| Tue 22 Mar 2005, 16:09 | | Unaudited quarterly results ended 31 December 2004 |
|
Western Areas - Unaudited quarterly results ended 31 December 2004
WESTERN AREAS LIMITEDIncorporated in the Republic of South Africa(Registration
number: 1959/003209/06)(`Western Areas` or `the Company`)Share code: WAR ISIN
No: ZAE000016549ADR Ticker symbol: WARUYCUSIP No: 957654304
UNAUDITED QUARTERLY RESULTS ENDED 31 DECEMBER 2004
PRODUCTION AND UNIT RESULTS
Year Year Quarter Quarter Quarter Quarter
ended ended ended ended ended ended
31.12.03 31.12.04 31.03.04 30.06.04 30.09.04 31.12.04
IMPERIAL
Reef mined tons 1 097 888 208 210 248 222
(000)
Ore milled tons 1 095 1 241 290 299 317 335
(000)
Yield oz/ton 0.206 0.228 0.200 0.230 0.229 0.254
(underground)
Yield (incl. oz/ton 0.205 0.176 0.161 0.175 0.184 0.185
surface)
Gold produced oz 224 227 218 025 46 643 52 354 58 233 60 795
Gold sold oz 225 218 218 582 47 565 52 244 57 372 61 401
Cash costs US$/oz 287 373 406 379 359 375
Total US$/oz 341 445 491 441 406 472
production
costs
Gold price US$/oz 315 298 284 284 314 336
achieved
Average
exchange rate
achieved
Period end
exchange rate
Capital US$m 63 49 14 12 11 12
expenditure
Capital US$m 13 5 14 10 8 5
commitment at
end of period
Quarter Quarter Quarter Quarter Year Year
ended ended ended ended ended Ended
31.12.04 30.09.04 30.06.04 31.03.04 31.12.04 31.12.03
METRIC
Reef mined tonnes 201 225 190 189 805 996
(000)
Ore milled tonnes 297 289 271 262 1,119 995
(000)
Yield g/tonne 8.74 7.82 7.89 6.87 7.84 7.05
(underground
)
Yield (incl. g/tonne 6.36 6.27 6.00 5.54 6.06 7.01
surface)
Gold kg 1 891 1 811 1 628 1 451 6 781 6.974
produced
Gold sold kg 1 911 1 784 1 624 1 480 6 799 7 005
Cash costs R/kg 74 660 73 636 80 468 88 550 77 873 69 861
Total R/kg 93 892 83 330 93 738 107 162 92 770 83 150
production
costs
Gold price R/kg 66 792 64 349 60 328 61 861 62 289 76 647
achieved
Average R/$ 6.1829 6.3741 6.6071 6.7750 6.5009 7.5682
exchange
rate
achieved
Period end R/$ 5.6600 6.4570 6.2700 6.2675 5.6600 6.6150
exchange
rate
Capital Rm 45 69 76 88 278 417
expenditure
Capital Rm 28 54 61 84 28 86
commitment
at end of
period
ABRIDGED CONSOLIDATED INCOME STATEMENT
Quarters ended Years ended
SA Rand Million Notes
31.12.04 30.09.04 31.12.04 31.12.03
Unaudited Unaudited Unaudited Audited
Gold revenue 102.3 108.6 381.4 582.4
Total production costs 1 (168.4) (151.0) (627.5) (579.9)
Production costs - (135.2) (133.4) (528.1) (487.3)
cash
Production costs - non (33.2) (17.6) (99.4) (92.6)
cash
Operating (loss)/profit (66.1) (42.4) (246.1) 2.5
from gold
Other income/(costs) 0.4 (0.3) (6.9) 176.7
Administration and (2.0) (7.9) (20.5) (25.6)
other expenditure
Operating (loss)/profit (67.7) (50.6) (273.5) 153.6
before derivative
transactions
Present value (9.0) (50.9) (69.8) (75.0)
adjustment for option
premium payable
Fair value adjustment 2 187.9 (39.5) 221.0 447.4
Exchange gains/(losses) 3 128.4 (29.1) 151.2 340.8
Profit/(Loss) before 239.6 (170.1) 28.9 866.8
taxation
Taxation 6 (49.7) 11.7 (15.4) (402.0)
Minority interest in - - - (4.1)
profit
Profit/(Loss) for the 189.9 (158.4) 13.5 460.7
period
Headline 171.8 (148.2) 10.8 332,3
earnings/(loss) per
share - cents
Earnings/(Loss) per 172.2 (148.2) 12.2 440,6
share - cents
Number of issued shares 118.5 118.5 118.5 105.4
(million)
Determination of
headline earnings:
Net profit/(loss) for 189.9 (158.4) 13.5 460.7
the period
Net loss on disposal of - - - 40.0
subsidiary
(Profit)/Loss on (0.7) - (0.7) 2.4
disposal of mining
assets
Unclaimed dividends (1.1) (1.1) -
written back
Net (loss)/profit on 1.4 - 0.2 (155.7)
disposal of investments
Headline 189.5 (158.4) 11.9 347.4
earnings/(loss)
ABRIDGED CONSOLIDATED BALANCE SHEET
Period ended Year ended
SA Rand Million Notes
31.12.04 30.09.04 31.12.03
Unaudited Unaudited Audited
Assets
Mining assets 4 3 411.8 3 399.8 3 223.9
Derivative asset 702.6 694.2 792.1
Listed/Other investments 5 38.2 0.3 45.5
Deferred taxation 6 446.0 418.6 429.3
Cash and cash equivalents 13.2 14.9 21.9
Other assets 54.5 75.1 66.8
Total assets 4 666.3 4 602.9 4 579.5
Equity and liabilities
Shareholders` equity 1 511.0 1 414.4 1 135.6
Option premium payable 905.7 1 047.2 1 084.7
Derivative liability 2 016.7 2 013.5 2 217.6
Other liabilities 7 232.9 127.8 141.6
Total equity and 4 666.3 4 602.9 4 579.5
liabilities
ABRIDGED CONSOLIDATED CASH FLOW STATEMENT
Quarters ended Years ended
SA Rand Million Notes
31.12.04 30.09.03 31.12.04 31.12.03
Unaudited Unaudited Unaudited Audited
Cash flow (utilised (40.1) (30.2) (147.0) 43.1
by)/from operating
activities
Cash flow utilised in 7 (56.8) (69.3) (261.5) (69.6)
investing activities
Cash flow 93.5 91.3 399.8 (27.6)
from/(utilised in)
finance activities
Net decrease in cash (3.4) (8.2) (8.7) (54.1)
and cash equivalents
Cash and cash
equivalents:
- at beginning of 14.9 22.6 21.9 76.4
period
- effect of exchange 1.7 0.5 - 1.4
rate fluctuations on
cash held
- cash and cash - - - (1.8)
equivalents of
subsidiary disposed of
At end of period 13.2 14.9 13.2 21.9
STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY
Avai-
Trea- Cash lable Re-
Share sury flow for- tained
SA Rand Share Pre- shares Hedge sale Ear-
million capital mium Rm Reserve reserve nings Total
Balance as 105.4 1 863.5 (8.9) (1 330.6) 1.7 504.5 1 135.6
at 31
December
2003
Number of 13.1 388.6 - - - - 401.7
ordinary
shares
issued
Share issue - (6.6) - - - - (6.6)
costs
Fair value - - - (142.7) - - (142.7)
adjustment
Recycling - - - 105.4 - - 105.4
of fair
value on
maturing of
derivatives
Recycling - - - - (1.7) - (1.7)
of fair
value on
disposal of
investment
Disposal of - - 5.8 - - - 5.8
shares
Attribu- - - - - - 13.5 13.5
table
profit for
the period
Balance as 118.5 2 245.5 (3.1) (1 367.9) - 518.0 1 511.0
at 31
December
2004
31.12.04 30.09.04 31.12.03
Reconciliation of the weighted 000s 000s 000s
average number of ordinary shares
Balance at beginning of year 104 667 104 667 104 162
- Ordinary shares 105 376 105 376 105 376
- Treasury shares (709) (709) (1 214)
Shares sold/exercised 19 19 391
Rights issue during the year 5 650 2 339 -
Weighted average number of 110 336 106 897 104 553
ordinary shares for earnings per
share (million)
NOTES TO THE ABRIDGED FINANCIAL STATEMENTS
1. Non-cash operating costs generally includes the amortisation of Western
Areas` share of South Deep and the change in inventory for the period.
2. Fair value adjustments relate to the revaluation to fair value of the
derivative structure at period-end. The revaluation based on exchange rate
fluctuations are accounted for in the income statement whilst the revaluation
based on the gold price fluctuations is accounted for in equity in the balance
sheet.
3. Exchange gains relating to option premium payable are attributable to the
change in the Rand/US Dollar exchange rate from 6.457 at 30 September to 5.660
at 31 December 2004.
4. No adjustment has been made to reflect mining assets at their fair value.
5. During 2004, the Company`s entire investment of 42 268 345 JCI Limited
shares and 50 651 JCI Limited debentures were sold.
6. Deferred taxation movement includes the effect of the fair value revaluation
of the derivative structure based on the gold price fluctuations, which is
accounted for in equity. The US$ gold price increased from US$418 at 30
September 2004 to US$438 at 31 December 2004.
7. The loan of 293.7 million (including capitalised interest), provided by JCI
Limited in terms of the Western Areas` rights offer has been settled. JCI
Limited funded an additional R95.2 million in terms of the stand-by facility of
R200 million in the current quarter.
BASIS OF ACCOUNTING
The quarterly results are prepared in accordance with South African Statements
of Generally Accepted Accounting Practice and the accounting policies applied
are consistent with those of the previous corresponding period with the adoption
of AC133 Financial Instruments: Recognition and Measurements, in 2003.
LETTER TO SHAREHOLDERS
RECOVERY AT WESTERN AREAS IN 4TH QUARTER: LIFTS YEAR-END RESULTS INTO THE
BLACKSubstantial revaluation gains of R307 million on Dollar liabilities (in
accordance with AC133), boosted the results of Western Areas for the quarter
ended December 2004. This allowed the Company to report a modest year-end after-
tax profit of R13.5 million from a year-to-date loss of R176.4 million in
September. Fourth quarter profit for the Company was R189.9 million (171,8
cents/share), inclusive of R9.8 million of severance costs, compared to a loss
of R158.4 (148,2 cents/share) for the previous quarter.
The results for the year reflect the impact of the further appreciation of the
Rand relative to the Dollar, and the sustained positive trend in the gold price,
although the impact was offset by the call options sold in the derivative
structure, in the order of R192.2 million.
Year on year profit declined from R460.7 million to R13.5 million as a
consequence of the lower gold revenue stemming from the negative impact of the
call options sold, increased cost pressures at South Deep, the absence of
abnormal profits from the sale of investments (R207 million in 2003) and a
lesser appreciation in the Rand, resulting in revaluation gains of R302.4
million compared to R713.2 million in 2004.
Gold production for the year of 6 781 kilograms (218 025 ounces) was slightly up
on the forecast of 6 600 kilograms (212 195 ounces). However, production
decreased by 3% from 6 974 kilograms (224 227 ounces) relative to 2003.
Tonnes milled for the year was 1 119 000 (2003 - 995 000) - of which
788 500 tonnes was from underground - against a forecast throughput of
1 055 000 tonnes. The yield achieved was 6.06g/t relative to the forecast of
6.25g/t. The lower yield was primarily due to the increased treatment of low-
grade surface material to utilise the metallurgical plant capacity more fully.
Excluding hedging losses, gold revenue decreased from R619.9 million in 2003 to
R573.6 million in 2004, and including hedging losses, from R582.4 million in
2003 to R381.4 million in 2004.
Cash costs per kilogram produced increased from R69 861/kg to R77 873/kg. The
average Dollar spot gold price (excluding hedging) achieved increased from
$363/oz in 2003 to $398/oz in 2004. The benefit of the improved gold price was
offset by the strengthening of the Rand, from an average of R7.5735/$ in 2003 to
R6.490/$ in 2004, translating into R88 300/kg for 2003 and R82 989/kg for 2004.
Countering the higher gold price were the sold call options in the derivative
structure, reducing the average gold price (including hedging) achieved to
$298/oz compared to $315/oz in 2003.
Operating cash flow from mining activities, including hedging gains and losses,
decreased from R34 million net inflow in 2003 to R147 million net outflow in
2004. Cost of sales, comprising total cash costs, retrenchment and
rehabilitation costs, changes in gold inventories and amortisation of mining
assets, increased from R580 million in 2003 to R628 million in 2004. Corrective
action in 2004 resulted in retrenchment and rehabilitation costs increasing by
R11 million to R21 million. Abnormal costs included R4 million in the September
quarter for the purchase of a 3-D seismic from Gold Fields.
The South Deep Main Shaft was successfully commissioned on 19 November 2004.
Total cost of the South Deep Twin Shafts project over the 10-year project
duration amounted to R4 billion. The South Deep Main Shaft will provide more
productive access to underground workings.
Further capital expenditure of approximately R215 million will be invested at
the South Deep Twin Shafts during 2005, principally on station and lateral
access development on Levels 100, 105 and 110, installation of production and
development equipment and the commissioning of the main surface fans.
The Company intends to restructure its derivatives to more appropriately match
the South Deep production build-up. In a similar vein, Western Areas is planning
to refinance the Dollar liability incurred as part of the derivative transaction
in 2001 at R11.05/$ into a convertible preference share. It is anticipated that
some R1.2 billion will be raised to ensure that a funding buffer exists for the
ramp-up of production at South Deep. An additional aim of the funding structure
will be to increase the liquidity of the Western Areas share.
Under consideration is a mill expansion from the current installed capacity of
220 000 tonnes per month to approximately 330 000 tonnes per month combined with
accelerated development on the 100, 105 and 110 Levels.
The PDWA JV informed Harmony on Friday, 7 January 2005 it would cease pumping
water from Harmony`s Randfontein Estates No. 4 Shaft. The boundary plugs and
pillars separating the mines have been thoroughly tested by independent
international experts, and found to be satisfactory and there will therefore be
no impact on mining at South Deep.
Western Areas is conducting a review to establish the extent to which, following
the formation of the Joint Venture and the management of South Deep by Placer
Dome, the project suffered from poor planning and execution of work, overruns of
capital expenditure, a delay in the commissioning of the Main Shaft and possible
contraventions of the Joint Venture Agreement.
Should this review indicate grounds for seeking restitution of losses incurred
by the Joint Venture and a negotiated solution of this matter is not achieved,
Western Areas may institute action against Placer Dome to claim for the losses
incurred, which may be material.
Western Areas` Mineral Resources and Mineral Reserves attributable to Western
Areas as of 31 December 2004 were 37 445 ounces and 27 808 ounces respectively.
The Mineral Resources are estimated on the basis of the July 2002 Mineral
Resource Model reported as at 31 December 2003, and depleted for production
during 2004. The Mineral Reserves are estimated on the basis of the March 2004
Mineral Reserves, and are depleted for production during 2004. The geological
model is presently being updated to accommodate new sampling data, the recently
introduced `mini-models` and the results of the 3-D Seismic survey.
WESTERN AREAS LIMITEDIncorporated in the Republic of South Africa(Registration
number: 1959/003209/06)(`Western Areas` or `the Company`)Share code: WAR ISIN
No: ZAE000016549ADR Ticker symbol: WARUYCUSIP No: 957654304
28 Harrison Street, Johannesburg, 2001PO Box 61719, Marshalltown, 2107Telephone:
+27 (11) 688-5000Fax: +27 (11) 834-9195
COMMUNICATIONSBrian Gibson Issue ManagementContact person: Brian
GibsonTelephone: +27 (11) 880-1510Fax: +27 (11) 880-1392e-mail:
gibson@icon.co.za
TRANSFER SECRETARIES - SOUTH AFRICAComputershare Investor Services 2004 (Pty)
Ltd70 Marshall Street, Johannesburg, 2001PO Box 61051, Marshalltown,
2107Telephone: +27 (11) 370-5000Fax: +27 (11) 688-7721/2
OFFICE OF UNITED KINGDOM REGISTRARSCapita RegistrarsThe Registry34 Beckenham
Road, BeckenhamKent, BR3 4TU
UNITED STATES DEPOSITORYAmerican Depository ReceiptsThe Bank of New
YorkShareholder Relations DepartmentTel: +91 212 815 3326Fax: +91 212 571
3050www: adrbny.comShareholder RelationsToll free no: (US or Canada only)1-888-
269-2377 (1-888-BNY-ADRS)
Mafika Mkwanazi Non-executive Chairman
Brett Kebble Chief Executive Officer
Johannensburg
22 March 2005
Date: 22/03/2005 04:00:34 PM
Produced by the JSE SENS Department
