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EPS
EPS
EPS - Eastern Platinum Limited - Condensed consolidated interim financial
statements of Eastern Platinum Limited March 31, 2011 (Unaudited)
EASTERN PLATINUM LIMITED
(Incorporated in Canada)
(Canadian Registration number BC0722783)
(South African Registration number 2007/006318/10)
Share Code TSX: ELR ISIN: CA 2768551038
Share Code AIM: ELR ISIN: CA 2768551038
Share Code JSE: EPS ISIN: CA 2768551038
Condensed consolidated interim financial statements of Eastern Platinum
Limited March 31, 2011 (Unaudited)
Condensed consolidated interim income statements
(Expressed in thousands of U.S. dollars, except per share amounts - unaudited)
Three months ended
March 31, March 31,
Note 2011 2010
Revenue $ 35,702 $ 34,699
Cost of operations
Production costs 29,290 25,703
Depletion and depreciation 8 5,119 5,315
34,409 31,018
Mine operating earnings 1,293 3,681
Expenses
General and administrative 3,095 3,196
Share-based payments 15 8,223 1,739
11,318 4,935
Operating loss (10,025) (1,254)
Other income (expense)
Interest income 1,509 372
Finance costs 17 (522) (370)
Foreign exchange gain 1,564 268
Loss before income taxes (7,474) (984)
Deferred income tax recovery 122 548
Net loss for the period $ (7,352) $ (436)
Attributable to
Non-controlling interest 16 $ (1,719) $ (1,260)
Equity shareholders of the Company (5,633) 824
Net loss for the period $ (7,352) $ (436)
(Loss) earnings per share
Basic 18 $ (0.01) $ 0.00
Diluted 18 $ (0.01) $ 0.00
Weighted average number of common
shares
outstanding in thousands
Basic 18 908,015 681,200
Diluted 18 908,015 693,830
Condensed consolidated interim statements of comprehensive (loss) income
(Expressed in thousands of U.S. dollars - unaudited)
Three months ended
March 31, March 31,
2011 2010
Net loss for the period $ (7,352) $ ( 436)
Other comprehensive income
Exchange differences on translating
foreign operations (1,729) 9,879
Exchange differences on translating
non-controlling interest (192) 97
Comprehensive (loss) income for the period$ (9,273) $ 9,540
Attributable to
Non-controlling interest (1,911) (1,163)
Equity shareholders of the Company (7,362) 10,703
Comprehensive (loss) income for the period$ (9,273) $ 9,540
Condensed consolidated interim statements of financial position
as at March 31, 2011 and December 31, 2010
(Expressed in thousands of U.S. dollars - unaudited)
March 31, December 31,
Note 2011 2010
Assets
Current assets
5
Cash and cash equivalents $ 95,846 $ 107,846
Short-term investments 253,873 242,446
Trade and other receivables 6 34,221 33,787
Inventories 7 8,656 8,832
392,596 392,911
Non-current assets
Property, plant and equipment 8 715,365 715,976
Refining contract 9 13,507 14,265
Other assets 10 4,498 3,823
$ 1,125,966 $ 1,126,975
Liabilities
Current liabilities
Accounts payable and accrued
liabilities 11 $ 29,055 $ 27,009
Finance leases 12 3,185 3,211
32,240 30,220
Non-current liabilities
Provision for environmental
rehabilitation 13 8,897 8,934
Deferred tax liabilities 45,049 46,642
86,186 85,796
Equity
Issued capital 15 1,219,950 1,219,869
Treasury shares 15(e) (334) -
Equity-settled employee benefits
reserve 41,517 33,390
Currency translation adjustment 15,727 17,456
Deficit (242,397) (236,764)
Capital and reserves attributable
to
equity shareholders of the Company 1,034,463 1,033,951
Non-controlling interest 16 5,317 7,228
1,039,780 1,041,179
$ 1,125,966 $ 1,126,975
Approved and authorized for issue by the Board on May 9, 2011.
"David Cohen" "Robert Gayton"
David Cohen, Director Robert Gayton, Director
Condensed consolidated interim statements of changes in equity
(Expressed in thousands of U.S. dollars, except number of shares - unaudited)
Issued Treasury Equity- Currency
capital shares settled translation
employee adjustment
benefits
reserve
December 31, 2009$ 890,150 $ - $ 32,336 $ (52,899)
Stock options
exercised 120 - (77) -
Share-based
payments - - 1,739 -
Net profit - - - -
Currency
translation
adjustment - - - 9,879
March 31, 2010 $ 890,270 $ - $ 33,998 $ (43,020)
Public offering 345,391 - - -
Share issuance
costs (16,501) - - -
Stock options
exercised 709 - (321) -
Share-based
payments - - (287) -
Net profit - - - -
Currency
translation
adjustment - - - 60,476
December 31, 2010 $ 1,219,869 $ - $ 33,390 $ 17,456
Stock options
exercised 81 - (81) -
Share-based
payments - - 8,186 -
Treasury shares - (334) 22 -
Net loss - - - -
Currency
translation
adjustment - - - (1,729)
March 31, 2011 $ 1,219,950 $ (334) $ 41 ,517 $ 15,727
Deficit Capital and Non-controlling Equity
reserves interest
attributable to
equity
shareholders
of the Company
December
31, 2009 $ (250,116) $ 619,471 $ 10,041 $ 629,512
Stock
options
exercised - 43 - 43
Share-based
payments - 1,739 - 1,739
Net profit 824 824 (1,260) (436)
Currency
translation
adjustment - 9,879 97 9,976
March 31,
2010 $ (249,292) $ 631,956 $ 8,878 $ 640,834
Public
offering - 345,391 - 345,391
Share
issuance
costs - (16,501) - (16,501)
Stock
options
exercised - 388 - 388
Share-based
payments - (287) - (287)
Net profit 12,528 12,528 (2,315) 10,213
Currency
translation
adjustment - 60,476 665 61,141
December
31, 2010 $ (236,764) $ 1,033,951 $ 7,228 $ 1,041,179
Stock
options
exercised - - - -
Share-based
payments - 8,186 - 8,186
Treasury
shares - (312) - (312)
Net loss (5,633) (5,633) (1,719) (7,352)
Currency
translation
adjustment - (1,729) (192) (1,921)
March 31,
2011 $ (242,397) $ 1,034,463 $ 5,317 $ 1,039,780
Condensed consolidated interim statements of cash flows
(Expressed in thousands of U.S. dollars - unaudited)
Three months ended
March 31, March 31,
Note 2011 2010
Operating activities
Loss before income taxes $ (7,474) $ (984)
Adjustments to net loss for
non-cash items
Depletion and depreciation 8 5,119 5,315
Refining contract amortization 9 395 368
Share-based payments 15 8,223 1,739
Interest income 17 (1,509) (372)
Finance costs 522 370
Foreign exchange gain (1,564) (268)
Net changes in non-cash working
capital items
Trade and other receivables (317) (3,808)
Inventories (38) (758)
Accounts payable and accrued
liabilities 2,428 (2,269)
Cash generated from (utilized in)
operations 5,785 (667)
Adjustments to net loss for cash
items
Interest income received 650 348
Finance costs paid (193) (16)
Income taxes paid (283) -
Net operating cash flows 5,959 (335)
Investing activities
(Purchase) maturity of short-term
investments (5,071) 961
Purchase of other assets (691) (269)
Property, plant and equipment
expenditures (14,323) (4,295)
Net investing cash flows (20,085) (3,603)
Financing activities
Common shares issued for cash -
exercise
of stock options - 43
Payment of finance leases - (2)
Net financing cash flows - 41
Effect of exchange rate changes on
cash
and cash equivalents 2,126 18
Decrease in cash and cash
equivalents (12,000) (3,879)
Cash and cash equivalents,
beginning of period 107,846 7,249
Cash and cash equivalents, end of
period $ 95,846 $ 3,370
Notes to the condensed consolidated interim financial statements
(Expressed in thousands of U.S. dollars, except number of shares and per share
amounts - unaudited)
1. Nature of operations
Eastern Platinum Limited (the "Company") is a platinum group metal ("PGM")
producer engaged in the mining, exploration and development of PGM properties
located in various provinces in South Africa.
Eastern Platinum Limited is a publicly listed company incorporated in Canada
with limited liability under the legislation of the Province of British
Columbia. The Company`s shares are listed on the Toronto Stock Exchange,
Alternative Investment Market, and the Johannesburg Stock Exchange.
The head office, principal address and records office of the Company are
located at 1075 West Georgia Street, Suite 250, Vancouver, British Columbia,
Canada, V6E 3C9. The Company`s registered address is 1055 West Georgia Street,
Suite 1500, Vancouver, British Columbia, Canada, V6E 4N7.
2. Basis of preparation
These unaudited condensed consolidated interim financial statements, including
comparatives, have been prepared using accounting policies consistent with
International Financial Reporting Standards ("IFRS") and in accordance with
International Accounting Standard ("IAS") 34 Interim Financial Reporting.
The preparation of financial statements requires management to make judgments,
estimates and assumptions that affect the application of policies and reported
amounts of assets and liabilities, and revenue and expenses. The estimates and
associated assumptions are based on historical experience and various other
factors that are believed to be reasonable under the circumstances, the
results of which form the basis of making the judgments about carrying values
of assets and liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognized in the period in which the
estimate is revised if the revision affects only that period or in the period
of the revision and further periods if the review affects both current and
future periods.
Judgments made by management in the application of IFRS that have a
significant effect on the financial statements and estimates with a
significant risk of material adjustment in the current and following fiscal
years are discussed in Notes 4(v) and 4(w) of the Company`s audited
consolidated financial statements for the year ended December 31, 2010.
3. Application of new and revised International Financial Reporting
Standards
Effective January 1, 2011, the Company adopted new and revised International
Financial Reporting Standards ("IFRSs") that were issued by the International
Accounting Standards Board ("IASB"). The application of these new and revised
IFRSs has not had any material impact on the amounts reported for the current
and prior years but may affect the accounting for future transactions or
arrangements.
(a) Amendment to IAS 32 Financial Instruments: Presentation
Rights, options or warrants to acquire a fixed number of the Company`s equity
instruments for a fixed amount of any currency will be allowed to be
classified as equity instruments so long as the Company offers the rights,
options or warrants pro rata to all of the Company`s existing owners of the
same class of the Company`s non-derivative equity instruments.
(b) Amendments to IFRS 3 Business Combinations
Clarification that the contingent consideration arising in a business
combination previously accounted for in accordance with IFRS 3 that is
outstanding at the adoption date continues to be accounted for in accordance
with IFRS 3.
Limiting the accounting policy choice to measure non-controlling interests
upon initial recognition at fair value or at the non-controlling interest`s
proportionate share of the acquiree`s identifiable net assets to instruments
that give rise to a present ownership interest and that currently entitle the
holder to a share of net assets in the event of liquidation.
Expansion of the guidance with regards to the attribution of the market-based
measure of an acquirer`s share-based payment awards issued in exchange for
acquiree awards.
(c) Amendments to IAS 27 Consolidated and Separate Financial Statements
Clarification that the amendments to IAS 21 The Effects of Changes in Foreign
Exchange Rates, IAS 28 Investments in Associates, and IAS 31 Interests in
Joint Ventures resulting from IAS 27 should be applied prospectively, except
for amendments resulting from renumbering.
(d) Amendments to IFRS 7 Financial Instruments: Disclosures
Amendment to disclosure requirements, specifically, ensuring qualitative
disclosures are made in close proximity to quantitative disclosures in order
to better enable financial statement users to evaluate an entity`s exposure to
risks arising from financial instruments.
(e) Amendments to IAS 1 Presentation of Financial Statements
Clarification that the breakdown of changes in equity resulting from
transactions recognized in other comprehensive income is required to be
presented in the statement of changes in equity or in the notes to the
financial statements.
(f) Amendments to IAS 24 Related Party Disclosures
Amendment of the definition for related parties.
(g) Amendments to IAS 34 Interim Financial Reporting
Addition of further examples of events or transactions that require disclosure
and removal of references to materiality when discussing other minimum
disclosures.
4. Summary of significant accounting policies
The preparation of financial data is based on accounting principles and
practices consistent with those used in the preparation of the audited
consolidated financial statements as at December 31, 2010. The accompanying
unaudited condensed consolidated interim financial statements should be read
in conjunction with the Company`s audited consolidated financial statements
for the year ended December 31, 2010.
5. Cash and cash equivalents
Cash and cash equivalents are comprised of:
March 31, December 31,
2011 2010
Cash in bank $ 94,641 $ 102,654
Short-term money market instruments 1,205 5,192
$ 95,846 $ 107,846
6. Trade and other receivables
Trade and other receivables are comprised of the following:
March 31, December 31,
2011 2010
Trade receivables $ 28,486 $ 30, 142
Current tax receivable 1,410 1,283
Other receivables 4,534 2,556
Allowance for doubtful debts for
other receivables (209) ( 194)
$ 34,221 $ 33, 787
7. Inventories
March 31, December 31,
2011 2010
Consumables $ 6,438 $ 6,607
Ore and concentrate 818 477
Chrome inventory 1,400 1,748
$ 8,656 $ 8,832
Production costs for the three months ended March 31, 2011 was $29,290 (March
31, 2010 - $25,703). Production costs represent the cost of inventories sold
during the period. For the three months ended March 31, 2011 and 2010,
production costs did not include any amounts with regards to the write-down of
inventory to net realizable value or with regards to the reversal of write-
downs.
At March 31, 2011 and December 31, 2010, no inventories have been pledged as
security for liabilities.
8. Property, plant and equipment
Mineral Mineral
Plant and Plant and properties properties
equipment equipment being not being
owned leased depleted depleted
Cost
Balance as at
December 31,
2009 $ 426,223 $ 6,132 $ 136,100 $ 546,122
Assets acquired 32,444 - - 261
Foreign
exchange
movement 56,520 768 17,040 58,901
Balance as at
December 31,
2010 $ 515,187 $ 6,900 $ 153,140 $ 605,284
Assets acquired 14,308 - - 15
Foreign
exchange
movement (12,026) (168) (3,737) (7,464)
Balance as at
March 31, 2011 $ 517,469 $ 6,732 $ 149,403 $ 597,835
Accumulated
depreciation
and impairment
losses
Balance as at
December 31,
2009 $ 126,944 $ 3,691 $ 20,765 $ 342,322
Depreciation 15,452 1,244 5,676 -
Foreign
exchange
movement 17,574 598 3,224 42,862
Balance as at
December 31,
2010 $ 159,970 $ 5,533 $ 29,665 $ 385,184
Depreciation 3,561 324 1,197 -
Foreign
exchange
movement (3,764) (123) (679) (9,404)
Balance as at
March 31, 2011 $ 159,767 $ 5,734 $ 30,183 $ 375,780
Carrying amounts
At December 31,
2009 $ 299,279 $ 2,441 $ 115,335 $ 203,800
At December 31,
2010 $ 355,217 $ 1,367 $ 123,475 $ 220,100
At March 31,
2011 $ 357,702 $ 998 $ 119,220 $ 222,055
Residential Properties
properties and land
TOTAL
Cost
Balance as at December 31, 2009 $ 10,071 $ 6,978 $ 1,131,626
Assets acquired 286 - 32,991
Foreign exchange movement 1,275 874 135,378
Balance as at December 31, 2010 $ 11,632 $ 7,852 $ 1,299,995
Assets acquired - - 14,323
Foreign exchange movement (285) (193) (23,873)
Balance as at March 31, 2011 $ 11,347 $ 7,659 $ 1,290,445
Accumulated depreciation and
impairment
losses
Balance as at December 31, 2009 $ 2,296 $ 830 $ 496,848
Depreciation 135 - 22,507
Foreign exchange movement 302 104 64,664
Balance as at December 31, 2010 $ 2,733 $ 934 $ 584,019
Depreciation 37 - 5,119
Foreign exchange movement (65) (23) (14,058)
Balance as at March 31, 2011 $ 2,705 $ 911 $ 575,080
Carrying amounts
At December 31, 2009 $ 7,775 $ 6,148 $ 634,778
At December 31, 2010 $ 8,899 $ 6,918 $ 715,976
At March 31, 2011 $ 8,642 $ 6,748 $ 715,365
8. Property, plant and equipment
Kennedy`s
Crocodile Vale Project Spitzkop PGM
River Mine (a) (b) Project (c)
Cost
Balance as at December
31, 2009 $ 585,376 $ 400,017 $ 118,994
Assets acquired 32,728 - 47
Foreign exchange
movement 76,470 50,082 7,316
Balance as at December
31, 2010 $ 694,574 $ 450,099 $ 126,357
Assets acquired 14,306 - -
Foreign exchange
movement (16,413) (10,989) 2,794
Balance as at March 31,
2011 $ 692,467 $ 439,110 $ 129,151
Accumulated
depreciation and
impairment losses
Balance as at December
31, 2009 $ 154,417 $ 342,322 $ -
Depreciation 22,500 - -
Foreign exchange
movement 21,796 42,861 -
Balance as at December
31, 2010 $ 198,713 $ 385,183 $ -
Depreciation 5,119 - -
Foreign exchange
movement (4,657) (9,404) -
Balance as at March 31,
2011 $ 199,175 $ 375,779 $ -
Carrying amounts
At December 31, 2009 $ 430,959 $ 57,695 $ 118,994
At December 31, 2010 $ 495,861 $ 64,916 $ 126,357
At March 31, 2011 $ 493,292 $ 63,331 $ 129,151
Mareesburg Other property
Project plant and
(c) equipment TOTAL
Cost
Balance as at
December 31, 2009 $ 27,111 $ 128 $ 1,131,626
Assets acquired 214 2 32,991
Foreign exchange
movement 1,503 7 135,378
Balance as at
December 31, 2010 $ 28,828 $ 137 $ 1,299,995
Assets acquired 15 2 14,323
Foreign exchange
movement 731 4 (23,873)
Balance as at March
31, 2011 $ 29,574 $ 143 $ 1,290,445
Accumulated
depreciation and
impairment losses
Balance as at
December 31, 2009 $ - $ 109 $ 496,848
Depreciation - 7 22,507
Foreign exchange
movement 1 6 64,664
Balance as at
December 31, 2010 $ 1 $ 122 $ 584,019
Depreciation - - 5,119
Foreign exchange
movement - 3 (14,058)
Balance as at March
31, 2011 $ 1 $ 125 $ 575,080
Carrying amounts
At December 31, 2009 $ 27,111 $ 19 $ 634,778
At December 31, 2010 $ 28,827 $ 15 $ 715,976
At March 31, 2011 $ 29,573 $ 18 $ 715,365
8. Property, plant and equipment (continued)
(a) Crocodile River Mine ("CRM")
The Company holds directly and indirectly 87.5% of CRM, which is located on
the eastern portion of the western limb of the Bushveld Complex. The
Maroelabult and Zandfontein sections are currently in production. Development
of the Crocette section recommenced on April 4, 2010.
(b) Kennedy`s Vale Project ("KV")
The Company holds directly and indirectly 87.5% of KV, which is located on the
eastern limb of the Bushveld Complex, near Steelpoort in the Province of
Mpumalanga. It comprises PGM mineral rights on five farms in the Steelpoort
Valley. The development of this project was on hold as at March 31, 2011.
(c) Spitzkop PGM Project and Mareesburg Project
The Company holds directly and indirectly a 93.4% interest in the Spitzkop PGM
Project and a 75.5% interest in the Mareesburg Project. The Company currently
acts as the operator of both the Mareesburg Platinum Project and Spitzkop PGM
Project, both located on the east ern limb of the Bushveld Complex. Planning
for the development of these projects commenced in late 2010.
9. Refining Contract
During the year ended June 30, 2006, the Company acquired a 69% interest in
Barplats and assigned a portion of the purchase price to the off-take contract
governing the sales of Barplats` PGM concentrate production. The initial value
of the contract was $17,939. During the year ended June 30, 2007, the Company
acquired an additional 5% interest in Barplats resulting in an additional
allocation to the contract of $4,802 for a total aggregate value of $22,741.
During the year ended December 31, 2008, the Company acquired an additional
2.47% interest in Barplats. The acquisition did not affect the aggregate value
of the contract. The value of the contract is amortized over the remaining
term of the contract which is 8.25 years as at March 31, 2011.
Cost
Balance as at December 31, 2009 $ 21,122
Foreign exchange movement 2,645
Balance as at December 31, 2010 $ 23,767
Foreign exchange movement (580)
Balance as at March 31, 2011 $ 23,187
Accumulated amortization
Balance as at December 31, 2009 $ 6,953
Amortization 1,513
Foreign exchange movement 1,036
Balance as at December 31, 2010 $ 9,502
Amortization 395
Foreign exchange movement (217)
Balance as at March 31, 2011 $ 9,680
Carrying amounts
At December 31, 2009 $ 14,169
At December 31, 2010 $ 14,265
At March 31, 2011 $ 13,507
10. Other assets
Other assets consists of a money market fund investment that is classified as
available-for- sale and serves as security for a guarantee issued to the
Department of Mineral Resources of South Africa in respect of the
environmental rehabilitation liability (Note 13). Changes to other assets for
the three months ended March 31, 2011 are as follows:
Balance, December 31, 2009 $ 2,282
Additional investment $ 955
Service fees (8)
Interest income 185
Foreign exchange movement 409
Balance, December 31, 2010 $ 3,823
Additional investment 691
Service fees (2)
Interest income 52
Foreign exchange movement (66)
Balance, March 31, 2011 $ 4,498
11. Accounts payable and accrued liabilities
March 31, December 31,
2011 2010
Trade payables $ 15,786 $ 10,604
Accrued liabilities 7,877 10,240
Other 5,392 6,165
$ 29,055 $ 27,009
The average credit period of purchases is 1 month. The Company has financial
risk management policies in place to ensure that all payables are paid within
the pre-agreed credit terms.
12. Finance leases
Finance leases relate to mining vehicles with lease terms of 5 years payable
half yearly in advance. The Company has the option to purchase the vehicles
for a nominal amount at the conclusion of the lease agreements. The Company`s
obligations under finance leases are secured by the lessor`s title to the
leased assets. Interest is calculated at the South African prime rate plus 1%.
At March 31, 2011, the finance leases are repayable in 1 semiannual
installment (December 31, 2010 - 1) of $652 (December 31, 2010 - $667) and a
top-up payment of $2,670 in December 2011. The fair value of the finance lease
liabilities approximated carrying value.
(a) Minimum lease payments
March 31, December 31,
2011 2010
No later than 1 year $ 3,322 $ 3, 405
Less: future finance charges (137) ( 194)
Present value of minimum
lease payments $ 3,185 $ 3, 211
March 31, December 31,
2011 2010
No later than 1 year $ 3,185 $ 3, 211
13. Provision for environmental rehabilitation
Although the ultimate amount of the environmental rehabilitation provision is
uncertain, the fair value of these obligations is based on information
currently available, including closure plans and applicable regulations.
Significant closure activities include land rehabilitation, demolition of
buildings and mine facilities and other costs.
The provision for environmental rehabilitation at March 31, 2011 is
approximately ZAR 60.1 million ($8,897). The provision was determined using an
inflation rate of 5.49% (December 31, 2010 - 5.49%) and an estimated life of
mine of 20 years for Zandfontein (December 31, 2010 - 20 years), 11 years for
Maroelabult (December 31, 2010 - 11 years), 14 years for Crocette (December
31, 2010 - 14 years), 1 year for Kennedy`s Vale (December 31, 2010 - 1 year)
and 22 years for Spitzkop (December 31, 2010 - 22 years). A discount rate of
8.29% was used (December 31, 2010 - 8.29%). A guarantee of $4,498 (December
31, 2010 - $3,823) has been issued to the Department of Mineral Resources
(Note 10). The guarantee will be utilized to cover expenses incurred to
rehabilitate the mining area upon closure of the mine. The undiscounted value
of this liability is approximately ZAR 215.4 million ($31,896).
Changes to the environmental rehabilitation provision are as follows:
Balance, December 31, 2009 $ 8 ,1 52
Revision in estimates (961)
Interest expense (Note 17) 694
Foreign exchange movement 1,049
Balance, December 31, 2010 $ 8,934
Revision in estimates -
Interest expense (Note 17) 174
Foreign exchange movement (211)
Balance, March 31, 2011 $ 8,897
14. Commitments
The Company has committed to capital expenditures on projects of approximately
ZAR 155.7 million ($23,065) as at March 31, 2011 (December 31, 2010 - ZAR 86
million, $13,056).
15. Issued capital
(a) Authorized
- Unlimited number of preferred redeemable, voting, non-participating shares
without nominal or par value,
- Unlimited number of common shares with no par value.
15. Issued capital
(b) Issued and outstanding
Changes to the number of shares issued and outstanding are as follows:
March 31, 2011 December 31, 2010
Number of Number of
shares shares
Balance outstanding,
beginning of period 907,589,567 680,893,325
Public offering - 224,250,000
Shares issued upon
option exercise 482,358 2,446,242
Balance outstanding,
end of period 908,071,925 907,589,567
(c) December 30, 2010 Public Offering
On December 30, 2010, the Company completed a public offering (the "Public
Offering"). The Public Offering consisted of 224,250,000 common shares, of
which 195,361,476 common shares were sold at a price of Cdn$1.55 and
28,888,524 common shares were sold at a price of GBP0.9568. Share issue costs
of Cdn$16,501 were incurred.
(d) Share options
The Company has an incentive plan (the "2008 Plan"), approved by the Company`s
shareholders at its annual general meeting held on June 4, 2008, under which
options to purchase common shares may be granted to its directors, officers,
employees and others at the discretion of the Board of Directors. Under the
terms of the 2008 Plan:
- 75 million common shares are reserved for issuance upon the exercise of
options.
- All outstanding options at June 4, 2008 granted under the Company`s
previous plan (the "2005 Plan") will continue to exist under the 2008 plan
provided that the fundamental terms governing such options will be deemed
to be those under the 2005 Plan.
- Each option granted shall be for a term not exceeding five years from the
date of being granted and the vesting period is determined based on the
discretion of the Board of Directors. Vesting is dependent on continued
employment with the Company.
- The option exercise price is set at the date of the grant and cannot be
less than the closing market price of the Company`s common shares on the
Toronto Stock Exchange on the day immediately preceding the day of the
grant of the option.
- The 2008 Plan includes share appreciation rights providing for an
optionee to elect to exercise options and to receive an amount in common
shares equal to the difference between fair market value at the time of
exercise and the exercise price for the options exercised.
(i) Movements in share options during the period
The changes in share options during the three months ended March 31, 2011 and
year ended December 31, 2010 were as follows:
March 31, 2011 December 31, 2010
Weighted Weighted
average average
Number of exercise Number of exercise
options price options price
Cdn$ Cdn$
Balance outstanding,
beginning of period 57,976,836 1.52 59,575,834 1.48
Options granted 9,875,000 1.55 2,231,000 1.30
Options exercised (590,000) 0.32 (2,794,995) 0.33
Options forfeited (30,000) 0.32 (1,035,003) 1.82
Balance outstanding,
end of period 67,231,836 1.54 57,976,836 1.52
590,000 share options were exercised during the three months ended March 31,
2011. The weighted average closing share price at the date of exercise was
Cdn$1.75.
(ii) Fair value of share options granted in the period
The fair value of each option granted is estimated at the time of the grant
using the Black-Scholes option pricing model with weighted average assumptions
for grants as follows:
2011
March 25
Exercise price Cdn$1.55
Closing market price on day
preceding date of grant Cdn$1.38
Grant date share price Cdn$1.39
Risk-free interest rate 2.69%
Expected life 5
Annualized volatility 73%
Dividend rate 0%
Grant date fair value Cdn$0.82
2010
January 18
Exercise price Cdn$1.30
Closing market price on day
preceding date of grant Cdn$1.30
Grant date share price Cdn$1.42
Risk-free interest rate 1.73%
Expected life 3 years
Annualized volatility 83%
Dividend rate 0%
Grant date fair value Cdn$0.80
Exercise price for the March 25, 2011 option issuance is the December 30, 2010
public offering price. Exercise price for the January 18, 2010 option issuance
is the closing market price on the day preceding the date the options were
granted, as defined by the 2008 Plan.
Grant date share price is the closing market price on the day the options were
granted.
(iii) Share options outstanding at the end of the period
The following table summarizes information concerning outstanding and
exercisable options at March 31, 2011:
Remaining
Options Options Exercise Contractual
outstanding exercisable price Life (Years) Expiry date
Cdn$
6,725,000 6,725,000 1.70 0.15 May 24, 2011
250,000 250,000 1.70 0.66 November 27, 2011
19,987,500 19,987,500 1.82 0.94 March 7, 2012
13,963,334 13,963,334 0.32 2.72 December 18, 2013
10,000 10,000 0.32 2.87 February 11, 2014
400,000 400,000 0.52 3.25 June 30, 2014
95,002 45,000 0.76 3.59 November 3, 2014
2,226,000 2,226,000 1.30 3.81 January 18, 2015
9,875,000 9,875,000 1.55 4.99 March 25, 2016
13,070,000 13,070,000 2.31 6.52 October 5, 2017
460,000 460,000 3.38 6.90 February 20, 2018
170,000 170,000 3.38 6.99 March 27, 2018
67,231,836 67,181,834 3.08
The weighted average exercise price of options exercisable at March 31, 2011
is Cdn$1.54.
(e) Key skills retention plan
In 2010, the Company`s South African subsidiary, Barplats Investments Limited
("BIL"), implemented a key skills retention plan for its senior employees in
South Africa, in response to the growing skills shortage in the country. The
purpose of the plan is to retain key employees, attract new employees as the
need arises and remain competitive with other South African mining companies.
The plan operates through a trust ("the Trust") which purchases shares of the
Company on behalf of the employees. These shares then vest to the employees
over time.
During the 3 months ended March 31, 2011, the Trust purchased 198,563 shares
pursuant to the plan which resulted in a share-based payment expense of $37
and a share-based payment liability of $15.
16. Non-controlling interest
The non-controlling interests are comprised of the following:
Balance, December 31, 2009 $ 10,041
Non-controlling interests` share of loss in Barplats (866)
Non-controlling interests` share of interest on advances to
Gubevu (2,709)
Foreign exchange movement 762
Balance, December 31, 2010 $ 7,228
Non-controlling interests` share of loss in Barplats (1,056)
Non-controlling interests` share of interest on advances to
Gubevu (663)
Foreign exchange movement (192)
Balance, March 31, 2011 $ 5,317
17. Finance costs
March 31, March 31,
2011 2010
Interest on revenue advances $ 126 $ 119
Interest on finance leases 51 77
Interest on provision for environmental
rehabilitation 174 168
Interest on tax 171 -
Other interest - 6
$ 522 $ 370
18. Earnings per share
The weighted average number of ordinary shares for the purposes of diluted
earnings per share reconciles to the weighted average number of ordinary
shares used in the calculation of basic earnings per share as follows:
March 31, March 31,
2011 2010
(in thousands)
Weighted average number of ordinary shares
used in the calculation of basic earnings
per share 908,015 681,200
Shares deemed to be issued for no
consideration in respect of options - 12,630
Weighted average number of ordinary shares
used in the calculation of diluted earnings
per share 908,015 693,830
The loss used to calculate basic and diluted earnings per share for the three
months ended March 31, 2011 was $5,633 (March 31, 2010 - earnings of $824).
The following potential ordinary shares, outstanding at March 31, 2011, are
anti-dilutive and are therefore excluded from the weighted average number of
ordinary shares for the purposes of diluted earnings per share:
March 31, March 31,
2011 2010
(in thousands)
Options 40,663 41,073
19. Retirement benefit plans
The Barplats Provident Fund is an independent, defined contribution plan
administered by Liberty Life Limited in South Africa. The costs associated
with the defined contribution plan included in net profit were $1,023 (March
31, 2010 - $899). The total number of employees in the plan at March 31, 2011
was 1,854 (March 31, 2010 - 1,863).
20. Related party transactions
Balances and transactions between the Company and its subsidiaries have been
eliminated on consolidation and are not disclosed in this note. Details of the
transactions between the Company and other related parties are disclosed
below.
(a) Trading transactions
The Company`s related parties consist of companies owned by executive officers
and directors as follows:
Nature of transactions
Andrews PGM Consulting Consulting
Buccaneer Management Inc. Management
Jazz Financial Ltd. Management
Maluti Services Limited General and administrative
Xiste Consulting Ltd. Management
(a) Trading transactions
The Company incurred the following fees and expenses in the normal course of
operations in connection with companies owned by key management and directors.
Expenses have been measured at the exchange amount which is determined on a
cost recovery basis.
March 31, March 31,
Note 2011 2010
Consulting fees (i) $ 42 $ 29
General and administrative
expenses 18 20
Management fees 350 307
$ 410 $ 356
(i) The Company paid fees to a private company controlled by a director of
the Company for consulting services performed outside of his capacity
as a director.
Amounts due to related parties are unsecured, non-interest bearing and due on
demand. Accounts payable at March 31, 2011 included $13 (December 31, 2010 -
$1,089) which were due to private companies controlled by officers of the
Company.
(b) Compensation of key management personnel
The remuneration of directors and other members of key management personnel
during the three months ended March 31, 2011 and 2010 were as follows:
March 31, March 31,
Note 2011 2010
(i) $ 647 $ 548
Salaries and directors` fees
(ii) 7,996 1,627
Share-based payments
$ 8,643 $ 2,175
(i) Salaries and directors` fees include consulting and management fees
disclosed in Note 20(a).
(ii) Share-based payments are the fair value of options granted to key
management personnel.
(iii) Key management personnel were not paid post-employment benefits,
termination benefits, or other long-term benefits during the three
months ended March 31, 2011 and 2010.
21. Segmented information
(a) Operating segment - The Company`s operations are primarily directed
towards the acquisition, exploration and production of platinum group
metals in South Africa.
(b) Geographic segments - The Company`s revenues and expenses by
geographic areas for the three months ended March 31, 2011 and 2010
and assets by geographic areas as at March 31, 2011 and December 31,
2010 are as follows:
March 31, 2011
Crocodile Kennedy`s
River Mine Vale Spitzkop
Current assets $ 48,446 $ 387 $ 1,616
Property, plant
and equipment 493,292 63,331 129,151
Refining contract 13,507 - -
Other Assets 4,498 - -
$ 559,743 $ 63,718 $ 130,767
Property, plant and
equipment expenditures $ 14,306 $ - $ -
Revenue $ 35,702 $ - $ -
Production costs (29,290) - -
Depletion and depreciation (5,119) - -
General and administrative
expenses (1,472) (257) (69)
Share-based payment (247) - -
Interest income 395 - -
Finance costs (322) (200) -
Foreign exchange gain 491 - -
Profit (loss) before
income taxes 138 (457) (69)
Deferred income tax
recovery 122 - -
Net profit (loss) $ 260 $ (457) $ (69)
Total
South
Mareesburg Other Africa
Current assets $ 132 $ 882 $ 51,463
Property, plant
and equipment 29,573 - 715,347
Refining contract - - 13,507
Other Assets - - 4,498
$ 29,705 $ 882 $ 784,815
Property, plant and
equipment expenditures $ 15 $ - $ 14,321
Revenue $ - $ - $ 35,702
Production costs - - (29,290)
Depletion and depreciation - - (5,119)
General and administrative
expenses (29) (1) (1,828)
Share-based payment - - (247)
Interest income - - 395
Finance costs - - (522)
Foreign exchange gain - - 491
Profit (loss) before
income taxes (29) (1) (418)
Deferred income tax
recovery - - 122
Net profit (loss) $ (29) $ (1) $ (296)
Barbados
and BVI Canada TOTAL
Current assets $ 1,178 $ 339,955 $ 392,596
Property, plant
and equipment - 18 715,365
Refining contract - - 13,507
Other Assets - - 4,498
$ 1,178 $ 339,973 $ 1,125,966
Property, plant and
equipment expenditures $ - $ 2 $ 14,323
Revenue $ - $ - $ 35,702
Production costs - - (29,290)
Depletion and depreciation - - (5,119)
General and administrative
expenses (5) (1,262) (3,095)
Share-based payment - (7,976) (8,223)
Interest income - 1,114 1,509
Finance costs - - (522)
Foreign exchange gain - 1,073 1,564
Profit (loss) before
income taxes (5) (7,051) (7,474)
Deferred income tax
recovery - - 122
Net profit (loss) $ (5) $ (7,051) $ (7,352)
For the three months ended March 31, 2011 and 2010, substantially all of the
Company`s PGM production was sold to one customer.
March 31, 2010
Crocodile Kennedy`s
River Mine Vale Spitzkop Mareesburg
Property,
plant and
equipment
expenditures $ 4,261 $ - $ 2 $ 32
Revenue $ 34,699 $ - $ - $ -
Production
costs (25,703) - - -
Depreciation
and
amortization (5,315) - - -
General and
administrative
expenses (1,764) (328) - (1)
Share-based
payment (34) - - -
Interest
income 337 - - 2
Finance costs (182) (184) (4) -
Foreign
exchange
(loss) gain (9) - - -
Profit
(loss)
before
income taxes 2,029 (512) (4) 1
Deferred
income tax
recovery 548 - - -
Net profit
(loss) $ 2,577 $ (512) $ (4) $ 1
Total
South
Other Africa Canada TOTAL
Property, plant
and
equipment
expenditures $ - $ 4,295 $ - $ 4,295
Revenue $ - $ 34,699 $ - $ 34,699
Production costs - (25,703) - (25,703)
Depreciation and
amortization - (5,315) - (5,315)
General and
administrative
expenses - (2,093) (1,103) (3,196)
Share-based
payment - (34) (1,705) (1,739)
Interest income - 339 33 372
Finance costs - (370) - (370)
Foreign exchange
(loss) gain - (9) 277 268
Profit (loss)
before income
taxes - 1,514 (2,498) (984)
Deferred income
tax recovery - 548 - 548
Net profit (loss) $ - $ 2,062 $ (2,498) $ (436)
December 31, 2010
Crocodile Kennedy`s
River Mine Vale Spitzkop Mareesburg
Current assets $ 45,787 $ 445 $ 1,669 $ 61
Property,
plant and
equipment 495,861 64,916 126,357 28,827
Refining
contract 14,265 - - -
Other Assets 3,823 - - -
$ 559,736 $ 65,361 $ 128,026 $ 28,888
Total South
Other Africa Canada TOTAL
Current assets $ 997 $ 48,959 $ 343,952 $ 392,911
Property, plant and
equipment - 715,961 15 715,976
Refining contract - 14,265 - 14,265
Other Assets - 3,823 - 3,823
$ 997 $ 783,008 $ 343,967 $ 1,126,975
22. Events after the reporting period
From April 1, 2011 to May 9, 2011:
(a) 151,333 stock options were exercised by way of stock appreciation
rights at a weighted average exercise price of Cdn$0.32.
Date: 12/05/2011 13:50:01 Produced by the JSE SENS Department.
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