| Thu 31 Mar 2011, 15:00 | | PLN - Platmin Limited - Consolidated Financial Statements for the twelve months |
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PLN
PLN
PLN - Platmin Limited - Consolidated Financial Statements for the twelve months
ended December 31, 2010 (Expressed in United States dollars, unless otherwise
stated)
Platmin Limited
Incorporated in the accordance with the laws of Canada
Registration number: 610178-0
Share code on TSX: PPN
Share code on AIM: PPN
Share code on JSE: PLN
ISIN: CA72765Y1097
Platmin Limited
(A development stage company)
Consolidated Financial Statements for the twelve months ended December 31, 2010
(Expressed in United States dollars, unless otherwise stated)
Management`s responsibility for financial reporting
The accompanying consolidated financial statements of Platmin Limited were
prepared by management in accordance with International Financial Reporting
Standards ("IFRS"). Management acknowledges responsibility for the preparation
and presentation of the consolidated financial statements, including
responsibility for significant accounting judgments and estimates and the choice
of accounting principles and methods that are appropriate to the Company`s
circumstances. The significant accounting policies of the Company are summarized
in Note 3 to the consolidated financial statements.
Management has established systems of internal control over the financial
reporting process, which are designed to provide reasonable assurance that
relevant and reliable financial information is produced.
The Board of Directors is responsible for reviewing and approving the
consolidated financial statements and for ensuring that management fulfils its
financial reporting responsibilities. An Audit Committee assists the Board of
Directors in fulfilling this responsibility. The members of the Audit Committee
are not officers of the Company. The Audit Committee meets with management as
well as with the independent auditors to review the internal controls over the
financial reporting process, the consolidated financial statements and the
auditors report. The Audit Committee also reviews the Annual Report to ensure
that the financial information reported therein is consistent with the
information presented in the financial statements. The Audit Committee reports
its findings to the Board of Directors for its consideration in approving the
consolidated financial statements for issuance to the shareholders.
Management recognizes its responsibility for conducting the Company s affairs in
compliance with established financial standards, and applicable laws and
regulations, and for maintaining proper standards of conduct for its activities.
Thom as Graham Dale Wayne Gregory Koonin
Chief Executive Officer Chief Financial Officer
March 29, 2011
Audit report
The audit report issued by PricewaterhouseCoopers LLP can be viewed on
www.sedar.com
Consolidated statement of financial position
as at December 31, 2010
(Expressed in U.S. dollars, unless otherwise stated)
Dec 31, Dec 31,
2010 2009
Notes $000 $000
ASSETS
Non-current assets
Mining assets 4 49,886 43,454
Intangible assets 5 14,019 9,348
Property, plant and equipment 6 578,550 422,471
Loans receivable 7 63 50
Restricted cash investments and guarantees 8.2 84,471 7,163
Total non-current assets 726,989 482,486
Current assets
Inventories 9 11,285 9,849
Accounts and other receivables 10 46,877 28,452
Restricted cash 8.2 135,131 -
Cash and cash equivalents (unrestricted) 8.1 188,596 29,375
Total current assets 381,889 67,676
TOTAL ASSETS 1,108,878 550,162
EQUITY AND LIABILITIES
Equity attributable to owners of the parent
Share capital 11 756,579 425,535
Accumulated deficit (90,419) (35,002)
Other components of equity 198,352 82,587
864,512 473,120
Non-controlling interests 12 (30,116) (20,091)
Total equity 834,396 453,029
Non-current liabilities
Long-term borrowings 13 4,710 3,817
Finance lease liability 14 9,410 12,282
Decommissioning and rehabilitation provision 15 70,705 52,744
Total non-current liabilities 84,825 68,843
Current liabilities
Trade payables and accrued liabilities 16 20,747 22,144
Revolving commodity facility 17 3,468 5,854
Current portion of finance lease liability 14 291 292
Current portion of long-term borrowings 18 31,923 -
Convertible debenture 19 133,228 -
Total current liabilities 189,657 28,290
Total liabilities 274,482 97,133
TOTAL EQU ITY AND LIABILITIES 1,108,878 550,162
NATURE OF OPERATIONS AND GOING CONCERN 1
CONTINGENCIES AND COMMITMENTS 24
The accompanying notes are an integral part of the consolidated financial
statements
Consolidated statement of income
for the twelve months ended December 31, 2010
(Expressed in U.S. dollars, unless otherwise stated)
For the period
For the year ended
ended
Dec 31, Dec 31,
2010 2009
Notes $ 000 $ 000
Operating expenses 21 (23,539) (13,693)
Other (expenses) / income 21 (36,883) 3,233
Finance income 3,357 4,402
Finance costs (8,377) (5,057)
Loss before taxation (65,442) (11,115)
Income tax expense 20 - -
LOSS FOR THE PERIOD (65,442) (11,115)
(Loss) / income attributable to:
Owners of the parent (55,417) (7,642)
Non-controlling interest (10,025) (3,473)
(65,442) (11,115)
Loss per share (in currency units)
attributable to owners of the parent:
Basic and diluted 22 (0.09) (0.02)
The accompanying notes are an integral part of the consolidated financial
statements
Consolidated statement of comprehensive income
for the twelve months ended December 31, 2010
(Expressed in U.S. dollars, unless otherwise stated)
For the period
For the year ended
ended
Dec 31, Dec 31,
2010 2009
Notes $ 000 $ 000
Loss for the period (65,442) (11,115)
Other comprehensive income / (loss)
- net of tax 83,704 (109,688)
Exchange differences on translation
from functional to presentation currency 83,704 (109,688)
Income tax relating to components of
other comprehensive income - -
TOTAL COMPREHENSIVE INCOME /
(LOSS) FOR THE PERIOD 18,262 (120,803)
Total comprehensive (loss) / income
attributable to:
Owners of the parent 28,287 (117,330)
Non-controlling interest (10,025) (3,473)
18,262 (120,803)
The accompanying notes are an integral part of the consolidated financial
statements
Consolidated statement of changes in shareholders` equity
for the twelve months ended December 31, 2010
(Expressed in U.S. dollars, unless otherwise stated)
Equity attributable to the shareholders
Share Capital Deficit Share Based Warrants
Payment
Reserve
$ 000 $ 000 $ 000 $ 000
Balance at March 1, 2009 366,180 (27,360) 7,329 846
Shares issued 59,355 - - -
Loss for the period - (7,642) - -
Stock based compensation - - 2,838 -
Currency translation adjustment - - - -
Balance at December
31, 2009 425,535 (35,002) 10,167 846
Shares issued 331,044 - - -
Loss for the period - (55,417) - -
Stock based compensation * - - 32,061 -
Currency translation adjustment - - - -
Balance at December
31, 2010 756,579 (90,419) 42,228 846
Note 11 (b)
Subtotal
Foreign Non-controlling Total
Currency interest Equity
Translation
Reserve
$ 000 $ 000 $ 000 $ 000
Balance at March
1, 2009 (38,114) 308,881 (16,618) 292,263
Shares issued - 59,355 - 59,355
Loss for the period - (7,642) (3,473) (11,115)
Stock based compensation - 2,838 - 2,838
Currency translation
adjustment 109,688 109,688 - 109,688
Balance at December
31, 2009 71,574 473,120 (20,091) 453,029
Shares issued - 331,044 - 331,044
Loss for the period - (55,417) (10,025) (65,442)
Stock based compensation * - 32,061 - 32,061
Currency translation
adjustment 83,704 83,704 - 83,704
Balance at December
31, 2010 155,278 864,512 (30,116) 834,396
Note 12
* The movement includes stock based compensation of US$4.158 million relating to
the vesting of share options and US$27.903 million relating to the fair value of
the convertible debenture issued.
The accompanying notes are an integral part of the consolidated financial
statements
Consolidated statement of cashflows
for the twelve months ended December 31, 2010
(Expressed in U.S. dollars, unless otherwise stated)
For the year For the period
ended ended
Dec 31, Dec 31,
2010 2009
Notes $ 000 $ 000
Cash flows from operating activities
Cash receipts from customers 67,030 12,136
Cash paid to suppliers and employees (174,745) (116,553)
Cash (utilized in) / generated from
operations (107,715) (104,417)
Interest received / (paid) 171 3,069
Income taxes paid - (16)
Net cash (used in) / generated from
operating activities (107,544) (101,364)
Cash flows from investing activities
Purchase of property, plant and equipment (8,858) (55,162)
Proceeds from sale of property,
plant and equipment - -
Additions to intangible assets (3,697) (1,638)
Increase in rehabilitation investment (67,231) (3,170)
Increase in deferred exploration expenses (1,512) (2,404)
Net cash used in investing activities (81,298) (62,374)
Cash flows from financing activities
(Decrease) / Increase in loans payable - (48,858)
(Decrease) in finance lease liability (3,937) (1,361)
(Decrease)/Increase in revolving commodity (4,471) 5,270
facility
Cost of debenture issue (1,020) -
Realised foreign exchange gains on settlement
of FEC`s - 19,411
Increase in Promissory note 26,199 -
Proceeds from issue of shares 329,598 59,640
Net cash generated from financing activities 346,369 34,102
Net (decrease) / increase in cash
and cash equivalents 157,527 (129,636)
Net foreign exchange differences 1,694 31,061
Cash and cash equivalents at the
beginning of the period 8.1 29,375 127,950
Cash and cash equivalents at the end
of the period 8.1 188,596 29,375
The accompanying notes are an integral part of the consolidated financial
statements
Notes to the consolidated financial statements
for the twelve months ended December 31, 2010
(Expressed in U.S. dollars, unless otherwise stated)
1. Nature of operations and going concern
Platmin Limited (the "Company") and its subsidiaries (the "Group") is a
development stage Natural Resources Group engaged in the acquisition,
exploration and development of Platinum Group Elements ("PGE") properties in the
Republic of South Africa.
The Company was incorporated under the Canada Business Corporation Act on May
29, 2003. The Company has continued as a company under the Business Corporations
Act of British Columbia, Canada effective April 1, 2009. Its Common Shares are
listed on the Toronto Stock Exchange ("TSX") and the Alternative Investment
Market ("AIM") of the London Stock Exchange. The Company trades under the symbol
PPN on both exchanges. On July 22, 2009, the Company listed on the Johannesburg
Securities Exchange Limited ("JSE") with the symbol PLN.
These consolidated financial statements have been prepared using International
Financial Reporting Standards ("IFRS") applicable to a going concern, which
contemplates the realization of assets and settlement of liabilities in the
normal course of business as they become due.
The Group changed its financial year end from the last day of February in each
calendar year to the last day of December, effective for the period ending
December 31, 2009. As a result of the change in year end, the comparative
amounts are not directly comparable with the current balances.
For the twelve months ended December 31, 2010 the Group incurred a loss of
US$65.442 million and as at December 31, 2010 had an accumulated deficit of
US$90.419 million. The Group is dependent on the successful completion of the
Pilanesberg Platinum Mines ("PPM") to generate cash flows in order to fund its
operations and pay debt as it becomes due. Such circumstances may cast
significant doubt as to the ability of the Group to meet its obligations as they
become due and accordingly the appropriateness of the use of the accounting
principles applicable to a going concern.
The Group raised US$331.000 million in capital by way of a private placement
during May and November 2010, respectively and had US$188.596 million in cash
and cash equivalents at December 31, 2010 to fund development activities and
meet its contractual obligations.
The Company`s financing efforts to date, while substantial, may not be
sufficient in and of themselves to enable the Company to fund all aspects of its
operations when taking into consideration forecasted revenue streams based upon
planned production. Management expects that the Company will be able to secure
the necessary financing to meet the Company s requirements on an ongoing basis.
Nevertheless, there is no assurance that these initiatives will be successful or
sufficient. If the going concern assumption were not appropriate for these
consolidated financial statements, then adjustments to the carrying values of
the assets and liabilities, the reported expenses and the statement of financial
position classifications, which could be material, may be necessary.
2. Basis of presentation
- Statement of compliance
The Group`s consolidated annual financial statements were prepared in accordance
with IFRS as issued by the International Accounting Standards Board ("IASB").
The annual financial statements were approved by the Board of Directors on
(March 24, 2011).
- Basis of measurement
The financial statements are prepared on the historical cost basis except for
the revaluation of certain financial instruments.
- Functional and presentation currency
The Group`s functional currency, as determined at the transition date of March
1, 2008, is the South African Rand ("ZAR"). The consolidated financial
statements are presented in US Dollars ("US$") which is the Group`s presentation
currency for purposes of dual listing and foreign shareholders.
All financial information presented has been rounded to the nearest thousand.
- Use of estimates, assumptions and judgements
The preparation of financial statements in conformity with IFRS requires
management to make judgements, estimates and assumptions that affect the
application of accounting policies and the reported amounts of assets,
liabilities, income and expenses. Actual results may differ from these
estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions
to accounting estimates are recognised in the period in which the estimates are
revised and in any future periods affected.
The primary areas in which estimates and judgements are applied are as follows:
Determination of functional currency
In accordance with IAS 21 The Effects of Changes in Foreign Exchange Rates,
management determined that the functional currencies of Platmin Limited and its
South African subsidiaries are the South African Rand ("ZAR").
Determination of consolidation
Management applies significant judgement when determining whether the Company
should consolidate entities where percentage of ownership is below 50%. These
judgements include the Company s power to:
- appoint or remove the majority of the members of the board of directors; and
- cast the majority of votes at meetings of the board and control of the entity.
Impairment of assets
The carrying value of goodwill, intangible assets and property, plant and
equipment for which the key assumptions and management approach for determining
these, are described in the policy on Impairment.
Inventory
Inventory is held in a wide variety of forms across the value chain reflecting
the stage of refinement. Prior to production as final metal the inventory is
always contained within a carrier material. As such inventory is typically
sampled and assays taken to determine the metal content and how this is split by
metal. Measurement and sampling accuracy can vary quite significantly depending
on the nature of the vessels and the state of the material. Management
judgement, therefore, is also applied.
Use of estimates, assumptions and judgements (continued)
- Rehabilitation costs
The Group assesses its mine rehabilitation provision annually. Significant
estimates and assumption are made in determining the provision for mine
rehabilitation as there are numerous factors that will affect the ultimate
liability payable. These factors include estimates of the extent and costs of
rehabilitation activities, technological changes, regulatory changes, cost
increases, and changes in discount rates. Those uncertainties may result in
future actual expenditure differing from the amounts currently provided. The
provision at the reporting date represents management s best estimate of the
present value of the rehabilitation costs anticipated to be incurred at the end
of the mine s life.
3. Accounting policies
The accounting policies set out below have been applied consistently to all
periods presented in these annual consolidated financial statements.
- Basis of consolidation
The consolidated financial statements comprise the accounts of Platmin, the
parent company and its controlled subsidiaries, after the elimination of all
material intercompany balances and transactions. The purchase method of
accounting is used to account for the acquisition of subsidiaries b y the Group.
The cost of an acquisition is measured as the fair value of the assets given,
equity instruments issued and liabilities incurred or assumed at the date of
exchange, plus costs directly attributable to the acquisition. Identifiable
assets acquired and liabilities and contingent liabilities assumed in a business
combination are measured initially at their fair values at the acquisition date,
irrespective of the extent of any non-controlling interest. The excess of the
cost of acquisition over the fair value of the Group`s share of the identifiable
net assets acquired is recorded as goodwill. If the cost of acquisition is less
than the fair value of the net assets of the subsidiary acquired, the difference
is recognised directly in the statement of income and comprehensive income.
Subsidiaries
Subsidiaries are all entities (including special purpose entities) over which
the group has the power to govern the financial and operating policies generally
accompanying a shareholding of more than one half of the voting rights. Where
the group does not directly hold more than one half of the voting rights,
significant judgement is used to determine whether control exists. These
significant judgements include assessing whether the group can control the
operating policies through the group s ability to appoint the majority of
directors to the board. The existence and effect of potential voting rights that
are currently exercisable or convertible are considered when assessing whether
the group controls another entity. Subsidiaries are fully consolidated from the
date on which control is transferred to the group until the date on which
control ceases.
The accounts of subsidiaries are prepared for the same reporting period as the
parent entity, using consistent accounting policies. Inter-company transactions,
balances and unrealised gains on transactions between Group companies are
eliminated. Unrealised losses are also eliminated. Accounting policies of
subsidiaries have been changed where necessary to ensure consistency with the
policies adopted by the Group. A list of subsidiaries appears in Note 23.
Transactions and non-controlling interest
The group treats transactions with non-controlling interests as transactions
with equity owners of the group. For purchases from non-controlling interests,
the difference between any consideration paid and the relevant share acquired of
the carrying value of net assets of the subsidiary is recorded in equity. Gains
or losses on disposals to non- controlling interests are also recorded in
equity.
- Business combinations
The acquisition method of accounting is used to account for business
combinations by the group. The consideration transferred for the acquisition of
a business is the fair values of the assets transferred, the liabilities
incurred and the equity interests issued by the group. The consideration
transferred includes the fair value of any asset or liability resulting from a
contingent consideration arrangement. Acquisition-related costs are expensed as
incurred. Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are measured initially at their
fair values at the acquisition date. On an acquisition-by-acquisition basis, the
group recognises any non-controlling interest in the acquiree either at fair
value or at the non-controlling interest s proportionate share of the acquirees
net assets. Subsequently, the carrying amount of non-controlling interest is the
amount of the interest at initial recognition plus the non-controlling
interest`s share of the subsequent changes in equity. Total comprehensive income
is attributed to non-controlling interest even if this results in the non-
controlling interest having a deficit balance. The excess of the consideration
transferred, the amount of any non-controlling interest in the acquiree and the
acquisition-date fair value of any previous equity interest in the acquiree over
the fair value of the identifiable net assets acquired is recorded as goodwill.
If this is less than the fair value of the net assets of the subsidiary acquired
in the case of a bargain purchase, the difference is recognised directly in the
statement of comprehensive income.
The Group has made an election in terms of IFRS 1 to apply the requirements of
IFRS 3 (Revised) Business Combinations to all business combinations with
effective dates on or after March 1, 2008. The classification and accounting
treatment of business combinations with effective dates prior to March 1, 2008
has not been reconsidered.
- Common control transactions - premium and discount arising on subsequent
purchase from or sales to non controlling interests in subsidiaries
Following the presentation of non-controlling interests in equity any increases
and decreases in ownership interests in subsidiaries without a change in control
are recognized as equity transactions in the consolidated financial statements.
Accordingly, any premium or discount on subsequent purchases of equity
instruments from or sales of equity instruments to minority interests are
recognized directly in equity of the parent shareholder.
Under Canadian GAAP, the Company previously recognized a premium on subsequent
purchases of equity instruments from non-controlling interests as goodwill, and
a premium or discount on subsequent disposal of equity instruments to non-
controlling interests were taken to profit or loss as a capital item in the
statement of income and comprehensive income.
- Functional and presentation currency
Items included in the financial statements of each of the Group`s entities are
measured using the currency of the primary economic environment in which the
entity operates ("the functional currency"). The Group`s functional currency, as
determined at the transition date of March 1, 2008, is the South African Rand
("ZAR"). The consolidated financial statements are presented in US Dollars
("US$") which is the Group`s presentation currency for purposes of dual listing
and foreign shareholders.
Translation of transactions and balances
Foreign currency transactions are translated into the functional currency using
the exchange rates prevailing at the dates of the transactions or valuation
where items are re-measured. Foreign exchange gains and losses resulting from
the settlement of such transactions and from the translation at period end
exchange rates of monetary assets and liabilities denominated in foreign
currencies are recognized in the statement of income and comprehensive income.
Group companies
The results and financial position of all the Group entities (none of which has
the currency of a hyper-inflationary economy) that have a functional currency
different from the presentation currency are translated into the presentation
currency as follows:
- assets and liabilities for each statement of financial position presented are
translated at the closing rate at the date of that financial period end;
- income and expenses for each statement of income and comprehensive income are
translated at average exchange rates (unless this average is not a reasonable
approximation of the cumulative effect of the rates prevailing on the
transaction dates, in which case income and expenses are translated at the rate
on the dates of the transactions);
- equity transactions are translated using the exchange rate at the date of the
transaction; and
- all resulting exchange differences are recognized as a separate component of
equity.
On consolidation, exchange differences arising from the translation of
functional to presentation, and of borrowings and other currency instruments
designated as hedges of such investments, are taken to shareholders equity.
Goodwill and fair value adjustments arising on the acquisition of a foreign
entity are treated as assets and liabilities of the foreign entity and
translated at the closing rate.
IAS 21 The effects of Changes in Foreign Exchange Rates differs from the
Canadian GAAP equivalent, applied by the Group until February 28, 2009. IAS 21
requires an entity to measure its assets, liabilities, revenue and expenses in
its functional currency. It has been determined that as at the transition date
of March 1, 2008, the South African Rand ("ZAR") was the functional currency of
all entities in the Group. Prior to the adoption of IFRS, the functional
currency of Platmin Limited and Platmin Resources Limited (BVI) was the US
Dollar ("US$").
Under IAS 21, the assets and liabilities of the Group are translated from the
Group`s functional currency ("ZAR"), to the presentation currency at the
reporting date. The income and expenses are translated to the Group`s
presentation currency, which is US$ at the average for the reporting period.
Foreign currency differences are recognized directly in other comprehensive
income within the foreign currency translation reserve.
- Exploration and evaluation assets and development expenditure
Exploration and evaluation costs, including the cost of acquiring licenses, are
capitalized as exploration and evaluation assets on a project-by-project basis
pending determination of the technical feasibility and the commercial viability
of the project. The capitalized costs are presented as either tangible or
intangible exploration and evaluation assets according to the nature of the
assets acquired. Capitalised costs include costs directly related to exploration
and evaluation activities in the area of interest. General and administrative
costs are only allocated to the asset to the extent that those costs can be
directly related to operational activities in the relevant area of interest.
When a license is relinquished or a project is abandoned, the related costs are
recognized in profit and loss immediately.
Exploration and evaluation assets are assessed for impairment if (i) sufficient
data exists to determine technical feasibility and commercial viability, and
(ii) fact and circumstances suggest that the carrying amount exceeds the
recoverable amount (see impairment).
- Exploration and evaluation assets and development expenditure (continued)
The technical feasibility and commercial viability of extracting a mineral
resource is considered to be determinable when proven reserves are determined to
exist, the rights of tenure are current and it is considered probable that the
costs will be recouped through successful development and exploitation of the
area, or alternatively b y sale of the property. Upon determination of proven
reserves, intangible exploration and evaluation assets attributable to those
reserves are first tested for impairment and then reclassified from exploration
and evaluation assets to a separate category within tangible assets. Expenditure
deemed to be unsuccessful is recognised in profit or loss immediately. Upon
transfer of Exploration and evaluation costs into Mine development, all
subsequent expenditure on the construction, installation or completion of
infrastructure facilities is capitalised within Mine development. After
production starts, all assets included in Mine development are transferred to
Producing Mines.
- Mining properties
When further development expenditure is incurred in respect of a mining property
after the commencement of production, such expenditure is carried forward as
part of the mining property when it is probable that additional future economic
benefits associated with the expenditure will flow to the entity. Otherwise such
expenditure is classified as a cost of production.
Depreciation is charged using the units-of-production method, with separate
calculations being made for each area of interest. The units of production basis
results in a depreciation charge proportional to the depletion of proven and
probable reserves.
Mining properties are tested for impairment in accordance with the policy for
impairment as set out below.
- Intangible assets
Intangible assets that are acquired by the Group are stated at cost less
accumulated amortization and impairment losses.
Amortization is charged to profit and loss on a straight line basis over the
estimated useful lives of the intangible assets.
Useful life
Asset category (years)
Computer software 2
ERP Software 5
Water right 13
The estimated useful life for the water right is 13 years based on the current
life of mine.
- Property, plant and equipment
Property, plant and equipment are stated at historical cost less accumulated
depreciation and accumulated impairment losses.
Subsequent costs are included in the asset s carrying amount or recognized as a
separate asset, as appropriate, only when it is probable that future economic
benefits associated with the item will flow to the Group and the cost of the
item can be measured reliably. The carrying amount of the replaced part is
derecognized. All other repairs and maintenance are charged to the statement of
income and comprehensive income during the financial period in which they are
incurred.
Gains and losses on disposals are determined by comparing the proceeds with the
carrying amount and are recognized within Other (expense) and income in the
statement of income and comprehensive income.
Upon completion of mine construction, the assets are transferred into property,
plant and equipment.
Depreciation and amortization are calculated on a straight-line method to write
off the cost of the assets to their residual values over their estimated useful
lives. The depreciation and amortization rates applicable to each category of
property, plant and equipment are as follows:
Useful life
Asset category (years)
Vehicles 5
Computer equipment 3
Office equipment 6
Furniture and fittings 6
Other equipment 5
Buildings 20
Leasehold improvements 5
Plant construction, deferred stripping costs and mine
development Units of production
Exploration and evaluation assets (available for use) Units of production
Where parts (components) of an item of property, plant and equipment have
different useful lives or for which different depreciation rates are
appropriate, they are accounted for as separate items of property, plant and
equipment.
Estimates of residual values and useful lives of all assets are assessed
annually.
The Group measures the estimated residual value of an item of property, plant
and equipment as the amount the Group estimates it would receive currently from
the asset if the asset were already of the age and in the condition expected at
the end of its useful live.
The Group has assessed the useful lives and residual values of all individual
components of property, plant and equipment and no adjustments were required to
the carrying values of items at the date of transition.
- Deferred stripping costs
Stripping costs comprise the removal of overburden and other waste products from
a mine.
Stripping costs incurred in the development of a mine before production
commences are capitalised as part of the cost of constructing the mine and
subsequently amortised over the life of the mine on a units of production basis.
Stripping costs incurred during the production stage of a mine are deferred when
this is considered the most appropriate basis for matching the costs against the
relevant economic benefits. The amount deferred is based on the waste-to-ore
ratio (called a "Stripping ratio") which is calculated by dividing the tonnage
of waste mined by the quantity of ore mined. Stripping costs incurred in a
period are deferred to the extent that the current period ratio exceeds the
expected life-of-mine ratio. Such deferred costs are then charged to the
statement of income and comprehensive income to the extent that, in subsequent
periods, the current ratio falls below the life-of-mine ratio. The life-of-mine
stripping ratio is calculated based on proven and probable reserves. Any changes
to the life-of-mine ratio are accounted for prospectively.
Where a mine operates more than one open pit that are regarded as separate
operations for the purpose of mine planning, stripping costs are accounted for
separately by reference to the ore from each separate pit. If, however, the pits
are highly integrated for the purpose of the mine planning, the second and
subsequent pits are regarded as extensions of the first p it in accounting for
stripping costs. In such cases, the initial stripping, (i.e., overburden and
other waste removal) of the second and subsequent pits is considered to be
production phase stripping relating to the combined operation.
Deferred stripping costs are included as part of Mining properties. These form
part of the total investment in the relevant cash generating units, which are
reviewed for impairment if events or changes of circumstance indicate that the
carrying value may not be recoverable.
- Leased assets
Leases in terms of which the Group assumes substantially all the risks and
rewards of ownership are classified as finance leases. Upon initial recognition
the leased asset is measured at an amount equal to the lower of its fair value
and the present value of the minimum lease payments. Subsequent to initial
recognition, the asset is accounted for in accordance with the accounting policy
applicable to that asset. The Group has made an election in terms of IFRS 1 to
apply the transitional provisions in IFRIC 4 - Determining whether an
Arrangement contains a Lease, therefore determining if any arrangement existed
at the transition date.
Other leases are operating leases and the leased assets are not recognized on
the Group`s statement of financial position.
- Impairment of assets
The carrying amount of the Group`s assets (which include Property, plant and
equipment, exploration and evaluation assets, mineral rights and properties and
intangible assets) is reviewed at each reporting date to determine whether there
is any indication of impairment. If such indication exists, the recoverable
amount of the asset is estimated in order to determine the extent of the
impairment loss. An impairment loss is recognized whenever the carrying amount
of an asset or its cash generating unit exceeds its recoverable amount.
Impairment losses are recognized in the statement of income and comprehensive
income.
The recoverable amount of assets is the greater of an asset s fair value less
cost to sell and value in use. In assessing value in use, the estimated future
cash flows are discounted to their present value using a pre-tax discount rate
that reflects the current market assessments of the time value of money and the
risks specific to the asset. For an asset that does not generate cash inflows
largely independent of those from other assets, the recoverable amount is
determined for the cash-generating unit to which the asset belongs.
An impairment loss is only reversed if there is an indication that the
impairment loss may no longer exist and there has been a change in the estimates
used to determine the recoverable amount, however, not to an amount higher than
the carrying amount that would have been determined had no impairment loss been
recognized in previous years. Assets that have an indefinite useful life are not
subject to amortisation and are tested annually for impairment.
- Inventory
Inventories are measured at the lower of cost and net realisable value. The cost
of inventories includes expenditure incurred in acquiring the inventories,
production or conversion costs and other costs incurred in bringing them to
their existing location and condition. In the case of manufactured inventories
and work in progress, cost includes an appropriate share of production overheads
based on normal operating capacity.
Net realisable value is the estimated selling price in the ordinary course of
business, less the estimated costs of completion and selling expenses.
- Financial assets
The Group classifies its financial assets in the following categories: at fair
value through profit or loss, loans and receivables, and available for sale. The
classification depends on the purpose for which the financial assets were
acquired. Management determines the classification of its financial assets at
initial recognition.
Regular purchases and sales of financial assets are recognised on the trade-date
the date on which the group commits to purchase the asset.
Loans and receivables are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. They are included
in current assets, except for maturities greater than 12 months after the end of
the reporting period. These are classified as non-current assets.
The Group`s loans and receivables comprise Loans receivable, Cash investments
and guarantees, Accounts and other receivables and Cash and cash equivalents in
the statement of financial position.
Financial assets are derecognized when the rights to receive cash flows from the
investments have expired or have been transferred and the Group has transferred
substantially all risks and rewards of ownership.
The Group assesses at each reporting date whether there is objective evidence
that a financial asset or a Group of financial assets is impaired.
Loans receivable
Loans receivable are recognized initially at fair value and subsequently
measured at amortized cost using the effective interest method, less provision
for impairment.
Cash investments and guarantees
Cash investments and guarantees include cash and term deposits with an original
maturity of more than twelve months.
Accounts receivables
Accounts receivables are recognized initially at fair value and subsequently
measured at amortized cost using the effective interest method, less provision
for impairment.
A provision for impairment of accounts receivables is established when there is
objective evidence that the Group will not be able to collect all amounts due
according to the original terms of the receivables. Significant financial
difficulties of the debtor, probability that the debtor will enter bankruptcy or
financial reorganization, and default or delinquency in payments (more than 60
days overdue) are considered indicators that the accounts receivable is
impaired. The amount of the provision is the difference between the asset s
carrying amount and the present value of estimated future cash flows, discounted
at the original effective interest rate. The carrying amount of the asset is
reduced through the use of an allowance account, and the amount of the loss is
recognized in the statement of income and comprehensive income.
When an accounts receivable is uncollectible, it is written off against the
allowance account for accounts receivables. Subsequent recoveries of amounts
previously written off are credited against in the statement of income and
comprehensive income.
Cash and cash equivalents
Cash and cash equivalents include cash and term deposits with an original
maturity of three months or less.
- Trade payables
Trade payables are obligations to pay for goods or services that have been
acquired in the ordinary course of business from supplies. Accounts payable are
classified as current liabilities if payment is due within one year or less. If
not, they are presented as non-current liabilities.
Trade payables are recognized initially at fair value and subsequently measured
at amortized cost using the effective interest method.
- Borrowings
Borrowings are recognized initially at fair value, net of transaction costs
incurred. Borrowings are subsequently stated at amortized cost; any difference
between the proceeds (net of transaction costs) and the redemption value is
recognized in the statement of income and comprehensive income over the period
of the borrowings using the effective interest method.
Fees paid on the establishment of loan facilities are recognized as transaction
costs of the loan to the extent that it is probable that some or all of the
facility will be drawn down. In this case, the fee is deferred until the draw-
down occurs. To the extent there is no evidence that it is probable that some or
all of the facility will be drawn down, the fee is capitalized as a pre-payment
for liquidity services and amortized over the period of the facility to which it
relates. Borrowings are classified as current liabilities unless the Group has
an unconditional right to defer settlement of the liability for at least 12
months after the reporting date.
- Provisions
Provisions for environmental restoration, restructuring costs and legal claims
are recognized when: the Group has a present legal or constructive obligation as
a result of past events; it is probable that an outflow of resources will be
required to settle the obligation; and the amount has been reliably estimated.
Provisions are not recognized for future operating losses.
Provisions are measured at the present value of the expenditures expected to be
required to settle the obligation using a pre-tax rate that reflects current
market assessments of the time value of money and the risks specific to the
obligation. The increase in the provision due to passage of time is recognized
as interest expense.
An obligation to incur decommissioning and rehabilitation costs occurs when an
environmental disturbance is caused by exploration, evaluation, development or
ongoing production. Costs are estimated on the basis of a formal closure plan
and are subject to regular review.
Decommissioning and site rehabilitation costs arising from the installation of
plant and other site preparation work, discounted to their present value, are
provided when the obligation to incur such costs arises and are capitalized into
the cost of the related asset. These costs are charged against profits through
depreciation of the asset and unwinding of the discount on the provision.
Depreciation is included in operating costs while the unwinding of the discount
is included as a financing cost. Changes in the measurement of a liability
relating to the decommissioning or site rehabilitation of plant and other site
preparation work are added to, or deducted from, the costs of the related asset.
The costs for the restoration of site damage, which arises during production,
are provided at their net present values and charged against their operating
profit as extraction progresses. Changes in the measurement of a liability which
arises during production are charged against operating profit.
The discount rate used to measure the net present value of the obligations is
the pre-tax rate that reflects the current market assessments of the time value
of money and the risks specific to the obligation.
In accordance with the Group`s policy and applicable legal requirements, a
provision for decommissioning liabilities is recognized when the asset is
installed and rehabilitation liabilities are recognized when the land is
disturbed. Changes in estimated decommissioning and rehabilitation liabilities
that occurred before the transition to IFRS have been adjusted for at the
transition date on a net basis in accordance with the provisions of IFRIC 1 and
the applicable exemptions under IFRS 1.
- Share based payment transactions
Equity settled
The fair value of share options under the employee share incentive schemes and
other equity instruments granted to Group employees is recognised as an employee
expense with a corresponding increase in equity. The fair value is measured at
grant date and expensed over the period during which the employee becomes
unconditionally entitled to the equity instruments. The total amount to be
expensed is determined by reference to the fair value of the options granted,
excluding the impact of any non-market service and performance vesting
conditions. Non-market vesting conditions are included in assumptions about the
number of options that are expected to vest.
The fair value of the instruments granted is measured using generally accepted
valuation techniques, taking into account the terms and conditions upon which
the instruments are granted. At each reporting date, the entity revises its
estimates of the number of options that are expected to vest based on the non-
marketing vesting conditions. It recognises the impact of the revision to
original estimates, if any, in the statement of income and comprehensive income,
with a corresponding adjustment to equity. The proceeds received, net of any
directly attributable transaction costs, are credited to share capital when the
options are exercised.
This accounting policy has been applied to all equity instruments granted after
November 7, 2002 that has not yet vested at January 1, 2005. The increase in
equity arising from vested share options was credited to common shares when
options were exercised under the Group`s previous accounting policies.
- Income taxes
The income tax expense for the period comprises current and deferred taxation.
Taxation is recognised in the statement of income and comprehensive income,
except to the extent that it relates to items recognised directly in equity.
Current taxation
Current tax is the expected tax payable on the taxable income for the period,
using tax rates enacted or substantively enacted at the reporting date in
countries where the companys subsidiaries operate and generate taxable income.
Management periodically evaluates positions taken in tax returns with respect to
situations in which applicable tax regulation is subject to interpretation. It
establishes provisions where appropriate on the basis of amount expected to be
paid to tax authorities.
- Income taxes
Deferred taxation
Deferred taxation is recognised using the liability method, on temporary
differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for taxation purposes. However, the
deferred taxation is not recognised for if it arises from initial recognition of
an asset or liability in a transaction other than a business combination that at
the time of the transaction affects neither accounting nor taxable profit or
loss. Deferred taxation is determined using tax rates (and laws) that have been
enacted or substantially enacted by reporting date and are expected to apply
when the related deferred taxation asset is realised or the deferred taxation
liability is settled.
Deferred tax assets and liabilities are offset if there is a legally enforceable
right to offset current tax liabilities and assets, and they relate to income
taxes levied by the same tax authority on the same taxable entity, or on
different tax entities, but they intend to settle current tax liabilities and
assets on a net basis or their tax assets and liabilities w ill be realised
simultaneously.
A deferred tax asset is recognised to the extent that it is probable that future
taxable profits will be available against which the temporary difference can be
utilised. Deferred tax assets are reviewed at each reporting date and are
reduced to the extent that it is no longer probable that the related tax benefit
will be realised. Additional income taxes that arise from the distribution of
dividends are recognised at the same time that the liability to pay the related
dividend is recognised.
Deferred income tax is provided on temporary differences arising on investments
in subsidiaries and associates, except where the timing of the reversal of the
temporary difference is controlled by the Group and it is probable that the
temporary difference will not reverse in the foreseeable future.
- Revenue
Revenue comprises the fair value of the consideration received or receivable for
the sale of goods and services in the ordinary course of the Group`s activities.
Revenue is shown net of value-added tax, returns, rebates and discounts and
after eliminating sales within the Group.
The Group recognises revenue when the amount of revenue can be reliably
measured, it is probable that future economic benefits will flow to the entity
and when specific criteria have been met for each of the Group`s activities as
described below. The amount of revenue is not considered to be reliably
measurable until all contingencies relating to the sale have been resolved. In
certain circumstances, metal prices and assayed quantities at the point of sale
may be provisional. Adjustments in respect of final assayed quantities and/or
prices arising between the date of recognition and the date of settlement are
recognised in the period in which the adjustment arises and reflected through
revenue and receivables
Revenue from the sale of goods is recognized when the significant risks and
rewards of ownership have been transferred to the buyer. Revenue is not
recognized if there are significant uncertainties regarding recovery of the
consideration due.
As a development stage company, Platmin will offset revenue from mining
activities against capitalised operating costs until such time as PPM is brought
into commercial production.
- Finance income
Finance income is recognized on the time proportion basis, taking account of the
investment balances outstanding and the effective rate over the period to
maturity.
- Borrowing costs
Borrowing costs are recognized as an expense in the period in which they are
incurred, except to the extent that they are directly attributable to the
acquisition or construction of assets that necessarily take a substantial period
to prepare for their intended use or sale ("qualifying assets").
Borrowing costs directly attributable to the acquisition, construction or
production of a qualifying asset is capitalized as part of the cost of that
asset in accordance with the transitional provisions of IAS 23 Borrowing costs
(revised) and IFRS 1 from January 1, 2009.
- Segment information
The executive committee reviews the Group`s internal reporting in order to
assess performance and allocate resources. Management has determined the
operating segments based on these reports.
- Accounting standards and interpretations issued but not yet effective
There are new or revised Accounting Standards and Interpretations in issue that
are not yet effective. These include the following Standards and Interpretation
that are applicable to the business of the Group and may have an impact on
future financial statements.
- Which will be effective for the financial year ending December 31, 2011:
Standard / Interpretation Details of amendment
IFRS 1 First-time Adoption Amendment relieves first-time adopters of
of International Financial IFRSs from providing the additional
Reporting Standards disclosures
introduced through Amendments to IFRS 7 in
March 2009.
IFRS 1 First-time Adoption Amendment clarifies that, if a first-time
of International Financial adopter changes its accounting policies
Reporting Standards or its use of the exemptions in IFRS 1
after it has published interim financial
statement, it needs to explain those changes
and update the reconciliations between
previous GAAP and IFRS.
IFRS 1 First-time Adoption Amendment allows first-time adopters to
of International Financial use an event-driven fair value as deemed
Reporting Standards cost, even if the event occurs after the
date
of transition, but before the first IFRS
financial statement are issued.
IFRS 1 First-time Adoption Amendment permits the use of carrying
of International Financial amount under previous GAAP as deemed cost
Reporting Standards for operations subject to rate regulation.
IFRS 3 Business Amendment clarifies that the amendments
Combinations to
IFRS 7, IAS 3 2 and IAS 39, that eliminate
the exemption for contingent consideration,
do not apply to contingent consideration
that arose from business combinations
whose acquisition dates precede the
application of IFRS 3 (as revised in 2008).
IFRS 3 Business The amendment limits the scope of the
Combinations measurement choices that only the components
of NCI that are present ownership interests
and entitle heir holders to a proportionate
share of the entitys net assets, in the
event of liquidation, shall be measured
either at fair value or a the present
ownership instruments proportionate share
of the acquirees identifiable net assets.
Other components of NCI are measured at
their acquisition date fair value, unless
another measurement basis is required by
another IFRS.
IFRS 3 Business Additional guidance provided on un-replaced
Combinations and voluntary replaced share-based payment
Awards.
IFRS 7 Financial Amendment clarifies the intended
Instruments: Disclosures interaction between qualitative and
quantitative disclosures of the nature and
extent of risks arising from financial
instruments and removed some disclosure
items which were seen to be superfluous or
misleading.
IAS 1 Presentation of Amendment clarifies that an entity should
Financial Statements present an analysis of other comprehensive
income for each component of equity, either
in the statement of changes in equity or in
the notes to the financial statements.
IAS 24 Related Party The revised IAS 24 Related Party Disclosures
Disclosures amends the definition of a related party
and modifies certain related party
disclosure requirements for government-
related entities and clarifies the
definition of a related party.
Standard / Interpretation Assessed impact on results.
IFRS 1 First-time Adoption The Group has already adopted
of International Financial IFRS. No impact is expected.
Reporting Standards
IFRS 1 First-time Adoption The Group has already adopted
of International Financial IFRS. No impact is expected.
Reporting Standards
IFRS 1 First-time Adoption The Group has already adopted
of International Financial IFRS. No impact is expected.
Reporting Standards
IFRS 1 First-time Adoption The Group has already adopted
of International Financial IFRS. No impact is expected.
Reporting Standards
IFRS 3 Business The Group has already considered
Combinations these principles. No impact is expected.
IFRS 3 Business The Group will only be required to
Combinations apply this amendment prospectively and will
therefore only impact future business
combinations.
IFRS 3 Business The Group will only be required to
Combinations apply this amendment
prospectively and will therefore
only impact future business
combinations.
IFRS 7 Financial The amendment will impact the
Instruments: Disclosures extent of IFRS 7 disclosures
provided in the financial
statements.
IAS 1 Presentation of The Group already provides such
Financial Statements an analysis in the statement of
changes in equity. No impact is
expected.
IAS 24 Related Party The Group is assessing the impact
Disclosures of these amendments.
Standard / Interpretation Details of amendment
IAS 27 Consolidated and Transition requirements for amendments
Separate Financial arising as a result of IAS 27
Statements Consolidated and Separate Financial
Statements.
IAS 28 Investments in Consequential amendments from changes to
Associates IAS 27 Consolidated and Separate Financial
Statements (Clarification on the transition
rules in respect of the disposal or partial
disposal of an interest in a foreign
operation).
IAS 31 Interests in Joint Consequential amendments from changes to IAS
Ventures 27 Consolidated and Separate Financial
Statements (Clarification on the transition
rules in respect of the disposal or partial
disposal of an interest in a foreign
operation).
IAS 32 Financial Accounting for rights issues (including
Instruments: Presentation rights, options or warrants) that are
denominated in a currency other than the
functional currency of the issuer
The IASB amended IAS 32 to allow rights,
options or warrants to acquire a fixed
number of the entitys own equity instruments
for a fixed amount of any currency to be
classified as equity instruments provided
the entity offers the rights, options
or warrants pro rata to all of its existing
owners of the same class of its own non-
derivative equity instruments.
IAS 34 Interim Financial Clarification of disclosure requirements
Statements around significant events and transactions
including financial instruments.
IFRIC 19 Extinguishing This interpretation clarifies the
Financial Liabilities requirements of IFRSs when an entity
with Equity Instruments negotiates the terms of a financial
liability with a creditor and the creditor
accepts the
entit`y s shares or other equity instruments
to settle the financial liability fully or
partially.
Standard / Interpretation Assessed impact on results
IAS 27 Consolidated and The Group is assessing the impact
Separate Financial of these amendments.
Statements
IAS 28 Investments in The Group is assessing the impact
Associates of these amendments.
IAS 31 Interests in Joint The Group is assessing the impact
Ventures of these amendments.
IAS 32 Financial The Group does not currently have
Instruments: Presentation any rights issued. No impact is expected.
The impact of any possible future
instruments will be assessed as they arise.
IAS 34 Interim Financial The Group`s disclosures provided
Statements in the quarterly financial statements
and press releases prepared in
accordance with IAS 34 may be impacted.
IFRIC 19 Extinguishing The Group is assessing the impact
Financial Liabilities with of this amendment.
Equity Instruments
- Standard and interpretations issued and not yet adopted
Certain accounting standards and interpretations are in issue which are not
required to be adopted for the current reporting period. As at the date of these
financial statements the following standards and interpretations were in issue
but not yet effective.
- Which will be effective for the financial year ending December 31, 2012:
Standard / Interpretation Details of amendment
IFRS 1 First-time Adoption Standard amended to provide guidance for
of International Financial entities emerging from severe hyperinflation
Reporting Standards and resuming presentation of IFR S compliant
financial statemnt, or presenting IFRS compliant
financial statement for the first time.
IFRS 1 First-time Adoption Standard amended to remove the fixed date of 1
of International Financial January 2004 relating to the retrospective
Reporting Standards application of the de-recognition requirements
of IAS3 9, and relief for first-time adopters
from calculating day 1 gains on transactions
that occurred before the date of adoption.
IFRS 7 Financial Amendments required additional disclosure on
Instruments: Disclosures transfer transactions of financial assets,
including the possible effects of any residual
risks that the transferring entity retains.
The amendments also require additional
disclosures if a disproportionate amount of
transfer transactions are undertaken around the
end of a reporting period.
IAS 12 Income taxes Rebuttable presumption introduced that an
investment property will be recovered
in its entirety through sale.
IAS 21 The Effects of Consequential amendments from changes to IAS 27
Changes in Foreign Consolidated and Separate Financial Statements
Exchange Rates (Clarification on the transition rules in respect
of the disposal or partial disposal of an
interest in a foreign operation).
Standard / Interpretation Assessed impact on results
IFRS 1 First-time Adoption The Group does not operate in a
of International Financial hyper- inflationary environment. No
Reporting Standards impact is expected.
IFRS 1 First-time Adoption The Group has already adopted
of International Financial IFRS. No impact is expected.
Reporting Standards
IFRS 7 Financial The Group is currently reviewing
Instruments: Disclosures the potential impact of the new standard.
IAS 12 Income taxes The Group is currently reviewing
the potential impact of the new standard.
IAS 21 The Effects of The Group is currently reviewing
Changes in Foreign the potential impact of the new standard.
- Which will be effective for the financial year ending December 31, 2013:
Standard / Interpretation Details of amendment
IFRS 9 Financial New standard that form s the first part of a
Instruments three-part project to replace IAS 39 Financial
Instruments: Recognition and Measurement.
Standard / Interpretation Assessed impact on results
IFRS 9 Financial The Group is currently reviewing
Instruments the potential impact of the new standard.
4. Mining assets
Comprising exploration and evaluation assets, mineral properties and mineral
rights acquired:
As at Dec 31, As at Dec 31,
2010 2009
$ 000 $ 000
Exploration and evaluation assets 42,282 36,652
Mineral properties acquired 4,410 3,945
Mineral rights acquired 3,194 2,857
Balance at the end of the period 49,886 43,454
Reconciliation of mining assets:
Exploration & Mineral properties
evaluation assets acquired
$000 $000
Balance as at Mar 1, 2009 25,078 2,911
Additions 2,593 -
Foreign exchange variance 8,981 1,034
Balance as at Dec 31, 2009 36,652 3,945
Additions 1,672 -
Impairment of mining assets (365) -
Foreign exchange variance 4,323 465
Balance as at Dec 31, 2010 42,282 4,410
Mineral rights
acquired TOTAL
$ 000
$ 000
Balance as at Mar 1, 2009 2,108 30,097
Additions - 2,593
Foreign exchange variance 749 10,764
Balance as at Dec 31, 2009 2,857 43,454
Additions - 1,672
Impairment of mining assets - (365)
Foreign exchange variance 337 5,125
Balance as at Dec 31, 2010 3,194 49,886
5. Intangible assets
As at Dec 31, As at Dec 31,
2010 2009
$ 000 $ 000
13,070 8,479
Water pipeline
ERP software 886 869
Com puter software 63 -
Balance at the end of the period 14,019 9,348
Reconciliation of intangible assets:
Water ERP Computer
pipeline Software software TOTAL
$ 000 $000 $ 000 $ 000
Balance as March 1, 2009 5,389 120 121 5,630
Additions during the year 1,176 614 30 1,820
Amortization for the year - - (93) (93)
Foreign exchange variance 1,914 38 39 1,991
Balance as at December 31, 2009 8,479 772 97 9,348
Additions during the period 1,228 169 43 1,440
Reclassified from receivables 2,064 - - 2,064
Amortization for the period - (132) (80) (212)
Foreign exchange variance 1,299 77 3 1,379
Balance as at December 31, 2010 13,070 886 63 14,019
PPM entered into an agreement with The Board of Magalies Water (a State-owned
water board operating under the Water Services Act, Number 108 of 1997 as
amended, "Magalies Water") and other parties to build a water pipeline and
related infrastructure from the Vaalkop Water Treatment Works to the mine
located at Tuschenkomst. Upon completion, the ownership of the water pipeline
and related infrastructure will remain with Magalies Water; however, PPM will
have a right to use 9Ml a day through the pipeline for the entire life of mine.
6. Property, plant and equipment
Plant construction
and mine Land and
development buildings Other
$ 000 $ 000 $ 000
COST
Balance as at March 1, 2009 186,379 721 1,099
Additions 155,246 48 410
Foreign exchange movement 66,164 256 390
Balance as at December 31, 2009 407,789 1,025 1,899
Additions 107,008 55 561
Transfers (23) - 23
Foreign exchange movement 48,107 120 224
Balance as at December 31, 2010 562,881 1,200 2,707
ACCUMULATED DEPRECIATION
Balance as at March 1, 2009 - - 356
Depreciation for the period - - 237
Foreign exchange movement - - 166
Balance as at December 31, 2009 - - 759
Depreciation for the period - - 442
Foreign exchange movement - - 122
Balance as at December 31, 2010 - - 1,323
CARRYING AMOUNTS
At March 1, 2009 186,379 721 743
At Dec ember 31, 2009 407,789 1,025 1,140
At December 31, 201 0 562,881 1,200 1,384
Leased
assets TOTAL
$ 000 $ 000
COST
Balance as at March 1, 2009 - 188,199
Additions 12,031 167,735
Foreign exchange movement 960 67,770
Balance as at December 31, 2009 12,991 423,704
Additions - 107,624
Transfers - -
Foreign exchange movement 1,531 49,982
Balance as at December 31, 2010 14,522 581,310
ACCUM UL AT ED DEPREC I AT ION
Balance as at M arch 1, 2009 - 356
Depreciation for the period 428 665
Foreign exchange movement 46 212
Balance as at December 31, 2009 474 1,233
Depreciation for the period 821 1,263
Foreign exchange movement 142 264
Balance as at December 31, 2010 1,437 2,760
CARRYING AMOUNTS
At M arch 1, 2009 - 187,843
At Dec ember 31, 2009 12,517 422,471
At December 31, 201 0 13,085 578,550
Included in the plant construction and mine development is a total of US$129.537
million (Dec 31, 2009 - US$78.491 million) relating to stripping costs which are
capitalized as part of the mine development at PPM.
7. Loans receivable
As at Dec 31, As at Dec 31,
2010 2009
$ 000 $ 000
Tafida Investments (Pty) Ltd -
Defacto In vestments 275 (Pty) Ltd 63
Balance at the end of the period 63
These loans bear no interest and have no fixed
terms of repayment.
8. Cash, restricted cash investments and guarantees
8.1 Cash and cash equivalents (unrestricted)
As at Dec 31, As at Dec 31,
2010 2009
$ 000 $ 000
Cash at bank
Total cash and cash equivalents
Cash at banks earns interest at a floating rate based on daily bank deposit
rates. Cash is deposited at highly reputable financial institutions of a high
quality credit standing within the Republic of South Africa and their foreign
affiliates in the United Kingdom. The fair value of cash and cash equivalents
equates the values as disclosed in this note.
For the purpose of the consolidated statement of cash flows, cash and cash
equivalents comprise only the cash at bank and on hand line-item is disc losed
for each period end above.
8.2 Restricted cash
Restricted cash investments and guarantees
Cash investments were made relating to certain guarantees required by the
Republic of South Africa s Department of Mineral Resources ("DMR"), formerly
known as the Department of Minerals and Energy ("DME"), and ESKOM Holdings
Limited ("ESKOM"), the South African state utility supplier, of which the
details are as follows:
- Rehabilitation guarantees
The DMR requires rehabilitation guarantees for all prospecting and mining
rights. These rehabilitation guarantees primarily relates to the mining rights
for the Pilanesberg and Mphahlele Projects. These guarantees have been provided
to the DMR on two separate basis:
- on an insurance basis with a portion of the total guarantee being paid over in
a separate bank account controlled b y the Group and ceded in favour of the
Insurance company and the remaining portion paid in premiums over the expected
life of the mine; and
- on a cash backed basis.
- ESKOM guarantees
On June 17, 2008 a guarantee of US$8.400 million (ZAR84.900 million),
underwritten by an insurance backed guarantee issued by Lombard Insurance
Company Limited (Lombard Insurance) was provided to ESKOM to order critical long
lead time material for the construction of the electrical substation at the
Pilanesberg Project. Lombard Insurance required cash collateral on a portion of
the total amount which has been paid over in a separate bank account controlled
by the Group and ceded in favour of Lombard Insurance. The balance is payable on
a premium basis over 5 years and re-assessed on an annual basis.
As at Dec 31, As at Dec 31,
2010 2009
$ 000 $ 000
Pilanesberg rehabilitation guarantee 76,430 1,794
ESKOM guarantee 6,856 3,087
Mphahlele rehabilitation guarantee 1,077 1,661
Other guarantees 108 621
Balance at the end of the period - current 84,471 7,163
Cash collateral
On May 13, 2010, the Company issued US$135.000 million of convertible
debentures. The cash collateral represents the funds received and the interest
accrued thereon to date.
As at Dec 31, As at Dec 31,
2010 2009
$ 000 $ 000
Cash collateral for convertible debentures 135,131 -
Balance at the end of the period - non-current 135,131 -
9. Inventories
As at Dec 31, As at Dec 31,
2010 2009
$ 000 $ 000
Ore stockpiled at cost 4,424 4,323
Work in progress at cost 2,258 3,154
Consumables at cost 4,603 2,372
Balance at the end of the period 11,285 9,849
10. Accounts and other receivables
As at Dec 31, As at Dec 31,
2010 2009
$ 000 $ 000
Accounts receivable (a) 40,539 19,202
Other receivables (b) 6,338 9,250
Balance at the end of the period 46,877 28,452
a) Accounts receivable
Accounts receivable are due from Northam Platinum Limited ("Northam"), Impala
Refining Services Limited ("Impala") and Richtrau No. 123 (Pty) Ltd
("Richtrau"). Richtrau is a related party to the Company, refer to note 23 for
further disclosure.
None of the amounts are past due or impaired.
b) Other receivables
Other receivables are non-interest bearing and due within twelve months.
Included in other receivables is amongst others, an amount of US$5.292 million
(Dec 2009: US$6.513 million) due from the South African Revenue Services
("SARS") relating to Value Added Tax ("VAT")
11. Share capital
a) Common shares authorized
The Company has an unlimited number of common shares with no par value.
b) Common shares issued
Number of Amount $000
Movement during the year ended December 31, 2009 shares
Balance, March 1, 2009 370,002,800 366,180
Common shares issued (i) 75,015,552 59,355
Exercise of options - -
Fair value of options exercised - -
Balance, December 31, 2009 445,018,352 425,535
Movement during the period ended December 31,
2010
Balance, January 1, 2010 445,018,352 425,535
Common shares issued (ii) 304,662,415 331,044
Balance, December 31, 2010 749,680,767 756,579
(i) On May 15, 2009, Platmin engaged GMP Securities Europe LLP to conduct a
brokered private placement of common shares of the Company. In terms of the
placement, 75,015,552 common shares were issued for a consideration of US$59.355
million, net of brokerage and legal fees.
(ii) On May 13, 2010 the Company issued 205,761,317 new common shares at a price
of US$1.215 per common share for a total consideration of US$250.000 million,
raising US$241.260 million net of brokerage and legal fees. In addition to the
fund-raising process, US$135.000 million of convertible debentures have been
placed. The total funding from the prospectus offering and private placement was
US$385.000 million before underwriting and share issuance cost.
On December 17, 2010 the Company issued 98,901,099 new common shares at a price
of US$0.910 (CAD$0.930) per common share for a total consideration of US$90.000
million, raising US$89.785 million net of brokerage and legal fees.
c) Share options
The Board of Directors adopted a resolution dated May 3, 2005, which established
a share option plan (the "2005 Stock Option Plan"), pursuant to which options
may be granted to directors, officers, employees and persons providing ongoing
and contract services to the Group. The purpose of the Plan is to attract
persons by offering to such persons the opportunity to acquire (or to increase)
an equity interest in the Company through the purchase of shares under the Plan.
Subject to adjustment made in the case of a share split of the issued common
shares of the Group, the aggregate number of common shares that may be issuable
pursuant to options granted under the Plan is fixed at a maximum of 9% of the
outstanding common shares of the Group from time to time and shall be calculated
on an as-needed basis. Prior to the establishment of the Plan, options were
issued to directors and employees, at the discretion of management, to
compensate for services provided. This 2005 Stock Option Plan was re-approved in
accordance with its terms at the Annual General Meeting held on June 26, 2008.
The Board of Directors adopted a resolution dated June 24, 2007, which
established a stock option plan (the "2007 Stock Option Plan"), pursuant to
which options may be granted to directors, officers, employees and persons
providing ongoing and contract services to the Group. The purpose of the Plan is
to attract persons by offering to such persons the opportunity to acquire (or to
increase) an equity interest in the Group through the purchase of shares under
the Plan. The maximum number of common shares reserved for issuance under the
2007 Stock Option Plan is 2,500,000 common shares. No stock options have been
granted under the 2007 Stock Option Plan.
The changes in stock options during the twelve months ended December 31, 2010
and period ended December 31, 2009 were as follows:
Weighted average
Number of options exercise price
$
Movement during the period ended
December 31, 2009
Options outstanding, March 1, 2009 4,631,733 4.98
Options granted 3,300,000 1.28
Options outstanding, December 31, 2009 7,931,733 3.44
Options exercisable, December 31, 2009 4,634,432 3.23
Movement during the year ended December
31, 2010
Options outstanding, January 1, 2010 7,931,733 3.44
Options granted 10,500,000 0.96
Options forfeited / expired (2,017,833) 11.64
Options outstanding, December 31, 2010 16,413,900 2.21
Options exercisable, December 31, 2010 7,876,565 3.14
As at December 31, 2010, 5,608,168 options will vest within the next year and
3,500,000 options will vest when performance targets relating to the PPM
production are reached.
As at December 31, 2010 the following options were exercisable and outstanding:
Exercisable
Exercise Number of
price options
Expiry date Currency $
September 15, 2013 CAD 4.40 75,000
June 1, 2017 CAD 6.75 570,000
January, 14, 2013 CAD 9.08 642,83
November 7, 2012 CAD 9.40 170,400
August 28, 2013 CAD 7.40 150,000
September 19, 2013 CAD 3.08 62,000
April 25, 2013 CAD 7.16 140,000
June 23, 2013 CAD 6.57 133,332
June 30, 2013 CAD 7.16 133,000
December 15, 2013 CAD 1.35 2,3
September 27, 2015 CAD 0.96 3,350,000
November 6, 2015 CAD 1.07 150,000
Weighted average 2.82 7,876,565
Outstanding
Exercise Number of
price options
Expiry date $
September 15, 2013 4.40 75,000
June 1, 2017 6.75 570,000
January, 14, 2013 9.08 945,500
November 7, 2012 9.40 170,400
August 28, 2013 7.40 150,000
September 19, 2013 3.08 93,000
April 25, 2013 7.16 210,000
June 23, 2013 6.57 200,000
June 30, 2013 7.16 200,000
December 15, 2013 1.35 3,300,000
September 27, 2015 0.96 10,050,000
November 6, 2015 1.07 450,000
Weighted average 2.11 16,413,900
The weighted average fair value of options granted during the period determined
using the Black-Scholes valuation model was US$0.66c per option (2009:
US$0.66c). The significant inputs into the model were weighted average share
price of US$0.96c (2009:US$1.41) at the grant date, exercise price shown above,
volatility of 0.84% (2009: 76%), dividend yield of 0% (2009: 0%), an expected
life of five years (2009: 2 years) and an annual risk free rate of 0.02%
(2009:1.43%). The volatility measured at the standard deviation of continuously
compounded share returns is based on statistical analysis of daily share prices
over the past five years. See note 23 for the total expense recognised in the
income statement for share options granted to directors and management
personnel.
12. Non-controlling interest
The non-controlling interests are comprised of the following:
$ 000
Balance as at March 1, 2009 (16,618)
Non-controlling interests share of losses in Boynton Investments
(Pty) Ltd (3,095)
Non-controlling interests share of losses in Mahube Mining (Pty) Ltd (337)
Non-controlling interests share of losses in Taung Platinum
Exploration (Pty) Ltd (36)
Non-controlling interests share of losses in Sengani Family Mining
and Exploration (Pty) Ltd (5)
Balance as at December 31, 2009 (20,091)
Non-controlling interests share of profits in Boynton Investments
(Pty) Ltd (9,607)
Non-controlling interests share of losses in Mahube Mining (Pty) Ltd (403)
Non-controlling interests share of losses in Taung Platinum
Exploration (Pty) Ltd (13)
Non-controlling interest s share of losses in Sengani Family Mining
and Exploration (Pty) Ltd (2)
Balance as at December 31, 2010 (30,116)
13. Long-term borrowings
As at Dec 31, As at Dec 31,
2010 2009
$ 000 $ 000
Corridor Mining Resources (Pty) Ltd (a) 4,681 3,794
Perilya Exploration (Pty) Ltd (b) 29 23
4,710 3,817
Perilya
Corridor Mining (a) Exploration (b) TOTAL
$ 000 $ 000 $ 000
Balance as at March 1, 2009 2,106 15 2,121
Increases during the year 560 - 560
Interest for the year 297 2 299
Foreign exchange variance 831 6 837
Balance as at Dec 31, 2009 3,794 23 3,817
Increases during the period - - -
Interest for the period 440 3 443
Foreign exchange variance 447 3 450
Balance as at Dec 31, 2010 4,681 29 4,710
a) Corridor Mining Resources (Pty) Ltd
Corridor Mining Resources (Pty) Ltd is a wholly owned subsidiary of Limpopo
Economic Development Enterprise ("LimDev"), an agency of the Limpopo Provincial
Government, Republic of South Africa.
The long-term loan bears interest at South African prime rate until otherwise
agreed by the shareholders. The loan is to be repaid from the proceeds generated
by the Mphahlele project in Tameng Mining and Exploration (Pty) Ltd, a
subsidiary of Mahube Mining (Pty) Ltd.
b) Perilya Exploration (Pty) Ltd
Perilya Exploration (Pty) Ltd (formerly known as Ranger Minerals (Pty) Ltd) is a
wholly owned subsidiary of Perilya Limited and registered in the Commonwealth of
Australia.
The long-term loan bears interest at South African prime overdraft rate plus 2%
until otherwise agreed by the shareholders, and will be repaid from profits. The
loan is used by Defacto Investments 275 (Pty) Ltd to fund exploration
activities.
14. Finance lease liability
ESKOM designed and built an electrical substation and related infrastructure
adjacent to the Pilanesberg Mine to produce the required electric ity and ESKOM
maintains ownership and control over all significant aspects of operating the
facility. Each month, the Pilanesberg Mine will pay a fixed capacity charge and
a variable charge based on actual electricity consumed. These payments attract
interest at the South African prime overdraft rate plus 2%.
The arrangement with ESKOM, entered into during the period ended December 31,
2009 meet these requirements of IFRIC 4 Arrangements containing a lease, and
therefore constitutes a lease and falls within the scope of IAS 17 Leases and is
further classified as a finance lease due to the sub-station being constructed
exclusively for the use of PPM. An asset (the electrical installation) is
explicitly identified in the arrangement and fulfilment of the arrangement is
dependent on the electrical installation.
Reconciliation between the total minimum lease payments and their present value:
Up to More than
1 year 5 years
1 to 5 years Total
$ 000 $ 000 $ 000 $ 000
Minimum lease payments 1,495 7,477 12,308 21,280
Finance cost (1,204) (5,364) (5,011) (11,579)
Present value 291 2,113 7,297 9,701
15. Decommissioning and rehabilitation provision
As at Dec 31, As at Dec 31,
2010 2009
$ 000 $ 000
DISCOUNTED
Balance at the beginning of the period 52,744 12,791
Increase in liability for the period 10,435 36,272
Unwinding of interest (Accretion) 1,307 426
64,486 49,489
Effect of exchange rate changes 6,219 3,255
Balance at the end of the period 70,705 52,744
UNDISCOUNTED
Balance at the beginning of the period 70,829 17,527
Increase in liability for the period 7,486 47,080
78,315 64,607
Effect of exchange rate changes 8,352 6,222
Balance at the end of the period 86,667 70,829
The Pilanesberg Mine is currently in the commissioning phase and the estimate
represents the current cost of environmental liabilities as at the respective
period end. An annual estimate of the quantum of closure costs is necessary in
order to fulfil the requirements of the DMR, as well as meeting specific closure
objectives outlined in the mine s Environmental Management Programme (EMP).
For the year ended December 31, 2010, the waste hauling methodology being
applied to the requirements in the EMP changed from load and haul to a conveying
system. This change resulted in a lower than expected increase in the
rehabilitation obligation for the financial year ended December 31, 2010.
Although the ultimate amount of the asset retirement obligation is uncertain,
the fair value of the obligation is based on information that is currently
available. The estimated undiscounted liability for the asset retirement
obligation at December 31, 2010 is US$86.667 million (December 31, 2009:
US$70.829 million). This estimate includes costs for the removal of all current
mine infrastructure and the rehabilitation of all disturbed areas to a condition
as described in the mines
Environmental Management Programme. The asset retirement obligation has been
determined using a discount rate of 7.95% (2009:8.6%) and an inflation rate of
6% over a period of 11 years.
16. Trade payables and accrued liabilities
As at Dec 31, As at Dec 31,
2010 2009
$ 000 $ 000
Trade payables 14,276 18,518
Accrued expenses 6,471 3,626
Balance at the end of the period 20,747 22,144
17. Revolving commodity facility
On October 9, 2009, the Company signed a definitive agreement with Investec Bank
Limited (Investec) to provide a twelve month renewable revolving commodity
finance facility of up to ZAR400.000 million (US$54.420 million at the exchange
rate at the date of signature of the facility of ZAR7.35: US$1.00) for working
capital purposes.
In terms of this facility Investec will finance up to 91% of PPM s platinum,
palladium, gold, copper and nickel deliveries to Northam Platinum Limited. This
facility bears interest at the Johannesburg Interbank Lending Rate (JIBAR) plus
3.0% and is repaid within 2 to 3 months upon which the funds are again available
for draw-down. This facility was renewed for a further twelve months on October
1, 2010.
As at Dec 31, As at Dec 31
2010 2009
$ 000 $ 000
Balance at the beginning of the period 5,854 -
Increase in liability for the period (2,684) 5,913
Interest accrued (48) (53)
3,122 5,860
Effect of exchange rate changes 346 (6)
Balance at the end of the period 3,468 5,854
18. Current portion of long-term borrowings
As at Dec 31, As at Dec 31,
2010 2009
$ 000 $ 000
Balance at the beginning of the period - 38,752
Bridge loan facility - -
Pallinghurst short-term loan facility 26,603 -
Interest on borrowings 1,620 2,053
Settlement of bridge loan facility - (51,987)
28,223 (11,182)
Effect of exchange rate changes 3,700 11,182
Balance at the end of the period 31,923 -
On May 14, 2008, PPM signed a US$35.000 million (ZAR350.000 million) bridge
financing facility with Standard Bank of South Africa Limited (Standard Bank).
The term of the bridge loan facility was initially for the period of four months
to August 2008 and was subsequently extended to August 31, 2009. At the outset,
the facility incurred interest at the JIBAR plus 3.0%. From March 1, 2009 to
August 31, 2009, PPM provided cash collateral to Standard Bank of US$49.870
million (ZAR387.800 million) as security against the loan. This resulted in a
reduction in the interest rate to JIBAR plus 0.5%, The Company earned interest
at JIBAR plus 0.1% on cash collateral, bringing the net finance cost on the loan
to 0.4%.
The bridge loan facility has been used to fund the development and construction
of the Pilanesberg Mine. The bridge loan facility was repaid in full on August
31, 2009.
In connection with this facility, the Company issued 300,000 warrants
exercisable at $6.95 per common share from September 15, 2008 until expiry of
the warrants on May 14, 2011. The fair value of the warrants of US$0.846 has
been treated as a cost of the transaction and fully amortized during the year
ended February 28, 2009.
The Company has classified this facility as held to maturity and the fair value
of the warrants of US$846,238 has been treated as a cost of the loan transaction
and has been amortized to net income using the effective interest method over
the facility term.
On March 22, 2010, a subsidiary of Platmin entered into a ZAR191.000 million
short term lending facility (the equivalent of US$26.000 million at an exchange
rate of ZAR7.38 to the US dollar) with Pallinghurst Resources Limited
("Pallinghurst"). As at December 31, 2010, a total of ZAR191.000 million had
been drawn against this facility. This facility was initially for a period of 3
months but has been extended until February 28, 2011 and was repaid in full on
February 28, 2011.
Funds raised will be used by the Company for working capital, to complete the
build-up to full production at the Pilanesberg Platinum Mine ("PPM"), to pursue
a number of growth and acquisition opportunities, and to further develop the
Company`s Eastern Limb projects.
19. Convertible debenture
As at Dec 31, As at Dec 31,
2010 2009
$ 000 $ 000
Convertible debenture issued 135,000 -
Option component accounted for in equity (26,664) -
Share-based payment expense (Fair value 108,336 -
adjustment at transaction date) 23,708 -
Fair value of debt component on transaction date 132,044 -
Fair value adjustment at extension date (1,060) -
Interest for the period 3,372 -
Transaction costs (1,128) -
133,228 -
The debentures were issued on May 13, 2010 to Ridgewood Investments (Mauritius)
Pte Limited, Pallinghurst and Investec Bank Limited, for a principal sum of
US$135.000 million.
The debenture is convertible at the option of the holder into ordinary shares of
Platmin Limited at a conversion price of US$ 1.215 per share by December 31,
2010. If the debenture is not converted into ordinary shares by the maturity
date, the principal sum becomes repayable to the holders. On December 22, 2010,
Platmin has accepted an extension to the maturity date of the convertible
debenture and accordingly the convertible debentures will now mature on February
28, 2011 as is permitted by the debenture terms.
The debentures have a zero coupon rate. The effective interest rate is 3.76%
calculated based on the expected payments. The fair value of the option
component was determined using the following assumptions:
- a risk-free rate of 0.28% (Original maturity - 0.61%);
- a volatility index of 60% (Original maturity - 67.73%) and
- a dividend yield of 0% (Original maturity - 0%).
The debentures are secured over cash and cash equivalents of US$135.131 million
(including interest accrued to date). The security provides the holder with a
first ranking interest in the collateral account (or any in vestments made using
the cash collateral account) and any interest or other proceeds earned thereon.
The security interest is released when the conversion right is exercised.
The fair value of the debt instrument at the reporting date is US$134.225
million.
20. Income tax expense
Income tax rates
The South African taxation rate remained unchanged at 28%. The statutory tax
rate in Canada is 28.5%. The Group`s effective tax rate in the period ended
December 31, 2010 was 0% (December 31, 2009: 0%). A reconciliation of income tax
expense applicable to profit / (loss) from operating activities before
income tax at the statutory income tax rate to income tax expenses at the
groups effective rate at period end is as follows:
For the periods ended For the periods ended
Dec 31, Dec 31, Dec 31, Dec 31,
2010 2009 2010 2009
$ 000 $ 000 % %
Corporate tax rate (18,651) (3,668) (28.5) (33.0)
Tax effects of:
- Expenses not deductible for tax
purposes 12,926 2,857 19.8 25.7
- Tax losses for which no
deferred income tax asset was
recognised 5,496 2,698 8.4 24.3
- Benefit of losses not
previously recognised - (2,776) - (25.0)
Foreign income tax allowances and
rate differentials 229 889 0.3 8.0
Effective tax rate - - - -
South Africa
As at the periods ended, the group had not recognised the following temporary
differences and tax losses:
As at Dec 31, As at Dec 31,
2010 2009
$ 000 $ 000
Unredeemed capital expenditure available for
utilisation against future mining taxable income 2,779 1,158
Foreign exchange and provisions (135,319) (59,664)
Tax losses carried forward utilisable against taxable
income 245,354 116,917
112,814 58,411
The unrecognised deferred tax at the period end is 31,588 16,355
The South African losses do not have an expiry date.
Canada
As at the periods ended, the group had not recognised the following temporary
differences and tax losses:
As at Dec 31, As at Dec 31,
2010 2009
$ 000 $ 000
Share issue costs 12,000 6,734
Tax losses carried forward utilisable against
taxable income 6,551 7,329
18,551 14,063
The unrecognised deferred tax at the period end is 4,638 3,516
The Canadian losses carried forward expire in various fiscal years, as indicated
in the following table: US$ 000
2029 6,551
6,551
21. Loss before taxation
For the year For the period
ended ended
Dec 31, Dec 31,
2010 2009
$ 000 $ 000
Included in the operating expenses are the following:
Share based payments expense (5,310) (2,792)
Employee expenses (9,370) (5,772)
Audit fees (578) (441)
Consulting and professional fees (543) (501)
Royalty tax (292) -
Ammortization and Depreciation (653) (330)
General and administration expenses (6,793) (3,857)
(23,539) (13,693)
Included in other (expenses)/income are the following:
Other income 373 17
Loss on impairment of exploration project (330) -
Share-based payment expense (fair value adjustment) (24,120) -
Foreign exchange gain / (loss) (12,806) 3,216
(36,883) 3,233
22. Loss per share attributable to owners of the parent
For the year For the
ended period ended
Dec 31, Dec 31,
2010 2009
$ 000 $ 000
Basic (loss) / earnings per share (0.09) (0.02)
Basic (loss) / earnings per share is calculated
by dividing the net (loss) / profit for the
period/ year attributable to owners of the
parent by the weighted average number of
ordinary shares outstanding during the period/year
Reconciliations:
Net (loss) used in calculating basic earnings
per share attributable to owners of the
parent (US$ `000) (55,417) (7,642)
Weighted average number of shares used in the
calculation of basic earnings per share (`000) 590,434 430,015
There are no reconciling items between (loss) / earnings and headline (loss) /
earnings and therefore (loss) / earnings per share and headline (loss) /
earnings per share is the same.
Due to the Group reporting a loss for the period ending December 31, 2010 the
diluted loss per share is equal to the basic loss per share.
23. Related party disclosures
Compensation of Directors and key management personnel of the group:
For the year For the
ended period ended
Dec 31, Dec 31,
2010 2009
$ 000 $ 000
Compensation of directors:
Short-term benefits (salary) 1,178 1,424
Share options vested during the period 520 572
1,698 1,996
Compensation of key management personnel:
Short-term benefits (salary) 1,167 609
Share options vested during the period 1,085 687
2,252 1,296
Total remuneration of directors and key
management personnel of the Group 3,950 3,292
Share options outstanding and exercisable are as follows:
Options Exercise Remaining
exercisable price Expiring date life
Number C$ Days
Executive directors
1,400,000 C$1.35 Dec 15, 2013 1080
Non-executive directors
112,167 C$9.08 Jan 14, 2013 745
Key management personnel
570,000 C$6.75 Jun 1, 2017 2344
119,000 C$9.08 Jan 14, 2013 745
170,400 C$9.04 Nov 7, 2012 677
62,000 C$3.08 Sep 19,2013 993
900,000 C$1.35 Dec 15, 2013 1080
800,000 C$0.96 Sep 27, 2015 1731
150,000 C$1.07 Nov 6, 2015 1771
Black Scholes option pricing Valuation
Total
maturity Expected Risk free
time volatility rate
Years % % CAD USD
2.08 76% 1.43% 0.69 0.66
3.00 71% 3.50% 3.40 3.33
3.00 66% 4.50% 4.68 4.96
3.00 71% 3.50% 3.40 3.33
3.00 74% 4.24% 4.09 4.41
3.00 77% 3.03% 1.64 1.54
2.08 76% 1.43% 0.69 0.66
4.99 84% 2.01% 0.65 0.64
5.00 84% 1.89% 0.70 0.70
A dividend yield of 0% has been applied as the Company has no history of
dividends and no dividends will be paid in the foreseeable future.
During the year none of the options listed above were exercised, and no
consideration was received by the Group.
Controlled entities
Details of controlled entities are as follows:
Dec 31, Dec 31,
2010 2009
% %
Platmin Resources Ltd. 100.0 100.0
Boynton Investments (Pty) Ltd. ("Boynton") 72.4 72.4
Boynton Platinum (Pty) Ltd. 72.4 72.4
Boynton Platinum (Pty) Ltd. (East) 72.4 72.4
Born Free Investments 144 (Pty) Ltd. 72.4 72.4
Born Free Investments 330 (Pty)Ltd. 35.5 35.5
Bubesi Investments (Pty) Ltd. ("Bubesi") 72.4 72.4
Crowned Cormorant In vestments 13 (Pty) Ltd. 72.4 72.4
Crowned Cormorant In vestments 16 (Pty) Ltd. 72.4 72.4
Dream World Investments 226 (Pty) Ltd. 35.5 35.5
Dream World Investments 249 (Pty) Ltd. 72.4 72.4
Eagle Creek Investments 55 (Pty) Ltd. 72.4 72.4
Eagle Creek In vestments 86 (Pty) Ltd. 72.4 72.4
Intrax Investments 255 (Pty) Ltd. 72.4 72.4
Isandlwana Mining and Exploration (Pty) Ltd. 72.4 72.4
eenan Investments (Pty) Ltd. 72.4 72.4
Mahube Mining (Pty) Ltd. ("Mahube") (1) 57.2 57.2
Midnight Masquerade Properties 170 (Pty) Ltd. 72.4 72.4
New Line Investments 77 (Pty) Ltd. 72.4 72.4
Pilanesberg Platinum Mines (Pty) Ltd ("PPM") 72.4 72.4
Private Preview In vestments 39 (Pty) Ltd. ("Private
Preview") 72.4 72.4
Sengani Family Mining and Exploration (Pty) Ltd. ("Sengani") 35.5 35.5
Setseka Mining (Pty) Ltd. ("Setseka") 34.0 34.0
Tafida Investments (Pty) Ltd. 18.1 18.1
Taung Minerals (Pty) Ltd. ("Taung Minerals") 72.4 72.4
Taung Platinum Exploration (Pty) Ltd. ("Taung Platinum") 29.0 29.0
Ubkhosi Mining and Exploration (Pty) Ltd. 72.4 72.4
Versatex Trading 346 (Pty) Ltd. 72.4 72.4
West Dunes Properties 115 (Pty) Ltd. 72.4 72.4
5 Brothers Mining (Pty) Ltd. 72.4 72.4
8 Mile In vestments49 (Pty) Ltd. 72.4 72.4
(1) Mahube owns 95% of Tameng Mining and Exploration (Pty) Ltd ("Tameng")
All companies, with the exception of Platmin Resources Limited, are registered
within the Republic of South Africa. Platmin Resources is registered in the
British Virgin Islands. The type of shareholding held in all companies, are
ordinary.
Transactions within the Group
During the financial period, unsecured loan advances were made by subsidiaries
within the Group and between subsidiaries and the parent entity. Certain such
loans carried a discounted rate of interest. Intra-entity loan balances have
been eliminated in the financial statement of the Group.
For the For the
12 months 10 months
ended ended
Dec 31, Dec 31,
2010 2009
$ 000 $ 000
Related Party Transactions
Pallinghurst Resources Ltd (a) 2,220 36
Richtrau 123 (Pty)Ltd (b) 372 -
Related Party Balances 2,592 36
Pallinghurst Resources Ltd (a) 31,935 -
Richtrau 123 (Pty)Ltd (b) 1,619 -
33,554 -
a) Pallinghurst Resources Ltd is a major shareholder in the Group. US$0.300
million share issuance cost reimbursed to them was capitalised to equity. A
further US$0.072 million is included in operating expenses.
b) Administration fees were recovered from Richtrau 123 (Pty) Ltd ("Richtrau"),
a subsidiary of Pallinghurst Resources Ltd, relating to the exploration project
managed by Boynton Investments (Pty) Ltd on behalf of Richtrau.
24. Contingencies and commitments
- The Company has provided guarantees to the DMR for environmental
rehabilitation due to numerous exploration targets. As at December 31, 2010, the
total guarantees held by a bank were US$81.720 million (Dec 31, 2009 - US$5.362
million) and the total premiums paid to date on insurance backed guarantees were
US$2.751 million (Dec 31, 2009 US$1.800 million)
- Boynton has entered into an agreement with Impala Platinum Limited ("Impala")
for the right of first refusal to purchase PGM concentrate produced by Boynton
from the properties, Ruighoek 169JP, Vogelstruisnek 173JP and
Palmietfontein 208JP. Should Boynton elect not to accept the terms proposed by
Impala, a break fee of US$2,089,573 in aggregate will be payable to Impala.
- Boynton has an obligation, which cannot be quantified, pro rata to its
shareholding in Mahube to provide funding to Tameng to undertake the necessary
exploration and development on the Mphahlele project. The consequence of not
contributing accordingly, results in dilution of Boynton s shareholding.
- Boynton has entered into an agreement with Codoca Beleggings Closed
Corporation ("Codoca"); where Codoca will transfer its m ineral rights to
Boynton. A deposit of US$203,569 (ZAR1.500 million) was paid to Codoca.
The remaining balances are due to be paid by Boynton when the following
requirements are met:
- A payment of 50% of the balance of the consideration amount within 30 days of
being notified by the DMR that a prospecting right, in terms of the Mineral and
Petroleum Resources Development Act, Number 28 of 2002 (MPRDA), has been granted
and issued to Boynton, enabling and entitling Boynton to commence prospecting
activities and also in respect of Codoca`s undivided share in the mineral
rights. The remaining balance for this, less the deposit, will be US$217,141
(ZAR1.600 million).
- Furthermore, payment of remaining balance of the consideration amount within
30 days of being notified by the DMR that a mining right in terms of the MPRDA
has been granted and issued to Boynton, enabling and entitling Boynton to
commence mining activities and also in respect of Codoca`s undivided share in
the mineral rights. The remaining balance for this, less the deposit, will be
US$217,141 (ZAR1.600 million).
- A notarial prospecting contract was entered into on April 29, 2005 between
Boynton and Sephaku Development (Pty) Ltd ("Sephaku"), BHP Billiton SA Limited
("BHP") and Samancor Limited ("Samancor") with respect to the properties; Annex
Grootboom 335KT ("Annex Grootboom") and Scheiding 407KS ("Scheiding"). In terms
of the agreement, Samancor as the holder of certain old order rights pertaining
to Annex Grootboom and Scheiding was obligated to apply for conversion of these
rights under the provisions of the MPRDA. Subsequent to a conversion being
granted, Samancor is obligated in terms of the agreement to transfer the rights
to PGM s and all metals and minerals m ineralogically associated therewith on
Annex Grootboom and Scheiding (the "PGM rights"), to BHP.
Samancor lodged an application for conversion of the mining licence in December
2006. In terms of the same agreement, Sephaku was appointed to carry out
exploration activities on Annex Grootboom and Scheiding on a contract basis.
Boynton s right to acquire the PGM rights in respect of Scheiding expired on
April 28, 2010.
In terms of the agreement, Sephaku has the right to, within one month of the
completion of a Bankable Feasibility Study on Annex Grootboom, acquire from BHP
the PGM Rights for cash consideration of US$8.00 per resource ounce as
determined in a Bankable Feasibility Study in accordance with the South African
Mineral Resource Committee s ("SAMREC") Code.
Sephaku has subsequently assigned all of its rights and obligations in terms of
the aforementioned contract to Boynton.
- PPM also entered into a number of agreements with various suppliers to render
services associated with the operating of the mine. The remaining value with
regards to this agreements as at December 31, 2010 is:
- For carrying out opencast mining operations US$415.723 million
- For managing and maintaining the processing plant US$19.218 million.
25. Events after the reporting period
On February 18, 2011 it was announced that agreements have been executed with
the holders of the convertible debentures, to convert the convertible debentures
into 160,714,287 new common shares, subject to certain conditions and it was
approved by the Board and the debenture holders to adjust the conversion price
to US$0.84 per share, reflecting recent trading levels. The conversion is
subject to regulatory approval and to the completion of the transfer of certain
power and water rights from Barrick Platinum South Africa (Pty) Ltd to an
affiliate of Platmin.
On March 1, 2011 it was announced that Platmin has agreed with the holders of
all the convertible debentures issued on 13 May 2010, in principal amount of
US$135.000 million, to extend the maturity date of the convertible debentures
from 28 February 2011 to 31 March 2011. The only condition remaining outstanding
is the completion of the transfer of certain power and water rights from Barrick
Platinum South Africa (Proprietary) Limited to an affiliate of Platmin, and the
extension is intended to permit the necessary time for that transaction to
close.
On February 28, 2011 Platmin repaid the prommisory note and accumulated interest
to Pallinghurst in full. On March 23, 2011 it was announced that the acquisition
of an incremental 5.99 million 4E PGM inferred resource ounces (42.57 million
tonnes at a grade of 4.38g/t) contained within the western portion of the
Sedibelo PGM Project concession ("Sedibelo West") from the Bakgatla-Ba-Kgafela
Tribe ("Bakgatla") and Itereleng Bakgatla Mineral Resources (Pty) Limited
("IBMR"), for an aggregate consideration of US$75.000 million in cash
(equivalent to US$12.50 per 4E PGM inferred resource ounce). In addition to the
Sedibelo West purchase, Platmin has also acquired an effective 50% interest in
an infrastructure vehicle (the "Vehicle"), which has acquired all of Barrick s
strategically important infrastructure rights and assets. These include power
and water rights as well as certain other assets which can be used for the
development of the PGM deposits to the east of the existing operations.
On March 31, 2011, the Company announced that all the conditions precedent for
the conversion of the $135.000 million in convertible debentures had been
fulfilled and that conversion had taken place at US$0.84 per share. A total of
160,714,287 new shares are to be issued resulting in a total of 910,395,054
shares in issue.
26. Financial risk management
The Group is exposed to certain financial risks in the normal course of its
operations:
- Market risk (including foreign exchange/ currency risk, commodity price risk,
interest rate risk);
- Liquidity risk; and
- Credit risk.
This note presents information about the Group`s financial risk management
framework, objectives, policies and processes for measuring and managing risk,
the Group`s exposure to these financial risks, and the Group`s management of
capital.
Furthermore, quantitative disclosures are included throughout these consolidated
financial statements.
a) Financial risk management framework, objectives and policies
The Board of Directors has overall responsibility for the establishment and
oversight of the Group`s risk management framework. The Group`s Executive is
responsible for developing and monitoring the Group`s risk management policies.
The Group`s Executive reports regularly to the Board of Directors on its
activities.
The Group`s risk management policies are established to identify and analyse the
risks faced by the Group, to set appropriate risk limits and controls, and to
monitor risks and adherence to limits. Risk management policies and systems are
reviewed regularly to reflect changes in market conditions and the Group`s
activities. The Group, through its training and management standards and
procedures, aims to develop a disciplined and constructive control environment
in which all employees understand their roles and obligations.
The Group Audit Committee oversees how management monitors compliance with the
Group`s risk management policies and procedures, and reviews the adequacy of the
risk management framework in relation to the risks faced by the Group.
Group Treasury risk
The Group monitors its forecast financial position on a regular basis. The
Group`s Executive meets regularly and considers cash flow projections for the
following 12 months in detail, taking into consideration the impact of market
conditions including commodity prices and foreign exchange rates. The Group`s
Executive also receives reports from independent exchange consultants and
receives presentations from advisors on current and forecast economic
conditions.
The Group`s forecast financial risk position with respect to key financial
objectives and compliance with treasury practice are regularly reported to the
Board.
From time to time, the Group does use derivative financial instruments to hedge
certain identified risk exposures, as deemed necessary by the Group`s Executive.
The Group does not acquire, hold or issue derivative instruments for trading
purposes.
The Group`s objectives, policies and processes for managing risks arising from
financial instruments have not changed from the previous financial year.
b) Market risk
i) Foreign exchange (Currency) risk
The group operates internationally and is exposed to foreign exchange risk
arising from various currency exposures, primarily with respect to the United
States dollar ("US dollar"). The group s functional currency is the South
African rand ("SA rand").
Foreign exchange risk arises from future commitments, assets and liabilities
that are denominated in a currency that is not the functional currency. Most of
the company s purchases are denominated in SA rand. However, certain initial
capital items during the plant construction phase as well as long lead-capital
items are denominated in US dollars, Euros or Australian dollars. These have to
be acquired by the South African operating company due to the South African
Reserve Bank s Foreign Exchange Control Rulings. This exposed the South African
subsidiary companies to changes in the foreign exchange rates.
The Group`s cash deposits are largely denominated in US dollar and SA rand. A
foreign exchange risk arises from the funds deposited in US dollar which will
have to be exchanged into the functional currency for working capital purposes.
Furthermore, the international commodity market is predominately priced in US
dollars which expose the Group`s cash flows to foreign exchange currency risks.
The following significant exchange rates were applied during the reporting
period:
Average rate Reporting date spot rate
12 months 10 months
ended ended Dec 31, Dec 31,
Dec 31, 2010 Dec 31, 2009 2010 2009
US Dollar 1 = SA Rand 7.2903 8.1850 6.5913 7.3685
UK Pound Sterling 1 = SA
Rand 11.2621 12.8926 10.2033 11.8788
At financial period end, the financial instruments exposed to foreign currency
risk movements are as follows:
Accounts
Presented denominated
Balances as on Dec 31, 2010 US$ `000 in US$ `000 ZAR `000
Financial assets
Loans receivable 63 - 415
Restricted cash investments
and guarantees 84,471 - 556,774
Accounts and other receivables 46,877 - 308,980
Restricted cash 135,131 135,131 890,689
Cash and cash equivalents 188,596 77,213 1,243,093
Total financial assets 455,138 212,344 2,999,951
Financial liabilities
Long-term borrowings 4,710 - 31,045
Trade payables and accrued liabilities
(1) 20,747 15 136,750
Current portion of long-term borrowings 31,923 31,923 210,414
Revolving commodity facility (2) 3,468 - 22,859
Convertible debenture 133,228 133,228 878,146
Total financial liabilities 194,076 165,166 1,279,214
(1) An insignificant amount of payables were denominated in other currencies.
(2) This amount represents the total drawn down on the Revolving Commodity
Facility at December 31, 2010.
Accounts
Presented denominated
Balances as on Dec 31, 2009 US$ `000 in US$ `000 ZAR `000
Financial assets
Loans receivable 50 - 368
Restricted cash investments
and guarantees 7,163 - 52,778
Accounts and other receivables 28,452 - 209,649
Cash and cash equivalents (3) 29,375 1,703 186,084
Total financial assets 65,040 1,703 448,879
Financial liabilities
Long-term borrowings 3,817 - 28,126
Trade payables and accrued liabilities
(4) 22,144 198 161,516
Revolving commodity facility (5) 5,854 - 43,137
Total financial liabilities 31,815 198 232,779
(3) An insignificant amount of cash and cash equivalents were denominated in
other currencies.
(4) An insignificant amount of payables were denominated in other currencies.
(5) This amount represents the total drawn down on the Revolving Commodity
Facility at December 31, 2009.
The following table summarises the sensitivity of financial instruments held at
balance date to movements in the exchange rate of the SA rand to the US dollar,
with all other variables held constant. The US dollar denominated instruments
have been assessed using the sensitivities indicated in the table. These are
based on reasonably possible changes, over a financial period, using the
observed range of actual historical rates for the preceding two-year period.
Dec 31, Dec 31,
2010 2009
Impact on profit/equity (pre-tax gain/(loss)) US$ `000 US$ `000
Judgements on reasonable possible movements
US$/ZAR increase by 30% (14,911) (4,995)
US$/ZAR decrease by 20% 16,153 5,411
ii) Commodity price risk
Commodity price risk arises from the possible adverse effect on current and
future earnings due to fluctuations in commodity prices, in particular the price
of platinum group metals (PGMs). Most of these prices are determined in US
Dollars and are internationally determined in the open market. The Group
regularly measures exposure to commodity price risk by stress testing the
Group`s forecast financial position to changes in PGM prices. The Group reviews
it exposure with reference to the basket price for the following 4 metals:
Platinum, Palladium, Rhodium and Gold (commonly referred to in the platinum
mining industry as the 4E basket price) The Group does not actively hedge future
commodity prices against price fluctuations. The PPM operation recognises
revenue at the month end during which delivery of concentrate has occurred at
the month s average commodity price for the contained metal. The revenue is
revalued at each month end to the latest commodity price averages until such
time that the commodity is determined under the Concentrate Agreement entered
into with Northam Platinum Limited ("Northam"). These fair value adjustments are
set off against revenue, as this is the mining industry standard. The total fair
value adjustments amounted to a profit of US$2.082 million (Dec 2009 - US$1.025
million).
During 2009 and continuing in 2010, the Group entered into a Revolving Commodity
Facility with Investec (please refer to note 19 for details on this facility).
In terms of this facility, Investec will finance up to 91% of PPM s platinum,
palladium, gold, copper and nickel deliveries to Northam in the month following
the delivery month. This facility is repaid within 2 to 3 months. The respective
commodity prices are determined and fixed upon each drawdown in SA rand and any
fluctuations in the commodity prices or SA rand/US dollar exchange rate are
hedged in terms of a swap agreement. Under this agreement, the Group agrees to
swap a fixed amount on maturity date of the respective drawdown with the
variable amount realised on the commodity and currency markets. The fair value
adjustments arising from this are set off against revenue, as this is the mining
industry standard. The total fair value adjustments amounted to a loss of
US$1.675 million (Dec 2009 - US$0.173 million).
The following 4E basket prices were applied during the reporting period:
Average for the
12 months Data for the 10
ended months of
Dec 31, 2010 Dec 31, 2009
4E basket price in US Dollar 1,405 1,100
US Dollar 1 = SA Rand 7.2903 8.1850
4E basket price in SA Rand 10,242 9,004
The financial instruments exposed to movements in commodity prices (in US$) are
as follows:
Gross amount
Presented exposed
Balances as on Dec 31, 2010 US$ `000 US$ `000
Accounts and other receivables 46,877 38,341
Revolving commodity facility (3,468) (3,468)
Total financial instruments 43,409 34,873
Balances as on Dec 31, 2009
Accounts and other receivables 28,452 18,636
Revolving commodity facility (5,854) (5,854)
Total financial instruments 22,598 12,782
The following table summarises the sensitivity of financial instruments held at
balance date to movements in the relevant forward commodity price, with all
other variables held constant. The sensitivities are based on reasonably
possible changes, over a financial period, using observed ranges of actual
historical rates.
Dec 31, Dec 31,
2010 2009
Im pact on profit/equity (pre-tax gain/(loss)) US$ `000 US$ `000
Judgements on reasonable possible movements
Increase by 30% in 4E basket price - -
Decrease by 20% in 4E basket price - -
No impact would have realised on profit/equity (on a pre-tax basis), as the
revenue is being capitalised. PPM has not yet reached desired production levels
and all costs and revenues are off-set against the Mine development asset (refer
note 6 and 3 for accounting policies).
iii) Interest rate risk
Interest rate risk is the risk that the Group`s financial position will be
adversely affected by movements in interest rates. The Group`s main interest
rate risk arises from short-term loans with interest charges based on the
Johannesburg Interbank Acceptance Rate ("JIBAR"). Floating rate debt exposes the
Group to cash flow interest rate risk. The long- term loans bear interest at an
interest rate linked to the South African prime overdraft rate. Cash holdings
are subject to interest rate risk in the country in which they are held on
deposit. All other financial assets and liabilities in the form of receivables,
payables and provisions, is non-interest bearing.
The Group currently does not engage in any hedging or derivative transactions to
manage interest rate risk. In conjunction with external advice, management
consideration is given on a regular basis to alternative financing structures
with a view to optimising the Groups funding structure.
The financial instruments exposed to movements in variable interest rates are as
follows:
Exposed to
Presented movements
Balances as on Dec 31, 2010 US$`000 US$`000
Loans receivable Non-interest bearing 63 -
Restricted cash investments Cash deposited at reputable
and guarantees financial
institutions (1) 84,471 -
Cash and cash equivalents Cash on hand at
reputable financial
institutions (1) 188,596 77,213
Total financial assets 273,130 77,213
Current portion of long term Fixed at Interest at
borrowings JIBAR + 2% 31,923 31,923
Long-term borrowings Interest at SA prime
overdraft 4,710 4,681
Interest at SA prime + 2% - 29
Revolving commodity facility Fixed at Interest at
JIBAR + 3% 3,468 -
Total financial liabilities 40,101 36,633
(1) Restricted cash investments and guarantees as well as cash and cash
equivalents are exposed to movements in US dollars, GBP sterling and SA rand
cash deposit rates.
Exposed to
Presented movements
Balances as on Dec 31, 2009 US$`000 US$`000
Loans receivable Non-interest bearing 50 -
Restricted cash investments Cash deposited at
and guarantees reputable financial
institutions (1) 7,163 7,163
Cash and cash equivalents Cash on hand at
reputable financial
institutions (1) 29,375 29,375
Total financial assets 36,588 36,538
Long-term borrowings Interest at SA prime
overdraft 3,817 3,794
Interest at SA prime + 2% - 23
Revolving commodity facility Fixed at Interest at
JIBAR + 3% 5,854 -
Total financial liabilities 9,671 3,817
(1) Restricted cash investments and guarantees as well as cash and cash
equivalents are exposed to movements in US dollars, GBP sterling and SA rand
cash deposit rates.
The following table summarises the sensitivity of the financial instruments held
at reporting date, following a movement in variable interest rates, with all
other variables held constant. The sensitivities are based on reasonably
possible changes over a financial period, using the observed range of actual
historical rates.
Dec 31, Dec 31,
2010 2009
Im pact on profit/equity (pre-tax gain/(loss)) US$ `000 US$ `000
Judgements on reasonable possible movements
Increase of 1% in prime overdraft 116 51
Decrease of 0.5% in prime overdraft (64) (25)
The impact is calculated on the net financial instruments exposed to variable
interest rates as at reporting date and does not take into account any
repayments of long or short-term borrowing.
b) Liquidity risk
The liquidity position of the Group is managed to ensure sufficient liquid funds
are available to meet financial commitments in a timely and cost effective
manner. The Group`s Executive continually reviews the liquidity position
including cash flow forecasts to determine the forecast liquidity position and
maintain appropriate liquidity levels. All excess cash is held by the Company or
the South African operating company, Boynton. The Company in vests excess funds
in a 32 day deposit account and Boynton keeps excess funds in a current account.
Cash is deposited at highly reputable financial institutions of high quality
credit standing within the Republic of South Africa and their foreign affiliates
in the United Kingdom.
The concentration of cash balances on hand in geographical areas was as
follows:
United Republic of
Presented Kingdom South Africa
US$ `000 US$ `000 US$ `000
Balances as on Dec 31, 2010
Cash and cash equivalents (1) 188,596 77,213 111,383
Total financial assets 188,596 77,213 111,383
Balances as on Dec 31, 2009
Cash and cash equivalents 29,375 4,122 25,254
Total financial assets 29,375 4,122 25,254
The contractual maturity analysis of payables at the reporting date was as
follows:
Less than
Presented 6 m onths
Balances as on Dec 31, 2010 US$ `000 US$ `000
Long-term borrowings (1) 4,710 -
Trade payables and accrued liabilities 20,747 20,747
Revolving commodity facility (1) 3,468 3,468
Current portion of long term borrowings 31,923 31,923
Convertible debenture 133,228 133,228
Total financial liabilities 194,076 189,366
Balances as on Dec 31,2009
Long-term borrowings (1) 3,817 -
Trade payables and accrued liabilities 22,144 22,144
Revolving commodity facility (1) 5,854 5,854
Total financial liabilities 31,815 27,998
Between Greater than
6 - 12 months 12 months
Balances as on Dec 31, 2010 US$ `000 US$ `000
Long-term borrowings (1) - 4,710
Trade payables and accrued liabilities - -
Revolving commodity facility (1) - -
Current portion of long term borrowings - -
Convertible debenture - -
Total financial liabilities - 4,710
Balances as on Dec 31,2009
Long-term borrowings (1) - 3,817
Trade payables and accrued liabilities - -
Revolving commodity facility (1) - -
Total financial liabilities - 3,817
(1) Refer to notes 13 and 17 for the repayment obligations for borrowings.
d) Credit risk
Credit risk is the risk that a contracting entity will not complete its
obligation under a financial instrument that will result in a financial loss to
the Group. The carrying amount of financial assets represents the maximum credit
exposure. Receivable balances are monitored on an ongoing basis with the result
that the Group`s exposure to bad debts is not significant. The Group`s credit
risk is limited to the carrying value of its financial assets. At balance date
there is a significant concentration of credit risk represented in the cash and
accounts receivables balance. With respect to accounts receivables, this is due
to the fact that the majority of sales are made to one customer, being Northam,
as per contractually agreed terms. The customer has complied with all
contractual sales terms and has not at any stage defaulted on amounts due. The
Group manages its credit risk by predominantly dealing with counterparties with
a positive credit rating.
The maximum exposure to credit risk was as follows:
Dec 31, Dec 31,
2010 2009
Balances as on US$`000 US$`000
Loans receivable 63 50
Restricted cash investments and guarantees 219,602 7,163
Accounts and other receivables 46,877 28,452
Cash and cash equivalents 188,596 29,375
Total financial assets 455,138 65,040
The ageing of receivables at the reporting date was as follows:
Less than Between
Balances as on Presented 1 month 1 - 2 months
Dec 31, 2010 US$`000 US$`000 US$`000
Loans receivable 63 - -
Accounts and other receivables 46,877 10,054 36,823
Total financial assets 46,940 10,054 36,823
Balances as on
Dec 31, 2009
Loans receivable 50 - -
Accounts and other receivables 28,452 19,202 9,250
Total financial assets 28,502 19,202 9,250
Between Greater than
Balances as on 3 - 12 months 12 months
Dec 31, 2010 US$`000 US$`000
Loans receivable - 63
Accounts and other receivables - -
Total financial assets - 63
Balances as on
Dec 31, 2009
Loans receivable - 50
Accounts and other receivables - -
Total financial assets - 50
e) Capital management
The Group`s corporate office is responsible for capital management. This
involves the use of corporate forecasting models, which facilitates analysis of
the Group`s financial position including cash flow forecasts to determine the
future capital management requirements. Corporate office monitors gearing.
Capital management is undertaken to ensure a secure, cost effective supply of
funds to ensure the Group`s operating and capital expenditure requirements are
met. The mix of debt and equity is regularly reviewed. The Group does not have a
target debt/equity ratio, but has a policy of maintaining a flexible financing
structure so as to be able to take advantage of new investment opportunities
that may arise. Net debt is calculated as total borrowings (including the
current and non-current borrowings as reported on the Statement of Financial
Position). Total capital is calculated as the total equity (as reported) plus
net debt.
Dec 31, Dec 31,
2010 2009
US$ `000 US$ `000
Long term borrowings 4,710 3,817
Revolving commodity facility 3,468 5,854
Convertible debenture (1) 133,228 -
Current portion of long-term borrowings 31,923 -
Net debt 173,329 9,671
Total equity 834,396 453,029
Total capital 1,007,725 462,700
Gearing ratio 20.773% 2%
No dividends were paid during the reporting period. The Board maintains a
policy of balancing returns to shareholders with the need to fund growth.
(1) The debentures are secured over cash and cash equivalents of US$135.131
million. The security provides the holder with a first ranking interest in the
collateral account (or any investments made using the cash collateral account)
and any interest or other proceeds earned thereon. The security interest is
released when the conversion right is exercised.
f) Financial assets and liabilities by category
The accounting policies for financial instruments have been applied to the line
items below:
Dec 31, Dec 31,
2010 2009
US$`000 US$`000
All classified as loans and receivables (1)
Loans receivable 63 50
Restricted cash investments and guarantees 84,471 7,163
Restricted cash 135,131 -
Accounts and other receivables 46,877 28,452
Cash and cash equivalents 188,596 29,375
Total financial assets 455,138 65,040
(1) None of the Group`s financial assets have been categorised as assets through
profit or loss, derivatives used for hedging or available for sale assets.
Dec 31, Dec 31,
2010 2009
All classified as liabilities at fair value through (1)
profit or loss US$ `000 US$ `000
Long term borrowings 4,710 3,817
Current portion of long-term borrowings 31,923 -
Trade payables and accrued liabilities 20,747 22,144
Revolving commodity facility 3,468 5,854
Convertible debenture 133,228 -
Total financial liabilities 194,076 31,815
(1) None of the Group`s financial liabilities have been categorised as
derivatives used for hedging or available for sale liabilities.
g) Fair value of financial assets and liabilities
The fair value of a financial asset or a financial liability is the amount at
which the asset could be exchanged or liability settled in a current transaction
between willing parties in an arm s length transaction. The fair values of the
Group`s financial assets and liabilities approximate their carrying values, as a
result of their short maturity or because they carry floating rates of interest.
All financial assets and liabilities recorded in the financial statements
approximate their respective net fair values.
27. Segmented information
Management has determined the operating segments based on the reports reviewed
by the executive committee that are used to make strategic decisions.
The committee considers the business from an operating perspective. The Group
operates in one geographic segment, the Republic of South Africa. The operating
segments comprise the following:
- Mining operation: The Pilanesberg Mine is currently in an advanced development
and build-up stage. This mine is involved in the mining and processing of
platinum group elements.
- Development and exploration operations: The Group is engaged in a number of
other development and exploration projects within the Republic of South Africa.
- Administrative operations: The Group administration is done at the local
corporate office based in Centurion, the Metropolitan City of Tshwane in the
Republic of South Africa.
Although the development and exploration as well as administrative operations do
not meet the quantitative thresholds required by IFRS 8 Segment reporting,
management has concluded that these segments should be reported, as it is
closely monitored by the executive committee. The development and exploration
segment is earmarked as the growth area for the Group.
The committee assesses the performance of the operating segments as follows:
- Mining: based on an adjusted earnings before interest, taxation, depreciation
and amortisation ("EBITDA") prior to the capitalising of the costs per the
accounting policies;
- Development and exploration: based on the additions to non-current assets and
viability; and
- Administrative: based on an adjusted EBITDA.
The chief operating decision maker ("CODM") at reporting date was Mr. Thomas
Graham Dale, the Chief Executive Officer of the Group.
The segment information provided to the committee for the reportable segments
for the period ended December 31, 2010 is as follows:
Development and
Mining exploration
Dec Dec Dec Dec
Amounts in $ `000 2010 2009 2010 2009
Reportable items in the
Statement of Comprehensive Income
External revenues 82,301 29,422 - -
Intersegment revenue - - - -
Depreciation and
amortization (1,096) (153) (1) (1)
Income tax expense - - - -
Adjusted EBITDA (88,062) (55,320) - -
Administration Consolidated
Dec Dec Dec Dec
Amounts in $`000 2010 2009 2010 2009
Reportable items in the
Statement of Comprehensive
Income
External revenues - - 82,301 29,422
Intersegment revenue - - - -
Depreciation and
amortisation (245) (176) (1,342) (330)
Income tax expense - - - -
Adjusted EBITDA (36,431) (11,584) (124,493) (66,904)
The revenue from external parties reported to the committee is measured in
accordance with IFRS. No revenue is recorded in the Consolidated statement of
income and comprehensive income as the Pilanesberg Mine has not yet reached
commercial production (consistent with the accounting policies of the Group).
All revenues reported were from two customers, being Northam Platinum Limited
and Impala Refining Services Ltd.
A reconciliation of adjusted EBITDA to total comprehensive (loss)/income for the
period is provided as follows:
Consolidated
Dec 2010 Dec 2009
$`000 $`000
Total EBITDA for reportable segments (124,493) (66,904)
Revenues offset against the cost of the plant
construction (82,301) (29,422)
Mining costs offset against the cost of the plant
construction 159,831 82,980
Total EBITDA per Consolidated statement of income
and comprehensive income (46,963) (13,346)
Foreign exchange gains (12,806) 3,216
Depreciation (653) (330)
Finance costs (net) (5,020) (655)
Loss before taxation (65,442) (11,115)
Income tax expense - -
Exchange differences on translating from functional
currency to presentation currency 83,704 (109,688)
Total comprehensive income / (loss) for the period 18,262 (120,803)
The segment information provided to the committee for the reportable segments
for the period ended December 31, 2010 is as follows:
Development and
Mining exploration
Dec Dec Dec Dec
Amounts in $`000 2010 2009 2010 2009
Reportable items in the Statement
of Financial Position
Total assets 731,974 486,680 42,260 10,571
Additions to non-current assets 231,803 170,232 141,563 1,172
Total liabilities 141,679 91,141 9,542 4,640
Administration Consolidated
Dec Dec Dec Dec
Amounts in $`000 2010 2009 2010 2009
Reportable items in the Statement
of Financial Position
Total assets 334,644 52,911 1,108,878 550,162
Additions to non-current assets 4,204 744 377,570 172,148
Total liabilities 123,261 1,352 274,482 97,133
The amounts provided to the committee with respect to total assets are measured
in a manner consistent with that of the financial statements. These assets are
allocated based on the operations of the segment. Additions to non-current
assets include all additions to Mining assets, Intangible assets and Property,
Plant and Equipment (refer to notes 4, 5 and 6). The amounts provided to the
committee with respect to total liabilities are measured in a manner consistent
with that of the financial statements. These assets are allocated based on the
operations of the segment.
Date: 31/03/2011 15:00:01 Produced by the JSE SENS Department.
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