TIDMPPN
RNS Number : 0294E
Platmin Limited
31 March 2011
Platmin Limited
(A development stage company)
Consolidated Financial Statements
for the twelve months ended December 31, 2010
(Expressed in United States dollars, unless otherwise
stated)
Management's responsibility for financial reporting
The accompanying consolidated financial statements of Platmin
Limited were prepared by management in accordance with
International Financial Reporting Standards ("IFRS"). Management
acknowledges responsibility for the preparation and presentation of
the consolidated financial statements, including responsibility for
significant accounting judgments and estimates and the choice of
accounting principles and methods that are appropriate to the
Company's circumstances. The significant accounting policies of the
Company are summarized in Note 3 to the consolidated financial
statements.
Management has established systems of internal control over the
financial reporting process, which are designed to provide
reasonable assurance that relevant and reliable financial
information is produced.
The Board of Directors is responsible for reviewing and
approving the consolidated financial statements and for ensuring
that management fulfils its financial reporting responsibilities.
An Audit Committee assists the Board of Directors in fulfilling
this responsibility. The members of the Audit Committee are not
officers of the Company. The Audit Committee meets with management
as well as with the independent auditors to review the internal
controls over the financial reporting process, the consolidated
financial statements and the auditors' report. The Audit Committee
also reviews the Annual Report to ensure that the financial
information reported therein is consistent with the information
presented in the financial statements. The Audit Committee reports
its findings to the Board of Directors for its consideration in
approving the consolidated financial statements for issuance to the
shareholders.
Management recognizes its responsibility for conducting the
Company's affairs in compliance with established financial
standards, and applicable laws and regulations, and for maintaining
proper standards of conduct for its activities.
Thomas Graham Dale Wayne Gregory Koonin
Chief Executive Officer Chief Financial Officer
March 29, 2011
Audit report
The audit report issued by PricewaterhouseCoopers LLP can be
viewed on www.sedar.com
Consolidated statement of financial position
as at December 31, 2010
(Expressed in U.S. dollars, unless otherwise stated)
Dec 31, Dec 31,
2010 2009
Notes $000 $000
ASSETS
Non-current assets
Mining assets 4 49,886 43,454
Intangible assets 5 14,019 9,348
Property, plant and equipment 6 578,550 422,471
Loans receivable 7 63 50
Restricted cash investments and guarantees 8.2 84,471 7,163
--------------------------------------------- ---------- --------
Total non-current assets 726,989 482,486
--------------------------------------------- ---------- --------- --------
Current assets
Inventories 9 11,285 9,849
Accounts and other receivables 10 46,877 28,452
Restricted cash 8.2 135,131 -
Cash and cash equivalents (unrestricted) 8.1 188,596 29,375
--------------------------------------------- ---------- --------- --------
Total current assets 381,889 67,676
--------------------------------------------- ---------- --------- --------
TOTAL ASSETS 1,108,878 550,162
============================================= ========== ========= ========
EQUITY AND LIABILITIES
Equity attributable to owners of the
parent
Share capital 11 756,579 425,535
Accumulated deficit (90,419) (35,002)
Other components of equity 198,352 82,587
--------------------------------------------- ---------- --------- --------
864,512 473,120
Non-controlling interests 12 (30,116) (20,091)
--------------------------------------------- ---------- --------- --------
Total equity 834,396 453,029
--------------------------------------------- ---------- --------- --------
Non-current liabilities
Long-term borrowings 13 4,710 3,817
Finance lease liability 14 9,410 12,282
Decommissioning and rehabilitation
provision 15 70,705 52,744
--------------------------------------------- ---------- --------- --------
Total non-current liabilities 84,825 68,843
--------------------------------------------- ---------- --------- --------
Current liabilities
Trade payables and accrued liabilities 16 20,747 22,144
Revolving commodity facility 17 3,468 5,854
Current portion of finance lease
liability 14 291 292
Current portion of long-term borrowings 18 31,923 -
Convertible debenture 19 133,228 -
--------------------------------------------- ----------
Total current liabilities 189,657 28,290
--------------------------------------------- ---------- --------- --------
Total liabilities 274,482 97,133
--------------------------------------------- ---------- --------- --------
TOTAL EQUITY AND LIABILITIES 1,108,878 550,162
============================================= ========== ========= ========
NATURE OF OPERATIONS AND GOING CONCERN 1
CONTINGENCIES AND COMMITMENTS 24
The accompanying notes are an integral part of the consolidated
financial statements
Consolidated statement of income
for the twelve months ended December 31, 2010
(Expressed in U.S. dollars, unless otherwise stated)
For the year ended For the period ended
Dec 31, Dec 31,
2010 2009
Notes $ 000 $ 000
Operating expenses 21 (23,539) (13,693)
Other (expenses) / income 21 (36,883) 3,233
Finance income 3,357 4,402
Finance costs (8,377) (5,057)
-------------------------- ------ ------------------- ---------------------
Loss before taxation (65,442) (11,115)
Income tax expense 20 - -
-------------------------- ------ ------------------- ---------------------
LOSS FOR THE PERIOD (65,442) (11,115)
========================== ====== =================== =====================
(Loss) / income
attributable to:
Owners of the parent (55,417) (7,642)
Non-controlling interest (10,025) (3,473)
-------------------------- ------ ------------------- ---------------------
(65,442) (11,115)
========================== ====== =================== =====================
Loss per share (in
currency units)
attributable to owners of
the parent:
Basic and diluted 22 (0.09) (0.02)
-------------------------- ------ ------------------- ---------------------
The accompanying notes are an integral part of the consolidated
financial statements
Consolidated statement of comprehensive income
for the twelve months ended December 31, 2010
(Expressed in U.S. dollars, unless otherwise stated)
Dec 31, Dec 31,
2010 2009
Notes $ 000 $ 000
Loss for the period (65,442) (11,115)
Other comprehensive income / (loss) - net of tax 83,704 (109,688)
------------------------------------------------------- --------- ----------
Exchange differences on translation from functional
to presentation currency 83,704 (109,688)
Income tax relating to components of other
comprehensive income - -
---------------------------------------------- ------- --------- ----------
TOTAL COMPREHENSIVE INCOME / (LOSS) FOR THE PERIOD 18,262 (120,803)
======================================================= ========= ==========
Total comprehensive (loss) / income
attributable to:
Owners of the parent 28,287 (117,330)
Non-controlling interest (10,025) (3,473)
------------------------------------------------------- --------- ----------
18,262 (120,803)
====================================================== ========= ==========
The accompanying notes are an integral part of the consolidated
financial statements
Consolidated statement of changes in shareholders' equity
for the twelve months ended December 31, 2010
(Expressed in U.S. dollars, unless otherwise stated)
Equity attributable to the shareholders
Share Foreign
Based Currency
Share Payment Translation Non-controlling Total
Capital Deficit Reserve Warrants Reserve Subtotal interest Equity
$ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000
Balance at
March 1,
2009 366,180 (27,360) 7,329 846 (38,114) 308,881 (16,618) 292,263
Shares issued 59,355 - - - - 59,355 - 59,355
Loss for the
period - (7,642) - - - (7,642) (3,473) (11,115)
Stock based
compensation - - 2,838 - - 2,838 - 2,838
Currency
translation
adjustment - - - - 109,688 109,688 - 109,688
Balance at
December 31,
2009 425,535 (35,002) 10,167 846 71,574 473,120 (20,091) 453,029
Shares issued 331,044 - - - - 331,044 - 331,044
Loss for the
period - (55,417) - - - (55,417) (10,025) (65,442)
Stock based
compensation
* - - 32,061 - - 32,061 - 32,061
Currency
translation
adjustment - - - - 83,704 83,704 - 83,704
Balance at
December 31,
2010 756,579 (90,419) 42,228 846 155,278 864,512 (30,116) 834,396
================= ============= ========= ======== ========= ============ ========= ================ =========
Note 11 (b) Note 12
* The movement includes stock based compensation of US$4.158
million relating to the vesting of share options and US$27.903
million relating to the fair value of the convertible debenture
issued.
The accompanying notes are an integral part of the consolidated
financial statements
Consolidated statement of cashflows
for the twelve months ended December 31, 2010
(Expressed in U.S. dollars, unless otherwise stated)
For the For the
year ended period ended
Dec 31, Dec 31,
2010 2009
Notes $ 000 $ 000
Cash flows from operating activities
---------------------------------------- ------ ------------ --------------
Cash receipts from customers 67,030 12,136
Cash paid to suppliers and employees (174,745) (116,553)
---------------------------------------- ------ ------------ --------------
Cash (utilized in) / generated from
operations (107,715) (104,417)
Interest received / (paid) 171 3,069
Income taxes paid - (16)
---------------------------------------- ------ ------------ --------------
Net cash (used in) / generated from
operating activities (107,544) (101,364)
---------------------------------------- ------ ------------ --------------
Cash flows from investing activities
---------------------------------------- ------ ------------ --------------
Purchase of property, plant and
equipment (8,858) (55,162)
Proceeds from sale of property, plant
and equipment - -
Additions to intangible assets (3,697) (1,638)
Increase in rehabilitation investment (67,231) (3,170)
Increase in deferred exploration
expenses (1,512) (2,404)
---------------------------------------- ------ ------------ --------------
Net cash used in investing activities (81,298) (62,374)
---------------------------------------- ------ ------------ --------------
Cash flows from financing activities
---------------------------------------- ------ ------------ --------------
(Decrease) in loans payable - (48,858)
(Decrease) in finance lease liability (3,937) (1,361)
(Decrease)/Increase in revolving
commodity facility (4,471) 5,270
Cost of debenture issue (1,020) -
Realised foreign exchange gains on
settlement of FEC's - 19,411
Increase in Promissory note 26,199 -
Proceeds from issue of shares 329,598 59,640
---------------------------------------- ------ ------------ --------------
Net cash generated from financing
activities 346,369 34,102
---------------------------------------- ------ ------------ --------------
Net (decrease) / increase in cash and
cash equivalents 157,527 (129,636)
Net foreign exchange differences 1,694 31,061
Cash and cash equivalents at the
beginning of the period 8.1 29,375 127,950
---------------------------------------- ------ ------------ --------------
Cash and cash equivalents at the end of
the period 8.1 188,596 29,375
======================================== ====== ============ ==============
The accompanying notes are an integral part of the consolidated
financial statements
Notes to the consolidated financial statements
for the twelve months ended December 31, 2010
1. Nature of operations and going concern
Platmin Limited (the "Company") and its subsidiaries (the
"Group") is a development stage Natural Resources Group engaged in
the acquisition, exploration and development of Platinum Group
Elements ("PGE") properties in the Republic of South Africa.
The Company was incorporated under the Canada Business
Corporation Act on May 29, 2003. The Company has continued as a
company under the Business Corporations Act of British Columbia,
Canada effective April 1, 2009. Its Common Shares are listed on the
Toronto Stock Exchange ("TSX") and the Alternative Investment
Market ("AIM") of the London Stock Exchange. The Company trades
under the symbol "PPN" on both exchanges. On July 22, 2009, the
Company listed on the Johannesburg Securities Exchange Limited
("JSE") with the symbol "PLN".
These consolidated financial statements have been prepared using
International Financial Reporting Standards ("IFRS") applicable to
a going concern, which contemplates the realization of assets and
settlement of liabilities in the normal course of business as they
become due.
The Group changed its financial year end from the last day of
February in each calendar year to the last day of December,
effective for the period ending December 31, 2009. As a result of
the change in year end, the comparative amounts are not directly
comparable with the current balances.
For the twelve months ended December 31, 2010 the Group incurred
a loss of US$65.442 million and as at December 31, 2010 had an
accumulated deficit of US$90.419 million. The Group is dependent on
the successful completion of the Pilanesberg Platinum Mines ("PPM")
to generate cash flows in order to fund its operations and pay debt
as it becomes due. Such circumstances may cast signifcant doubt as
to the ability of the Group to meet its obligations as they become
due and accordingly the appropriateness of the use of the
accounting principles applicable to a going concern.
The Group raised US$331.000 million in capital by way of a
private placement during May and November 2010, respectively and
had US$188.596 million in cash and cash equivalents at December 31,
2010 to fund development activities and meet its contractual
obligations.
The Company's financing efforts to date, while substantial, may
not be sufficient in and of themselves to enable the Company to
fund all aspects of its operations when taking into consideration
forecasted revenue streams based upon planned production.
Management expects that the Company will be able to secure the
necessary financing to meet the Company's requirements on an
ongoing basis. Nevertheless, there is no assurance that these
initiatives will be successful or sufficient. If the going concern
assumption were not appropriate for these consolidated financial
statements, then adjustments to the carrying values of the assets
and liabilities, the reported expenses and the statement of
financial position classifications, which could be material, may be
necessary.
2. Basis of presentation
-- Statement of compliance
The Group's consolidated annual financial statements were
prepared in accordance with IFRS as issued by the International
Accounting Standards Board ("IASB"). The annual financial
statements were approved by the Board of Directors on March 29,
2011.
-- Basis of measurement
The financial statements are prepared on the historical cost
basis except for the revaluation of certain financial
instruments.
-- Functional and presentation currency
The Group's functional currency, as determined at the transition
date of March 1, 2008, is the South African Rand ("ZAR"). The
consolidated financial statements are presented in US Dollars
("US$") which is the Group's presentation currency for purposes of
dual listing and foreign shareholders.
All financial information presented has been rounded to the
nearest thousand.
-- Use of estimates, assumptions and judgements
The preparation of financial statements in conformity with IFRS
requires management to make judgements, estimates and assumptions
that affect the application of accounting policies and the reported
amounts of assets, liabilities, income and expenses. Actual results
may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognised in the
period in which the estimates are revised and in any future periods
affected.
The primary areas in which estimates and judgements are applied
are as follows:
Determination of functional currency
In accordance with IAS 21 - The Effects of Changes in Foreign
Exchange Rates, management determined that the functional
currencies of Platmin Limited and its South African subsidiaries
are the South African Rand ("ZAR").
Determination of consolidation
Management applies significant judgement when determining
whether the Company should consolidate entities where percentage of
ownership is below 50%. These judgements include the Company's
power to:
- appoint or remove the majority of the members of the board of
directors; and
- cast the majority of votes at meetings of the board and
control of the entity.
Impairment of assets
The carrying value of goodwill, intangible assets and property,
plant and equipment for which the key assumptions and management
approach for determining these are described in the policy on
Impairment.
Inventory
Inventory is held in a wide variety of forms across the value
chain reflecting the stage of refinement. Prior to production as
final metal the inventory is always contained within a carrier
material. As such inventory is typically sampled and assays taken
to determine the metal content and how this is split by metal.
Measurement and sampling accuracy can vary quite significantly
depending on the nature of the vessels and the state of the
material. Management judgement, therefore, is also applied.
Rehabilitation costs
The Group assesses its mine rehabilitation provision annually.
Significant estimates and assumption are made in determining the
provision for mine rehabilitation as there are numerous factors
that will affect the ultimate liability payable. These factors
include estimates of the extent and costs of rehabilitation
activities, technological changes, regulatory changes, cost
increases, and changes in discount rates. Those uncertainties may
result in future actual expenditure differing from the amounts
currently provided. The provision at the reporting date represents
management's best estimate of the present value of the
rehabilitation costs anticipated to be incurred at the end of the
mine's life.
3. Accounting policies
The accounting policies set out below have been applied
consistently to all periods presented in these annual consolidated
financial statements.
-- Basis of consolidation
The consolidated financial statements comprise the accounts of
Platmin, the parent company and its controlled subsidiaries, after
the elimination of all material intercompany balances and
transactions.
The purchase method of accounting is used to account for the
acquisition of subsidiaries by the Group. The cost of an
acquisition is measured as the fair value of the assets given,
equity instruments issued and liabilities incurred or assumed at
the date of exchange, plus costs directly attributable to the
acquisition. Identifiable assets acquired and liabilities and
contingent liabilities assumed in a business combination are
measured initially at their fair values at the acquisition date,
irrespective of the extent of any non-controlling interest. The
excess of the cost of acquisition over the fair value of the
Group's share of the identifiable net assets acquired is recorded
as goodwill. If the cost of acquisition is less than the fair value
of the net assets of the subsidiary acquired, the difference is
recognised directly in the statement of income and comprehensive
income.
Subsidiaries
Subsidiaries are all entities (including special purpose
entities) over which the group has the power to govern the
financial and operating policies generally accompanying a
shareholding of more than one half of the voting rights. Where the
group does not directly hold more than one half of the voting
rights, significant judgement is used to determine whether control
exists. These significant judgements include assessing whether the
group can control the operating policies through the group's
ability to appoint the majority of directors to the board. The
existence and effect of potential voting rights that are currently
exercisable or convertible are considered when assessing whether
the group controls another entity. Subsidiaries are fully
consolidated from the date on which control is transferred to the
group until the date on which control ceases.
The accounts of subsidiaries are prepared for the same reporting
period as the parent entity, using consistent accounting policies.
Inter-company transactions, balances and unrealised gains on
transactions between Group companies are eliminated. Unrealised
losses are also eliminated. Accounting policies of subsidiaries
have been changed where necessary to ensure consistency with the
policies adopted by the Group. A list of subsidiaries appears in
Note 23.
Transactions and non-controlling interest
The group treats transactions with non-controlling interests as
transactions with equity owners of the group. For purchases from
non-controlling interests, the difference between any consideration
paid and the relevant share acquired of the carrying value of net
assets of the subsidiary is recorded in equity. Gains or losses on
disposals to non-controlling interests are also recorded in
equity.
-- Business combinations
The acquisition method of accounting is used to account for
business combinations by the group. The consideration transferred
for the acquisition of a business is the fair values of the assets
transferred, the liabilities incurred and the equity interests
issued by the group. The consideration transferred includes the
fair value of any asset or liability resulting from a contingent
consideration arrangement. Acquisition-related costs are expensed
as incurred. Identifiable assets acquired and liabilities and
contingent liabilities assumed in a business combination are
measured initially at their fair values at the acquisition date. On
an acquisition-by-acquisition basis, the group recognises any
non-controlling interest in the acquiree either at fair value or at
the non-controlling interest's proportionate share of the
acquiree's net assets. Subsequently, the carrying amount of
non-controlling interest is the amount of the interest at initial
recognition plus the non-controlling interest's share of the
subsequent changes in equity. Total comprehensive income is
attributed to non-controlling interest even if this results in the
non-controlling interest having a deficit balance.
The excess of the consideration transferred, the amount of any
non-controlling interest in the acquiree and the acquisition-date
fair value of any previous equity interest in the acquiree over the
fair value of the identifiable net assets acquired is recorded as
goodwill. If this is less than the fair value of the net assets of
the subsidiary acquired in the case of a bargain purchase, the
difference is recognised directly in the statement of comprehensive
income.
The Group has made an election in terms of IFRS 1 to apply the
requirements of IFRS 3 (Revised) - Business Combinations to all
business combinations with effective dates on or after March 1,
2008. The classification and accounting treatment of business
combinations with effective dates prior to March 1, 2008 has not
been reconsidered.
-- Common control transactions - premium and discount arising on
subsequent purchase from or sales to non controlling interests in
subsidiaries
Following the presentation of non-controlling interests in
equity any increases and decreases in ownership interests in
subsidiaries without a change in control are recognized as equity
transactions in the consolidated financial statements. Accordingly,
any premium or discount on subsequent purchases of equity
instruments from or sales of equity instruments to minority
interests are recognized directly in equity of the parent
shareholder.
Under Canadian GAAP, the Company previously recognized a premium
on subsequent purchases of equity instruments from non-controlling
interests as goodwill, and a premium or discount on subsequent
disposal of equity instruments to non-controlling interests were
taken to profit or loss as a capital item in the statement of
income and comprehensive income.
-- Functional and presentation currency
Items included in the financial statements of each of the
Group's entities are measured using the currency of the primary
economic environment in which the entity operates ("the functional
currency"). The Group's functional currency, as determined at the
transition date of March 1, 2008, is the South African Rand
("ZAR"). The consolidated financial statements are presented in US
Dollars ("US$") which is the Group's presentation currency for
purposes of dual listing and foreign shareholders.
Translation of transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions or valuation where items are re-measured. Foreign
exchange gains and losses resulting from the settlement of such
transactions and from the translation at period end exchange rates
of monetary assets and liabilities denominated in foreign
currencies are recognized in the statement of income and
comprehensive income.
Group companies
The results and financial position of all the Group entities
(none of which has the currency of a hyper-inflationary economy)
that have a functional currency different from the presentation
currency are translated into the presentation currency as
follows:
- assets and liabilities for each statement of financial
position presented are translated at the closing rate at the date
of that financial period end;
- income and expenses for each statement of income and
comprehensive income are translated at average exchange rates
(unless this average is not a reasonable approximation of the
cumulative effect of the rates prevailing on the transaction dates,
in which case income and expenses are translated at the rate on the
dates of the transactions);
- equity transactions are translated using the exchange rate at
the date of the transaction; and
- all resulting exchange differences are recognized as a
separate component of equity.
On consolidation, exchange differences arising from the
translation of functional to presentation, and of borrowings and
other currency instruments designated as hedges of such
investments, are taken to shareholders' equity.
Goodwill and fair value adjustments arising on the acquisition
of a foreign entity are treated as assets and liabilities of the
foreign entity and translated at the closing rate.
IAS 21 - The effects of Changes in Foreign Exchange Rates
differs from the Canadian GAAP equivalent, applied by the Group
until February 28, 2009. IAS 21 requires an entity to measure its
assets, liabilities, revenue and expenses in its functional
currency. It has been determined that as at the transition date of
March 1, 2008, the South African Rand ("ZAR") was the functional
currency of all entities in the Group. Prior to the adoption of
IFRS, the functional currency of Platmin Limited and Platmin
Resources Limited (BVI) was the US Dollar ("US$").
Under IAS 21, the assets and liabilities of the Group are
translated from the Group's functional currency ("ZAR"), to the
presentation currency at the reporting date. The income and
expenses are translated to the Group's presentation currency, which
is US$ at the average for the reporting period. Foreign currency
differences are recognized directly in other comprehensive income
within the foreign currency translation reserve.
-- Exploration and evaluation assets and development
expenditure
Exploration and evaluation costs, including the cost of
acquiring licenses, are capitalized as exploration and evaluation
assets on a project-by-project basis pending determination of the
technical feasibility and the commercial viability of the project.
The capitalized costs are presented as either tangible or
intangible exploration and evaluation assets according to the
nature of the assets acquired. Capitalised costs include costs
directly related to exploration and evaluation activities in the
area of interest. General and administrative costs are only
allocated to the asset to the extent that those costs can be
directly related to operational activities in the relevant area of
interest. When a license is relinquished or a project is abandoned,
the related costs are recognized in profit and loss
immediately.
Exploration and evaluation assets are assessed for impairment if
(i) sufficient data exists to determine technical feasibility and
commercial viability, and (ii) fact and circumstances suggest that
the carrying amount exceeds the recoverable amount (see
impairment).
The technical feasibility and commercial viability of extracting
a mineral resource is considered to be determinable when proven
reserves are determined to exist, the rights of tenure are current
and it is considered probable that the costs will be recouped
through successful development and exploitation of the area, or
alternatively by sale of the property. Upon determination of proven
reserves, intangible exploration and evaluation assets attributable
to those reserves are first tested for impairment and then
reclassified from exploration and evaluation assets to a separate
category within tangible assets. Expenditure deemed to be
unsuccessful is recognised in profit or loss immediately.
Upon transfer of "Exploration and evaluation costs" into "Mine
development", all subsequent expenditure on the construction,
installation or completion of infrastructure facilities is
capitalised within "Mine development". After production starts, all
assets included in "Mine development" are transferred to "Producing
Mines".
-- Mining properties
When further development expenditure is incurred in respect of a
mining property after the commencement of production, such
expenditure is carried forward as part of the mining property when
it is probable that additional future economic benefits associated
with the expenditure will flow to the entity. Otherwise such
expenditure is classified as a cost of production.
Depreciation is charged using the units-of-production method,
with separate calculations being made for each area of interest.
The units of production basis results in a depreciation charge
proportional to the depletion of proven and probable reserves.
Mining properties are tested for impairment in accordance with
the policy for impairment as set out below.
-- Intangible assets
Intangible assets that are acquired by the Group are stated at
cost less accumulated amortization and impairment losses.
Amortization is charged to profit and loss on a straight line
basis over the estimated useful lives of the intangible assets.
Useful life
Asset category (years)
Computer software 2
ERP Software 5
Water right 13
The estimated useful life for the water right is 13 years based
on the current life of mine.
-- Property, plant and equipment
Property, plant and equipment are stated at historical cost less
accumulated depreciation and accumulated impairment losses.
Subsequent costs are included in the asset's carrying amount or
recognized as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item
will flow to the Group and the cost of the item can be measured
reliably. The carrying amount of the replaced part is derecognized.
All other repairs and maintenance are charged to the statement of
income and comprehensive income during the financial period in
which they are incurred.
Gains and losses on disposals are determined by comparing the
proceeds with the carrying amount and are recognized within 'Other
(expense) and income' in the statement of income and comprehensive
income.
Upon completion of mine construction, the assets are transferred
into property, plant and equipment.
Depreciation and amortization are calculated on a straight-line
method to write off the cost of the assets to their residual values
over their estimated useful lives. The depreciation and
amortization rates applicable to each category of property, plant
and equipment are as follows:
Useful life
Asset category (years)
Vehicles 5
Computer equipment 3
Office equipment 6
Furniture and fittings 6
Other equipment 5
Buildings 20
Leasehold improvements 5
Plant construction, deferred stripping Units of production
costs and mine development
Exploration and evaluation assets (available Units of production
for use)
Where parts (components) of an item of property, plant and
equipment have different useful lives or for which different
depreciation rates are appropriate, they are accounted for as
separate items of property, plant and equipment. Estimates of
residual values and useful lives of all assets are assessed
annually.
The Group measures the estimated residual value of an item of
property, plant and equipment as the amount the Group estimates it
would receive currently from the asset if the asset were already of
the age and in the condition expected at the end of its useful
live.
The Group has assessed the useful lives and residual values of
all individual components of property, plant and equipment and no
adjustments were required to the carrying values of items at the
date of transition.
-- Deferred stripping costs
Stripping costs comprise the removal of overburden and other
waste products from a mine.
Stripping costs incurred in the development of a mine before
production commences are capitalised as part of the cost of
constructing the mine and subsequently amortised over the life of
the mine on a units of production basis.
Stripping costs incurred during the production stage of a mine
are deferred when this is considered the most appropriate basis for
matching the costs against the relevant economic benefits. The
amount deferred is based on the waste-to-ore ratio (called a
"Stripping ratio") which is calculated by dividing the tonnage of
waste mined by the quantity of ore mined. Stripping costs incurred
in a period are deferred to the extent that the current period
ratio exceeds the expected life-of-mine ratio. Such deferred costs
are then charged to the statement of income and comprehensive
income to the extent that, in subsequent periods, the current ratio
falls below the life-of-mine ratio. The life-of-mine stripping
ratio is calculated based on proven and probable reserves. Any
changes to the life-of-mine ratio are accounted for
prospectively.
Where a mine operates more than one open pit that are regarded
as separate operations for the purpose of mine planning, stripping
costs are accounted for separately by reference to the ore from
each separate pit. If, however, the pits are highly integrated for
the purpose of the mine planning, the second and subsequent pits
are regarded as extensions of the first pit in accounting for
stripping costs. In such cases, the initial stripping, (i.e.,
overburden and other waste removal) of the second and subsequent
pits is considered to be production phase stripping relating to the
combined operation.
Deferred stripping costs are included as part of "Mining
properties". These form part of the total investment in the
relevant cash generating units, which are reviewed for impairment
if events or changes of circumstance indicate that the carrying
value may not be recoverable.
-- Leased assets
Leases in terms of which the Group assumes substantially all the
risks and rewards of ownership are classified as finance leases.
Upon initial recognition the leased asset is measured at an amount
equal to the lower of its fair value and the present value of the
minimum lease payments. Subsequent to initial recognition, the
asset is accounted for in accordance with the accounting policy
applicable to that asset.
The Group has made an election in terms of IFRS 1 to apply the
transitional provisions in IFRIC 4 - Determining whether an
Arrangement contains a Lease, therefore determining if any
arrangement existed at the transition date.
Other leases are operating leases and the leased assets are not
recognized on the Group's statement of financial position.
-- Impairment of assets
The carrying amount of the Group's assets (which include
Property, plant and equipment, exploration and evaluation assets,
mineral rights and properties and intangible assets) is reviewed at
each reporting date to determine whether there is any indication of
impairment. If such indication exists, the recoverable amount of
the asset is estimated in order to determine the extent of the
impairment loss. An impairment loss is recognized whenever the
carrying amount of an asset or its cash generating unit exceeds its
recoverable amount. Impairment losses are recognized in the
statement of income and comprehensive income.
The recoverable amount of assets is the greater of an asset's
fair value less cost to sell 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 the
current market assessments of the time value of money and the risks
specific to the asset. For an asset that does not generate cash
inflows largely independent of those from other assets, the
recoverable amount is determined for the cash-generating unit to
which the asset belongs.
An impairment loss is only reversed if there is an indication
that the impairment loss may no longer exist and there has been a
change in the estimates used to determine the recoverable amount,
however, not to an amount higher than the carrying amount that
would have been determined had no impairment loss been recognized
in previous years.
Assets that have an indefinite useful life are not subject to
amortisation and are tested annually for impairment.
-- Inventory
Inventories are measured at the lower of cost and net realisable
value. The cost of inventories includes expenditure incurred in
acquiring the inventories, production or conversion costs and other
costs incurred in bringing them to their existing location and
condition.
In the case of manufactured inventories and work in progress,
cost includes an appropriate share of production overheads based on
normal operating capacity.
Net realisable value is the estimated selling price in the
ordinary course of business, less the estimated costs of completion
and selling expenses.
-- Financial assets
The Group classifies its financial assets in the following
categories: at fair value through profit or loss, loans and
receivables, and available for sale. The classification depends on
the purpose for which the financial assets were acquired.
Management determines the classification of its financial assets at
initial recognition.
Regular purchases and sales of financial assets are recognised
on the trade-date - the date on which the group commits to purchase
the asset.
Loans and receivables are non-derivative financial assets with
fixed or determinable payments that are not quoted in an active
market. They are included in current assets, except for maturities
greater than 12 months after the end of the reporting period. These
are classified as non-current assets.
The Group's loans and receivables comprise 'Loans receivable',
'Cash investments and guarantees', 'Accounts and other receivables'
and 'Cash and cash equivalents' in the statement of financial
position.
Financial assets are derecognized when the rights to receive
cash flows from the investments have expired or have been
transferred and the Group has transferred substantially all risks
and rewards of ownership.
The Group assesses at each reporting date whether there is
objective evidence that a financial asset or a Group of financial
assets is impaired.
Loans receivable
Loans receivable are recognized initially at fair value and
subsequently measured at amortized cost using the effective
interest method, less provision for impairment.
Cash investments and guarantees
Cash investments and guarantees include cash and term deposits
with an original maturity of more than twelve months.
Accounts receivables
Accounts receivables are recognized initially at fair value and
subsequently measured at amortized cost using the effective
interest method, less provision for impairment.
A provision for impairment of accounts receivables is
established when there is objective evidence that the Group will
not be able to collect all amounts due according to the original
terms of the receivables. Significant financial difficulties of the
debtor, probability that the debtor will enter bankruptcy or
financial reorganization, and default or delinquency in payments
(more than 60 days overdue) are considered indicators that the
accounts receivable is impaired. The amount of the provision is the
difference between the asset's carrying amount and the present
value of estimated future cash flows, discounted at the original
effective interest rate. The carrying amount of the asset is
reduced through the use of an allowance account, and the amount of
the loss is recognized in the statement of income and comprehensive
income. When an accounts receivable is uncollectible, it is written
off against the allowance account for accounts receivables.
Subsequent recoveries of amounts previously written off are
credited against in the statement of income and comprehensive
income.
Cash and cash equivalents
Cash and cash equivalents include cash and term deposits with an
original maturity of three months or less.
-- Trade payables
Trade payables are obligations to pay for goods or services that
have been acquired in the ordinary course of business from
supplies. Accounts payable are classified as current liabilities if
payment is due within one year or less. If not, they are presented
as non-current liabilities.
Trade payables are recognized initially at fair value and
subsequently measured at amortized cost using the effective
interest method.
-- Borrowings
Borrowings are recognized initially at fair value, net of
transaction costs incurred. Borrowings are subsequently stated at
amortized cost; any difference between the proceeds (net of
transaction costs) and the redemption value is recognized in the
statement of income and comprehensive income over the period of the
borrowings using the effective interest method.
Fees paid on the establishment of loan facilities are recognized
as transaction costs of the loan to the extent that it is probable
that some or all of the facility will be drawn down. In this case,
the fee is deferred until the draw-down occurs. To the extent there
is no evidence that it is probable that some or all of the facility
will be drawn down, the fee is capitalized as a pre-payment for
liquidity services and amortized over the period of the facility to
which it relates.
Borrowings are classified as current liabilities unless the
Group has an unconditional right to defer settlement of the
liability for at least 12 months after the reporting date.
-- Provisions
Provisions for environmental restoration, restructuring costs
and legal claims are recognized when: the Group has a present legal
or constructive obligation as a result of past events; it is
probable that an outflow of resources will be required to settle
the obligation; and the amount has been reliably estimated.
Provisions are not recognized for future operating losses.
Provisions are measured at the present value of the expenditures
expected to be required to settle the obligation using a pre-tax
rate that reflects current market assessments of the time value of
money and the risks specific to the obligation. The increase in the
provision due to passage of time is recognized as interest
expense.
An obligation to incur decommissioning and rehabilitation costs
occurs when an environmental disturbance is caused by exploration,
evaluation, development or ongoing production. Costs are estimated
on the basis of a formal closure plan and are subject to regular
review.
Decommissioning and site rehabilitation costs arising from the
installation of plant and other site preparation work, discounted
to their present value, are provided when the obligation to incur
such costs arises and are capitalized into the cost of the related
asset. These costs are charged against profits through depreciation
of the asset and unwinding of the discount on the provision.
Depreciation is included in operating costs while the unwinding of
the discount is included as a financing cost. Changes in the
measurement of a liability relating to the decommissioning or site
rehabilitation of plant and other site preparation work are added
to, or deducted from, the costs of the related asset.
The costs for the restoration of site damage, which arises
during production, are provided at their net present values and
charged against their operating profit as extraction progresses.
Changes in the measurement of a liability which arises during
production are charged against operating profit.
The discount rate used to measure the net present value of the
obligations is the pre-tax rate that reflects the current market
assessments of the time value of money and the risks specific to
the obligation.
In accordance with the Group's policy and applicable legal
requirements, a provision for decommissioning liabilities is
recognized when the asset is installed and rehabilitation
liabilities are recognized when the land is disturbed.
Changes in estimated decommissioning and rehabilitation
liabilities that occurred before the transition to IFRS have been
adjusted for at the transition date on a net basis in accordance
with the provisions of IFRIC 1 and the applicable exemptions under
IFRS 1.
-- Share based payment transactions
Equity settled
The fair value of share options under the employee share
incentive schemes and other equity instruments granted to Group
employees is recognised as an employee expense with a corresponding
increase in equity. The fair value is measured at grant date and
expensed over the period during which the employee becomes
unconditionally entitled to the equity instruments. The total
amount to be expensed is determined by reference to the fair value
of the options granted, excluding the impact of any non-market
service and performance vesting conditions. Non-market vesting
conditions are included in assumptions about the number of options
that are expected to vest.
The fair value of the instruments granted is measured using
generally accepted valuation techniques, taking into account the
terms and conditions upon which the instruments are granted. At
each reporting date, the entity revises its estimates of the number
of options that are expected to vest based on the non-marketing
vesting conditions. It recognises the impact of the revision to
original estimates, if any, in the statement of income and
comprehensive income, with a corresponding adjustment to equity.
The proceeds received, net of any directly attributable transaction
costs, are credited to share capital when the options are
exercised.
This accounting policy has been applied to all equity
instruments granted after November 7, 2002 that has not yet vested
at January 1, 2005. The increase in equity arising from vested
share options was credited to common shares when options were
exercised under the Group's previous accounting policies.
-- Income taxes
The income tax expense for the period comprises current and
deferred taxation. Taxation is recognised in the statement of
income and comprehensive income, except to the extent that it
relates to items recognised directly in equity.
Current taxation
Current tax is the expected tax payable on the taxable income
for the period, using tax rates enacted or substantively enacted at
the reporting date in countries where the company's subsidiaries
operate and generate taxable income. Management periodically
evaluates positions taken in tax returns with respect to situations
in which applicable tax regulation is subject to interpretation. It
establishes provisions where appropriate on the basis of amount
expected to be paid to tax authorities.
Deferred taxation
Deferred taxation is recognised using the liability method, on
temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used
for taxation purposes. However, the deferred taxation is not
recognised for if it arises from initial recognition of an asset or
liability in a transaction other than a business combination that
at the time of the transaction affects neither accounting nor
taxable profit or loss. Deferred taxation is determined using tax
rates (and laws) that have been enacted or substantially enacted by
reporting date and are expected to apply when the related deferred
taxation asset is realised or the deferred taxation liability is
settled.
Deferred tax assets and liabilities are offset if there is a
legally enforceable right to offset current tax liabilities and
assets, and they relate to income taxes levied by the same tax
authority on the same taxable entity, or on different tax entities,
but they intend to settle current tax liabilities and assets on a
net basis or their tax assets and liabilities will be realised
simultaneously.
A deferred tax asset is recognised to the extent that it is
probable that future taxable profits will be available against
which the temporary difference can be utilised. Deferred tax assets
are reviewed at each reporting date and 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 that the liability to pay
the related dividend is recognised.
Deferred income tax is provided on temporary differences arising
on investments in subsidiaries and associates, except where the
timing of the reversal of the temporary difference is controlled by
the Group and it is probable that the temporary difference will not
reverse in the foreseeable future.
-- Revenue
Revenue comprises the fair value of the consideration received
or receivable for the sale of goods and services in the ordinary
course of the Group's activities. Revenue is shown net of
value-added tax, returns, rebates and discounts and after
eliminating sales within the Group.
The Group recognises revenue when the amount of revenue can be
reliably measured, it is probable that future economic benefits
will flow to the entity and when specific criteria have been met
for each of the Group's activities as described below. The amount
of revenue is not considered to be reliably measurable until all
contingencies relating to the sale have been resolved. In certain
circumstances, metal prices and assayed quantities at the point of
sale may be provisional. Adjustments in respect of final assayed
quantities and/or prices arising between the date of recognition
and the date of settlement are recognised in the period in which
the adjustment arises and reflected through revenue and
receivables
Revenue from the sale of goods is recognized when the
significant risks and rewards of ownership have been transferred to
the buyer. Revenue is not recognized if there are significant
uncertainties regarding recovery of the consideration due.
As a development stage company, Platmin will offset revenue from
mining activities against capitalised operating costs until such
time as PPM is brought into commercial production.
-- Finance income
Finance income is recognized on the time proportion basis,
taking account of the investment balances outstanding and the
effective rate over the period to maturity.
-- Borrowing costs
Borrowing costs are recognized as an expense in the period in
which they are incurred, except to the extent that they are
directly attributable to the acquisition or construction of assets
that necessarily take a substantial period to prepare for their
intended use or sale ("qualifying assets").
Borrowing costs directly attributable to the acquisition,
construction or production of a qualifying asset is capitalized as
part of the cost of that asset in accordance with the transitional
provisions of IAS 23 - Borrowing costs (revised) and IFRS 1 from
January 1, 2009.
-- Segment information
The executive committee reviews the Group's internal reporting
in order to assess performance and allocate resources. Management
has determined the operating segments based on these reports.
-- Accounting standards and interpretations issued but not yet
effective
There are new or revised Accounting Standards and
Interpretations in issue that are not yet effective. These include
the following Standards and Interpretation that are applicable to
the business of the Group and may have an impact on future
financial statements.
o Which will be effective for the financial year ending December
31, 2011:
Standard / Details of amendment Assessed impact
Interpretation on results
IFRS 1 - First-time Amendment relieves The Group has
Adoption of first-time adopters of already adopted
International IFRSs from providing the IFRS. No impact
Financial Reporting additional disclosures is expected.
Standards introduced through
Amendments to IFRS 7 in
March 2009.
----------------------- -------------------------- -------------------------
IFRS 1 - First-time Amendment clarifies that, The Group has
Adoption of if a first-time adopter already adopted
International changes its accounting IFRS. No impact
Financial Reporting policies or its use of is expected.
Standards the exemptions in IFRS 1
after it has published
interim financial
statement, it needs to
explain those changes and
update the
reconciliations between
previous GAAP and IFRS.
----------------------- -------------------------- -------------------------
IFRS 1 - First-time Amendment allows The Group has
Adoption of first-time adopters to already adopted
International use an event-driven fair IFRS. No impact
Financial Reporting value as deemed cost, is expected.
Standards even if the event occurs
after the date of
transition, but before
the first IFRS financial
statement are issued.
----------------------- -------------------------- -------------------------
IFRS 1 - First-time Amendment permits the use The Group has
Adoption of of carrying amount under already adopted
International previous GAAP as deemed IFRS. No impact
Financial Reporting cost for operations is expected.
Standards subject to rate
regulation.
----------------------- -------------------------- -------------------------
IFRS 3 - Business Amendment clarifies that The Group has
Combinations the amendments to IFRS 7, already considered
IAS 32 and IAS 39, that these principles.
eliminate the exemption No impact is expected.
for contingent
consideration, do not
apply to contingent
consideration that arose
from business
combinations whose
acquisition dates precede
the application of IFRS 3
(as revised in 2008).
----------------------- -------------------------- -------------------------
IFRS 3 - Business The amendment limits the The Group will
Combinations scope of the measurement only be required
choices that only the to apply this
components of NCI that amendment prospectively
are present ownership and will therefore
interests and entitle only impact future
heir holders to a business combinations.
proportionate share of
the entity's net assets,
in the event of
liquidation, shall be
measured either at fair
value or at the present
ownership instruments'
proportionate share of
the acquiree's
identifiable net assets.
Other components of NCI
are measured at their
acquisition date fair
value, unless another
measurement basis is
required by another
IFRS.
----------------------- -------------------------- -------------------------
IFRS 3 - Business Additional guidance The Group will
Combinations provided on un-replaced only be required
and voluntary replaced to apply this
share-based payment amendment prospectively
awards. and will therefore
only impact future
business combinations.
IFRS 7 - Financial Amendment clarifies the The amendment
Instruments: intended interaction will impact the
Disclosures between qualitative and extent of IFRS
quantitative disclosures 7 disclosures
of the nature and extent provided in the
of risks arising from financial statements.
financial instruments and
removed some disclosure
items which were seen to
be superfluous or
misleading.
IAS 1 - Presentation Amendment clarifies that The Group already
of Financial an entity should present pro- vides such
Statements an analysis of other an analysis in
comprehensive income for the statement
each component of equity, of changes in
either in the statement equity. No impact
of changes in equity or is expected.
in the notes to the
financial statements.
----------------------- -------------------------- -------------------------
IAS 24 - Related The revised IAS 24 The Group is assessing
Party Disclosures Related Party Disclosures the impact of
amends the definition of these amend-ments.
a related party and
modifies certain related
party disclosure
requirements for
government-related
entities and clarifies
the definition of a
related party.
----------------------- -------------------------- -------------------------
IAS 27 - Consolidated Transition requirements The Group is assessing
and Separate for amendments arising as the impact of
Financial Statements a result of IAS 27 these amend-ments.
Consolidated and Separate
Financial Statements.
----------------------- -------------------------- -------------------------
IAS 28 - Investments Consequential amendments The Group is assessing
in Associates from changes to IAS 27 the impact of
Consolidated and Separate these amend-ments.
Financial Statements
(Clarification on the
transition rules in
respect of the disposal
or partial disposal of an
interest in a foreign
operation).
----------------------- -------------------------- -------------------------
IAS 31 - Interests Consequential amendments The Group is assessing
in Joint Ventures from changes to IAS 27 the impact of
Consolidated and Separate these amend-ments.
Financial Statements
(Clarification on the
transition rules in
respect of the disposal
or partial disposal of an
interest in a foreign
operation).
----------------------- -------------------------- -------------------------
IAS 32 - Financial Accounting for rights The Group does
Instruments: issues (including rights, not currently
Presentation options or warrants) that have any rights
are denominated in a issued. No impact
currency other than the is expected.
functional currency of The impact of
the issuer. The IASB any possible future
amended IAS 32 to allow instruments will
rights, options or be assessed as
warrants to acquire a they arise.
fixed number of the
entity's own equity
instruments for a fixed
amount of any currency to
be classified as equity
instruments provided the
entity offers the rights,
options or warrants pro
rata to all of its
existing owners of the
same class of its own
non-derivative equity
instruments.
----------------------- -------------------------- -------------------------
IAS 34 - Interim Clarification of The Group's disclosures
Financial Statements disclosure requirements provided in the
around significant events quarterly financial
and transactions statements and
including financial press releases
instruments. prepared in accordance
with IAS 34 may
be impacted.
----------------------- -------------------------- -------------------------
IFRIC 19 - This interpretation The Group is assessing
Extinguishing clarifies the the impact of
Financial Liabilities requirements of IFRSs this amendment.
with Equity when an entity negotiates
Instruments the terms of a financial
liability with a creditor
and the creditor accepts
the entity's shares or
other equity instruments
to settle the financial
liability fully or
partially.
----------------------- -------------------------- -------------------------
-- Standard and interpretations issued and not yet adopted
Certain accounting standards and interpretations are in issue
which are not required to be adopted for the current reporting
period. As at the date of these financial statements the following
standards and interpretations were in issue but not yet
effective.
o Which will be effective for the financial year ending December
31, 2012:
Standard / Details of amendment Assessed impact
Interpretation on results
IFRS 1 - First-time Standard amended to provide The Group does
Adoption of guidance for entities not operate in
International emerging from severe a hyper- inflationary
Financial Reporting hyperinflation and resuming environment. No
Standards presentation of IFRS impact is expected.
compliant financial
statement, or presenting IFRS
compliant financial statement
for the first time.
--------------------- ------------------------------ -----------------------
IFRS 1 - First-time Standard amended to remove The Group has
Adoption of the fixed date of 1 January already adopted
International 2004 relating to the IFRS. No impact
Financial Reporting retrospective application of is expected.
Standards the de-recognition
requirements of IAS39, and
relief for first-time
adopters from calculating day
1 gains on transactions that
occurred before the date of
adoption.
--------------------- ------------------------------ -----------------------
IFRS 7 - Financial Amendments required The Group is currently
Instruments: additional disclosure on reviewing the
Disclosures transfer transactions of potential impact
financial assets, including of the new standard.
the possible effects of any
residual risks that the
transferring entity retains.
The amendments also require
additional disclosures if a
disproportionate amount of
transfer transactions are
undertaken around the end of
a reporting period.
--------------------- ------------------------------ -----------------------
IAS 12 - Income Rebuttable presumption The Group is currently
taxes introduced that an investment reviewing the
property will be recovered in potential impact
its entirety through sale. of the new standard.
--------------------- ------------------------------ -----------------------
IAS 21 - The Consequential amendments from The Group is currently
Effects of changes to IAS 27 reviewing the
Changes in Consolidated and Separate potential impact
Foreign Exchange Financial Statements of the new standard.
Rates (Clarification on the
transition rules in respect
of the disposal or partial
disposal of an interest in a
foreign operation).
--------------------- ------------------------------ -----------------------
o Which will be effective for the financial year ending December
31, 2013:
Standard / Details of amendment Assessed impact
Interpretation on results
IFRS 9 - Financial New standard that forms the The Group is currently
Instruments first part of a three-part reviewing the
project to replace IAS 39 - potential impact
Financial Instruments: of the new standard.
Recognition and Measurement.
------------------- -------------------------------- -----------------------
4. Mining assets
Comprising exploration and evaluation assets, mineral properties
and mineral rights acquired:
As at Dec As at Dec
31, 31,
2010 2009
$ 000 $ 000
Exploration and evaluation assets 42,282 36,652
Mineral properties acquired 4,410 3,945
Mineral rights acquired 3,194 2,857
---------------------------------- ---------------- -------------
Balance at the end of the period 49,886 43,454
================================== ================ =============
Reconciliation of mining assets:
Exploration Mineral
& evaluation properties Mineral
assets acquired rights acquired TOTAL
$ 000 $ 000 $ 000 $ 000
Balance as at
Mar 1, 2009 25,078 2,911 2,108 30,097
Additions 2,593 - - 2,593
Foreign exchange
variance 8,981 1,034 749 10,764
---------------- ------------- ------------ ---------------- -------------
Balance as at
Dec 31, 2009 36,652 3,945 2,857 43,454
Additions 1,672 - - 1,672
Impairment of
mining assets (365) - - (365)
Foreign exchange
variance 4,323 465 337 5,125
Balance as at
Dec 31, 2010 42,282 4,410 3,194 49,886
================ ============= ============ ================ =============
5. Intangible assets
As at Dec As at Dec
31, 31,
2010 2009
$ 000 $ 000
Water pipeline 13,070 8,479
ERP software 886 869
Computer software 63 -
--------------------------------- ---------------- ------------
Balance at the end of the period 14,019 9,348
================================= ================ ============
Reconciliation of intangible assets:
Water ERP
pipeline Software Computer TOTAL
$ 000 $ 000 software $ 000 $ 000
Balance as March
1, 2009 5,389 120 121 5,630
Additions during
the year 1,176 614 30 1,820
Amortization for
the year - - (93) (93)
Foreign exchange
variance 1,914 38 39 1,991
---------------- ------------- ------------ ---------------- -------------
Balance as at
December 31,
2009 8,479 772 97 9,348
Additions during
the period 1,228 169 43 1,440
Reclassified
from
receivables 2,064 - - 2,064
Amortization for
the period - (132) (80) (212)
Foreign exchange
variance 1,299 77 3 1,379
Balance as at
December 31,
2010 13,070 886 63 14,019
================ ============= ============ ================ =============
PPM entered into an agreement with The Board of Magalies Water
(a State-owned water board operating under the Water Services Act,
Number 108 of 1997 as amended, "Magalies Water") and other parties
to build a water pipeline and related infrastructure from the
Vaalkop Water Treatment Works to the mine located at Tuschenkomst.
Upon completion, the ownership of the water pipeline and related
infrastructure will remain with Magalies Water; however, PPM will
have a right to use 9Ml a day through the pipeline for the entire
life of mine.
6. Property, plant and equipment
Plant
construction
and mine Land Leased
development $ and buildings Other assets TOTAL
000 $ 000 $ 000 $ 000 $ 000
COST
Balance as at
March 1,
2009 186,379 721 1,099 - 188,199
Additions 155,246 48 410 12,031 167,735
Foreign
exchange
movement 66,164 256 390 960 67,770
--------------- --------------- --------------- ------- -------- --------
Balance as at
December 31,
2009 407,789 1,025 1,899 12,991 423,704
Additions 107,008 55 561 - 107,624
Transfers (23) - 23 - -
Foreign
exchange
movement 48,107 120 224 1,531 49,982
--------------- --------------- --------------- ------- -------- --------
Balance as at
December 31,
2010 562,881 1,200 2,707 14,522 581,310
=============== =============== =============== ======= ======== ========
ACCUMULATED DEPRECIATION
ACCUMULATED DEPRECIATION
Balance as at March 1, 2009 - - 356 - 356
Depreciation for the period - - 237 428 665
Foreign exchange movement - - 166 46 212
----------------------------- --- --- ------ ------ ------
Balance as at December 31,
2009 - - 759 474 1,233
Depreciation for the period - - 442 821 1,263
Foreign exchange movement - - 122 142 264
----------------------------- --- --- ------ ------ ------
Balance as at December 31,
2010 - - 1,323 1,437 2,760
============================= === === ====== ====== ======
CARRYING AMOUNTS
At March 1, 2009 186,379 721 743 - 187,843
---------------------- -------- ------ ------ ------- --------
At December 31, 2009 407,789 1,025 1,140 12,517 422,471
====================== ======== ====== ====== ======= ========
At December 31, 2010 562,881 1,200 1,384 13,085 578,550
====================== ======== ====== ====== ======= ========
Included in the plant construction and mine development is a
total of US$129.537 million (Dec 31, 2009 - US$78.491 million)
relating to stripping costs which are capitalized as part of the
mine development at PPM.
7. Loans receivable
As at Dec As at Dec
31, 31,
2010 2009
$ 000 $ 000
Tafida Investments (Pty) Ltd - 3
Defacto Investments 275 (Pty) Ltd 63 47
Balance at the end of the period 63 50
==================================== ========= =========
These loans bear no interest and have no fixed terms of
repayment.
8. Cash, restricted cash investments and guarantees
8.1 Cash and cash equivalents (unrestricted)
As at Dec As at Dec
31, 31,
2010 2009
$ 000 $ 000
Cash at bank 188,596 29,375
Total cash and cash equivalents 188,596 29,375
================================== ================ ================
Cash at banks earns interest at a floating rate based on daily
bank deposit rates. Cash is deposited at highly reputable financial
institutions of a high quality credit standing within the Republic
of South Africa and their foreign affiliates in the United Kingdom.
The fair value of cash and cash equivalents equates the values as
disclosed in this note.
For the purpose of the consolidated statement of cash flows,
cash and cash equivalents comprise only the cash at bank and on
hand line-item is disclosed for each period end above.
8.2 Restricted cash
Restricted cash investments and guarantees
Cash investments were made relating to certain guarantees
required by the Republic of South Africa's Department of Mineral
Resources ("DMR"), formerly known as the Department of Minerals and
Energy ("DME"), and ESKOM Holdings Limited ("ESKOM"), the South
African state utility supplier, of which the details are as
follows:
-- Rehabilitation guarantees
The DMR requires rehabilitation guarantees for all prospecting
and mining rights. These rehabilitation guarantees primarily
relates to the mining rights for the Pilanesberg and Mphahlele
Projects. These guarantees have been provided to the DMR on two
separate basis:
- on an insurance basis with a portion of the total guarantee
being paid over in a separate bank account controlled by the Group
and ceded in favour of the Insurance company and the remaining
portion paid in premiums over the expected life of the mine;
and
- on a cash backed basis.
-- ESKOM guarantees
On June 17, 2008 a guarantee of US$8.400 million (ZAR84.900
million), underwritten by an insurance backed guarantee issued by
Lombard Insurance Company Limited ("Lombard Insurance") was
provided to ESKOM to order critical long lead time material for the
construction of the electrical substation at the Pilanesberg
Project. Lombard Insurance required cash collateral on a portion of
the total amount which has been paid over in a separate bank
account controlled by the Group and ceded in favour of Lombard
Insurance. The balance is payable on a premium basis over 5 years
and re-assessed on an annual basis.
As at Dec As at Dec
31, 31,
2010 2009
$ 000 $ 000
Pilanesberg rehabilitation guarantee 76,430 1,794
ESKOM guarantee 6,856 3,087
Mphahlele rehabilitation guarantee 1,077 1,661
Other guarantees 108 621
Balance at the end of the period - current 84,471 7,163
=========================================== ================ ============
Cash collateral
On May 13, 2010, the Company issued US$135.000 million of
convertible debentures. The cash collateral represents the funds
received and the interest accrued thereon to date.
As at Dec As at Dec
31, 31,
2010 2009
$ 000 $ 000
Cash collateral for convertible debentures 135,131 -
Balance at the end of the period - non-current 135,131 -
============================================== ================ =========
9. Inventories
As at Dec As at Dec
31, 31,
2010 2009
$ 000 $ 000
Ore stockpiled at cost 4,424 4,323
Work in progress at cost 2,258 3,154
Consumables at cost 4,603 2,372
Balance at the end of the period 11,285 9,849
================================= ================ ================
10. Accounts and other receivables
As at Dec As at Dec
31, 31,
2010 2009
$ 000 $ 000
Accounts receivable (a) 40,539 19,202
Other receivables (b) 6,338 9,250
Balance at the end of the period 46,877 28,452
================================= ================ =============
a) Accounts receivable
Accounts receivable are due from Northam Platinum Limited
("Northam"), Impala Refining Services Limited ("Impala") and
Richtrau No. 123 (Pty) Ltd ("Richtrau"). Richtrau is a related
party to the Company, refer to note 23 for further disclosure.
None of the amounts are past due or impaired.
b) Other receivables
Other receivables are non-interest bearing and due within twelve
months. Included in other receivables is amongst others, an amount
of US$5.292 million (Dec 2009: US$6.513 million) due from the South
African Revenue Services ("SARS") relating to Value Added Tax
("VAT")
11. Share capital
a) Common shares authorized
The Company has an unlimited number of common shares with no par
value.
b) Common shares issued
Movement during the year ended December 31, Number Amount
2009 of shares $000
Balance, March 1, 2009 370,002,800 366,180
Common shares issued (i) 75,015,552 59,355
Exercise of options - -
Fair value of options exercised - -
-----------------------------------------------
Balance, December 31, 2009 445,018,352 425,535
=============================================== ============ ========
Movement during the period ended December 31,
2010
Balance, January 1, 2010 445,018,352 425,535
Common shares issued (ii) 304,662,415 331,044
-----------------------------------------------
Balance, December 31, 2010 749,680,767 756,579
=============================================== ============ ========
(i) On May 15, 2009, Platmin engaged GMP Securities Europe LLP
to conduct a brokered private placement of common shares of the
Company. In terms of the placement, 75,015,552 common shares were
issued for a consideration of US$59.355 million, net of brokerage
and legal fees.
(ii) On May 13, 2010 the Company issued 205,761,317 new common
shares at a price of US$1.215 per common share for a total
consideration of US$250.000 million, raising US$241.260 million net
of brokerage and legal fees.
In addition to the fund-raising process, US$135.000 million of
convertible debentures have been placed. The total funding from the
prospectus offering and private placement was US$385.000 million
before underwriting and share issuance cost.
On December 17, 2010 the Company issued 98,901,099 new common
shares at a price of US$0.910 (CAD$0.930) per common share for a
total consideration of US$90.000 million, raising US$89.785 million
net of brokerage and legal fees.
c) Share options
The Board of Directors adopted a resolution dated May 3, 2005,
which established a share option plan (the "2005 Stock Option
Plan"), pursuant to which options may be granted to directors,
officers, employees and persons providing ongoing and contract
services to the Group. The purpose of the Plan is to attract
persons by offering to such persons the opportunity to acquire (or
to increase) an equity interest in the Company through the purchase
of shares under the Plan. Subject to adjustment made in the case of
a share split of the issued common shares of the Group, the
aggregate number of common shares that may be issuable pursuant to
options granted under the Plan is fixed at a maximum of 9% of the
outstanding common shares of the Group from time to time and shall
be calculated on an as-needed basis. Prior to the establishment of
the Plan, options were issued to directors and employees, at the
discretion of management, to compensate for services provided. This
2005 Stock Option Plan was re-approved in accordance with its terms
at the Annual General Meeting held on June 26, 2008.
The Board of Directors adopted a resolution dated June 24, 2007,
which established a stock option plan (the "2007 Stock Option
Plan"), pursuant to which options may be granted to directors,
officers, employees and persons providing ongoing and contract
services to the Group. The purpose of the Plan is to attract
persons by offering to such persons the opportunity to acquire (or
to increase) an equity interest in the Group through the purchase
of shares under the Plan. The maximum number of common shares
reserved for issuance under the 2007 Stock Option Plan is 2,500,000
common shares. No stock options have been granted under the 2007
Stock Option Plan.
The changes in stock options during the twelve months ended
December 31, 2010 and period ended December 31, 2009 were as
follows:
Weighted average
Number of exercise price
options $
Movement during the period ended December
31, 2009
Options outstanding, March 1, 2009 4,631,733 4.98
Options granted 3,300,000 1.28
Options outstanding, December 31, 2009 7,931,733 3.44
============================================== =========== ================
Options exercisable, December 31, 2009 4,634,432 3.23
============================================== =========== ================
Movement during the year ended December 31,
2010
Options outstanding, January 1, 2010 7,931,733 3.44
Options granted 10,500,000 0.96
Options forfeited / expired (2,017,833) 11.64
Options outstanding, December 31, 2010 16,413,900 2.21
============================================== =========== ================
Options exercisable, December 31, 2010 7,876,565 3.14
============================================== =========== ================
As at December 31, 2010, 5,608,168 options will vest within the
next year and 3,500,000 options will vest when performance targets
relating to the PPM production are reached.
As at December 31, 2010 the following options were exercisable
and outstanding:
Exercisable Outstanding
Exercise Exercise
price Number of price Number of
Expiry date Currency $ options $ options
September 15, 2013 CAD 4.40 75,000 4.40 75,000
June 1, 2017 CAD 6.75 570,000 6.75 570,000
January, 14, 2013 CAD 9.08 642,833 9.08 945,500
November 7, 2012 CAD 9.40 170,400 9.40 170,400
August 28, 2013 CAD 7.40 150,000 7.40 150,000
September 19, 2013 CAD 3.08 62,000 3.08 93,000
April 25, 2013 CAD 7.16 140,000 7.16 210,000
June 23, 2013 CAD 6.57 133,332 6.57 200,000
June 30, 2013 CAD 7.16 133,000 7.16 200,000
December 15, 2013 CAD 1.35 2,300,000 1.35 3,300,000
September 27, 2015 CAD 0.96 3,350,000 0.96 10,050,000
November 6, 2015 CAD 1.07 150,000 1.07 450,000
Weighted average 2.82 7,876,565 2.11 16,413,900
================================ ======== ========= ======== ==========
The weighted average fair value of options granted during the
period determined using the Black-Scholes valuation model was
US$0.66c per option (2009: US$0.66c). The significant inputs into
the model were weighted average share price of US$0.96c (2009:1.41)
at the grant date, exercise price shown above, volatility of 0.84%
(2009: 76% ), dividend yield of 0% (2009: US$0%), an expected life
of five years (2009: 2 years) and an annual risk free rate of 0.02%
(2009:1.43%). The volatility measured at the standard deviation of
continuously compounded share returns is based on statistical
analysis of daily share prices over the past five years. See note
23 for the total expense recognised in the income statement for
share options granted to directors and management personnel.
12. Non-controlling interest
The non-controlling interests are comprised of the
following:
$ 000
Balance as at March 1, 2009 (16,618)
Non-controlling interest's share of losses in Boynton Investments
(Pty) Ltd (3,095)
Non-controlling interest's share of losses in Mahube Mining
(Pty) Ltd (337)
Non-controlling interest's share of losses in Taung Platinum
Exploration (Pty) Ltd (36)
Non-controlling interest's share of losses in Sengani Family
Mining and Exploration (Pty) Ltd (5)
-------------------------------------------------------------------
Balance as at December 31, 2009 (20,091)
Non-controlling interest's share of profits in Boynton
Investments (Pty) Ltd (9,607)
Non-controlling interest's share of losses in Mahube Mining
(Pty) Ltd (403)
Non-controlling interest's share of losses in Taung Platinum
Exploration (Pty) Ltd (13)
Non-controlling interest's share of losses in Sengani Family
Mining and Exploration (Pty) Ltd (2)
------------------------------------------------------------------- ---------
Balance as at December 31, 2010 (30,116)
=================================================================== =========
13. Long-term borrowings
As at Dec As at Dec
31, 31,
2010 2009
$ 000 $ 000
Corridor Mining Resources (Pty) Ltd (a) 4,681 3,794
Perilya Exploration (Pty) Ltd (b) 29 23
---------------------------------------- ------------ ------------
4,710 3,817
======================================== ============ ============
Perilya
Corridor Exploration
Mining (a) (b) TOTAL
$ 000 $ 000 $ 000
Balance as at March 1, 2009 2,106 15 2,121
Increases during the year 560 - 560
Interest for the year 297 2 299
Foreign exchange variance 831 6 837
---------------------------- ------------ ------------ ------------
Balance as at Dec 31, 2009 3,794 23 3,817
Increases during the period - - -
Interest for the period 440 3 443
Foreign exchange variance 447 3 450
Balance as at Dec 31, 2010 4,681 29 4,710
============================ ============ ============ ============
a) Corridor Mining Resources (Pty) Ltd
Corridor Mining Resources (Pty) Ltd is a wholly owned subsidiary
of Limpopo Economic Development Enterprise ("LimDev"), an agency of
the Limpopo Provincial Government, Republic of South Africa.
The long-term loan bears interest at South African prime rate
until otherwise agreed by the shareholders. The loan is to be
repaid from the proceeds generated by the Mphahlele project in
Tameng Mining and Exploration (Pty) Ltd, a subsidiary of Mahube
Mining (Pty) Ltd.
b) Perilya Exploration (Pty) Ltd
Perilya Exploration (Pty) Ltd (formerly known as Ranger Minerals
(Pty) Ltd) is a wholly owned subsidiary of Perilya Limited and
registered in the Commonwealth of Australia.
The long-term loan bears interest at South African prime
overdraft rate plus 2% until otherwise agreed by the shareholders,
and will be repaid from profits. The loan is used by Defacto
Investments 275 (Pty) Ltd to fund exploration activities.
14. Finance lease liability
ESKOM designed and built an electrical substation and related
infrastructure adjacent to the Pilanesberg Mine to produce the
required electricity and ESKOM maintains ownership and control over
all significant aspects of operating the facility. Each month, the
Pilanesberg Mine will pay a fixed capacity charge and a variable
charge based on actual electricity consumed. These payments attract
interest at the South African prime overdraft rate plus 2%.
The arrangement with ESKOM, entered into during the period ended
December 31, 2009 meet these requirements of IFRIC 4 - Arrangements
containing a lease, and therefore constitutes a lease and falls
within the scope of IAS 17 - Leases and is further classified as a
finance lease due to the sub-station being constructed exclusively
for the use of PPM. An asset (the electrical installation) is
explicitly identified in the arrangement and fulfilment of the
arrangement is dependent on the electrical installation.
Reconciliation between the total minimum lease payments and
their present value:
Up to 1 to 5 More than
1 year years 5 years Total
$ 000 $ 000 $ 000 $ 000
Minimum lease payments 1,495 7,477 12,308 21,280
Finance cost (1,204) (5,364) (5,011) (11,579)
------------------------
Present value 291 2,113 7,297 9,701
======================== ======== ======== ========== =========
15. Decommissioning and rehabilitation provision
As at Dec As at Dec
31, 31,
2010 2009
$ 000 $ 000
DISCOUNTED
Balance at the beginning of the period 52,744 12,791
Increase in liability for the period 10,435 36,272
Unwinding of interest (Accretion) 1,307 426
---------------------------------------- ---------- ----------
64,486 49,489
Effect of exchange rate changes 6,219 3,255
---------------------------------------- ---------- ----------
Balance at the end of the period 70,705 52,744
======================================== ========== ==========
UNDISCOUNTED
Balance at the beginning of the period 70,829 17,527
Increase in liability for the period 7,486 47,080
---------------------------------------- ---------- ----------
78,315 64,607
Effect of exchange rate changes 8,352 6,222
---------------------------------------- ---------- ----------
Balance at the end of the period 86,667 70,829
======================================== ========== ==========
The Pilanesberg Mine is currently in the commissioning phase and
the estimate represents the current cost of environmental
liabilities as at the respective period end. An annual estimate of
the quantum of closure costs is necessary in order to fulfil the
requirements of the DMR, as well as meeting specific closure
objectives outlined in the mine's Environmental Management
Programme ("EMP").
For the year ended December 31, 2010, the waste hauling
methodology being applied to the requirements in the EMP changed
from "load and haul" to a conveying system. This change resulted in
a lower than expected increase in the rehabilitation obligation for
the financial year ended December 31, 2010.
Although the ultimate amount of the asset retirement obligation
is uncertain, the fair value of the obligation is based on
information that is currently available. The estimated undiscounted
liability for the asset retirement obligation at December 31, 2010
is US$86.667 million (December 31, 2009: US$70.829 million). This
estimate includes costs for the removal of all current mine
infrastructure and the rehabilitation of all disturbed areas to a
condition as described in the mine's Environmental Management
Programme. The asset retirement obligation has been determined
using a discount rate of 7.95% (2009: 8.6%) and an inflation rate
of 6% over a period of 11 years.
16. Trade payables and accrued liabilities
As at Dec As at Dec
31, 31,
2010 2009
$ 000 $ 000
Trade payables 14,276 18,518
Accrued expenses 6,471 3,626
Balance at the end of the period 20,747 22,144
================================== ============= =============
17. Revolving commodity facility
On October 9, 2009, the Company signed a definitive agreement
with Investec Bank Limited ("Investec") to provide a twelve month
renewable revolving commodity finance facility of up to ZAR400.000
million (US$54.420 million at the exchange rate at the date of
signature of the facility of ZAR7.35: US$1.00) for working capital
purposes.
In terms of this facility Investec will finance up to 91% of
PPM's platinum, palladium, gold, copper and nickel deliveries to
Northam Platinum Limited. This facility bears interest at the
Johannesburg Interbank Lending Rate ("JIBAR") plus 3.0% and is
repaid within 2 to 3 months upon which the funds are again
available for draw-down. This facility was renewed for a further
twelve months on October 1, 2010.
As at Dec As at Dec
31, 31
2010 2009
$ 000 $ 000
Balance at the beginning of the period 5,854 -
Increase in liability for the period (2,684) 5,913
Interest accrued (48) (53)
---------------------------------------- ---------- ----------
3,122 5,860
Effect of exchange rate changes 346 (6)
---------------------------------------- ---------- ----------
Balance at the end of the period 3,468 5,854
======================================== ========== ==========
18. Current portion of long-term borrowings
As at Dec As at Dec
31, 31,
2010 2009
$ 000 $ 000
Balance at the beginning of the period - 38,752
Bridge loan facility - -
Pallinghurst short-term loan facility 26,603 -
Interest on borrowings 1,620 2,053
Settlement of bridge loan facility - (51,987)
---------------------------------------- ---------- ----------
28,223 (11,182)
Effect of exchange rate changes 3,700 11,182
---------------------------------------- ---------- ----------
Balance at the end of the period 31,923 -
======================================== ========== ==========
On May 14, 2008, PPM signed a US$35.000 million (ZAR350.000
million) bridge financing facility with Standard Bank of South
Africa Limited ("Standard Bank"). The term of the bridge loan
facility was initially for the period of four months to August 2008
and was subsequently extended to August 31, 2009. At the outset,
the facility incurred interest at the JIBAR plus 3.0%. From March
1, 2009 to August 31, 2009, PPM provided cash collateral to
Standard Bank of US$49.870 million (ZAR387.800 million) as security
against the loan. This resulted in a reduction in the interest rate
to JIBAR plus 0.5%, The Company earned interest at JIBAR plus 0.1%
on cash collateral, bringing the net finance cost on the loan to
0.4%.
The bridge loan facility has been used to fund the development
and construction of the Pilanesberg Mine. The bridge loan facility
was repaid in full on August 31, 2009.
In connection with this facility, the Company issued 300,000
warrants exercisable at $6.95 per common share from September 15,
2008 until expiry of the warrants on May 14, 2011. The fair value
of the warrants of US$0.846 has been treated as a cost of the
transaction and fully amortized during the year ended February 28,
2009.
The Company has classified this facility as held to maturity and
the fair value of the warrants of US$846,238 has been treated as a
cost of the loan transaction and has been amortized to net income
using the effective interest method over the facility term.
On March 22, 2010, a subsidiary of Platmin entered into a
ZAR191.000 million short term lending facility (the equivalent of
US$26.000 million at an exchange rate of ZAR7.38 to the US dollar)
with Pallinghurst Resources Limited ("Pallinghurst"). As at
December 31, 2010, a total of ZAR191.000 million had been drawn
against this facility. This facility was initially for a period of
3 months but has been extended until February 28, 2011 and was
repaid in full on February 28, 2011.
Funds raised will be used by the Company for working capital, to
complete the build-up to full production at the Pilanesberg
Platinum Mine (PPM), to pursue a number of growth and acquisition
opportunities, and to further develop the Company's Eastern Limb
projects.
19. Convertible debenture
As at Dec As at Dec
31, 31,
2010 2009
$ 000 $ 000
Convertible debenture issued 135,000 -
Option component accounted
for in equity (26,664) -
----------------------------------------- --------------- ----------------
108,336 -
Share-based payment expense
(Fair value adjustment at transaction
date) 23,708 -
----------------------------------------- --------------- ----------------
Fair value of debt component
on transaction date 132,044 -
Fair value adjustment at extension
date (1,060) -
Interest for the period 3,372 -
Transaction costs (1,128) -
----------------------------------------- --------------- ----------------
133,228 -
========================================= =============== ================
The debentures were issued on May 13, 2010 to Ridgewood
Investments (Mauritius) Pte Limited, Pallinghurst and Investec Bank
Limited, for a principal sum of US$135.000 million.
The debenture is convertible at the option of the holder into
ordinary shares of Platmin Limited at a conversion price of US$
1.215 per share by December 31, 2010. If the debenture is not
converted into ordinary shares by the maturity date, the principal
sum becomes repayable to the holders. On December 22, 2010, Platmin
has accepted an extension to the maturity date of the convertible
debenture and accordingly the convertible debentures will now
mature on February 28, 2011 as is permitted by the debenture
terms.
The debentures have a zero coupon rate. The effective interest
rate is 3.76% calculated based on the expected payments.
The fair value of the option component was determined using the
following assumptions:
-- a risk-free rate of 0.28% (Original maturity - 0.61%);
-- a volatility index of 60% (Original maturity - 67.73%)
and
-- a dividend yield of 0% (Original maturity - 0%).
The debentures are secured over cash and cash equivalents of
US$135.131 million (including interest accrued to date). The
security provides the holder with a first ranking interest in the
collateral account (or any investments made using the cash
collateral account) and any interest or other proceeds earned
thereon. The security interest is released when the conversion
right is exercised.
The fair value of the debt instrument at the reporting date is
US$134.225 million.
20. Income tax expense
Income tax rates
The South African taxation rate remained unchanged at 28%. The
statutory tax rate in Canada is 28.5%. The Group's effective tax
rate in the period ended December 31, 2010 was 0% (December 31,
2009: 0%). A reconciliation of income tax expense applicable to
profit / (loss) from operating activities before income tax at the
statutory income tax rate to income tax expenses at the group's
effective rate at period end is as follows:
For the periods For the periods
ended ended
Dec 31, Dec 31, Dec 31, Dec 31,
2010 2009 2010 2009
$ 000 $ 000 % %
Corporate tax rate (18,651) (3,668) (28.5) (33.0)
Tax effects of:
- Expenses not deductible for
tax purposes 12,926 2,857 19.8 25.7
- Tax losses for which no
deferred income tax asset
was recognised 5,496 2,698 8.4 24.3
- Benefit of losses not
previously recognised - (2,776) - (25.0)
Foreign income tax allowances and
rate differentials 229 889 0.3 8.0
Effective tax rate - - - -
===================================== ======== ========= ======= =========
South Africa
As at the periods ended, the group had not recognised the
following temporary differences and tax losses:
As at Dec As at Dec
31, 31,
2010 2009
$ 000 $ 000
Unredeemed capital expenditure available
for utilisation against future mining
taxable income 2,779 1,158
Foreign exchange and provisions (135,319) (59,664)
Tax losses carried forward utilisable
against taxable income 245,354 116,917
------------------------------------------ ---------------- ----------------
112,814 58,411
========================================== ================ ================
The unrecognised deferred tax at the
period end is 31,588 16,355
========================================== ================ ================
The South African losses do not have an expiry date.
Canada
As at the periods ended, the group had not recognised the
following temporary differences and tax losses:
As at Dec As at Dec
31, 31,
2010 2009
$ 000 $ 000
Share issue costs 12,000 6,734
Tax losses carried forward utilisable against taxable
income 6,551 7,329
------------------------------------------------------- --------- ---------
18,551 14,063
======================================================= ========= =========
The unrecognised deferred tax at the period end
is 4,638 3,516
======================================================= ========= =========
The Canadian losses carried forward expire in various fiscal
years, as indicated in the following table:
US$ 000
2029 6,551
6,551
========
21. Loss before taxation
For the year For the period
ended ended
Dec 31,
2010 Dec 31, 2009
$ 000 $ 000
Included in the operating expenses are the
following:
Share based payments expense (5,310) (2,792)
Employee expenses (9,370) (5,772)
Audit fees (578) (441)
Consulting and professional fees (543) (501)
Royalty tax (292) -
Ammortization and Depreciation (653) (330)
General and administration expenses (6,793) (3,857)
------------------------------------------------
(23,539) (13,693)
================================================ ============ ==============
Included in other (expenses)/income are the
following:
Other income 373 17
Loss on impairment of exploration project (330) -
Share-based payment expense (fair value
adjustment) (24,120) -
Foreign exchange gain / (loss) (12,806) 3,216
------------------------------------------------
(36,883) 3,233
================================================ ============ ==============
22. Loss per share attributable to owners of the parent
For the
For the period
year ended ended
Dec 31, Dec 31,
2010 2009
$ 000 $ 000
Basic (loss) / earnings per share Basic (loss) /
earnings per share is calculated by dividing the
net (loss) / profit for the period/ year
attributable to owners of the parent by the
weighted average number of ordinary shares
outstanding during the period/ year (0.09) (0.02)
Reconciliations:
Net (loss) used in calculating basic earnings
per share attributable to owners of the parent
(US$'000) (55,417) (7,642)
===================================================== ============= ========
Weighted average number of shares used in the
calculation of basic earnings per share ('000) 590,434 430,015
===================================================== ============= ========
There are no reconciling items between (loss) / earnings and
headline (loss) / earnings and therefore (loss) / earnings per
share and headline (loss) / earnings per share is the same.
Due to the Group reporting a loss for the period ending December
31, 2010 the diluted loss per share is equal to the basic loss per
share.
23. Related party disclosures
Compensation of Directors and key management personnel of the
group:
For the
For the period
year ended ended
Dec 31, Dec 31,
2010 2009
$ 000 $ 000
Compensation of directors:
Short-term benefits (salary) 1,178 1,424
Share options vested during the period 520 572
---------------------------------------------------- ------------ --------
1,698 1,996
Compensation of key management personnel:
Short-term benefits (salary) 1,167 609
Share options vested during the period 1,085 687
---------------------------------------------------- ------------ --------
2,252 1,296
---------------------------------------------------- ------------ --------
Total remuneration of directors and key management
personnel of the Group 3,950 3,292
==================================================== ============ ========
Share options outstanding and exercisable are as follows:
Black Scholes option
pricing Valuation
Total Risk
Options Exercise Expiring Remaining maturity Expected free
exercisable price date life time volatility rate
Number C$ Days Years % % CAD USD
Executive directors
--------------------------------------------------------------------------------------------
Dec 15,
1,400,000 C$1.35 2013 1080 2.08 76% 1.43% 0.69 0.66
Non-executive directors
--------------------------------------------------------------------------------------------
Jan 14,
112,167 C$9.08 2013 745 3.00 71% 3.50% 3.40 3.33
Key management personnel
--------------------------------------------------------------------------------------------
Jun 1,
570,000 C$6.75 2017 2344 3.00 66% 4.50% 4.68 4.96
Jan 14,
119,000 C$9.08 2013 745 3.00 71% 3.50% 3.40 3.33
Nov 7,
170,400 C$9.04 2012 677 3.00 74% 4.24% 4.09 4.41
Sep
62,000 C$3.08 19,2013 993 3.00 77% 3.03% 1.64 1.54
Dec 15,
900,000 C$1.35 2013 1080 2.08 76% 1.43% 0.69 0.66
Sep 27,
800,000 C$0.96 2015 1731 4.99 84% 2.01% 0.65 0.64
Nov 6,
150,000 C$1.07 2015 1771 5.00 84% 1.89% 0.70 0.70
------------ --------- --------- ---------- --------- ----------- ------ ----- -----
A dividend yield of 0% has been applied as the Company has no
history of dividends and no dividends will be paid in the
foreseeable future.
During the year none of the options listed above were exercised,
and no consideration was received by the Group.
Controlled entities
Details of controlled entities are as follows:
Dec 31, Dec 31,
2010 2009
% %
Platmin Resources Ltd. 100.0 100.0
Boynton Investments (Pty) Ltd. ("Boynton") 72.4 72.4
Boynton Platinum (Pty) Ltd. 72.4 72.4
Boynton Platinum (Pty) Ltd. (East) 72.4 72.4
Born Free Investments 144 (Pty) Ltd. 72.4 72.4
Born Free Investments 330 (Pty )Ltd. 35.5 35.5
Bubesi Investments (Pty) Ltd. ("Bubesi") 72.4 72.4
Crowned Cormorant Investments 13 (Pty)
Ltd. 72.4 72.4
Crowned Cormorant Investments 16 (Pty)
Ltd. 72.4 72.4
Dream World Investments 226 (Pty) Ltd. 35.5 35.5
Dream World Investments 249 (Pty) Ltd. 72.4 72.4
Eagle Creek Investments 55 (Pty) Ltd. 72.4 72.4
Eagle Creek Investments 86 (Pty) Ltd. 72.4 72.4
Intrax Investments 255 (Pty) Ltd. 72.4 72.4
Isandlwana Mining and Exploration (Pty)
Ltd. 72.4 72.4
Keenan Investments (Pty) Ltd. 72.4 72.4
Mahube Mining (Pty) Ltd. ("Mahube") (1) 57.2 57.2
Midnight Masquerade Properties 170 (Pty)
Ltd. 72.4 72.4
New Line Investments 77 (Pty) Ltd. 72.4 72.4
Pilanesberg Platinum Mines (Pty) Ltd ("PPM") 72.4 72.4
Private Preview Investments 39 (Pty) Ltd.
("Private Preview") 72.4 72.4
Sengani Family Mining and Exploration
(Pty) Ltd. ("Sengani") 35.5 35.5
Setseka Mining (Pty) Ltd. ("Setseka") 34.0 34.0
Tafida Investments (Pty) Ltd. 18.1 18.1
Taung Minerals (Pty) Ltd. ("Taung Minerals") 72.4 72.4
Taung Platinum Exploration (Pty) Ltd.
("Taung Platinum") 29.0 29.0
Ubkhosi Mining and Exploration (Pty) Ltd. 72.4 72.4
Versatex Trading 346 (Pty) Ltd. 72.4 72.4
West Dunes Properties 115 (Pty) Ltd. 72.4 72.4
5 Brothers Mining (Pty) Ltd. 72.4 72.4
8 Mile Investments49 (Pty) Ltd. 72.4 72.4
---------------------------------------------- -------- --------
(1) Mahube owns 95% of Tameng Mining and Exploration (Pty) Ltd
("Tameng")
All companies, with the exception of Platmin Resources Limited,
are registered within the Republic of South Africa. Platmin
Resources is registered in the British Virgin Islands. The type of
shareholding held in all companies, are ordinary.
Transactions within the Group
During the financial period, unsecured loan advances were made
by subsidiaries within the Group and between subsidiaries and the
parent entity. Certain such loans carried a discounted rate of
interest. Intra-entity loan balances have been eliminated in the
financial statement of the Group.
For the For the
12 months 10 months
ended ended
Dec 31, Dec 31,
2010 2009
$ 000 $ 000
Related Party Transactions
Pallinghurst Resources Ltd (a) 2,220 36
Richtrau 123 (Pty)Ltd (b) 372 -
-------------------------------- ----------- -----------
2,592 36
-------------------------------- ----------- -----------
Related Party Balances
Pallinghurst Resources Ltd (a) 31,935 -
Richtrau 123 (Pty)Ltd (b) 1,619 -
-------------------------------- ----------- -----------
33,554 -
-------------------------------- ----------- -----------
a) Pallinghurst Resources Ltd is a major shareholder in the
Group. US$0.300 million share issuance cost reimbursed to them was
capitalised to equity. A further US$0.072 million is included in
operating expenses.
b) Administration fees were recovered from Richtrau 123 (Pty)
Ltd ("Richtrau"), a subsidiary of Pallinghurst Resources Ltd,
relating to the exploration project managed by Boynton Investments
(Pty) Ltd on behalf of Richtrau.
24. Contingencies and commitments
-- The Company has provided guarantees to the DMR for
environmental rehabilitation due to numerous exploration targets.
As at December 31, 2010, the total guarantees held by a bank were
US$81.720 million (Dec 31, 2009 - US$5.362 million) and the total
premiums paid to date on insurance backed guarantees were US$2.751
million (Dec 31, 2009 - US$1.800 million)
-- Boynton has entered into an agreement with Impala Platinum
Limited ("Impala") for the right of first refusal to purchase PGM
concentrate produced by Boynton from the properties, Ruighoek
169JP, Vogelstruisnek 173JP and Palmietfontein 208JP. Should
Boynton elect not to accept the terms proposed by Impala, a break
fee of US$2,089,573 in aggregate will be payable to Impala.
-- Boynton has an obligation, which cannot be quantified, pro
rata to its shareholding in Mahube to provide funding to Tameng to
undertake the necessary exploration and development on the
Mphahlele project. The consequence of not contributing accordingly,
results in dilution of Boynton's shareholding.
-- Boynton has entered into an agreement with Codoca Beleggings
Closed Corporation ("Codoca"); where Codoca will transfer its
mineral rights to Boynton. A deposit of US$203,569 (ZAR1.500
million) was paid to Codoca.
The remaining balances are due to be paid by Boynton when the
following requirements are met:
- A payment of 50% of the balance of the consideration amount
within 30 days of being notified by the DMR that a prospecting
right, in terms of the Mineral and Petroleum Resources Development
Act, Number 28 of 2002 ("MPRDA"), has been granted and issued to
Boynton, enabling and entitling Boynton to commence prospecting
activities and also in respect of Codoca's undivided share in the
mineral rights. The remaining balance for this, less the deposit,
will be US$217,141 (ZAR1.600 million).
- Furthermore, payment of remaining balance of the consideration
amount within 30 days of being notified by the DMR that a mining
right in terms of the MPRDA has been granted and issued to Boynton,
enabling and entitling Boynton to commence mining activities and
also in respect of Codoca's undivided share in the mineral rights.
The remaining balance for this, less the deposit, will be
US$217,141 (ZAR1.600 million).
-- A notarial prospecting contract was entered into on April 29,
2005 between Boynton and Sephaku Development (Pty) Ltd ("Sephaku"),
BHP Billiton SA Limited ("BHP") and Samancor Limited ("Samancor")
with respect to the properties; Annex Grootboom 335KT ("Annex
Grootboom") and Scheiding 407KS ("Scheiding"). In terms of the
agreement, Samancor as the holder of certain old order rights
pertaining to Annex Grootboom and Scheiding was obligated to apply
for conversion of these rights under the provisions of the MPRDA.
Subsequent to a conversion being granted, Samancor is obligated in
terms of the agreement to transfer the rights to PGM's and all
metals and minerals mineralogically associated therewith on Annex
Grootboom and Scheiding (the "PGM rights"), to BHP.
Samancor lodged an application for conversion of the mining
licence in December 2006. In terms of the same agreement, Sephaku
was appointed to carry out exploration activities on Annex
Grootboom and Scheiding on a contract basis. Boynton's right to
acquire the PGM rights in respect of Scheiding expired on April 28,
2010.
In terms of the agreement, Sephaku has the right to, within one
month of the completion of a Bankable Feasibility Study on Annex
Grootboom, acquire from BHP the PGM Rights for cash consideration
of US$8.00 per resource ounce as determined in a Bankable
Feasibility Study in accordance with the South African Mineral
Resource Committee's ("SAMREC") Code.
Sephaku has subsequently assigned all of its rights and
obligations in terms of the aforementioned contract to Boynton.
-- PPM also entered into a number of agreements with various
suppliers to render services associated with the operating of the
mine. The remaining value with regards to this agreements as at
December 31, 2010 is:
- For carrying out opencast mining operations - US$415.723
million
- For managing and maintaining the processing plant - US$19.218
million.
25. Events after the reporting period
On February 18, 2011 it was announced that agreements have been
executed with the holders of the convertible debentures, to convert
the convertible debentures into 160,714,287 new common shares,
subject to certain conditions and it was approved by the Board and
the debenture holders to adjust the conversion price to US$0.84 per
share, reflecting recent trading levels. The conversion is subject
to regulatory approval and to the completion of the transfer of
certain power and water rights from Barrick Platinum South Africa
(Pty) Ltd to an affiliate of Platmin.
On March 1, 2011 it was announced that Platmin has agreed with
the holders of all the convertible debentures issued on 13 May
2010, in principal amount of US$135.000 million, to extend the
maturity date of the convertible debentures from 28 February 2011
to 31 March 2011. The only condition remaining outstanding is the
completion of the transfer of certain power and water rights from
Barrick Platinum South Africa (Proprietary) Limited to an affiliate
of Platmin, and the extension is intended to permit the necessary
time for that transaction to close.
On February 28, 2011 Platmin repaid the prommisory note and
accumulated interest to Pallinghurst in full.
On March 23, 2011 it was announced that the acquisition of an
incremental 5.99 million 4E PGM inferred resource ounces (42.57
million tonnes at a grade of 4.38g/t) contained within the western
portion of the Sedibelo PGM Project concession ("Sedibelo West")
from the Bakgatla-Ba-Kgafela Tribe ("Bakgatla") and Itereleng
Bakgatla Mineral Resources (Pty) Limited ("IBMR"), for an aggregate
consideration of US$75.000 million in cash (equivalent to US$12.50
per 4E PGM inferred resource ounce). In addition to the Sedibelo
West purchase, Platmin has also acquired an effective 50% interest
in an infrastructure vehicle (the "Vehicle"), which has acquired
all of Barrick's strategically important infrastructure rights and
assets. These include power and water rights as well as certain
other assets which can be used for the development of the PGM
deposits to the east of the existing operations.
On March 31, 2011, the Company announced that all the conditions
precedent for the conversion of the $135.000 million in convertible
debentures had been fulfilled and that conversion had taken place
at US$0.84 per share. A total of 160,714,287 new shares are to be
issued resulting in a total of 910,395,054 shares in issue.
26. Financial risk management
The Group is exposed to certain financial risks in the normal
course of its operations:
-- Market risk (including foreign exchange / currency risk,
commodity price risk, interest rate risk);
-- Liquidity risk; and
-- Credit risk.
This note presents information about the Group's financial risk
management framework, objectives, policies and processes for
measuring and managing risk, the Group's exposure to these
financial risks, and the Group's management of capital.
Furthermore, quantitative disclosures are included throughout these
consolidated financial statements.
a) Financial risk management framework, objectives and
policies
The Board of Directors has overall responsibility for the
establishment and oversight of the Group's risk management
framework. The Group's Executive is responsible for developing and
monitoring the Group's risk management policies. The Group's
Executive reports regularly to the Board of Directors on its
activities.
The Group's risk management policies are established to identify
and analyse the risks faced by the Group, to set appropriate risk
limits and controls, and to monitor risks and adherence to limits.
Risk management policies and systems are reviewed regularly to
reflect changes in market conditions and the Group's activities.
The Group, through its training and management standards and
procedures, aims to develop a disciplined and constructive control
environment in which all employees understand their roles and
obligations.
The Group Audit Committee oversees how management monitors
compliance with the Group's risk management policies and
procedures, and reviews the adequacy of the risk management
framework in relation to the risks faced by the Group.
Group Treasury risk
The Group monitors its forecast financial position on a regular
basis. The Group's Executive meets regularly and considers cash
flow projections for the following 12 months in detail, taking into
consideration the impact of market conditions including commodity
prices and foreign exchange rates. The Group's Executive also
receives reports from independent exchange consultants and receives
presentations from advisors on current and forecast economic
conditions.
The Group's forecast financial risk position with respect to key
financial objectives and compliance with treasury practice are
regularly reported to the Board.
From time to time, the Group does use derivative financial
instruments to hedge certain identified risk exposures, as deemed
necessary by the Group's Executive. The Group does not acquire,
hold or issue derivative instruments for trading purposes.
The Group's objectives, policies and processes for managing
risks arising from financial instruments have not changed from the
previous financial year.
b) Market risk
i) Foreign exchange (Currency) risk
The group operates internationally and is exposed to foreign
exchange risk arising from various currency exposures, primarily
with respect to the United States dollar ("US dollar"). The group's
functional currency is the South African rand ("SA rand").
Foreign exchange risk arises from future commitments, assets and
liabilities that are denominated in a currency that is not the
functional currency. Most of the company's purchases are
denominated in SA rand. However, certain initial capital items
during the plant construction phase as well as long lead-capital
items are denominated in US dollars, Euros or Australian dollars.
These have to be acquired by the South African operating company
due to the South African Reserve Bank's Foreign Exchange Control
Rulings. This exposed the South African subsidiary companies to
changes in the foreign exchange rates.
The Group's cash deposits are largely denominated in US dollar
and SA rand. A foreign exchange risk arises from the funds
deposited in US dollar which will have to be exchanged into the
functional currency for working capital purposes.
Furthermore, the international commodity market is predominately
priced in US dollars which expose the Group's cash flows to foreign
exchange currency risks.
The following significant exchange rates were applied during the
reporting period:
Reporting date spot
Average rate rate
12 months 10 months
ended ended Dec 31, Dec 31,
Dec 31, 2010 Dec 31, 2009 2010 2009
US Dollar 1 =
SA Rand 7.2903 8.1850 6.5913 7.3685
UK Pound
Sterling 1 =
SA Rand 11.2621 12.8926 10.2033 11.8788
-------------- -------------- -------------- -------------- --------------
At financial period end, the financial instruments exposed to
foreign currency risk movements are as follows:
Accounts
Presented denominated
Balances as on Dec 31, 2010 US$ '000 in US$ '000 ZAR '000
Financial assets
Loans receivable 63 - 415
Restricted cash investments
and guarantees 84,471 - 556,774
Accounts and other
receivables 46,877 - 308,980
Restricted cash 135,131 135,131 890,689
Cash and cash equivalents 188,596 77,213 1,243,093
---------------------------- -------------- -------------- ----------------
Total financial assets 455,138 212,344 2,999,951
============================ ============== ============== ================
Financial liabilities
Long-term borrowings 4,710 - 31,045
Trade payables and accrued
liabilities (1) 20,747 15 136,750
Current portion of long-term
borrowings 31,923 31,923 210,414
Revolving commodity facility
(2) 3,468 - 22,859
Convertible debenture 133,228 133,228 878,146
Total financial liabilities 194,076 165,166 1,279,214
============================ ============== ============== ================
(1) An insignificant amount of payables were denominated in
other currencies.
(2) This amount represents the total drawn down on the Revolving
Commodity Facility at December 31, 2010.
Accounts
Presented denominated
Balances as on Dec 31, 2009 US$ '000 in US$ '000 ZAR '000
Financial assets
Loans receivable 50 - 368
Restricted cash investments
and guarantees 7,163 - 52,778
Accounts and other receivables 28,452 - 209,649
Cash and cash equivalents
(3) 29,375 1,703 186,084
Total financial assets 65,040 1,703 448,879
=============================== ============= ============ ==============
Financial liabilities
Long-term borrowings 3,817 - 28,126
Trade payables and accrued
liabilities (4) 22,144 198 161,516
Revolving commodity facility
(5) 5,854 - 43,137
Total financial liabilities 31,815 198 232,779
=============================== ============= ============ ==============
(3) An insignificant amount of cash and cash equivalents were
denominated in other currencies.
(4) An insignificant amount of payables were denominated in
other currencies.
(5) This amount represents the total drawn down on the Revolving
Commodity Facility at December 31, 2009.
The following table summarises the sensitivity of financial
instruments held at balance date to movements in the exchange rate
of the SA rand to the US dollar, with all other variables held
constant. The US dollar denominated instruments have been assessed
using the sensitivities indicated in the table. These are based on
reasonably possible changes, over a financial period, using the
observed range of actual historical rates for the preceding
two-year period.
Dec 31, Dec 31,
2010 2009
Impact on profit/equity (pre-tax gain/(loss)) US$ '000 US$ '000
Judgements on reasonable possible movements
US$/ZAR increase by 30% (14,911) (4,995)
US$/ZAR decrease by 20% 16,153 5,411
--------------------------------------------- --------------- --------------
ii) Commodity price risk
Commodity price risk arises from the possible adverse effect on
current and future earnings due to fluctuations in commodity
prices, in particular the price of platinum group metals ("PGMs").
Most of these prices are determined in US Dollars and are
internationally determined in the open market. The Group regularly
measures exposure to commodity price risk by stress testing the
Group's forecast financial position to changes in PGM prices. The
Group reviews it exposure with reference to the basket price for
the following 4 metals: Platinum, Palladium, Rhodium and Gold
(commonly referred to in the platinum mining industry as the "4E
basket price")
The Group does not actively hedge future commodity prices
against price fluctuations. The PPM operation recognises revenue at
the month end during which delivery of concentrate has occurred at
the month's average commodity price for the contained metal. The
revenue is revalued at each month end to the latest commodity price
averages until such time that the commodity is determined under the
Concentrate Agreement entered into with Northam Platinum Limited
("Northam"). These fair value adjustments are set off against
revenue, as this is the mining industry standard. The total fair
value adjustments amounted to a profit of US$2.082 million (Dec
2009 - US$1.025 million).
During 2009 and continuing in 2010, the Group entered into a
Revolving Commodity Facility with Investec (please refer to note 19
for details on this facility). In terms of this facility, Investec
will finance up to 91% of PPM's platinum, palladium, gold, copper
and nickel deliveries to Northam in the month following the
delivery month. This facility is repaid within 2 to 3 months. The
respective commodity prices are determined and fixed upon each
drawdown in SA rand and any fluctuations in the commodity prices or
SA rand / US dollar exchange rate are hedged in terms of a swap
agreement. Under this agreement, the Group agrees to swap a fixed
amount on maturity date of the respective drawdown with the
variable amount realised on the commodity and currency markets. The
fair value adjustments arising from this are set off against
revenue, as this is the mining industry standard. The total fair
value adjustments amounted to a loss of US$1.675 million (Dec 2009
- US$0.173 million).
The following 4E basket prices were applied during the reporting
period:
Average for Data for
the 12 months the 10 months
ended of
Dec 31, 2010 Dec 31, 2009
4E basket price in US Dollar 1,405 1,100
US Dollar 1 = SA Rand 7.2903 8.1850
4E basket price in SA Rand 10,242 9,004
----------------------------- -------------- --------------
The financial instruments exposed to movements in commodity
prices (in US$) are as follows:
Gross amount
Presented exposed
Balances as on Dec 31, 2010 US$ '000 US$ '000
Accounts and other receivables 46,877 38,341
Revolving commodity facility (3,468) (3,468)
Total financial instruments 43,409 34,873
=============================== ============== ==============
Balances as on Dec 31, 2009
Accounts and other receivables 28,452 18,636
Revolving commodity facility (5,854) (5,854)
Total financial instruments 22,598 12,782
=============================== ============== ==============
The following table summarises the sensitivity of financial
instruments held at balance date to movements in the relevant
forward commodity price, with all other variables held constant.
The sensitivities are based on reasonably possible changes, over a
financial period, using observed ranges of actual historical
rates.
Impact on profit/equity (pre-tax gain/(loss)) Dec 31, Dec 31,
2010 2009
US$ '000 US$ '000
Judgements on reasonable possible movements
Increase by 30% in 4E basket price - -
Decrease by 20% in 4E basket price - -
--------------------------------------------- --------- ---------
No impact would have realised on profit/equity (on a pre-tax
basis), as the revenue is being capitalised. PPM has not yet
reached desired production levels and all costs and revenues are
off-set against the Mine development asset (refer note 6 and 3 for
accounting policies).
iii) Interest rate risk
Interest rate risk is the risk that the Group's financial
position will be adversely affected by movements in interest
rates.
The Group's main interest rate risk arises from short-term loans
with interest charges based on the Johannesburg Interbank
Acceptance Rate ("JIBAR"). Floating rate debt exposes the Group to
cash flow interest rate risk. The long-term loans bear interest at
an interest rate linked to the South African prime overdraft rate.
Cash holdings are subject to interest rate risk in the country in
which they are held on deposit. All other financial assets and
liabilities in the form of receivables, payables and provisions, is
non-interest bearing.
The Group currently does not engage in any hedging or derivative
transactions to manage interest rate risk. In conjunction with
external advice, management consideration is given on a regular
basis to alternative financing structures with a view to optimising
the Groups' funding structure.
The financial instruments exposed to movements in variable
interest rates are as follows:
Exposed to
Balances as on Dec Presented movements
31, 2010 US$ '000 US$ '000
Loans receivable Non-interest bearing 63 -
Restricted cash Cash deposited at
investments and reputable financial
guarantees institutions (1) 84,471 -
Cash on hand at
Cash and cash reputable financial
equivalents institutions (1) 188,596 77,213
Total financial assets 273,130 77,213
=============================================== ============== =============
Current portion of Fixed at Interest at
long term borrowings JIBAR + 2% 31,923 31,923
Interest at SA prime
Long-term borrowings overdraft 4,710 4,681
Interest at SA prime +
2% - 29
Revolving commodity Fixed at Interest at
facility JIBAR + 3% 3,468 -
Total financial liabilities 40,101 36,633
=============================================== ============== =============
(1) Restricted cash investments and guarantees as well as cash
and cash equivalents are exposed to movements in US dollars, GBP
sterling and SA rand cash deposit rates.
Exposed to
Balances as on Dec Presented movements
31, 2009 US$ '000 US$ '000
Loans receivable Non-interest bearing 50 -
Restricted cash Cash deposited at
investments and reputable financial
guarantees institutions (1) 7,163 7,163
Cash on hand at
Cash and cash reputable financial
equivalents institutions (1) 29,375 29,375
Total financial assets 36,588 36,538
================================================ ============= =============
Interest at SA prime
Long-term borrowings overdraft 3,817 3,794
Interest at SA prime +
2% - 23
Revolving commodity Fixed at Interest at
facility JIBAR + 3% 5,854 -
Total financial liabilities 9,671 3,817
================================================ ============= =============
(1) Restricted cash investments and guarantees as well as cash
and cash equivalents are exposed to movements in US dollars, GBP
sterling and SA rand cash deposit rates.
The following table summarises the sensitivity of the financial
instruments held at reporting date, following a movement in
variable interest rates, with all other variables held constant.
The sensitivities are based on reasonably possible changes over a
financial period, using the observed range of actual historical
rates.
Dec 31, Dec 31,
2010 2009
Impact on profit/equity (pre-tax gain/(loss)) US$ '000 US$ '000
Judgements on reasonable possible movements
Increase of 1% in prime overdraft 116 51
Decrease of 0.5% in prime overdraft (64) (25)
---------------------------------------------- ----------- -----------
The impact is calculated on the net financial instruments
exposed to variable interest rates as at reporting date and does
not take into account any repayments of long or short-term
borrowing.
b) Liquidity risk
The liquidity position of the Group is managed to ensure
sufficient liquid funds are available to meet financial commitments
in a timely and cost effective manner. The Group's Executive
continually reviews the liquidity position including cash flow
forecasts to determine the forecast liquidity position and maintain
appropriate liquidity levels.
All excess cash is held by the Company or the South African
operating company, Boynton. The Company invests excess funds in a
32 day deposit account and Boynton keeps excess funds in a current
account. Cash is deposited at highly reputable financial
institutions of high quality credit standing within the Republic of
South Africa and their foreign affiliates in the United
Kingdom.
The concentration of cash balances on hand in geographical areas
was as follows:
Republic
of South
Presented United Kingdom Africa
Balances as on Dec 31, 2010 US$ '000 US$ '000 US$ '000
Cash and cash equivalents (1) 188,596 77,213 111,383
Total financial assets 188,596 77,213 111,383
============================== ============== ============== ==============
Balances as on Dec 31, 2009
------------------------------ -------------- -------------- --------------
Cash and cash equivalents 29,375 4,122 25,254
Total financial assets 29,375 4,122 25,254
============================== ============== ============== ==============
The contractual maturity analysis of payables at the reporting
date was as follows:
Less than Between Greater than
Balances as on Presented 6 months 6 - 12 months 12 months
Dec 31, 2010 US$ '000 US$ '000 US$ '000 US$ '000
Long-term
borrowings (1) 4,710 - - 4,710
Trade payables
and accrued
liabilities 20,747 20,747 - -
Revolving
commodity
facility (1) 3,468 3,468 - -
Current portion
of long term
borrowings 31,923 31,923 - -
Convertible
debenture 133,228 133,228 - -
Total financial
liabilities 194,076 189,366 - 4,710
================ ============== ============== ============== ============
Balances as on
Dec 31,2009
---------------- -------------- -------------- -------------- ------------
Long-term
borrowings (1) 3,817 - - 3,817
Trade payables
and accrued
liabilities 22,144 22,144 - -
Revolving
commodity
facility (1) 5,854 5,854 - -
Total financial
liabilities 31,815 27,998 - 3,817
================ ============== ============== ============== ============
(1) Refer to notes 13 and 17 for the repayment obligations for
borrowings.
d) Credit risk
Credit risk is the risk that a contracting entity will not
complete its obligation under a financial instrument that will
result in a financial loss to the Group. The carrying amount of
financial assets represents the maximum credit exposure. Receivable
balances are monitored on an ongoing basis with the result that the
Group's exposure to bad debts is not significant. The Group's
credit risk is limited to the carrying value of its financial
assets.
At balance date there is a significant concentration of credit
risk represented in the cash and accounts receivables balance. With
respect to accounts receivables, this is due to the fact that the
majority of sales are made to one customer, being Northam, as per
contractually agreed terms. The customer has complied with all
contractual sales terms and has not at any stage defaulted on
amounts due. The Group manages its credit risk by predominantly
dealing with counterparties with a positive credit rating.
The maximum exposure to credit risk was as follows:
Dec 31, Dec 31,
2010 2009
Balances as on US$ '000 US$ '000
Loans receivable 63 50
Restricted cash investments
and guarantees 219,602 7,163
Accounts and other receivables 46,877 28,452
Cash and cash equivalents 188,596 29,375
Total financial assets 455,138 65,040
=============================== ============== =============
The ageing of receivables at the reporting date was as
follows:
Between
3 - 12 Greater
Balances as Less than Between months than 12
on Dec 31, Presented 1 month 1 - 2 months US$ months
2010 US$ '000 US$ '000 US$ '000 '000 US$ '000
Loans
receivable 63 - - - 63
Accounts and
other
receivables 46,877 10,054 36,823 - -
Total
financial
assets 46,940 10,054 36,823 - 63
============ ============= ============= ============= ======== =========
Balances as
on Dec 31,
2009
------------ ------------- ------------- ------------- -------- ---------
Loans
receivable 50 - - - 50
Accounts and
other
receivables 28,452 19,202 9,250 - -
Total
financial
assets 28,502 19,202 9,250 - 50
============ ============= ============= ============= ======== =========
e) Capital management
The Group's corporate office is responsible for capital
management. This involves the use of corporate forecasting models,
which facilitates analysis of the Group's financial position
including cash flow forecasts to determine the future capital
management requirements. Corporate office monitors gearing.
Capital management is undertaken to ensure a secure, cost
effective supply of funds to ensure the Group's operating and
capital expenditure requirements are met. The mix of debt and
equity is regularly reviewed. The Group does not have a target
debt/equity ratio, but has a policy of maintaining a flexible
financing structure so as to be able to take advantage of new
investment opportunities that may arise. Net debt is calculated as
total borrowings (including the current and non-current borrowings
as reported on the Statement of Financial Position). Total capital
is calculated as the total equity (as reported) plus net debt.
Dec 31, Dec 31,
2010 2009
US$ '000 US$ '000
Long term borrowings 4,710 3,817
Revolving commodity facility 3,468 5,854
Convertible debenture(1) 133,228 -
Current portion of long-term
borrowings 31,923 -
----------------------------- ---------------- --------------
Net debt 173,329 9,671
Total equity 834,396 453,029
----------------------------- ---------------- --------------
Total capital 1,007,725 462,700
============================= ================ ==============
Gearing ratio 20.773% 2%
----------------------------- ---------------- --------------
No dividends were paid during the reporting period. The Board
maintains a policy of balancing returns to shareholders with the
need to fund growth.
(1) The debentures are secured over cash and cash equivalents of
US$135.131 million. The security provides the holder with a first
ranking interest in the collateral account (or any investments made
using the cash collateral account) and any interest or other
proceeds earned thereon. The security interest is released when the
conversion right is exercised.
f) Financial assets and liabilities by category
The accounting policies for financial instruments have been
applied to the line items below:
Dec 31, Dec 31,
All classified as loans and receivables 2010 2009
(1) US$ '000 US$ '000
Loans receivable 63 50
Restricted cash investments and
guarantees 84,471 7,163
Restricted cash 135,131 -
Accounts and other receivables 46,877 28,452
Cash and cash equivalents 188,596 29,375
Total financial assets 455,138 65,040
======================================== ============== =============
(1) None of the Group's financial assets have been categorised
as assets through profit or loss, derivatives used for hedging or
available for sale assets.
All classified as liabilities Dec 31, Dec 31,
at fair value through profit 2010 2009
or loss (1) US$ '000 US$ '000
Long term borrowings 4,710 3,817
Current portion of long-term
borrowings 31,923 -
Trade payables and accrued liabilities 20,747 22,144
Revolving commodity facility 3,468 5,854
Convertible debenture 133,228 -
Total financial liabilities 194,076 31,815
======================================= ============== =============
(1) None of the Group's financial liabilities have been
categorised as derivatives used for hedging or available for sale
liabilities.
g) Fair value of financial assets and liabilities
The fair value of a financial asset or a financial liability is
the amount at which the asset could be exchanged or liability
settled in a current transaction between willing parties in an
arm's length transaction. The fair values of the Group's financial
assets and liabilities approximate their carrying values, as a
result of their short maturity or because they carry floating rates
of interest.
All financial assets and liabilities recorded in the financial
statements approximate their respective net fair values.
27. Segmented information
Management has determined the operating segments based on the
reports reviewed by the executive committee that are used to make
strategic decisions.
The committee considers the business from an operating
perspective. The Group operates in one geographic segment, the
Republic of South Africa. The operating segments comprise the
following:
-- Mining operation: The Pilanesberg Mine is currently in an
advanced development and build-up stage. This mine is involved in
the mining and processing of platinum group elements.
-- Development and exploration operations: The Group is engaged
in a number of other development and exploration projects within
the Republic of South Africa.
-- Administrative operations: The Group administration is done
at the local corporate office based in Centurion, the Metropolitan
City of Tshwane in the Republic of South Africa.
Although the development and exploration as well as
administrative operations do not meet the quantitative thresholds
required by IFRS 8 - Segment reporting, management has concluded
that these segments should be reported, as it is closely monitored
by the executive committee. The development and exploration segment
is earmarked as the growth area for the Group.
The committee assesses the performance of the operating segments
as follows:
-- Mining: based on an adjusted earnings before interest,
taxation, depreciation and amortisation ("EBITDA") prior to the
capitalising of the costs per the accounting policies;
-- Development and exploration: based on the additions to
non-current assets and viability; and
-- Administrative: based on an adjusted EBITDA.
The chief operating decision maker ("CODM") at reporting date
was Mr. Thomas Graham Dale, the Chief Executive Officer of the
Group.
The segment information provided to the committee for the
reportable segments for the period ended December 31, 2010 is as
follows:
Development
and
Mining exploration Administration Consolidated
Amounts in $ Dec Dec Dec Dec Dec
'000 Dec 2010 2009 2010 2009 Dec 2010 2009 Dec 2010 2009
Reportable items in the Statement of Comprehensive Income
External
revenues 82,301 29,422 - - - - 82,301 29,422
Intersegment
revenue - - - - - - - -
Depreciation
and
amortization (1,096) (153) (1) (1) (245) (176) (1,342) (330)
Income tax
expense - - - - - - - -
Adjusted
EBITDA (88,062) (55,320) - - (36,431) (11,584) (124,493) (66,904)
============== ========= ========= ====== ====== ========= ========= ========== =========
The revenue from external parties reported to the committee is
measured in accordance with IFRS. No revenue is recorded in the
Consolidated statement of income and comprehensive income as the
Pilanesberg Mine has not yet reached commercial production
(consistent with the accounting policies of the Group). All
revenues reported were from two customers, being Northam Platinum
Limited and Impala Refining Services Ltd.
A reconciliation of adjusted EBITDA to total comprehensive
(loss)/income for the period is provided as follows:
Consolidated
Dec
Dec 2010 2009
$'000 $'000
Total EBITDA for reportable segments (124,493) (66,904)
Revenues offset against the cost of the plant
construction (82,301) (29,422)
Mining costs offset against the cost of the plant
construction 159,831 82,980
------------------------------------------------------ ---------- ----------
Total EBITDA per Consolidated statement of income and
comprehensive income (46,963) (13,346)
Foreign exchange gains (12,806) 3,216
Depreciation (653) (330)
Finance costs (net) (5,020) (655)
------------------------------------------------------ ---------- ----------
Loss before taxation (65,442) (11,115)
Income tax expense - -
Exchange differences on translating from functional
currency to presentation currency 83,704 (109,688)
------------------------------------------------------ ---------- ----------
Total comprehensive income / (loss) for the period 18,262 (120,803)
====================================================== ========== ==========
The segment information provided to the committee for the
reportable segments for the period ended December 31, 2010 is as
follows:
Development
Mining and exploration Administration Consolidated
Amounts in $ Dec Dec Dec Dec Dec Dec Dec
'000 2010 2009 2010 2009 2010 2009 Dec 2010 2009
Reportable items in the Statement of Financial Position
Total assets 731,974 486,680 42,260 10,571 334,644 52,911 1,108,878 550,162
Additions to
non-current
assets 231,803 170,232 141,563 1,172 4,204 744 377,570 172,148
Total
liabilities 141,679 91,141 9,542 4,640 123,261 1,352 274,482 97,133
============= ======== ======== ======== ======= ======== =======
The amounts provided to the committee with respect to total
assets are measured in a manner consistent with that of the
financial statements. These assets are allocated based on the
operations of the segment. Additions to non-current assets include
all additions to Mining assets, Intangible assets and Property,
Plant and Equipment (refer to notes 4, 5 and 6).
The amounts provided to the committee with respect to total
liabilities are measured in a manner consistent with that of the
financial statements. These assets are allocated based on the
operations of the segment.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR WGUAGWUPGGPG
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