| Wed 11 May 2011, 13:00 | | UUU - Uranium One Inc - Interim Financial Statements for the period ended |
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UUU - Uranium One Inc - Interim Financial Statements for the period ended
March 31, 2011 (unaudited)
Uranium One Inc
(Incorporated in Canada)
(Registration number: 15096422420)
Share code on the JSE: UUU & ISIN: CA91701P1053
Share code on the TSX: UUU & ISIN: CA91701P1053
Interim Financial Statements for the period ended March 31, 2011 (unaudited)
Consolidated Income Statements - unaudited
For the three months ended March 31, 2011 and 2010
Period ended
Mar 31, Mar 31,
2011 2010
Notes US$m US$m
Revenues 101.9 35.5
Cost of sales
Operating expenses (23.3) (14.0)
Depreciation (27.4) (11.8)
Earnings from mine operations 51.2 9.7
General and administrative 3 (12.2) (9.4)
Exploration expense (1.2) (0.9)
Impairment of mineral interests, - (1.2)
plant and equipment
Care and maintenance (0.3) (1.6)
Operating earnings / (loss) 37.5 (3.4)
Finance income 4 1.8 1.0
Finance expense 4 (11.5) (10.8)
Foreign exchange (loss) / gain (5.3) 4.0
Other (0.9) 8.4
Earnings / (loss) before income taxes 21.6 (0.8)
Current and deferred income tax (7.6) (0.6)
expense
Net earnings / (loss) 14.0 (1.4)
Net earnings / (loss) per share
Basic 0.01 (0.00)
Diluted 0.01 (0.00)
Weighted average number of shares
(millions)
Basic 14 957.2 587.3
Diluted 14 1,049.7 587.3
Consolidated Statements of Comprehensive Income - Unaudited
For the three months ended March 31, 2011 and 2010
Mar 31, Mar 31,
2011 2010
Notes US$m US$m
Other comprehensive income / (loss)
for the period
Unrealized gain recognized on 15.9 3.7
translation of foreign operations
Fair value adjustments on available- - (1.5)
for-sale securities, net of tax
Total other comprehensive income for 15.9 2.2
the period
Net earnings / (loss) 14.0 (1.4)
Total comprehensive income 29.9 0.8
The accompanying notes, including note 21 - First time adoption of
International Financial Reporting Standards, form an integral part of these
Interim Consolidated Financial Statements
Consolidated Balance Sheets - unaudited
As at March 31, 2011, December 31, 2010 and January 1, 2010
As at As at As at
Mar 31, Dec 31, Jan 1,
2011 2010 2010
Notes US$m US$m US$m
ASSETS
Current assets
Cash and cash equivalents 13 371.8 324.4 148.5
Trade and other receivables 70.6 103.4 42.4
Inventories 6 98.7 90.0 68.8
Other assets 8 12.6 12.8 23.4
553.7 530.6 283.1
Non-current assets
Mineral interests, property, 7 2,364.0 2,339.9 1,305.0
plant and equipment
Loans to joint ventures 5 14.6 28.7 29.3
Other assets 8 58.4 58.9 85.7
2,437.0 2,427.5 1,420.0
Total assets 2,990.7 2,958.1 1,703.1
LIABILITIES
Current liabilities
Trade and other payables 57.1 72.2 45.7
Current tax payable 13.9 13.8 1.6
Interest bearing liabilities 9 64.2 60.1 68.6
Provisions 11 - - 20.2
Current portion of convertible 10 158.3 151.4 -
debentures
Other liabilities 12 35.0 36.0 132.1
328.5 333.5 268.2
Non-current liabilities
Interest bearing liabilities 9 82.5 86.2 47.6
Convertible debentures 10 220.7 208.7 140.9
Provisions 11 65.9 65.1 74.5
Deferred tax liabilities 331.2 334.0 138.4
Other liabilities 12 0.4 0.4 13.1
700.7 694.4 414.5
Total liabilities 1,029.2 1,027.9 682.7
EQUITY
Share capital 5,325.4 5,325.4 3,823.3
Reserves 253.5 236.2 178.9
Deficit (3,617.4) (3,631.4) (2,981.8)
1,961.5 1,930.2 1,020.4
2,990.7 2,958.1 1,703.1
Total equity and liabilities
The accompanying notes, including note 21 - First time adoption of
International Financial Reporting Standards, form an integral part of these
Interim Consolidated Financial Statements
Consolidated Statements of Changes in Equity - unaudited
For the periods ending March 31, 2011 and December 31, 2010
Reserves
Share Equity- Equity Acumul Deficit Total
Numbe capital settle componen ated
r of d t of other
share employ converti compre
s ee ble hen-
benefi debentur sive
ts es income
reserv
e
( US$m US$m US$m US$m US$m US$m
milli
ons)
Balance as at 587.4 3,823.3 132.3 46.5 0.1 (2,981.8) 1,020.4
January 1, 2010
Net loss for the - - - - - (153.7) (153.7)
period
Special cash - - - - - (492.9) (492.9)
dividend
Stock options - - 13.9 - - - 13.9
and restricted
shares vested
Exercise of 13.5 67.8 (32.5) - - - 35.3
stock options
and restricted
shares
Unrealized gain - - - - 6.9 - 6.9
recognized on
translation of
foreign
operations
Unrealized fair - - - - (10.7) - (10.7)
value
adjustments on
available for
sale securities
Realized fair - - - - 10.6 - 10.6
value
adjustments on
available for
sale securities
JUMI Debentures - - - 125.7 - - 125.7
issued
JUMI Debentures - - - (125.7) - (3.0) (128.7)
redeemed
2010 Debentures 0.1 - - 69.1 - - 69.1
issued
ARMZ private 178.1 602.7 - - - - 602.7
placement
Acquisition of 178.1 831.6 - - - - 831.6
Akbastau and
Zarechnoye
Balance as at 957.2 5,325.4 113.7 115.6 6.9 (3,631.4) 1,930.2
December 31,
2010
Net earnings for - - - - - 14.0 14.0
the period
Stock options - - 1.4 - - - 1.4
vested
Unrealized gain - - - - 15.9 - 15.9
recognized on
translation of
foreign
operations
Balance as at 957.2 5,325.4 115.1 115.6 22.8 (3,617.4) 1,961.5
March 31, 2011
January 1, 2010 587.4 3,823.3 132.3 46.5 0.1 (2,981.8) 1,020.4
Net loss for - - - - - (1.4) (1.4)
the period
Stock options - - 2.0 - - - 2.0
and restricted
shares vested
Exercise of 0.1 0.7 (0.6) - - - 0.1
stock options
and restricted
shares
Unrealized gain - - - - 3.7 - 3.7
recognized on
translation of
self-sustaining
foreign
operations
Fair value - - - - (1.5) - (1.5)
adjustments on
available for
sale securities
JUMI Debentures - - - 125.7 - - 125.7
March 31, 2010 587.5 3,824.0 133.7 172.2 2.3 (2,983.2) 1,149.0
The accompanying notes, including note 21 - First time adoption of
International Financial Reporting Standards, form an integral part of these
Interim Consolidated Financial Statements
Consolidated Statements of Cash Flows - unaudited
For the three months ended March 31, 2011 and 2010
Period ended
Note Mar 31, Mar 31,
s 2011 2010
US$m US$m
Net earnings / (loss) 14.0 (1.4)
Items not affecting cash:
- Depreciation 27.4 11.8
- Impairment of mineral interests, - 1.2
property plant and equipment
- Interest accrued 11.5 10.8
-Income tax expense 13.3 3.2
- Unrealized foreign exchange loss / 6.8 (5.1)
(gain)
- Deferred tax recovery (5.7) (2.6)
- Fair value adjustment on financial - (10.4)
liabilities
- Other 1.7 (2.3)
Movement in non-cash working capital 12.7 (0.2)
Operating cash flows before interest 81.7 5.0
and tax
Cash tax paid (13.2) (4.2)
Cash interest paid (1.5) (0.6)
Cash flows from operating activities 67.0 0.2
Acquisition of mineral interests, (27.9) (21.0)
plant and equipment
Cash payments for other assets (5.7) (17.4)
Business combinations - (28.9)
Acquisition of available for sale - (26.4)
securities
Karatau promissory note and - (111.8)
contingent payment
Other - (0.1)
Cash flows used in investing (33.6) (205.6)
activities
Common shares issued, net of issue - 0.1
costs
Net loans received by joint ventures 12.9 12.3
Debentures issued, net of issue costs - 498.6
Cash flows from financing activities 12.9 511.0
Effects of exchange rate changes on 1.1 5.9
cash and cash equivalents
Net increase in cash and cash 47.4 311.5
equivalents
Cash and cash equivalents at the beginning 324.4 148.5
of the period
Cash and cash equivalents at the end 371.8 460.0
of the period
Supplemental cash flow information (note 13)
The accompanying notes, including note 21 - First time adoption of
International Financial Reporting Standards, form an integral part of these
Interim Consolidated Financial Statements
Notes to the Consolidated Financial Statements - unaudited
As at March 31, 2011, December 31, 2010 and January 1, 2010
1 NATURE OF OPERATIONS
Uranium One Inc. ("Uranium One"), its subsidiaries and joint ventures
(collectively, the "Corporation") is a Canadian Corporation engaged
through subsidiaries and joint ventures in the mining and production of
uranium, and in the acquisition, exploration and development of
properties for the production of uranium in Kazakhstan, the United
States, Australia and Canada. The Corporation`s registered head office
address is 1285 West Pender Street, Suite 900, Vancouver, British
Columbia, Canada, V6E 4B1.
Uranium One is a controlled company, with JSC Atomredmetzoloto ("ARMZ")
owning 51.4% of the outstanding common shares. The Corporation holds a
70% interest in the Betpak Dala joint venture, which owns the Akdala and
South Inkai uranium mines in Kazakhstan, a 50% interest in the Karatau
joint venture, which owns the Karatau uranium mine in Kazakhstan, a 50%
interest in the Akbastau joint venture, which owns the Akbastau uranium
mine in Kazakhstan, a 49.67% interest in the Zarechnoye joint venture,
which owns the Zarechnoye uranium mine in Kazakhstan, and a 30% interest
in the Kyzylkum joint venture, which owns the Kharasan Project in
Kazakhstan. In the United States, the Corporation owns projects in the
Powder River and Great Divide basins in Wyoming. The Corporation owns a
51% interest in the Honeymoon Uranium Project in Australia. The
Corporation owns, either directly or through joint ventures, a large
portfolio of uranium exploration properties in the western United
States, South Australia, and Canada.
The financial statements were approved on May 10, 2011.
2 SIGNIFICANT ACCOUNTING POLICIES
Basis of preparation and consolidation
The condensed consolidated interim financial statements have been
prepared in accordance with International Accounting Standard 34 -
Interim Financial Reporting ("IAS 34"). These are the Corporation`s
first consolidated financial statements prepared in accordance with
International Financial Reporting Standards ("IFRS") and IFRS 1 - First-
time Adoption of International Financial Reporting Standards has been
applied.
The preparation of the interim financial statements in conformity with
IAS 34 requires management to make judgments, estimates and assumptions
that affect the application of policies and reported amounts of assets
and liabilities, income and expenses. The interim financial statements
do not include all of the required disclosures which would be included
in the annual financial statements.
The interim financial statements include the accounts of Uranium One,
its subsidiaries and the proportionate share of its interests in joint
ventures. All intercompany balances and transactions have been
eliminated.
Functional and presentation currency
These interim financial statements are presented in US dollars. The
functional currency of Uranium One Inc, is the Canadian dollar. Judgment
is requirement to determine the functional currency of each entity.
These judgments are continuously evaluated and are based on management`s
experience and knowledge of the relevant facts and circumstances.
Adoption of new and revised International Financial Reporting Standards
The policies applied in these interim consolidated financial statements
are based on IFRS issued and outstanding as of May 10, 2011. Any
subsequent changes to IFRS that are given effect in the Corporation`s
annual consolidated financial statements for the year ending December
31, 2011 could result in restatement of these interim consolidated
financial statements, including the transition adjustments recognized on
transition to IFRS.
Detailed disclosures of the effects of transition to IFRS from Canadian
GAAP can be found below in note 21.
Joint ventures
The Corporation undertakes a number of business activities through joint
ventures. A joint venture is a contractual arrangement whereby two or
more parties undertake an economic activity that is subject to joint
control. The interim financial statements include the Corporation`s
proportionate share of the entities` assets, liabilities, revenue and
expenses with items of a similar nature on a line-by-line basis, from
the date that joint control commences until the date that joint control
ceases. The Corporation has interests in two types of joint ventures:
Jointly controlled entities
A jointly controlled entity is a corporation, partnership or other
entity in which each participant holds an interest. A jointly controlled
entity operates in the same way as other entities, controlling the
assets of the joint venture, earning its own income and incurring its
own liabilities and expenses.
Jointly controlled assets
The Corporation has contractual agreements with other participants to
engage in joint activities that do not give rise to a jointly controlled
entity. These arrangements involve the joint ownership of assets
dedicated to the purposes of each venture but do not create a jointly
controlled entity as the participants directly benefit from the
operation of their jointly owned assets, rather than deriving returns
from an interest in a separate entity.
Business combinations
Business combinations are accounted for by applying the acquisition
method of accounting, whereby the purchase consideration of the
combination is allocated to the identifiable net assets on the basis of
fair value on acquisition. Mineral rights that can be reliably valued
are recognized in the assessment of fair values on acquisition. Other
potential mineral rights for which values cannot be reliably determined
are not recognized.
Measurement and reporting currency
Financial statements of subsidiaries, joint ventures and associates, are
maintained in their functional currencies and converted to US dollars
for consolidation of the Corporation`s results. The functional currency
of each entity is determined after consideration of the primary economic
environment of the entity.
Transactions denominated in foreign currencies (currencies other than
the functional currency of an operation) are translated at the exchange
rates ruling at the date of transaction. Monetary assets and liabilities
denominated in foreign currencies are translated at closing exchange
rates.
On translation of foreign operations with functional currencies other
than the US dollar, income statement items are translated at average
rates of exchange where this is a reasonable approximation of the
exchange rate at the dates of the transactions. Balance sheet items are
translated at closing exchange rates. Gains or losses on translation of
foreign operations are recorded in the foreign currency translation
reserve in equity.
On disposal of a foreign entity, the deferred cumulative amount
recognised in equity relating to that particular foreign operation is
recognised in the consolidated income statement.
Inventories
Solutions and concentrates in process and finished concentrates are
valued at the lower of average production cost or net realizable value.
Production costs include the cost of raw materials, direct labour, mine-
site related overhead expenses and depreciation of Mineral interest,
property, plant and equipment.
Net realizable value is the estimated selling price in the ordinary
course of business, less the estimated costs of completion and selling
expenses.
Materials and supplies are valued on the weighted average basis and
recorded at the lower of average cost or replacement cost.
Exploration and evaluation expenditure
Exploration and evaluation expenditure comprises costs that are directly
attributable to:
- researching and analysing existing exploration data;
- conducting geological studies, exploratory drilling and sampling;
- examining and testing extraction and treatment methods; and
- activities in relation to evaluating the technical feasibility and
commercial viability of extracting a mineral resource.
Exploration expenditure relates to the initial search for deposits with
economic potential. Evaluation expenditure arises from a detailed
assessment of deposits or projects that have been identified as having
economic potential. Expenditure on exploration activity is not
capitalized. Capitalization of evaluation expenditure commences when
there is a high degree of confidence in the project`s viability and
hence it is probable that future economic benefits will flow to the
Corporation.
The carrying values of capitalised amounts are reviewed annually, or
when indicators of impairment are present. In the case of undeveloped
projects there may be only inferred resources to form a basis for the
impairment review. The review is based on the Corporation`s intentions
for development of the undeveloped project. If a project does not prove
viable, all irrecoverable costs associated with the project are charged
to the consolidated income statement.
Development expenditure
Development commences when approved by Management. Development
expenditures are capitalised and classified as assets under
construction. Development expenditure includes the pre-commercial
production costs, net of proceeds from the sale of extracted product
during the development phase, and wellfield development costs. On
completion of development, the completed assets included in assets under
construction are reclassified as property, plant and equipment.
Mineral interests
Mineral interests are recorded at cost less accumulated depreciation and
impairment charges. Mineral interest costs include the purchase price of
mineral properties.
The costs associated with mineral interests are separately allocated to
reserves, resources and exploration potential, and include acquired
interests in production, development and exploration stage properties
representing the fair value at the time they were acquired.
Upon sale or abandonment of any mineral interest, the cost and related
accumulated depreciation, are written off and any gains or losses
thereon are included in the consolidated income statement.
Property, plant and equipment
Property, plant and equipment is recorded at cost less accumulated
depreciation and accumulated impairment losses. Plant and equipment
includes its purchase price, any costs directly attributable to bringing
plant and equipment to the location and condition necessary for it to be
capable of operating in the manner intended by management and the
estimated close down and restoration costs associated with dismantling
and removing the asset.
Upon sale or abandonment of any property, plant and equipment, the cost
and related accumulated depreciation, are written off and any gains or
losses thereon are included in the consolidated income statement.
Depreciation of mineral interests, property, plant and equipment
The carrying amounts of mineral interests, property, plant and equipment
are depreciated to their estimated residual value over the estimated
economic life of the specific assets to which they relate, or using the
straight-line method over their estimated useful lives indicated below.
Estimates of residual values and useful lives are reassessed annually
and any change in estimate is taken into account in the determination of
remaining depreciation charges. Depreciation commences on the date when
the asset is available for use.
- Mineral interests - based on reserves on a unit of production basis
- Assets under construction - not depreciated
- Plant and equipment - 12 to 15 years straight-line or on a unit of
production basis
- Buildings - 6 to 40 years straight-line or on a unit of production
basis
Impairment
Formal impairment tests are carried out annually and whenever there is
an indication of impairment for intangible assets with indefinite useful
lives. The Corporation reviews the carrying amounts of its tangible and
intangible assets with finite lives to determine whether there are any
indications of impairment, at the end of each reporting period. If any
such indication exists, the recoverable amount of the asset is estimated
in order to determine the extent of the impairment, if any. The
recoverable amount is determined as the higher of fair value less direct
costs to sell and the asset`s value in use.
Fair value is defined as the amount that would be obtained from the
sale, in an arm`s length transaction, between knowledgeable and willing
parties. Fair value for mineral interests, plant and equipment is
generally determined as the present value of the estimated future cash
flows expected to arise from the continued use of the asset, including
any expansion prospects, and its eventual disposal, using assumptions
that an independent market participant may take into account.
Value in use is determined as the present value of the estimated future
cash flows expected to arise from the continued use of the asset in its
present form and its eventual disposal. Value in use is determined by
applying assumptions specific to the Corporation`s continued use and
cannot take into account future development.
The Corporation`s weighted average cost of capital is used as a starting
point for determining the discount rates, with appropriate adjustments
for the risk profile of the countries in which the individual cash
generating units operate and the specific risks related to the
development of the project.
Where the asset does not generate cash flows that are independent of
other assets, the Corporation estimates the recoverable amount of the
cash generating unit to which the asset belongs. If the carrying amount
of an asset or cash generating unit exceeds its recoverable amount, the
carrying amount of the asset or cash generating unit is reduced to its
recoverable amount. An impairment loss is recognized as an expense in
the consolidated income statement.
Non financial assets that have been impaired are tested at the end of
each reporting period for possible reversal of the impairment whenever
events or changes in circumstance indicate that the impairment may have
reversed. Where an impairment subsequently reverses, the carrying amount
of the asset or cash generating unit is increased to the revised
estimate of its recoverable amount, but only so that the increased
carrying amount does not exceed the carrying amount that would have been
determined (net of amortization or depreciation) had no impairment loss
been recognized for the asset or cash generating unit in prior years. A
reversal of impairment is recognized as a gain in the consolidated
income statement.
Non-current assets held for sale
Non-current assets are classified as held for sale if their carrying
amounts will be recovered through a sales transaction rather than
through continuing use. This condition is regarded as met only when the
sale is highly probable and the assets or disposal groups are available
for immediate sale in their present condition. The Corporation must be
committed to the sale which should be expected to qualify for
recognition as a completed sale within one year of the date of
classification.
Non-current assets held for sale are carried at the lower of the
carrying amount prior to being classified as held for sale, and the fair
value less costs to sell. Where the fair value less costs to sell is
lower than the carrying amount at the time of classification as held for
sale, the resulting impairment is recognised in the consolidated income
statement in that period.
A non-current asset is not depreciated while classified as held for
sale. A non-current asset held for sale is presented separately in the
consolidated balance sheet. The assets and liabilities of a disposal
group classified as held for sale are presented separately as one line
in the assets and liabilities sections on the face of the balance sheet.
Comparative balance sheet information is not restated.
Borrowing costs
Borrowing costs directly relating to the financing of the acquisition,
construction or production of qualifying assets are capitalized to the
cost of those assets until such time as they are substantially ready for
their intended use or sale. Where funds have been borrowed specifically
to finance an asset, the amount capitalized is the actual borrowing
costs incurred. Where the funds used to finance an asset form part of
general borrowings, the amount capitalized is calculated using a
weighted average of rates applicable to relevant general borrowings of
the Corporation during the period.
Transaction costs related to the establishment of a loan facility are
capitalized and amortized over the life of the facility. Other borrowing
costs are recognized in the consolidated income statement in the period
in which they are incurred.
Provisions
Provisions are recognised when the Corporation has a present legal or
constructive obligation as a result of past events, and it is probable
that an outflow of resources that can be reliably estimated will be
required to settle the obligation. Where a provision is measured using
the cash flows estimated to the settle the obligation, its carrying
amount is the present value of those cash flows.
Environmental protection, rehabilitation and closure costs
The mining, extraction and processing activities of the Corporation
normally give rise to obligations for site closure or rehabilitation.
Provision is made for close down, restoration and for environmental
rehabilitation costs, which include the dismantling and demolition of
infrastructure, removal of residual materials and remediation of
disturbed areas, in the financial period when the related environmental
disturbance occurs, based on the estimated future costs using
information available at the balance sheet date.
At the time of establishing the provision, a corresponding asset is
capitalised, where it gives rise to a future benefit, and depreciated
over future production from the operations to which it relates. The
provision is discounted to its present value using a risk free rate
relevant to the jurisdiction in which the rehabilitation has to be
performed. The unwinding of the discount is included in the finance
expense. Costs arising from unforeseen circumstances, such as the
contamination caused by unplanned discharges, are recognised as an
expense and liability when the event gives rise to an obligation which
is probable and capable of reliable estimation.
The provision is reviewed on an annual basis for changes to obligations,
legislation or discount rates that impact estimated costs or lives of
operations. The cost of the related asset is adjusted for changes in the
provision resulting from changes in the estimated cash flows or discount
rate and the adjusted cost of the asset is depreciated prospectively.
Rehabilitation trust funds holding monies committed for use in
satisfying environmental obligations are included within other assets on
the consolidated balance sheet.
Revenue
Revenue from uranium sales is recognized when persuasive evidence of an
arrangement exists, the risks and rewards of ownership pass to the
purchaser, including delivery of the product, the selling price is fixed
or determinable, and collectability is reasonably assured.
On deliveries to conversion facilities ("Converters"), the Converter
credits the Corporation`s account for the volume of accepted uranium.
Based on delivery terms in a sales contract with its customer, the
Corporation instructs the Converter to transfer title of a contractually
specified quantity of uranium to the customer`s account at the
Converter. At this point, the Corporation invoices the customer and
recognizes revenue for the uranium supply.
On deliveries to locations other than converters, as agreed with the
customer, the Corporation delivers uranium to the agreed location. At
this point, the Corporation invoices the customer and recognizes revenue
for the uranium supply.
The Corporation does not recognize revenue in circumstances where it
delivers borrowed material into contracts.
Current tax
Current tax for each taxable entity in the Corporation is based on the
local taxable income at the local statutory tax rate enacted or
substantively enacted at the balance sheet date, and includes
adjustments to tax payable or recoverable in respect of previous years.
Deferred tax
Deferred tax is accounted for using the balance sheet liability method,
providing for the tax effect of temporary differences between the
carrying amount of assets and liabilities for financial reporting
purposes and their respective tax bases.
Deferred income tax liabilities are recognized for all taxable temporary
differences except where the deferred income tax liability arises from
the initial recognition of goodwill, or the initial recognition of an
asset or liability in a transaction that is not a business combination
and, at the time of the transaction, affects neither the accounting
profit nor taxable profit or loss in respect of taxable temporary
differences associated with investments in subsidiaries and interest in
joint ventures, where the timing of the reversal of the temporary
differences can be controlled and it is probable that the temporary
differences will not reverse in the foreseeable future.
Deferred income tax assets are recognized for all deductible temporary
differences, carry-forward of unused tax credits and unused tax losses,
to the extent that it is probable that taxable profit will be available
against which the deductible temporary differences, and the carry-
forward of unused tax credits and losses can be utilized, except where
the deferred income tax asset related to the deductible temporary
difference arises from the initial recognition of an asset or liability
in a transaction that is not a business combination and, at the time of
the transaction, affects neither the accounting profit nor taxable
profit or loss. In respect of deductible temporary differences
associated with investments in subsidiaries and interest in joint
ventures, deferred tax assets are recognized only to the extent that it
is probable that the temporary differences will reverse in the
foreseeable future and taxable profit will be available against which
the temporary differences can be utilized.
The carrying amount of deferred income tax assets is reviewed at each
balance sheet date and is adjusted to the extent that it is no longer
probable that sufficient taxable profit will be available to allow all
or part of the asset to be utilized. To the extent that an asset not
previously recognized fulfils the criteria for recognition, a deferred
income tax asset is recorded.
Deferred tax is measured on an undiscounted basis using the tax rates
that are expected to apply in the period when the liability is settled
or the asset is realized, based on tax rates and tax laws enacted or
substantively enacted at the balance sheet date.
Deferred tax assets and liabilities are offset when they relate to
income taxes levied by the same taxation authority and the Corporation
intends to settle its current tax assets and liabilities on a net basis.
Current and deferred tax relating to items recognized directly in equity
are recognized in equity and not in the consolidated income statement.
Mining taxes and royalties are treated and disclosed as current and
deferred taxes if they have the characteristics of an income tax. This
is considered to be the case when they are imposed under government
authority and the amount payable is calculated by reference to revenue
derived (net of any allowable deductions) after adjustment for items
comprising temporary differences.
Stock based compensation
The Corporation grants share-based awards, including restricted share
rights and options, to certain employees. For equity-settled awards,
the fair value is charged to the consolidated income statement and
credited to the related reserve account, on a straight-line basis over
the vesting period, after adjusting for the estimated number of awards
that are expected to vest.
The fair value of the equity-settled awards is determined at the date of
the grant. In calculating fair value, no account is taken of any vesting
conditions, other than conditions linked to the price of the shares of
the Corporation. The fair value is determined by using the Black-Scholes
option pricing model. At each balance sheet date, the cumulative expense
representing the extent to which the vesting period has expired and
management`s best estimate of the awards that are ultimately expected to
vest is computed. The movement in cumulative expense is recognised in
the consolidated income statement with a corresponding entry against the
related reserve. No expense is recognised for awards that do not
ultimately vest.
Under Uranium One`s Stock Option Plan, options granted are non-
assignable and may be granted for a term not exceeding ten years. The
plan is administered by the Board of Directors, which determines
individual eligibility under the plan, the number of shares reserved
underlying the options granted to each individual (not exceeding 5% of
issued and outstanding shares to any insider and not exceeding 1% of the
issued and outstanding shares to any non-employee director on a non-
diluted basis) and any vesting period which, pursuant to the stock
option plan is one-third on the first anniversary of the grant date, one-
third on the second anniversary of the grant date and the remainder on
the third anniversary of the grant date. The maximum number of shares of
Uranium One that are issuable pursuant to the plan is limited to 7.2% of
issued and outstanding shares.
Earnings / loss per share
Earnings / loss per share calculations are based on the weighted average
number of common shares and common share equivalents issued and
outstanding during the period. The calculation of diluted earnings per
share assumes that outstanding options and warrants that are dilutive to
earnings per share are exercised and the proceeds are used to repurchase
shares of Uranium One at the average market price of the shares for the
period. The effect is to increase the number of shares used to
calculate diluted earnings per share. The impact of outstanding share
options and warrants are excluded from the diluted share calculation for
loss per share amounts, because it is anti-dilutive. The if-converted
method is used to compute the dilutive effect of convertible debt. The
dilutive effect of contingently issuable shares is computed by comparing
the conditions required for issuance of shares against those existing at
the end of the period.
Financial instruments
The Corporation`s financial instruments primarily consist of cash, short-
term money market investments, marketable securities, accounts
receivable, accounts payable and accrued liabilities, loans to joint
ventures, draw downs against credit facilities, other loans, uranium
loans, and convertible debentures. The fair value of these financial
instruments, except for the convertible debentures which is carried at
amortized cost, approximates their carrying values. Fair values of
other financial instruments have been estimated by reference to quoted
market prices for actual or similar instruments where available and
disclosed accordingly.
Comprehensive income comprises the Corporation`s net income and other
comprehensive income. Comprehensive income represents changes in
shareholders` equity during a period arising from non-owner sources and,
for the Corporation, other comprehensive income includes currency
translation adjustments on its net investment in foreign operations.
Financial assets and liabilities initial recognition and classification
Financial assets and financial liabilities are recognized on the balance
sheet when the Corporation has become party to the contractual
provisions of the instruments. Financial instruments are initially
measured at fair value, which includes transaction costs for all
financial instruments except for financial instruments at fair value
through profit and loss. All financial assets are recognized on the
trade date at market value, which is the date that the Corporation
commits to purchase or sell the asset. Financial assets are classified
into the following specified categories: financial assets `at fair value
through profit or loss`, `held-to-maturity` investments, `available-for-
sale` financial assets and `loans and receivables`. The classification
depends on the nature and purpose of the financial assets and is
determined at the time of initial recognition. Financial liabilities
are classified as either financial liabilities `at fair value through
profit or loss` or `other financial liabilities`. Financial assets and
liabilities are classified as `at fair value through profit or loss`
when the financial liability is either `held for trading` or it is
designated as `fair value through profit or loss`. Subsequent to initial
recognition these instruments are measured as set out below:
Cash and cash equivalents
Cash and cash equivalents consist of cash on hand, bank balances,
deposits held at call and certificates of deposits, money market
instruments, including cashable guaranteed investment certificates,
bearer deposit notes and commercial paper with an original term to
maturity of three months or less at date of purchase, and are carried at
amortized cost.
Available for sale investments
After initial recognition, investments which are classified as available
for sale are carried at fair value, with the fair value adjustments
accounted for in other comprehensive income. When available for sale
investments are sold, the cumulative fair value adjustment previously
recorded in other comprehensive income is recognized in the consolidated
income statement.
Trade and other receivables
Accounts receivable are carried at amortized cost unless a provision has
been recorded for uncollectability of these receivables. A provision
for impairment of accounts receivable is established when there is
objective evidence that the Corporation may not be able to collect all
amounts due according to the original terms of receivables.
Impairment and uncollectability of financial assets
An assessment is made at each reporting date to determine whether there
is objective evidence that a financial asset or group of financial
assets, other than those at fair value through profit or loss, may be
impaired. If such evidence exists, the estimated recoverable amount of
the asset is determined and an impairment loss is recognized for the
difference between the recoverable amount and the carrying amount as
follows: the carrying amount of the asset is reduced to its estimated
recoverable amount, either directly or through the use of an allowance
account and the resulting loss is recognized in the consolidated income
statement.
When an available for sale financial asset is considered to be impaired,
cumulative gains or losses previously recognised in other comprehensive
income are reclassified to the consolidated income statement.
With the exception of assets held for sale and available for sale equity
instruments, if, in a subsequent period, the amount of the impairment
loss decreases, the previously recognised impairment loss is reversed
through income to the extent that the carrying amount of the investment
at the date the impairment is reversed does not exceed what the
amortised cost would have been had the impairment not been recognised.
In respect of available for sale equity securities, impairment losses
previously recognised in profit or loss are not reversed through profit
or loss. Any increase in fair value subsequent to an impairment loss is
recognised in other comprehensive income.
Financial liabilities
After initial recognition, financial liabilities, other than liabilities
at fair value through profit or loss, are subsequently measured at
amortized cost using the effective interest rate method. Amortized cost
is calculated by taking into account any transaction costs and any
discount or premium on settlement.
Financial liabilities at fair value through profit and loss are
recognized on the trade date at fair value, which is the date that the
Corporation commits to the contract. After initial recognition, the
liabilities are carried at fair value, with the fair value adjustments
accounted for in the consolidated income statement.
Accounts payable
Liabilities for trade and other payables which are normally settled on
30 to 90 day terms are carried at amortized cost.
Interest bearing liabilities
Interest bearing liabilities are recognized initially at the proceeds
received, net of transaction costs incurred. Interest bearing
liabilities are subsequently measured at amortized cost using the
effective interest rate method. Any difference between proceeds (net of
transaction costs) and the redemption value is recognized in the
consolidated income statement over the period of the loan.
Offset
Where a legally enforceable right of offset exists for recognized
financial assets and financial liabilities, and there is an intention to
settle the liability and realize the asset simultaneously, or settle on
a net basis, all related financial effects are offset.
Compound instruments
The component parts of compound instruments are classified separately as
financial liabilities and equity in accordance with the substance of the
contractual agreement. At the date of issue, the fair value of the
liability component is estimated using the prevailing market interest
rate for similar non-convertible instruments. This amount is recorded
as a liability on an amortized cost basis until extinguished upon
conversion or at the instrument`s maturity date. The equity component
is determined by deducting the amount of the liability component from
the total proceeds received for the instrument as a whole. This is
recognized and included in equity, net of income tax effects, and is not
subsequently remeasured.
Embedded derivatives
Derivatives may be embedded in other financial instruments (the "host
instrument"). Embedded derivatives are treated as separate derivatives
when their economic characteristics and risks are not clearly and
closely related to those of the host instrument, the terms of the
embedded derivative are the same as those of a stand-alone derivative,
and the combined contract is not held for trading or designated at fair
value. These embedded derivatives are measured at fair value with
subsequent changes recognized in gains or losses on derivatives within
interest and other in the consolidated income statement.
New accounting standards
IFRS 9 Financial instruments
On November 12, 2009, the IASB issued IFRS 9: Financial instruments as
the first step in its project to replace IAS 39 Financial instruments:
Recognition and Measurement. IFRS 9 must be applied from January 1, 2013
with early adoption permitted. The Corporation is currently assessing
the impact of adopting IFRS 9.
Critical accounting judgments and key sources of estimation uncertainty
The preparation of consolidated financial statements in conformity with
IFRS requires the Corporation`s management to make estimates and
assumptions about future events that affect the amounts reported in the
consolidated financial statements and related notes to the consolidated
financial statements. Actual results may differ from those estimates.
Information about areas of judgment and key sources of uncertainty and
estimation is contained in the accounting policies and/or the notes to
the consolidated financial statements.
The following are the key sources of estimation uncertainty at the end
of the reporting period, that have a significant risk of causing a
material adjustment to the carrying amounts of assets and liabilities
within the next financial year:
Recoverability of accounts receivable and investments
Provision is made against accounts that in the estimation of management
may be impaired. The recoverability assessment of accounts receivable is
based on a range of factors including the age of the receivable and the
creditworthiness of the customer. The provision is assessed monthly with
a detailed formal review of balances and security being conducted at
year-end. Determining the recoverability of an account involves
estimation as to the likely financial condition of the customer and
their ability to subsequently make payment. To the extent that future
events impact the financial condition of the customers these provisions
could vary significantly.
Investments in securities are reviewed for impairment at the end of each
reporting period, when the fair value of the investment falls below the
Corporation`s carrying value, and it is considered to be significant or
prolonged, an impairment charge is recorded to the consolidated income
statement for the difference between the investment`s carrying value and
its estimated fair value at the time. In making the determination as to
whether a decline is considered prolonged, the Corporation considers
such factors as the duration and extent of the decline, the investee`s
financial performance, and the Corporation`s ability and intention to
retain its investment for a period that will be sufficient to allow for
any anticipated recovery in the investment`s market value. Differing
assumptions could affect whether an investment is impaired in any period
or the amount of the impairment.
Net realizable value of inventories
In determining the net realizable value of inventories, the Corporation
estimates the selling prices, based on published market rates, cost of
completion and cost to sell. To the extent that future events impact the
saleability of inventory these provisions could vary significantly.
Estimated reserves, resources and exploration potential
Reserves are estimates of the amount of product that can be extracted
from the Corporation`s properties, considering both economic and legal
factors. Calculating reserves and estimates requires decisions on
assumptions about geological, technical and economic factors, including
quantities, grades, production techniques, recovery rates, production
costs, transport costs, commodity demand, prices and exchange rates.
Estimating the quantity and/or grade of reserves require the analysis of
drilling samples and other geological data.
Estimates of reserves may change from period to period as the economic
assumptions used to estimate reserves change from period to period, and
because additional geological data is generated during the course of
operations. Changes in reported reserves may affect the Corporation`s
financial position in a number of ways, including the following:
- Asset carrying values may be affected due to changes in estimated
future cash flows;
- Depreciation and amortization charged in the consolidated income
statement may change where such charges are determined by the units
of production basis, or where the useful economic lives of assets
change; and
- The carrying value of deferred tax assets may change due to changes
in estimates of the likely recovery of the tax benefits.
Impairment of mineral interests, property, plant and equipment
Assets or cash generating units are evaluated at each reporting date to
determine whether there are any indications of impairment. If any such
indication exists, a formal estimate of recoverable amount is performed
and an impairment loss recognized to the extent that carrying amount
exceeds recoverable amount. The recoverable amount of an asset or cash
generating group of assets is measured at the higher of fair value less
costs to sell and value in use.
Fair value is determined as the amount that would be obtained from the
sale of the asset in an arm`s length transaction between knowledgeable
and willing parties, and is generally determined as the present value of
the estimated future cash flows expected to arise from the continued use
of the asset, including any expansion prospects, and its eventual
disposal. Present values are determined using a risk-adjusted pre-tax
discount rate appropriate to the risks inherent to the asset. Future
cash flow estimates are based on expected production and sales volumes,
commodity prices (considering current and historical prices, price
trends and related factors), reserves, operating costs, restoration and
rehabilitation costs and future capital expenditure. The Corporation`s
management is required to make these estimates and assumptions which are
subject to risk and uncertainty; hence there is a possibility that
changes in circumstances will alter these projections, which may impact
the recoverable amount of the assets. In such circumstances, some or all
of the carrying value of the asset may be impaired and the impairment
would be charged against the consolidated income statement.
Expected economic lives of, estimated future operating results and net
cash flows from mining interests
The carrying amounts of mineral interests are depreciated to their
estimated residual value over the estimated economic life of the
specific assets to which they relate.
Depreciation commences on the date of commissioning and is based on
reserves on a unit of production basis.
Residual values and useful lives are reviewed, and adjusted if
appropriate, at least annually. Changes in estimated residual values or
useful lives are accounted for prospectively. In applying the units of
production method, depreciation is normally calculated using the
quantity of material extracted from the mine in the period as a
percentage of the total quantity of material to be extracted in current
and future periods based on proved and proven reserves.
In assessing the life of a mine for accounting purposes, mineral
resources are only taken into account where there is a high degree of
confidence of economic extraction.
The Corporation`s operating result and net cash flow forecasts are based
on the best estimates of expected future revenues and costs, including
the future cash costs of production, capital expenditure, close down and
restoration. These may include net cash flows expected to be realised
from extraction, processing and sale of mineral resources that do not
currently qualify for inclusion in proven ore reserves. Such non reserve
material is included where there is a high degree of confidence in its
economic extraction. This expectation is usually based on preliminary
drilling and sampling of areas of mineralisation that are contiguous
with existing reserves.
The mine plan takes account of all relevant characteristics of the ore
body, ore grades, chemical and metallurgical properties of the ore
impacting on process recoveries and capacities of processing equipment
that can be used. The mine plan is therefore the basis for forecasting
production output in each future year and for forecasting production
costs.
The Corporation`s cash flow forecasts are based on estimates of future
commodity prices. These long term commodity prices, for most
commodities, are derived from an analysis of the marginal costs of the
producers of these commodities. These assessments often differ from
current price levels and are updated periodically.
In some cases, prices applying to some part of the future sales volumes
of a cash generating unit are predetermined by existing sales contracts.
The effects of such contracts are taken into account in forecasting
future cash flows.
There are numerous uncertainties inherent in estimating ore reserves,
and assumptions that are valid at the time of estimation may change
significantly when new information becomes available. Changes in the
forecast prices of commodity, exchange rates, production costs or
recovery rates may change the economic status of reserves and may,
ultimately, result in the reserves being restated.
Fair value of financial instruments
The Corporation`s financial instruments primarily consist of cash, short-
term money market investments, marketable securities, accounts
receivable, accounts payable and accrued liabilities, loans to joint
ventures, draw downs against credit facilities, other loans, uranium
loans, and convertible debentures. The fair value of these financial
instruments, except for the convertible debentures, approximates their
carrying values, due primarily to their immediate or short-term
maturity.
Fair value of financial instruments (continued)
Fair values of other financial instruments have been estimated by
reference to quoted market prices for actual or similar instruments
where available and disclosed accordingly.
The valuation models maximize the use of observable market inputs
however certain assumptions and estimates require management judgment
including excess spread, prepayment rates, expected credit losses and
discount rates. Valuation methodologies and assumptions are reviewed on
an ongoing basis. A significant change in this assessment may result in
unrealized losses being recognized in net income.
Fair value of stock-based compensation
The Corporation grants share-based awards, including restricted share
rights and stock options, to certain employees. For equity-settled
awards, the fair value is charged to the consolidated income statement
and credited to a related reserve account on a straight-line basis over
the vesting period, after adjusting for the estimated number of awards
that are expected to vest.
The fair value of the equity-settled awards is determined at the date of
the grant. In calculating fair value, no account is taken of any vesting
conditions, other than conditions linked to the price of the shares of
the Corporation. The fair value is determined by using the Black-Scholes
option pricing model.
Option pricing models require the input of highly subjective
assumptions, including the expected price volatility. Changes in these
assumptions can materially affect the fair value estimate and,
therefore, the existing models do not necessarily provide a reliable
measure of the fair value of the Corporation`s stock options.
Fair value of assets and liabilities acquired in business combinations
Business combinations are accounted for by applying the acquisition
method of accounting, whereby the purchase consideration of the
combination is allocated to the identifiable net assets on the basis of
fair value on acquisition. The amount of goodwill initially recognized
is dependent on the allocation of the purchase price to the fair value
of the identifiable assets acquired and the liabilities assumed. The
determination of the fair value of the assets and liabilities is based,
to a considerable extent, on management`s judgment.
Allocation of the purchase price affects the results of the Corporation
as finite lived intangible assets are amortized, whereas indefinite
lived intangible assets, including goodwill, are not amortized and could
result in differing amortization charges based on the allocation to
indefinite lived and finite lived intangible assets.
Reclamation and closure cost obligations
Reclamation and closure costs obligation provisions represents
management`s best estimate of the present value of the future costs.
Significant estimates and assumptions are made in determining the amount
of reclamation and closure cost obligations provisions. Those estimates
and assumptions deals with uncertainties such as: requirements of the
relevant legal and regulatory framework; the magnitude of possible
contamination; and the timing, extent and costs of required restoration
and rehabilitation activity. These uncertainties may result in future
actual expenditure differing from the amounts currently provided.
Taxation
The provision for income taxes and composition of income tax assets and
liabilities requires management`s judgment as to the types of
arrangements considered to be a tax on income in contrast to an
operating cost. Judgment is also required in assessing whether deferred
tax assets and certain deferred tax liabilities are recognized in the
balance sheet.
Assumptions about the generation of future taxable profits depend on
management`s estimates of future cash flows. These depend on estimates
of future production and sales volumes, commodity prices, reserves,
operating costs, and other capital management transactions. The
application of income tax legislation also requires judgments. These
judgments and assumptions are subject to risk and uncertainty, therefore
there is a possibility that changes in circumstances will alter
expectations, which may impact the amount of deferred tax assets and
deferred tax liabilities recognized on the balance sheet and the amount
of other tax losses and temporary differences not yet recognized
Exchange rates
The following exchange rates to the US dollar have been applied in the
interim financial statements:
Average Average Average Closing Closing
period period year period year
ended ended ended ended ended
Mar 31, Mar 31, Dec 31, Mar 31, Dec 31,
2011 2010 2010 2011 2010
Canadian dollar 0.98 1.04 1.03 0.97 1.00
Australian dollar 0.99 1.11 1.09 0.99 0.98
Kazakh Tenge 146.43 147.71 147.39 145.70 147.40
Euro 0.73 0.72 0.76 0.71 0.76
3 GENERAL AND ADMINISTRATIVE
Period ended
Mar 31, Mar 31,
2011 2010
US$m US$m
General and administrative 10.8 7.4
Stock option and restricted share 1.4 2.0
expense
12.2 9.4
4 FINANCE INCOME AND EXPENSE
Period ended
Mar 31, Mar 31,
2011 2010
US$m US$m
Finance income
Interest income 1.8 1.0
1.8 1.0
Finance expense
Accrued interest (2.1) (1.0)
Convertible debenture interest (8.5) (6.8)
Credit facility charges - (0.9)
Unwinding of contingent payments (0.7) (1.7)
Other (0.2) (0.4)
(11.5) (10.8)
Net finance costs (9.7) (9.8)
5 LOANS TO JOINT VENTURES
Mar 31, Dec 31, Jan 1,
2011 2010 2010
US$m US$m US$m
Non-current
SKZ-U 14.6 14.8 3.6
Kyzylkum - 13.9 25.7
Total 14.6 28.7 29.3
Kyzylkum loan
The Corporation made loans to Kyzylkum pursuant to its obligation to
provide project financing for construction and commissioning of the
Kharasan Project in the amount of $80 million. The loans bear interest
at LIBOR plus 1.5% per annum, with interest payable on a semi-annual
basis, commencing within two years of initial funding.
Mar 31, Dec 31,
2011 2010
US$m US$m
Balance at January 1 19.0 35.0
Interest capitalized - 3.1
Repaid during the period (19.0) (19.1)
- 19.0
Accrued interest - 0.8
Balance at the end of the period - 19.8
Less: elimination of - (5.9)
proportionate share - 30%
- 13.9
Less: current portion - -
Long term portion - 13.9
The loans to Kyzylkum were unsecured.
SKZ-U loan
The Corporation made loans to SKZ-U pursuant to its obligation to
provide project financing for construction and commissioning of the
Sulphuric acid plant project in the amount of $31.0 million. The loans
bear interest at LIBOR plus 6% per annum, with interest payable on a
semi-annual basis.
Mar 31, Dec 31,
2011 2010
US$m US$m
Balance at January 1 18.0 4.3
Repaid during the period - (4.3)
Additions during the period - 18.0
18.0 18.0
Accrued interest - 0.3
Balance at the end of the period 18.0 18.3
Less: elimination of (3.4) (3.5)
proportionate share - 19%
14.6 14.8
Less: current portion - -
Long term portion 14.6 14.8
The loans to SKZ-U are unsecured.
6 INVENTORIES
Mar 31, Dec 31, Jan 1,
2011 2010 2010
US$m US$m US$m
Finished uranium concentrates 68.0 62.8 39.4
Solutions and concentrates in 21.3 17.6 23.8
process
Product inventory 89.3 80.4 63.2
Materials and supplies 9.4 9.6 5.6
98.7 90.0 68.8
The value of inventory recognized in the income statement is $50.7
million and $189.4 million for the three months ended March 31, 2011 and
the year ended December 31, 2010 respectively.
7 MINERAL INTERESTS, PROPERTY, PLANT AND EQUIPMENT
March 31, 2011 Mineral Property Developm Total
interest , Plant ent
s and expendit
equipmen ure
t
US$m US$m US$m US$m
Cost
Balance at January 1 2,064.0 374.7 127.0 2,565.7
Additions - 12.0 19.2 31.2
Pre-production revenue and - - (2.3) (2.3)
costs capitalized
Disposals - (0.1) (0.8) (0.9)
Currency translation 22.9 3.2 1.2 27.3
adjustments taken to reserves
Transfers (51.0) 71.7 (20.7) -
At the end of the period 2,035.9 461.5 123.6 2,621.0
Accumulated depreciation
Balance at January 1 (129.5) (96.3) - (225.8)
Charge for the period (18.1) (10.4) - (28.5)
Currency translation (1.6) (1.1) - (2.7)
adjustments taken to reserves
At the end of the period (149.2) (107.8) - (257.0)
Net book value at March 31, 1,886.7 353.7 123.6 2,364.0
2011
December 31, 2010 Mineral Proper Total
interest ty, Develo
s Plant pment
and expend
equipm iture
ent
US$m US$m US$m US$m
Cost
Balance at January 1 1,092.7 196.0 124.0 1,412.7
Additions 0.2 27.7 100.7 128.6
Acquisitions of subsidiaries 956.8 103.9 7.5 1,068.2
Pre-production revenue and - - (6.0) (6.0)
costs capitalized
Disposals (0.8) (5.1) (0.4) (6.3)
Impairment (2.8) (5.5) (40.6) (48.9)
Currency translation 11.7 (5.4) 11.1 17.4
adjustments taken to reserves
Transfers 6.2 63.1 (69.3) -
At the end of the period 2,064.0 374.7 127.0 2,565.7
Accumulated depreciation
Balance at January 1 (68.8) (30.8) (8.1) (107.7)
Charge for the period (62.8) (68.7) 7.7 (123.8)
Disposals - 1.2 - 1.2
Impairment - 0.7 0.4 1.1
Currency translation 2.1 1.3 - 3.4
adjustments taken to reserves
At the end of the period (129.5) (96.3) - (225.8)
Net book value at December 1,934.5 278.4 127.0 2,339.9
31, 2010
8 OTHER ASSETS
Mar 31, Dec 31, Jan 1,
2011 2010 2010
US$m US$m US$m
Current
Borrowed uranium concentrates 12.5 12.5 8.9
Deposit for future business - - 8.8
acquisitions
Deferred expenditure - - 5.2
Other 0.1 0.3 0.5
12.6 12.8 23.4
Non-current
Asset retirement fund 37.9 37.8 13.5
Advances for plant and equipment 15.8 16.0 7.5
Long term inventory 2.0 1.5 1.2
Deferred tax assets - 1.3 1.1
Available for sale securities 0.3 0.3 9.3
Sales tax recoverable 1.8 1.5 0.5
Assets held for sale - - 51.5
Other 0.6 0.5 1.1
58.4 58.9 85.7
Uranium concentrates loans
The Corporation entered into a uranium concentrates borrowing agreement
to mitigate the risk of delivery delays, enabling the Corporation to
meet its contractual obligations in terms of current uranium sales
contracts. The asset represents the borrowed uranium concentrates,
which are held at a conversion facility in the Corporation`s account.
The asset is recorded at its fair value. The corresponding financial
liability of $12.5 million, which was classified as fair value through
profit and loss, is also carried at fair value and is included in
uranium concentrates loans in current liabilities (note 12).
Available for sale securities
The Corporation holds available for sale securities with a cost of $0.3
million and a fair value of $0.3 million.
9 INTEREST BEARING LIABILITIES
Facilities held by Uranium One Mar 31, Dec 31, Jan 1,
2011 2010 2010
US$m US$m US$m
Opening balance - 63.6 61.3
Amortized financing fees - 1.5 2.4
Interest paid - (0.8) (1.2)
Interest accrued - 0.7 1.1
Repaid - (65.0) -
- - 63.6
- - (63.6)
Less: current portion
Long term portion - - -
Proportionate share of joint Mar 31, Dec 31, Jan 1,
venture facilities 2011 2010 2010
US$m US$m US$m
Opening balance 146.3 52.6 36.0
Acquired on business - 59.1 5.0
combination
Drawdown 14.8 40.9 12.0
Repaid (15.1) (6.7) -
Amortized financing fees - - (0.4)
Interest paid (1.4) (0.3) -
Interest accrued 2.1 0.7 -
146.7 146.3 52.6
(64.2) (60.1) (5.0)
Less: current portion
Long term portion 82.5 86.2 47.6
Consolidated Total
60.1 68.6
Current portion 64.2
Non-current portion 82.5 86.2 47.6
Total 146.7 146.3 116.2
Uranium One
On June 27, 2008, the Corporation established a $100 million bank debt
senior secured revolving credit facility (the "facility"). Under the
terms of the facility, the Corporation had the ability to borrow up to
$100 million from the lead lenders, Bank of Montreal and The Bank of
Nova Scotia (the "Banks"). The facility had a two year term which ended
during 2010.
Kyzylkum
Kyzylkum has loans outstanding of $54.3 million, $69.9 million and $41.5
million from the Japan Bank for International Cooperation ("JBIC"),
Citibank and Kazatomprom, respectively. At March 31, 2011, the
Corporation`s share of Kyzlkum`s loans is $49.7 million.
Karatau
Karatau has loans outstanding of $10.0 million and $5.0 million from
UniCredit and Citibank, respectively. At March 31, 2011, the
Corporation`s share of Karatau`s loans is $7.5 million.
SKZ-U
In addition to the $18.0 million loan (note 5) from the Corporation, SKZ-
U has loans outstanding of $15.9 million, $15.0 million and $46.3
million from Sumitomo Mitsui Banking Corporation, Mizuho Corporate Bank
and JBIC, respectively. At March 31, 2011, the Corporation`s share of
SKZ-U`s loans is $14.7 million.
Akbastau
Akbastau had loans outstanding of $10.0 million, $3.4 million and $43.7
million from Alpha Bank, GRK and Effective Energy At March 31, 2011,
the Corporation`s share of these loans is $28.5 million.
Zarechnoye
Zarechnoye had loans outstanding of $28.0 million, $60.0 million and
$3.4 million from Eurasia Development Bank, Effective Energy and
Citibank, respectively. At March 31, 2011, the Corporation`s share of
these loans is $45.4 million.
10 CONVERTIBLE DEBENTURES
2006 Debentures
The Corporation has outstanding convertible unsecured subordinated
debentures maturing December 31, 2011 (the "2006 Debentures") with a
face value of C$155.3 million. The 2006 Debentures were originally
issued at C$1,000 per debenture and bear interest at an annual rate of
4.25%, payable semi-annually in arrears on June 30 and December 31 of
each year. The conversion price is C$15.76 per share, which is
equivalent to 63.45 common shares for each C$1,000 principal amount of
debentures.
2010 Debentures
On March 12, 2010 the Corporation issued convertible unsecured
subordinated debentures for gross proceeds of C$260 million ($253.3
million), including C$10 million taken up under an underwriters` over-
allotment option. The 2010 Debentures have a March 13, 2015 maturity
date, with interest payable at a rate of 5.0% per annum, payable semi-
annually. The 2010 Debentures is convertible into common shares of the
Corporation, at a rate of 317.46 common shares per C$1,000 principal and
have a conversion price of C$3.15 per common share.
The debentures have a cash settlement option which is accounted for as
an embedded derivative. The Corporation has allocated the fair value of
the debentures to the individual liability and derivative components by
establishing the derivative component and then allocating the balance
remaining, after subtracting the fair value of the derivative from the
face value, to the liability component. The embedded derivative is
designated as a financial liability carried at fair value through profit
and loss. On October 12, 2010, the Corporation received all necessary
Kazakh approvals for the conversion of the 2010 Debentures and as a
result the cash settlement option was cancelled. The embedded
derivative was reclassified as equity on cancellation of the cash
settlement option.
The table below provide a breakdown of the liability and derivative
allocation on initial recognition of the 2010 Debentures:
2010
Debentures
US$m
Liability 211.6
Transaction costs (12.4)
Net liability 199.2
Derivative 41.7
liability
Net derivative 41.7
liability
Net proceeds 240.9
JUMI Debentures
On January 14, 2010, the Corporation issued to Japan Uranium Management
Inc. ("JUMI") a C$269.1 million ($258.1 million ) aggregate principal
amount 3% convertible unsecured subordinated debenture maturing ten
years from the date of issue (the "JUMI Debentures"). Pursuant to the
terms of the JUMI Debentures, the Corporation must offer to re-purchase
the JUMI Debentures for 101% of the outstanding principal amount plus
accrued interest upon a "change of control". The transaction with ARMZ
during 2010 constituted a "change of control" and on July 30, 2010, the
Corporation made such a re-purchase offer to JUMI, which JUMI accepted,
after which the debentures were redeemed on December 29, 2010.
The table below indicates the movement in the liability:
March 31, 2011 2010 2006 Total
Debentures Debentures
US$m US$m US$m
Opening balance 208.7 151.4 360.1
Interest accrued 5.9 2.6 8.5
Foreign exchange 6.1 4.3 10.4
movement
Liability as at the 220.7 158.3 379.0
end of the period
Current portion - 158.3 158.3
Non-current portion 220.7 - 220.7
220.7 158.3 379.0
Fair value of 387.0 158.0
convertible
debentures
December 31, 2010 JUMI 2010 2006 Total
Debentures Debentures Debentures
US$m US$m US$m US$m
Opening balance - - 140.9 140.9
Issued 131.4 211.6 - 343.0
Interest accrued 14.5 18.3 9.9 42.7
Coupon payment (7.6) (14.0) (6.4) (28.0)
Transaction costs (1.0) (12.4) - (13.4)
Redemption (141.9) - - (141.9)
Foreign exchange 4.6 5.2 7.0 16.8
movement
Liability as at the - 208.7 151.4 360.1
end of the period
Current portion - - 151.4 151.4
Non-current portion - 208.7 - 208.7
- 208.7 151.4 360.1
11 PROVISIONS
Current Mar 31, Dec 31, Jan 1,
2011 2010 2010
US$m US$m US$m
Provision for contingent - - 20.0
payments
Other - - 0.2
- - 20.2
Non-current Mar 31, Dec 31, Jan 1,
2011 2010 2010
US$m US$m US$m
Environmental protection, 29.0 29.1 17.9
rehabilitation and closure
costs
Provision for contingent 34.3 33.3 54.9
payments
Provision for historical cost 2.6 2.7 1.7
65.9 65.1 74.5
Environ Provisi Histori
mental on for cal Total
& conting cost
closure ent
costs payment
s
US$m US$m US$m US$m
Balance at 1 January 2011 29.1 33.3 2.7 65.1
Accretion 0.6 0.8 - 1.4
Reductions arising from (0.9) - (0.1) (1.0)
payments
Foreign exchange movement 0.2 0.2 - 0.4
29.0 34.3 2.6 65.9
12 OTHER LIABILITIES
Current Mar 31, Dec 31, Jan 1,
2011 2010 2010
US$m US$m US$m
Promissory note - - 90.2
Unfavorable contracts 11.3 11.4 11.7
Uranium concentrates loan 12.5 12.5 8.9
Advances received 9.6 10.6 19.9
Other 1.6 1.5 1.4
35.0 36.0 132.1
Non-current Mar 31, Dec 31, Jan 1,
2011 2010 2010
US$m US$m US$m
Liabilities held for sale - - 12.9
Other 0.4 0.4 0.2
0.4 0.4 13.1
Uranium concentrates loan
On September 22, 2008, the Corporation entered into a loan agreement to
borrow 200,000 pounds of U3O8 to be repaid on September 30, 2010. In
July 2010, the maturity of the loan was extended to September 30, 2011.
Under the loan agreement, loan fees of 3.5% per annum are payable based
on the value of the borrowed U3O8. In addition to the loan agreement,
the Corporation incurred $0.4 million in loan arrangement fees, which
has been expensed. The Corporation recognized the borrowed uranium as
an other asset (note 8). The loan was classified as a financial
liability carried at fair value through profit and loss.
13 CASH FLOW INFORMATION
Cash and cash equivalents Mar 31, Dec 31, Jan 1,
2011 2010 2010
US$m US$m US$m
Cash 212.7 255.7 44.4
Money market instruments, 146.7 60.1 104.1
including cashable guaranteed
investment certificates, bearer
deposit notes and commercial paper
Restricted cash 12.4 8.6 -
371.8 324.4 148.5
Cash equivalents include highly liquid investments that are readily
convertible to cash with a maturity of less than 90 days.
Restricted cash consists of a collateral deposit for the letter of
credit that was issued as a guarantee for the uranium concentrate loan
(note 12).
Period ended
Mar 31, Mar 31,
2011 2010
US$m US$m
Changes in non-cash working capital
excluding business combinations:
Decrease in accounts and other 34.1 11.2
receivables
Increase in inventories (7.0) (5.7)
Decrease in accounts payable and (14.4) (5.7)
accrued liabilities
12.7 (0.2)
14 BASIC AND DILUTED WEIGHTED-AVERAGE NUMBER OF SHARES OUTSTANDING
Period ended
Mar 31, Mar 31,
2011 2010
Basic weighted-average number of shares 957.2 587.3
outstanding (millions)
Effect of dilutive securities:
-stock options 0.1 -
-convertible debentures 92.4 -
Diluted weighted-average number of shares 1,049.7 587.3
outstanding
For the period ended March 31, 2010, convertible debentures, stock
options, warrants and restricted shares were not included in the
dilutive weighted average number of shares outstanding as they were anti-
dilutive.
15 FINANCIAL RISK MANAGEMENT
Designation and valuation of financial instruments
The following tables summarizes the designation and fair value hierarchy
under which the Corporation`s financial instruments are valued, other
than trade and other receivables and payables.
- Level 1 of the fair value hierarchy includes unadjusted quoted
prices in active markets for identical assets or liabilities;
- Level 2 of the hierarchy includes inputs that are observable for
the asset or liability, either directly or indirectly; and
- Level 3 includes inputs for the asset or liability that are not
based on observable market data. The Corporation does not have any
financial instruments included in Level 3.
As at March 31, 2011
Designation of Loans and Available Total
financial assets receivables for sale
securities
Notes US$m US$m US$m
Cash and cash 13 371.8 - 371.8
equivalents
Loans to joint ventures 5 14.6 - 14.6
Available for sale 8 - 0.3 0.3
securities
Asset retirement fund 8 37.9 - 37.9
Total 424.3 0.3 424.6
As at December 31, 2010
Loans and Available Total
receivables for sale
securities
Designation of financial Notes US$m US$m US$m
assets
Cash and cash equivalents 13 324.4 - 324.4
Loans to joint ventures 5 28.7 - 28.7
Available for sale 8 - 0.3 0.3
securities
Asset retirement fund 8 37.8 - 37.8
Total 390.9 0.3 391.2
As at March 31, 2011
Held at Financial
Designation of financial fair value liabilities
liabilities through at Total
profit and amortized
loss cost
Notes US$m US$m US$m
Interest bearing 9 - 146.7 146.7
liabilities
Convertible debenture 10 - 379.0 379.0
Uranium concentrates loan 12 12.5 - 12.5
Provision for contingent 11 - 34.3 34.3
payments
Other 12 - 2.0 2.0
Total 12.5 562.0 574.5
As at December 31, 2010
Held at Financial
fair value liabilities
through at Total
profit and amortized
loss cost
Designation of financial Notes US$m US$m US$m
liabilities
Interest bearing liabilities 9 - 146.3 146.3
Convertible debenture 10 - 360.1 360.1
Uranium concentrates loan 12 12.5 - 12.5
Provision for contingent 11 - 33.3 33.3
payments
Other 12 - 1.9 1.9
Total 12.5 541.6 554.1
As at March 31, 2011
Fair value hierarchy of Level 1 Level 2 Level 3 Total
financial assets and US$m US$m US$m US$m
liabilities measured at
fair value
Available for sale 0.3 - - 0.3
securities
Uranium concentrates loan - (12.5) - (12.5)
Total 0.3 (12.5) - (12.2)
As at December 31, 2010
Fair value hierarchy of Level 1 Level 2 Level 3 Total
financial assets and
liabilities measured at
fair value
US$m US$m US$m US$m
Available for sale 0.3 - - 0.3
securities
Uranium concentrates loan - (12.5) - (12.5)
Total 0.3 (12.5) - (12.2)
16 SUBSIDIARIES
Details of the Corporation`s significant subsidiaries as at March 31,
2011 are as follows:
Name of Country of Project Principa Project Intere
subsidiar incorporati l stage st
y on activity
Uranium US United Mineral Developme 100%
One states property nt
Americas, Developme holdings
Inc nt
projects
Uranium US United Processi Developme 100%
One USA states ng nt
Inc Developme facilty
nt and
projects mineral
property
holdings
17 JOINTLY CONTROLLED ENTITIES
The Corporation owns the following interests subject to joint control as
a result of governing contractual agreements:
Shareholding in Countr Principa Stage Inte
Jointly controlled y of l rest
entities incorp activity
oratio
n
Betpak Dala LLP Kazakh Uranium Product 70%
stan Mining ion
Kyzylkum LLP Kazakh Uranium Develop 30%
stan Mining ment
Karatau LLP Kazakh Uranium Product 50%
stan Mining ion
Akbastau JSC Kazakh Uranium Product 50%
stan Mining ion
Zarechnoye JSC Kazakh Uranium Product 49.6
stan Mining ion 7%
SKZ-U LLP Kazakh Sulphuri Develop 19%
stan c Acid ment
The Corporation`s proportionate share of the assets and liabilities of
the jointly controlled entities are as follows:
As at March Akbastau Betpak Karatau Zarech Kyzylku SKZ-U Total
31, 2011 Dala noye m
US$m US$m US$m US$m US$m US$m US$m
Current assets
Cas 4.9 75.4 5.0 1.2 11.3 3.9 101.7
h
Other current 17.1 84.9 - 16.5 2.2 - 120.7
assets
22.0 160.3 5.0 17.7 13.5 3.9 222.4
Non-current
assets
Mineral 744.2 532.0 498.8 252.3 124.6 15.9 2,167.8
interests,
plant and
equipment
Other assets 1.4 2.7 - 5.9 1.3 9.3 20.6
745.6 534.7 498.8 258.2 125.9 25.2 2,188.4
Total assets 767.6 695.0 503.8 275.9 139.4 29.1 2,410.8
Current
liabilities
Current (2.3) (15.3) (6.8) (4.5) (0.8) (0.8) (30.5)
liabilities
Current (28.9) - (7.5) (11.8) (16.0) - (64.2)
portion of
interest
bearing
liabilities
(31.2) (15.3) (14.3) (16.3) (16.8) (0.8) (94.7)
Non-current
liabilities
Non-current - - - (33.8) (34.2) (14.5) (82.5)
portion of
interest
bearing
liabilities
Other (7.9) (0.2) (16.1) (11.5) (1.6) - (37.3)
Deferred (117.1) (67.7) (89.8) (35.2) (11.6) - (321.4)
income taxes
Provisions (2.6) (9.8) (3.1) (2.1) (1.6) - (19.2)
(127.6) (77.7) (109.0) (82.6) (49.0) (14.5) (460.4)
Total (158.8) (93.0) (123.3) (98.9) (65.8) (15.3) (555.1)
liabilities
Net assets 608.8 602.0 380.5 177.0 73.6 13.8 1,855.7
As at December Akbasta Betpak Karatau Zarech Kyzylk SKZ-U Total
31, 2010 u Dala noye um
US$m US$m US$m US$m US$m US$m US$m
Current assets
Cash 4.8 37.2 1.3 2.3 1.1 6.8 53.5
Other current 14.1 100.2 7.8 13.3 0.9 - 136.3
assets
18.9 137.4 9.1 15.6 2.0 6.8 189.8
Non-current
assets
Mineral 737.5 532.2 498.3 249.6 124.1 12.8 2,154.5
interests,
plant and
equipment
Other assets 1.1 3.1 4.0 5.9 0.6 8.7 23.4
738.6 535.3 502.3 255.5 124.7 21.5 2,177.9
Total assets 757.5 672.7 511.4 271.1 126.7 28.3 2,367.7
Current
liabilities
Current (14.6) (9.1) (8.7) (3.4) (1.0) (0.2) (37.0)
liabilities
Current (14.7) - (18.8) (10.6) (16.0) - (60.1)
portion of
interest
bearing
liabilities
(29.3) (9.1) (27.5) (14.0) (17.0) (0.2) (97.1)
Non-current
liabilities
Non-current - - - (33.8) (37.9) (14.5) (86.2)
portion of
interest
bearing
liabilities
Other (6.3) (0.2) (24.5) (11.5) (4.2) - (46.7)
Deferred (117.0) (69.0) (89.7) (35.4) (11.6) - (322.7)
income taxes
Provisions (2.6) (9.7) (2.9) (3.2) (1.6) - (20.0)
(125.9) (78.9) (117.1) (83.9) (55.3) (14.5) (475.6)
Total (155.2) (88.0) (144.6) (97.9) (72.3) (14.7) (572.7)
liabilities
Net assets 602.3 584.7 366.8 173.2 54.4 13.6 1,795.0
As at January 1, Betpak Karatau Kyzylk SKZ-U Total
2010 Dala um
US$m US$m US$m US$m US$m
Current assets
Cas 3.1 0.2 0.9 0.4 4.6
h
Other current 75.1 19.0 0.2 - 94.3
assets
78.2 19.2 1.1 0.4 98.9
Non-current assets
Mineral interests, 556.7 511.7 123.4 3.6 1,195.4
plant and equipment
Other assets 1.5 1.8 0.4 7.0 10.7
558.2 513.5 123.8 10.6 1,206.1
Total assets 636.4 532.7 124.9 11.0 1,305.0
Current liabilities
Current liabilities (8.5) (7.1) (4.1) - (19.7)
Current portion of - (5.0) - - (5.0)
interest bearing
liabilities
(8.5) (12.1) (4.1) - (24.7)
Non-current
liabilities
Non-current portion - - (47.6) - (47.6)
of interest bearing
liabilities
Other financial (0.2) (31.6) (0.8) - (32.6)
liabilities
Deferred income (55.8) (74.6) (7.9) - (138.3)
taxes
Provisions (9.4) (56.3) (1.7) - (67.4)
(65.4) (162.5) (58.0) - (285.9)
Total liabilities (73.9) (174.6) (62.1) - (310.6)
Net assets 562.5 358.1 62.8 11.0 994.4
The Corporation`s proportionate share of revenue, expenses, net earnings
/ (loss) and cash flows are as follows:
Period ended March Akbas Betpak Karatau Zarech Kyzyl SKZ-U Total
31, 2011 tau Dala noye kum
US$m US$m US$m US$m US$m US$m US$m
Revenue 8.2 62.2 23.2 5.4 - - 99.0
Expenses and other (8.6) (26.2) (11.9) (5.1) (0.2) - (52.0)
income
Foreign exchange 0.2 (0.6) 0.2 0.3 0.7 0.2 1.0
gain / (loss)
(Loss) / earnings (0.2) 35.4 11.5 0.6 0.5 0.2 48.0
before income taxes
Current and 0.4 (7.0) (2.9) 0.1 - - (9.4)
deferred income tax
expense
Earnings 0.2 28.4 8.6 0.7 0.5 0.2 38.6
Cash flows from 4.0 42.8 18.7 1.9 - - 67.4
operating
activities
Cash flows used in (3.9) (4.6) (3.7) (3.0) (4.1) (2.9) (22.2)
investing
activities
Cash flows (used - - (11.3) - 14.3 - 3.0
in) / from
financing
activities
Net increase / 0.1 38.2 3.7 (1.1) 10.2 (2.9) 48.2
(decrease) in cash
Period ended March Betpak Karata Kyzyl SKZ-U Total
31, 2010 Dala u kum
US$m US$m US$m US$m US$m
Revenue 28.0 5.5 - - 33.5
Expenses and other (20.8) (5.6) (0.3) (0.1) (26.8)
income
Foreign exchange (2.5) (0.9) 0.8 - (2.6)
(loss) / gain
Earnings / (loss) 4.7 (1.0) 0.5 (0.1) 4.1
before income taxes
Current and (1.3) (0.6) - - (1.9)
deferred income tax
expense
Earnings / (loss) 3.4 (1.6) 0.5 (0.1) 2.2
Cash flows from / 22.1 (4.8) - - 17.3
(used in) operating
activities
Cash flows used in (4.6) (3.0) (1.1) (0.2) (8.9)
investing
activities
Cash flows (used (2.0) 15.1 0.3 - 13.4
in) / from
financing
activities
Net increase / 15.5 7.3 (0.8) (0.2) 21.8
(decrease) in cash
18 JOINTLY CONTROLLED ASSETS
The jointly controlled assets in which the Corporation owns an interest
and which are proportionately included in the interim financial
statements are as follows:
Shareholding in Country of Princip Ownersh
jointly controlled incorporati al Stage ip
assets on activit
y
Honeymoon Joint Australia Uranium Developme 51%
Venture Mining nt
Australia Australia Uranium Explorati 50.1%
exploration joint Mining on
ventures
The Corporation`s proportionate share of the assets and liabilities of
the joint ventures are as follows:
As at March 31, 2011 Honeymo Austral Total
on ia
explora
tion
US$m US$m US$m
Current assets
Cash 8.3 0.3 8.6
Other current assets 0.7 0.1 0.8
9.0 0.4 9.4
Non-current assets
Mineral interests, plant and 16.3 0.3 16.6
equipment
16.3 0.3 16.6
Total assets 25.3 0.7 26.0
Current liabilities
Current liabilities (5.7) (0.1) (5.8)
(5.7) (0.1) (5.8)
Non-current liabilities
Provisions (1.7) - (1.7)
(1.7) - (1.7)
Total liabilities (7.4) (0.1) (7.5)
Net assets 17.9 0.6 18.5
As at December 31, 2010 Honeymo Austral Total
on ia
explora
tion
US$m US$m US$m
Cash 9.3 0.7 10.0
Other current assets 0.4 0.2 0.6
9.7 0.9 10.6
Non-current assets
Mineral interests, plant and 12.3 0.3 12.6
equipment
12.3 0.3 12.6
Total assets 22.0 1.2 23.2
Current liabilities
Current liabilities (6.5) (0.4) (6.9)
(6.5) (0.4) (6.9)
Non-current liabilities
Provisions (1.7) - (1.7)
(1.7) - (1.7)
Total liabilities (8.2) (0.4) (8.6)
Net assets 13.8 0.8 14.6
As at January 1, 2010 Honeymo Austral Total
on ia
explora
tion
US$m US$m US$m
Current assets
Cash 5.1 0.1 5.2
Other current assets 1.4 - 1.4
6.5 0.1 6.6
Non-current assets
Mineral interests, plant and 15.0 0.3 15.3
equipment
15.0 0.3 15.3
Total assets 21.5 0.4 21.9
Current liabilities
Current liabilities (2.6) - (2.6)
(2.6) - (2.6)
Non-current liabilities
Provisions (0.7) - (0.7)
(0.7) - (0.7)
Total liabilities (3.3) - (3.3)
Net assets 18.2 0.4 18.6
The Corporation`s proportionate share of revenue, expenses, net earnings
/ (loss) and cash flows are as follows:
Period ended March 31, 2011 Honeymo Austral Total
on ian
explora
tion
US$m US$m US$m
Revenue - - -
Expenses and other income (0.2) - (0.2)
Foreign exchange (loss) / - - -
gain
Loss before income taxes (0.2) - (0.2)
Current and deferred income - - -
tax expense
Loss (0.2) - (0.2)
Cash flows used in investing (5.0) (0.4) (5.4)
activities
Cash flows from financing 4.0 - 4.0
activities
Net decrease in cash (1.0) (0.4) (1.4)
Period ended March 31, 2010 Honeymo Austral Total
on ian
explora
tion
US$m US$m US$m
Revenue
Expenses and other income - - -
Foreign exchange loss - - -
Earnings / (loss) before - - -
income taxes
Current and deferred income - - -
tax expense
Earnings / (loss) - - -
Cash flows from / (used in) - - -
operating activities
Cash flows used in investing (11.4) - (11.4)
activities
Cash flows from financing 14.7 - 14.7
activities
Net increase in cash 3.3 - 3.3
19 SEGMENTED INFORMATION
Information reported to the Corporation`s chief operating decision maker
for the purposes of resource allocation and assessment of segment
performance is primarily the operating mine or mineral property and its
location. The following financial information is presented by operating
segment and is reconciled to the interim financial statements.
The Corporation`s reportable operating segments are summarized in the
table below:
For the period ended March 31, 2011:
Reven Operat Explo Net Taxat Deprec Net
ues ing ratio finan ion iation earnin
expens n ce (expe and gs/
es expen costs nse) deplet (loss)
ses / ion
recov
ery
US$m US$m US$m US$m US$m US$m US$m
Kazakhstan
Akbastau 8.2 (1.7) - (0.6) 0.4 (6.4) 0.2
Mine
Akdala 4.5 (0.9) - (0.4) (0.7) (0.8) 2.3
Mine
South 60.6 (15.3) - (0.7) (6.3) (9.9) 28.9
Inkai Mine
Karatau 23.2 (3.6) - (0.9) (2.9) (7.7) 8.6
Mine
Zarechnoye 5.4 (1.8) - (0.9) 0.1 (2.6) 0.7
Mine
Kharasan - - - (0.3) - - 0.7
Project
United
States
Developmen - - - - - - -
t projects
Exploratio - - (0.9) - 1.8 - 0.9
n projects
Convention - - - - - - (0.3)
al mining
projects
Australia
Honeymoon - - (0.3) - - - (0.2)
Project
Corporate - - - (5.9) - - (27.8)
and other
101.9 (23.3) (1.2) (9.7) (7.6) (27.4) 14.0
For the period ended March 31, 2010:
Reven Operat Explo Net Taxati Deprec Net
ues ing ratio finan on iation earnin
expens n ce (expen and gs/
es expen costs se) / deplet (loss)
ses recove ion
ry
US$m US$m US$m US$m US$m US$m US$m
Kazakhstan
Akbastau - - - - - - -
Mine
Akdala 8.8 (2.8) - (0.1) (0.5) (2.0) 3.1
Mine
South 21.2 (9.6) - (0.1) (0.7) (5.7) 4.7
Inkai Mine
Karatau 5.5 (1.6) - (1.4) (0.6) (4.1) (1.6)
Mine
Zarechnoye - - - - - - -
Mine
Kharasan - - - - - - 0.4
Project
United
States
Developmen - - - - 1.3 - 1.3
t projects
Exploratio - - (0.7) - - - (0.7)
n projects
Convention - - - - - - (0.3)
al mining
projects
Australia
Honeymoon - - (0.1) - - - -
Project
Corporate - - (0.1) (8.2) (0.1) - (8.3)
and other
35.5 (14.0) (0.9) (9.8) (0.6) (11.8) (1.4)
As at March 31, 2011:
Mineral
interest
plant Total Total
and Deferr
ed tax
equipmen asset liabil liabil Additi
t s ities ities ons
US$m US$m US$m US$m US$m
Kazakhstan
Akbastau Mine 744.2 767.6 117.1 158.8 1.5
Akdala Mine 134.2 181.0 19.6 27.0 0.8
South Inkai Mine 397.4 436.7 48.0 64.8 3.6
Karatau Mine 498.8 503.8 89.8 123.3 5.2
Zarechnoye Mine 252.3 275.9 35.2 98.9 3.1
Kharasan Project 140.5 168.5 11.6 81.1 5.5
United States
Development 120.7 142.7 - 5.9 7.5
projects
Exploration 34.6 35.5 4.9 4.9 -
projects
Conventional 15.6 23.8 5.0 10.1 -
mining projects
Australia
Honeymoon 16.6 26.0 - 7.5 3.9
Project
Corporate and 9.1 429.2 - 446.9 0.1
other
2,364.0 2,990 331.2 1,029. 31.2
.7 2
As at December 31, 2010:
Mineral
interest
plant and Total Deferre Total
d tax
equipment assets liabili liabilit Additi
ties ies ons
US$m US$m US$m US$m US$m
Kazakhstan
Akbastau Mine 737.5 757.5 117.0 155.2 -
Akdala Mine 135.9 182.0 20.0 26.6 3.3
South Inkai Mine 396.0 462.7 49.0 60.3 22.0
Karatau Mine 498.3 511.4 89.7 144.6 24.2
Zarechnoye Mine 249.6 271.1 35.4 97.9 -
Kharasan Project 136.9 155.0 11.6 87.0 17.2
United States
Development 113.0 135.0 - 6.4 27.4
projects
Exploration 34.6 35.5 6.3 6.7 -
projects
Conventional 15.6 23.8 5.0 10.0 -
mining projects
Australia
Honeymoon 12.6 23.2 - 8.6 33.7
Project
Corporate and 9.9 400.9 - 424.6 0.8
other
2,339.9 2,958.1 334.0 1,027.9 128.6
As at January 1, 2010:
Mineral
interest
plant and Total Deferred Total
tax
equipment assets liabilities Liabilities
US$m US$m US$m US$m
Kazakhstan
Akbastau Mine - - - -
Akdala Mine 150.4 183.9 18.2 24.0
South Inkai Mine 406.0 448.3 37.7 49.0
Karatau Mine 511.7 532.7 74.6 174.6
Zarechnoye Mine - - - -
Kharasan Project 127.0 135.9 7.9 62.1
United States
Development 29.1 29.6 - 0.2
projects
Exploration 33.1 33.9 - -
projects
Conventional 15.7 23.1 - 4.8
mining projects
Australia
Honeymoon Project 15.3 21.9 - 3.3
Corporate and 16.7 293.8 - 364.7
other
1,305.0 1,703.1 138.4 682.7
20 CONTINGENT LIABILITIES
Betpak Dala is disputing a tax assessment of approximately $23 million
in respect of the 2004 to 2008 taxation years, which primarily relates
to excess profit tax. Excess profit tax is not applicable to the
Corporation`s operations in Kazakhstan following the January 1, 2009
amendments to Kazakhstan`s tax code. Betpak Dala`s appeals against the
tax assessment have so far been unsuccessful and Betpak Dala intends to
apply to the Kazakh Supreme Court for leave to appeal the lower courts`
decisions. Betpak Dala paid $18 million of the disputed amount, to
ensure that there is no interruption in their business. Following
consultation with external legal counsel, the Corporation assessed there
to be a high probability to successfully recover payments made in
respect of the assessment. Accordingly, the Corporation has not
recognised the income tax expense, but recorded the payment in trade and
other receivables that the Corporation expects to recover against future
tax assessments.
21 FIRST TIME ADOPTION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS
The Canadian Accounting Standards Board has mandated the adoption of
IFRS effective for interim and annual financial statements relating to
fiscal years beginning on or after January 1, 2011 for Canadian publicly
accountable profit-orientated enterprises. The date of transition is
January 1, 2010 and as a result the 2010 comparative information has
been adjusted to conform with IFRS.
Under IFRS 1: First time adoption of financial reporting standards, IFRS
are applied retrospectively at the transition balance sheet with all
adjustments to assets and liabilities as stated under Canadian generally
accepted accounting principles recorded to retained earnings unless
certain exemptions are applied. The primary exemptions applied by the
Corporation are:
Fair value as deemed cost
IFRS 1 allows the Corporation to initially measure an item of property,
plant and equipment and investment property upon transition to IFRS at
fair value as deemed cost (or under certain circumstances using a
previous GAAP revaluation) as opposed to full retroactive application of
the cost model under IFRS. Under this option, fair value as deemed cost
will become the new cost amount for qualifying assets at transition.
The Corporation has elected to use the fair value as deemed cost for
selected properties. Applying the IFRS 1 elections for fair value as
deemed cost to certain long lived assets will limit the IFRS requirement
to reverse impairments previously recognized.
Business combinations
IFRS 1 generally provides for the business combinations standard to be
applied either retrospectively or prospectively from the date of
transition to IFRS (or to restate all business combinations after a
selected date). Retrospective application would require an entity to
restate all prior transactions that meet the definition of a business
under IFRS. Prospective application requires that the first-time adopter
shall recognize at the previous carrying amount all its assets and
liabilities at the date of transition to IFRS`s that were acquired or
assumed in past business combinations, other than certain assets and
liabilities as defined by IFRS 1.
The Corporation has elected to apply the business combination standard
prospectively with adjustments as necessary, and have to recognize
contingent liabilities and payments not previously recognized that arose
from past business combinations. Contingent payments of a cash nature
are recognized as liabilities and payments that are equity in nature are
recognized in equity as part of reserves.
Cumulative translation differences
An entity may elect to deem the cumulative translation differences that
resulted from the translation of its foreign operations to the reporting
currency to be zero at the transition date. This will result in the
exclusion of translation differences that were recorded in accumulated
other comprehensive income arose prior to the transition date and from
gains or losses on a subsequent disposal of a foreign operation.
The Corporation has elected to reset the cumulative translation
differences to zero on transition date.
Borrowing costs
On adoption, an entity may designate any date on or before January 1,
2010 to commence capitalization of borrowing costs relating to all
qualifying development projects commencing after such date.
The Corporation has elected to implement a policy for capitalization of
borrowing costs on January 1, 2010.
IFRS 1 also outlines specific guidance that a first-time adopter must
adhere to under certain circumstances. The Corporation has applied the
following guidelines to its opening balance sheet dated January 1, 2010:
Assets and liabilities of subsidiaries and joint ventures
In accordance with IFRS 1, if a parent company adopts IFRS subsequent to
its subsidiary or joint venture adopting IFRS, the assets and
liabilities of the subsidiary or joint venture are to be included in the
consolidated financial statements at the same carrying amounts as in the
financial statements of the subsidiary or joint venture. The Corporation
has subsidiaries and joint ventures that have already adopted IFRS.
Estimates
In accordance with IFRS 1, an entity`s estimate under IFRS at the date
of transition to IFRS must be consistent with estimates made for the
same date under previous GAAP, unless there is objective evidence that
those estimates were erroneous. The Corporation applied estimates that
are consistent with the estimates made for its Canadian GAAP reporting.
Balance sheet reconciliation - January 1, 2010
Canadia IFRS Classifica IFRS
n GAAP adjustment tion
adjustment
s
Note US$m US$m US$m US$m
s
ASSETS
Current assets
Cash, cash equivalents 148.5 - - 148.5
and restricted cash
Trade and other 42.4 - - 42.4
receivables (Accounts
and other
receivables)1
Inventories c 71.6 (2.8) - 68.8
Other assets 24.5 - (1.1) 23.4
287.0 (2.8) (1.1) 283.1
Non-current assets
Mineral interests, a (312.1) 1,305.0
property, plant and 1,748.3 -
equipment
c (133.0) -
d 1.8
Loans to joint 29.3 - - 29.3
ventures
Other assets 33.1 - 52.6 85.7
Assets held for sale 51.5 - (51.5) -
(443.3) 1.1 1,420.0
1,862.2
Total assets (446.1) - 1,703.1
2,149.2
LIABILITIES
Current liabilities
Trade and other g 65.9 - (20.2) 45.7
payables (Accounts and
other payables)1
Current tax payable 1.6 - - 1.6
(Income tax payable)1
Current portion of 5.0 - (5.0) -
joint venture debt
Interest bearing 63.6 - 5.0 68.6
liabilities (Current
portion of long term
debt)1
Provisions - - 20.2 20.2
Other financial g 132.1 - - 132.1
liabilities
268.2 - - 268.2
Non-current
liabilities
Interest bearing g - - 47.6 47.6
liabilities (Long term
debt)1
Joint venture debt 47.6 (47.6) -
Convertible debentures 140.9 - - 140.9
Asset retirement 16.1 (16.1) -
obligations
Provisions e - 56.7 17.8 74.5
Deferred tax a 180.7 (42.3) - 138.4
liabilities (Future
income tax)1
Other financial e,g 1.9 - 11.2 13.1
liabilities
Liabilities held for 12.9 - (12.9) -
sale
400.1 14.4 - 414.5
Equity 1,480.9 (460.5) - 1,020.4
Total equity and 2,149.2 (446.1) - 1,703.1
liabilities
(1) Terms used in brackets represent Canadian GAAP terminology
Balance sheet reconciliation - December 31, 2010
Canadia IFRS Classific IFRS
n GAAP adjustme ation
nt adjustmen
ts
Note US$m US$m US$m US$m
s
ASSETS
Current assets
Cash, cash equivalents 315.8 - 8.6 324.4
and restricted cash
Restricted cash 8.6 - (8.6) -
Trade and other 103.4 - - 103.4
receivables (Accounts and
other receivables)1
Inventories c 91.0 (1.0) - 90.0
Other assets 13.6 - (0.8) 12.8
532.4 (1.0) (0.8) 530.6
Non-current assets
Mineral interests, a 2,729.9 (365.0) (25.0) 2,339.9
property, plant and
equipment
Loans to joint ventures 28.7 - - 28.7
Other assets 78.0 (2.2) (16.9) 58.9
2,836.6 (367.2) (41.9) 2,427.5
Total assets 3,369.0 (368.2) (42.7) 2,958.1
LIABILITIES
Current liabilities
Trade and other payables 82.8 - (10.6) 72.2
(Accounts and other
payables)1
Current tax payable 13.8 - - 13.8
(Income tax payable)1
Interest bearing 60.1 - - 60.1
liabilities (Current
portion of long term
debt)1
Provisions - - - -
Current portion of 151.4 - - 151.4
convertible debentures
Other financial 25.4 - 10.6 36.0
liabilities
333.5 - - 333.5
Non-current liabilities
Interest bearing - - 86.2 86.2
liabilities (Long term
debt)1
Joint venture debt 86.2 - (86.2) -
Convertible debentures d 206.3 2.4 - 208.7
Asset retirement 26.2 - (26.2) -
obligations
Provisions e - 73.9 (8.8) 65.1
Deferred tax liabilities a 377.3 (38.3) (5.0) 334.0
(Future income tax)1
Other financial 3.1 - (2.7) 0.4
liabilities
699.1 38.0 (42.7) 694.4
Equity 2,336.4 (406.2) - 1,930.2
Total equity and 3,369.0 (368.2) (42.7) 2,958.1
liabilities
(1)Terms used in brackets represent Canadian GAAP terminology
Income statement reconciliation for the period ended March 31, 2010
Canadia IFRS Classifica IFRS
n GAAP adjustm tion
ent adjustment
s
Note US$m US$m US$m US$m
s
Revenues 35.5 35.5
Operating expenses c (14.1) 0.1 - (14.0)
Depreciation c (12.5) 0.7 - (11.8)
Earnings from mine 8.9 0.8 - 9.7
operations
General and administrative (9.4) - - (9.4)
Exploration expense (0.9) - - (0.9)
Impairment of mineral (1.2) - -
interests, plant and (1.2)
equipment
Care and maintenance (1.6) - - (1.6)
Operating (loss) / earnings (4.2) 0.8 - (3.4)
Financial income (Interest 1.0 - - 1.0
and other income)1
Financial expense (Interest e (9.1) (1.7) - (10.8)
and other income)1
Foreign exchange (loss) / c (7.5) 11.5 - 4.0
gain
Other d,e (1.1) 9.5 - 8.4
(Loss) / earnings before (20.9) 20.1 - (0.8)
income taxes
Current income tax expense (3.2) - 3.2 -
Deferred income tax recovery 2.6 - (2.6) -
Current and deferred income - - (0.6) (0.6)
tax expense
Net loss (21.5) 20.1 - (1.4)
Net loss per share
Basic and diluted (0.04) (0.00)
Weighted average number of
shares (millions)
Basic and diluted 587.3 587.3
(1) Terms used in brackets represent Canadian GAAP terminology
Cash flow statement reconciliation for period ended March 31, 2010
Canadia IFRS IFRS
n GAAP adjustme
nt
Note US$m US$m US$m
s
Net (loss) / earnings from (21.5) 20.1 (1.4)
continuing operations
Items not affecting cash:
- Fair value adjustment included in (3.4) 3.4 -
revenue
- Depreciation and depletion c 12.5 (0.7) 11.8
- Impairment of mineral interest 1.2 - 1.2
plant and equipment
- Stock option and restricted share 2.0 (2.0) -
expense
- Interest accrued e 6.4 4.4 10.8
- Income tax expense - 3.2 3.2
- Unrealized foreign exchange loss / c 6.4 (11.5) (5.1)
(gain)
- Future income tax recovery (2.6) - (2.6)
- Fair value adjustment on financial d,e - (10.4) (10.4)
liabilities
- Other 0.5 (2.8) (2.3)
Movement in non-cash working capital (1.3) 1.1 (0.2)
Operating cash flow before interest 0.2 4.8 5.0
and tax
- Tax paid - (4.2) (4.2)
- Interest expense paid - (0.6) (0.6)
Cash flow from operations 0.2 - 0.2
Acquisition of mineral interests, (21.0) - (21.0)
plant and equipment
Cash payments for other assets (17.4) - (17.4)
Acquisition of Christensen Ranch and (28.9) - (28.9)
Irigaray
Acquisition of available for sale (26.4) - (26.4)
securities
Karatau promissory note and (111.8) - (111.8)
contingent payment
Restricted cash (8.6) 8.6 -
Other (0.1) - (0.1)
Cash flows (used in) / from (214.2) 8.6 (205.6)
investing activities
Common shares issued, net of issue 0.1 - 0.1
costs
Net loans received by joint ventures 12.3 - 12.3
Debentures issued, net of issue 498.6 - 498.6
costs
Cash flows from financing activities 511.0 - 511.0
Effects of exchange rate changes on 5.9 - 5.9
cash and cash equivalents
Net increase in cash and cash 302.9 8.6 311.5
equivalents
Cash and cash equivalents at the 148.5 - 148.5
beginning of the period
Cash and cash equivalents at the end 451.4 8.6 460.0
of the period
(1)Terms used in brackets represent Canadian GAAP terminology
Reconciliation of comprehensive income/loss
Not Period Year
es ended ended
Mar 31, Dec 31,
2010 2010
US$m US$m
Comprehensive income under Canadian (21.0) (176.1)
GAAP
Income statement adjustments:
Exchange differences on translation c 11.5 12.7
Impairment of mineral interest, a - 65.7
property, plant and equipment
Fair value adjustment of financial d 4.9 (8.9)
liabilities
Fair value adjustment of embedded d 4.6 (26.5)
derivative
Unwinding of contingent liabilities e (1.7) (7.0)
Other 0.8 -
Other comprehensive income
adjustments:
Exchange differences on translation c 1.7 (6.8)
Total IFRS conversion comprehensive 21.8 29.2
income adjustments
Comprehensive income under IFRS 0.8 (146.9)
Reconciliation of shareholders` equity
Not Period Year
es ended ended
Mar 31, Dec 31, Jan 1,
2010 2010 2010
US$m US$M US$m
Under Canadian GAAP 1,631.7 2,336.4 1,480.9
IAS 36 - Impairment of assets a (269.8) (210.8) (269.8)
IAS 21 - Effects of Changes c (124.0) (122.1) (135.8)
in Foreign Exchange rates
IAS 39 - Financial d (39.4) (2.3) -
instruments
IFRS 1 - Business e (51.8) (71.0) (54.9)
combinations
Under IFRS 1,146.7 1,930.2
1,020.4
Explanation of differences between Canadian GAAP and IFRS giving rise to
the adjustment in the reconciliations:
(a) IAS 36 - Impairment of assets
Under Canadian GAAP, impairment is recognized for non-financial assets
based on estimated fair value when the undiscounted future cash flows
from an asset, or group of assets, is less than the carrying value.
Under IFRS, an entity is required to assess at the end of each reporting
period where there is any indication that an asset may be impaired. If
any such indication exists, the entity estimates the recoverable amount
of the asset, determined as the higher of the estimated fair value less
cost to sell or value in use. Value in use is the discounted present
value of estimated future cash flows expected to arise from the planned
use of an asset and from its disposal at the end of its useful life.
IFRS also requires the reversal of an impairment loss when the
recoverable amount is higher than the carrying value (by no more than
what the depreciated amount of the asset would have been had the
impairment not occurred) unlike Canadian GAAP, which does not permit
reversals.
The Corporation performed its analysis of impairment of its properties
on the transition date. The assessment resulted in IFRS opening balance
sheet impairments of $312.1 million on the Honeymoon Project ($62.8
million), the Kharasan Project ($48.9 million), the Corporation`s United
States Development projects in Wyoming ($174.7 million) and its
Conventional mining projects in the United States ($25.7 million). The
Honeymoon project was impaired under Canadian GAAP for the year ended
December 31, 2010, aligning the value with IFRS.
(b) IFRS 2 - Share based payments
Under Canadian GAAP, the Corporation elected to accrue compensation cost
as if all instruments granted were expected to vest and recognize the
effect of actual forfeitures as they occur.
Under IFRS, an entity is required to estimate the number of equity-
settled instruments that are expected to vest and then make adjustments
to the actual number that vest unless forfeitures are due to market-
based conditions. The application of a forfeiture rate on the options
resulted in a larger portion of the options being expensed on transition
date.
(c) IAS 21- The effects of changes in foreign exchange rates
Under Canadian GAAP, there are various indicators to be considered in
determining the appropriate functional currency of a foreign operation
and such indicators are similar to those under IFRS.
When the assessment of functional currency under IFRS provides mixed
indicators and the functional currency is not obvious, priority should
be given to certain indicators.
As the Corporation has interests in entities that prepare stand alone
IFRS financial statements, the functional currency used in such
financial statements needs to be consistent with the functional currency
used in the group financial statements. The Corporation has identified
certain entities where the functional currency changed to the local
currency on transition to IFRS and this resulted in non-monetary assets
and liabilities being translated to the reporting currency using the
closing rate on balance sheet date, compared to the historical rate.
(d) IAS 39 - Financial instruments
Under Canadian GAAP, embedded derivative accounting is not required for
a cash conversion option included as a feature of a convertible
debenture, as the cash conversion feature is regarded as a settlement
feature of the instrument.
Under IFRS, a cash conversion option included as a feature of a
convertible debenture meets the definition of an embedded derivative and
is required to be separated and accounted for as a derivative
instrument.
The Corporation recognized the conversion option of the 2010 Debentures
as a liability carried at fair value through profit and loss. The
adjustment had no effect on the opening balance sheet as the convertible
debentures were issued during 2010. The comparative 2010 position has
been adjusted.
(e) IFRS 1 - Business combinations election
The Corporation has elected to apply the business combination standard
prospectively with adjustments as necessary, and have to recognize
contingent liabilities and payments not previously recognized that arose
from past business combinations. Contingent payments of a cash nature
are recognized as liabilities and payments that are equity in nature is
recognized in equity as part of reserves.
(f) IFRS 1 - Cumulative translation losses election
The Corporation has elected to reset the cumulative translation losses
to zero on transition date.
(g) Reclassifications
The Corporation has reclassified certain balances on its balance sheet
and cash flow statement to conform with its adjusted note disclosures
resulting from the transition.
Sponsor
Nedbank Capital
Date: 11/05/2011 13:00:02 Produced by the JSE SENS Department.
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