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VIL
VIL
VIL - Village - Statement of Changes in the Reviewed Condensed Provisional
Consolidated Financial Statements and Notice of Annual General Meeting
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")
STATEMENT OF CHANGES IN THE REVIEWED CONDENSED PROVISIONAL CONSOLIDATED
FINANCIAL STATEMENTS AND NOTICE OF ANNUAL GENERAL MEETING
Shareholders are advised that the annual financial statements will be
distributed to shareholders on or about 11 November 2011 and contain certain
modifications to the reviewed results which were published on SENS on 22
September 2011. The changes to the financial statements are set out in the
reviewed results statement as published in this announcement.
Notice of the annual general meeting
Notice is hereby given that the 2011 annual general meeting of Village
shareholders will be held at The Killarney Country Club, 60 5th Street,
Lower Houghton on Friday, 9 December 2011 at 10:00 to transact the
business as stated in the annual general meeting notice forming part of
the annual financial statements.
Salient dates
The notice of the Company`s annual general meeting will be sent to its
shareholders who are recorded as such in the Company`s securities
register on 4 November 2011 being the notice record date used to
determine which shareholders are entitled to receive notice of the annual
general meeting. The record date on which shareholders of the Company must be
registered as such in the Company`s securities register in order to attend
and vote at the annual general meeting is 2 December 2011 being the voting
record date used to determine which shareholders are entitled to attend and
vote at the annual general meeting. The last day to trade in order to be
entitled to vote at the annual general meeting will therefore be 25 November
2011. Proxy forms must be lodged by no later than 10:00 on
Wednesday 7 December 2011. Any forms of proxy not lodged by this time
must be handed to the chairperson of the annual general meeting immediately
prior to the annual general meeting.
AUDITED 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
condensed 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 audited by PricewaterhouseCoopers Inc., and their unqualified
review opinion is available for inspection at the company`s registered
offices.
The condensed 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 audited by Mr TD Shango, CA (SA) of
PricewaterhouseCoopers Inc.
Restatement of reviewed condensed provisional results
The provisional results released on 22 September 2011 were reviewed by the
auditors at the time of the release of the initial SENS announcement. As a
result of the complexity and the nature of the reverse acquisition
transaction restatement and disclosure corrections were required by the
auditors to the reviewed numbers during the finalization of the comparative
figures in the Simmer and Jack Carve- Out entity accounts. These restatements
had an impact on the current year`s retained income and certain
classifications and disclosures in the audited annual financial statements.
Differences between the initial reviewed results released on SENS on 22
September 2011 and the numbers disclosed in the final audited annual report
arelisted below the statement of financial position, statement of
comprehensive income, statement of changes in equity and the statement of
cash flows.
Audited condensed 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 1 761 030 583 932
Investment property 28 859 32 956
Investment in rehabilitation 124 558 119 853
trust fund
Intangible assets 83 063 -
Financial assets 5 343 362 21 852
Reimbursive asset 95 553 71 227
Investment in associate 6 - 2 001 030
Total non-current assets 2 436 425 2 830 850
Current assets
Financial assets 5 4 750 110 594
Trade and other receivables 69 098 99 065
Inventories 44 119 18 054
Cash and cash equivalents 7 170 298 612 082
Total current assets 288 265 839 795
Non-current assets held for sale 251 995 4 903
Total assets 2 976 685 3 675 548
Equity and liabilities
Equity
Stated capital 486 500 -
Retained earnings 1 242 278 3 025 777
Fair value reserve 12 146 11 738
Non-distributable reserve 32 462 89 765
Non-controlling interest 44 714 -
Total equity 1 818 100 3 127 280
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 526 728 420 894
Current liabilities
Financial liabilities 8 160 890 13 657
Trade and other payables 392 744 113 717
Retirement benefit obligations 3 723 -
Bank overdraft 7 28 811 -
Total current liabilities 586 168 127 374
Non-current liabilities held for 45 689 -
sale
Total liabilities 1 158 585 548 268
Total equity and liabilities 2 976 685 3 675 548
Restated comparative results - 31 Final Initial reviewed
March 2010 annual results as
report release on SENS
audited on 22 Sep 11
results
Property, plant and equipment 583 932 578 070
Investment in rehabilitation 119 853 119 874
trust fund
Financial assets (current 110 594 -
portion)
Trade and other receivables 99 065 63 761
Retained earnings 3 025 777 3 105 218
Non-distributable reserve 89 765 (141 161)
Trade and other payables 113 717 113 464
Restated results - 30 June 2011
Retained earnings 1 242 278 1 264 415
Fair value reserve 12 146 12 146
Non-distributable reserve 32 462 10 326
Trade and other payables 392 744 396 467
Retirement benefit obligations 3 723 -
Audited condensed 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) (923 503)
Gross profit / (loss) 70 168 (56 108)
Other income 25 492 35 925
Operating, administrative and
general expenses (222 760) (147 731)
Operating loss 9 (127 100) (167 914)
Finance income 77 667 76 810
Restructuring cost (49 629) (3 650)
Fair value adjustment 36 156 66 222
Gain on bargain purchase 154 532 -
Loss on non-current asset
Held-for-sale - (230)
Impairment of assets and (1 436 895) (13 382)
associate
Finance cost (68 951) (34 940)
Share of loss of associate (326 265) (291 770)
Loss from continuing
Operations (1 740 485) (368 854)
Loss from discontinuing (43 014) (5 770)
operations
Loss before taxation (1 783 499) (374 624)
Taxation - -
Loss for the period (1 783 499) (374 624)
Other comprehensive income:
Fair value adjustments to
available
-for-sale investments 408 7 658
Foreign currency translation (57 303) -
reserve
Share of associate`s other
comprehensive income - 89 765
Total comprehensive income
for the period (1 840 394) (277 201)
Profit attributable to:
Owners of the parent (1 840 394) (277 201)
Non-controlling interest - -
Loss for the period (1 840 394) (277 201)
Total comprehensive income:
Owners of the parent (1 840 394) (277 201)
Non-controlling interest - -
Total comprehensive income for (1 840 394) (277 201)
the period
Basic loss per share
From continuing operations
(cents per share) 10 (290.32) (61.73)
From discontinuing operations
(cents per share) 10 (7.17) (0.97)
Diluted loss per share
From continuing operations
(cents per share) 10 (290.32) (61.73)
From discontinuing operations
(cents per share) 10 (7.17) (0.97)
Headline loss per share
From continuing operations
(cents per share) 10 (76.73) (60.97)
From discontinuing operations
(cents per share) 10 (5.15) (0.97)
Diluted headline loss
per share
From continuing operations
(cents per share) 10 (76.73) (60.97)
From discontinuing operations
(cents per share) 10 (5.15) (0.97)
Restated comparative results - Final annual Initial
31 March 2010 report reviewed
audited results as
results release on
SENS on 22 Sep
11
Other income 35 925 26 764
Operating, administrative and (147 731) (123 290)
general expenses
Operating loss (167 914) (152 636)
Finance income 76 810 133 292
Fair value adjustment 66 222 (823)
Share of loss in associate (291 770) (205 790)
Loss from continuing (368 854) (278 159)
operations
Loss from discontinuing (5 770) -
operations
Loss before taxation (374 624) (278 159)
Loss for the period (374 624) (278 159)
Share of associate`s other 89 765 (80 802)
comprehensive income
Total comprehensive income for (277 201) (351 303)
the period
Basic loss per share (cents) (61.73) (46.55)
from continuing operations
Basic loss per share (cents) (0.97) -
from discontinuing operations
Diluted loss per share (cents) (61.73) (46.55)
from continuing operations
Diluted loss per share (cents) (0.97) -
from discontinuing operations
Restated results - 30 June
2011
Finance income 77 667 81 361
Share of loss in associate (326 265) (383 569)
Finance cost (68 951) (72 645)
Loss from continuing (1 740 485) (1 797 790)
operations
Loss before taxation (1 783 499) (1 840 803)
Loss for the period (1 783 499) (1 840 803)
Foreign currency translation (57 303) 151 487
reserve
Total comprehensive income for (1 840 394) (1 688 908)
the period
Basic loss per share (cents) (290.32) (299.88)
from continuing operations
Diluted loss per share (cents) (290.32) (299.88)
from continuing operations
Audited condensed consolidated
statement of changes in equity
for the period ended 30 June 2011
Stated Retained Fair value Non-distri-
butable
capital Earnings Reserve Reserve
R`000 R`000 R`000 R`000
Balance as at 1 April 2009 - 3 400 401 4 080 -
Loss for the period - (374 624) - -
Other comprehensive income
for the period - - 7 658 -
Balance as at 31 March 2010 - 3 025 777 11 738 -
Reverse acquisition share issue 486 500 - - -
Loss for the period - (1 783 499) - -
Other comprehensive income
for the period - - 408 -
Balance as at 30 June 2011 486 500 1 242 278 12 146 -
Audited condensed consolidated
statement of changes in equity
for the period ended 30 June 2011 (continued)
Foreign Equity Non- Total
currency attribu-table controlling equity
Transalation to the owners of Interest
Reserve the parent
R`000 R`000 R`000 R`000
Balance as at 1 - 3 404 481 - 3 404 481
April 2009
Loss for the period - (374 624) - (374 624)
Other comprehensive
income
for the period 89 765 97 423 - 97 423
Balance as at 31 89 765 3 127 280 - 3 127 280
March 2010
Reverse acquisition
share issue - 486 500 44 714 531 214
Loss for the period - (1 783 499) - (1 783 499)
Other comprehensive
income
for the period (57 303) (56 895) - (56 895)
Balance as at 30 32 462 1 773 386 44 714 1 818 100
June 2011
Restated comparative results - 31 Final annual Initial
March 2010 report reviewed
audited results as
results release on
SENS on 22
Sep 11
Retained earnings 1 April 2009 3 400 401 3 456 521
Loss for the period (374 624) (351 303)
Non-distributable - 10 326
reserve
Foreign currency - (70 685)
translation reserve
1 April 2009
Foreign currency 89 765 (80 802)
translation reserve
through other
comprehensive income
Restated results -
30 June 2011
Loss for the period (1 783 499) (1 840 803)
Foreign currency (57 303) 151 487
translation reserve
through other
comprehensive income
Audited condensed 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
operating activities 232 065 99 962
Cash flow from investing (890 371) (295 734)
activities
Cash flow from financing 187 711 (13 291)
activities
Net increase/(decrease) in cash
and cash equivalents (470 595) (209 063)
Cash and cash equivalents at the
beginning of the period 7 612 082 821 145
Cash and cash equivalents at the
end of the period 7 141 487 612 082
Restated comparative results - 31 Final annual Initial reviewed
March 2010 report results as
audited release on SENS
results on 22 Sep 11
Cash generated from/(utilised in) 99 962 (48 162)
operating activities
Cash flow from investing (295 734) (804 183)
activities
Cash flow from financing (13 291) 1 204 762
activities
Net increase/(decrease) in cash (209 063) 352 417
and cash equivalents
Cash and cash equivalents at the 821 145 259 666
beginning of the period
Restated results - 30 June 2011
Cash generated from/(utilised in) 232 065 52 706
operating activities
Cash flow from investing (890 371) (711 013)
activities
Notes to the audited condensed 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 1 January 2013
Instruments first part of a three-part
project to replace IAS 39
Financial Instruments:
Recognition and Measurement
IAS 1: Presentation Current/non-current 1 July 2012
of Financial classification of convertible
Statements instruments
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 audited consolidated financial statements of
Simmer and Jack Mines, Limited from the audited 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 19 315 1 273
Accumulated depreciation
and impairment losses as at (1 597) (17 695) (5 255) (210)
1 April 2009
Carrying value as at
1 April 2009 6 022 89 150 14 060 1 063
Depreciation (373) (2 730) (3 482) (267)
Disposals - - (9) -
Additions 362 11 973 6 104 -
Carrying value as at
31 March 2010 6 011 98 393 16 673 796
Cost as at 31 March 2010 7 981 118 818 25 410 1 273
Accumulated depreciation
and impairment losses as at (1 970) (20 425) (8 737) (477)
31 March 2010
Carrying value as at
31 March 2010 6 011 98 393 16 673 796
2011
Cost as at 1 April 2010 7 981 118 818 25 410 1 273
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 98 393 16 673 796
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 87 527 3 734 96 -
Disposals - - (2 991) (510)
Carrying value as at
30 June 2011 126 445 103 599 16 349 3 974
Cost as at 30 June 2011 138 118 131 600 34 280 4 657
Accumulated depreciation
and impairment losses as at (11 673) (28 001) (17 931) (683)
30 June 2011
Carrying value as at
30 June 2011 126 445 103 599 16 349 3 974
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 1 257 602 773
Accumulated depreciation
and impairment losses as at (77 193) (4 952) - (106 902)
1 April 2009
Carrying value as at
1 April 2009 380 522 3 797 1 257 495 871
Depreciation (23 690) (2 059) - (32 601)
Disposals - - - (9)
Additions 101 124 928 180 120 671
Carrying value as at
31 March 2010 457 956 2 666 1 437 583 932
Cost as at 31 March 2010 558 839 9 677 1 437 723 435
Accumulated depreciation
and impairment losses as at (100 883) (7 011) - (139 503)
31 March 2010
Carrying value as at
31 March 2010 457 956 2 666 1 437 583 932
2011
Cost as at 1 April 2010 558 839 9 677 1 437 723 435
Accumulated depreciation
and impairment losses as at (100 883) (7 011) - (139 503)
1 April 2010
Carrying value as at
1 April 2010 457 956 2 666 1 437 583 932
Depreciation (84 017) (510) - (99 136)
Impairment (6 311) (61) - (18 442)
Additions 647 716 1 140 2 233 718 406
Additions by business
combination 35 570 - 455 000 581 927
Disposals - (2 156) - (5 657)
Carrying value as at
30 June 2011 1 050 914 1 079 458 670 1 761 030
Cost as at 30 June 2011 1 242 125 8 661 458 670 2 018 111
Accumulated depreciation
and impairment losses as at (191 211) (7 582) - (257 081)
30 June 2011
Carrying value as at
30 June 2011 1 050 914 1 079 458 670 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` 8 9
valuation
Rand Refinery Limited
24 004 shares - Directors` 22 252 21 843
valuation
Total available-for-sale financial 22 260 21 852
assets
Financial assets at fair value
through
profit and loss
Mine Waste Solution convertible 392 874 -
Rand Notes
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 4 750 110 594
Total financial assets at 4 750 110 594
amortised cost
Total financial asset 348 112 132 446
Non-current assets
Available for sale 22 260 21 852
Fair value through profit and loss 321 102 -
Amortised cost - -
343 362 21 852
Current assets
Amortised cost 4 750 110 594
6. Investment in associate
Name of company
Associate
First Uranium Corporation - 2 001 030
Reconciliation of carrying value
Opening balance 2 001 030 2 134 746
Share of loss in associate (326 265) (291 770)
Impairment of investment in (1 251 213) -
associate
Share of associates other (57 303) 89 765
comprehensive income
Loan by Simmer and Jack Mines, - 68 289
Limited
Transfer to non-current assets (366 249) -
held-for-sale
Carrying amount at the end of the - 2 001 030
year
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:
Cash on hand 1 45
Bank balances 170 297 612 037
Bank overdraft (28 811) -
141 487 612 082
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) 114 595 223 701
The Simmer and Jack Mines, Limited
(SJML) 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, SJML 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 SJML` 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 SJML 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
SJML 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$10 million convertible loan
plus the balance of a graduated
gold royalty due for the fourth
quarter of FY2008, from the Simmer
and Jack carve-out entities.
A settlement has been reached with
Aberdeen subsequent to year-end.
"Deutsche Bank A.G. Forward Gold
Purchase Agreement - First
Agreement
BGM entered into a Forward Gold 44 332 -
Purchase Agreement with Deutsche
Bank A.G. whereby Deutsche Bank
purchased 24 360 oz of gold from
BGM. Deutsche Bank subsequently
deposited a Prepayment US$ 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 213 730 -
Purchase 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 9 271 -
pursuant 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 2 472 -
equipment at 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 (45 376) (56 475)
factors
Carrying amount at 31 March 384 400 223 701
Non-current portion 223 510 210 044
Current portion 160 890 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
Operating loss for the year is
stated after accounting for the
following:
Operating lease charges - (2 450) (1 724)
equipment
Management fee: Related party (547) -
Exploration expenditure - (19 422)
Audit fees - external (2 464) (1 603)
Audit fees - internal (33) (410)
Profit on sale of property, plant
and equipment 1 865 10
Loss on partial disposal of
financial asset (25 500) -
Loss on financial assets - (799)
Loss on sale of non-current assets
held for sale - (230)
Depreciation and impairment on (117 578) (32 601)
property, plant and equipment
Employee costs - including share (1 053 575) (598 622)
option costs
Net foreign exchange losses (11 548) (30 409)
10. Earnings per share
Reconciliation between loss and
headline loss:
Net loss from continuing (1 740 485) (368 854)
operations
Net loss from discontinuing (43 014) (5 770)
operations
Basic loss for the year (1 783 499) (374 624)
Add back:
Non-controlling interest - -
Attributable to the owners of the (1 783 499) (374 624)
parent
Impairment of property, plant and 18 442 -
equipment
Impairment of investment in 1 251 213 -
associate
Impairment in non-current asset 145 835 -
held-for-sale
Impairment of loans 33 536 13 382
Disposal of property, plant and
equipment - gain (1 865) (10)
Loss on sale of non-current assets
held for sale - 230
Fair value adjustments on - (10 025)
investment property
Fair value adjustment on held-for- - 960
sale assets
Gain on bargain purchase (154 532) -
Headline loss for the year (490 870) (370 087)
Basic loss per share (cents)
from continuing operations* (290.32) (61.73)
Basic loss per share (cents)
from discontinuing operations* (7.17) (0.97)
Total basic loss per share (297.49) (62.70)
(cents)*
Diluted loss per share (cents)
from continuing operations* (290.32) (61.73)
Diluted loss per share (cents)
from discontinuing operations* (7.17) (0.97)
Total diluted loss
per share (cents)* (297.49) (62.70)
Headline loss per share (cents) (76.73) (60.97)
from continuing operations*
Headline loss per share (cents) (5.15) (0.97)
from discontinuing operations*
Diluted headline loss per share (76.73) (60.97)
(cents) from continuing
operations*
Diluted headline loss per share (5.15) (0.97)
(cents) from discontinuing
operations*
Net asset value per share (cents) 201.66
* Based on weighted average number
of shares in issue
Weighted average number of
ordinary shares
in issue 599 513 597 512
Adjusted for:
- Share options - -
Weighted average number of 599 513 597 512
ordinary shares 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 operations
Loss before taxation (1 783 499) (374 624)
Adjusted for:
Depreciation and impairment 99 136 32 601
Loss on sale of asset - (10)
Loss on non-current asset
held for sale - 230
Loss from discontinuing operations 43 014 -
Share of losses of associate 326 625 291 770
Finance income (77 667) (76 810)
Finance cost 68 951 34 940
Gain on bargain purchase (154 532) -
Fair value adjustments - (36 156) (9 065)
investment property and non-
current assets held-for-sale
Impairment of assets 1 436 895 -
Movement in reimbursive asset - 10 615
ABSA call and put option - 2 973
Foreign exchange gains and losses 11 548 -
Movement due to reverse - 223 124
acquisition
Increase in financial asset - (7 658)
Net movement in environmental - 17 167
rehabilitation trust
Net movement in environmental
rehabilitation provision - 15 369
(65 685) 91 507
Changes in working capital:
(Increase)/decrease in inventories (26 065) 4 074
(Increase)/decrease in trade and
other receivables 29 967 (24 963)
Increase/(decrease) in trade and
other payables 279 027 (39 190)
Cash generated from/(utilised in) 217 244 31 428
operations
12. Events after the reporting period
Disposal of First Uranium common shares and lock-up of Mine Waste Solution
convertible redeemable notes
On 22 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.
AngloGold and Village also entered into a lockup 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 R1 000 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. Post 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.
Settlement with Aberdeen dispute
On 8 October 2011, Village and Aberdeen International Incorporated, entered
into a binding settlement agreement in favour of Aberdeen for the payment of
the loan up to an amount of US$9 million and a 1% perpetual net smelter
royalty as initially stipulated in the Aberdeen loan agreement.
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. The segments have been
determined from a geographical and product perspective. The group includes
operating assets in two gold operations, Buffelsfontein and the Tau Lekoa
(the "North West" segment), an antimony/gold producer in Cons Murch (the
"Limpopo-Cons Murch" segment) and a very exciting brownflields platinum
exploration project in Lesego Platinum Limited (the "Limpopo-Lesego"
segment). During the current financial year all of the group`s gold was sold
to the Rand Refinery, while Cons Murch exports its antimony to India and
China.
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.
Products produced by the operations are not sold internally between
operations. Sales between operations are limited and in such events comprise
of plant and equipment and consumables.
2011
Figures in Rand Limpopo Limpopo North West
thousand Lesego Cons Murch Buffelsfontein
Revenue - - 1 755 258
Cost of production - - (1 685 090)
Gross profit - - 70 168
Other income - - 25 045
General - - (104 335)
administrative and
overhead
expenditure
Operating loss - - (9 122)
Finance income - - 6 793
Restructuring - - (49 629)
costs
Fair value - - 36 156
adjustments
Impairment of - - (40 256)
assets and
associate
investment
Share of losses of - - -
associate
Gain on bargain - - -
purchase
Finance charges - - (57 056)
Loss on ordinary - - (113 114)
activities
Loss from - - -
discontinuing
operations
Other
comprehensive
income
Foreign currency - - -
translation
reserve
Fair value - - 408
adjustments to
available-for-sale
Total
comprehensive
loss for the year - - (112 706)
Total assets 455 000 352 844 1 452 768
Total liabilities - (116 222) (944 049)
2011
Figures in Rand Duff Scott & Total
thousand Corporate
Revenue - 1 755 258
Cost of production (1 685 090)
-
Gross profit - 70 168
Other income 447 25 492
General (222 760)
administrative and
overhead
expenditure (118 425)
Operating loss (117 978) (127 100)
Finance income 70 874 77 667
Restructuring (49 629)
costs -
Fair value 36 156
adjustments -
Impairment of (1 436 895)
assets and
associate
investment (1 396 639)
Share of losses of (326 265)
associate (326 265)
Gain on bargain 154 532
purchase 154 532
Finance charges (11 895) (68 951)
Loss on ordinary (1 740 485)
activities (1 627 371)
Loss from (43 014)
discontinuing
operations (43 014)
Other
comprehensive
income
Foreign currency (57 303)
translation
reserve (57 303)
Fair value 408
adjustments to
available-for-sale
-
Total
comprehensive
loss for the (1 840 394)
year (1 727 688)
Total assets 716 073 2 976 685
Total liabilities (98 314) (1 158 585)
2010
Figures in Rand North West Duff Scott Total
thousand Province and
Corporate
Profit/(loss)
Revenue 867 395 - 867 395
Cost of production (923 503) - (923 503)
Gross loss (56 108) - (56 108)
Other income 10 404 25 521 35 925
General
administrative and
overhead (50 408) (97 323) (147 731)
expenditure
Operating loss (96 112) (71 802) (167 914)
Finance income 3 447 73 363 76 810
Restructuring (3 650) - (3 650)
costs
Loss from equity-
accounted
investment - (291 770) (291 770)
Net movement in 57 159 9 063 66 222
fair value
Impairment of (13 382) - (13 382)
assets
Loss on non- (230) - (230)
current assets
held-for-sale
Finance charges (34 922) (18) (34 940)
Loss on ordinary (87 690) (281 164) (368 854)
activities
Other
comprehensive
income
Share of other
comprehensive
income of equity-
accounted
investment - 89 765 89 765
Movement in
available-for-sale
financial 7 658 - 7 658
instruments
Total
comprehensive
loss for the (80 032) (197 169) (277 201)
year
Total assets 893 747 2 781 801 3 675 548
Total liabilities (526 791) (21 477) (548 268)
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
Fair values Carrying
values
R`000 R`000
Non-current assets
Property, plant and equipment 603 479 71 241
Investment in rehabilitation trust fund 4 705 4 705
Intangible assets 83 063 83 063
Reimbursive asset 25 000 25 000
Total non-current assets 716 248 184 009
Current assets
Inventory 15 897 15 897
Trade and other receivables 32 319 32 319
Cash and cash equivalents 62 314 62 314
Total current assets 110 530 110 530
Total assets 826 778 294 538
Non-current liabilities
Financial liabilities (10 662) (10 662)
Deferred tax (20 458) (20 458)
Environmental rehabilitation provision (43 697) (43 697)
Total non-current liabilities (74 817) (74 817)
Current liabilities
Trade and other payables (50 106) (50 106)
Financial liabilities (1 081) (1 081)
Accruals and provisions (21 434) (21 434)
Total current liabilities (72 621) (72 621)
Total liabilities (147 438) (147 438)
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.
The effect of this business combination having
taken effect from 1 April 2010 would result in
the consolidated revenue for the period being R1
855 million and the loss for the period being R1
822 million.
Transaction costs amounting to R7 609 000 was
incurred by the acquirer.
15. Related parties
Relationships Held by Holding Holding
2011 % 2010 %
Holding Village Main Reef Limited
company
Subsidiaries Umbono Minerals and Mining Village Main 100.00 100.00
(Pty) Ltd Reef Limited
Umbono Platinum Mining Umbono Minerals 72.80 72.80
(Pty) Ltd and Mining (Pty)
Ltd
Village Main 27.20 27.20
Reef Limited
Nebavest 69 (Proprietary) Village Main 100.00 100.00
Limited Reef Limited
Lesego Platinum Mining Umbono Platinum 45.10 45.10
Limited Mining (Pty) Ltd
Village Main 26.30 26.30
Reef Limited
Sweet Sensation 79 Lesego Platinum 45.00 45.00
(Proprietary) Limited Mining Limited
Khumo Mining and 50.00 50.00
Investments
(Proprietary)
Limited
Nebavest 69 5.00 5.00
(Proprietary)
Limited
Khumo Mining and Nebavest 69 100.00 100.00
Investments (Proprietary) (Proprietary)
Limited Limited
Cons Murch Mine (Pty) Ltd Nebavest 49 66.60 0.00
(Proprietary)
Limited
Nebavest 49 (Proprietary) Village Main 100.00 0.00
Limited Reef Limited
Village Main Reef Nature Village Main 100.00 100.00
Conservation Trust Reef Limited
Simmer and Jack Investments Village Main 100.00 0.00
(Proprietary) Limited Reef Limited
Buffelsfontein Gold Mines Simmer and Jack 100.00 100.00
Limited Investments
(Proprietary)
Limited
Duff Scott Hospital Buffelsfontein 100.00 100.00
(Proprietary) Limited Gold Mines
Limited
Buffelsfontein Buffelsfontein 100.00 100.00
Rehabilitation Trust Gold Mines
Limited
Temotuo Rehabilitation Buffelsfontein 100.00 100.00
Company - NPC Gold Mines
Limited
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 Village directors are
management listed on the Village
website
(www.villagemainreef.co.za)
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) has 70 553 71 227
not yet approved the transfer of the mining rights
to MWS, the liability still resides with BGM.
Loan accounts - owing (to)/by related parties
First Uranium (Proprietary) Limited (4 750) (110 594)
Related party transactions
Capitation fees received from related parties
Duff Scott Hospital (Proprietary) Limited (22 805) (13 584)
Interest received from related party loans 1 846 19 335
Interest received in Mine Waste Notes 49 472 -
Royalties received from Mine Waste Solutions 9 874 4 987
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
Key management compensation
Key management includes directors (executive and
non-executive), member of the executive committee
and the company secretary. The compensation paid
or payable to key management for employee services
is shown below:
Salaries and other short-term employee benefits 31 349 37 541
Termination benefits 4 628 -
Post-retirement benefits 256 -
Share-based payments 3 447 31 002
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
11 November 2011
Date: 11/11/2011 16:45:48 Produced by the JSE SENS Department.
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