| Mon 26 Feb 2007, 16:22 | | ELD - Eland Platinum Holdings Limited - Unaudited |
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ELD
ELD
ELD - Eland Platinum Holdings Limited - Unaudited Condensed Consolidated Interim
Results for the Twelve Months ended 31 December 2006
Eland Platinum Holdings Limited
Incorporated in the Republic of South Africa
(Reg no: 2005/029957/06)
(ISIN: ZAE000078655)
JSE code: ELD
`Eland Platinum`
Unaudited Condensed Consolidated Interim Results
for the Twelve Months ended 31 December 2006
Condensed Income Statement
(R thousand) Note Twelve months Six months From date of
ended 31 ended 31 incorporation
December 2006 December200 to 31
6 December 2005
Revenue - - -
Cost of sales - - -
Gross profit - - -
Other operating 63 63 -
income
Administrative and 2 (39 642) (20 042) (3 245)
other operating
expenses
Operating loss before (39 579) (19 979) (3 245)
financing
income/(costs) and
taxation
Net finance 31 241 20 069 (194)
income/(costs)
(Loss) / Profit (8 338) 90 (3 439)
before tax
Income tax expense 3 (12 608) (7 754) (64)
Loss for the period (20 946) (7 664) (3 503)
Attributable to:
Equity holders of the (20 946) (7 664) (3 503)
parent
Minority interest - - -
Loss for the period (20 946) (7 664) (3 503)
Basic loss per share 4 (35.5) (9.6) (52.5)
(cents)
Diluted loss per 4 (35.5) (9.6) (52.5)
share (cents)
Headline loss per 4 (35.5) (9.6) (52.5)
share (cents)
Condensed Balance Sheet
(R thousand) Note 31 December 31 December
2006 2005
Assets
Non-current assets 5 352 531 123 895
Current assets 6 384 934 51 397
Total assets 737 465 175 292
Equity and
liabilities
Capital and reserves 706 674 105 324
Non-current 7 6 882 -
liabilities
Current liabilities 8 23 909 69 968
Total equity and 737 465 175 292
liabilities
Condensed Cash Flow Statement
(R thousand) Twelve months Six months From date of
ended 31 ended 31 incorporation
December2006 December200 to 31
6 December 2005
Cash flows from operating 1 162 42 866 (14 668)
activities
Cash flows from investing (284 798) (257 585) (62 394)
activities
Cash flows from financing 626 659 6 882 111 346
activities
Net increase in cash and 343 023 (207 837) 34 284
cash equivalents
Cash and cash equivalents 34 284 585 144 -
at the beginning of the
period
Cash and cash equivalents 377 307 377 307 34 284
at the end of the period
Condensed Statement of Changes in Shareholders` Equity
(R thousand) Issued Share Accumulated Minority Total
Capital Premium Deficit Interest
Shares issued 345 111 265 - - 111 610
Share issue expenses - (2 783) - - (2 783)
Minority - - - - -
shareholders`
interest
Loss for the period - - (3 503) - (3 503)
Balance at 31 345 108 482 (3 503) - 105 324
December 2005
Shares issued 319 649 115 - - 649 434
Share issue expenses - (27 138) - - (27 138)
Minority - - - - -
shareholders`
interest
Loss for the period - - (20 946) - (20 946)
Balance at 31 664 730 459 (24 449) - 706 674
December 2006
Notes
1 The principal accounting policies used by Eland Platinum Holdings Limited and
its subsidiary companies (`the group`) are in accordance with International
Financial Reporting Standards (`IFRS`) of the International Accounting Standards
Board (`IASB`) and the South African Companies Act, 61 of 1973 (as amended), and
are, except as noted below, consistent with those applied in the financial
statements for the period ended 31 December 2005. These interim financial
statements have been prepared in accordance with IAS 34 - Interim Financial
Reporting, and have not been reviewed or audited by the group`s auditors.
The comparative figures are for the period from the date of incorporation, 26
August 2005, to 31 December 2005. The income statement and cash flow results for
the six months ended 31 December 2006 have also been disclosed.
During the period the group adopted IFRS 6 - Exploration for and Evaluation of
Mineral Resources (`IFRS 6`). In accordance with this standard, expenditure
incurred in the exploration for and evaluation of mineral resources has been
capitalised to an intangible asset and the group will continue with this
treatment of costs until such time as the technical feasibility and commercial
viability of extracting the mineral resource is demonstrable. The 2005 results
have been restated to comply with IFRS 6 (see note 5).
2 Administrative and other operating expenses for the twelve-month period
include:
* Employment costs of R18.3 million (2005: R0.7 million).
* Consulting and professional fees of R4.8 million (2005: R2.0 million).
* Investor relations costs of R2.9 million (2005: R Nil), which mainly comprise
that portion of the listing costs that were not written off against share
premium.
* Mining and exploration costs that were not capitalised of R2.9 million (2005:
R Nil).
* Operating lease costs of R2.0 million (2005: R Nil).
* Insurance costs of R1.7 million (2005: R Nil).
3 Income tax expense comprises current taxation expense of R9.6 million (2005:
R0.02 million), deferred tax credits of R0.4 million (2005: R Nil) and a
secondary tax on companies (`STC`) of R3.4 million (2005: R0.04 million).
4 Loss per share:
The calculation of basic, diluted and headline loss per share is based on the
loss for the twelve month period of R20.9 million (2005: R3.5 million).
The basic and diluted weighted average number of shares in issue increased
during the period to 58 925 053 (2005: 6 668 465).
5 Capital expenditure for the twelve-month period under review amounted to
R228.7 million (2005: R123.9 million) of which R25.9 million (2005: R123.8
million) has been capitalised to an intangible asset in terms of IFRS 6. R149
million of the total intangible asset of R150 million has been transferred to
mining assets as the technical feasibility and commercial viability of
extracting the mineral resource is now demonstrable. The remainder of the
intangible asset represents exploration costs related to the Merensky Reef where
the technical feasibility and commercial viability of extracting the mineral
resource is not yet demonstrable.
6 Current assets include:
* Cash of R377.3 million (2005: R34.3 million)
* Prepayments of R5.4 million (2005: R Nil)
* Value-added tax recoverable of R2.1 million (2005: R17.1 million)
7 Non-current liabilities include an environmental rehabilitation provision of
R6.8 million (2005: R Nil).
8 Current liabilities include:
* Trade payables - R11.9 million (2005: R5.9 million)
* Current taxation - R7.5 million (2005: R0.02 million)
* Provision for STC on accrued preference share dividends of R3.4 million
(2005: R0.04 million)
9 No dividends have been declared nor are any proposed for the period under
review.
10 The net asset value per share (cents) at 31 December 2006 is 1 064.6 (2005:
305.7).
Commentary
Six months of rapid progress
During the six months to 31 December 2006 rapid progress was made towards
development of the group`s Elandsfontein Platinum Mine (`Elandsfontein` or `the
mine`). The first blast to mark the start of open-pit production took place on
18 January 2007, just 17 months after the group was established and comfortably
within schedule.
During October 2006, a contract worth more than R600 million was signed with DRA
Mineral Projects (Pty) Limited for the supply of the mine`s 250 000tpm
concentrator and associated infrastructure. Early in November 2006 the open-pit
mining contract was awarded to MCC Contracts (Pty) Limited, the underground
development and mining contract to Shaft Sinkers Mining (Pty) Limited and the
concentrator operation contract to Minopex (Pty) Limited. It is particularly
pleasing that all of these companies, like the Eland Platinum group, have
impeccable Black Economic Empowerment (BEE) credentials.
The Elandsfontein bankable feasibility study, which Eland Platinum Mines (Pty)
Limited (`EPM`), a 65% subsidiary of Eland Platinum, conducted with input from
leading PGM (platinum, palladium, rhodium and gold) industry consultants, was
also completed in November 2006 and showed the mine to have robust economics and
solid cash flows. Using conservative long-term assumptions with platinum (Pt) at
USD950/oz, palladium (Pd) at USD300/oz, rhodium (Rh) at USD2 100/oz, gold (Au)
at USD500/oz and an exchange rate of R8:USD1, the ungeared, pre-tax discounted
cash flow analysis yields a net present value (NPV) of R2 050 million at a 10%
discount rate and an internal rate of return (IRR) of 27%. At current prices,
with Pt at USD1 225/oz, Pd at USD347/oz, Rh at USD6 025/oz, Au at USD677/oz and
an exchange rate of R7.06:USD1, the NPV (discounted at 10%) is R6 342 million
and the IRR, 58%.
On 21 December 2006 EPM was awarded a mining right covering both the original
Elandsfontein prospecting area, acquired from Rustenburg Platinum Mines Limited,
and the contiguous `triangle` land owned by the state. The granting of these
rights, just nine months from the date of application, bears testimony both to
the efficacy of South Africa`s new minerals legislation and the commitment of
the Department of Minerals and Energy (DME) to the growth and development of the
country`s resources sector.
In January 2007, the group announced the following SAMREC-compliant UG2 mineral
reserve estimate:
Elandsfontein Platinum Mine
UG2 Mineral Reserve Estimate
Tonnes True Grade Contained %Pt %Pd %Rh %Au
Classificati (Mt) thick (g/t 4E) Metal (Moz
on (m) 4E)
Proved 11.400 1.81 3.48 1.277 63 26 11 1
Probable 30.629 2.15 3.39 3.340 62 27 10 1
TOTAL 42.029 2.06 3.41 4.617 62 27 10 1
Note: Apparent inconsistencies between grades, tonnage and contained metal may
arise from rounding.
The above mineral reserve estimate represents a part of the mine`s resource
base, which consists of 165 Mt of PGM ore yielding 21.5 Moz @ 4.05gt (4E PGM)
after including the state `triangle` land.
In addition to the above, it was announced in January 2007 that the DME had
consented to the transfer to Eland Platinum of prospecting rights over the
Zilkaatsnek properties, which add approximately 1.5km of UG2 outcrop to the
mine`s resource base. Work has begun to determine the nature and extent of the
UG2 deposit on the Zilkaatsnek properties.
Financial
After accounting for administrative and other operating expenses of R39.6
million, net finance income of R31.2 million and taxation of R12.6 million, the
loss for the period was R20.9 million, equating to a headline loss per share of
35.5 cents. Revenue will be generated once the company begins concentrate
production.
Looking ahead
With open-pit mining now under way it is expected that some 600 000t of ore will
have been stockpiled in time for the commissioning of the concentrator in
October 2007. Open-pit mining will take place over the next five years at an
estimated steady state production rate of 160 000oz of 4E PGMs and a run-of-mine
(ROM) grade of approximately 3.00g/t 4E. The total open-pit operating cost is
estimated at R219/t (Q4 2006 terms).
Underground development will begin in December 2007 and by 2012 all ore
production, with an estimated ROM grade of 3.54 g/t 4E, will be from
underground. Also by 2012, metal production will have ramped up to a steady
state rate of approximately 270 000oz of 4E PGMs a year. The underground
operating cost is estimated at R279/t (Q4 2006 terms).
The total estimated capital required for the development of the mine to August
2008, including contingency and escalation, is R1 460 million. To the end of
December 2006 some R180 million had been spent on metallurgical plant progress
payments, long-lead items and site infrastructure. The balance comprises R970
million of capital expenditure and R310 million of working capital to fund the
metal pipeline. Some R177 million has been spent on acquisition, study and
related costs. Net equity of R731 million raised prior to and on listing of
Eland Platinum is funding construction currently. Project finance arrangements,
which are being concluded with Nedbank Capital, will be applied to fund
completion of the project. Some R292 million will be needed for sustaining
development over the 16-year mine planning horizon. This will be funded from
cash generated by ongoing operations.
The inclusion of the `triangle` area in Elandsfontein`s mining right, the mining
potential of the Zilkaatsnek properties, Elandsfontein`s as-yet undetermined
Merensky resource base and other acquisitions currently under consideration, are
all enhancing confidence that a growth target of 1 million PGM oz a year (4E) by
2015 is attainable.
On behalf of the board
Loucas Pouroulis
Chairman
David Salter
Managing Director
27 February 2007
Registered Office:
1st Floor, Eland Platinum House
The Braes
3 Eaton Avenue
Bryanston
South Africa
e: info@elandplats.com
(Postnet Suite 433, Private Bag X51, Bryanston 2021)
Transfer Secretaries:
Link Market Services South Africa (Pty) Ltd (formerly Ultra Registrars (Pty)
Ltd)
5th Floor, 11 Diagonal Street
Johannesburg 2001
South Africa
(PO Box 4844, Johannesburg 2000)
Sponsor: Nedbank Capital
Directors:
LC Pouroulis (chairman)*, Dr JD Salter (managing director)**, JA Clark (finance
director), JM Jansen van Vuuren, GY Ditodi+, Dr PM Maduna+, SR Ngwenya+, LS
Modise++, LX Mtumtum++
*Cypriot **British +non-executive, ++independent non-executive
Date: 26/02/2007 16:22:05 Produced by the JSE SENS Department.
