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WGR - Wits Gold - Summarised audited results for the ten months ended 31
December 2011
Witwatersrand Consolidated Gold Resources Limited
(Registration number 2002/031365/06)
JSE share code: WGR ISIN: ZAE000079703
TSX share code: WGR CUSIP number: S98297104
("Wits Gold" or the "Company")
Summarised audited results
for the ten months ended 31 December 2011
All figures quoted in South African Rand unless otherwise stated.
Bank of Canada noon rate at 26 March 2011: R7.66 = CAD$1; 31 December 2011:
R7.94 = CAD$1; (28 February 2011: R7.14 = CAD$1)
The financial statements have been prepared under the supervision of the
Financial Director, Mr DM Urquhart (CA(SA)).
Statement of financial position
as at 31 December 2011
December February
2011 2011
R R
Assets
Non-current assets 445 629 036 423 062 154
Property and equipment 4 856 506 5 023 496
Intangible exploration and evaluation assets 440 772 530 418 038 658
Current assets 112 900 999 147 667 283
Other receivables 1 311 247 1 488 679
Cash and cash equivalents 111 589 752 146 178 604
Total assets 558 530 035 570 729 437
Equity and liabilities
Capital and reserves 551 981 469 565 729 742
Ordinary share capital 344 903 344 903
Share premium 573 194 892 573 211 583
Equity-settled share-based payment reserve 18 033 076 7 119 295
Revaluation reserve 1 329 449 1 329 449
Accumulated loss (40 920 851) (16 275 488)
Current liabilities 6 548 566 4 999 695
Trade and other payables 6 448 566 4 699 695
Provisions 100 000 300 000
Total equity and liabilities 558 530 035 570 729 437
Statement of comprehensive income
for the ten months ended 31 December 2011
Ten months Year
ended ended
December February
2011 2011
R R
Revenue - -
Other income 16 813 6 620
Administrative expenses (30 765 683) (20 221 949)
Loss from operating activities (30 748 870) (20 215 329)
Finance income - interest received 6 103 507 5 326 307
Loss before income tax (24 645 363) (14 889 022)
Income tax expense - -
Loss from operations attributable to owners
of the Company (24 645 363) (14 889 022)
Other comprehensive income net of income tax - 75 468
Increase in revaluation of land and building - 75 468
Total comprehensive income attributable to owners
of the Company (24 645 363) (14 813 554)
Loss per share
Basic and diluted basic loss per share (cents) (71.65) (50.11)
Headline and diluted headline loss per share (cents) (68.46) (50.11)
Supplementary information:
Number of shares in issue 34 490 265 34 490 265
Weighted average number of shares in issue 34 398 701 29 713 768
The loss attributable to ordinary shareholders
is reconciled to headline loss as follows:
Net loss attributable to ordinary shareholders (24 645 363) (14 889 022)
Profit on disposal of property, plant
and equipment (10 919) -
Impairment of intangible assets 1 105 652 -
Headline loss (23 550 630) (14 889 022)
Net asset value per issued share (cents) 1 600.40 1 640.26
Net tangible asset value per issued share (cents) 322.44 428.21
Statement of cash flows
for the ten months ended 31 December 2011
Ten months Year
ended ended
December February
2011 2011
R R
Cash flows from operating activities
Cash utilised in operating activities (18 812 147) (13 928 826)
Finance income received 6 103 507 5 326 307
Taxation refunded/(paid) 2 085 337 (1 991 507)
Net cash utilised by operating activities (10 623 303) (10 594 026)
Cash flows from investing activities
Additions to property and equipment (121 176) (65 115)
Additions to intangible exploration and
evaluation assets (23 839 524) (41 147 571)
Proceeds on disposal of property and equipment 11 842 -
Net cash utilised in investing activities (23 948 858) (41 212 686)
Cash flows from financing activities
Proceeds from issue of shares for cash - 120 050 370
Costs from issue of share capital (16 691) (7 744 382)
Net cash (utilised)/generated by financing
activities (16 691) 112 305 988
(Decrease)/increase in cash and cash equivalents (34 588 852) 60 499 276
Cash and cash equivalents at beginning of the
period 146 178 604 85 679 328
Cash and cash equivalents at end of the period 111 589 752 146 178 604
Statement of changes in equity
for the ten months ended 31 December 2011
Equity-settled
share-based
Ordinary Share payment
share capital premium reserve
R R R
Balance at 28 February 2010 278 909 185 971 589 19 604 280
Total comprehensive loss
for the year - - -
Loss for the year - - -
Other comprehensive
income for the year - - -
Increase on revaluation
of land and buildings - - -
Transactions with owners
recorded directly in equity 65 994 387 239 994 (12 484 985)
Issue of share capital 65 994 394 984 376 -
Qualifying costs of share issue - (7 744 382) -
Share-based payment - - 6 191 666
Share-based options fully exercised - - (18 676 651)
Balance at 28 February 2011 344 903 573 211 583 7 119 295
Total comprehensive loss
for the ten months
Loss and total comprehensive
income for the ten months - - -
Transactions with owners
recorded directly in equity - (16 691) 10 913 781
Qualifying costs of share issue* - (16 691) -
Share-based payment - - 10 913 781
Balance at 31 December 2011 344 903 573 194 892 18 033 076
Total
capital
Revaluation Accumulated and
reserve loss reserves
R R R
Balance at 28 February 2010 1 253 981 (20 063 117) 187 045 642
Total comprehensive loss
for the year 75 468 (14 889 022) (14 813 554)
Loss for the year - (14 889 022) (14 889 022)
Other comprehensive
income for the year 75 468 - 75 468
Increase on revaluation
of land and buildings 75 468 - 75 468
Transactions with owners
recorded directly in equity - 18 676 651 393 497 654
Issue of share capital - - 395 050 370
Qualifying costs of share issue - - (7 744 382)
Share-based payment - - 6 191 666
Share-based options fully exercised - 18 676 651 -
Balance at 28 February 2011 1 329 449 (16 275 488) 565 729 742
Total comprehensive loss
for the ten months
Loss and total comprehensive
income for the ten months - (24 645 363) (24 645 363)
Transactions with owners
recorded directly in equity - - 10 897 090
Qualifying costs of share issue* - - (16 691)
Share-based payment - - 10 913 781
Balance at 31 December 2011 1 329 449 (40 920 851) 551 981 469
*Additional expenses relating to the capital raised in the prior year.
Nature of business
Witwatersrand Consolidated Gold Resources Limited (registration number
2002/031365/06) is a company domiciled in the Republic of South Africa. The
Company`s shares are publicly traded in South Africa on the JSE Limited
securities exchange (primary listing), and in Canada on the Toronto Stock
Exchange (secondary listing). The Company carries on the business of acquiring,
preserving, evaluating, trading and developing Prospecting Rights for
exploration and investment purposes. In addition, the Company has submitted a
Mining Right application to the Department of Mineral Resources (DMR) with the
intention of undertaking mining operations in due course.
The Company has been granted 14 Prospecting Rights by the DMR under the Mineral
and Petroleum Resources Development Act of 2002. One of these Rights has been
impaired in total and is being handed back to the State. Three renewal
applications for Prospecting Rights were granted during the period under review.
A further renewal application was submitted to the DMR in November 2011 and is
being processed in terms of the abovementioned Act. The Company has submitted a
Mining Right application for its combined De Bron - Merriespruit Project (DBM
Project) to the DMR and they have accepted the application subject to Wits Gold
complying with obligations in terms of feasibility studies, environmental
compliance and social and labour plan commitments. Wits Gold has not, and does
not in the near future, expect to generate any operating income from its
projects. Mineral exploration is highly speculative due to a number of
significant risks, including the possible failure to discover mineral deposits
that are sufficient in quantity and quality to justify the completion of
feasibility studies. Additional work will be undertaken in order to determine if
any economic deposits occur on any of the Company`s properties.
The ongoing exploration of the Company`s Prospecting Rights is dependent upon
the Company`s ability to obtain additional financing through the joint venturing
of projects, debt financing, equity financing or other means. In future, such
sources of financing may not be available on acceptable terms, if at all. The
Company has, however, been successful in the past in raising the required
capital from its shareholders to fund its operating and exploration activities.
Wits Gold intends raising additional capital during the course of its 2012
financial year in order to be able to settle its obligations with respect to the
planned purchase of Evander Gold Mines Limited (Evander), as discussed below
under subsequent events, and to fast track the development of its DBM Project.
Operational review*
During the period under review, the Company continued to focus its exploration
efforts predominantly in the southern Free State goldfield, however some
additional studies were initiated in the Potchefstroom and Klerskdorp goldfields
in order to better plan the future exploration activities in these areas. The
Company complies with the rehabilitation procedures agreed to at the time the
DMR grants the relevant Prospecting Right and has provided bank guarantees in
the amount of R320 000 (February 2011: R310 000) to the DMR as security to cover
these obligations.
The directors are not aware of any legal proceedings or other material
conditions that may impact on the Company`s ability to continue its exploration
activities, other than the ability to raise additional financing as noted above.
Southern Free State goldfield
Between March 2011 and September 2011, nine diamond drill boreholes were
completed within the DBM Project, achieving a total of some 9 500 metres at a
total cost of some R12 million. In addition a single borehole within the
Bloemhoek Project, drilled at a cost of just over R2 million was completed to a
depth of 1 860 metres in December 2011, the assay results of which are awaited.
In February, Snowden Mining Industry Consultants Inc, published a NI43-101 and
Samrec compliant Independent Technical Report dated February 24, 2012,
incorporating the results from the abovementioned DBM drilling into a revised
Resource Estimate for DBM including the Merriespruit area. This increased the
Indicated Resource by 27% to 41.8Mt at 5.5g/t Au (7.5Moz), and the Inferred
Resource consequently decreased to 19.5Mt at 5.4g/t Au (3.4Moz).
In addition to gold, the uranium resource was also updated to reflect an
Indicated Resource of 21.7Mt at 0.17Kg/t U308 (8.2Mlb) and an Inferred Resource
of 12.5Mt at 0.17Kg/t U308 (4.6Mlb). These resources were estimated using all
available borehole data and sample widths corrected for dip. No metal equivalent
calculations were made. Analyses of borehole core were undertaken at SGS South
Africa (Proprietary) Limited, an accredited laboratory (accreditation number
T0169), during which the Company`s standard sampling and QA/QC policies were
adopted.
Exploration in this area has continued to be concentrated on the shallow DBM
Project where gold mineralisation is associated with the Beatrix, Kalkoenkrans,
B and Leader Reefs at depths of between 500 and 1 450 metres below surface. The
recent drilling programme at DBM was aimed at more precisely locating both the
De Bron Fault, which serves as the western limit of the project area and the
eastern subcrop position of the reefs, as well as infilling sparsely drilled
areas in order to upgrade resources from the Inferred Category to the Indicated
Category.
The resultant DBM Indicated gold Resource has now been defined from the results
of 97 boreholes drilled over an area of some 22.0 km2 and is considered
representative of the mineralisation in this area. The Company has therefore
contracted Turgis Consulting (Proprietary) Limited to undertake a Pre-
feasibility Study (PFS), based on the relevant Indicated Resources, to assess
the viability of establishing a mine. The results of this study are expected to
become available during the second quarter of 2012 and will provide guidance for
any future exploration requirements in this area. The Section 102 application to
include the Merriespruit South area, acquired from Harmony Gold Mining Company
Limited (Harmony), has been lodged with the DMR in order to complete the
consolidation of the DBM Project area. As at the date of this report, the DMR
had not yet completed the process of transferring the Merriespruit property to
Wits Gold and the R51 million balance of the purchase price remains outstanding
to Harmony, until such time as the transfer has been finalised.
The Potchefstroom goldfield
No further diamond drilling was undertaken in this area during the period under
review. A 3-dimensional structural analysis of the Boskop Project has been
initiated in order to optimally position boreholes planned for late 2012.
The Klerksdorp goldfield
A desk-top study of the Klerksdorp goldfield is in progress, in order to
highlight areas where the Vaal Reef is shallower than 5 000 metres below
surface.
Mineral resources
The Company`s declared Mineral Resources are estimated by qualified independent
geologists or Competent Persons. These Resource Estimates are dependent on
geological interpretation and statistical inferences drawn from drilling and
sampling that may prove to be unreliable. The Inferred or Indicated Resources
outlined in the Company`s properties have been calculated from widely-spread
borehole data. No assurance can be given that future exploration will be
successful in the improvement of the confidence levels or that any particular
level of recovery of minerals will in fact be realised. It is uncertain whether
the identified Mineral Resources will ever qualify as a viable orebody that can
be economically exploited. In addition, the grade and tonnages of any orebody
that may ultimately be mined may differ from the Mineral Resources currently
estimated and such differences could be material.
For further information concerning the locality of the Company`s Mineral
Resources, including information concerning the geology, mineral occurrences,
nature of mineralisation, geological controls, rock types, historical work
including data density, the application of quality assurance and quality control
measures, sampling and analytical procedures, the names of analytical
laboratories employed and the key assumptions, parameter and methods used to
estimate the Mineral Resources at the Company`s various projects, please see the
Company`s NI43-101 and Samrec compliant Independent Technical Reports dated
November 2007, June 2008, May 2009, June 2009, October 2009, May 2010, August
2011 and February 2012 which can be viewed at www.sedar.com and on the Company`s
web site, www.witsgold.com. The information referred to in this paragraph has
not changed materially except as stated above.
Despite the historic exploration work on the Company`s remaining Prospecting
Rights, other than the DBM and Bloemhoek Projects, no other known bodies of
commercial ore or economic deposits have been determined. Additional work will
be required in order to determine if any economic deposits occur on these
properties.
Qualified person
The technical and scientific information contained in this release was reviewed
by Qualified Person, Dirk Jacobus Muntingh, who is a full time employee of the
Company.
Mr Muntingh (MSc Geology) is a registered Professional Natural Scientist
(Pr.Sci.Nat) with the South African Council for Natural Scientific Professionals
(SACNASP) and has 21 years of experience in gold exploration.
*The information in the section "Operational review" has not been audited by
KPMG Inc.
Financial review
The Company changed its year end to 31 December 2011 and accordingly the current
financial results relate to the ten months then ended, whilst the comparative
figures relate to the year ended 28 February 2011.
Results from operating activities
The loss from operating activities for the ten months under review increased by
R10.5 million compared to the prior year. This increase results mainly from the
impairment of one of its Prospecting Rights to the amount of R1.1 million
(February 2011: Rnil) and the increase in employment related expenditure (R9.3
million). The latter has mainly arisen from an increase in the non-cash cost
entries required to account for the employee share scheme (R5.6 million) and an
increase in the cash cost element of employee remuneration (R3.8 million) which
included the severance benefit paid to the outgoing Chief Executive Officer.
Loss before income tax
The loss before taxation increased by R9.8 million which results from the
increased loss from operating activities mentioned above, offset by the increase
in interest received of R0.8 million. Interest income increased compared to the
previous year, due to the increased funds invested during the ten months under
review.
Non-current assets
During the ten months under review, the Company incurred direct exploration
expenditure in the amount of R23.8 million (February 2011: R316.1 million) which
has been capitalised to intangible exploration and evaluation assets. This
expenditure included Rnil (February 2011: R285 million) on the acquisition of
Rights. The Company impaired the entire carrying amount of one of its low
priority Prospecting Rights amounting to R1.1 million (February 2011: Rnil).
Current assets
The Company`s cash and cash equivalents decreased by R34.6 million (February
2011: R60.5 million increase) which reflects the normal operational and
exploration outflows offset by interest received.
Current liabilities
The main contributor to the R1.5 million increase in current liabilities was the
R2 million incorrect refund of taxation paid, offset by a R0.2 million reduction
in provisions for rehabilitation.
Commitments
The Company has committed to spend approximately R9.4 million (February 2011:
R1.4 million) on professional consultants during the next year. Furthermore the
Company has also committed to spend R55.5 million (February 2011: R55.5 million)
on the acquisition of exploration properties and R15.5 million (February 2011:
R17.6 million) on exploration activities during the next five
years. All of these commitments will be funded out of existing cash resources.
Litigation
There are no legal or arbitration proceedings in which the Company is or has
been engaged, which may have or have had, a material effect on the Company`s
financial position.
Dividends
No dividends were declared or paid by the Company during the period under review
(February 2011: nil).
Basis of preparation
These summarised financial results for the ten months ended 31 December 2011
comply with the recognition and measurement requirements of International
Financial Reporting Standards, the presentation and disclosure requirements of
IAS 34, Interim Financial Reporting, AC500 series and the South African
Companies Act of 2008. The accounting policies are consistent with those applied
in the previous financial year. They do not include all the information required
for full annual financial statements and should be read in conjunction with the
financial statements for the ten months ended 31 December 2011.
The Company consists of only one segment and there have been no changes to the
composition of the entity. There has been no reclassification or correction of
errors and no changes in accounting estimates. The Company does not have any
contingent assets or liabilities. No material related party transactions have
been identified, apart from those disclosed under "subsequent events".
Subsequent events
On 30 January 2012 the Company together with Pan African Resources Plc (PAR),
signed an agreement to jointly acquire Evander from Harmony for R1.7 billion.
The agreement is conditional on the fulfilment of a number of conditions
precedent, including the approvals from shareholders, the Department of Mineral
Resources as well as the Competition Commission and raising bank debt. The
purchase price will be settled by means of bank debt at the Evander level as
well as cash to be provided by Wits Gold and PAR. The two Joint Venture partners
will effectively each acquire 50% of Evander and the partners will jointly
manage Evander.
The valuation date of the transaction is 31 March 2012 and any dividends
distributed to Harmony from profits generated from this date to the date of the
fulfilment of the last condition precedent, will reduce the R1.7 billion
purchase price. Harmony disclosed in its half year results to 31 December 2011
that Evander produced just over 54 000 ounces of gold and had an operating
profit of R338 million for the six months.
Mr KV Dicks was appointed as a non-executive director with effect from 5 March
2012.
Mr Dicks, a mining engineer of background, has 39 years` experience working in
the South African mining industry, having held a number of senior positions
within AngloGold Ashanti Limited. He presently also serves on the boards of
Harmony and Bauba Platinum Limited.
Going concern
Due to the inherent risk in the nature of exploration activities, there may be
uncertainty regarding the recoverability of the Company`s exploration
expenditure. To meet its ongoing obligations and maintain its operations, the
Company will periodically seek to raise additional equity funding which will be
premised on the exploration results and the contingent further exploration
plans. This will generally be in the form of the issuance of additional Company
shares, both to local and international markets. In this regard the Company
currently intends to undertake a capital raising during 2012 in order to obtain
the required funds to settle its potential obligations for the Evander
acquisition and to enable it to fast track its DBM Project. Should the Company
fail to raise the required funds, the Evander acquisition will not take place
and the management of Wits Gold will make the appropriate adjustments to the
Company`s planned future expenditure until such time as further funding is
obtained. These adjustments will ensure that the Company can continue as a going
concern for the foreseeable future.
After making enquiries, the directors have reasonable expectation that the
Company has adequate resources to continue in operational existence for the
foreseeable future. Accordingly, the directors continue to adopt the going
concern basis in preparing the annual report and financial statements.
Audit report
These summarised financial statements have been extracted from the complete set
of financial statements on which the auditors, KPMG Inc. have expressed an
unqualified audit opinion. KPMG has also issued an unqualified audit report on
these summarised financial statements stating that these summarised results are
consistent, in all material respects, with the complete financial statements. A
copy of the auditor`s report is available for inspection at the Company`s
registered office.
Forward-looking information
Certain statements in this release may constitute forward-looking information
within the meaning of securities laws. In some cases, forward looking
information can be identified by use of terms such as "may", "will", "should",
"expect", "believe", "plan", "scheduled", "intend", "estimate", "forecast",
"predict", "potential", "continue", "anticipate" or other similar expressions
concerning matters that are not historical facts. Forward-looking information
may relate to management`s future outlook and anticipated events or results, and
may include statements or information regarding the future plans or prospects of
the Company. Without limitation, statements about the timing of a preliminary
economic assessment are forward-looking information as are statements about the
timing of a pre-feasibility study, the anticipated period in which the grant of
a Mining Right may be expected, and the effective date of the Evander
transaction.
Forward looking information involves known and unknown risks, uncertainties and
other important factors that could cause the actual results, performance or
achievements of the Company to be materially different from the future results,
performance or achievements expressed or implied by such forward looking
information. Such risks, uncertainties and other important factors include among
others: economic, business and political conditions in South Africa; decreases
in the market price of gold; hazards associated with underground and surface
gold mining; the ability to attract and retain qualified personnel; labour
disruptions; changes in laws and government regulations, particularly
environmental regulations and Mineral Rights legislation including risks
relating to the acquisition of the necessary licences and permits; changes in
exchange rates; currency devaluations and inflation and other macro-economic
factors; risk of changes in capital and operating costs, financing,
capitalisation and liquidity risks, including the risk that the financing
required to fund all currently planned exploration and related activities,
potential obligations for the Evander acquisition and to fast track the DBM
Project may not be available on satisfactory terms, or at all; and the ability
to maximise the value of any economic resources. These forward-looking
statements speak only as of the date of this release.
You should not place undue importance on forward-looking information and should
not rely upon this information as of any other date. The Company undertakes no
obligation to update publicly or release any revisions to these forward-looking
statements to reflect events or circumstances after the date of this release or
to reflect the occurrence of unanticipated events except where required by
applicable laws.
For and on behalf of the Board
P Kotze DM Urquhart Johannesburg
Chief Executive Officer Financial Director 30 March 2012
Business and Registered Office
12th Floor, 70 Fox Street, Johannesburg 2001
PO Box 61147, Marshalltown 2107
Tel: (011) 832 1749 Fax: (011) 838 3208
Directors
Mr Adam Fleming (Chairman)*, Prof Taole Mokoena (Deputy Chairman)*
Dr Humphrey Mathe (Director)*, Mrs Gayle Wilson (Director)*, Mr K Dicks
(Director)* Mr P Kotze (Chief Executive Officer), Mr Derek Urquhart
(Financial director) *Non-Executive
Company Secretary
Mr Brian Dowden
7 Pam Road, Morningside Ext 5, Sandton, Johannesburg 2057
PO Box 651129, Benmore 2010, South Africa
Sponsor
PricewaterhouseCoopers Corporate Finance (Pty) Limited
2 Eglin Rd, Sunninghill 2157
Private Bag X37, Sunninghill 2157, South Africa
Transfer Secretaries
JSE: Link Market Services SA (Pty) Limited
TSX: CIBC Mellon Trust Company
Date: 30/03/2012 14:00:04 Supplied by www.sharenet.co.za
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