| Fri 30 Sep 2005, 15:29 | | Aflease - Consolidated Financial Results for the S |
|
Aflease - Consolidated Financial Results for the Six Months ended 30 June 2005
and Operational Update to end September 2005
Aflease Gold and Uranium Resources Limited
(Formerly The Afrikander Lease Limited)
(Incorporated in the Republic of South Africa)
AFL (JSE) AFLUY (NASDAQ)
(Registration number 1921/006955/06)
ISIN: ZAE000061461 & Share Code : AFL
("Aflease" or "the Company")
Consolidated Financial Results for the Six Months ended 30 June 2005 and
Operational Update to end September 2005
Salient features
- Acquisition agreement with Southern Cross Resources Inc ("SXR") announced in
July 2005 and signed in September 2005, followed by Reserve Bank approval in
September 2005
- Acquisition of AngloGold Ashanti"s Weltevreden deposits announced in July 2005
- Announcement of an intention to merge NKMC with Sub Nigel Ltd ("Sub Nigel")
- A 402% increase in the market capitalisation of the company to R1.6 billion
from June 2004
- Dominion uranium project scheduled for commissioning in 2007
- First gold pour at Bonanza South in June 2005
- Aflease Shareholders give full backing to empowerment transaction
- Modder East resource base continue to increase through focussed exploration
- Headline loss rises to R138 million, mainly due to a non cash flow item
related to the Eastbourne loan
- Operating loss improves by 13% to R42.5 million
OUTLOOK
The transformation by Aflease to a focused uranium company continues through the
acquisition of Aflease by SXR and the announcement by Aflease of its intention
to sell New Kleinfontein Mining Company (NKMC) to Sub Nigel. This process
fulfils the twin strategy of becoming a focused uranium producer, whilst
providing shareholders with exposure to our quality gold assets in a separate
listed vehicle.
The proposed acquisition by SXR of Aflease, will improve the access to funding
in international markets and will position the new entity as one of a few
companies to bring new sources of uranium oxide to market by early in 2007.
COMMENTARY TO THE INTERIM FINANCIAL STATEMENTS
Financial Results
The interim financial statements for the six months ending June 2005 reflect the
continuing success of the "Strong Rand Strategy" which was developed and
implemented towards the end of 2003, with the company developing its high margin
assets and proceeding with focused exploration.
Management is pleased to report that the Bonanza South mine was commissioned in
the second quarter of 2005, with its first gold pour in June 2005. As a result
of the company"s accounting policies no gold sales were recognised for the
period under review. The cash operating loss of R3.7 million (loss of R4.7
million for the six months ended December 2004) was a direct result of
commissioning expenditure on the Bonanza South mine.
The operating loss improved by 13% from R48.6 million for the six months ended
December 2004 to R42.5 million for the period under review. This was mainly
achieved through the combined effect of a reduction in impairment, lock up and
write down expenditure of R19 million, a reduction in legal and funding expenses
of R4.8 million, while there was an increase in exploration expenditure of R17.3
million.
General and administrative expenses increased by R5.7 million to R10.5 million
from the six months ended 30 June 2004 to the period under review. The increase
reflected increased activity levels at the company due to a step up in
international corporate development activities.
The increase in exploration expenditure amounting to R22m for the period under
review (R4.75 million for the six months ended December 2004) has not only led
to an increase in the company"s ore resource but also to the increased
geological confidence at the Dominion uranium project which will allow for the
positioning, and development of the declines before year end.
The increase in headline losses from R69 million for the six months ended
December 2004 to R138 million for the six months under review can be mainly
attributed to an expense of R87.3 million relating to the mark-to-market of
derivative financial instruments. The R87.3 million non-cash flow expense is a
result of accounting for the fluctuations in the Aflease share price compared to
the fixed share price at which ordinary shares were issued to Eastbourne Capital
("Eastbourne") as repayment of the convertible loan. These shares were issued
on 23 September 2005.
Financial Position
Comparing the balances of December 2004 to June 2005, non-current liabilities
remained virtually constant, but short term liabilities increased from R93.1
million to R226.6 million. The increase of some R133.5 million can be mainly
ascribed to an increase in the non-cash flow item "Embedded derivative financial
instruments" of R87.3 million and an increase in the "Nedcor" loan of R34.9
million. The Embedded derivative financial instruments balance, amounting to
R103.8 million at the end of June 2005, is due to the mark-to-market of the
obligations arising from the Eastbourne convertible loan as described above. The
Nedcor loan relates to a futures related loan incurred.
An increase in business activities was the main reason for the increase in Trade
and Other Payables from R8.3 million as at December 2004 to R20.8 million as at
June 2005.
Eastbourne loan:
On 23 September 2005, the Eastbourne loan was repaid through the issue of 21.5
million Aflease shares and the awarding of 21.5 million warrants.
Randgold and Exploration investment
Although Aflease"s investment in 5.9 million Randgold and Exploration shares as
at the end of June 2005 is not material in relation to Aflease"s market
capitalization or asset base, management will endeavour to realise the
appropriate value for the shares. To this end, Aflease issued a requisition to
the Randgold and Exploration board on 23 August 2005 which seeks to ensure
proper corporate governance based on an independent board of directors, and full
disclosure on past activities and transactions.
Cashflows
The net cashflow requirement from Operational and Investing activities for the
six months ended June 2005 was funded through the issuance of ordinary shares
for cash, amounting to R33.2 million, and the raising of the Nedcor loan of
R34.9 million.
OPERATIONAL UPDATE TO SEPTEMBER 2005
Dominion Reefs:
The Department of Minerals and Energy (DME) has accepted our application for a
mining right on the Dominion uranium project. This is subsequent to the issuance
of a prospecting permit in April 2005. The detailed feasibility for the Dominion
uranium project is underway, with long lead time equipment on order so as to
facilitate production from 2007. In addition, the site clearing for the 210 000
tonnes per month uranium plant commenced during the week of 26 September 2005.
Exploration and drilling is continuing, and Aflease is encouraged that six twin
confirmatory drill holes have produced data which gives us confidence that the
data on which we are planning our mining and exploration is sound, and remains
valid. Aflease has applied to the DME for further prospecting rights for both
gold and uranium, and these applications have been accepted. Further detailed
announcements will be made in due course.
Bonanza South
Our Bonanza South mine, which adjoins Dominion Reefs will be housed in our
uranium portfolio due to its uranium by-product potential, poured its first gold
at the end of June. This restored Aflease"s status as an active miner following
the decision to suspend gold production at the end of 2003. Bonanza South is in
the very early stages of production build up and is not expected to break even
until the end of the year.
The Bonanza South mine serves as a pilot project for the larger Dominion uranium
project. Bonanza is providing invaluable experience in the run up to the mining
of uranium at Dominion Reefs. The Bonanza project was brought into production on
time and below budget. The cost and labour efficiencies achieved to date compare
favorably with the initial Bonanza South feasibility study. These are reflected
below:
Bonanza Efficiencies
Parameter Pre-Feasibility Bonanza Budget Bonanza Actual
Study Dec 2003 2005 Jul/Aug 2005
Inflated Inflated
Development
Metres/
Development
Man 2.6 3.4 3.4
Stoping m2/
Stoping Man 27.0 29.9 21.6
Milled Tons/
Total Employee
Costed 49 50 45 *
Development Cost
(R)/Metre
Developed 2,483 2,882 2,545
Stoping Cost 270 270 231
(R)/m2 Mined
Total Cost
(R)/Milled Ton 262 264 264 *
* Adjusted to 30,000 tons per month as per feasibility study
The build up phase of Bonanza South is on schedule. A strike by the National
Union of Mineworkers has so far had little impact on production. However, on the
105 level, we have exposed a zone of water inflow and poor ground conditions.
We are exploring ways to ameliorate this, but caution that production in the
third and fourth quarters of 2006 could be affected. The development sampling
results at Bonanza are in line with the geological model and are summarised
below:
Bonanza Reef Development Sampling for year to date (end June 2005)
Average
Metres Metres Average Channel
Content Width
Reef developed Sampled (cmg/t) (cm)
Upper Reef 646 711 623 66
Lower Reef 525 351 286 88
Gold
We are continuing exploration activities at our Modder East project on the East
Rand, and we have identified additional resources on both the Black Reef and the
Kimberley Reef. Details of these will be announced when they have been audited.
A bankable feasibility study for the Modder East project is in progress.
MODDER EAST DRILLING RESULTS TO SEPTEMBER 2005
Borehole BPLZ (top depth) CHANNEL (basal depth)
Number Depth True cm cmg/t Depth True cm cmg/ t
DD28 276.87 29.3 43 283.22 588.6 227
DD29 257.12 25 130 261.00 286 58
DD30 265.82 56 130 269.82 328 400
DD31 309.67 83 271 311.70 120 60
DD32 NON DEVELOPED-BEYOND UK9A SUBCROP
DD33 287.20 27 46 292.60 533 463
DD34 253.10 88 375 260.50 724 812
DD35 276.18 30 109 282.15 565 579
DD36 310.97 49 615 313.04 152 166
DD37 314.47 87 1931 320.18 475 656
DD38 288.50 14 200 294.29 560.5 357
DD40 288.44 20 119 294.43 379 141
DD41 313.04 176 2154 316.08 125 357
DD42 NON DEVELOPED-BPLZ - WASTE ON CONTACT (WOC)
DD43 264.30 25.4 46 268.32 372.7 199
DD44 251.24 41.6 149 252.50 104.3 19
DD45 260.59 13.9 155 265.95 517.7 205
DD46 261.80 WOC WOC 263.83 186.3 373
DD47 302.18 19.9 23 307.08 480.2 113
DD48 269.70 WOC WOC 275.05 533 531
DD49 279.58 33.5 383 284.34 367.1 520
DD50 274.50 WOC WOC Not developed
DD51 AWAITING RESULTS
Borehole UK9A UK5
Number Depth True cm cmg/t Depth True cm cmg/t
DD28 455.18 27.5 1133
DD29 295.75 54 102
DD30 317.58 15 16
DD31 406.50 23 19
DD32 NON DEVELOPED-BEYOND UK9A SUBCROP
DD33 448.60 27 121 351.96 189 191
DD34 269.40 29 1754
DD35 427.53 37 219 326.75 139 282
DD36 368.75 29.48 39
DD37 341.42 23 32
DD38 436.56 35.2 276 347.18 139.9 304
DD40 423.02 25 204 323.44 263 1059
DD41 349.77 85 126
DD42 NON DEVELOPED-BPLZ - WASTE ON CONTACT (WOC)
DD43 309.68a 108.8 229
308.14b 52.7 114
DD44 277.74c 25.3 110
277.73d 20.9 59
DD45 407.72 17.2 25 304.00 107 370
DD46 302.00 Faulted Out
DD47 514.50 15.8 419 419.00 233 279
DD48 331.50 15.5 2
DD49 316.45 13.3 1
DD50 274.70 17 62
DD51 AWAITING RESULTS
309.68a Below thrust fault
308.14b Above thrust fault
277.74c Motherhole & short deflection
277.73d Long deflection
Financial Results:
Unaudited Unaudited Audited
six months to six months to year ended
30 Jun 2005 30 Jun 2004 31 Dec 2004
Highlights
Gold produced and sold
- Kilograms - 127 146
- Ounces - 4 097 4 709
Cash operating cost
per ton mined n/a n/a n/a
Gold produced and sold
- Rand per kilogram n/a 80 159 113 320
- US$ per ounce n/a 366 552
Cash operating (loss)/
profit (R"000) (3 703) 4 263 (469)
Operating loss before
other costs (R"000) (56 239) (16 519) (55 567)
Net loss (R"000) (138 197) (26 775) (95 812)
Headline loss per
share (cents) (41.12) (12.57) (36.79)
Basic loss per
share (cents) (40.77) (12.57) (39.61)
Operating results
Tons mined
- Open pit - - -
- Underground 15 104 - -
Tons
- Stacked - CIS - 341 091 341 091
- Milled - CIL 19 725 21 557 21 557
Metres developed
- Reef - Underground 1 535 366 751
- Waste - Underground 1 426 1 012 2 355
Gold produced and
sold (kg) - 127 146
Grade
- Stacked - CIS - 0.33 0.33
- Milled - CIL - 0.75 0.75
Gold price received
- Rand per kilogram n/a 86 149 83 299
- Rand per ounce n/a 2 680 2 591
- US$ per ounce n/a 399 399
Consolidated Income Statement
Unaudited Unaudited Unaudited SA GAAP audited
six months six months six months year ended
to 30 Jun ended 31 Dec to 30 Jun 31 Dec
2005 2004 2004 2004
Unaudited
Restated Restated
for IFRS for IFRS
R"000 R"000 R"000
Revenue 176 1,650 14 478 16 128
Gold - 1,650 10 978 12 200
Sundry 176 - 3 500 3 500
Cash operating costs (3 879) (6,382) (10 215) (16 597)
Cash operating (loss)
/ profit (3 703) (4,732) 4 263 (469)
Amortisation and
depreciation (587) (573) (584) (1 157)
Non-cash movement
in lock-up - - (4 071) (4 071)
General and
administrative
expenditure (10 501) (9,571) (4 774) (14 345)
Decommissioning and
retrenchment costs (6) (116) (576) (692)
Funding expenses and
legal fees (1 663) (6,506) (1 880) (8 386)
Share options expensed (5 162) (4,595) (3 942) (8 537)
Exploration expenditure(22 027) (4,766) (1 654) (6 420)
Impairment of property,
plant and equipment - (16,847) - (16 847)
Write down of heap leach
and other stock items (31) (3,120) (7 800) (10 920)
Rehabilitation provision - (3,018) - (3 018)
Profit on disposal of
property, plant and
equipment 1 207 5,293 - 5 293
Operating loss (42 473) (48,551) (21 018) (69 569)
Interest paid (15 121) (12,605) (6 569) (19 174)
Interest Received 862 812 812 1 624
(Loss) / profit on disposal
of investments (8) 4,750 - 4 750
Mark-to-market of
listed investments 5 807 (15,082) - (15 082)
Loss before
derivative adjustments (50 933) (70,676) (26 775) (97 451)
Mark-to-market of
derivative financial
instrument (87 265) 1,639 - 1 639
Loss before taxation (138 198) (69 037) (26 775) (95 812)
Taxation - - - -
Net loss for the period (138 198) (69 037) (26 775) (95 812)
Loss per share (cents) (40.77) (28.44) (12.57) (39.61)
Fully diluted basic loss
per share (cents) (40.77) (28.44) (12.57) (39.61)
Neither the Eastbourne loan conversion, nor the employees" share options have
any dilutive effect on the loss per share.
Consolidated Balance Sheet
Unaudited Unaudited SA GAAP audited
as at as at as at
30 Jun 2005 30 Jun 2004 31 Dec 2004
Unaudited
Restated Restated
for IFRS for IFRS
R"000 R"000 R"000
ASSETS
Non-current assets 346 614 242 502 306 071
Property, plant and
equipment 270 070 229 138 225 538
Investments 76 544 13 364 80 533
Current assets 27 967 10 302 31 187
Inventories 3 457 1 352 1 112
Receivables and
prepayments 14 754 6 107 28 644
Amounts owing by
related parties 165 113 140
Bank and cash balances 9 591 2 730 1 291
Total assets 374 581 252 804 337 258
EQUITY AND LIABILITIES
Capital and reserves 108 994 101 976 208 861
Ordinary share capital 6 909 4 294 6 729
Share premium 708 633 506 614 675 593
Accumulated losses (630 252) (423 017) (492 054)
Share-based payment
reserve 23 704 14 085 18 593
Non-current liabilities 38 964 80 431 35 320
Interest bearing
borrowings 14 214 59 772 11 642
Rehabilitation and closure
cost obligation 24 750 20 659 23 628
Amounts owing to related
third parties - - 50
Current liabilities 226 623 70 397 93 077
Derivative financial
instrument 103 801 - 16 537
Short term loans 88 028 44 226 41 608
Current portion of
interest bearing
borrowings 9 591 9 217 15 775
Trade and other payables 20 829 11 653 8 347
Provisions 4 374 5 207 10 731
Bank overdraft balances - 94 79
Total equity and
liabilities 374 581 252 804 337 258
Abridged Consolidated Cashflow Statement
Unaudited Unaudited SA GAAP audited
six months to six months to year ended
30 Jun 2005 30 Jun 2004 31 Dec 2004
Unaudited
Restated Restated
for IFRS for IFRS
R"000 R"000 R"000
Cashflows from
operating activities (24 978) (15 576) (46 683)
Cashflows from
investing activities (34 125) (15 645) 24 288
Cashflows from
financing activities 67 482 30 917 20 667
Net increase/(decrease)
in cash and cash
equivalents 8 379 (304) (1 728)
Cash and cash
equivalents at
beginning of year 1 212 2 940 2 940
Cash and cash
equivalents at end
of year 9 591 2 636 1 212
Consolidated Statement of Changes in Equity
Unaudited Unaudited SA GAAP audited
six months to six months to year ended
30 Jun 2005 30 June 2004 31 Dec 2004
Unaudited
Restated Restated
for IFRS for IFRS
R"000 R"000 R"000
Ordinary share capital
At the beginning of
the period 6 729 4 219 4 219
Issued during the
period 180 75 2 516
Shares bought back
by subsidiary - - (80)
Shares sold by
subsidiary - - 80
Cancelled during
the period - - (6)
At the end of
the period 6 909 4 294 6 729
Share Premium
At the beginning of
the period 675 593 495 050 495 050
Issued during
the period 32 989 10 526 184 235
Cancelled during
the period - - (1 899)
Share options exercised
- prior periods - 950 950
Share options exercised 51 88 175
Expenditure written off
against share premium - - (2 918)
At the end of the period 708 633 506 614 675 593
Accumulated losses
At the beginning of
the period (492 054) (396 242) (396 242)
Net loss for the period (138 198) (26 775) (95 812)
At the end of the period (630 252) (423 017) (492 054)
Share-based payment reserve
At the beginning of
the period 18 593 10 231 10 231
Share options expensed 5 162 3 942 8 537
Share options exercised (51) (88) (175)
At the end of the period 23 704 14 085 18 593
Reconciliation of previous SA GAAP and IFRS
IFRS
transition
date Six months to Year ended
1 Jan 2004 30 Jun 2004 31 Dec 2004
R"000 R"000 R"000
Balance Sheet
Equity
As previously
reported - SA GAAP 114 208 109 776 208 861
Change in estimate -
Write down of heap
leach and other
stock items - (7 800) -
Effect of options
exercised on share
premium 950 1 038 1 125
Share-based payment
reserve 10 231 14 085 18 593
Effect of changes on
income statement
- Current period - (3 942) (8 537)
- Prior periods (11 181) (11 181) (11 181)
Equity restated - IFRS 114 208 101 976 208 861
Income Statement
Net loss for the period
as previously reported (15 033) (87 275)
Restatement of write
down of inventories
for six months to
30th June 2004 (7 800) -
Effect of transition
to IFRS:
Share-based payment charge (3 942) (8 537)
Net loss for the period
restated - IFRS (26 775) (95 812)
Notes to the Consolidated Financial Statements for the six months ended 30 June
1. Basis of preparation:
These June 2005 interim consolidated financial statements of Aflease are for the
six months ended 30 June 2005. They have been prepared in accordance with
International Accounting Standard ("IAS") 34, Interim Financial Reporting and
South African Statement of Generally Accepted Accounting Practice AC127 -
Interim Financial Reporting, and are covered by International Financial
Reporting Standard ("IFRS") 1, First-time Adoption of IFRS, because they are
part of the period covered by the Group"s first IFRS financial statements for
the year ended 31 December 2005. These interim financial statements have been
prepared in accordance with those IFRS standards and International Financial
Reporting Interpretations Committee ("IFRIC") interpretations issued and
effective or issued and early adopted as at the time of preparing these
statements (August 2005). The IFRS standards and IFRIC interpretations that will
be applicable at 31 December 2005, including those that will be applicable on an
optional basis, are not known with certainty at the time of preparing these
interim financial statements.
The accounting policies have been consistently applied to all the years
presented.
Aflease"s consolidated financial statements were prepared in accordance with
South Africa"s Generally Accepted Accounting Principles ("GAAP") until 31
December 2004. GAAP differs in some areas from IFRS. In preparing Aflease"s 2005
consolidated interim financial statements, management has amended certain
accounting, valuation and consolidation methods applied in the GAAP financial
statements to comply with IFRS. The comparative figures in respect of 2004 were
restated to reflect these adjustments.
Reconciliations and descriptions of the effect of the transition from GAAP to
IFRS on the Group"s equity and its net income and cash flows are provided in the
table above.
These consolidated interim financial statements have been prepared under the
historical cost convention, as modified by the revaluation of available-for-sale
financial assets, and financial assets and financial liabilities (including
derivative instruments) at fair value through profit or loss.
The preparation of financial statements in accordance with IAS 34 requires the
use of certain critical accounting estimates. It also requires management to
exercise judgement in the process of applying the Company"s accounting policies.
There were no areas involving a higher degree of judgement or complexity, or
areas where assumptions and estimates are significant to the consolidated
interim financial statements.
The results for the six months ended 30 June 2004 were restated by R7.8 million
which related to a write down on inventories to their net realisable value.
2. Significant changes to the Group"s accounting policies as a result of the
adoption of IFRS:
The fair value of share options granted to Aflease employees is recognised as an
employee expense with a corresponding increase in equity (Share-based payment
reserve). The fair value is measured at grant date and expensed over the period
in which the employee becomes unconditionally entitled to the equity instrument.
The fair value of the instrument granted is measured using generally accepted
valuation techniques, taking into account the terms and conditions upon which
the instrument is granted. The fair value of share-based payments was not
recognised under the Group"s previous accounting policies.
3. Share placement:
Shareholders are referred to the general authority granted to the board of
directors of Aflease ("the board") at its annual general meeting of 28 July 2005
("the AGM"), authorising the board to issue up to 15% of the total issued share
capital of Aflease at 1 January 2005, placed under its control, to prospective
investors ("the mandate") and the announcement dated 16 September 2005
announcing that Aflease has entered into an acquisition agreement with SXR for
the acquisition by SXR of the entire issued share capital of Aflease by means of
a scheme of arrangement. Under the provisions of rule 19 of the Securities
Regulation Code on Takeovers and Mergers ("the Code"), compiled by the
Securities Regulation Panel ("the SRP"), Aflease may not issue any authorised
but unissued securities during an offer period unless approved by its
shareholders in general meeting pursuant to a notice of meeting where
information about an offer or anticipated offer is included.
Aflease has consulted the SRP with a view to clarify that the board may exercise
the rights given to it under the mandate in respect of 9 492 698 shares
(representing 2.5% of the total ordinary shares of Aflease in issue at 21
September 2005) during the SXR offer period. Due to the fact that the mandate
was given at a general meeting of shareholders of which proper notice was given,
and the fact that the offer from SXR was made known to ordinary shareholders and
the general public before the AGM on 5 July 2005, it is the view of Aflease and
its advisors, with which view the SRP concurs, that Aflease complies with the
provisions of rule 19 of the Code.
4. Dividend:
No dividend has been proposed or declared for the period under review.
5. Segmental reporting:
The group operates in two geographical areas, the East Rand, Gauteng, South
Africa, and Klerksdorp, North West Province, South Africa. The bulk of the
capital expenditure was incurred on the Bonanza South Development Project. The
other areas of activity include the Corporate Office and maintaining the New
Kleinfontein property in the East Rand. Gold revenue was generated from the
Klerksdorp Operations, whereas the sundry revenue consisting of royalties
received which originated from the East Rand area.
6. Revenue:
Sundry revenue consists of the proceeds from the sale of leach pad rock.
7. Loss per share
Unaudited Unaudited SA GAAP audited
six months six months year ended
to 30 June to 30 June 31 December
. 2005 2004 2004
Unaudited
Restated Restated
for IFRS for IFRS
Loss per share and
fully diluted basic
loss per share have
been calculated
using the net loss
for the period of
(R"000) (138 197) (26 775) (95 812)
and a weighted average
number of shares of 338 983 365 212 979 940 241 902 897
Neither the Eastbourne loan conversion, nor the employees" share options have
any dilutive effect on the loss per share.
8. Headline Loss per share
Headline loss per share
(cents) (41.12) (12.57) (36.79)
Fully diluted headline
loss per share (cents) (41.12) (12.57) (36.79)
The headline loss per
share and fully diluted
headline loss per
share have been
calculated
using headline loss
of (R"000) (139 396) (26 775) (89 008)
and a weighted average
number of shares of 338 983 365 212 979 940 241 902 897
Neither the Eastbourne
loan conversion,nor
the employees" share
options have any
dilutive effect on
the loss per share.
R"000 R"000 R"000
Reconciliation of basic
loss to headline loss:
Net loss for the period (138 197) (26 775) (95 812)
Profit on disposal of
property, plant and
equipment (1 207) - (5 293)
(Loss)/profit on
disposal of investments 8 - (4 750)
Impairment of property,
plant and equipment - - 16 847
Headline loss (139 396) (26 775) (89 008)
9. Related Party Transactions
There were no related party transactions entered into during the interim period
to 30 June 2005.
10. Subsequent events:
On 5 July 2005 shareholders were advised that Aflease and SXR have entered into
a pre-merger arrangement with a view to conclude a business combination
transaction, which will have the effect of Aflease ordinary shareholders
exchanging 100% of their Aflease ordinary shares for shares in SXR, which is
listed on the Toronto Stock Exchange ("TSX"); Aflease terminating its listing on
the JSE; SXR changing its name to SXR Uranium One Inc. ("SXR Uranium One"); and
SXR Uranium One obtaining a secondary listing on the JSE Limited. Aflease and
SXR have subsequently announced that they have signed the definitive acquisition
agreement and that the transaction was expected to be completed in November
2005, subject to shareholder and regulatory approval. In a further welcome
development, the South African Reserve Bank has given its approval to the
transaction, and we are in the process of securing approvals from the Securities
Regulation Panel and the JSE Limited.
On 19 July 2005 shareholders were advised that Aflease has concluded an
agreement with AngloGold Ashanti Limited ("AngloGold Ashanti") in terms of which
Aflease will purchase the Weltevreden gold mine for R75 million (excluding VAT),
to be paid through the issue of 23 618 785 Aflease ordinary shares at a price of
R3.62 per share. The transaction is subject to certain conditions precedent
being fulfilled by no later than 31 December 2005.
Aflease has announced a strategy of realising value from our pure gold assets,
by developing a focused uranium company, with a pure gold subsidiary. In line
with this, we announced on 23 August 2005 that we intended to acquire a
controlling shareholding in Sub Nigel in a deal which would involve the transfer
of Aflease"s wholly-owned New Kleinfontein Mining Company (Pty) Ltd, in which
the Modder East project is housed, to Sub Nigel. The transaction has the
support of 62% of Sub Nigel"s shareholders and is intended to crystallise the
value of Modder East. The new company will retain its JSE listing and will be
named "Aflease Gold. Subsequent to the announcement, we have seen a pleasing
rise in the Aflease share price, which suggests that our strategy of
crystallising value for our pure gold assets is taking shape. Aflease continues
to explore how we can further contribute to the consolidation of gold assets in
the East Rand basin.
On 20 September 2005, shareholders of Aflease, at a General Meeting in
Johannesburg, backed resolutions to implement an historic empowerment deal, with
votes of 99.9% in favour, just one abstention, and no votes against the
resolutions. The empowerment consortium, provisionally called Micawber 397
(Pty) Ltd, is broad-based, with 30% shareholding by Aflease workers and a
further 30% by the local community. This empowerment deal covers Aflease"s
mines and exploration properties in the Klerksdorp area, and separate
empowerment consortia, of a similar structure, will be put together for
Aflease"s other South African assets.
As announced on 3 August 2005, Aflease concluded a R136 million (US$20.5
million) private placement of new Aflease ordinary shares on 19 July 2005, with
a number of institutional investors, predominantly in Canada, the United States
and Europe. A total of 32 million shares were issued at an average price of
R4.25.
On 23 September 2005, the Eastbourne Capital ("Eastbourne") loan was settled
through the issue of 21.5 million Aflease shares. In addition, 21.5 million
warrants at R3.50 were issued as part of the settlement.
Supplementary Information
Unaudited Unaudited Audited
as at as at as at
30 Jun 2005 30 Jun 2004 31 Dec 2004
R"000 R"000 R"000
Capital commitments 102 375 1 100 86 036
Capital expenditure 45 119 20 178 39 614
Interest bearing
borrowings
Asset finance leases 23 805 24 489 19 584
- Short-term portion 9 591 9 217 7 942
- Long-term portion 14 214 15 272 11 642
These finance leases are repayable over periods varying from one to five years
and bear interest at an average rate of 10.00%. The Industrial Development
Corporation"s loan is secured by a general notarial bond over all moveable
assets.
Heap leach pad loan - 8 515 7 833
- Short-term portion - - 7 833
- Long-term portion - 8 515 -
The loan was repaid during May 2005. An interest rate of 15.25% was applicable.
Nedbank loan
- Short-term portion - 44 226 -
The loan was repaid during 2004 and bore interest at a rate of JIBAR plus a
margin of 4%, decreasing to 3%.
Nedcor loan
- Short-term portion 34 893 - -
- Embedded derivative
financial instrument
On 9 February 2005, the Group sold 3 million Randgold and Exploration Company
Limited ("Randgold") shares and entered into a single stock long futures
position on the same shares. On 26 April 2005, the Group sold another 2.866
million shares and entered into a long futures position of the same shares. Both
futures are exercisable on 15 December 2005. The interest rate on the futures is
7.75%. The true nature of the transaction is that the Group has obtained funding
from Nedcor at favourable rates on the back of its shares in Randgold.
The intention is for the Group to roll its futures position until it decides to
sell the underlying shares. Aflease can close out the futures-position at any
time and exchange it for Randgold shares.
The market value of the underlying shares in Randgold of R77.448 million is
included in Investments.
Included in net finance costs is an amount of R696 thousand related to the
facility.
Eastbourne loan 156 936 35 985 58 145
- Short-term portion 53 135 - 41 608
- Long-term portion - 35 985 -
- Embedded derivative
financial instrument 103 801 - 16 537
Interest is at 1.5% above prime interest rate and further terms are detailed in
the 2004 Annual Report.
The loan is to be settled as follows:
1. R1 million payable in cash; and
2. The balance of the loan, including interest thereon, was be settled through
the issue of approximately 21.5 million Aflease shares on 23 September 2005. In
addition, Eastbourne received a warrant, exercisable over three years at a price
of R3.50, for each Aflease share received.
The conversion of the loan to equity was on 23 September 2005. Upon settlement
of the loan, the balance sheet was affected as follows:
An additional mark to market loss, for the period between 30 June 2005 and
conversion date, on the derivative financial instrument due to Aflease"s
appreciation in its share price was recognized. This affected both the income
statement and the financial derivative instrument;
The Eastbourne short term loan as well as the derivative financial liability
were removed from the balance sheet;
In their stead, share capital and share premium were recognised to reflect the
fair value of issued shares in settlement of the liability; and
The derivative financial liability related to the R3.50 warrants remains until
Eastbourne makes an election on whether or not to exercise the option. This
instrument will continue to be marked to market over the term of the warrant.
Total borrowings 215 634 113 215 85 562
Short term portion of
finance leases 9 591 9 217 15 775
Short term loans 88 028 44 226 41 608
Derivative financial
instrument 103 801 - 16 537
Total long term
borrowings 14 214 59 772 11 642
On behalf of the Board
Neal Froneman Jean Nortier
Chief Executive Officer Chief Financial Officer
Johannesburg
30 September 2005
Disclaimer
Statements made in this announcement 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.
The ordinary shares of Aflease have not been and will not be registered under
the U.S. Securities Act of 1933, as amended. This announcement does not
constitute an offer of securities for sale in the United States. Securities may
not be offered or sold in the United States absent registration or an exemption
from registration. Any public offering of securities to be made in the United
States will only be made by means of a prospectus that may be obtained from AFL
and that will contain detailed information about the company and management, as
well as financial statements
Date: 30/09/2005 03:29:35 PM Produced by the JSE SENS Department
