| Thu 16 Feb 2012, 8:32 | | VIL - Village Main Reef Limited - Reviewed condensed consolidated interim |
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VIL
VIL
VIL - Village Main Reef Limited - Reviewed condensed consolidated interim
results for the 6 months ended 31 December 2011
Village Main Reef Limited
(formerly Village Main Reef Gold Mining Company (1934) Limited)
(Incorporated in the Republic of South Africa)
Registration number 1934/005703/06)
JSE code: VIL
ISIN: ZAE000154761
("Village" or "the company" or "the group")
REVIEWED CONDENSED CONSOLIDATED INTERIM RESULTS FOR THE 6 MONTHS ENDED 31
DECEMBER 2011
* The results presented for this half year present the results for the
first six-month period where Village was the owner of both Tau Lekoa
("Tau") and Buffelsfontein Gold Mine ("Buffels"). The comparative numbers
presented reflect in essence the results of the operations of Simmers and
Jack Mines Limited ("Simmers") as the owners of Tau and Buffels in line
with the requirements of IFRS 3 - Business Combinations and particularly
the accounting treatment in relation to reverse take-overs. This is
consistent with the approach taken in the annual report of Village for the
15 months ended 30 June 2011.
Highlights
- Net cash generated by operations for the six months of R313,3 million - a
substantial turnaround compared to the results achieved by the operations
during the comparative period.
- Production at all operations stable, with a significant turnaround
completed at Buffels, resulting in Buffels returning to profitability
during the December quarter.
- Village materially strengthening its balance sheet through the successful
disposal of 19,79% of its equity interest in First Uranium Corporation
("FIU") to AngloGold Ashanti for R205 million.
- At Lesego Platinum ("Lesego") a platinum resource of 41,8 Moz confirmed,
with some 4,8 million ounces in the measured category. Lesego successfully
completed a shallow drilling programme, confirming economic intersections
of Merensky and UG2 chromite at depths between 350 m and 700 m.
- Lesego completed a positive pre-feasibility study meeting all criteria
set by the Industrial Development Corporation ("IDC") enabling Lesego to
draw down the remainder of the IDC funding of R54 million which will fully
fund the definitive feasibility study ("DFS").
- Settlement reached over long-standing dispute with Aberdeen
International, resulting in Village having to pay Aberdeen US$9 million in
full and final settlement.
- Village and DRD Limited ("DRD") jointly announce the potential
acquisition by Village of Blyvooruitzicht Gold Mining Company Limited
("Blyvoor") from DRD for a total consideration of R150 million to be
settled through Village issuing 85 714 286 Village shares to DRD.
Events after reporting period
- Village announces that a binding agreement has been concluded with DRD in
relation to the acquisition of DRD`s entire interest in Blyvoor. In terms
of the agreement the acquisition will close in two parts, the part A sale
and the part B sale. As part of the part A sale, Village will acquire all
amounts owed to DRD by Blyvoor and as part of the part B sale, Village will
acquire the entire 74% equity interest in Blyvoor held by DRD. Both the
part A and part B closures remain subject to certain conditions, as set out
in the transaction announcement of 13 February 2012.
- DRD announced a Section 189 process, intended to shut down the loss-
making operations at its 4 and 6 shafts, in order to ensure Blyvoor`s
financial viability at current gold prices.
- Mr Keith Scott, a non-executive director, announced that he will resign
to pursue personal interests. The board thanks Mr Scott for his valuable
contribution to Village and wishes him all the best in his future
endeavours.
- First Uranium Corporation ("FIU") announced on 14 February 2012 that it
is in negotiations to dispose of all or some of its assets. Village reminds
its shareholders that it remains the owner of 5,7% of the ordinary equity
of FIU, as well as 392,874 well-secured Mine Waste Solution Rand Notes
("MWS Rand Notes")with a face value of R392,8 million. In the event that a
transaction is concluded by FIU this will result in the value of the equity
investment as well as the investment in MWS Rand Notes being crystallised
by Village. Village has consistently indicated that it would distribute the
bulk of the proceeds from this realisation to its shareholders by way of a
special dividend.
Condensed consolidated statement of financial position
at 31 December 2011
31 December 31 December 30 June 31 March
2011 2010 2011 2010
Notes R`000 R`000 R`000 R`000
Assets
Non-current assets
Property, plant and 1 772 857 1 195 974 1 761 030 583 932
equipment
Investment property 21 888 33 517 28 859 32 956
Investment in 124 558 119 853 124 558 119 853
rehabilitation trust fund
Intangible assets 83 063 - 83 063 -
Financial assets 5 383 537 311 578 343 362 21 852
Reimbursive asset 95 553 71 227 95 553 71 227
Investment in associate - 1 669 139 - 2 001 030
Total non-current assets 2 481 456 3 401 288 2 436 425 2 830 850
Current assets
Financial assets 5 6 510 3 476 4 750 110 594
Trade and other 107 630 40 146 69 098 99 065
receivables
Inventories 51 765 34 177 44 119 18 054
Cash and cash equivalents 309 600 161 247 170 298 612 082
Total current assets 475 505 239 046 288 265 839 795
Non-current assets held 6 6 230 4 000 251 995 4 903
for sale
Total assets 2 963 191 3 644 334 2 976 685 3 675 548
Equity and liabilities
Equity
Stated capital 486 500 - 486 500 -
Retained earnings 1 424 444 2 647 942 1 242 278 3 025 777
Fair value reserve 12 146 11 738 12 146 11 738
Non-distibutable reserve 2 911 89 765 32 462 89 765
Minority interest 44 309 - 44 714 -
Total equity 1 970 310 2 749 445 1 818 100 3 127 280
Non-current liabilities
Financial liabilities 196 638 322 648 223 510 210 044
Deferred tax 20 458 - 20 458 -
Provision for 261 138 274 690 282 760 210 850
environmental
rehabilitation
Total non-current 478 234 597 338 526 728 420 894
liabilities
Current liabilities
Financial liabilities 228 577 15 064 160 890 13 657
Trade and other payables 282 519 244 502 392 744 113 717
Retirement benefit 3 551 - 3 723 -
obligations
Bank overdraft - 37 985 28 811 -
Total current liabilities 514 647 297 551 586 168 127 374
Non-current liabilities 6 - - 45 689 -
held for sale
Total liabilities 992 881 894 889 1 158 585 548 268
Total equity and 2 963 191 3 644 334 2 976 685 3 675 548
liabilities
Condensed consolidated statements of comprehensive income
for the 6 months ended 31 December 2011
6 months 9 months
ended ended
31 December 31 December
2011 2010
Notes R`000 R`000
Revenue 1 287 808 948 361
Cost of sales (877 044) (915 729)
Gross profit 410 764 32 632
Other income 21 624 12 085
Operating, administrative and general (81 996) (150 690)
expenses
Operating profit/(loss) 350 392 (105 973)
Finance income 29 084 43 053
Restructuring cost 13 558 (8 060)
Fair value adjustment (133 840) (16 400)
Impairment of assets and associate (22 883) (4 581)
Profit from partial disposal of investment 51 299 -
in associate held for sale
Foreign exchange (losses)/gains (34 728) 4 759
Aberdeen dispute settlement expense (73 129) -
Business optimisation project (14 000) -
Share-based payment expenses (10 512) -
Share of loss in associate - (224 144)
Finance cost (5 887) (52 664)
Profit/(loss) from continuing operations 149 354 (364 010)
Loss from discontinued operations (55) (13 825)
Profit/(loss) before taxation 149 299 (377 835)
Taxation - -
Profit/(loss) for the period 149 299 (377 835)
Other comprehensive income:
Foreign currency translation reserve 6 32 462 -
Total comprehensive income for the period 181 761 (377 835)
Profit attributable to:
Owners of the parent 149 704 (377 835)
Non-controlling interest (405) -
Profit/(loss) for the period 149 299 (377 835)
Total comprehensive income:
Owners of the parent 182 166 (377 835)
Non-controlling interest (405) -
Total comprehensive income for the period 181 761 (377 835)
Basic earnings/(loss) per share 4
From continuing operations (cents per share) 16,57 (60,92)
From discontinued operations (cents per (0,01) (2.31)
share)
Diluted earnings/(loss) per share 4
From continuing operations (cents per share) 16,57 (60,92)
From discontinued operations (cents per (0,01) (2.31)
share)
Headline earnings/(loss) per share 4
From continuing operations (cents per share) 12,06 (62,47)
From discontinued operations (cents per (0,01) (2,31)
share)
Diluted headline earnings/(loss) per share 4
From continuing operations (cents per share) 12,06 (62,47)
From discontinued operations (cents per (0,01) (2,31)
share)
Condensed consolidated statement of changes in equity
for the 6 months ended 31 December 2011
Stated Retained Fair Foreign
capital earnings value currency
reserve translation
reserve
R`000 R`000 R`000 R`000
Balance as at 31 March 2010 - 3 025 777 11 738 89 765
Loss for the period - (377 835) - -
Other comprehensive income - - - -
Balance as at 31 December 2010 - 2 647 942 11 738 89 765
Reverse acquisition share issue 486 500 - - -
Loss for the period - (1 462 967) - -
Other comprehensive income - 57 303 408 (57 303)
Balance as at 30 June 2011 486 500 1 242 278 12 146 32 462
Profit for the period - 149 704 - -
Other comprehensive income - 32 462 - (32 462)
Share options expensed during - - - -
the period
Balance as at 31 December 2011 486 500 1 424 444 12 146 -
Share Equity Non- Total equity
option attributa- Control-
reserve ble to ling
owners of interest
the parent
R`000 R`000 R`000 R`000
Balance as at 31 March 2010 - 3 127 280 - 3 127 280
Loss for the period - (377 835) - (377 835)
Other comprehensive income - - - -
Balance as at 31 December 2010 - 2 749 445 - 2 749 445
Reverse acquisition share issue - 486 500 44 714 531 214
Loss for the period - (1 462 967) - (1 462 967)
Other comprehensive income - 408 - 408
Balance as at 30 June 2011 - 1 773 386 44 714 1 818 100
Profit for the period - 149 704 (405) 149 299
Other comprehensive income - - - -
Share options expensed during 2 911 2 911 - 2 911
the period
Balance as at 31 December 2011 2 911 1 926 001 44 309 1 970 310
Condensed consolidated statement of cash flow
for the 6 months ended 31 December 2011
6 months 9 months
ended ended
31 December 31 December
2011 2010
Notes R`000 R`000
Cash generated from operations 87 103 262 271
Finance cost (5 887) (52 664)
Finance income 29 084 43 053
Cash generated from operating 110 300 252 660
activities
Cash flow from investing activities
Net additions of property, plant and (73 374) (206 482)
equipment and investment property
Net proceeds on disposal of non- 211 199 -
current assets held for sale
Cash paid in respect of acquisition - (450 000)
of Tau Lekoa
Cash invested in Mine Waste Solution - (296 084)
Notes
Proceeds from Loans repaid - 113 476
Loans issued to related parties (1 760) -
Cash flow from investing activities 136 065 (839 090)
Cash flow from financing activities
(Repayment of)/proceeds from loans (78 252) 97 610
classified as financial liabilities
(78 252) 97 610
Net increase/(decrease) in cash and 168 113 (488 820)
cash equivalents
Cash and cash equivalents at the 141 487 612 082
beginning of the period
Cash and cash equivalents at the end 309 600 123 262
of the period
Notes to the condensed interim financial statements
for the 6 months ended 31 December 2011
1. Significant accounting policies
1.1 General information
Village transformed itself from an exploration holding company with a very
exciting brownfields platinum project, Lesego Platinum Limited (Lesego),
into a mining company, with operating assets in two gold operations,
Buffels and Tau Lekoa, an antimony/gold producer in Cons Murch, as well as
a gold processing plant at Buffelsfontein.
1.2 Basis of preparation
The condensed interim consolidated financial statements are for the six
months ended 31 December 2011 and 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, the JSE Listings Requirements and the
requirements of the Companies Act of South Africa, 2008 as amended. They do
not include all of the information required in annual financial statements
in accordance with International Financial Reporting Standards, and should
be read in conjunction with the consolidated financial statements of the
Group for the year ended 30 June 2011. These accounting policies are
consistent with the previous annual financial statements. The condensed
interim financial statements have been reviewed by PricewaterhouseCoopers
(PwC) whose unqualified review report is available for inspection at the
Group`s registered office.
In compliance with 8.58(b) of the Listings Requirements of the JSE, there
have been no material changes other than as disclosed in the notes.
1.3 Estimates and accounting policies
The preparation of interim financial statements 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. In
preparing these condensed consolidated interim financial statements, the
significant judgements made by management in applying the Group`s
accounting policies and the key sources of estimation uncertainty were the
same as those that applied to the consolidated financial statements for the
year ended 30 June 2011.
2. Events after reporting period
- Village announces that a binding agreement has been concluded with DRD in
relation to the acquisition of DRD`s entire interest in Blyvoor. In terms
of the agreement the acquisition will close in two parts, the part A sale
and the part B sale. As part of the part A sale, Village will acquire all
amounts owed to DRD by Blyvoor and as part of the part B sale, Village will
acquire the entire 74% equity interest in Blyvoor held by DRD. Both the
part A and part B closures remain subject to certain conditions, as set out
in the transaction announcement of 13 February 2012.
- DRD announced a Section 189 process, intended to shut down the loss-
making operations at its 4 and 6 shafts, in order to ensure Blyvoor`s
financial viability at current gold prices.
- Mr Keith Scott, a non-executive director, announced that he will resign
to pursue personal interests. The board thanks Mr Scott for his valuable
contribution to Village and wishes him all the best in his future
endeavours.
- FIU announced on 14 February 2012 that it is in negotiations to dispose
of all or some of its assets. Village reminds its shareholders that it
remains the owner of 5,7% of the ordinary equity of FIU, as well as 392,874
well-secured Mine Waste Solution Rand Notes ("MWS Rand Notes")with a face
value of R392,8 million. In the event that a transaction is concluded by
FIU this will result in the value of the equity investment as well as the
investment in MWS Rand Notes being crystallised by Village. Village has
consistently indicated that it would distribute the bulk of the proceeds
from this realisation to its shareholders by way of a special dividend.
3. Segmental reporting
The Group`s mining and exploration activities are conducted mainly to
produce and explore gold, antimony and platinum commodities. An analysis of
the Group`s operating segments is set out below per these commodities.
Platinum Antimony Gold Corporate Total
2011 R`000 R`000 R`000 R`000 R`000
Profit/(loss)
Revenue - 150 431 1 104 555 - 1 254 986
Cost of production - (96 362) (747 860) - (844 222)
Gross profit - 54 069 356 695 - 410 764
Other income 22 1 522 19 912 168 21 624
General administrative (2 723) (22 839) (47 134) (9 300) (81 996)
and overhead expenditure
Operating (loss)/profit (2 701) 32 752 329 473 (9 132) 350 392
Finance income 342 1 366 - 27 376 29 084
Restructuring costs - - 13 558 - 13 558
Net movement in fair - - (107 364) (26 476) (133 840)
value
Impairment of assets and - - (22 883) - (22 883)
associate investment
Profit from partial - - - 51 299 51 299
disposal of investment
in associate held for
sale
Foreign exchange losses - - (34 728) - (34 728)
Aberdeen dispute - - (73 129) - (73 129)
settlement expense
Business optimisation - - (14 000) - (14 000)
project
Share-based payment - - - (10 512) (10 512)
expense
Finance charges - (211) (5 376) (300) (5 887)
(Loss)/profit on (2 359) 33 907 85 551 32 255 149 354
ordinary activities
Loss from discontinued - - (55) - (55)
operations
Other comprehensive
income
Foreign currency - - - 32 462 32 462
translation reserve
Total comprehensive (2 359) 33 907 85 496 64 717 181 761
(loss)/profit for the
year
Total assets 439 158 376 053 1 470 014 677 966 2 963 191
Total liabilities 4 290 (105 526) (836 393) (55 252) (992 881)
Platinum Antimony Gold Corporate Total
2010 R`000 R`000 R`000 R`000 R`000
Profit/(loss)
Revenue - - 948 361 - 948 361
Cost of production - - (915 729) - (915 729)
Gross profit - - 32 632 - 32 632
Other income - - 11 846 239 12 085
General administrative - - (61 404) (89 286) (150 690)
and overhead
expenditure
Operating loss - - (16 926) (89 047) (105 973)
Finance income - - (1 846) 44 899 43 053
Restructuring costs - - (8 060) - (8 060)
Net movement in fair - - 97 265 (113 665) (16 400)
value
Profit from partial - - (4 581) - (4 581)
disposal of investment
in associate held for
sale
Foreign exchange gains - - 4 759 - 4 759
Share of loss in - - (224 144) - (224 144)
associate
Finance charges - - (12 127) (40 537) (52 664)
Loss on ordinary - - (165 660) (198 350) (364 010)
activities
Loss from discontinued - - (13 825) - (13 825)
operations
Other comprehensive - - (179 485) (198 350) (377 835)
income
Foreign currency - - - - -
translation reserve
Total comprehensive - - (179 485) (198 350) (377 835)
loss for the year
Total assets - - 1 522 680 2 121 654 3 644 334
Total liabilities - - (774 189) (120 700) (894 889)
6 months 9 months
ended ended
31 December 31 December
2011 2010
R`000 R`000
Reconciliation between earnings/(loss) and
headline earnings/(loss):
Net loss from continuing operations 149 354 (364 010)
Net loss from discontinued operations (55) (13 825)
Basic earnings/(loss) for the year 149 299 (377 835)
Add back:
Non-controlling interest 405 -
Attributable to the owners of the parent 149 704 (377 835)
Impairment of assets and associate 22 883 4 581
Profit from disposal of investment in associate (51 299) -
classified as held for sale
Profit from sale of assets (12 597) -
Headline earnings/(loss) for the year 108 691 (373 254)
Basic loss per share (cents) from continuing 16,57 (60,92)
operations*
Basic loss per share (cents) from discontinued (0,01) (2,31)
operations*
Total basic loss per share (cents)* 16,56 (63,23)
Diluted loss per share (cents) from continuing 16,57 (60,92)
operations*
Diluted loss per share (cents) from (0,01) (2,31)
discontinued operations*
Total diluted loss per share (cents)* 16,56 (63,23)
Headline loss per share (cents) from continuing 12,06 (62,47)
operations*
Headline loss per share (cents) from (0,01) (2,31)
discontinued operations*
Diluted headline loss per share (cents) from 12,06 (62,47)
continuing operations*
Diluted headline loss per share (cents) from (0,01) (2,31)
discontinued operations*
Net asset value per share (cents) 218,54 460,15
* Based on weighted average number of shares in
issue
Weighted average number of ordinary shares in 901 575 597 512
issue
Adjusted for: - -
- Share options - -
Weighted average number of ordinary shares for 901 575 597 512
diluted earnings per share
Basic earnings per share is 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.
5. Financial assets
During the interim period ending 31 December 2011, the Mine Waste Solution
convertible rand notes, classified as financial assets at fair value
through profit and loss, were revalued to their fair value. This resulted
in a fair value gain of R22,4 million which has been included in the
statement of comprehensive income through profit and loss.
The investment in First Uranium Corporation was reclassified from non-
current assets held for sale to available-for-sale financial assets. Please
refer to note 6 (Non-current assets held for sale) for more details.
6. Non-current assets/(liabilities) held for sale
6.1 Investment in First Uranium Corporation
Village disposed of 19,8% of its equity interest in FFIU to AngloGold
Ashanti for R205 million on 27 July 2011. The remaining portion held is now
5,7%. Due to the decrease in holding, FIU is now no longer classified as an
investment in associate. The investment was reclassified from non-current
assets held for sale to available-for-sale financial assets, which
subsequently triggered the release of the foreign currency translation
reserve of R32,462 million relating to the equity accounting of the FIU
investment in associate.
6.2 Disposal of Duff Scott Hospital
The disposal of Duff Scott Hospital was concluded with effect on 1 November
2011. In terms of the disposal, Village will pay R5,2 million towards the
settlement of Duff Scott`s outstanding creditors and liabilities. The
liabilities of Duff Scott exceeded its assets resulting in a profit on
disposal of R9,696 million. Together with the loss from operations for the
period of R9,751 million, the loss from the discontinued operations
amounted to R55 000.
Directors` emoluments will be disclosed in full details in the directors`
report to the annual report
Village CFO - Marius Saaiman
Msaaiman@villagemainreef.co.za
011 274 4603
082 458 3420
Vestor Media and Investor Relations
Louise Brugman
louise@vestor.co.za
011 787 3015
083 504 1186
Transfer secretaries
Link Market Services South Africa (Pty) Ltd
PO Box 4844, Johannesburg, 2000
Auditor
PricewaterhouseCoopers Inc.
2 Eglin Road, Sunninghill, 2157
Registered office
210 Cumberland Avenue, Bryanston, 2021
Sponsor
Java Capital 2 Arnold Road, Rosebank, 2196
The financial information was prepared by Fritz-Jan van der Westhuizen
(qualified chartered accountant) in his capacity as Group financial
controller under the supervision of Marius Saaiman (qualified chartered
accountant) in his capacity as Financial Director
The reviewed condensed statements have been reviewed by PwC and the review
report is available for inspection at the company`s offices.
Date: 16/02/2012 08:31:59 Produced by the JSE SENS Department.
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