| Wed 29 Mar 2006, 11:14 | | Wesizwe - Reviewed Provisional Results For The Yea |
|
WEZ
WEZ
Wesizwe - Reviewed Provisional Results For The Year Ended 31 December 2005
Wesizwe Platinum Limited
(Incorporated in the Republic of South Africa)
(Registration number 2003/020161/06)
JSE code: WEZ & ISIN: ZAE000075859
(the "Company" or "Wesizwe")
REVIEWED PROVISIONAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2005
Highlights
First black-controlled exploration company to list on the JSE
Since listing in December 2005, attributable Inferred mineral resources
have increased by 6,5% to 6,9 million PGE(4) ounces
New-order prospecting rights secured for all Pilanesberg Project properties
Drilling results to date are positive and conform to original assumptions
and targets
Plans to accelerate the drilling programme
Capital raising for the next phase of exploration is expected to be
successfully concluded within six months
Comment
Mike Solomon, Chief Executive Officer
"Wesizwe has made significant progress in moving up the value curve since
listing in December last year. The Company has drilled an additional 5 000
metres and added some 423 000 ounces of attributable Inferred resource, bringing
the total to 6,9 million ounces. The technical and management team has been
expanded and strengthened, and exploration infrastructure has been significantly
bolstered. The directors remain confident about the future and are planning to
accelerate the drilling programme to commission a bankable feasibility study
towards the end of 2007."
Introduction
It is important in reading these results to note that by their nature,
exploration companies do not generate operating income. The loss of R 32,1
million stated in the income statement therefore represents the net operating
expenses for the year, which is met by capital raised.
In this respect it is also important to appreciate that most of the classical
standard financial indicators are irrelevant in the case of an exploration
company. The performance of the Company should instead be measured by the
shareholder value created by the exploration programme compared with the cost
associated to achieve that value.
Wesizwe listed on the JSE Limited (JSE) on 21 December 2005 under the Mining -
platinum and precious metals sector. No capital was raised. The original venture
capital raised by private placement was R115 million. The total cash outflow
since incorporation has been R100,9 million, resulting in a cash balance of
R14,1 million at 31 December 2005. The Company"s market capitalisation at the
close of business on 28 March 2006 was R837,5 million.
Intangible exploration and evaluation assets
Wesizwe"s portfolio of exploration assets is primarily located on the western
limb of the Bushveld Igneous Complex, comprising portions of the farms
Frischgewaagd 96JQ, Ledig 909JQ, Mimosa 81JQ and Zandrivierspoort 210JP, which
total 4 676 hectares. The properties are situated near Rustenburg and are to the
south of the Pilanesberg Game Reserve and Sun City, and are referred to as the
"Pilanesberg Project". Subsequent to 31 December 2005, the outstanding new-order
prospecting rights required to be granted in terms of the Mineral and Petroleum
Resources Development Act have been obtained for the total portfolio of
properties comprising the Pilanesberg Project.
Current operations
During the year under review, the Company continued its exploration programme on
the farms Frischgewaagd and Ledig. By the end of February 2006, Wesizwe had
drilled 35 boreholes with 30 705 metres of core. A substantial amount of ground
remains unexplored for Merensky and UG2 reefs. There are presently four drill
rigs in operation on the farm Frischgewaagd and another on the farm Mimosa.
The next phase of the exploration programme and capital raising
The assessment of capital requirements is a progressive process whereby the
planning of any phase of the exploration programme is contingent on the results
of the previous phase. Accordingly, it would be inappropriate to raise the total
capital required to take the project through to bankable feasibility study (BFS)
in a single capital raising.
Furthermore, because of the steep growth in value from bare farmland to a SAMREC
Code (South African Code for Reporting of Mineral Resources and Reserves)
qualified resource, the timing of the capital raising is an important factor in
mitigating the excessive early dilution of value.
The raising of capital for the next phase of exploration is about to commence.
This phase is intended to upgrade the current Inferred resource to Indicated
during the course of 2006 and to Measured during the first and second quarters
of 2007.
The projected budget for the Company to the end of 2008 includes taking the
Pilanesberg Project through to BFS as well as making provision for the
exploration of other properties for which Wesizwe has been or will be granted
the prospecting permits.
With the need to raise capital progressively, the Company will seek to raise
additional capital during 2006. This will cater for capital requirements until a
decision is made on the 3D geoseismic survey and the BFS, expected during the
third quarter of 2007.
Mineral resource estimates
The total Inferred mineral resources at the time of listing totalled 63,608
million tonnes at an average grade of 5,09 g/t of PGE(4)*, amounting to 10,417
million ounces (moz), of which 6,463 moz were attributable to Wesizwe.
The drilling update of 9 March 2006 reported an increase of the Inferred mineral
resource estimates for the Merensky and UG2 reefs. Between listing and the end
of February 2006, the resource estimates increased to 68,756 million tonnes at
an average grade of 5,08 g/t PGE(4) equating to 11,223 million PGE(4) ounces for
the Pilanesberg Project. Wesizwe"s attributable ounces increased by 6,5 per cent
to 6,886 moz. The aforementioned increased mineral resource estimates represent
the only material change that has occurred subsequent to the issue of the
Competent Person"s Report on 5 November 2005.
The table below reflects the summary results for the total Inferred mineral
resource estimate for the Pilanesberg Project at 28 February 2006:
Total Attributable
PGE(4)* PGE(4)* PGE(4)*
Tonnage Grade Million Million
Farm Reef (Mt) (g/t) Ounces Ownership Ounces
Ledig Merensky 7,615 4,99 1,222 100% 1,222
909JQ UG2 9,815 4,20 1,327 100% 1,327
Frischgewaagd Merensky 24,185 6,16 4,793 50%** 2,396
96JQ (portions UG2 27,141 4,45 3,881 50%** 1,941
3 and 4, and 11)
Total 68,756 5,08 11,223 6,886
* Platinum Group Elements comprising platinum, palladium, rhodium plus gold
** Remaining 50 per cent of portion 11 owned by Anglo Platinum Limited and
remaining 50 per cent of portions 3 and 4 owned by the Western Bushveld Joint
Venture.
Both of the abovementioned independent mineral resource estimates have been
prepared in accordance with the SAMREC Code and incorporate the drilling results
of both the Merensky and UG2 reefs on the listed farms. The Competent Person, Mr
DR Young, a director of Mineral Corporation Consultancy (Proprietary) Limited,
has issued a report stating that there have been no material changes other than
those under Mineral resource estimates reflected above, to the facts contained
in the Competent Person"s Report dated 5 November 2005. Mr Young"s
qualifications are BSc (Hons), FGSSA, FAusIMM, Pr Sci Nat and his business
address is Homestead Office Park, 65 Homestead Avenue, Bryanston 2021.
Future strategy
The most recent drilling results are broadly in line with Wesizwe"s original
project planning parameters of grade, tonnages and ounces that were set in
accordance with a scoping document derived from an Independent Engineer"s Report
prepared in January 2005. These were to establish a resource that could
economically yield 6,5 moz of PGE(4) metal from 43 million tonnes of resource.
The results achieved to date are an Inferred resource of 68 million tonnes
containing 11,2 moz PGE(4) metal of which 6,9 moz is attributable to Wesizwe.
These results are in excess of the minimum economically viable critical mass of
resource required to support a stand-alone mining operation of 180 000 tons per
month for a life of mine of at least 20 years.
The initial capital of R115 million has been used for the acquisition of the
portfolio of exploration properties, phase one of the exploration programme,
establishment of the Company and listing on the JSE. The Company is currently
pursuing the raising of capital for phases two and three of the exploration
programme. Phase two will take the current resource from Inferred to Indicated
and pre-feasibility study. Phase three of the programme will take the resource
to Measured and phase four to the completion of the BFS. The new funding will be
raised incrementally and is needed to meet the achievement of closely defined
objectives in a similar vein to those set in January 2005 and accomplished to
date.
The original timeframe set for the commencement of the BFS was the second
quarter of 2008. For strategic reasons the drilling programme is to be
accelerated to enable the BFS to be brought forward to the latter half of 2007.
This increased rate of drilling will require an earlier capital raising than
originally planned.
While the focus of the exploration campaign has been on the Pilanesberg
properties, Wesizwe has applied for a number of other exploration properties on
the Bushveld Igneous Complex. Once the prospecting permits for these properties
have been received from the Department of Minerals and Energy, an announcement
will be made.
Statement on Going Concern
By the very nature of the exploration business, exploration companies are not
cash generative in the classic business sense and the issue of going concern is
one that requires a different perspective. The business of an exploration
company is to establish the presence of a mineral resource, and once this has
been achieved, to solicit additional funding to develop the resource to a point
at which the economic viability of exploiting the resource can be ascertained.
The raising of capital represents the Company"s sole source of income other than
interest earned and the sale of assets, and has to be carefully timed. To this
end, the Company will be seeking to raise capital within six months.
The Company has debt of R18 million which is repayable in 2007 representing the
final payment for mineral rights acquired in 2004. There are no significant
recurrent contractual obligations. Should the Company not be capable of raising
capital to meet these obligations it can adjust the scale of its expenditure
flexibly and at short notice. At its current rate of operation, it can continue
operating until the fourth quarter of 2006 without the need for additional
capital inputs. A major South African bank is being mandated to assist with the
raising of the above capital for the Company and has expressed confidence in the
ability to do so. Furthermore, discussions held between Wesizwe and a number of
local and foreign financial institutions on the question of their appetite to
participate in a capital raising on the JSE or by way of a secondary listing on
a foreign bourse have been positive. The Company"s directors are accordingly
confident that the planned capital raising has a considerable likelihood of
success and that there should be no major concerns over the Company"s financial
liquidity and going concern over the next twelve months.
Prospects
The Company is satisfied with the exploration results and expenditure to date,
and has every confidence that it will achieve the targets set for the coming
year of advancing the Inferred resources to Indicated resources on the farms
Frischgewaagd and Ledig. Further to this the location of the Company"s
Pilanesberg Project properties could facilitate future consolidation within the
area and the 52 per cent broad based black control of our equity is a
concomitant advantage.
Financial results
REVIEWED PROVISIONAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2005
Balance sheet
At 31 December 2005 2004
Reviewed Audited
R R
Assets
Non current assets
Property, plant and equipment 333 088 117 972
Intangible exploration and
evaluation assets 70 244 159 44 783 018
Loans receivable - 168 982
Total non current assets 70 577 247 45 069 972
Current assets
Trade and other receivables 4 500 390 397 820
Cash and cash equivalents 14 147 353 10 595 035
Total current assets 18 647 743 10 992 855
Total assets 89 224 990 56 062 827
Equity and liabilities
Equity
Share capital 3 564 3 344
Share premium 102 029 602 22 848 568
Share based payment reserve 730 000 630 000
Accumulated loss (37 498 282) (5 365 963)
Total capital 65 264 884 18 115 949
Non current liabilities
Interest-bearing loans and
Borrowings 15 312 607 12 666 745
Total non current liabilities 15 312 607 12 666 745
Current liabilities
Trade and other payables 5 463 254 4 126 722
Provisions 184 245 -
Interest-bearing loans and
Borrowings 3 000 000 21 153 411
Total current liabilities 8 647 499 25 280 133
Total equity and liabilities 89 224 990 56 062 827
Net asset value per share
(cents) 18,89 6.93
Income statement
For the year ended 31 December 2005 2004*
Reviewed Audited
R R
Revenue - -
Administration expenditure 32 589 778 4 674 193
Depreciation 81 618 -
Loss from operations 32 671 396 4 674 193
Finance cost 316 932 691 770
Finance income (856 009) -
Loss before income tax expense 32 132 319 5 365 963
Income tax expense - -
Loss for the year / period 32 132 319 5 365 963
Loss for the year has been adjusted by the following to arrive at the headline
loss to calculate the headline loss per share:
Loss for the year / period 32 132 319 5 365 963
Naboom project development
Expense (100 000) -
Headline loss for the
year / period 32 032 319 5 365 963
Number of shares in issue 356 366 659 334 380 258
Weighted average number of
shares in issue 345 464 647 261 231 072
Diluted weighted average
number of shares in issue 345 464 647 261 598 589
Basic loss per share (cents) (9,30) (2,05)
Diluted loss per share (cents) (9,30) (2,05)
Headline loss per share (cents) (9,27) (2,05)
Statement of changes in equity
For the year ended 31 December 2005
Share
based
Share Share payment Accumulated
Capital premium reserve loss Total
R R R R R
Balance at 21 August 2003
Issue of share
Capital 3 344 - - - 3 344
Premium on issue of
share capital - 26 281 504 - - 26 281 504
Share issue
expenditure
written off - (3 432 936) - - (3 432 936)
Acquisition of
mineral rights - - 630 000 - 630 000
Net loss for
the period - - - (5 365 963) (5 365 963)
Balance at
31 December 2004* 3 344 22 848 568 630 000 (5 365 963) 18 115 949
Issue of
share capital 220 - - - 220
Premium on issue
of share capital - 88 718 258 - - 88 718 258
Share issue
expenditure
written off - (9 537 224) - - (9 537 224)
Expenditure settled
by shares - - 100 000 - 100 000
Net loss for
the year - - - (32 132 319) (32 132 319)
Balance at
31 December 2005 3 564 102 029 602 730 000 (37 498 282) 65 264 884
Cash flow statement
For the year ended 31 December 2005 2004*
Reviewed Audited
R R
Cash flows utilised by operating activities
Cash utilised by operations (35 071 571) (942 218)
Finance cost (316 932) (26 233)
Finance income 856 009 -
Net cash outflow from
operating activities (34 532 494) (968 451)
Cash flows utilised by investing activities
Acquisition of property, plant
and equipment as a result of
increasing operations (296 734) (121 045)
Expenditure on intangible
exploration and evaluation
assets as a result of
increasing operations (25 461 141) (19 710 331)
Net cash outflow from
investing activities (25 757 875) (19 831 376)
Cash flows from financing activities
Share capital issued 79 181 254 22 851 912
(Decrease) / increase in
interest- bearing loans and
borrowings (15 507 549) 8 711 932
Decrease / (increase) in loan
Receivable 168 982 (168 982)
Net cash inflow from financing
Activities 63 842 687 31 394 862
Net increase in cash and cash
Equivalents 3 552 318 10 595 035
Cash and cash equivalents at
the beginning of the
year / period 10 595 035 -
Cash and cash equivalents at
the end of the year / period 14 147 353 10 595 035
* 16 months ended 31 December 2004
Basis of preparation and accounting policies
The financial information for the year ended 31 December 2005 has been prepared
on the historical cost basis and is in accordance with International Financial
Reporting Standards and its interpretations adopted by the International
Accounting Standards Board. The accounting policies have been applied
consistently throughout the Group and are consistent with those for the 16
months ended 31 December 2004.
The Company has elected to early adopt IFRS6: Exploration for and Evaluation of
Mineral Resources.
Comment
During the year under review the Company allotted and issued 22,0 (2004: 334,4)
million ordinary shares of 0,00001 cents each raising R88,7 (2004: R26,3)
million. On listing on the JSE Wesizwe had 356 366 659 ordinary shares in issue
and this total remains unchanged at the date of this report.
Wesizwe incurred a loss for the year of R32,1 (2004: R5,4) million, the primary
components of which are:
Bakubung economic development R11,7 million
advisors and listing fees R10,1 million
drilling and related costs not capitalised R2,3 million
administrative expenditure R8,0 million
The cash outflow during 2005 was R60,3 (2004: R20,8) million, comprising largely
loss for the year of R32,1 million, changes in working capital consisting mainly
of an increase in Valued Added Taxation due to the Company of R2,8 million
drilling expenses capitalised of R25,5 million
The most significant balance sheet item is the intangible evaluation and
exploration asset. This balance consists of the costs of acquiring the mineral
rights and exploration and related expenditure that have been capitalised.
Independent auditors" report
The above provisional financial statements have been reviewed by KPMG Inc. The
report of the auditors is available for inspection at the Company"s registered
office.
Directorate
On 6 May 2005 Messrs EM Monnakgotla and DJ Phologane were co-opted onto the
board as non-executive directors and Mr DN Campbell was similarly co-opted onto
the board on 1 October 2005 as an independent non-executive director. These
persons were elected directors by the shareholders at the annual general meeting
held on 25 November 2005.
Signed on behalf of the board
TE Skweyiya (Mrs) MH Solomon
Chairperson Chief Executive Officer
Johannesburg
29 March 2006
Sponsors
Standard Bank
Directors TE Skweyiya (1) (Mrs) (Chairperson), MH Solomon (Chief
Executive
Officer), DN Campbell (2), WM Eksteen (2), L Maloney (1)
(Mrs), ME Monnakgotla (1), DJ Phologane (1), JC Williams (1)
(1) Non-executive (2) Independent non-executive
Company secretary : RH Phillips
Registered office Second floor, AMB Capital, 18 Fricker Road, Illovo 2196.
Investor relations enquiries to:
College Hill
Nick Williams : Cell + 27 83 607 0761
: Telephone + 27 11 447 3030
Wesizwe
Melanie Low : Telephone + 27 11 215 2375
Web site : http://www.wesizwe.com
Date: 29/03/2006 11:14:32 AM Produced by the JSE SENS Department
