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EPS
EPS
EPS - Eastern Platinum Limited - Condensed consolidated interim financial
statements of Eastern Platinum Limited June 30, 2010 (Unaudited)
EASTERN PLATINUM LIMITED
(Incorporated in Canada)
(Canadian Registration number BC0722783)
(South African Registration number 2007/006318/10)
Share Code TSX: ELR ISIN: CA 2768551038
Share Code AIM: ELR ISIN: CA 2768551038
Share Code JSE: EPS ISIN: CA 2768551038
Condensed consolidated interim financial statements of Eastern Platinum Limited
June 30, 2010 (Unaudited)
Eastern Platinum Limited
Condensed consolidated interim income statements
(Expressed in thousands of U .S. dollars, except per share amounts - unaudited)
Three months ended
Note June 30, June 30,
2010 2009
Revenue $ 36,612 $ 24,838
Cost of operations
Production costs 26,855 18,309
Depletion and depreciation 7 5,528 4,286
32,383 22,595
Mine operating earnings 4,229 2,243
Expenses
General and administrative 2,037 3,171
Share-based payments 14 13 203
2,050 3,374
Operating profit (loss) 2,179 (1,131)
Other income (expense)
Interest income 421 495
Finance costs 16 (593) (375)
Foreign exchange (loss) gain (36) (1,372)
Profit (loss) before income taxes 1,971 (2 ,383)
Deferred income tax recovery 548 1,609
Net profit (loss) for the period $ 2,519 $ (774)
Attributable to
Non-controlling interest 15 $ (929) $ (1,091)
Equity shareholders of the
Company 3,448 317
Net profit (loss) for the period $ 2,519 $ (774)
Earnings per share
Basic 17 $ 0.01 $ 0.00
Diluted 17 $ 0.00 $ 0.00
Weighted average number of common
shares outstanding in thousands
Basic 17 682,792 680,538
Diluted 17 693,988 687,181
Six months ended
June 30, June 30,
2010 2009
Revenue $ 71,311 $ 49,741
Cost of operations
Production costs 52,558 36,194
Depletion and depreciation 10,843 7,803
63,401 43,997
Mine operating earnings 7,910 5,744
Expenses
General and administrative 5,233 4,807
Share-based payments 1,752 335
6,985 5,142
Operating profit (loss) 925 602
Other income (expense)
Interest income 793 989
Finance costs (963) (827)
Foreign exchange (loss) gain 232 (1 ,447)
Profit (loss) before income taxes 987 (683)
Deferred income tax recovery 1,096 2,289
Net profit (loss) for the period $ 2,083 $ 1,606
Attributable to
Non-controlling interest $ (2,189) $ (1 ,875)
Equity shareholders of the
Company 4,272 3,481
Net profit (loss) for the period $ 2,083 $ 1,606
Earnings per share
Basic $ 0.01 $ 0.01
Diluted $ 0.01 $ 0.01
Weighted average number of common
shares outstanding in thousands
Basic 682,000 680,532
Diluted 693,909 685,597
See accompanying notes to the unaudited condensed consolidated interim
financial statements
Eastern Platinum Limited
Condensed consolidated interim statements of comprehensive (loss) income
(Expressed in thousands of U.S. dollars - unaudited)
Three months ended
June 30, June 30,
2010 2009
Net profit (loss) for the period $ 2,519 $ (774)
Other comprehensive (loss) income
Exchange differences on translating
foreign operations (27,398) 95,369
Exchange differences on translating
non-controlling interest (364) 2,309
Comprehensive (loss) income $ (25,243) $ 96,904
Attributable to
Non-controlling interest $ (1,293) $ 1,218
Equity shareholders of the Company $ (23,950) $ 95,686
Six months ended
June 30, June 30,
2009
2010
Net profit (loss) for the period $ 2,083 $ 1,606
Other comprehensive (loss) income
Exchange differences on translating
foreign operations (17,519) 82,042
Exchange differences on translating
non-controlling interest (267) 1,955
Comprehensive (loss) income $ (15,703) $ 85,603
Attributable to
Non-controlling interest $ (2,456) $ 80
Equity shareholders of the Company $ (13,247) $ 85,523
See accompanying notes to the unaudited condensed consolidated interim
financial statements
Eastern Platinum Limited
Condensed consolidated interim statements of financial position
as at June 30, 2010 and December 31, 2009
(Expressed in thousands of U.S. dollars - unaudited)
June 30, December 31,
Note 2010 2009
Assets
Current assets
Cash and cash equivalents 4 $ 6,280 $ 7,249
Short-term investments 13,285 14,409
Trade and other receivables 5 29,629 29,138
Inventories 6 5,621 4,825
54,815 55,621
Non-current assets
Property, plant and equipment 7 616,758 634,778
Refining contract 8 12,989 14,169
Other assets 9 2,739 2,282
$ 687,301 $ 706,850
Liabilities
Current liabilities
Accounts payable and accrued
liabilities 10 $ 19,882 $ 22,919
Current portion of finance leases 11 936 926
20,818 23,845
Non-current liabilities
Provision for environmental
rehabilitation 12 8,219 8,152
Finance leases 11 2,280 2,850
Deferred tax liabilities 40,041 42,491
71,358 77,338
Equity
Issued capital 14 890,876 890,150
Equity-settled employee benefits
reserve 33,744 32,336
Currency translation adjustment (70,418) (52,899)
Deficit (245,844) (250,116)
Capital and reserves attributable to
equity shareholders of the Company 608,358 619,471
Non-controlling interest 15 7,585 10,041
615,943 629,512
$ 687,301 $ 706,850
Approved and authorized for issue by the Board on August 9, 2010.
"David Cohen" "Robert Gayton"
David Cohen, Director Robert Gayton, Director
See accompanying notes to the unaudited condensed consolidated interim
financial statements
Eastern Platinum Limited
Condensed consolidated interim statements of changes in equity
(Expressed in thousands of U.S. dollars, except number of shares - unaudited)
Issued capital
Common Amount
Shares
Balance, December 31,
2008 680,526,454 $ 890,049
Stock options exercised 30,948 12
Share-based payments - -
Comprehensive income - -
Balance, June 30,
2009 680,557,402 $ 890,061
Stock options exercised 335,923 89
Share-based payments - -
Comprehensive income - -
Balance, December 31,
$ 890,150
2009 680,893,325
Stock options exercised 2,124,257 726
Share-based payments - -
Comprehensive loss - -
Balance, June 30,
2010 683,017,582 $ 890,876
Equity- Currency
settled translation
employee adjustment
benefits
reserve
Balance, December 31,
2008 $ 31,827 $ (169,577)
Stock options exercised (7) -
Share-based payments 335 -
Comprehensive income - 82,042
Balance, June 30,
2009 $ 32,155 $ (87,535)
Stock options exercised (66) -
Share-based payments 247 -
Comprehensive income - 34,636
Balance, December 31,
$ 32,336 $ (52,899)
2009
Stock options exercised (344) -
Share-based payments 1,752 -
Comprehensive loss - (17,519)
Balance, June 30,
2010 $ 33,744 $ (70,418)
Deficit Capital and
reserves
attributable to
equity
shareholders
of the parent
Balance, December 31,
2008 $ (255,766) $ 496,533
Stock options exercised - 5
Share-based payments - 335
Comprehensive income 3,481 85,523
Balance, June 30,
2009 $ (252,285) $ 582,396
Stock options exercised - 23
Share-based payments - 247
Comprehensive income 2,169 36,805
Balance, December 31,
$ (250,116) $ 619,471
2009
Stock options exercised - 382
Share-based payments - 1,752
Comprehensive loss 4,272 (13,247)
Balance, June 30,
2010 $ (245,844) $ 608,358
Non-controlling Equity
interest
Balance, December 31,
2008 $ 12,002 $ 508,535
Stock options exercised - 5
Share-based payments - 335
Comprehensive income 80 85,603
Balance, June 30,
2009 $ 12,082 $ 594,478
Stock options exercised - 23
Share-based payments - 247
Comprehensive income (2,041) 34,764
Balance, December 31,
$ 10,041 $ 629,512
2009
Stock options exercised - 382
Share-based payments - 1,752
Comprehensive loss (2,456) (15,703)
Balance, June 30,
2010 $ 7,585 $ 615,943
See accompanying notes to the unaudited condensed consolidated interim
financial statements
Eastern Platinum Limited
Condensed consolidated interim statements of cash flows
(Expressed in thousands of U.S. dollars - unaudited)
Three months ended
Note June 30, June 30,
2010 2009
Operating activities
Profit (loss) before income taxes $ 1,971 $ (2,383)
Adjustments to net profit for
non-cash items
Depletion and depreciation 7 5,528 4,286
Refining contract amortization 8 367 356
Share-based payments 14 13 203
Interest income (421) (495)
Finance costs 16 593 375
Foreign exchange loss (gain) 36 1,372
Net changes in non-cash working
capital items
Trade receivables 2,153 5,320
Inventories (211) (859)
Accounts payable and
accrued liabilities (148) (369)
Cash generated from (utilized
in) operations 9,881 7,806
Adjustments to net profit (loss)
for cash items
Interest income received 389 423
Finance costs paid (231) -
Acquisition related dividend
taxes paid - -
Net operating cash flows 10,039 8,229
Investing activities
Maturity of short-term
investments - -
Purchase of other assets (272) (382)
Property, plant and
equipment expenditures (6,416) (8,282)
Sale of property, plant
and equipment - 1,552
Net investing cash flows (6,688) (7,112)
Financing activities
Common shares issued for cash,
net of share issue costs 339 12
Payment of current loans - (3,106)
Payment of finance leases (626) (605)
Net financing cash flows (287) (3,699)
Effect of exchange rate changes
on cash and cash equivalents (154) 1,324
Increase (decrease) in cash and
cash equivalents 2,910 (1,258)
Cash and cash equivalents,
beginning of period 3,370 7,740
Cash and cash equivalents,
end of period $ 6,280 $ 6,482
Six months ended
June 30, June 30,
2010 2009
Operating activities
Profit (loss) before income taxes $ 987 $ (683)
Adjustments to net profit for
non-cash items
Depletion and depreciation 10,843 7,803
Refining contract amortization 735 610
Share-based payments 1,752 335
Interest income (793) (989)
Finance costs 963 827
Foreign exchange loss (gain) (232) 1,447
Net changes in non-cash working
capital items
Trade receivables (1,655) (7,943)
Inventories (969) (640)
Accounts payable and
accrued liabilities (2,417) (17,353)
Cash generated from (utilized
in) operations 9,214 (16,586)
Adjustments to net profit (loss)
for cash items
Interest income received 737 799
Finance costs paid (247) (11)
Acquisition related dividend
taxes paid - (2,422)
Net operating cash flows 9,704 (18,220)
Investing activities
Maturity of short-term
investments 961 20,095
Purchase of other assets (541) (409)
Property, plant and
equipment expenditures (10,711) (18,999)
Sale of property, plant
and equipment - 1,552
Net investing cash flows (10,291) 2,239
Financing activities
Com mon shares issued for cash,
net of share issue costs 382 12
Payment of current loans - (3,065)
Payment of finance leases (628) (618)
Net financing cash flows (246) (3,671)
Effect of exchange rate changes
on cash and cash equivalents (136) 328
Increase (decrease) in cash and
cash equivalents (969) (19,324)
Cash and cash equivalents,
beginning of period 7,249 25,806
Cash and cash equivalents,
end of period $ 6,280 $ 6,482
See accompanying notes to the unaudited condensed consolidated interim
financial statements
Eastern Platinum Limited
Notes to the condensed consolidated interim financial statements as at June 30,
2010
(Expressed in thousands of U.S. dollars, except number of shares and per share
amounts - unaudited)
1. Nature of operations
Eastern Platinum Limited (the "Company") is a platinum group metal
("PGM") producer engaged in the mining, exploration and development of
PGM properties located in various provinces in South Africa.
Eastern Platinum Limited is a publicly listed company incorporated in
Canada with limited liability under the legislation of the Province of
British Columbia. The Company`s shares are listed on the Toronto Stock
Exchange, Alternative Investment Market, and the Johannesburg Stock
Exchange.
The head office, principal address and records office of the Company are
located at 1075 West Georgia Street, Suite 250, Vancouver, British
Columbia, Canada, V6E 3C9. The Company`s registered address is 1055 West
Georgia Street, Suite 1500, Vancouver, British Columbia, Canada, V6E
4N7.
2. Basis of preparation
These unaudited condensed consolidated interim financial statements,
including comparatives, have been prepared using accounting policies
consistent with International Financial Reporting Standards "(IFRS") and
in accordance with International Accounting Standard ("IAS") 34 Interim
Financial Reporting.
The preparation of financial statements requires management to make
judgments, estimates and assumptions that affect the application of
policies and reported amounts of assets and liabilities, and revenue and
expenses. The estimates and associated assumptions are based on
historical experience and various other factors that are believed to be
reasonable under the circumstances, the results of which form the basis
of making the judgments about carrying values of assets and liabilities
that are not readily apparent from other sources. Actual results may
differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognized in the period in
which the estimate is revised if the revision affects only that period
or in the period of the revision and further periods if the review
affects both current and future periods.
Judgments made by management in the application of IFRS that have a
significant effect on the financial statements and estimates with a
significant risk of material adjustment in the current and following
fiscal years are discussed in Notes 3(l), 3(v), and 3(w) of the
Company`s audited consolidated financial statements for the year ended
December 31, 2009.
3. Summary of significant accounting policies
The preparation of financial data is based on accounting principles and
practices consistent with those used in the preparation of the audited
annual financial statements as at December 31, 2009 except as noted
below. The accompanying unaudited condensed consolidated interim
financial statements should be read in conjunction with the Company`s
audited consolidated financial statements for the year ended December
31, 2009.
Effective January 1, 2010, the Company adopted a new accounting standard
(IFRS 8 Operating Segments) that was issued by the International
Accounting Standards Board ("IASB"). IFRS 8 was revised and now requires
disclosure of information about segment assets. This accounting policy
change was adopted on a prospective basis with no restatement of prior
period financial statements.
4. Cash and cash equivalents
Cash and cash equivalents are comprised of:
June 30, December 31,
2010 2009
Cash in bank $ 3,518 $ 7,249
Short-term money market instruments 2,762 -
$ 6,280 $ 7,249
5. Trade other and receivables
Trade and other receivables are comprised of the following:
June 30, December 31,
2010 2009
Trade receivables $ 26,815 $ 25,839
Allowance for doubtful debts (105) (74)
26,710 25,765
Other receivables 1,896 2,316
Current tax receivable 1,023 1,057
$ 29,629 $ 29,138
6. Inventories
June 30, December 31,
2010 2009
Consumables $ 4,798 $ 4,549
Ore and concentrate 823 276
$ 5,621 $ 4,825
Production costs for the three and six months ended June 30, 2010 was $26,855
and $52,558 (June 30, 2009 - $18,309 and $36,194), respectively. Production
costs represent the cost of inventories sold during the period. This expense
includes Nil (June 30, 2009 - Nil) with regards to the write-down of inventory
to net realizable value, and a reduction of Nil (June 30, 2009 - Nil) with
regards to the reversal of write-downs.
At June 30, 2010 and December 31, 2009, no inventories were pledged as security
for liabilities.
7. Property, plant and equipment
Mineral
Plant and Plant and properties
equipment equipment being
owned leased depleted
Cost
Balance as at December 31,
2008 $ 315,547 $ 4,892 $ 108,680
Additions
Assets acquired 27,593 - (186)
Disposals (1,510) - -
Foreign exchange movement 84,593 1,240 27,606
Balance as at December 31,
2009 $ 426,223 $ 6,132 $ 136,100
Assets acquired 10,637 - -
Foreign exchange movement (13,956) (199) (4,398)
Balance as at June 30, 2010 $ 422,904 $ 5,933 $ 131,702
Accumulated depreciation and
impairment
losses
Balance as at December 31,
2008 $ 91,179 $ 1,966 $ 12,397
Depreciation 11,298 1,092 4,646
Foreign exchange movement 24,467 633 3,722
Balance as at December 31,
2009 $ 126,944 $ 3,691 $ 20,765
Depreciation 7,379 605 2,793
Foreign exchange movement (4,230) (130) (721)
Balance as at June 30, 2010 $ 130,093 $ 4,166 $ 22,837
Carrying amounts
At December 31, 2008 $ 224,368 $ 2,926 $ 96,283
At December 31, 2009 $ 299,279 $ 2,441 $ 115,335
At June 30, 2010 $ 292,811 $ 1,767 $ 108,865
Mineral
properties Residential
not being properties
depleted
Cost
Balance as at December 31, 2008 $ 444,115 $ 7,954
Additions
Assets acquired 921 88
Disposals - -
Foreign exchange movement 101,086 2,029
Balance as at December 31, 2009 $ 546,122 $ 10,071
Assets acquired 85 -
Foreign exchange movement (15,040) (325)
Balance as at June 30, 2010 $ 531,167 $ 9,746
Accumulated depreciation and impairment
losses
Balance as at December 31, 2008 $ 273,084 $ 1,726
Depreciation - 118
Foreign exchange movement 69,238 452
Balance as at December 31, 2009 $ 342,322 $ 2,296
Depreciation - 66
Foreign exchange movement (11,062) (75)
Balance as at June 30, 2010 $ 331,260 $ 2,287
Carrying amounts
At December 31, 2008 $ 171,031 $ 6,228
At December 31, 2009 $ 203,800 $ 7,775
At June 30, 2010 $ 199,907 $ 7,459
Properties
and land TOTAL
Cost
Balance as at December 31, 2008 $ 5,299 $ 886,487
Additions
Assets acquired 331 28,747
Disposals - (1,510)
Foreign exchange movement 1,348 217,902
Balance as at December 31, 2009 $ 6,978 $ 1,131,626
Assets acquired - 10,722
Foreign exchange movement (226) (34,144)
Balance as at June 30, 2010 $ 6,752 $ 1,108,204
Accumulated depreciation and impairment
losses
Balance as at December 31, 2008 $ 662 $ 381,014
Depreciation - 17,154
Foreign exchange movement 168 98,680
Balance as at December 31, 2009 $ 830 $ 496,848
Depreciation - 10,843
Foreign exchange movement (27) (16,245)
Balance as at June 30, 2010 $ 803 $ 491,446
Carrying amounts
At December 31, 2008 $ 4,637 $ 505,473
At December 31, 2009 $ 6,148 $ 634,778
At June 30, 2010 $ 5,949 $ 616,758
7. Property, plant and equipment
Crocodile Kennedy`s Spitzkop
River Mine Vale Project PGM Project
(a) (b) (c)
Cost
Balance as at December
31, 2008 $ 442,262 $ 319,109 $ 101,712
Additions
Assets acquired 27,826 - 826
Disposals (1,510) - -
Foreign exchange movement 116,798 80,908 16,456
Balance as at December
31, 2009 $ 585,376 $ 400,017 $ 118,994
Additions
Assets acquired 10,637 - 8
Foreign exchange movement (19,102) (12,926) (1,688)
Balance as at June 30,
2010 $ 576,911 $ 387,091 $ 117,314
Accumulated depreciation
and impairment losses
Balance as at December
31, 2008 $ 107,855 $ 273,084 $ -
Depreciation 17,130 - -
Foreign exchange movement 29,432 69,238 -
Balance as at December
31, 2009 $ 154,417 $ 342,322 $ -
Depreciation 10,843 - -
Foreign exchange movement (5,182) (11,062) -
Balance as at June 30,
2010 $ 160,078 $ 331,260 $ -
Carrying amounts
At December 31, 2008 $ 334,407 $ 46,025 $ 101,712
At December 31, 2009 $ 430,959 $ 57,695 $ 118,994
At June 30, 2010 $ 416,833 $ 55,831 $ 117,314
Other
Mareesburg property
Project plant and
(c) equipment TOTAL
Cost
Balance as at December 31,
2008 $ 23,294 $ 110 $ 886,487
Additions
Assets acquired 95 - 28,747
Disposals - - (1,510)
Foreign exchange movement 3,722 18 217,902
Balance as at December 31,
2009 $ 27,111 $ 128 $ 1,131,626
Additions
Assets acquired 77 - 10,722
Foreign exchange movement (426) (2) (34,144)
Balance as at June 30, 2010 $ 26,762 $ 126 $ 1,108,204
Accumulated depreciation
and impairment losses
Balance as at December 31,
2008 $ - $ 75 $ 381,014
Depreciation - 24 17,154
Foreign exchange movement - 10 98,680
Balance as at December 31,
2009 $ - $ 109 $ 496,848
Depreciation - - 10,843
Foreign exchange movement - (1) (16,245)
Balance as at June 30, 2010 $ - $ 108 $ 491,446
Carrying amounts
At December 31, 2008 $ 23,294 $ 35 $ 505,473
At December 31, 2009 $ 27,111 $ 19 $ 634,778
At June 30, 2010 $ 26,762 $ 18 $ 616,758
(a) Crocodile River Mine ("CRM")
The Company holds directly and indirectly 87.5% of CRM, which is
located on the eastern portion of the western limb of the
Bushveld Complex. The Maroelabult and Zandfontein sections are
currently in production. Development of the Crocette section
recommenced on April 4, 2010.
(b) Kennedy`s Vale Project ("KV")
The Company holds directly and indirectly 87.5% of KV, which is
located on the eastern limb of the Bushveld Complex, near
Steelpoort in the Province of Mpumalanga.
It comprises PGM mineral rights on five farms in the Steelpoort
Valley.
(c) Spitzkop PGM Project and Mareesburg Project
The Company holds directly and indirectly a 93.4% interest in
the Spitzkop PGM Project and a 75.5% interest in the Mareesburg
Project. The Company currently acts as the operator of both the
Mareesburg Platinum Project and Spitzkop PGM Project, both
located on the eastern limb of the Bushveld Complex.
8. Refining Contract
During the year ended June 30, 2006, the Company acquired a 69%
interest in Barplats and assigned a portion of the purchase price to
the off-take contract governing the sales of Barplats` PGM concentrate
production. The initial value of the contract was $17,939. During the
year ended June 30, 2007, the Company acquired an additional 5%
interest in Barplats resulting in an additional allocation to the
contract of $4,802 for a total aggregate value of $22,741. During the
year ended December 31, 2008, the Company acquired an additional 2.47%
interest in Barplats. The acquisition did not affect the aggregate
value of the contract.
The value of the contract is amortized over the remaining term of the
contract which is 9 years as at June 30, 2010.
Cost
Balance as at December 31, 2008 $ 16,850
Foreign exchange movement 4,272
Balance as at December 31, 2009 $ 21,122
Foreign exchange movement (682)
Balance as at June 30, 2010 $ 20,440
Accumulated amortization
Balance as at December 31, 2008 $ 4,357
Amortization for the period 1,332
Foreign exchange movement 1,264
Balance as at December 31, 2009 $ 6,953
Amortization for the period 735
Foreign exchange movement (237)
Balance as at June 30, 2010 $ 7,451
Carrying amounts
At December 31, 2008 $ 12,493
At December 31, 2009 $ 14,169
At June 30, 2010 $ 12,989
9. Other assets
Other assets consist of a money market fund investment that is
classified as available-for-sale and serves as security for a guarantee
issued to the Department of Minerals and Energy of South Africa in
respect of the environmental rehabilitation liability (Note 12). Changes
to other assets for the six months ended June 30, 2010 are as follows:
Balance, December 31, 2008 $ 1,017
Additional investment $ 811
Service fees (6)
Interest income 123
Foreign exchange movement 337
Balance, December 31, 2009 $ 2,282
460
Additional investment
Service fees (4)
Interest income 84
Foreign exchange movement (83)
Balance, June 30, 2010 $ 2,739
10. Accounts payable and accrued liabilities
June 30, December 31,
2010 2009
Trade payables $ 10,326 $ 9,932
Accrued liabilities 5,004 6,849
Other 4,552 6,138
$ 19,882 $ 22,919
The average credit period of purchases is 1 month. The Company has
financial risk management policies in place to ensure that all payables
are paid within the pre-agreed credit terms.
11. Finance leases
Finance leases relate to mining vehicles with lease terms of 5 years payable
half yearly in advance. The Company has the option to purchase the vehicles for
a nominal amount at the conclusion of the lease agreements. The Company`s
obligations under finance leases are secured by the lessor`s title to the
leased assets. Interest is calculated at the South African prime rate plus 1%.
At June 30, 2010, the finance leases are repayable in 2 semiannual
installments (December 31, 2009 - 3) of $585 (December 31, 2009 - $611) and a
top-up payment of $2,365 in December 2011. The fair value of the finance
lease liabilities approximated carrying value.
(a) Minimum lease payments
June 30, December 31,
2010 2009
No later than 1 year $ 1,169 $ 1,221
Later than 1 year, but no later than 5 years 2,365 3,061
3,534 4,282
Less: future finance charges (318) (506)
Present value of minimum lease payments $ 3,216 $ 3,776
(b) Present value of minimum lease payments
June 30, December 31,
2010 2009
No later than 1 year $ 936 $ 926
Later than 1 year, but no later than 5 years 2,280 2,850
$ 3,216 $ 3,776
12. Provision for environmental rehabilitation
Although the ultimate amount of the environmental rehabilitation
provision is uncertain, the fair value of these obligations is based on
information currently available, including closure plans and applicable
regulations. Significant closure activities include land
rehabilitation, demolition of buildings and mine facilities and other
costs.
The liability for the environmental rehabilitation provision at June
30, 2010 is approximately ZAR 62.9 million ($8,219). The liability was
determined using an inflation rate of 7.00% (December 31, 2009 - 7.00%)
and an estimated life of mine of 18 years for Zandfontein and
Maroelabult (December 31, 2009 - 18 years), 1 year for Kennedy`s Vale
(December 31, 2009 - 1 year) and 26 years for Spitzkop (December 31,
2009 - 26 years). A discount rate of 8.39% was used (December 31, 2009
- 8.39%). A guarantee of $2,739 (December 31, 2009 - $2,282) has been
issued to the Department of Minerals and Energy (Note 9). The guarantee
will be utilized to cover expenses incurred to rehabilitate the mining
area upon closure of the mine. The undiscounted value of this liability
is approximately ZAR 236.3 million ($30,854).
Changes to the environmental rehabilitation provision are as follows:
Balance, December 31, 2008 $ 5,598
Revision in estimates 629
Interest expense 443
Foreign exchange movement 1,482
Balance, December 31, 2009 $ 8,152
Revision in estimates -
Interest expense (Note 16) 336
Foreign exchange movement (269)
Balance, June 30, 2010 $ 8,219
13. Commitments
The Company has committed to capital expenditures on projects of
approximately ZAR 40.1 million ($5,230) as at June 30, 2010 (December
31, 2009 - ZAR 37 million, $4,959).
14. Issued capital
(a) Authorized
- Unlimited number of preferred redeemable, voting,
non-participating shares without nominal or par value,
- Unlimited number of common shares with no par value.
(b) Share options
The Company has an incentive plan (the "2008 Plan"), approved by
the Company`s shareholders at its annual general meeting held on
June 4, 2008, under which options to purchase common shares may
be granted to its directors, officers, employees and others at
the discretion of the Board of Directors. Under the terms of the
2008 Plan, 75 million common shares are reserved for issuance
upon the exercise of options. All outstanding options at June 4,
2008 granted under the Company`s previous plan (the "2005 Plan")
will continue to exist under the 2008 Plan provided that the
fundamental terms governing such options will be deemed to be
those under the 2005 Plan. Upon adoption of the 2008 Plan,
options to purchase a total of 27,525,000 common shares were
available for grant under the 2008 Plan, representing 75,000,000
less the 47,475,000 outstanding options at June 4, 2008 granted
under the 2005 Plan.
Under the 2008 Plan, each option granted shall be for a term not
exceeding five years from the date of being granted and the
vesting period is determined based on the discretion of the
Board of Directors. The option exercise price is set at the date
of the grant and cannot be less than the closing market price of
the Company`s common shares on the Toronto Stock Exchange on the
day immediately preceding the day of the grant of the option.
(i) Movements in share options
The changes in share options during the six months ended
June 30, 2010 and year ended December 31, 2009 were as
follows:
June 30, 2010
Weighted
average
Number of exercise
options price
Cdn$
Balance outstanding,
beginning of year 59,575,834 1.48
Options granted 2,231,000 1.30
Options exercised (2,412,994) 0.33
Options forfeited (666,668) 1.74
Balance outstanding,
end of period 58,727,172 1.52
December 31, 2009
Weighted
average
Number of exercise
options price
Cdn$
Balance outstanding,
beginning of year 64,746,000 1.52
Options granted 695,000 0.57
Options exercised (535,999) 0.32
Options forfeited (5,329,167) 2.00
Balance outstanding,
end of period 59,575,834 1.48
(ii) Fair value of share options granted
The fair value of each option granted is estimated at the time of the grant
using the Black-Scholes option pricing model with weighted average assumptions
for grants as follows:
2010
Weighted
January 18 average
Exercise price Cdn$1.30 Cdn$1.30
Closing market price on day
preceding date of grant Cdn$1.30 Cdn$1.30
Grant date share price Cdn$1.42 Cdn$1.42
Risk-free interest rate 1.73% 1.73%
Expected life 3 years 3 years
Annualized volatility 83% 83%
Dividend rate 0% 0%
Grant date fair value Cdn$0.80 Cdn$0.80
2009
Weighted
February 11 June 30 November 3 average
Exercise price Cdn$0.32 Cdn$0.52 Cdn$0.76 Cdn$0.57
Closing market price
on day
preceding date of grant Cdn$0.32 Cdn$0.52 Cdn$0.76 Cdn$0.57
Grant date share price Cdn$0.38 Cdn$0.52 Cdn$0.81 Cdn$0.59
Risk-free interest rate 1.69% 1.84% 1.86% 1.83%
Expected life 3 years 3 years 3 years 3 years
Annualized volatility 78% 79% 82% 80%
Dividend rate 0% 0% 0% 0%
Grant date fair value Cdn$0.21 Cdn$0.27 Cdn$0.45 Cdn$0.32
Exercise price is the closing market price on the day preceding the date the
options were granted, as defined by the Company`s 2008 share option plan.
Grant date share price is the closing market price on the day the options were
granted.
Expected volatility is based on the historical share price volatility since
Eastern Platinum Limited completed its acquisition of Barplats Investment
Limited on May 2, 2006, or for 3 years prior to the date of grant, whichever is
shorter.
(iii) Share options outstanding at the end of the period
The following table summarizes information concerning outstanding and
exercisable options at June 30, 2010:
Remaining
Options Options Exercise Contractual
outstanding exercisable price Life (Years) Expiry date
Cdn$
6,725,000 6,725,000 1.70 0.90 May 24, 2011
250,000 250,000 1.70 1.41 November 27, 2011
19,987,500 19,987,500 1.82 1.69 March 7, 2012
14,987,005 14,230,338 0.32 3.47 December 18, 2013
20,000 - 0.32 3.62 February 11, 2014
400,000 400,000 0.52 4.00 June 30, 2014
141,667 28,334 0.76 4.34 November 3, 2014
2,226,000 2,226,000 1.30 4.56 January 18, 2015
13,270,000 13,270,000 2.31 7.27 October 5, 2017
90,000 90,000 2.50 7.46 December 12, 2017
460,000 460,000 3.38 7.65 February 20, 2018
170,000 170,000 3.38 7.74 March 27, 2018
58,727,172 57,837,172 3.52
The weighted average exercise price of options exercisable at June 30, 2010 is
Cdn$1.54.
(c) Share purchase warrants
The changes in warrants during the six months ended June 30, 2010 and the year
ended December 31, 2009 were as follows:
June 30, 2010
Weighted
average
Number of exercise
warrants price
Cdn$
Balance outstanding,
beginning of year - -
Warrants expired - -
Balance outstanding,
end of period - -
December 31, 2009
Weighted
average
Number of exercise
warrants price
Cdn$
Balance outstanding,
beginning of year 58,485,996 1.80
Warrants expired (58,485,996) 1.80
Balance outstanding,
end of period - -
15. Non-controlling interest
The non-controlling interests are comprised of the following:
Balance, December 31, 2008 $ 12,002
Non-controlling interests` share of loss in Barplats (671)
Non-controlling interests` share of interest on advances to
Gubevu (1,204)
Foreign exchange movement 1,955
Balance, June 30, 2009 $ 12,082
Non-controlling interests` share of loss in Barplats (1,237)
Non-controlling interests` share of interest on advances to
Gubevu (1,316)
Foreign exchange movement 512
Balance, December 31, 2009 $ 10,041
Non-controlling interests` share of loss in Barplats (865)
Non-controlling interests` share of interest on advances to
Gubevu (1,324)
Foreign exchange movement (267)
Balance, June 30, 2010 $ 7,585
16. Finance costs
Three months ended
June 30, June 30,
2010 2009
Interest on revenue advances $ 138 $ 128
Interest on finance leases 72 99
Interest on provision for
environmental rehabilitation 168 109
Interest on tax 209 -
Other interest 6 39
$ 593 $ 375
Six months ended
June 30, June 30,
2010 2009
Interest on revenue advances $ 257 $ 270
Interest on finance leases 149 202
Interest on provision for
environmental rehabilitation 336 202
Interest on tax 209 2
Other interest 12 151
$ 963 $ 827
17. Earnings per share
The weighted average number of ordinary shares for the purposes of diluted
earnings per share reconciles to the weighted average number of ordinary
shares used in the calculation of basic earnings per share as follows:
Three months ended
June 30, June 30,
2010 2009
(in thousands)
Weighted average number of
ordinary shares used in the
calculation of basic earnings
per share 682,792 680,538
Shares deemed to be issued
for no consideration in
respect of in the money
options 11,196 6,643
Weighted average number of
ordinary shares used in the
calculation of diluted earnings
per share 693,988 687,181
Six months ended
June 30, June 30,
2010 2009
(in thousands)
Weighted average number of
ordinary shares used in the
calculation of basic earnings
per share 682,000 680,532
Shares deemed to be issued
for no consideration in
respect of in the money
options 11,909 5,065
Weighted average number of
ordinary shares used in the
calculation of diluted earnings
per share 693,909 685,597
The following potential ordinary shares, outstanding at June 30, 2010, are
anti-dilutive and are therefore excluded from the weighted average number of
ordinary shares for the purposes of diluted earnings per share:
Three months ended Six months ended
June 30, June 30, June 30, June 30,
2010 2009 2010 2009
(in thousands) (in thousands)
Options 43,179 41,073 40,953 41,473
Warrants - - - -
18. Retirement benefit plans
The Barplats Provident Fund is an independent, defined contribution plan
administered by Liberty Life Limited in South Africa. The costs
associated with the defined contribution plan included in net profit for
the three and six months, respectively, were $969 and $1,868 (June 30,
2009 - $616 and $1,137). The total number of employees in the plan at
June 30, 2010 was 1,804 (June 30, 2009 - 1,807).
19. Related party transactions
Balances and transactions between the Company and its subsidiaries have
been eliminated on consolidation and are not disclosed in this note.
Details of the transactions between the Company and other related
parties are disclosed below.
(a) Trading transactions
The Company`s related parties consist of companies owned by
executive officers and directors as follows:
Nature of transactions
Andrews PGM Consulting Consulting
Buccaneer Management Inc. Management
Jazz Financial Ltd. Management
Maluti Services Limited General and administrative
Xiste Consulting Ltd. Management
The Company incurred the following fees and expenses in the
normal course of operations in connection with companies owned
by key management and directors.
Expenses have been measured at the exchange amount which is
determined on a cost recovery basis.
Three months ended
June 30, June 30,
Note 2010 2009
Consulting fees (i) $ 36 $ 45
General and administrative
expenses 42 19
Management fees 313 238
$ 391 $ 302
Six months ended
June 30, June 30,
2010 2009
Consulting fees $ 65 $ 76
General and administrative
expenses 62 19
Management fees 620 473
$ 747 $ 568
(i) The Company paid fees to a private company controlled by a director of
the Company for consulting services performed outside of his capacity as
a director.
(ii) Amounts due to related parties are unsecured, non-interest bearing and due
on demand. Accounts payable at June 30, 2010 included $40 (December 31, 2009 -
$510) which were due to private companies controlled by officers of the
Company.
(b) Compensation of key management personnel
The remuneration of directors and other members of key management personnel
during the three and six months ended June 30, 2010 and 2009 were as follows:
Three months ended
June 30, June 30,
Note 2010 2009
Salaries and directors` fees (i) $ 568 $ 506
Share-based payments (ii) - 93
$ 568 $ 599
Six months ended
June 30, June 30,
2010 2009
Salaries and directors` fees $ 1,116 $ 980
Share-based payments 1,627 93
$ 2,743 $ 1,073
(i) Salaries and directors` fees include consulting and management fees
disclosed in Note 19(a).
(ii) Share-based payments are the fair value of options granted to key
management personnel, translated at the grant date foreign exchange
rate.
(iii) Key management personnel were not paid post-employment benefits,
termination benefits, or other long-term benefits during the three and
six months ended June 30, 2010 and 2009.
20. Segmented Information
(a) Operating segment - The Company`s operations are primarily
directed towards the acquisition, exploration and production of
platinum group metals in South Africa.
(b) Geographic segments - The Company`s revenues and expenses by
geographic areas for the three and six months ended June 30,
2010 and 2009 and assets by geographic areas as at June 30,
2010 and December 31, 2009 are as follows:
Three months ended June 30, 2010
Crocodile Kennedy`s
River Mine Vale Spitzkop Mareesburg
Current assets$ 38,519 $ 97 $ 1,444 $ 25
Property,
plant and
equipment 416,833 55,831 117,314 26,762
Refining
contract 12,989 - - -
Other Assets 2,739 - - -
$ 471,080 $ 55,928 $ 118,758 $ 26,787
Property,
plant and
equipment
expenditures $ 6,376 $ - $ 6 $ 45
Sale of
property,
plant
and equipment - - - -
Revenue $ 36,612 $ - $ - $ -
Production
costs (26,855) - - -
Depreciation
and
amortization (5,528) - - -
General and
administrativ
e
expenses (603) (479) (7) (1)
Share-based
payment (13) - - -
Interest
income 387 - - 2
Finance costs (402) (182) (9) -
Foreign
exchange loss - - - -
Profit (loss)
before
income taxes $ 3,598 $ (661) $ (16) $ 1
Total South
Other Africa Canada TOTAL
Current assets $ 992 $ 41,077 $ 13,738 $ 54,815
Property, plant
and equipment - 616,740 18 616,758
Refining
contract - 12,989 - 12,989
Other Assets - 2,739 - 2,739
$ 992 $ 673,545 $ 13,756 $ 687,301
Property, plant
and
equipment
expenditures $ - $ 6,427 $ - $ 6,427
Sale of
property, plant
and equipment - - - -
Revenue $ - $ 36,612 $ - $ 36,612
Production costs - (26,855) - (26,855)
Depreciation
and
amortization - (5,528) - (5,528)
General and
administrative
expenses (3) (1,093) (944) (2,037)
Share-based
payment - (13) - (13)
Interest income - 389 32 421
Finance costs - (593) - (593)
Foreign
exchange loss - - (36) (36)
Profit (loss)
before
income taxes $ (3) $ 2,919 $ (948) $ 1,971
Three months ended June 30, 2009
Crocodile Kennedy`s
River Mine Vale Spitzkop Mareesburg
Property,
plant and
equipment
expenditures $ 8,184 $ - $ 38 $ 60
Sale of
property,
plant
and equipment 1,552 - - -
Revenue $ 24,838 $ - $ - $ -
Production
costs (18,309) - - -
Depreciation
and
amortization (4,286) - - -
General and
administrative
expenses (2,086) (47) (197) (4)
Share-based
payment (110) - - -
Interest income 383 - 31 -
Finance costs (281) (55) - -
Foreign
exchange gain
(loss) 70 (28) - -
Profit (loss)
before income
taxes $ 219 $ (130) $ (166) $ (4)
Total South
Other Africa Canada TOTAL
Property, plant and
equipment
expenditures $ - $ 8,282 $ - $ 8,282
Sale of property,
plant
and equipment - 1,552 - 1,552
Revenue $ - $ 24,838 $ - $ 24,838
Production costs - (18,309) - (18,309)
Depreciation and
amortization - (4,286) - (4,286)
General and
administrative
expenses (25) (2,359) (812) (3,171)
Share-based payment - (110) (93) (203)
Interest income 2 416 79 495
Finance costs (39) (375) - (375)
Foreign exchange
gain (loss) - 42 (1,414) (1,372)
Profit (loss) before
income taxes $ (62) $ (143) $ (2,240) $ (2,383)
Six months ended June 30, 2010
Crocodile Kennedy`s
River Mine Vale Spitzkop Mareesburg
Property, plant
and
equipment
expenditures $ 10,637 $ - $ 8 $ 77
Sale of
property, plant
and equipment - - - -
Revenue $ 71,311 $ - $ - $ -
Production costs (52,558) - - -
Depreciation
and
amortization (10,843) - - -
General and
administrative
expenses (2,367) (807) (7) (2)
Share-based
payment (47) - - -
Interest income 724 - - 4
Finance costs (584) (366) (13) -
Foreign
exchange (loss)
gain (9) - - -
Profit (loss)
before
income taxes $ 5,627 $ (1,173) $ (20) $ 2
Total South
Other Africa Canada TOTAL
Property, plant
and
equipment
expenditures $ - $ 10,722 $ - $ 10,722
Sale of
property, plant
and equipment - - - -
Revenue $ - $ 71,311 $ - $ 71,311
Production costs - (52,558) - (52,558)
Depreciation and
amortization - (10,843) - (10,843)
General and
administrative
expenses (3) (3,186) (2,047) (5,233)
Share-based
payment - (47) (1,705) (1,752)
Interest income - 728 65 793
Finance costs - (963) - (963)
Foreign exchange
(loss) gain - (9) 241 232
Profit (loss)
before
income taxes $ (3) $ 4,433 $ (3,446) $ 987
Six months ended June 30, 2009
Crocodile Kennedy`s
River Mine Vale Spitzkop Mareesburg
Property, plant and
equipment
expenditures $ 18,484 $ - $ 427 $ 88
Sale of property,
plant
and equipment 1,552 - - -
Revenue $ 49,741 $ - $ - $ -
Production costs (36,194) - - -
Depreciation and
amortization (7,803) - - -
General and
administrative
expenses (2,464) (254) (332) (4)
Share-based payment (242) - - -
Interest income 737 - 31 -
Finance costs (628) (55) - -
Foreign exchange
gain (loss) 52 (5) - -
Profit (loss) before
income taxes $ 3,199 $ (314) $ (301) $ (4)
Total South
Other Africa Canada TOTAL
Property, plant and
equipment
expenditures $ - $ 18,999 $ - $ 18,999
Sale of property,
plant
and equipment - 1,552 - 1,552
Revenue $ - $ 49,741 $ - $ 49,741
Production costs - (36,194) - (36,194)
Depreciation and
amortization - (7,803) - (7,803)
General and
administrative
expenses (63) (3,117) (1,690) (4,807)
Share-based payment - (242) (93) (335)
Interest income 2 770 219 989
Finance costs (144) (827) - (827)
Foreign exchange
gain (loss) (99) (52) (1,395) (1,447)
Profit (loss) before
income taxes $ (304) $ 2,276 $ (2,959) $ (683)
December 31, 2009
Crocodile Kennedy`s
River Mine Vale Spitzkop Mareesburg
Current assets $ 36,749 $ 176 $ 1,509 $ 45
Property, plant
and equipment 430,959 57,695 118,994 27,111
Refining
contract 14,169 - - -
Other Assets 2,282 - - -
$ 484,159 $ 57,871 $ 120,503 $ 27,156
Total
Other South Canada TOTAL
Africa
Current assets $ 1,003 $ 39,482 $ 16,139 $ 55,621
Property, plant and
equipment - 634,759 19 634,778
Refining contract - 14,169 - 14,169
Other Assets - 2,282 - 2,282
$ 1,003 $ 690,692 $ 16,158 $ 706,850
For the three and six months ended June 30, 2010 and 2009, substantially all of
the Company`s PGM production was sold to one customer.
21. Events after the reporting period
From July 1, 2010 to August 9, 2010, 20,000 stock options were exercised by way
of cashless exercise at a weighted average exercise price of Cdn$0.32.
Date: 11/08/2010 15:11:02 Produced by the JSE SENS Department.
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