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The Afrikander Lease Limited - The Afrikander Lease Limited Consolidated
Release Date: 19/03/2004 08:00:04 Code(s): AFL
THE AFRIKANDER LEASE LIMITED - THE AFRIKANDER LEASE LIMITED CONSOLIDATED
FINANCIAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2003
THE AFRIKANDER LEASE LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1921/006955/06)
Share code: AFL (JSE) AFKDY (NASDAQ)
ISIN: ZAE000000253
("Aflease" or "the company")
The Afrikander Lease Limited Consolidated Financial Results for the year ended
31 December 2003
Financial and Operational Overview
Salient features:
- Gold produced and sold (kg) - 1,222 kg - 2002: 1,075 kg
- Cash operating (loss)/profit (R"000) - (R 48,435) - 2002: R 28,020
- Net (loss)/profit (R"000) - (R 410,029) - 2002: R 15,593
Due to an impairment adjustment of long life assets (R"000): (R 230,325) and the
write down of Heap Leach and stockpiles (R"000): (R 58,557)as well as losses
from operations (R"000): (R107,839)
- Headline (loss)/earnings per share (cents) of (95.37) - 2002, earnings of
10.53.
The gold price received for the year decreased 16% from R103,597/kg in 2002 to
R87,338/kg in 2003. The gold price received in the December quarter decreased
marginally from R85,815/kg in the September quarter to R84,186/kg.
Reef tonnes stacked and milled during the 2003 financial year amounted to
approximately 2,6 million tonnes compared to 1,7 million tonnes in 2002. The
Reef tonnes stacked and milled remained at approximately 1 million tonnes
through the September and December quarters.
The Cash Operating Cost for the 2003 financial year was R79/ton mined compared
to R49/ton for the 2002 financial year. Although mining efficiencies improved,
the total unit cost per ton increased due to the resumption of underground
mining and the start-up of the CIL Plant during the second part of the 2003
financial year.
The suspension of Open Pit mining activities at the Klerksdorp Operations have
resulted in the reclassification of the inner and outer basins as Resources and
resulted in the impairment and write down of related mining assets and stock
items amounting to R289 million.
ADR listing
Work on the upgrade of the ADR listing is continuing and the company will keep
shareholders informed of relevant developments.
Prospects
Over the past year, we have invested significant resources and time into
assessing the quality of the Group"s assets. After significant
restructuring, the Board is confident that the Group has a number of high
margin development projects and adequate funding in place to enable it to
successfully bring these assets to account over the next 18 months.
CONSOLIDATED FINANCIAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2003
REVIEWED AUDITED UNAUDITED UNAUDITED UNAUDITED
YEAR TO YEAR TO QUARTER TO QUARTER TO QUARTER TO
31 DEC 2003 31 DEC 2002 31 DEC 2003 30 SEPT 2003 31 DEC 2002
HIGHLIGHTS:-
GOLD PRODUCED AND SOLD
-KILOGRAMS 1,222 1,075 381 534 226
-OUNCES 39,288 34,562 12,249 17,168 7,266
CASH OPERATING COST PER
TON MINED(before
non-recurring
items)* 79.01 49.29 104.67 83.53 51.31
CASH OPERATING COST
-RAND / KG 122,258 77,533 109,599 94,779 94,646
-$ / OZ 518 233 504 399 311
CASH OPERATING(LOSS)
/PROFIT(R"000) (48,435) 28,020 (9,682) (10,550) 868
OPERATING (LOSS)
/PROFIT (R "000) (before
non-recurring
items) (107,839) 15,593 (36,894) (28,480) (749)
NET(LOSS)/EARNINGS(R"000) (410,029) 15,593 (333,618) (30,015)
(749)
HEADLINE (LOSS)
/EARNINGS PER
SHARE(CENTS) (95.37) 10.53 (50.05) (15.62) (0.45)
BASIC (LOSS) /
EARNINGS (217.61) 10.53 (161.64) (15.62) (0.45)
PER SHARE (CENTS)
*Excluding underground tonnage and net costs for Sept and Dec 2003 quarterly
results.
OPERATING RESULTS:-
TONS MINED -
OPEN PIT 1,799,361 1,691,069 343,466 605,882 367,747
TONS MINED - UNDERGROUND 91,405 - 26,492 47,749 -
TONS STACKED -
CIS 1,341,956 1,728,943 481,031 427,666 416,903
TONS MILLED - CIL 1,262,518 - 500,823 620,999 -
GOLD PRODUCED
AND SOLD (KG) 1,222 1,075 381 534 226
GRADE STACKED -
CIS 0.47 1.08 0.15 0.21 0.99
GRADE MILLED -
CIL 0.83 - 0.78 0.80 -
GOLD PRICE RECEIVED
-RAND/KG 87,338 103,597 84,186 85,815 98,487
-RAND / OZ 2,717 3,222 2,618 2,669 3,063
-$ / OZ 367 312 389 361 324
INCOME STATEMENT
REVIEWED AUDITED UNAUDITED UNAUDITED UNAUDITED
YEAR TO YEAR TO QUARTER TO QUARTER TO QUARTER TO
31 DEC 2003 31 DEC 2002 31 DEC 2003 30 SEPT 2003 31 DEC 2002
R"000 R"000 R"000 R"000 R"000
REVENUE 100,964 111,368 32,075 40,062 22,258
CASH OPERATING
COSTS 160,629 102,892 41,757 50,612 25,413
CASH MOVEMENT
IN LOCK-UP (11,230) (19,544) - - (4,023)
CASH OPERATING
(LOSS)/PROFIT (48,435) 28,020 (9,682) (10,550) 868
AMORTISATION AND
DEPRECIATION 15,563 9,047 4,112 4,110 1,497
NON-CASH MOVEMENT IN
LOCK-UP 4,767 (1,777) - 4,767 (189)
NET FINANCE
COSTS 9,270 1,640 2,889 4,238 (897)
GENERAL AND
ADMINISTRATIVE 9,165 1,421 3,117 4,166 583
EXPLORATION
EXPENDITURE 5,557 2,096 2,012 649 623
REHABILITATION
PROVISION 15,082 - 15,082 - -
(107,839) 15,593 (36,894) (28,480) (749)
NON RECURRING
COSTS
DECOMMISSIONING 6,744 - 4,142 - -
FUNDING EXPENSES
AND LEGAL
FEES 6,263 - 3,399 1,535 -
FAIR VALUE
LOSS ON
INVESTMENTS 301 - 301 - -
IMPAIRMENT OF
LONG LIFE
ASSETS 230,325 - 230,325 - -
WRITE DOWN OF HEAP LEACH
AND OTHER
STOCK ITEMS 58,557 - 58,557 - -
OPERATING(LOSS)/PROFIT
BEFORE
TAXATION (410,029) 15,593 (333,618) (30,015) (749)
TAXATION - - - - -
(LOSS)/INCOME ATTRIBUTABLE
TO ORDINARY
SHAREHOLDERS (410,029) 15,593 (333,618) (30,015) (749)
RATIOS:-
(LOSS)/ EARNINGS PER SHARE
(CENTS):-
- CASH OPERATING (LOSS)
/PROFIT (25.71) 18.92 (4.69) (5.49) 0.52
- OPERATING
(LOSS)/PROFIT
(before non-
recurring
items) (57.23) 10.53 (17.88) (14.82) (0.45)
- HEADLINE (95.37) 10.53 (50.05) (15.62) (0.45)
- BASIC (217.61) 10.53 (161.64) (15.62) (0.45)
- FULLY DILUTED
HEADLINE (91,49) 10.34 (48.18) (14.86) (0.44)
- FULLY DILUTED
BASIC (208.74) 10.34 (155.60) (14.86) (0.44)
NET ASSET VALUE PER SHARE
(CENTS):- 53.95 198.25 53.95 193.80 198.25
WEIGHTED AVERAGE NUMBER
OF ORDINARY SHARES
IN ISSUE 188,421,148 148,098,027 206,393,754 192,189,181 167,320,971
NUMBER OF SHARES IN
ISSUE AT END
OF PERIOD 210,952,406 173,329,123 210,952,406 199,598,406 173,329,123
THE FULLY DILUTED EARNINGS PER SHARE IS BASED UPON THE DILUTIVE EFFECT OF
EMPLOYEE SHARE OPTIONS.
REVIEWED UNAUDITED AUDITED
YEAR AS AT QUARTER AS AT YEAR AS AT
31 Dec 2003 30 SEP 2003 31 DEC 2002
R"000 R"000 R"000
ABRIDGED BALANCE SHEET
ASSETS
NON-CURRENT ASSETS:-
-MINING ASSETS 212,853 420,820 233,292
-OTHER ASSETS 791 9,890 6,843
-LEACH PADS - 39,221 39,221
-INVESTMENTS 13,799 13,382 10,036
227,443 483,313 289,392
CURRENT ASSETS:-
-INVENTORIES 14,698 29,344 6,038
-LEACH PADS - 5,038 9,805
-RECEIVABLES AND
PREPAYMENTS 8,228 13,284 21,799
-AMOUNTS OWING BY RELATED
THIRD PARTIES 270 213 817
-BANK AND CASH BALANCES 12,482 1,682 76,209
35,678 49,561 114,668
TOTAL ASSETS 263,121 532,874 404,060
EQUITY AND LIABILITIES
CAPITAL AND RESERVES:-
-ORDINARY SHARE CAPITAL 4,219 3,992 3,467
-SHARE PREMIUM 495,050 434,681 315,604
-ACCUMULATED (LOSSES)/EARNINGS (385,468) (51,850) 24,561
113,801 386,823 343,632
NON-CURRENT LIABILITIES:-
-INTEREST BEARING
BORROWINGS 65,175 73,672 26,685
-REHABILITATION AND
CLOSURE COST OBLIGATIONS 20,610 5,528 4,500
-AMOUNTS OWING TO RELATED
THIRD PARTIES 56 65 50
85,841 79,265 31,235
CURRENT LIABILITIES:-
-TRADE AND OTHER PAYABLES 17,070 29,520 14,886
-PROVISIONS 8,793 6,236 1,160
-CURRENT PORTION OF
INTEREST BEARING BORROWINGS 28,074 20,448 6,066
-BANK OVERDRAFT BALANCES 9,542 10,582 7,081
63,479 66,786 29,193
TOTAL EQUITY AND
LIABILITIES 263,121 532,874 404,060
ABRIDGED CASH FLOW STATEMENT
REVIEWED AUDITED UNAUDITED UNAUDITED
UNAUDITED
YEAR TO YEAR TO QUARTER TO QUARTER TO
QUARTER TO
31 DEC 2003 31 DEC 2002 31 DEC 2003 30 SEPT 2003 31 DEC 2002
R"000 R"000 R"000 R"000 R"000
CASH FLOW(UTILISED BY)
/GENERATED FROM:-
OPERATING
ACTIVITIES (103,148) (6,460) (37,544) (39,499) (61,571)
INVESTING
ACTIVITIES (146,697) (132,002) (17,787) (26,736) (54,204)
FINANCING
ACTIVITIES 183,657 195,647 67,171 46,942 137,144
NET (DECREASE)/INCREASE IN
CASH AND CASH
EQUIVALENTS (66,188) 57,185 11,840 (19,293) 21,369
CASH & CASH EQUIVALENTS
AT BEGINNING
OF PERIOD 69,128 11,942 (8,900) 10,393 47,758
CASH & CASH
EQUIVALENTS
AT END OF
PERIOD 2,940 69,127 2,940 (8,900) 69,127
SHARE SHARE ACCUM TOTAL
CAPITAL PREMIUM PROFIT/(LOSS)EQUITY
R"000 R"000 R"000 R"000
STATEMENT OF CHANGES IN EQUITY
BALANCE AT 31 DECEMBER 2002 3,467 315,604 24,561 343,632
ISSUED DURING THE PERIOD 299 - - 299
SHARE PREMIUM - 67,334 - 67,334
NET LOSS AFTER TAXATION - - (13,961) (13,961)
BALANCE AT 31 MARCH 2003 3,766 382,938 10,600 397,304
ISSUED DURING THE PERIOD 6 - - 6
SHARE PREMIUM - 426 - 426
NET LOSS AFTER TAXATION - - (32,435) (32,435)
BALANCE AT 30 JUNE 2003 3,772 383,364 (21,835) 365,301
ISSUED DURING THE PERIOD 220 - - 220
SHARE PREMIUM - 51,317 - 51,317
NET LOSS AFTER TAXATION - - (30,015) (30,015)
BALANCE AT 30 SEPTEMBER 2003 3,992 434,681 (51,850) 386,823
ISSUED DURING THE PERIOD 227 - - 227
SHARE PREMIUM - 60,369 - 60,369
NET LOSS AFTER TAXATION - - (333,618) (333,618)
BALANCE AT 31 DECEMBER 2003 4,219 495,050 (385,468) 113,801
REVIEWED AUDITED UNAUDITED UNAUDITED UNAUDITED
YEAR TO YEAR TO QUARTER TO QUARTER TO QUARTER TO
31 DEC 2003 31 DEC 2002 31 DEC 2003 30 SEPT 2003 31 DEC 2002
R"000 R"000 R"000 R"000 R"000
SUPPLEMENTARY INFORMATION
CAPITAL
COMMITMENTS 2,000 50,000 2,000 8,000 50,000
CAPITAL
EXPENDITURE 115,166 119,306 20,442 24,590 35,982
ASSET FINANCE
LEASES:- 26,810 23,826 26,810 29,370 23,826
LESS:- SHORT-
TERM PORTION (8,074) (6,003) (8,074) (7,222) (6,003)
18,736 17,823 18,736 22,148 17,823
THE ABOVE FINANCE LEASES
ARE REPAYABLE OVER PERIODS
VARYING FROM ONE TO FIVE
YEARS AND BEAR INTEREST AT
AN AVERAGE RATE OF 10.85%.
LOAN-HEAP
LEACH PLANT:- 8,924 8,924 8,924 8,924 8,924
THE ABOVE LOAN IS REPAYABLE
IN 2005 AND BEARS INTEREST
AT A RATE OF 15.25%.
LOAN-NEDBANK:- 54,799 - 54,799 50,000 -
LESS:- SHORT-
TERM PORTION (20,000) - (20,000) (12,500) -
34,799 - 34,799 37,500 -
THE ABOVE IS A THREE YEAR
FACILITY AND BEARS INTEREST
AT A RATE OF JIBAR PLUS A
MARGIN OF 4% DECREASING TO 3%.
DUE TO THE TEMPORARY SUSPENSION
OF THE KLERKSDORP OPERATIONS,
THE COMPANY IS IN BREACH OF THE
TERMS OF THE LOAN AGREEMENT. THE
BREACH IS HOWEVER A SUBJECT OF
DISCUSSION AND ALTERNATIVE
FINANCING ARRANGEMENTS.
62,459 26,747 62,459 68,572 26,747
SECURITY:-
1. THE LOAN FOR THE HEAP-LEACH PLANT IS SECURED BY MOVABLE EQUIPMENT LIMITED TO
R8M, BOND OVER MINERAL RIGHTS FOR AN AMOUNT OF R11M AND BY A PLEDGE AND CESSION
OF ALL SHORT-TERM INSURANCE POLICIES COVERING THE HEAP LEACH PLANT.
2. THE NEDBANK LOAN FACILITY IS SECURED BY A BOND OVER MINERAL RIGHTS AND THE
CIL PLANT AS WELL AS SECURITY OVER CERTAIN MOVEABLE ASSETS.
Notes to the Provisional results
Accounting Policies
During the year, Aflease adopted the provisions of AC133, "Financial
Instruments: Recognition and Measurement." As a result of this, investments are
now stated in the balance sheet at fair market value. The net adjustment to
reflect the investments at market value amounted to a negative adjustment of
some R300 000. All other accounting policies used are consistent with those used
in the audited financial statements for the year ended 31 December 2002.
The provisional results have been prepared in accordance with South African
Statements of Generally Accepted Accounting Practice, including accounting
standard AC127, "Interim Financial Reporting".
New Acquisitions
New Kleinfontein Mining Company Ltd and its wholly owned subsidiaries were
acquired with 100% acceptance from shareholders for a consideration of R101,4
million which was settled through the issuance of 14,10 million shares and R33,8
million cash. R100 million of the acquisition price was allocated to undeveloped
properties with R1,4 million being allocated to net assets and liabilities.
Impairment of Long Life Assets and Write Down of Inventory
In terms of Generally Acceptable Accounting Practice, the book value of assets
must be supported by future discounted cash flows. These cash flows should be
based on proven and probable reserves of a mine. The suspension of mining
activities at the open pit operations and the resulting mothballing of the CIL
plant have resulted in the impairment of certain long-lived assets and write
down of in-process inventories. The in-process inventories contained in
stockpiles were assessed at year end and the gold content was found to be
inadequate to support the carrying value thereof. The non-cash charges to the
income statement consist of the following items:
Book Value
after
(Figures in R"000) Impairment Impairment
Underground Assets 5,501 31,184
CIL Plant 91,549 49,149
Open Pit & Supporting Equipment 126,528 25,158
Deferred Stripping 6,747 -
Total impairment adjustment 230,325 105,491
Write down of Heap Leach Pads & Stockpiles 58,557 -
Total non-cash adjustment 288,882
Rehabilitation Provision
Management has during the past number of months embarked upon a holistic review
of the Klerksdorp operations including the impact of past and future mining
activities on the environment. To this end, both an independent and internal
review was performed of the rehabilitation obligations at the operations and it
was concluded that the provision made at the end of the previous financial year
of R4,5 million was inadequate. Given the reduction of the life-of-mine and the
above review, the provision was subsequently increased by R15,1 million to R19,6
million as at the end of December 2003.
Contingencies and capital commitments
The capital commitments relates to capital expenditure on the Bonanza and Modder
East projects.
6. Segmental reporting
The group operates in two geographical areas, the East Rand, Gauteng, South
Africa, and Klerksdorp, North West Province, South Africa, and is involved in
only one business segment, namely that of gold mining. Due to the capital
development at the East Rand operations, revenue as reported in the income
statement only includes that revenue generated from the Klerksdorp operations.
Headline (loss)/earnings
The calculation of headline (loss)/earnings per share is derived from the
consolidated net loss after taxation of R410,0 million (2002: profit R15,6
million) adjusted for any non-operational losses or gains divided by the average
number of shares in issue. The 2003 year end losses have been adjusted for the
post tax impact of impairment of the long-lived assets amounting to 230,3
million.
Headline losses for the year ended 31 December 2003 are R179,8 million (2002:
profit R15,6 million)
Subsequent events -Kalahari Gold Ridge Limited
During November 2003, Aflease announced the conclusion of an agreement with
Harmony Gold Mine Limited in terms of which Kalahari Gold Ridge Limited would be
acquired for a consideration of R275 million pending certain conditions
precedent. On the 17th of March 2004, Aflease announced that Harmony rejected
the proposed payment terms and the transaction was cancelled and specific
performance claims were subsequently waived by both parties.
Going concern
The provisional financial results for the year ended 31 December 2003 has been
prepared on a going concern basis. Aflease has secured sufficient funding
facilities to complete the current capital programs which will bring into
production future cash generative projects.
Funding facilities are as follows:
- R82,5 million private placement as announced on 12 February 2004.
- Underwritten Rights Offer to shareholders of R100 million. A commitment letter
from the underwriters has been accepted by Aflease and the terms and conditions
of the Rights Offer will be communicated to shareholders as soon as practical.
Dividends
No dividend has been proposed or declared for the period under review
Audit Review
PricewaterhouseCoopers Inc. unmodified review report on the condensed
financial statements contained in this provisional report is available for
inspection at the company"s registered office.
Disclaimer
Statements made in this document with respect to Aflease"s current plans,
estimates, strategies and beliefs and other statements that are not historical
facts are forward-looking statements about the future performances of Aflease.
These statements are based on management"s assumptions and beliefs in light of
the information currently available to it. Aflease cautions you that a number of
risk and assumptions could cause actual results to differ materially from those
discussed in the forward-looking statements, and therefore you should not place
undue reliance on them. The potential risk and assumptions include, amongst
others, risks associated with fluctuations in the Rand-dollar exchange rate,
dollar market price of gold, gold production at operations, estimates of
reserves and resources. Aflease assumes no obligation to update information of
this release.
