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Western Areas - Unaudited Quarterly Results Ended 30 September 2005 And
Withdrawal Of Cautionary Announcement
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:
ZAE000016549ADR Ticker symbol: WARUYCUSIP No: 957654304
UNAUDITED QUARTERLY RESULTS ENDED 30 SEPTEMBER 2005 AND WITHDRAWAL OF CAUTIONARY
ANNOUNCEMENT
PRODUCTION AND UNIT RESULTS
Quarter Quarter Quarter Year Year
ended ended ended to date ended
30.09.05 30.06.05 31.03.05 30.09.05 31.12.04
IMPERIAL
Reef mined tons 256 241 194 691 888
(000)
Ore milled tons 275 306 292 873 1 241
(000)
Yield oz/ton 0.243 0.217 0.259 0.239 0.228
(underground)
Yield (incl. oz/ton 0.243 0.190 0.158 0.195 0.176
surface)
Gold produced oz 66 938 57 545 46 260 170 743 218 025
Gold sold oz 63 423 56 654 45 066 165 143 218 582
Cash costs US$/oz 324 364 451 372 373
Total US$/oz 370 426 553 438 445
production
costs
Gold price US$/oz 354 308 301 326 298
achieved
Average
exchange rate
achieved
Period end
exchange rate
Capital US$m 4 4 5 13 49
expenditure
Capital US$m 2 1 2 2 5
commitment at
end of period
PRODUCTION AND UNIT RESULTS (Contd)
Quarter Quarter Quarter Year Year
ended ended ended to date ended
30.09.05 30.06.05 31.03.05 30.09.05 31.12.04
METRIC
Reef mined tonnes 232 219 176 627 805
(000)
Ore milled tonnes 249 271 265 785 1 119
(000)
Yield g/tonne 8.34 7.44 8.87 8.14 7.84
(underground)
Yield (incl. g/tonne 8.35 6.62 5.45 6.77 6.06
surface)
Gold produced kg 2 082 1 790 1 439 5 311 6 781
Gold sold kg 1 973 1 762 1 402 5 137 6 799
Cash costs R/kg 67 981 75 141 87 278 75 623 77 873
Total R/kg 77 657 87 957 106 962 89 069 92 770
production
costs
Gold price R/kg 74 352 63 561 58 193 66 241 62 289
achieved
Average R/$ 6.5328 6.4187 6.0182 6.3200 6.5009
exchange rate
achieved
Period end R/$ 6.3665 6.6540 6.2440 6.3665 5.6600
exchange rate
Capital Rm 25 25 31 81 278
expenditure
Capital Rm 8 7 12 8 28
commitment at
end of period
ABRIDGED CONSOLIDATED INCOME STATEMENT
Quarters ended Year to Year
date ended
30.09.05 30.06.05 30.09.05 31.12.04
SA Rand million Notes Unaudited Unaudited Unaudited Audited
Gold revenue 130.7 96.4 289.0 381.4
Total production (161.7) (157.4) (473.0) (627.5)
costs
Production costs - (141.5) (134.5) (401.6) (528.1)
cash
Production costs - 1 (20.2) (22.9) (71.4) (99.4)
non cash
Operating loss from (31.0) (61.0) (184.0) (246.1)
gold
Other costs (6.9) (3.6) (12.0) (6.9)
Administration and (4.8) (5.6) (15.8) (20.5)
other expenditure
Operating loss (42.7) (70.2) (211.8) (273.5)
before derivative
transactions
Present value (4.1) (43.3) (44.4) (69.8)
adjustment for
option premium
payable
Fair value 2 70.1 (85.5) (142.3) 221.0
adjustment
Exchange 3 46.5 (63.5) (111.8) 151.2
gains/(losses)
Profit/(Loss) before 69.8 (262.5) (510.3) 28.9
taxation
Taxation - deferred 7 (37.8) 137.2 230.2 (15.4)
Profit/(Loss) for 32.0 (125.3) (280.1) 13.5
the period
Earnings/(Loss) per
ordinary share
(cents)
- Basic 27.1 (106.1) (237.3) 12.2
- Headline 24.1 (105.3) (241.4) 10.8
- Diluted basic 4 27.1 (105.9) (236.9) 12.2
- Diluted headline 4 24.0 (105.1) (241.0) 10.8
Number of ordinary 118.5 118.5 118.5 118.5
shares issued
(million)
Weighted average 5 118.0 118.0 118.0 110.3
number of ordinary
shares (million)
Determination of
headline earnings:
Net profit/(loss) 32.0 (125.3) (280.1) 13.5
for the period
(Profit)/loss on (3.6) 1.0 (4.9) (0.7)
disposal of fixed
assets
Unclaimed dividends - - - (1.1)
written back
Net loss on disposal - - - 0.2
of investments
Headline 28.4 (124.3) (285.0) 11.9
earnings/(loss)
ABRIDGED CONSOLIDATED BALANCE SHEET
Period ended Year ended
30.09.05 30.06.05 31.12.04
SA Rand million Notes Unaudited Unaudited Audited
Assets
Mining assets 6 3 408.1 3 412.7 3 411.8
Derivative asset 2 838.1 709.1 702.6
Listed/Other 39.4 39.0 38.2
investments
Deferred taxation 7 721.0 637.6 446.0
Cash and cash 16.0 1.3 13.2
equivalents
Other assets 62.0 45.9 54.5
Total assets 5 084.6 4 845.6 4 666.3
Equity and liabilities
Shareholders" equity 1 185.5 1 295.5 1 511.0
Option premium payable 965.8 1 038.3 905.7
Derivative liability 2 2 431.4 2 096.5 2 016.7
JCI Limited loan 8 369.3 226.3 95.2
Other liabilities 132.6 189.0 137.7
Total equity and 5 084.6 4 845.6 4 666.3
liabilities
STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY
Avai-
lable
for-sale-
Share Trea- Cash flow re-
SA Rand Cap- Share sury Hedge serve Retained
Million ital premium shares Reserve earnings Total
Balance 118.5 2 245.5 (3.1) (1 367.9) - 518.0 1 511.0
as at 31
December
2004
Fair - - - (136.5) 0.8 - (135.7)
value
adjustmen
t
Recycling - - - 90.3 - - 90.3
of fair
value on
maturing
of deriva-
tives
Attribu- - - - - - (280.1) (280.1)
table
loss for
the
period
Balance 118.5 2 245.5 (3.1) (1 414.1) 0.8 (237.9) 1 185.5
as at 30
September
2005
ABRIDGED CASH FLOW STATEMENT
Quarters ended Year to Year
date ended
30.09.05 30.06.05 31.03.05 30.09.05 31.12.04
SA Rand million Unaudited Unaudited Unaudited Unaudited Audited
Cash flow (62.8) 2.2 (21.9) (82.5) (147.0)
utilised in
operating
activities
Cash flow (25.2) (19.7) (31.3) (76.2) (261.5)
utilised in
investing
activities
Cash flow from 102.7 13.8 45.0 161.5 399.8
finance
activities
Net 14.7 (3.7) (8.2) 2.8 (8.7)
increase/(decrea
se) in cash and
cash equivalents
Cash and cash
equivalents:
- at beginning 1.3 5.0 13.2 13.2 21.9
of period
At end of period 16.0 1.3 5.0 16.0 13.2
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. 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 gains relating to option premium payable are attributable to the
change in the R/US$ exchange rate from 6.654 at 30 June 2005 to 6.3665 at 30
September 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$435 at 30 June
2005 to US$475 at 30 September 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 the forthcoming
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 positive trend established with restructuring of the South Deep management
team in 2004 has continued with a mining operating profit of R20.1 million
(excluding hedging) in the third quarter reflecting an impressive performance.
This was despite the negative impact of the strikes associated with the annual
wage negotiations.
The positive trends in respect of production increases, along with technical and
administrative efficiencies and improvements, show that South Deep is starting
to deliver on the promise that prompted a multi-billion investment a decade ago.
Attributable gold production increased by a further 16% to 2 082kg (including
approximately 50kg from the demolishing of the old plant), and cash costs
reduced by a further 9,5% to R67 981/kg quarter on quarter. This latter
achievement was accompanied by a 11,7% decrease in total costs to R77 657/kg,
compared to R87 957/kg in the June quarter and R106 962/kg in the March quarter.
The average gold price realised improved 17% to R74 352/kg from
R63 561/kg. Without the hedge obligations, the average price of gold realised
was R92 229/kg, emphasising the imperative to restructure the derivative
structure and thus improve the Company"s cash flows. The directors are paying
particular attention to this aspect and hope to complete the restructuring
within the next few months.
Nonetheless, net gold revenue for the quarter was boosted to R130.7 million
compared to R96.4 million the previous quarter, on the back of the strong
operational performance. A 2,7% increase in total production costs to R161.7
million saw a significant reduction in the operating loss from gold (including
hedging) from R61 million in the previous period to R31 million for the
September quarter.
Fair value adjustments relating to the revaluation of the derivative structure
at the period end contributed R70.1 million to income while the exchange gains
relating to the option premium payable, added a further R46.5 million. The
deferred taxation adjustment arising from the fair value revaluations was R37.8
million. The net result was that Western Areas reported a welcome profit for the
period of R32 million, or 27,1 cents per ordinary share.
Shareholders are advised that the rights issue announced on 12 May 2005 will
proceed shortly. It is the Company"s intention to raise approximately R640
million to finance the capital expenditure required to increase production at
South Deep.
JCI Limited, by virtue of the R460 million facility provided to that company by
Investec Limited, remains committed to subscribing to the rights offer and to
underwriting a portion of the rights offer up to a maximum R250 million. The
JCI loan of R369.3 million (including the recent settlement of approximately $13
million, being Western Areas" outstanding contribution to operating costs at
South Deep) will be repaid using rights offer proceeds. A rights offer circular
will be sent to shareholders shortly.
Work to finalise the South Deep year-end mineral reserve declaration under the
auspices of an independent international review panel is on schedule. Details
of the possible reduction in mineral reserves anticipated in the previous
quarterly report will be reported to shareholders in the 2005 annual financial
statements.
Regarding the dewatering of Randfontein Estates Limited No. 4 Shaft, South Deep
will withdraw its pumping staff on 21 October 2005. Responsibility for pumping
will revert to the owner of the mine. South Deep has satisfied the Department of
Minerals and Energy as to the safety of its people and assets, regardless of the
subsequent action taken by the owners. The saving to South Deep should be in
the order of R5 million a month. Interaction with the underwriters regarding the
SV1 insurance claim is ongoing, but no certainty can be ascribed to the claim
being fully settled at this junction.
The directors and staff of Western Areas take this opportunity to extend their
condolences to the family and friends of Mr Brett Kebble, who was tragically
killed a short while after relinquishing his position as CEO of Western Areas on
24 August 2005.
WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
WAL shareholders are referred to the announcements published on 12 May 2005, 30
June 2005 and 19 August 2005 setting out the intention of the board of directors
of WAL ("the WAL board"), subject to certain conditions precedent, to implement
a renounceable rights offer to WAL shareholders. WAL shareholders are further
referred to the announcement published on 30 August 2005, which confirmed the
major features of the proposed rights offer, and providing full terms of the
rights.
Accordingly, shareholders are advised that it is no longer necessary to exercise
caution in dealing in their shares.
Chris Lamprecht
Financial Director
Vaughan Bray
Independent Non-executive Director
Johannesburg
20 October 2005
CONTACT DETAILS
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
Tel: +944 (0870) 162 3100
Fax: +944 (020) 8639 2142
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)
International callers:
Tel: +91 212 815 3700
Date: 20/10/2005 03:00:24 PM Produced by the JSE SENS Department
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