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Western Areas Limited: Quarterly results ended 30 June 2002
Western Areas Limited
Registration number 1959/003209/06
Incorporated in the Republic of South Africa
ISIN: ZAE000016549 SHARE CODE: WAR
Quarterly results ended 30 June 2002
Highlights
* Significant hedge restructuring
* New gold plant commissioned
* Gold production steady
* Profit after tax R32.9 million
* Earnings per share 31 cents
CONSOLIDATED INCOME STATEMENT
US$ Million R Million
Quarter Quarter Year Quarter Quarter Year
ended ended ended ended ended ended
30.6.02 31.3.02 31.12.01 30.06.02 31.03.02 31.12.01
Un- Un- Audited Note
audited audited Unaudited Unaudited Audited
12.8 12.7 47.9 Revenue from gold at spot 140.4 145.9 414.2
(9.5) (7.9) (39.9) Costs and other expenses (104.9) (91.5) (345.2)
(8.3) (7.2) (33.8) Production costs (91.3) (83.2) (292.2)
(1.2) (0.7) (6.1) Non-cash items (13.6) (8.3) (53.0)
3.3 4.8 8.0 Profit from gold 35.5 54.4 69.0
2.6 2.6 13.7 Plus 28.7 29.6 118.0
0.4 0.6 3.4 Sundry revenue 4.4 7.0 29.3
2.2 2.0 10.3 Net interest receipts 24.3 22.6 88.7
(1.2) (0.9) (6.6) Less (13.0) (10.8) (57.1)
Administration costs and
amortisation of corporate
(1.2) (1.0) (5.7) assets (13.0) (11.8) (49.5)
- 0.1 (0.3) Exploration and new business - 1.0 (2.8)
- - (0.6) Prestea mine closure costs - - (4.8)
Operating profit before
4.7 6.5 15.1 derivative transactions 51.2 73.2 129.9
(4.6) (13.0) (4.5) Less (51.3) (149.5) (38.8)
Net amortised premiums on
(8.5) (6.1) (1.9) put and call options 1 (93.3) (69.9) (16.6)
(1.1) (1.9) 0.7 Hedging (loss)/profit 1 (12.2) (21.9) 6.2
5.0 (5.0) (3.3) Exchange profit/(loss) 1 54.2 (57.7) (28.4)
(Loss)/profit before
0.1 (6.5) 10.6 non-recurring costs (0.1) (76.3) 91.1
4.2 (0.2) (4.3) Non-recurring income/(costs) 2 46.1 (2.4) (37.4)
4.3 (6.7) 6.3 profit/(loss) before taxation 46.0 (78.7) 53.7
(0.8) 3.5 (2.2) Taxation (9.0) 41.3 (18.4)
(0.9) (0.7) (1.0) Normal taxation (10.4) (7.5) (8.4)
0.1 4.2 (1.2) Deferred taxation 1.4 48.8 (10.0)
Attributable to
(0.4) - (0.3) outside shareholders (4.1) (0.6) (2.3)
Attributable profit/(loss)
3.1 (3.2) 3.8 after taxation 32.9 (38.0) 33.0
Earnings/(loss) per
3 (3) 4 share - cents 31 (36) 34
Number of shares in
105.4 105.4 105.4 issue (million) 105.4 105.4 105.4
Notes:
1. The derivative structures in place are based upon options bought and sold.
Option premium income and expenses are amortised to the income statement over
the period of the options. Exchange gains/losses on the premium liability and
cash balances are reflected in the income statement.
2. Non-recurring income relates mainly to a profit on sale of Golden Star
Resources Limited shares by Barnato Exploration Limited of R34 million and a
revaluation of the CAWMS liability at the South Deep Mine of R13 million.
CONSOLIDATED BALANCE SHEET
US$ Million R Million
Quarter Quarter Year Quarter Quarter Year
ended ended ended ended ended ended
30.6.02 31.3.02 31.12.01 30.6.02 31.3.02 31.12.01
Un- Un- Audited
audited audited Unaudited Unaudited Audited
Assets
419.5 381.3 363.4 Non-current assets 4,310.6 4,312.6 4,350.0
272.7 237.5 217.9 Mining assets 2,801.9 2,685.8 2,608.4
131.1 128.1 130.6 Deferred premium costs 1,347.4 1,449.0 1,563.8
11.3 11.8 11.2 Listed investments 116.4 133.5 133.5
Loan to Randfontein
1.9 1.7 1.6 Estates Limited 19.5 19.5 19.5
2.5 2.2 2.1 Other long-term assets 25.4 24.8 24.8
140.6 135.8 137.2 Current assets 1,445.0 1,535.8 1,642.2
2.8 2.0 0.9 Inventories 28.7 22.3 10.3
6.0 4.4 5.3 Receivables 61.7 50.5 63.8
Loan to JCI Gold Ltd -
45.6 39.8 36.7 Western Areas Ltd 468.9 450.1 438.5
Loan to JCI Gold Ltd -
6.8 3.4 2.1 Barnato Exploration Ltd 69.8 38.4 25.5
79.4 86.2 92.2 Cash and short-term funds 815.9 974.5 1,104.1
560.1 517.1 500.6 Total assets 5,755.6 5,848.4 5,992.2
250.5 224.3 215.1 Equity 2,574.0 2,536.8 2,574.5
248.3 222.6 213.5 Shareholders` equity 2,550.8 2,517.6 2,555.9
Outside shareholders`
2.2 1.7 1.6 interests 23.2 19.2 18.6
298.8 86.4 278.2 Non-current liabilities 3,070.4 3,239.3 3,329.7
32.3 29.4 31.9 Deferred taxation 331.2 332.6 381.3
Provision for post-retirement
0.5 1.7 1.7 medical benefits 6.4 20.1 20.1
Provision for environmental
1.0 0.9 0.8 rehabilitation 10.1 9.8 9.5
149.5 143.7 111.1 Option premium payable 1,535.8 1,625.2 1,330.8
Deferred option premium
115.5 110.7 132.7 income 1,186.9 1,251.6 1,588.0
10.8 2.0 7.3 Current liabilities 111.2 72.3 88.0
560.1 517.1 500.6 Total equity and liabilities 5,755.6 5,848.4 5,992.2
HEDGE BOOK
The following table represents the anticipated open hedge position following the
current restructuring:
Years to December 2002 2003 2004 2005 2006 2007 2008
Put options bought
Amount hedged
(oz 000s) 74 192 210 215 205 206 214
Average price
($/oz) 318 290 275 285 288 288 288
Call options sold
Amount hedged
(oz 000s) - 48 162 166 157 158 165
Average price
($/oz) - 316 269 279 289 289 289
Fixed forward contract
Amount hedged
(oz 000s) 18 39 42 21
Average price
($/oz) 260 260 260 260
Call options bought
Amount hedged
(oz 000s) 35 77 84 42
Average price
($/oz) 325 325 325 325
Gold lease rate swaps
Amount hedged - 109 95 32
Years to December 2009 2010 2011 2012 2013 2014 Total
Put options bought
Amount hedged
(oz 000s) 209 214 200 206 205 186 2,497
Average price
($/oz) 293 303 313 313 323 313
Call options sold
Amount hedged
(oz 000s) 161 165 154 158 158 186 1,890
Average price
($/oz) 294 304 314 314 324 314
Fixed forward contract
Amount hedged
(oz 000s) 120
Average price
($/oz
Call options bought
Amount hedged
(oz 000s) 238
Average price
($/oz)
Gold lease rate swaps
Amount hedged
Cost and revenue per unit of production
Quarter Quarter Year Quarter Quarter Year
ended ended ended ended ended ended
30.6.02 31.3.02 31.12.01 30.6.02 31.3.02 31.12.01
R R R US$ US$ US$
METRIC IMPERIAL
Per tonne/ton milled
413 420 431 Production costs 35 33 45
62 42 78 Other expenses and 5 3 8
non-cash costs
475 462 509 Total costs 40 36 53
Per kilogram/ounce
produced
67,229 58,882 54,894 Production costs 191 159 198
10,046 5,874 9,957 Other expenses and 29 15 36
non-cash costs
77,275 64,756 64,851 Total costs 220 174 234
Gold price received
(spot)
636 737 611 Per tonne/ton milled 53 59 64
106,319 109,043 78,063 Per kilogram/ounce 302 295 281
declared
Capital commitment
at end of period
118 64 95 (R million)/($ million) 11 6 8
Conversion rates used:
US$ 1 = Rands
10.9500 11.4909 8.6425 Average rate 10.9500 11.4909 8.6425
for period
10.2750 11.3100 11.9700 Rate at period end 10.2750 11.3100 11.9700
South Deep Shaft Sinking
Main Shaft Vent Shaft
Quarter Quarter Quarter Quarter
ended ended ended ended
30.06.02 31.03.02 30.06.02 31.03.02
Sinking (metres) 24 4 - -
Metres per calender day 0.27 0.04 - -
Distance below collar (metres) 2,991 2,967 2,760 2,760
Days on development - 84 days- 91 days- 90 days-
110A 94 lev 94 lev
lev and devel. devel.
loading box
Cubic metres broken in dev. (Plan) - 5,120 6,233 9,993
Cubic metres broken in dev. (Actual) 121 4,965 1,909 2,925
Metres/Calendar day sink
(excl. dev days) 0.81 0.87 - -
Summarised Development Results
Total Primary Reef Primary Reef Channel Channel
Development Development Sampled Width Value Channel
Quarter Ending (m) (m) (m) (m) (g/t) (cm-g/t)
30.06.2002 956 - - - - -
31.03.2002 1,277 4 - - - -
Year to
30.06.2002 2,233 4 - - - -
DEVELOPMENT
Metric Imperial
Quarter Year to date Quarter Year to date
ended ended ended ended
30.06.02 31.03.02 30.06.02 30.06.02 31.03.02 30.06.02
Advance on reef
and country rock (metres) (metres) (metres) (feet) (feet) (feet)
Total metres 956 1,277 2,233 3,136 4,191 7,327
CONSOLIDATED CASH FLOW STATEMENT
US$ Million R Million
Quarter Quarter Year Quarter Quarter Year
ended ended ended ended ended ended
30.6.02 31.3.02 31.12.01 30.06.02 31.03.02 31.12.01
Un- Un- Audited
audited audited Unaudited Unaudited Audited
Cash flow from operating
activities
3.5 1.6 18.4 Cash from operations 38.7 18.6 159.1
0.3 0.4 1.5 Interest received 3.3 4.4 13.0
- - (0.4) Interest paid - - (3.5)
- - - Dividends received - - 0.4
(0.4) - (9.7) Taxation paid (4.7) - (83.7)
3.4 2.0 9.8 37.3 23.0 85.3
Investing activities
(11.9) (8.0) (45.3) Additions to mining assets (130.1) (91.7) (391.4)
Proceeds on disposal of
4.7 - 0.4 mining assets 51.0 - 3.8
Net decrease in other
- - 2.4 long-term assets - - 20.5
Repayment of loan by JCI
- - 1.4 Gold Limited - - 11.7
(2.7) (0.5) (10.9) Advances to JCI Gold Limited (29.5) (6.3) (94.0)
Repayment of loan by Durban
- - 3.8 Roodepoort Deep Ltd - - 32.9
(9.9) (8.5) (48.2) (108.6) (98.0) (416.5)
Financing activities
- - 112.5 Option premiums received - - 1,242.4
- - (8.3) Option premiums paid - - (91.4)
- - - Exchange loss (87.3) (54.6) -
- - 104.2 (87.3) (54.6) 1,151.0
Net (decrease)/increase in
(6.5) (6.5) 65.8 cash and cash equivalents (158.6) (129.6) 819.8
86.2 92.2 37.6 At beginning of period 974.5 1,104.1 284.3
(0.2) 0.5 (11.2) Translation adjustment
79.5 86.2 92.2 At end of period 815.9 974.5 1,104.1
STATEMENT OF CHANGE IN SHAREHOLDERS` 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 31 December 2001 105.4 105.4 2,387.2 63.3 2,555.9
Attributable loss for
the March quarter - - - (38.0) (38.0)
Attributable profit for
the June quarter - - - 32.9 32.9
Balance at 30 June 2002 105.4 105.4 2,387.2 58.2 2,550.8
LETTER TO SHAREHOLDERS
It is with regret that we note the deaths of two colleagues at South Deep during
this quarter. It is our endeavour to ensure that such incidents do not occur by
virtue a stringent policy of zero tolerance as regards unsafe work practices.
The highlight`s for the quarter were the final commissioning of the new 220 000
tpm gold plant and the first gold pour on 17 June 2002. Whilst commissioning
problems have been experienced, the plant is expected to be running efficiently
by the end of July. A substantial reef stockpile was established at the new
plant during the month of June. Although this affected the June quarter
results, this should be compensated for during the next quarter. The old gold
plant has been flushed and is presently being mothballed.
Gold declared for the quarter totalled 1321 kg, by comparison 1338 kg for the
previous quarter. The gold yield was lower at 6.14 g/t, as a result of the waste
rock that was milled during June as part of the commissioning phase. As a
consequence of this, the tons milled for the quarter exceeded the previous
quarter by 11% to total 221 000 tons.
Gold profit at spot was R35.5 million, and after sundry revenue and interest
income of R28.7 million, derivative costs of R51.3 million and non-recurring
income of R46.1 million, the Group achieved a before tax profit of R46.0
million. Costs increased as a result of the plant transition process, in
addition to wage increases paid to a section of the workforce. Capital
expenditure for the quarter was R130.1 million.
Proposals have been received from the JCI Limited Group for settlement of the
R469 million loan owed to WAL, and for the purchase of the total issued share
capital of Barnato Exploration Limited ("Barnex") by way of the scheme of
arrangement. WAL will distribute its entitlement to receive repayment of the
loan to its shareholders, who will receive shares in WAL from JCI in settlement
of such entitlement. In addition to the distribution of the loan entitlement,
the purchase consideration received from the sale of Barnex and the JCI shares,
and debentures currently held by WAL, will be distributed to WAL shareholders.
A significant restructuring of the hedge book is occurring: 1.5 million ounces
of committed gold in terms of forwards and sold options, lease rate swops on 480
000 ounces and currency forwards on US$102 million are being closed out at a
total cost of some US$58 million. The residual of the old hedge positions are
due to be closed over the next few weeks at a cost of approximately US$3
million.
The anticipated open hedge positions will be 1.9 million ounces in sold calls
over a 12-year period at an average strike price of approximately U$300 per
ounce. The downside protection in the form of the bought puts over the same
period has been retained.
RB Kebble JF Brownrigg
Chief Executive Officer Managing Director
Johannesburg
18 July 2002
PRODUCTION RESULTS
Quarter Quarter Year Quarter Quarter Year
ended ended ended ended ended ended
30.6.02 31.3.02 31.12.01 30.6.02 31.3.02 31.12.01
METRIC IMPERIAL
Ore milled,
tonnes/tons (000)
131 146 469 Western Areas section 144 160 518
66 52 206 South Deep section 72 57 226
24 - 3 Surface material 26 - 3
221 198 678 Total ore milled 242 217 747
Yield, grams per
tonne/ton
6.66 6.70 7.74 Western Areas section 0.194 0.195 0.226
7.19 8.40 8.20 South Deep section 0.210 0.247 0.239
0.63 - 2.08 Surface material 0.018 - 0.068
6.14 7.14 7.85 Average grade recovered 0.175 0.209 0.228
Gold production,
kilograms/ounces
870 974 3,631 Western Areas section 27,955 31,299 116,727
473 439 1,685 South Deep section 15,191 14,098 54,171
15 - 7 Surface material 482 - 212
1,358 1,413 5,323 Total gold production 43,628 45,397 171,110
(37) (75) (17) Work-in-progress (1,190) (2,411) (531)
1,321 1,338 5,306 Total gold declared 42,438 42,986 170,579
WESTERN AREAS LIMITED
Registration Number 1959/003209/06
Incorporated in the Republic of South Africa
Share code: WAR ISIN: ZAE000016549
PO Box 61719, Marshalltown 2107
Telephone: +27 (11) 688-5000 Fax: +27 (11) 834-9195
Office of South African Transfer Secretaries
Computershare Investor Services Limited PO Box 1053, Johannesburg, 2001
Office of UK Transfer Secretaries
Capita IRG Plc, Balfour House, 390/398 High Road, Ilford, Essex, IG1 1NQ
Investor Relations
George Poole Telephone: +27 (11) 688-5000 Fax: +27 (11) 836-3757
email: gpoole@jci.co.za or Leanda Visagie
Telephone: +27 (11) 688-5000 Fax: +27 (11) 834-5086
email: lvisagie@jci.co.za
Date: 18/07/2002 05:25:29 PM Produced by the JSE SENS Department
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