| Mon 18 Feb 2002, 0:00 | | Western Areas Limited - Report For The Fourth |
|
WESTERN AREAS LIMITED
Registration Number 1959/003209/06
Incorporated in the Republic of South Africa
ISIN No: ZAE000016549
Share Code: WAR
REPORT FOR THE FOURTH QUARTER AND YEAR ENDED 31 DECEMBER 2001
* Profit from gold up 264%
* Gold production up 10%
* Recovered grade improves by 16%
* Cash costs US$173/oz
LETTER TO SHAREHOLDERS
South Deep Joint Venture has achieved excellent results for the December
quarter. Gold revenue has increased by 46% to R148.9 million. Whilst the
increase in the gold price received for the quarter and the devaluation of
the rand contributed to this improvement, a significant impact was made by
the 10% increase in gold output from 1 354kg to 1 490kg and the hedging
profits received on the exercising of options bought as part of the new
derivative transaction.
Profits from gold increased by 264%, from R11.7 million to R42.6 million.
Production costs decreased from US$221 per ounce to US$173 per ounce, with
the recovered grade improving from 7.16 grams per tonne, to 8.3 grams per
tonne. Production costs in rands improved from R59 442/kg to R56 174/kg.
The improvement in recovered grade is a result of focused efforts on ore
reserve management and grade control programs.
The attributable profit/(loss) after taxation fell to (R5.9 million) as a
result of R58.6 million non-cash costs and non-recurring cash costs of R37.8
million.
Capital expenditure at the South Deep project amounted to R145.1 million for
the quarter.
The advances to Durban Roodepoort Deep, Limited were repaid in December
2001. Payment was made by means of a cash consideration of R33 million as
well as listed shares in Randgold & Exploration Company Limited, JCI Gold
Limited and Consolidated African Mines Limited.
The South Deep asset has been refinanced using a long-dated derivative
structure, based upon the selling of options on a portion of Western Areas'
50% share of South Deep's gold production over 12.5 years. This arrangement
raised cash of US$104 million. Work is ongoing to increase the facility and
thereby raising approximately US$21 million, to increase the total to US$125
million.
The derivative structure, although conservative, will unlock value and allow
for the payment of special dividends, will provide for ongoing capital
development expenditure and will allow shareholders to participate in this
great asset for its full life.
RB Kebble JF Brownrigg
Chief Executive Managing Director
Johannesburg
18 February 2002
PRODUCTION RESULTS
Quarter Quarter Year Year
ended ended ended ended
31.12.01 30.09.01 31.12.01 31.12.00
METRIC
Ore milled,
tonnes (000)
Western Areas
section 127 135 469 345
South Deep section 53 54 206 204
Surface material - - 3 60
Total ore milled 180 189 678 609
Yield, ounces per
tonne
Western Areas
section 7.07 7.20 7.74 10.43
South Deep section 8.74 9.28 8.20 7.00
Surface material - - 2.08 0.57
Average grade
recovered 8.30 7.16 7.83 8.33
Gold production,
kilograms
Western Areas
section 897 971 3 631 3 599
South Deep section 458 501 1 685 1 426
Surface material - - 7 34
Total gold
production 1 355 1 472 5 323 5 059
Work-in-progress 135 (118) (17) 4
Total gold declared 1 490 1 354 5 306 5 063
PRODUCTION RESULTS (continued)
Quarter Quarter Year Year
ended ended ended ended
31.12.01 30.09.01 31.12.01 31.12.00
IMPERIAL
Ore milled,
tons (000)
Western Areas
Section 140 149 518 380
South Deep section 58 60 226 224
Surface material - - 3 66
Total ore milled 198 209 747 670
Yield, ounces per
ton
Western Areas
section 0.206 0.210 0.226 0.304
South Deep section 0.254 0.269 0.239 0.204
Surface material - - 0.068 0.017
Average grade
recovered 0.242 0.209 0.228 0.243
Gold production,
ounces
Western Areas
Section 28 839 31 218 116 727 115 694
South Deep
section 14 725 16 108 54 171 45 831
Surface material - - 212 1 093
Total gold
production 43 564 47 326 171 110 162 618
Work-in-progress 4 340 (3 794) (531) 129
Total gold
declared 47 904 43 532 170 579 162 747
CONSOLIDATED INCOME STATEMENT
US$ million
Quarter Quarter Year
Ended ended ended Year
31.12.01 30.09.01 31.12.01 ended
Notes Un- Un- Un- 31.12.00
audited audited audited Audited
Revenue from
gold 14.8 12.2 49.5 47.4
At spot 14.1 12.2 48.0 46.6
Hedging profits 0.7 - 1.5 0.8
Costs and other
expenses (10.5) (10.8) (40.1) (36.8)
Production costs (8.3) (9.6) (33.9) (30.9)
Non-cash items (2.2) (1.2) (6.2) (5.9)
Profit from gold 4.3 1.4 9.4 10.6
Plus 1.2 3.4 10.4 23.4
Sundry revenue 2.5 0.7 3.9 2.8
Exchange loss 1 (3.2) - (3.8) -
Net interest
received 1.9 2.7 10.3 20.6
Less (4.4) (1.7) (9.7) (12.0)
Net amortised
premiums on put
and call
options 1/2 (2.6) - (3.0) (2.8)
Administration costs
and amortisation
of corporate
assets (1.6) (1.5) (5.9) (6.9)
Exploration and
new Business - - (0.2) (1.0)
Prestea mine
closure costs (0.2) (0.2) (0.6) (1.3)
Operating profit 1.1 3.1 10.1 22.0
Non recurring
costs (3.7) - (4.3) (3.3)
(Loss)/profit
before
taxation (2.6) 3.1 5.9 18.7
Taxation 2.2 (0.9) (0.7) (6.7)
Normal taxation (0.4) (0.6) (2.6) (6.9)
Deferred taxation 2.6 (0.3) 1.9 0.2
Attributable to
outside
shareholders (0.2) - (0.3) 0.1
Attributable
(loss)/profit
after taxation (0.6) 2.2 4.9 12.1
Headline (loss)/
earnings
per share
- cents 0 2 6 13
(Loss)/earnings per
share - cents 0 2 5 12
Number of shares in
issue (million) 105.4 105.4 105.4 105.4
CONSOLIDATED INCOME STATEMENT (CONTINUED)
R million
Quarter Quarter Year
ended ended ended Year
31.12.01 30.09.01 31.12.01 ended
Notes Un Un Un 31.12.00
audited audited audited Audited
Revenue
from gold 148.9 102.3 428.1 329.1
At spot 142.3 102.3 414.9 323.4
Hedging profits 6.6 - 13.2 5.7
Costs and other
expenses (106.3) (90.6) (346.4) (255.2)
Production
costs (83.7) (80.5) (292.6) (214.0)
Non-cash items (22.6) (10.1) (53.8) (41.2)
Profit from gold 42.6 11.7 81.7 73.9
Plus 12.6 27.6 90.6 162.8
Sundry revenue 25.4 5.9 34.0 19.7
Exchange loss 1 (32.5) - (32.5) -
Net interest
received 19.7 21.7 89.1 143.1
Less (44.2) (14.1) (83.4) (83.1)
Net amortised
premiums on put
and call
options 1/2 (26.1) - (26.1) (19.6)
Administration
costs and
amortisation
of corporate
assets (16.3) (12.6) (50.7) (47.4)
Exploration
and new
business - (0.1) (1.7) (6.8)
Prestea mine
closure costs (1.8) (1.4) (4.9) (9.3)
Operating
profit 11.0 25.2 88.9 153.6
Non recurring
costs (37.8) - (37.8) (22.7)
(Loss)/profit
before
taxation (26.8) 25.2 51.1 130.9
Taxation 23.2 (8.0) (6.5) (46.7)
Normal
taxation (3.5) (5.3) (22.5) (48.2)
Deferred
taxation 26.7 (2.7) 16.0 1.5
Attributable to
outside
shareholders (2.3) (0.2) (2.5) 0.4
Attributable
(loss)/profit
after
taxation (5.9) 17.0 42.1 84.6
Headline (loss)/
earnings per
share
- cents (15) 16 52 90
(Loss)/earnings
per share
- cents (5) 16 40 80
Number of shares
in issue
(million) 105.4 105.4 105.4 105.4
Notes
1 Western Areas has implemented a derivative structure, based upon the
selling of options on a portion of Western Areas' 50% share of South Deep's
gold production. Option premiums have been received upfront and payment of
premiums for the bought options have been deferred. The accounting
treatment has resulted in the raising of a deferred expense asset and a
deferred income liability in respect of premiums payable and received on the
options. Premium income and expenses are amortised to the Income Statement
over the period of the structure (12.5 years). Exchange gains/losses on
this transaction are reflected in the Income Statement.
2 There has been a change in accounting policy to recognise income and
expenditure relating to option premiums on instruments existing in the prior
period, in line with the accounting treatment for the new derivative
transaction (See note 1). The change in accounting policy has resulted in a
prior period adjustment of R29 million to opening retained income. The
impact on the current period is R11 million
net premium income, included in net amortised premiums on put and call
options.
CONSOLIDATED BALANCE SHEET
US$ million
Quarter Quarter
ended ended Year
31.12.01 30.09.01 ended
Un Un 31.12.00
Notes audited audited Audited
Capital Employed
Shareholders'
equity 4 214.5 288.5 337.8
Outside
shareholders'
interests 1.6 1.9 2.3
Deferred
taxation 29.8 45.2 52.6
Deferred
premium
income 3 111.3 - -
Long term
liabilities 3 133.1 2.0 2.4
490.3 337.6 395.1
Represented by
Mining assets 218.2 273.2 300.6
Deferred
premium costs 3 130.5 - -
Listed
investments 2 11.2 2.0 -
Unlisted
investments 0.1 0.1 0.3
Long-term
advances 3.3 4.6 8.1
Net current
assets 127.0 57.7 86.1
Current assets 135.6 74.1 105.3
Inventories 0.9 2.1 1.8
Receivables 3.7 4.4 10.8
Loan to JCI
Gold Limited 1 38.8 47.8 38.0
Short-term
cash advances 2 - 16.1 17.1
Cash and
short-term funds 92.2 3.7 37.6
Current
liabilities 8.6 16.4 19.2
Payables
and provisions 8.6 10.8 19.2
Short-term
borrowings - 5.6 -
490.3 337.6 395.1
CONSOLIDATED BALANCE SHEET (CONTINUED)
R million
Quarter Quarter
ended ended Year
31.12.01 30.09.01 ended
Un Un 31.12.00
Notes audited audited Audited
Capital Employed
Shareholders'
equity 4 2 567.5 2 604.2 2 553.9
Outside
shareholders'
interests 19.6 17.4 17.4
Deferred
taxation 356.7 408.3 397.7
Deferred
premium
income 3 1 332.7 - -
Long term
liabilities 3 1 593.4 18.3 18.3
5 869.9 3 048.2 2 987.3
Represented by
Mining assets 2 612.8 2 466.3 2 272.9
Deferred
premium costs 3 1 562.7 - -
Listed
investments 2 133.5 18.1 -
Unlisted
investments 1.6 1.1 2.2
Long-term
advances 39.3 41.7 61.6
Net current
assets 1 520.0 521.0 650.6
Current assets 1 623.1 668.8 796.0
Inventories 10.3 19.3 13.6
Receivables 44.7 39.7 81.4
Loan to JCI
Gold Limited 1 464.0 431.4 287.2
Short-term
cash advances 2 - 145.1 129.5
Cash and
short-term funds 1 104.1 33.3 284.3
Current
liabilities 103.1 147.8 145.4
Payables
and provisions 103.1 97.5 145.4
Short-term
borrowings - 50.3 -
5 869.9 3 048.2 2 987.3
Notes
1 The loan to JCI Gold Limited, repayable on 31 March 2002, is secured by a
pledge of marketable securities and carries interest at prime overdraft rate
plus 1.5%.
2 The cash advances to Durban Roodepoort Deep, Limited, amounting to R145.1
million as at the end of September 2001 have been repaid in December 2001.
Payment was made by means of a cash consideration of R33 million as well as
listed shares in Randgold & Exploration Company Limited (7.2 million), JCI
Gold Limited (6.3 million) and Consolidated African Mines Limited (16.1
million). The listed shares received have a current market value of R168
million.
3 Refer to note 1 of the Income Statement.
4 Refer to note 2 of the Income Statement.
HEDGE BOOK
The following table represents the new hedge book as at 31 December 2001:
Years to 31 December 2002 2003 2004 2005
Put options bought
Amount hedged (oz 000) 148 204 210 215
Average price ($/oz) 318 278 268 278
Call options sold
Amount hedged (oz 000) 95 136 162 166
Average price ($/oz) 319 279 269 279
Call options sold
Amount hedged (oz 000) 39 54 65 66
Average price ($/oz) 279 289 304 319
Call options bought
Amount hedged (oz 000) 53 73 87 89
Average price ($/oz) 269 279 289 299
(continued):
Years to 31 December 2006 2007 2008 2009
Put options bought
Amount hedged (oz 000) 205 206 214 209
Average price ($/oz) 288 288 288 293
Call options sold
Amount hedged (oz 000) 157 158 165 161
Average price ($/oz) 289 289 289 294
Call options sold
Amount hedged (oz 000) 63 63 66 64
Average price ($/oz) 334 349 364 379
Call options bought
Amount hedged (oz 000) 85 85 89 87
Average price ($/oz) 309 324 334 349
(continued):
Years to 31 December 2010 2011 2012 2013
Put options bought
Amount hedged (oz 000) 214 200 206 205
Average price ($/oz) 303 313 313 323
Call options sold
Amount hedged (oz 000) 165 154 158 158
Average price ($/oz) 304 314 314 324
Call options sold
Amount hedged (oz 000) 66 62 63 63
Average price ($/oz) 394 409 424 439
Call options bought
Amount hedged (oz 000) 89 83 86 85
Average price ($/oz) 359 374 399 414
(continued):
Years to 31 December 2014 Total
Put options bought
Amount hedged (oz 000) 98 2 534
Average price ($/oz) 333
Call options sold
Amount hedged (oz 000) 76 1 911
Average price ($/oz) 334
Call options sold
Amount hedged (oz 000) 30 764
Average price ($/oz) 454
Call options bought
Amount hedged (oz 000) 41 1 302
Average price ($/oz) 429
The following table represents the existing hedge book as at 31 December
2001:
Years to 31 December 2002 2003 2004 2005
Fixed forward contract
Amount hedged (oz 000) 140 38 42 21
Average price ($/oz) 260 260 260 260
Fixed forward contract
Amount hedged (oz 000) 105 - - -
Average price (R/oz) 1 822 - - -
Call options sold
Amount hedged (oz 000) 35 40 42 42
Average price ($/oz) 325 325 325 325
Call options bought
Amount hedged (oz 000) 70 76 77 38
Average price ($/oz) 420 420 420 420
Gold lease rate swaps
Amount hedged - - - 214
Forward exchange contracts
Amount $ (mil) 92 25
Exchange rate (Eur/$) 0.9564 0.9596
(continued)
Years to 31 December 2006 2007 2008 2009 total
Fixed forward contract
Amount hedged (oz 000) - - 84 84 409
Average price ($/oz) - - 280 280
Fixed forward contract
Amount hedged (oz 000) - - - - 105
Average price (R/oz) - - - -
Call options sold
Amount hedged (oz 000) 42 42 42 42 327
Average price ($/oz) 325 325 325 325
Call options bought
Amount hedged (oz 000) - - - - 261
Average price ($/oz) - - - -
Gold lease rate swaps
Amount hedged - 157 - 126 497
CONSOLIDATED CASH FLOW STATEMENT
US$ million
Quarter Quarter Year
Ended ended ended Year
31.12.01 30.09.01 31.12.01 ended
Un- Un- Un- 31.12.00
audited audited audited Audited
Cash flow from
operating
activities
Cash from/
(utilised in)
operations 3.5 0.9 8.9 (5.4)
Interest paid (0.1) - (0.1) (1.7)
Taxation paid (2.5) - (9.7) (1.1)
Net cash generated
by/(utilised in)
operating
activities 0.9 0.9 (0.9) (8.2)
Investing
activities
Capital expenditure
on the South Deep
project (14.4) (13.2) (45.9) (38.0)
Investment in
listed shares (11.5) - (13.5) -
Proceeds on sale
of assets - - 0.2 2.3
Increase in loan
to JCI (1.7) (7.8) (9.5) (7.7)
Decrease in
advances 14.8 - 19.6 3.1
Increase in long-term
advances 0.2 - 0.3 -
Decrease in short-term
advances - - - 50.1
Interest received - 0.1 1.2 8.0
Dividends received - - - 0.1
Net cash (utilised in)/
generated by
investing
activities (12.6) (20.9) (47.6) 17.9
Financing
activities
(Decrease)/increase
in short-term
loans (5.0) 6.0 - -
Decrease in
long-term
liabilities - - - (8.7)
Income from
derivative
transaction 104.2 - 104.2 -
Cash distribution - - - (87.4)
Net cash
generated by/
(utilised) in
financing
activities 99.2 6.0 104.2 (96.1)
Net cash generated/
(utilised) 87.5 (14.0) 55.7 (86.4)
Opening balance
of cash
and cash
equivalents 3.7 18.7 37.6 143.5
Translation
adjustment 1.0 (1.0) 1.1 (19.5)
Closing balance of
cash and cash
equivalents 92.2 3.7 92.2 37.6
CONSOLIDATED CASH FLOW STATEMENT (continued)
R million
Quarter Quarter Year
ended ended ended Year
31.12.01 30.09.01 31.12.01 ended
Un- Un- Un- 31.12.00
audited audited audited Audited
Cash flow from
operating
activities
Cash from/
(utilised in)
operations 35.0 7.4 77.2 (37.7)
Interest paid (0.6) - (0.6) (11.7)
Taxation paid (25.2) - (83.6) (7.4)
Net cash generated
by/(utilised in)
operating
activities 9.2 7.4 (7.0) (56.8)
Investing activities
Capital expenditure
on the South
Deep project (145.1) (110.3) (396.3) (263.7)
Investment in
listed shares (116.3) - (116.3) -
Proceeds on sale of
assets - - 1.7 15.8
Increase in loan
to JCI (16.8) (65.5) (82.2) (53.4)
Decrease in
advances 149.3 - 169.1 21.8
Increase in
long-term
advances 2.4 - 2.4 -
Decrease in
short-term
advances - - - 347.4
Interest received - 0.9 10.0 55.4
Dividends received - - - 0.4
Net cash
(utilised in)/
generated by
investing
activities (126.5) (174.9) (411.6) 123.7
Financing activities
(Decrease)/increase
in short-term
loans (50.3) 50.3 - -
Decrease in
long-term
liabilities - - - (60.2)
Income from
derivative
transaction 1 238.4 - 1 238.4 -
Cash distribution - - - (606.0)
Net cash generated
by/(utilised) in
financing
activities 1 188.1 50.3 1 238.4 (666.2)
Net cash generated/
(utilised) 1 070.8 (117.2) 819.8 (599.3)
Opening balance
of cash
and cash
equivalents 33.3 150.5 284.3 883.6
Translation
adjustment
Closing balance
of cash
and cash
equivalents 1 104.1 33.3 1 104.1 284.3
STATEMENT OF CHANGES IN SHAREHOLDER'S EQUITY
Number
of
ordinary
shares
issued Share Share Retained
and paid capital premium earnings Total
Millions Rm Rm Rm Rm
Group and
company
Balance at
1 January
2001 105.4 105 2 387 62 2 554
Attributable
profit
for the
year 0 0 0 42 42
Prior year
adjustments (29) (29)
Balance at
31 December
2001 105.4 105 2 387 75 2 567
COST AND REVENUE PER UNIT OF PRODUCTION
Quarter Quarter Year Year
ended ended ended ended
31.12.01 30.09.01 31.12.01 31.12.00
R R R R
Metric
Per tonne milled
Production costs 465 426 432 352
Other expenses
and non-cash
costs 126 53 79 68
Total costs 591 479 511 420
Per kilogram produced
Production costs 56 174 59 442 55 145 42 276
Other expenses
and non-cash
costs 15 167 7 439 10 139 8 139
Total costs 71 341 66 881 65 284 50 415
Gold price received (spot)
Per tonne
milled 791 541 612 532
Per kilogram
produced 95 503 75 548 78 195 63 888
Capital commitment
at end of period
(R million)/
($ million) 95 96 95 66
Conversion rates used:
US$ 1 = Rands
Average rate
for period 10.1000 8.3728 8.6425 6.9362
Rate at end
of period 11.9700 9.0276 11.9700 7.5605
COST AND REVENUE PER UNIT OF PRODUCTION (continued)
Quarter Quarter Year Year
Ended ended ended ended
31.12.01 30.09.01 31.12.01 31.12.00
US$ US$ US$ US$
Imperial
Per ton milled
Production
costs 42 46 45 46
Other expenses
and non-cash
costs 11 6 8 9
Total costs 53 52 53 55
Per kilogram/
ounce produced
Production
costs 173 221 199 190
Other expenses
and non-cash
costs 47 28 36 36
Total costs 220 249 235 226
Gold price
received (spot)
Per ton milled 71 59 64 69
Per kilogram/
ounce produced 294 281 281 286
Capital commitment
at end of period
(R million)/
($ million) 8 11 8 9
Conversion rates used:
US$ 1 = Rands
Average rate
for period 10.1000 8.3728 8.6425 6.9362
Rate at end
of period 11.9700 9.0276 11.9700 7.5605
SOUTH DEEP SHAFT SINKING
Main Shaft
Quarter ended Quarter ended
31.12.01 30.09.01
Sinking (metres) 0 49
Metres per
calendar day 0.00 0.53
Distance below
collar (metres) 2 948 2 948
Days on development 92 days - 50 days -
110A lev devel. 110, 110A lev devel.
Cubic metres
broken in dev.
(Plan) 6 725 3 469
Cubic metres
broken in dev.
(Actual) 7 350 4 591
Metres/Calendar
day sink
(excl dev. days) 0.00 1.17
SOUTH DEEP SHAFT SINKING (CONTINUED)
Vent Shaft
Quarter ended Quarter ended
31.12.01 30.09.01
Sinking (metres) 0 0
Metres per calendar day 0.00 0.00
Distance below collar
(metres) 2 759.5 2 759.5
Days on development 92 days - 92 days -
100 lev devel. 94, 100 lev devel.
Cubic metres broken
in dev. (Plan) 5 883 4 004
Cubic metres broken
in dev. (Actual) 3 130 1 683
Metres/Calendar
day sink
(excl dev. Days) 0.00 0.00
SUMMARISED DEVELOPMENT RESULTS
Total Primary Reef Primary Reef
Development Development Sampled
Quarter Ending (m) (m) (m)
31.12.2001 1 808 11.4 21.0
30.09.2001 1 286 20.2 0.0
Year to
31.12.2001 6 051 228.5 224.0
SUMMARISED DEVELOPMENT RESULTS (CONTINUED)
Channel Channel
Width Value Channel
Quarter Ending (m) (g/t) (cm-g/t)
31.12.2001 331 11.8 3 906
30.09.2001 0 0.0 0
Year to
31.12.2001 287 5.9 1 693
DEVELOPMENT
Metric
Quarter ended Year to date
31.12.01 30.09.01 31.12.01
Advance on
reef and
country
rock (metres) (metres) (metres)
Ventersdorp
Contact
Section 1 168 856 2 846
Upper
Elsburg
Section 640 430 3 205
Total metres 1 808 1 286 6 051
DEVELOPMENT (CONTINUED)
Imperial
Quarter ended Year to date
31.12.01 30.09.01 31.12.01
Advance on
reef and
country
rock (feet) (feet) (feet)
Ventersdorp
Contact
Section 3 833 2 808 9 337
Upper
Elsburg
Section 2 100 1 411 10 515
Total metres 5 933 4 219 19 852
WESTERN AREAS LIMITED
Registration Number 1959/003209/06
Incorporated in the Republic of South Africa
ISIN No: ZAE000016549
Share Code: WAR
PO Box 61719, Marshalltown 2107
Telephone: +27(11) 688-5000
Fax: +27(11) 834-9195
Office of South African Transfer Secretaries
Mercantile Registrars Limited
PO Box 1053, Johannesburg, 2001
www.westernareas.co.za
For further details please contact
Brett Kebble (CEO)
+27 11 688-5074
+27 (0) 83-633-1803
John Brownrigg (MD)
+27 11 688 5076
+27 (0)83 653 4043
WESTERN AREAS PLANS SPECIAL DIVIDEND AS GOLD PROFIT SOARS AND SOUTH DEEP
PROJECT NEARS COMPLETION
Johannesburg, 18 February - Western Areas increased its profit from gold
by 264% to R42.6 million in the December quarter on the back of a strong
performance by the South Deep joint venture.
While the improvement was partly attributable to the increase in the gold
price and the devaluation of the rand, a 10% increase in gold output and
hedging profits from the derivative transaction concluded during the
quarter, also made a significant contribution.
Operationally, gold production rose to 1 490 kg while production costs were
reduced from US$221 per ounce to US$173 per ounce (or from R59 442 per kg to
R56 174 per kg) and the recovered grade improved from 7.16 grams per tonne
to 8.3 grams per tonne. Managing director John Brownrigg said the grade
improvement was the result of focused attention to ore reserve management
and grade control programmes.
Brownrigg also noted that the South Deep project, designed to exploit the
world's single largest gold reserve, was moving rapidly to completion. The
new metallurgical plant is scheduled for commissioning in May this year and
the new shaft system is due to be completed by August 2003. The development
of the underground infrastructure is on target and the trackless operations
continue to improve. Capex on the R5 billion project will peak this year at
R820 million.
When completed, the South Deep project will be a major low-cost, long-life
producer with an annual gold output of some 700 000 ounces. During the past
quarter, Western Areas announced that, after considering a number of
approaches from prospective buyers, it had decided to retain its 50%
interest in South Deep.
At the same time Western Areas said it was refinancing the asset through a
long-dated derivative structure, based on the sale of options on its share
of South Deep's gold production over 12.5 years, in order to release value
for shareholders. The transaction raised US$104 million and the facility
is currently being raised further to increase the total to US$125 million.
Chief executive Brett Kebble said although the derivative structure was
conservative, it would not only provide for Western Areas' share of South
Deep's ongoing capex but would also allow for the payment of special
dividends. Details of the proposed distribution will be announced shortly.
Western Areas also announced that the loan to DRD had been repaid in full
during the quarter.
Issued by du Plessis Associates on behalf of Western Areas Limited. dPA
contact Kathy du Plessis on Tel : +27 11 728 4701, cell : +27 (0) 83 266
5847 or e-mail: westernareas@dpapr.com
