| Thu 31 Mar 2005, 18:00 | | RESULTS FOR THE YEAR ENDED 31 DECEMBER 2004 |
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Aflease Gold And Uranium Resources Limited - Reviewed Consolidated Financial
Results For The Year Ended 31 December 2004
AFLEASE GOLD AND URANIUM RESOURCES LIMITED
(Formerly The Afrikander Lease Limited)
(Incorporated in the Republic of South Africa)
Share code: AFL (JSE) AFLUY (NASDAQ)
(Registration number 1921/006955/06) ISIN: ZAE000061461
(`Aflease` or `the company`)
REVIEWED CONSOLIDATED FINANCIAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2004
Commentary to the Reviewed Annual Financial Statements
Introduction
The financial statements for the year 2004 reflect the initial success of the
strong Rand strategy that was developed and implemented towards the end of 2003.
This strategy required that the operations be restructured, that the company
develops its high margin assets and continues with focused exploration.
The company implemented a decision in November 2003 to restructure its marginal
operations. Management subsequently restructured the marginal opencast mine in
November 2003. The Rand continued to strengthen further in 2004, which resulted
in all gold production being terminated. As a result the company`s status
changed to that of an exploration and development company. This status is about
to change again as the first of Aflease`s three high-margin operations, Bonanza
South, will become operational during the second quarter of 2005, generating a
revenue stream. It is pleasing to note that with the operational restructuring,
and despite the continued strengthening of the Rand, the large operating losses
of 2003 have been reversed and the company is pleased to report a 99%
improvement to the cash operating loss of 2003.
The balance of the high margin assets, the Modder East Gold and the Dominion
Uranium project, have required significant expenditure for feasibility and
exploration drilling. The encouraging results from the focused exploration
drilling program will be released in the 2004 Reserve and Resource declaration.
Despite this additional expenditure the operating loss before other costs,
reflects a 56% improvement to a R47 million loss.
The implementation of the strong Rand strategy also required that the company
raise sufficient cash to ensure that the company was fully funded. As a
consequence a number of non-reoccurring costs resulted in the net loss
attributable to shareholders for 2004 being R87.3 million, a 79% improvement
over the previous year.
The capital raising resulted in the company restructuring the balance sheet.
The interest bearing debt of Nedcor was completely settled during the year and
the company`s balance sheet remained largely ungeared. A large part of the
remaining outstanding debt is convertible into equity.
AFLEASE GOLD AND URANIUM RESOURCES LIMITED
CONSOLIDATED FINANCIAL RESULTS
REVIEWED AUDITED UNAUDITED UNAUDITED UNAUDITED
YEAR YEAR 6 MONTHS 6 MONTHS 6 MONTHS
ENDED ENDED ENDED ENDED ENDED
HIGHLIGHTS:- 31 DEC 31 DEC 31 DEC 30 JUN 31 DEC
2004 2003 2004 2004 2003
GOLD PRODUCED
AND SOLD:-
- 146 1,222 19 127 915
KILOGRAMS
-OUNCES 4,709 39,288 612 4,097 29,418
CASH OPERATING n/a 79.01 n/a n/a 63.78
COST PER TON
MINED
CASH OPERATING
COST:-
-RAND / KG 113,320 122,258 335,361 80,159 100,949
-$ / OZ 552 518 1,692 366 445
CASH OPERATING (469) (48,435) (4,732) 4,263 (20,231)
(LOSS)/PROFIT
(R`000)
OPERATING LOSS (47,030) (107,839) (34,453) (12,577) (65,282)
(before other
costs) (R `000)
NET LOSS (R`000) (87,275) (409,624) (72,242) (15,033) (363,136)
HEADLINE LOSS (33.27) (95.16) (26.96) (7.06) (66.60)
PER SHARE
(CENTS)
BASIC LOSS PER (36.08) (217.40) (29.76) (7.06) (182.11)
SHARE (CENTS)
OPERATING RESULTS:-
TONS MINED - - 1,799,3 - - 949,348
OPEN PIT 61
TONS MINED - - 91,405 - - 74,241
UNDERGROUND
TONS STACKED - 341,091 1,341,9 - 341,091 908,697
CIS 56
TONS MILLED - 21,557 1,262,5 - 21,557 1,121,822
CIL 18
REEF METRES 751 - 385 366 -
DEVELOPED -
UNDERGROUND
WASTE METRES 2,355 - 1,343 1,012 -
DEVELOPED -
UNDERGROUND
GOLD PRODUCED 146 1,222 19 127 915
AND SOLD (KG)
GRADE STACKED - 0.33 0.47 - 0.33 0.18
CIS
GRADE MILLED - 0.75 0.83 - 0.75 0.79
CIL
GOLD PRICE
RECEIVED:-
-RAND / 83,302 87,338 64,240 86,149 85,137
KG
-RAND / 2,591 2,717 1,998 2,680 2,648
OZ
-$ / OZ 399 367 400 384 373
INCOME REVIEWED AUDITED UNAUDITED
STATEMENT:- UNAUDITED UNAUDITED
YEAR YEAR 6 MONTHS 6 MONTHS 6 MONTHS
ENDED ENDED ENDED ENDED ENDED
31 DEC 31 DEC 31 DEC 30 JUN 31 DEC
2004 2003 2004 2004 2003
R`000 R`000 R`000 R`000 R`000
REVENUE 16,128 100,964 1,650 14,478 72,137
GOLD 12,200 100,964 1,222 10,978 72,137
SUNDRY 3,928 - 428 3,500 -
CASH OPERATING 16,597 160,629 6,382 10,215 92,368
COSTS
CASH MOVEMENT IN - (11,230) - - -
LOCK-UP
CASH OPERATING (469) (48,435) (4,732) 4,263 (20,231)
(LOSS)/PROFIT
AMORTISATION 1,157 15,563 573 584 8,132
AND DEPRECIATION
NON-CASH 4,071 4,767 - 4,071 4,767
MOVEMENT IN LOCK-
UP
NET FINANCE 17,550 9,270 11,793 5,757 7,127
COSTS
GENERAL AND 14,345 9,165 9,571 4,774 7,283
ADMINISTRATIVE
EXPLORATION 6,420 5,557 4,766 1,654 2,661
EXPENDITURE
REHABILITATION 3,018 15,082 3,018 - 15,082
PROVISION
OPERATING LOSS (47,030) (107,839) (34,453) (12,577) (65,282)
BEFORE OTHER
COSTS
OTHER COSTS
691 6,744 115 576 4,142
DECOMMISSIONING
FUNDING EXPENSES 8,387 6,265 6,507 1,880 4,936
AND LEGAL FEES
PROFIT ON SALE (5,293) - (5,293) - -
OF PROPERTY,
PLANT AND
EQUIPMENT
PROFIT ON SALE (4,750) - (4,750) - -
OF INVESTMENTS
FAIR VALUE LOSS 15,082 301 15,082 - 301
ON INVESTMENTS
IMPAIRMENT OF 16,847 230,325 16,847 - 230,325
LONG LIFE ASSETS
WRITE DOWN OF 10,920 58,557 10,920 - 58,557
HEAP LEACH AND
OTHER STOCK
ITEMS
LOSS BEFORE (88,914) (410,031) (73,881) (15,033) (363,543)
DERIVATIVE
ADJUSTMENT
MARK-TO-MARKET 1,639 - 1,639 - -
OF DERIVATIVE
FINANCIAL
INSTRUMENT
LOSS BEFORE (87,275) (410,031) (72,242) (15,033) (363,543)
TAXATION
TAXATION - 407 - - 407
LOSS (87,275) (409,624) (72,242) (15,033) (363,136)
ATTRIBUTABLE TO
ORDINARY
SHAREHOLDERS
(LOSS) /
EARNINGS PER
SHARE (CENTS):-
-HEADLINE (33.27) (95.16) (26.96) (7.06) (66.60)
-BASIC (36.08) (217.40) (29.76) (7.06) (182.11)
-FULLY DILUTED (33.27) (91.28) (26.96) (7.06) (64.02)
HEADLINE
-FULLY DILUTED (36.08) (208.53) (29.76) (7.06) (175.04)
BASIC
NET ASSET VALUE 62.08 54.14 62.08 51.13 54.14
PER SHARE
(CENTS):-
WEIGHTED AVERAGE
NUMBER
OF ORDINARY 241,902,8 188,421,14
SHARES IN ISSUE 97 8 242,766,8 212,979,9 199,408,95
87 40 9
NUMBER OF SHARES 336,451,3 210,952,40
IN ISSUE AT END 21 6 336,451,3 214,684,6 210,952,40
OF PERIOD 21 14 6
REVIEWED UNAUDITED AUDITED
AS AT AS AT AS AT
ABRIDGED BALANCE 31 DEC 30 JUNE 31 DEC
SHEET:- 2004 2004 2003
R`000 R`000 R`000
ASSETS
NON-CURRENT
ASSETS:-
-MINING ASSETS 225,316 228,916 214,707
-OTHER ASSETS 222 222 222
-INVESTMENTS 80,533 13,364 12,514
306,071 242,502 227,443
CURRENT ASSETS:-
-INVENTORIES 1,112 9,152 14,698
-RECEIVABLES AND 28,644 6,107 8,539
PREPAYMENTS
-AMOUNTS OWING 140 113 86
BY RELATED THIRD
PARTIES
-BANK AND CASH 1,291 2,730 12,482
BALANCES
31,187 18,102 35,805
TOTAL ASSETS 337,258 260,604 263,248
EQUITY AND
LIABILITIES
CAPITAL AND
RESERVES:-
-ORDINARY SHARE 6,729 4,294 4,219
CAPITAL
-SHARE PREMIUM 674,468 505,576 495,050
-ACCUMULATED (400,094)
LOSS (472,337) (385,061)
208,860 109,776 114,208
NON-CURRENT
LIABILITIES:-
-INTEREST 11,642 23,787 63,391
BEARING
BORROWINGS
-REHABILITATION 23,677 20,659 20,610
AND CLOSURE COST
OBLIGATIONS
-AMOUNTS OWING - - 106
TO RELATED THIRD
PARTIES
35,319 44,446 84,107
CURRENT
LIABILITIES:-
- DERIVATIVE 16,537 - -
FINANCIAL
INSTRUMENT
-TRADE AND OTHER 8,350 11,653 17,147
PAYABLES
-PROVISIONS 10,731 5,207 8,793
SHORT TERM LOAN 41,608 80,211 -
-CURRENT PORTION 15,774 9,217 29,451
OF INTEREST
BEARING
BORROWINGS
-BANK OVERDRAFT 79 94 9,542
BALANCES
93,079 106,382 64,933
TOTAL EQUITY AND 337,258 260,604 263,248
LIABILITIES
REVIEWED AUDITED UNAUDITED UNAUDITED
UNAUDITED
YEAR YEAR 6 MONTHS 6 MONTHS 6 MONTHS
ENDED ENDED ENDED ENDED ENDED
ABRIDGED CASH 31 DEC 31 DEC 31 DEC 30 JUN 31 DEC
FLOW STATEMENT:- 2004 2003 2004 2004 2003
R`000 R`000 R`000 R`000 R`000
CASH FLOW
GENERATED FROM /
(UTILISED BY) :-
OPERATING (42,155) (87,710) (27,285) (14,870) (94,239)
ACTIVITIES
INVESTING 4,885 (145,623) 20,528 (15,643) 39,288
ACTIVITIES
FINANCING 35,542 167,145 5,334 30,817 47,497
ACTIVITIES
NET (DECREASE) / (1,728) (66,188) (1,423) (304) (7,453)
INCREASE IN CASH
AND CASH
EQUIVALENTS
CASH & CASH
EQUIVALENTS
AT BEGINNING OF 2,940 69,128 2,635 2,940 10,393
PERIOD
CASH & CASH
EQUIVALENTS
AT END OF PERIOD 1,212 2,940 1,212 2,636 2,940
STATEMENT OF CHANGES IN EQUITY:-
SHARE SHARE ACCUM TOTAL
CAPITAL PREMIUM LOSS EQUITY
R`000 R`000 R`000 R`000
BALANCE AT 31ST 3,466 315,605 24,563 343,634
DECEMBER 2002
ISSUED DURING 753 - - 753
THE PERIOD
SHARE PREMIUM - 179,445 - 179,445
NET LOSS AFTER - - (409,624) (409,624)
TAXATION
BALANCE AT 31 4,219 495,050 (385,061) 114,208
DECEMBER 2003
ISSUED DURING 75 - - 75
THE PERIOD
SHARE PREMIUM - 10,526 - 10,526
NET LOSS AFTER - - (15,033) (15,033)
TAXATION
BALANCE AT 30 4,294 505,576 (400,094) 109,776
JUNE 2004
ISSUED DURING 2,435 - - 2,435
THE PERIOD
SHARE PREMIUM - 168,892 - 168,892
NET LOSS AFTER - - (72,242) (72,242)
TAXATION
BALANCE AT 31 6,729 674,468 (472,336) 208,861
DECEMBER 2004
REVIEWED AUDITED UNAUDITED UNAUDITED UNAUDITED
YEAR YEAR 6 MONTHS 6 MONTHS 6 MONTHS
ENDED ENDED ENDED ENDED ENDED
SUPPLEMENTARY 31 DEC 31 DEC 31 DEC 30 JUN 31 DEC
INFORMATION:- 2004 2003 2004 2004 2003
R`000 R`000 R`000 R`000 R`000
CAPITAL 19,657 2,000 19,657 1,100 2,000
COMMITMENTS
CAPITAL 39,614 115,166 19,436 20,178 45,032
EXPENDITURE
ASSET FINANCE 19,583 26,810 19,583 24,489 26,810
LEASES:-
LESS:- SHORT- (7,941) (9,452) (7,941) (9,217) (9,452)
TERM PORTION
11,642 17,358 11,642 15,272 17,358
THE ABOVE FINANCE LEASES ARE REPAYABLE OVER PERIODS VARYING FROM ONE
TO FIVE YEARS AND BEAR INTEREST AT AN AVERAGE RATE OF 10.00%
LOAN-HEAP LEACH 7,833 8,924 7,833 8,515 8,924
PLANT:-
THE ABOVE LOAN IS REPAYABLE IN 2005 AND BEARS INTEREST AT A RATE OF
15.25%.
LOAN-NEDBANK:- - 54,799 - 44,226 54,799
LESS:- SHORT- - - (44,226) (20,000)
TERM PORTION (20,000)
- 34,799 - - 34,799
THE LOAN BEARS INTEREST AT A RATE OF JIBAR PLUS A MARGIN OF 4%
DECREASING TO 3% AND WAS REPAID DURING 2004.
LOAN-EASTBOURNE:-
CONVERTIBLE LOAN 41,608 - 41,608 35,985 -
DERIVATIVE 16,537 - 16,537 - -
FINANCIAL
INSTRUMENT
INTEREST IS AT 1.5% ABOVE PRIME INTEREST RATE, AND WILL BE REPAID BY
AFLEASE ON THE LAST DAY OF THE TWELVE MONTH PERIOD FOLLOWING THE
CLOSURE OF THE RANDGOLD SHARE SWAP TRANSACTION (AS ANNOUNCED ON 2
AUGUST 2004) BY ONE OF THE FOLLOWING METHODS AT THE ELECTION OF
EASTBOURNE:
1. CONVERSION OF THE LOAN AT A SHARE PRICE OF R2.75 PER AFLEASE
ORDINARY SHARE PLUS A THREE YEAR OPTION WITH AN EXERCISE PRICE OF
R3.50 PER AFLEASE ORDINARY SHARE.
2. CONVERSION OF THE LOAN AT AN AFLEASE ORDINARY SHARE PRICE EQUAL
TO 90% OF THE 30-DAY TRADE WEIGHTED AVERAGE SHARE PRICE. EASTBOURNE
HAS COMMITTED NOT TO TRADE IN AFLEASE SHARES FOR A PERIOD OF 60 DAYS
LEADING UP TO CONVERSION DATE.
INCLUDED IN THE LOAN STRUCTURE IS A DERIVATIVE FINANCIAL INSTRUMENT
WHICH IS CARRIED AT ITS FAIR VALUE AT 31 DECEMBER 2004.
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 WAS SECURED BY A BOND OVER MINERAL
RIGHTS AND THE CIL PLANT AS WELL AS SECURITY OVER CERTAIN MOVEABLE
ASSETS.
Notes to the Results
1. Accounting Policies
The accounting policies applied are consistent with those applied in the audited
financial statements for the year ended 31 December 2003. The provisional
results have been prepared in accordance with South African Statements of
Generally Accepted Accounting Practice, including accounting standard AC127,
`Interim Financial Reporting`.
2. Impairment of Long Life Assets and Write Down of Inventory
At the end of the 2003 financial year, certain identified moveable assets were
written down to the net selling price. The net selling price was determined by
identifying certain assets for sale, and commencing with a tender process. An
auctioneer was also approached to evaluate the assets identified. These assets
were then impaired to the extent that their carrying amount exceeded their
tender or auctioneer value. During the current financial year, an auction was
held whereby some of these assets were sold. However, moveable assets to the
carrying amount of R21.8 million were not sold at this auction, and at this
stage, it is not anticipated that these assets will be sold in the near future.
As a result of these assets being directly related to the suspended open-pit
operations, a decision was made to impair these assets to the recoverable amount
of R5 million.
Certain inventory items were identified for sale and were placed on auction as
described above. As part of the auction process, it was determined that the
inventory items were over valued, and as such the inventory was written down by
R7.4 million to their net realisable value.
3. Rehabilitation Provision
During the current financial year, an extensive independent and internal review
was performed of the rehabilitation obligations at the operations. As stated in
the Competent Person`s Report signed in March 2004, the preliminary closure cost
estimate for the existing infrastructure at the Klerksdorp Operations amounts to
R22.6 million. The provision was increased by R3 million from R19.6 million to
R22.6 million as at the end of December 2004.
4. Headline loss
The calculation of headline loss per share is derived from the consolidated net
loss after taxation of R87 million (2003: R410 million) adjusted for any non-
trading items divided by the average number of shares in issue. Headline losses
for the year ended 31 December 2004 are R80.5 million (2003: R179.3 million).
5. Share swap transaction with Randgold and Exploration Company Limited
(`Randgold`)
During the current financial year, the company acquired 9.4 million ordinary
shares of R0.01 each, fully paid up, in the issued share capital of Randgold
against the allotment and issue to Randgold of 94 million ordinary shares of
R0.02 each, fully paid up, in the issued share capital of Aflease.
The terms of the transaction included the intention of the company to dispose of
the Randgold swap shares in a commercially prudent manner, in consultation with
Randgold. Arrangements were put in place to facilitate the efficient placement
of the shares without unnecessary short term disruption of the Randgold share
price.
As at 31 December 2004, 6 million Randgold shares were not yet disposed of in
accordance with the above transaction. 3.4m shares in Randgold and Exploration
were sold during the 2004 year. These sales realised a profit of R5.3m. An
unrealised loss on the remaining 6m shares was recorded on 31 December 2004 to
the value R15m.
6. Loan facility with Randgold and Exploration Company Limited (`Randgold`) and
the purchase thereof by Eastbourne Capital Management L.L.C.
During the course of the financial year, Randgold made available R45 million of
the agreed R50 million loan facility, as announced on 30 July 2004.
The above loan facility attracts interest at 1.5% margin above the prime
interest rate and is to be repaid by the Company on the last day of the 12 month
period following the closure of the Share swap transaction, as set out above, by
one of the following methods at the election of the Holder of the facility:
a) Conversion of the loan at a share price of R2.75 per Aflease share plus a 3
year option with an exercise price of R3.50 per Aflease share, OR
b) Conversion of the loan at a share price equal to 90% of the 30 day trade
weighted average share price of Aflease.
On 13 December 2004, Eastbourne Capital Management, L.L.C. purchased 100% of the
loan facility above from Randgold. The terms of the loan are the same as set out
above.
Included in the finance structure is a derivative financial instrument, which is
accounted for at its fair value in the accounting records of the company. The
instrument was marked-to-market at 31 December 2004 to its fair value of R16.7
million and a profit of R1.6 million was recognised during the current financial
year. The fair value of this derivative financial instrument is linked to the
volatility of the company`s share price and may result in significant fair value
adjustments.
7.Going Concern
The provisional financial results for the year ended 31 December 2004 have been
prepared on the going concern basis.
Aflease is certain that it has sufficient funding to continue with its current
capital programs which will bring its future cash generating projects into
production as a result of the following:
a) As at 31 December 2004, Aflease held 6 million Randgold shares (in terms of
the share swap agreement) with a value of R66 million, AND
b) In accordance with ordinary resolution 2, as passed at the annual general
meeting held on 28 June 2004, Aflease has the option to sell shares for cash,
the number of which will not exceed 15% of the company`s issued ordinary shares
held at the beginning of the financial year.
8. Subsequent events
a)As of close of business on 28 January 2005, the company changed its name from
THE AFRIKANDER LEASE LIMITED to AFLEASE GOLD AND URANIUM RESOURCES LIMITED. This
change took place in keeping with the company`s strategy to realise value for
stakeholders by developing, mining and producing both its gold and uranium
assets.
b)On 3 February 2005, the company entered into an agreement with Harmony Gold
Mining Company Limited (`Harmony`), whereby the company will acquire the right
to mine, process and market all of Harmony`s uranium resources. It is
anticipated that these rights will be acquired for R200 million and payment to
Harmony would be by way of Aflease scrip. Harmony will also receive a royalty as
and when these resources are brought into account. This transaction is however,
subject to the drawing up of a detailed agreement, normal regulatory approvals,
various levels of due diligence, and the approval of the boards of both
companies.
c)On 22 February 2005, the company announced that it has entered into a
Memorandum of Understanding with Micawber 397 (Proprietary) Limited (`Micawber`)
in terms of which the company will sell an undivided 26% share of its mineral
and mining assets to Micawber, a company 100% owned by historically
disadvantaged South Africans.
9. Dividends
No dividend has been proposed or declared for the period under review.
10. Segmental Reporting
The Group operates in two geographical areas, the East Rand, Gauteng, and
Klerksdorp, North West Province in South Africa, and as at year end, is involved
in two business segments: gold mining and uranium mining (where pre-feasibility
studies have commenced). 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.
11. Contingencies and Capital Commitments
The capital commitments relates to capital expenditure on the Bonanza
Underground development project.
12. Changes to the Board of Directors of Aflease
With effect from 1 October 2004, three new non-executive directors were
appointed to the Board - Mrs. Thuthukile Skweyiya, Mr. Lunga Ncwana and Mr.
Kazunori Yoshimura.
In addition, Mrs. Skweyiya assumed the position of Chairperson, replacing Mr.
Jean Nortier, who remained on the Board and assumed the executive position of
Chief Financial Officer, replacing Mr. Marais Steyn.
13. 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.
Conclusion
Strategic update
The company is expected to produce a strategic update during April 2005. This
announcement reflects on the 2004 year and its achievements.
On behalf of the Board
NJ Froneman DJ Nortier
Chief Executive Officer Chief Financial Officer
31 March 2005
Johannesburg
Sponsor
NEDBANK CAPITAL
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.
Date: 31/03/2005 05:39:10 PM
Produced by the JSE SENS Department
