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VIL
VIL
VIL - Village Main Reef Limited - Reviewed results for the year ended 30
June 2011
Village Main Reef Limited
(formerly Village Main Reef)
Gold Mining Company (1934) Limited)
(Incorporated in the Republic of South Africa)
(Registration number 1934/005703/06)
JSE code: VIL ISIN: ZAE000154761
("Village" or "the company" or "the group")
REVIEWED RESULTS FOR THE YEAR ENDED 30 JUNE 2011
The results presented below are in accordance with IFRS 3, and deals
essentially with the results of Buffelsfontein Gold Mines Limited (BGM),
consisting of Buffelsfontein Mine (Buffels) and Tau Lekoa Mine (Tau).
These operations were owned and managed by Simmer & Jack Mines Limited
(Simmers) for the majority of the period under review. Village Main Reef
Limited (Village) only owned the assets for three days during the period
under review.
Highlights
* Acquisition of the majority of the Simmers assets successfully
completed and Village consideration shares distributed to Simmers
shareholders on 27 June 2011.
* Acquisition of Consolidated Murchison Mine (Proprietary) Limited (Cons
Murch) from To The Point Growth Specialists (Proprietary) Limited,
completion effective 7 March 2011. Village successfully raised R22,5
million through a private placement, which will be utilised for the
expansion and upgrade of operations at Cons Murch.
* Village transformed itself from an exploration holding company with a
very exciting brown fields platinum project, Lesego Platinum Limited
(Lesego) into a mining company, with operating assets in two gold
operations, Buffels and Tau, an antimony/gold producer in Cons Murch, as
well as a gold processing plant at Buffels.
* Cons Murch operations benefited from strong antimony and gold prices,
showing the positive impact of management intervention and operating
profitably since acquisition. At current commodity prices, payback is
expected within 12 months.
* Lesego`s current drill programme is progressing on schedule with well-
mineralised reef intersected at depths from 325 m.
* Restructuring programme at Buffels announced with intention to restore
Buffels to profitability.
After period-end
* Village disposed of 19,78% of its 25,5% interest in the equity of
First Uranium Corporation (FIU) to AngloGold Ashanti Limited (AngloGold)
for a cash consideration of R205 million. Village entered into a lock-up
agreement with AngloGold providing AngloGold with the first right to
acquire the remainder of the FIU equity held by Village and all of the
Mine Waste Solution Rand Notes (MWS Notes), with a face value of R393
million, held by Village.
* A 50% upgrade in Lesego inferred resources from infill drilling
undertaken during the year to 41,8 Moz from the previously declared 27,8
Moz, with 4,6 Moz ounces classified in the measured category and 6,5 Moz
at shallower depths, up to 700 m below surface.
* A seismic event caused a fall of ground, which regrettably resulted in
the loss of one of our employees.
Accounting treatment
The Simmers transaction resulted in a reverse take-over by Simmers of
Village for accounting purposes and requires Village to account for the
Simmers transaction on a consolidated group basis, in compliance with
the guidelines provided by IFRS 3, Business Combinations. As a result
the group consolidated abridged financial information presented deal
with the results of operations of the acquired Simmers assets for a 15-
month period and do not reflect the results of Cons Murch since
acquisition thereof by Village. In addition, recognition in the
statement of financial position requires that all Village assets be fair
valued at acquisition date (27 June 2011), i.e. Cons Murch and Lesego.
This resulted in a profit on bargain purchase of R154 million being
recognised.
The consolidated condensed financial information for the period ended 30
June 2011 have been reviewed by PricewaterhouseCoopers Inc., and their
unqualified review opinion is available for inspection at the company`s
registered offices.
The abridged financial information has been prepared by the company for
the period ending 30 June 2011 and has been supervised by Mr A Avis
(B.Compt. (Hons) CTA.) and was reviewed by Mr TD Shango, CA (SA) of
PricewaterhouseCoopers Inc.
Reviewed abridged provisional consolidated
statement of financial position
at 30 June 2011
30 June 31 March
2011 2010
Notes R`000 R`000
Assets
Non-current assets
Property, plant and equipment 4 1 761 030 578 070
Investment property 28 859 32 956
Investment in rehabilitation trust fund 124 558 119 874
Intangible assets 83 063 -
Financial assets 5 343 362 21 852
Reimbursive asset 95 553 71 227
Investment in associate 6 - 2 001 030
Investment in subsidiaries - -
Total non-current assets 2 436 424 3 525 810
Current assets
Financial assets 5 4 750 -
Trade and other receivables 69 098 63 761
Inventories 44 119 18 054
Cash and cash equivalents 7 170 298 612 083
Total current assets 288 265 693 898
Non-current assets held for sale 251 995 4 903
Total assets 2 976 685 3 523 810
Equity and liabilities
Equity
Stated capital 486 500 -
Retained earnings 1 264 415 3 105 218
Reserves 22 472 (129 423)
Non-controlling interest 44 714 -
Total equity 1 818 101 2 975 795
Non-current liabilities
Financial liabilities 8 223 510 210 044
Deferred tax 20 458 -
Provision for environmental 282 760 210 850
rehabilitation
Total non-current liabilities 526 729 420 894
Current liabilities
Financial liabilities 8 160 888 13 657
Trade and other payables 396 467 113 464
Bank overdraft 7 28 811 -
Total current liabilities 586 166 127 121
Non-current liabilities held for sale 45 689 -
Total liabilities 1 158 583 548 015
Total equity and liabilities 2 976 685 3 523 810
Reviewed abridged provisional consolidated
statement of comprehensive income
for the period ended 30 June 2011
15 months 12 months
Ended Ended
30 June 31 March
2011 2010
Notes R`000 R`000
Revenue 1 755 258 867 395
Cost of sales (1 685 090) (923 505)
Gross profit / (loss) 70 168 (56 110)
Other income 25 492 26 764
Operating, administrative and
general expenses (222 760) (123 290)
Operating loss 9 (127 101) (166 018)
Investment revenue 81 361 133 292
Restructuring cost (49 629) (3 650)
Fair value adjustment 36 156 (823)
Gain on bargain purchase 154 532 -
Loss on non-current asset
held for sale - (230)
Impairment of assets and associate (1 436 895) (13 382)
Finance cost (72 645) (34 940)
Share of loss of associate (383 569) (205 790)
Loss from continuing
Operations (1 797 789) (278 159)
Loss from discontinuing operations (43 013) -
Loss before taxation (1 840 803) (278 159)
Taxation - -
Loss for the period (1 840 303) (278 159)
Other comprehensive income:
Fair value adjustments to available
for sale investments 408 7 658
Foreign currency translation reserve 151 487 -
Share of associate`s other
comprehensive income - (80 802)
Total comprehensive income
for the period (1 688 908) (351 303)
Profit attributable to:
Owners of the parent (1 688 908) (351 303)
Non-controlling interest - -
Loss for the period (1 688 908) (351 303)
Total comprehensive income:
Owners of the parent (1 688 908) (351 303)
Non-controlling interest - -
Total comprehensive income for the (1 688 908) (351 303)
period
Basic earnings/(loss) per share
From continuing operations
(cents per share) 10 (299.88) (46.55)
From discontinuing operations
(cents per share) 10 (7.17) -
Diluted earnings/(loss) per share
From continuing operations
(cents per share) 10 (299.88) (46.55)
From discontinuing operations
(cents per share) 10 (7.17) -
Headline earnings/(loss) per share
From continuing operations
(cents per share) 10 (52.23) (46.27)
From discontinuing operations
(cents per share) 10 (7.17) -
Diluted headline earnings/(loss)
per share
From continuing operations
(cents per share) 10 (52.23) (46.27)
From discontinuing operations
(cents per share) 10 (7.17) -
Reviewed abridged provisional consolidated
statement of changes in equity
for the period ended 30 June 2011
Stated Retained Fair Non-
value distributable
capital Earnings Reserve Reserve
R`000 R`000 R`000 R`000
Balance as at 1 April 2009 - 3 456 521 4 080 10 326
Loss for the period - (351 303) - -
Other comprehensive income
for the period - - 7 658 -
Balance as at 31 March 2010 - 3 105 218 11 738 10 326
Reverse acquisition share 486 500 - - -
issue
Loss for the period - (1 840 803) - -
Other comprehensive income
for the period - - 408 -
Balance as at 30 June 2011 486 500 1 264 415 12 146 10 326
Reviewed abridged provisional consolidated
statement of changes in equity
for the period ended 30 June 2011 (continued)
Foreign Equity Non- Total
currency attribu- controlling equity
Transalatio table Interest
n Reserve to the
owners of
the parent
R`000 R`000 R`000 R`000
Balance as at 1 April 2009 (70 685) 3 400 242 - 3 400 242
Loss for the period - (351 303) - (351 303)
Other comprehensive income
for the period (80 802) (73 144) - (73 144)
Balance as at 31 March 2010 (151 487) 2 975 795 - 2 975 795
Reverse acquisition
share issue - 486 500 44 714 531 214
Loss for the period - (1 840 803) - (1 840 803)
Other comprehensive income
for the period 151 487) 151 895 - 151 895
Balance as at 30 June 2011 - 1 773 387 44 714 1 818 101
Reviewed abridged provisional consolidated
statement of cash flow
for the period ended 30 June 2011
15 months 12 months
Ended Ended
30 June 31 March
2011 2010
Notes R`000 R`000
Cash generated from/(utilised in)
operating activities 50 783 (48 162)
Cash flow from investing activities (711 013) (804 183)
Cash flow from financing activities 187 711 1 204 762
Net increase/(decrease) in cash
and cash equivalents (470 596) 352 417
Cash and cash equivalents at the
beginning of the period 7 612 083 259 666
Cash and cash equivalents at the
end of the period 7 141 487 612 083
Notes to the reviewed abridged provisional financial information
for the ended 30 June 2011
1. Significant accounting policies
1.1 General information
Village Main Reef Limited ("the company") and its subsidiaries (together
"the group") are engaged in exploration, extraction and processing of
gold and antimony. The group has mining operations in the North West,
Limpopo and Free State provinces in South Africa.
1.2 Basis of accounting
The condensed consolidated financial information for the period ended 30
June 2011 have been prepared in accordance with IAS 34, Interim
Financial Reporting, JSE Listing Requirements, the AC 500 standards as
issued by the Accounting Practices Board or its successor and in the
manner required by the Companies Act of South Africa. They should be
read in conjunction with the annual financial statements for the year
ended 30 June 2010, which have been prepared in accordance with
International Financial Reporting Standards as issued by the
International Accounting Standards Board (IFRS). The accounting policies
are consistent with those described in the annual financial statements,
except for the adoption of applicable revised and/or new standards
issued by the International Accounting Standards Board.
2. Statements and interpretations not yet effective
At the date of authorisation of this financial information, certain new
standards, amendments and interpretations to existing standards have
been published but are not yet effective, and have not been early
adopted by the group.
Management anticipates that all of the pronouncements will be adopted in
the group`s accounting policies for the first period beginning after the
effective date of the pronouncement. Information on new standards,
amendments and interpretations that are expected to be relevant to the
group`s financial information is provided below. Certain other new
standards and interpretations have been issued but are not expected to
have a material impact on the group`s financial information.
Standard Details of Amendment Annual periods
beginning on
or after
IFRS 9 Financial New standard that forms the first 1 January 2013
Instruments part of a three-part project to
replace IAS 39 Financial
Instruments: Recognition and
Measurement
IAS 1: Presentation Current/non-current classification 1 July 2012
of Financial of convertible instruments
Statements
IAS 19 (Amendment): 1 January 2013
Employee Benefits
3. Reverse acquisition accounting
The "Disposal Group" or "Simmer and Jack Disposal Group" comprises the
disposal assets and the assumed liabilities. The Disposal Group`s
historical financial information was compiled in terms of International
Financial Reporting Standards. The historical financial information of
the Disposal Group was derived from the reviewed consolidated financial
statements of Simmer and Jack Mines, Limited from the reviewed
consolidated financial statements of Simmer and Jack Mines, Limited for
the year ended 31 March 2010."
Included in the historical financial information are the financial
effects of the Aberdeen International Incorporated liability, Domestic
Medium Term Note Programme liability, Rand Merchant Bank Bridge Loan
liability and Mine Waste Solution Notes asset, which were reported in
the consolidated financial statements of Simmer and Jack Mines, Limited.
The financial position, financial performance and cash flows of Simmer
and Jack Mines, Limited, Transvaal Gold Mining Estates Limited, Sabie
Mines (Proprietary) Limited, Bobsat Investments (Proprietary) Limited,
Caledonian Mining and Exploration Company (Proprietary) Limited, Vanaxe
Share Block (Proprietary) Limited, Simmer and Jack Mines, Limited Share
Trust were eliminated from the consolidated financial statements for
purposes of compiling the Disposal Group historical financial
information.
The investment in associate, First Uranium Corporation, held by Simmer
and Jack Mines, Limited has been equity accounted for throughout the
historical financial period , the accounting treatment changed with the
company`s decision to dispose of the investment, resulting in a change
in the basis of accounting with the investment carried at market value.
4. Property, plant and equipment
Group Land and Plant and Furniture Motor
buildings equipment and vehicles
fittings
2010 R`000 R`000 R`000 R`000
Cost as at 1 April 2009 7 619 106 845 16 310 1 274
Accumulated depreciation
and impairment losses as (1 598) (17 695) (5 246) (210)
at 1 April 2009
Carrying value as at
1 April 2009 6 021 89 150 14 064 1 064
Depreciation (373) (2 730) (3 491) (267)
Additions 363 11 904 5 549 -
Carrying value as at
31 March 2010 6 011 98 324 16 122 797
Cost as at 31 March 2010 7 982 118 749 24 859 1 274
Accumulated depreciation
and impairment losses as (1 970) (20 425) (8 737) (477)
at 31 March 2010
Carrying value as at
31 March 2010 6 011 98 324 16 122 797
2011
Cost as at 1 April 2010 7 982 118 749 24 859 1 274
Accumulated depreciation
and impairment losses
as at 1 April 2010 (1 970) (20 425) (8 737) (477)
Carrying value as at
1 April 2010 6 011 98 324 16 122 797
Depreciation (2 250) (7 576) (4 782) (1)
Impairment (7 453) - (4 412) (205)
Additions 42 610 9 048 11 765 3 894
Additions by business
Combination 87 526 876 96 (189)
Disposals - - (2 440) (203)
Carrying value as at
30 June 2011 126 444 100 672 16 349 4 094
Cost as at 30 June 2011 138 117 128 673 34 280 4 776
Accumulated depreciation
and impairment losses as (11 673) (28 001) (17 931) (682)
at 30 June 2011
Carrying value as at
30 June 2011 126 444 100 672 16 349 4 094
4. Property, plant and equipment(continued)
Group Mining Computer Exploration Total
assets equipment costs
and
software
2010 R`000 R`000 R`000 R`000
Cost as at 1 April 2009 457 715 8 749 1 257 602 769
Accumulated depreciation
and impairment losses as (77 193) (4 954) - (106 895)
at 1 April 2009
Carrying value as at
1 April 2009 380 522 3 795 1 257 495 874
Depreciation (23 690) (2 060) - (32 611)
Additions 95 884 927 180 114 807
Carrying value as at
31 March 2010 452 716 2 662 1 437 578 070
Cost as at 31 March 2010 553 599 9 676 1 437 717 576
Accumulated depreciation
and impairment losses as (100 883) (7 014) - (139 506)
at 31 March 2010
Carrying value as at
31 March 2010 452 716 2 662 1 437 578 070
2011
Cost as at 1 April 2010 553 599 9 676 1 437 717 576
Accumulated depreciation
and impairment losses as (100 883) (7 014) - (139 506
at 1 April 2010
Carrying value as at
1 April 2010 452 716 2 662 1 437 578 070
Depreciation (84 017 (510) - (99 136)
Impairment (6 311) (61) - (18 442)
Additions 647 716 1 140 2 233 718 405
Additions by business
combination 43 620 (698) 455 000 586 231
Disposals - (1 455) - (4 098)
Carrying value as at
30 June 2011 1 053 724 1 077 458 670 1 761 030
Cost as at 30 June 2011 1 244 936 8 662 458 670 2 018 113
Accumulated depreciation
and impairment losses as (191 211) (7 585) - (257 084)
at 30 June 2011
Carrying value as at
30 June 2011 1 053 724 1 077 458 670 1 761 030
15 months 12 months
ended Ended
30 June 31 March
2011 2010
R`000 R`000
5. Financial assets
Available for sale financial assets
Unlisted shares
Rand Mutual Assurance Company
115 shares - Directors` valuation 8 9
Rand Refinery Limited
24 004 shares - Directors` valuation 22 252 21 843
22 260 21 852
Listed shares
Investment in listed shares
Total available for sale financial assets 22 260 21 852
Financial assets at fair value through
profit and loss
Mine Waste Solution convertible Rand Notes 392 874 -
During April 2010, FIU concluded its
convertible redeemable note financing in
terms of the FIU recapitalisation
programme. In terms of the Village
transaction, Village acquired 392 874 of
the Mine Waste Solution Rand Notes. Each
note has a face value of
R1 000, carries interest at 11% per annum
and is convertible into 107,36 common FIU
shares at an equivalent rand price of R9,31
per share at the option of the holder prior
to 13 April 2013.
The fair values of unlisted securities are
based on cash flows discounted using a rate
based on the market interest rates and the
risk premium specific to the unlisted
securities.
Fair value adjustment (71 772) -
Total financial assets at fair value
through profit and loss 343 362 -
Financial assets at amortised cost
Loan to First Uranium Corporation 4 750 -
Total financial assets at amortised cost 4 750 -
Total financial asset 348 112 21 852
Non-current assets
Available for sale 242 674 21 852
Fair value through profit and loss 100 688 -
Amortised cost - -
343 362 21 852
Current assets
Amortised cost 4 750 -
6. Investment in associate
Name of company
Associate
First Uranium Corporation - 2 001 030
Reconciliation of carrying value
Opening balance 2 001 030 2 287 622
Equity accounted portion
of loss in associate (873 476) (205 790)
Impairment of investment in associate (923 436) -
Share of other comprehensive income (57 303) (80 802)
Transfer to financial assets at
fair value through profit and loss (146 815) -
Carrying amount at the end of the year - 2 001 030
Summary of the group`s interest associate*
Total assets 5 864 697 13 152 930
Total liabilities (3 475 723) (6 464 376)
Revenue 797 326 540 072
Loss (759 793) (613 905)
* These balances represent 100% of the
First Uranium balances for the 15 months
ended
30 June 2011.
7. Cash and cash equivalents
Cash and cash equivalents consist of:
Bank balances 171 526 612 083
Impairment of Assets (1 228) -
Bank overdraft (28 811) -
141 487 612 083
Cons Murch Mine (Pty) Ltd
Cash and cash equivalents held by the
entity
that are not available for use by the
group. The restricted cash consist of
R24 448 592,81 held for the settlement
of employee benefits.
Cash and cash equivalents pledged
as collateral
Total financial assets pledged
as collateral for Eskom
A payment guarantee in the form of a bank
guarantee has been required by Eskom for
the provision of electrical supply to the
operation.
R105 million of the cash and cash
equivalents held by the group at period end
is not available for general use by the
group as it has been committed to fund
rehabilitation commitments in respect of
Tau Lekoa and BGM.
R96 million of the cash and cash
equivalents held by the Disposal Group at
period end is not available for general use
by the Disposal Group as it has been
committed to fund rehabilitation
commitments.
R450 million of the cash and cash
equivalents held by the Disposal Group at
period end is not available for general use
by the Disposal Group as it has been
committed to settle the acquisition of Tau
Lekoa.
8. Financial liabilities
Financial liabilities
At fair value through profit or loss
Aberdeen International Incorporated
(Aberdeen) 104 296 223 701
The Simmer and Jack carve-out entities
entered into an agreement with Aberdeen
(the Aberdeen Loan Agreement), a Canadian
exploration and royalty company trading on
TSX, whereby Aberdeen provided a loan
facility of US$10 million to enable the
Simmer and Jack carve-out entities to
acquire BGM.
The loan had a 3% coupon up to a gold price
of US$400/oz and 2,5% thereafter. In
addition a Net Smelter Royalty (NSR) on
BGM`s gold production was charged, which
was linked to the price of gold ranging
from 0,5% NSR at US$300/oz to a 4,75% NSR
at gold prices of US$750/oz or higher. The
principal amount of the loan was converted
into a 1% NSR on BGM`s gold production.
In October 2008, the Simmer and Jack carve-
out entities advised shareholders that
Aberdeen had elected to convert its US$10
million loan facility into equity.
Accordingly, a circular was dispatched to
shareholders on 30 January 2009 outlining
the implications of the conversion being
accepted or declined, and recommending that
shareholders vote against the conversion.
The issue was put to the vote at a general
meeting held on 16 February 2009 at the
Simmer and Jack carve-out entities`
registered offices, whereupon 87.1% of the
voteable shares present voted against the
issue of shares to Aberdeen. 71,88% of the
voteable shares were represented at the
meeting. Aberdeen disputes the terms of the
agreement - see Disputes with Aberdeen
below.
The loan is secured by a bond over BGM`s
North Plant.
The loan, royalties and options have been
fair valued by Mr Ranti Mothapo, a
consulting actuary and analyst with the
Matlotlo Group (Proprietary) Limited. The
downward adjustment during the current
financial year resulted from the closure of
non-profitable mine shafts at BGM and the
impact that the reduced resource for future
mining, had on the valuation of the
perpetual royalty valuation.
Disputes with Aberdeen
Aberdeen has declared two disputes with
regard to the Aberdeen Loan Agreement. In
the first, the South African High Court of
Appeal ruled against an appeal by Aberdeen
against an earlier ruling by the North
Gauteng High Court on 5 September 2008 in
which it was found that the Simmer and Jack
carve-out entities had not breached the
Right of First Refusal in the Aberdeen Loan
Agreement.
The dispute followed a notification from
Aberdeen in September 2008 alleging that
the Simmer and Jack carve-out entities
was in breach of a right of first
refusal following a private placement
of shares concluded during May 2007.
As a consequence, Aberdeen attempted to
claim an amount of R68 739 162.40 as
being
the loss of appreciation of share value
had Aberdeen been given the option to
participate in the private placement.
Since Aberdeen has no further recourse in
the South African law courts, this matter
has effectively been brought to a close.
The second dispute relates to Aberdeen`s
attempt to recover the US$10 million
convertible loan plus the balance of a
graduated gold royalty due for the fourth
quarter of FY2008, from the Simmer and Jack
carve-out entities and is ongoing. The
Simmer and Jack carve-out entities` view is
that Aberdeen`s claim for US$11.4 million,
filed in August 2009, is invalid in terms
of the Aberdeen Loan Agreement which states
that should Aberdeen`s application to
convert the loan into the Simmer and Jack
carve-out entities` equity be unsuccessful,
the loan converted into a 1% perpetual
royalty.
Simmers shareholders voted against the
conversion of the Aberdeen loan into
Simmers equity at a general meeting held on
16 February 2009.
"Deutsche Bank A.G. Forward Gold Purchase
Agreement - First Agreement
BGM entered into a Forward Gold Purchase 44 332 -
Agreement with Deutsche Bank A.G. whereby
Deutsche Bank purchased 24 360 oz of gold
from BGM. Deutsche Bank subsequently
deposited a Prepayment US$ 20 million (less
fees) to BGM which will be repaid over a
tenure of 12 months. The repayment will
transpire by means of the delivery of the
first 2 030 oz of BGM`s delivered gold to
the Rand Refinery per month for the period
starting November 2010 to October 2011. An
Additional amount will be paid to BGM on
the second day of every month which is
calculated on the 2 030 ounces @ US$550 /oz
being the difference between the maximum of
US$1 400/oz and minimum of US$850/oz as set
in the agreement."
"Deutsche Bank A.G. Forward Gold Purchase
Agreement - Second Agreement
BGM entered into a Forward Gold Purchase 224 029 -
Agreement with Deutsche Bank A.G. whereby
Deutsche Bank purchased 64 800 oz of gold
from BGM. Deutsche Bank subsequently
deposited a Prepayment US$25 million (less
fees) to BGM which will be repaid over a
tenure of 18 months. The repayment will
transpire by means of the delivery of the
first 3 600 oz of BGM`s delivered gold to
the Rand Refinery per month for the period
starting November 2011 to April 2013. An
Additional Amount will be paid to BGM on
the second day of every month which is
calculated on the 3 600 ounces @ US$450 /oz
being the difference between the maximum of
US$1 550/oz and minimum of US$1 100/oz as
set in the agreement."
Call and Put Option
Village holds call and put options pursuant 9 271 -
to a Black Economic Empowerment ("BEE")
transaction of Cons Murch Mines (Pty) Ltd
("Cons Murch"). The call option provides
Village with a right to acquire a 10%
interest in Cons Murch from the BEE
shareholders. The put option provides the
BEE shareholders with a right to dispose of
their 10% shareholding in Cons Murch to
Village at which point Village will be
obliged to purchase the shares. The put
option has been recognised as a liability
in the Village`s books.
Finance lease obligation
Certain motor vehicles and equipment at 2 472 -
Cons Murch Mine (Pty) Ltd have been
acquired through a finance lease
transaction. The average lease term was
three years and the average effective
borrowing rate was 11,5%.The company`s
obligations under finance leases are
secured by the lessor`s charge over the
leased assets.
Financial liabilities designated at fair
value through profit or loss 384 400 223 701
Carrying amount at 1 April 223 701 287 094
New borrowings raised 291 895 13 643
Absa put option realised 9 271 (6 735)
Repayments (95 091) (13 291)
Change in fair values - -
- attributable to changes in credit
interest risk - -
- attributable to changes in credit
currency risk - (535)
- transfer to subsidiary/associate - -
- attributable to other market factors (45 376) (56 475)
Carrying amount at 31 March 384 400 223 701
Non-current portion 223 510 210 044
Current portion 160 888 13 657
The fair value of these financial
liabilities is estimated using valuation
techniques with all significant inputs
based on observable market prices.
Management estimates the credit risk-
related change in fair value on a residual
basis, as the difference between fair-value
changes specifically attributable to
interest rates and foreign exchange rates
and the total change in fair value.
9. Operating (loss) profit
Operating loss for the year is stated after
accounting for the following:
Operating lease charges
Premises
Contractual amounts - (1 837)
Equipment
- Contractual amounts (2 450) (1 397)
(2 450) (3 234)
Management fee: Related party (547) (442)
Exploration expenditure - (19 422)
Audit fees - external (2 234) (1 603)
Audit fees - internal (492) (410)
Profit on sale of property, plant
and equipment (1 865) 10
Gain/(loss) on partial disposal of
investment in subsidiary (25 500) -
Impairment on property, plant and equipment (18 442) -
Impairment on loans (31 024) (13 382)
Impairment of associate (1 436 896) -
Loss/profit on financial assets - (799)
(Loss)/gain on sale of non-current assets
held for sale - (230)
Depreciation on property, plant and (106 102) (32 601)
equipment
Employee costs - including share option (960 047) (518 444)
costs
10. Earnings per share
Reconciliation between earnings/(loss) and
headline loss:
Net loss from continuing operations (1 797 789) (278 159)
Net loss from discontinuing operations (43 013) -
Basic (loss)/earnings for the year (1 840 803) (278 159)
Add back:
Non-controlling interest - -
Attributable to the owners of the parent (1 840 803) (278 159)
Impairment of property, plant and equipment 18 442 -
Impairment of associate 1 436 895 -
Impairment of loans 31 024 -
Disposal of property, plant and
equipment - (gain)/loss (1 865) (10)
(Loss)/gain on sale of non-current assets
held for sale - 230
Fair value adjustments - 538
Fair value adjustment on held-for-sale - 960
assets
Headline loss for the year (356 127) (276 441)
Basic (loss)/profit per share (cents)
from continuing operations* (299.88) (46.55)
Basic (loss)/profit per share (cents)
from discontinuing operations* (7.17) -
Total basic (loss)/profit per share (307.05) (46.55)
(cents)*
Diluted (loss)/profit per share (cents)
from continuing operations* (299.88) (46.55)
Diluted (loss)/profit per share (cents)
from discontinuing operations* (7.17) -
Total diluted (loss)/profit
per share (cents)* (307.05) (46.55)
Headline loss per share (cents)* (59.40) (46.27)
Diluted headline loss per share (cents)* (59.40) (46.27)
Net asset value per share (cents) 201.66
* Based on weighted average number of
shares in issue
Reconciliation of number of shares issued
Reported at 1 April 1 1
Shares issued for cash 901 575 -
Shares issued at 30 June 901 576 1
Weighted average number of ordinary shares
in issue 590 728 597 512
Adjusted for:
- Share options - -
Weighted average number of ordinary shares 590 728 597 512
for diluted
earnings per share
Basic earnings per share are calculated by
dividing the profit attributable to equity
holders of the company by the weighted
average number of ordinary shares in issue
during the year.
11. Cash generated from/(utilised in)
operations
Profit/(loss) before taxation (1 797 789) (278 159)
Adjusted for:
Depreciation and impairment 129 905 32 611
Loss/(profit) on sale of asset - 789
Loss/(profit) on non-current asset
held for sale - 230
Loss from discontinuing operations (43 013) -
Share of losses of associate 383 569 205 790
Investment revenue (81 361) (133 292)
Movement in Aberdeen liability - 13 801
Finance cost 72 645 34 940
Gain on bargain purchase (154 532) -
Fair value adjustments (36 156) (12 974)
Impairment of associate investment 1 436 895 -
Impairment loss - 13 100
Share based payments 20 496 14 572
Foreign exchange gains and losses (4 741) -
Net smelter royalty (63 773) (56 658)
Increase in financial asset - (7 658)
Non-cash finance charges in terms of (15 589) -
rehabilitation trust fund
Non-cash items on accretion expense on (10 056) (9 497)
debentures - liability portion
Non-cash items on rehabilitation liability (37 318) (8 257)
accretion
Net movement in environmental
rehabilitation provision - 11 850
(200 818) (178 812)
Changes in working capital:
(Increase)/decrease in inventories (26 065) 4 074
(Increase)/decrease in trade and
other receivables (5 337) 6 385
Increase/(decrease) in trade and
other payables 283 003 (24 072)
Cash generated from/(utilised in) 50 783 (192 425)
operations
12. Events after the reporting period
Disposal of First Uranium common shares and lock-up of Mine Waste
Solution convertible redeemable notes
During July 2011, Village concluded a transaction with AngloGold Ashanti
Limited in which Village disposed of 47 065 916 First Uranium
Corporation (FIU) common shares to AngloGold for a total consideration
of R205 million. AngolGold and Village also entered into a lock-up
agreement in relation to the remaining 13 556 737 FIU shares owned by
Village, as well as in relation to the 392 874 Mine Waste Solution
convertible redeemable notes (MWS notes) with a face value of R1000 per
note. In terms of the lock-up agreement, Village will not dispose of any
of the common shares until 30 November 2011, or any of the MWS Notes
until 30 October, unless they dispose of the instruments to AngloGold.
After the lock-up period, AngloGold has a right of first refusal in
relation to any disposal Village may contemplate in relation to the FIU
equity and the MWS Notes.
Disposal of Duff Scott medical clinic
Village executive management has started a competitive bid process to
dispose of Duff Scott hospital. It is the intention to ensure that the
Duff Scott facilities remain available to the wider community, without
negatively impacting on the financial wellbeing of Buffelsfontein.
Village has received expressions of interest from a number of potential
buyers. It is anticipated that a transaction will be concluded by the
end of November 2011.
13. Segmental reporting
The group`s mining and exploration activities are conducted mainly in
the Limpopo and North West provinces of South Africa. An analysis of the
group`s operating segments is geographically set out below.
It was determined that an operating segment consists of a shaft or a
group of shafts managed by a single general manager and management team.
When assessing profitability, management considers the revenue and cash
production costs of each segment. Segment assets and liabilities
consist of mining assets which can be attributed to the shaft or group
of shafts.
All gold is sold to Rand Refinery Limited.
2011
Figures in Rand thousand Limpopo North West Duff Scott &
Province Province Corporate
Profit/(loss)
Revenue - 1 755 258 -
Production related
depreciation
Cost of production - (1 735 968) -
Gross profit/(loss) - 19 290 50 878
Other income - 25 046 446
Impairment of assets - (40 256) (1 251 212)
General administrative and - (59 908) (162 852)
overhead expenditure
Operating loss - (55 828) (1 362 741)
Finance income - (8 796) 90 157
Restructuring costs - (49 629) -
Share of losses of associate - - (383 569)
Net movement in fair value - 31 760 4 396
Gain on bargain purchase - 154 532
Finance charges - (27 007) (45 638)
Loss on ordinary activities - (109 500) (1 542 862)
Loss from discontinuing - - (43 013)
operations
Other comprehensive income
Share of other comprehensive - 408 (408)
income of equity-accounted
investment
Foreign currency translation - - 151 487
reserve
Movement in available-for-sale
financial instruments - - (145 019)
Total comprehensive
income/(loss) for the year - (109 092) (1 579 816)
Total assets 817 844 1 480 913 677 928
Total liabilities (116 222) (1 002 774) (39 587)
2011
Figures in Rand thousand Total
Profit/(loss)
Revenue 1 755 258
Production related
depreciation
Cost of production (1 685 090)
Gross profit/(loss) 70 168
Other income 25 492
General administrative and (222 760)
overhead expenditure
Operating loss (127 101)
Finance income 81 361
Restructuring costs (49 629)
Share of losses of associate (383 569)
Net movement in fair value 36 156
Gain on bargain purchase 154 532
Impairment of assets and (1 436 895)
associate investment
Finance charges (72 645)
Loss on ordinary activities (1 797 789)
Loss from discontinuing (43 013)
operations
Other comprehensive income
Share of other comprehensive -
income of equity-accounted
investment
Foreign currency translation 151 487
reserve
Movement in available-for-sale
financial instruments 408
Total comprehensive
income/(loss) for the year (1 688 908)
Total assets 2 976 685
Total liabilities (1 158 583)
2010
Figures in Rand thousand North West Duff Scott and Total
Province Corporate
Profit/(loss)
Revenue 867 395 - 867 395
Production-related
depreciation (26 544) - (26 544)
Cost of production (896 961) - (896 961)
Gross profit/(loss) (56 110) - (56 110)
Other income 10 404 25 897 36 301
General administrative and
overhead expenditure (50 585) (72 020) (122 605)
Share option costs (11 307) (16 805) (28 112)
Operating loss (107 598) (62 928) (170 526)
Finance income 56 582 76 710 133 292
Restructuring costs (3 650) - (3 650)
Loss from equity-accounted
investment - (213 972) (213 972)
Net movement in fair value 677 9 063 9 740
Impairment of assets (30 509) 32 636 2 127
Loss on non-current assets (230) - (230)
held for sale
Finance charges (34 922) (18) (34 940)
Loss on ordinary activities (119 650) (158 509) (278 159)
Other comprehensive income
Share of other comprehensive
income of equity-accounted
investment - (80 802) (80 802)
Movement in available-for-sale
financial instruments - 7 658 7 658
Total comprehensive
income/(loss) for the year (119 650) (231 653) (351 303)
Total assets 876 596 2 757 808 3 634 404
Total liabilities (526 791) (1 302 218) (1 829 009)
14. Business combination
A merger transaction between Simmers and
Village Main Reef Limited (`Village`) was
approved by the Simmers and Village
shareholders on 25 March 2011. In terms of the
merger Simmers and Village had entered into an
agreement in terms of which Village would
acquire the majority of the Simmers assets in
exchange for Village sharers, which Village
shares would be unbundled to Simmers`
shareholders.
The sale assets (collectively referred to as
the Simmers disposal group) consisted of:
- 100% shareholding in and claims on loan
account against Simmer and Jack Investments
(Proprietary) Limited, which is the holding
company of Buffelsfontein Gold Mines Limited,
which, in turn, owns the Buffelsfontein Gold
Mine, Hartebeesfontein Gold Mine and the Tau
Lekoa Mine;
- 60,622,653 common shares in First Uranium
Corporation (FIU); and
- 392 874 Mine Waste Solutions (Proprietary)
Limited (MWS) Notes
The liabilities assumed by Village were as
follows:
- all of Simmers` rights and obligations under
the ABSA Note Programme
- all of Simmers` rights and obligations under
the Forward Gold Purchase Transaction
- payment by Village to Simmers of any amount
which is or becomes or will become due, owing
and payable by Simmers to any other person
under, in terms of or arising out of the ABSA
Note Programme Documents
- payment by Village to Simmers of any amount
which is or becomes or will become due, owing
and payable by Simmers to any other person
under, in terms of or arising out of the
Forward Gold Purchase Transaction Documents
- all loss, liability, damage or expense which
Simmers may suffer as a result of or which may
be attributable to any claims arising out of,
or connected with, the Aberdeen loan agreement
This transactions was finalised and became
effective on the 27 June 2011
15 months 12 months
Ended ended
30 June 31 March
2011 2010
R`000 R`000
Carrying value of assets sold
Investment properties 28,859 -
Property, plant and equipment 1,157,551 -
Environmental rehabilitation trust fund 119,853 -
Financial assets 321,101 -
Available for sale investments 242,674 -
Total non-current assets 1,870,038
Financial asset 4,750 -
Reimbursive assets 70,553 -
Loan ceded to Village 249,839 -
Inventories 28,221 -
Trade and other receivables 36,780 -
Total current assets 390,143
Non-current assets held for sale 31,581 -
Financial liabilities (230,809) -
Environmental rehabilitation provision (239,063) -
Total non-current liabilities (469,872) -
Trade and other payables (328,767) -
Financial liabilities (162,955) -
Total current liabilities (491,722) -
Non-current liabilities held for sale (45,689) -
Total net assets, excluding cash
disposed of 1,284,479 -
Consideration received 956,019 -
Cash and cash equivalents disposed of (79,174) -
Net consideration received 876,845
In consideration of the acquisition of the
Simmers disposal assets, Village issued the
Village consideration shares to Simmers. The
Village consideration shares amounted to 597
512 158 new Village shares which was issued on
17 June 2011 and which represented the last
day of trade before the conclusion of the
merger transaction en when the terms of the
agreement became unconditional. The Village
consideration share resulted in Simmers
effectively acquiring 66,0% of the enlarged
share capital of Village post their issue to
Simmers the Village consideration shares.
-
The 304 062 736 ordinary issued Village shares
prior to the merger equated to a market
capitalisation of R486.5 million. Compared to
the R641.0 million net asset value of the
Village assets immediately prior to the
conclusion of the merger transaction, the
difference of R154.5 million represents the
gain on bargain purchase.
A component of non-controlling interest
amounting to R44.7 million was also recognised
as part of the accounting for the business
combination. This related to the fair value
attributable to the non-controlling interest
in the Lesego Platinum project.
As a result of the upcoming merger between
Simmers and Village, the results for the
disposal group were prepared on a liquidation
basis. This basis of reporting required the
asset, liabilities, income and expenditures of
those entities forming part of the
transaction, to be disclosed as assets
available for sale and losses on non-current
assets held for sale, respectively. This basis
of accounting requires that all assets and
liabilities are accounted for at fair value
less costs to sell. This is a departure from
the valuation methodology applied in the
previous quarters in relation to the
investment in FIU, which were accounted for on
the value in use basis. As a result of the
change in the valuation basis and to give
effect to the impact of the transaction with
Village, an impairment of R1.4 billion was
processed for the period.
15. Related parties
Relationships -
Holding company Village Main Reef Limited
Subsidiaries Umbono Minerals and Mining (Pty) Ltd
Umbono Platinum Mining (Pty) Ltd
Nebavest 69 (Proprietary) Limited
Lesego Platinum Mining Limited
Sweet Sensation 79 (Proprietary) Limited
Khumo Mining and Investments (Proprietary) Limited
Cons Murch Mine (Pty) Ltd
Nebavest 49 (Proprietary) Limited
Simmer and Jack Investments (Proprietary) Limited
Buffelsfontein Gold Mines Limited
Duff Scott Hospital (Proprietary) Limited
Temotuo Rehabilitation Company - A company registered
under Section 21 of the Companies Act
Companies Margaret Water Company (Association incorporated
under Section 21)
BEE partner Xelexwa Investments Holdings (Proprietary) Limited
(Formerly Jaganda Holdings (Proprietary) Limited)
Vulisango Holdings (Proprietary) Limited
Umbono Financial Services (Proprietary) Limited
Key management Village directors are listed on the Village website
(www.villagemainreef.co.za)
Officers A Avis
Related party balances
Reimbursive asset recognised
Buffelsfontein Gold Mines Limited
On 20 December 2006, First Uranium
(Proprietary) Limited (FUSA) entered into an
agreement to acquire 11 surface tailings from
BGM, (the Buffelsfontein Tailings and Rights
Agreement). It was originally contemplated that
the transaction would be recognised on the
satisfaction of the conditions precedent in the
Buffelsfontein Tailings and Rights Agreement.
While the conditions have not yet been
satisfied, Mine Waste Solutions (MWS) commenced
processing the material from the Buffelsfontein
Tailings in December 2007. All the benefits
thereof accrued to MWS, and consequently, MWS
assumed the asset retirement obligation related
to the Buffelsfontein Tailings.
As the Department of Mineral Resources (DMR) 70 553 71 227
has not yet approved the transfer of the mining
rights to MWS, the liability still resides with
BGM.
Related party transactions
Capitation fees received from related parties (22 805) (13 584)
Duff Scott Hospital (Proprietary) Limited
Interest received from related parties 1 846 19 335
First Uranium (Proprietary) Limited
Share based payments will be disclosed in full
details in the directors` report to the Annual
Report
Director`s emoluments will be disclosed in full
details in the directors` report to the Annual
Report
Village CFO - Marius Saaiman
Msaaiman@villagemainreef.co.za
011 274 4603
082 458 3420
Vestor Media and Investor Relations
Louise Brugman
louise@vestor.co.za
011 787 3015
083 504 1186
Transfer secretaries
Link Market Services South Africa (Pty) Ltd
PO Box 4844, Johannesburg, 2000
Auditor
PricewaterhouseCoopers Inc
2 Eglin Road, Sunninghill, Johannesburg
Registered Office
210 Cumberland Avenue, Bryanston, 2021
Sponsor
Java Capital
2 Arnold Road, Rosebank
22 September 2011
Date: 22/09/2011 11:25:34 Produced by the JSE SENS Department.
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