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WESTERN AREAS LIMITED
Registration Number 1959/003209/06
Incorporated in the Republic of South Africa
REPORT FOR THE FOURTH QUARTER AND YEAR ENDED 31 DECEMBER 2000
- Profit from gold up 14%
- Cash cost US$146/oz
- South Deep project development on track
- Value-unlocking process reached advanced stage
Letter to shareholders
Effective cost management by the South Deep joint venture reduced cash costs by
16% to US$146 per ounce (or 11% to R35 660 per kilogram) in the December
quarter. It is expected that the JV's adherence to strict cost control will
ensure that these costs will remain well controlled.
While attributable gold declared for the quarter was down 3% at 1 405
kilograms, mainly because of decreased tonnage throughput from all areas, the
reduction in cash costs increased profit from gold to R28.1 million. Higher
deferred tax provisions, amortisation and administration costs resulted in
profit after tax consequently decreasing to R12.6 million.
The South Deep project is now within two years of full commissioning and shaft
sinking is progressing very well. The sinking phase of the ventilation shaft
was completed without fatalities at 2 791 metres below collar. The main shaft
complex had reached a depth of 2 856 metres below collar at the end of the
quarter and is now the longest single lift shaft in the world.
The process of unlocking shareholder value has reached an advanced stage and
the alternatives being considered are the sale of the company's 50% interest in
South Deep or the gearing of this asset, followed by a cash distribution.
Shareholders will be kept informed of developments in this regard.
Roger Kebble has been appointed as chairman of the company in succession to
Prof Wiseman Nkuhlu, who relinquished the position after becoming senior
economic adviser to the President.
RB Kebble JF Brownrigg
Chief Executive Officer Director
Johannesburg
15 February 2001
The following table represents the hedge book as at 31 December 2000.
3 Months Years to
to
31.12.00 31.12.01 31.12.02 31.12.03
Fixed forward contract
Amount hedged
(oz 000s) - - 35 40
Average price
($/oz) - - 301 301
Years to
31.12.04 31.12.05 31.12.06 31.12.07
Fixed forward contract
Amount hedged
(oz 000s) 42 42 42 42
Average price
($/oz) 301 311 320 320
Years to
Fixed forward contract 31.12.08 31.12.09 Total
Amount hedged (oz 000s) 42 42 327
Average price ($/oz) 320 320
3 Months Years to
to
31.12.00 31.12.01 31.12.02 31.12.03
Fixed forward contract
Amount hedged
(oz 000s) - - 35 38
Average price
(R/oz) - - 2 100 2 300
Years to
31.12.04 31.12.05 31.12.06 31.12.07
Fixed forward contract
Amount hedged
(oz 000s) 42 42 42 42
Average price
(R/oz) 2 500 2 800 2 800 2 800
Years to
31.12.08 31.12.09 Total
Fixed forward contract
Amount hedged (oz 000s) 42 42 325
Average price (R/oz) 2 800 2 800
3 Months Years to
to
31.12.00 31.12.01 31.12.02 31.12.03
Call options sold
Amount hedged
(oz 000s) - - 35 40
Average price ($/oz) - - 325 325
Years to
31.12.04 31.12.05 31.12.06 31.12.07
Call options sold
Amount hedged
(oz 000s) 42 42 42 42
Average price ($/oz) 325 325 325 325
Years to
31.12.08 31.12.09 Total
Call options sold
Amount hedged (oz 000s) 42 42 327
Average price ($/oz) 325 325
3 Months Years to
to
31.12.00 31.12.01 31.12.02 31.12.03
Call options bought
Amount hedged
(oz 000s) - - 70 76
Average price ($/oz) - - 420 420
Years to
31.12.04 31.12.05 31.12.06 31.12.07
Call options bought
Amount hedged
(oz 000s) 77 38 - -
Average price ($/oz) 420 420 - -
Years to
31.12.08 31.12.09 Total
Call options bought
Amount hedged (oz 000s) - - 261
Average price ($/oz) - -
CONSOLIDATED INCOME STATEMENT
US$ (MILLION) Year 18 months
Quarters ended ended ended
31.12.00 30.09.00 31.12.00 31.12.99
Unaudited Unaudited Unaudited Audited
Revenue from gold 12.9 13.0 47.3 216.6
At spot 12.9 13.0 46.5 117.9
Hedging profits - - 0.8 98.7
Costs and other
expenses 9.2 9.5 36.8 108.9
Production costs 6.6 8.3 30.8 100.7
Non cash items (1) 2.6 1.2 6.0 8.2
Profit from gold 3.7 3.5 10.5 107.7
Plus 3.7 4.4 23.5 16.5
Sundry revenue 0.3 0.1 2.9 8.5
Net interest received 3.4 4.3 20.6 8.0
Less 2.7 1.5 11.6 46.0
Net premiums on put
and call options - - 2.8 26.8
Administration costs
and amortisation of
corporate assets(2) 2.0 1.3 6.7 9.2
Exploration and new
business - - - 7.3
Prestea operating
loss, mine closure
and feasibility
study costs (3) 0.7 0.2 2.1 2.7
Operating profit 4.7 6.4 22.4 78.2
Restructuring costs - 0.8 3.3 3.6
Exceptional items - - - 73.9
Profit before
taxation 4.7 5.6 19.1 0.7
Taxation 3.0 0.4 6.7 16.3
Normal taxation 0.9 1.6 6.9 3.6
Deferred taxation 2.1 (1.2) (0.2) 12.7
Attributable to
outside
shareholders (0.1) (0.1) - (4.0)
Profit after taxation 1.8 5.3 12.4 (11.6)
Headline earnings per
share - cents 2 5 12 43
Earnings/(loss) per
share - cents 2 5 12 (11)
Number of shares in
issue (million)
R (MILLION) Year 18 months
Quarters ended ended ended
31.12.00 30.09.00 31.12.00 31.12.99
Unaudited Unaudited Unaudited Audited
Revenue from gold 98.1 93.6 328.5 1 315.9
At spot 98.1 93.6 322.8 716.5
Hedging profits - - 5.7 599.4
Costs and other
expenses 70.0 69.0 255.3 661.7
Production costs 50.1 60.1 213.9 611.9
Non cash items (1) 19.9 8.9 41.4 49.8
Profit from gold 28.1 24.6 73.2 654.2
Plus 27.8 31.3 163.1 100.6
Sundry revenue 2.3 0.7 20.0 51.7
Net interest
received 25.5 30.6 143.1 48.9
Less 21.1 10.7 80.9 279.9
Net premiums on put
and call options - - 19.6 162.9
Administration costs
and amortisation of
corporate assets(2) 15.1 9.3 46.6 56.2
Exploration and new
business - - - 44.4
Prestea operating
loss, mine closure
and feasibility
study costs (3) 6.0 1.4 14.7 16.4
Operating profit 34.8 45.2 155.4 474.9
Restructuring costs - 5.6 22.7 21.6
Exceptional items - - - 448.9
Profit before
taxation 34.8 39.6 132.7 4.4
Taxation 22.6 2.8 46.8 99.2
Normal taxation 6.7 11.1 48.2 22.0
Deferred taxation 15.9 (8.3) (1.4) 77.2
Attributable to
outside
shareholders (0.4) (0.5) 0.2 (24.1)
Profit after
taxation 12.6 37.3 85.7 (70.7)
Headline earnings per
share - cents 12 35 81 259
Earnings/(loss) per
share - cents 12 35 81 (67)
Number of shares in
issue (million) 105.4 105.4 105.4 105.4
Notes:
(1) Quarter non cash items increased due to the additional provision for post
retirement medical benefits and gold work-in-progress adjustment
(2) Includes corporate advisors fees incurred relating to the investigations
into various strategic options
(3) Includes year end provisions for the write down of exploration assets
CONSOLIDATED CASH FLOW STATEMENT
US$ (MILLION) Year 18 months
Quarters ended ended ended
31.12.00 30.09.00 31.12.00 31.12.99
Unaudited Unaudited Unaudited Audited
Cash flow from
operating
activities
Profit before
taxation 4.6 5.6 19.1 0.7
Amortisation 1.6 1.5 5.5 9.1
Profit on sale of
investments - - (0.3) (0.4)
(Applied to)/provided
by changes in
working capital (0.7) 2.0 (94.1) 55.8
Net cash generated/
(utilised) by
operating activities 5.5 9.1 (69.8) 65.2
Investing activities
Mining assets
acquired (12.3) (8.5) (33.5) (93.9)
Proceeds on sale of
assets - - - 253.0
Proceeds on sale of
unlisted investments 0.2 - 0.5 0.6
Decrease/(increase) in
long term advances 0.7 0.2 1.9 (9.0)
(Increase)/reduction
in short term cash
advance) (2.5) 45.7 29.3 (101.4)
Net cash (expended)/
generated by
investing
activities (13.9) 37.4 (1.8) 49.3
Financing activities
Increase/(decrease)
in share capital
and share premium - - - (0.3)
Increase/(decrease)
in long term and
other financial
liabilities 0.4 (8.8) (7.6) 2.5
Net cash generated/
(utilised) by
financing activities 0.4 (8.8) (7.6) 2.2
Net cash (utilised)/
generated (8.0) 37.7 (79.2) 116.7
Opening balance of
cash and short term
funds 47.5 11.2 147.2 28.8
Translation adjustment
in respect of
foreign subsidiary - (0.2) (0.2) -
Translation
adjustment (2.0) (1.2) (30.3) 1.7
Closing balance of
cash and short term
funds 37.5 47.5 37.5 147.2
R (MILLION) Year 18 months
Quarters ended ended ended
31.12.00 30.09.00 31.12.00 31.12.99
Unaudited Unaudited Unaudited Audited
Cash flow from
operating activities
Profit before
taxation 34.8 39.6 132.7 4.4
Amortisation 12.1 11.0 41.4 55.4
Profit on sale of
investments - - (2.1) (2.7)
(Applied to)/provided
by changes in
working capital (5.0) 14.1 (700.3) 339.0
Net cash generated/
(utilised) by
operating
activities 41.9 64.7 (528.3) 396.1
Investing activities
Mining assets
acquired (93.2) (61.1) (253.1) (570.4)
Proceeds on sale of
assets - - - 1 537.5
Proceeds on sale of
unlisted investments 1.6 (0.1) 4.1 3.9
Decrease/(increase) in
long term advances 5.5 1.3 14.4 (54.4)
(Increase)/reduction
in short term cash
advances (19.0) 327.4 221.5 (616.0)
Net cash (expended)/
generated by
investing
activities (105.1) 267.5 (13.1) 300.6
Financing activities
Increase/(decrease)
in share capital
and share premium - - 0.1 (1.7)
Increase/(decrease)
in long term and
other financial
liabilities 2.7 (63.4) (57.4) 15.3
Net cash generated/
(utilised) by
financing activities 2.7 (63.4) (57.3) 13.6
Net cash (utilised)/
generated (60.5) 268.8 (598.7) 710.3
Opening balance of
cash and short
term funds 343.7 76.6 883.6 173.3
Translation
adjustment in
respect of foreign
subsidiary 0.3 (1.7) (1.4) -
Translation adjustment
Closing balance of
cash and short
term funds 283.5 343.7 283.5 883.6
CONSOLIDATED BALANCE SHEET
US$ (MILLION) Quarters at 18 mnths at
31.12.00 30.09.00 31.12.99
Notes Unaudited Unaudited Audited
Capital employed
Shareholders' equity 337.8 351.4 411.6
Outside shareholders'
interests 2.4 2.6 3.1
Deferred taxation 52.6 52.8 66.5
Long term borrowings - - 10.0
Long term liabilities 2.1 1.9 2.8
394.9 408.7 494.0
Represented by
Mining assets 300.7 303.1 343.6
Unlisted investments 0.3 0.5 0.8
Long-term advances 7.8 9.0 13.1
Net current assets 86.1 96.1 136.5
Current assets 105.6 115.5 271.3
Inventories 1.8 2.8 3.0
Receivables 11.2 10.2 15.5
Loan to JCI Gold Ltd 1 38.0 37.8 40.9
Short term cash
advances 2 17.1 17.2 64.7
Cash and short term
funds 37.5 47.5 147.2
Current liabilities 19.5 19.4 134.8
Payables and provisions 19.5 19.4 134.8
394.9 408.7 494.0
R (MILLION) Quarters at 18 mnths at
31.12.00 30.09.00 31.12.99
Notes Unaudited Unaudited Audited
Capital employed
Shareholders' equity 2 553.9 2 541.6 2 469.3
Outside shareholders'
interests 18.4 18.8 18.5
Deferred taxation 397.7 381.9 399.2
Long term borrowings - - 60.2
Long term liabilities 15.9 13.4 16.9
2 985.9 2 955.7 2 964.1
Represented by
Mining assets 2 273.8 2 192.3 2 061.8
Unlisted investments 2.2 3.6 4.8
Long-term advances 59.2 64.7 78.7
Net current assets 650.7 695.1 818.8
Current assets 798.3 834.9 1 627.6
Inventories 13.6 20.1 17.8
Receivables 84.5 73.2 93.1
Loan to JCI Gold Ltd 1 287.2 273.6 245.6
Short term cash
advances 2 129.5 124.3 387.5
Cash and short term funds 283.5 343.7 883.6
Current liabilities 147.6 139.8 808.8
Payables and provisions 147.6 139.8 808.8
2 985.9 2 955.7 2 964.1
Notes
1. The loan to JCI Gold Ltd is repayable on 30 April 2001, is secured by a
pledge of marketable securities and carries interest at prime overdraft rate
plus 1.5%.
2. Short term cash advances included the following:
Durban Roodepoort Deep, Ltd - R129.5 million
The advance to Durban Roodepoort Deep, Ltd carries interest at prime rate plus
1% and is secured by a pledge of marketable securities with a current market
value of R77.5 million, and is repayable on 28 February 2001.
PRODUCTION RESULTS
METRIC Quarters ended Year ended
31.12.00 30.09.00 31.12.00
Ore milled, tonnes (000)
Western Areas section 93 94 345
South Deep section 52 62 204
Surface material 10 12 60
Total ore milled 155 167 608
Yield, grams per tonne
Western Areas section 10.51 10.92 10.43
South Deep section 6.87 7.61 7.00
Surface material 0.37 1.04 0.57
Average grade recovered 9.09 8.72 8.33
Gold production, kilograms
Western Areas section 973 1 021 3 599
South Deep section 354 468 1 426
Surface material 4 12 34
Total gold production 1 331 1 501 5 058
Work-in-progress 74 (49) 4
Total gold declared 1 405 1 453 5 062
IMPERIAL Quarters ended Year ended
31.12.00 30.09.00 31.12.00
Ore milled, tons (000)
Western Areas section 102 103 380
South Deep section 57 68 224
Surface material 11 13 66
Total ore milled 170 184 670
Yield, ounces per ton
Western Areas section 0.307 0.319 0.304
South Deep section 0.200 0.222 0.204
Surface material 0.010 0.030 0.017
Average grade recovered 0.265 0.254 0.243
Gold production, ounces
Western Areas section 31 267 32 834 115 694
South Deep section 11 381 15 048 45 831
Surface material 113 386 1 093
Total gold production 42 761 48 267 162 618
Work-in-progress 2 379 (1 559) 129
Total gold declared 45 140 46 708 162 747
COST AND REVENUE PER UNIT OF PRODUCTION
Quarters ended Year ended
31.12.00 30.09.00 31.12.00
METRIC R R R
Per tonne milled
Production costs 324 361 352
Other expenses and non
cash costs 129 32 68
Total costs 453 393 420
Per kilogram produced
Production costs 35 660 40 020 42 255
Other expenses and non
cash costs 14 153 3 568 8 184
Total costs 49 813 43 588 50 439
Gold price received (spot)
Per tonne milled 635 543 531
Per kilogram produced 69 854 62 274 63 778
Capital commitment at end
of period (R million) 120 44 120
IMPERIAL US$ US$ US$
Per ton milled
Production costs 39 46 46
Other expenses and non
cash costs 15 4 6
Total costs 54 50 52
Per ounce produced
Production costs 146 174 190
Other expenses and non
cash costs 58 15 23
Total costs 204 159 213
Gold price received (spot)
Per ton milled 76 71 69
Per ounce produced 286 283 286
Capital commitment at end
of period ($ million) 16 6 16
Conversion rates used:
US$ 1 = Rands
Average rate for quarter 7.5980 7.1714 7.9362
Rate at quarter ended 7.5605 7.2300 7.5605
SOUTH DEEP SHAFT SINKING
Main Shaft Vent Shaft
Quarter Quarter Quarter Quarter
ended ended ended ended
31.12.00 30.09.00 31.12.00 30.09.00
Sinking (metres) 65 15 61 82
Metres per calendar
day 0.71 0.16 0.66 0.89
Distance below
collar (metres) 2 879 2 814 2 727 2 669
Days on
development 37 days- 89 days- 54 days- 12 days-
110 level 105 level 100 level 93 level
station station station station
8 days- 14 days
105 level 94 level
station airway
11 days-
94 level
station
21 days-
95 level
station
Cubic mtrs broken
in dev. (Plan) 2 089 6 693 2 838 2 259
Cubic mtrs broken
in dev. (Actual) 2 886 9 954 4 548 4 759
Metres/Calendar
day sink (excl.
dev days) 3.25 5.00 1.61 2.41
SUMMARISED DEVELOPMENT RESULTS
Total Primary Reef Primary Reef
development development sampled
Quarter ended (metres) (metres) (metres)
Dec 00 1 644 335 301
Sept 00 1 119 63 84
Year to 31.12.00 4 373 506 479
Channel width Channel value Channel
Quarter ended (cm) (g/t) (cm-g/t)
Dec 00 349 4.1 1 431
Sept 00 235 5.5 1 293
Year to 31.12.00 308 4.7 1 448
DEVELOPMENT
METRIC Quarter ended Year to
31.12.00 30.09.00 31.12.00
Advance on reef and
country rock (metres) (metres) (metres)
Ventersdorp Contact Section 735 659 2 349
Upper Elsburg Section 910 459 2 024
Total metres 1 645 1 119 4 373
IMPERIAL Quarter ended Year to
31.12.00 30.09.00 31.12.00
Advance on reef and
country rock (feet) (feet) (feet)
Ventersdorp Contact Section 2 410 2 163 7 706
Upper Elsburg Section 2 985 1 507 6 640
Total metres 5 395 3 670 14 346
WESTERN AREAS LIMITED
PO Box 61719, Marshalltown 2107
Telephone: +27(11) 688-5000
Fax: +27(11) 838-3393
Investor and media relations: For further information contact Kathy du Plessis
on:
Tel: +27(11) 728 4701, Fax: +27(11) 728 2547
e-mail: gold@dpa.co.za
www.westernareas.co.za
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