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Western Areas - Unaudited quarterly results ended 30 June 2005
Please note that this announcement was submitted to, and approved by the JSE, on
Friday 26 August 2005, but due to technical problems experienced at the JSE, it
could not be released.
WESTERN AREAS LIMITED
Incorporated in the Republic of South Africa
(Registration number: 1959/003209/06)
(`Western Areas` or `the Company`)
Share code: WAR & ISIN No: ZAE000016549
ADR Ticker symbol: WARUY
CUSIP No: 957654304
UNAUDITED QUARTERLY RESULTS ENDED 30 JUNE 2005
PRODUCTION AND UNIT RESULTS
Quarter Quarter Year Year
Ended ended to date ended
30.06.05 31.03.05 30.06.05 31.12.04
IMPERIAL
Reef mined (000) tons 241 194 435 888
Ore milled (000) tons 306 292 598 1 241
Yield oz/ton 0.217 0.259 0.237 0.228
(underground)
Yield (incl. oz/ton 0.190 0.158 0.174 0.176
surface)
Gold produced oz 57 545 46 260 103 805 218 025
Gold sold oz 56 654 45 066 101 720 218 582
Cash costs US$/oz 364 451 403 373
Total production US$/oz 426 553 482 445
costs
Gold price US$/oz 308 301 306 298
achieved
Average exchange
rate achieved
Period end
exchange rate
Capital US$m 4 5 9 49
expenditure
Capital US$m 1 2 1 5
commitment at
end of period
PRODUCTION AND UNIT RESULTS (Contd)
Quarter Quarter Year to Year
ended ended date Ended
30.06.05 31.03.05 30.06.05 31.12.04
METRIC
Reef mined (000) tonnes 219 176 395 805
Ore milled (000) tonnes 271 265 536 1 119
Yield g/tonne 7.44 8.87 8.00 7.84
(underground)
Yield (incl. g/tonne 6.62 5.45 6.03 6.06
surface)
Gold produced kg 1 790 1 439 3 229 6 781
Gold sold kg 1 762 1 402 3 164 6 799
Cash costs R/kg 75 141 87 278 80 549 77 873
Total production R/kg 87 957 106 962 96 425 92 770
costs
Gold price R/kg 63 561 58 193 61 183 62 289
achieved
Average exchange R/$ 6.4187 6.0182 6.2190 6.5009
rate achieved
Period end R/$ 6.6540 6.2440 6.6540 5.6600
exchange rate
Capital Rm 25 31 56 278
expenditure
Capital Rm 7 12 7 28
commitment at end
of period
ABRIDGED CONSOLIDATED INCOME STATEMENT
Quarters ended Year to Year
date ended
30.06.05 31.03.05 30.06.05 31.12.04
SA Rand Million Notes Unaudited Unaudited Unaudited Audited
Gold revenue 96.4 61.9 158.3 381.4
Total production (157.4) (153.9) (311.3) (627.5)
costs
Production costs (134.5) (125.6) (260.1) (528.1)
- cash
Production costs 1 (22.9) (28.3) (51.2) (99.4)
- non cash
Operating loss (61.0) (92.0) (153.0) (246.1)
from gold
Other costs (3.6) (1.6) (5.2) (6.9)
Administration and (5.6) (5.3) (10.9) (20.5)
other expenditure
Operating loss (70.2) (98.9) (169.1) (273.5)
before derivative
transactions
Present value (43.3) 3.0 (40.3) (69.8)
adjustment for
option premium
payable
Fair value 2 (85.5) (126.9) (212.4) 221.0
adjustment
Exchange 3 (63.5) (94.8) (158.3) 151.2
(losses)/gains
(Loss)/Profit (262.5) (317.6) (580.1) 28.9
before taxation
Taxation - 7 137.2 130.8 268.0 (15.4)
deferred
(Loss)/Profit for (125.3) (186.8) (312.1) 13.5
the period
(Loss)/Earnings
per ordinary share
(cents)
- Basic (106.1) (158.2) (264.4) 12.2
- Headline (105.3) (160.2) (265.5) 10.8
- Diluted basic 4 (105.9) (157.9) (263.9) 12.2
- Diluted headline 4 (105.1) (159.9) (265.0) 10.8
Number of ordinary 118.5 118.5 118.5 118.5
shares issued
(million)
5
Weighted average 118.0 118.0 118.0 110.3
number of ordinary
shares (million)
Determination of
headline earnings:
(Loss)/Profit for (125.3) (186.8) (312.1) 13.5
the period
Loss/(Profit) on 1.0 (2.3) (1.3) (0.7)
disposal of fixed
assets
Unclaimed - - - (1.1)
dividends written
back
Net loss on - - - 0.2
disposal of
investments
Headline (124.3) (189.1) (313,4) 11.9
(loss)/earnings
ABRIDGED CONSOLIDATED BALANCE SHEET
Year
Period ended ended
30.06.05 31.03.05 31.12.04
SA Rand Million Notes Unaudited Unaudited Audited
Assets
Mining assets 6 3 412.7 3 417.4 3 411.8
Derivative asset 2 709.1 691.6 702.6
Listed/Other investments 39.0 38.5 38.2
Deferred taxation 7 637.6 528.2 446.0
Cash and cash equivalents 1.3 5.0 13.2
Other assets 45.9 45.6 54.5
Total assets 4 845.6 4 726.3 4 666.3
Equity and liabilities
Shareholders` equity 1 295.5 1 381.3 1 511.0
Option premium payable 1 038.3 964.9 905.7
Derivative liability 2 2 096.5 2 048.8 2 016.7
JCI Limited loan 8 226.3 174.1 95.2
Other liabilities 189.0 157.2 137.7
Total equity and liabilities 4 845.6 4 726.3 4 666.3
STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY
Share Trea- Cash flow
SA Rand Cap- Share sury Hedge
Million ital premium shares Reserve
Balance as at 31 118.5 2 245.5 (3.1) (1 367.9)
December
2004
Fair value - - - 32.9
adjustment
Recycling - - - 63.3
of fair
value on
maturing of
derivatives
Attribu- - - - -
table loss
for the period
Balance as 118.5 2 245.5 (3.1) (1 271.7)
at 30 June
2005
Avai-
lable
for-
SA Rand sale- Retained
Million reserve earnings Total
Balance as at 31 - 518.0 1 511.0
December
2004
Fair value 0.4 - 33.3
adjustment
Recycling - - 63.3
of fair
value on
maturing of
derivatives
Attribu- - (312.1) (312.1)
table loss
for the
period
Balance as 0.4 205.9 1 295.5
at 30 June
2005
ABRIDGED CASH FLOW STATEMENT
Year
Quarters ended to date Year ended
30.06.05 31.03.05 30.06.05 31.12.04
SA Rand Million Unaudited Unaudited Unaudited Audited
Cash flow
from/(utilised) 2.2 (21.9) (19.7) (147.0)
in operating activities
Cash flow utilised in (19.7) (31.3) (51.0) (261.5)
investing activities
Cash flow from finance 13.8 45.0 58.8 399.8
activities
Net decrease in cash
and (3.7) (8.2) (11.9) (8.7)
cash equivalents
Cash and cash
equivalents:
- at beginning of
period 5.0 13.2 13.2 21.9
At end of period 1.3 5.0 1.3 13.2
NOTES TO THE ABRIDGED FINANCIAL STATEMENTS
1. Non-cash operating costs primarily include the amortisation of Western
Areas` share of South Deep and the change in inventory for the period.
2. The fair value adjustments relate to the revaluation of the derivative
structure at period-end. The revaluation stemming from exchange rate
fluctuations are accounted for in the income statement whilst the
revaluation stemming from the gold price fluctuations are accounted for
through the hedge reserve on the balance sheet.
3. The exchange losses relating to option premium payable are attributable to
the change in the Rand/US Dollar exchange rate from 6.244 at 31 March 2005
to 6.654 at 30 June 2005.
4. Diluted earnings and diluted headline earnings per share are attributable to
the shares held in the Share Incentive Trust (Treasury Shares) for which the
exercise price is lower than the current market value.
5. The weighted average number of ordinary shares is arrived at after making
adjustments for the treasury shares and the rights issue during 2004.
6. No adjustment has been made to reflect mining assets at their fair value.
7. 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$427 at 31
March 2005 to US$435 at 30 June 2005.
8. The JCI Limited loan includes capitalised interest which is in terms of the
stand-by facility arranged in 2004. The facility is unsecured, carries
interest at prime plus 1.5% and is to be repaid out of funds raised from a
rights offer.
BASIS OF ACCOUNTING
The accounting policies used to prepare the quarterly results are consistent
with those applied in the previous periods and are in accordance with South
African Statements of Generally Accepted Accounting Practice and International
Financial Reporting Standards.
LETTER TO SHAREHOLDERS
The disappointment associated with technical problems at the South Deep mine
earlier this year was replaced by optimism in the second quarter ended June
2005 when attributable gold production increased by almost 25% and cash costs
decreased by almost 14% over the previous quarter.
Attributable gold production increased from 1 439 kg to 1 790 kg. 271 tonnes of
ore were milled, including 219 tonnes of underground reef, compared to 176
tonnes in the previous quarter.
Cash costs decreased from R87 278/kg to R75 141/kg, although gross costs
increased by R8.9 million quarter-on-quarter, mainly due to the increased
tonnes mined and treated.
The average dollar spot gold price achieved remained almost unchanged at
$428/oz (excluding hedging) and $308/oz (including hedging). The partial
weakening of the Rand (which averaged R6.38/$ compared to R6.02/$ in the March
quarter) combined with the improved production, resulted in an increase of spot
gold revenue by R32 million.
Before the application of hedge transactions, the average price of gold
realised was R87 807/kg, compared to R83 345/kg for the March quarter.
Including the hedge transactions (principally `out of the money` sold call
options), the average gold price realised was R63 188/kg.
Due to the weakening of the R/$ exchange rate from R/$6.24 on 31 March 2005 to
R/$ 6.65 on 30 June 2005, a negative fair value adjustment of R85.5 million was
incurred (compared to a negative R126.9 million fair value adjustment in the
previous quarter). The fair value adjustment of R192.3 million, together with
the R56.7 million hedging loss and an operating loss of R4.3 million, accounted
for a R262.5 million loss before taxation for the quarter. After the deferred
taxation adjustments, principally for the fair value losses, the net loss for
the quarter was R125.3 million (105.3 cents a share), compared to R186.8
million (160.23 cents a share) in the previous quarter. The reduction was
attributable mainly to the improved operating performance.
The planning of Phase I, which covers 25 years, is complete. Key features of
this mine plan will be included in the rights offer circular to be sent to
shareholders in due course. The salient terms of the rights offer will be
released shortly.
An updated Mineral Reserve statement, which incorporates recent seismic data
and certain revised modifying factors, is due for release at the end of 2005.
Preliminary indications are that the mineral reserves will be of the order of
some 45 million ounces, representing a reduction of approximately 10 million
ounces on the previous published estimate. The latter reduction in mineral
reserves is predominantly a function of the redesign of the regional pillars in
the Phase 1 and Phase 2 areas, but primarily Phase 2. This reduction in mineral
reserves is partly mitigated in the case of Western Areas by the interest it
has in the contiguous mineral rights and their associated mineral resources.
This issue is a complex one which involves the distinction between reserves and
resources. Further particulars will be provided in the rights offer circular in
due course.
South Deep is legally obliged to continue pumping water from the Randfontein
Estates No. 4 Shaft which is owned by Harmony Gold, until the relevant
governmental departments accept the opinion of its independent experts as to
the integrity of the boundary plugs and mining pillars separating the mines.
Under a Directive from the Department of Minerals and Energy, the cost of
pumping is being shared equally with Harmony.
It now appears that, contrary to earlier indications, the insurance claim
arising from a fall of ground in the SV1 shaft in January 2004 will not be
settled. Placer Dome Inc administers the mine`s insurance on behalf of the
Placer Dome Western Areas Joint Venture. Western Areas will look to review this
arrangement.
Shareholders are advised that Placer Dome has initiated a formal process in
terms of the joint venture agreement that Western Areas should meet its
outstanding obligations in regard to the South Deep development costs. Western
Areas will be in a position to meet these obligations shortly after the
finalising of the terms of the proposed rights offer.
A letter was sent to Placer Dome at the beginning of June 2005 requesting
information that would enable Western Areas to submit a quantification of its
claim for poor planning, execution of work and other issues during the period
that Placer Dome was responsible for management of the mine.
Placer Dome has not responded to the request. The Western Areas Board will
escalate the matter.
Mafika Mkwanazi Non-executive Chairman
Chris Lamprecht Financial Director
Johannesburg
26 August 2005
CONTACT DETAILS
WESTERN AREAS LIMITED
Incorporated in the Republic of South Africa
(Registration number: 1959/003209/06)
(`Western Areas` or `the Company`)
Share code: WAR ISIN No: ZAE000016549
ADR Ticker symbol: WARUY
CUSIP No: 957654304
28 Harrison Street, Johannesburg, 2001
PO Box 61719, Marshalltown, 2107
Telephone: +27 (11) 688-5000
Fax: +27 (11) 834-9195
COMMUNICATIONS
Brian Gibson Issue Management
Contact person: Brian Gibson
Telephone: +27 (11) 880-1510
Fax: +27 (11) 880-1392
e-mail: gibson@icon.co.za
TRANSFER SECRETARIES - SOUTH AFRICA
Computershare Investor Services 2004 (Pty) Ltd
70 Marshall Street, Johannesburg, 2001
PO Box 61051, Marshalltown, 2107
Telephone: +27 (11) 370-5000
Fax: +27 (11) 688-7721/2
OFFICE OF UNITED KINGDOM REGISTRARS
Capita Registrars
The Registry
34 Beckenham Road, Beckenham
Kent, BR3 4TU
UNITED STATES DEPOSITORY
American Depository Receipts
The Bank of New York
Shareholder Relations Department
Tel: +91 212 815 3326
Fax: +91 212 571 3050
www: adrbny.com
Shareholder Relations
Toll free no: (US or Canada only)
1-888-269-2377 (1-888-BNY-ADRS)
Date: 29/08/2005 07:04:17 AM
Produced by the JSE SENS Department
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