| Mon 30 May 2011, 16:00 | | WGR - Wits Gold - Reviewed condensed results for the year ended 28 February 2011 |
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WGR
WGR
WGR - Wits Gold - Reviewed condensed results for the year ended 28 February 2011
Witwatersrand Consolidated Gold Resources Limited
(Incorporated in the Republic of South Africa)
(Registration number 2002/031365/06)
JSE share code: WGR ISIN: ZAE000079703
TSX share code: WGR CUSIP number: S98297104
("Wits Gold" or "the Company")
Reviewed condensed results for the year ended 28 February 2011
All figures quoted in South African Rand unless otherwise stated.
Bank of Canada noon rate at 28 February 2011: R7.14 = CAD$1 (2010: R7.7 = CAD$1)
Condensed statement of financial position
as at 28 February 2011
Reviewed Audited
2011 2010
R R
ASSETS
Non-current assets 423 062 154 107 170 733
Property and equipment 5 023 496 5 279 646
Intangible exploration and evaluation assets 418 038 658 101 891 087
Current assets 147 667 283 86 713 462
Other receivables 1 488 679 1 034 134
Cash and cash equivalents 146 178 604 85 679 328
Total assets 570 729 437 193 884 195
EQUITY AND LIABILITIES
Capital and reserves 565 729 742 187 045 642
Ordinary share capital 344 903 278 909
Share premium 573 211 583 185 971 589
Equity-settled share-based payment reserve 7 119 295 19 604 280
Revaluation reserve 1 329 449 1 253 981
Accumulated loss (16 275 488) (20 063 117)
Current liabilities 4 999 695 6 838 553
Trade and other payables 4 699 695 4 447 046
Taxation payable - 1 991 507
Provisions 300 000 400 000
Total equity and liabilities 570 729 437 193 884 195
Condensed statement of comprehensive income
for the year ended 28 February 2011
Reviewed Audited
2011 2010
R R
Revenue - -
Other income 6 620 4 666
Administrative expenses (20 221 949) (14 759 179)
Loss from operating activities (20 215 329) (14 754 513)
Net finance income 5 326 307 7 078 523
Finance income 5 326 307 7 525 222
Finance expense - (446 699)
Loss before income tax (14 889 022) (7 675 990)
Income tax expense - (98 260)
Loss from operations attributable to owners (14 889 022) (7 774 250)
Other comprehensive income
net of income tax 75 468 66 399
Increase in revaluation of property 75 468 72 208
Deferred tax on revaluation adjustment - (10 809)
Total comprehensive income attributable
to owners of the Company (14 813 554) (7 707 851)
Basic and headline loss per share (cents) (50.11) (28.05)
Diluted basic and headline loss per share (cents) (50.11) (45.02)
Supplementary information:
Number of shares in issue 34 490 265 27 890 916
Weighted average number of shares in issue 29 713 768 27 715 893
Net asset value per share (cents) 1 640.26 670.63
Net tangible asset value per share (cents) 428.21 305.31
Condensed statement of cash flows
for the year ended 28 February 2011
Reviewed Audited
2011 2010
R R
Cash flows from operating activities
Cash utilised in operating activities (13 928 826) (14 421 318)
Finance income received 5 326 307 7 525 222
Interest paid - (446 699)
Taxation paid (1 991 507) (3 184 605)
Net cash utilised by operating activities (10 594 026) (10 527 400)
Cash flows from investing activities
Additions to property and equipment (65 115) (7 851)
Additions to intangible exploration and
evaluation assets (41 147 571) (20 848 557)
Net cash utilised in investing activities (41 212 686) (20 856 408)
Cash flows from financing activities
Proceeds from issue of shares for cash 120 050 370 -
Costs from issue of share capital (7 744 382) -
Net cash generated by financing activities 112 305 988 -
Increase/(Decrease) in cash and cash equivalents 60 499 276 (31 383 808)
Cash and cash equivalents at beginning of the year 85 679 328 117 063 136
Cash and cash equivalents at end of the year 146 178 604 85 679 328
Condensed statement of changes in equity
for the year ended 28 February 2011
Equity-settled
share-based
Ordinary Share payment
share capital premium reserve
Audited
Balance at 28 February 2009 278 909 185 971 589 17 849 857
Total comprehensive loss for the year - - -
Loss for the year - - -
Other comprehensive income - - -
Increase on revaluation of
land and buildings - - -
Deferred taxation on
revaluation - - -
Transactions with owners recorded
in equity - - 1 754 423
Equity-settled share-based payment - - 1 754 423
Balance at 28 February 2010 278 909 185 971 589 19 604 280
Total comprehensive loss for
the year - - -
Reviewed
Loss for the year - - -
Other comprehensive income
for the year - - -
Increase on revaluation of
land and buildings - - -
Transactions with owners recorded
directly in equity 65 994 387 239 994 (12 484 985)
Issue of share capital 65 994 394 984 376 -
Qualifying costs of share issue - (7 744 382) -
Share-based payment - - 6 191 666
Share-based options fully
exercised - - (18 676 651)
Balance at 28 February 2011 344 903 573 211 583 7 119 295
Total
capital
Revaluation Accumulated and
reserve loss reserves
Audited
Balance at 28 February 2009 1 187 582 (12 288 867) 192 999 070
Total comprehensive loss for the
year 66 399 (7 774 250) (7 707 851)
Loss for the year - (7 774 250) (7 774 250)
Other comprehensive income 66 399 - 66 399
Increase on revaluation of land
and buildings 77 208 - 77 208
Deferred taxation on revaluation (10 809) - (10 809)
Transactions with owners recorded
in equity - - 1 754 423
Equity-settled share-based
payment - - 1 754 423
Balance at 28 February 2010 1 253 981 (20 063 117) 187 045 642
Total comprehensive loss for the
year 75 468 (14 889 022) (14 813 554)
Reviewed
Loss for the year - (14 889 022) (14 889 022)
Other comprehensive income for
the year 75 468 - 75 468
Increase on revaluation of land
and buildings 75 468 - 75 468
Transactions with owners recorded
directly in equity - 18 676 651 393 497 654
Issue of share capital - - 395 050 370
Qualifying costs of share issue - - (7 744 382)
Share-based payment - - 6 191 666
Share-based options fully exercised - 18 676 651 -
Balance at 28 February 2011 1 329 449 (16 275 488) 565 729 742
Nature of business
Witwatersrand Consolidated Gold Resources Limited (registration number
2002/031365/06) is a company domiciled in the Republic of South Africa. The
Company`s shares are publicly traded in South Africa on the JSE Limited
securities exchange (primary listing), and in Canada on the Toronto Stock
Exchange (secondary listing).
The Company carries on the business of acquiring, preserving, evaluating,
trading and developing Prospecting Rights for exploration and investment
purposes.
The Company has been granted 14 Prospecting Rights by the Department of Mineral
Resources (the "DMR") under the Mineral and Petroleum Resources Development Act
of 2002. During the year under review the initial term of five of these rights
expired and renewal applications have been submitted and are being processed in
terms of the abovementioned Act. Wits Gold has not, and does not in the near
future, expect to generate any operating income. Mineral exploration is highly
speculative due to a number of significant risks, including the possible failure
to discover mineral deposits that are sufficient in quantity and quality to
justify the completion of feasibility studies. Additional work will be required
in order to determine if any economic deposits occur on any of the Company`s
properties.
The ongoing exploration of the Company`s Prospecting Rights is dependent upon
the Company`s ability to obtain additional financing through the joint venturing
of projects, debt financing, equity financing or other means. In the future,
such sources of financing may not be available on acceptable terms, if at all.
The Company has, however, been successful in the past in raising the required
capital from its shareholders to fund its operating and exploration activities.
In November 2010, capital raising of R120 million was concluded by way of a
private placement of shares.
Operational review*
During the year under review, the Company focused its exploration efforts
predominantly in the southern Free State goldfield, where during September 2010
two transactions were successfully negotiated with Harmony Gold Mining Company
Limited (Harmony).
The first concerned the purchase of the Armgold/Harmony Freegold Joint Venture
Company (Pty) Limited`s option to acquire a 40% interest over selected parts of
the southern Free State goldfield. The agreed price for this transaction was
R275 million, which was settled by issuing 4 376 194 ordinary shares in Wits
Gold to Harmony. At the same time, a second transaction was concluded to acquire
the unmined southern portion of the Merriespruit Mine for a cash price of R61
million. Further details of these agreements are contained in the sections
headed "Non-current assets" and "Capital and reserves". Combined, these two
transactions were instrumental in the Company being able to achieve its
objective in consolidating its Prospecting Rights in the southern Free State and
gaining complete control over its most advanced projects.
Over the period March 2010 to February 2011, 13 diamond boreholes have been
completed on the Company`s Prospecting Rights in the Witwatersrand Basin for a
total of 14 045 metres. Most of this drilling (nine boreholes for 8 775 metres)
was undertaken in the combined De Bron-Merriespruit South area, currently known
as the DBM project, where a total of 88 boreholes have been completed over an
area of some 22.0km2. Considering this density of drilling, the results are
thought to be representative of the mineralisation in this area, where the only
additional information comes from the adjacent mines. This resulted in a
material increase in the estimated resources with the Indicated Resource growing
by 52% to 34.5Mt at 5.3g/t Au (5.9Moz), and the Inferred Resource rising 165% to
25.0Mt at 5.2g/t Au (4.2Moz).
This is presented in the Company`s NI43-101 and Samrec compliant Independent
Technical Report dated 6 April 2011 by Snowden Mining Industry Consultants (Pty)
Limited (Snowden) which can be viewed at www.sedar.com and on the Company`s web
site (www.witsgold.com).
These resources were estimated using all of the available borehole data and
sample widths corrected for dip. In addition to gold, a uranium estimate was
calculated with an Indicated Resource of 17.0Mt at 0.16Kg/t U308 (6.1Mlb) and an
Inferred Resource of 11.9Mt at 0.14Kg/t U308 (3.7Mlb). No metal equivalent
calculations were made. Analyses of borehole core were undertaken at three
accredited laboratories, Anglo Research, ALS Chemex South Africa (Pty) Limited
and SGS South Africa (Pty) Limited, during which the Company`s standard sampling
and QA/QC policies were adopted.
Southern Free State goldfield
Exploration in this area has concentrated on the shallow DBM project where gold
mineralisation is associated with the Beatrix, Kalkoenkrans, B and Leader Reefs
at depths of between 500 metres and 1 250 metres below surface. As a result of
the substantial increase in both the size of the DBM gold resource as well as
the gold grade, the Company has initiated a preliminary economic assessment of
the financial benefit of establishing a mine. This study is being undertaken by
Turgis Consultants (Pty) Limited, with input on the mine scheduling provided by
Snowden. The results of this study are expected to become available during the
second quarter of 2011 and will provide guidance for future exploration in this
area.
Besides the DBM area, the Company has also undertaken further drilling in the
Bloemhoek, Beisa North and Beisa South areas, where a single borehole in each of
these areas has been completed. No material changes to the existing resource
statements were made following the completion of these boreholes.
Bloemhoek and the southern portion of the DBM project occur in the Prospecting
Right PR76 which was renewed by the DMR on 11 April 2011. The Section 102
application to include Merriespruit South can now be lodged with the DMR in
order to complete the consolidation of the DBM project.
The Potchefstroom goldfield
No further diamond drilling was undertaken in this area during the year under
review. However a reflection seismic survey was completed in the Deelkraal South
area, immediately south of Harmony`s Kusasalethu Gold Mine. The migrated results
from this survey at Deelkraal South produced a well-constrained image of the
base of the Ventersdorp lavas and therefore the associated Ventersdorp Contact
Reef ("VCR"). An interpretation of these seismic data indicated that the VCR
occurs at a depth of 3 100 metres on the northern boundary of the Company`s
Deelkraal South project where the reef dips southwards at 20 to 25 degrees and
has been subjected to only minor small scale faults.
The Klerksdorp goldfield
Drilling of the single deep borehole which was sited to intersect the Vaal Reef
in the Kromdraai area had to be curtailed due to recurring technical problems
caused by a shale unit in Gold Estates Formation at 3 613 metres, some 200
metres above the Vaal Reef. Despite several attempts to circum-navigate this
problem, this could not be achieved. Consequently, in order to minimise
expenditure as well as the possibility of equipment failure at these substantial
depths, it was decided to abandon drilling operations.
Qualified Person
The technical and scientific information contained in this release was reviewed
by Qualified Person, Dirk Jacobus Muntingh, who is a full time employee of the
Company. Mr Muntingh (MSc Geology) is a registered Professional Natural
Scientist (Pr.Sci.Nat) with the South African Council for Natural Scientific
Professionals (SACNASP) and has 20 years of experience in gold exploration.
Mineral resources
The Company`s declared Mineral Resources are estimated by qualified independent
geologists or Competent Persons. These Resource Estimates are dependent on
geological interpretation and statistical inferences drawn from drilling and
sampling that may prove to be unreliable. The Inferred or Indicated Resources
outlined in the Company`s properties have been calculated from widely-spread
borehole data. No assurance can be given that future exploration will be
successful in the improvement of the confidence levels or that any particular
level of recovery of minerals will in fact be realised. It is uncertain whether
the identified Mineral Resources will ever qualify as a viable orebody that can
be legally or economically exploited. In addition, the grade and tonnages of any
orebody that is ultimately mined may differ from the Mineral Resources currently
estimated and such differences could be material.
For further information concerning the Company`s resources, including
information concerning the geology, mineral occurrences, nature of
mineralisation, geological controls, rock types, historical work including data
density, the application of quality assurance and quality control measures,
sampling and analytical procedures, the names of analytical laboratories
employed and the key assumptions, parameter and methods used to estimate the
Mineral Resources at the Company`s various projects, please see the Company`s
NI43-101 and Samrec compliant Independent Technical Reports dated November 2007,
June 2008, May 2009, June 2009, 20 October 2009, October 2009 and April 2011
which can be viewed at www.sedar.com and on the Company`s website,
www.witsgold.com.
Financial review
Operating loss
The loss from operating activities for the year under review increased by R5.5
million compared to the prior year. This increased loss results mainly from
the higher employment-related expenditure (R5.0 million), which has primarily
arisen from an increase in the non-cash cost entries required to account for
the employee share scheme (R4.4 million).
Non-current assets
During the year, the Company incurred direct exploration expenditure and
acquired rights in the amount of R316.1 million (2010: R20.8 million) which has
been capitalised to intangible exploration and evaluation assets.
Included in the above was the buyback of the Harmony 40% Participation Right
over certain southern Free State assets for R275 million (2010: nil) which was
equity-settled.
Current assets
The Company`s cash and cash equivalents increased by R60.5 million (2010: R31.4
million decrease) which reflects the normal operational and exploration outflows
offset from interest received and the proceeds of the R120 million (2010: nil)
capital raising.
Current liabilities
The main contributor to the decrease in current liabilities by R1.8 million was
the payment of R2.0 million against the taxation provision.
Capital and reserves
There was no change in the authorised share capital of the Company during the
year ended 28 February 2011 (2010: no change). The Company issued a total of 6
599 349 new shares during the year to 28 February 2011 (2010: nil), of which 2
223 155 were issued for cash and 4 376 194 were issued to settle the buyback of
the Harmony Participation Right mentioned above.
Commitments
The Company has committed to spend an additional amount of approximately R1.4
million (2010: R0.7 million) on professional consultants during the year.
Furthermore the Company has also committed to spend R73.1 million (2010: R27.0
million) on the acquisition of exploration properties and exploration activities
during the next five years.
All of these commitments will be funded out of existing cash resources.
Basis of preparation
These financial results for the year ended 28 February 2011 comply with the
Listings Requirements of the JSE Limited, the recognition and measurement
requirements of International Financial Reporting Standards, the presentation
and disclosure requirements of IAS 34, Interim Financial Reporting, AC 500
series and the South African Companies Act, 61 of 1973, as amended. The
accounting policies are consistent with those applied in the previous financial
year. They do not include all the information required for full annual financial
statements and should be read with the financial statements for the year ended
28 February 2010.
The Company consists of only one segment and there have been no changes to the
composition of the entity.
There has been no reclassification or correction of errors and no changes in
accounting estimates. The Company does not have any contingent assets or
liabilities and no material subsequent events have occurred since the reporting
date. No material related party transactions have been identified.
Dividends
No dividends were declared or paid by the Company during the year under review
(2010: R nil).
Going concern
Due to the inherent risk in the nature of exploration activities, there may be
uncertainty regarding the recoverability of the Company`s exploration
expenditure. To meet its ongoing obligations and maintain its operations, the
Company will periodically seek to raise additional equity funding which will be
premised on the exploration results and the contingent further exploration
plans. This will be in the form of the issue of additional Company shares to
both local and international markets.
After making enquiries the directors have reasonable expectation that the
Company has adequate funds to continue in operational existence for the next 18
months and that there are no material uncertainties that lead to significant
doubt upon the Company`s ability to continue as a going concern. Accordingly,
the directors continue to adopt the going concern basis in preparing the
financial statements.
Review report
The unqualified review report issued by KPMG Inc, on the condensed financial
statements contained in this report is available for inspection at the Company`s
registered office.
* The Information in the first paragraph in the section "Operational review" has
been reviewed by KPMG Inc., however the remainder of this section has not been
reviewed.
Forward-looking information
Certain statements in this release may constitute forward-looking information
within the meaning of securities laws. In some cases, forward-looking
information can be identified by use of terms such as "may", "will", "should",
"expect", "believe", "plan", "scheduled", "intend", "estimate", "forecast",
"predict", "potential", "continue", "anticipate" or other similar expressions
concerning matters that are not historical facts. Forward- looking information
may relate to management`s future outlook and anticipated events or results, and
may include statements or information regarding the future plans or prospects of
the Company. Without limitation, statements about the timing of a preliminary
economic assessment are forward-looking information.
Forward-looking information involves known and unknown risks, uncertainties and
other important factors that could cause the actual results, performance or
achievements of the Company to be materially different from the future results,
performance or achievements expressed or implied by such forward-looking
information. Such risks, uncertainties and other important factors include among
others: economic, business and political conditions in South Africa; decreases
in the market price of gold; hazards associated with underground and surface
gold mining; the ability to attract and retain qualified personnel; labour
disruptions; changes in laws and Government regulations, particularly
environmental regulations and Mineral Rights legislation including risks
relating to the acquisition of the necessary licences and permits; changes in
exchange rates; currency devaluations and inflation and other macro-economic
factors; risk of changes in capital and operating costs, financing,
capitalization and liquidity risks, including the risk that the financing
required to fund all currently planned exploration and related activities may
not be available on satisfactory terms, or at all and the ability to maximise
the value of any economic resources. These forward-looking statements speak only
as of the date of this release.
You should not place undue importance on forward-looking information and should
not rely upon this information as of any other date. The Company undertakes no
obligation to update publicly or release any revisions to these forward-looking
statements to reflect events or circumstances after the date of this release or
to reflect the occurrence of unanticipated events, except where required by
applicable laws.
For and on behalf of the Board
M B Watchorn D M Urquhart
Chief Executive Officer Chief Financial Officer
30 May 2011
Sponsor
PricewaterhouseCoopers Corporate Finance (Pty) Ltd
Date: 30/05/2011 16:00:01 Produced by the JSE SENS Department.
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