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BPL
BPL
Barplats - Eastern Platinum Limited Business Acquisition Report
Barplats Investments Limited
(Incorporated in the Republic of South Africa)
(Registration number 1987/004830/06)
Share code: BPL
ISIN: ZAE000028692
("Barplats")
EASTERN PLATINUM LIMITED
BUSINESS ACQUISITION REPORT
JULY 12, 2006
TABLE OF CONTENTS
1. Identity of Company 1
1.1 Name and Address of Company 1
1.2 Executive Officer 1
2. Details of Acquisition 1
2.1 Nature of Business Acquired 1
2.2 Date of Acquisition 1
2.3 Consideration 1
2.4 Affect on Financial Position 1
2.5 Prior Valuations 1
2.6 Parties to the Transaction 1
2.7 Date of Report 1
3. Financial Statements 1
APPENDIX A - Audited Financial Statements of Barplats Investments Limited for
the years ended June 30, 2005 and June 30, 2004
APPENDIX B - Unaudited Financial Statements of Barplats Investments Limited
for the nine months ended March 31, 2006
APPENDIX C - Pro-Forma Condensed Consolidated Financial Statements of Eastern
Platinum Limited
BUSINESS ACQUISITION REPORT
Scheme C
Identity of Company
Name and Address of Company
The Company"s full name is Eastern Platinum Limited. The Company"s
principal business office is located at Suite 408, 837 West Hastings
Street, Vancouver, B.C., V6C 3N6. The Company has a registered and
records office at 1500 Royal Centre,1055 West Georgia Street, Vancouver,
B.C., V6E 4N7.
Executive Officer
An executive officer of the Company who is knowledgeable about the
significant acquisition described herein and this report is:
Ian Rozier, telephone (604) 685-6851.
Details of Acquisition
Nature of Business Acquired
The Company acquired all of the shares of three closely held British
Virgin Islands companies which in turn held 69% of the issued and
outstanding shares (the "Barplats Shares") of Barplats Investments Limited
("Barplats"), a platinum group metals producing company, in South Africa,
the shares of which are listed on the JSE Limited. Barplats two main
assets are the Crocodile River mine on the western limb of the Bushveld
located near Brits in the Northwest Province, and the Kennedy"s Vale
project on the eastern limb of the Bushveld located near Steelpoort in the
Mpumalanga Province, adjacent to the Company"s Spitzkop project.
See the news releases of the Company dated February 15, 2006 and May 2,
2006 as filed on SEDAR.
Date of Acquisition
The acquisition of the Barplats Shares was completed on April 29, 2006.
Consideration
In consideration for the acquisition of the Barplats Shares the Company
issued 288,585,122 shares and paid cash of $27,708,597. In connection
with the acquisition the Company raised gross proceeds of $150,000,000 by
way of an offering of subscription receipts at $1.25 per security. Each
subscription receipt entitled the holder to receive without further
consideration a unit of the company comprised of one share and one-half of
a warrant with a whole warrant entitling the holder to acquire a further
share of the Company at $1.80 for a period of three years. The
subscription receipts were exchanged for the units concurrent with the
closing of the acquisition of the Barplats Shares.
See the news releases of the Company dated March 16, 2006 and March 29,
2006 as filed on SEDAR.
Affect on Financial Position
The Company has no plans or proposals for material changes in its business
affairs or the affairs of Barplats which may have a significant affect on
the results of operations and financial position of the Company.
Prior Valuations
There were no valuation opinions obtained by Barplats or the Company with
respect to the acquisition of the Barplats Shares by the Company.
Parties to the Transaction
The acquisition was made by way of a share purchase agreement entered into
with the 12 persons who held the shares of the three British Virgin
Islands companies acquired by the Company, all of whom were at arm"s
length to the Company.
Date of Report
This report is dated July 12, 2006.
Financial Statements
Enclosed with this report are the following financial statements:
- audited financial statements of Barplats for the years ended June 30,
2005 and June 30, 2004 including the auditor"s reports thereon;
- unaudited financial statements of Barplats for the nine months ended
March 31, 2006;
- pro-forma financial statements comprises of the following:
- pro-forma balance sheets as at March 31, 2006;
- pro-forma income statements as of June 30, 2005 and March 31, 2006
that give effect to the acquisition as of July 1, 2005;
- pro-forma earnings per share based on the above pro-forma income
statements; and
- a compilation report.
APPENDIX A
Audited Financial Statements of Barplats Investments Limited
for the years ended June 30, 2005 and June 30, 2004
Barplats Investments Limited ("Barplats" or "company")
Registration number: 1987/004830/06
ISIN: ZAE000028692
Annual Financial Statements for the year ended 30 June 2005
Directors responsibility and approval of the Annual financial statements
The directors of the company are responsible for the fair presentation to
shareholders of the affairs of the group as at the end of the financial year,
and of the results for the period, as set out in the annual financial
statements. The directors are responsible for the overall co-ordination of the
preparation, presentation and for the approval of the financial statements.
The auditors are responsible for auditing and reporting on the financial
statements in the course of executing their statutory duties.
The financial statements have been prepared on a going concern basis conform to
International Financial Reporting Standards and are presented applying
consistent accounting policies (other than accounting policy for inventory -
refer to paragraph 7 of the accounting policies on page 22) supported by
reasonable and prudent judgments and estimates. To discharge this
responsibility, the group maintains accounting and administrative control
systems designed to provide reasonable assurance that assets are safeguarded
and that transactions are executed and recorded in accordance with generally
accepted business practices and procedures. The accounting policies of the
company are set out on pages 17 to 26 of this report.
The annual financial statements for the year ended 30 June 2005, which appear
on pages 5 to 36, were approved by the directors on 23 September 2005.
JD Salter JA Clark
Director Director
Independent Auditors" Report
To the members of Barplats Investments Limited
We have audited the annual financial statements and group annual financial
statements of Barplats Investments Limited set out on pages 5 to 36 for the
year ended 30 June 2005. These financial statements are the responsibility of
the company"s directors. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with International Standards on Auditing.
Those Standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements present fairly, in all material
respects, the financial position of the group as of 30 June 2005 and of the
results of their operations and cash flows for the year then ended in
accordance with International Financial Reporting Standards.
Without qualifying our opinion, we draw attention to the funding paragraph in
the directors" report which indicates that as at 30 June 2005, the group"s
current liabilities exceeded its current assets by R200 million. The paragraph
also indicates why in these circumstances the financial statements are prepared
on the basis of accounting policies applicable to a going concern.
"KPMG Inc."
KPMG Inc.
Registered Accountants and Auditors
Chartered Accountants (SA)
PO Box 11265
Hatfield 0028
Pretoria
23 September 2005 (except for note 23 which is as of July 12, 2006)
Report of the Independent Auditors
We have audited the annual financial statements and group annual statements of
Barplats Investments Limited set out on pages 5 to 36 for the year ended 30
June 2004. These financial statements are the responsibility of the directors
of the company. Our responsibility is to express an opinion on these financial
statements based on our audit.
Scope
We conducted our audit in accordance with Generally Accepted Auditing Standards
in South Africa in accordance with International Standards on Auditing issued
by the International Federation of Accounting. Those standards require that we
plan and perform the audit to obtain reasonable assurance that the financial
statements are free of material misstatement.
An audit includes:
- examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements;
- assessing the accounting principles used and significant estimates made by
management; and
- evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
Audit opinion
In our opinion, the financial statements fairly present, in all material
respects, the financial position of the company and of the group at 30 June
2004 and the results of their operations and cash flows for the year then
ended, in accordance with South African Statements of Generally Accepted
Accounting Practice, International Financial Reporting Standards.
Going concern
Without qualifying our opinion, we draw attention to the funding note in the
Directors" Report of the financial statements which explains the company"s
reliance on external financing. The business could be under threat as a going
concern in the event that alternative financing cannot be secured once
facilities currently in place have been fully utilized.
"PricewaterhouseCoopers Inc."
PricewaterhouseCoopers Inc.
Chartered Accountants (SA)
Registered Accountants and Auditors
Johannesburg
27 August 2004 (except for note 23 which is as of July 12, 2006)
DIRECTORS REPORT
The directors have pleasure in presenting the consolidated annual financial
statements for Barplats Investments Limited for the year ended 30 June 2005.
Nature of business
Barplats Investments Limited (Barplats) is incorporated in South Africa and is
listed on the JSE Limited under the Mining Resources - Platinum Sector. Its
principal interest is the development of the platinum rights held by its wholly-
owned subsidiary, Barplats Mines Limited (Barmines).
Barplats is a platinum group metals (PGMs) mining company whose core business
is PGM mining and processing in South Africa"s Bushveld Igneous Complex (the
BIC). Barplats" two assets are:
- the Crocodile River mine on the western limb of the BIC near Brits in the
North-West Province; and
- the Kennedy "s Vale project on the eastern limb of the BIC near Steelpoort
in Mpumalanga.
Funding
On 19 August 2004 Barplats entered into an agreement with Eagle Worldwide
Investments Ltd. (Eagle), a company incorporated in the British Virgin Islands,
in terms of which Eagle extended a US$ 7.5 million credit facility to Barplats
at one-month US dollar LIBOR plus 4%. The facility had a term of three years.
The purpose of this credit facility is to meet the group"s short-term working
capital requirements and to develop a detailed mining plan for the Zandfontein
Section, after which the group"s ongoing funding requirements would be
determined and negotiated.
In the circumstances, the directors gave particular consideration to the values
of the assets as reflected in the balance sheet as at 30 June 2004. The
directors were of the view that those assets would at least, realize amounts
not less than the values stated in the balance sheet.
The company recommenced the production of concentrate during March 2005. The
results of the re-start have been better than expected.
At 30 June 2005 the group"s current liabilities exceeded its current assets by
R200.2 million. Barplats is in the process of raising long-term funding to
expand the company"s mining operations and to optimise the company"s funding
profile. However, the introduction of Gubevu Consortium Investment Holdings
(Proprietary)Limited as a 26% shareholder in Barplats on 22 July 2005 by way of
an all-cash R172.8 million transaction, together with the company receiving
cash of R71.7 million by drawing down the balance of the Nedbank R120 million
facility and the repayment of an amount of R120 million to Eagle Worldwide
Investments, Limited ("Eagle ") meant that at the date of this announcement,
the group has a remaining Eagle facility of US$24.3 (R154.5 million at an
exchange rate of R6.49 per US$) and R92.3 million cash on deposit.
On 31 January 2006 Barplats is required to repay the R120 million outstanding
to Nedbank. The company"s budgets and projected cash flow forecasts, which are
based on reasonable and supportable assumptions, indicate that the company will
generate positive cash flows during the six months from the date of this
announcement. The company also has the option to draw down on the remaining
Eagle facility noted above.
The directors are confident that the budgets and projected cash flow forecasts
will be achieved, that the company will meet its obligations as they fall due
and that the company will be a going concern in the year ahead. Accordingly,
the directors continue to adopt the going concern basis in the preparation of
the annual financial statements.
A rights offer of options to shareholders was announced in June 2005.
Shareholders were, however, advised on 29 August 2005 that the board of
directors of Barplats had, following consultation with Barplats "major
shareholder, resolved not to proceed with the rights offer.
Capital
Authorised and issued
The authorised and issued share capital of 900,000,000 and 222 540 344,
respectively, ordinary shares remained unchanged at 30 June 2005 (refer to note
10 to the annual financial statements).
Unissued share capital
In terms of a resolution passed at the last annual general meeting, the
unissued share capital is under the control of the directors until the
forthcoming annual general meeting.
Shareholder resolution
At the annual general meeting of shareholders held on Monday, 6 December 2004,
shareholders authorised the directors to issue for cash up to 15% of the
company"s issued share capital in any one year.
These general authorities expire at the forthcoming Annual General Meeting.
Shareholders will be asked to consider resolutions renewing these general
authorities. The proposed resolutions are set out in the notice convening the
annual general meeting.
Shareholders as at 26 August 2005
Pursuant to the Listings Requirements of the JSE Limited, and to the best
knowledge of the directors, the spread between non-public shareholders at 26
August 2005 is set out in the table below. Furthermore, according to the
company"s register of members the only individual shareholders who could be
identified as holding five per cent or more of the issued share capital of the
company at 26 August 2005 were:
Number of
shares %
Shareholders (000) Holding
Non-public shareholders(1)
Platinum Consortium 208 137.0 69.2
Gubevu Consortium Investment Holdings (Pty) 78 190.0 26.0
Limited
Directors 23.5
All other shareholders 14 379.7 4.8
300 730.2 100.0
(1) As defined in the JSE Limited Listings Requirements
Activities and financial results
Results for the year
The group made a net profit of R24.95 million (2004: net loss of R42.03
million) for the year ended 30 June 2005.
The results for the year are fully dealt with on pages 13 to 36 in the annual
financial statements.
Accounting policies
The principal accounting policies are consistent with those applied in the
previous year, except for inventories, previously valued using the first-in-
first-out basis and now valued using the weighted average method (refer to
paragraph 7 of the accounting policies).
Dividends
No dividend was declared during the year ended 30 June 2005 (2004: Nil).
Property plant and equipment
Capital expenditure of R134.4 million (2004:R5.4 million) was incurred at
Crocodile River Mine.
The Crocodile River mine is regarded as a single cash generating unit and the
determination of the R56 million impairment reversal is based on the value of
the assets in use discounted at a rate of 9.75 per cent.
Subsidiary companies
Information regarding the company"s subsidiaries is set out in note 6 of the
annual financial statements.
Directorate
Composition of the board
On 1 June 2005 Messrs P J Botha, J R Hawkrigg and A J Palmiere were appointed
as directors and resigned from the board on 7 June 2005. Mr LC Pouroulis
resigned as a director on 15 September 2005. As a result, the board comprises:
Appointed
J A Clark(1) 14 July 2004
P J Gard(2) 14 July 2004
J D Salter(1) 14 July 2004
J M J van Vuuren2 1 August 2004
(1) Executive
(2) Independent non-executive
At the forthcoming annual general meeting Mr P J Gard will be standing for re-
election.
Directors" fees
At the forthcoming annual general meeting members will be asked to consider an
ordinary resolution to set the fee paid to a non-executive director at R200 000
per annum and R50 000 per annum for each board committee chaired.
Interest of the directors
Mr J M J van Vuuren has a shareholding of 23 500 shares in the company.
Other than the related party transactions described in note 20 of the annual
financial statements, there were no contracts of significance during or at the
end of the financial year in which the directors of the company were materially
interested.
Directors" emoluments
The executive directors of the company waived their right to the payment of
directors "fees for the 2004 financial year. Accordingly, directors "fees for
services as a director were only paid to the non-executive directors as
follows:
2004
(R000)
D Kovarsky (resigned 14 July 2004) 86
RS Hislop (resigned 14 July 2004) 86
JV Roberts (resigned 14 July 2004) 86
RGH Smith (resigned 14 July 2004) 109
Total 367
The directors" remuneration for the year ending 30 June 2005 was as follows:
Director Fees Salaries Other Retirement Other 2005
and material benefits services
bonuses benefits
1
R000 R000 R000 R000 R000 R000
Executive
LC Pouroulis - 1 800 - - - 1 800
JD Salter(2) - 1 098 225 165 - 1 488
JA Clark(2) - 844 240 125 - 1 209
Non-Executive
JMJ van Vuuren(3) 400 - - - - 400
PJ Gard(3) 400 - - - - 400
Total 800 3 742 465 290 0 5 297
(1) comprising travel allowance, medical aid and group life
(2) Executive
(3) Independent non-executive
Related party transactions
Mr LC Pouroulis, who resigned as a director on 15 September 2005, had the
ability to exercise significant influence over certain companies in making
financial and operating decisions and therefore transactions with these
entities have been treated as related party transactions. Details of these
transactions are set out in note 20 of the annual financial statements.
Post Balance Sheet Events
Black economic empowerment transaction
Shareholder resolutions required inter alia to introduce Gubevu as a 26%
shareholder in Barplats, details of which were set out in a circular to
shareholders dated 20 June 2005, were approved at the general meeting held on 5
July 2005. As a result a total of 78 189 851 ordinary shares were issued at a
price of R2.21 per share on 28 July 2005. The total number of ordinary shares
now in issue is 300 730 195.
The financial effect of the transaction would be to increase cash and cash
equivalents by R172.8 million. In terms of IFRS2 - share based payments - the
difference between the market value of the shares issued and the issue price
should be expensed to the income statement. This will result in a charge of
R374 million to the income statement for the year ended 30 June 2006.
The following transactions were also approved at the general meeting of
shareholders on 5 July 2005:
- The grant of an option to Nedbank Capital exercisable for a period
commencing 19 November 2005 until 31 March 2006 to subscribe for R15
million of ordinary shares at a 15% discount to the seven day volume
weighted average price on the JSE Limited for the seven trading days prior
to the options being exercised, subject to a maximum issue price of R5.20
per ordinary share and a minimum issue price of R1.25 per ordinary share.
- The grant of a right to Eagle to convert the outstanding portion of the
Eagle loan facility into ordinary shares at a 20% discount to the seven
day weighted average price for the seven trading days prior to the
conversion being exercised subject to a maximum issue price of R5.20 per
ordinary share and a minimum issue price of R1.25 per ordinary share. The
estimated value of these options was R29 million on the date of grant,
which will be expensed to the income statement during the 2006 financial
year.
Auditor
The auditors of the company, KPMG Inc. will continue in office in accordance
with section 270 (2) of the Companies Act 61 of 1973 (as amended).
Administration
Secretary
Mr TK Savage was appointed Group Secretary on 1 September 2004.
Income Statements
Barplats Investments Limited and its subsidiaries
Group
2005 2004
For the year ended 30 June Notes R000 R000
Revenue 40 177 112 893
Cost of sales 36 723 118 568
Mining costs 26 283 77 317
Ore purchased 5 987 -
Smelter slag purchased - 2 268
Concentrating costs 9 553 24 102
Amortisation 5 4 475 13 519
Other costs - 1 362
Closing inventory (9 575) -
Gross profit/(loss) 3 454 (5 675)
Other operating income 1 471 -
Administrative expenses and other (14 169) (18 930)
operating expenses
Net exploration expense - (494)
Reversal of impairment 5 56 000 -
Operating profit/(loss) before 2 46 756 (25 099)
financing costs
Net financing costs 1 (21 806) (16 903)
Profit / (loss) before taxation 24 950 (42 002)
Income tax expense 3 - (26)
Profit / (loss) for the year 24 950 (42 028)
Basic and diluted earnings/(loss) 4 11.2 (18.9)
per share (cents)
Headline loss per share (cents) 4 (14.0) (18.9)
Balance sheets
Barplats Investments Limited and its subsidiaries
Group
2005 2004
As at 30 June Notes R000 R000
ASSETS
Non-current assets 391 367 207 703
Property, plant and equipment 5 391 367 207 703
Investments in subsidiaries 6
Current assets 46 974 2 909
Inventories 7 9 899 242
Trade and other receivables 8 30 509 433
Cash and cash equivalents 9 5 212 880
Current taxation asset 18 1 354 1 354
Total assets 438 341 210 612
EQUITY AND LIABILITIES
Equity 83 065 60 187
Issued capital 10 2 225 2 225
Share premium 10 1 047 856 1 049 928
Accumulated loss (967 016) (991 966)
Non-current liabilities 108 067 99 373
Provision for environmental 11 31 404 30 490
obligations
Borrowings 13 76 663 68 883
Current liabilities 247 209 51 052
Trade and other payables 12 37 387 5 130
Bank overdrafts 9 5 140 -
Borrowings 13 204 682 45 922
Total equity and liabilities 438 341 210 612
Consolidated statement of changes in equity
Barplats Investments Limited and its subsidiaries
Issued Share Accumulated
Capital premium loss Total
For the year ended 30 June R000 R000 R000 R000
1 049 928 (949 938) 102 215
Balance at 30 June 2003 2 225
Net loss for the year (42 028) (42 028)
Balance at 30 June 2004 2 225 1 049 928 (991 966) 60 187
Share issue expenses (2 072) (2 072)
Profit for the year 24 950 24 950
Balance as at 30 June 2005 2 225 1 047 856 (967 016) 83 065
Cash flow statements
Barplats Investments Limited and its subsidiaries
Group
2005 2004
As at 30 June Notes R000 R000
Cash flows from operating activities
Cash utilised in operations 17 (11 331) (7 650)
Financial income 1 93 85
Interest paid 1 (12 205) (13 717)
Taxation paid 18 - (1 406)
Rehabilitation costs 11 - (6 989)
Net cash utilized in operating (23 443) (29 677)
activities
Cash flows from investing activities
Purchase of property, plant and 5 (134 403) (5 434)
equipment to expand operations
Proceeds from disposal of property, 5 2 264 2 078
plant & equipment
(Increase)/decrease in loan to 6 - -
subsidiary company
Net cash utilised in investing (132 139) (3 356)
activities
Cash flows from financing activities
Proceeds from borrowings 13 204 991 33 709
Repayment of borrowings 13 (48 145) -
Share issue expenses 10 (2 072) -
Net cash generated by financing 154 774 33 709
activities
Net increase/(decrease) in cash and (808) 676
cash equivalents
Cash and cash equivalents at the 880 204
beginning of the year
Cash and cash equivalents at the end 9 72 880
of the year
Barplats Investments Limited is a company domiciled in South Africa. The
consolidated financial statements of the Company for the year ended 30 June
2005 comprise the company and its subsidiaries (together referred to as "the
Group").
The financial statements were authorised for issue by the directors on 23
September 2005.
1. Statement of compliance
The consolidated financial statements have been prepared in accordance with
International Financial Reporting Standards ("IFRSs") and its interpretations
adopted by the International Accounting Standards Board ("IASB"). These
policies are consistent with Canadian generally accepted accounting policies
("Canadian GAAP") in all material respects except as outlined in Note 23.
2. Basis of preparation
The financial statements are presented in South African rands, rounded to the
nearest thousand. They are prepared on the historical cost basis except for
certain financial instruments that are stated at their fair value.
The preparation of financial statements in conformity with IFRSs requires
management to make judgments, estimates and assumptions that affect the
application of policies and reported amounts of assets and liabilities, income
and expenses. The estimates and associated assumptions are based on historical
experience and various other factors that are believed to be reasonable under
the circumstances, the results of which form the basis of making the judgments
about carrying values of assets and liabilities that are not readily apparent
from other sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or in the period
of the revision and further periods if the review affects both current and
future periods.
Except for the accounting policy on inventories (refer to paragraph 7), the
accounting policies set out below have been applied consistently to all periods
presented in these financial statements.
3. Basis of consolidation
The consolidated financial statements include those of Barplats Investments and
its subsidiaries.
3.1 Subsidiaries
Subsidiaries are entities controlled by the company. Control exists when the
company has the power, directly or indirectly, to govern the financial and
operating policies of an entity so as to obtain benefits from its activities.
In assessing control, potential voting rights that presently are exercisable or
convertible are taken into account. The financial statements of subsidiaries
are included in the consolidated financial statements from the date that
control commences until the date that control ceases.
3.2 Goodwill
Goodwill represents the excess of cost of an acquisition over the fair value of
the group"s share of the identifiable net assets of that entity at the date of
acquisition.
Goodwill is reflected at cost less accumulated impairment losses, if any. In
accordance with IFRS 3, goodwill is no longer amortised. Goodwill is allocated
to cash-generating units and is tested annually for impairment.
The loss or gain on disposal of an entity includes the remaining goodwill
relating to the entity.
If the cost of the acquisition is less than the fair value of the net assets of
the entity acquired, the difference is recognised directly in the income
statement.
3.3 Transactions eliminated on consolidation
Intragroup balances and any unrealised gains and losses or income and expenses
arising from intragroup transactions, are eliminated in preparing the
consolidated financial statements.
3.4 Investment in subsidiaries
The company carries its investments in subsidiaries at cost less accumulated
impairment losses.
4. Foreign currency
Foreign currency transactions are accounted for at the rate of exchange ruling
at the date of the transaction. Monetary assets and liabilities denominated in
foreign currencies at the balance sheet date are translated to rands at the
foreign exchange rate ruling at that date. Gains and losses arising on
settlement of such transactions and from the translation of foreign currency
monetary assets and liabilities are recognized in the income statements. Non-
monetary assets and liabilities denominated in foreign currencies that are
stated at fair value are translated to rand at foreign exchange rates ruling at
the dates the fair value was determined.
5. Property, plant and equipment
5.1 Mining assets
Mining assets are recorded at cost less accumulated amortization and less any
accumulated impairment losses. Expenditure, including evaluation costs,
incurred to establish or expand productive capacity, to support and maintain
that productive capacity and networking costs incurred on mines prior to the
commencement of commercial levels of production, are capitalized to mining
assets. Interest on borrowings, specifically to finance establishment of
mining assets, is capitalized until commercial levels of production are
achieved.
Mining assets are amortised using the units-of-production method based on
estimated economically recoverable proved and probable ore reserves, limited to
a maximum period of 25 years.
5.2 Other assets
Depreciation is charged on the straight-line basis over the estimated useful
lives of the assets.
The estimated maximum useful lives of items of property, plant and equipment
are:
Buildings and infrastructure (including residential buildings) 25 years
Fixed plant and equipment 15 years
Loose plant 7 years
IT hardware 5 years
IT software 3 years
Vehicles 5 years
Office furniture 10 years
Where an item of plant and equipment comprises major components with different
useful lives, the components are accounted for as separate items of plant and
equipment.
Expenditure incurred to replace a component of an item of property, plant and
equipment that is accounted for separately, including major inspection and
overhaul expenditure, is capitalised.
Directly attributable expenses relating to major capital projects and site
preparation are capitalised until the asset is brought to a working condition
for its intended use. These costs include dismantling and site restoration
costs to the extent these are recognised as a provision.
The cost of self-constructed assets includes the cost of materials, direct
labour and an appropriate portion of production overheads.
Maintenance and repairs which neither materially add to the value of assets nor
appreciably prolong their useful lives are charged against income.
Financing costs directly associated with the construction or acquisition of
qualifying assets are capitalised at interest rates relating to loans
specifically raised for that purpose, or at the average borrowing rate where
the general pool of group borrowings is utilised. Capitalisation of borrowing
costs ceased when the asset is substantially complete.
5.3 Impairment
The carrying amounts of the Group"s mining assets are reviewed at each balance
sheet date to determine whether there is any indication of impairment. If any
such indication exists, the asset"s recoverable amount is estimated.
An impairment loss is recognised whenever the carrying amount of an asset or
its cash-generating unit exceeds its recoverable amount. Impairment losses are
recognised in the income statement.
Impairment losses recognised in respect of cash-generating units are allocated
first to reduce the carrying amount of any goodwill allocated to cash-
generating units (group of units) and then, to reduce the carrying amount of
the other assets in the unit (group of units) on a pro rata basis.
5.3.1 Recoverable amount
The recoverable amount is the greater of their net selling price and value in
use. In assessing value in use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to the
asset. For an asset that does not generate largely independent cash inflows,
the recoverable amount is determined for the cash-generating unit to which the
asset belongs.
5.3.2 Reversal of impairment
An impairment loss is reversed if there has been a change in the estimates used
to determine the recoverable amount.
An impairment loss is reversed only to the extent that the asset"s carrying
amount does not exceed the carrying amount that would have been determined, net
of depreciation or amortisation, if no impairment loss had been recognised.
6. Cash and cash equivalents
Cash and cash equivalents are carried in the balance sheet at cost. For the
purposes of the cash flow statement, cash and cash equivalents comprise cash on
hand, deposits held at call with banks, other short-term highly liquid
investments with original maturities of three months or less.
7. Inventories
Inventories comprise consumables, reef ore stockpiled and concentrate awaiting
further processing and sale, are valued at the lower of cost and net realisable
value. Cost is determined using the weighted average method and includes
direct mining expenditure and an appropriate portion of overhead expenditure.
Net realisable value is the estimated selling price in the ordinary course of
business, less the estimated costs of completion and selling expenses.
Obsolete, redundant and slow moving stores are identified and written down to
economic or realisable values.
Inventories were previously valued using the first-in-first-out basis. The
change in accounting policy does not have a significant effect on the annual
financial statements.
8. Derivative financial instruments
The group uses derivative financial instruments to hedge its exposure to
foreign exchange and interest rate risks arising from operational, financing
and investment activities. In accordance with its treasury policy, the group
does not hold or issue derivative financial instruments for trading purposes.
However, derivatives that do not qualify for hedge accounting are accounted for
as trading instruments.
Derivative financial instruments are recognised initially at cost. Subsequent
to initial recognition, derivative financial instruments are stated at fair
value. The gain or loss on remeasurement to fair value is recognised
immediately in profit or loss. However, where derivatives qualify for hedge
accounting, recognition for any resultant gain or loss depends on the nature of
the item being hedged.
The fair value of interest rate swaps is the estimated amount the group would
receive or pay to terminate the swap at the balance sheet date, taking into
account current interest rates and the current creditworthiness of swap
counterparties. The fair value of forward exchange contracts is their quoted
market price at the balance sheet date, being the present value of the quoted
forward price.
9. Trade receivables
Trade receivables are carried at anticipated realizable value. A provision is
made for impairment of receivables based on a review of all outstanding amounts
at year end. Bad debts are written off during the year in which they are
identified.
10. Trade and other payables
Trade and other payables are stated at amortised cost.
11. Net financing costs
Net financing costs comprise interest payable on borrowings calculated using
the effective interest rate method, interest receivable on funds invested,
dividend income, foreign exchange gains and losses on foreign currency
borrowings, and gains and losses on hedging instruments that are recognised in
the income statement.
Interest income is recognised in the income statement as it accrues, using the
effective interest method. Dividend income is recognised in the income
statement on the date the entity"s right to receive payments.
12. Interest-bearing borrowings
Interest-bearing borrowings are recognised initially at fair value less
attributable transaction costs. Subsequent to initial recognition, interest-
bearing borrowings are stated at amortised cost with any difference between
cost and redemption value being recognised in the income statement over the
period of the borrowings on an effective interest basis.
13. Provisions
Provisions are recognised when the group has a present legal or constructive
obligation as a result of past events where it is probable that an outflow of
resources embodying economic benefits will be required to settle the
obligation, and a reliable estimate of the amount of the obligation can be
made. Where the effect of discounting to present value is material, provisions
are adjusted to reflect the time value of money, and where appropriate, the
risk specific to the liability.
14. Employee post-retirement obligations - defined contribution retirement
plan
The group operates a defined contribution retirement plan for the group"s
employees. The pension plans are funded by payments from the employees and by
the relevant group companies and charged to income as incurred. The assets of
the different plans are held by independently managed trust funds. These funds
are governed by the South African Pension Fund Act of 1956.
15. Income tax
Income tax on the profit or loss for the year comprises current and deferred
tax. Income tax is recognised in the income statement except to the extent that
it relates to items recognised directly in equity, in which case it is
recognised in equity.
Current tax is the expected tax payable on the taxable income for the year,
using tax rates enacted or substantially enacted at the balance sheet date, and
any adjustment to tax payable in respect of previous years.
Deferred tax is provided using the balance sheet liability method, providing
for temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for taxation
purposes. The following temporary differences are not provided for: goodwill
not deductible for tax purposes, the initial recognition of assets or
liabilities that affect neither accounting nor taxable profit. The amount of
deferred tax provided is based on the expected manner of realisation or
settlement of the carrying amount of assets and liabilities, using tax rates
enacted or substantively enacted at the balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable that
future taxable profits will be available against which the asset can be
utilised. Deferred tax assets are reduced to the extent that it is no longer
probable that the related tax benefit will be realised.
Additional income taxes that arise from the distribution of dividends are
recognised at the same time as the liability to pay the related dividend.
16. Environmental obligations
16.1 Rehabilitation costs
The net present value of future rehabilitation cost estimates of disturbances
at year end are recognized and provided for in full in the financial
statements. The estimates are reviewed annually to take into account the
effects of inflation and changes in the estimates. Discount rates that reflect
the time value of money are utilised in calculating the net present value.
Annual increases in the provision, as a result of the change in the net present
value, are charged to income and are split between finance costs and
inflationary adjustments.
The net present value of additional environmental disturbances and changes in
the cost estimates are capitalized to mining assets along with a corresponding
increase in the rehabilitation provision. The rehabilitation asset is
amortised in terms of the group"s accounting policy.
Rehabilitation projects undertaken, included in the estimates, are charged to
the provision as incurred.
16.2 Ongoing rehabilitation cost
The cost of the ongoing current programmes to prevent and control pollution is
charged against income as incurred.
17. Revenue recognition
Revenue is recognised to the extent that it is probable that the economic
benefits will flow to the group and the revenue can be reliably measured. The
following specific recognition criteria must also be met before revenue is
recognised:
17.1 Sale of goods
Revenue is recognised where specific risks and rewards of ownership have been
transferred to the purchaser and comprises the sale of platinum group metals
("PGMs"). The pricing of PGMs is based on the average market price for the
calendar month ruling three months after the month of delivery. Revenue for
the months for which final pricing has not yet been established is recognised
using the latest available average market price for a calendar month as a
basis. Where ruling prices at the reporting date are below those determined
above, a further adjustment is made.
Group
2005 2004
As at 30 June R000 R000
1 NET FINANCING COSTS
Financial expense consists mainly of the
following:
Rehabilitation provision-present value - (3 271)
adjustment
Interest income 93 85
Interest expense (12 205) (13 717)
Interest charged (20 080) (13 717)
Interest capitalized 7 875 -
Net foreign exchange transaction losses (9 694) -
(21 806) (16 903)
2 OPERATING PROFIT/(LOSS) BEFORE FINANCING
COSTS
The following items have been
charged/(credited) in arriving at profit/(loss)
before taxation:
Auditor"s remuneration 554 359
External audit fees for audit services 554 234
Under provision prior year - 125
Professional fees 1 586 3 356
Total Cost 3 537 3 356
Capitalised (1 951) -
Internal audit fees 365 -
Rehabilitation provision-inflation adjustment - 4 909
Amortisation (refer note 5) 4 475 13 519
Employment costs 24 654 5 160
Total Costs 42 533 5 160
Wages and salaries 39 267 4 784
Pension costs - defined contribution plans 3 266 376
Capitalised (17 879) -
Foreign exchange (gain) /loss relating to sales (1 098) 4 642
Directors" emoluments (refer to the directors" 5 297 367
report)
3 INCOME TAX EXPENSE
South African normal taxation
Current taxation - 26
Estimated unredeemed capital expenditure
available for utilization against future mining 1 206 860 1 074 920
taxable income
Calculated tax losses available for utilisation 109 215 89 329
against future taxable income
Reconciliation of rate of taxation % %
Current statutory tax rate 29 30
Adjust for:
Non deductible expenditure 1 -
Non taxable income (65) -
Utilisation of deferred tax asset not 35 -
previously created
Deferred tax asset not recognised - (30)
Effective tax rate - -
4 BASIC AND HEADLINE EARNINGS/(LOSS) PER SHARE
Headline and basic earnings per share is
calculated by dividing the net profit
attributable to shareholders by the number of
ordinary shares in issue during the year
Headline loss (31 050) (42 028)
Profit / (loss) attributable to shareholders 24 950 (42 028)
Adjusted for reversal of impairment loss (56 000) -
(000) (000)
Weighted average number of shares in issue 222 540 222 540
Basic and diluted profit/(loss) per share 11.2 (18.9)
Headline loss per share (14.0) (18.9)
5 PROPERTY, PLANT AND EQUIPMENT
Mining assets
These comprise expenditure on shafts, plant and
equipment, mining development, mineral rights,
land and general capital expenditure.
Cost 1 463 297 1 331 158
Opening balance 1 331 158 1 327 802
Additions 134 403 5 434
Assets acquired 73 921 5 434
Capitalised expenditure 52 607 -
Interest capitalized 7 875
Disposals (2 264) (2 078)
Accumulated amortization and impairment losses 1 071 930 1 123 455
Opening balance 1 123 455 1 109 936
Reversal of impairment loss (refer to the (56 000) -
directors" report)
Amortisation charge for the year 4 475 13 519
Total net book value 391 367 207 703
A register of land and buildings is available for inspection at the company"s
registered office. The mining assets are encumbered as listed in note 13.
6 INVESTMENTS IN SUBSIDIARIES
Valued by the directors at book value. The
following companies are wholly owned by
Barplats Mines Limited:
- Barplats Mines (North West) (Pty) Limited
- Rhodium Reefs Limited
7 INVENTORIES
9 899 242
Consumables 324 242
Ore and concentrate 9 575 -
8 RECEIVABLES AND PREPAYMENTS
30 509 433
Trade receivables 26 115 30
Other receivables 3 968 403
Prepayments 426
9 CASH AND CASH EQUIVALENTS
72 880
Cash in bank 5 212 880
Bank Overdraft (5 140) -
10 ORDINARY SHARES AND SHARE PREMIUM
1 047 856 1 049 928
Share premium 1 049 928 1 049 928
Share issue expenses (2 072) -
Issued capital 2 225 2 225
Number of ordinary shares issued is 222 540 344 (2004:222 540 344) of 1 cents
each.
The total authorised number of ordinary shares is 900 million shares (2004:900
million shares) of 1 cents each.
The unissued shares may be issued by the directors at their discretion until
the next annual general meeting. The share issue expenses relate to shares
that were issued to Gubevu Consortium Investment Holdings (Pty) Ltd subsequent
to year end.
11 PROVISION FOR ENVIRONMENTAL OBLIGATIONS
Provision raised for future rehabilitation
Opening balance 30 490 29 299
Charged to income statement 914 8 180
Rehabilitation asset raised - (6 989)
Closing balance 31 404 30 490
Current rehabilitation estimate for life of
mine obligation 31 404 30 490
Future value of rehabilitation obligation 53 617 48 938
The closing balance of the provision is stated as the current cost estimate
because it is not possible to accurately estimate the life of mine of the
company"s various mining operations without a board approved mining plan.
In the absence of a board approved mining plan, the future value of the
rehabilitation obligation is based on respective estimated life of mines of 10
years for Zandfontein, 8 years for Maroelabult and 10 years for Kennedy"s Vale.
A guarantee has been issued in favour of the Department of Minerals and Energy.
12 TRADE AND OTHER PAYABLES
Trade payables 17 094 2 615
Leave liability provision 4 830 80
Other payables 15 463 2 435
Accruals 9 767 -
Provisions 1 739 317
Employees 2 869 46
Sundry payables 1 088 2 072
37 387 5 130
Analysis of leave liability:
Opening balance 80 166
Add: current year provision 6 023 111
Less: utilized during the year (1 273) ( 197)
Closing balance 4 830 80
Employee entitlements to annual leave are recognised on an ongoing basis. A
provision is made for the estimated liability for annual leave as a result of
services rendered by employees up to the balance sheet date.
13 BORROWINGS
Non-current 76 663 68 883
Impala Platinum Limited 36 385 68 883
Eagle Worldwide Investments Limited 40 278 -
Current 204 682 45 922
Eagle Worldwide Investments Limited 120 000 -
Impala Platinum Limited 36 385 45 922
Nedbank Capital 48 297 -
281 345 114 805
Impala Platinum Limited
Borrowings comprise a loan of R72.77 million (2004: R114.8 million)
from Impala Platinum Limited. The loan bore interest at the
Johannesburg Interbank Acceptance Rate (JIBAR) plus 2% until 31 May
2004. On 1 June 2004 the interest rate increased to JIBAR plus 3%.
The loan is secured by mortgage bonds registered over houses owned by
Barplats Mines Limited, which are included in mining assets as per note
5. Interest is capitalised on a monthly basis (refer to note 15 which
sets out the effective interest rate)and the capital outstanding will
be repaid as follows:
- 50% in June 2006; and
- 50% in June 2007.
Eagle Worldwide Investments, Limited
Borrowings also comprise a loan of R160.278 million from Eagle. The
loan bore interest at the London Inter Bank Offered Rate (LIBOR) plus
4% (refer to note 15 which sets out the effective interest rate). The
loan is secured as follows:
- Mortgage bond registered over portions 166 and 162 of Zandfontein
447 JQ;
- Notarial bond over the concentrator plant;
- General notarial bond over moveable assets; and
- Rhodium Reefs Limited and Barplats Mines (North West)
(Proprietary)Limited stand surety for Barplats Mines Limited"s
obligations and Barplats Mines Limited stands surety for the
obligations of Barplats Investments Limited.
The loan will be repaid as follows:
- 100% any time before 31 December 2007
Nedbank Capital
Borrowings also comprise a loan of R48.297 million from Nedbank. The
loan bore interest at the prime lending rate which was 10,5% at 30 June
2005. The loan is secured as follows:
- Mortgage bond registered over portions 166 and 162 of Zandfontein
447 JQ.
- Notarial bond over the Concentrator plant
- General notarial bond over moveable assets
- Rhodium Reefs Limited and Barplats Mines (North West)(Pty)Ltd
stand surety for Barplats Mines Limited"s obligations and Barplats -
Mines Limited stands surety for the obligations of Barplats
Investments Limited
The loan will be repaid as follows:
- 100% before 31 January 2006
Borrowing powers
In terms of the articles of association of the
companies in the group, the borrowing powers of
the group are determined by the directors but
are limited to ordinary shareholders" interest.
At the annual general meeting of 6 December
2004 the borrowing powers of the directors were
extended to: 750 000 200 000
Currently utilised 281 345 114 805
14 PROVIDENT FUND
Defined contribution plan
An independent fund provides pension and other benefits for all permanent
employees and their dependants. At the end of the financial year all permanent
employees were members of the Barplats Provident Fund, which is an independent
fund administered by Liberty Life. The group contributed R3 265 662 to the
provident fund. At 30 June 2005 there were 509 working members of the fund.
15 FINANCIAL INSTRUMENTS
Fair value of other financial assets and liabilities
At 30 June 2005, the carrying amount of cash and cash equivalents, receivables,
trade and other payable and short-term maturities of these assets and
liabilities.
Foreign currency risk
In the normal course of business, the group enters into transactions
denominated in foreign currencies (primarily US$). Generally the group does
not hedge its exposure to fluctuations in foreign currency exchange rates.
Metal price risk
The group is exposed to fluctuations in metal prices. The group does not enter
into metal futures, options or lease contracts to manage the fluctuations in
its metal prices.
Credit risk
Trade debtors comprise a single customer in South Africa namely Impala Refining
Services Limited. The potential concentration of credit risk consists mainly
of cash and cash equivalents, trade debtors and other receivables. The group
limits its counter party exposures from its cash and cash equivalents by only
dealing with well-established financial institutions of high quality credit
standing.
Interest rate risk
Fluctuations in interest rates impact on the financing activities, giving rise
to interest rate risk. Working capital and capital expenditure requirements
are funded through cash generated by operations and the loan facilities
provided to the group. At 30 June 2005, the group did not consider there to be
any significant concentration of interest related risk.
In respect of income-earning financial assets and interest-bearing financial
liabilities, the following table indicates their effective interest rates at
the balance sheet date and the periods in which they re-price.
2005
Effectiv
e 6 months 6-12 More
R000 interest Total or less months 1-2 2-5 than 5
rate years years years
Cash and 5.12% 5 212 5 212 - - - -
cash
equivalents
Impala 10.33% 72 770 - 36 385 36 385 - -
Platinum
Limited
secured
loan
Eagle 7.46% 160 278 120 000 - - 40 278 -
secured
loan
Nedbank 11.02% 48 297 - 48 297 - - -
Capital
secured
loan
Bank 11.02% 5 140 5 140 - - - -
overdrafts
2004
Effectiv More
e 6 months 6-12 than 5
R000 interest Total or less months 1-2 2-5 years
rate years years
Cash and 0.25% 880 - - - - -
cash
equivalents
Impala 11.58% 114 805 45 922 34 441 34 442 - -
Platinum
Limited
secured
loan
Eagle - - - - - - -
secured
loan
Nedbank - - - - - - -
Capital
secured
loan
Bank - - - - - - -
overdrafts
Fair values
The fair values together with the carrying amounts shown in the balance sheet
are as follows:
Carrying Fair Carrying Fair
amount value amount value
R000 2005 2005 2004 2004
Taxation assets 1 354 1 354 1 354 1 354
Trade and other receivables 30 509 30 509 433 433
Cash and cash equivalents 5 212 5 212 880 880
Secured bank loans 281 345 281 345 114 805 114 805
Trade and other payables 37 387 37 387 5 130 5 130
Bank overdraft 5 140 5 140 - -
16 COMMITMENTS
Capital expenditure commitments
Capital expenditure contracted at the balance
sheet date but not recognized in the financial
statements is as follows:
Commitments in respect of amounts contracted 5 174 -
for
Approved expenditure outstanding at 30 June 5 174 -
17 CASH UTILISED IN OPERATIONS
Reconciliation of profit before taxation to
cash utilised in by operations:
Profit /(loss) before taxation 24 950 (42 002)
Adjustments for: (29 903) 39 973
Amortisation 4 475 13 519
Environmental rehabilitation income statement 914 8 180
charge
Reversal of provision for loss in subsidiaries
Reversal of impairment (56 000) -
Foreign gain on foreign currency loan 9 694 -
Interest income (93) (85)
Financial expense 12 205 13 717
Foreign exchange (gain)/loss relating to sales (1 098) 4 642
Changes in working capital (6 378) (5 621)
Trade and other receivables (28 978) 23 971
Inventories (9 657) 1 293
Trade and other payables 32 257 (30 885)
Cash utilized in operations (11 331) (7 650)
18 TAXATION PAID
(Receivable)/owed at the beginning of the year (1 354) 26
Current charge per income statement - 26
Receivable at the end of the year 1 354 1 354
- 1 406
19 SEGMENTAL REPORTING
No segmental report is presented as the group
conducts a single mining operation with all
production and sales activities undertaken in
South Africa.
20 RELATED PARTY TRANSACTIONS
Mr LC Pouroulis, who resigned as a director on
15 September 2005, had the ability to exercise
significant influence over certain companies in
making financial and operating decisions and
therefore transactions with these entities as
listed below have been treated as related party
transactions.
Implats owned 83% of the Barplats Group until
31 May 2004 and therefore transactions with
entities in the Implats Group have been treated
as related party transactions up to that date.
Sale of Goods:
Impala Refining Services Limited - metal sales - 112 894
Purchase of services:
Salene Mining (Pty) Ltd - Ore and equipment 5 731 -
Salene Management Services (Pty) Ltd - 1 308 -
Management fees
Gravelotte Mines Limited - Equipment 800 -
Impala Platinum Limited - interest on loan - 12 763
Impala Platinum Limited - management fees - 2 895
7 839 15 658
Loans from a related party:
Loan from Impala Platinum Limited
At the beginning of year - 81 096
Loan advanced/(repaid) during the year - 32 639
At 31 May 2004 - 113 735
The loan bore interest at the Johannesburg
Interbank Acceptance Rate (JIBAR) plus 2% until
31 May 2004. On 1 June 2004 the interest rate
increased to JIBAR plus 3%. The loan will be
repaid as follows:
40% in June 2005
30% in June 2006; and
30% in June 2007
Related party debtors:
Metal sales to the Impala Refining Services - 125
Limited
21. DEFERRED TAXATION
Group
A deferred tax asset has not been raised
because of the uncertainty of its realization.
Had it been raised, an asset of R277 768 661
would have been created in the current year
(2004: R296 134 802).
Company
A deferred tax asset has not been raised
because of the uncertainty of its realization.
Had it been raise, an asset of R3 573 567 would
have been created in the current year (2004:
Nil).
Comprising
Mining Capital expenditure 235 450 260 165
Provisions 10 508 9 171
Other 238 -
Calculated tax losses 31 673 26 799
277 769 296 135
22. SUBSEQUENT EVENTS
Black economic empowerment transaction
Shareholder resolutions required inter alia to introduce Gubevu as a 26%
shareholder in Barplats, details of which were set out in a circular to
shareholders dated 20 June 2005, were approved at the general meeting
held on 5 July 2005. As a result a total of 78 189 851 ordinary shares
were issued at a price of R2.21 per share on 28 July 2005. The total
number of ordinary shares now in issue is 300 730 195.
The financial effect of the transaction would be to increase cash and
cash equivalents by R172.8 million. In terms of IFRS2 - share based
payments - the difference between the market value of the shares issued
and the issue price should be expensed to the income statement. This will
result in a charge of R374 million to the income statement for the year
ended 30 June 2006.
The following transactions were also approved at the general meeting of
shareholders on 5 July 2005:
The grant of an option to Nedbank Capital exercisable for a period
commencing 19 November 2005 until 31 March 2006 to subscribe for R15
million of ordinary shares at a 15% discount to the seven day volume
weighted average price on the JSE Limited for the seven trading days
prior to the options being exercised, subject to a maximum issue price of
R5.20 per ordinary share and a minimum issue price of R1.25 per ordinary
share.
The grant of a right to Eagle to convert the outstanding portion of the
Eagle loan facility into ordinary shares at a 20% discount to the seven
day weighted average price for the seven trading days prior to the
conversion being exercised subject to a maximum issue price of R5.20 per
ordinary share and a minimum issue price of R1.25 per ordinary share. The
estimated value of these options was R29 million on the date of grant,
which will be expensed to the income statement during 2006 financial
year.
23. RECONCILIATION TO CANADIAN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
Under Canadian GAAP the recovery of previously recorded impairment
provisions is not permitted. Therefore the recovery of the impairment
provisions has been reversed.
2005 2004
Profit/(loss) for the year under IFRS 24 950 (42 028)
Deducted reversal of impairment (56 000) -
Profit/(loss) for the year under Canadian GAAP (31 050) (42 028)
Property, plant and equipment under IFRS 391 367 207 703
Deducted reversal of impairment (56 000) -
Deduct adjustment of discount rate for the (7 376) -
provisions for environmental obligations
Property, plant and equipment under Canadian 327 991 207,703
GAA)
Provision for environmental obligations under 31 404 30 490
IFRS
Deduct adjustment of discount rate for the (7 376) -
provisions for environmental obligations
Provision for environmental obligations under 24 028 30 490
Canadian GAAP
Accumulated loss under IFRS (967 016) (991 966)
Deduct reversal of impairment 56 000 -
Accumulated loss under Canadian GAAP (1 023 016) (991 966)
The reversal of the previously recorded impairment provisions and the
adjustment to the discount rate for provisions for environmental
obligations do not impact cash flow from operations as they are non-cash
items.
APPENDIX B
Unaudited Financial Statements of Barplats Investments Limited for the nine
months ended March 31, 2006
BARPLATS INVESTMENT LIMITED
Condensed Consolidated Balance Sheet
31 March 30 June
2006 2005
R000 R000
ASSETS
NON-CURRENT
Property, plant & equipment 456 479 391 367
Other non-current assets 2 896 -
459 375 391 367
CURRENT
Cash and cash equivalents 50 365 5 212
Receivables 86 286 30 509
Taxation 1 354 1 354
Inventory 10 387 9 899
148 392 46 974
607 767 438 341
LIABILITIES
NON-CURRENT
Borrowings 70 527 76 663
Provision for environmental obligations 31 404 31 404
101 931 108 067
CURRENT
Borrowings 143 771 204 682
Payables 76 027 37 387
Cash and cash equivalent - 5 140
219 798 247 209
SHAREHOLDERS" EQUITY
Share capital 3 007 2 225
Share premium 1 218 990 1 047 856
Share-based payments reserve 397 986 -
Options 13 656 -
Accumulated loss (1 347 601) (967 016)
286 038 83 065
607 767 438 341
BARPLATS INVESTMENT LIMITED
Condensed Consolidated Income Statement
Three months ended Nine months ended
March 31, March 31,
2006 2005 2006 2005
R000 R000 R000 R000
Revenue 119 465 - 286 789 -
Cost of sales (61 002) - (175 406) -
Gross profit 60 999 - 111 383 -
Other operating
income 2 245 1 935 5 839 6 458
Selling and other
distribution costs (2 760) - (3 267) -
Administrative & other
operating expenses (34 418) (20 517) (66 674) (29 062)
Profit (loss) before
share-based payments,
net finance costs &
taxation 23 530 (18 582) 47 281 (22 604)
Share-based
payments - - (405 111) -
Profit (loss) before
net finance costs &
taxation 23 530 (18 582) (357 830) (22 604)
Net finance costs (8 597) (3 160) (22 755) (10 325)
Profit (loss)
before taxation 14 933 (21 742) (380 585) (32 929)
Taxation - - - -
Net profit (loss)
for the period 14 933 (21 742) (380 585) (32 929)
Basic and headline net
earnings (loss) per
share 5 (10) (129) (15)
BARPLATS INVESTMENT LIMITED
Condensed Consolidated Statement of Cash Flows
Three months ended Nine months ended
March 31, March 31,
2006 2005 2006 2005
R000 R000 R000 R000
OPERATING ACTIVITIES
Net profit (loss) for 14 933 (21 742) (380 585) (32 929)
the period
Items not involving
cash
Amortisation 714 323 11 026 1 244
Share based payments 479 - 411 642 -
Environmental charge - - - 914
16 126 (21 420) 42 005 (30 771)
Net changes in working
capital
Receivables (27 883) 5 549 (64 771) (4 503)
Payables 27 628 (57 347) 47 713 10 417
Inventory 1 884 (1 833) (488) (6 271)
17 755 (75 051) 24 459 (31 128)
INVESTING ACTIVITIES
Purchase of property,
plant & equipment (39 611) (15 746) (76 137) (75 579)
Increase in non-current
investments - - (2 896) -
(39 611) (15 746) (79 033) (75 579)
FINANCING ACTIVITIES
Proceeds on share issue 74 - 172 800 -
Share issue expenses - - (885) -
Proceeds from
borrowings 3 081 96 838 - -
Repayment of borrowings - - (67 048) 113 966
3 155 96 838 104 867 113 966
INCREASE (DECREASE) IN
CASH AND CASH
EQUIVALENTS (18 701) 6 041 50 293 7 259
CASH AND CASH
EQUIVALENTS AT THE
BEGINNING OF PERIOD 69 066 2 098 72 880
CASH AND CASH
EQUIVALENTS AT THE END
OF PERIOD 50 365 8 139 50 365 8 139
Nature of business
Barplats is a platinum group metals ("PGMs") mining company whose core business
is PGM mining and processing in South Africa"s Bushveld Igneous Complex ("the
BIC"). Barplats" two assets are:
- the Crocodile River Mine on the Western Limb of the BIC near Brits in the
North West Province; and
- the Kennedy"s Vale Project on the Eastern Limb of the BIC near Steelpoort
in Mpumalanga.
Notes
These condensed consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards ("IFRS") using the
following significant accounting policies. These policies are consistent with
Canadian generally accepted accounting principles (Canadian GAAP") in all
material respects except as outlined in Note 5.
Other expenses include:
9 months 9 months
ended 31 ended 31
March 2006 March 2005
R000 R000
Employment costs 22 103 9 715
Consulting fees 16 697 3 808
Employee relates share-based payments 6 531 -
Transport costs 3 267 -
Security costs 3 224 2 649
Rentals 1 245 25
Insurance 3 711 3 750
Non-current liabilities include:
- a provision of R31.4 million for environmental rehabilitation.
- the long-term portion of the interest bearing loan from Impala Platinum
Limited of R36.2 million.
- the interest bearing loan outstanding from Eagle Worldwide Investments
Ltd. ("Eagle") of R34.3 million (US$5.9 million).
Current liabilities include:
- the portion of the interest bearing loan from Impala that is repayable in
June 2006 of R36.2 million.
- the interest bearing loan from Nedbank that is repayable in May 2006 of
R106.8 million.
Reconciliation to Canadian generally accepted accounting principles:
Under Canadian GAAP the recovery of previously recorded impairment provisions
is not permitted. Therefore the recovery of the impairment provisions has been
reversed.
9 months ended 9 months
31 March 2006 ended 31
March 2005
R000 R000
Net (loss) under IFRS (380 585) (32 929)
Add back recovery of impairment provisions 2 100 -
Add back share-based payments relating to BEE
transaction 397 986 -
Net profit (loss) under Canadian GAAP 19 501 (32 929)
31 March 2006 30 June 2005
R000 R000
Property, plant & 456 479 391 367
equipment IFRS
Property, plant & (53 900) (56 000)
equipment reversal
Deduct adjustment of discount rate for the
provisions for environmental obligations (6 724) (7 376)
Property, plant & equipment under Canadian GAAP 395 855 327 991
Provision for environmental obligations under IFRS 31 404 31 404
Deduct adjustment of discount rate for the
provisions for environmental obligations (6 724) (7 376)
Provision for environmental obligations under 24 680 24 028
Canadian GAAP
Retained earnings IFRS (1 347 601) (967 016)
Retained earnings reversal (53 900) (56 000)
Add back share-based payments relating to BEE 397 986 -
transaction
Retained earnings under Canadian GAAP (1 003 515) (1 023 016)
The reversal of the previously recorded impairment provisions does not impact
cash flow from operations as this is a non-cash item.
Share-based payments include:
During the period ended 31 March 2006, the company had share-based payment
arrangements, which are described below.
Black Economic Empowerment (BEE) transaction
On 5 July 2005, Barplats shareholders voted in favour of resolutions to
introduce Gubevu Consortium Investment Holdings (PTY) Ltd as a 26% shareholder
in Barplats Investments Limited through the issue of 78 189 851 ordinary shares
on 22 July 2005 for consideration of R172 799 570.71. The share based payment
effect of this transaction is brought about by the fact that the share issue
price paid was below the market value at the time of the transaction. In terms
of IFRS2, Barplats is required to expense the price difference (a non-cash
entry) of R397 986 342 in the period of the transaction.
Executive share incentive scheme and financing related options
In terms of IFRS2, Barplats is required to expense the value of consideration
(options) granted over the period from grant date to full vesting:
Type of Employee share Financing
arrangement options related options
Date of 15 September 2005 5 July 2005
grant
Number 3 250 000 2 884 615
granted
Vesting One third vested Vested
conditions immediately. The
remaining options
vest equally on 15
July 2006 and 15
July 2007, provided
the employees are
still in the employ
of the company.
Exercise 3.80 5.20
price
Earnings per share
The calculation of basic, diluted and headline loss per share is based on a net
profit and loss of R14.933 million and R380.585 million for three and nine
months respectively (2005: loss of R21.742 and R32.929 million respectively).
The basic and diluted weighted average number of shares in issue increased
during the period to 294 693 479 and 298 228 094 respectively (2005: 222 540
344).
APPENDIX C
Pro-Forma Condensed Consolidated Financial Statements of Eastern Platinum
Limited
Pro Forma Condensed Consolidated Financial Statements of EASTERN PLATINUM
LIMITED
Compilation Report
To the Directors of Eastern Platinum Limited
We have read the accompanying unaudited pro forma condensed consolidated
balance sheet of Eastern Platinum Limited (the "Company") as at March 31, 2006
and the unaudited pro forma condensed consolidated statements of operations for
the nine months then ended and for the year ended June 30, 2005, and have
performed the following procedures.
1. Compared the figures in the columns captioned "Eastern Platinum" to the
unaudited consolidated financial statements of the Company as at March 31,
2006 and for the nine months then ended, and found them to be in
agreement.
2. Compared the figures in the column captioned "Fifteen months ended June
30, 2005" in Schedule 1 (a) to the pro forma condensed consolidated
statements of operations to the audited consolidated financial statements
of the Company for the fifteen months ended June 30, 2005, and in the
column captioned "Three months ended June 30, 2004" to the unaudited
consolidated financial statements of the Company for the three months
ended June 30, 2004 and 2003 and found them to be in agreement and
recalculated the figures in the column captioned "Twelve months ended June
30, 2005", and found them to be arithmetically correct.
3. Compared the figures in the columns captioned "IFRS" and "GAAP
adjustments" in Schedule 1 (b) to the unaudited pro forma condensed
consolidated balance sheet to the unaudited consolidated financial
statements of Barplats Investments Limited ("Barplats") as at March 31,
2006, and found them to be in agreement and recalculated the figures in
the columns captioned "Canadian GAAP - ZAR 000"s" and "Canadian GAAP - $
000"s", and found them to be arithmetically correct.
4. Compared the figures in the columns captioned "IFRS" and "GAAP
adjustments" in Schedule 1 (c) to the unaudited pro forma condensed
consolidated statements of operations to the unaudited consolidated
financial statements of Barplats for the nine months ended March 31, 2006,
and found them to be in agreement and recalculated the figures in the
columns captioned "Canadian GAAP - ZAR 000"s" and "Canadian GAAP - $
000"s", and found them to be arithmetically correct.
5. Compared the figures in the columns captioned "IFRS" and "GAAP
adjustments" in Schedule 1 (d) to the unaudited pro forma condensed
consolidated statements of operations to the audited consolidated
financial statements of Barplats for the year ended June 30, 2005, and
found them to be in agreement and recalculated the figures in the columns
captioned "Canadian GAAP - ZAR 000"s" and "Canadian GAAP - $ 000"s", and
found them to be arithmetically correct.
6. Made enquiries of certain officials of the Company who have responsibility
for financial and accounting matters about:
(a) the basis for determination of the pro forma adjustments; and
(b) whether the pro forma condensed consolidated financial statements
comply as to form in all material respects with the published
requirements of the Canadian Securities Legislation.
The officials:
(a) described to us the basis for determination of the pro forma
adjustments; and
(b) stated that the pro forma condensed consolidated financial statements
comply as to form in all material respects with the published
requirements of the Canadian Securities Legislation.
7. Read the notes to the unaudited pro forma condensed consolidated financial
statements, and found them to be consistent with the basis described to us
for determination of the pro forma adjustments.
8. Recalculated the application of the pro forma adjustments to the aggregate
of the amounts in the columns captioned "Eastern Platinum" and "Barplats"
as at March 31, 2006 and for the nine months ended March 31, 2006 and for
the year ended June 30, 2005 and found the amounts in the column captioned
"Pro forma consolidated" to be arithmetically correct.
A pro forma condensed consolidated financial statement is based on management"s
assumptions and adjustments, which are inherently subjective. The foregoing
procedures are substantially less than either an audit or a review, the
objective of which is the expression of assurance with respect to management"s
assumptions, the pro forma adjustments, and the application of the adjustments
to the historical financial information. Accordingly, we express no such
assurance. The foregoing procedures would not necessarily reveal matters of
significance to the pro forma condensed consolidated financial statements, and
we therefore make no representation about the sufficiency of the procedures for
the purposes of a reader of such statements.
"Deloitte & Touche LLP"
Deloitte & Touche LLP
Chartered Accountants
Vancouver, British Columbia
July 12, 2006
EASTERN PLATINUM LIMITED
Pro Forma Condensed Consolidated Balance Sheet
March 31, 2006
(Unaudited)
(in thousands of Canadian dollars unless otherwise stated)
Eastern Pro forma Pro forma
Platinum Barplats Note adjustments consolidated
ASSETS (Schedule 1
(b))
CURRENT
Cash and cash $1,221 $9,418 4(a) $141,000 $123,930
equivalents
4(b) (27,709)
Short-term 23,586 - - 23,586
investments
Receivables 535 16,135 - 16,670
and prepaids
Inventories - 1,942 - 1,942
Refundable 3,131 - - 3,131
taxes
Other assets - 253 - 253
28,473 27,749 113,291 169,513
Property, 100,618 74,025 - 174,643
plant and
equipment
Other assets 53 542 - 595
Unallocated - - 4 (b) 373,694 373,694
purchase
price
$129,144 $102,316 $486,985 $718,445
LIABILITIES
CURRENT
Accounts
payable and
accrued
liabilities $319 $14,217 4(b) $4,422 $18,958
Current - 26,885 - 26,885
portion of
long-term
debt
319 41,102 4,422 45,843
Long-term - 13,189 - 13,189
debt
Asset - 4,615 - 4,615
retirement
obligation
Future income 21,321 - - 21,321
taxes
21,640 58,906 4,422 84,968
SHAREHOLDERS"
EQUITY
Share capital 134,635 562 4(a) 141,000 660,608
4(b) 384,411
Contributed 3,875 230,505 4(b) (230,505) 3,875
surplus
Deficit (31,006) (187,657) 4(b) 187,657 (31,006)
107,504 43,410 482,563 633,477
$129,144 $102,316 $486,985 $18,445
EASTERN PLATINUM LIMITED
Pro Forma Condensed Consolidated Statement of Operations
Nine months ended March 31, 2006
(Unaudited)
(in thousands of Canadian dollars unless otherwise stated)
Eastern Pro forma Pro forma
Platinum Barplats Note adjustments consolidated
(Schedule 1
(c))
Revenue $- $52,970 $- $52,970
Cost of sales - 32,785 - 32,785
Gross profit - 20,185 - 20,185
Other - 1,078 - 1,078
operating
income
Selling and
other
distribution - (603) - (603)
costs
General and
administrative
expenses (1,878) (12,315) - (14,193)
Stock-based (123) (1,316) - (1,439)
compensation
Foreign (394) - - (394)
exchange gain
(loss)
Net interest 864 (4,203) - (3,339)
income
(expense)
Other 57 - - 57
NET EARNINGS
(LOSS)
FOR THE PERIOD $(1,474) $2,826 $- $1,352
EASTERN PLATINUM LIMITED
Pro Forma Condensed Consolidated Statement of Operations
Year ended June 30, 2005
(Unaudited)
(in thousands of Canadian dollars unless otherwise stated)
Eastern Pro forma Pro forma
Platinum Barplats Note adjustments consolidated
(Schedule 1 (Schedule 1
(a)) (d))
Revenue $- $8,132 $- $8,132
Cost of sales - 7,433 - 7,433
Gross profit - 699 - 699
Other - 298 - 298
operating
income
General and
administrative
expenses (1,145) (2,868) - (4,013)
Stock-based (289) - - (289)
compensation
Foreign (246) - - (246)
exchange gain
(loss)
Loss on sale (284) - - (284)
of mineral
property
Write-off of (622) - - (622)
mineral
property
Net interest 229 (4,414) - (4,185)
income
(expense)
Other 31 - - 31
NET LOSS FOR $(2,326) $(6,285) $- $(8,611)
THE PERIOD
EASTERN PLATINUM LIMITED
Notes to the Pro Forma Condensed Consolidated Financial Statements
March 31, 2006
(Unaudited)
(in thousands of Canadian dollars unless otherwise stated)
1. BASIS OF PRESENTATION
The unaudited pro forma condensed consolidated balance sheet of Eastern
Platinum Limited ("Eastern Platinum" or the "Company") as at March 31, 2006 and
unaudited pro forma condensed consolidated statements of operations for the
nine months ended March 31, 2006 and for the year ended June 30, 2005 have been
prepared by management of Eastern Platinum, in accordance with Canadian
generally accepted accounting principles, for illustrative purposes only, after
giving effect to the business combination between Eastern Platinum and Barplats
Investments Limited ("Barplats"). These unaudited pro forma condensed
consolidated financial statements have been compiled from, and include:
(a) a pro forma condensed consolidated balance sheet combining the unaudited
consolidated balance sheet of Eastern Platinum as at March 31, 2006 and
the unaudited balance sheet of Barplats as at March 31, 2006 (Schedule 1
(b));
(b) a pro forma condensed consolidated statement of operations combining the
unaudited consolidated statement of operations of Eastern Platinum for the
year ended June 30, 2005 (Schedule 1 (a)) and the audited consolidated
statement of operations of Barplats for the year ended June 30, 2005
(Schedule 1 (d)); and
(c) a pro forma condensed consolidated statement of operations combining the
unaudited consolidated statement of operations of Eastern Platinum for the
nine month period ended March 31, 2006 and the unaudited consolidated
statement of operations of Barplats for the nine month period ended March
31, 2006 (Schedule 1 (c)).
It is management"s opinion that the pro forma condensed consolidated balance
sheet and the pro forma condensed consolidated statement of operations includes
all adjustments necessary for the fair presentation, in all material respects,
of the transactions described in Note 3 in accordance with Canadian generally
accepted accounting principles applied on a basis consistent with Eastern
Platinum"s accounting policies.
The pro forma condensed consolidated balance sheet is intended to reflect the
financial position of the Company as if the transactions had been effected on
March 31, 2006; however, it is not necessarily indicative of the financial
position which would have resulted if the transaction had actually occurred on
March 31, 2006. The pro forma condensed consolidated statement of operations
is intended to reflect the results of operations of the Company as if the
transaction had been effected on July 1, 2004; however, it is not necessarily
indicative of the results of operations which would have resulted if the
transaction had occurred on July 1, 2004.
The unaudited pro forma condensed consolidated balance sheet should be read in
conjunction with the historical financial statements and notes thereto of
Eastern Platinum and Barplats.
2. SIGNIFICANT ACCOUNTING POLICIES
The unaudited pro forma consolidated balance sheet and pro forma condensed
consolidated statement of operations have been compiled using the significant
accounting policies as set out in the audited financial statements of Eastern
Platinum for the fifteen months ended June 30, 2005. The significant
accounting policies of Barplats conform in all material respects to those of
Eastern Platinum.
3. BUSINESS COMBINATION AND ACQUISITION
On February 15, 2006, the Company announced that it had entered into an
agreement to acquire the shareholdings of three private companies, the combined
assets of which represent a 69% interest in Barplats, a platinum group metals
producing company in South Africa. The consideration to be paid by the Company
is 288,585,122 shares of the Company and a cash payment of $27,308,597.
As a condition of closing, the Company is to complete an equity financing of a
minimum of $100 million, shall assume an outstanding convertible loan to
Barplats of approximately $6.9 million and shall retire or replace a ZAR100
million loan that is secured by a pledge of 100 million of the Barplats shares.
On February 15, 2006, the Company announced that it had entered into an
agreement to acquire the shareholdings of three private companies, the combined
assets of which The business combination will be accounted for as a purchase
transaction with the Company being identified as the acquirer. The Company"s
common shares issued in exchange for the shares held in Barplats have been
valued at a price of $1.33 being the average common share price of the Company
two days before, the day of and the two days after the date of announcement.
The Company has not yet determined the fair value of all identifiable assets
and liabilities acquired the amount of the purchase price that may be allocated
to goodwill, or the complete impact of applying purchase accounting on the
income statement. Therefore, after reflecting the pro forma purchase
adjustments identified to date, the excess of the purchase consideration over
the adjusted book values of Barplats" assets and liabilities has been presented
as "unallocated purchase price." Upon consummation of the proposed acquisition
of the interests in Barplats, the fair value of all identifiable assets and
liabilities acquired as well as any goodwill arising upon the acquisition will
be determined. On completion of valuations, with a corresponding adjustment to
the historic carrying amounts of mining interests, or on recording of any
finite life intangible assets on acquisition, these adjustments will impact the
measurement of amortization recorded in the consolidated income statements of
the Company for periods after the date of acquisition. No pro forma
adjustments have been reflected for any changes in future tax assets or
liabilities that would result from recording Barplats" identifiable assets and
liabilities at fair value as the process of estimating the fair value of
identifiable assets and liabilities is not complete.
The preliminary allocation of the purchase price, summarized in the table
below, is subject to change:
Purchase price:
288,585,122 Eastern Platinum common shares $384,973
Cash 27,709
Acquisition costs 4,422
$417,104
Net assets acquired:
Cash and cash equivalents $9,418
Non-cash working capital 4,114
Property, plant and equipment 74,025
Other non-current assets 542
Long-term debt (40,074)
Asset retirement obligation (4,615)
Unallocated purchase price 373,694
$417,104
4. PRO FORMA ASSUMPTIONS AND ADJUSTMENTS
The pro forma condensed consolidated financial statements include the following
pro forma assumptions and adjustments:
(a) the completion of a private placement of 120 million units at a price of
$1.25 per unit for net proceeds of $141 million; and
(b) the completion of the acquisition of Barplats by the Company and the
recording of all the purchase accounting adjustments related thereto as
described in Note 3.
5. PRO FORMA EARNINGS PER SHARE
The average number of shares used in the computation of pro forma basic loss
per share has been determined as follows:
Nine months Twelve months
ended ended
March 31, June 30,
2006 2005
Weighted average number of shares
outstanding
for the period 93,037,038 35,148,121
Issued on Eastern Platinum equity 120,000,000 120,000,000
issue
Issued on acquisition of 288,585,122 288,585,122
interests in Barplats
501,622,160 443,733,243
Pro forma basic and diluted loss $0.00 $(0.02)
per share
See accompanying notes to the unaudited pro forma condensed consolidated
financial statements.
EASTERN PLATINUM LIMITED Schedule
1 (a)
Pro Forma Consolidated Financial Statements
Statement of Operations of Eastern Platinum Limited
Year ended June 30, 2005
(Unaudited)
(in thousands of Canadian dollars unless
otherwise stated)
Fifteen Three Twelve
months
months months ended
ended ended
June 30, June June 30,
30,
2005 2004 2005
A B C=A-B
GENERAL AND ADMINISTRATIVE
EXPENSES
Amortization $1 $- $1
Consulting fees 268 41 227
Directors" fees 5 - 5
Insurance - - -
Listing fees 323 - 323
Management fees 61 8 53
Office and rent 73 2 71
Professional fees 189 - 189
Shareholder information and
public relations 78 - 78
Transfer agent and filing 123 2 121
fees
Travel and related costs 77 - 77
(1,198) (53) (1,145)
Stock-based compensation (289) - (289)
Foreign exchange gain (248) (2) (246)
(loss)
Loss on sale of mineral (284) - (284)
property
Write-off of mineral (622) - (622)
property
Interest income 231 2 229
Other 32 1 31
Net loss for the period $(2,378) $(52) $(2,326)
EASTERN PLATINUM LIMITED
Pro Forma Consolidated Financial Statements
Consolidated Balance Sheet of Barplats Investments Limited
March 31, 2006
(in thousands of Canadian dollars unless otherwise stated)
Schedule 1 (b)
GAAP Canadian Exchange Canadian
IFRS adjustments GAAP rate GAAP
ZAR 000"s ZAR 000"s ZAR 000"s $ 000"s
ASSETS
Cash and cash 50,365 - 50,365 0.1870 $9,418
equivalents
Receivables and 86,286 - 86,286 0.1870 16,135
prepaids
Inventories 10,387 - 10,387 0.1870 1,942
Other assets 1,354 - 1,354 0.1870 253
148,392 - 148,392 0.1870 27,749
Property, plant 456,479 (60,624) 395,855 0.1870 74,025
and equipment
Other assets 2,896 - 2,896 0.1870 542
607,767 (60,624) 547,143 0.1870 $102,316
LIABILITIES
Accounts payable
and accrued
liabilities 76,027 - 76,027 0.1870 $14,217
Current portion of 143,771 - 143,771 0.1870 26,885
long-term debt
219,798 - 219,798 0.1870 41,102
Long-term debt 70,527 - 70,527 0.1870 13,189
Asset retirement 31,404 (6,724) 24,680 0.1870 4,615
obligation
321,729 (6,724) 315,005 0.1870 58,906
SHAREHOLDERS" EQUITY
Share capital 3,007 - 3,007 0.1870 562
Contributed 1,218,990 - 1,218,990 0.1870 227,951
surplus
Options 411,642 (397,986) 13,656 0.1870 2,554
Deficit (1,347,601) 344,086 (1,003,515) 0.1870 (187,657)
286,038 (53,900) 232,138 0.1870 43,410
607,767 (60,624) 547,143 0.1870 $102,316
(1) Spot rate
at March 31,
2006
EASTERN PLATINUM LIMITED
Pro Forma Consolidated Financial Statements
Consolidated Statement of Operations of Barplats Investments Limited
Nine months ended March 31, 2006
(in thousands of Canadian dollars unless otherwise stated)
Schedule 1 (c)
GAAP Canadian Exchange Canadian
IFRS adjustments GAAP rate GAAP
ZAR 000"s ZAR 000"s ZAR 000"s $ 000"s
Revenue 286,789 - 286,789 0.1847 $52,970
Cost of sales 175,406 2,100 177,506 0.1847 32,785
Gross profit 111,383 (2,100) 109,283 0.1847 20,185
Other 5,839 - 5,839 0.1847 1,078
operating
income
Selling and
other
distribution (3,267) - (3,267) 0.1847 (603)
costs
General and
administrative
expenses (66,674) - (66,674) 0.1847 (12,315)
Share-based (405,111) 397,986 (7,125) 0.1847 (1,316)
payments
Net interest (22,755) - (22,755) 0.1847 (4,203)
expense
Loss for the (380,585) 395,886 15,301 0.1847 $2,826
period
(1) Average exchange rate for the nine months ended March 31, 2006
EASTERN PLATINUM LIMITED
Pro Forma Consolidated Financial Statements
Consolidated Statement of Operations of Barplats Investments Limited
Year ended June 30, 2005
(in thousands of Canadian dollars unless otherwise stated)
Schedule 1 (d)
GAAP Canadian Exchange Canadian
IFRS adjustments GAAP rate GAAP
ZAR 000"s ZAR 000"s ZAR 000"s $ 000"s
Revenue 40,177 - 40,177 0.2024 $8,132
Cost of sales 36,723 - 36,723 0.2024 7,433
Gross profit 3,454 - 3,454 0.2024 699
Other operating 1,471 - 1,471 0.2024 298
income
General and administrative
expenses (14,169) - (14,169) 0.2024 (2,868)
Reversal of 56,000 (56,000) - 0.2024 -
impairment
Net interest (21,806) - (21,806) 0.2024 (4,414)
expense
Earnings (loss) 24,950 (56,000) (31,050) 0.2024 $(6,285)
for the year
(1) Average exchange rate for the year ended June 30, 2005
Date: 14/07/2006 12:59:17 PM Produced by the JSE SENS Department
