31, 2009, receivables of $74 (December 31, 2008 - $85; January 1,
2008 - $111) were impaired and provided for.
These receivables were for rental income, and impairment was determined based
on payment history.
7. Inventories
December 31, December 31, January 1,
2009 2008 2008
Consumables $ 4,549 $ 3,509 $ 5,446
Ore and concentrate 276 372 1,442
$ 4,825 $ 3,881 $ 6,888
Production costs for the year ended December 31, 2009 was $82,839
(December 31, 2008 - $79,961). Production costs represent the cost of
inventories sold during the period. This expense includes Nil (December
31, 2008 - Nil) with regards to the write-down of inventory to net
realizable value, and a reduction of Nil (December 31, 2008 - Nil) with
regards to the reversal of write-downs.
At December 31, 2009 and 2008, no inventories have been pledged as
security for liabilities.
Eastern Platinum Limited
Notes to the consolidated financial statements - years ended December 31, 2009
and 2008
(Expressed in thousands of U.S. dollars, except number of shares and per share
amounts)
8. Property, plant and equipment
Plant and Plant and
equipment equipment
owned leased
Cost
Balance as at January 1, 2008 $ 267,210 $ 6,603
Additions
Assets acquired 133,650 -
Assets acquired through step acquisition - -
Foreign exchange movement (85,313) (1,711)
Balance as at December 31, 2008 $ 315,547 $ 4,892
Assets acquired 27,593 -
Disposals (1,510) -
Foreign exchange movement 84,593 1,240
Balance as at December 31, 2009 $ 426,223 $ 6,132
Accumulated depreciation and
impairment losses
Balance as at January 1, 2008 $ 114,993 $ 1,333
Depreciation for the year 6,791 1,112
Impairment loss - -
Foreign exchange movement (30,605) (479)
Balance as at December 31, 2008 $ 91,179 $ 1,966
Depreciation for the year 11,298 1,092
Foreign exchange movement 24,467 633
Balance as at December 31, 2009 $ 126,944 $ 3,691
Carrying amounts
At January 1, 2008 $ 152,217 $ 5,270
At December 31, 2008 $ 224,368 $ 2,926
At December 31, 2009 $ 299,279 $ 2,441
Mineral Mineral
properties properties
being not being
depleted depleted
Cost
Balance as at January 1, 2008 $ 136,818 $ 535,883
Additions
Assets acquired - 4,985
Assets acquired through step acquisition 7,236 32,353
Foreign exchange movement (35,374) (129,106)
Balance as at December 31, 2008 $ 108,680 $ 444,115
Assets acquired (186) 921
Disposals - -
Foreign exchange movement 27,606 101,086
Balance as at December 31, 2009 $ 136,100 $ 546,122
Accumulated depreciation and
impairment losses
Balance as at January 1, 2008 $ 8,840 $ 15,666
Depreciation for the year 6,648 -
Impairment loss - 297,285
Foreign exchange movement (3,091) (39,867)
Balance as at December 31, 2008 $ 12,397 $ 273,084
Depreciation for the year 4,646 -
Foreign exchange movement 3,722 69,238
Balance as at December 31, 2009 $ 20,765 $ 342,322
Carrying amounts
At January 1, 2008 $ 127,978 $ 520,217
At December 31, 2008 $ 96,283 $ 171,031
At December 31, 2009 $ 115,335 $ 203,800
Residential Properties
properties and land TOTAL
Cost
Balance as at January 1, 2008 $ 8,903 $ 3,897 $ 959,314
Additions
Assets acquired 1,543 2,742 142,920
Assets acquired through step
acquisition - - 39,589
Foreign exchange movement (2,492) (1,340) (255,336)
Balance as at December 31,
2008 $ 7,954 $ 5,299 $ 886,487
Assets acquired 88 331 28,747
Disposals - - (1,510)
Foreign exchange movement 2,029 1,348 217,902
Balance as at December 31,
2009 $ 10,071 $ 6,978 $ 1,131,626
Accumulated depreciation and
impairment losses
Balance as at January 1, 2008 $ 2,198 $ 894 $ 143,924
Depreciation for the year 111 - 14,662
Impairment loss - - 297,285
Foreign exchange movement (583) (232) (74,857)
Balance as at December 31,
2008 $ 1,726 $ 662 $ 381,014
Depreciation for the year 118 - 17,154
Foreign exchange movement 452 168 98,680
Balance as at December 31,
2009 $ 2,296 $ 830 $ 496,848
Carrying amounts
At January 1, 2008 $ 6,705 $ 3,003 $ 815,390
At December 31, 2008 $ 6,228 $ 4,637 $ 505,473
At December 31, 2009 $ 7,775 $ 6,148 $ 634,778
Eastern Platinum Limited
Notes to the consolidated financial statements
(Expressed in thousands of U.S. dollars, except number of shares and per share
amounts)
8. Property, plant and equipment
Crocodile Kennedy`s Spitzkop
River Mine Vale Project PGM Project
(a) (b) (c)
Cost
Balance as at January 1, 2008 $ 423,315 $ 386,352 $ 121,443
Additions
Assets acquired 137,917 257 4,728
Assets acquired through step
acquisition 7,236 32,353 -
Foreign exchange movement (126,206) (99,853) (24,459)
Balance as at December 31, 2008 $ 442,262 $ 319,109 $ 101,712
Additions
Assets acquired 27,826 - 826
Disposals (1,510) - -
Foreign exchange movement 116,798 80,908 16,456
Balance as at December 31, 2009 $ 585,376 $ 400,017 $ 118,994
Accumulated depreciation and
impairment
losses
Balance as at January 1, 2008 $ 128,223 $ 15,666 $ -
Depreciation for the period 14,609 - -
Impairment loss - 297,285 -
Foreign exchange movement (34,977) (39,867) -
Balance as at December 31, 2008 $ 107,855 $ 273,084 $ -
Depreciation for the period 17,130 - -
Foreign exchange movement 29,432 69,238 -
Balance as at December 31, 2009 $ 154,417 $ 342,322 $ -
Carrying amounts
At January 1, 2008 $ 295,092 $ 370,686 $ 121,443
At December 31, 2008 $ 334,407 $ 46,025 $ 101,712
At December 31, 2009 $ 430,959 $ 57,695 $ 118,994
Other
Mareesburg property
Project plant and
(c) equipment TOTAL
Cost
Balance as at January 1, 2008 $ 28,088 $ 116 $ 959,314
Additions
Assets acquired - 18 142,920
Assets acquired through step
acquisition - - 39,589
Foreign exchange movement (4,794) (24) (255,336)
Balance as at December 31, 2008 $ 23,294 $ 110 $ 886,487
Additions
Assets acquired 95 - 28,747
Disposals - - (1,510)
Foreign exchange movement 3,722 18 217,902
Balance as at December 31, 2009 $ 27,111 $ 128 $ 1,131,626
Accumulated depreciation and
impairment
losses
Balance as at January 1, 2008 $ - $ 35 $ 143,924
Depreciation for the period - 53 14,662
Impairment loss - - 297,285
Foreign exchange movement - (13) (74,857)
Balance as at December 31, 2008 $ - $ 75 $ 381,014
Depreciation for the period - 24 17,154
Foreign exchange movement - 10 98,680
Balance as at December 31, 2009 $ - $ 109 $ 496,848
Carrying amounts
At January 1, 2008 $ 28,088 $ 81 $ 815,390
At December 31, 2008 $ 23,294 $ 35 $ 505,473
At December 31, 2009 $ 27,111 $ 19 $ 634,778
Eastern Platinum Limited
Notes to the consolidated financial statements - years ended December 31, 2009
and 2008
(Expressed in thousands of U.S. dollars, except number of shares and per share
amounts)
(a) Crocodile River Mine ("CRM")
The Company holds directly and indirectly 87.5% of CRM, which is
located on the eastern portion of the western limb of the
Bushveld Complex. The Maroelabult and Zandfontein sections are
currently in production. Development of the Crocette section was
on hold as at December 31, 2009.
(b) Kennedy`s Vale Project ("KV")
The Company holds directly and indirectly 87.5% of KV, which is
located on the eastern limb of the Bushveld Complex, near
Steelpoort in the Province of Mpumalanga.
It comprises PGM mineral rights on five farms in the Steelpoort
Valley.
(c) Spitzkop PGM Project and Mareesburg Project
The Company holds directly and indirectly a 93.4% interest in
the Spitzkop PGM Project and a 75.5% interest in the Mareesburg
Project. The Company currently acts as the operator of both the
Mareesburg Platinum Project and Spitzkop PGM Project, both
located on the eastern limb of the Bushveld Complex. The
development of these projects was on hold as at December 31,
2009.
(d) Impairment of property, plant and equipment
During the year ended December 31, 2008, the significant decline
in platinum group metal prices triggered an impairment
assessment which resulted in an impairment of $297 million on
Kennedy`s Vale. Future cash flows were discounted to present
value at the weighted average cost of capital of 9%.
The foreign exchange rate utilized in the model is ZAR9.51 =
US$1.00.
The average forecast prices utilized in the impairment model
were:
2009 2010 2011
Platinum US$/oz 950 1,020 1,055
Palladium US$ /oz 210 225 305
Rhodium US$ /oz 1,000 980 2,785
Gold US$/oz 870 815 650
Iridium US$ /oz 270 295 345
Ruthenium US$ /oz 190 215 240
Nicke l US$/tonne 13,850 15,875 16,210
Copper US$ /tonne 5,180 5,550 5,505
Chrome US$/tonne 380 382 400
2012 2013 +
Platinum US$/oz 1,155 1,180
Palladium US$ /oz 385 380
Rhodium US$ /oz 2,895 2,830
Gold US$/oz 695 680
Iridium US$ /oz 350 340
Ruthenium US$ /oz 250 245
Nicke l US$/tonne 16,285 15,915
Copper US$ /tonne 4,265 4,170
Chrome US$/tonne 400 400
9. Refining Contract
During the year ended June 30, 2006, the Company acquired a 69%
interest in Barplats and assigned a portion of the purchase price to
the off-take contract governing the sales of Barplats` PGM concentrate
production. The initial value of the contract was $17,939. During the
year ended June 30, 2007, the Company acquired an additional 5%
interest in Barplats resulting in an additional allocation to the
contract of $4,802 for atotal aggregate value of $22,741. During the
year ended December 31, 2008, the Company acquired an additional 2.47%
interest in Barplats. The acquisition did not affect the aggregate
value of the contract.
The value of the contract is amortized over the remaining term of the
contract which is 9.5 years as at December 31, 2009.
Cost
Balance as at January 1, 2008 $ 22,741
Foreign exchange movement (5,891)
Balance as at December 31, 2008 $ 16,850
Foreign exchange movement 4,272
Balance as at December 31, 2009 $ 21,122
Accumulated amortization
Balance as at January 1, 2008 $ 4,274
Amortization for the period 1,353
Foreign exchange movement (1,270)
Balance as at December 31, 2008 $ 4,357
Amortization for the period 1,332
Foreign exchange movement 1,264
Balance as at December 31, 2009 $ 6,953
Carrying amounts
At January 1, 2008 $ 18,467
At December 31, 2008 $ 12,493
At December 31, 2009 $ 14,169
10. Other assets
Other assets consists of a money market fund investment that is
classified as available-for- sale and serves as security for a guarantee
issued to the Department of Minerals and Energy of South Africa in
respect of the environmental rehabilitation liability (Note 14). Changes
to other assets for the year ended December 31, 2009 are as follows:
Balance , January 1, 2008 $ 1,247
Service fees (16)
Interest income 122
Foreign exchange movement (336)
Balance , December 31, 2008 $ 1,017
Additional investment 811
Service fees (6)
Interest income 123
Foreign exchange movement 337
Balance, December 31, 2009 $ 2,282
11. Accounts payable and accrued liabilities
December 31, December 31, January 1,
2009 2008 2008
Trade payables $ 9,932 $ 9,976 $ 6,467
Accrued liabilities 6,849 16,767 14,544
Taxes payable - 2,388 732
Other 6,138 7,598 1,224
$ 22,919 $ 36,729 $ 22,967
The average credit period of purchases is 1 month. The Company has
financial risk management policies in place to ensure that all payables
are paid within the pre-agreed credit terms.
Eastern Platinum Limited
Notes to the consolidated financial statements
(Expressed in thousands of U.S. dollars, except number of shares and per share
amounts)
12. Finance leases
Finance leases relate to mining vehicles with lease terms of 5 years payable
half yearly in advance. The Company has the option to purchase the vehicles
for a nominal amount at the conclusion of the lease agreements. The Company`s
obligations under finance leases are secured by the lessor`s title to the
leased assets. Interest is calculated at the South African prime rate plus 1%.
At December 31, 2009, the finance leases are repayable in 3 semi annual
installments (December 31, 2008 - 5) of $611 (December 31, 2008 - $544) and
atop-up payment of $2,450 in December 2011. The fair value of the finance
lease liabilities approximated carrying value.
(a) Minimum lease payments
December 31, December 31, January 1,
2009 2008 2008
No later than 1 year $ 1,221 $ 1,102 $ 1,565
Later than 1 year, but
no later than 5 years 3,061 3,644 5,599
4,282 4,746 7,164
Less: future finance charges (506) (1,083) (1,359)
Present value of minimum lease
payments $ 3,776 $ 3,663 $ 5,805
(b) Present value of minimum lease payments
December 31, December 31, January 1,
2009 2008 2008
No later than 1 year $ 926 $ 649 $ 748
Later than 1 year, but
no later than 5 years 2,850 3,01 4 5,057
$ 3,776 $ 3,663 $ 5,805
13. Loans
December 31, December 31, January 1,
Note 2009 2008 2008
Short-term portion (i) $ - $ 3,219 $ 3,837
Long-term portion (i) - - 3,322
$ - $ 3,219 $ 7,159
(i) Pursuant to the Company`s acquisition of a 42.39% interest in
Gubevu Consortium Investment Holdings (Pty) Ltd. ("Gubevu")
during the year ended June 30, 2007, the Company entered into
an agreement to pay an unrelated third party certain amounts
that existed in the underlying Gubevu agreements as an
obligation of Gubevu. As at June 30, 2007, the total payable
was ZAR 55.4 million of which half was paid in June, 2008, and
the remaining amount was paid in June, 2009. The fair value of
loans approximated carrying value.
14. Provision for environmental rehabilitation
Although the ultimate amount of the environmental rehabilitation
provision is uncertain, the fair value of these obligations is based on
information currently available, including closure plans and applicable
regulations. Significant closure activities include land
rehabilitation, demolition of buildings and mine facilities and other
costs.
The liability for the environmental rehabilitation provision at
December 31, 2009 is approximately ZAR 60 million ($8,152). The
liability was determined using an inflation rate of 7.00% (December 31,
2008 - 5.78%) and an estimated life of mine of 18 years for Zandfontein
and Maroelabult (December 31, 2008 - 14 years), 1 year for Kennedy`s
Vale (December 31, 2008 - 1 year) and 26 years for Spitzkop. A
provision for environmental rehabilitation was not recognized for
Spitzkop as at December 31, 2008. A discount rate of 8.39% was used
(December 31, 2008 - 7.09%). A guarantee of $2,282 (December 31, 2008 -
$1,017) has been issued to the Department of Minerals and Energy (Note
10). The guarantee will be utilized to cover expenses incurred to
rehabilitate the mining area upon closure of the mine. The undiscounted
value of this liability is approximately ZAR236.3 million ($31,885).
Changes to the environmental rehabilitation provision are as follows:
Balance , January 1, 2008 $ 6,224
Revision in estimates 554
Interest expense (Note 19) 491
Foreign exchange movement (1,671)
Balance , December 31, 2008 $ 5,598
Revision in estimates 629
Interest expense (Note 19) 443
Foreign exchange movement 1,482
Balance, December 31 , 2009 $ 8,152
15. Income taxes
The income tax recognized in profit or loss comprises of:
December 31, December 31,
2009 2008
Deferred tax recovery relating to the
origination and
reversal of temporary differences $ (1,623) $ (79,730)
Effect of changes in tax rates - (5,383)
Total deferred income tax recovery $ (1,6 23) $ (85,113)
The provision for income taxes reported differs from the amounts
computed by applying the cumulative Canadian federal and provincial
income tax rates to the loss before tax provision due to the following:
December 31, December 31,
2009 2008
Statutory tax rate 30.00% 31.00%
Expected tax recovery on net
income (loss) before income tax $ (120) $ (92,452)
Difference in tax rates between foreign
jurisdictions and Canada (9,057) (15,534)
Items not deductible for income tax
purposes 1,986 2,840
Effective change in tax rates - (5,383)
Tax losses not recognized 5,568 32,883
Change in tax estimates - (7,467)
Deferred income tax recovery $ (1,623) $ (85,113)
The approximate tax effect of each item that gives rise to the Company`s
deferred tax liabilities are as follows:
December 31, December 31, January 1,
2009 2008 2008
Non-capital loss
carry forwards $ 5,175 $ 5,160 $ 5,304
Share issue costs 1,013 2,119 2,919
Accumulated cost
base difference on
assets and other (36,877) (36,880) (143,505)
Deferred receipts (5,461) 1,213 (6,416)
Deferred tax
liabilities before
valuation
$ (36,150) $ (28,388) $ (141,698)
allowance
Less valuation
allowance (6,341) (7,226) (8,334)
Total deferred tax
liabilities $ (42,491) $ (35,614) $ (150,032)
The movement between the opening and closing balances was recognized in
profit or loss.
At December 31, 2009, the Company has non-capital losses of
approximately Cdn$21,713 available to apply against future Canadian
income for tax purposes. In South Africa, the Company has unredeemed
capital expenditures available for utilization against future mining
taxable income of approximately R3,127 million, and estimated assessable
tax losses of approximately R9.3 million. The South African losses do
not expire unless the Company`s mining activities cease. The non-capital
losses will expire as follows (in thousands of Canadian dollars):
2009 2008
Cdn$ Cdn$
(000`s) (000`s)
2011 $ 1,115 $ 1,115
2012 272 272
2013 1,592 1,595
2014 916 916
2025 3,224 3,101
2026 6,105 6,106
2027 3,393 2,551
2028 4,217 4,614
2029 879 -
$ 21,713 $ 20,270
The Company does not have any capital losses available to apply against
future capital gains in Canada.
The Company is subject to assessments by various taxation authorities
which may interpret tax legislation and tax filing positions differently
from the Company. The Company provides for such differences when it is
probable that ataxation authority will not sustain the Company`s filing
position and the amount of the tax exposure can be reasonably estimated.
As at December 31, 2009, no provisions have been made in the financial
statements for any estimated tax liability.
16. Commitments
The Company has committed to capital expenditures on projects of
approximately ZAR37 million ($4,959) as at December 31, 2009 (December
31, 2008 - ZAR 259 million, $27,925).
17. Issued capital
(a) Authorized
- Unlimited number of preferred redeemable, voting,
non-participating shares without nominal or par value,
- Unlimited number of common shares with no par value.
(b) Share options
The Company has an incentive plan (the "2008 Plan"), approved
by the Company`s shareholders at its annual general meeting
held on June 4, 2008, under which options to purchase common
shares may be granted to its directors, officers, employees
and others at the discretion of the Board of Directors. Under
the terms of the 2008 Plan, 75 million common shares are
reserved for issuance upon the exercise of options. All
outstanding options at June 4, 2008 granted under the
Company`s previous plan (the "2005 Plan") will continue to
exist under the 2008 Plan provided that the fundamental terms
governing such options will be deemed to be those under the
2005 Plan. Upon adoption of the 2008 Plan, options to
purchase a total of 27,525,000 common shares were available
for grant under the 2008 Plan, representing 75,000,000 less
the 47,475,000 outstanding options at June 4, 2008 granted
under the 2005 Plan.
Under the 2008 Plan, each option granted shall be for a term
not exceeding five years from the date of being granted and
the vesting period is determined based on the discretion of
the Board of Directors. The option exercise price is set at
the date of the grant and cannot be less than the closing
market price of the Company`s common shares on the Toronto
Stock Exchange on the day immediately preceding the day of
the grant of the option.
(i) Movements in share options during the year
The changes in share options during the years ended
December 31, 2009 and 2008 were as follows:
December 31, 2009
Weighted
average
Number of exercise
options price
Cdn$
Balance outstanding,
beginning of year 64,746,000 1.52
Options granted 695,000 0.57
Options exercised (535,999) 0.32
Options forfeited (5,329,167) 2.00
Balance outstanding,
end of year 59,575,834 1.4 8
December 31 , 2008
Weighted
average
Number of exercise
options price
Cdn$
Balance outstanding,
beginning of year 46,360,000 1.94
Options granted 19,856,000 0.55
Options exercised (845,000) 1.26
Options forfeited (625,000) 1.76
Balance outstanding,
end of year 64 ,746,000 1.52
(ii) Fair value of share options granted in the year
The fair value of each option granted is estimated at
the time of the grant using the Black-Scholes option
pricing model with weighted average assumptions for
grants as follows:
2009
February 11 June 30
Exercise price Cdn$ 0.32 Cdn$ 0.52
Closing market price on day
preceding date of grant Cdn$ 0.32 Cdn$ 0.52
Grant date share price Cdn$ 0.38 Cdn$ 0.52
Risk-free interest rate 1.69 % 1.8 4%
Expected life 3 years 3 years
Annualized volatility 78 % 79%
Dividend rate 0% 0%
Grant date fair value Cdn$ 0.21 Cdn$ 0.27
Weighted
November 3 average
Exercise price Cdn$ 0.76 Cdn$ 0.57
Closing market price on day
preceding date of grant Cdn$ 0.76 Cdn$ 0.57
Grant date share price Cdn$ 0.81 Cdn$ 0.59
Risk-free interest rate 1.8 6 % 1.83 %
Expected life 3 years 3 years
Annualized volatility 82% 80%
Dividend rate 0% 0%
Grant date fair value Cdn$ 0.45 Cdn$ 0.32
Exercise price is the closing market price on the day
preceding the date the options were granted, as defined
by the Company`s 2008 share option plan.
Grant date share price is the closing market price on
the day the options were granted.
(ii) Fair value of share options granted in the year
(continued)
Expected volatility is based on the historical share
price volatility since Eastern Platinum Limited
completed its acquisition of Barplats Investment Limited
on May 2, 2006, or for 3 years prior to the date of
grant, whichever is shorter.
2008
February 19 March 26
Exercise price Cdn$ 3.38 Cdn$ 3.38
Closing market price on day
preceding date of grant Cdn$ 3.38 Cdn$ 3.32
Grant date share price Cdn$ 3.38 Cdn$ 3.38
Risk-free interest rate 3.2 4% 2 .67 %
Expected life 3 years 3 years
Annualized volatility 49% 49%
Dividend rate 0% 0%
Grant date fair value Cdn$ 1.22 Cdn$ 1.20
Weighted
December 18 average
Exercise price Cdn$ 0.32 Cdn$ 0.55
Closing market price on day
preceding date of grant Cdn$ 0.32 Cdn$ 0.55
Grant date share price Cdn $0.30 Cdn$ 0.53
Risk-free interest rate 1.42 % 1.54 %
Expected life 3 years 3 years
Annualized volatility 76% 74 %
Dividend rate 0% 0%
Grant date fair va lue Cdn$ 0.15 Cdn$ 0.23
(iii) Share options exercised during the year
The following table outlines share options exercised
during the year:
Closing
Number of share price
options at exercise
Date of issue exercised Exercise date date
December 18, 2008 6,000 May 8, 2009 $ 0.55
December 18, 2008 15,000 May 22, 2009 0.45
December 18, 2008 33,333 June 3, 2009 0.65
December 18, 2008 10,000 Sept ember 22, 2009 0.59
December 18, 2008 15,000 November 4, 2009 0.83
December 18, 2008 44,999 November 13, 2009 0.84
December 18, 2008 20,000 November 16, 2009 0.91
December 18, 2008 266,667 November 23, 2009 1.00
December 18, 2008 10,000 November 26, 2009 0.96
December 18, 2008 115,000 Dec ember 23, 2009 0.88
535,999 $ 0.90
(iv) Share options outstanding at the end of the year
The following table summarizes information concerning
outstanding and exercisable options at December 31,
2009:
Options Options Exercise
outstanding exercisable price
Cdn$
6,725,000 6,725,000 1.70
250,000 250,000 1.70
19,987,500 19,987,500 1.82
17,478,334 16,598,334 0.32
60,000 20,000 0.32
400,000 400,000 0.52
215,000 71,667 0.76
13,740,000 13,740,000 2.31
90,000 90,000 2.50
460,000 440,000 3.38
170,000 130,000 3.38
59,575,834 58,452,501 1.50
Remaining
Contractual
Life (Years) Expiry date
1.40 May 24 , 2011
1.91 November 27 , 2011
2.19 March 7, 2012
3.97 December 18, 2013
4.12 February 11, 2014
4.50 June 30, 2014
4.84 November 3, 2014
7.77 October 5, 2017
7.96 December 12, 2017
8.15 February 20 , 2018
8.24 March 27, 2018
4.01
(c) Share purchase warrants
The changes in warrants during the years ended December 31, 2009
and 2008 were as follows:
December 31, 2009
Weighted
average
Number of exercise
warrants price
Cdn$
Balance outstanding,
beginning of year 58,485,996 1.80
Warrants exercised - -
Warrants expired (58,485,996) 1.80
Balance outstanding,
end of year - -
December 31, 2008
Weighted
average
Number of exercise
warrants price
Cdn$
Balance outstanding,
beginning of year 71,248,050 1.83
Warrants exercised (10,824,077) 1.97
Warrants expired (1,937,977) 2.00
Balance outstanding,
end of year 58,485,996 1.80
18. Non-controlling interest
The non-controlling interests are comprised of the following:
Balance , January 1, 2008 $ 23,133
Non-controlling interests` share of loss in Barplats (717)
Non-controlling interests` share of interest on advances
to Gubevu (3,018)
Foreign exchange movement (7,396)
Balance , December 31, 2008 $ 12,002
Non-controlling interests` share of loss in Barplats (1,908)
Non-controlling interests` share of interest on advances
to Gubevu (2,520)
Foreign exchange movement 2,467
Balance, December 31 , 2009 $ 10,041
19. Finance costs
December 31, December 31,
2009 2008
Interest on revenue advances $ 482 $ 1,784
Interest on finance leases 377 604
Interest on provision for
environmental rehabilitation 443 491
Interest on tax 2 395
Other interest 387 451
$ 1 ,691 $ 3,725
20. Diluted earnings per share
The weighted average number of ordinary shares for the purposes of
diluted earnings per share reconciles to the weighted average number of
ordinary shares used in the calculation of basic earnings per share as
follows:
December 31, December 31,
2009 2008
(in thousands)
Weighted average number of ordinary shares
used in the calculation of basic earnings
per share 680,577 677,117
Shares deemed to be issued for no
consideration in
respect of:
Options 7,213 -
Weighted average number of ordinary shares
used
in the calculation of diluted earnings per
share 687,790 677,117
The following potential ordinary shares, outstanding at December 31,
2009, are anti-dilutive and are therefore excluded from the weighted
average number of ordinary shares for the purposes of diluted earnings
per share:
December 31, December 31,
2009 2008
(in thousands)
Options 41,434 61,053
Warrants - 58,486
21. Retirement benefit plans
The Barplats Provident Fund is an independent, defined contribution plan
administered by Liberty Life Limited in South Africa. The costs
associated with the defined contribution plan included in net profit
(loss) were $2,705 (December 31, 2008 - $2,308). The total number of
employees in the plan at December 31, 2009 was 1,800 (December 31, 2008
- 1,460).
22. Related party transactions
Balances and transactions between the Company and its subsidiaries have
been eliminated on consolidation and are not disclosed in this note.
Details of the transactions between the Company and other related
parties are disclosed below.
(a) Trading transactions
The Company`s related parties consist of companies owned by
executive officers and directors as follows:
Nature of transactions
Andrews PGM Consulting Consulting
Buccaneer Management Inc. Management
Jazz Financial Ltd. Management
Maluti Services Limited General and administrative
Xiste Consulting Ltd. Management
The Company incurred the following fees and expenses in the
normal course of operations in connection with companies owned
by key management and directors.
Expenses have been measured at the exchange amount which is
determined on a cost recovery basis.
December 31, December 31,
Note 2009 2008
Consulting fees (i) $ 232 $ 90
General and administrative
expenses 48 254
Management fees 1,429 1,205
$ 1,709 $ 1,549
(i) The Company paid fees to a private company controlled
by a director of the Company for consulting services
performed outside of his capacity as a director.
(ii) Amounts due to related parties are unsecured,
non-interest bearing and due on demand. Accounts
payable at December 31, 2009 included $510 (December
31, 2008 - $35) which were due to private companies
controlled by officers of the Company.
(b) Compensation of key management personnel
The remuneration of directors and other members of key
management personnel during the years ended December 31, 2009
and 2008 were as follows:
December 31, December 31,
Note 2009 2008
Salaries and directors` fees (i) $ 2,695 $ 2,133
Share-based payments (ii) 93 2,374
$ 2,788 $ 4,507
(i) Salaries and directors` fees include consulting and
management fees disclosed in Note 22(a).
(ii) Share-based payments are the fair value of options
granted to key management personnel, translated at the
grant date foreign exchange rate.
(iii) Key management personnel were not paid post-employment
benefits, termination benefits, or other long-term
benefits during the years ended December 31, 2009 and
2008.
23. Segmented information
(a) Operating segment - The Company`s operations are primarily
directed towards the acquisition, exploration and production of
platinum group metals in South Africa.
(b) Geographic segments - The Company`s assets, revenues and
expenses by geographic areas for the years ended December 31,
2009 and 2008 are as follows:
December 31, 2009
Crocodile Kennedy`s
River Mine Vale Spitzkop
Current assets $ 36,749 $ 176 $ 1,509
Property, plant and equipment 430,959 57,695 118,994
Refining contract 14,169 - -
Other Assets 2,282 - -
$ 484,159 $ 57,871 $ 120,503
Property, plant and
equipment expenditures $ 27,826 $ - $ 826
Sale of property, plant
and equipment (1,510) - -
Revenue $ 111,365 $ - $ -
Production costs (82,839) - -
Depreciation and amortization (17,130) - -
General and administrative
expenses (3,397) (2,286) (510)
Share-based payment (489) - -
Interest income 1,388 - 38
Finance costs (1,547) - -
Foreign exchange gain (loss) 28 - -
Profit (loss) before
income taxes $ 7,379 $ (2,286) $ (472)
Total
Mareesburg Other South
Africa
Current assets $ 45 $ 1,003 $ 39,482
Property, plant and equipment 27,111 - 634,759
Refining contract - - 14,169
Other Assets - - 2,282
$ 27,156 $ 1,003 $ 690,692
Property, plant and
equipment expenditures $ 95 $ - $ 28,747
Sale of property, plant
and equipment - - (1,510)
Revenue $ - $ - $ 111,365
Production costs - - (82,839)
Depreciation and amortization - - (17,130)
General and administrative
expenses (157) (26) (6,376)
Share-based payment - - (489)
Interest income - - 1,426
Finance costs - - (1,547)
Foreign exchange gain (loss) - - 28
Profit (loss) before
income taxes $ (157) $ (26) $ 4,438
Canada TOTAL
Current assets $ 16,139 $ 55,621
Property, plant and equipment 19 634,778
Refining contract - 14,169
Other Assets - 2,282
$ 16,158 $ 706,850
Property, plant and
equipment expenditures $ - $ 28,747
Sale of property, plant
and equipment - (1,510)
Revenue $ - $ 111,365
Production costs - (82,839)
Depreciation and amortization (24) (17,154)
General and administrative
expenses (4,152) (10,528)
Share-based payment (9 3) (582)
Interest income 360 1 ,7 8 6
Finance costs (144) (1,691)
Foreign exchange gain (loss) (786) (758)
Profit (loss) before
income taxes $ (4,839) $ (401)
December 31, 2008
Crocodile Kennedy`s Spitzkop
River Mine Vale
Current assets $ 13,636 $ 2,047 $ 1,839
Property, plant and equipment 334,407 46,025 101,712
Refining contract 12,493 - -
Other Assets 1,017 - -
$ 361,553 $ 48,072 $ 103,551
Property, plant and
equipment expenditures $ 137,917 $ 257 $ 4,728
Sale of property, plant
and equipment - - -
Revenue $ 114,681 $ - $ -
Production costs (79,961) - -
Depreciation and amortization (14,609) - -
Impairment - (297,285) -
General and administrative
expenses (12,317) (1,415) (588)
Share-based payment (1,979) - -
Interest income 3,770 42 7
Finance costs (3,068) (86) -
Foreign exchange gain (loss) (8) - 343
Profit (loss) before
income taxes $ 6,509 $ (298,744) $ (238)
Total South
Mareesburg Other Africa
Current assets $ 132 $ 1 $ 17,655
Property, plant and equipment 23,294 - 505,438
Refining contract - - 12,493
Other Assets - - 1,017
$ 23,426 $ 1 $ 536,603
Property, plant and
equipment expenditures $ - $ 18 $ 142,920
Sale of property, plant
and equipment - - -
Revenue $ - $ - $ 114,681
Production costs - - (79,961)
Depreciation and amortization - - (14,609)
Impairment - - (297,285)
General and administrative
expenses - (18) (14,338)
Share-based payment - - (1,979)
Interest income - - 3,819
Finance costs - - (3,154)
Foreign exchange gain (loss) 55 2 392
Profit (loss) before
income taxes $ 55 $ (16) $ (292,434)
Canada TOTAL
Current assets $ 56,720 $ 74,375
Property, plant and equipment 35 505,473
Refining contract - 12,493
Other Assets - 1,017
$ 56,755 $ 593,358
Property, plant and
equipment expenditures $ - $ 142,920
Sale of property, plant
and equipment - -
Revenue $ - $ 114,681
Production costs - (79,961)
Depreciation and amortization (53) (14,662)
Impairment - (297,285)
General and administrative
expenses (5,103) (19,441)
Share-based payment (2,646) (4,625)
Interest income 5,125 8,944
Finance costs (571) (3,725)
Foreign exchange gain (loss) (2,547) (2,155)
Profit (loss) before
income taxes $ (5,795) $ (298,229)
For the years ended December 31, 2009 and 2008, substantially all of the
Company`s PGM production was sold to one customer.
24. Financial instruments
(a) Management of capital risk
The capital structure of the Company consists of equity
attributable to common shareholders, comprising issued capital,
equity-settled employee benefits reserve, deficit and currency
translation adjustment. The Company`s objectives when managing
capital are to: (i) preserve capital, (ii) obtain the best
available net return, and (iii) maintain liquidity.
The Company manages the capital structure and makes adjustments
to it in light of changes in economic conditions and the risk
characteristics of the underlying assets.
To maintain or adjust the capital structure, the Company may
attempt to issue new shares.
The Company is not subject to externally imposed capital
requirements.
(b) Categories of financial instruments
December 31, December 31, January 1,
2009 2008 2008
Financial assets
Cash and cash equivalents $ 7,249 $ 25,806 $ 18,818
Loans and receivables
Trade receivables 29,138 9,431 32,560
Available for sale
financial assets
Short-term investments 14,409 35,257 171,038
O t h e r assets 2,282 1,017 1 ,2 4 7
$ 53,078 $ 71,511 $ 223,663
Financial liabilities
Other financial liabilities
Accounts payable and
accrued
liabilities $ 22,919 $ 36,729 $ 22,967
Current portion of finance
leases 926 649 748
Current loans - 3,219 3,837
Long-term portion of
finance
leases 2,850 3,014 5,057
Long-term loans - - 3,322
$ 26,695 $ 43,611 $ 35,931
(c) Fair value of financial instruments
(i) Fair value estimation of financial instruments
The fair value of financial instruments traded in
active markets is based on quoted market prices at
the balance sheet date.
The fair values of cash and cash equivalents,
short-term investments, trade receivables and
accounts payable approximate their carrying values
due to the short-term to maturities of these
financial instruments.
The fair value of short-term debt was determined
using discounted cash flows at prevailing market
rates and the fair value is considered to
approximate carrying value.
(ii) Fair value measurements recognized in the statement of
financial position
Financial instruments that are measured subsequent to
initial recognition at fair value are grouped into a
hierarchy based on the degree to which the fair value is
observable. Level 1 fair value measurements are derived
from unadjusted, quoted prices in active markets for
identical assets or liabilities.
Level 2 fair value measurements are derived from inputs
other than quoted prices included within Level 1 that
are observable for the asset or liability directly or
indirectly. Level 3 fair value measurements are derived
from valuation techniques that include inputs for the
asset or liability that are not based on observable
market data.
The Company`s short-term investments and other assets
are measured subsequent to initial recognition at fair
value and are Level 2 financial instruments at December
31, 2009. There were no transfers between levels during
the year ended December 31, 2009.
(d) Reclassification of financial assets
During the year ended December 31, 2008, ashort-term investment
classified as held-to-maturity was sold prior to its maturity
date. This tainted the Company`s held- to-maturity investments
and resulted in the reclassification of the Company`s held-to-
maturity investments, short-term investments ($35,257) and other
assets ($1,017), to available for sale financial assets. The
short-term investments were re-measured at fair value with any
gains or losses recorded directly to other comprehensive income.
The impact of the reclassification was insignificant.
(e) Financial risk management
The Company`s financial instruments are exposed to certain
financial risks, including currency risk, interest rate risk,
price risk, credit risk and liquidity risk. The Company`s
exposure to these risks and its methods of managing the risks
remain consistent.
(i) Currency risk
The Company is exposed to the financial risk related to
the fluctuation of foreign exchange rates. The Company`s
revenues are based on US dollar PGM prices, but the
Company receives revenue in South African Rand. A
significant change in the currency exchange rates
between the South African Rand relative to the US dollar
could have an effect on the Company`s results of
operations, financial position and cash flows. The
Company has not entered into any derivative financial
instruments to manage exposures to currency
fluctuations.
The carrying amount of the Company`s foreign-currency
denominated monetary assets at December 31, 2009, is as
follows:
December31, 2009 December 31, 2008
(000`s (000`s (000`s (000`s
Cdn) ZAR) Cdn$) ZAR
Financial assets
Loans and receivables 320 213,701 552 83,410
The sensitivity of the Company`s net earnings and other
comprehensive income due to changes in the exchange rate
between the South African Rand and the United States
dollar, and between the Canadian dollar and the United
States dollar are summarized in the tables below. The
increase (decrease) in other comprehensive income is due
to the effect of the exchange rate on financial
instruments.
Year ended Dec. 31, 2009
10% 10%
increase in decrease in
ZAR to USD ZAR to USD
FX rate FX rate
Increase (decrease) in other
comprehensive income (2,621) 3,204
Year ended Dec. 31, 2009
10% 10%
increase in decrease in
Cdn to USD Cdn to USD
FX rate FX rate
Increase (decrease) in other
comprehensive income (2,914) 2,914
(ii) Interest rate risk
Interest rate risk is the risk that the fair value or
future cash flows of a financial instrument will
fluctuate because of changes in market interest rates.
The Company is exposed to interest rate risk on its
short-term investments.
The risk that the Company will realize a loss as a
result of a decline in the fair value of short-term
investments is limited because these investments,
although available for sale, are generally not sold
before maturity. The Company monitors its exposure to
interest rates and has not entered into any derivative
financial instruments to manage this risk. A sensitivity
analysis has not been completed for interest rate risk
as it is immaterial.
(iii) Price risk
The Company is exposed to price risk with respect to
fluctuations in the prices of platinum group metals.
These fluctuations directly affect revenues and trade
receivables. As at December 31, 2009, the Company`s
financial assets subject to metal price risk consist of
trade receivables of $25,765 (December 31, 2008 -
$1,365). Historically, the Company has not entered into
any derivative financial instruments to manage exposures
to price fluctuations. No such derivative financial
instruments existed at December 31, 2009 and 2008.
The Company has not included a sensitivity analysis of
price risk at year-end as it does not reflect the
exposure experienced during the twelve months ended
December 31, 2009. Presenting such an analysis would be
misleading.
(iv) Credit risk
Credit risk is the risk of an unexpected loss if a
customer or third party to a financial instrument fails
to meet its contractual obligations, and arises
principally from the Company`s trade receivables. The
carrying value of the financial assets represents the
maximum credit exposure.
The Company currently sells substantially all of its
concentrate production to one customer under an off-take
contract. At December 31, 2009, the Company had
receivable balances associated with this one customer of
$25,765 (December 31, 2008 - $1,365). The loss of this
customer or unexpected termination of the off-take
contract could have a material adverse effect on the
Company`s results of operations, financial condition and
cash flows. The Company has not experienced any bad debts
with this customer.
The Company minimizes credit risk by reviewing the credit
risk of the counter party to the arrangement and has made
any necessary provisions related to credit risk at
December 31, 2009.
(v) Liquidity risk
Liquidity risk is the risk that the Company will not be
able to meet its financial obligations as they fall due.
The Company has a planning and budgeting process in place
to help determine the funds required to support the
Company`s normal operating requirements on an ongoing
basis and its expansionary plans. The Company ensures
that there are sufficient funds to meet its short-term
business requirements, taking into account its
anticipated cash flows from operations and its holdings
of cash and cash equivalents.
The Company`s policy is to invest its excess cash in
highly liquid, fully guaranteed, bank-sponsored
instruments. The Company staggers the maturity dates of
its investments over different time periods and dates to
minimize exposure to interest rate changes. This strategy
remains unchanged from 2008.
In the normal course of business, the Company enters into
contracts that give rise to commitments for future
minimum payments. The following table summarizes the
Company`s significant commitments and corresponding
maturities.
December 31, 2009
Tota l <1 year 1-3 years
Accounts payable $ 22,919 $ 22,919 $ -
Finance leases 4,282 1,221 3,061
Purchase commitments 8 81 881 -
Capital expenditures 4,077 4,077 -
$ 32,159 $ 29,098 $ 3,061
December 31, 2008
Total <1 year 1-3 years
Accounts payable $ 36,729 $ 36,729 $ -
Finance leases 4,746 1,102 3,644
Loans 3,219 3,219 -
Purchase commitments 4,751 4,751 -
Capital expenditures 23,174 22,725 449
$ 72,619 $ 68,526 $ 4,093
January 1, 2008
Total <1 year 1-3 years
Accounts payable $ 22,967 $ 22,967 $ -
Finance leases 7,164 1,565 5,599
Loans 7,159 3,837 3,322
Purchase commitments 2,407 2,407 -
Capital expenditures 22,741 22,741 -
$ 62,438 $ 53,517 $ 8,921
25. IFRS
IFRS 1 First-time Adoption of International Financial Reporting
Standards sets forth guidance for the initial adoption of IFRS. Under
IFRS 1 the standards are applied retrospectively at the transitional
statement of financial position date with all adjustments to assets and
liabilities taken to retained earnings unless certain exemptions are
applied. The Company has applied the following exemptions to its opening
statement of financial position dated January 1, 2008:
(a) Business Combinations
IFRS 1 indicates that a first-time adopter may elect not to
apply IFRS 3 Business Combinations retrospectively to business
combinations that occurred before the date of transition to
IFRS. The Company has taken advantage of this election and has
applied IFRS 3 to business combinations that occurred on or
after January 1, 2008.
(b) Cumulative translation differences
IFRS 1 allows a first-time adopter to not comply with the
requirements of IAS 21 The Effects of Changes in Foreign
Exchange Rates for cumulative translation differences that
existed at the date of transition to IFRS. The Company has
chosen to apply this election and has eliminated the cumulative
translation difference and adjusted retained earnings by the
same amount at the date of transition to IFRS. If, subsequent to
adoption, a foreign operation is disposed of, the translation
differences that arose before the date of transition to IFRS
will not affect the gain or loss on disposal.
(c) Share-based payment transactions
IFRS 1 encourages, but does not require, first-time adopters to
apply IFRS 2 Share- based Payment to equity instruments that
were granted on or before November 7, 2002, or equity
instruments that were granted subsequent to November 7, 2002 and
vested before the later of the date of transition to IFRS and
January 1, 2005. The Company has elected not to apply IFRS 2 to
awards that vested prior to January 1, 2008, which have been
accounted for in accordance with Canadian GAAP.
(d) IAS 27 - Consolidated and Separate Financial Statements
In accordance with IFRS 1, if a company elects to apply IFRS 3
Business Combinations retrospectively, IAS 27 Consolidated and
Separate Financial Statements must also be applied
retrospectively. As the Company elected to apply IFRS 3
prospectively, the Company has also elected to apply IAS 27
prospectively.
(e) IAS 23 - Borrowing Costs
In accordance with IFRS 1, the Company has elected to
prospectively apply IAS 23 effective January 1, 2009.
IFRS 1 also outlines specific guidelines that a first-time
adopter must adhere to under certain circumstances. The Company
has applied the following guidelines to its opening statement of
financial position dated January 1, 2008:
(f) Assets and liabilities of subsidiaries and associates
In accordance with IFRS 1, if a parent company adopts IFRS
subsequent to its subsidiary or associate adopting IFRS, the
assets and the liabilities of the subsidiary or associate are to
be included in the consolidated financial statements at the same
carrying amounts as in the financial statements of the
subsidiary or associate. The Company`s principal operating
subsidiary, Barplats Investments Limited, adopted IFRS in 2005.
(g) Estimates
In accordance with IFRS 1, an entity`s estimates under IFRS at
the date of transition to IFRS must be consistent with estimates
made for the same date under previous GAAP, unless there is
objective evidence that those estimates were in error. The
Company`s IFRS estimates as of January 1, 2008 are consistent
with its Canadian GAAP estimates for the same date.
IFRS employs a conceptual framework that is similar to Canadian GAAP.
However, significant differences exist in certain matters of
recognition, measurement and disclosure. While adoption of IFRS has not
changed the Company`s actual cash flows, it has resulted in changes to
the Company`s reported financial position and results of operations. In
order to allow the users of the financial statements to better
understand these changes, the Company`s Canadian GAAP statement of
operations, statement of comprehensive income, statement of financial
position and statement of cash flows for the year ended December 31,
2008 have been reconciled to IFRS, with the resulting differences
explained.
(h) Revenue and interest income
The Company settles its metal sales three or five months,
depending on the type of metal, following the physical delivery
of the concentrates.
The present value of sales revenue expected to be received in
three or five months is recognized on the date of sale. The
difference between the present value and the future value is
recognized as interest revenue over the term of settlement. In
its Canadian GAAP financial statements for the year ended
December 31, 2008, the Company recorded the future value as
sales revenue, as opposed to recognizing the difference between
the present value and the future value as interest revenue over
the term of settlement. The difference in the treatment of
revenue results in atiming difference in the recognition of
income and is not material to these financial statements.
(i) Property plant and equipment
Due to the adjustments to the provision for environmental
rehabilitation discussed in Note 25(k), the cost of property
plant and equipment is different in accordance with IFRS than in
accordance with Canadian GAAP. As a result, even though
depreciation is calculated in the same manner, the amount of
depreciation differs.
(j) Share-based payments
IFRS
Each tranche of an award with different vesting dates is
considered a separate grant for the calculation of fair
value, and the resulting fair value is amortized over the
vesting period of the respective tranches.
Forfeiture estimates are recognized in the period they are
estimated, and are revised for actual forfeitures in
subsequent periods.
Canadian GAAP
The fair value of stock-based awards with graded vesting are
calculated as one grant and the resulting fair value is
recognized on a straight-line basis over the vesting period.
Forfeitures of awards are recognized as they occur.
(k) Provision for environmental rehabilitation
IFRS
The provision for environmental rehabilitation must be
adjusted for changes in the discount rate.
Canadian GAAP
The provision for environmental rehabilitation is not
adjusted for changes in the discount rate.
(l) Deferred tax asset/liability
IFRS
All deferred tax assets and liabilities must be classified
as non-current.
Canadian GAAP
Deferred tax assets and liabilities are classified as
current or non-current as appropriate.
(m) Other comprehensive income (loss)
Other comprehensive income (loss) consists of the change in the
cumulative translation adjustment ("CTA"). Due to other IFRS
adjustments, the balances that are used to calculate the CTA are
different in accordance with IFRS than in accordance with
Canadian GAAP. As a result, CTA and other comprehensive income
(loss) are different in accordance with IFRS than in accordance
with Canadian GAAP.
(n) Impairment
IFRS - If indication of impairment is identified, the asset`s
carrying value is compared to the asset`s discounted cash flows.
If the discounted cash flows are less than the carrying value,
the asset is impaired by an amount equal to the difference
between the discounted cash flows and the carrying value.
Canadian GAAP - If indication of impairment is identified, the
asset`s carrying value is compared to the asset`s undiscounted
cash flows. If the undiscounted cash flows are less than the
carrying value, the asset is impaired by an amount equal to the
difference between the discounted cash flows and the carrying
value.
The Company completed an impairment review of its assets at
January 1, 2008 and concluded that the assets were not impaired
in accordance with IFRS. At December 31, 2008, the carrying
value of the Kennedy`s Vale mineral property was less than the
property`s undiscounted cash flows, but greater than the
property`s discounted cash flows. As a result, the mineral
property was concluded to be impaired in accordance with IFRS,
but not impaired in accordance with Canadian GAAP. An impairment
of $297.3 million and an income tax recovery of $71.5 million
have been recorded relating to the Kennedy`s Vale impairment.
(o) Presentation
The presentation in accordance with IFRS differs from the
presentation in accordance with Canadian GAAP.
The January 1, 2008 Canadian GAAP statement of financial position has
been reconciled to IFRS as follows:
January 1 , 2008
Canadian
GAAP
Assets
Current assets
Cash and cash equivalents Notes $ 18,818
Short-term investments 171,038
Trade and other receivables (f)(h) 33,157
Inventories 6,888
229,901
Property, plant and
equipment (f)(i)(k) 813,461
Refining contract 18,467
Other assets 1,247
$ 1,063,076
Liabilities
Current liabilities
Accounts payable and
$ 22,967
accrued liabilities
Current portion of finance
(o) $ -
leases
Current portion of
long-term liability 3,837
Deferred tax (l) 6,416
33,220
Provision for environmental
(f)(k) 2,889
rehabilitation
Capital leases and other
long-term liabilities (o) 9,12 7
Finance leases (o) -
Loans (o) -
Deferred tax liabilities (l) 143,616
188,852
Equity
Issued capital 868,045
Equity-settled employee
benefits reserve 27,428
Currency translation
adjustment (b) 23,481
Deficit (68,132)
Capital and reserves attributable
to equity shareholders of
the Company 850,822
Non-controlling interest 23,402
874,224
$ 1,063,076
Effect of IFRS
transition
to IFRS
Assets
Current assets
Cash and cash equivalents $ - $ 18,818
Short-term investments - 171,038
Trade and other receivables (597) 32,560
Inventories - 6,888
(597) 229,304
Property, plant and
equipment 1,929 815,390
Refining contract - 18,467
Other assets - 1,247
$ 1,332 $ 1,064,408
Liabilities
Current liabilities
Accounts payable and
$ - $ 2 2,96 7
accrued liabilities
Current portion of finance
$ 748 $ 748
leases
Current portion of
long-term liability - 3,83 7
Deferred tax (6,416) -
(5,668) 27,552
Provision for environmental
3,335 6,224
rehabilitation
Capital leases and other
long-term liabilities (9,127) -
Finance leases 5,057 5,057
Loans 3,322 3,322
Deferred tax liabilities 6,416 150,032
3,335 192,187
Equity
Issued capital - 868,045
Equity-settled employee
benefits reserve - 27,428
Currency translation
adjustment (23,481) -
Deficit 21,747 (46,385)
Capital and reserves attributable
to equity shareholders of
the Company (1,734) 849,088
Non-controlling interest (269) 23,133
(2,003) 872,221
$ 1,332 $ 1,064,408
The Canadian GAAP income statement and statement of comprehensive income
for the twelve months ended December 31, 2008 have been reconciled to
IFRS as follows:
12 months ended December 31, 2008
Canadian
Note GAAP
Revenue (h) $ 116,198
Cost of operations
Production costs 79,961
Depletion and de preciation (i) 14,599
94,560
Mine operating earnings 21,638
Expenses
Impairment (n) -
General and administrative (f) 19,411
Share-based payments (j) 4,290
23,701
Operating loss (2,063)
Other income (expense)
Interest income (h) 7,081
Finance costs (k) (3,551)
Foreign exchange gain (2,155)
Loss before income taxes (688)
Deferred income tax recovery (n) 13,623
Net profit (loss) for the year $ 12,935
Attributable to
Non-controlling interest $ (3,429)
Equity shareholders of the Company $ 16, 364
Net profit (loss) for the year $ 12,935
Effect of
transition to IFRS
IFRS
Revenue $ (1,517) $ 114,681
Cost of operations
Production costs - 79,961
Depletion and de preciation 63 14,662
63 94,623
Mine operating earnings (1,580) 20,058
Expenses
Impairment 297,285 297,285
General and administrative 30 19,441
Share-based payments 335 4,625
297,650 321,351
Operating loss (299,230) (301,293)
Other income (expense)
Interest income 1,863 8,944
Finance costs (174) (3 ,725)
Foreign exchange gain - (2 ,155)
Loss before income taxes (297,541) (298,229)
Deferred income tax recovery 71,490 8 5 ,1 1 3
Net profit (loss) for the year $ (226,051) $ (213,116)
Attributable to
Non-controlling interest $ (306) $ (3 ,735)
Equity shareholders of the Company $ (225,745 ) $ (209 ,381 )
Net profit (loss) for the year $ (226,051) $ (213,116)
12 months ended December 31 , 2008
Note Canadian
GAAP
Net profit (loss) for the year $ 12,935
Other comprehensive loss - currency
translation adjustment (m) (197,052)
Exchange differences on translating
non-controlling interest (o) -
Comprehensive loss $ (184,117)
Attributable to
Non-controlling interest (o) $ (3,429)
Equity shareholders of the Company $ (180,688)
Effect of
transition to IFRS IFRS
Net profit (loss) for the year $ (226,05 1) $ (213 ,116)
Other comprehensive loss - currency
translation adjustment 27,4 75 (169 ,577)
Exchange differences on translating
non-controlling interest (7,3 96) (7 ,396)
Comprehensive loss $ (205,97 2) $ (390 ,089)
Attributable to
Non-controlling interest $ (7,7 02) $ (1 1,131)
Equity shareholders of the Company $ (198,27 0) $ (378 ,958)
The Canadian GAAP statement of financial position at December 31, 2008
has been reconciled to IFRS as follows:
Note Canadian
GAAP
Assets
Current assets
Cash and cash equivalents $ 25,806
Short-term investments 35,257
Trade receivables (h) 9,556
Inventories 3,881
Deferred tax asset (l) 1,178
75,678
Property, plant and equipment (i)(k)(n) 783,039
Re fining contract 12,493
Other assets 1,017
$ 872,227
Liabilities
Current liabilities
Accounts payable and accrued
$ 36,729
liabilities
Current portion of finance leases 649
Current loans (o) 2,972
40,350
Non-current liabilities
Provision for environmental
(k) 2,846
rehabilitation
Finance leases (o) 3,261
Deferred tax liabilities (l)(n) 117,234
1 63,691
Equity
Issued capital 890,049
Equity-settled employee benefits
reserve (j) 31,491
Currency translation
adjustment (m) (173,571 )
Deficit (51,768)
Capital and reserves attributable
to equity shareholders of the
Company 696,201
Non-controlling interest 12,335
708,536
$ 872,227
December 31, 2008
Effect of
transition to
IFRS IFRS
Assets
Current assets
Cash and cash equivalents $ - $ 25,806
Short-term investments - 35,257
Trade receivables (125) 9,431
Inventories - 3,881
Deferred tax asset (1,178) -
(1,303) 74,375
Property, plant and equipment (277,566) 505,473
Re fining contract - 12,493
Other assets - 1,017
$ (278,869) $ 593,358
Liabilities
Current liabilities
Accounts payable and accrued
$ - $ 36,729
liabilities
Current portion of finance leases - 649
Current loans 247 3,219
247 40,597
Non-current liabilities
Provision for environmental
2,752 5,598
rehabilitation
Finance leases (247) 3,014
Deferred tax liabilities (81,620) 35,614
(78,868) 84,823
Equity
Issued capital - 890,049
Equity-settled employee benefits
reserve 336 31,827
Currency translation
adjustment 3,994 (169,577)
Deficit (203 ,998) (255,766)
Capital and reserves attributable
to equity shareholders of the
Company (199,668) 496,533
Non-controlling interest (333) 12,002
(200,001) 508,535
$ (278,869) $ 593,358
The reconciliation of the statement of cash flows for the twelve months
ended December 31, 2008:
December 31, 2008 (12 months)
Note Canadian
GAAP
Operating activities
Net profit (loss) for the year $ (688)
Adjustments to net profit (loss) for
non-cash items
Depreciation (i) 14,877
Re fining contract amortization 1,353
Impairment (n) -
Share-based payments (j) 4,290
Interest income (o) -
Finance costs (o) 2,845
Foreign exchange loss (o) 5,731
Net changes in non-cash working
capital items
Trade receivables (h) 10,765
Inventories 1 ,3 9 1
Accounts payable and accrued
liabilities 12,962
Cash generated from operations 53,526
Adjustments to net profit for cash items
Realized foreign exchange gain (o) -
Interest income received (o) -
Finance costs paid (o) -
Net operating cash flows 53,526
Investing activities
Acquisitions, net of cash acquired (39,589)
Maturity of short-term investments (o) 119,318
Purchase of other assets (o) -
Property, plant and equipment
expenditures (143,373)
Net investing cash flows (63,644)
Financing activities
Common shares issued for cash, net of
share issue costs 22,004
Repayment of short-term debt (o) (892)
Other long-term liabilities (o) (3,411)
Net financing cash flows 17,701
Effect of exchange rate changes on cash
and cash equivalents (595)
Increase in cash and cash equivalents 6,988
Cash and cash equivalents, beginning
of year 18,818
Cash and cash equivalents, end
of year $ 25,806
Effect of IFRS
transition
to IFRS
Operating activities
Net profit (loss) for the year $ (297,541) $ (298,229)
Adjustments to net profit (loss) for
non-cash items
Depreciation (215) 14,662
Re fining contract amortization - 1,353
Impairment 297,285 297,285
Share-based payments 335 4,625
Interest income (8 ,944) (8,944)
Finance costs 880 3,725
Foreign exchange loss (3,576) 2,155
Net changes in non-cash working
capital items
Trade receivables 3,266 14,031
Inventories - 1,391
Accounts payable and accrued
liabilities - 12,962
Cash generated from operations (8,510) 45,016
Adjustments to net profit for cash items
Realized foreign exchange gain (1,157) (1,157)
Interest income received 10,028 10,028
Finance costs paid (375) (375)
Net operating cash flows (14) 53,512
Investing activities
Acquisitions, net of cash acquired - (39,589)
Maturity of short-term investments 42 119,360
Purchase of other assets (42) (42)
Property, plant and equipment
expenditures - (143,373)
Net investing cash flows - (63,644)
Financing activities
Common shares issued for cash, net of
share issue costs - 22,004
Repayment of short-term debt 892 -
Other long-term liabilities (898) (4,309)
Net financing cash flows (6) 17,695
Effect of exchange rate changes on cash
and cash equivalents 20 (575
Increase in cash and cash equivalents - 6,988
Cash and cash equivalents, beginning
of year - 18,818
Cash and cash equivalents, end
of year $ - $ 25,806
26. Events after the reporting period
From January 1, 2010 to March 24, 2010:
(a) The Company granted 2,231,000 options with an exercise price of
Cdn$1.30 per share expiring on January 18, 2015.
(b) 444,831 stock options were exercised, of which 83,333 were
exercised by way of cash payment at a weighted average exercise
price of Cdn$0.32 for proceeds of Cdn$27, and 361,498 were
exercised by way of stock appreciation rights at a weighted
average exercise price of Cdn$0.35.
Date: 31/03/2010 16:42:01 Produced by the JSE SENS Department.
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