| Thu 29 Sep 2011, 9:00 | | WEZ - Wesizwe Platinum Ltd - Reviewed condensed consolidated interim |
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WEZ
WEZ
WEZ - Wesizwe Platinum Ltd - Reviewed condensed consolidated interim
financial information for the six months ended 30 June 2011
Wesizwe Platinum Ltd
Registration number 2003/020161/06
Share code: WEZ ISIN: ZAE000075859
("Wesizwe" or "the Group")
- Conclusion of the transaction with China-Africa Jinchuan Investment
Limited and Micawber 809 (Pty) Ltd resulting in the subscription of 829
884 460 new ordinary shares for an amount of US$227 million.
- Frischgewaagd-Ledig mine development project officially launched on 4
July 2011.
- Appointment of new Chief Executive Officer and Finance Director.
- Mine development accelerated under experienced and competent management
team.
- Platinum Group Metals (RSA) (Pty) Ltd exercised its option to secure an
additional 19,25% in Maseve Investments 11 (Pty) Ltd from Wesizwe for
R408,8 million.
Condensed consolidated statement of financial position
Note Six months Six months Year ended
ended ended December
June 2011 June 2010 2010
Reviewed Reviewed Audited
R`000 R`000 R`000
ASSETS
Non-current assets 2 584 184 2 492 346 2 516 054
Property, plant and equipment 1 657 227 134 240 1 583 551
Tangible exploration and - 147 191 -
evaluation assets
Intangible exploration and - 1 284 774 -
evaluation assets
Available-for-sale financial asset 11 749 8 560 10 283
Investment in equity accounted 5 915 208 917 581 922 220
investee
Current assets 1 333 820 105 455 56 237
Loan to the Bakubung community 11 4 464 1 429 8 257
Other receivables 15 212 20 958 9 271
Restricted cash 13 28 244 27 828 27 852
Cash and cash equivalents 1 285 900 55 240 10 857
TOTAL ASSETS 3 918 004 2 597 801 2 572 291
EQUITY AND LIABILITIES
Capital and reserves 3 589 720 2 139 880 2 105 860
Share capital 8 16 8 8
Share premium 8 3 425 528 1 955 159 1 955 159
Share-based payment reserve 10 472 179 63 763 65 384
Available-for-sale financial asset 1 012 726 1 012
reserve
(Accumulated loss)/retained (309 015) 120 224 84 297
earnings
Non-current liabilities
Deferred tax liability 285 251 285 251 290 113
Current liabilities 43 033 172 670 176 318
Trade and other payables 23 800 33 573 22 214
Taxation payable 19 233 - -
Bridging loan - - 33 270
Equalisation liability 6 - 139 097 120 834
TOTAL EQUITY AND LIABILITIES 3 918 004 2 597 801 2 572 291
Condensed consolidated statement of comprehensive income
Note Six months Six months Year ended
ended ended December
June 2011 June 2010 2010
Reviewed Reviewed Audited
R`000 R`000 R`000
Revenue - - -
Other income 96 71 144
Gain on bargain purchase - 378 083 378 083
(Loss)/profit on re- 6 (4 666) - 17 878
measurement of liability
denominated in a foreign currency
Gain on foreign exchange rate 9 60 585 - -
fluctuation
Administration expenditure 12 (17 491) (46 663) (85 821)
Share-based payment expense 10 (408 002) - -
Impairment of mineral rights - - (7 721)
Impairment of loan to the Bakubung 11 (3 793) - -
community
Exploration and evaluation expense - (7) (1 787)
(Loss)/profit from operations (373 271) 331 484 300 776
Net finance income 1 342 3 317 5 600
Finance income 3 403 4 218 6 122
Finance expense (2 061) (901) (522)
Share of loss of equity accounted 5 (7 012) - (2 640)
investee (net of tax)
(Loss)/profit before income tax (378 941) 334 801 303 736
Income tax expense (14 371) - (4 862)
(Loss)/profit for the period (393 312) 334 801 298 874
Net change in fair value of the - - 286
available-for-sale financial asset
Total other comprehensive income - - 286
Total comprehensive (loss)/income (393 312) 334 801 299 160
for the period
Basic (loss)/earnings per share 20 (36,97) 50,47 40,87
(cents)
Diluted (loss)/earnings per share 20 (36,97) 50,45 40,85
(cents)
Condensed consolidated statement of changes in equity
Note Share Share Share-
capital premium based
R`000 R`000 payment
reserve
R`000
Balance at 1 January 2010 6 1 489 091 62 582
Shares issued - Project Delta 2 466 068 -
Share-based payment expenditure - - 1 181
Total comprehensive income for - - -
the period
Balance at 30 June 2010 8 1 955 159 63 763
Share-based payment expenditure - - 1 621
Loss for the period - - -
Other comprehensive income - - -
Total comprehensive loss for the - - -
period
Balance at 31 December 2010 8 1 955 159 65 384
Shares issued - Chinese 8 8 1 505 002 -
consortium
Share Issue expenses 8 - (34 633) -
Share-based payment expenditure 10 - - 406 795
Total comprehensive loss for the - - -
period
Balance at 30 June 2011 16 3 425 528 472 179
Condensed consolidated statement of changes in equity
Available- (Accumu- Total
for-sale lated R`000
reserves loss)/
R`000 retained
earnings
R`000
Balance at 1 January 2010 726 (214 577) 1 337 828
Shares issued - Project Delta - - 466 070
Share-based payment expenditure - - 1 181
Total comprehensive income for the - 334 801 334 801
period
Balance at 30 June 2010 726 120 224 2 139 880
Share-based payment expenditure - - 1 621
Loss for the period - (35 927) (35 927)
Other comprehensive income 286 - 286
Total comprehensive loss for the period 286 (35 927) (35 641)
Balance at 31 December 2010 1 012 84 297 2 105 860
Shares issued - Chinese consortium - - 1 505 010
Share Issue expenses - - (34 633)
Share-based payment expenditure - - 406 795
Total comprehensive loss for the period - (393 312) (393 312)
Balance at 30 June 2011 1 012 (309 015) 3 589 720
Condensed consolidated statement of cash flows
Note Six months Six months Year
ended ended ended
June 2011 June 2010 December
Reviewed Reviewed 2010
R`000 R`000 Audited
R`000
Cash flows used in operating 19 (27 015) (51 882) (89 637)
activities
Finance income 3 403 4 218 6 122
Finance expense (2 061) (4) (9)
Cash utilised in operations (25 673) (47 668) (83 524)
Cash flows utilised by investing
activities
Acquisition of property, plant and (74 284)
equipment as (3 953) (41 945)
a result of expanding operations
Acquisition of tangible - (3 718) -
exploration and evaluation assets
as a result of expanding
operations
Acquisition of intangible - (7 959) -
exploration and evaluation assets
as a result of expanding
operations
Loan to equity accounted investee - - (7 279)
Recovery of intangible exploration - 10 306 10 346
and evaluation expenditure
Loans and long term receivables - (1 429) (8 257)
advanced
Capital invested in the available- (1 466) (1 397) (2 835)
for-sale financial asset
Proceeds on disposal of property, - - 47
plant and equipment
Net cash outflow from investing (75 750) (8 150) (49 923)
activities
Cash flows from financing
activities
Capital raised from issue of 9 1 565 595 - -
shares
Share issue expenses 8 (34 633) - -
Bridging loan raised 7 17 800 - 33 270
Bridging loan (repaid) 7 (51 070) - -
Equalisation liability repaid 6 (120 834) - -
1 376 858 - 33 270
Net increase/(decrease) in cash 1 275 435 (55 818) (100 177)
and cash equivalents
Cash and cash equivalents at the 38 709 138 886 138 886
beginning of the period
Cash and cash equivalents at the 1 314 144 83 068 38 709
end of the period
1 314 144 83 068 38 709
Cash and cash equivalents 1 285 900 55 240 10 857
Restricted cash 28 244 27 828 27 852
1. Reporting entity
Wesizwe Platinum Limited ("Wesizwe" or "the Company") is a company
domiciled in the Republic of South Africa. The condensed consolidated
interim financial information of the Company as at 30 June 2011 comprise
the Company, its subsidiaries and the Group`s interest in its equity
accounted investee (together referred to as the "Group"). The
consolidated financial statements of the Group for the year ended 31
December 2010 are available upon request from the Company`s registered
office at Unit 13, 2nd Floor, 3 Melrose Boulevard, Melrose Arch,
Johannesburg, 2076 or at www.wesizwe.com.
2. Statement of compliance
The condensed consolidated interim financial information has been
prepared in accordance with IAS 34 Interim Financial Reporting issued by
the International Accounting Standards Board and AC 500 standards issued
by the Accounting Practice Committee. It does not include all of the
information required for full annual financial statements, and should be
read in conjunction with the consolidated financial statements of the
Group for the year ended 31 December 2010. The condensed consolidated
interim financial information was approved by the Board of Directors on
22 September 2011.
3. Significant accounting policies
The accounting policies applied by the Group in the condensed
consolidated interim financial information are the same as those applied
by the Group in its consolidated financial statements for the year ended
31 December 2010.
4. Estimates
The preparation of the interim financial information requires management
to make judgements, estimates and assumptions that affect the application
of accounting policies and the reported amounts of assets and
liabilities, income and expense. Actual results may differ from these
estimates.
Except as described below, in preparing the condensed consolidated
interim financial information, the significant judgements made by
management in applying the Group`s accounting policies and the key
sources of estimation were the same as those that applied to the
consolidated financial statements for the year ended 31 December 2010.
During the six months ended 30 June 2011 management reassessed its
estimates in respect of:
- The recoverable amount of the loan to the Bakubung community
(note 11).
5. Investment in equity accounted investee
Following the unwinding of the Western Bushveld Joint Venture ("WBJV")
structure and the acquisition of Prospecting Rights from Rustenburg
Platinum Mines Limited ("RPM"), the Group contributed certain of these
Prospecting Rights (Project 1 and 3 Prospecting Rights) to a new company,
Maseve Investments 11 (Pty) Ltd ("Maseve"), in exchange for a 45,25%
shareholding, with Platinum Group Metals (RSA) (Pty) Ltd ("PTM") holding
the other 54,75%.
PTM had the right, within a stipulated time period, to subscribe for
additional shares to increase its percentage shareholding to 74% by
contributing R408 813 480 into an interest bearing escrow account in
favour of the Group which will count as part of the Group`s contribution
towards the development of Projects 1 and 3. PTM exercised this right on
14 January 2011. The balance of the Investment in Equity Accounted
Investee was adjusted to reflect the Group`s share in the loss incurred
for the 6 months ended 30 June 2011 as follows:
R`000
a) Original consideration paid for 26% in the WBJV
Recorded value of 26% investment in the WBJV as at 31 668 732
December 2009
Plus: Equalisation liability transferred to current liabilities 140 236
Less: Adjustment to equalisation liability and assets (2 037)
Current value of 26% in the WBJV 806 931
b) Additional acquisition of Prospecting rights at fair value
Acquisition of Prospecting rights in Project 1 and 3 at fair 143 730
value
Less: Deferred tax on Project 1 and 3 (40 244)
Acquisition of Project 1 and 3 Prospecting rights after 103 486
providing for deferred taxation
c) Gain on bargain purchase of previously held 26% interest in
the WBJV
Gain on bargain purchase of previously held 26% interest before 9 950
deferred taxation
Less: Deferred taxation on bargain purchase (2 786)
Gain on bargain purchase on previously held 26% interest in 7 164
the WBJV
Balance (a+b+c) as at 30 June 2010 917 581
Additional net cash call 7 279
Share of loss in equity accounted investee (2 640)
Balance as at 31 December 2010 922 220
Share of loss in equity accounted investee (7 012)
Total Investment in equity accounted investee as at 30 June 915 208
2011
6. Equalisation liability
The WBJV agreements required the payment/receipt of an equalisation
payment by the partners of the WBJV to equalise the mineral resources and
funding contribution of each party in relation to its economic
participation in the WBJV.
On 25 February 2010 an agreement was reached with RPM to fix the
equalisation liability in US$ terms. As reported in the annual financial
statements for the year ended 31 December 2010, the agreement with RPM
required that the equalisation liability be settled by Africa Wide by
31 March 2011, failing which Wesizwe would assume the liability. Pending
the imminent financial closure of the transaction with China-Africa
Jinchuan and Micawber, RPM granted Wesizwe an extention.
Following the closure of this transaction on 4 May 2011, the equalisation
liability was settled on 20 May 2011. The final amount settled included
interest due up to the payment date and an exchange rate adjustment as
follows:
Six months Six months Year ended
ended ended December
June 2011 June 2010 2010
Reviewed Reviewed Audited
R`000 R`000 R`000
Opening balance 120 834 - -
Equalisation liability transferred from - 140 236 140 236
Investment in Equity Accounted
Investee
Adjustment of liability following - (2 037) (2 037)
agreement to fix the liability in US$
terms
Interest 330 352 513
Exchange rate fluctuation 4 666 546 (17 878)
Settlement of liability (125 830) - -
- 139 097 120 834
7. Bridging loan
This facility was used for the ongoing capital development of the
Frischgewaagd-Ledig mine. Interest was payable at Jibar +250 basis points
and was settled following the successful conclusion of the China-Africa
Jinchuan and Micawber transaction.
Six months Six months Year ended
ended ended December
June 2011 June 2010 2010
Reviewed Reviewed Audited
R`000 R`000 R`000
Opening balance 33 270 - -
Bank of China drawdown facility 17 800 - 33 270
Settlement of liability (51 070) - -
- - 33 270
8. Share capital and share premium
Share capital
Six months Six months Year ended
ended ended December
June 2011 June 2010 2010
Reviewed Reviewed Audited
R`000 R`000 R`000
Authorised
2 000 000 000 (2010: 1 500 000 000) 20 15 15
ordinary shares of R0,00001 each
Issued
1 627 827 058 (2010: 797 642 16 8 8
598) ordinary shares of R0,00001 each
The Company issued 829 884 460 ordinary shares on 4 May 2011 at an issue
price of R1,81.
Share Premium
Six months Six months Year ended
ended ended December
June 2011 June 2010 2010
Reviewed Reviewed Audited
R`000 R`000 R`000
Opening balance 1 955 159 1 489 091 1 489 091
Premium on issue of 211 850 125 shares - 466 068 466 068
Premium on issue of 829 884 460 shares 1 505 002 - -
Share issue expenses (34 633) - -
3 425 528 1 955 159 1 955 159
9. Gain on foreign exchange rate fluctuation
On 4 May 2011 China-Africa Jinchuan and Micawber subscribed for
829 884 460 shares in Wesizwe for a cash consideration of US$227 million.
On the day of subscription, the ZAR/US$ exchange rate traded at an
average of R6,63, resulting in an effective subscription price of R1,81
per share. The foreign exchange strategy presented to the newly
constituted Board of Directors on 4 May 2011 resulted in the US$
consideration being converted over a period of 30 days. This resulted in
the cash reserves being converted at an average exchange rate of R6,90,
realising an exchange gain of R60,6 million.
The total cash introduced amounted to R1 565,6 million resulting in cash
and cash equivalents reflecting a significant increase as at
30 June 2011.
10. Share-based payment reserve
Six months Six months Year ended
ended ended December
June 2011 June 2010 2010
Reviewed Reviewed Audited
R`000 R`000 R`000
Opening balance 65 384 62 582 62 582
406 795 1 181 2 802
Share-based payment expenditure - share 1 359 1 181 2 802
incentive scheme
Option excercised in terms of LTIP share (1 207) - -
scheme
Share-based payment expense on issue of 406 643 - -
shares
472 179 63 763 65 384
- The share-based payment expense of R406,6 million relates to an IFRS
2 adjustment for the specific issue of 829 884 460 shares for cash to
China-Africa Jinchuan and Micawber. On 3 May 2011 a mutual shared
understanding of the terms and conditions of the issue was reached. The
issue price was set at R1,81. The price was arrived at by converting the
US$227 million into ZAR at the ruling exchange rate of R6.63. The closing
price on 3 May 2011, which represents the fair value of the Wesizwe share
was R2,30. The difference between the fair value at the date of mutual
understanding and the strike price represents the share-based payment
expense.
- Share-based payment expenditure of R1,4 million represents the IFRS2
expense for the six months ended 30 June 2011 for the Long Term
Incentive Plan ("LTIP") and Share Appreciation Rights Scheme ("SARS").
- The R1,2 million represents the recognition of the options exercised in
terms of the share scheme.
11. Impairment of loan to the Bakubung community
As previously reported, the Company was requested by the DMR to assist
the community and the Royal Family in their efforts to obtain proper
accounting for the community`s assets in relation to Wesizwe.
Consequently, funds were advanced by way of direct payment to service
providers. In 2010 the courts made a ruling in favour of the community
that the cost of legal proceedings be paid by the respondents.
In evaluating the recoverability of the loan, management is of the
opinion that the recoverability of the non-legal fees within the next 6
to 12 months is doubtful and, in adopting a conservative approach, has
accordingly impaired the loan for accounting purposes.
Six months Six months Year ended
ended ended December
June 2011 June 2010 2010
Reviewed Reviewed Audited
R`000 R`000 R`000
Opening balance 8 257 - -
Loan advanced - 1 429 8 257
Impairment (3 793) - -
4 464 1 429 8 257
The loan is interest free and the Directors believe that the loan will be
collected in the short-term.
12. Financial results
As the Group is developing a mine, it will not earn revenue from mining
activities until such time as a mine is brought into production.
The total comprehensive loss for the six months under review was
R393,3 million (compared to income of R334,8 million for the same
period in 2010). The total comprehensive loss for the period comprises
administration expenses of R17,5 million, impairment of loan of
R3,8 million, share of loss of equity accounted investee of
R7,0 million, income tax expense of R14,3 million and share-based payment
expense of R408,0 million offset by net foreign exchange gain of
R55,9 million, net finance income of R1,3 million and other income
of R0,1 million.
Administration expenses of R17,5 million include the following:
- Depreciation - R0,6 million (June 2010: R0,7 million)
- Other administrative overheads - R5.2 million (June 2010
R2,4 million)
- Corporate advisory and success fee - Rnil (June 2010: R26,4 million)
- Consulting and professional fees - R0,5 million (June 2010:
R4,1 million)
- Directors expenses - R1,5 million (June 2010: 3,6 million)
- Salaries - R6,7 million (June 2010: R3,7 million)
- Marketing expenses and investor relations - R1,9 million (June 2010:
R2,3 million)
- Community sustainability projects - R1,1 million (June 2010:
R2,3 million)
The basic loss per share for the period was 36,97 cents per share
(June 2010: basic earnings of 50,47 cents per share). The headline
loss per share was 36,61 cents per share (June 2010: headline loss of
6,52 cents per share).
Capital Expenditure includes project expenditure capitalised of
R74,1 million and purchase of plant and equipment to the value of
R0,2 million.
13. Restricted cash
Restricted cash covers the guarantee of R27,4 million (June 2010:
R27 million) in favour of the DMR on issue of the mining licence and R0,8
million (June 2010: R0,8 million)guaranteed to the landlord for the
operating lease agreement.
14. Independent review
The condensed consolidated statement of financial position at
30 June 2011 and related condensed consolidated statements of
comprehensive income, changes in equity and cash flows for the period
have been reviewed by KPMG Inc. Their unmodified review report is
available for inspection at the Company`s registered office.
15. Segment reporting
No segmental report has been produced as the Group is conducting
exploration activities in one geological location which represents its
only business activity.
An operating segment is a component of the Group that engages in business
activities from which it may earn revenues and incur expenses, including
revenues and expenses that relate to transactions with any of the Group`s
other components. The operating results for the Group as a whole are
reviewed regularly by the Group`s CEO to make decisions about resources
to be allocated and to assess its performance.
16. Mineral resources
There were no changes to the mineral resources for the six months ended
30 June 2011.
17. Judgements by Directors and Management
Other than the impairment reported earlier, the management of Wesizwe is
confident that the assets of the Group are not impaired.
18. Subsequent events
There were no events that occurred after the interim period which
requires further disclosure in these financial results.
19. Reconciliation of (loss)/profit for the period to cash flows from
operating activities
Note Six months Six months Year ended
ended ended December
June 2011 June 2010 2010
Reviewed Reviewed Audited
R`000 R`000 R`000
(Loss)/profit from operations (373 271) 331 484 300 776
Adjustment for:
Depreciation 609 706 1 867
Gain on bargain purchase - (378 083) (378 083)
Profit on re-measurement of 6 - - (17 878)
liability denominated in a foreign
currency
Gain on foreign exchange 9 (60 585) - -
fluctuation
Impairment of loan to Bakubung 11 3 793 - -
community
Impairment of mineral rights - - 7 721
Share-based payment expenditure 10 406 795 1 181 2 802
Operating loss before working (22 659) (44 712) (82 795)
capital changes
Changes in working capital (4 356) (7 170) (6 842)
Increase in other receivables (5 941) (16 088) (4 401)
Increase/(decrease) in trade and 1 585 8 918 (2 441)
other payables
Cash flows used in operating (27 015) (51 882) (89 637)
activities
20. (Loss)/earnings per share
Six months Six months Year ended
ended ended December
June 2011 June 2010 2010
Reviewed Reviewed Audited
R R R
The basis of calculation of
basic (loss)/earnings per share
is:
Attributable (loss)/profit to (393 310 141) 334 800 854 298 873 679
ordinary shareholders (Rand)
Weighted average number of 1 063 872 425 663 341 690 731 195 298
ordinary shares in issue
(shares)
Basic (loss)/earnings per share (36,97) 50,47 40,87
(cents)
The basis of calculation of
diluted (loss)/earnings per
share is:
Attributable (loss)/profit to (393 310 141) 334 800 854 298 873 679
ordinary shareholders (Rand)
Adjusted weighted average 1 063 872 425 663 673 245 731 611 765
number of ordinary shares
outstanding (shares)
Weighted average number of 1 063 872 425 663 341 690 731 195 298
ordinary shares in issue
(shares)
LTIP and SARS options - 331 555 416 467
outstanding
Diluted (loss)/earnings per (36,97) 50,45 40,85
share (cents)
The basis of calculation of
headline loss per share is:
Attributable (loss)/profit to (393 310 141) 334 800 854 298 873 679
ordinary shareholders (Rand)
3 793 036 (378 083 (370 362
044) 219)
Impairment of mineral rights - - 7 720 825
Impairment of loan to the 3 793 036 - -
Bakubung community
Tax on the above - - -
Gain on bargain purchase - (378 083 (378 083
044) 044)
Headline loss (Rand) (389 517 105) (43 282 190) (71 488 540)
Weighted average number of 1 063 872 425 663 341 690 731 195 298
ordinary shares in issue
(shares)
Headline and diluted headline (36,61) (6,52) (9,78)
loss per share (cents)
Commentary
Financial overview
The comprehensive loss for the six months under review was
R393,3 million (compared to a comprehensive income of R334,8 million for
the same period in 2010). The total comprehensive loss for the period
comprises administration expenses of R17,5 million, impairment of a loan
of R3,8 million, equity accounted share of losses of Maseve Investments
11 (Pty) Ltd ("Maseve") of R7 million, income tax expense of
R14,3 million and share-based payment expense of R408,0 million, offset
by net-foreign exchange gain of R55,9 million, net finance income of R1,3
million and other income of R0,1 million. The share-based payment expense
is the IFRS 2 expense for the issue of shares for cash to China-Africa
Jinchuan Investment Limited ("China-Africa Jinchuan")and Micawber 809
(Pty) Ltd ("Micawber") at a discount to the market price on the
subscription date.
The basic loss per share for the period was 36,97 cents per share
(basic earnings of 50,47 cents per share for the same period in 2010).
The headline loss per share was 36,61 cents per share (headline loss
of 6,52 cents per share for same period in 2010).
The total number of shares in issue at 30 June 2011 was 1 627 827 058 (30
June 2010: 797 942 598).
Conclusion of the fully funded transaction
On 4 May 2011, the transaction to facilitate a total financing solution
for the development of the Company`s core Frischgewaagd-Ledig Project was
concluded and became effective.
The Company received an equity injection of US$227 million by means of
allotting 732 522 177 ordinary shares to China-Africa Jinchuan (as
nominated by the Chinese Consortium comprising the Jinchuan Group Limited
("JNMC") and China-Africa Development Fund ("CADFund")) and 97 362 283
ordinary shares to "Micawber" for a subscription price of US$200 368 295
and US$26 631 705 respectively. This is supported by a debt component of
US$650 million project finance facility which is secured by the Chinese
Consortium. Further support was provided by the Chinese Consortium for
any additional funding that may be required in order to achieve
operational completion of the Project. As such, the current Wesizwe
shareholders are not expected to be called upon to provide further
funding or be subject to dilution. This funding will be provided either
by JNMC and CADFund directly or through the provision of third party
funding on terms similar to those of the funding to be provided by the
China Development Bank.
Wesizwe launches the Frischgewaagd-Ledig Project
The Frischgewaagd-Ledig mine development project was officially launched
on 4 July 2011. This date provides the benchmark against which future
project delivery milestones will be measured. The launch date is a
critical milestone in the life of the project and will capitalise on the
early works programme executed before the official launch date.
Resourcing of both the Wesizwe Platinum Owner`s Team and that of the
Engineering, Procurement and Construction Management ("EPCM") contractor
is an important part of this preparation, as is the establishment of
project systems for procurement, financial management and quality
assurance, amongst others.
TWP Projects (Pty) Ltd ("TWP") has been appointed as EPCM contractor for
the first 12 months of mine development - from July 2011 to June 2012 -
with the option of renewing this over the entire life of project
execution. The scope of this work will include all project critical
activities that will enable the project to start pre-sink preparation on
the main and ventilation shafts in the first half of 2012.
Key contracts to be awarded in the short term are the civils contract,
which will be awarded within the next four months to do the collaring on
the main and ventilation shafts following the box cut excavations; and
the shaft sinking contract. The shaft sinking contractor is expected to
be awarded by the first quarter of 2012 after review and approval by the
Board. Other activities on the critical path include a complete
refurbishment of all the winders which have already been purchased and
securing final approval for bulk services, being water and electricity
services.
Wesizwe paid the national energy supplier, Eskom, the requisite deposit
of approximately R58 million and provided the required performance
guarantees of approximately R31 million which will enable Eskom to commit
to the provision of permanent power supply to the mine in line with the
requirements of the project.
Platinum Group Metals exercises option to secure an additional 19,25% in
Maseve
On 14 January 2011 Platinum Group Metals (RSA) (Pty) Ltd ("PTM")
exercised their option to subscribe for an additional 19.25% in Projects
1 and 3 of Maseve by making a deposit of approximately R408,8 million
into an escrow account on behalf of the Company, thereby diluting
Wesizwe`s interest to 26%.
The escrow account is held in the name of Maseve but will be used solely
for funding Wesizwe`s 26% contribution to project development, which is
expected to make Wesizwe`s participation in these projects fully funded.
The Maseve projects are located near Rustenburg in the North West
province of South Africa. Project 1 adjoins Wesizwe`s Frischgewaagd-Ledig
Project; and shares a boundary with the Styldrift mine, which is under
construction, and the producing Bafokeng Rasimone Platinum Mine, both of
which are owned by Royal Bafokeng Platinum Limited ("RBP").
The Project 1 Platinum Mine plan calls for a production rate of 275 000
ounces 4E (platinum, palladium, rhodium and gold). The EPCM contractor
has been appointed and work has begun on the planning of the surface
infrastructure and underground mine development.
Wesizwe and Maseve, are collaborating in the processes of securing bulk
water supply to the two mines. The companies are continuing discussions
with the Magalies Water Authority and other stakeholders in order to
derive maximum advantages from a synergistic approach to the
infrastructure needs of both parties.
Community Issues
Challenges continue in the community largely due to a long standing
leadership vacuum. Despite this, Wesizwe remains committed to sustainable
community development and empowerment. Our strategic intent is to improve
community confidence in Wesizwe as a business partner. The Company
acknowledges the community as an important stakeholder and strives to
have a healthy relationship with the community. To this end, Wesizwe
conducted a community stakeholder perception survey to probe perceptions
of the Ledig community on the mine project being developed in Ledig. The
feedback received will be used to inform future interaction and plans.
Board and Management Changes
Following the conclusion of the transaction, the Board of Directors
welcomed Messrs Dexin Chen, Liliang Teng, Jikang Li, Jianke Gao, Wenliang
(Michael) Ma, Qiyin (James) Zhang and James Ngculu as Directors of
Wesizwe with effect from 4 May 2011. As part of the implementation,
Messrs Peter Gaylard and Jacques de Wet resigned as Directors of the
Company and Mr Rob Rainey indicated that he would not stand for re-
election as a Director at the Wesizwe Annual General Meeting that was
held on 5 May 2011. Messrs Mike Solomon and Julian Williams were not re-
elected as Directors at the Annual General Meetings that were held on
9 March 2011 and 5 May 2011 respectively.
The Board of Directors would like to thank Messrs Peter Gaylard, Rob
Rainey, Jacques de Wet, Mike Solomon and Julian Williams for the
contributions they have made to the Company during their tenure on the
Board.
Following a meeting of the newly re-constituted Board on 4 May 2011, Mr
Arthur Mashiatshidi stepped down as Chief Executive Officer and was re-
appointed as Joint Acting Chief Executive Officer together with Mr
Qiyin (James) Zhang to ensure a smooth handover period following the
transaction. In addition Mr Wenliang (Michael) Ma was appointed as Acting
Finance Director and the Board designated Mr Jianke Gao as Chief
Executive Officer. Mr Jianke Gao assumed the position of Chief Executive
Officer on 1 August 2011, at which time Messrs Arthur Mashiatshidi and
Qiyin (James) Zhang stepped down as Joint Acting Chief Executive
Officers, and Mr Wenliang (Michael) Ma the position of Finance Director
on 10 August 2011.
Mr Arthur Mashiatshidi subsequently resigned as a Non-Executive Director
on 19 September 2011. The Chairman and Board would like to thank Mr
Arthur Mashiatshidi for his valuable contribution both in his capacity as
Chief Executive Officer and in the successful conclusion of the financing
transaction which has resulted in a fully funded mine development
project. Mr Qiyin (James) Zhang is retained as an Executive Director and
Mr Jacques de Wet continues to serve in an advisory capacity.
Furthermore, Mr Mlibo Mgudlwa, the Corporate Affairs Executive Director,
resigned as an Executive Director but will remain a Non-Executive
Director on Wesizwe`s Board.
Going forward
While Wesizwe remains focused on the development of its core project, the
Frischgewaagd-Ledig complex, the Group has recognised its progression
from explorer to developer and in this regard, the Board of Directors has
fully discussed and evaluated a new vision and mission for the Company. A
detailed strategic plan will be presented to the Board of Directors and
once approved, communicated to all stakeholders.
By order of the Board
Dawn Mokhobo
Chairman
Sponsors: Investec Bank Limited
Directors: DNM Mokhobo (Chairman)**, D Chen (Deputy Chairman)*#,
J Gao (Chief Executive Officer)#, W Ma (Financial Director)#,
WM Eksteen**, J Li*#, MG Mgudlwa*, LV Ngculu*, L Teng*#,
BJ Van Der Merwe*, Q Zhang#
* non-executive director ** independent non-executive director
# Chinese
Company secretary: S van Schalkwyk
Registered address: Unit 13, 2nd Floor, 3 Melrose Boulevard,
Melrose Arch, 2076
Date: 29/09/2011 09:00:05 Produced by the JSE SENS Department.
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