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WGR
WGR
WGR - Wits Gold - Unaudited financial results for the six months ended 31
August 2010
Witwatersrand Consolidated Gold Resources Limited
(`Wits Gold` or `the Company`)
Incorporated in the Republic of South Africa
(Registration Number 2002/031365/06)
JSE Share Code: WGR ISIN: ZAE000079703
TSX Share Code: WGR CUSIP Number: S98297104
Unaudited financial results for the six months ended 31 August 2010
Highlights - 1 March 2010 to 30 November 2010
Wits Gold raises R120 million through an issue of shares
Wits Gold acquires full control of southern Free State properties
Harmony becomes a shareholder in Wits Gold
Wits Gold purchases Merriespruit South with potential shallow resources
Immediate exploration initiated at Merriespruit South
The financial information reported herein is presented in South African
Rand (R). The exchange rates, based on the Bank of Canada noon rate, were
as follows:
31 August 2009 CAD $1.00 = R7.10
28 February 2010 CAD $1.00 = R7.70
31 August 2010 CAD $1.00 = R6.93
19 November 2010 CAD $1.00 = R6.88
Condensed statement of comprehensive income
for the six months ended 31 August 2010
Six months ended Year ended
31 August 31 August 28 February
2010 2009 2010
(Unaudited) (Unaudited) (Audited)
R R R
Revenue - - -
Results from operating activities(10 465 732) (7 892 885) (14 754 513)
Net finance income 2 443 438 4 409 583 7 078 523
Loss for the period before
income tax (8 022 294) (3 483 302) (7 675 990)
Income tax expense (5 283) 320 460 (98 260)
Loss for the period attributable
to owners (8 027 577) (3 162 842) (7 774 250)
Other comprehensive income net
of income tax - - 66 399
Total comprehensive loss
attributable to owners of the
Company (8 027 577) (3 162 842) (7 707 851)
Loss per share
Weighted average number of
shares in issue 27 742 028 27 712 758 27 715 893
Basic and headline loss per
share (cents) (28.94) (11.41) (28.05)
Diluted weighted average number
of shares in issue 27 867 028 27 837 758 27 840 893
Diluted basic and headline loss
per share (cents) (40.35) (22.05) (45.02)
Condensed statement of financial position
as at 31 August 2010
As at As at
31 August 28 February
2010 2009 2010
(Unaudited) (Unaudited) (Audited)
R R R
Assets
Non-current assets 122 907 484 98 996 745 107 170 733
Current assets 65 286 186 97 983 522 86 713 462
Total assets 188 193 670 196 980 267 193 884 195
Equity and liabilities
Capital and reserves 182 548 564 190 832 290 187 045 642
Current liabilities 5 645 106 6 147 977 6 838 553
Total equity and liabilities 188 193 670 196 980 267 193 884 195
Condensed statement of cash flows
for the six months ended 31 August 2010
Six months ended Year ended
31 August 28 February
2010 2009 2010
(Unaudited) (Unaudited) (Audited)
R R R
Cash flows from operating activities
Cash utilised in operating
activities (6 234 723) (11 366 568) (14 421 318)
Taxation paid (1 991 507) (1 103 369) (3 184 605)
Net finance income 2 443 438 4 409 583 7 078 523
Net cash utilised by operating
activities (5 782 792) (8 060 354) (10 527 400)
Cash flows from investing activities
Net cash utilised in investing
activities (15 932 954) (12 119 017) (20 856 408)
Decrease in cash and cash
equivalents (21 715 746) (20 179 371) (31 383 808)
Cash and cash equivalents at
beginning of period 85 679 328 117 063 136 117 063 136
Cash and cash equivalents at
end of period 63 963 582 96 883 765 85 679 328
Condensed statement of changes in equity
for the six months ended 31 August 2010
Equity-
settled
Ordinary Share share-based
share capital premium payment reserve
R R R
Balance at 28 February 2009
(Audited) 278 909 185 971 589 17 849 857
Total comprehensive loss for
the period
Equity-settled share-based
payments - - 990 658
Deferred taxation on revaluation - - -
Balance at 31 August 2009
(Unaudited) 278 909 185 971 589 18 840 515
Balance at 28 February 2010
(Audited) 278 909 185 971 589 19 604 280
Total comprehensive loss
for the period - - -
Equity-settled share-based payments - - 3 535 215
Deferred taxation on revaluation - - -
Balance at 31 August 2010
(Unaudited) 278 909 185 971 589 23 129 495
Revaluation Accumulated
reserve loss Total
R R R
Balance at 28 February 2009
(Audited) 1 187 582 (12 288 867) 192 999 070
Total comprehensive loss for
the period (3 162 842) (3 162 842)
Equity-settled share-based payments - - 990 658
Deferred taxation on revaluation 5 404 - 5 404
Balance at 31 August 2009
(Unaudited) 1 192 986 (15 451 709) 190 832 290
Balance at 28 February 2010
(Audited) 1 253 981 (20 063 117) 187 045 642
Total comprehensive loss
for the period - (8 027 576) (8 027 576)
Equity-settled share-based payments - - 3 525 215
Deferred taxation on revaluation 5 283 - 5 283
Balance at 31 August 2010
(Unaudited) 1 259 264 (28 090 693) 182 548 564
Overview
The Company is involved in the mineral exploration industry and does not
generate any operating income. Mineral exploration is highly speculative
due to a number of significant risks, including the possible failure to
discover mineral deposits, sufficient in quantity and quality to justify
the establishment of a mine. Wits Gold has completed a Pre-Feasibility
Study over its Bloemhoek project, however additional work will be
required before a decision will be made to initiate a Definitive
Feasibility Study. Despite the historic exploration work on the Company`s
remaining Prospecting Rights, no other known economic deposits have been
determined. Additional work will be required in order to determine if any
economic deposits occur on these properties.
The Company has previously been able to raise sufficient capital from its
shareholders to fund its operating and exploration requirements. If the
Company`s current exploration programmes are successful, additional
financing may be required to complete further feasibility studies as well
as to develop any mineral properties identified in order to bring them
into commercial production. The longer term exploration of the Company`s
Prospecting Rights is also dependent upon the Company`s ability to obtain
additional financing through the joint venturing of projects, debt
financing, equity financing or other means.
During the six month period under review, Wits Gold did not issue any
additional shares. However, subsequent to 31 August 2010, as noted below,
the Company issued 6 599 349 additional ordinary shares.
The Wits Gold Annual General Meeting was held in Johannesburg on 10
September 2010. Two directors, Prof Taole Mokoena and Dr Humphrey Mathe,
were re-appointed by the shareholders, following their retirement by
rotation.
Basis of Preparation
The interim condensed financial statements for the six months ended 31
August 2010 are unaudited and have not been reviewed by our auditors.
They have been prepared in accordance with IAS 34 - Interim Financial
Reporting, as well as the AC 500 standards as issued by the Accounting
Practices Board and in compliance with the Listing Requirements of the
JSE Limited.
The financial information has been prepared on the basis of the
recognition and measurement requirements of International Financial
Reporting Standards (IFRS). The accounting policies of the Company have
been consistently applied and these financial statements should be read
in conjunction with the annual report for the year ended 28 February
2010.
The Company identified only one business segment, being exploration
within South Africa.
Interim operations
The operating loss for the six months under review increased by R2.6
million when compared to the first six months of the prior year. The
increase in operating loss results mainly from an increase in the
employee share based payment expenses (R2.6 million).
The loss before taxation increased by R4.5 million due mainly to the
decrease in interest received (R2 million) and the increase in the
operating loss mentioned above.
The Company invested R15.9 million (2009 - R12.2 million) in intangible
exploration assets.
Dividend
No dividend has been declared for the period under review (2009 - Nil).
Commitments
The Company`s commitments amount to R23.9 million (2009 - R29.5 million),
of which R18.3 million (2009 - R24.8 million) is in respect of
exploration activities. The net decrease results from the completion of
various drilling projects.
Events subsequent to the review period
On 7 September 2010, the Company announced the conclusion of an agreement
whereby the Armgold/Harmony Freegold Joint Venture Company (Proprietary)
Limited (Freegold JV), a wholly owned subsidiary of Harmony, agreed to
sell back its 40% option over the Company`s southern Free State assets
for a consideration of R275 million, subject to the fulfilment of certain
conditions precedent. The Company has settled the consideration by the
issue of 4,376,194 ordinary shares. Harmony has agreed to certain lock up
provisions on the shares received and has, in addition, agreed to waive
any Participation Rights that its subsidiaries previously held over the
Company`s southern Free State assets.
The Company also announced that it had concluded a second agreement with
Harmony Gold Mining Limited (Harmony) to purchase the Merriespruit South
area for an amount of R61 million, to be paid in cash. The agreement is
subject to the fulfilment of certain conditions precedent, including the
Company obtaining funding to an amount of at least R61 million, not later
than 31 May 2011 and to the Department of Mineral Resources agreeing to
add the Merriespruit South area to one of the Company`s existing
Prospecting Rights by no later than 31 October 2011.
On 15 November 2010, the Company issued 2,223,155 ordinary shares to
public shareholders for cash; under the general authority granted to the
directors at the annual general meeting held on 10 Sepember 2010, at
R54.00 per share realising R120 million in gross proceeds.
Following this capital raising, Wits Gold`s board of directors is of the
opinion that the Company has sufficient funds to finance its planned
exploration programme for approximately the next two years.
Mineral Resources
Wits Gold currently holds legal title to 14 Prospecting Rights covering
119 586ha in the southern Free State, Potchefstroom and Klerksdorp
goldfields. None of these assets are presently in production and the
directors are not aware of any legal proceedings or any other material
conditions that may impact on the Company`s ability to continue with its
exploration activities. The contained Mineral Resources are currently
reflected as being fully attributable to Wits Gold. However, over certain
properties in the Potchefstroom and Klerksdorp areas, Gold Fields and
AngloGold Ashanti have options to acquire a 40% interest in any future
mines following the completion of Definitive Feasibility Studies.
As part of the environmental management plan (EMP), the Company has
lodged bank guarantees totaling R270 000 with the Department of Mineral
Resources (DMR). This amount has been accepted for the work programmes
proposed over the 14 Prospecting Rights granted to Wits Gold. EMP
compliance will be monitored on an ongoing basis for the duration of the
Prospecting Rights.
During the period since February 2010, the Company has not revised the
Mineral Reserve and Resource Estimates relating to the Prospecting Rights
granted by the DMR. The previously reported Mineral Reserve and Resource
Estimates as tabulated below are compliant with the NI 43-101 and SAMREC
reporting codes. The Mineral Resources include the Company`s Mineral
Reserves.
Mineral Reserves (Based on a gold price of US$975/oz and an exchange rate
of R8.00/US$)
Bloemhoek Project (SOFS goldfield) Mt Au (g/t) Tonnes Au Moz Au
Probable Reserves 31.6 5.3 168.8 5.4
Mineral Resources
Indicated gold resources Inferred gold resources
Goldfield
Mt Au (g/t) (Moz) Mt Au (g/t) (Moz)
SOFS 103.3 6.0 19.9 111.6 4.6 16.5
Potchefstroom - - - 333.6 7.1 75.8
Klerksdorp - - - 85.1 14.5 39.5
Total 103.3 6.0 19.9 530.3 7.8 131.8
Inferred uranium resources
Goldfield
Mt U3O8 (kg/t) (Mlb)
SOFS 211.1 0.225 104.5
Potchefstroom 250.0 0.300 163.6
Klerksdorp - - -
Total 461.1 0.265 268.1
At the time of estimation, all of the available exploration results were
used to calculate these Resources and Reserves and involved the
application of true reef widths. Gold and uranium Resources were
separately estimated without the use of metal equivalent calculations.
These Resources have been estimated to a maximum depth of 5 000 metres,
using a gold cut-off value of 300cm.g/t for narrow reefs and 600cm.g/t
for the wider Cobble Reef in the Potchefstroom area. The gold estimates
have been based on simple kriging in the Potchefstroom and Klerksdorp
area and on ordinary kriging in the southern Free State. The only area
where kriging has not been employed is at Beisa North where an inverse
distance approach was applied to estimate Resources.
Information concerning the geology, mineral occurrences, nature of
mineralisation, geological controls, rock types, historical work
including data density, the application of quality assurance and quality
control measures, sampling and analytical procedures, the names of
analytical laboratories employed and the key assumptions, parameters and
methods used to estimate the Mineral Resources at the Company`s various
projects are communicated in the Company`s NI 43-101 compliant
Independent Technical Reports dated November 2007, May 2009, June 2009
and October 2009, which can be viewed at www.sedar.com and on the
Company`s website.
Mr Dirk Muntingh, the Company`s Competent Person and Exploration Manager
is responsible for the technical material in this release. Mr Muntingh
(M.Sc Geology) is a registered Professional Natural Scientist
(Pr.Sci.Nat.) with the South African Council for Natural Scientific
Professionals (SACNASP) and has 18 years of experience in gold
exploration. The technical content of this release has been compiled by
Mr Muntingh, who has issued a written statement that the information
disclosed above is SAMREC compliant.
Exploration activities
During the six month period under review, Wits Gold has incurred
expenditure of R15.9 million by continuing exploration in all three
regions where the Company holds Prospecting Rights, namely the
Potchefstroom, Klerksdorp and the southern Free State goldfields. The
target in each of these areas is conglomerate-hosted gold and uranium
mineralisation, similar to that exploited in the Witwatersrand Basin
since 1886. In view of the Company`s active programmes, all of the
Prospecting Rights granted by the Department of Mineral Resources remain
in good standing.
Potchefstroom goldfield
In this area, the Company has focused attention on the south of Deelkraal
project, where a seismic survey has been completed over the more
prospective eastern half of the project. This area occurs to the
immediate south of Harmony`s Kusasalethu Mine and contains the down-dip
extensions of the Ventersdorp Contact Reef (VCR) and Elsburg Reefs. The
seismic survey was completed during June 2010 by GAP Geophysics (Pty)
Ltd. It comprises three dip lines orientated north-south, with two
perpendicular tie lines for a combined distance of 33 kilometres. The
data acquisition and processing have been completed, whilst the
interpretation phase is currently in progress. These results indicate an
excellent response with the base of the Klipriviersberg Lava, where the
VCR occurs, being a strong reflector. It is expected that all faults with
throws in excess of 25 metres will be imaged and that a final
interpretation is expected by the end of 2010. Depending on the Company`s
priorities, this product could be used as a basis for future diamond
drilling in the area.
Klerksdorp goldfield
Exploration has concentrated on the Kromdraai project, which forms part
of the down-dip extension of the Klerksdorp goldfield. In this area, the
drilling of borehole WDS1 had to be curtailed during June 2010 due to on-
going technical problems. This was due to the presence of in-hole caving
caused by a shale unit in the Gold Estates Formation at 3 613 metres,
some 200 metres above the Vaal Reef. Despite several attempts to circum-
navigate this problem, this could not be achieved. Consequently, in order
to minimise expenditure as well as the possibility of equipment failure
at these substantial depths, it was decided to abandon drilling
operations.
Although the principal exploration target, the Vaal Reef was not
intersected in WDS1, some measure of success was encountered in the Gold
Estates Conglomerates. These revealed the presence of moderate gold
mineralisation in a strongly pyritic unit which returned 5.88 g/t gold
over 113.9 cm (670cm.g/t).
Southern Free State goldfield
In this region, diamond drilling has been undertaken in four project
areas. At Beisa South, the deepening of borehole ST20 below the Beatrix
Reef has been completed. Accordingly, the Beisa Reef was intersected at a
depth of 1 619 metres where it returned results of 0.301 kg/t U3O8 over
102.5 cm (30.83cm.kg/t) and 0.96g/t gold (98cm.g/t).
At Beisa North, DHM4 has been completed on the boundary with the old
Beisa Uranium Mine. This borehole intersected the Beisa Reef at a depth
of 919 metres where two clusters of assay results yielded an average of
0.702 kg/t U3O8 over 84.1 cm (45.1cm.kg/t) and 1.77g/t gold (149cm.g/t).
In the Bloemhoek area, the Company`s most advanced project, borehole DWN
28 intersected faulted Beatrix Reef at 1 648 metres, whilst the
Kalkoenkrans Reef was faulted out. The single sheared, and therefore non-
representative intersection of the Beatrix Reef returned a gold value of
3.05 g/t over 109.93cm (335cm.g/t) and 0.105 kg/t U3O8 (11.490cm.kg/t).
Despite the presence of this fault, DWN 28 has indicated that the Beatrix
and Kalkoenkrans Reefs are preserved towards the southern boundary of
Bloemhoek, where previously it was thought that these reefs had been
removed by the Platberg Unconformity. Further drilling in this area is
planned for 2011.
On 7 September, the Company announced the conclusion of two transactions
with the Harmony Group involving mineral assets in the southern Free
State. The first of these comprised a R275 million buy back of the
Armgold/Harmony Freegold Joint Venture Company`s option to acquire a 40%
interest in future mines developed by Wits Gold over parts of the
southern Free State. The second concerned the R61 million acquisition of
Harmony`s unmined Merriespruit South area. Based on information from 36
surface boreholes drilled in the Company`s De Bron area as well as
Merriespruit South, it is evident that they fall within the same
structural block, measuring some 15kmSquared. Within this area, the two
principal targets the Beatrix and Leader Reefs occur at relatively
shallow depths of 500 - 1 250 metres below surface.
A geological model based on available drill core suggests the presence of
a seam-carbon facies in the Leader Reef that extends across the boundary
between De Bron and Merriespruit South. This interpretation was partly
substantiated by borehole WF3 which returned 8.21 g/t gold over 103.51cm
(850cm.g/t) at a depth of 582.1 metres. In the overlying Beatrix Reef it
is anticipated that a northwest - southeast channel extends from De Bron
into the southwestern part of Merriespruit South. On the basis of these
observations, the Company has prioritised the Merriespruit South area as
the primary focus for exploration. A total of five boreholes have been
completed, and final assay results are still awaited.
For and on behalf of the board
Adam Fleming Marc Watchorn
Chairman CEO
Johannesburg
29 November 2010
Business and Registered Office
12th Floor, 70 Fox Street, Johannesburg,2001
PO Box 61147, Marshalltown,2107
Tel: (011) 832 1749
Fax: (011) 838 3208
Directors
Mr. Adam Fleming Chairman*, Prof Taole Mokoena Deputy Chairman*,
Dr Humphrey Mathe Director*, Mrs.Gayle Wilson Director*,
Dr Marc Watchorn (Chief Executive Officer), Mr. Derek Urquhart
(Chief Financial Officer) *Non-executive
Company Secretary Sponsor
Mr. Brian Dowden PricewaterhouseCoopers
7 Pam Road, Morningside Ext 5 Corporate Finance (Pty) Ltd
Sandton, Johannesburg, 2057 2 Eglin Rd, Sunninghill, 2157
PO Box 651129, Benmore, 2010 Private Bag X37, Sunninghill,
2157
South Africa South Africa
Transfer Secretaries
JSE: Link Market Services SA (Pty) Ltd
TSX: CIBC Mellon Trust Company
www.witsgold.com
Date: 29/11/2010 15:00:01 Produced by the JSE SENS Department.
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