| Wed 27 Sep 2006, 14:15 | | Wesizwe - Interim report for the 6 months ended 30 |
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WEZ
WEZ
Wesizwe - Interim report for the 6 months ended 30 June 2006
Wesizwe Platinum Limited
("the Company" or "Wesizwe")
(Incorporated in the Republic of South Africa)
(Registration number 2003/020161/06)
JSE code: WEZ & ISIN: ZAE000075859
Highlights
Exploration milestone - 11,6% of total Mineral Resources moved up into
the Indicated category
Total attributable Mineral Resources at 30 June 2006 increased by 613 000
ounces or 9,5% to 7,1 million PGE(4) ounces
Over-delivered on original exploration targets, within budget and on
schedule
Costs well controlled - no increase in overheads
Successful capital raising of R67,3 million during third quarter - well
funded to continue accelerated exploration programme
INTERIM REPORT FOR THE SIX MONTHS ENDED 30 JUNE 2006
Income statement Six months ended Year ended
30 June 30 June 31 December
2006 2005 2005
Unaudited Unaudited Audited
R R R
Revenue - - -
Administration expenditure 6 528 795 19 268 891 32 589 778
Depreciation 73 012 - 81 618
Loss from operations 6 601 807 19 268 891 32 671 396
Finance cost 165 857 257 108 316 932
Finance income (213 212) (116 931) (856 009)
Loss before income tax expense 6 554 452 19 409 068 32 132 319
Income tax expense - - -
Loss for the period/year 6 554 452 19 409 068 32 132 319
Loss for the year
has been adjusted
by the following to
arrive at the headline
loss to calculate the headline
loss per share:
Naboom project
development expense - - (100 000)
Headline loss for the period/year 6 554 452 19 409 068 32 032 319
Number of shares in issue 356 366 659 341 922 301 356 366 659
Weighted average number of
shares in issue 356 366 659 349 122 301 345 468 748
Diluted weighted
average number of
shares in issue 356 366 659 349 122 301 345 468 748
Basic loss per share (cents) (1,84) (5,68) (9,30)
Diluted loss per share (cents) (1,84) (5,56) (9,30)
Headline loss per share (cents) (1,84) (5,68) (9,27)
Statement of changes in equity
Share
based
Share Share payment
capital premium reserve
R R R
Balance at
1 January 2005 3 344 22 848 568 630 000
Issue of share capital 135 - -
Premium on issue of
share capital - 82 147 048 -
Share issue expenditure
written off - (9 537 229) -
Net loss for the period - - -
Balance at
30 June 2005 3 479 95 458 387 630 000
Issue of share capital 85 - -
Premium on issue of
share capital - 6 571 215 -
Share issue expenditure
written off - - -
Expenditure settled by shares - - 100 000
Net loss for the year - - -
Balance at
31 December 2005 3 564 102 029 602 730 000
Issue of share capital - - -
Premium on issue of
share capital - - -
Share issue expenditure
written off - - -
Expenditure settled by shares - - -
Net loss for the year - - -
Balance at
30 June 2006 3 564 102 029 602 730 000
Accu-
mulated
loss Total
R R
Balance at
1 January 2005 (5 365 963) 18 115 949
Issue of share capital - 135
Premium on issue of
share capital - 82 147 048
Share issue expenditure
written off - (9 537 229)
Net loss for the period (19 409 068) (19 409 068)
Balance at
30 June 2005 (24 775 031) 71 316 835
Issue of share capital - 85
Premium on issue of
share capital - 6 571 215
Share issue expenditure
written off - -
Expenditure settled by shares - 100 000
Net loss for the year (12 723 251) (12 723 251)
Balance at
31 December 2005 (37 498 282) 65 264 884
Issue of share capital - -
Premium on issue of
share capital - -
Share issue expenditure
written off - -
Expenditure settled by shares - -
Net loss for the year (6 554 452) (6 554 452)
Balance at
30 June 2006 (44 052 734) 58 710 432
Cash flow statement
Six months ended Year ended
30 June 30 June 31 December
2006 2005 2005
Unaudited Unaudited Audited
R R R
Cash flows utilised by
operating activities
Cash utilised by
operations (6 155 840) (23 026 575) (35 071 571)
Finance cost (165 857) (257 108) (316 932)
Finance income 213 212 116 931 856 009
Net cash outflow from
operating activities (6 108 485) (23 166 752) (34 532 494)
Cash flows utilised by
investing activities
Acquisition of property,
plant and equipment
as a result of
increasing operations (151 184) (98 647) (296 734)
Expenditure on
intangible exploration
and evaluation assets as
a result of
increasing operations (9 166 507) (10 439 780) (25 461 141)
Net cash outflow from
investing activities (9 317 691) (10 538 427) (25 757 875)
Cash flows from
financing activities
Share capital issued - 72 609 954 79 181 254
Increase/(decrease) in
interest-bearing loans
and borrowings 8 619 686 (7 775 117) (15 507 549)
(Increase)/decrease in
loan receivable - (2 754 874) 168 982
Net cash inflow from
financing activities 8 619 686 62 079 963 63 842 687
Net (decrease)/increase
in cash and
cash equivalents (6 806 490) 28 374 784 3 552 318
Cash and cash
equivalents at the
beginning
of the period/year 14 147 353 10 595 035 10 595 035
Cash and cash
equivalents at the end
of
the period/year 7 340 863 38 969 819 14 147 353
BALANCE SHEET
30 June 30 June 31 December
2006 2005 2005
Unaudited Unaudited Audited
R R R
Assets
Non-current assets
Property, plant and equipment 411 260 180 654 333 088
Intangible exploration and
evaluation assets 79 410 666 55 222 798 70 244 159
Total non-current assets 79 821 926 55 403 452 70 577 247
Current assets
Trade and other receivables 2 645 660 2 429 932 4 500 390
Loans receivable - 2 923 856 -
Cash and cash equivalents 7 340 863 38 969 819 14 147 353
Total current assets 9 986 523 44 323 607 18 647 743
Total assets 89 808 449 99 727 059 89 224 990
Equity and liabilities
Equity
Share capital 3 564 3 479 3 564
Share premium 102 029 602 95 458 387 102 029 602
Share based payment reserve 730 000 630 000 730 000
Accumulated loss (44 052 734) (24 775 031) (37 498 282)
Total capital 58 710 432 71 316 835 65 264 884
Non-current liabilities
Interest-bearing loans and
borrowings 10 165 833 14 188 369 15 312 607
Total non-current liabilities 10 165 833 14 188 369 15 312 607
Current liabilities
Trade and other payables 3 795 911 2 255 866 5 463 254
Provisions 369 813 109 319 184 245
Interest-bearing loans and
borrowings 16 766 460 11 856 670 3 000 000
Total current liabilities 20 932 184 14 221 855 8 647 499
Total equity and liabilities 89 808 449 99 727 059 89 224 990
Net asset value per share
(cents) 16,47 20,86 18,31
Basis of preparation and accounting policies
The financial information for the six months ended 30 June 2006 has been
prepared on the historical cost and is in accordance with International
Financial Reporting Standards (IFRS) and its interpretations adopt the
International Accounting Standards Board. The accounting policies have been
applied consistently through the Group and are consistent with those for the
year ended 31 December 2005.
The Company has elected to early adopt IFRS6: Exploration for and Evaluation
of Mineral Resources.
Comment - Mike Solomon, Chief Executive Officer
"Wesizwe continues to make significant progress in moving up the value curve.
To date we have successfully raised R67,3 million as part of our progressive
capital raising and we are well placed to continue our accelerated drilling
programme to commission a Bankable Feasibility Study towards the end of 2007."
"During the period under review, we drilled 9 659 metres which included 46
deflections, and added 613 000 ounces to the attributable Inferred Resource
category. This brings the total attributable resource to 7,1 million PGE(4)
ounces. Some 11,6% of the total Mineral Resource categorisation has been
upgraded into the Indicated category. Exploration infrastructure has been
significantly bolstered with seven drill rigs operating on our properties by
mid September 2006. We will increase the current drill rig deployment by a
further 4 units to 11 by mid October to push forward our exploration efforts
considerably."
"The most significant aspect of these results is that Wesizwe has
over-delivered on the original exploration targets set in January 2005 while
keeping the project on schedule and within the original budgets set at that
time."
"The successful South African capital raising also attests to the coming of age
of Wesizwe and the acceptance of the company in the markets. This bodes well
for our future capital raisings and the overall potential of the project."
Introduction
The Company successfully concluded a private placing of R67,3 million from
South African institutions during early September 2006.
Wesizwe continued to be fully focused on its exploration activities.
Attributable PGE(4) ounces to Wesizwe from the Pilanesberg Project have
increased during the period under review by 613 000 ounces to 7,1 million
ounces.
Pilanesberg Project: Current
Wesizwe continued to pursue this project located on the Western Limb of the
Bushveld Igneous Complex on the farms Frischgewaagd 96 JQ, Ledig 909 JQ, Mimosa
81 JQ, Zandrivierspoort 210 JP measuring 4 676 hectares in extent. The
properties are northwest of Rustenburg, and to the south of the Pilanesberg
Game Reserve and Sun City. The table below reflects the summary results for the
total estimated mineral resources for the Pilanesberg Project at 30 June 2006
compared to those in November 2005.
PGE(4)*
Tonnes Grade
Farm Reef Category (Mt) (g/t)
INDICATED
Frischgewaagd 96QJ
(portions 3 and 4,
and 11) Merensky Indicated 6,319 5,40
UG2 Indicated 1,631 4,61
Total All reefs Indicated
(June 2006) Indicated 7,950 5,23
Total All reefs Indicated
(November 2005) Indicated - -
INFERRED
Ledig 909JQ Merensky Inferred 8,025 5,18
UG2 Inferred 9,711 4,24
Frischgewaagd 96JQ
(portions 3 and 4,
and 11) Merensky Inferred 18,366 6,66
UG2 Inferred 25,810 4,29
Total All reefs Inferred
(June 2006) Inferred 61,912 5,10
Total All reefs Inferred
(November 2005) Inferred 63,608 5,09
Grand total: All reefs Inferred and
(June 2006) Indicated 69,862 5,12
Change: November 2005
to June 2006 Absolute 6,254
Per cent 9,8 0,06
Attri-
Total butable
PGE(4)* PGE(4)*
Million Owner- Million
Farm Reef Ounces ship Ounces
INDICATED
Frischgewaagd 96QJ
(portions 3 and 4,
and 11) Merensky 1,096 50%# 0,548
UG2 0,242 50%# 0,121
Total All reefs Indicated
(June 2006) 1,338 50%# 0,669
Total All reefs Indicated
(November 2005) - - -
INFERRED
Ledig 909JQ Merensky 1,337 100% 1,337
UG2 1,324 100% 1,324
Frischgewaagd 96JQ
(portions 3 and 4,
and 11) Merensky 3,932 50%# 1,966
UG2 3,561 50%# 1,780
Total All reefs Inferred
(June 2006) 10,154 63% 6,407
Total All reefs Inferred
(November 2005) 10,419 6,463
Grand total: All reefs
(June 2006) 11,492 7,076
Change: November 2005
to June 2006 1,073 0,613
10,3 9,5
* Platinum Group Elements comprising: platinum, palladium, rhodium and gold.
# The remaining 50 per cent of portion 11 is owned by Anglo Platinum Limited.
The remaining 50 per cent of portions 3 and 4 are owned by the Western Bushveld
Joint Venture.
The abovementioned resource estimates incorporate the drilling results of both
the Merensky and UG reefs located on the Pilanesberg Project farms. Both
reports were prepared in accordance with Section 12 of the Listings
Requirements of the JSE Limited and the South African Code for Reporting of
Mineral Resources and Reserves ("the SAMREC Code").
Mr DR Young, a director of Mineral Corporation Consultancy (Proprietary)
Limited as the Competent Person updated his report on Wesizwe"s Mineral
Resources as at 30 June 2006. Mr Young"s qualifications are BSc (Hons), FGSSA,
FAusIMM, Pr Sci Nat and his business address is Homestead Office Park, 65
Homestead Avenue, Bryanston 2021.
During the period ended 30 June 2006, an exploration milestone was achieved
with some 11,6% of the Mineral Resources attributable to the Pilanesberg
Project being upgraded to the Indicated Resource category. This marks the
transition from Phase 2 to Phase 3 of the exploration programme and progressive
movement up the value curve.
Phase 1 Establish company, discovery drilling
Phase 2 Establish Inferred Resource, list company on JSE Limited
Phase 3 Move Mineral Resource from Inferred to Indicated category and embark
on pre-feasibility study
Phase 4 Move Mineral Resource from Indicated to Measured category and
commission a Bankable Feasibility Study (BFS)
Phase 5 Capital construction and mine development.
Since listing on the JSE Limited the Wesizwe attributable PGE(4) ounces have
increased by 613 000 ounces to 7,076 million ounces representing an increase of
9,5 per cent (November 2005: 6,463 million ounces). The tonnage of mineral
resource has increased from 63,6 million tonnes during November 2005 to 69,9
million tonnes at 30 June 2006 being an increase of 9,8 per cent. The reported
average PGE(4) grade has improved marginally to 5,12 g/t (November 2005:
5,09g/t).
To date a total of 50 boreholes have been drilled for the Pilanesberg Project
compared with 35 holes at the end of February 2006. During the period under
review the emphasis of the drilling programme was changed from not only
drilling new boreholes but to the completion of deflection holes within the
previously drilled boreholes. The aim is three deflections per completed
borehole to enable a better perspective of the orebody to be obtained. This had
not been previously undertaken. During this period 46 deflections were drilled.
The cumulative total of core drilled at 30 June 2006 was 39 200 metres being an
increase of 8 500 metres since February 2006.
The Company is pleased to report that no reportable accidents occurred on any
of its drill sites since the inception of the Pilanesberg Project in November
2004.
A drilling report for the quarter ending 30 September 2006 will be released
early October 2006. By mid-September, there were seven drill rigs in operation
and a further four are expected to be mobilised within the next month.
Pilanesberg Project
Future developments for the Pilanesberg Project programme are the upgrade of
the Mineral Resource categorisation from the Inferred to the Indicated status
during the remainder of calendar year 2006. Wesizwe expects the pre-
feasibility study to be commissioned before the end of 2006. Phase four, to
improve the confidence levels of the resource from Indicated to Measured
Resource category, is to be commenced in the first quarter and completed in the
second quarter of 2007. The BFS study is expected to be commissioned during the
course of 2007 in accordance with the existing programme.
Prospecting permits
During the half year, prospecting permits were obtained in terms of the Mineral
and Petroleum Resources Development Act over farms Grootfontein 225 JP and
Zandfontein 112 JP. The old order right prospecting permit over portion 11 of
Frischgewaagd 96 JQ was converted into a new order right. Currently the Company
is registering a new order prospecting permit over portion 1 of Frischgewaagd
96 JQ.
Private placement
Subsequent to 30 June 2006 as a result of the successful private placement, the
issued share capital has increased by 9,1 per cent to 388 789 152 ordinary
shares.
The shareholders at the 2005 annual general meeting placed the equivalent of 15
per cent of the issued share capital under the control of the directors to
issue for cash. The private placement allotments were made under this general
authority. The shareholders at the annual general meeting held on 8 September
2006 again voted to place 15 per cent of the Company"s issued number of shares
under the control of the directors to make issues for cash in accordance with
the JSE Limited"s Listings Requirements to meet future operational needs of the
Company.
Financial
During the period under review, the Company spent R9,2 million (2005: R10,4
million) on exploration activities and R6,2 million on operating expenses
(2005: R23,0 million). The former expense has been capitalised whereas the
latter charged to the income statement. A term repayment of R3,0 million was
made on a loan. Total net operating cash outgoings for the six months were
R15,4 million (2005: R33,7 million). Cash resources at 30 June 2006 were R7,3
million (2005: R39,0 million).
At the date of this report cash and cash equivalents amounted to R62,9 million.
The loss for the six months under review totals R6,6 million (2005: R19,4
million). Operating expenses were well controlled at R6,5 million (2005: R19,3
million). However, these expenses are not comparable from the prior reporting
period as contractual payments amounting to R11,7 million were made to the
Bakubung-Ba-Ratheo community for the establishment of the Bakubung-Ba-Ratheo
Economic Development Trust and other expenses were incurred for the
establishment of the Company. Finance costs of R166 000 were incurred compared
to R257 000 in the 2005 period.
Finance income of R213 000 was earned during the half year under review whereas
R117 000 was earned on surplus funds derived from fund raising in the prior
period. The basic loss per share for the period was 1,84 cents per share (2005:
5,68 cents per share). As mentioned in our annual results announcement, it is
important in reading these results to note that by their nature, exploration
companies do not generate operating income. The reported loss therefore
represents the net operating expenses for the period, which is met out of
existing cash resources and future capital raising as the Company derives no
income from current operating activities. This state will persist until such
time a mine is brought into operation.
During May 2006, the Company drew down the full R10,0 million bridging loan
provided by Abante Capital (Proprietary) Limited. Notwithstanding that the
terms of this loan are yet to be determined finance cost has been accrued
during the period under review at prime plus 3 percent. Repayment of this loan
is anticipated by mid 2007. There is also an additional term loan of R15,3
million provided by Ledig Minerale (Proprietary) Limited and repayable during
2007. At 30 June 2006 interest bearing loans and borrowings totalled R26,9
million (2005: R26,0 million).
Financial: Future
The funds raised by the private placement will be used for accelerating the
existing Pilanesberg Project exploration programme to BFS. As previously
mentioned by mid-September 2006 there were seven drill rigs on location and a
further four have been secured to commence operations during October 2006.
Wesizwe intends to continue to follow its progressive capital raising programme
utilising the recent shareholder authority placing another tranche of unissued
shares under the control of the directors equating to 15 per cent of the
Company"s issued number of shares. The placement of these unissued shares will
provide funding for the Company"s continuing exploration, evaluation, and
drilling activities plus operational expenditure.
The nature of exploration companies requires a different perspective on going
concerns compared to the classical business. Exploration companies do not
generate income from operations and are dependent upon the raising of capital
or loans to fund their operations until a mine can be brought into production.
As a result of the successful fund raising campaign the directors are confident
that there will be no major concerns on raising sufficient funds to meet the
challenge of going concern funding requirements. The Company operations, should
this prove to be necessary, can be drastically modified at short notice.
The commissioning of the BFS and the undertaking of a 3 dimensional seismic
survey during the latter half of 2007 will need to be considered separately to
the above requirements and shareholder authority will be sought to raise the
funds required.
Prospects
The Company continues to be satisfied with the exploration results to date and
has every confidence that it is well on-track to continue upgrading the Mineral
Resources from Inferred to Indicated on the farms Frischgewaagd and Ledig
during the remainder of 2006.
Directorate
Mesdames TE Skweyiya and L Maloney and Mr JC Williams who retired by rotation
at the annual general meeting held on 8 September 2006 were re-elected
directors of the Company. Mr DN Campbell resigned as a director on 15 September
2006.
On behalf of the board
TE Skweyiya (Mrs) MH Solomon
Chairperson Chief Executive Officer
Johannesburg
22 September 2006
Directors: TE Skweyiya* (Mrs) (Chairperson),
MH Solomon (Chief Executive Officer), WM Eksteen**,
L Maloney* (Mrs), EM Monnakgotla*, DJ Phologane*, JC Williams*
* Non-executive directors
** Independent non-executive director.
Company Secretary: RH Phillips
Registered office: Second floor, AMB Capital, 18 Fricker Road, Illovo 2196
Wesizwe Platinum Limited ("the Company" or "Wesizwe")
(Incorporated in the Republic of South Africa)
(Registration number 2003/020161/06)
JSE code: WEZ ISIN: ZAE000075859
Sponsors: Investec Bank Limited
Web site: http://www.wesizwe.com
Disclaimer: Forward looking statements
Certain statements included in this report constitute "forward looking
statements" that are not profit forecasts or estimates in any way as defined by
JSE Listings Requirements. Such forward looking statements involve known and
unknown risks, uncertainties and other factors that may cause the actual
results, performance or achievements of Wesizwe, or of the platinum mining
industry, to be materially different from future results, performance or
achievements expressed or implied by those forward looking statements. Wesizwe
is subject to the effect of changes in platinum group metals prices, currency
and the risks involved in mining operations.
Date: 27/09/2006 02:15:32 PM Produced by the JSE SENS Department
