| Fri 30 Mar 2012, 15:00 | | ARQ - Anooraq Resources Corporation - Anooraq announces audited consolidated |
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ARQ
ARQ
ARQ - Anooraq Resources Corporation - Anooraq announces audited consolidated
financial statements for the years ended 31 December 2011 and 2012
Anooraq Resources Corporation
(Incorporated in British Columbia, Canada)
(Registration number 10022-2033)
TSXV/JSE share code: ARQ
NYSE Amex share code: ANO
ISIN: CA03633E1088
("Anooraq" or the "Company")
ANOORAQ ANNOUNCES AUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARs
ENDED 31 DECEMBER 2011 AND 2012
Anooraq announces its audited consolidated financial results for the years
ended 31 December 2011 and 2010. This announcement should be read with the
Company`s full Financial Statements and Management Discussion & Analysis,
available at www.anooraqresources.com and filed on www.sedar.com.
Independent audit by the auditors
The consolidated financial statements of Anooraq Resources Corporation, which
comprise the consolidated statement of financial position as at 31 December
2011 and 2010 and the consolidated statements of comprehensive income,
changes in equity and cash flows for each of the years in three-year period
ended 31 December 2011, and the notes to the consolidated financial
statements were audited by KPMG Inc. The individual auditor assigned to
perform the audit is Mr CH Basson. KPMG`s unqualified audit report is
available for inspection at the registered office of the company.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION AS AT 31 DECEMBER 2011 AND 2010
(Expressed in Canadian Dollars, unless otherwise stated)
Note 2011 2010
Assets
Non-current assets
Property, plant and equipment 7 798,924,420 984,906,533
Capital work-in-progress 8 20,826,290 10,311,973
Intangible assets 9 1,895,205 3,280,056
Mineral property interests 10 8,268,783 13,716,383
Goodwill 11 10,994,115 13,185,952
Platinum Producers` Environmental 12 2,927,591 2,862,075
Trust
Other non-current assets 367,825 348,076
Total non-current assets 844,204,229 1,028,611,048
Current assets
Assets classified as held for sale 10 4,101,654 -
Inventories 13 787,084 -
Trade and other receivables 14 27,048,591 36,190,110
Current tax receivable 136,109 163,244
Cash and cash equivalents 15 15,945,008 25,764,590
Restricted cash 16 786,291 1,377,263
Total current assets 48,804,737 63,495,207
Total assets 893,008,966 1,092,106,255
Equity and Liabilities
Equity
Share capital 17 71,967,083 71,852,588
Treasury shares 17 (4,991,726) (4,991,726)
Convertible preference shares 17 162,910,000 162,910,000
Foreign currency translation reserve (11,238,333) (5,197,843)
Hedging reserve - (4,124,155)
Share-based payment reserve 24,042,711 22,032,571
Accumulated loss (245,448,316) (163,519,502)
Total equity attributable to equity (2,758,581) 78,961,933
holders of the Company
Non-controlling interest (25,326,683) 42,404,014
Total equity (28,085,264) 121,365,947
Liabilities
Non-current liabilities
Loans and borrowings 18 744,456,487 622,534,699
Deferred taxation 19 144,032,213 208,805,557
Provisions 20 8,383,708 8,184,494
Derivative liability 21 - 4,969,563
Total non-current liabilities 896,872,408 844,494,313
Current liabilities
Trade and other payables 22 23,125,587 31,844,332
Short-term portion of loans and 18 1,096,235 94,401,663
borrowings
Total current liabilities 24,221,822 126,245,995
Total liabilities 921,094,230 970,740,308
Total equity and liabilities 893,008,966 1,092,106,255
The accompanying notes are an integral part of these consolidated financial
statements.
Approved by the Board of Directors on 30 March 2012
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED 31
DECEMBER 2011, 2010 AND 2009
(Expressed in Canadian Dollars, unless otherwise stated)
Note 2011 2010 2009
Revenue 23 144,406,716 148,286,833 62,627,868
Cost of sales 24 (209,966,805) (173,151,188) (80,966,467)
Gross loss (65,560,089) (24,864,355) (18,338,599)
Administrative (23,788,855) (18,291,753) (11,781,689)
expenses
Transaction costs - (1,811,294) (10,401,725)
Other income 116,191 426,617 1,138,850
Operating loss (89,232,753) (44,540,785) (39,383,163)
Finance income 25 745,590 1,113,642 529,285
Finance expense 26 (92,044,884) (67,521,703) (20,340,287)
Net finance expense (91,299,294) (66,408,061) (19,811,002)
Share of loss of - - (219,849)
equity accounted
investees (net of
income tax)
Loss before income tax 27 (180,532,047) (110,948,846) (59,414,014)
Income tax 28 32,667,499 17,290,040 7,633,485
Loss for the year (147,864,548) (93,658,806) (51,780,529)
Other comprehensive
(loss)/income
Foreign currency (7,913,856) 6,237,524 (14,072,611)
translation
differences for
foreign operations
Effective portion of 1,602,501 (3,121,650) (731,293)
changes in fair value
of cash flow hedges
Reclassification to 2,521,654 - -
profit or loss on
settlement of cash
flow hedge
Other comprehensive 29 (3,789,701) 3,115,874 (14,803,904)
(loss)/income for the
year, net of income
tax
Total comprehensive (151,654,249) (90,542,932) (66,584,433)
loss for the year
Loss attributable to:
Owners of the Company (81,928,814) (51,721,410) (35,531,631)
Non-controlling (65,935,734) (41,937,396) (16,248,898)
interest
Loss for the year (147,864,548) (93,658,806) (51,780,529)
Total comprehensive
loss attributable to:
Owners of the Company (83,923,552) (50,921,216) (45,783,507)
Non-controlling (67,730,697) (39,621,716) (20,800,926)
interest
Total comprehensive (151,654,249) (90,542,932) (66,584,433)
loss for the year
Basic and diluted loss 30 (19 cents) (12 cents) (12 cents)
per share
The accompanying notes are an integral part of these consolidated financial
statements.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED 31 DECEMBER
2011, 2010 AND 2009
(Expressed in Canadian Dollars, unless otherwise stated)
Attributable to equity holders of the Company
Share capital Treasury shares
Note Number of Amount Number of Amount
shares shares
Balance at 1 186,640,007 54,948,341 - -
January 2009
Arising from 33 - - - -
business
acquisition
Total
comprehensive loss
for the year
Loss for the - - - -
year
Total other 29 - - - -
comprehensive loss
Total - - - -
comprehensive loss
for the year
Transactions with
owners, recognised
directly in equity
Contributions by
and distributions
to owners
Common shares 14,296,567 15,869,148 (4,497,062) (4,991,726)
issued
Preference - - - -
shares issued
Share options - - - -
re-priced
Share-based 806,898 895,625 - -
payment
transactions
Total 15,103,465 16,764,773 (4,497,062) (4,991,726)
contributions by
and distributions
to owners
Balance at 31 201,743,472 71,713,114 (4,497,062) (4,991,726)
December 2009
Total
comprehensive loss
for the year
Loss for the - - - -
year
Total other 29 - - - -
comprehensive loss
Total - - - -
comprehensive loss
for the year
Transactions with
owners, recognised
directly in equity
Contributions by
and distributions
to owners
Common shares 70,000 139,474 - -
issued
Share-based - - - -
payment
transactions
Total 70,000 139,474 - -
contributions by
and distributions
to owners
Balance at 31 201,813,472 71,852,588 (4,497,062) (4,991,726)
December 2010
Total
comprehensive loss
for the year
Loss for the - - - -
year
Total other 29 - - - -
comprehensive loss
Total - - - -
comprehensive loss
for the year
Transactions with
owners, recognised
directly in equity
Contributions by
and distributions
to owners
Common shares 75,000 114,495 - -
issued
Share-based - - - -
payment
transactions
Total 75,000 114,495 - -
contributions by
and distributions
to owners
Balance at 31 201,888,472 71,967,083 (4,497,062) (4,991,726)
December 2011
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED 31 DECEMBER
2011, 2010 AND 2009 (Continued)
(Expressed in Canadian Dollars, unless otherwise stated)
Attributable to equity holders of the Company
Convertible Foreign Share- based Hedging
preference currency payment reserve
shares translation reserve
reserve
Note
Balance at 1 - 129,684 17,584,974 -
January 2009
Arising from 33 - - - -
business
acquisition
Total
comprehensive loss
for the year
Loss for the - - - -
year
Total other 29 - (9,520,583) - (731,293)
comprehensive loss
Total - (9,520,583) - (731,293)
comprehensive loss
for the year
Transactions with
owners, recognised
directly in equity
Contributions by
and distributions
to owners
Common shares - - - -
issued
Preference 162,910,000 - - -
shares issued
Share options - - 1,117,441 -
re-priced
Share-based - - 1,068,371 -
payment
transactions
Total 162,910,000 - 2,185,812 -
contributions by
and distributions
to owners
Balance at 31 162,910,000 (9,390,899) 19,770,786 (731,293)
December 2009
Total
comprehensive loss
for the year
Loss for the - - - -
year
Total other 29 - 4,193,056 - (3,392,862)
comprehensive loss
Total - 4,193,056 - (3,392,862)
comprehensive loss
for the year
Transactions with
owners, recognised
directly in equity
Contributions by
and distributions
to owners
Common shares - - (71,665) -
issued
Share-based - - 2,333,450 -
payment
transactions
Total - - 2,261,785 -
contributions by
and distributions
to owners
Balance at 31 162,910,000 (5,197,843) 22,032,571 (4,124,155)
December 2010
Total
comprehensive loss
for the year
Loss for the - - - -
year
Total other 29 - (6,040,490) (78,403) 4,124,155
comprehensive loss
Total - (6,040,490) (78,403) 4,124,155
comprehensive loss
for the year
Transactions with
owners, recognised
directly in equity
Contributions by
and distributions
to owners
Common shares - - (51,495) -
issued
Share-based - - 2,140,038 -
payment
transactions
Total - - 2,088,543 -
contributions by
and distributions
to owners
Balance at 31 162,910,000 (11,238,333) 24,042,711 -
December 2011
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED 31 DECEMBER
2011, 2010 AND 2009 (Continued)
(Expressed in Canadian Dollars, unless otherwise stated)
Attributable to equity holders of the
Company
Accumulated Total Non- Total equity
loss controlling
interest
Not
e
Balance at 1 (76,266,461) (3,603,462) - (3,603,462)
January 2009
Arising from 33 - - 102,826,656 102,826,656
business
acquisition
Total
comprehensive
loss for the
year
Loss for (35,531,631) (35,531,631) (16,248,898) (51,780,529)
the year
Total other 29 - (10,251,876) (4,552,028) (14,803,904)
comprehensive
loss
Total (35,531,631) (45,783,507) (20,800,926) (66,584,433)
comprehensive
loss for the
year
Transactions
with owners,
recognised
directly in
equity
Contributions
by and
distributions
to owners
Common - 10,877,422 - 10,877,422
shares issued
Preference - 162,910,000 - 162,910,000
shares issued
Share - 1,117,441 - 1,117,441
options re-
priced
Share-based - 1,963,996 - 1,963,996
payment
transactions
Total - 176,868,859 - 176,868,859
contributions
by and
distributions
to owners
Balance at 31 (111,798,092) 127,481,890 82,025,730 209,507,620
December 2009
Total
comprehensive
loss for the
year
Loss for (51,721,410) (51,721,410) (41,937,396) (93,658,806)
the year
Total other 29 - 800,194 2,315,680 3,115,874
comprehensive
loss
Total (51,721,410) (50,921,216) (39,621,716) (90,542,932)
comprehensive
loss for the
year
Transactions
with owners,
recognised
directly in
equity
Contributions
by and
distributions
to owners
Common - 67,809 - 67,809
shares issued
Share-based - 2,333,450 - 2,333,450
payment
transactions
Total - 2,401,259 - 2,401,259
contributions
by and
distributions
to owners
Balance at 31 (163,519,502) 78,961,933 42,404,014 121,365,947
December 2010
Total
comprehensive
loss for the
year
Loss for (81,928,814) (81,928,814) (65,935,734) (147,864,548
the year )
Total other 29 - (1,994,738) (1,794,963) (3,789,701)
comprehensive
loss
Total (81,928,814) (83,923,552) (67,730,697) (151,654,249
comprehensive )
loss for the
year
Transactions
with owners,
recognised
directly in
equity
Contributions
by and
distributions
to owners
Common - 63,000 - 63,000
shares issued
Share-based - 2,140,038 - 2,140,038
payment
transactions
Total - 2,203,038 - 2,203,038
contributions
by and
distributions
to owners
Balance at 31 (245,448,316) (2,758,581) (25,326,683) (28,085,264)
December 2011
The accompanying notes are an integral part of these consolidated financial
statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED 31 DECEMBER 2011,
2010 AND 2009
(Expressed in Canadian Dollars, unless otherwise stated)
Note 2011 2010 2009
Cash flows from operating
activities
Cash receipts from customers 148,279,469 138,546,181 41,293,161
Cash paid to suppliers and (189,597,810) (154,336,968) (69,086,487)
employees
Cash utilised by operations 31 (41,318,341) (15,790,787) (27,793,326)
Interest received 544,825 985,573 426,621
Interest paid (510,447) (13,731) (1,258,710)
Tax paid - (299,394) -
Cash utilised by operating (41,283,963) (15,118,339) (28,625,415)
activities
Cash flows from investing
activities
Investment in environmental (505,440) - (216,245)
trusts
Acquisition of cash in a 33 - - 3,576,912
business combination -
Bokoni Mine
Bokoni Mine acquisition 33 - - (119,956,375)
Asset acquisition 33 - - (6,592,523)
ESOP Trust contribution 33 - - (6,741,102)
Proceeds on disposal of - - 118,311
property, plant and
equipment
Acquisition of property, 7 (2,238) (494,095) (31,478)
plant and equipment
Acquisition of capital work- 8 (28,678,042) (28,193,472) (24,418,832)
in-progress
Acquisition of intangible 9 (236,304) (3,328,100) -
assets
Other - (335,800) 14
Cash utilised by investing (29,422,024) (32,351,467) (154,261,318)
activities
Cash flows from financing
activities
Loans and borrowings raised 18 68,543,022 41,382,644 125,380,745
Common shares issued 63,000 67,809 15,869,148
Settlement of interest rate (3,691,604) - -
swap
"A" Preference shares issued - - 177,720,000
"A" Preference shares repaid - - (1,066,320)
"B" Preference shares issued - - 162,910,000
Transaction costs paid - - (4,857,128)
Vendor claims settled 33 - - (251,770,000)
Interest-free loan raised 18 - 599,442 4,267,913
Other loans repaid 18 (716,371) - -
Loans repaid 18 - (590,537) (16,790,368)
Cash generated from 64,198,047 41,459,358 211,663,990
financing activities
Effect of foreign currency (3,311,642) 827,527 (1,680,420)
translation
Net (decrease) /increase in (9,819,582) (5,182,921) 27,096,837
cash and cash equivalents
Cash and cash equivalents, 25,764,590 30,947,511 3,850,674
beginning of the year
Cash and cash equivalents, 15 15,945,008 25,764,590 30,947,511
end of the year
The accompanying notes are an integral part of these consolidated financial
statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED 31
DECEMBER 2011, 2010 AND 2009
(Expressed in Canadian Dollars, unless otherwise stated)
1. NATURE OF OPERATIONS
Anooraq Resources Corporation ("Company" or "Anooraq") is incorporated in the
Province of British Columbia, Canada. The Company has a primary listing on
the TSX Venture Exchange ("TSX-V") and a secondary listing on the New York
Stock Exchange ("NYSE") and the JSE Limited ("JSE"). The consolidated
financial statements of the Company as at 31 December 2011 and 2010 and for
the years ended 31 December 2011, 2010 and 2009 comprise the Company and its
subsidiaries (together referred to as the "Group" and individually as "Group
entities") and the Group`s interest in associates, special purpose entities
and jointly controlled entities. Its principal business activity is the
mining and exploration of Platinum Group Metals ("PGM") through its mineral
property interests. The Company focuses on mineral property interests located
in the Republic of South Africa in the Bushveld Complex. Anooraq operates in
South Africa through its wholly-owned subsidiary Plateau Resources
(Proprietary) Limited ("Plateau") which owns the Group`s various mineral
property interests and conducted the Group`s business in South Africa.
2. GOING CONCERN
The consolidated financial statements are prepared on the basis that the
Group will continue as a going concern which contemplates the realisation of
assets and settlement of liabilities in the normal course of operations as
they become due.
As a result of the acquisition of the operating mine (refer note 33) in 2009,
the Group secured various funding arrangements (refer note 18) in order to
fund the purchase consideration and to fund its planned business objectives.
The funding agreements included securing a long-term credit facility, the
Operating Cash Flow Shortfall Facility ("OCSF"), with Rustenburg Platinum
Mines Limited ("RPM") (a related party) for an amount of $185 million
(ZAR1,470 million). The facility is used to fund operating cash and capital
requirements for an initial period of three years. As at 31 December 2011,
the Group utilised $138.5 million (ZAR1,100 million) thereof to fund
operating requirements from 1 July 2009 as the mining operations are
currently not generating sufficient cash flows to fund operations and capital
projects. In addition, RPM has extended the terms of the OCSF facility to
fund cash shortfalls up to 31 January 2013. The Group also has no significant
obligation to repay interest and capital on its outstanding loans and
borrowings during 2012.
As a result of securing the financial resources and the terms of the long-
term funding, the directors expect that cash flows from mining operations and
the extended OCSF will be sufficient to meet immediate ongoing operating and
capital cash requirements of the Group, and accordingly the financial
statements have been prepared on a going concern basis.
The Company is in the process of completing a proposed refinancing and
restructuring transaction (refer note 38). The proposed transaction will
among others significantly reduce and restructure the total debt of the Group
and thereby significantly improve its financial position as well as providing
new debt facilities to fund operations and capital projects.
3. BASIS OF PRESENTATION
3.1 Statement of compliance
The consolidated financial statements have been prepared in accordance with
International Financial Reporting Standards ("IFRS") as issued by the
International Accounting Standards Board and the AC 500 Standards as issued
by the Accounting Practices Board or its successor.
3.2 Basis of measurement
The consolidated financial statements have been prepared on the historical
cost basis as set out in the accounting policies below. Certain items,
including derivative financial instruments, are stated at fair value.
3.3 Use of estimates and judgements
The preparation of the consolidated financial statements in accordance with
IFRS requires management to make judgements, estimates and assumptions that
affect the application of accounting policies and the reported amounts of
assets, liabilities, income and expenses. Actual results may differ from
these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimates are revised and in any future periods affected.
Information about critical judgements in applying accounting policies that
have the most significant effect on the amounts recognised in the
consolidated financial statements is included in the notes to the financial
statements where applicable.
4. ACCOUNTING POLICIES
These consolidated financial statements are presented in (unless stated
otherwise) Canadian Dollars ("$"), which is also the Company`s functional
currency.
The accounting policies set out below are applied consistently to all years
presented in these consolidated financial statements and have been applied
consistently by Group entities.
4.1 Basis for consolidation
(i) Business combinations
All business combinations are accounted for by applying the acquisition
method.
Control is the power to govern the financial and operating policies of an
entity so as to obtain benefits from its activities. In assessing control,
consideration is given to potential voting rights that are currently
exercisable. The acquisition date is the date on which control is transferred
to the acquirer. Judgement is applied in determining the acquisition date and
determining whether control is transferred from one party to another.
Goodwill is measured as the fair value of the consideration transferred
including the recognised amount of any non-controlling interest in the
acquiree, less the net recognised amount (generally fair value) of the
identifiable assets acquired and liabilities assumed, all measured at the
acquisition date. To the extent that the fair value exceeds the consideration
transferred, the excess is recognised in profit or loss.
Consideration transferred includes the fair values of the assets transferred,
liabilities incurred by the Group to the previous owners of the acquiree, and
equity interests issued by the Group. Consideration transferred also includes
the fair value of any contingent consideration and share-based payment awards
of the acquiree that are replaced mandatorily in the business combination.
A contingent liability of the acquiree is assumed in a business combination
only if such a liability represents a present obligation and arises from a
past event, and its fair value can be measured reliably.
Non-controlling interest is measured at its proportionate interest in the
fair value of the identifiable net assets of the acquiree.
Transaction costs incurred in connection with a business combination, such as
legal fees, due diligence fees and other professional and consulting fees are
expensed as incurred, unless it is debt related. Directly attributable
transaction costs related to debt instruments are capitalised.
If the Group obtains control over one or more entities that are not
businesses, then the bringing together of those entities are not business
combinations. The cost of acquisition is allocated among the individual
identifiable assets and liabilities of such entities, based on their relative
fair values at the date of acquisition. Such transactions do not give rise to
goodwill and no non- controlling interest is recognised.
(ii)Acquisitions of non-controlling interests
Acquisitions of non-controlling interests are accounted for as transactions
with equity holders in their capacity as equity holders and therefore no
goodwill is recognised as a result of such transactions.
(iii)Subsidiaries
Subsidiaries are entities controlled by the Group. The financial statements
of subsidiaries are included in the consolidated financial statements from
the date that control commences until the date that control ceases. The
accounting policies of subsidiaries have been changed where necessary to
align them with the policies adopted by the Group.
(iv)Investments in jointly controlled entities (equity accounted investees)
Jointly controlled entities are those entities over whose activities the
Group has joint control, established by contractual agreement and requiring
unanimous consent for strategic financial and operating decisions.
Investments in jointly controlled entities are accounted for using the equity
method ("equity accounted investees") and are recognised initially at cost.
The Group`s equity investment includes goodwill identified on acquisition,
net of any accumulated impairment losses. The consolidated financial
statements include the Group`s share of the income and expenses and equity
movements of equity accounted investees, after adjustments to align
accounting policies with those of the Group, from the date that significant
influence or joint control commences until the date that significant
influence or joint control ceases. When the Group`s share of losses exceeds
its interest in an equity accounted investee, the carrying amount of that
interest, including any long-term investments, is reduced to nil, and the
recognition of further losses is discontinued except to the extent that the
Group has an obligation or has made payments on behalf of the investee.
(v)Special purpose entities
A Special Purpose Entity ("SPE") is consolidated if, based on an evaluation
of the substance of its relationship with the Group and the SPE`s risks and
rewards, the Group concludes that it controls the SPE. SPE`s controlled by
the Group were established under terms that impose strict limitations on the
decision-making powers of the SPE`s management and that result in the Group
receiving the majority of the benefits related to the SPE`s operations and
net assets, being exposed to the majority of risks incident to the SPE`s
activities, and retaining the majority of the residual or ownership risks
related to the SPE`s or their assets.
(vi)Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income and expenses
arising from intra-group transactions, are eliminated in preparing the
consolidated financial statements. Unrealised gains arising from transactions
with equity accounted investees are eliminated against the investment to the
extent of the Group`s interest in the investee. Unrealised losses are
eliminated in the same way as unrealised gains, but only to the extent that
there is no evidence of impairment.
4.2 Foreign currencies
(i)Foreign currency transactions
Transactions in foreign currencies are translated to the respective
functional currencies of Group entities at exchange rates at the date of the
transactions. Monetary assets and liabilities denominated in foreign
currencies at the reporting date are translated to the functional currency at
the exchange rate at that date. The foreign currency gain or loss on monetary
items is the difference between amortised cost in the functional currency at
the beginning of the year, adjusted for effective interest and payments
during the year, and the amortised cost in foreign currency translated at the
exchange rate at the end of the year. Such gains and losses are recognised
in profit or loss.
Non-monetary assets and liabilities denominated in foreign currencies that
are measured at fair value are retranslated to the functional currency at the
exchange rate at the date that the fair value was determined. Non-monetary
items in a foreign currency that are measured in terms of historical cost are
translated using the exchange rate at the date of the transaction. Foreign
currency differences arising on retranslation are recognised in profit or
loss, except for differences arising on the retranslation of available-for-
sale equity investments, a financial liability designated as a hedge of the
net investment in a foreign operation that is effective, or qualifying cash
flow hedges, which are recognised in other comprehensive income.
(ii)Foreign operations
The financial results of Group entities that have a functional currency
different from the presentation currency are translated into the presentation
currency. The presentation currency of the Company is Canadian Dollars.
Income and expenditure transactions of foreign operations are translated at
the average rate of exchange for the year except for significant individual
transactions which are translated at the rate of exchange in effect at the
transaction date. All assets and liabilities, including fair value
adjustments and goodwill arising on acquisition, are translated at the rate
of exchange ruling at the reporting date.
Foreign currency differences are recognised in other comprehensive income,
and presented in the foreign currency translation reserve ("FCTR") in equity.
However, if the foreign operation is a non-wholly owned subsidiary, then the
relevant proportion of the translation difference is allocated to non-
controlling interests.
When the settlement of a monetary item receivable from or payable to a
foreign operation is neither planned nor likely in the foreseeable future,
foreign exchange gains and losses arising from such a monetary item are
considered to form part of the net investment in a foreign operation and are
recognised in other comprehensive income and are included in the foreign
currency translation reserve.
On disposal of part or all of the operations, the proportionate share of the
related cumulative gains and losses previously recognised in the FCTR through
the statement of comprehensive income are included in determining the profit
or loss on disposal of that operation recognised in profit or loss.
4.3 Financial instruments
(i)Non-derivative financial assets
Non-derivative financial assets comprise loans and receivables.
Loans and receivables are recognised on the date of origination. All other
financial assets are recognised initially on the trade date at which the
Group becomes a party to the contractual provisions of the instrument.
Financial assets are derecognised when the contractual rights to the cash
flows from the asset expire, or the Group transfers the rights to receive the
contractual cash flows on the financial asset in a transaction in which
substantially all the risks and rewards of ownership of the financial assets
are transferred. Any interest in transferred financial assets that is created
or retained is recognised as a separate asset or liability.
Financial assets and financial liabilities are offset and the net amount
presented in the statement of financial position when, and only when, the
Group has a legal right to offset the amounts and intends either to settle on
a net basis or to realise the asset and settle the liability simultaneously.
Loans and receivables
Loans and receivables are financial assets with fixed or determinable
payments that are not quoted in an active market. Such assets are recognised
initially at fair value plus any directly attributable transaction costs.
Subsequent to initial recognition loans and receivables are measured at
amortised cost using the effective interest method, less any impairment
losses.
Loans and receivables comprise trade and other receivables, restricted cash,
investment in the Platinum Producer`s Environmental Trust and cash and cash
equivalents.
Cash and cash equivalents comprise cash balances and call deposits with
original maturities of three months or less. Bank overdrafts that are
repayable on demand and form an integral part of the Group`s cash management
are included as a component of cash and cash equivalents for the purpose of
the statement of cash flows.
(ii)Non-derivative financial liabilities
The Group initially recognises debt securities issued and subordinated
liabilities on the date that they originated. All other financial liabilities
are recognised initially on the trade date at which the Group becomes a party
to the contractual provisions of the instrument.
Financial liabilities are derecognised when the contractual obligations are
discharged, cancelled or expire.
Non-derivative financial liabilities comprise loans and borrowings, bank
overdrafts, trade and other payables.
Financial liabilities are recognised initially at fair value plus any
directly attributable transaction costs. Subsequent to initial recognition
these financial liabilities are measured at amortised cost using the
effective interest method.
(iii)Derivative financial instruments, including hedge accounting
The Group held derivative financial instruments to hedge its interest rate
risk exposures. Embedded derivatives are separated from the host contract and
accounted for separately if the economic characteristics and risks of the
host contract and the embedded derivative are not closely related, a separate
instrument with the same terms as the embedded derivative would meet the
definition of a derivative, and the combined instrument is not measured at
fair value through profit or loss.
On initial designation of the hedge, the Group formally documents the
relationship between the hedging instrument(s) and hedged item(s), including
the risk management objectives and strategy in undertaking the hedge
transaction, together with the methods that will be used to assess the
effectiveness of the hedging relationship. The Group makes an assessment,
both at the inception of the hedge relationship as well as on an ongoing
basis, whether the hedging instruments are expected to be "highly effective"
in offsetting the changes in the fair value or cash flows of the respective
hedged items during the year for which the hedge is designated, and whether
the actual results of each hedge are within a range of 80-125 percent. For a
cash flow hedge of a forecast transaction, the transaction should be highly
probable to occur and should present an exposure to variations in cash flows
that could ultimately affect reported net income.
Derivatives are recognised initially at fair value; attributable transaction
costs are recognised in profit or loss as incurred. Subsequent to initial
recognition, derivatives are measured at fair value, and changes therein are
accounted for as described below.
Cash flow hedges
When a derivative is designated as the hedging instrument in a hedge of the
variability in cash flows attributable to particular risk associated with a
recognised asset or liability or a highly probable forecast transaction that
could affect profit or loss, the effective portion of changes in the fair
value of the derivative is recognised in other comprehensive income and
presented in the hedging reserve in equity. The amount recognised in other
comprehensive income is removed and included in profit or loss in the same
period as the hedged cash flows affects profit or loss under the same line
item in the statement of comprehensive income as the hedged item. Any
ineffective portion of changes in the fair value of the derivative is
recognised immediately in profit or loss.
If the hedging instrument no longer meets the criteria for hedge accounting,
expires or is sold, terminated, exercised, or the designation is revoked,
then hedge accounting is discontinued prospectively. The cumulative gain
or loss previously recognised in other comprehensive income and presented
in the hedging reserve in equity remains there until the forecast transaction
affects profit or loss.
When the hedged item is a non-financial asset, the amount recognised in other
comprehensive income is transferred to the carrying amount of the asset when
the asset is recognised. If the forecast transaction is no longer expected to
occur, then the balance in other comprehensive income is recognised
immediately in profit or loss. In other cases the amount recognised in other
comprehensive income is transferred to profit or loss in the same period that
the hedged item affects profit or loss.
Separate embedded derivatives
Changes in the fair value of separated embedded derivatives are recognised
immediately in profit or loss.
Other derivatives
When a derivative financial instrument is not held for trading purposes and
is not designated in a qualifying hedge relationship, all changes in its fair
value are recognised immediately in profit or loss.
(iv)Share capital
Common shares
Common shares are classified as equity. Incremental costs directly
attributable to the issue of common shares and share options are recognised
as a deduction from equity, net of any tax effects.
Preference share capital
Preference share capital is classified as equity if it is non-redeemable,
redeemable for a fixed number of the Company`s shares, or redeemable only at
the Company`s option, and any dividends are discretionary. Dividends thereon
are recognised as distributions within equity upon approval by the Company`s
Board of Directors.
Preference share capital is classified as a liability if it is redeemable on
a specific date or at the option of the holders, or if dividend payments are
not discretionary. Dividends thereon are recognised as finance expense in
profit or loss as accrued.
Treasury shares
Shares issued to subsidiaries or SPE`s are reflected as treasury shares on
consolidation.
4.4 Accounting for borrowing costs
In respect of borrowing costs relating to qualifying assets the Group
capitalises borrowing costs that are directly attributable to the
acquisition, construction or production of a qualifying asset as part of the
cost of that asset. The Group has capitalised borrowing costs with respect to
property, plant and equipment under construction.
4.5 Property, plant and equipment
Mining assets, including mine development cost and infrastructure costs, mine
plant facilities and buildings are measured at historical cost less
accumulated depreciation and impairment losses.
Mining assets are capitalised to capital work-in-progress and transferred to
mining property, plant and equipment when the mining venture reaches
commercial production.
Capitalised mine development and infrastructure costs include expenditure
incurred to develop new mining operations and to expand the capacity of the
mine to the extent that it gives rise to future economic benefit. Costs
include borrowing costs capitalised during the construction period where
qualifying expenditure is financed by borrowings, the cost of materials and
direct labour, any other costs directly attributable to bringing the asset to
a working condition for its intended use as well as an estimate of the costs
of dismantling and removing the items and restoring the site on which they
are located. Items of mining property, plant and equipment, excluding
capitalised mine development and infrastructure costs, are depreciated on a
straight-line basis over their expected useful life. Capitalised mine
development and infrastructure are depreciated on a units of production
basis. Depreciation is charged on mining assets from the date on which they
are available for use.
When parts of an item of property, plant and equipment have different useful
lives, they are accounted for as separate items (major components) of
property, plant and equipment.
Property, plant and equipment are depreciated over their estimated useful
lives as follows:
Mine development and infrastructure units of production
Plant and equipment 1 - 30 years
Buildings 5 - 30 years
Motor vehicles 1 - 5 years
Furniture and fittings 1 - 10 years
Items of property, plant and equipment that are withdrawn from use, or have
no reasonable prospect of being recovered through use or sale, are regularly
identified and written off.
The assets` residual values, depreciation methods and useful lives are
reviewed, and adjusted if appropriate, at each reporting date.
Non-mining assets are measured at historical cost less accumulated
depreciation and impairment losses. Depreciation is charged on the straight-
line basis over the useful lives of these assets.
Subsequent expenditure relating to an item of property, plant and equipment
is capitalised when it is probable that future economic benefits from the
use of the assets will be increased.
Repairs and maintenance are recognised in profit or loss during the period in
which they are incurred.
Gains and losses on disposal of property, plant and equipment are determined
by comparing the proceeds from disposal with the carrying amount of the asset
and are recognised net within profit or loss.
4.6 Intangible assets
(i)Goodwill
Goodwill is measured at cost less accumulated impairment losses and is not
amortised. In respect of equity accounted investees, the carrying amount of
goodwill is included in the carrying amount of the investment, and an
impairment loss on such an investment is not allocated to any asset,
including goodwill, that forms part of the carrying amount of the equity
accounted investee.
(ii)Other intangible assets
Other intangible assets include mineral property interests (refer note 4.18
below) and purchased software. These intangible assets are recognised if it
is probable that future economic benefits will flow to the entity from the
intangible assets and the costs of the intangible assets can be reliably
measured.
Mineral property interests are carried at cost less impairment losses.
Purchased software is stated at cost less amortisation and impairment losses
and is amortised on a straight line basis over its estimated useful life. The
amortisation method and estimated useful life are reviewed at least annually.
4.7 Impairment of assets
(i)Non-financial assets
The carrying amounts of the Group`s non-financial assets, other than
inventories and deferred tax assets, are reviewed at each reporting date to
determine whether there is any indication of impairment. If any such
indication exists, then the asset`s recoverable amount is estimated. For
goodwill and intangible assets that have indefinite lives or that are not yet
available for use, the recoverable amount is estimated each year at the same
time.
The recoverable amount of an asset or cash-generating unit is the greater of
its value in use and its fair value less costs to sell. In assessing value in
use, the estimated future cash flows are discounted to their present value
using a pre-tax discount rate that reflects current market assessments of the
time value of money and the risks specific to the asset. For the purpose of
impairment testing, assets are grouped together into the smallest group of
assets that generates cash inflows from continuing use that are largely
independent of the cash inflows of other assets or groups of assets (the
"cash-generating unit"). The goodwill acquired in a business combination, for
the purpose of impairment testing, is allocated to cash-generating units that
are expected to benefit from the synergies of the combination.
An impairment loss is recognised if the carrying amount of an asset or its
cash-generating units exceed its estimated recoverable amount. Impairment
losses are recognised in profit or loss. Impairment losses recognised in
respect of cash- generating units are allocated first to reduce the carrying
amount of any goodwill allocated to the units and then to reduce the carrying
amounts of the other assets in the unit (group of units) on a pro rata basis.
An impairment loss in respect of goodwill is not reversed. In respect of
other assets, impairment losses recognised in prior years are assessed at
each reporting date for any indications that the loss has decreased or no
longer exists. An impairment loss is reversed if there has been a change in
the estimates used to determine the recoverable amount. An impairment loss is
reversed only to the extent that the asset`s carrying amount does not exceed
the carrying amount that would have been determined, net of depreciation or
amortisation, if no impairment loss had been recognised.
(ii)Financial assets (including receivables)
A financial asset not measured at fair value through profit or loss is
assessed at each reporting date to determine whether there is objective
evidence that it is impaired. A financial asset is impaired if objective
evidence indicates that a loss event has occurred after the initial
recognition of the asset, and that the loss event had a negative effect on
the estimated future cash flows of that asset that can be estimated reliably.
The Group considers evidence of impairment for loans and receivables at both
a specific asset and collective level. All individually significant assets
are assessed for specific impairment. Those found not to be specifically
impaired are then collectively assessed for any impairment that has been
incurred but not yet identified. Assets that are not individually significant
are collectively assessed for impairment by grouping together assets with
similar risk characteristics. In assessing collective impairment the Group
uses historical trends of the probability of default, the timing of
recoveries and the amount of loss incurred, adjusted for management`s
judgement as to whether current economic and credit conditions are such that
the actual losses are likely to be greater or less that suggested by
historical trends.
An impairment loss in respect of a financial asset measured at amortised cost
is calculated as the difference between its carrying amount and the present
value of the estimated future cash flows discounted at the asset`s original
effective interest rate. Losses are recognised in profit or loss and
reflected in an allowance account against receivables. Interest on the
impaired asset continues to be recognised through the unwinding of the
discount. When a subsequent event causes the amount of impairment loss to
decrease, the decrease in impairment loss is reversed through profit or loss.
4.8 Inventories
Inventories, comprising ore stockpiles, are measured at the lower of cost and
net realisable value.
The cost of inventories is based on the average cost of ore in stockpiles and
comprises all costs incurred to the stage immediately prior to stockpiling,
including costs of extraction and crushing, as well as processing costs
associated with ore stockpiles, based on the relevant stage of production.
Net realisable value is the estimated selling price in the ordinary course of
business, less the estimated costs of completion and selling expenses.
4.9 Employee benefits
(i)Defined contribution plans
A defined contribution plan is a post-employment benefit plan under which an
entity pays fixed contributions into a separate entity and will have no legal
or constructive obligation to pay further amounts. Obligations for
contributions to defined contribution pension plans are recognised as an
employee benefit expense in profit or loss in the years during which services
are rendered by employees. Prepaid contributions are recognised as an asset
to the extent that a cash refund or a reduction in future payments is
available. Contributions to a defined contribution plan that are due more
than 12 months after the end of the year in which the employees render the
service are discounted to their present value.
(ii)Short-term employee benefits
Short-term employee benefit obligations are measured on an undiscounted basis
and are expensed as the related service is provided.
A liability is recognised for the amount expected to be paid under short-term
cash bonus or profit-sharing plans if the Group has a present legal or
constructive obligation to pay this amount as a result of past service
provided by the employee, and the obligation can be estimated reliably.
(iii)Share-based payment transactions
The grant date fair value of share-based payment awards granted to employees
is recognised as an employee cost, with a corresponding increase in equity,
over the period that the employees unconditionally become entitled to the
awards. The amount recognised as an expense is adjusted to reflect the number
of awards for which the related service and non-market vesting conditions are
expected to be met, such that the amount ultimately recognised as an expense
is based on the number of awards that do meet the related service and non-
market performance conditions at the vesting date.
For share-based payment awards with non-vesting conditions, the grant date
fair value of the share-based payment is measured to reflect such conditions
and there is no true-up for differences between expected and actual outcomes.
The fair value of the amount payable to employees in respect of the share
appreciation rights, which are settled in cash, is recognised as an expense
with a corresponding increase in liabilities over the period that the
employees unconditionally become entitled to payment. The liability is
remeasured at each reporting date and at settlement date. Any changes in the
fair value of the liability are recognised as employee costs in profit or
loss.
Share-based payment arrangements in which the Group receives goods or
services as consideration for its own equity instruments are accounted for as
equity-settled share-based payment transactions, regardless of how the equity
instruments are obtained by the Group.
(iv)Termination benefits
Termination benefits are recognised as an expense as and when the Group is
committed demonstrably, without realistic possibility of withdrawal, to a
formal detailed plan to either terminate employment before the normal
retirement date, or to provide termination benefits as a result of an offer
made to encourage voluntary redundancy.
Termination benefits for voluntary redundancies are recognised as an expense
if the Group has made an offer of voluntary redundancy, it is probable that
the offer will be accepted, and the number of acceptances can be estimated
reliably.
If benefits are payable more than 12 months after the reporting year, the
benefits are discounted to their present value.
4.10 Provisions
A provision is recognised if, as a result of a past event, the Group has a
present legal or constructive obligation that can be estimated reliably and
it is probable that an outflow of economic benefits will be required to
settle the obligation. Provisions are determined by discounting the expected
future cash flows at a pre-tax rate that reflects current market assessments
of the time value of money and the risks specific to the liability. The
unwinding of the discount is recognised as finance expense ("notional
interest").
Provisions are reviewed at each reporting date and adjusted to reflect the
current best estimate. If it is no longer probable that an outflow of
economic benefits will be required, the provision is reversed.
(i)Environmental rehabilitation provisions
Estimated environmental provisions, comprising pollution control,
rehabilitation and mine closure, are based on the Group`s environmental
policy taking into account current technological, environmental and
regulatory requirements. The provision for rehabilitation is recognised as
and when the environmental liability arises. To the extent that the
obligations relate to the construction of an asset, they are capitalised as
part of the cost of those assets. The effect of subsequent changes to
assumptions in estimating an obligation for which the provision was
recognised as part of the cost of the asset is adjusted against the asset.
Any subsequent changes to an obligation which did not relate to the initial
construction of a related asset are recognised in profit or loss.
(ii)Restructuring
A provision for restructuring is recognised when the Group has approved a
detailed and formal restructuring plan, and the restructuring has either
commenced or has been announced publically. Future operating losses are not
provided for.
4.11 Platinum Producers` Environmental Trust
The Group contributes to the Platinum Producers` Environmental Trust
annually. The trust was created to fund the estimated cost of pollution
control, rehabilitation and mine closure at the end of the lives of the
Group`s mines. Contributions are determined on the basis of the estimated
environmental obligation over the life of a mine. Contributions made are
reflected in non-current investments held by the Platinum Producers`
Environmental Trust. Interest earned on monies paid to rehabilitation trust
funds is accrued on a time proportion basis and is recognised as finance
income.
4.12 Revenue
Revenue arising from the sale of metals and intermediary products is
recognised when the price is determinable, the product has been delivered in
accordance with the terms of the contract, the significant risks and rewards
of ownership have been transferred to the customer and collection of the
sales price is reasonably assured. These criteria are typically met when the
concentrate reaches the smelter. Revenue further excludes value-added tax and
mining royalties.
4.13 Lease payments
(i)Operating leases - Lessor
Operating lease income is recognised as income on a straight-line basis over
the lease term.
Initial direct costs incurred in negotiating and arranging operating leases
are added to the carrying amount of the leased asset and recognised as an
expense over the lease term on the same basis as the lease income. Income
for leases is disclosed under other income in profit or loss.
(ii)Operating leases - Lessee
Operating lease payments are recognised as an expense on a straight-line
basis over the lease term. The difference between the amounts recognised as
an expense and the contractual payments are recognised as an operating lease
liability. This liability is not discounted.
Any contingent rents are expensed in the period they are incurred.
4.14 Finance income and finance expense
Finance income comprises interest income on funds invested and interest
received on loans and receivables. Interest income is recognised as it
accrues in profit or loss, using the effective interest method.
Finance expense comprises interest expense on borrowings, unwinding of the
discount on provisions, dividends on preference shares classified as
liabilities and gains/losses on hedging instruments that are recognised in
profit or loss. Borrowing costs that are not directly attributable to the
acquisition, construction or production of a qualifying asset are recognised
in profit or loss using the effective interest method.
Foreign currency gains and losses are reported on a net basis.
4.15 Income tax
Income tax expense comprises current and deferred tax. Current tax and
deferred tax are recognised in profit or loss except to the extent that it
relates to a business combination, or items recognised directly in equity or
in other comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income
or loss for the year, using tax rates enacted or substantively enacted at the
reporting date, and any adjustment to tax payable in respect of previous
years.
Deferred tax is recognised in respect of temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes
and the amounts used for taxation purposes. Deferred tax is not recognised
for the following temporary differences: the initial recognition of assets or
liabilities in a transaction that is not a business combination and that
affects neither accounting nor taxable profit or loss, and differences
relating to investments in subsidiaries and jointly controlled entities to
the extent that it is probable that they will not reverse in the foreseeable
future. In addition, deferred tax is not recognised for taxable temporary
differences arising on the initial recognition of goodwill.
Deferred tax is measured at the tax rates that are expected to be applied to
temporary differences when they reverse, based on the laws that have been
enacted or substantively enacted by the reporting date. Deferred tax assets
and liabilities are offset if there is a legally enforceable right to offset
current tax liabilities and assets, and they relate to income taxes levied by
the same tax authority on the same taxable entity, or on different tax
entities, but they intend to settle current tax liabilities and assets on a
net basis or their tax assets and liabilities will be realised
simultaneously.
A deferred tax asset is recognised for unused tax losses, tax credits and
deductible temporary differences, to the extent that it is probable that
future taxable profits will be available against which they can be utilised.
Deferred tax assets are reviewed at each reporting date and are reduced to
the extent that it is no longer probable that the related tax benefit will be
realised.
4.16 Earnings/(Loss) per share
The Group presents basic and diluted earnings/(loss) per share ("EPS") data
for its common shares. Basic EPS is calculated by dividing the profit or loss
attributable to owners of the Company by the weighted average number of
common shares outstanding during the year, adjusted for own shares held.
Diluted EPS is determined by adjusting the profit or loss attributable to
owners of the Company and the weighted average number of common shares
outstanding, adjusted for own shares held and for the effects of all dilutive
potential common shares, which include share options granted to employees.
4.17 Segment reporting
An operating segment is a component of the Group that engages in business
activities from which it may earn revenues and incur expenses, including
revenues and expenses that relate to transactions with any of the Group`s
other components. All operating segments` operating results are reviewed
regularly by the Group`s Chief Executive Officer (who is considered the chief
operating decision maker) to make decisions about resources to be allocated
to the segment and assess its performance, and for which discrete financial
information is available.
4.18 Exploration expenditure and mineral property interests
The acquisitions of mineral property interests are initially measured at
cost. Mineral property acquisition costs and development expenditures
incurred subsequent to the determination of the feasibility of mining
operations and approval of development by the Group are capitalised until the
property to which they relate is placed into production, sold or allowed to
lapse.
Exploration and evaluation costs incurred prior to determination of the
feasibility of mining operations are expensed as incurred. Re-imbursement of
previously expensed exploration and evaluation costs are recognised as other
income in profit or loss.
Mineral property acquisition costs include the cash consideration and the
fair market value of shares issued for mineral property interests pursuant to
the terms of the relevant agreements. These costs will be amortised over the
estimated life of the property following commencement of commercial
production, or written off if the property is sold, allowed to lapse, or when
an impairment of value has been determined to have occurred.
4.19 Non-current assets held for sale or distribution
Non-current assets, or disposal groups comprising assets and liabilities,
that are expected to be recovered primarily through sale or distribution
rather than through continuing use, are classified as held for sale or
distribution. Immediately before classification as held for sale or
distribution, the assets, or components of a disposal group are remeasured in
accordance with the Group`s accounting policies. Thereafter generally the
assets, or disposal group, are measured at the lower of their carrying amount
and fair value less costs to sell. An impairment loss on a disposal group
first is allocated to goodwill, and then to remaining assets and liabilities
on a pro rata basis, except that no loss is allocated to inventories and
deferred tax assets, which continue to be measured in accordance with the
Group`s accounting policies.
Impairment losses on initial classification as held for sale or distribution
and subsequent gains and losses on remeasurement are recognised in profit or
loss. Gains are not recognised in excess of any cumulative impairment loss.
Once classified as held for sale or distribution, intangible assets and
property, plant and equipment are no longer amortised or depreciated.
4.20 New standards and interpretations
Standards and interpretations issued but not yet effective and applicable to
the Group:
- Amendments to IAS 12, Deferred Tax: Recovery of Underlying assets
(effective 1 January 2012)
- IAS 19, Employee benefits: Defined benefit plans (effective 1 January 2013)
- IAS 27, Separate Financial Statements (effective 1 January 2013)
- IAS 28, Investment in Associates and Joint ventures (effective 1 January
2013)
- IFRS 9, Financial Instruments (effective 1 January 2015)
- IFRS 9, Additions to IFRS 9 Financial instruments (effective 1 January
2015)
- IFRS 10, Consolidated Financial Statements (effective 1 January 2013)
- IFRS 11, Joint Arrangements (effective 1 January 2013)
- IFRS 12, Disclosure of Interests in Other Entities (effective 1 January
2013)
- IFRS 13, Fair Value Measurement (effective 1 January 2013)
- IFRIC 20, Stripping costs in the Production Phase of a Surface Mine
(effective 1 January 2013)
The Group is currently evaluating the impact, if any, that these new
standards will have on the consolidated financial statements.
Standards and interpretations adopted in the current year by the Group:
- IAS 24 (revised), Related Party Disclosures
- Amendments to IAS 32, Financial statements: Presentation: Classification of
Rights Issue
- Amendments to IFRS 7, Disclosures - Transfers of Financial Assets
- IFRIC 19, Extinguishing Financial liabilities with Equity Instruments
- Various improvements to IFRS 2010
- Amendments to IAS 1, Presentation of Financial Statements: Presentation of
items of Other Comprehensive Income (early adopted)
There was no significant impact on these consolidated financial statements as
a result of adopting these standards and interpretations.
5. DETERMINATION OF FAIR VALUES
A number of the Group`s accounting policies and disclosures require the
determination of fair value, for both financial and non- financial assets and
liabilities. Fair values have been determined for measurement and/or
disclosure purposes based on the following methods. When applicable, further
information about the assumptions made in determining fair values is
disclosed in the notes specific to that asset or liability.
5.1 Property, plant and equipment
The fair value of property, plant and equipment recognised as a result of a
business combination is based on market values. The market value of property
is the estimated amount for which a property could be exchanged on the date
of valuation between a willing buyer and a willing seller in an arm`s length
transaction after proper marketing wherein the parties had each acted
knowledgeably and willingly. The fair value of items of plant, equipment,
fixtures and fittings is based on the market approach and cost approach using
quoted market prices for similar items when available and replacement cost
when appropriate.
The fair value of mining rights included in property, plant and equipment
acquired as part of a business combination is determined using the multi-year
excess earnings method, whereby the subject asset is valued after deducting a
fair return on all other assets that are part of creating the related cash
flows.
5.2 Mineral property interest
The fair value of mineral property interests acquired in a business
combination is determined using a market comparative approach. In applying a
market comparative approach, a selection of appropriate historic transactions
is used to determine an average transaction value.
5.3 Trade and other receivables
The fair value of trade and other receivables is estimated as the present
value of future cash flows, discounted at the market rate of interest at the
reporting date. This fair value is determined for disclosure purposes.
5.4 Derivatives
The fair value of interest rate swaps is based on the fair value of the cash
flows of the swap using the ZAR zero-coupon swap curve and the fair value of
the projected shifted cash flows discounted using the shifted zero-coupon
rates.
Fair values reflect the credit risk of the instrument and exclude the credit
risk of the Group entity and counterparty when appropriate.
5.5 Non-derivative financial liabilities
Fair value is calculated based on the present value of future principal and
interest cash flows, discounted at the market rate of interest at the
reporting date. This fair value is determined for disclosure purposes.
5.6 Share-based payment transactions
The fair value of the employee share options is measured using the Black-
Scholes option pricing model. Measurement inputs include share price on
measurement date, exercise price of the instrument, expected volatility
(based on weighted average historic volatility adjusted for changes expected
due to publicly available information), weighted average expected life of the
instruments (based on historical experience and general option holder
ehavior), expected dividends, and the risk-free interest rate (based on
government bonds). Service and non-market performance conditions attached to
the transactions are not taken into account in determining fair value.
The fair value of the cash-settled share appreciation rights is measured
using the binomial valuation model. Measurement inputs include share price on
measurement date, strike price of the instrument, expected volatility (based
on weighted average historic volatility adjusted for changes expected due to
publicly available information), vesting, expiry and exercise dates, expected
dividends and the risk free interest rate (based on the Bond Exchange of
South Africa).
5.7 Equity and debt securities
The fair value of equity and debt securities is determined by reference to
their quoted closing bid price at reporting date, or if unquoted, determined
using a valuation technique such as market multiples and discounted cash flow
analysis using expected future cash flows and a market-related discount rate.
5.8 Other non-derivative financial liabilities
Fair value, which is determined for disclosure purposes, is calculated based
on the present value of future principal and interest cash flows, discounted
at the market rate of interest at the reporting date.
6. FINANCIAL RISK MANAGEMENT
The Board of Directors has overall responsibility for the establishment and
oversight of the Group`s risk management framework.
The Group`s risk management policies are established to identify and analyse
the risks faced by the Group, to set appropriate risk limits and controls,
and to monitor risks and adherence to limits. Risk management policies and
systems are reviewed regularly to reflect changes in market conditions and
the Group`s activities. The Group, through its training and management
standards and procedures, aims to develop a disciplined and constructive
control environment in which all employees understand their roles and
obligations.
Overview
The Group has exposure to the following risks from its use of financial
instruments:
- credit risk
- liquidity risk
- interest rate risk
- foreign currency risk
- commodity price risk
This note presents information about the Group`s exposure to each of the
above risks, the Group`s objectives, policies and processes for measuring and
managing risk and the Group`s management of capital. Further quantitative
disclosures are included throughout these consolidated financial statements.
(i)Credit risk
Credit risk is the risk of financial loss to the Group if a customer or
counterparty to a financial instrument fails to meet its contractual
obligations, and arises principally from the Group`s receivables from
customers, and cash and equivalents. Management has evaluated treasury
counterparty risk and does not expect any treasury counterparties to fail in
meeting their obligations.
Trade and other receivables
Trade receivables represents sale of concentrate to RPM in terms of a
concentrate off-take agreement. The carrying value represents the maximum
credit risk exposure. The Group has no collateral against these receivables.
100% of the Group`s revenue is generated in South Africa from sale of
concentrate by Bokoni Mine to RPM.
Cash and cash equivalents
At times when the Group`s cash position is positive, cash deposits are made
with financial institutions having superior local credit ratings.
(ii)Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its
financial obligations as they fall due. The Group ensures that there is
sufficient capital in order to meet short term business requirements, after
taking into account cash flows from operations and the Group`s holdings of
cash and cash equivalents. This is facilitated via an Operating Cash Flow
Shortfall Facility ("OCSF"). The Group`s cash and cash equivalents are
invested in business accounts which are available on demand.
The Group operates in South Africa and is subject to currency exchange
controls administered by the South African Reserve Bank ("SARB"). South
African law provides for exchange control regulations that restrict the
export of capital. The exchange control regulations, which are administered
by SARB, regulate transactions involving South African residents, including
legal entities, and limit a South African company`s ability to borrow from
and repay loans to non-residents and to provide guarantees for the
obligations of its affiliates with regard to funds obtained from non-
residents.
A portion of the Company`s funding for its South African operations consist
of loans advanced to its South African subsidiaries from subsidiaries that
are non-residents of South Africa. The Company is in compliance with SARB
regulations and is therefore not subject to restrictions on the ability of
its South African subsidiaries to transfer funds to the Company or to other
subsidiaries. In addition, the SARB has introduced various measures in
recent years to relax the exchange controls in South Africa to entice foreign
investment in the country. However, if more burdensome exchange controls
were proposed or adopted by the SARB in the future, or if the Company was
unable to comply with existing SARB regulations, such exchange control
regulations could restrict the ability of the Company and its subsidiaries to
repatriate funds needed to effectively finance the Company`s operations.
The maturity profile of the contractual undiscounted cash flows of financial
instruments, including scheduled interest payments on loans and borrowings,
at 31 December were as follows:
2012 2013 2014
2011
Non-derivative financial
liabilities
Loans and borrowings 1,027,035 4,201,292 44,553,903
Trade and other payables 13,497,013 - -
Total 14,524,048 4,201,292 44,553,903
Derivative financial
liabilities
Interest rate swap - - -
Total 2011 14,524,048 4,201,292 44,553,903
2011 2012 2013
2010
Non-derivative financial
liabilities
Loans and borrowings 94,401,663* 15,253,536 28,707,198
Trade and other payables 20,077,869 - -
Total 114,479,532 15,253,536 28,707,198
Derivative financial
liabilities
Interest rate swap - 4,969,563 -
Total 2010 114,479,532 20,223,099 28,707,198
2015 Thereafter Total
2011
Non-derivative
financial liabilities
Loans and borrowings 44,553,903 1,510,996,207 1,605,332,340
Trade and other - - 13,497,013
payables
Total 44,553,903 1,510,996,207 1,618,829,353
Derivative financial
liabilities
Interest rate swap - - -
Total 2011 44,553,903 1,510,996,207 1,618,829,353
2014 Thereafter Total
2010
Non-derivative
financial liabilities
Loans and borrowings 27,186,483 941,834,737 1,107,383,617
Trade and other - - 20,077,869
payables
Total 27,186,483 941,834,737 1,127,461,486
Derivative financial
liabilities
Interest rate swap - - 4,969,563
Total 2010 27,186,483 941,834,737 1,132,431,049
*-Refer note 18
(iii)Interest rate risk
As a result of the Group acquiring the Bokoni business during 2009, the Group
had secured loan facilities with Standard Chartered Bank plc ("Standard
Chartered") and Rustenburg Platinum Mines Limited ("RPM"). Standard Chartered
provided a loan of $62.95 million (ZAR500 million) and RPM provided a loan of
$60.4 million (ZAR480 million) to the Group which was subject to interest
rate risk. On 28 April 2011, the Standard Chartered loan was ceded to RPM
with revisions to certain terms of the loan including a reduction in the
interest rate to 3 month JIBAR plus 4% (9.585% at 31 December 2011) from a 3
month JIBAR plus applicable margin (4.5%) and mandatory cost (1.27%) (refer
to note18). These revised loans are also subject to interest rate risk.
The Group previously entered into an interest rate swap arrangement with
Standard Chartered to fix the variable interest rate on $74 million (ZAR500
million) of the principal amount of the loan at 14.695% which arrangement was
settled on 28 April 2011 with funding obtained from RPM. This funding has the
same terms as the debt ceded to RPM and is also subject to interest rate
risk.
A 100 basis point change in the interest rate at 31 December 2011 on the RPM
loans would have changed the loss for the year by approximately $1,210,659
(2010: $1,337,459). This analysis assumes that all other variables remain
constant.
(iv)Foreign currency risk
The Group, from time to time, enters into transactions for the purchase of
supplies and services denominated in foreign currency. As a result, the
Group is subject to foreign exchange risk from fluctuations in foreign
exchange rates. The Group has not entered into any derivative or other
financial instruments to mitigate this foreign exchange risk.
Within the Group, certain loans between Group entities amounting to $49.9
million (2010: $49.3 million) are exposed to foreign exchange fluctuations. A
10% change in the $/ZAR exchange rate at 31 December 2011 would have resulted
in an increase/decrease of $5 million (2010: $4.9 million) in equity. The
Group has no significant external exposure to foreign exchange risk. All
loans and borrowings are denominated in ZAR (refer note 18).
(v)Commodity price risk
The value of the Group`s revenue and resource properties depends on the
prices of PGM`s and their outlook. The Group does not hedge its exposure to
commodity price risk. PGM prices historically have fluctuated widely and are
affected by numerous factors outside of the Group`s control, including, but
not limited to, industrial and retail demand, forward sales by producers and
speculators, levels of worldwide production, and short-term changes in supply
and demand because of hedging activities.
(vi)Capital risk management
The primary objective of managing the Group`s capital is to ensure that there
is sufficient capital available to support the funding and operating
requirements of the Group in a way that optimises the cost of capital,
maximizes shareholders` returns, matches the current strategic business plan
and ensures that the Group remains in a sound financial position.
The Group manages and makes adjustments to the capital structure which
consists of debt and equity as and when borrowings mature or when funding is
required. This may take the form of raising equity, market or bank debt or
hybrids thereof. The Group may also adjust the amount of dividends paid, sell
assets to reduce debt or schedule projects to manage the capital structure.
Anooraq`s ability to raise new equity in the equity capital markets is
subject to the mandatory requirement that Atlatsa Holdings (Proprietary)
Limited ("Atlatsa Holdings") (formerly Pelawan Investments (Proprietary)
Limited), its majority Black Economic Empowerment ("BEE ") shareholder,
retain a 51% fully diluted shareholding in the Company up until 1 January
2015, as required by covenants given by Atlatsa Holdings and Anooraq in
favour of the Department of Mineral Resources ("DMR"), the SARB and Anglo
Platinum.
There were no changes to the Group`s approach to capital management during
the year.
(vii) Summary of the carrying value of the Group`s financial instruments
At 31 December 2011 Loans and Financial Derivative
receivables liabilities financial
at liabilities
amortised
cost
Platinum Producers` 2,927,591 - -
Environmental Trust
Trade and other receivables 24,999,127 - -
Cash and cash equivalents 15,945,008 - -
Restricted cash 786,291 - -
Loans and borrowings 367,178 745,552,722 -
Trade and other payables - 13,497,013 -
At 31 December 2010 Loans and Financial Derivative
receivables liabilities financial
at liabilities
amortised
cost
Platinum Producers` 2,862,075 - -
Environmental Trust
Trade and other receivables 33,847,529 - -
Cash and cash equivalents 25,764,590 - -
Restricted cash 1,377,263 - -
Loans and borrowings 347,300 716,936,362 -
Trade and other payables - 20,077,869 -
Derivative - Interest rate - - 4,969,563
swap*
* - The interest rate swap is at a level 2 in the fair value hierarchy as the
fair value is compiled from the swap curve and quoted markets that are
available.
2011 2010
Carrying Fair value Carrying Fair value
value value
Loans and borrowings 745,552,722 822,304,338 716,936,362 754,066,515
The loans and borrowings carrying value compared to fair value is as follows:
The fair value of all other non-derivative financial instruments approximates
carrying value due to the short-term to maturity.
7. PROPERTY, PLANT AND EQUIPMENT
Summary
2011 2010
Cost
Balance at beginning of year 1,032,647,854 707,131,018
Additions 2,238 494,095
Transferred from capital work-in-progress 17,168,350 260,839,548
Disposals (1,087,212) (544,766)
Adjustment to rehabilitation assets 1,050,670 144,952
Effect of translation (173,017,272) 64,583,007
Closing Balance 876,764,628 1,032,647,854
Accumulated depreciation and impairment
losses
Balance at beginning of year 47,741,321 13,737,282
Depreciation for the year 42,075,759 31,397,522
Disposals (748,144) (499,587)
Effect of translation (11,228,728) 3,106,104
Closing Balance 77,840,208 47,741,321
Carrying value 798,924,420 984,906,533
2011 Total Mining Plant and
Development Equipment
and
Infrastructure
Cost
Balance at beginning of 1,032,647,854 849,610,976 117,821,913
year
Additions 2,238 - -
Transferred from capital 17,168,350 16,309,016 842,437
work-in-progress
Disposals (1,087,212) (1,004,020) -
Adjustment to 1,050,670 1,050,670 -
rehabilitation assets
Effect of translation (173,017,272) (142,529,915) (19,652,091)
Closing Balance 876,764,628 723,436,727 99,012,259
Accumulated depreciation
and impairment losses
Balance at beginning of 47,741,321 43,172,561 1,989,265
year
Depreciation for the 42,075,759 31,624,591 6,686,843
year
Disposals (748,144) (682,274) -
Effect of translation (11,228,728) (9,641,801) (863,463)
Closing Balance 77,840,208 64,473,077 7,812,645
Carrying Value 798,924,420 658,963,650 91,199,614
2010 Total Mining Plant and
Development Equipment
and
Infrastructure
Cost
Balance at beginning of 707,131,018 547,552,355 117,808,441
year
Transfer between asset - 56,769,748 (46,182,134)
classes
Additions 494,095 404,943 61,112
Transferred from capital 260,839,548 195,269,087 36,141,848
work-in-progress
Disposals (544,766) (85,910) (229,435)
Adjustment to 144,952 144,952 -
rehabilitation assets
Effect of translation 64,583,007 49,555,801 10,222,081
Closing Balance 1,032,647,854 849,610,976 117,821,913
Accumulated depreciation
and impairment losses
Balance at beginning of 13,737,282 5,226,244 6,121,393
year
Transfer between asset - 17,315,108 (11,007,946)
classes
Depreciation for the 31,397,522 19,020,752 6,274,755
year
Disposals (499,587) (85,910) (229,435)
Effect of translation 3,106,104 1,696,367 830,498
Closing Balance 47,741,321 43,172,561 1,989,265
Carrying Value 984,906,533 806,438,415 115,832,648
2011 Buildings Motor Vehicles Furniture and
Fittings
Cost
Balance at beginning of 60,002,112 4,521,033 691,820
year
Additions - - 2,238
Transferred from capital - 16,897 -
work-in-progress
Disposals - (83,192) -
Adjustment to - - -
rehabilitation assets
Effect of translation (9,973,862) (746,227) (115,177)
Closing Balance 50,028,250 3,708,511 578,881
Accumulated depreciation
and impairment losses
Balance at beginning of 483,279 1,733,011 363,205
year
Depreciation for the 2,758,749 884,868 120,708
year
Disposals - (65,870) -
Effect of translation (300,146) (353,327) (69,991)
Closing Balance 2,941,882 2,198,682 413,922
Carrying Value 47,086,368 1,509,829 164,959
2010 Buildings Motor Vehicles Furniture and
Fittings
Cost
Balance at beginning of 39,632,116 1,495,527 642,579
year
Transfer between asset (3,452,419) (7,135,195) -
classes
Additions 564 20,431 7,045
Transferred from capital 19,853,568 9,575,045 -
work-in-progress
Disposals (24,483) (204,938) -
Adjustment to - - -
rehabilitation assets
Effect of translation 3,992,766 770,163 42,196
Closing Balance 60,002,112 4,521,033 691,820
Accumulated depreciation
and impairment losses
Balance at beginning of 1,893,570 286,996 209,079
year
Transfer between asset (3,450,033) (2,857,129) -
classes
Depreciation for the 1,813,154 4,157,702 131,159
year
Disposals (24,483) (159,759) -
Effect of translation 251,071 305,201 22,967
Closing Balance 483,279 1,733,011 363,205
Carrying Value 59,518,833 2,788,022 328,615
Certain assets are encumbered (refer to note 18).
The recoverable amount of mining assets and goodwill reviewed for impairment
is determined based on value-in-use calculations. All mining assets and
goodwill are allocated to one cash-generating-unit ("CGU"). Key assumptions
relating to this valuation include the discount rate and cash flows used to
determine the value-in-use. Future cash flows are estimated based on
financial budgets approved by management which is based on the mine`s life-of-
mine plan. Management determines the expected performance of the mine based
on past performance and its expectations of market developments which are
incorporated into a life-of-mine plan.
Key assumptions used in the value-in-use calculation of the impairment
assessment of mining assets were the following:
- Life-of-mine - 39 years
- South African discount rate - 16.81% (the weighted average cost of capital
for Bokoni)
- Range of PGM prices - based on market expectations. Initial price of
US$1,688/oz for platinum in 2012
- Range of ZAR/US$ exchange rates - based on market expectations. Initial
exchange rate of ZAR8.21/US$ used in 2012
- South African inflation - long-term inflation rate of 5.67%
8. CAPITAL WORK-IN-PROGRESS
Capital work-in-progress consists of mine development and infrastructure
costs relating to the Bokoni Mine and will be transferred to property, plant
and equipment when the relevant projects are commissioned.
2011 2010
Balance at beginning of year 10,311,973 235,838,915
Additions 28,678,042 28,193,472
Transfer to property, plant and equipment (17,168,350) (260,839,548)
Capitalisation of borrowing costs 1,777,431 8,271,379
Impairment - (345,123)
Effect of translation (2,772,806) (807,122)
20,826,290 10,311,973
Capital work-in-progress is funded through cash generated from operations and
available loan facilities (refer note 18).
9. INTANGIBLE ASSETS
Cost
Balance at beginning of year 3,473,000 -
Additions 236,304 3,328,100
Effect of translation (596,129) 144,900
Balance at end of year 3,113,175 3,473,000
Accumulated
mortization and impairment losses
Balance at beginning of year 192,944 -
Amortisation for the year 1,148,618 180,039
Effect of translation (123,592) 12,905
Balance at end of year 1,217,970 192,944
Carrying value 1,895,205 3,280,056
The intangible asset relates to the implementation of a SAP system throughout
the Group during 2010. The asset is amortised on a straight line basis over
three years.
10. MINERAL PROPERTY INTERESTS
Balance at beginning of year 13,716,383 13,223,703
Effect of translation (1,345,946) 492,680
12,370,437 13,716,383
Assets classified as available for sale:
Ga-Phasha (4,068,794) -
Boikgantsho (32,860) -
(4,101,654) -
8,268,783 13,716,383
The Group`s mineral property interest consists of various early stage
exploration projects as detailed below:
Ga-Phasha
In January 2004, Anooraq and Atlatsa Holdings combined their respective PGM
assets, comprising Anooraq`s Northern and Western Limb PGM projects and
Atlatsa Holding`s 50% participation interest in the Ga-Phasha Project ("Ga-
Phasha Project") on the Eastern Limb of the Bushveld Complex in South Africa.
The Ga-Phasha Project property consists of four farms - Portion 1 of
Paschaskraal 466KS, and the whole of farms Klipfontein 465KS, De Kamp 507KS
and Avoca 472KS - covering an area of approximately 9,700 hectares.
As of 1 July 2009, the joint venture agreements terminated and Ga-Phasha
Platinum Mines (Proprietary) Limited ("GPM"), a wholly-owned subsidiary of
Bokoni Holdco, acquired the respective interest in the assets relating to the
Ga-Phasha Project. Anooraq owns an effective 51% interest in the Ga-Phasha
Project.
Anooraq increased its interest in the GPM exploration project assets from 50%
to 51% through the transaction discussed in note 33 in 2009.
The mineral title relating to the Ga-Phasha Project is held by GPM.
During 2011, the Group`s management committed to a plan to sell two
(Pashaskraal and De Kamp) of the four farms in Ga-Phasha as part of the
refinancing and restructuring plan of the Group (refer note 38). Efforts to
sell these mineral properties have commenced and a sale is expected during
2012. The disposal relates to the projects segment.
Platreef
As of 1 July 2009, the Group holds an effective 51% in Platreef properties
located on the Northern Limb of the Bushveld Igneous Complex ("BIC") in South
Africa. The Group has received conversion to new order prospecting rights in
respect of all Platreef mineral properties.
Boikgantsho
As of 1 July 2009, the Boikgantsho joint venture agreements terminated and
Boikgantsho Platinum Mine (Proprietary) Limited ("BPM"), a private company
incorporated under the laws of South Africa, a wholly-owned subsidiary of
Bokoni Holdco, acquired the interest in and assets relating to the
Boikgantsho Project ("Boikgantsho Project"). Anooraq owns an effective 51%
interest in the Drenthe 778LR ("Drenthe") and Witrivier 777LR ("Witrivier")
farms and a portion of Mogalakwena`s adjacent Overysel 815LR farm. These
farms are located on the Northern Limb of the Bushveld Complex. The Group has
received new order prospecting rights in respect of the Drenthe and Witrivier
mineral properties which have been transferred to BPM.
During 2011, the Group`s management committed to a plan to sell the BPM asset
as part of the refinancing and restructuring plan of the Group (refer note
38). Efforts to sell these mineral properties have commenced and a sale is
expected during 2012. The disposal relates to the projects segment.
Kwanda
As of 1 July 2009, the Kwanda joint venture agreements terminated and Kwanda
Platinum Mine (Proprietary) Limited, a private company incorporated under the
laws of South Africa, a wholly-owned subsidiary of Bokoni Holdco, acquired
the interest in assets relating to the Kwanda Project ("Kwanda Project").
Anooraq owns an effective 51% interest in this project. The Group received
conversion to new order prospecting rights for the Kwanda North and Kwanda
South properties.
Rietfontein
The Group has entered into a settlement agreement (the "Agreement") effective
11 December 2009 with Ivanhoe Nickel & Platinum Ltd. ("Ivanplats") to replace
and supersede the 2001 agreement relating to the Rietfontein property located
on the Northern Limb of the BIC. The Agreement settles the arbitration
process relating to disagreements with respect to the exploration activities
undertaken at the Rietfontein property. Salient terms of the new Agreement
are as follows:
- Both parties abandon their respective claims under dispute forming the
subject matter of arbitration.
- The existing joint venture ("JV") between the parties is amended such that
the current Rietfontein JV is extended to incorporate a defined area of
Ivanplats` adjacent Turfspruit mineral property. Both parties retain their
existing prospecting rights in respect of mineral properties in their own
names but make these rights and technical information available to the
extended JV ("the Extended JV").
- Anooraq will be entitled to appoint a member to the Extended JV technical
committee and all technical programmes going forward will be carried out with
input from Anooraq.
- Anooraq is awarded a 6% free carried interest in the Extended JV, provided
that the Extended JV contemplates an open pit mining operation, incorporating
the Rietfontein mineral property. Anooraq has no financial obligations under
the Extended JV terms and Ivanplats is required to fund the entire
exploration programme to feasibility study with no financial recourse to
Anooraq. On delivery of the feasibility study, Anooraq may elect to either:
- Retain a participating interest of 6% in the Extended JV and finance its
pro rata share of the project development going forward; or
- Relinquish its participating interest of 6% in the Extended JV in
consideration for a 5% net smelter return royalty in respect of mineral
products extracted from those areas of the Rietfontein mineral property
forming part of the Extended JV mineral properties.
11. GOODWILL
2011 2010
Balance at beginning of the year 13,185,952 12,382,569
Effect of translation (2,191,837) 803,383
10,994,115 13,185,952
For impairment considerations, refer note 7. The goodwill relates to the
acquisition of Bokoni Mine.
12. PLATINUM PRODUCERS` ENVIRONMENTAL TRUST
The Group contributes to the Platinum Producers` Environmental Trust
annually. The Trust was created to fund the estimated cost of pollution
control, rehabilitation and mine closure at the end of the lives of the
Group`s mines. Contributions are determined on the basis of the estimated
environmental obligation over the life of a mine. The Group`s share of the
cash deposits made is reflected in non-current cash deposits held by Platinum
Producers` Environmental Trust.
The non-current cash deposits are restricted in use as it is to be used
exclusively for pollution control, rehabilitation and mine closure at the end
of lives of the Group`s mines.
13. INVENTORIES
Ore stock piles 787,084 -
14. TRADE AND OTHER RECEIVABLES
2011 2010
Financial assets
Trade receivables 24,230,043 33,335,405
Other trade receivables 769,084 512,124
24,999,127 33,847,529
Non-financial assets
Prepayments 1,385,976 1,465,826
Lease debtor 1,925 1,132
Value added tax 2,014 91,100
Employee receivables 657,564 611,551
Other receivables 1,985 172,972
27,048,591 36,190,110
The Group has one major customer with an outstanding account within the
agreed payment terms. As a result, no allowance for impairment losses has
been recognised.
15. CASH AND CASH EQUIVALENTS
Bank balances 15,927,937 25,737,824
Cash on hand 17,071 26,766
15,945,008 25,764,590
16. RESTRICTED CASH
Restricted cash - ESOP Trust 786,291 1,377,263
Restricted cash consist of cash and cash equivalents held by the Bokoni
Platinum Mine ESOP Trust, a consolidated SPE, which is not available to fund
operations.
During the year, $386,191 (ZAR3,067,439) (2010: Nil) was paid out as a cash
distribution to beneficiaries in terms of the trust deed.
17. SHARE CAPITAL
Authorised and issued
Number of shares
Common shares with no par value 201,888,472 201,813,472
B2 Convertible Preference shares of $0.1481 115,800 115,800
(ZAR1) each
B3 Convertible Preference shares of $0.1481 111,600 111,600
(ZAR1) each
The Company`s authorised share capital consists of an unlimited number of
common shares without par value. During 2009 cumulative convertible
redeemable "B" preference shares were issued to facilitate the transaction as
discussed in note 33.
Share capital
Share capital 74,150,116 74,035,621
Share issue costs (2,183,033) (2,183,033)
71,967,083 71,852,588
Treasury shares 4,991,726 4,991,726
Treasury shares relate to shares held by the ESOP Trust in Anooraq, which is
consolidated by the Group.
Preference shares
2011 2010
B2 Convertible Preference shares 17,150 17,150
B3 Convertible Preference shares 16,528 16,528
Share premium 162,876,322 162,876,322
162,910,000 162,910,000
$162.9 million (ZAR1.1 billion) was raised through share-settled financing
with the issue of cumulative mandatory convertible "B" preference shares ("B
Prefs") to RPM and a subsidiary of Atlatsa Holdings to finance the
acquisition discussed in note 33. The final effects of the share settled
financing will result in RPM receiving a fixed number of 115.8 million common
shares of Anooraq and Atlatsa Holdings, Anooraq`s controlling shareholder,
receiving a fixed number of 111.6 million common shares.
These preference shares are convertible upon the earlier of the date of
receipt of a conversion notice from RPM and 1 July 2018.
A dividend will be declared on the last business day immediately prior to the
conversion date, in terms of a formula set out in the preference share
subscription agreement.
18. LOANS AND BORROWINGS
Senior Term Loan Facility - 93,412,907
Capitalised transaction costs - (4,251,970)
Redeemable "A" preference shares (related 392,191,315 418,050,018
party)
Rustenburg Platinum Mines - Funding loans 172,650,283 89,370,192
(related party)
Rustenburg Platinum Mines - OCSF (related 172,991,980 111,208,925
party)
Rustenburg Platinum Mines - Interest free 3,639,900 4,365,567
loan (related party)
Rustenburg Platinum Mines - commitment fees 1,298,865 1,122,854
(related party)
Other 2,780,379 3,657,869
745,552,722 716,936,362
Short-term portion
Senior Term Loan Facility - (93,412,907)
Other (1,096,235) (988,756)
(1,096,235) (94,401,663)
Non-current liabilities 744,456,487 622,534,699
The carrying value of the Group`s loans and borrowings changed during the
year as follows:
2011 2010
Balance at beginning of the year 716,936,362 555,509,417
Loan from Rustenburg Platinum Mine - 64,851,418 39,043,300
OCSF
Loan from Rustenburg Platinum Mine - - 599,442
Interest free loan
Loans repaid - (590,537)
Loans repaid - other (716,317) -
Commitment fee capitalised (394,063) (640,086)
Finance expenses accrued 88,648,310 74,436,897
Funding loan raised - Rustenburg 3,691,604
Platinum Mine (related party)
Capitalisation transaction costs 3,834,378
written-off
Amortisation of loan costs 17,738 631,929
Commitment fee liability 394,063 640,086
Interest rate swap adjustment 355,852 (354,093)
Other 69,200 3,328,100
Effect of translation (132,135,823) 44,331,907
Balance at end of the year 745,552,722 716,936,362
Short-term portion
Senior Term Loan Facility - (93,412,907)
Other (1,096,235) (988,756)
(1,096,235) (94,401,663)
Non-current portion 744,456,487 622,534,699
The terms and conditions for the outstanding borrowings at 31 December 2011
are as follows:
Senior Term Loan Facility
On 28 April 2011, the Senior Term Loan Facility with Standard Chartered Bank
("SCB") and FirstRand Bank acting through its division, Rand Merchant Bank
("RMB") was ceded to Anglo Platinum Limited ("Anglo") through its subsidiary,
RPM. The outstanding interest rate swap was settled with funding obtained
from RPM.
The debt ceded to RPM has similar terms as the Senior Term Loan Facility
except for certain revisions. The revised terms of the loan is a reduction in
the interest rate from a 3 month JIBAR plus applicable margin (4.5%) and
mandatory cost (11.735% at 31 December 2010) to 3 month JIBAR plus 4% (9.575%
at 31 December 2011). The total facility has also been increased from $94.4
million (ZAR750 million) to $117.1 million (ZAR930 million). The commencement
of re-payments has been deferred by one year from 31 January 2013 to 31
January 2014. RPM has also waived the loan covenants on the debt as of 31
December 2011 and until 31 January 2013.
Transaction costs capitalised of $4 million (ZAR28 million) were written off
to finance expense on the cession of the Senior Term Loan Facility.
At 31 December 2010, the Group did not meet certain covenants specified in
the senior term facility agreement. The lenders had subsequently waived their
rights and entitlements arising from the failure of the Group to meet the
specific covenants. Notwithstanding the waiver received from the lenders and
the fact that there was no legal or constructive obligation to settle the
senior term facility within 12 months, IAS 1, Presentation of Financial
Statements, requires that the senior term facility be disclosed as a current
liability at 31 December 2010.
Redeemable "A" Preference Shares
The "A" preference shares were issued by Plateau and Bokoni Holdco to RPM as
part of the business combination and liabilities assumed (refer note 33).
These shares are cumulative mandatory redeemable shares which attract a fixed
quarterly cumulative dividend of 11.49%. The Group is obligated to redeem the
outstanding amount including undeclared dividends which should have been
declared within six years (1 July 2015) of issue, to the extent that the
Company is in the position to redeem the shares. Any preference shares not
redeemed in six years must be redeemed after nine years (1 July 2018).
During the three year period prior to the initial maturity date, Plateau will
be required to undertake a mandatory debt refinancing and use 100% of such
external debt funding raised to settle the following amounts owing by Plateau
to RPM at such time, in the following order:
(i)any outstanding amounts of the Standby Facility;
(ii)any outstanding amounts of the OCSF; and
(iii)the redemption amount payable upon the redemption of any outstanding
Redeemable "A" Preference Shares. Plateau is obliged to undertake the
refinancing process but if the debt is not re-financeable based upon the debt
markets at that time then there is no sanction on Plateau. At the acquisition
date, 1 July 2009, an amount of $1.1 million (ZAR7.2 million) was repaid with
surplus cash available.
Rustenburg Platinum Mines - Funding Loans
This loan is between RPM and Bokoni Holdco and consists of the retention of
the original RPM loans for an amount of $60.5 million (ZAR480.3 million)
As a result of the changes to the Senior Term Loan Facility, the commencement
of the repayments of the $60.5 million has also been deferred by one year
from 31 January 2013 to 31 January 2014 and is payable in semi-annual
instalments. The unpaid principal balance will bear interest at the interest
rate and on the same terms as the revised Senior Term Loan Facility ceded by
SCB to Anglo. The total facility has also been increased from $90.7 million
(ZAR720 million) to $112.5 million (ZAR893 million).
Rustenburg Platinum Mines - OCSF
Under the Operating Cash flow Shortfall Facility ("OCSF"), if funds are
requested by Bokoni (and authorised by Bokoni Holdco), RPM shall advance such
funds directly to Bokoni. At 31 December 2011, $138.5 million (ZAR1.1
billion) of the available $185 million (ZAR1.47 billion) has been advanced by
RPM. The remaining facility may be utilised only for the purposes of
operating or capital expenditure cash shortfalls at Bokoni. In addition, RPM
has extended the terms of the OCSF facility to fund cash shortfalls up to 31
January 2013.
The OCSF Loan was originally payable in semi-annual instalments starting 31
January 2013 to the extent cash is available after payment of the Senior Term
Facility and the RPM funding loan. The unpaid principal balance on the OCSF
will bear interest at a fixed rate of 15.84%, compounded quarterly in
arrears. Based on the revised terms on the Senior Facility with RPM,
repayment will also be deferred by one year from 31 January 2013 to 31
January 2014.
Rustenburg Platinum Mines - Standby Facility
The Group secured an agreement with RPM to access RPM`s attributable share of
the Bokoni Holdco cash flows ("the Standby Facility") up to a maximum of 29%
of all free cash flow generated from the Bokoni Mine to meet its repayment
obligations in terms of the Senior Term Loan Facility. This facility will
bear interest at the prime rate of interest in South Africa (currently 9%)
The standby facility has a final maturity date on 1 July 2018. As at 31
December 2011, no draw-down was made on the standby facility.
Rustenburg Platinum Mines - Interest-free loan
This loan is between RPM and Bokoni Holdco. The loan is interest-free and
repayable 12 months and 1 day after requested by RPM.
Other
This loan is between Plateau and the Deloitte Mining Shared Service Centre
("DMSSC") relating to the financing of the new SAP system (refer note 9). The
loan bears interest at prime (9% at 31 December 2011) plus 2% and is payable
in quarterly instalments starting 31 March 2011.
Security
The Senior Term Loan Facility is secured through various security
instruments, guarantees and undertakings provided by the Group against 51% of
the cash flows generated by the Bokoni Mine, together with 51% of the Bokoni
Mine asset base. The Standby Facility, OCSF and the "A" preference shares
rank behind the Senior Term Loan Facility for security purposes.
Refer note 38 for subsequent event.
The Group`s debt is denominated in ZAR, which is translated to the
presentation currency of the Company.
19. DEFERRED TAX
Deferred tax liabilities and assets on the statement of financial position
relate to the following:
2011 2010
Deferred tax liabilities
Property plant and equipment (including capital 228,912,376 277,619,568
work-in-progress)
Prepayments 339,869 399,696
Environmental trust fund contributions 664,358 638,540
Inventories 220,384 -
Gross deferred tax liability 230,136,987 278,657,804
Deferred tax assets
Provision for environmental liabilities (2,347,438) (2,291,658)
Unredeemed capital expenditure (34,485,988) (32,497,913)
Accrual for employee leave liabilities (1,924,872) (2,057,664)
Liability for share-based compensation (165,801) (333,964)
Calculated tax losses (47,180,675) (32,671,048)
Gross deferred tax asset (86,104,774) (69,852,247)
Net deferred tax liability 144,032,213 208,805,557
The movement in the net deferred tax liability utilized in the statement of
financial position is as follows:
Balance at beginning of year 208,805,557 213,484,109
Current year (32,667,499) (18,868,120)
Prior year - 1,578,080
Effect of translation (32,105,845) 12,611,488
144,032,213 208,805,557
As at 31 December the Group had not utilized the following net deferred tax
assets:
Deferred tax assets 13,736,801 12,884,973
The tilize
edd temporary
differences are:
Unredeemed capital expenditure 1,766,508 2,118,688
Tax losses 12,052,145 10,261,209
Other deductible temporary differences 2,426,322 505,076
Foreign exchange losses (2,508,174) -
13,736,801 12,884,973
Deferred tax assets have not been utilized for the above temporary
differences as it is not probable that the respective Group entities to which
they relate will generate future taxable income against which to utilize the
temporary differences.
Gross calculated tax losses expire as follows:
2012-2016 (4,456,781) (4,456,781)
Thereafter (9,939,500) (8,400,233)
Indefinitely (140,157,235) (140,216,282)
(154,553,516) (153,073,296)
20. PROVISIONS
Non-current provisions
2011 2010
Rehabilitation provision
Balance at beginning of the year 8,184,494 7,021,038
Capitalised to property, plant and equipment 1,050,670 144,952
Unwinding of interest 644,045 515,626
Effect of translation (1,495,501) 502,878
Balance at end of year 8,383,708 8,184,494
Future net obligations
Undiscounted rehabilitation cost 12,963,704 13,723,729
Amount invested in environmental trust fund (2,927,591) (2,862,075)
(refer note 12)
Total future net obligation - Undiscounted 10,036,113 10,861,654
The Group intends to finance the ultimate rehabilitation costs from the money
invested in environmental trust funds, ongoing contributions as well as the
proceeds on sale of assets and metals from plant clean-up at the time of mine
closure.
Key assumptions used in determining the provision:
Discount period 20 years 20 years
South African discount rate (risk free rate) 8.4% 8.4%
South African inflation 5.2% 5.2%
Sensitivity - change in provision Inflation Inflation
rate rate
1% increase 1,866,759 1,704,848
1% decrease (1,558,336) (1,423,175)
Discount Discount
rate rate
1% increase (1,307,110) (1,310,453)
1% decrease 1,545,655 1,576,048
21. DERIVATIVE LIABILITY
Interest rate swap - 4,969,563
22. TRADE AND OTHER PAYABLES
Financial liabilities
Trade payables 7,508,854 11,867,027
Arbitration settlement * - 2,303,614
Other payables 5,988,159 5,907,228
13,497,013 20,077,869
Non-financial liabilities
Payroll accruals 1,546,767 2,876,127
Leave liabilities 7,328,438 7,606,100
Share-appreciation rights 404,607 1,170,899
Lease accrual 53,667 99,632
Other accruals 6,847 -
Deferred income 9,596 13,705
Value added tax 278,652 -
23,125,587 31,844,332
*- This relates to the additional amount that QuestCo (Proprietary) Limited
and North Corporate Finance Advisory Services Limited considered payable to
them in respect of corporate advisory services rendered by them pursuant to
the implementation of the Bokoni acquisition on 1 July 2009. This matter was
resolved via an arbitration process finding in favour of Questco
(Proprietary) Limited and North Corporate Finance Advisory Services Limited
during 2010. As a result, the Group was liable to settle an amount of ZAR12.4
million ($1.9 million) for services rendered. The liability includes interest
of ZAR2.8 million ($0.4 million) that was also awarded from 1 July 2009.
23. REVENUE
Revenue from mining operations by
commodity:
2011 2010 2009
Platinum 85,146,242 89,250,257 39,282,459
Palladium 23,999,481 20,185,949 6,582,056
Rhodium 9,910,678 14,033,214 6,439,392
Nickel 14,414,240 15,120,505 6,278,262
Other 10,936,075 9,696,908 4,045,699
144,406,716 148,286,833 62,627,868
Revenue consists of the sale of concentrate to Rustenburg Platinum Mines
Limited (a related party).
24. COST OF SALES
Cost of sales includes:
Labour costs 86,226,560 79,399,203 39,333,125
Stores costs 33,519,868 25,468,848 11,036,693
Power and compressed air 11,871,488 9,619,321 4,481,837
Contractors cost 18,059,940 9,171,193 2,742,494
Other costs 19,174,646 17,135,596 11,022,676
Inventory movement (855,227) 1,084,930 (1,083,390)
Depreciation 41,969,530 31,272,097 13,433,032
209,966,805 173,151,188 80,966,467
25. FINANCE INCOME
Interest received - Financial assets
at amortised cost
Platinum Producers` Environmental 82,685 108,504 102,664
Trust
Bank accounts 662,905 1,005,138 426,621
745,590 1,113,642 529,285
26. FINANCE EXPENSES
2011 2010 2009
Financial liabilities at
amortised cost
Bank and short-term facilities - 13,617 72,158
"A" Preference shares (related 47,409,220 39,661,792 19,560,689
party)
OCSF and funding facilities 30,903,663 22,779,618 8,439,108
(related party)
Senior Term Loan Facility 9,132,826 11,512,806 5,028,432
Interest on fair value of 546,169 (195,702) 189,173
interest rate swap
Other 702,438 563,219 324
88,694,316 74,335,350 33,289,884
Non-financial liabilities
Notional interest - 644,045 515,626 181,813
rehabilitation provision
Commitment fees on OCSF 631,838 310,177 38,091
Transaction costs 3,852,116 631,929 411,058
5,127,999 1,457,732 630,962
Total finance costs before 93,822,315 75,793,082 33,920,846
interest capitalised
Interest capitalised (1,777,431) (8,271,379) (13,580,559)
Total finance costs 92,044,884 67,521,703 20,340,287
The capitalisation rate used to determine the amount of borrowing costs
eligible for capitalisation during the year is 12.4% (2010: 13.2%).
27. LOSS BEFORE INCOME TAX
Loss before income tax as stated includes the following:
Operating lease expense - buildings 275,450 360,925 387,131
Restructuring costs 44,323 - 1,784,452
Share-based payment expense - equity 2,140,038 2,333,450 2,185,812
settled
Share-based payments expense - cash (437,152) 947,176 145,199
settled
Bonus settled via shares - - 895,625
Interest rate swap fair value 2,550,958 223,727 (636,529)
Depreciation and amortisation 43,224,377 31,577,561 13,557,111
28. INCOME TAX
SA normal taxation
Current tax - prior year - - (35,154)
Deferred tax - prior year - (1,578,080) -
Deferred tax - current year 32,667,499 18,868,120 7,668,639
32,667,499 17,290,040 7,633,485
Taxation rate reconciliation:
2011 2010 2009
Statutory Canadian tax rate 26.50% 28.5% 30.00%
Other disallowed expenditure (0.17%) (0.13%) (1.62%)
Transaction costs disallowed (0.57%) (0.63%) (5.25%)
Preference dividends disallowed (6.92%) (8.89%) (5.65%)
Equity settled share based (0.32%) (1.10%) (1.10%)
compensation
Investment income not taxable 0.01% 0.03% 0.07%
Tax adjustments - prior year - (1.45%) (0.02%)
Deferred tax assets not (1.81%) (0.47%) (3.01%)
recognised
Effect of rate differences 1.04% (0.28%) (0.57%)
Effective taxation rate 17.76% 15.58% 12.85%
29. OTHER COMPREHENSIVE INCOME NET OF INCOME TAX
Components of other comprehensive income:
Foreign currency translation (7,913,856) 6,237,524 (14,072,611)
differences for foreign
operations
Effective portion of changes in 1,602,501 (3,121,650) (731,293)
fair value of cash flow hedges
Reclassification to profit or 2,521,654 - -
loss on settlement of cash flow
hedge
Tax effect - - -
(3,789,701) 3,115,874 (14,803,904)
Attributable to:
Owners of the Company (1,994,738) 800,194 (10,251,876)
Non-controlling interest * (1,794,963) 2,315,680 (4,552,028)
(3,789,701) 3,115,874 (14,803,904)
*- Relates to the foreign currency translation differences for foreign
operations in 2011, 2010 and 2009.
30. EARNINGS PER SHARE
The calculation of basic loss per share for the year ended 31 December 2011
was based on the loss attributable to owners of the Company of $81,928,814
(2010: $51,721,410; 2009: $35,531,631), and a weighted average number of
common shares of 424,783,603 (2010: 424,665,314; 2009: 305,971,455).
At 31 December 2011, 2010 and 2009, share options were excluded in
determining diluted weighted average number of common shares as their effect
would have been anti-dilutive.
Issued common shares at 1 201,813,473 201,743,472 186,640,007
January
Effect of shares issued in 67,192 18,904 9,817,003
financial year
Treasury shares (4,497,062) (4,497,062) (4,497,062)
Convertible "B" Preference 227,400,000 227,400,000 114,011,507
shares - issued on 1 July 2009
Weighted average number of 424,783,603 424,665,314 305,971,455
common shares at 31 December
The basic and diluted loss per share for the year ended 31 December 2011 was
19 cents (2010: 12 cents; 2009:12 cents).
31. CASH UTILISED BY OPERATIONS
CASH UTILISED BY OPERATIONS
2011 2010 2009
Loss before income tax (180,532,047) (110,948,846) (59,414,014)
Adjustments for:
Finance expense 92,044,884 67,521,703 20,340,287
Finance income (745,590) (1,113,642) (529,285)
Non-cash items:
Depreciation and amortisation 43,224,377 31,577,561 13,557,111
Equity-settled share-based 2,140,038 2,333,450 2,185,812
compensation
Bonus settled via shares - - 895,658
Loss from equity accounted - - 219,849
investees
Loss/(gain) on disposal of 339,068 45,179 (69,239)
property, plant and equipment
Derivative (profit)/loss - (223,727) 636,529
Settlement of cash flow hedge 2,550,958 - -
Transaction costs - - 1,587,959
Impairment of assets - 345,123 -
Other 69,200 135 (24,166)
Cash utilised before ESOP (40,909,112) (10,463,064) (20,613,499)
transactions
ESOP cash transactions (restricted 836,081 - -
cash)
Cash utilised before working (40,073,031) (10,463,064) (20,613,499)
capital changes
Working capital changes
Decrease/(increase) in trade and 3,357,055 (8,719,410) (1,727,856)
other receivables (i)
(Decrease)/increase in trade and (3,747,138) 2,306,757 (4,368,581)
other payables (ii)
(Increase)/decrease in inventories (855,227) 1,084,930 (1,083,390)
(iii)
Cash utilised by operations (41,318,341) (15,790,787) (27,793,326)
(i)Decrease/(increase) in trade and other receivables
Opening balance 36,190,110 23,466,503 271,554
Arising from business combination - - 22,477,941
(refer note 33)
Closing balance (27,048,591) (36,190,110) (23,466,503)
Movement for the year 9,141,519 (12,723,607) (717,008)
Effect of translation (5,784,464) 4,004,197 (1,010,848)
3,357,055 (8,719,410) (1,727,856)
(ii)(Decrease)/increase in trade and other payables
Opening balance (31,844,332) (26,948,647) (1,798,839)
Arising from business combination - - (30,845,374)
(refer note 33)
Closing balance 23,125,587 31,844,332 26,948,647
Movement for the year (8,718,745) 4,895,685 (5,695,566)
Effect of translation 4,971,607 (2,588,928) 1,326,985
(3,747,138) 2,306,757 (4,368,581)
(iii)(Increase)/decrease in inventories
2011 2010 2009
Opening balance - 1,091,860 -
Arising from business combination (refer - - -
note 33)
Closing balance (787,084) - (1,091,860)
Movement for the year (787,084) 1,091,860 (1,091,860)
Effect of translation (68,143) (6,930) 8,470
(855,227) 1,084,930 (1,083,390)
32. SEGMENT INFORMATION
The Group has two reportable segments as described below. These segments are
managed separately based on the nature of operations. For each of the
segments, the Group`s CEO (the Group`s chief operating decision maker)
reviews internal management reports monthly. The following summary describes
the operations in each of the Group`s reportable segments:
- Bokoni Mine - Mining of PGM`s.
- Projects - Mining exploration in Boikgantsho, Kwanda, and Ga-Phasha
exploration projects.
The majority of operations and functions are performed in South Africa. An
insignificant portion of administrative functions are performed in the
Company`s country of domicile.
The CEO considers earnings before net finance expense, income tax,
depreciation and amortisation ("EBITDA") to be an appropriate measure of each
segment`s performance. Accordingly, the EBITDA for each segment has been
included. All external revenue is generated by the Bokoni Mine segment.
31 December 2011
Bokoni Mine Projects Total Note
Revenue 144,406,716 - 144,406,716
Cost of sales (212,137,181) - (212,137,181) (i)
EBITDA (36,767,412) (632,855) (37,400,267) (ii)
Loss before income (163,883,532) (632,855) (164,516,387) (iii)
tax
Income tax 30,006,122 - 30,006,122 (iv)
Depreciation (41,020,865) - (41,020,865) (v)
Finance income 281,868 - 281,868 (vi)
Finance expense (86,377,123) - (86,377,123) (vii)
Total assets 901,154,720 9,703,357 910,858,077 (viii
)
Additions to non- 268,678,042 - 268,678,042 (ix)
current assets
Total Liabilities (770,025,392) (14,862,260) (784,887,652) (x)
31 December 2010
Bokoni Mine Projects Total Note
Revenue 148,286,833 - 148,286,833
Cost of sales (175,024,817) - (175,024,817) (i)
EBITDA (4,849,754) (485,829) (5,335,583) (ii)
Loss before income (100,296,522) (485,829) (100,782,351) (iii)
tax
Income tax 15,258,868 - 15,258,868 (iv)
Depreciation (29,566,864) - (29,566,864) (v)
Finance income 453,911 - 453,911 (vi)
Finance expense (66,333,814) - (66,333,814) (vii)
Total assets 1,093,388,333 11,541,285 1,104,929,618 (viii
)
Additions to non- 28,660,090 - 28,660,090 (ix)
current assets
Total Liabilities (789,428,564) (17,030,115) (806,458,679) (x)
Reconciliations of reportable segment cost of sales, EBITDA, loss before
income tax, income tax, depreciation, finance income, finance expense,
assets, addition to non-current assets and liabilities:
2011 2010
(i)Cost of sales
Total cost of sales for reportable (212,137,181) (175,024,817)
segments
Corporate and consolidation 2,170,376 1,873,629
adjustments
Consolidated cost of sales (209,966,805) (173,151,188)
(ii)EBITDA 2011 2010
Total EBITDA for reportable segments (37,400,267) (5,335,583)
Net finance expense (91,299,294) (66,408,061)
Depreciation and amortisation (43,224,377) (31,577,561)
Corporate and consolidation (8,608,109) (7,627,641)
adjustments
Consolidated loss before income tax (180,532,047) (110,948,846)
(iii)Loss before income tax
Total loss before tax for reportable (164,516,387) (100,782,351)
segments
Corporate and consolidation (16,015,660) (10,166,495)
adjustments
Consolidated loss before income tax (180,532,047) (110,948,846)
(iv)Income tax
Taxation for reportable segments 30,006,122 15,258,868
Corporate and consolidation 2,661,377 2,031,172
adjustments
Consolidated taxation 32,667,499 17,290,040
(v)Depreciation
Depreciation for reportable segments (41,020,865) (29,566,864)
Corporate and consolidation (2,203,512) (2,010,697)
adjustments
Consolidated depreciation (43,224,377) (31,577,561)
(vi)Finance income
Finance income for reportable segments 281,868 453,911
Corporate and consolidation 463,722 659,731
adjustments
Consolidated finance income 745,590 1,113,642
(vii)Finance expenses
Finance expense for reportable (86,377,123) (66,333,814)
segments
Corporate and consolidation (5,667,761) (1,187,889)
adjustments
Consolidated finance expense (92,044,884) (67,521,703)
(viii)Total assets
Assets for reportable segments 910,858,077 1,104,929,618
Corporate and consolidation (17,849,111) (12,823,363)
adjustments
Consolidated assets 893,008,966 1,092,106,255
(ix)Additions to non-current assets
Additions to non-current assets for 28,678,042 28,660,090
reportable segments
Corporate and consolidation 238,542 3,355,577
adjustments
Consolidated additions to non-current 28,916,584 32,015,667
assets
(x)Total liabilities
Liabilities for reportable segments (784,887,652) (806,458,679)
Corporate and consolidation (136,206,578) (164,281,629)
adjustments
Consolidated liabilities (921,094,230) (970,740,308)
33. ACQUISITIONS OF SUBSIDIARY AND NON-CONTROLLING INTERESTS - 2009
Anooraq, through Plateau, acquired 51% controlling interests in Bokoni as
well as an additional one percent interest in several PGM exploration
projects, including the advanced stage Ga-Phasha Project, the Boikgantsho
Project, and the early stage Kwanda Project. The acquisition of the
controlling interest was affected by Plateau acquiring 51% of the
shareholding of Bokoni Holdco on 1 July 2009, for an aggregate purchase
consideration of $385 million (ZAR2.6 billion), which includes $251 million
used to repay loans and borrowings assumed in the transaction.
Bokoni, previously 100% owned by Anglo Platinum, is located on the north-
eastern limb of the Bushveld Complex adjacent to the Ga-Phasha Project. The
Bokoni mining operation consists of a vertical shaft and declines to access
the underground development on the Merensky and UG2 Reefs, and two
concentrators.
Pursuant to the terms of the acquisition agreements, Plateau acquired 51% of
the shares in, and claims on shareholders loan account against Bokoni Holdco.
The joint venture agreements in respect of the Ga-Phasha Project, Boikgantsho
Project and Kwanda Project were terminated and these projects were
transferred into separate project companies, established as wholly- owned
subsidiaries of Bokoni Holdco.
Financing
The Group financed the purchase consideration transferred of $385 million
(ZAR2.6 billion) as follows:
- $111 million (ZAR750 million) of senior debt funding in terms of the
Standard Chartered senior term loan facility (the "Senior Term Loan
Facility") from Standard Chartered Bank plc ("Standard Chartered" or "SCB")
provided to Plateau, of which $74 million (ZAR500 million) was drawn down on
1 July 2009. The Group applied approximately $44 million (ZAR300 million) of
the Senior Term Loan Facility in part settlement of the consideration
transferred. Refer note 19 for details.
On 11 December 2009, 34% of the facility was acceded to First Rand Bank
Limited, acting through its Rand Merchant Bank division ("RMB"). The same
terms apply as per the initial agreement with SCB;
- $177.8 million (ZAR1.2 billion) through the issue of cumulative mandatory
redeemable "A" preference shares ("A Prefs") of Plateau to RPM (refer note
19); and
- $162.9 million (ZAR1.1 billion) through the effects of a share settled
financing with the issue of cumulative convertible "B" preference shares ("B
Prefs") to RPM and a subsidiary of Atlatsa Holdings. The final effects of
the share settled financing will result in RPM receiving a total of 115.8
million common shares of Anooraq and Atlatsa Holdings, Anooraq`s controlling
shareholder, receiving 111.6 million common shares, to maintain its minimum
51% shareholding in the Company.
Transaction costs amounting to $15.2 million associated with finalising the
transaction were incurred of which $10.4 million, relating to the
acquisition, was recognised in profit or loss. The remaining costs were
capitalised to the related debt.
Identifiable assets acquired and liabilities assumed
The following summarises the amounts of assets acquired and liabilities
assumed at the acquisition date:
Carrying Fair Value
value
Property, plant and equipment 767,109,345 725,226,891
Capital work-in-progress 216,194,965 216,194,965
Cash deposits held in Platinum Producers` 2,356,993 2,356,993
Environmental Trust
Other non-current assets 741 741
Trade and other receivables 22,477,941 22,477,941
Cash and cash equivalents 3,576,912 3,576,912
Loans and borrowings (owing to RPM) (493,666,666) (493,666,666)
Deferred taxation (60,367,689) (231,040,913)
Provisions (4,308,137) (4,308,137)
Current tax payable (123,034) (123,034)
Trade and other payables (30,845,374) (30,845,374)
Total identifiable net assets 422,405,997 209,850,319
Goodwill on acquisition
Goodwill was recognised as a result of the acquisition as follows:
Total purchase consideration 385,060,000
Assets acquired as part of the transaction
(refer note 10) (6,592,523)
Contributions received from Anglo Platinum
relating to ESOP Trust (6,741,102)
Repayment of loans and borrowings to RPM (251,770,000)
(refer note 19)
Consideration transferred as part of 119,956,375
business combination
Non-controlling interest in Bokoni 102,826,656
Less total identifiable net assets (209,850,319)
At acquisition goodwill, as of 1 July 2009
12,932,712
Anooraq increased its interest in the PGM exploration project assets from 50%
to 51% through the above mentioned transaction. The acquisition of the
additional one percent was accounted for as an asset acquisition (mineral
property interests) and the additional interests were recognised at their
respective fair values amounting to $6.6 million in total.
The consideration transferred was further reduced by $251 million for the
repayment of loans and borrowings owing to RPM as well as contributions
received from Anglo Platinum amounting to $6.8 million relating to the Bokoni
Platinum Mine ESOP Trust, a consolidated SPE, on 1 July 2009.
The contributions to the 2009 revenue and operating loss since acquisition
had the acquisition occurred on 1 January 2009, respectively, are as follows:
2009
Since For the full
acquisition year
Revenue 62,627,868 113,654,693
Loss before income tax (39,753,539) (93,826,099)
34. SHARE OPTIONS
34.1Equity-settled options
The Group has a share option plan approved by the shareholders that allows it
to grant options, subject to regulatory terms and approval, to its directors,
employees, officers, and consultants to acquire up to 32,600,000 (2010:
32,600,000) common shares. As at 31 December 2011, 12,162,667 options were
outstanding and 20,437,333 options remained available to be granted. On 30
June 2009 the Company obtained shareholder and stock exchange approval to
decrease the exercise price to C$1.29 per option for 8,061,000 share options,
including stock options granted to certain insiders of the Company pursuant
to repricing. The exercise price of each option is set by the Board of
Directors at the time of grant but cannot be less than the market price (less
permissible discounts) on the TSX Venture Exchange. Options have a term of
up to a maximum of ten years (however, the Company has historically granted
options for up to a term of five years), and terminate 30 to 90 days
following the termination of the optionee`s employment or term of engagement,
except in the case of retirement or death. Vesting of options is at the
discretion of the Board of Directors at the time the options are granted. The
continuity of share purchase options is as follows:
Weighted Number of Contractual
average options weighted
exercise average
price remaining
life
(years)
Balance - 31 December 2009 $ 1.10 14,192,000 4.32
Granted 1.30 1,240,000
Exercised 0.97 (70,000)
Cancelled 1.02 (717,000)
Expired 1.29 (1,404,000)
Balance - 31 December 2010 $ 1.11 13,241,000 3.97
Granted - -
Exercised 0.84 (75,000)
Cancelled 1.05 (593,333)
Expired 1.24 (410,000)
Balance - 31 December 2011 $ 1.11 12,162,667 2.89
Options outstanding and exercisable at 31 December 2011 were as follows:
Expiry date Option Number of Number of Weighted
price options options average
outstanding vested life
(years)
15 October 2012 $ 1.29 # 3,785,000 3,785,000 0.8
25 June 2013 $ 1.29 # 916,000 916,000 1.5
30 June 2013 $ 1.29 # 1,410,000 1,410,000 1.5
25 June 2014 $ 0.96 600,000 600,000 2.5
30 November 2016 $ 0.84 4,705,000 3,450,880 4.9
1 May 2017 $1.61 500,000 166,500 5.3
1 July 2017 $1.05 86,667 86,667 5.5
1 August 2017 $1.11 160,000 160,000 5.6
Total 12,162,667 10,575,047
Weighted average exercise $ 1.11 $ 1.28
price
# - The options were re-priced to $1.29 on 30 June 2009
The exercise prices of all share purchase options granted during the year
were equal to or greater than the market price at the grant date. Using the
Black-Scholes option pricing model with the assumptions noted below, the
estimated fair value of all options granted have been reflected in the
statement of changes in equity.
The share-based payments expense recognised during the year ended 31 December
2011 was $1,156,036 (2010: $2,333,450; 2009: $2,185,812).
The assumptions used to estimate the fair value of options granted during the
year were:
2011 2010 2009
Canadian risk- free interest rate 2.8% 2.8% 3%
Expected life 5-7 years 5- 7 5 - 7
years years
Volatility 83% 83% 83%
Forfeiture rate 0% 0% 0%
Expected dividends Nil Nil Nil
The volatility of the shares was calculated over the expected life of the
option. Volatility was calculated by using available historical information
on the share price for Anooraq equal to the expected life of the scheme.
The risk free rate for periods within the contractual term of the share right
is based on the Government of Canada benchmark bond yield.
34.2 Cash-settled share-based payments
The Group also currently has a scheme in place to award share appreciation
rights ("SARs") to recognise the contributions of senior staff to the Group`s
financial position and performance and to retain key employees. These share
appreciation rights are linked to the share price of the Group on the JSE and
are settled in cash on the exercise date.
A third of the share appreciation rights granted are exercisable annually
from the grant date with an expiry date of 4 years from the grant date. The
offer price of these share appreciation rights equaled the closing market
price of the underlying shares on the trading date immediately preceding the
granting of the share appreciation rights.
2011 2010 2009
Share appreciation rights granted (all 6,294,869 3,737,103 2,933,000
unvested at year-end)
Vesting year of unvested share appreciation rights:
Within one year 2,396,801 1,575,035 977,667
One to two years 2,025,134 1,575,035 977,667
Two to three years 1,872,934 587,033 977,666
Total number of shares unvested 6,294,869 3,737,103 2,933,000
The value of the share appreciation rights expensed in the year ended 31
December 2011 was ($437,152)(2010: $947,176; 2009: $145,199).
The assumptions used to estimate the fair value of the SARS granted during
the year were:
South African risk-free rate 6.4% 6.7% 8.4%
Volatility 85.1% 82% - 86% 83%
Forfeiture rate 0% 0% 0%
Expected dividends Nil Nil Nil
The only vesting conditions for the scheme are that the employees should be
in the employment of the Group.
The volatility of the shares were calculated with the equally weighted
standard approach of calculating volatility by using available historical
information on the share price for Anooraq equal to the term to maturity of
the scheme.
The risk-free rate for periods within the contractual term of the share right
is based on the South African Government Bonds in effect at the time.
34.3 Bonus settled via shares
The Group issued 806,898 shares to key members of management at a cost of
$895,625 during the year ended 31 December 2009 as consideration for
finalising the acquisition as discussed in note 33 (2011 and 2010: Nil).
34.4 Anglo Platinum Limited senior executive share scheme
In terms of a Management Services Agreement, certain senior management of
Bokoni Mines can still participate in the Anglo Platinum Limited share
scheme.
The operation of the scheme is summarised as follows:
- Anglo Platinum Limited will be responsible for any liability up to $629,500
(ZAR5 million)
- Bokoni Mines will be responsible for any liability between $629,500 and
$1,888,500 (ZAR5 million and ZAR15 million)
- Anglo Platinum Limited will be responsible for any liability greater than
$1,888,500 (ZAR15 million)
Based on the Anglo Platinum Limited share price at 31 December 2011 there is
no liability to the Group (2010 and 2009: Nil).
34.5 Bokoni Platinum Mine ESOP Trust
Prior to the acquisition of Bokoni on 1 July 2009, certain employees of
Bokoni were part of the Anglo Platinum Group Employee Empowerment Scheme
("Kotula Scheme"). When Anooraq acquired Bokoni, Anglo Platinum Limited and
Anooraq replaced the Kotula Scheme with the Bokoni Platinum Mine ESOP Trust
("ESOP Trust"), which has similar participation benefits to the Kotula
Scheme.
The purpose of the ESOP Trust scheme is to incentivize and retain employees,
promote BEE and increase broad-based and effective participation in the
equity of Anooraq by historically disadvantaged persons.
The ESOP Trust holds and utilises ordinary shares in Anooraq (refer note 17)
for the benefit of the beneficiaries.
Any units that the employees held in the Kotula Scheme were exchanged into
units in the ESOP Trust at a ratio of 15 units in the ESOP Trust for every
Kotula unit held. The remaining units in the ESOP Trust are allocated to the
employees in five equal annual installments beginning 31 March 2010 and for
the next four years thereafter. Employees will receive an equal allocation of
units. Any units held by a beneficiary that are forfeited shall be added back
to the number of unallocated units available for future allocation.
The ESOP Trust shall dispose of the shares held in Anooraq to the
beneficiaries as follows:
- One third shall vest in proportion to the beneficiaries units on 16 May
2013;
- Half of the remaining balance of ordinary shares will vest in proportion to
their interest on 16 May 2014; and
- The remaining balance of ordinary shares will vest in proportion to their
interest on 16 May 2015.
The trustees (acting as agent on behalf of the beneficiaries) shall dispose
of and sell as many shares as will be necessary to settle all taxes payable
by the beneficiaries. The beneficiaries may also direct the trustees to sell
the distribution shares on behalf of the beneficiaries and the proceeds of
such sale, net of all expenses, shall be distributed to the beneficiaries.
If a beneficiary`s employment is terminated due to death, retrenchment,
retirement, disability or ill-health, Bokoni will pay a cash amount equal to
the fair value of the beneficiary`s units to the beneficiary who will then
cease to be a beneficiary of the ESOP Trust. The units will be transferred to
Bokoni who will become a beneficiary of the ESOP Trust. Where the
beneficiary`s employment is terminated prior to the termination date for any
other reason, the beneficiary shall forfeit all his rights under the scheme.
The forfeited units will be added back to the number of unallocated units for
future allocation.
At 31 December the following units were allocated:
2011 2010 2009
Total units available for 70,000,000 70,000,000 70,000,000
allocation
Allocation 1 July 2009 (20,078,634) (20,078,634) (20,078,634)
Allocation 31 March 2010 (10,282,759) (10,282,759) -
Allocation 31 March 2011 (10,666,586) - -
Total units available for 28,972,021 39,638,607 49,921,366
allocation at 31 December
Units forfeited 1,535,309 1,492,429 -
Forfeiture rate 5% 5% 5%
Expected dividends Nil Nil Nil
Exercise price Nil Nil Nil
Share price at grant date (ZAR) 7.00 11.10 8.00
The share-based payment expense recognised during the year ended 31 December
2011 was $984,002 (2010 and 2009: Nil).
35. CONTINGENCIES
There are no contingencies that the directors are aware of at the reporting
date.
36. RELATED PARTIES
Relationships
Related party Nature of relationship
Rustenburg The Group concluded a number of shared services
Platinum Mines agreements between Bokoni mine and Rustenburg
(`RPM`) Platinum Mines (`RPM`), a wholly owned subsidiary
of Anglo Platinum and 49% shareholder in Bokoni
Holdco. Pursuant to the terms of various shared
services agreements, the Anglo American group of
companies will continue to provide certain
services to Bokoni Mines at a cost that is no
greater than the costs charged to any other Anglo
American group company for the same or similar
services. It is anticipated that, as Anooraq
builds its internal capacity, and makes the
transformation to a fully operational PGM
producer, these services will be phased out and
replaced either with internal services or third
party services. RPM also provides debt funding to
the Group and purchases all of the Group`s PGM
concentrate.
Atlatsa Holdings Atlatsa Holdings is the Company`s controlling
(Proprietary) shareholder.
Limited ("Atlatsa
Holdings")
Key management All directors directly involved in the Anooraq
Group and certain members of top management at
Bokoni and Plateau.
Related party balances
2011 2010
RPM Loans and (742,772,344) (624,117,556)
Borrowings (refer
note 18)
Trade and other (5,384,861) (2,490,280)
payables
Trade and other 24,230,043 33,335,405
receivables
Convertible
preference shares
(refer note 17)
Atlatsa Holdings Convertible
preference shares
(refer note 17)
Related party transactions
RPM Revenue (refer note (144,406,715) (148,286,833)
23)
Finance expense 84,762,114 62,751,587
(before interest
capitalised)
Administration 1,272,406 3,556,086
expenses
Cost of sales 40,967,150 19,621,801
Costs capitalised 7,852,805 7,576,824
to capital work-in-
progress
Also refer to note 38 for a proposed transaction with Anglo American Platinum
Limited, RPM`s holding company.
Key Management Compensation
Remuneration for executive directors and key
management
Salaries 3,998,042 4,283,048
Short-term benefits 1,094,315 725,269
Restructuring 76,334 -
Share options 994,729 1,929,869
Cash settled share-based payments (437,152) 947,176
Remuneration for non-executives 304,454 609,130
6,030,722 8,494,492
37. COMMITMENTS
2011 2010
Contracted for 32,761,664 8,116,976
Not yet contracted for 38,474,167
54,554,966
Authorised capital expenditure 71,235,831
62,671,942
The committed expenditures relate to property, plant and equipment and will
be funded through cash generated from operations and available loan
facilities.
38. EVENTS AFTER THE REPORTING DATE
On 2 February 2012, Anooraq announced a transaction to facilitate it`s
refinancing and restructuring plan in conjunction with Anglo American
Platinum Limited ("Amplats").
The key features of the transaction include inter alia:
- Amplats will, through a series of related transactions, acquire the whole
of the Boikgantsho project and the Eastern section of the Ga-Phasha project.
On implementation of these transactions, the effective net consideration of
ZAR1.7 billion ($214 million) received by Anooraq will be applied to reduce
its approximately ZAR5.9 billion ($742.8 million) debt owing to Amplats.
- The parties will enter into an interest standstill agreement with respect
to existing debt owing to Amplats effective 1 July 2011 through to 30 April
2012. This translates into an interest saving of approximately ZAR572 million
($72 million) for Anooraq over the standstill period.
- The net effect of the asset disposal and application of the proceeds
thereof against existing debt, together with the interest standstill
agreement described above and the recapitalisation of Bokoni Holdco is that
Anooraq`s existing attributable debt owing to Amplats will reduce by 83% from
approximately ZAR5.9 billion ($742.8 million) to approximately ZAR1 billion
($125.9 million).
- The historical debt balance owing by Anooraq to Amplats following the asset
disposal, interest standstill agreement and the recapitalisation of Bokoni
Holdco (approximately ZAR1 billion ($125.9 million)) will be consolidated
under one new debt facility (the "Consolidated Debt Facility").
- Amplats will provide further debt funding to Anooraq under the Consolidated
Debt Facility for an amount of up to ZAR2.6 billion ($327.3 million), with a
maximum total facility limit of ZAR3.6 billion ($453.2 million). Anooraq will
utilise this extended facility to fund the Brakfontein and MPH Delta 80 UG2
expansion projects, including the construction of a new UG2 concentrator
plant at Bokoni Platinum Mine.
- The Consolidated Debt Facility will be available to Anooraq for nine years
terminating on 31 December 2020 and will attract a variable interest rate.
The variable interest rate will be determined by adding a fixed margin to 3-
month JIBAR. The Consolidated Debt Facility will attract a reduced interest
rate during the initial term (comprising the capital intensive phase of the
growth operations at Bokoni Platinum Mine through to 2016) and escalating at
an increased rate depending on the amount owing by Anooraq under the
Consolidated Debt Facility over the funding period.
- The weighted average interest rate under the Consolidated Debt Facility
will escalate from 0.5% to approximately 15% up to 2020, thereby
substantially reducing Anooraq`s current cost of debt (approximately 16%).
- There will be no fixed repayment term for the Consolidated Debt Facility
during the peak funding years while the Brakfontein and MPH Delta 80 UG2
expansion projects are still in their ramp-up phase through to 2016. Anooraq
will be required to fully repay the Consolidated Debt Facility to Amplats by
31 December 2020. There will be no penalty for early repayment. Anooraq will
be required to reduce the Consolidated Debt Facility owing to Amplats to an
outstanding balance (including capitalised interest) of ZAR1 billion ($125.9
million) as at 31 December 2018, and ZAR0.5 billion ($63 million) as at 31
December 2019.
- Anooraq will be obliged to utilise 90% of its attributable share of free
cash flows generated from Bokoni Platinum Mine operations to service the
Consolidated Debt Facility and 10% of such free cash flow will be available
to Anooraq.
- Anooraq will not be required to effect any mandatory refinancing of the
Consolidated Debt Facility during the debt term through to 2020.
- Bokoni Platinum Mine will extend its existing concentrate purchase
agreement with Amplats on the same terms and conditions for a period of eight
years, terminating on 31 December 2020.
- Anooraq will retain its existing option to acquire an ownership interest in
Amplats` Polokwane smelter complex on terms agreed between the parties.
- Amplats will provide Anooraq with a working capital facility at JIBAR plus
4% per annum of up to ZAR90 million ($11.3 million) (including capitalised
interest) to fund its general and administrative expenses. This will ensure
that Anooraq has sufficient working capital to cover its corporate overheads
through to 2015. The working capital facility is fully repayable by 31
December 2018.
- Amplats will continue to hold the B preference shares issued at the time of
the original transaction (representing a 26% interest in Anooraq) until 31
December 2018. Atlatsa Holdings (Proprietary) Limited, being the 51% Black
Economic Empowerment majority shareholder in Anooraq, will also extend its
shareholding in Anooraq through to 31 December 2018.
- Anooraq will not issue any new equity in terms of the proposed transaction
and its fully diluted shares in issue will remain at 445 million shares in
issue.
The implementation of the transaction will be subject, inter alia, to the
fulfillment of the following conditions precedent:
- conclusion of the requisite definitive agreements;
- approval of the definitive agreements by the Amplats Board and Anooraq
special committee of independent directors and board of directors;
- approval of the transaction by the relevant regulatory authorities
including the TSX Venture Exchange, Johannesburg Stock Exchange, NYSE Amex
and the South African Department of Mineral Resources; and
- approval by Anooraq shareholders, where required, in a general meeting.
There were no other significant events after the reporting date
39. EMPLOYEE COSTS
Employee costs included in loss for the year are as follows:
2011 2010 2009
Salaries and wages and other 90,109,090 82,309,144 39,994,754
benefits
Retirement benefit costs 442,633 372,975 296,442
Medical aid contributions 17,853 14,088 7,434
Employment termination costs 44,323 56,486 1,793,791
Share-based compensation - equity- 1,991,277 2,333,450 2,185,812
settled
Share-based compensation - cash- (437,152) 947,176 145,199
settled
Bonus settled via shares - - 895,625
92,168,024 86,033,319 45,319,057
40. GROUP ENTITIES
The following are the shareholdings of the Company in the various group
entities:
Company Country of
Incorporation
2011 2010
N1C Resources Cayman Islands 100 % 100 %
Incorporation
Anooraq Minera Mexicana Mexico - 100 %
N2C Resources Cayman Islands 100 % 100 %
Incorporation *
Plateau Resources South Africa 100 % 100 %
(Proprietary) Limited *
Bokoni Holdings South Africa 51 % 51 %
(Proprietary) Limited *
Bokoni Mine (Proprietary) South Africa 51 % 51 %
Limited *
Boikgantsho (Proprietary) South Africa 51 % 51 %
Limited *
Kwanda (Proprietary) South Africa 51 % 51 %
Limited *
Ga-Phasha (Proprietary) South Africa 51 % 51 %
Limited *
Lebowa Platinum Mine South Africa 51 % 51 %
Limited * #
Middlepunt Hill South Africa 51 % 51 %
Management Services
(Proprietary) Limited * #
- Entity has been
liquidated
*- Indirectly held
#- These entities are
dormant
41. HEADLINE AND DILUTED HEADLINE EARNINGS PER SHARE
Headline earnings per share is calculated by dividing headline earnings
attributable to owners of the Company by the weighted average number of
ordinary shares in issue during the period. Diluted headline earnings per
share is determined by adjusting the headline earnings attributable to owners
of the Company and the weighted average number of ordinary shares in issue
during the period, for the effects of all dilutive potential ordinary shares,
which comprise share options granted to employees.
Headline earnings per share
The calculation of headline loss per share for the year ended 31 December
2011 of 19 cents (2010: 12 cents; 2009: 12 cents) is based on headline loss
of $81,589,746 (2010: $51,331,108; 2009: $35,600,870) and a weighted average
number of shares of 424,783,603 (2010: 424,665,314; 2009: 305,971,455).
The following adjustments to loss attributable to owners of the Company were
taken into account in the calculation of headline loss attributable to owners
of the Company:
2011 2010 2009
Loss attributable to (81,928,814) (51,721,410) (35,531,631)
shareholders of the Company
Loss/(gain) on disposal of 339,068 45,179 (69,239)
property, plant and equipment
Impairment - 345,123 -
Headline loss attributable to (81,589,746) (51,331,108) (35,600,870)
owners of the Company
Diluted headline earnings per share
The calculation of diluted headline loss per share for the year ended 31
December 2011 of 19 cents (2010: 12 cents; 2009: 12 cents) is based on
headline loss of $81,589,746,(2010: $51,331,108; 2009: $35,600,870; 2008:
$13,975,875) and a diluted weighted average number of shares of 424,783,603
(2010: 424,665,314; 2009: 305,971,455).
At 31 December 2011, 2010 and 2009 share options were excluded in determining
diluted weighted average number of common shares as their effect would have
been anti-dilutive.
There are no reconciling items between headline loss and diluted headline
loss.
Refer to note 30 for the calculation of the weighted average number of
shares.
Johannesburg
30 March 2012
JSE Sponsor
Macquarie First South Capital (Pty) Limited
Issued on behalf of Anooraq Resources Corporation
On behalf of Anooraq
Joel Kesler
Executive: Corporate Development
Office: +27 11 779 6800
Mobile: +27 82 454 5556
Russell and Associates
Nicola Taylor
Office: +27 11 880 3924
Mobile: +27 82 927 8957
Macquarie First South Capital
Annerie Britz/ Yvette Labuschagne/ Melanie de
Nysschen
Office: +27 11 583 2000
Date: 30/03/2012 15:00:03 Produced by the JSE SENS Department.
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