| Tue 18 Oct 2011, 16:00 | | WGR - Witwatersrand Consolidated Gold Resources Limited - Unaudited financial |
|
WGR
WGR
WGR - Witwatersrand Consolidated Gold Resources Limited - Unaudited financial
results for the six months ended 31 August 2011
Witwatersrand Consolidated Gold Resources Limited
Incorporated in the Republic of South Africa
(Registration number 2002/031365/06)
JSE Share Code: WGR ISIN: ZAE000079703
TSX Share Code: WGR CUSIP Number: S98297104
(`Wits Gold` or `the Company`)
Unaudited financial results for the six months ended 31 August 2011
The financial results have been prepared by Mr DM Urquhart CA (SA), the
Company`s financial director and are presented in South African Rand (R). The
exchange rates, based on the Bank of Canada noon rate, were as follows:
31 August 2010 CAD $1.00 = R6.93
31 August 2011 CAD $1.00 = R7.57
28 February 2011 CAD $1.00 = R7.14
14 October 2011 CAD $1.00 = R7.72
Highlights
- Philip Kotze appointed CEO of Wits Gold
- Wits Gold completes a positive scoping study on the DBM Project
Pre-feasibility study underway at DBM
CONDENSED STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 31 August 2011
Six months ended Year ended
31 August 31 August 28 February
2011 2010 2011
(Unaudited) (Unaudited) (Audited)
R R R
Revenue - - -
Results from operating (13 101 725) (10 465 732) (20 215 329)
activities
Net finance income 3 869 247 2 443 438 5 326 307
Loss for the period before (9 232 478) (8 022 294) (14 889 022)
income tax
Income tax expense - (5 283) -
Loss for the period (9 232 478) (8 027 577) (14 889 022)
attributable to owners
Other comprehensive income net - - 75 468
of income tax
Total comprehensive loss (9 232 478) (8 027 577) (14 813 554)
attributable to owners of the
Company
Loss per share
Weighted average number of 34 391 359 27 742 028 29 713 768
shares in issue
Basic and headline loss per (26,85) (28,94) (50,11)
share (cents)
Headline loss per share (26,88) (28,94) (50,11)
(cents)
Diluted weighted average 34 391 359 27 867 028 29 713 768
shares in issue
Diluted basic loss per share (26,85) (40,35) (50,11)
(cents)
Diluted headline loss per (26,88) (40,35) (50,11)
share (cents)
Headline loss per share is
calculated from
Basic loss (9 232 478) (8 027 577) (14 813 554)
Add back profit on disposal (10 919) - -
of fixed assets
Headline loss (9 243 397) (8 027 577) (14 813 554)
CONDENSED STATEMENT OF FINANCIAL POSITION
as at 31 August 2011
As at As at
31 August 31 August 28 February
2011 2010 2011
(Unaudited) (Unaudited) (Audited)
R R R
Assets
Non-current assets 440 221 929 122 907 484 423 062 154
Current assets 131 656 469 65 286 186 147 667 283
Total assets 571 878 398 188 193 670 570 729 437
Equity and liabilities
Capital and reserves 557 939 021 182 548 564 565 729 742
Current liabilities 13 939 377 5 645 106 4 999 695
Total equity and liabilities 571 878 398 188 193 670 570 729 437
CONDENSED STATEMENT OF CASH FLOWS
for the six months ended 31 August 2011
Six months ended Year ended
31 August 31 August 28 February
2011 2010 2011
(Unaudited) (Unaudited) (Audited)
R R R
Cash flows from operating
activities
Cash utilised in operating (5 741 819) (6 234 723) (13 928 826)
activities
Taxation paid (refunded) 2 085 337 (1 991 507) (1 991 507)
Net finance income 3 869 247 2 443 438 5 326 307
Net cash generated (utilised) 212 765 (5 782 792) (10 594 026)
by operating activities
Cash flows from financing
activities
Cash flows from financing (16 691) - 112 305 988
activities
Cash flows from investing
activities
Net cash utilised in investing (17 336 605) (15 932 954) (41 212 686)
activities
(Decrease)/increase in cash (17 140 531) (21 715 746) 60 499 276
and cash equivalents
Cash and cash equivalents at 146 178 604 85 679 328 85 679 328
beginning of period
Cash and cash equivalents at 129 038 073 63 963 582 146 178 604
end of period
CONDENSED STATEMENT OF CHANGES IN EQUITY
for the six months ended 31 August 2011
Equity-
settled
share-
Ordinary based
share Share payment
capital premium reserve
R R R
Balance at 28 February 2010
(Audited) 278 909 185 971 589 19 604 280
Total comprehensive loss for the - - -
period
Deferred taxation on revaluation - - -
Equity-settled share-based - - 3 525 215
payments
Balance at 31 August 2010
(Unaudited) 278 909 185 971 589 23 129 495
Balance at 28 February 2011
(Audited) 344 903 573 211 583 7 119 295
Total comprehensive loss for the - - -
period
Costs related to prior - (16 691) -
transactions with owners
recorded directly in equity
Equity-settled share-based - - 1 458 448
payments
Balance at 31 August 2011 344 903 573 194 892 8 577 743
(Unaudited)
Revalua- Accumu-
tion lated
reserve loss Total
R R R
Balance at 28 February 2010
(Audited) 1 253 981 (20 063 117) 187 045 642
Total comprehensive loss for the - (8 027 576) (8 027 576)
period
Deferred taxation on revaluation 5 283 - 5 283
Equity-settled share-based - - 3 525 215
payments
Balance at 31 August 2010
(Unaudited) 1 259 264 (28 090 693) 182 548 564
Balance at 28 February 2011
(Audited) 1 329 449 (16 275 488) 565 729 742
Total comprehensive loss for the - (9 232 478) (9 232 478)
period
Costs related to prior - - (16 691)
transactions with owners
recorded directly in equity
Equity-settled share-based - - 1 458 448
payments
Balance at 31 August 2011 1 329 449 (25 507 966) 557 939 021
(Unaudited)
Overview
The Company is involved in the mineral exploration industry and does not
generate any operating income. Mineral exploration is highly speculative due to
a number of significant risks, including the possible failure to discover
mineral deposits, sufficient in quantity and quality to justify the
establishment of a mine. Wits Gold has completed a pre-feasibility study over
its Bloemhoek Project and has initiated a similar study over its DBM Project
which is due for completion by May 2012. Additional work will be undertaken
before a decision is made to initiate any Definitive Feasibility Studies over
either of these projects. Despite the historic exploration work on the Company`s
remaining Prospecting Rights, no other known economic deposits have been
determined. Further work will be required in order to determine if any economic
deposits occur on these properties.
The Company has previously been able to raise sufficient capital from its
shareholders to fund its operating and exploration requirements. If the
Company`s current exploration programmes are successful, additional financing
will be required to complete further feasibility studies as well as to develop
any mineral properties identified in order to bring them into commercial
production. The longer-term exploration of the Company`s Prospecting Rights is
also dependent upon the Company`s ability to obtain additional financing through
the joint venturing of projects, debt financing, equity financing or other
means. During the six month period under review, Wits Gold did not issue any
additional shares.
Directorate
The Wits Gold Annual General Meeting was held in Johannesburg on 29 July 2011.
Two directors, Mrs GM Wilson and Mr DM Urquhart, were re-appointed by the
shareholders, following their retirement by rotation.
Dr MB Watchorn resigned as Chief Executive Officer with effect from 1 August
2011 and Mr P Kotze was appointed in his stead. Mr P Kotze`s appointment to the
board of directors of the Company will be ratified at the next general meeting
of shareholders.
Basis of preparation
The interim condensed financial statements for the six months ended 31 August
2011 are unaudited and have not been reviewed by our auditors. They have been
prepared in accordance with IAS 34 - Interim Financial Reporting, as well as the
AC 500 standards as issued by the Accounting Practices Board and in compliance
with the South African Companies Act, 2008 and the Listing Requirements of the
JSE Limited.
The financial information has been prepared on the basis of the recognition and
measurement requirements of International Financial Reporting Standards (IFRS).
The accounting policies of the Company are consistent with those of the previous
financial statements and have been consistently applied. These results should be
read in conjunction with the annual report for the year ended 28 February 2011.
The Company identified only one business segment, being exploration within South
Africa.
Interim operations
The operating loss for the six months under review increased by R2,6 million
when compared to the first six months of the prior year. The increase in
operating loss incorporates the severance package of R4,0 million awarded to Dr
Watchorn and an increase in investor relations costs of R0,2 million. These
increases were partially offset by reductions of R2 million in the share based-
payment expense for employees and advisors together with R0,1 million in
employee costs.
The loss before taxation increased by R1,3 million due mainly to the factors
mentioned above mitigated by an increase in interest received amounting to R1,4
million. The increase in interest income results from the additional funds
available for investing arising from the R120 million capital raised in November
2010.
The Company invested R17,3 million (2010 - R15,9 million) in intangible
exploration assets during the six months under review.
Dividend
No dividend has been declared for the period under review (2010 - Nil).
Commitments
The Company`s commitments amount to R77,1 million (2010: R23,9 million), of
which R20,9 million (2010: R18,3 million) is in respect of exploration
activities. The net increase in commitments results primarily from the
acquisition of exploration properties (R55 million) and approval of four
Prospecting Right renewals (R11,6 million).
Events subsequent to the review period
There have been no material events that have occurred between 31 August 2011 and
the date of this report. Wits Gold`s board of directors is of the opinion that
the Company has sufficient funds to finance its planned exploration programme,
including the estimated costs relating to the completion of the Definitive
Feasibility Study on the DBM Project, for approximately the next 18 months.
Mineral Resources
Wits Gold maintains legal title to 14 Prospecting Rights in the southern Free
State, Potchefstroom and Klerksdorp goldfields and there has been no change in
the locality of these Rights. None of these assets are currently in production
and the directors are not aware of any legal proceedings or any other material
conditions that may impact on the Company`s abilities to continue its
exploration activities. The contained Mineral Resources are currently reflected
as being fully attributable to Wits Gold. However, over certain properties in
the Potchefstroom and Klerksdorp areas, Gold Fields and AngloGold Ashanti have
options to acquire up to 40% interest in any future mines following the
completion of Definitive Feasibility Studies. In addition, should any of these
properties be sold, the abovementioned companies would be entitled to receive
50% of the proceeds of the sale after deducting three times the exploration
costs incurred by Wits Gold. There are no legal proceedings involving the
Company that will have an impact on its ability to continue exploration
activities.
As part of the Environmental Management Plan (EMP), the Company has lodged bank
guarantees totalling R320 000 with the Department of Mineral Resources (DMR).
This amount has been accepted for the work programmes proposed over the 14
Prospecting Rights held by Wits Gold. EMP compliance is monitored on an ongoing
basis for the duration of each Prospecting Right.
Following the acquisition of the Merriespruit South area from the Harmony Group
and its consolidation with the De Bron Project to form the De Bron-Merriespruit
Project (DBM Project), the Company completed a drilling programme of five
diamond boreholes in January 2011. Subsequently, an Indicated Resource of 34,5Mt
at 5,3g/t Au (5,9Moz) and an Inferred Resource of 25,0Mt at 5,2g/t Au (4,2Moz)
have been defined at depths between 500 metres and 1 200 metres. This Resource
Estimate for DBM is presented in a NI43-101 and SAMREC-compliant Independent
Technical Report by Snowden Mining Industry Consultants (Limited) (Snowden)
dated 6 April 2011 which can be viewed on www.sedar.com and the Company`s
website, www.witsgold.com. These resources were estimated using all the
available borehole data and using sample widths corrected for dip. Analysis of
the borehole core was undertaken at three accredited laboratories: Anglo
Research, ALS Chemex South Africa (Pty) Limited and SGS South Africa (Pty)
Limited, during which the Company`s standard QA/QC procedures were followed.
The Company`s total Mineral Reserve and Resource Estimates are tabulated below,
and have not changed during the period under review. Mineral Resources that are
not Mineral Reserves do not have demonstrated economic viability. These
estimates are compliant with the Canadian National Instrument NI43-101 (NI43-
101) and SAMREC reporting codes. The stated Indicated Mineral Resources are
inclusive of the Company`s Mineral Reserves. Information concerning the geology,
mineral occurrences, nature of mineralisation, geological controls, rock types,
historical work, the application of quality assurance and quality control
measures, sampling and analytical procedures, the names of analytical
laboratories and the key assumptions, parameters and methods used to estimate
s at the Company`s various projects are communicated in NI43-101 reports
dated November 2007, May 2009, June 2009, October 2009, April 2011 and August
2011, which can be viewed at www.sedar.com and on the Company`s website.
Mr D Muntingh, the Company`s Competent Person and Exploration Manager, is
responsible for the technical material in this release. Mr Muntingh (MSc
Geology) is a registered Professional Natural Scientist ("Pr.Sci.Nat.") with the
South African Council for Natural Scientific Professionals ("SACNASP") and has
19 years of experience in gold exploration. The technical content of this
release has been compiled by Mr Muntingh who has issued a written statement that
the information disclosed is both SAMREC- and NI43-101-compliant.
Mineral Reserves*
Based on a gold price of US$975/oz and an exchange rate of R8,00/US$ (R250
000/kg)
Bloemhoek Project (SOFS Goldfield) Mt Grade (g/t) Moz
Probable Reserves 31,6 5,3 5,4
Mineral Resource*
(at a cut-off grade of 3 g/t Au)
Key Projects (SOFS Goldfield)
Indicated Gold
Resources
Grade
Mt (g/t) Moz
DBM Project 34,5 5,3 5,9
Bloemhoek Project 47,8 6,9 10,6
Indicated Uranium
Resources
Grade
Mt (Kg/t) Mlbs
DBM Project 17,0 0,16 6,1
Bloemhoek Project - - -
Inferred Gold
Resources
Grade
Mt (g/t) Moz
DBM Project 25,0 5,2 4,2
Bloemhoek Project 15,3 6,9 3,4
Inferred Uranium
Resources
Grade
Mt (Kg/t) Mlbs
DBM Project 11,9 0,14 3,7
Bloemhoek Project 63,1 0,15 20,9
Total Mineral Resource*
Indicated Gold
Goldfield Resources
Grade
Mt (g/t) Moz
SOFS 114,6 6,0 21,9
Potchefstroom - - -
Klerksdorp - - -
Total 114,6 6,0 21,9
Indicated Uranium
Goldfield Resources
Grade
Mt (Kg/t) Mlbs
SOFS 17,0 0,16 6,1
Potchefstroom - - -
Klerksdorp - - -
Total 17,0 0,16 6,1
Inferred Gold
Goldfield Resources
Grade
Mt (g/t) Moz
SOFS 127,2 4,7 19,1
Potchefstroom 333,6 7,1 75,8
Klerksdorp 85,1 14,5 39,5
Total 545,9 7,7 134,5
Inferred Uranium
Goldfield Resources
Grade
Mt (Kg/t) Mlbs
SOFS 194,2 0,23 98,7
Potchefstroom 250,0 0,30 163,6
Klerksdorp - - -
Total 444,2 0,27 262,3
* Mineral Resource and Reserve Estimates are compliant with the NI43-101 and
SAMREC reporting codes.
The stated Indicated Resources are inclusive of the Company`s Mineral Reserves.
These Resource Estimates are dependent on geological interpretation and
statistical inference drawn from drilling and sampling that may prove to be
unreliable. The Probable Reserves as well as the Inferred and Indicated
Resources outlined in the Company`s properties have been calculated from widely
spaced borehole data. No assurance can be given that future exploration will be
successful in the improvement of the confidence levels or that any particular
level of recovery of minerals will in fact be realised. It is uncertain whether
the identified Mineral Resources will ever qualify as viable orebodies that can
be legally and economically exploited. In addition, the grade and tonnages of
any orebody that is ultimately mined may differ from the Mineral Resources
currently estimated and such differences could be material.
Exploration activities
During the six months under review, the Company incurred direct exploration
expenditure of R17,3 million. These exploration efforts were predominantly
focused within the DBM Project in the southern Free State.
DBM Project
Between March and June 2011 the Company conducted a preliminary economic
assessment of the financial benefit of establishing a mine at DBM. The study was
undertaken by Turgis Consultants (Pty) Limited with mine scheduling input
provided by Snowden, and was completed under the guidelines of NI43-101. The
detailed results of this study are discussed in a NI43-101 and SAMREC-compliant
report dated August 2011. This scoping level study, based only on the Indicated
Resources, showed there was significant probability that it is both technically
and economically viable to establish a mine at DBM. At this preliminary stage it
has been established that the optimum financial returns may be achieved by
establishing a 700 metre vertical shaft for men and material movement served by
a 12? conveyer decline from which the reefs are accessed via footwall declines
and haulages and crosscuts at 150 metre intervals. The scoping study has been
based on a monthly production rate of 80 000 tonnes derived mainly from the
Kalkoenkrans and Leader Reefs. First gold production is scheduled at 32 months
after the commencement of the project, with an average annual gold production of
150 000oz for 10 years after achieving full production. The peak capital
required will be R1,59 billion (US$227 million) whilst operating costs are
estimated at R559/tonne and cash costs at US$569/oz. In assuming an exchange
rate of R7/US$ and a gold price of R325 000/kg the project has a pre-tax IRR of
35,2% and an NPV(10%) of US$506 million, with payback of five years. The
preliminary economic assessment highlighted the added financial benefit that may
be derived from converting shallow high-grade Inferred Resources to the
Indicated category. Certain of the above-mentioned characteristics of a proposed
mine are likely to change once additional options are tested in the pre-
feasibility study which is currently being undertaken. The Company immediately
embarked on a drilling programme of 11 boreholes targeting shallow areas (<700
metre depth), along the subcrop of the reefs against the Karoo Sequence, as well
as determining the exact location of the De Bron fault, which bounds the deposit
in the west. This programme, consisting of some 12 000 metres and costing
approximately R15 million, has been completed and the assay results are expected
at the end of October 2011.
Results from this drilling programme will be used to update the Resource
Estimate for DBM during the last quarter of 2011. This revised resource will be
incorporated in to the prefeasibility study expected to be completed during the
first half of 2012.
Potchefstroom goldfield
The Company`s current focus in the Potchefstroom goldfield is on the Boskop
Project area. A comprehensive desktop investigation highlighted the potential
for high-grade Carbon Leader Reef to occur between 1 650 metres and 2 200
metres within the Boskop area. This project is situated along the structurally
highly deformed, western margin of the Central Rand Group rocks where
substantial fault-loss areas can be expected. A 3D wireframe model of the
project area is currently being constructed in order to optimally position
two exploration boreholes planned for early 2012.
Klerksdorp goldfield
Attention in this area is concentrated on the Groenfontein Project, where a
regional review of the geology is currently being undertaken. Early indications
are that the most prospective ground may represent sizable reef blocks preserved
within the northeast-southwest trending Jersey Fault Zone.
For and on behalf of the board
Philip Kotze Derek Urquhart
Chief Executive Officer Financial Director
Johannesburg
18 October 2011
Business and Registered Office
12th Floor, 70 Fox Street, Johannesburg 2001
PO Box 61147, Marshalltown 2107
Tel: (011) 832 1749 Fax: (011) 838 3208
Directors
Mr Adam Fleming (Chairman)*
Prof Taole Mokoena (Deputy Chairman)*
Dr Humphrey Mathe (Director)*
Mrs Gayle Wilson (Director)*
Mr P Kotze (Chief Executive Officer)
Mr Derek Urquhart (Chief Financial Officer)
*Non-executive
Company Secretary
Mr Brian Dowden
7 Pam Road, Morningside Ext 5, Sandton, Johannesburg 2057
PO Box 651129, Benmore 2010, South Africa
Sponsor
PricewaterhouseCoopers Corporate Finance (Pty) Limited
2 Eglin Rd, Sunninghill 2157
Private Bag X37, Sunninghill 2157, South Africa
Transfer Secretaries
JSE: Link Market Services SA (Pty) Limited
TSX: CIBC Mellon Trust Company
www.witsgold.com
Date: 18/10/2011 16:00:01 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
