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SXR
SXR
sxr Uranium One Inc - Financial Report
sxr Uranium One Inc
(Formerly Southern Cross Resources Inc.)
(Incorporated in Canada)
(Registration number: 15096422420)
Share code on the JSE: SXR ISIN: CA87112P1062
Share code on the TSX: SXR ISIN: CA87112P1062
("Corporation")
sxr Uranium One Inc.
Consolidated Balance Sheets
as at December 31
(in US Dollars)
2005 2004
Notes US$"000 US$"000
ASSETS
Current assets
Cash 10,891 229
Accounts receivable 3 8,823 5,099
Inventories 4 681 197
Short term investments 7 - -
20,395 5,525
Non-current assets
Property, plant and equipment 5 157,255 39,954
Asset retirement fund 6 1,275 1,597
Other investments 7 - 12,670
158,530 54,221
Total assets 178,925 59,746
LIABILITIES
Current liabilities
Accounts payable and accrued 8 15,045 3,394
liabilities
Current portion of lease 9 1,452 2,794
obligations
Short term loan 10 993 8,862
17,490 15,050
Non-current liabilities
Asset retirement obligations 11 4,094 4,195
Lease obligations 9 1,560 2,063
Future taxation liability 17 21,156 -
26,810 6,258
SHAREHOLDERS" EQUITY
Share capital 12 216,123 80,736
Accumulated deficit (114,399) (72,659)
Contributed surplus 13 11,367 2,790
Currency translation adjustments 21,534 27,571
134,625 38,438
Total equity and liabilities 178,925 59,746
See accompanying notes to the Consolidated Financial Statements, including:
* Basis of presentation (note 2.1)
* Commitments (notes 19 and 23)
* Subsequent events (note 24)
Approved on behalf of the Board of Directors
"Andrew Adams" "Neal Froneman"
Director Director
sxr Uranium One Inc.
Consolidated Statements of Operations and Deficit
for the years ended December 31
(in US Dollars)
2005 2004
Notes US$"000 US$"000
Gold sales 14 2,730 1,892
Cost of sales 15 (7,221) (8,302)
Gross loss (4,491) (6,410)
Sundry income 14 770 609
General and administrative (5,539) (2,225)
expenditure
Share options expensed (7,240) (1,324)
Exploration expenditure 16 (11,019) (996)
Other net income/(costs) 265 (1,055)
Operating loss (27,254) (11,401)
Interest received 1,065 251
Interest paid (2,480) (1,678)
Profit on disposal of investments 27 737
Fair value adjustment of short-term 7 (2,169) (2,672)
investments
Impairment of investments 7 (10,929) -
Loss before income taxes (41,740) (14,763)
Provision for income taxes 17 - -
Net loss (41,740) (14,763)
Accumulated deficit at the (72,659) (57,896)
beginning of the year
Accumulated deficit at the end of (114,399) (72,659)
the year
Basic loss per common share (cents) 18 (58.67) (33.81)
Fully diluted loss per common share 18 (58.67) (33.81)
(cents)
Weighted average number of basic 18 71,139,266 43,661,816
common shares outstanding
Fully diluted weighted average 18 71,139,266 43,661,816
number of basic common shares
outstanding
See accompanying notes to the Consolidated Financial Statements
sxr Uranium One Inc.
Consolidated Statements of Cash Flows
for the years ended December 31
(in US Dollars)
2005 2004
Notes US$"000 US$"000
Loss before taxation (41,740)
(14,763)
Add back: Net finance costs 1,415 1,427
Add back: Non-cash items:
- Depreciation and amortization 767 179
- Write down of inventory - 631
- Write down of heap leach and - 1,934
other inventory items
- Impairment of property, plant and - 2,984
equipment
- Expensing share options 7,240 1,324
- Profit on disposal of property, (265) (821)
plant and equipment
- Provision for rehabilitation - 468
- Finance charges on short term - 966
loan
- Profit on disposal of investments (27) (737)
- Fair value adjustment of listed 2,169 2,672
investments
- Impairment of investments 10,929 -
(19,512) (3,736)
Movement in working capital:
- Increase in inventories (484) (568)
- Increase in trade receivables and (1,183) (1,182)
prepayments
- Increase/(decrease) in trade and 8,978 (491)
other payables
- Increase in asset retirement (340) -
obligations
Cash utilized by operations (12,541) (5,977)
Net finance costs paid (1,415) (1,360)
- Net finance costs per Income (1,415) (1,427)
Statement
- Add back: Capitalized interest - 67
on short term loan
Cash flows from operating (13,956) (7,337)
activities
Proceeds from disposal of property, 265 2,528
plant and equipment
Cash taken over from Southern Cross 21 8,389 -
Additions to property, plant and (14,762) (6,144)
equipment
Proceeds on disposal of investments 10,615 7,563
Increase in environmental trust and (8) (207)
other investments
Cash flows from investing 4,499 3,740
activities
Net proceeds from the issue of 29,288 6,399
ordinary shares
(Decrease)/Increase in investment 7 970 (395)
in debt redemption fund
Loan (repaid) / received during the (7,869) 7,174
year
Decrease in capital element of (1,924) (8,734)
finance lease and other long term
debt
(Decrease)/Increase in bank (14) 14
overdraft
Cash flows from financing 20,451 4,458
activities
Effects of exchange rate changes on (332) (2,495)
cash held in foreign currencies
Net (decrease)/increase in cash 10,662 (1,634)
Cash at the beginning of the year 229 1,863
Cash at the end of the year 10,891 229
See accompanying notes to the Consolidated Financial Statements
sxr Uranium One Inc.
Notes to the Consolidated Financial Statements
December 31, 2005
1 NATURE OF OPERATIONS
sxr Uranium One Inc. (the "Corporation") is a Canadian corporation engaged in
the acquisition, exploration and development of properties for production of
uranium in South Africa, Australia and Canada and gold in South Africa.
sxr Uranium One Inc. is a Canadian uranium and gold resource company with a
primary listing on the Toronto Stock Exchange and a secondary listing on the JSE
Limited (the Johannesburg stock exchange). The Corporation owns 100% of the
Dominion uranium project in South Africa and the fully permitted Honeymoon
uranium project in South Australia. Through a joint venture with Pitchstone
Exploration Ltd., the Corporation is also engaged in uranium exploration
activities in the Athabasca Basin of Saskatchewan. The Corporation"s Aflease
Gold and Uranium Resources Limited subsidiary owns the Modder East gold property
and related gold assets in South Africa.
The exploration and development of mineral properties involves significant
financial risk. In the event these properties are determined to be commercially
viable, additional financing will be required.
1.1 Acquisition of Southern Cross Resources Inc.
The acquisition by Southern Cross Resources Inc. ("Southern Cross") of all of
the issued and outstanding Aflease Gold and Uranium Resources Limited
("Aflease") shares pursuant to the Acquisition Agreement dated as of September
14, 2005 and the Scheme of Arrangement, was finalized on December 8, 2005, being
the date that the last condition precedent was met.
The essence of the transaction was that Aflease shareholders were offered 0.9
new Southern Cross shares for each Aflease issued and outstanding share,
resulting in Aflease eventually being wholly owned by Southern Cross. Subsequent
to this issue, there were the following:
The share consolidation: Southern Cross shareholders were offered 1 share for
every 5 shares held;
The name change, with Southern Cross being changed to sxr Uranium One Inc.; and
The grant of the replacement options in consideration of the Aflease
options.
For accounting purposes, the transaction is considered a reverse takeover
whereby Aflease is considered the acquiring company as the shareholders of
Aflease acquired more than 50% of the issued and outstanding shares of Southern
Cross.
Note that the comparative information contained in the consolidated balance
sheet as at December 31, 2004 and the consolidated statements of operations and
deficit and cash flows for the year then ended therefore represent the financial
position and results of operations of Aflease ("Corporation"). The results of
operations of Southern Cross were included with effect from December 9, 2005.
The consolidated balance sheet at December 31, 2005 represents the financial
position of the entire Group.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
2.1 Basis of presentation
Consolidation
These consolidated financial statements have been prepared in accordance with
Canadian GAAP. The consolidated financial statements include the amounts of the
Corporation and all of its subsidiaries. All significant inter company balances
and transactions are eliminated on consolidation.
2.2 Use of estimates
The preparation of these audited consolidated financial statements in accordance
with Canadian GAAP requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent liabilities at the date of the audited consolidated financial
statements and the reported amount of revenues and expenses during the reporting
period. Actual results could differ from those reported.
2.3 Foreign currency translation
Items included in the financial statements of each entity in the Group are
measured using the currency that best reflects the economic substance of the
underlying events and circumstances relevant to that entity ("the functional
currency").
Foreign currency transactions are translated into the functional currency using
the exchange rates prevailing at the dates of the transactions. Foreign exchange
gains and losses resulting from the settlement of such transactions and from the
translation of monetary assets and liabilities denominated in foreign
currencies, are recognized in the statements of operations and deficit, except
when deferred in equity as qualifying cash flow hedges.
The Group considers the United States ("US") Dollar to be the reporting currency
and the South African Rand, Australian Dollar and Canadian Dollar to be the
functional currencies. The translated amounts are of a foreign entity and as
such, the translation to US Dollars was made using the current rate method, as
follows: monetary assets and liabilities are translated at the exchange rate in
effect at the balance sheet date; non-monetary assets and liabilities are
translated at rates prevailing at the respective transaction dates; revenues and
expenses are translated at either the exchange rate at the date of the
transaction or the average exchange rate where it was impractical to establish
the former rate. All resulting exchange differences are classified as equity and
disclosed as currency translation adjustments in the balance sheet.
2.4 Financial Instruments
Financial assets and financial liabilities are recognized on the balance sheet
when the Corporation has become party to the contractual provisions of the
instruments.
Financial instruments recognized on the balance sheet include:
* Investments
- Investment
- Environmental Trust Fund
- Investment - Debt Redemption Fund
- Investment - Rehabilitation Cash Management Account
- Investment in listed shares
* Receivables
* Cash and cash equivalents
* Long term debt
* Short term loans
* Trade payables
Measurement
Financial instruments are initially measured at cost, which includes transaction
costs. Subsequent to initial recognition these instruments are measured as set
out below:
Investments
Purchases and sales of investments are recognized on the trade date, which is
the date that the Corporation commits to purchase or sell the asset. After
initial recognition, investments, which include the Corporation"s listed
investments and which are designated as long term investments, are measured at
the lesser of historic cost or net realizable value. Listed investments which
are designated as short term investments are measured at fair value. Losses on
long term investments and profits and losses on short term investments are
recognized in the income statement.
Other long-term investments that are intended to be held to maturity are
subsequently measured at amortized cost using the effective interest rate
method. Amortized cost is calculated by taking into account any discount or
premium on acquisition over the period to maturity. For investments carried at
amortized cost, gains and losses are recognized in the income statement when the
investments are derecognized or impaired, as well as through the amortization
process.
Cash and cash equivalents
Cash and cash equivalents consist of cash on hand, bank balances, deposits held
at call and certificate of deposits with a remaining maturity of three months or
less. Bank and cash balances are reported separately from bank overdraft
balances, which are included in accounts payable.
Accounts receivable
Accounts receivable are carried at original invoice amount unless a provision
has been recorded for impairment of these receivables. A provision for
impairment of accounts receivable is established when there is objective
evidence that the Corporation will not be able to collect all amounts due
according to the original terms of receivables.
Financial liabilities
After initial recognition, financial liabilities other than trading liabilities
are subsequently measured at amortized cost using the effective interest rate
method. Amortized cost is calculated by taking into account any transaction
costs, and any discount or premium on settlement.
Accounts payable
Liabilities for trade and other payables which are normally settled on 30 to 90
day terms are carried at cost.
Impairment and uncollectability of financial assets
An assessment is made at each balance sheet date to determine whether there is
objective evidence that a financial asset or group of financial assets may be
impaired. If such evidence exists, the estimated recoverable amount of the asset
is determined and an impairment loss is recognized for the difference between
the recoverable amount and the carrying amount as follows: The carrying amount
of the asset is reduced to its discounted estimated recoverable amount, either
directly or through the use of an allowance account, and the resulting loss is
recognized in the income statement for the period.
Loans payable
Loans payable are recognized initially at the proceeds received, net of
transaction costs incurred. Loans payable are subsequently stated at amortized
cost using the effective yield method; any difference between proceeds (net of
transaction costs) and the redemption value is recognized in the income
statement over the period of the loan.
Offset
Where a legally enforceable right of offset exists for recognized financial
assets and financial liabilities, and there is an intention to settle the
liability and realize the asset simultaneously, or settle on a net basis, all
related financial effects are offset.
Equity instruments
Equity instruments issued by the Corporation are recorded at the proceeds
received, net of direct issue costs.
The carrying amounts for cash and cash equivalents, short-term investments,
accounts receivable and accounts payable and accrued liabilities approximate
fair value due to the short maturities of these instruments.
2.5 Property, plant and equipment
Mine development and infrastructure
Mining assets are initially recorded at cost and will include mine development
and mine plant facilities. Costs include pre-production expenditure.
Development costs incurred to evaluate and develop new ore bodies or to define
mineralization in existing ore bodies or to establish or expand productive
capacity are capitalized. Mine development costs in the ordinary course to
maintain production are expensed as incurred. Initial development and pre-
production costs relating to a new ore body are capitalized until the reef
horizon is intersected and commercial levels of production are achieved, at
which time the costs are amortized.
Mineral and surface rights
Mineral and surface rights are recorded at cost of acquisition. When there is
little likelihood of a mineral right being exploited, or the value of mineral
rights have diminished below cost, a write-down is effected against income in
the period that such determination is made.
Mining exploration
Exploration costs are expensed as incurred. When a decision is made that
commercial production on a mining property should commence, all further pre-
production expenditures are capitalized. These costs include evaluation costs.
2.6 Capitalization of interest
Net interest costs incurred during the development, construction and start up
phase of major projects are capitalized.
2.7 Other assets
The Company"s interest in process technology is carried at acquisition cost and
is being amortized on a straight-line basis over a twenty year period.
2.8 Asset retirement obligations
On January 1, 2004, the Corporation adopted the new CICA accounting standard for
asset retirement obligations. Under this new standard, the Corporation
recognizes the fair value of a future asset retirement obligation as a liability
in the year in which it incurs a legal obligation associated with the retirement
of tangible long-lived assets that results from the acquisition, construction,
development, and/or normal use of the assets. The Corporation concurrently
recognizes a corresponding increase in the carrying amount of the related long-
lived asset that is depreciated over the life of the asset. The fair value of
the asset retirement obligation is estimated using the expected cash flow
approach that reflects a range of possible outcomes discounted at credit
adjusted risk-free interest rate. Provision is made in full for the estimated
future costs of pollution control and rehabilitation, in accordance with
statutory requirements. The fair value of asset retirement obligations is
recognized and provided for in the financial statements and capitalized to
mining assets when incurred.
Subsequent to the initial measurement, the asset retirement obligation is
adjusted at the end of each year to reflect the passage of time and changes in
the estimated future cash flows underlying the obligation.
Changes in the obligation due to the passage of time are recognized in income as
an operating expense using the interest method. Changes in the obligation due to
changes in estimated cash flows are recognized as an adjustment of the carrying
amount of the long-lived asset that is depreciated over the remaining life of
the asset. The impact of this change in accounting policy was not material.
Annual increases in the provision are accreted into income and consist of
financing costs relating to the change in present value of the provision and
inflationary increases in the provision estimate. The present value of
additional environmental disturbances created are capitalized to mining assets
against an increase in rehabilitation provision.
2.9 Impairment of long-lived assets
Where impairment is identified, the carrying value of the related property,
plant and equipment is written down to fair value. Recoverability of the long-
term assets of the Corporation, which includes development costs and undeveloped
property costs, are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amounts may not be recoverable, based
on future undiscounted cash flows. In preparing this evaluation, the
Corporation compares the carrying amount of the asset to its fair value. For the
purposes of assessing impairment, assets are grouped at the lowest levels for
which there are separately identifiable cash flows. To determine fair value,
management makes its best estimates of the future cash inflows that will be
obtained each year over the life of the asset and discounts the cash flows by a
rate that is based on the time value of money, adjusted for the risk associated
with the applicable asset.
Management"s best estimate includes only those projections which it believes are
reliable. These estimates are subject to risks and uncertainties including
future metal prices. It is therefore reasonably possible that changes could
occur which may affect the recoverability of the assets.
2.10 Future income and mining taxes
The Corporation utilizes the asset and liability method of accounting for income
and mining taxes. Under the asset and liability method, future income and mining
tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases reduced by a
valuation allowance to reflect the recoverability of any future income tax
asset. Future income and mining tax assets and liabilities are measured using
enacted or substantively enacted tax rates expected to apply when the asset is
realized or the liability settled. The effect on future income and mining tax
assets and liabilities of a change in tax rates is recognized in income in the
year that enactment or substantive enactment occurs.
2.11 Stock-based compensation
The Corporation"s stock-based compensation plan is described in note 13. The
Corporation recognizes as an expense the fair value of employee share-stock
compensation, including stock options. Any consideration paid upon the exercise
of stock options, in addition to the fair value attributable to stock options
granted is credited to share capital. The fair value attributable to stock
options that expire unexercised is credited to contributed surplus.
2.12 Revenue recognition
Revenue from the sale of gold is recognized when significant risks and rewards
of title and ownership of the goods are transferred upon delivery to the final
refiner.
Interest income is recognized on a time proportion basis, taking account of the
principal outstanding and the effective rate over the period to maturity, when
it is determined that such income will accrue to the Company.
2.13 Leased assets
Leases of property, plant and equipment where the Corporation has substantially
all the risks and rewards of ownership are classified as finance leases. Finance
leases are capitalized at the inception of the lease at the lower of the fair
value of the leased property or the present value of the minimum lease payments.
Each lease payment is allocated between the liability and finance charges so as
to achieve a constant rate on the finance balance outstanding. The corresponding
rental obligations, net of finance charges, are included in other long-term
payables. The interest element of the instalment is charged to the income
statement over the lease period so as to produce a constant periodic rate of
interest on the remaining balance of the liability for each period. The
property, plant and equipment acquired under finance leases are depreciated over
the shorter of the useful life of the asset or the lease term.
2.14 Inventories
Inventories, which include gold in process and consumable stores are stated at
the lower of cost or net realizable value. The related direct production costs
associated with gold in process are deferred and charged to costs as the
contained gold is recovered. Consumable stores are valued on the weighted
average basis. Gold in process is identified and measured from the ore
stockpiles up to and including the on-site refining plant.
2.15 Earnings or loss per share
Basic earnings or loss per share is computed by dividing earnings or loss
available to common shareholders by the weighted average number of common shares
outstanding during the year. The treasury stock method is used to calculate
diluted earnings or loss per share. Diluted earnings or loss per share is
similar to basic earnings or loss per share, except that the denominator is
increased to include the number of additional common shares that would have been
outstanding assuming that options and warrants with an average market price for
the year greater than their exercise price are exercised and the proceeds used
to repurchase common shares. As a result of the loss for each of the reporting
years, the potential effect of exercising stock options and warrants has not
been included in the calculation of diluted loss per share as to do so would be
anti-dilutive.
2.16 Comparatives
Certain numbers in the comparative financial statements have been reclassified
to conform to changes in presentation in the current year.
3 ACCOUNTS RECEIVABLE
2005 2004
US$"000 US$"000
Trade receivables 54 2,800
Value Added Tax and General Sales Tax 4,614 854
Prepayments and advances 3,803 -
Deposits and guarantees 93 94
Other receivables 259 1,351
8,823 5,099
4 INVENTORIES
2005 2004
US$"000 US$"000
In-process metal 231 -
Spares and consumables 450 197
681 197
Certain inventory items classified as spares and consumables were identified for
sale and were placed on auction during the previous financial year. 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 $1.9 million to its net
realizable value.
5 PROPERTY, PLANT AND EQUIPMENT
2005 2004
Accumula Accumula
ted ted
Cost amortiza Net Cost amortiza Net
tion tion
US$"000 US$"000 US$"000 US$"000 US$"000 US$"000
Mine development 38,014 (3,676) 34,338 23,349 (1,337) 22,012
costs and mine
plant facilities
Undeveloped 122,639 - 122,639 17,725 - 17,725
properties
Motor vehicles 433 (316) 117 255 (145) 110
Office equipment 544 (383) 161 291 (184) 107
161,630 (4,375) 157,255 41,620 (1,666) 39,954
Owned assets 156,890 38,830
Leased assets 365 1,124
Total net carrying 157,255 39,954
amount as at end
of the year
Mineral properties Undeveloped properties
2005 2004 2005 2004
Undeveloped properties US$"000 US$"000 US$"000 US$"000
comprise:
New Kleinfontein - - 15,807 17 725
Honeymoon, Australia 6,016 - 28,670 -
Goulds Dam, Australia - - 24,921 -
Billeroo / Karkarook, - - 43,170 -
Australia
Athabasca, Canada 1,281 - 1,427 -
Loan guarantees, Native title - - 1,347 -
and project generation
7,297 - 115,342 17,725
Impairment of property, plant and equipment
During 2004 management determined that assets directly related
to suspended open-pit operations with a carrying value of $3.9 million were
impaired and should be written down to a fair value of $0.9 million.
Native title claims
The Corporation"s interests in the Honeymoon and Goulds Dam properties are
subject to two Native Title claims. Agreements have been secured with both
groups, whereby the Corporation pays annual administration fees to each claimant
group.
6 ASSET RETIREMENT FUND
2005 2004
US$"000 US$"000
Investments in Environmental Trust Fund 1,171 1,488
- Opening balance 1,488 1 087
- Investment income 13 173
- Costs incurred (168) -
- Foreign exchange gain / (loss) (162) 228
Rehabilitation Cash Management account 104 109
1,275 1,597
The Environmental Trust Fund is a trust under the Corporation"s control and is
to be used to fund the rehabilitation liabilities. Funds in the trust consist of
primarily cash held in interest bearing accounts, together with investments in
South African equities.
The Rehabilitation Cash Management account is a money market fund investment.
Interest is capitalized on a monthly basis.
7 OTHER INVESTMENTS
2005 2004
US$"000 US$"000
Debt Redemption Fund - 970
Listed investment - 11,700
- 12,670
Designated short term investment - -
Designated long term investment - 12,670
- 12,670
The Debt Redemption Fund was used to fully settle a long term loan.
The Listed Investment classified as short term investments resulted from the
share swap transaction with Randgold and Exploration Company Limited
("Randgold"). The Corporation acquired 9.4 million ordinary shares, fully paid
up, in the issued share capital of Randgold against the allotment and issue to
Randgold of 94.0 million ordinary shares, fully paid up, in the issued share
capital of the Corporation. The terms of the transaction included the intention
of the Corporation to dispose of the Randgold swap shares in a commercially
prudent manner, in consultation with Randgold.
After disposing of some 3 million shares, the Corporation was left with 6
million Randgold shares on December 31, 2004. This investment was valued at
$11.7 million on that date.
The Corporation subsequently sold 1,340,000 shares, where after it used a
futures related structure to raise finance against this investment. To this end,
Aflease bought futures representing a future obligation to purchase 5.866
million Randgold shares. Refer note 10.
The Corporation then entered into a further transaction acquiring 2.88 million
futures in Randgold. In terms of the futures contract, the Corporation must
purchase Randgold and Exploration Company shares at a price of $0.95 at some
future date. The terms of the contract include a profit sharing arrangement
whereby up to a share price of $1.58, the Corporation will only retain 30% of
the profit arising out of the contract. This percentage increases to 70% for any
profit beyond a price of $1.58 per share.
Fair value adjustments to the total investment (shares and futures) amounted to
$2.2 million for the year (2004: $2.7 million).
In July 2005, Randgold shares were suspended on the JSE Limited (the
Johannesburg stock exchange). Effective from September 21, 2005, the company was
delisted from the NASDAQ. Since suspension, the share price has not traded and
has not moved from the price of $1.39 per share. This has raised concerns of
possible impairment of the Corporation"s investment in Randgold. Due to
uncertainty that still prevails however, management has resolved to write this
investment down to a zero value. The impairment charge amounted to $8.2
million.
The underlying shares pertaining to the contractual commitment to acquire shares
in Randgold in terms of the futures contract referred to above, were also
impaired. A provision of $2.7 million has been recorded to recognize the
Corporation"s future obligation under the contractual commitment. Refer note 8.
8 ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
2005 2004
US$"000 US$"000
Bank overdraft balances - 14
Trade payables 6,651 1,398
Accruals 4,396 81
Provisions 3,998 1,901
- Provision for leave pay 79 136
- Provision for bonuses 1,238 454
- Provision for settlement of employee - 795
taxes
- Provision for diminution in value of 2,681 -
shares
- Other provisions - 516
15,045 3,394
9 LEASE OBLIGATIONS
2005 2004
US$"000 US$"000
Present value of finance lease obligations 1 452 2,794
payable within 1 year
Minimum lease payments 1,650 2,798
Finance charges (198) (4)
Present value of finance lease obligations 1,560 2,063
payable within 2 to 5 years
Minimum lease payments 1,772 2,690
Finance charges (212) (627)
Payable in 3,422 5,488
- 2005 - 2,276
- 2006 1,650 1,492
- 2007 1,479 1,491
- 2008 246 229
- 2009 14 -
- 2010 14
- Thereafter 19 -
Total debt 3,012 4,857
Short term portion of finance leases 1 452 2,794
Total long term debt 1,560 2,063
Finance leases were obtained for the purchase of equipment required for mining
operations. Monthly instalments payable range from $0.6k (2004: $0.7k) to $35k
(2004: $36k) and are repayable over various terms. Interest rates are linked to
prime and range from prime less 2.5% to prime less 0.5%.
Included in the lease obligations are loans that are secured by a general
notarial bond over all moveable assets..
10 SHORT TERM LOAN
2005 2004
US$"000 US$"000
Convertible short term loan - 8 140
Value of share options - (151)
Nedbank loan 993 -
Foreign exchange loss - 873
Total liability 993 8,862
The convertible loan facility of $8.9 million, which was purchased by Eastbourne
Capital Management L.L.C. from the original financier, bore interest at a 1.5%
margin above the South African prime rate. This loan was fully settled in
September and October 2005 through:
a) Conversion of the loan balance to shares of Aflease at an issue price of
$0.49 per share plus a 3 year option with an exercise of $0.62 per Aflease
share. The shares and warrants have since been converted to the equivalent of
the Corporation"s shares and warrants. The warrants are exercisable within 3
years from the date of issue; and
b) Settlement of $157 thousand of the loan through cash.
The Nedcor loan represents draw-downs on a facility availed by Nedcor Securities
on the back of Aflease"s investment in Randgold shares. This loan attracts
interest at a flat rate of 7.75% per annum. The loan has no fixed repayment
terms.
11 ASSET RETIREMENT OBLIGATIONS
Klerksd New TOTAL TOTAL
orp
Operati Kleinfo 2005 2004
ons ntein
US$"000 US$"000 US$"000 US$"000
Opening balance 4,004 182 4,186 3,076
- Incurred during the year - - - -
- Settled - - - -
- Accretion expense 344 16 360 -
- Revision - - - 468
- Foreign exchange loss (432) (20) (452) 642
Closing balance 3,916 178 4,094 4,186
Amount owing to AFL - - - 9
Rehabilitation Trust
Total obligations 3,916 178 4,094 4,195
The rehabilitation trusts have been set up as sinking funds for the purposes of
the environmental rehabilitation and closure costs. The trust deed prohibits use
of the funds for any other purpose.
The fair value of the restricted assets at year end is $1.3 million. Refer note
6.
During 2004 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 $4.0
million. The provision was therefore increased by $0.5 million from $3.6 million
(after foreign exchange loss) to $4.1 million as at the end of December 2004.
The remainder of the obligation relates to the East Rand region.
The associated long lived assets are in the East Rand and Klerksdorp regions.
The liability for the entire East Rand excluding the old plant and slimes dam
entails the plugging of the shafts and cover with topsoil. The old plant will be
demolished and the small slimes dam will be cleaned, and vegetated. The open pit
of the Dominion operations will be landscaped and covered with topsoil,
vegetated and monitored for organic growth. There are also shafts that will be
plugged and covered with topsoil. The Corporation is in the process of compiling
a rehabilitation programme for the two slimes dams at Dominion. The plant will
also be demolished at the end of the life of mine. The demolished old plant
might be used in future for additional plant facilities.
The above table provides a reconciliation of the present value of the liability
at year end:
The following are the key assumptions used in the model:
(i) The total undiscounted and uninflated amount of the estimated cash flows is
$5.8 million
(ii) It is estimated that the liability in respect the Klerksdorp Operations
will be payable 11 years hence and the New Kleinfontein Group liability, 5 years
hence.
(iii) Inflation of 5% and a discount rate of 9.65% were used to discount nominal
future liabilities.
AFL Rehabilitation Trust is a trust set up as a sinking fund for the
Corporation"s mine rehabilitation and closure costs.
12 SHARE CAPITAL
On December 8, 2005, sxr Uranium One Inc. was created through the reverse
acquisition of Southern Cross Resources Inc. by Aflease Gold and Uranium
Resources Limited ("Aflease"). See note 1.1 for the acquisition terms. Below is
disclosure of the movement of the Corporation"s share options as well as
disclosure of the Corporation"s shares in issue as at December 31, 2005.
Number of shares Value of shares
2005 2004 2005 2004
Ordinary Shares US$"000 US$"00
Opening balance of common shares in 336,451,321 210,952,406 80,736 52,495
issue
Common shares issued in public or 50,325,405 31,675,250 35,508 9,836
private offering
Shares issued in settlement of 21,535,107 - 9,312 -
Eastbourne Capital loan (refer note
10)
Shares bought back by subsidiary - (4,000,000) - (12)
Shares sold by subsidiary - 4,000,000 - 12
Share swap issue (refer note 7) - 94,000,000 - 19 15
Cancelled during the year - (300,000) - (296)
Exercise of stock options 998,288 123,665 634 -
Share issue costs (453)
(6,220)
Closing balance of issued and 409,310,121 336,451,321 119,970 80,736
outstanding shares on December 8,
2005
Conversion of Aflease shares to sxr 368,379,109
Uranium One Inc. shares at a ratio 119,970
of 0.9
Share consolidation: 1 share for 73,675,822 119,970
every 5 shares held
Acquisition of Southern Cross 15,427,992 95,976
Resources Inc. (refer to note 21)
Warrants issued after December 8, 177
2005
Closing balance of issued and 89,103,814
outstanding shares on December 31, 216,123
2005
13 CONTRIBUTED SURPLUS
The following table details the movements of contributed surplus during the
year:
Warrant Options TOTAL TOTAL
s
2005 2004
US$"000 US$"000 US$"000 US$"000
At the beginning of the year 217 2,573 2,790 1,276
Share options expensed - 7,240 7,240 1,324
Share options exercised - (259) (259) (27)
Warrants issued to Eastbourne - - - 217
Capital L.L.C.
Warrants issued to BMO Nesbitt 1,773 - 1,773 -
Warrants exercised (177) - (177) -
At the end of the year 1,813 9,554 11,367 2,790
Options
Under the Corporation"s Option plan, options granted are non-assignable and may
be granted for a term not exceeding ten years. The plan is administered by the
Board of Directors, which determines individual eligibility under the plan,
number of shares reserved for optioning to each individual (not exceeding 50% of
issued and outstanding shares to any one individual) and any vesting period
which is generally one-third on grant date, one-third on the first anniversary
of the grant date and the remainder on the second anniversary of the grant date.
The maximum number of shares of the Corporation that are issuable pursuant to
the plan is limited to 10% of issued and outstanding shares. On December 8,
2005, the Corporation issued replacement share options to Aflease"s as well as
to SXR Inc."s employees. The replacement options were issued on the same basis
as the replacement shares to shareholders. Below is disclosure of the movement
of Aflease"s share options as well as a reconciliation to the Corporation"s
share options outstanding on December 31, 2005.
The fair value of stock options used to calculate compensation expense has been
estimated using the binomial option pricing model with the following
assumptions:
Dec 31, Dec 8, Dec 31,
2005 2005 2004
Risk free interest rate: 3.70% - 7.41% - 13.42%
Canadian rates (Dec 8 and 2004: 4.12% 12.41%
South African rates)
Expected dividend yield 0% 0% 0%
Expected volatility of the 61% 41% - 53% - 62%
Company"s share price 176%
Average expected life of option 3.88 4.20 3.04
- for options with 5 years to years years years
expiry
Average expected life of option 0.95 - -
- for options with 1 year to years
expiry
Changes in the subjective input assumptions can materially affect the fair value
estimate, and therefore, the existing models do not necessarily provide a
reliable measure of the fair value of the Company"s stock options.
The following is a summary of the Corporation"s options granted under its stock-
based compensation plan:
Weighted Average
Number of options Exercise Price
2005 2004 2005 2004
US$ US$
At the beginning of the year 13,139,178 8,045,443 0.47 0.61
Granted during the year 12,759,147 9,575,239 0.46 0.27
Exercised during the year (997,130) (123,665) 0.40 0.29
Forfeiture of share options (784,847) (4,357,839) 0.36 0.51
At the end of the year 24,116,348 13,139,178 0.47 0.47
Replacement options issued to 4,340,943
Aflease at a conversion rate
of 0.18
Southern Cross options 927,667
converted at a rate of 0.20
Outstanding options as at 5,268,610 2.74
December 31, 2005
The stock option compensation expense for 2005 was $7.2 million (2004: $1.3
million). As at December 31, 2005 the aggregate unexpensed fair value of
unvested stock options granted amounted to $6.4 million (2004: $3.6 million).
The following table summarizes certain information about the Corporations stock
options outstanding at December 31, 2005:
Options outstanding
Options exercisable
Range of Exercise Number Weighted Weighted Number Weighted
Prices outstandi average average exercisable as average
US$ ng as at remaining exercise at exercise
Dec 31, life price Dec 31, 2005 price US$
2005 years US$
1.15 to 1.73 2,232,903 4.85 1.46 1,282,327 1.45
2.19 to 2.68 333,445 4.88 2.32 221,741 2.32
3.15 to 3.98 1,788,744 4.17 3.55 1,373,081 3.57
4.05 to 4.32 699,803 4.07 4.16 409,702 4.18
5.06 to 5.52 213,715 2.93 5.31 164,359 5.26
5,268,610 4.44 2.74 3,451,210 2.85
Options exercised during January 2004 resulted in 17,000 shares being issued at
a price of $0.13; 53,333 shares at a price of $0.32 each and 6,667 shares at a
price of $0.26 each.
Options exercised during April 2004 resulted in 46,665 shares being issued at a
price of $0.28 each.
Options exercised during the first quarter 2005 resulted in 19 366 shares being
issued at a price of $0.44.
88 620 options were exercised during the third quarter of the year resulting in
that many shares being issued at an average price of $0.41.
Options exercised during the fourth quarter of the year resulted in 889 144
shares being issued at an average price of $0.23.
None of the replacement options were exercised in the 2005 financial year.
Warrants
Average
Number of warrants Allocated value exercise price
2005 2004 2005 2004 2005 2004
US$"000 US$"000 US$ US$
At the beginning 3,876,319 - 217 - 2.73
of the year
Issued to - 3,876,319 - 217 - 2.73
Eastbourne
Capital L.L.C.
Issued to BMO 1,800,000 - 1,773 - 5.39 -
Nesbitt
Warrants 300,000 - - - 5.96 -
acquired
At the end of 5,976,319 3,876,319 1,990 217
the year
The fair value of the Eastbourne warrants was valued, for Canadian GAAP
purposes, at $0.2 million on December 31, 2004. The warrants have a term of 3
years from the date of issue and expire on September 23, 2008.
The fair value of the BMO warrants was valued at $1.8 million on December 30,
2005 using the binomial option pricing model with the following assumptions:
United States zero coupon rates of between 4.39% and 4.83%, expected dividend
yield of nil, expected 90 day volatility of 51.5% and expected warrants term of
1.18 years.
The expiry date of the these warrants is the later of (i) March 5, 2007 and (ii)
the expiry of 12 months from the date on which ordinary SXR shares become listed
on Toronto Stock Exchange ("TSX").
Warrants acquired represent those acquired from Southern Cross through the
reverse take over. These warrants expire on September 17, 2007 and the
beneficiary is Pitchstone Exploration Ltd. Refer note 23.
14 REVENUE
2005 2004
US$"000 US$"000
Gold sales 2,730 1,892
Sundry income 770 609
- Royalties - 543
- Sundry 770 66
3,500 2,501
In the previous year, royalties were received from Petrex (Proprietary) Limited,
for mining on property owned by New Kleinfontein Mining Company Limited, a
wholly owned subsidiary of Aflease Gold and Uranium Resources Limited.
15 COST OF SALES
2005 2004
US$"000 US$"000
Cash operating costs 6,454 2,574
Depreciation and amortization 767 179
Write down of inventory - 631
Write down of heap leach and other - 1,934
inventory items
Impairment of property, plant and - 2,984
equipment
7,221 8,302
16 EXPLORATION EXPENDITURE
2005 2004
US$"000 US$"000
Exploration and pre-feasibility (9,570) (996)
expenditure
Bankable feasibility (1,449) -
(11,019) (996)
17 INCOME TAXES
2005 2004
US$"000 US$"000
South African taxation - current - -
Future income taxes - -
A reconciliation between the average
effective tax rate and the applicable tax
rate is presented below:
Income tax rate reconciliation
% %
Statutory rate of taxation 34.12% 30.00%
Income not subject to tax 0.44% (0.07%)
Expenses not deductible for tax purposes (23.15%) 20.64%
Future taxes not provided (2.17%) (50.57%)
Adjustment due to different tax rate - (4.12%) -
Australia
Adjustment due to different tax rate - (5.12%) -
South Africa
Effective tax rate - -
Gold mining tax on mining income is determined by taking into account the
taxable income, total mining income and capital expenditure from mining
operations during the year. Various Group jurisdictions are regulated by their
respective tax regimes. No mining tax was payable in 2005 as the Corporation has
an estimated unredeemed capital expenditure balance of $44.1 million (2004:
$40.0 million) and calculated tax losses balance of $77.2 million (2004: $34.3
million). This is made up as follows:
Unredeemed
capital expenditure Tax losses
2005 2004 2005 2004
US$"000 US$"000 US$"000 US$"000
South Africa 44,075 40,035 50,509 34,296
Canada - - 21,125 -
Australia - - 5,592 -
44,075 40,035 77,226 34,296
The mining tax rates utilized as at December 31, 2005 were 34.12% in Canada, 30%
in Australia and 29% in South Africa.
These future deductions are utilizable only against income generated from the
Corporation"s current mining operation and do not expire unless the mine ceases
to trade.
Non-mining taxable income, which consists primarily of net interest received,
was shielded against mining tax losses that were not ring-fenced for tax
purposes. In South Africa, the Corporation is exempt from payment of secondary
taxation on companies, having made an election to be taxed based on the "gold
tax formula".
Except to the extent disclosed below, a net future tax asset arising from tax
losses and unredeemed capital expenditure, has not been recognized in the
current period as its recoverability is not more likely than not.
The Corporation"s future income tax assets as at December 31, 2005 and 2004 are
summarized below. These amounts incorporate the unredeemed capital expenditure
as well as the tax loss balances referred to above multiplied by the applicable
tax rates.
2005 2004
US$"000 US$"000
Mining Assets (33,043) (10,493)
Non-mining assets (3,719) (68)
Provisions 1,300 (1,456)
(35,462) (12,017)
Unredeemed capital expenditure 12,782 18,366
Taxation losses 22,893 15,778
Net future income tax asset 213 22,127
Adjustment due to different tax rates per 386 -
various jurisdictions
Valuation adjustment (21,755) (22,127)
Net future income tax liability recognized (21,156) -
The Company has recorded a valuation allowance in the amount of $21.8 million as
at December 31, 2005 (2004 - $22.1 million) because management believes that the
future income tax assets are not more likely than not to be realized in the
carry-forward period.
The revaluation of mining assets arose on the fair valuation of assets that
formed part of the reverse take over of Southern Cross by Aflease. In compliance
with accounting practice, a future tax liability on this revaluation was
recognized to the extent that the ring-fenced future tax asset of $2.5 million
was insufficient to off-set the full liability of $23.7 million.
18 BASIC LOSS PER SHARE AND FULLY DILUTED LOSS PER SHARE
2005 2004
US$"000 US$"000
Basic loss per share:
Net loss ($"000) (41,740) (14,763)
Weighted average number of shares 71,139,266 43,661,816
outstanding
Fully diluted loss per share:
The calculation of fully diluted basic (41,740) (14,763)
loss per share is based on net loss of the
year of ($"000)
and a weighted average number of shares 71,139,266 43,661,816
outstanding of
The dilutive effects of warrants and employee stock options were not taken into
account during the current or prior financial year as the warrants and options
bore no profit potential for the beneficiaries.
19 COMMITMENTS
2005 2004
US$"000 US$"000
Capital expenditure commitments contracted 37,931 -
for
Capital expenditure commitment authorized 113,857 150,230
by the Directors but not yet contracted
for
151,788 150,230
Payable in 151,788 150,230
- 2005 15,241
- 2006 151,788 134 989
- 2007 - -
- 2008 - -
- 2009 - -
- 2010 -
- Thereafter - -
The capital commitment relates to capital expenditure on the Bonanza and Modder
East projects.
20 FINANCIAL INSTRUMENTS
Financial risk factors
The Corporation"s activities expose it to a variety of financial risks,
including the effects of changes in debt and equity market prices, foreign
currency exchange rates and interest rates. The Corporation"s overall risk
management programme focuses on the unpredictability of financial markets and
seeks to minimize potential adverse effects on the financial performance of the
Corporation. The Corporation does not hedge its exposure to foreign currency
exchange risk.
Risk management carried out by the Corporation is approved by the Board of
Directors.
(i) Foreign exchange risk
The Corporation is exposed to foreign exchange risk arising predominantly from
foreign currency denominated sales. The Corporation, however, does not hedge its
exposure to foreign currency exchange risk.
(ii) Interest rate risk
The Corporation"s income and operating cash flows are substantially independent
of changes in market interest rates. The Corporation has no set policy on
maintenance of a set proportion of borrowings in fixed rate instruments versus
variable instruments. At the year end no debt was at fixed rates.
(iii) Credit risk
The Corporation has no significant concentrations of credit risk. The
Corporation has policies in place to ensure that sales of products and services
are made to customers with an appropriate credit history. The Corporation has
policies that limit the amount of credit exposure to any one financial
institution.
(iv) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and
marketable securities, the availability of funding through an adequate amount of
committed credit facilities and the ability to close out market positions.
Fair value estimation
The fair value of publicly traded derivatives and trading securities is based on
quoted market prices at the balance sheet date. In assessing the fair value of
other financial instruments, the Corporation uses a variety of methods and makes
assumptions that are based on market conditions existing at each balance sheet
date. Option pricing models and estimated discounted value of future cash flows,
are used to determine fair value for the remaining financial instruments.
The face values less any estimated credit adjustments for financial assets and
liabilities with a maturity of less than one year are assumed to approximate
their fair values. The fair value of financial liabilities for disclosure
purposes is estimated by discounting the future contractual cash flows at the
current market interest rate available to the Corporation for similar financial
instruments.
The actual disclosed values of the financial instruments all approximate the
fair values of these instruments.
21 REVERSE TAKE OVER OF SOUTHERN CROSS RESOURCES INC.
The aggregate fair values of assets acquired and liabilities assumed on the
purchase of Southern Cross Resources Inc. were as follows:
US$"000
Property, plant and equipment 32,373
Undeveloped properties 76,490
Other assets 96
Receivables and prepayments 2,541
Cash 8,389
Interest bearing borrowings (79)
Trade and other payables (2,678)
Future taxation liability (21,156)
Purchase price 95,976
Cash taken over 8,389
Shares consideration (95,976)
Net Cash Flow 8,389
The terms of the purchase price were agreed between the parties in terms of an
agreement of acquisition dated September 14, 2005. The effective date of the
reverse take over was December 8, 2005.
22 NON-CASH TRANSACTIONS
In the current financial year the merger between Southern Cross and Aflease was
accomplished through the issue of 0.9 new Southern Cross shares for each Aflease
issued and outstanding share, as detailed in note 1.1.
During the previous financial year, the Corporation issued 94.0 million ordinary
shares in exchange for 9.4 million Randgold and Exploration Company Limited
ordinary shares by way of a share swap agreement, as detailed in note 7.
These transactions have been excluded from the cash flow statement as it did not
result in an exchange of cash.
23 JOINT VENTURE AGREEMENT
On September 7, 2004, Southern Cross entered into a Letter Agreement, (the
"Joint Venture") with Pitchstone Exploration Ltd. ("Pitchstone"). The
Corporation has an option to earn a 50% interest in the five properties located
in the Athabasca Basin of Northern Saskatchewan for $3.9 million over a period
of 3 years.
The Company must invest $3.4 million in exploration on the properties and make
cash payments to Pitchstone of $0.3 million to acquire the 50% interest. The
Corporation will invest $2.6 million over the first 3 years with a maximum of
one-third during the first year, a minimum of one-third in the second year and
the balance in the third year. The remaining $0.8 million is expected to be
spent during the third year but the Corporation and Pitchstone can negotiate and
mutually agree on an extension. If the Corporation terminates the 50% option
prior to exercising, it will be required to pay the balance of $2.6 million
dollars less expenditures incurred to the date of termination.
The terms of the Joint Venture included the issuance of 1 million common shares
and 1.5 million share purchase warrants, half upon TSX approval and the balance
by January 10, 2005. Pitchstone is the operator of the Joint Venture and is
responsible for managing exploration programs on the properties as jointly
agreed. The Corporation has the right to become operator under a number of
conditions including if its interest in the Joint Venture increases to over 50%.
The first tranche of shares and warrants (500,000 and 750,000 warrants
respectively) issued in relation to the Joint Venture were valued at $528
thousand and $408 thousand respectively. The second tranche of shares and
warrants issued on January 4, 2005, were valued on the same basis as the first
tranche.
As at December 31, 2005 the Company had incurred $1.4 million (2004 - $0.2
million) of qualifying exploration expenses in connection with the Joint
Venture.
24 SUBSEQUENT EVENTS
Aflease Gold Limited
During January 2006, Sub Nigel Gold Mining Company Limited ("Sub Nigel")
acquired all of the issued and outstanding ordinary shares of New Kleinfontein
Mining Company Limited ("New Kleinfontein"), a wholly-owned subsidiary of
Aflease, and all amounts due by New Kleinfontein to Aflease on loan account.
The net assets so acquired had a carrying value of $15.0 million at December 31,
2005 and the purchase consideration was $54.6 million, settled by issuing
339,011,680 new Sub Nigel ordinary shares to Aflease at $0.16 per share. Sub
Nigel subsequently changed its name to Aflease Gold Limited. Through this
transaction, Aflease now owns 80% of Aflease Gold.
Capital raising
On February 17, 2006 the Corporation announced the closing of a private
placement of 22,300,000 of its common shares, at a price of $6.64 per share for
aggregate gross proceeds of $148 million.
Options
On February 22, 2006 the Corporation granted a further 1,746,530 options in
terms of its stock-based compensation plan. The options were granted at an
exercise price of $6.80 each.
25 SEGMENTED INFORMATION
A business segment is a group of assets and operations engaged in providing
products or services that are subject to risks and returns that are different
from those of other business segments. The Corporation is managed according to
the same segments.
For the year ended December 31, 2005:
Total Total Total 2005
South Africa Australi Canada TOTAL
a
US$"000 US$"000 US$"000 US$"000
Gold Sales 2,730 - - 2,730
Cost of Sales (7,039) (180) (2) (7,221)
Gross loss (4,309) (180) (2) (4,491)
Sundry income 768 2 - 770
General and administrative (5,584) 151 (106) (5,539)
expenditure
Share options expensed (7,052) - (188) (7,240)
Exploration expenditure (10,342) - (677) (11,019)
Other net income/(costs) 265 - - 265
Operating loss (26,254) (27) (973) (27,254)
Interest received 1,054 - 11 1,065
Interest paid (2,480) - - (2,480)
Profit on disposal of 27 - - 27
investments
Fair value adjustment of short- (2,169) - - (2,169)
term investments
Impairment of investments (10,929) - - (10,929)
Loss before income taxes (40,751) (27) (962) (41,740)
Provision for income taxes - - - -
Net loss (40,751) (27) (962) (41,740)
Total assets 34,189 69,700 75,036 178,925
Total liabilities (20,178) (23,082) (44,300)
(1,040)
Other segment items
Capital expenditure 14,688 74 - 14,762
Amortization and depreciation 752 13 2 767
For the year ended December 31, 2004
Total Total 2004
South Africa Rest of TOTAL
world
US$"000 US$"000 US$"000
Gold Sales 1,892 - 1,892
Cost of Sales (8,302) - (8,302)
Gross (loss)/profit (6,410) - (6,410)
Sundry income 609 - 609
General and administrative (2,225) - (2,225)
expenditure
Share options expensed (1,324) - (1,324)
Exploration expenditure (996) - (996)
Other net income/(costs) (1,055) - (1,055)
Operating (loss)/profit (11,401) - (11,401)
Interest received 251 - 251
Interest paid (1,678) - (1,678)
Profit on disposal of 737 - 737
investments
Fair value adjustment of short- (2,672) - (2,672)
term investments
(Loss)/profit before income (14,763) - (14,763)
taxes
Provision for income taxes - - -
Net (loss)/profit for the year (14,763) - (14,763)
Total assets 59,746 - 59,746
Total liabilities (21,308) - (21,308)
Other segment items
Capital expenditure 6,144 - 6,144
Amortization and depreciation 179 - 179
Date: 03/04/2006 09:50:26 AM Produced by the JSE SENS Department
