| Wed 22 Oct 2003, 8:17 | | RESULTS FOR THE QUARTER ENDED 30 SEPTEMBER 2003 |
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Avgold - UNAUDITED RESULTS FOR THE QUARTER ENDED 30 SEPTEMBER 2003
Avgold Limited
(Incorporated in the Republic of South Africa)
Registration Number: 1990/007025/06
Share code AVG
ISIN ZAE000012175
("Avgold" or "the Company")
UNAUDITED RESULTS FOR THE QUARTER ENDED 30 SEPTEMBER 2003
HIGHLIGHTS
- Gold sold at Target mine up 51% to 3099 kg (Q403: 2048 kg)
- Revenue up 11% to R244 million (Q403: R219 million)
- Headline earnings (before unrealised non-hedged derivatives) up significantly
to R40.6 million (Q403: R7.8 million)
- Strong operating performance following redesign and rescheduling at Target
mine and cost containment
- Cash generated from operations of R81 million (Q403:R47 million)
- Cash costs at Target mine down 18% to R41 018/ kg (Q403: R50 060/kg)
- Yield at Target mine improved 35% to 11.38 g/t (Q403: 8.44 g/t)
- Strong rand impacts earnings - rand per kg revenues down 6%
- Pre-feasibility on Northern Free State completed - phased two-shaft approach
most viable
22 October 2003
Jan Steenkamp, Managing Director, commented:
"This quarter marked a substantial improvement in the operational and financial
performance of the company with significant increases in production and
earnings. This follows an ongoing exercise to optimise the mine design and to be
cost efficient. We are excited about the prospects for developing the resource
north of Target and are encouraged by the results of the pre-feasibility study."
Enquiries:
Avgold Limited
Jan Steenkamp, Managing Director
Ebrahim Takolia, Investor Relations
Tel: 011 634 0333
Mobile: 083 291 3384
FINANCIAL RESULTS
INCOME STATEMENT - Rand thousand
Unaudited Audited
Quarter ended Year ended
Sept. Sept. June June
2003 2002 2003* 2003*
Revenue 244 190 260 728 219 097 999 480
- gold revenue 243 933 260 538 218 738 998 217
- by-products 257 190 359 1 263
Costs and expenses 201 300 227 554 205 990 889 560
- gold operating 127 360 172 610 148 574 673 344
- amortisation 68 343 49 112 46 577 186 900
- administration and general 5 597 5 832 10 839 29 316
Operating profit 42 890 33 174 13 107 109 920
Investment income 572 3 113 3 333 12 987
Finance cost 2 902 14 137 13 811 57 946
Foreign exchange gain/(loss) - (10 498) 559 66 745
Unrealised non-hedge derivatives (123 730) - (102 715) (102 715)
Income/(loss) before exceptional
item (83 170) 11 652 (99 527) 28 991
Exceptional items 4 661 - 7 085 7 085
Income/(loss) before taxation (78 509) 11 652 (92 442) 36 076
Taxation 3 750 - 1 000 9 207
Net earnings/(loss) for the period (82 259) 11 652 (93 442) 26 869
Additional information
Net earnings for the period
excluding unrealised non-hedge
derivatives 41 471 11 652 9 273 129 584
Headline earnings/(loss) (83 170) 11 652 (94 926) 25 385
Headline earnings before
unrealised non-hedge
derivatives 40 560 11 652 7 789 128 100
Headline earnings/(loss)
per share (cents) (12) 2 (14) 4
Headline earnings per share
before unrealised non-hedge
derivatives (cents) 6 2 1 19
Earnings/(loss)
per share (cents) (12) 2 (14) 4
Weighted number of shares in
issue (million) 677 673 676 674
Reconciliation of earnings and
Headline earnings
Net earnings/(loss) per
income statement (82 259) 11 652 (93 442) 26 869
Exceptional items: Profit on
sale of ETC (4 661) - (7 085) (7 085)
Recoupments tax on sale of ETC 3 750 - 5 601 5 601
(83 170) 11 652 (94 926) 25 385
BALANCE SHEET - Rand thousand
Unaudited Unaudited Audited
30 Sept. 30 Sept. 30 June
2003 2002 2003*
ASSETS
Non-current assets 2 504 751 2 901 457 2 569 795
Property, plant and equipment 2 479 352 2 853 586 2 543 841
Investments 25 399 47 871 25 954
Current assets 107 052 227 275 84 382
Inventories 57 817 55 208 46 407
Trade and other receivables 44 095 57 379 37 214
Deposits and cash 5 140 114 688 761
Total assets 2 611 803 3 128 732 2 654 177
EQUITY AND LIABILITIES
Capital and reserves
Share capital 6 779 6 734 6 765
Share premium 2 226 351 2 208 043 2 219 900
Retained income/(accumulated loss) (38 432) (19 224) 43 827
Total shareholders" equity 2 194 698 2 195 553 2 270 492
Non-current liabilities 267 892 638 200 144 639
Long-term loans - 556 789 -
Non-hedge derivatives 226 444 - 102 715
Long-term provisions 41 448 81 411 41 924
Current liabilities 149 213 294 979 239 046
Trade and other payables 98 288 117 076 104 126
Derivative instruments - 47 834 -
Short-term borrowings 50 925 130 069 134 920
Total equity and liabilities 2 611 803 3 128 732 2 654 177
* Includes ETC at 15 June 2003
CASH FLOW STATEMENT - Rand thousand
Unaudited Audited
Quarter ended Year ended
Sept. Sept. June June
2003 2002 2003* 2003*
Cash generated from/(utilised by)
operations
Operating profit 42 890 33 174 13 107 109 920
Non-cash items and adjustments
Amortisation and depreciation 68 343 49 112 46 577 186 900
Provisions - (620) (5 262) (5 546)
Profit on sale of property, plant
and equipment - - - (1 519)
111 233 81 666 54 422 289 755
Net withdrawal from/(payments to)
environmental trust fund - - 3 925 3 925
Investment income 654 3 113 3 333 12 987
Finance charges (2 902) (14 137) (13 811) (57 946)
108 985 70 642 47 869 248 721
Cash provided by/(reinvested in)
working capital
Inventories (11 410) (10 447) (15 910) (18 351)
Trade and other payables (9 588) (36 266) 3 426 (30 390)
Trade and other receivables (6 881) (2 247) 11 446 13 578
Net cash generated from operating
activities 81 106 21 682 46 831 213 558
Cash utilised in investment
activities
Property, plant and equipment
acquired (15 795) (20 559) (33 846) (124 364)
Investments acquired - - (5) (483)
Property, plant and equipment
sold 16 598 1 196 199 3 558
Proceeds on sale of ETC mine - - 251 817 251 817
803 (19 363) 218 165 130 528
Cash provided by financing activities
Net increase in shareholders" funding 6 465 1 662 3 922 13 551
Leased assets - (341) (380) (1 434)
Decrease in long-term loans - (1 743) (327 920) (376 189)
(Decrease)/increase in overdrafts
and short-term borrowings (83 995) 3 981 (74 096) (76 224)
(77 530) 3 559 (398 474) (440 296)
Increase/(decrease) in cash balances 4 379 5 878 (133 478) (96 210)
Cash and cash equivalents at beginning
of period 761 108 810 133 813 108 810
Translation adjustment - - 426 (11 839)
Cash and cash equivalents at end
of period 5 140 114 688 761 761
STATEMENT OF SHAREHOLDERS" EQUITY - Rand thousand
Retained Unaudited Audited
Ordinary share income/ year to date Year ended
capital and (Accumulated Sept. Sept. June
premium loss) 2003 2002 2003*
Changes in
shareholders" equity
Balance at beginning
of period 2 226 665 43 827 2 270 492 2 230 072 2 230 072
Share options exercised 6 473 - 6 473 1 679 13 584
Derivative instruments - - - (47 834) -
Expenses written off
against share premium (8) - (8) (16) (33)
Net earnings/(loss) for
the period - (82 259) (82 259) 11 652 26 869
Balance at end of period 2 233 130 (38 432) 2 194 698 2 195 553 2 270 492
* Includes ETC at 15 June 2003
INCOME STATEMENT - US dollar thousand
Quarter ended Year ended
Sept. Sept. June June
2003 2002 2003* 2003*
Revenue 32 646 25 094 28 053 109 592
- gold revenue 32 612 25 076 28 007 109 454
- by-products 34 18 46 138
Costs and expenses 26 912 21 901 26 375 97 539
- gold operating 17 027 16 613 19 023 73 832
- amortisation 9 137 4 727 5 964 20 493
- administration and general 748 561 1 388 3 214
Operating profit 5 734 3 193 1 678 12 053
Investment income 76 300 427 1 424
Finance cost 388 1 361 1 768 6 354
Foreign exchange gain/(loss) - (1 010) 72 7 319
Unrealised non-hedge derivatives (16 541) - (11 263) (11 263)
Income/(loss) before exceptional item (11 119) 1 122 (10 854) 3 179
Exceptional items 623 - 777 777
Income/(loss) before taxation (10 496) 1 122 (10 077) 3 956
Taxation 535 - 133 1 010
Net earnings/(loss) for the period (11 031) 1 122 (10 210) 2 946
Additional information
Net earnings for the period
excluding unrealised non-hedge
derivatives 5 510 1 122 1 053 14 209
Headline/(loss) earnings (11 654) 1 122 (10 987) 2 783
Headline earnings before
unrealised non-hedge derivatives 4 887 1 122 276 14 046
Headline earnings/(loss)
per share (cents) (2) - (2) -
Headline earnings per share before
unrealised non-hedge
derivatives (cents) 1 - - 2
Earnings/(loss) per share (cents) (2) - (2) -
Weighted number of shares
in issue (million) 677 673 676 674
Reconciliation of earnings and
Headline earnings
Net earnings/(loss) per
income statement (11 031) 1 122 (10 210) 2 946
Exceptional items: Profit on
sale of ETC (623) - (777) (777)
Recoupment tax on sale of ETC 535 - 614 614
(11 119) 1 122 (10 373) 2 783
BALANCE SHEET - US dollar thousand
30 Sept. 30 Sept. 30 June
2003 2002 2003*
ASSETS
Non-current assets 357 822 275 020 342 183
Property, plant and equipment 354 193 270 482 338 727
Investments 3 629 4 538 3 456
Current assets 15 293 21 543 11 236
Inventories 8 260 5 233 6 180
Trade and other receivables 6 299 5 439 4 955
Deposits and cash 734 10 871 101
Total assets 373 115 296 563 353 419
EQUITY AND LIABILITIES
Capital and reserves
Share capital 968 638 901
Share premium 321 506 211 745 299 343
Retained income/(accumulated loss) (8 946) (4 273) 2 085
Total shareholders" equity 313 528 208 110 302 329
Non-current liabilities 38 271 60 493 19 259
Long-term loans - 52 776 -
Non-hedge derivatives 32 349 - 13 677
Long-term provisions 5 922 7 717 5 582
Current liabilities 21 316 27 960 31 831
Trade and other payables 14 041 11 097 13 865
Derivative instruments - 4 534 -
Short-term borrowings 7 275 12 329 17 966
Total equity and liabilities 373 115 296 563 353 419
* Includes ETC at 15 June 2003
CASH FLOW STATEMENT - US dollar thousand
Quarter ended Year ended
Sept. Sept. June June
2003 2002 2003* 2003*
Cash generated from/(utilised by)
operations
Operating profit 5 734 3 193 1 678 12 053
Non-cash items and adjustments:
Amortisation and depreciation 9 137 4 727 5 964 20 493
Provisions - (60) (674) (608)
Profit on sale of property, plant
and equipment - - - (167)
14 871 7 860 6 968 31 771
Net withdrawals from/(payments to)
environmental trust fund - - 503 430
Investment income 76 300 427 1 424
Finance charges (388) (1 361) (1 768) (6 354)
14 559 6 799 6 130 27 271
Cash provided by/(reinvested in)
working capital
Inventories (1 525) (1 006) (2 037) (2 012)
Trade and other payables (1 282) (3 490) 439 (3 332)
Trade and other receivables (920) (216) 1 465 1 489
Net cash generated from operating
activities 10 832 2 087 5 997 23 416
Cash utilised in investment activities
Property, plant and equipment acquired (2 112) (1 979) (4 334) (13 636)
Investments acquired - - (1) (53)
Property, plant and equipment sold 2 219 115 26 390
Proceeds on sale of ETC mine - - 32 243 27 612
107 (1 864) 27 934 14 313
Cash provided by financing activities
Net increase in shareholders" funding 864 160 502 1 486
Leased assets - (33) (49) (157)
Decrease in long-term loans - (168) (41 987) (41 249)
(Decrease)/increase in overdrafts
and short-term borrowings (11 229) 383 (9 487) (8 358)
(10 365) 342 (51 021) (48 278)
Increase/(decrease) in cash balances 574 565 (17 090) (10 549)
Cash and cash equivalents at
beginning of period 101 10 616 16 727 10 616
Translation adjustment 59 (310) 464 34
Cash and cash equivalents at
end of period 734 10 871 101 101
STATEMENT OF SHAREHOLDERS" EQUITY - US dollar thousand
Retained
Ordinary share income/ Year to date Year ended
capital and (Accumulated Sept. Sept. June
premium loss) 2003 2002 2003*
Changes in shareholders"
equity
Balance at beginning of
period 300 244 2 085 302 329 217 568 217 568
Share options exercised 865 - 865 163 1 489
Derivative instruments - - - (4 534) -
Expenses written off
against share premium (1) - (1) (2) (4)
Net earnings/(loss) for
the period - (11 031) (11 031) 1 122 2 946
Translation adjustment 21 366 - 21 366 (6 207) 80 330
Balance at end of period 322 474 (8 946) 313 528 208 110 302 329
* Includes ETC at 15 June 2003
OPERATING RESULTS
AVGOLD TOTAL
Quarter ended Year ended
Sept. Sept. June June
2003 2002 2003* 2003*
Metric
Ore milled tonnes 272 391 362 535 320 811 1 388 764
Gold sold kg 3 099 3 075 2 623 11 899
Yield g/t 11,38 8,48 8,18 8,57
Cash cost R/kg 41 018 56 151 56 508 56 503
Non-cash cost R/kg 23 800 17 782 21 885 18 150
Total cost R/kg 64 818 73 932 78 393 74 653
Capital expenditure R000"s 15 792 20 037 33 825 122 905
Imperial
Ore milled tons 300 257 399 622 353 630 1 530 835
Gold sold oz 99 626 98 873 84 334 382 561
Yield oz/t 0,33 0,25 0,24 0,25
Cash cost US$/oz 171 168 225 193
Non-cash cost US$/oz 99 53 87 62
Total cost US$/oz 270 221 312 255
Capital expenditure US$000"s 2 111 1 928 4 331 13 476
TARGET TOTAL
Metric
Ore milled tonnes 272 391 282 894 242 549 1 068 376
Gold sold kg 3 099 2 373 2 048 9 155
Yield g/t 11,38 8,39 8,44 8,57
Cash cost R/kg 41 018 49 724 50 060 51 327
Non-cash cost R/kg 22 237 18 092 21 188 17 900
Total cost R/kg 63 255 67 816 71 248 69 227
Capital expenditure R000"s 14 735 15 666 28 427 100 539
Development results:
Advanced m 1 957 1 903 1 713 7 431
Reef development m 1 142 1 125 1 045 5 308
Sampled m 555 673 243 1 866
Channel width cm 433 456 479 1 818
Channel value g/t 4,33 5,98 3,32 6,76
cm.g/t 1 874 2 727 1 590 12 298
Imperial
Ore milled tons 300 257 311 834 267 362 1 177 671
Gold sold oz 99 626 76 299 65 855 294 339
Yield oz/t 0,33 0,24 0,25 0,25
Cash cost US$/oz 171 149 199 175
Non-cash cost US$/oz 92 54 85 61
Total cost US$/oz 263 203 284 236
Capital expenditure US$000"s 1 970 1 508 3 640 11 024
* Includes ETC to 15 June 2003
PRODUCTION COST RECONCILIATION
AVGOLD TOTAL - Rand thousand
Quarter ended Year ended
Sept. Sept. June June
2003 2002 2003* 2003*
Gold operating costs per income
statement 127 360 172 610 148 574 673 344
Less: Revenue from by-products (257) (190) (359) (1 263)
Cash costs 127 103 172 420 148 215 672 081
Add:
- Amortisation and depreciation 68 343 49 112 46 577 186 900
- Administration and general 5 597 5 832 10 839 29 316
Non-cash costs 73 940 54 944 57 416 216 216
Total cost 201 043 227 364 205 631 888 297
Gold sold kg 3 099 3 075 2 623 11 899
Production cost:
Cash cost R/kg 41 018 56 151 56 508 56 503
Non-cash cost R/kg 23 800 17 782 21 885 18 150
Total operating cost R/kg 64 818 73 932 78 393 74 653
Gold price realised R/kg 78 721 84 719 83 390 83 891
* Includes ETC at 15 June 2003
AVGOLD TOTAL - US dollar thousand
Quarter ended Year ended
Sept. Sept. June June
2003 2002 2003* 2003*
Gold operating costs per
income statement 17 027 16 613 19 024 73 832
Less: Revenue from by-products (34) (18) (46) (139)
Cash costs 16 992 16 595 18 978 73 693
Add:
- Amortisation and depreciation 9 137 4 727 5 964 20 493
- Administration and general 748 561 1 388 3 215
Non-cash costs 9 885 5 288 7 352 23 708
Total cost 26 877 21 883 26 329 97 401
Gold sold oz 99 626 98 873 84 334 382 560
Production cost:
Cash cost US$/oz 171 168 225 193
Non-cash cost US$/oz 99 53 87 62
Total operating cost US$/oz 270 221 312 255
Gold price realised US$/oz 328 302 309 305
* Includes ETC at 15 June 2003
COMMENTARY
SALIENT FEATURES - SALES AND COSTS
Quarter ended Year ended
Sept Sept June June
2003 2002 2003* 2003*
Avgold total:
Revenue received - Rand per kilogram 78 721 84 719 83 390 83 891
- US$ per ounce 328 302 309 305
Average spot price - Rand per kilogram 86 556 104 886 86 740 97 266
- US$ per ounce 359 314 346 334
Cash cost - Rand per kilogram 41 018 56 151 56 508 56 503
- US$ per ounce 171 168 225 193
Total gold sales - kilograms 3 099 3 075 2 623 11 899
- ounces 99 626 98 873 84 334 382 561
Target:
Cash cost - Rand per kilogram 41 018 49 724 50 060 51 327
- US$ per ounce 171 149 199 175
Total gold sales - kilograms 3 099 2 373 2 048 9 155
- ounces 99 626 76 299 65 855 294 339
* Comparative figures for the June 2003 quarter include ETC to 15 June 2003
OVERVIEW
This report contains:
* the results for the quarter ended 30 September 2003 of the Target gold mine;
* information from the pre-feasibility study, which evaluates the most viable
mining design to access the resources north of Target.
In terms of the rules of the generally accepted accounting statement on
financial instruments, AC133, a significant charge to the income statement is
recorded due to the strengthening of the rand.
Avgold: Quarter ended 30 September 2003
Headline earnings before unrealised non-hedge derivatives showed a
significant improvement to R40,6 million (30 June 2003: R7,8 million). Revenue
increased 11 per cent to R244,2 million (R219,1 million) as a result of Target"s
strong operating performance - operating profit increased 227 per cent to R42,9
million as costs were well controlled during the quarter. Gold sold increased 18
per cent to 3 099kg (2 623kg), while cash costs declined 27 per cent to R41
018/kg (R56 508/kg).
During the quarter certain ETC properties (retained following the sale of
ETC) were all sold for a consideration of R16,6 million, realising a surplus of
R4,7 million. A taxation provision of R3,7 million has been made against this
transaction.
TARGET - Quarter ended 30 September 2003
Following the redesign and rescheduling of the massive stopes the operating
performance of the mine improved significantly during the quarter. Gold sold
increased 51 per cent to 3 099kg (2 048kg) while yield improved 35 per cent to
11,38g/t (8,44g/t) and ore milled increased to 272 391 tonnes (242 549 tonnes).
Cash costs also showed a marked improvement, declining 18 per cent to R41 018/kg
(R50 060/kg) or 14 per cent to US$171/oz (US$199/oz) as a result of cost control
efforts. Capital expenditure decreased to R14,7 million (R28,4 million).
Costs
Costs were well controlled during the quarter. As the last of the capital
projects near completion, the temporary labour component has been reduced
accordingly. Following the restructuring of responsibilities, Target has reduced
and streamlined its management team. The strong performance of the rand against
the US dollar had a negative influence on operating margins, and as a result
Target has commenced a process of supply chain cost management.
PRODUCTION
Production improved significantly during the quarter and some areas were
mined out. This improved production was achieved by the redesign and
rescheduling of the massive stopes through:
* A reduction in the size of the massive stopes;
* Changing the configuration of the excavation ceilings;
* Spacing the drawpoints further apart to improve the stability of pillars; and
* The establishment of new slots outside of the abutment stresses.
We remain committed to our critical path to allow us to mine efficiently the
massive stopes and to destress the blocks to the north.
Northern Free State
The pre-feasibility study for the Northern Free State has been completed and
was presented to the board in October 2003. The study evaluated several options
for accessing what is one of the largest unexploited gold resource in the world.
The study has demonstrated the solid growth prospects at Target North and the
potential to access Sun, neighbouring Target North to the north west.
The resource base is comprised as follows:
Key aspects Content Grade
(Moz)** (g/t)**
Eldorado block* 7.1 6.6
Paradise block 8.8 7.8
Siberia block 15.5 6.9
Mariasdal block 10.2 8.4
Total 41.6 7.3
Remaining 32.8 6.1
*Excludes the Target mines reserves of 3.86Moz
**Confirmed by independent auditors.
The evaluated options were threefold:
* A greenfields development of a mega mine with two shafts;
* A brownfields development with a twin shaft system adjacent to the current
Target operation to be followed by a subsequent future shaft to the north; or
* A brownfields development with a single shaft system adjacent to the current
Target operation to be followed by a subsequent future shaft to the north.
The findings of the pre-feasibility prove beyond doubt that the greenfields
and brownfields three shafts options are not viable in the current climate as
both options produce negative returns. However, the brownfields phased two
shafts option is proven to be extremely viable and is expected to produce a real
IRR of more than 25% with an NPV of approximately R0,75 billion.
The study also proved beyond doubt that the lead times and capital
requirements for a greenfields operation make a mega-mine uneconomical. In
contrast, the development of a single shaft in the vicinity of Target"s current
operations does add significant value. Accordingly, the most viable alternative
has proved to be the brownfields development with 2 shafts. This development is
a three phase process:
* Phase One will comprise sinking a shaft and associated infrastructure
immediately adjacent to Target at a cost of approximately R900 million. This
will provide immediate financial and operational benefits, while also providing
a base to develop into phase two.
* Phase Two will focus on an expansion to more than 200 000tpm with the
development of a plant and other infrastructure at a cost of R1 to R1,5 billion
in real terms.
* Phase Three will establish the north shaft system, at an additional capital
cost of approximately R3,8 billion.
The operational benefits of this development option are:
* The risk is reduced due to the phased process;
* Reduced travelling distances;
* Improved ventilation close to faces;
* Increase opportunities for underground exploration; and
* Improved flexibility of resource exploitation
With these exciting prospects for optimally exploiting the Northern Free State
resources at very favourable terms a bankable feasibility will be undertaken and
completed as soon as possible.
HEDGING
As at 30 September 2003, Avgold"s hedge book represented 72 per cent of
forecast gold production to June 2006 and had a mark-to-market value of a
negative R331 million. This was calculated at a gold price of US$385,00/oz and
an exchange rate of US$1,00:ZAR7,00. This mark-to-market valuation is inclusive
of a negative R226 million pertaining to the rand/US$ forward exchange contracts
utilised to convert the rand gold hedges into dollar gold hedges. The fair value
adjustment on these FEC"s has been included in the income statement. The hedges
are unmargined and Avgold is maintaining its policy of not using derivative
instruments for speculative purposes.
Earnings are significantly distorted as a result and do not present an
accurate economic picture of the Company"s results during the reporting period.
Subsequent changes to exchange rates will result in adjustments to the income
statement thereby creating further variability in earnings.
The net hedge book at 30 September 2003, is as follows:
June June June
Period ending 2004 2005 2006
Dollar forward
sales contracts
Quantity sold kg 6 916 9 137 4 403
oz 222 366 293 762 141 545
US$/oz 313 316 323
TRANSLATION INTO US DOLLARS
To assist international investors, a translation of convenience into United
States dollars is provided for in the income statements, balance sheets and cash
flow statements. These translations are based on average rates of exchange for
income statement and cash flow statement items and those ruling at period end
for the balance sheet items.
The following rand/US dollar exchange rates were used to prepare the financial
results:
Year
Quarter ended ended
Sept. Sept. June June
2003 2002 2003 2003
Average rate for the period 7,48 10,39 7,81 9,12
Spot rate at end of period 7,00 10,55 7,51 7,51
CHANGE OF DIRECTORS
Avgold is pleased to announce the appointment of Mr Andre Wilkens as non-
executive director of the Company and Mr Graham Briggs as his alternate with
effect from 10 October 2003.
BORROWINGS
Net borrowings reduced significantly during the quarter to R46 million (R134
million) following the strong operational performance at Target.
PROSPECTS
We remain confident about achieving our production objective of 350 000 oz
for the year to 30 June 2004 and are committed to maintain the critical path and
optimise the orebody extraction. We are fully focused on achieving cost
efficiencies and expect to minimise our cash costs. Earnings will however
continue to be affected by future fluctuations in the Rand/US$ exchange rate.
DIVIDEND POLICY
After meeting our obligations for debt servicing and capital replacement, we
intend to distribute surplus cash in the form of a dividend. We are planning for
this to occur once Avgold achieves debt-free status. The payment of future
dividends remains dependent on the board"s ongoing assessment of our earnings,
financial condition (including cash requirements), future earnings and other
external factors.
ACCOUNTING POLICIES
The accounting policies used are in accordance with South African Statements
of Generally Accepted Accounting Practice and are consistent with those applied
in the previous financial year.
On behalf of the Board of Directors
Chairman
R P Menell
Managing Director
J C Steenkamp
Directors: R P Menell (Chairman), J C Steenkamp+ (Managing), M Arnold+,
J J Geldenhuys, A N Lewis+, G S Potgieter+, A J Wilkens
Alternate director: G Briggs
+ Executive directors
Company secretary: S E Sather
Johannesburg
22 October 2003
CONTACT DETAILS
EBRAHIM TAKOLIA
Direct line: (+27 11) 634-0333
Fax: (+27 11) 634-0278
Mobile: 083 291 3384
e-mail: ebrahimt@avgold.co.za
AVGOLD LIMITED
Date: 22/10/2003 07:03:24 AM Produced by the JSE SENS Department
