| Tue 29 Jun 2010, 8:01 | | SIM - Simmer and Jack Mines - Audited abridged provisional consolidated results |
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SIM
SIIF
SIM - Simmer and Jack Mines, - Audited abridged provisional consolidated results
for the year ended 31 March 2010
Simmer and Jack Mines, Limited
Incorporated in the Republic of South Africa
(Registration no 1924/007778/06)
Share code SIM ISIN ZAE000006722
("Simmers" or "the Company" or "the Group")
SIMMER & JACK MINES, LIMITED - AUDITED ABRIDGED PROVISIONAL CONSOLIDATED RESULTS
FOR THE YEAR ENDED 31 MARCH 2010
SALIENT FEATURES
- Headline loss per share increases from 38.7 cents to 40.9 cents
- Change in accounting treatment of First Uranium from a subsidiary in FY2009 to
an associate in FY2010
- Impairment charge of R267.4 million primarily as a consequence of TGME having
been placed on care and maintenance in Q4 FY2010
- Operating loss widens from R255.7 million in FY2009 to R274.8 million
- Total comprehensive loss of R638.9 million for FY2010
- Comparable gold production down 7% at 119 877 oz (3 729 kg) compared to 129
376 oz (4 024 kg) in FY2009 mainly due to rationalisation programmes*
- Total cash costs increased by 7% to R998 million from R932 million in FY2009*
- Unit cash costs up from R231 624/kg (U$812/oz) to R267 703/kgU$1 061/oz)*
- Gold revenue down 5% from R989 million to R941 million in FY2009*
- Capital expenditure of R165 million compared to R156.3 million in FY2009
- Cash and cash equivalents of R633 million compared to R843 million in FY2009
*First Uranium production has been stripped out of FY2009 for comparative
purposes
POST YEAR-END
- Tau Lekoa mining right executed - awaiting registration
- R464 million (C$62.7 million) invested in First Uranium Recapitalisation
Programme funded through some R76 million from cash reserves, the conversion of
the R168 million First Uranium loan and a R220 million bridge loan facility from
Rand Merchant Bank (RMB bridge loan)
- Simmers` stake in First Uranium reduced from 37.24% to 34.35% as a consequence
of First Uranium issuing 14 million common shares to Gold Wheaton Corporation in
part exchange for a completion penalty
COMMENTS
In Q4 FY2009, Simmers` shareholding in First Uranium Corporation (First Uranium)
went from 62.36% to 40.99%, following a series of share placements by First
Uranium. This changed the nature of Simmers` investment in First Uranium from a
subsidiary to an associate company. As a result, financial comparisons between
FY2010 and FY2009 are not analogous given that First Uranium has been equity
accounted in FY2010. This is clearly illustrated by the fact that the R91.8
million gross profit reported in FY2009 includes R68.4 million income from First
Uranium while the gross loss of R112.2 million reported in FY2010 does not
include any income from First Uranium.
In addition to the change in nature of the investment in First Uranium, the 5%
decline in revenue combined with a 7% increase in cash costs from the wholly-
owned gold operations also impacted negatively on the gross loss. The increase
in gross loss was partially off-set by First Uranium`s overhead costs no longer
being reflected in the FY2010 operating loss. As a result, the operating loss
increased from R255.7 million to R274.8 million.
Total gold production from Simmers` wholly-owned operations decreased by 7% to
119 877 oz (3 729 kg) compared to 129 376 oz (4 024 kg) in FY2009, primarily due
to the shaft rationalisation programme at Buffelsfontein Gold Mine which saw the
closure of Number 8 shaft and the scaling down of operations at Number 12 shaft
and the suspension of TGME`s underground operations in Q2 FY2010, followed by
the subsequent decision to place the entire operation on care and maintenance in
Q4 FY2010.
Net finance charges went from an expense of R224 million in FY2009 to an income
of R97.5 million in FY2010 mainly as a result of the Aberdeen loan having been
converted into a net smelter royalty (NSR) on production from Buffelsfontein
Gold Mine in Q4 FY2009, details of which were announced on SENS on 16 February
2009.
The reduction in total assets reflects a R253 million impairment charge
following the decision to place TGME on care and maintenance in Q4 FY2010 as
well as the equity-accounted loss from First Uranium which amounted to R292
million.
Simmers reported a total comprehensive loss of R638.9 million in FY2010 compared
to a total comprehensive income of R2.6 billion in FY2009. This is largely
attributable to the aforementioned conversion of the Company`s investment in
First Uranium Corporation from a subsidiary to an associate in Q4 FY2009 which
resulted in a once-off amount of R3.2 billion included in the net income of
FY2009. The headline loss for FY2010 was therefore R489.7 million compared to
R412.5 million in FY2009.
Prospects
The financial information on which these forecasts are based has not been
reviewed and reported on by Simmers` auditors.
In FY2011 Buffelsfontein Gold Mine expects to produce in the order of 75 000oz(2
333 kg) of gold and is targeting cash costs of approximately US$ 1 050/oz
assuming an exchange rate of R7.68/US$, or R260 000/kg by Q4 FY2011. This is
notwithstanding the fatal accident at the mine`s Number 5 shaft on 4 May 2010
which resulted in closure of the mine for a total of 19 days. Normal production
volumes are only expected to resume by Q3 FY2011.
Growth prospects include the development of the North West Block, a reserve of
some 570 377 square meters, estimated to contain some 14 169 kg of gold; the
installation of a third mill to provide extra milling capacity to continue
treating the mine`s lucrative surface rock dump material post the acquisition of
Tau Lekoa and the conversion of the existing leach and Carbon in Pulp (CIP)
circuits in the South plant to a four stage Carbon in Leach (CIL) circuit, which
is expected to increase gold recovery by 4.5%. These growth projects are subject
to board approval.
As soon as the registration of the Tau Lekoa mining right takes place,
Buffelsfontein Gold Mine will begin treating ore from Tau Lekoa at its plant
with immediate effect. The full benefit in terms of free cash flow will only be
evident from the second month onwards given the need to account for a gold lock-
up in the first month due to the change in grade of the material being put
through the plant.
Tau Lekoa is expected to produce in the order of 125 000 oz (annualized) (or 3
888 kg) in the 2011 financial year at a total cash cost of around US$815/oz or
R200 000/kg. This is expected to generate an average, annualised free cash flow
of R150 million.
The acquisition of Tau Lekoa also includes the Weltevreden resource, a shallow,
up-dip extension of Tau Lekoa lying between 80 and 300 metres below surface.
Development of this 2.3 million ounce resource could significantly extend the
life of the Tau Lekoa operation.
This is currently the subject of a pre-feasibility study which is expected to be
complete by Q3 FY2011.
TGME will remain on care and maintenance for the foreseeable future. The
operation will continue to incur costs during FY2011 with care and maintenance
costs expected to settle on approximately R500 000 per month. At a sustainable
gold price of above R300 000/kg TGME has considerable option value and the board
will continue to consider its alternatives in this regard.
First Uranium Recapitalisation Programme
In March 2010, Simmers moved to protect its stake in First Uranium by
participating in the First Uranium Recapitalisation Programme. This decision was
made on the basis that the upside provided by the anticipated increase in gold
and uranium production from First Uranium`s two operations, will be substantial
in the medium to long term. In the near term however, the decision to invest
some R464 million in First Uranium has necessitated a rights offer in order to
repay the R220 million bridge loan from RMB and to bolster the Company`s cash
resources. In the interim, Simmers is considering alternative funding
mechanisms, including the potential sale and listing of all or part of the R464
million (C$62.7 million) secured convertible bonds issued by Mine Waste
Solutions (Proprietary) Limited (Rand FIU Notes) purchased as part of the First
Uranium Recapitalisation Programme. The potential sale of a portion of the Rand
First Uranium Notes does not preclude a Simmers Rights Offer, and vice versa.
Post year end, Simmers also secured additional funding facilities in the form of
a JSE-approved Domestic Medium Term Note Programme under the auspices of ABSA
Capital whereby the Company has the facility to issue Rand-denominated notes, up
to an amount of R250 million.
First Uranium`s financial and operating results for the 12 months and year ended
31 March 2010 were announced on 21 June 2010 and are available on
www.firsturanium.com.
Simmers` results are covered in more detail in the report to shareholders for
the quarter and year ended 31 March 2010, available on www.simmers.co.za, under
the heading `Latest Results` on the homepage.
CHANGES TO THE BOARD OF DIRECTORS
Substantial changes occurred in the composition of the board during the year
under review. Details of these changes as well as those that occurred post year
end are provided below:
Name of director Date of appointment Date of resignation
G Jacobs 30 June 2009 11 May 2010
SLB Mapisa 25 May 2006 19 September 2009
SA Murray 1 February 2010 19 September 2009
(Re-appointment)
BJ Njenje 1 February 2010 19 September 2009
(Re-appointment)
AX Sisulu-Dunston 27 October 2005 19 September 2009
KPE Wakeford 27 October 2005 19 September 2009
KPE Wakeford 1 February 2010 26 April 2010
(Re-appointment)
ME Oberholser 11 November 2008 27 November 2009
DT van der Mescht 10 December 2009 17 March 2010
N Segal 10 December 2009
V Khanyile 10 December 2009
R Havenstein 10 December 2009
C Brayshaw 11 December 2009 29 January 2010
G Msibi 11 December 2009 18 December 2009
SN Mabaso-Koyana 23 December 2009
G Miller 8 November 2004 6 January 2010
N Brunette 27 October 2005 6 January 2010
J Berry 8 November 2004 8 January 2010
A Meyer 1 October 2007 29 January 2010
DH Brown 1 February 2010
N Schoeman 17 March 2010
V Watson 28 April 2010
ZB Swanepoel 1 February 2010
P Surgey 2 February 2010 26 April 2010
M Saaiman 01 July 2010
CHANGE IN COMPANY SECRETARY
Post year end, Ms Julia Ann Swanepoel resigned as Company Secretary on 30 April
2010. iThemba Governance and Statutory Solutions (Pty) Limited (represented by
Ms Riana Bisschoff and Ms Annamarie van der Merwe) was appointed as company
secretary with effect from 1 May 2010.
AUDITORS MODIFIED REPORT
The auditors` modified report is available for inspection at the Company`s
registered office. Details of the modification are as follows:
Extracts from the audit report: "In accordance with our responsibilities in
terms of sections 44(2) and 44(3) of the Auditing Profession Act, we report that
we have identified an alleged breach of fiduciary duty committed by a person
responsible for the management of Simmer and Jack Mines, Limited which
constitutes a reportable irregularity in terms of the Auditing Profession Act,
and have reported such matter to the Independent Regulatory Board for Auditors.
The matter pertaining to the reportable irregularity has been described under
the heading "Reportable Irregularity" in the directors` report. Extracts from
the directors` report: "During the financial year, allegations were made by the
previous Chairman, Mr Brunette, that a non-executive director, Mr KPE Wakeford,
had disclosed confidential price sensitive information regarding the affairs of
Simmers. The matter was referred to the relevant regulators. The external
auditors issued a reportable irregularity report. The Financial Services Board
(FSB) had indicated that the Company would be notified of the commencement of a
formal investigation. No such confirmation has been received from the FSB to
date."
The abridged financial statements have been prepared in accordance with
International Accounting Standard (IAS34).
INVESTOR PRESENTATION AND CONFERENCE CALL
A results presentation will be held at 09:30 on 29 June 2010 at the Company`s
registered offices, 5 Press Avenue, Selby Ext, followed by conference call at
15:00. Participation and dial-in details can be found at www.simmers.co.za.
Disclaimer and Forward-looking Information
This shareholders report and financial statements for the year ended 31 March
2010 contains certain forward-looking statements. Forward-looking statements
include but are not limited to those with respect to the price of uranium and
gold, the estimation of mineral resources and reserves, the realization of
mineral reserve estimates, the timing and amount of estimated future production,
costs of production, capital expenditures, costs and timing of development of
new deposits, success of exploration activities, permitting time lines, currency
fluctuations, requirements for additional capital, government regulation of
mining operations, environmental risks, unanticipated reclamation expenses,
title disputes or claims and limitations on insurance coverage and the timing
and possible outcome of pending litigation. In certain cases, forward-looking
statements can be identified by the use of words such as "plans", "expects" or
"does not expect", "is expected", "budget", "scheduled", "estimates",
"forecasts", "intends", "anticipates", or "does not anticipate", or "believes"
or variations of such words and phrases, or state that certain actions, events
or results "may", "could", "would", "might" or "will" be taken, occur or be
achieved. Forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance
or achievements of Simmers to be materially different from any future results,
performance or achievement expressed or implied by the forward-looking
statements. Such risks and uncertainties include, among others, the actual
results of current exploration activities, conclusions of economic evaluations,
changes in project parameters as plans continue to be refined, possible
variations in grade and ore densities or recovery rates, failure of plant,
equipment or processes to operate as anticipated, accidents, labour disputes or
other risks of the mining industry, delays in obtaining government approvals or
financing or in completion of development or construction activities, risks
relating to the integration of acquisitions, to international operations, to
prices of uranium and gold. Although Simmers has attempted to identify
important factors that could cause actual actions, events or results to differ
materially from those described in forward-looking statements, there may be
other factors that cause actions, events or results not to be as anticipated,
estimated or intended. It is important to note, that: (i) unless otherwise
indicated, forward-looking statements indicate the Group`s` expectations as at
25 June 2010; (ii) actual results may differ materially from the Group`s
expectations if known and unknown risks or uncertainties affect its business, or
if estimates or assumptions prove inaccurate; (iii) the Group cannot guarantee
that any forward-looking statement will materialize and, accordingly, readers
are cautioned not to place undue reliance on these forward-looking statements;
and (iv) the Group disclaims any intention and assumes no obligation to update
or revise any forward-looking statement even if new information becomes
available, as a result of future events or for any other reason.
Johannesburg29 June 2010
Transfer secretaries
South Africa
Computershare Investor Services (Pty) Limited, Ground Floor, 70 Marshall Street,
Johannesburg, 2001
United Kingdom
Capita Registrars, The Registry, 34 Beckenham Road, Beckenham
Kent, BR3 4TU
Auditors: Grant Thornton, 137 Daisy Street, Sandown, 2196,
Republic of South Africa
Registered office: 5 Press Avenue, Selby, Johannesburg, 2025,
Republic of South Africa
Sponsor: RAND MERCHANT BANK (A division of FirstRand Bank Limited)
1 Merchant Place, Sandton, 2196, Republic of South Africa
Company Secretary: iThemba Governance and Statutory Solutions (Proprietary)
Limited, Monument Office Park, Block 5, Suite 102, 79 Steenbok Avenue, Monument
Park, Republic of South Africa
STATEMENT OF FINANCIAL POSITION as at 31 March 2010
Figures in Rand thousand Notes 2010 2009
ASSETS
Non-current assets
Investment property 37 376 33 479
Property, plant and equipment 2 583 803 720 804
Investment in associate 2 001 030 2 124 404
Financial assets 21 852 14 194
Environmental rehabilitation trust 123 424 138 531
fund
2 767 485 3 031 412
Current assets
Loans to group companies and 4 110 594 3 612
associate
Financial assets - 2 973
Current tax receivable 18 -
Inventories 26 565 37 951
Trade and other receivables 71 436 86 081
Reimbursive asset 71 227 81 842
Cash and cash equivalents 5 632 798 842 678
912 638 1 055 137
Non-current assets held for sale 4 903 1 969
Total Assets 3 685 026 4 088 518
EQUITY AND LIABILITIES
Equity
Equity attributable to owners of the
parent
Share capital and premium 1 231 913 951 847
Reserves 420 185 268 862
Retained income 1 464 136 2 200 499
Equity attributable to owners of the
parent 3 116 234 3 421 208
Non-controlling interest 1 1
3 116 235 3 421 209
Liabilities
Non-current liabilities
Finance lease obligation 4 024 3 198
Environmental rehabilitation 219 316 200 912
provision
Financial liabilities 6 210 044 263 827
433 384 467 937
Current liabilities
Finance lease obligation 2 933 1 277
Financial liabilities 6 13 657 23 267
Current tax payable - 36
Trade and other payables 118 817 174 792
135 407 199 372
Total liabilities 568 791 667 309
Total equity and liabilities 3 685 026 4 088 518
STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 March 2010
Figures in Rand thousand Notes 2010 2009
Revenue 940 767 1 336 535
Cost of production (1 053 010) (1 244 746)
Gross (loss)/profit (112 243) 91 789
Other income 39 657 49 815
General administrative and overhead
expenditure (171 239) (286 892)
Share option costs (31 002) (110 363)
Operating loss (274 827) (255 651)
Finance income 133 463 60 750
Loss from equity-accounted investment (291 770) (109 657)
Partial disposal of investment in
subsidiary - 3 232 089
Restructuring costs (8 480) -
Net movement in fair value 8 478 17 212
Impairment of assets 7 (267 049) (505)
(Loss)/gain on non-current assets held
for sale (230) 288
Finance charges (35 948) (322 877)
(Loss)/profit before taxation (736 363) 2 621 649
Taxation - (12 695)
(Loss)/profit for the year (736 363) 2 608 954
Other comprehensive income
Foreign currency translation differences
for foreign operations 89 765 (8 860)
Movement in available-for-sale financial 7 658 (1 680)
instruments
Other comprehensive income/(loss) for the
year, net of taxation 97 423 (10 540)
Total comprehensive (loss)/income for the
year (638 940) 2 598 414
Total comprehensive (loss)/income
attributable to:
Owners of the parent (638 940) 2 670 146
Non-controlling interest - (71 732)
(638 940) 2 598 414
Earnings per share
Basic (loss)/earnings per share (cents) 8 (61.51) 250.56
Diluted (loss)/earnings per share (cents) 8 (61.51) 245.12
Headline loss per share (cents) 8 (40.90) (38.71)
Diluted headline loss per share (cents) 8 (40.90) (37.87)
STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2010
Attributable to owners of the parent
Figures in Rand
thousand
Share based Available-
Share Share payment for-sale
Capital premium reserve valuation
Balance at 1 April 2008 20 738 822 619 158 181 5 760
Total changes for the
year 1 019 107 471 106 601 (1 680)
Balance at 1 April 2009 21 757 930 090 264 782 4 080
Total changes for the
year 2 199 277 867 53 900 7 658
Balance at 31 March
2010 23 956 1 207 957 318 682 11 738
STATEMENT OF CHANGES IN EQUITY (continued)
Attributable to owners of the parent
Conver- Accumulated Total
tible (loss)/ attributable
Other debenture- Retained to owners of
reserves equity income the parent
Balance at 1 April 2008 1 269 314 280 580 (469 647) 2 087 545
Total changes for the
year (1 269 314) (280 580) 2 670 146 1 333 663
Balance at 1 April 2009 - - 2 200 499 3 421 208
Total changes for the
year 89 765 - (736 363) (304 974)
Balance at31 March 2010
89 765 - 1 464 136 3 116 234
STATEMENT OF CHANGES IN EQUITY (continued)
Non-
controlling Total
interest equity
Balance at 1 April 2008 334 169 2 421 714
Total changes for the
year (334 168) 999 495
Balance at 1 April 2009 1 3 421 209
Total changes for the
year - (304 974)
Balance at 31 March
2010 1 3 116 235
STATEMENT OF CASH FLOWS
for the year ended 31 March 2010
Figures in Rand thousand Notes 2010 2009
Net cash from operating activities (131 567) (510 048)
Cash flows from investing activities (341 881) (1 188 089)
Cash flows from financing activities 263 568 1 072 680
Net effect of exchange rate changes on
cash held in foreign currencies - (113 877)
Net (decrease)/increase in cash and cash
equivalents (209 880) (739 334)
Cash and cash equivalents at the
beginning of the year 842 678 1 582 012
Total cash and cash equivalents at endof
the year 3 632 798 842 678
NOTES TO THE ANNUAL FINANCIAL STATEMENTS
for the year ended 31 March 2010
1 ACCOUNTING POLICIES
1.1 General information
Simmer and Jack Mines, Limited (`the Company`) and its subsidiaries (together
`the Group`) are engaged in exploration, extraction and processing of gold. The
group has mining operations in the North West and Mpumalanga Provinces in South
Africa.
1.2 Presentation of financial statements
The financial statements have been prepared in compliance with International
Financial Reporting Standards (IFRS) and the Companies Act of South Africa. The
financial statements have been prepared on the historical cost basis, unless
otherwise stated.
These accounting policies are consistent with those of the previous year.
The financial information has been audited by Grant Thornton whose modified
report is available for inspection at the Group`s registered office.
1.3 Statements and interpretations not yet effective
At the date of authorisation of these financial statements, certain new
standards, amendments and interpretations to existing standards have been
published but are not yet effective, and have not been early adopted by the
Group.
Management anticipates that all of the pronouncements will be adopted in the
Group`s accounting policies for the first period beginning after the effective
date of the pronouncement. Information on new standards, amendments and
interpretations that are expected to be relevant to the Group`s financial
statements is provided below. Certain other new standards and interpretations
have been issued but are not expected to have a material impact on the Group`s
financial statements.
Annual periods
beginning on or
Standard Details of Amendment after
IFRS 9 Financial New standard that forms the first 1 January 2013
Instruments part of a three-part project to
replace IAS 39 Financial
Instruments: Recognition and
measurement
IAS 1: Presentation Current/non-current 1 January 2010
of Financial classification of convertible
Statements Instruments
IAS 39: Financial Treating loan prepayment 1 January 2010
Instruments: penalties as closely related
embedded derivatives
Scope exemption for business
combination contracts
2 PROPERTY, PLANT AND EQUIPMENT
2010 2009
Accumu- Accumu-
lated lated
depre- depre-
ciation ciation
and Carry- and Carry-
impair- ing impair- ing
Cost ment value Cost ment value
R`000 R`000 R`000 R`000 R`000 R`000
Land and
buildings 8 553 (2 142) 6 411 8 020 (1 598) 6 422
Plant and
equipment 286 391 (189 795) 96 596 250 958 (29 727) 221 231
Furniture and
fixtures 25 583 (8 905) 16 678 19 466 (5 369) 14 097
Motor vehicles 1 589 (605) 984 1 813 (455) 1 358
Mining assets 574 894 (115 943) 458 951 475 246 (84 550) 390 696
Computer
equipment and
software 12 058 (9 312) 2 746 10 881 (5 734) 5 147
Development
and
infrastructure 134 866 (134 866) - 113 868 (36 912) 76 956
Mining rights 6 485 (6 485) - 5 312 (1 672) 3 640
Exploration
costs 1 437 - 1 437 1 257 - 1 257
Total 1 051 856 (468 053) 583 803 886 821 (166 017) 720 804
Reconciliation of property, plant and equipment - 2010
Carrying Carrying
value value at
beginnin Addi- Dis- Depre- Impair- 31 March
g of tions posals ciation ment 2010
year
R`000 R`000 R`000 R`000 R`000 R`000
Land and
buildings 6 422 533 - (378) (166) 6 411
Plant and
equipment 221 231 35 433 - (15 697) (144 371) 96 596
Furniture and
fixtures 14 097 6 169 (9) (3 495) (84) 16 678
Motor
vehicles 1 358 - - (374) - 984
Mining assets 390 696 99 649 - (25 860) (5 534) 458 951
Computer
equipment and
software 5 147 1 177 - (2 704) (874) 2 746
Development
and infra-
structure 76 956 20 998 - (128) (97 826) -
Mining rights 3 640 1 172 - - (4 812) -
Exploration
costs 1 257 180 - - - 1 437
Total 720 804 165 311 (9) (48 636) (253 667) 583 803
3 INVESTMENT IN ASSOCIATE
Carrying Carrying
% holding % holding amount amount
2010 2009 2010 2009
% % R`000 R`000
Associate
First Uranium Corporation 37.24% 40.99% 2 001 030 2 124 404
As at 31 March 2010 the market value of the investment was R591 million based on
the listed share price. Management is of the opinion that this does not reflect
the value of the investment.
Impairment testing
In assessing whether the investment in First Uranium Corporation has been
impaired, the carrying value is compared with its recoverable amount.
For the purpose of impairment testing, the recoverable amount has been
determined based on value in use (VIU) calculations.
4 LOANS TO ASSOCIATE
2010 2009
R`000 R`000
First Uranium Corporation 110 594 3 612
The loan is unsecured, bears interest at JIBAR +7%.
5 CASH AND CASH EQUIVALENTS
2010 2009
Cash and cash equivalents consist of: R`000 R`000
Cash on hand 82 10
Bank balances 632 716 770 055
Unit trust investments - 72 613
632 798 842 678
R450 million (2009: R300 million) of the cash and cash equivalents held
by the Group at year end is not available for general use by the Group as
it has been committed to settle the acquisition of Tau Lekoa. A further
R1.7 million (2009: R1.7 million) is held as security for rehabilitation
purposes.
6 FINANCIAL LIABILITIES
At fair value through profit or loss
ABSA Put Option - 6 735
The put option relates to the C$85 million
proceeds from the sale of the partial First
Uranium investment which converted to rands on
17 April 2009. The call and put strike prices
were R8.10 and R7.43 respectively. At 31 March
2009 the spot price was R7.34.
Aberdeen International Incorporated 223 701 280 358
(Aberdeen)
The Company entered into an agreement with
Aberdeen (the Aberdeen Loan Agreement), a
Canadian exploration and royalty company
trading on TSX, whereby Aberdeen provided a
loan facility of US$ 10 million to enable
the Company to acquire BGM.
The loan had a 3% coupon up to a gold price
of US$400/oz and 2.5% thereafter. In
addition a Net Smelter Royalty (NSR) on
BGM`s gold production was charged, which
was linked to the price of gold ranging
from 0.5% NSR at US$300/oz to a 4.75% NSR
at gold prices of US$750/oz or higher. The
principal amount of the loan was converted
into a 1% NSR on BGM`s gold production.
In October 2008, the Company advised
shareholders that Aberdeen had elected to
convert its US$10 million loan facility
into equity. Accordingly, a circular was
dispatched to shareholders on 30 January
2009 outlining the implications of the
conversion being accepted or declined, and
recommending that shareholders vote against
the conversion. The issue was put to the
vote at a general meeting held on 16
February 2009 at the Company`s registered
offices, whereupon 87.1% of the voteable
shares present voted against the issue of
shares to Aberdeen. 71.88% of the voteable
shares were represented at the meeting.
Aberdeen disputes the terms of the
agreement- see Disputes with Aberdeen
below.
The loan is secured by a bond over BGM`s
North Plant.
The loan, royalties and options have been
fair valued by Mr Ranti Mothapo, a
consulting actuary and analyst with the
Matlotlo Group (Proprietary) Limited.
Disputes with Aberdeen
Aberdeen has declared two disputes with
regard to the Aberdeen Loan Agreement. In
the first, the South African High Court of
Appeal ruled against an appeal by Aberdeen
against an earlier ruling by the North
Gauteng High Court on 5 September 2008 in
which it was found that Simmers had not
breached the Right of First Refusal in the
Aberdeen Loan Agreement.
The dispute followed a notification from
Aberdeen in September 2008 alleging that
Simmers was in breach of a right of first
refusal following a private placement of
shares concluded during May 2007. As a
consequence, Aberdeen attempted to claim an
amount of R68 739 162.40 as being the loss
of appreciation of share value had Aberdeen
been given the option to participate in the
private placement.
Since Aberdeen has no further recourse in
the South African law courts, this matter
has effectively been brought to a close.
The second dispute relates to Aberdeen`s
attempt to recover the US$10 million
convertible loan plus the balance of a
graduated gold royalty due for the fourth
quarter of FY2008, from Simmers and is
ongoing. Simmers` view is that Aberdeen`s
claim for US$11.4 million, filed in August
2009, is invalid in terms of the Aberdeen
Loan Agreement which states that should
Aberdeen`s application to convert the loan
into Simmers` equity be unsuccessful, the
loan converted into a 1% perpetual royalty.
Simmers shareholders voted against the
conversion of the Aberdeen loan into
Simmers equity at a general meeting held on
16 February 2009.
223 701 287 093
7 IMPAIRMENT OF ASSETS
Material impairment losses recognised
Property, plant and equipment (253 667) (505)
A decision was taken to place TGME on care and
maintenance due to a deterioration in the
subsidiary`s economics and significant inflation-
related increases, together with lower than
expected gold recoveries. The recoverable amount
of the assets was based on its expected
recoverable amount.
Loans to Margaret Water Company (13 382) -
The department of Water Affairs and Forestry
issued a directive that made Simmer and Jack
Mines, Limited, Harmony Gold Mining Company
Limited and AngloGold Ashanti Limited
responsible for the financing of the operations
of Margaret Water Company (a section 21 company
limited by guarantee). The loan to this company
has been impaired as the recoverability of itis
remote.
(267 049) (505)
8 HEADLINE LOSS
Reconciliation between earnings/(loss) and
headline loss:
Basic (loss)/earnings for the year (736 363) 2 608 954
Add back:
Non-controlling interest - 71 732
Attributable to the owners of the parent (736 363) 2 680 686
Impairment of property, plant and equipment 253 667 505
Valuation gain on available-for-sale investment - 1
Disposal of property, plant and equipment-
(gain)/loss (10) 30
(Loss)/gain on sale of non-current assets held 230 (288)
for sale
Reversal of impairment - (1 083)
Translation difference - (19 400)
Conversion of Aberdeen loan and recognition of
perpetual royalty - 166 872
Fair value adjustment- investment property (8 201) (11 063)
Impairment of assets - 337
Fair value adjustment on held-for-sale assets 960 (669)
Partial disposal of investment in subsidiary - (3 232 089)
Non-controlling interest - 3 632
Headline loss for the year (489 717) (412 529)
Basic (loss)/profit per share (cents)* (61.51) 250.56
Diluted (loss)/profit per share (cents)* (61.51) 245.12
Headline loss per share (cents)* (40.90) (38.71)
Diluted headline loss per share (cents)* (40.90) (37.87)
Net asset value per share (cents) 255.15 307.84
*Based on weighted average number of shares in issue
Reconciliation of number of shares issued `000 `000
Reported at 1 April 1 111 368 1 062 031
Shares issued to Simmers Share Trust - -
Shares issued for cash 109 950 49 337
Shares issued at 31 March 1 221 318 1 111 368
Weighted average number of ordinary shares in
issue 1 197 219 1 065 681
Adjusted for:
- Share options - 23 660
Weighted average number of ordinary shares for
diluted earnings per share 1 197 219 1 089 341
Basic earnings per share are calculated by dividing the profit
attributable to equity holders of the Company by the weighted average
number of ordinary shares in issue during the year.
9 EVENTS AFTER STATEMENT OF FINANCIAL POSITION DATE
First Uranium convertible redeemable notes:
During April 2010, First Uranium Corporation concluded its convertible
redeemable note financing (the Offering) in terms of the First Uranium
Recapitalisation Programme. In connection with the Offering, Simmer and Jack
Mines, Limited exchanged its R160 million loan plus accrued and unpaid interest
for an equivalent value of Rand Notes. Each Rand Note will have a principal
amount of R1 000 and will be convertible into 107.36 Common FIU Shares, also
representing a conversion price of $1.30.
The Company has furthermore used the Rand equivalent of CAD10 million from
Simmers` cash reserves to subscribe for Rand FIU Notes. In addition, Rand
Merchant Bank has provided the Company with a Bridge Loan Facility of R220
million (approximately CAD30 million) which Simmers used to subscribe for Rand
FIU Notes.
Proceeds of the Offering will be used for MWS capital expenditures including
completion of the second gold module and uranium plant, new tailings facility,
the third gold plant module, restructuring, financing and interest expenses and
for general corporate purposes.
Consideration of alternatives to rights issue:
The Company announced on SENS on 28 April 2010 and in the press on 29 April 2010
its intention to proceed with a rights offer of R360 million secured convertible
redeemable bonds in the Company (Rights Offer) in order to repay the Rand
Merchant Bank Bridge Loan Facility and to fund directly or indirectly, its
mining projects.
Shareholders were advised that the Board is investigating alternative solutions
to the proposed Rights Offer, including the listing and sale of part of the
R463.9 million (C$62.7 million) secured convertible bonds issued by Mine Waste
Solutions (Rand Notes) and purchased as part of the First Uranium Corporation
Recapitalisation Programme.
The listing and potential sale of a portion of the Rand Notes is being
considered solely for the purpose of raising capital and to limit dilution of
the Company shareholders.
Increase in authorised share capital:
At the General Meeting on 24 May 2010, it was resolved that the authorised
ordinary share capital of the Company be increased from R30 million, comprising
1 500 000 000 ordinary shares with a par value of 2 cents each, to R38 million,
comprising 1 900 000 000 ordinary shares with a par value of 2 cents each, by
the creation of 400 000 000 new ordinary shares with a par value of 2 cents
each, which new shares shall rank pari passu in all respects with the ordinary
shares of the Company already in issue.
Change in Articles of Association:
During the General Meeting on 24 May 2010, it was resolved that the Company`s
Articles of Association be amended to include provisions for the conversion of
the Secured Convertible Redeemable Bonds to be issued by the Company pursuant to
the Rights Offer, upon the exercise of the conversion rights of such Secured
Convertible Redeemable Bonds by inserting the following new Article 135:
"135 Convertible securities
"Where the Company has issued any securities that are convertible into ordinary
shares of the Company, then if and when the conversion rights of any such
security are exercised by a holder of that security in accordance with the terms
and conditions attaching to such security, then subject to Article 85, that
security will convert in accordance with, and into such number of ordinary
shares of the Company as provided for in terms of, such terms and conditions."
Irrevocable guarantee issued:
In terms of the arrangement agreed between the Company and the DMR, the Company
issued a R94 million bank guarantee for purposes of the Tau Lekoa rehabilitation
liability funding which enabled the transfer and registration of the Tau Lekoa
mining right to take place.
Domestic Medium Term Note Programme:
The establishment of a Domestic Medium Term Note Programme (Programme) has been
approved by the JSE Limited. In terms of this Programme, the Company may from
time to time issue notes (Notes) denominated in South African rand, up to an
aggregate nominal amount of R250 million outstanding under the Programme from
time to time. The first drawdown amounting to R100 million was made during June
2010.
10 SEGMENT INFORMATION
The Group`s mining and exploration activities are conducted mainly in the
Mpumalanga and North West provinces of South Africa. The Group only has one
product, gold. An analysis of the Group`s operating segments is set out below.
It was determined that an operating segment consists of a shaft or a group of
shafts managed by a single general manager and management team.
When assessing profitability, management considers the revenue and cash
production costs of each segment. Segment assets and liabilities consist of
mining assets which can be attributed to the shaft or group of shafts.
All gold is sold to Rand Refinery Limited.
2010
Figures in Rand BGM TGME Corporate Total
thousand and explora-
tion
Profit/(loss)
Revenue 867 395 73 372 - 940 767
Production related
depreciation (26 545) (16 035) - (42 580)
Cost of production (897 137) (113 543) 250 (1 010 430)
Gross profit/(loss) (56 287) (56 206) 250 (112 243)
Other income 10 404 3 556 25 697 39 657
General administrative
and overhead
expenditure (50 408) (8 812) (112 019) (171 239)
Share options costs (11 307) (2 890) (16 805) (31 002)
Operating loss (107 598) (64 352) (102 877) (274 827)
Finance income 56 582 171 76 710 133 463
Restructuring costs (3 650) (4 830) - (8 480)
Loss from equity
accounted investment - - (291 770) (291 770)
Net movement in fair
value 677 (1 262) 9 063 8 478
Impairment of assets (30 509) (269 176) 32 636 (267 049)
Loss on non-current
assets held for sale (230) - - (230)
Finance charges (34 922) (1 008) (18) (35 948)
Loss on ordinary
activities (119 650) (340 457) (276 256) (736 363)
Other comprehensive
income
Share of other - - 89 765 89 765
comprehensive income of
equity accounted
investment
Movement in available-
for-sale 7 658 - - 7 658
Total comprehensive
income/(loss) for the
year (111 992) (340 457) (186 491) (638 940)
Capital expenditure (119 410) (59 730) 13 828 (165 311)
Total assets 893 744 37 092 2 754 189 3 685 026
Total liabilities (526 791) (19 664) (22 336) (568 791)
Net cash flows utilised
in operations (80 274) (49 396) (1 897) (131 567)
Net cash flows
(utilised in)/generated
from investing
activities 81 945 46 955 (470 781) (341 881)
Net cash generated from
financing activities - 1 656 261 912 263 568
Net (decrease)/increase
in cash and cash
equivalents 1 671 (784) (210 767) (209 880)
Date: 29/06/2010 08:01:01 Produced by the JSE SENS Department.
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