| Fri 28 May 2010, 7:30 | | WGR - Wits Gold - Abridged results for the year ended 28 February 2010 |
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WGR
WGR
WGR - Wits Gold - Abridged results for the year ended 28 February 2010,
extracted from the audited financial statements
Witwatersrand Consolidated Gold Resources Limited
("Wits Gold" or "the Company")
(Registration Number 2002/031365/06)
JSE Share Code: WGR
ISIN: ZAE000079703
TSX Share Code: WGR
CUSIP Number: S98297104
Abridged results for the year ended 28 February 2010, extracted from the
audited financial statements
All figures quoted in South African Rands unless otherwise stated
Statement of financial position as at 28 February 2010
2010 2009
R R
Assets
Non-current assets 107 170 733 86 751 487
Property and equipment 5 279 646 5 592 553
Intangible exploration and evaluation assets 101 891 087 81 042 530
Deferred taxation - 116 404
Current assets 86 713 462 118 571 960
Other receivables 1 034 134 1 508 824
Cash and cash equivalents 85 679 328 117 063 136
Total assets 193 884 195 205 323 447
Equity and liabilities
Capital and reserves 187 045 642 192 999 070
Ordinary share capital 278 909 278 909
Share premium 185 971 589 185 971 589
Equity-settled share-based payment reserve 19 604 280 17 849 857
Revaluation reserve 1 253 981 1 187 582
Accumulated loss (20 063 117) (12 288 867)
Current liabilities 6 838 553 12 324 377
Trade and other payables 4 447 046 6 740 930
Taxation payable 1 991 507 5 183 447
Provisions 400 000 400 000
Total equity and liabilities 193 884 195 205 323 447
Statement of comprehensive income for the year ended 28 February 2010
2010 2009
R R
Revenue - -
Other income 4 666 264 057
Administrative expenses (14 759 179) (18 232 838)
Results from operating activities (14 754 513) (17 968 781)
Net finance income 7 078 523 15 376 822
Finance income 7 525 222 15 411 414
Finance expense (446 699) (34 592)
Loss before income tax (7 675 990) (2 591 959)
Income tax expense (98 260) (1 031 979)
Loss from operations attributable to owners (7 774 250) (3 623 938)
Other comprehensive income/(loss) net of
income tax 66 399 (3 204 718)
Increase/(decrease) in revaluation of property 77 208 (3 753 170)
Deferred tax on revaluation adjustment (10 809) 548 452
Total comprehensive loss attributable to
owners of the Company (7 707 851) (6 828 656)
Basic loss per share (cents) (28.05) (13.14)
Diluted loss per share (cents) (45.02) (20.26)
Supplementary information:
Reconciliation between loss and headline loss
Loss for the year after taxation (7 774 250) (3 623 938)
Profit on disposal of non current assets - (14 585)
Headline loss (7 774 250) (3 638 523)
Number of shares in issue 27 890 916 27 890 916
Weighted average number of shares in issue 27 715 893 27 581 457
Diluted weighted average number of shares in
issue 27 840 893 27 706 457
Performance per ordinary share
Basic headline loss per share (cents) (28.05) (13.19)
Diluted headline loss per share (cents) (45.02) (20.32)
Net asset value per share (cents) 670.63 691.98
Net tangible asset value per share (cents) 305.31 401.41
Statement of changes in equity for the year ended 28 February 2010
Equity-settled
share-based
Ordinary Share payment
share capital premium reserve
R R R
Balance at 29 February 2008 272 909 179 582 518 14 998 351
Total comprehensive
income/(loss) for the year
Loss for the year - - -
Total other comprehensive
income/(loss) - 25 071 -
Net reversal of qualifying
costs of share issue - 25 071 -
Reduction on revaluation
of land and buildings - - -
Deferred taxation on revaluation - - -
Total comprehensive
income/(loss) for the year - 25 071 -
Transactions with owners,
recorded directly in equity 6 000 6 364 000 2 851 506
Issue of shares 6000 6 364 000 -
Equity-settled share-based payment - - 2 851 506
Balance at 28 February 2009 278 909 185 971 589 17 849 857
Total comprehensive
income/(loss) for the year
Loss for the year - - -
Total other comprehensive
income/(loss) - - -
Increase on revaluation of
land and buildings - - -
Deferred taxation on revaluation - - -
Total comprehensive
income/(loss) for the year - - -
Transactions with owners, recorded
directly in equity - - 1 754 423
Equity-settled share-based payment - - 1 754 423
Balance at 28 February 2010 278 909 185 971 589 19 604 280
Revalua- Accumulated Total capital
tion reserve loss and reserves
R R
Balance at 29 February 2008 4 392 300 (8 664 929) 190 581 149
Total comprehensive
income/(loss) for the year
Loss for the year - (3 623 938) (3 623 938)
Total other comprehensive
income/(loss) (3 204 718) - (3 179 647)
Net reversal of qualifying
costs of share issue - - 25 071
Reduction on revaluation of
land and buildings (3 753 170) - (3 753 170)
Deferred taxation on
revaluation 548 452 - 548 452
Total comprehensive
income/(loss) for
the year (3 204 718) (3 623 938) (6 803 585)
Transactions with owners,
recorded directly in equity - - 9 221 506
Issue of shares - - 6 370 000
Equity-settled share-based
payment - - 2 851 506
Balance at 28 February 2009 1 187 582 (12 288 867) 192 999 070
Total comprehensive
income/(loss) for
the year
Loss for the year - (7 774 250) (7 774 250)
Total other comprehensive
income/(loss) 66 399 - 66 399
Increase on revaluation of
land and buildings 77 208 - 77 208
Deferred taxation on
revaluation (10 809) - (10 809)
Total comprehensive
income/(loss) for the year 66 399 (7 774 250) (7 707 851)
Transactions with owners,
recorded directly in equity - - 1 754 423
Equity-settled share-based
payment - - 1 754 423
Balance at 28 February 2010 1 253 981 (20 063 117) 187 045 642
Statement of cash flows for the year ended 28 February 2010
2010 2009
R R
Cash flows from operating activities
Cash utilised in operating activities (14 421 318) (15 345 709)
Finance income received 7 525 222 15 411 414
Interest paid (446 699) (34 592)
Taxation paid (3 184 605) (4 322)
Net cash (utilised)/generated by operating
activities (10 527 400) 26 791
Cash flows from investing activities
Additions to property and equipment (7 851) (853 622)
Additions to intangible exploration and
evaluation assets (20 848 557) (39 055 442)
Proceeds on disposal of property and equipment - 183 268
Actual cash flows from financial asset
realised - 14 299 000
Net cash utilised in investing activities (20 856 408) (25 426 796)
Cash flows from financing activities
Proceeds from issue of shares - 6 370 000
Net share issue cost reversal - 25 071
Net cash generated by financing activities - 6 395 071
Decrease in cash and cash equivalents (31 383 808) (19 004 934)
Cash and cash equivalents at beginning of the
year 117 063 136 136 068 070
Cash and cash equivalents at end of the year 85 679 328 117 063 136
The exchange rates, based on the Bank of Canada mid-market noon rate, in effect
as of 28 February 2010, 28 February 2009 and 31 August 2009 were as follows:
28 February 2010 CAD $1.00 = R7.70
28 February 2009 CAD $1.00 = R7.95
31 August 2009 CAD $1.00 = R7.10
Nature of business
Witwatersrand Consolidated Gold Resources Limited is a company domiciled in the
Republic of South Africa. The Company`s shares are publicly traded on the JSE
Limited and on the Toronto Stock Exchanges. The Company carries on the business
of acquiring, preserving, evaluating, trading and developing Prospecting Rights
for exploration and investment purposes.
The Company is involved in the mineral exploration industry and it has not, and
does not in the near future, expect to generate any operating income. Mineral
exploration is highly speculative due to a number of significant risks,
including the possible failure to discover mineral deposits that are sufficient
in quantity and quality to justify the completion of feasibility studies.
Significant additional work will be required in order to determine if any
economic deposits occur on any of the Company`s properties.
Operational review
Exploration activities
Wits Gold is focused on evaluating palaeoplacer gold-uranium mineralisation in
the Witwatersrand Basin. The Company has maintained the good standing of its
assets by conducting exploration drilling in all three regions where it holds
Prospecting Rights, namely the southern Free State, Potchefstroom and
Klerksdorp goldfields. A total of fourteen Prospecting Rights have been granted
to the Company by the Department of Mineral Resources (DMR), all of which are
currently valid. Total exploration expenditure during the period under review
has been R20.8 million (US$2.7 million). As an integral part of the drilling
programme, environmental rehabilitation guarantees amounting to R245 000 have
been lodged with the DMR. There are no legal proceedings involving the Company
that will impact on its ability to continue exploration activities. Wits Gold
uses Anglo Research (AR), an ISO17025 accredited laboratory (Accreditation No.
T0051) to undertake independent fire assay of samples for gold determination
and XRF for U308 analysis. The Company routinely undertakes a QA/QC procedure
by inserting standards and blank samples to complement AR`s internal QA/QC
policy.
Previously, considerable exploration drilling had been completed in the
Prospecting Rights currently held by the Company. This included 213 surface
boreholes which produced 553 794 metres of diamond drill core, with 3 002 reef
intersections. This core, as well as the related assay results acquired by the
Company, have been used in the relevant Resource Estimates. No SAMREC/NI43-101
compliant resources were estimated by previous explorers of these areas.
In the Klerksdorp and Potchefstroom goldfields, the drill density is
approximately 1 000m x 1 000m. In the southern Free State, drilling is
considerably more dense where it has been increased to about 500m x 500m,
comparable to the spacing used to define the adjacent Beatrix and Joel Mines.
The Company is currently focusing on two projects in the southern Free State.
At Bloemhoek, a pre-feasibility study (PFS) has been completed whilst in the
adjacent De Bron area, Wits Gold has recently concluded a scoping study.
Bloemhoek pre-feasibility study
On 20 October 2009, the Company announced a positive result following a
pre-feasibility study (PFS) on the Bloemhoek Project adjacent to Beatrix Gold
Mine in the southern Free State. This PFS, completed by Turnberry Projects
(Pty) Limited, is detailed in a National Instrument 43-101 technical report
filed on www.sedar.com. The study evaluated the financial and technical
implications of a number of alternative shaft positions and mine sizes to
exploit the Beatrix and Kalkoenkrans Reefs, containing a combined Indicated
Mineral Resource of 39.9Mt at a grade of 7.2g/t Au (9.2Moz). Inferred Resources
were excluded for the purpose of this study.
Economically, the most attractive option to mine this orebody, occurring at
depths of between 1 300m and 2 400m below surface, involves the sinking of a
twin shaft system to 1 951m with the deeper areas accessed by declines. A
three-dimensional mine plan was designed, comprising a system of footwall
haulages, cross-cuts to reef followed by conventional breast stoping. This
narrow reef layout is consistent with established practices utilised by gold
mines of similar depths in the Witwatersrand Basin. The life of mine capital
expenditure to develop this mine amounts to R7 664 million (US$958 million),
with peak funding of R3 528 million (US$441 million). Reef is scheduled to be
intersected in development four years after commencing shaft sinking. Average
production will be 224 000oz/year over the 23 years life of mine at an average
cash cost of US$406/oz. The viability of mining as indicated by this PFS,
together with the application of appropriate modifying factors, has resulted in
the definition of an estimated Probable Mineral Reserve of 31.6Mt at a plant
head grade of 5.3g/t Au containing 5.4Moz of gold. The conversion process of
Indicated Resource to Probable Reserve was calculated as follows:
Mt Au (g/t) Au Tonnes Au Moz
Indicated Mineral Resource 39.9 7.2 286.2 9.2
Less geological discounts
Mineral Resource 39.2 7.2 282.5 9.1
Less nodesign blocks*
Mineable Resource 28.1 7.5 212.2 6.8
Less design and mining losses
Mineable Resource 24.5 7.7 187.5 6.0
Diluted Mineable Resource 31.6 5.9 187.5 6.0
Less Mine Call losses
Probable Mineral Reserve 31.6 5.3 168.8 5.4
* Small, remote or lowgrade fault blocks not considered for mining.
Following the PFS, a preliminary assessment of the Bloemhoek area at scoping
level suggested that an upgrade of selected Inferred Mineral Resources to
Indicated Mineral Resources could increase the Probable Mineral Reserve to
32.2Mt at an average plant head grade of 5.7g/t, containing 5.9Moz. At a gold
price of US$975/oz, an exchange rate of R8.00/US$1, and a State royalty of 1.5%
on revenue, this would have the effect of increasing the Internal Rate of
Return (IRR) to 22.8% and the Net Present Value (NPV) (5%) to R7 753 million
(US$ 969 million).
De Bron scoping study
Following the definition of an Indicated Mineral Resource at De Bron, the
Company commissioned Turnberry Projects (Pty) Limited to conduct a preliminary
assessment or scoping study to investigate the establishment of a shallow (500m
to 1 200m) multi-reef mining operation to the east of the De Bron Fault. This
study (published on 2 May 2010) used a block model based on a
probability-weighted simulated resource that was not materially different to
that previously disclosed in the National Instrument 43-101 technical report
titled "Witwatersrand Consolidated Gold Resources Limited: Mineral Properties
in the SOFS Goldfield, South Africa", prepared by George Gilchrist and Shaun
Hackett of Snowden Mining Industry Consultants dated May, 2009. The study was
based on Indicated Resources alone and excludes the Inferred Resources for De
Bron.
The results of the De Bron scoping study are contained in a National Instrument
43-101 report dated May 2010 that is available on www.sedar.com. This report
considers two alternative mining scenarios. One is a medium sized 62.5kt/month
operation with a conventional system of footwall haulages and box holes linked
to raises. This design is based on a selected Indicated Mineral Resource of
8.7Mt at 6.4g/t Au (1.8Moz) using a 4g/t cutoff that is planned to exploit the
higher grade zones. This mine will produce its first reef 35 months after
inception and achieve peak production of 118 000oz annually at a yield of
4.4g/t Au. During a 16 year life, the mine will produce 1.4Moz Au. The total
capital required to develop the mine is estimated at R2 850 million (US$356
million), with peak funding of R1 994 million (US$249 million). The projected
operating costs for the life of mine will be R495/tonne milled and include the
recently announced Eskom tariff increases. Using a gold price of US$975/oz and
an exchange rate of R8/US$1 (R250 000/kg), a discounted cash flow model
produces an IRR of 12.8% and an NPV at a 5% discount rate of R1 192 million
(US$149 million).
As an alternative scenario, a smaller high grade operation was modeled with a
throughput of 30kt/month. This mine was designed to exploit only the highest
grade mineralisation in the northern sector of De Bron that contains an
Indicated Mineral Resource of 4.6Mt at an grade of 7.0g/t Au (1.0Moz), using a
4g/t Au cutoff. It is envisaged that this mine could produce its first gold 27
months after initiating shaft sinking using reef drives from the shaft
position. Average peak production will be 53 500oz annually at a yield of
4.8g/t Au. Total gold production during the 16 year life is anticipated to be
0.8Moz, whilst the capital required is estimated at R1 793 million (US$224
million), with peak funding of R1 147 million (US$143 million). The projected
operating costs for the life of mine will be R524/tonne milled, including the
Eskom tariff increases. Using a gold price of US$975/oz and an exchange rate of
R8/US$1 (R250 000/kg), a discounted cash flow model produces an IRR of 11.1%
and an NPV (5%) of R581 million (US$73 million).
Sensitivity analyses on both the 62.5kt/month and the 30kt/month options
illustrate strong gearing to changes in gold grade and price. These suggest
that a 20% increase in either the gold grade or price will have the effect of
increasing the IRR to 19.4% and 17.6% respectively. Under these circumstances,
additional drilling has been recommended, particularly in the high grade area
situated in the northern part of De Bron.
Southern Free State goldfield
The results of the PFS and related scoping study at Bloemhoek illustrated the
potential benefit of converting Inferred Mineral Resources to Indicated Mineral
Resources. Accordingly, borehole DWN28 was started in December 2009, however
the mother hole intersected a fault. Consequently, deflection drilling is
currently in progress in an attempt to intersect reef in the footwall block.
In the Beisa South area drilling has commenced to target the southern extension
of the Beisa Reef that was previously exploited at the Beisa uranium mine.
Historic borehole ST20 was successfully re-opened and deepened to intersect the
Beisa Reef. This yielded only a moderate result with 1.19g/t Au and 0.399kg/t
U3O8 over 67.9cm. Deflection drilling is currently underway after which the rig
will move to the Beisa North area.
During late 2009 Wits Gold undertook reconnaissance drilling in its newly
granted Eldorado Prospecting Right. Gold values reported from an historic
borehole, together with evidence from the regional magnetic and gravity
surveys, suggested the possibility of prospective Central Rand Group rocks in
this area to the west of the Beatrix 4 Shaft. Borehole WMF1 drilled to a final
depth of 754.8m, but failed to intersect Central Rand Reefs.
Potchefstroom goldfield
Following the intersection of low grade mineralisation in the Carbon Leader
during drilling to the immediate west of the Carletonville goldfield, the
Company has shifted its attention further south towards the Boskop project. An
in-house review of the geological structure of this area has defined a
significant block where the Carbon Leader and Middelvlei Reefs may be preserved
at depths of 1 600 - 2 500m below surface. A drilling programme to test this
model is planned for late 2010.
In the Deelkraal South project area, a two-dimensional seismic survey is
planned for July 2010. The objective is to identify the depth and structure of
preserved Ventersdorp Contact Reef to the immediate south of Harmony`s
Elandskraal Mine.
Klerksdorp goldfield
Following a four month suspension of drilling due to the limitations of the
previous drill rods, activities at borehole WDS1 in the Kromdraai project area
were resumed in December 2009. The target is high-grade Vaal Reef at a depth of
3 800 metres below surface.
Mineral Resources and Reserves
All available exploration results were used to estimate these resources
involving the application of true reef widths. Gold and uranium resources were
separately estimated without the use of metal equivalent calculations. These
resources are both National Instrument 43-101 and SAMREC compliant and have
been estimated using a cutoff gold value of 300cm.g/t for narrow reefs and
600cm.g/t for the wider Cobble Reef of the Bird Formation, to a maximum depth
of 5 000 metres below surface. The gold estimates have been based on either
global simple kriging (Potchefstroom and Klerksdorp) or ordinary kriging
(southern Free State). The only area where kriging has not been employed is at
Beisa North, where an inverse distance approach was applied to estimate
resources.
The Company`s declared Mineral Resources are estimated by qualified independent
geologists or Competent Persons. These Resource Estimates are dependent on
geological interpretation and statistical inferences drawn from drilling and
sampling that may prove to be unreliable. The Inferred or Indicated Resources
outlined in the Company`s properties have been calculated from widely-spaced
borehole data. No assurance can be given that future exploration will be
successful in the improvement of the confidence levels or that any particular
level of recovery of minerals will in fact be realised. It is uncertain whether
the identified Mineral Resources will ever qualify as a viable orebody that can
be legally or economically exploited. In addition, the grade and tonnages of
any orebody that is ultimately mined may differ from the Mineral Resources
currently estimated and such differences could be material. During the past
financial year the Company has commissioned a number of independent assessments
of its Mineral Resources. These include the following:
Beisa North. A review of the available exploration data was undertaken by
ExplorMine Consulting. (Technical Report on the Resource Estimate for the Beisa
North Project Area. ExplorMine, 30 June 2009). The principal target in this
area is the Beisa Reef, a carbon-rich conglomerate that was previously
exploited on the adjacent Beisa Mine by Gencor, for uranium with by-product
gold. In the Beisa North area, an Inferred Mineral Resource has been estimated
to a depth of 2 500 metres below surface. This comprises 27.9Mt at an in situ
grade of 0.78kg/t U3O8 (47.84Mlbs), using a cut-off of 50cm.kg/t with an
additional 1.72g/t Au (1.55Moz).
De Bron. Following the completion of the Company`s drilling programme in this
area, Snowden Mining Industry Consultants (Snowden) reviewed the contained gold
resources above a 300cm.g/t cutoff. This estimate, reported in a National
Instrument 43-101 technical report dated May 2009, outlined an Indicated
Mineral Resource on the Beatrix, Kalkoenkrans, B and Leader Reefs of 23.2Mt at
an in situ grade of 5.2g/t Au (3.85Moz). This represents a 41% increase in the
Indicated Mineral Resource, whilst the Inferred Mineral Resource decreased by
27% to 9.4Mt at an in situ grade of 5.3g/t Au (1.58Moz).
Potchefstroom goldfield. During 2009, the Company was granted uranium Variation
Rights over 44 658ha in the Potchefstroom goldfield, in addition to the gold
rights already held. Snowden was subsequently commissioned to conduct an update
of the uranium resources within this area, since uranium has frequently been a
by-product of gold mining in the adjacent Carletonville goldfield. The uranium
resource was therefore only reported where gold exceeds the 300cm.g/t and
600cm.g/t cut-offs as applied for narrow and wider reefs respectively, and to a
maximum depth of 5 000m below surface. Snowden, in a National Instrument 43-101
document dated 29 October 2009, estimated an Inferred Mineral Resource of
250.0Mt at an in situ grade of 0.3kg/t U308 containing 163.6Mlb uranium.
(Technical Report on Mineral Properties in the Potchefstroom Goldfield.
Snowden, October 2009).
The technical reports for these studies are filed on the website www.sedar.com
and contain Mineral Resource estimates that are compliant with the National
Instrument 43-101 and SAMREC reporting codes. A summary of the Company`s
Mineral Reserves and Resources is tabulated below. The Indicated Mineral
Resources are inclusive of the Company`s Mineral Reserves.
During the review period, the Indicated Resources of gold have increased from
19.5Moz to 19.9Moz due to a revision of the De Bron project (SOFS). Inferred
Resources of gold have also increased slightly from 130.4Moz to 131.8Moz due to
the addition of the resources at Beisa North (SOFS). There has also been a
significant addition of Inferred Resources of U308 from 54.3Mlbs to 268.1Mlbs
due to the estimation of resources at Beisa North, as well as the granting of
Variation Rights in the Potchefstroom area. No metal equivalent calculations
have been used.
Reserves (National Instrument 43-101 and SAMREC compliant)
Probable (gold)
Project Tonnes Grade (g/t) Au
(millions) Au (Moz)
Bloemhoek 1 31.6 5.3 5.4
Proved (gold)
Project Tonnes Grade (g/t) Au
(millions) Au (Moz)
Bloemhoek 1 - - -
Resources (National Instrument 43-101 and SAMREC compliant)
Indicated (gold)
Goldfield
Tonnes Grade (g/t) Au
(millions) Au (Moz)
SOFS2 103.3 6.0 19.9
Potchefstroom 3 - - -
Klerksdorp 4 - - -
Total 103.3 6.0 19.9
Inferred (gold)
Goldfield
Tonnes Grade (g/t) Au
(millions) Au (Moz)
SOFS2 111.6 4.6 16.5
Potchefstroom 3 333.6 7.1 75.8
Klerksdorp 4 85.1 14.5 39.5
Total 530.3 7.8 131.8
Inferred (uranium)
Goldfield
Tonnes Grade U308
(millions) (kg/t) Au (Mlb)
SOFS2 211.1 0.225 104.5
Potchefstroom 3 250.0 0.300 163.6
Klerksdorp 4 - - -
Total 461.1 0.265 268.1
1 Technical Report on the Pre-feasibility Study for the Bloemhoek Project.
Turnberry, 20 October 2009.
2 Mineral Properties in the SOFS Goldfield. Snowden, May 2009 and Technical
Report on the Resource Estimate for the Beisa North Project Area. ExplorMine,
June 2009.
3 Mineral Properties in the Potchefstroom Goldfield. Snowden, 20 October 2009.
4 Mineral Properties in the Southern Free State, Potchefstroom and Klerksdorp
Goldfields, South Africa. Snowden, October 2009.
Mr Dirk Muntingh, based at 70 Fox Street, the Company`s Exploration Manager and
Competent Person, is responsible for the technical material in this report. Mr
Muntingh (MSc Geology) is a registered Professional Natural Scientist
(Pr.Sci.Nat.) with the South African Council for Natural Scientific
Professionals (SACNASP) and has 18 years of experience in gold exploration.
The content of this release has been compiled by Mr Muntingh and he has issued
a written statement that the information disclosed above is SAMREC compliant.
Financial review
Accounting policies
The financial statements have been prepared in accordance with International
Financial Reporting Standards (IFRS),and its interpretations adopted by the
International Accounting Standards Board (IASB), and in the manner required by
the South African Companies Act. The accounting policies are consistent with
those applied in the previous annual financial statements.
Results from operating activities
The loss from operating activities for the year under review reduced by R3.2
million compared to the prior year. This reduction results mainly from
reductions in respect of consulting fees (R1.2 million), investor relations
expenditure (R0.9 million) and employment related expenditure (R1.5 million).
Loss before income tax
The net finance income has reduced by R8.3 million compared to the previous
year, due mainly to the natural declining balances of funds invested, as well
as the reduction of actual interest rates applicable to those investments. The
combination of the above and the results from operating activities has caused
the loss before taxation to increase by R5.1 million.
Non-current assets
During the year, the Company incurred direct exploration expenditure in the
amount of R20.8 million (2009: R39.1 million) which has been capitalised to
intangible exploration and evaluation assets.
Current assets
The Company`s cash and cash equivalents reduced by R31.4 million (2009: R19.0
million) which reflects the normal operational and exploration outflows offset
by interest received.
Capital raising
During the year under review, the Company did not raise any capital, whereas
during the previous year R20.7 million was raised by way of private placements,
which included R14.3 million relating to the excess proceeds from options
granted to advisors.
Current liabilities
The Company`s rate of physical exploration drilling remained fairly static over
the year, however at the year end the trade and other payables had decreased by
R2.3 million. Another main contributor to the decrease in current liabilities
to R6.8 million was the payment of R3.2 million against the taxation provision.
Commitments
The Company has committed to spend an additional amount of approximately R0.7
million (2009: R7 million) on professional consultants and R 0.2 million (2009:
R0.4 million) on an operating lease during the next five years. Furthermore the
Company has also committed to spend R27.0 million (2009: R26.1 million) on
exploration activities during the next five years. All of these commitments
will be funded out of existing cash resources.
Litigation
There are no legal or arbitration proceedings in which the Company is or has
been engaged, which may have or have had, a material effect on the Company`s
financial position.
Dividends
No dividends were declared or paid by the Company during the year under review
(2009: R Nil).
Going concern
Due to the inherent risk in the nature of exploration activities, there may be
uncertainty regarding the recoverability of the Company`s exploration
expenditure. To meet its ongoing obligations and maintain its operations, the
Company will periodically seek to raise additional equity funding which will be
premised on the exploration results and the contingent further exploration
plans. This will be in the form of the issue of additional Company shares, both
to local and international markets.
The Company`s objectives, details of its financial instruments and its exposure
to market and liquidity risk are detailed in the financial statements. Based on
the Company`s financial resources, the directors believe that the Company is
well positioned to manage its business risks successfully despite the current
uncertain economic climate.
After making enquiries, the directors have reasonable expectation that the
Company has adequate resources to continue in operational existence for the
foreseeable future, and that there are no material uncertainties that lead to
significant doubt upon the Company`s ability to continue as a going concern.
Accordingly, the directors continue to adopt the going concern basis in
preparing the annual report and financial statements.
Share capital authorised and issued
There was no change in the authorised share capital of the Company during the
year ended 28 February 2010 (2009: no change). The Company did not issue any
new shares during the year to 28 February 2010 (2009: 600 000).
American Depository Shares
At 28 February 2010, 147 675 (2009: 103 831) shares were held by The Bank of
New York Mellon as Depository for the Company`s American Depository Shares (ADS)
programme. Each ADS is equal to one ordinary share.
Auditor`s report
These abridged results have been extracted from the detailed audited financial
statements for the year ended 28 February 2010. The unmodified KPMG Inc. audit
report on the detailed financial statements is available for inspection at the
Company`s registered office.
Annual general meeting
The annual general meeting of the Company`s shareholders will take place at
14:00 hours on 10 September 2010, at the Wanderers Club, 21 North Road, Illovo
Johannesburg.
Forward-Looking Information
Certain statements in this release may constitute forward-looking information
within the meaning of securities laws. In some cases, forward-looking
information can be identified by use of terms such as "may", "will", "should",
"expect", "believe", "plan", "scheduled", "intend", "estimate", "forecast",
"predict", "potential", "continue", "anticipate" or other similar expressions
concerning matters that are not historical facts. Forward-looking information
may relate to management`s future outlook and anticipated events or results,
and may include statements or information regarding the future plans or
prospects of the Company. Without limitation, statements about future drilling
plans, exploration results, the ability of the Company to manage its business
risks, the sufficiency of capital to cover exploration and operating expenses
and other related statements are forward-looking statements.
Forward-looking information involves known and unknown risks, uncertainties and
other important factors that could cause the actual results, performance or
achievements of the Company to be materially different from the future results,
performance or achievements expressed or implied by such forward-looking
information. Such risks, uncertainties and other important factors include
among others: economic, business and political conditions in South Africa;
decreases in the market price of gold; hazards associated with underground and
surface gold mining; the ability to attract and retain qualified personnel;
labour disruptions; changes in laws and Government regulations, particularly
environmental regulations and Mineral Rights legislation including risks
relating to the acquisition of the necessary licences and permits;
changes in exchange rates; currency devaluations and inflation and other
macro-economic factors; risks of changes in capital and operating costs,
financing, capitalisation and liquidity risks, including the risk that the
financing required to fund all currently planned exploration and related
activities may not be available on satisfactory terms, or at all; the ability
to maximise the value of any economic resources. These forward-looking
statements speak only as of the date of this release.
You should not place undue importance on forward-looking information and should
not rely upon this information as of any other date. The Company undertakes no
obligation to update publicly or release any revisions to these forward-looking
statements to reflect events or circumstances after the date of this report or
to reflect the occurrence of unanticipated events except where required by
applicable laws.
For and on behalf of the Board
MB Watchorn DM Urquhart
Chief executive officer Chief financial officer
28 May 2010
Sponsor
PricewaterhouseCoopers Corporate Finance (Pty) Ltd
Date: 28/05/2010 07:30:01 Produced by the JSE SENS Department.
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