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BPL
BPL
Barplats - Consolidated financial statements of Eastern Platinum Limited
Barplats Investments Limited
Incorporated in the Republic of South Africa
(Reg. no. 1987/004830/06)
(ISIN: ZAE000028692)
JSE code: BPL
("Barplats" or "the company")
Consolidated financial statements of Eastern Platinum Limited September 30, 2006
(Unaudited)
Eastern Platinum Limited
Consolidated statements of operations and deficit
three month periods ended September 30,
(Expressed in thousands of Canadian dollars, except share and
per share amounts)
(Unaudited)
2006 2005
$ $
Revenue 25,450 -
Cost of operations
Production costs (17,103) -
Depletion and depreciation (2,972) -
(20,075) -
Income before undernoted items 5,375 -
Expenses
General and administrative 3,752 754
Stock-based compensation 56 19
3,808 773
Operating income (loss) 1,567 (773)
Other income (expense)
Interest income 1,899 347
Interest expense (1,448) -
Foreign exchange (loss) gain
(4,190) 4
Loss before income taxes and (2,172) (422)
other item
Recovery of future income taxes 403 -
Non-controlling interests (Note (710) -
8)
Net loss for the period (2,479) (422)
Deficit, beginning of period (43,955) (29,531)
Deficit, end of period (46,434) (29,953)
Basic and diluted loss per share (0.00) (0.01)
Weighted average number of common
shares
outstanding 514,337,681 84,793,863
Consolidated balance sheets
(Expressed in thousands of Canadian dollars)
(Unaudited)
September June 30,
30,
2006 2006
$ $
Assets
Current assets
Cash and cash equivalents 21,792 50,798
Short-term investments 69,857 83,386
Receivables (Note 3) 19,584 14,446
Inventories (Note 4) 10,889 1,871
122,122 150,501
Loan receivable (Note 5) 9,691 -
Property, plant and 588,021 600,739
equipment (Note 6)
Refining contract 15,298 16,718
Other assets 1,002 458
736,134 768,416
Liabilities
Current liabilities
Accounts payable and accrued 30,313 16,128
liabilities
Short-term debt 12,386 28,761
42,699 44,889
Asset retirement obligation 3,542 3,665
Future income taxes 133,069 140,006
179,310 188,560
Non-controlling interests 15,848 15,120
(Note 8)
Shareholders" equity
Share capital (Note 7) 672,143 668,453
Contributed surplus (Note 8,130 8,095
7)
Currency translation (92,863) (67,857)
adjustment (Note 9)
Deficit (46,434) (43,955)
540,976 564,736
736,134 768,416
Approved by the Board
(Signed) David Cohen
David Cohen, Director
(Signed) Ian Rozier
Ian Rozier, Director
Consolidated statements of cash flows
three month periods ended September 30,
(Expressed in thousands of Canadian dollars)
(Unaudited)
2006 2005
$ $
Operating activities
Net loss for the period (2,479) (422)
Items not involving cash
Accretion 122 -
Depletion and depreciation 2,972 7
Stock-based compensation 56 19
Foreign exchange gain 2,549 -
Future income tax recovery (403) -
Non-controlling interests 710 -
3,527 (396)
Net changes in non-cash working
capital items
Receivables (5,802) (208)
Inventories (9,960) -
Accounts payable and accrued 14,199 247
liabilities
1,964 (357)
Financing activity
Repayment of short-term debt (16,661) -
financing
Investing activities
Issuance of debt (Note 5) (9,691) -
Acquisition of interest in (6,165) -
Afriminerals (Pty) Ltd. (Note 6 (c))
Short-term investments 12,905 600
Property, plant and equipment
expenditures, net of
related accounts payable (11,343) -
Deferred acquisition costs and
intangible assets
incurred - (405)
(14,294) 195
Effect of exchange rate changes on (15) -
cash and cash equivalents
Decrease in cash and cash (29,006) (162)
equivalents
Cash and cash equivalents, 50,798 1,572
beginning of period
Cash and cash equivalents, end 21,792 1,410
of period
Cash and cash equivalents are
comprised of
Cash in bank 9,365 1,410
Short-term money market 12,427 -
instruments
21,792 1,410
Supplementary cash flow
information
Interest paid 313 -
Income taxes paid - -
During the three months ended September 30, 2006, the Company issued 3,000,000
common shares with a value of $3.7 million for the acquisition of the interest
in Afriminerals (Pty) Ltd. (Note 6 (c)).
Notes to the consolidated financial statements
September 30, 2006
(Tabular amounts expressed in thousands of Canadian dollars, except share and
per share amounts)
(Unaudited)
1. Nature of operations
Eastern Platinum Limited (the "Company") is focused on the exploration,
development and exploitation of platinum group metal ("PGM") properties.
Properties may be subject to undisclosed prior agreements or transfers and title
may be affected by undetected defects.
2. Basis of presentation
These unaudited interim financial statements have been prepared in accordance
with Canadian generally accepted accounting principles for interim financial
statements. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, the accompanying financial
information reflects all adjustments, consisting primarily of normal recurring
adjustments, which are, in the opinion of management, necessary for a fair
presentation of results for the interim periods. Operating results for the
three month period ended September 30, 2006 are not necessarily indicative of
the results that may be expected for the year ending June 30, 2007. These
interim consolidated financial statements follow the same accounting policies as
the audited consolidated financial statements of the Company for the year ended
June 30, 2006. Accordingly, these interim consolidated financial statements
should be read in conjunction with the Company"s 2006 annual audited
consolidated financial statements and notes thereto.
3. Receivables
September June 30,
30,
2006 2006
$ $
Trade receivables, net of advances 18,179 12,888
Other receivables 1,135 1,179
Refundable taxes 169 112
Prepaid expenses 101 267
19,584 14,446
4. Inventories
September June 30,
30,
2006 2006
$ $
Consumables 1,185 777
Ore and concentrate 9,704 1,094
10,889 1,871
5. Loan receivable
During the current quarter, the Company (through a wholly-owned subsidiary)
purchased a loan held by Nedbank Capital in favour of Gubevu Consortium
Investment Holdings (Pty) Ltd. ("Gubevu"), Barplats" minority shareholder and
Black Economic Empowerment partner, under the same commercial terms and
conditions as the Nedbank Capital loan. The debt was purchased for $9.5 million
and is a demand note with interest accruing at the floating South African prime
rate (September 30, 2006 - 11.5%).
6. Property, plant and equipment
September June 30,
30,
2006 2006
Accumulated
depreciation/ Net book Net book
Cost depletion value value
$ $ $ $
Mining plant and 86,363 2,883 83,480 80,634
equipment
Mineral properties
Crocodile River Mine 109,112 1,820 107,292 115,608
(a)
Kennedy"s Vale Project 284,106 - 284,106 303,571
(b)
Spitzkop PGM Project 85,776 - 85,776 73,640
(c)
Mareesburg JV (d) 27,284 - 27,284 27,209
Other property, plant
and
equipment 114 31 83 77
592,755 4,734 588,021 600,739
(a) Crocodile River Mine ("CRM")
CRM is located on the eastern portion of the western limb of Bushveld Igneous
Complex ("BIC"). The Maroelabult and Zandfontein sections are currently in
production with the Crocette deposit and other potential near-surface
opportunities being in the development stages.
(b) Kennedy"s Vale Project ("KV")
KV is located on the eastern limb of the BIC, near Steelpoort in the Province of
Mpumalanga. It comprises PGM mineral rights on five farms in the Steelpoort
Valley.
(c) Spitzkop PGM Project
The Company holds a 50% direct joint venture interest in the Spitzkop PGM
Project ("Spitzkop Project") along with a 37% indirect interest in Spitzkop and
on August 22, 2006 it acquired a 49% interest in South African, Black Economic
Empowerment ("BEE") company, Afriminerals (Pty) Ltd ("Afriminerals").
Afriminerals" net assets consist wholly of a 26% shareholding in Spitzkop
Platinum (Pty) Ltd. ("Spitzplats"), and is the Company"s joint venture partner
on the Spitzkop Project. The balance of the shares in Afriminerals are owned by
a consortium that includes companies and organizations representing Historically
Disadvantaged South Africans ("HDSA"s"). Total consideration paid to acquire
the 49% shareholding in Afriminerals was US$5.5 million and 3,000,000 shares of
the Company.
6. Property, plant and equipment (continued)
(c) Spitzkop PGM Project (continued)
As part of the overall transaction the Company has an obligation to either
finance, or organize, project financing for Afriminerals for its share of
capital costs for the development of the mine at Spitzkop. Such financing will
be repaid from the proceeds of initial production attributable to Afriminerals.
(d) Mareesburg JV
The Company entered into an agreement dated January 27, 2004 to participate in a
50:50 joint venture with Lion"s Head Platinum (Pty) Ltd. ("LHP") to purchase the
mineral rights on the farm Mareesburg 8JT from Samancor Limited. The Company
then entered into two agreements dated April 26, 2004 to acquire a 100% interest
in Royal Anthem ("RA").
RA holds a 51% ownership interest in LHP. Following the amalgamation, the
Company holds indirectly a 75.5% interest in the Mareesburg project.
7. Share capital
(a) Authorized
Unlimited number of preferred redeemable, voting, non-participating shares
without nominal or par value
Unlimited number of common shares with no par value
(b) Issued
Number of
common Contributed
shares Amount surplus
$ $
Balance, June 30, 2006 513,228,985 668,453 8,095
Issued for acquisition
of
Afriminerals (Pty) Ltd. 3,000,000 3,690 -
Stock option expense of
subsidiary, net of
non-controlling interest
portion of $21,000 - - 35
Balance, September 30, 516,228,985 672,143 8,130
2006
(c) Stock options
During the three month period ended September 30, 2006, the Company cancelled
92,500 stock options. In addition, during the same period no stock options were
granted or exercised.
7. Share capital (continued)
(c) Stock options (continued)
The following table summarizes information concerning outstanding and
exercisable options at September 30, 2006:
Options Options Expiry
Exercise
price date
outstanding exercisable
$
2,775,000 2,775,000 1.70 May 25, 2007
175,000 175,000 1.70 January 14, 2008
625,000 625,000 0.56 November 5, 2008
312,500 312,500 1.00 August 26, 2009
37,500 37,500 1.12 September 17, 2009
13,125,000 12,191,667 1.70 May 24, 2011
17,050,000 16,116,667
(d) Share purchase warrants
During the three months ended September 30, 2006, no share purchase warrants
were issued, exercised or cancelled.
The following table summarizes information concerning outstanding warrants at
September 30, 2006:
Number of Expiry
Exercise
warrants price date
$
3,900,000 1.50 March 18, 2007
11,373,500 2.40 May 11, 2007
1,364,820 1.80 May 11, 2007
11,361,054 2.00 April 22, 2008
59,999,996 1.80 March 28, 2009
87,999,370
8. Non-controlling interests
The Company holds an indirect interest in Barplats of 69.0% (June 2006 - 69.0%).
The non-controlling interests are comprised of the following:
September June 30,
30,
2006 2006
$ $
Balance, beginning of period 15,120 -
Non-controlling interests" share
of net assets at
acquisition date (Note 3) - 11,738
Non-controlling interests" share
of income in
Barplats 710 48
Non-controlling interests" share
of contributed
surplus arising from stock options and
cumulative
translation adjustment for the 18 -
period
Increase in non-controlling
interest arising from
share issuances in Barplats - 3,334
15,848 15,120
9. Currency translation adjustment
$
Balance, June 30, 2006 (67,857)
Translation adjustments for the (25,006)
period
Balance, September 30, 2006 (92,863)
The Company operates in two functional currencies: Canadian dollar and South
African Rand. Translation gains or losses on the consolidation of the financial
statements of self-sustaining operations are accumulated in the currency
translation adjustment account on the consolidated balance sheet. Translation
adjustments arise as a result of fluctuations in foreign currency exchange
rates. The currency translation adjustment for the three month period ending
September 30, 2006 resulted from the 6% weakening of the South African Rand
against the Canadian dollar.
10. Related party transactions
(a) The Company incurred the following expenses, on a cost recovery basis, with
companies and individuals related by way of directors and/or officers in common:
Three months ended
September 30,
2006 2005
$ $
Consulting fees 100 60
Directors" fees 58 30
Management fees 587 30
Rent 18 18
(b) Amounts due to related parties are unsecured, non-interest bearing and due
on demand. Accounts payable at September 30, 2006 included $441,664 (June 30,
2006 - $5,000) which were severance costs due to a director of $400,000 and
directors" fees and expenses of $41,664.
11. Commitments
The Company has committed to capital expenditures through its indirect
investment in Barplats of approximately $29.3 million (R202.8 million) as at
September 30, 2006.
12. Contingency
The current mineral rights permit for the Mareesburg property expired on April
29, 2005. While an application from old order rights to new order rights has
been submitted, a renewed permit has not yet been issued. The Company believes
that it has complied with all of the requirements of the South African
Department of Minerals and Energy ("DME") and that the DME will renew this
permit.
13. Segmented information
(a) Operating segment - The Company"s operations are primarily directed towards
the acquisition, exploration and production of PGMs in South Africa.
(b) Geographic segments - The Company"s assets as at September 30, 2006 and
June 30, 2006, and revenues and expenses by geographic areas for the three month
periods ended September 30, 2006 and 2005 are as follows:
September 30, 2006
South Canada Total
Africa
$ $ $
Property, plant
and
equipment 587,996 25 588,021
Total assets 665,263 70,871 736,134
Property, plant
and
equipment 11,343 - 11,343
expenditures
June 30, 2006
South Canada Total
Africa
$ $ $
Property, plant
and
equipment 600,725 14 600,739
Total assets 640,617 127,799 768,416
Property, plant
and
equipment 6,444 - 6,444
expenditures
Three months ended September 30, 2006
South Canada Total
Africa
$ $ $
Revenues 25,450 - 25,450
Production costs (17,103) - (17,103)
Depletion and (2,972) - (2,972)
depreciation
Expenses (2,707) (1,101) (3,808)
Interest income 935 964 1,899
Interest expense (1,448) - (1,448)
Foreign exchange (4,029) (161) (4,190)
loss
Loss before income
taxes
and other item (1,874) (298) (2,172)
13. Segmented information (continued)
(b) (continued)
Three months ended September 30, 2005
South Canada Total
Africa
$ $ $
Revenues - - -
Production costs - - -
Depletion and - - -
depreciation
Expenses (41) (732) (773)
Interest income - 347 347
Foreign exchange 1 3 4
gain
Loss before
income taxes
and other item (40) (382) (422)
For the three months ended September 30, 2006, 100% of revenue was to one
customer and as at September 30, 2006, 97% of trade receivables was from one
customer.
Date: 16/11/2006 08:16:37 AM Produced by the JSE SENS Department
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