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UUU
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UUU - Uranium One Inc - Interim Consolidated Financial Statements for the
three and six months ended June 30, 2010 (Unaudited)
Uranium One Inc
(Incorporated in Canada)
(Registration number: 15096422420)
Share code on the JSE: UUU & ISIN: CA91701P1053
Share code on the TSX: UUU & ISIN: CA91701P1053
Interim Consolidated Financial Statements for the three and six months ended
June 30, 2010 (Unaudited)
Uranium One Inc.
Interim Consolidated Balance Sheets - Unaudited
As at June 30, 2010 and December 31, 2009
(in United States dollars)
Jun 30, Dec 31,
2010 2009
Notes $`000 $`000
ASSETS
Current assets
Cash and cash equivalents 394,343 148,465
Restricted cash 8 8,577 -
Accounts and other receivables 60,556 42,405
Inventories 5 92,215 71,634
Other assets 7 9,862 24,472
565,553 286,976
Non-current assets
Mineral interests, plant and equipment 6 1,801,810 1,748,284
Loans to joint ventures 4.2 36,690 29,250
Other assets 7 53,446 33,137
Assets held for sale - 51,460
1,891,946 1,862,131
Total assets 2,457,499 2,149,107
LIABILITIES
Current liabilities
Accounts payable and accrued liabilities 54,888 65,908
Income taxes payable 6 1,633
Current portion of long term debt 8 - 63,579
Other liabilities 10 43,822 137,043
98,716 268,163
Non-current liabilities
Convertible debentures 9 469,299 140,862
Asset retirement obligations 22,594 16,100
Future income tax liabilities 190,560 180,687
Other liabilities 10 59,364 49,451
Assets held for sale - 12,944
741,817 400,044
SHAREHOLDERS` EQUITY
Share capital 11 3,823,956 3,823,297
Contributed surplus 12 136,698 133,478
Equity component of convertible 216,186 46,480
debentures
Accumulated other comprehensive income 10,120 16,392
Deficit (2,569,994) (2,538,747)
1,616,966 1,480,900
Total shareholders` equity and 2,457,499 2,149,107
liabilities
Basis of presentation and principles of consolidation (note 2.1)
The accompanying notes form an integral part of these Interim Consolidated
Financial Statements
Uranium One Inc.
Interim Consolidated Statements of Operations - Unaudited
For the three and six months ended June 30, 2010 and 2009
(in United States dollars)
Three months Six months ended
ended
Jun 30, Jun 30, Jun 30, Jun 30,
2010 2009 2010 2009
Notes $`000 $`000 $`000 $`000
Revenues 65,973 18,557 101,502 61,526
Operating expenses (22,153) (6,725) (36,323) (21,736)
Depreciation and (19,443) (5,251) (31,908) (17,282)
depletion
Earnings from mine 24,377 6,581 33,271 22,508
operations
General and (9,953) (9,059) (19,384) (18,150)
administrative (1)
Exploration expense (1,399) (2,679) (2,303) (4,470)
Impairment of mineral (670) (251,064) (1,886) (251,064)
interests, plant and
equipment
Care and maintenance (390) (4,018) (1,969) (7,594)
and closure costs
Operating earnings / 11,965 (260,239) 7,729 (258,770)
(loss)
Interest and other 13 (12,667) (1,628) (20,784) (3,694)
Loss on sale of (8,259) (8) (8,218) (8)
available for sale
securities
Foreign exchange gain 14 6,800 (1,268) (733) 69,191
/ (loss)
Corporate development (2,186) - (3,033) -
expenses
Other (850) (192) (1,056) (196)
Loss from continuing (5,197) (263,335) (26,095) (193,477)
operations before
income taxes
Current income tax (6,277) (3,230) (9,445) (14,847)
expense
Future income tax 1,733 839 4,293 5,954
recovery
Loss from continuing (9,741) (265,726) (31,247) (202,370)
operations
Earnings / (loss) from - 806 - (1,417)
discontinued
operations
Net loss (9,741) (264,920) (31,247) (203,787)
(1) Stock option and 12 1,792 2,298 3,771 3,764
restricted share
expense (non-cash)
included in general
and administrative
Loss per share from
continuing operations
Basic and diluted (0.02) (0.57) (0.05) (0.43)
Earnings / (loss)
earnings per share
from discontinued
operations
Basic and diluted - 0.00 - (0.00)
Net loss per share
Basic and diluted (0.02) (0.56) (0.05) (0.43)
Weighted average
number of shares (in
thousands)
Basic and diluted 16 587,495 469,690 587,466 469,652
The accompanying notes form an integral part of these Interim Consolidated
Financial Statements.
Uranium One Inc.
Interim Consolidated Statements of Changes in Equity - Unaudited
For the six months ended June 30, 2010 and year ended December 31, 2009
(in United States dollars)
Shar Contribu Equity Accumulat Deficit Total
e ted compone ed other $`000 $`000
capi surplus nt of comprehen
tal $`000 convert sive
$`00 ible income /
0 debentu (loss)
res $`000
$`000
Balance as at 3,522,824 131,602 46,480 (247,708) (2,502,660) 950,538
January 1,
2009
Net loss for - - - - (36,087) (36,087)
the year
Stock options - 7,502 - - - 7,502
and
restricted
shares vested
Exercise of 6,856 (5,626) - - - 1,230
stock options
and
restricted
shares
Issuance of 388 388
contingent
shares
Unrealized - - - 16,391 - 16,391
gain
recognized on
translation
of self-
sustaining
foreign
operations
Realized loss - - - 13,074 - 13,074
on sale of
Gold One
Realized loss - - - 234,533 - 234,533
on sale of
Uranium One
Africa
Acquisition 293,229 - - - - 293,229
of Karatau
Fair value - - - 102 - 102
adjustments
on available
for sale
securities
Balance as at 3,823,297 133,478 46,480 16,392 (2,538,747) 1,480,900
December 31,
2009
Net loss for - - - - (31,247) (31,247)
the period
Stock options - 3,771 - - - 3,771
and
restricted
shares vested
Exercise of 659 (551) - - - 108
stock options
and
restricted
shares
Unrealized - - - (1,692) - (1,692)
loss
recognized on
translation
of self-
sustaining
foreign
operations
Unrealized - - - (12,798) - (12,798)
fair value
adjustments
on available
for sale
securities
Realized fair - - - 8,218 - 8,218
value
adjustments
on available
for sale
securities
JUMI - - 125,692 - - 125,692
Debentures
(note 9)
2010 - - 44,014 - - 44,014
Debentures
(note 9)
Balance as at 3,823,956 136,698 216,186 10,120 (2,569,994) 1,616,966
June 30, 2010
The accompanying notes form an integral part of these Interim Consolidated
Financial Statements
Uranium One Inc.
Interim Consolidated Statements of Comprehensive Income / (Loss) - Unaudited
For the three and six months ended June 30, 2010 and 2009
(in United States dollars)
Three months Six months
ended ended
Jun Jun Jun Jun
30, 30, 30, 30,
2010 2009 2010 2009
$`000 $`000 $`000 $`000
Unrealized (loss) / gain (3,773) 12,084 (1,692) 12,891
recognized on translation
of self-sustaining foreign
operations
Realized loss on sale of - 543 - 11,383
Gold One
Realized loss on sale of - 234,513 - 234,513
Uranium One Africa
Unrealized fair value (11,276) 184 (12,798) 307
adjustments on available
for sale securities
Realized fair value 8,259 - 8,218 -
adjustment on available for
sale securities
Other comprehensive (loss) (6,790) 247,324 (6,272) 259,094
/ income for the period
Net loss (9,741) (264,920) (31,247) (203,787)
Comprehensive (loss) / (16,531) (17,596) (37,519) 55,307
income
Interim Consolidated Statements of Accumulated Other Comprehensive Income /
(Loss) - Unaudited
As at June 30, 2010 and December 31, 2009
(in United States dollars)
Jun 30, Dec 31,
2010 2009
$`000 $`000
Accumulated other comprehensive income 16,392 (247,708)
/ (loss) at January 1
Other comprehensive (loss) / income (6,272) 264,100
for the period
10,120 16,392
Deficit (2,569,994) (2,538,747)
Accumulated other comprehensive loss (2,559,874) (2,522,355)
and deficit
Components of accumulated other
comprehensive income at the end of the
period:
Unrealized foreign exchange adjustment 14,598 16,290
- continuing operations
Available for sale marketable (4,478) 102
securities and investments
10,120 16,392
The accompanying notes form an integral part of these Interim Consolidated
Financial Statements
Uranium One Inc.
Interim Consolidated Statements of Cash Flows - Unaudited
For the three and six months ended June 30, 2010 and 2009
(in United States dollars)
Three months ended Six months ended
Jun 30, Jun 30, Jun 30, 2010 Jun 30,
2010 2009 2009
Notes $`000 $`000 $`000 $`000
Net loss from (9,741) (265,726) (31,247) (202,370)
continuing operations
Items not affecting
cash:
- Fair value 10 (6,706) - (10,104) -
adjustment included in
revenue
- Depreciation and 19,443 5,251 31,908 17,282
depletion
- Impairment of 670 251,064 1,886 251,064
mineral interests,
plant and equipment
Loss on available for 8,259 8 8,218 8
sale securities
- Stock option and 12 1,792 2,298 3,771 3,764
restricted share
expense
- Interest accrued on 1,398 1,242 7,755 3,679
loans and debentures
- Unrealized foreign 14 (9,723) 2,802 (3,304) (68,121)
exchange (gain) / loss
- Future income tax (1,733) (839) (4,293) (5,954)
recovery
- Other (541) 190 (46) 1,529
Movement in non-cash 15 (30,053) (15,589) (31,314) (7,000)
working capital
Cash flows used in (26,935) (19,299) (26,770) (6,119)
operating activities
Acquisition of mineral (24,903) (17,523) (45,869) (27,706)
interests, plant and
equipment
Cash payment for other (6,867) (1,864) (24,309) (3,166)
assets
Acquisition of - - (28,869) -
Christensen Ranch and
Irigaray
Disposal / 11,108 - (15,337) -
(acquisition) of
available for sale
securities
Karatau promissory - - (111,773) -
note and contingent
payment
Cash advance for - (2,656) - (5,385)
sulphuric acid plant
investment
Proceeds on sale of 37,300 - 37,300 -
Dominion
Proceeds on sale of - 1,699 - 14,698
Gold One
Uranium purchased - 8,361 - 5,954
Cash proceeds from - 3,500 - 8,167
joint ventures
Proceeds on sale of - 1,493 - 5,172
mineral interests,
plant and equipment
Restricted cash 10 - - (8,577) -
Other (1,907) - (2,075) -
Cash flows from / 14,731 (6,990) (199,509) (2,266)
(used in) investing
activities
Common shares issued, 2 190 108 190
net of issue costs
Net loans received by 14,534 1,094 26,856 13,094
joint ventures
Advances received 7,948 - 7,948 -
Debentures issued, net - - 498,626 -
of issue costs
Repayment of credit 8 (65,000) - (65,000) -
facility
Cash flows (used in) / (42,516) 1,284 468,538 13,284
from financing
activities
Effects of exchange (2,298) 5,029 3,619 2,810
rate changes on cash
and cash equivalents
Net (decrease) / (57,018) (19,976) 245,878 7,709
increase in cash and
cash equivalents from
continuing operations
Cash and cash 451,361 203,910 148,465 176,225
equivalents at the
beginning of the
period
Cash and cash 394,343 183,934 394,343 183,934
equivalents at the end
of the period
Supplemental cash flow information (note 15)
The accompanying notes form an integral part of these Interim Consolidated
Financial Statements
Uranium One Inc.
Notes to the Interim Consolidated Financial Statements - Unaudited
as at June 30, 2010 and December 31, 2009
(in United States dollars)
1 NATURE OF OPERATIONS
Uranium One Inc. ("Uranium One"), its subsidiaries and joint ventures
(collectively, the "Corporation") is a Canadian Corporation engaged
through subsidiaries and joint ventures in the mining and production of
uranium, and in the acquisition, exploration and development of
properties for the production of uranium in Kazakhstan, the United States
and Australia.
Through the Betpak Dala joint venture, Uranium One owns a 70% interest in
the Akdala and South Inkai uranium mines in Kazakhstan. The Corporation
holds a 50% interest in the Karatau joint venture, which owns the Karatau
uranium mine in Kazakhstan, and a 30% interest in the Kyzylkum joint
venture, which owns the Kharasan Project in Kazakhstan. In the United
States, the Corporation owns projects in the Powder River and Great
Divide basins in Wyoming. The Corporation owns a 51% interest in the
Honeymoon Uranium Project in Australia. The Corporation owns, either
directly or through joint ventures, a large portfolio of uranium
exploration properties in the western United States, South Australia, and
Canada.
On April 14, 2010, the Corporation sold its South African development and
exploration assets.
2 SIGNIFICANT ACCOUNTING POLICIES
2.1 Basis of presentation and principles of consolidation
These interim unaudited consolidated financial statements have been
prepared in accordance with Canadian generally accepted accounting
principles for interim financial information, they follow the same
accounting policies, and methods of application as the audited
consolidated financial statements of the Corporation for the year ended
December 31, 2009, except as discussed in note 2.2. These interim
unaudited consolidated financial statements do not include all the
information and note disclosure required by the generally accepted
accounting principles for annual financial statements and therefore
should be read in conjunction with the most recent annual audited
consolidated financial statements.
The consolidated financial statements include the accounts of Uranium
One, its subsidiaries and the proportionate share of its interests in
joint ventures. All intercompany balances and transactions have been
eliminated.
The following are the Corporation`s principal mineral properties as at
June 30, 2010:
Operating mines:
Entity Mineral Location Ownership Status
property/Operation
Betpak Dala Akdala Uranium Kazakhstan 70% Proportionately
LLP Mine consolidated
Betpak Dala South Inkai Kazakhstan 70% Proportionately
LLP Uranium Mine consolidated
Karatau LLP Karatau Uranium Kazakhstan 50% Proportionately
Mine consolidated
Advanced development projects:
Entity Mineral Location Ownership Status
property/Operation
Kyzylkum Kharasan Uranium Kazakhstan 30% Proportionately
LLP Project consolidated
The Corporation is also developing the following mineral properties:
Entity Mineral Location Ownership Status
property/Operation
Uranium One United States United 100% Consolidated
Americas, development States
Inc. projects
Honeymoon Honeymoon Project Australia 51% Proportionately
Uranium consolidated
Project
Joint
Venture
The Corporation owns a 19% interest in the SKZ-U joint venture, which is
constructing a sulphuric acid plant in Kazakhstan (note 4.1).
2.2 Adoption of new standards and recent accounting pronouncements
Business combinations
CICA Section 1582 - "Business Combinations", which replaces CICA Section
1581 - "Business Combinations", establishes standards for the accounting
for a business combination. It is the Canadian GAAP equivalent to
International Financial Reporting Standard ("IFRS") 3, "Business
Combinations". This standard is effective for the Corporation`s business
combinations with acquisition dates on or after January 1, 2011. Early
adoption is permitted and the Corporation adopted this standard effective
January 1, 2010. The adoption of this standard did not result in a
material impact on the Corporation`s consolidated financial statements.
Consolidated financial statements and non-controlling interests
CICA Section 1601 - "Consolidated Financial Statements" ("Section 1601")
and Section 1602 - "Non-controlling Interests" ("Section 1602") replaces
CICA Handbook Section 1600 - "Consolidated Financial Statements".
Sections 1601 and 1602 establish standards for preparation of
consolidated financial statements and the accounting for non-controlling
interests in financial statements that are equivalent to the standards
under IFRS. These standards are effective for the Corporation for
interim and annual financial statements beginning on January 1, 2011.
Early adoption is permitted and the Corporation adopted this standard
effective January 1, 2010. The adoption of this standard did not result
in a material impact on the Corporation`s consolidated financial
statements.
Financial instruments - recognition and measurement
In June 2009, the CICA amended Section 3855 to clarify the application of
the effective interest rate method after a debt instrument has been
impaired and when an embedded prepayment option is separated from its
host debt instrument at initial recognition for accounting purposes. The
amendments are applicable for the Corporation`s interim and annual
financial statements for its fiscal year beginning January 1, 2011.
Earlier adoption is permitted. The Corporation is currently evaluating
the future impact of this section on its financial statements. The
adoption of this standard did not result in a material impact on the
Corporation`s consolidated financial statements.
3 ACQUISITIONS AND DISPOSALS
3.1 Acquisition of Christensen Ranch and Irigaray
The Corporation entered into a definitive agreement on August 7, 2009 to
acquire 100% of the MALCO Joint Venture ("MALCO") from wholly-owned
subsidiaries of AREVA and ElectricitE de France for $35.3 million in
cash. The assets of MALCO include the licensed and permitted Irigaray
ISR central processing plant, the Christensen Ranch satellite ISR
facility and associated U3O8 resources located in the Powder River Basin
of Wyoming. The Corporation also assumed MALCO`s reclamation liabilities
in respect of uranium properties in Texas.
Pursuant to the acquisition agreement, the Corporation placed a deposit
of $8.8 million in escrow to be applied against the purchase price. The
acquisition closed on January 25, 2010. The Corporation accounted for
the acquisition as a business combination.
The Corporation agreed to pay a portion of operating costs and all of the
Texas reclamation costs incurred from the execution date of August 7,
2009 to the closing date of January 25, 2010 which amounted to $2.6
million. Transaction costs incurred in connection with the acquisition
were $0.5 million, which were expensed as incurred.
The aggregate fair values of assets acquired and liabilities assumed were
as follows on acquisition date:
$`000
Purchase price:
Cash 35,315
Operating and remediation costs 2,619
37,934
Net assets acquired:
Cash and cash equivalents 315
Accounts and other receivables 2,005
Mineral interests, plant and 56,364
equipment
Accounts payable and accrued (34)
liabilities
Asset retirement obligations (7,320)
Future income tax liabilities (13,396)
37,934
3.2 Acquisition of Akbastau Uranium Mine and Zarechnoye Uranium Mine
The Corporation announced on June 8, 2010, the signing of a definitive
purchase and subscription agreement to acquire a 50% joint venture
interest in the Akbastau Uranium Mine ("Akbastau") and a 49.67% joint
venture interest in the Zarechnoye Uranium Mine ("Zarechnoye") in
Kazakhstan from JSC Atomredmetzoloto ("ARMZ"), the Russian state-owned
uranium mining company. Kazatomprom owns 50% and 49.67% joint venture
interests in Akbastau and Zarechnoye, respectively. The remainder of the
interest in Zarechnoye is held by a Kyrgyz company.
Pursuant to the transaction, ARMZ will contribute its interests in the
Akbastau and Zarehnoye joint ventures and a cash investment in return for
common shares of the Corporation. Following closing, the Corporation
will pay a special cash dividend to shareholders other than ARMZ. Each
of the cash investment, number of shares and special dividend is
dependent on whether Japan Uranium Management Inc. ("JUMI") exercises its
right of repurchase under the terms of its convertible debenture which
will be triggered by the transaction with ARMZ. On July 30, 2010, JUMI
undertook to exercise its right of repurchase. As a result of this
election, the cash investment by ARMZ will be $610 million; the number of
shares to be issued by the Corporation will be 356 million; and the
special dividend to be paid to shareholders other than ARMZ will be
$1.06.
Upon completion of the transaction, ARMZ will own not less than 51% of
Uranium One`s outstanding common shares. ARMZ has agreed to a standstill
of 18 months from closing during which it may not, without prior consent,
dispose of or acquire any additional Uranium One shares, except pursuant
to agreed anti-dilution rights, which will permit ARMZ to maintain not
less than a 51% interest in Uranium One and to certain other exceptions.
On July 15, 2010 the Independent Committee and the Board of Directors of
Uranium One have resolved to recommend the transaction to shareholders
and announced the completion of legal due diligence reviews by both
parties.
The transaction is subject to Uranium One shareholder approval, including
majority of minority approval (the minority being all shareholders
excluding ARMZ), to be sought at a shareholders meeting expected to be
held in August 2010, as well as to required Kazakh and other regulatory
approvals, and other usual and customary closing conditions. The
transaction is expected to be completed before the end of 2010.
3.3 Disposal of Uranium One Africa
The Corporation completed the sale of Uranium One Africa during April
2010, and received cash proceeds of $37.3 million. The net carrying
value of the investment of $38.5 million as at December 31, 2009 was
further impaired to the proceeds of $37.3 million, resulting in an
impairment of $1.2 million in the three months ended March 31, 2010.
4 JOINT VENTURES
4.1 Proportionate interests in joint ventures
The Corporation owns the following interests in joint ventures:
Betpak Dala 70%
Kyzylkum 30%
Karatau 50%
SKZ-U LLP 19%
Honeymoon 51%
Australia Exploration 50%
The Corporation`s proportionate share of the assets and liabilities of
the joint ventures are as follows:
As at June 30, 2010 Betpak Kyzylkum Karatau
Dala
$`000 $`000 $`000
Cash 15,354 3,456 95
Other current assets 83,813 703 33,702
Mineral interests, 641,033 205,259 500,705
plant and equipment
Other assets 2,132 358 1,749
Current liabilities (13,407) (7,141) (12,738)
Other (1,379) (48,129) (57,906)
liabilities(1)(2)(3)
Future income tax (54,269) (12,306) (75,529)
liabilities
Asset retirement (8,545) (1,422) (2,985)
obligation
Net Assets 664,732 140,778 387,093
As at June SKZ-U Honeymoon & Total
30, 2010 Australia
exploration
$`000 $`000 $`000
Cash 7,279 7,962 34,146
Other current 26 793 119,037
assets
Mineral interests, 6,082 92,515 1,445,594
plant and
equipment
Other assets 9,494 4,761 18,494
Current (360) (1,619) (35,265)
liabilities
Other liabilities (10,030) (34) (117,478)
(1) (2) (3)
Future income tax - (3,845) (145,949)
liabilities
Asset retirement - (717) (13,669)
obligation
Net Assets 12,491 99,816 1,304,910
(1) In addition to the $35 million loan (note 4.2) from the Corporation,
Kyzylkum negotiated unsecured bank loan facilities totaling $160 million
in prior periods. One facility, in the amount of $70 million, was
obtained from the Japan Bank for International Cooperation ("JBIC") and
the other facility, in the amount of $90 million, was obtained from
Citibank. These facilities were fully drawn down as at June 30, 2010,
and the Corporation`s share of these facilities is $48 million.
Negotiations are currently underway to extend the repayment terms of
these facilities, due to the delayed ramp-up schedule at Kharasan. While
the negotiations for additional funding are in progress, Kyzylkum is
being financed through the receipt of pre-payments on its sales
contracts.
(2) Karatau negotiated and drew down on a secured short term bank loan
totaling $10 million with Citibank during 2009. During the six months
ended June 30, 2010, Karatau negotiated additional secured bank loans
from Halyk Bank, in the amount of $11 million and Unicredit Bank in the
amount of $40 million. The Halyk Bank and Unicredit bank facilities were
drawn down in full, an additional $0.8 million was drawn down against the
Citibank short term loan and $5 million was repaid against the Citibank
facility during the period. The Corporation issued a guarantee to
Unicredit Bank to secure the $40 million facility. At June 30, 2010, the
Corporation`s share of these loans is $28.4 million.
(3) In addition to the $12.4 million loan (note 4.2) from the
Corporation, SKZ-U received unsecured loans from Sumitomo Mitsui Banking
Corporation, Mizuho Corporate Bank and JBIC in the amounts of $10.6
million, $10.6 million and $31.6 million respectively. At June 30, 2010,
the Corporation`s share of these loans is $10.0 million.
As at December 31, Betpak Dala Kyzylkum Karatau
2009
$`000 $`000 $`000
Cash 3,062 871 160
Other current assets 77,871 274 18,930
Mineral interests, 658,509 205,293 510,494
plant and equipment
Other assets 1,479 389 1,924
Current liabilities (8,494) (4,034) (27,020)
Other liabilities (1,479) (48,781) (16,687)
(1) (2)
Future income tax (55,844) (12,223) (74,637)
liabilities
Asset retirement (8,170) (1,356) (2,847)
obligation
Net Assets 666,934 140,433 410,317
As at December 31, SKZ-U Honeymoon & Total
2009 Australia
exploration
$`000 $`000 $`000
Cash 412 5,163 9,668
Other current assets 5 1,388 98,468
Mineral interests, 3,537 78,039 1,455,872
plant and equipment
Other assets 7,018 - 10,810
Current liabilities (38) (2,575) (42,161)
Other liabilities - (34) (66,981)
(1) (2)
Future income tax - (4,074) (146,778)
liabilities
Asset retirement - (705) (13,078)
obligation
Net Assets 10,934 77,202 1,305,820
(1) In addition to the $35 million loan (note 4.2) from the Corporation,
Kyzylkum negotiated unsecured bank loan facilities totaling $160 million
in prior periods. One facility, in the amount of $70 million, was
obtained from the Japan Bank for International Cooperation ("JBIC") and
the other facility, in the amount of $90 million, was obtained from
Citibank. These facilities were fully drawn down as at December 31,
2009, and the Corporation`s share of these facilities is $48 million.
Karatau negotiated a secured short term bank loan totaling $10 million
with Citibank and the Corporation`s share of this loan is $5 million.
4.1 Proportionate interests in joint ventures (continued)
The Corporation`s proportionate share of revenue, expenses, net earnings
/ (loss) and cash flows for the three and six months ended June 30, 2010
and 2009 are as follows:
Three months ended
June 30, 2010
Betpak Kyzylkum Honeymoon & Total
Dala Australia
exploration
$`000 $`000 $`000 $`000
Revenue 51,174 - - 62,566
Expenses and (33,863) 48 (262) (42,165)
other income
Foreign (1,578) 270 - (906)
exchange
(loss) / gain
Earnings / 15,733 318 (262) 19,495
(loss) before
income taxes
Current income (5,069) - - (6,277)
tax expense
Future income 694 - 75 425
tax recovery /
(expense)
Earnings / 11,358 318 (187) 13,643
(loss)
Cash flows 1,200 - - (9,727)
from / (used
in) operating
activities
Cash flows (6,424) (4,275) (8,591) (33,591)
used in
investing
activities
Cash flows 2,007 7,642 8,176 42,708
from financing
activities
Net (decrease) (3,217) 3,367 (415) (610)
/ increase in
cash
Three months ended
June 30, 2009
Betpak Kyzylkum Honeymoon & Total
Dala Australia
exploration
$`000 $`000 $`000 $`000
Revenue 18,557 - - 18,557
Expenses and (11,886) 263 (271) (11,894)
other income
Foreign (2,249) (641) - (2,890)
exchange
loss
Earnings / 4,422 (378) (271) 3,773
(loss)
before
income taxes
Current (3,022) (6) - (3,028)
income tax
expense
Future (242) - - (242)
income tax
expense
Earnings / 1,158 (384) (271) 503
(loss)
Cash flows (14,038) 449 (93) (13,682)
(used in) /
from
operating
activities
Cash flows (4,364) (5,209) (1,604) (11,177)
used in
investing
activities
Cash flows - - - -
from
financing
activities
Net decrease (18,402) (4,760) (1,697) (24,859)
in cash
Six months ended
June 30, 2010
Betpak Kyzylkum Karatau
Dala
$`000 $`000 $`000
Revenue 79,047 - 16,983
Expenses and other (54,685) (216) (13,734)
income
Foreign exchange (loss) (4,056) 168 (449)
/ gain
Earnings / (loss) 20,306 (48) 2,800
before income taxes
Current income tax (7,536) - (1,789)
expense
Future income tax 1,914 (8) (391)
recovery / (expense)
Earnings / (loss) 14,684 (56) 620
Cash flows from / (used 23,346 - (15,706)
in) operating
activities
Cash flows used in (11,053) (5,363) (7,768)
investing activities
Cash flows from - 7,948 23,410
financing activities
Net increase / 12,293 2,585 (64)
(decrease) in cash
SKZ-U Honeymoon Total
&
Australia
explorati
on
$`000 $`000 $`000
Revenue - - 96,030
Expenses and other 13 (268) (68,890)
income
Foreign exchange (loss) (4) - (4,341)
/ gain
Earnings / (loss) 9 (268) 22,799
before income taxes
Current income tax - - (9,325)
expense
Future income tax - 80 1,595
recovery / (expense)
Earnings / (loss) 9 (188) 15,069
Cash flows from / (used - - 7,640
in) operating
activities
Cash flows used in (9,717) (20,030) (53,931)
investing activities
Cash flows from 16,584 22,830 70,772
financing activities
Net increase / 6,867 2,800 24,481
(decrease) in cash
Six months ended
June 30, 2009
Betpak Kyzylkum Honeymoon Total
Dala &
Australia
exploratio
n
$`000 $`000 $`000 $`000
Revenue 61,526 - - 61,526
Expenses and (38,613) (9) (451) (39,073)
other income
Foreign exchange 56,955 12,534 - 69,489
gain
Earnings / 79,868 12,525 (451) 91,942
(loss) before
income taxes
Current income (12,725) (9) - (12,734)
tax expense
Future income 3,004 - - 3,004
tax recovery
Earnings / 70,147 12,516 (451) 82,212
(loss)
Cash flows from 11,989 374 (26) 12,337
/ (used in)
operating
activities
Cash flows used (5,634) (11,604) (2,602) (19,840)
in investing
activities
Cash flows from - 12,000 - 12,000
financing
activities
Net increase / 6,355 770 (2,628) 4,497
(decrease) in
cash
4.2 Loans to joint ventures
Jun 30, Dec 31,
2010 2009
$`000 $`000
Long term portion
Kyzylkum 26,548 25,698
SKZ-U 10,142 3,552
Total 36,690 29,250
Kyzylkum loan
The Corporation made loans to Kyzylkum pursuant to its obligation to
provide project financing for construction and commissioning of the
Kharasan Project in the amount of $80 million. The loans bear interest
at LIBOR plus 1.5% per annum, with interest payable on a semi-annual
basis, commencing within two years of initial funding.
Jun 30, Dec 31,
2010 2009
$`000 $`000
Balance at January 1 35,000 46,666
Repaid during the period - (11,666)
35,000 35,000
Interest accrued 2,925 1,711
Balance at the end of the period 37,925 36,711
Less: elimination of (11,377) (11,013)
proportionate share - 30%
26,548 25,698
Less: current portion - -
Long term portion 26,548 25,698
The loans to Kyzylkum are unsecured.
Kyzylkum has suspended scheduled payments of principal and interest to
the Corporation pending receipt of additional financing currently being
arranged by the Corporation and its partners in the Kyzylkum joint
venture. The repayments of the $35 million principal due from Kyzylkum
are likely to be deferred as part of the financing of Kyzylkum`s
activities. The Corporation therefore classified the amount outstanding
on the loan to Kyzylkum as non-current.
SKZ-U loan
The Corporation made loans to SKZ-U pursuant to its obligation to provide
project financing for construction of a sulphuric acid plant in the
amount of $12.4 million. The loans bear interest at LIBOR plus 6.0% per
annum, with interest payable on a semi-annual basis, commencing within
three years of initial funding.
Jun 30, Dec 31,
2010 2009
$`000 $`000
Balance at January 1 4,291 -
Repaid during the period (4,291) -
Additions during the period 12,383 4,291
12,383 4,291
Interest accrued 138 94
Balance at the end of the period 12,521 4,385
Less: elimination of (2,379) (833)
proportionate share - 19%
Less: current portion - -
Long term portion 10,142 3,552
The loans to SKZ-U are unsecured.
5 INVENTORIES
Jun 30, Dec 31,
2010 2009
$`000 $`000
Finished uranium concentrates 64,892 41,055
Solutions and concentrates in 19,088 24,871
process
Product inventory 83,980 65,926
Materials and supplies 8,235 5,708
92,215 71,634
All operating expenses and depreciation and depletion are processed to
inventory and expensed when the product is sold.
Finished uranium concentrates includes a fair value adjustment of $8.9
million at December 31, 2009 that was recognized on acquisition of
Karatau, to increase the carrying value to fair market value. The full
amount was released to the statement of operations as non-cash
depreciation and depletion for sales made up to June 30, 2010.
6 MINERAL INTERESTS, PLANT AND EQUIPMENT
June 30, 2010 Accumulated Net
carrying
Cost amortization Amount
$`000 $`000 $`000
Mineral interests 1,531,505 (113,358) 1,418,147
Plant and equipment 440,492 (56,829) 383,663
1,971,997 (170,187) 1,801,810
December 31, 2009 Accumulated Net
carrying
Cost amortization Amount
$`000 $`000 $`000
Mineral interests 1,485,968 (82,852) 1,403,116
Plant and equipment 385,621 (40,453) 345,168
1,871,589 (123,305) 1,748,284
A summary by property of the net book value is as follows:
June 30, 2010 Mineral interests
Non- Plant Total
depletabl and
e equipmen
t
Depleta Total
ble
Country $`000 $`000 $`000 $`000 $`000
Akdala Mine Kazakhs 69,088 74,358 143,446 27,100 170,546
tan
South Inkai Mine Kazakhs 97,992 269,817 367,809 102,290 470,099
tan
Karatau Mine Kazakhs 126,668 312,575 439,243 61,462 500,705
tan
Kharasan Project Kazakhs - 140,078 140,078 71,263 211,341
tan
United States United - 139,287 139,287 45,465 184,752
development States
projects
United States United - 117,015 117,015 489 117,504
exploration States
projects
United States United - 39,107 39,107 820 39,927
conventional States
mining projects
Honeymoon Austral - 30,527 30,527 61,988 92,515
Project ia
Corporate and - 1,635 1,635 12,786 14,421
other
Total 293,748 1,124,399 1,418,147 383,663 1,801,810
December Mineral interests
31, 2009
Non- Plant Total
and
equipmen
t
Deplet depleta Total
able ble
Country $`000 $`000 $`000 $`000 $`000
Akdala Mine Kazakhs 77,199 74,358 151,557 28,149 179,706
tan
South Inkai Kazakhs 194,753 181,068 375,821 102,598 478,419
Mine tan
Karatau Kazakhs 141,052 312,575 453,627 56,867 510,494
Mine tan
Kharasan Kazakhs - 140,078 140,078 68,752 208,830
Project tan
United United - 94,653 94,653 26,873 121,526
States States
development
projects
United United - 114,905 114,905 493 115,398
States States
exploration
projects
United United - 38,896 38,896 1,014 39,910
States States
conventiona
l mining
projects
Honeymoon Austral - 31,830 31,830 46,209 78,039
Project ia
Corporate - 1,749 1,749 14,213 15,962
and other
Total 413,004 990,112 1,403,116 345,168 1,748,284
7 OTHER ASSETS
Jun 30, Dec 31,
2010 2009
$`000 $`000
Current
Borrowed uranium concentrates 8,351 8,900
Future income tax assets 1,117 1,070
Deposit for acquisition of - 8,750
Christensen Ranch and Irigaray (note
3.1)
Deferred business development - 5,174
expenditure
Other 578
9,862 24,472
Non-current
Asset retirement fund 29,207 13,500
Advances for plant and equipment 10,177 7,487
Long term deposits and guarantees 344 347
Long term inventory 871 1,244
Available for sale securities 11,417 9,287
Other 1,430 1,272
53,446 33,137
Asset retirement fund
The Corporation contributed $15.4 million to its asset retirement fund as
part security for the additional asset retirement obligations acquired as
part of the acquisition of Christensen Ranch and Irigaray (note 3.1).
Uranium concentrates borrowed
The Corporation entered into uranium concentrates borrowing agreements to
mitigate the risk of delivery delays, enabling the Corporation to meet
its contractual obligations in terms of current uranium sales contracts.
The asset represents the borrowed uranium concentrates, which are held at
a conversion facility in the Corporation`s account. The asset is
recorded at its fair value. 130,000 pounds of borrowed uranium
concentrates, with a fair value of $4.7 million (note 10), were delivered
into sales contracts during the period due to shipping delays in respect
of product produced by Karatau.
Available for sale securities
The Corporation holds available for sale securities with a cost of $15.9
million and a fair value of $11.4 million. Unrealized losses of $4.5
million are included in accumulated other comprehensive income.
8 LONG TERM DEBT
Jun 30, Dec 31,
2010 2009
$`000 $`000
Opening balance 63,579 61,275
Amortized financing fees 1,507 2,371
Interest paid (806) (1,210)
Interest accrued 720 1,143
Repaid (65,000) -
Closing balance - 63,579
Current portion - 63,579
Long term portion - -
- 63,579
The Corporation established a $100 million credit facility with the Bank
of Montreal and the Bank of Nova Scotia in 2008. According to the terms
of the credit facility, the Corporation repaid the outstanding amount of
$65 million during the quarter and extended the maturity date of the
facility to September 30, 2010. Letters of credit in the amount of $8.7
million have been issued under the credit facility. Cash collateral of
$8.6 million has been provided in respect of letters of credit with
expiry dates after June 27, 2010 issued under the credit facility, in
accordance with the credit agreement.
9 CONVERTIBLE DEBENTURES
2006 Debentures
The Corporation has outstanding convertible unsecured subordinated
debentures maturing December 31, 2011 (the "2006 Debentures") with a face
value of C$155.3 million ($152.4 million). The 2006 Debentures were
originally issued at C$1,000 per debenture and bear interest at an annual
rate of 4.25%, payable semi-annually in arrears on June 30 and December
31 of each year. The conversion price is C$20 per share, which is
equivalent to 50 common shares for each C$1,000 principal amount of
debentures.
2010 Debentures
On March 12, 2010 the Corporation issued convertible unsecured
subordinated debentures for gross proceeds of C$260 million ($253.3
million), including C$10 million taken up under an underwriters` over-
allotment option. The 2010 Debentures have a March 13, 2015 maturity
date, with interest payable at a rate of 5.0% per annum, payable semi-
annually from the date of receipt of all necessary Kazakh approvals for
the conversion of the 2010 Debentures, or at a rate of 7.5% per annum,
payable semi-annually before the receipt of the necessary Kazakh
approvals. The 2010 Debentures will be convertible into common shares of
the Corporation after receipt of all necessary Kazakh approvals, at a
rate of 250 common shares per C$1,000 principal and will have a
conversion price of C$4.00 per common share.
JUMI Debentures
On January 14, 2010, the Corporation issued to Japan Uranium Management
Inc. ("JUMI") a C$269.1 million ($258.1 million ) aggregate principal
amount 3% convertible unsecured subordinated debenture maturing ten years
from the date of issue (the "JUMI Debentures"). Pursuant to the JUMI
Debentures, the Corporation must offer to re-purchase the JUMI Debentures
for 101% of the outstanding principal amount plus accrued interest upon a
"change of control". The proposed transaction with ARMZ (note 3.2)
constitutes a "change of control" and on July 30, 2010, the Corporation
made such a re-purchase offer to JUMI which JUMI accepted, subject to the
closing of the transaction with ARMZ. The JUMI Debentures was also
amended on July 30, 2010 such that the JUMI Debentures cannot be
converted into common shares of the Corporation unless the proposed
transaction with ARMZ is terminated.
The debentures contain both a liability component and an equity
component, being the holders` conversion right, which is presented
separately on the consolidated balance sheet as illustrated in the table
below. The Corporation has allocated the fair value of the debentures to
the individual liability and equity components by establishing the
liability component and then allocating the balance remaining, after
subtracting the fair value of the liability from the issue price, to the
equity component. The fair value of the liability component was
determined by discounting the stream of future payments of interest and
principal amounts at the estimated prevailing market rate for a debt
instrument of comparable maturity and credit quality but excluding any
conversion privilege by the holder. A rate of 10.38% was used for the
2010 Debentures and 11.33% for the JUMI Debentures.
The table below provides a breakdown of the equity and liability
allocation on initial recognition of the JUMI Debentures and 2010
Debentures:
JUMI 2010
Debentures Debentures
$`000 $`000
Liability 131,378 207,203
Transaction costs (1,050) (10,357)
Net liability 130,328 196,846
Equity 126,727 46,068
Transaction costs (1,035) (2,054)
Net equity 125,692 44,014
Net proceeds 256,020 240,860
The table below indicates the movement in the liability:
June 30, 2010
JUMI 2010 2006 Total
Debentures Debentures Debentures
$`000 $`000 $`000 $`000
Opening balance as - - 140,862 140,862
at Jan 1, 2010
Issued 131,378 207,203 - 338,581
Interest accrued 6,906 6,925 4,896 18,727
Coupon payment (3,556) (5,658) (3,176) (12,390)
Transaction costs (1,050) (10,357) - (11,407)
Foreign exchange (780) (4,384) 90 (5,074)
movement
Liability as at the 132,898 193,729 142,672 469,299
end of the period
December 31, 2009
2006 Total
Debentures
$`000 $`000
Opening balance as 118,042 118,042
at Jan 1, 2009
Interest incurred 8,739 8,739
Coupon payment (6,049) (6,049)
Foreign exchange 20,130 20,130
movement
Liability as at the 140,862 140,862
end of the period
10 OTHER LIABILITIES
Jun 30, Dec 31,
2010 2009
$`000 $`000
Current
Promissory note - 90,211
Contingent payment - 20,000
Unfavorable contract 281 11,655
Uranium concentrates loan (note 7) 13,018 8,900
Joint venture external loan 29,181 5,000
facilities
Other 1,342 1,277
43,822 137,043
Non-current
Joint venture external loan 57,656 47,574
facilities
Due to the Republic of Kazakhstan 1,558 1,696
Other 150 181
59,364 49,451
Uranium concentrates loan
On September 22, 2008, the Corporation entered into a loan agreement to borrow
200,000 pounds of U3O8 to be repaid on September 30, 2010. Under the loan
agreement, loan fees of 3.5% per annum are payable based on the value of the
borrowed U3O8. The loan was classified as a financial liability held for
trading and is recorded at fair value. The Corporation deposited $8.6 million
as cash collateral for the letter of credit that was issued as a guarantee for
the loan during the period.
During the period, the Corporation entered into a further short term borrowing
agreement to borrow 130,000 pounds of U308 and the borrowed material was
delivered into a contract to simplify logistical arrangements. The financial
liability is held for trading and is carried at fair value.
A director of Uranium One, is also a senior officer of an entity that advanced
a uranium loan to the Corporation.
The Corporation does not recognize revenue when borrowed material is delivered
into a contract, and revenue will be recognized on the date when the material
is returned into the Corporation`s account from its own production.
Unfavourable contract
The Corporation acquired an unfavorable contract as part of the Karatau
acquisition during 2009, which is carried at fair value. The Corporation
realized $6.7 million and $10.1 million of the fair value in revenue during
the three and six months ended June 30, 2010 respectively, for deliveries into
the unfavorable contract. A fair value adjustment of $0.1 million and $1.3
million was recorded in the statement of operations for the change in the
uranium price during the three and six months ended June 30, 2010,
respectively
Promissory note
During 2009, the Corporation issued a $90 million promissory note as part of
the consideration for the purchase of Karatau. The promissory note was due
not later than 12 months from closing and was repaid on January 18, 2010.
Contingent payment
The Karatau purchase agreement provides for contingent payments to ARMZ of up
to $60 million, payable in three equal tranches over the period between 2010
and 2012 subject to certain, post-closing tax related adjustments. The first
payment of $20 million was made during January 2010. The Corporation has not
recognized the remaining $40 million contingent payments as a liability, as
the requirement to make such payment will not be determinable until January 1,
2011 and 2012, respectively.
11 SHARE CAPITAL
Number of Value of
Issued and outstanding common shares shares shares
$`000
Common shares on January 1, 2009 469,612,956 3,522,824
Exercise of stock options 600,184 6,599
Exercise of restricted shares 44,836 257
Contingent shares issued 165,600 388
Karatau acquisition shares issued 117,000,000 293,229
Issued and outstanding common shares 587,423,576 3,823,297
at December 31, 2009
Exercise of stock options 71,200 659
Issued and outstanding common shares 587,494,776 3,823,956
at June 30, 2010
12 CONTRIBUTED SURPLUS
The following table details the movement of contributed surplus during the
period:
Restric
ted
Warrant shares Options Total
s
$`000 $`000 $`000 $`000
As at January 1, 13,912 1,606 116,084 131,602
2009
Stock options - - 7,027 7,027
issued and vested
Stock options - - (5,369) (5,369)
exercised
Restricted shares - 475 - 475
issued and vested
Restricted shares - (257) - (257)
exercised
As at December 31, 13,912 1,824 117,742 133,478
2009
Stock options - - 3,584 3,584
issued and vested
Stock options - - (551) (551)
exercised
Restricted shares - 187 - 187
issued and vested
As at June 30, 2010 13,912 2,011 120,775 136,698
Assumptions
The fair value of stock options and restricted shares used to calculate the
compensation expense was estimated using the Black-Scholes option pricing
model with the following assumptions:
June 30, December
2010 31, 2009
Risk free interest rate 2.79% 1.70% -
2.82%
Expected dividend yield 0% 0%
Expected volatility of the Uranium 94% 98% - 115%
One`s share price
Expected life 5 years 5 years
Warrants
The Corporation has no outstanding warrants at June 30, 2010 (December 31,
2009: nil).
Stock options
The following is a summary of options granted under the stock-based
compensation plan:
Weighted
Number of average
options exercise
price
Cdn $
Outstanding options as at January 15,858,517 7.82
1, 2009
Granted options 6,292,351 2.23
Exercised options (600,184) 2.25
Forfeitures of stock options (2,986,524 6.89
)
Outstanding options as at December 18,564,160 6.26
31, 2009
Granted options 4,446,400 2.79
Exercised options (71,200) 1.56
Forfeitures of stock options (1,292,595 7.00
)
Outstanding options as at June 30, 21,646,765 5.52
2010
The stock option compensation expense for the three and six month periods
ended June 30, 2010 was $1.7 million and $3.6 million respectively, and for
the three and six month periods ended June 30, 2009 it was $2.2 million and
$3.4 million. As at June 30, 2010, the aggregate unexpensed fair value of
unvested stock options granted amounted to $10.0 million. The fair value of
options granted during the six month period amounts to $9.0 million, $2.03 per
option (during the six months ended June 30, 2009: $8.0 million, $1.29 per
option).
The following table summarizes stock options outstanding at June 30, 2010:
Options outstanding Options exercisable
Range Number Weight Weight Number Weighted Weighted
of outstandin ed ed exercisabl average average
exercis g as at averag averag e as at remainin exercise
e June 30, e e June 30, g life price
prices 2010 remain exerci 2010
ing se
life price
Cdn $ (years Cdn $ (years) Cdn $
)
0.78 to 5,913,510 3.53 2.18 2,153,231 3.20 2.16
2.74
2.75 to 7,892,801 3.85 3.27 2,948,918 2.74 3.93
4.76
4.77 to 1,732,097 2.36 7.24 1,727,412 2.36 7.24
7.79
7.80 to 3,024,550 5.20 8.44 3,006,303 5.22 8.44
9.90
9.91 to 1,575,125 2.16 12.15 1,535,460 2.16 12.14
12.93
12.94 562,428 1.65 13.96 531,762 1.62 13.99
to
15.63
15.64 946,254 1.62 16.53 946,254 1.62 16.53
to
16.59
21,646,765 3.55 5.52 12,849,340 3.15 7.46
Restricted share rights
The following is a summary of Uranium One`s restricted shares issued under the
Restricted Share Plan:
Number of
restricted
shares
Balance at January 1, 2009 623,495
Exercised during the year (44,836)
Expired (127,500)
Balance at December 31, 2009 451,159
Expired (16,500)
Balance at June 30, 2010 434,659
The following is a summary of the outstanding restricted share rights:
Number of restricted
shares
Jun 30, Dec 31,
2010 2009
Grant date
June 7, 2006 72,083 72,083
December 8, 2006 4,576 4,576
April 7, 2008 358,000 374,500
Balance at the end of the period 434,659 451,159
Restricted share rights will not expire while the rights holder is an employee
of the Corporation.
The restricted share rights expense for the three and six month periods ended
June 30, 2010 was $0.1 million and $0.2 million respectively, and for the
three and six month periods ended June 30, 2009 was $0.1 million and $0.4
million. As at June 30, 2010 the aggregate unexpensed fair value of unvested
restricted share rights granted amounted to $0.3 million (2009: $1.0 million).
No restricted shares were granted during the three and six months ended June
30, 2010.
Contingently issuable shares
Under the terms of the acquisition agreement for the Kyzylkum JV interest,
Uranium One is obligated to issue 6,964,200 common shares of Uranium One upon
commencement of commercial production from Kyzylkum.
The Corporation assumed all of the obligations of Uranium One Americas, Inc.
(previously Energy Metals Corporation Inc.) and its subsidiaries arising under
certain option and joint venture agreements with third parties. At June 30,
2010 Uranium One has reserved a total of 57,500 common shares for issuance
pursuant to the assumed obligations under contingent share rights agreements.
No contingent shares were issued during the period and no contingent share
rights have lapsed during the period.
13 INTEREST AND OTHER
3 months ended 6 months ended
Jun 30, Jun 30, Jun 30, Jun 30,
2010 2009 2010 2009
$`000 $`000 $`000 $`000
Interest income 1,196 1,652 2,211 2,626
Interest paid (963) (344) (2,055) (693)
Convertible (11,929 (2,123) (18,727 (4,066)
debenture interest ) )
Credit facility (889) (738) (1,752) (1,396)
charges
Interest and costs
incurred on (73) (75) (152) (165)
uranium
concentrates loan
Costs incurred in -
relation to (9) (309) -
letters of credit
(12,667 (1,628) (20,784 (3,694)
) )
14 FOREIGN EXCHANGE GAIN / (LOSS)
A summary of the foreign exchange gain / (loss) by item is as follows:
3 months ended 6 months ended
Jun 30, Jun 30, Jun 30, Jun 30,
2010 2009 2010 2009
$`000 $`000 $`000 $`000
Unrealized foreign
exchange gain / 513 (1,776) (641) 67,123
(loss) on future
income tax
liabilities
Unrealized foreign
exchange gain / 9,210 (1,026) 3,945 998
(loss) on other
items
Foreign exchange
(loss) / gain on (2,923) 1,534 (4,037) 1,070
cash and other
items
6,800 (1,268) (733) 69,191
15 CASH FLOW INFORMATION
3 months ended 6 months ended
Jun 30, Jun 30, Jun 30, Jun 30,
2010 2009 2010 2009
$`000 $`000 $`000 $`000
Changes in non-
cash working
capital excluding
business
combinations:
(Increase) /
decrease in (22,572) (4,756) (11,369) 19,394
accounts and other
receivables
Increase in (660) (7,007) (6,379) (9,342)
inventories
(Decrease) /
increase in (6,260) 2,239 (11,929) (12,817)
accounts payable
and accrued
liabilities
Decrease in income (561) (6,065) (1,637) (4,235)
taxes payable
(30,053) (15,589) (31,314) (7,000)
Supplemental cash
flow information
Cash interest paid 12,646 3,102 13,210 3,500
Cash tax paid 6,837 9,295 11,072 19,082
Cash equivalents
Money market 197,103 96,923 197,103 96,923
instruments,
including cashable
guaranteed
investment
certificates,
bearer deposit
notes and
commercial paper
16 BASIC AND DILUTED WEIGHTED-AVERAGE NUMBER OF SHARES OUTSTANDING
3 months ended 6 months ended
June June June June
30, 30, 30, 30,
2010 2009 2010 2009
`000 `000 `000 `000
Basic weighted- 587,495 469,690 587,466 469,652
average number of
shares outstanding
Effect of dilutive
securities:
-convertible - - - -
debentures
-restricted shares - - - -
-stock options - - - -
-warrants - - - -
Diluted weighted- 587,495 469,690 587,466 469,652
average number of
shares outstanding
For the three and six months ended June 30, 2010 and 2009, convertible
debentures, stock options, warrants and restricted shares were not included in
the dilutive weighted average number of shares outstanding as they were anti-
dilutive.
17 FINANCIAL INSTRUMENTS
As at June 30, 2010: (in $`000)
Convertible JUMI 2010 2006
debentures Debenture Debenture Debenture
Liability component 132,898 193,729 142,672
Equity component 125,692 44,014 46,480
258,590 237,743 189,152
Fair value of N/A 225,429 138,457
convertible
debentures (1)
As at December 31, 2009: (in $`000)
Convertible 2006
debentures Debenture
Liability component 140,862
Equity component 46,480
187,342
Fair value of 131,668
convertible
debentures
(1) The fair value of the JUMI debenture is not determinable as it was issued
pursuant to a private placement and does not have a quoted market price.
The Corporation`s activities expose it to a variety of financial risks,
including the effects of changes in debt and prices of equity instruments
held, foreign currency exchange rates, interest rates, and commodity prices.
The Corporation continuously monitors its exposure to risk. The risk
management carried out by the Corporation is approved by the Board of
Directors. The following section describes the type of significant risks that
the Corporation is exposed to and its objectives and policies for managing
those risk exposures.
(i) Foreign exchange risk
The foreign exchange risk relates to the risk that the value of financial
commitments, recognized assets or liabilities will fluctuate due to
changes in foreign currency rates.
The Corporation is primarily exposed to foreign currency risk through the
following assets and liabilities denominated in currencies other than US
dollars:
Financial assets and liabilities Non-financial
assets
and
liabilities
Cash Account Account Conver Minera Future
and s s tible l income
cash receiva payable debent intere tax
equiva ble and ures sts liabil
lents accrued plant ities
liabili and
ties equipm
ent
(1)
June
30,
2010
$`000 $`000 $`000 $`000 $`000 $`000
Canadia 115,16 1,512 14,255 469,29 - -
n 8 9
dollar
Austral 22,395 449 2,695 - 92,514 3,845
ian
dollar
Kazakhs 14,117 27,971 33,038 - - 142,10
tan 4
tenge
Euro 127 - 239 - - -
151,80 29,932 50,227 469,29 92,514 145,94
7 9 9
Financial assets and liabilities Non-financial
assets and
liabilities
Decembe Cash Account Accoun Conver Minera Future
r 31, and s ts tible l income
2009 cash receiva payabl debent intere tax
equival ble e and ures st liabil
ents accrue plant ities
d and
liabil equipm
ities ent
$`000 (1)
$`000 $`000 $`000 $`000 $`000
Canadia 170 2,539 6,186 140,86 - -
n 2
dollar
Austral 22,071 1,571 4,369 - 78,039 4,074
ian
dollar
Kazakhs 3,496 28,981 37,761 - - 142,70
tan 4
tenge
Euro 41 - 9 - - -
South 674 - - - - -
African
rand
26,452 33,091 48,325 140,86 78,039 146,77
2 8
(1) Only includes mineral interests, plant and equipment of self-sustaining
operations.
The following table shows the effect on earnings and other comprehensive
income after tax as at June 30, 2010 of a 10% appreciation or depreciation in
the foreign currencies against the US dollar on the above-mentioned financial
and non-financial assets and liabilities of the Corporation.
Other
comprehensive Net
income Earnings
A 10% appreciation in all foreign (1,198) 15,227
currencies against the US dollar,
with all other variables held
constant.
A 10% depreciation in exchange rates would have the exact opposite effect on
other comprehensive income and net earnings.
(ii) Interest rate risk
The Corporation is exposed to interest rate risk on its outstanding borrowings
and short-term investments. The Corporation has outstanding interest-bearing
borrowings as at June 30, 2010 which include the loan facilities obtained by
Kyzylkum and Karatau (note 4.1) which bear interest at floating rates and the
convertible debentures, with fixed interest rates.
A 100 basis point change in interest rate would impact the Corporation`s net
earnings as follows:
Jun 30, Dec 31,
2010 2009
$`000 $`000
A 100 basis point appreciation in
interest rates, with all other
variables
held constant 1,585 1,659
A 100 basis point depreciation in interest rate would have the exact opposite
effect on net earnings.
18 SEGMENTED INFORMATION
The Corporation`s reportable operating segments are summarized in the table
below:
For the three months ended June 30, 2010: (in $`000)
Country Revenues Operating Depreciatio
expenses n and
depletion
$`000 $`000 $`000
Akdala Mine Kazakhstan 25,958 (7,279) (6,180)
South Inkai Kazakhstan 28,623 (13,103) (7,646)
Mine
Karatau Mine Kazakhstan 11,392 (1,771) (5,617)
Kharasan Kazakhstan - - -
Project
United States United - - -
development States
projects
United States United - - -
exploration States
projects
United States United - - -
conventional States
mining
projects
Honeymoon Australia - - -
Project
Corporate - - -
and other
Total 65,973 (22,153) (19,443)
For the three months ended June 30, 2010: (in $`000)
Country Exploratio Net earnings/ Capital
n expense (loss) from expenditure
continuing
operations
$`000 $`000 $`000
Akdala Mine Kazakhstan - 8,828 1,119
South Inkai Kazakhstan - 5,303 5,485
Mine
Karatau Mine Kazakhstan - 2,204 2,472
Kharasan Kazakhstan - 622 2,717
Project
United States United - 1,148 5,341
development States
projects
United States United (1,059) (948) -
exploration States
projects
United States United - (298) 4
conventional States
mining
projects
Honeymoon Australia (340) (145) 7,469
Project
Corporate and - (26,455) 296
other
Total (1,399) (9,741) 24,903
For the six months ended June 30, 2010: (in $`000)
Country Revenues Operating Depreciation
expenses and depletion
$`000 $`000 $`000
Akdala Kazakhstan 34,721 (10,102) (8,371)
Mine
South Kazakhstan 49,798 (22,818) (13,905)
Inkai Mine
Karatau Kazakhstan 16,983 (3,403) (9,632)
Mine
Kharasan Kazakhstan - - -
Project
United United States - - -
States
developmen
t projects
United United States - - -
States
exploratio
n projects
United United States - - -
States
convention
al mining
projects
Honeymoon Australia - - -
Project
Corporate - - -
and other
Total 101,502 (36,323) (31,908)
For the six months ended June 30, 2010: (in $`000)
Country Exploratio Net Capital
n expense earnings/ expenditure
(loss) from
continuing
operations
$`000 $`000 $`000
Akdala Kazakhstan - 10,774 1,760
Mine
South Kazakhstan - 5,508 8,478
Inkai Mine
Karatau Kazakhstan - 620 3,868
Mine
Kharasan Kazakhstan - (1,981) 4,242
Project
United United States - 2,433 8,662
States
developmen
t projects
United United States (1,768) (1,711) -
States
exploratio
n projects
United United States - (618) 12
States
convention
al mining
projects
Honeymoon Australia (409) (89) 18,502
Project
Corporate (126) (46,183) 345
and other
Total (2,303) (31,247) 45,869
For the three months ended June 30, 2009: (in $`000)
Country Revenues Operating Depreciation
expenses and depletion
$`000 $`000 $`000
Akdala Mine Kazakhstan 9,985 (2,731) (2,498)
South Inkai Kazakhstan 8,572 (3,994) (2,753)
Project
Kharasan Kazakhstan - - -
Project
United United States - - -
States
development
projects
United United States - - -
States
exploration
projects
United United States - - -
States
conventional
mining
projects
Honeymoon Australia - - -
Project
Corporate - - -
and other
Total 18,557 (6,725) (5,251)
For the three months ended June 30, 2009: (in $`000)
Country Exploration Net Capital
expense earnings/ expenditure
(loss)
from
continuing
operations
$`000 $`000 $`000
Akdala Mine Kazakhstan - 2,339 1,786
South Inkai Kazakhstan - 481 3,759
Project
Kharasan Kazakhstan - (384) 5,017
Project
United United - - 3,915
States States
development
projects
United United (2,082) (1,315) -
States States
exploration
projects
United United - (483) 24
States States
conventional
mining
projects
Honeymoon Australia (294) (271) 3,022
Project
Corporate (303) (266,093) -
and other
Total (2,679) (265,726) 17,523
For the six months ended June 30, 2009: (in $`000)
Country Revenues Operating Depreciation
expenses and
depletion
$`000 $`000 $`000
Akdala Mine Kazakhstan 28,395 (7,445) (6,643)
South Inkai Kazakhstan 33,131 (14,291) (10,639)
Project
Kharasan Kazakhstan - - -
Project
United United States - - -
States
development
projects
United United States - - -
States
exploration
projects
United United States - - -
States
conventional
mining
projects
Honeymoon Australia - - -
Project
Corporate - - -
and other
Total 61,526 (21,736) (17,282)
For the six months ended June 30, 2009: (in $`000)
Country Exploration Net Capital
expense earnings/ expenditure
(loss)
from
continuing
operations
$`000 $`000 $`000
Akdala Mine Kazakhstan - 17,550 1,961
South Inkai Kazakhstan - 55,165 5,777
Project
Kharasan Kazakhstan - 12,516 7,598
Project
United United - (12) 7,008
States States
development
projects
United United (3,189) (961) -
States States
exploration
projects
United United - (692) 44
States States
conventional
mining
projects
Honeymoon Australia (484) (451) 5,069
Project
Corporate (797) (285,485) 249
and other
Total (4,470) (202,370) 27,706
As at June 30, 2010: (in $`000)
Minera Future
l
intere
st
plant Total income Total
and tax
Count equipment assets liabili liabili
ry ties ties
$`000 $`000 $`000 $`000
Akdala Mine Kazakhstan 170,546 204,435 17,199 39,642
South Inkai Kazakhstan 470,099 521,141 37,070 64,803
Mine
Karatau Mine Kazakhstan 500,705 536,251 75,529 149,158
Kharasan Kazakhstan 211,341 232,657 12,306 79,388
Project
United States United 184,752 185,269 - 5,902
development States
projects
United States United 117,504 117,697 36,116 36,146
exploration States
projects
United States United 39,927 47,340 8,495 11,684
conventional States
mining
projects
Honeymoon Australia 92,515 106,832 3,845 6,215
Project
Corporate and 14,421 505,877 - 447,595
other
Total 1,801,810 2,457,499 190,560 840,533
As at December 31, 2009: (in $`000)
Mineral Future
interest
plant and Total income Total
tax
Country equipment assets liabiliti liabiliti
es es
$`000 $`000 $`000 $`000
Akdala Mine Kazakhstan 179,706 214,121 18,231 24,004
South Inkai Kazakhstan 478,419 522,574 37,613 49,017
Project
Karatau Mine Kazakhstan 510,494 531,508 74,637 141,192
Kharasan Kazakhstan 208,830 217,800 12,223 66,433
Project
United United 121,526 122,040 - 154
States States
development
projects
United United 115,398 116,148 28,711 28,742
States States
exploration
projects
United United 39,910 47,324 5,198 8,226
States States
conventional
mining
projects
Honeymoon Australia 78,039 85,380 4,074 7,389
Project
Corporate and 15,962 240,752 - 330,106
other
Total (1) 1,748,284 2,097,647 180,687 655,263
Excludes assets held for sale and discontinued operations
19 SUBSEQUENT EVENTS
Material transactions occurring subsequent to June 30, 2010 are described in
note 3.2 and note 9.
10 August 2010
Sponsor
Nedbank Capital
Date: 10/08/2010 10:04:02 Produced by the JSE SENS Department.
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