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EPS - Eastern Platinum Limited - Condensed consolidated interim financial
statements of
EASTERN PLATINUM LIMITED
(Incorporated in Canada)
(Canadian Registration number BC0722783)
(South African Registration number 2007/006318/10)
Share Code TSX: ELR ISIN: CA2768551038
Share Code AIM: ELR ISIN: CA2768551038
Share Code JSE: EPS ISIN: CA2768551038
Condensed consolidated interim financial statements of Eastern Platinum Limited
September 30, 2010 (Unaudited)
Table of contents
Condensed consolidated interim income statements ........................... 3
Condensed consolidated interim statements of comprehensive income .......... 4
Condensed consolidated interim statements of financial position ............ 5
Condensed consolidated interim statements of changes in equity ............. 6
Condensed consolidated interim statements of cash flows .................... 7
Notes to the condensed consolidated interim financial statements ........ 8-26
Eastern Platinum Limited
Condensed consolidated interim income statements
(Expressed in thousands of U.S. dollars, except per share amounts - unaudited)
Three months ended
Note September 30,
2010 2009
Revenue $ 38,073 $ 27,365
Cost of operations
Production costs 26,953 22,394
Depletion and depreciation 7 5,782 4,308
32,735 26,702
Mine operating earnings 5,338 663
Expenses
General and administrative 2,186 2,336
Share-based payments 14 16 109
2,202 2,445
Operating profit (loss) 3,136 (1 ,782)
Other income (expense)
Interest income 459 448
Finance costs 16 (392) (332)
Foreign exchange (loss) gain (576) 652
Profit (loss) before income taxes 2,627 (1,014)
Deferred income tax recovery 561 1,645
Net profit for the period $ 3,188 $ 631
Attributable to
Non-controlling interest 15 $ (851) $ (1,208)
Equity shareholders of the Company 4,039 1,839
Net profit for the period $ 3,188 $ 631
Earnings per share
Basic 17 $ 0.01 $ 0.00
Diluted 17 $ 0.01 $ 0.00
Weighted average number of common shares
outstanding in thousands
Basic 17 683,038 680,558
Diluted 17 693,409 687,018
Nine months ended
September 30,
2010 2009
Revenue $ 109,384 $77,106
Cost of operations
Production costs 79,511 58,588
Depletion and depreciation 16,625 12,111
96,136 70,699
Mine operating earnings 13,248 6,407
Expenses
General and administrative 7,419 7,143
Share-based payments 1,768 444
9,187 7,587
Operating profit (loss) 4,061 (1,180)
Other income (expense)
Interest income 1,252 1,437
Finance costs (1,355) (1,159)
Foreign exchange (loss) gain (344) (795)
Profit (loss) before income taxes 3,614 (1,697)
Deferred income tax recovery 1,657 3,934
Net profit for the period $ 5,271 $ 2,237
Attributable to
Non-controlling interest $ (3,040) $ (3,083)
Equity shareholders of the Company 8,311 5,320
Net profit for the period $ 5,271 $ 2,237
Earnings per share
Basic $ 0.01 $ 0.01
Diluted $ 0.01 $ 0.01
Weighted average number of common shares
outstanding in thousands
Basic 682,350 680,541
Diluted 693,754 686,112
See accompanying notes to the unaudited condensed consolidated interim financial
statements
Eastern Platinum Limited
Condensed consolidated interim statements of comprehensive income
(Expressed in thousands of U.S. dollars - unaudited)
Three months ended
September 30,
2010 2009
Net profit for the period $ 3,188 $ 631
Other comprehensive income
Exchange differences on translating foreign operations 49,620 24,012
Exchange differences on translating
non-controlling interest 625 349
Comprehensive income $ 53,433 $ 24,992
Attributable to
Non-controlling interest $ (226) $ (859)
Equity shareholders of the Company $ 53,659 $ 25,851
Nine months ended
September 30,
2010 2009
Net profit for the period $ 5,271 $ 2,237
Other comprehensive income
Exchange differences on translating
foreign operations 32,101 106,054
Exchange differences on translating
non-controlling interest 358 2,304
Comprehensive income $ 37,730 $ 110,595
Attributable to
Non-controlling interest $ (2,682) $ (779)
Equity shareholders of the Company $ 40,412 $ 111,374
See accompanying notes to the unaudited condensed consolidated interim financial
statements
Eastern Platinum Limited
Condensed consolidated interim statements of financial position
as at September 30, 2010 and December 31 , 2009
(Expressed in thousands of U.S. dollars - unaudited)
September 30, December 31,
Note 2010 2009
Assets
Current assets
4
Cash and cash equivalents $7,718 $ 7,249
Short-term investments 12,287 14,409
Trade and other receivables 5 31,856 29,138
Inventories 6 8,288 4,825
60,149 55,621
Non-current assets
Property, plant and equipment 7 671,2 20 63 4,778
Refining contract 8 13,8 27 14,169
Other assets 9 3,296 2,282
$ 748,492 $ 706,850
Liabilities
Current liabilities
Accounts payable and accrued liabilities 10 $ 23,060 $ 22,919
Current portion of finance leases 11 1,048 926
24,108 23,845
Non-current liabilities
9,180 8,152
Provision for environmental rehabilitation 12
Finance leases 11 2,542 2,850
Deferred tax liabilities 43,255 42,491
79,085 77,338
Equity
Issued capital 14 890,906 890,150
Equity-settled employee benefits reserve 33,745 32,336
Currency translation adjustment (20,798) (52,899)
Deficit (241,805) (250,116)
Capital and reserves attributable to
equity share holders of the Company 662,048 619,471
Non-controlling interest 15 7,359 10,041
669,407 629,512
$ 748,492 $ 706,850
Approved and authorized for issue by the Board on November 9, 2010.
"David Cohen" "Robert Gayton"
David Cohen, Director Robert Gayton, Director
See accompanying notes to the unaudited condensed consolidated interim financial
statements
Eastern Platinum Limited
Condensed consolidated interim statements of changes in equity
(Expressed in thousands of U.S. dollars, except number of shares - unaudited)
Issued capital Equity- Currency
Common Amount settled translation
Shares employee adjustment
benefits
reserve
Balance, December
31, 2008 680,526,454 $ 890,049 $ 31,827 $ (169,577)
Stock options exercised 35,659 13 (6) -
Share-based payments - - 444 -
Net profit - - - -
Currency translation adjustment - - - 106,054
Balance, September
30, 2009 680,562,113 $ 890,062 $ 32,265 $ (63,523)
Stock options exercised 331,212 88 (67) -
Share-based payments - - 138 -
Net profit - - - -
Currency translation adjustment - - - 10,624
Balance, December
31, 2009 680,893,325 $ 890,150 $ 32,336 $ (52 ,899)
Stock options exercised 2,192,481 756 (359) -
Share-based payments - - 1,768 -
Net profit - - - -
Currency translation adjustment - - - 32 ,101
Balance, September
30, 2010 683,085,806 $ 890,906 $ 33,745 $ (20,798)
Deficit Capital and Non-controlling Equity
reserves interest
attributable to
equity
share holders
of the Company
Balance, December
31, 2008 $ (2 55,766) $ 496,533 $ 12,002 $ 508,535
Stock options exercised - 7 - 7
Share-based payments - 444 - 444
Net profit 5 ,320 5,320 (3,083) 2,237
Currency translation
adjustment - 106,054 2,304 1 08,358
Balance, September
30, 2009 $ (250,446) $ 608,358 $ 11,223 $ 619,581
Stock options exercised - 21 - 21
Share-based payments - 138 - 138
Net profit 330 330 (1,345) (1,015)
Currency translation
adjustment - 10,624 163 10,787
Balance, December
31, 2009 $ (250,116) $ 619,471 $ 10,041 $ 629,512
Stock options exercised - 397 - 397
Share-based payments - 1,768 - 1,768
Net profit 8,311 8,311 (3,040) 5,271
Currency translation
adjustment - 32,101 358 32,459
Balance, September
30, 2010 $ (241,805) $ 662,048 $ 7,359 $ 669,407
See accompanying notes to the unaudited condensed consolidated interim financial
statements
Eastern Platinum Limited
Condensed consolidated interim statements of cash flows
(Expressed in thousands of U.S. dollars - unaudited)
Three months ended
Note September 30,
2010 2009
Operating activities
Profit (loss) before income taxes $ 2,627 $ (1,014)
Adjustments to net profit (loss) for
non-cash items
Depletion and depreciation 7 5,782 4,308
Refining contract amortization 8 378 354
Share-based payments 14 16 109
Interest income (459) (448)
Finance costs 16 392 332
Foreign exchange loss (gain) 576 (652)
Net changes in non-cash working capital items
Trade receivables 315 (1,492)
Inventories (2,042) 1,348
Accounts payable and accrued liabilities 1,268 333
Cash generated from (utilizedin) operations 8,853 3,178
Adjustments to net profit (loss) for cash items
Interest income received 523 491
Finance costs paid (4) -
Acquisition related dividend taxes paid - -
Net operating cash flows 9,372 3,669
Investing activities
Maturity of short-term investments 1,443 2,552
Purchase of other assets (285) (256)
Property, plant and equipment expenditures (9,724) (3,930)
Sale of property, plant and equipment - -
Net investing cash flows (8,566) (1,634)
Financing activities
Common shares issued for cash, net of share issue costs 15 -
Payment of current loans - -
Payment of finance leases - (1)
Net financing cash flows 15 (1)
Effect of exchange rate changes on cash and
cash equivalents 617 246
Increase (decrease) in cash and cash equivalents 1,438 2 ,280
Cash and cash equivalents, beginning of period 6,280 6,482
Cash and cash equivalents, end of period $ 7,718 $ 8,762
Nine months ended
September 30,
2010 2009
Operating activities
Profit (loss) before income taxes $ 3,614 $ (1,697)
Adjustments to net profit (loss) for non-cash items
Depletion and depreciation 16,625 12,111
Refining contract amortization 1,113 964
Share-based payments 1,768 444
Interest income (1 ,252) (1,437)
Finance costs 1,355 1,159
Foreign exchange loss (gain) 344 795
Net changes in non-cash working capital items
Trade receivables (1,340) (9,435)
Inventories (3,011) 708
Accounts payable andaccrued liabilities (1,149) (17,020)
Cash generated from (utilizedin) operations 18,067 (13,408)
Adjustments to net profit (loss) for cash items
Interest income received 1,260 1,290
Finance costs paid (2 51) (11)
Acquisition related dividend taxes paid - (2,422)
Net operating cash flows 19,076 (14,551)
Investing activities
Maturity of short-term investments 2,404 22,647
Purchase of other assets (826) (665)
Property, plant and equipment expenditures (20,435) (22,929)
Sale of property, plant and equipment - 1,552
Net investing cash flows (18,857) 605
Financing activities
Common shares issued for cash, net of share issue costs 397 12
Payment of current loans - (3,065)
Payment of finance leases (628) (619)
Net financing cash flows (231) (3,672)
Effect of exchange rate changes on cash and cash
equivalents 481 574
Increase (decrease) in cash and cash equivalents 469 (17,044)
Cash and cash equivalents, beginning of period 7,249 25,806
Cash and cash equivalents, end of period $ 7,718 $8,762
See accompanying notes to the unaudited condensed consolidated interim financial
statements
Eastern Platinum Limited
Notes to the condensed consolidated interim financial statements as at September
30, 2010 (Expressed in thousands of U.S. dollars, except number of shares and
per share amounts - unaudited)
1. Nature of operations
Eastern Platinum Limited (the "Company") is a platinum group metal ("PGM")
producer engaged in the mining, exploration and development of PGM properties
located in various provinces in South Africa.
Eastern Platinum Limited is a publicly listed company incorporated in Canada
with limited liability under the legislation of the Province of British
Columbia. The Company`s shares are listed on the Toronto Stock Exchange,
Alternative Investment Market, and the Johannesburg Stock Exchange.
The head office, principal address and records office of the Company are located
at 1075 West Georgia Street, Suite 250, Vancouver, British Columbia, Canada, V6E
3C9. The Company`s registered address is 1055 West Georgia Street, Suite 1500,
Vancouver, British Columbia, Canada, V6E 4N7.
2. Basis of preparation
These unaudited condensed consolidated interim financial statements, including
comparatives, have been prepared using accounting policies consistent with
International Financial Reporting Standards "(IFRS") and in accordance with
International Accounting Standard ("IAS") 34 Interim Financial Reporting.
The preparation of financial statements requires management to make judgments,
estimates and assumptions that affect the application of policies and reported
amounts of assets and liabilities, and revenue and expenses. The estimates and
associated assumptions are based on historical experience and various other
factors that are believed to be reasonable under the circumstances, the results
of which form the basis of making the judgments about carrying values of assets
and liabilities that are not readily apparent from other sources. Actual results
may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognized in the period in which the
estimate is revised if the revision affects only that period or in the period of
the revision and further periods if the review affects both current and future
periods.
Judgments made by management in the application of IFRS that have a significant
effect on the financial statements and estimates with a significant risk of
material adjustment in the current and following fiscal years are discussed in
Notes 3(l), 3(v), and 3(w) of the Company`s audited consolidated financial
statements for the year ended December 31, 2009.
3. Summary of significant accounting policies
The preparation of financial data is based on accounting principles and
practices consistent with those used in the preparation of the audited annual
financial statements as at December 31, 2009 except as noted below. The
accompanying unaudited condensed consolidated interim financial statements
should be read in conjunction with the Company`s audited consolidated financial
statements for the year ended December 31, 2009.
Effective January 1, 2010, the Company adopted a new accounting standard (IFRS 8
Operating Segments) that was issued by the International Accounting Standards
Board ("IASB"). IFRS 8 was revised and now requires disclosure of information
about segment assets. This accounting policy change was adopted on a prospective
basis with no restatement of prior period financial statements.
Eastern Platinum Limited
Notes to the condensed consolidated interim financial statements as at September
30, 2010 (Expressed in thousands of U.S. dollars, except number of shares and
per share amounts - unaudited)
4. Cash and cash equivalents
Cash and cash equivalents are comprised of:
September 30, December 31,
2010 2009
Cash in bank $ 2,585 $ 7,249
Short-term money market instruments 5,133 -
$ 7,718 $ 7,249
5. Trade and other receivables
Trade and other receivables are
comprised of the following:
September 30, December 31,
2010 2009
Trade receivables $ 28,199 $ 25,839
Allowance for doubtful debts (134) (74)
28,065 25,765
Other receivables 2,671 2,316
Current tax receivable 1,120 1,057
$ 31,856 $ 29,13 8
6. Inventories
September 30, December 31,
2010 2009
Consumables $ 5,051 $ 4,549
Ore and concentrate 1,036 276
Chrome inventory 2,201 -
$ 8,288 $ 4,825
Production costs for the three and nine months ended September 30, 2010 was
$26,953 and $79,511 (September 30, 2009 - $22,394 and $58,588), respectively.
Production costs represent the cost of inventories sold during the period. This
expense includes Nil (September 30, 2009 - Nil) with regards to the write-down
of inventory to net realizable value, and a reduction of Nil (September 30, 2009
- Nil) with regards to the reversal of write-downs.
At September 30, 2010 and December 31, 2009, no inventories were pledged as
security for liabilities.
During the three months ended September 30, 2010, the Company reassessed the
timing of its chrome revenue recognition and determined that it was more
appropriate to recognize chrome revenues at the time the physical chrome crossed
the ship`s rail at the port of shipment. This resulted in the recording of
chrome inventory of $2,201 at September 30, 2010 representing 45,752 tonnes of
chrome in transit, and a corresponding one-time adjustment to chrome revenues.
Eastern Platinum Limited
Notes to the condensed consolidated interim financial statements as at September
30, 2010 (Expressed in thousands of U.S. dollars, except number of shares and
per share amounts - unaudited)
7. Property, plant and equipment
Mineral Mineral
Plant and Plant and properties properties
equipment equipment being not being
owned leased depleted depleted
Cost
Balance as at December
31, 2008 $ 315,547 $ 4,892 $ 108,680 $ 444,115
Assets acquired 27,593 - (186) 921
Disposals (1,510) - - -
Foreign exchange movement 84,593 1,240 27,606 101,086
Balance as at December
31, 2009 $ 426,223 $ 6,132 $ 136,100 $ 546,122
Assets acquired 20,318 - - 128
Foreign exchange movement 26,599 364 8,099 27,181
Balance as at September
30, 2010 $ 473,140 $ 6,496 $ 144,199 $ 573,431
Accumulated depreciation
and impairment losses
Balance as at December
31, 2008 $ 91,179 $ 1,966 $ 12,397 $ 273,084
Depreciation 11,298 1,092 4,646 -
Foreign exchange movement 24,467 633 3,722 69,238
Balance as at December
31, 2009 $ 126,944 $ 3,691 $ 20,765 $ 342,322
Depreciation 11,385 916 4,224 -
Foreign exchange movement 8,284 279 1,510 20,372
Balance as at September
30, 2010 $ 146,613 $ 4,886 $ 26,499 $ 362,694
Carrying amounts
At December 31, 2008 $ 224,368 $ 2,926 $ 96,283 $ 171,031
At December 31, 2009 $ 299,279 $ 2,441 $ 115,335 $ 203,800
At September 30, 2010 $ 326,527 $ 1,610 $ 117,700 $ 210,737
Residential Properties
properties and land TOTAL
Cost
Balance as at December 31, 2008 $ 7,954 $ 5,299 $ 886,487
Assets acquired 88 331 28,747
Disposals - - (1,510)
Foreign exchange movement 2,029 1,348 217,902
Balance as at December 31, 2009 $ 10,071 $ 6,978 $ 1,131,626
Assets acquired - - 20,446
Foreign exchange movement 600 415 63,258
Balance as at September 30, 2010 $ 10,671 $ 7,393 $ 1,215,330
Accumulated depreciation and
impairment losses
Balance as at December 31, 2008 $ 1,726 $ 662 $ 381,014
Depreciation 118 - 17,154
Foreign exchange movement 452 168 98,680
Balance as at December 31, 2009 $ 2,296 $ 830 $ 496,848
Depreciation 100 - 16,625
Foreign exchange movement 143 49 30,637
Balance as at September 30, 2010 $ 2,539 $ 879 $ 544,110
Carrying amounts
At December 31, 2008 $ 6,228 $ 4,637 $ 505,473
At December 31, 2009 $ 7,775 $ 6,148 $ 634,778
At September 30, 2010 $ 8,132 $ 6,514 $ 71,220
Eastern Platinum Limited
Notes to the condensed consolidated interim financial statements as at September
30, 2010 (Expressed in thousands of U.S. dollars, except number of shares and
per share amounts - unaudited)
7. Property, plant and equipment
Crocodile Kennedy`s Spitzkop
River Mine Vale Project PGM Project
(a) (b) (c)
Cost
Balance as at December 31, 2008 $ 442,262 $ 319,109 $ 101,712
Assets acquired 27,826 - 826
Disposals (1,510) - -
Foreign exchange movement 116,798 80,908 16,456
Balance as at December 31, 2009 $ 585,376 $ 400,017 $ 118,994
Assets acquired 20,318 - 38
Foreign exchange movement 36,075 23,805 2,860
Balance as at September 30, 2010 $ 641,769 $ 423,822 $ 121,892
Accumulated depreciation and
impairment losses
Balance as at December 31, 2008 $ 107,855 $ 273,084 $ -
Depreciation 17,130 - -
Foreign exchange movement 29,432 69,238 -
Balance as at December 31, 2009 $ 154,417 $ 342,322 $ -
Depreciation 16,625 - -
Foreign exchange movement 10,262 20,372 -
Balance as at September 30, 2010 $ 181,304 $ 362,694 $ -
Carrying amounts
At December 31, 2008 $ 334,407 $ 46,025 $ 101,712
At December 31, 2009 $ 430,959 $ 57,695 $ 118,994
At September 30, 2010 $ 460,465 $ 61,128 $ 121,892
Mareesburg Other
Project property
plant and TOTAL
(c) equipment
Cost
Balance as at December 31, 2008 $ 23,294 $ 110 $ 886,487
Assets acquired 95 - 28,747
Disposals - - (1,510)
Foreign exchange movement 3,722 18 217,902
Balance as at December 31, 2009 $ 27,111 $ 128 $ 1,131,626
Assets acquired 90 - 20,446
Foreign exchange movement 516 2 63,258
Balance as at September 30, 2010 $ 27,717 $ 130 $ 1,215,330
Accumulated depreciation and
impairment losses
Balance as at December 31, 2008 $ - $ 75 $ 381,014
Depreciation - 24 17,154
Foreign exchange movement - 10 98,680
Balance as at December 31, 2009 $ - $ 109 $ 496,848
Depreciation - - 16,625
Foreign exchange movement - 3 30,637
Balance as at September 30, 2010 $ - $ 112 $ 544,110
Carrying amounts
At December 31, 2008 $ 23,294 $ 35 $ 505,473
At December 31, 2009 $ 27,111 $ 19 $ 634,778
At September 30, 2010 $ 27,717 $ 18 $ 671,220
Eastern Platinum Limited
Notes to the condensed consolidated interim financial statements as at September
30, 2010 (Expressed in thousands of U.S. dollars, except number of shares and
per share amounts - unaudited)
(a) Crocodile River Mine ("CRM")
The Company holds directly and indirectly 87.5% of CRM, which is located on the
eastern portion of the western limb of the Bushveld Complex. The Maroelabult and
Zandfontein sections are currently in production. Development of the Crocette
section recommenced on April 4, 2010.
(b) Kennedy`s Vale Project ("KV")
The Company holds directly and indirectly 87.5% of KV, which is located on the
eastern limb of the Bushveld Complex, near Steelpoort in the Province of
Mpumalanga. It comprises PGM mineral rights on five farms in the Steelpoort
Valley.
(c) Spitzkop PGM Project and Mareesburg Project
The Company holds directly and indirectly a 93.4% interest in the Spitzkop PGM
Project and a 75.5% interest in the Mareesburg Project. The Company currently
acts as the operator of both the Mareesburg Platinum Project and Spitzkop PGM
Project, both located on the eastern limb of the Bushveld Complex.
8. Refining Contract
During the year ended June 30, 2006, the Company acquired a 69% interest in
Barplats and assigned a portion of the purchase price to the off-take contract
governing the sales of Barplats` PGM concentrate production. The initial value
of the contract was $17,939. During the year ended June 30, 2007, the Company
acquired an additional 5% interest in Barplats resulting in an additional
allocation to the contract of $4,802 for a total aggregate value of $22,741.
During the year ended December 31, 2008, the Company acquired an additional
2.47% interest in Barplats. The acquisition did not affect the aggregate value
of the contract.
The value of the contract is amortized over the remaining term of the contract
which is 8.75 years as at September 30, 2010.
Cost
Balance as at December 31, 2008 $ 16,850
Foreign exchange movement 4,272
Balance as at December 31, 2009 $ 21,122
Foreign exchange movement 1,257
Balance as at September 30, 2010 $ 22,379
Accumulated amortization
Balance as at December 31, 2008 $ 4,357
Amortization for the period 1 ,332
Foreign exchange movement 1 ,264
Balance as at December 31, 2009 $ 6,953
Amortization for the period 1 ,113
Foreign exchange movement 486
Balance as at September 30, 2010 $ 8,552
Carrying amounts
At December 31, 2008 $ 12,493
At December 31, 2009 $ 14,169
At September 30, 2010 $ 13,827
Eastern Platinum Limited
Notes to the condensed consolidated interim financial statements as at September
30, 2010 (Expressed in thousands of U.S. dollars, except number of shares and
per share amounts - unaudited)
9. Other assets
Other assets consist of a money market fund investment that is classified as
available-for-sale and serves as security for a guarantee issued to the
Department of Minerals and Energy of South Africa in respect of the
environmental rehabilitation liability (Note 12). Changes to other assets for
the nine months ended September 30, 2010 are as follows:
Balance, December 31, 2008 $ 1,017
Additional investment $ 811
Service fees (6)
Interest income 123
Foreign exchange movement 337
Balance, December 31, 2009 $ 2,28 2
Additional investment 698
Service fees (6)
Inerest income 133
Foreign exchange movement 189
Balance, September 30, 2010 $ 3,296
10. Accounts payable and accrued liabilities
September 30, December 31,
2010 2009
Trade payables $ 11,635 $ 9,932
Accrued liabilities 6,033 6,849
Other 5,392 6,138
$ 23,060 $ 22,91 9
The average credit period of purchases is 1 month. The Company has financial
risk management policies in place to ensure that all payables are paid within
the pre-agreed credit terms.
11. Finance leases
Finance leases relate to mining vehicles with lease terms of 5 years payable
half yearly in advance. The Company has the option to purchase the vehicles for
a nominal amount at the conclusion of the lease agreements. The Company`s
obligations under finance leases are secured by the lessor`s title to the leased
assets. Interest is calculated at the South African prime rate plus 1%. At
September 30, 2010, the finance leases are repayable in 2 semiannual
installments (December 31, 2009 - 3) of $634 (December 31, 2009 - $611) and a
top-up payment of $2,583 in December 2011. The fair value of the finance lease
liabilities approximated carrying value.
(a) Minimum lease payments
September 30, December 31,
2010 2009
No later than 1 year $ 1,267 $ 1,221
Later than 1 year, but no later than 5 years 2,583 3,061
3,850 4,282
Less: future finance charges (260) (506)
Present value of minimum lease payments $ 3,590 $ 3,776
Eastern Platinum Limited
Notes to the condensed consolidated interim financial statements as at September
30, 2010 (Expressed in thousands of U.S. dollars, except number of shares and
per share amounts - unaudited)
11. Finance leases (continued)
(b) Present value of minimum lease payments
September 30, December 31,
2010 2009
No later than 1 year $ 1,048 $ 926
Later than 1 year, but no later than 5 years 2,542 2,850
$ 3,590 $ 3,776
12. Provision for environmental rehabilitation
Although the ultimate amount of the environmental rehabilitation provision is
uncertain, the fair value of these obligations is based on information currently
available, including closure plans and applicable regulations. Significant
closure activities include land rehabilitation, demolition of buildings and mine
facilities and other costs.
The liability for the environmental rehabilitation provision at September 30,
2010 is approximately ZAR 64.2 million ($9,180). The liability was determined
using an inflation rate of 7.00% (December 31, 2009 - 7.00%) and an estimated
life of mine of 18 years for Zandfontein and Maroelabult (December 31, 2009 - 18
years), 1 year for Kennedy`s Vale (December 31, 2009 - 1 year) and 26 years for
Spitzkop (December 31, 2009 - 26 years). A discount rate of 8.39% was used
(December 31, 2009 - 8.39%). A guarantee of $3,296 (December 31, 2009 - $2,282)
has been issued to the Department of Minerals and Energy (Note 9). The guarantee
will be utilized to cover expenses incurred to rehabilitate the mining area upon
closure of the mine. The undiscounted value of this liability is approximately
ZAR 236.3 million ($33,782).
Changes to the environmental rehabilitation provision are as follows:
Balance, December 31, 2008 $ 5,598
Revision in estimates 629
Interest expense 443
Foreign exchange movement 1,482
Balance, December 31, 2009 $ 8,152
Revision in estimates -
Interest expense (Note 16) 509
Foreign exchange movement 519
Balance, September 30, 2010 $ 9,180
13. Commitments
The Company has committed to capital expenditures on projects of approximately
ZAR 48 million ($6,877) as at September 30, 2010 (December 31, 2009 - ZAR 37
million, $4,959).
14. Issued capital
(a) Authorized
- Unlimited number of preferred redeemable, voting, non-participating shares
without nominal or par value,
- Unlimited number of common shares with no par value.
(b) Share options
The Company has an incentive plan (the "2008 Plan"), approved by the Company`s
shareholders at its annual general meeting held on June 4, 2008, under which
options to purchase common shares may be granted to its directors, officers,
employees and others at the discretion of the Board of Directors. Under the
terms of the 2008 Plan, 75 million common shares are reserved for issuance upon
the exercise of options. All outstanding options at June 4, 2008 granted under
the Company`s previous plan (the "2005 Plan") will continue to exist under the
2008 Plan provided that the fundamental terms governing such options will be
deemed to be those under the 2005 Plan. Upon adoption of the 2008 Plan, options
to purchase a total of 27,525,000 common shares were available for grant under
the 2008 Plan, representing 75,000,000 less the 47,475,000 outstanding options
at June 4, 2008 granted under the 2005 Plan.
Under the 2008 Plan, each option granted shall be for a term not exceeding five
years from the date of being granted and the vesting period is determined based
on the discretion of the Board of Directors. The option exercise price is set at
the date of the grant and cannot be less than the closing market price of the
Company`s common shares on the Toronto Stock Exchange on the day immediately
preceding the day of the grant of the option.
(i) Movements in share options
The changes in share options during the nine months ended September 30,
2010 and the year ended December 31, 2009 were as follows:
September 30, 2010
Weighted
average
Number of exercise
options price
Cdn$
Balance outstanding, beginning of year 59,575,834 1.48
Options granted 2,231,000 1.30
Options exercised (2,494,660) 0.33
Options forfeited (771,668) 1.76
Balance outstanding, end of period 58,540,506 1.52
December 31, 2009
Weighted
average
Number of exercise
options price
Cdn$
Balance outstanding, beginning of year 64 ,746,000 1.52
Options granted 695,000 0.57
Options exercised (535,999) 0.32
Options forfeited (5,329,167) 2.00
Balance outstanding, end of period 59,575,834 1.48
(ii) Fair value of share options granted
The fair value of each option granted is estimated at the time of the grant
using the Black-Scholes option pricing model with weighted average assumptions
for grants as follows:
2010
Weighted
January 18 average
Exercise price Cdn$ 1.30 Cdn$ 1.30
Closing market price on day
preceding date of grant Cdn$ 1.30 Cdn$ 1.30
Grant date share price Cdn$ 1.42 Cdn$ 1.42
Risk-free interest rate 1.7 3 % 1 .7 3%
Expected life 3 years 3 years
Annualized volatility 83 % 83%
Divid end rate 0% 0%
Grant date fair value Cdn$ 0.80 Cdn$ 0.80
2009
February 11 June 30
Exercise price Cdn $0.32 Cdn $0.52
Closing market price on day
preceding date of grant Cdn$0.32 Cdn$0.52
Grant date share price Cdn $0.38 Cdn $0.52
Risk-free interest rate 1.69% 1.84%
Expected life 3 years 3 years
Annualized volatility 78% 79%
Dividend rate 0% 0%
Grant date fair value Cdn$ 0.21 Cdn$ 0.27
Weighted
November 3 average
Exercise price Cdn$ 0.76 Cdn$ 0.57
Closing market price on day
preceding date of grant Cdn$0.76 C d n$0.57
Grant date share price Cdn$ 0.81 Cdn$ 0.59
Risk-free interest rate 1.86% 1 .8 3%
Expected life 3 years 3 years
Annualized volatility 82% 80%
Dividend rate 0% 0%
Grant date fair value Cdn$0.45 Cdn$0.32
Exercise price is the closing market price on the day preceding the date the
options were granted, as defined by the Company`s 2008 share option plan.
Grant date share price is the closing market price on the day the options were
granted.
Expected volatility is based on the historical share price volatility since
Eastern Platinum Limited completed its acquisition of Barplats Investment
Limited on May 2, 2006, or for 3 years prior to the date of grant, whichever is
shorter.
(iii) Share options outstanding at the end of the period
The following table summarizes information concerning outstanding and
exercisable options at September 30, 2010:
Remaining
Options Options Exercise Contractual
outstanding exercisable price Life (Years) Expiry date
Cdn $
6,725,000 6,725,000 1.70 0.65 May 24, 2011
250,000 250,000 1.70 1.16 November 27, 2011
19,987,500 19,987,500 1.82 1.44 March 7, 2012
14,892,006 14,160,339 0.32 3.22 December 18, 2013
20,000 - 0.32 3.37 February 11, 2014
400,000 400,000 0.52 3.75 June 30, 2014
130,000 16,667 0.76 4.09 November 3, 2014
2,226,000 2,226,000 1.30 4.31 January 18, 2015
13,190,000 13,190,000 2.31 7.02 October5, 2017
90,000 90,000 2.50 7.21 December 12, 2017
460,000 460,000 3.38 7.40 February 20, 2018
170,000 170,000 3.38 7.49 March 27, 2018
58,540,506 57,675,506 3.26
The weighted average exercise price of options exercisable at September 30, 2010
is Cdn$1.54.
(c) Share purchase warrants
The changes in warrants during the nine months ended September 30, 2010 and the
year ended December 31, 2009 were as follows:
September 30, 2010
Weighted
average
Number of exercise
warrants price
Cdn$
Balance outstanding, beginning of year - -
Warrants expired - -
Balance outstanding, end of period - -
December 31, 2009
Weighted
average
Number of exercise
warrants price
Cdn$
Balance outstanding, beginning of year 58,485,996 1.80
Warrants expired (58,485,996) 1.80
Balance outstanding, end of period - -
15. Non-controlling interest
The non-controlling interests are comprised of the following:
Balance, December 31, 2008 $ 12,002
Non-controlling interests` share of loss in Barplats (1,228)
Non-controlling interests` share of interest on advances to Gubevu (1,855)
Foreign exchange movement 2,304
Balance, September 30, 2009 $ 11,223
Non-controlling interests` share of loss in Barplats (680)
Non-controlling interests` share of interest on advances to Gubevu (665)
Foreign exchange movement 163
Balance, December 31, 2009 $ 10,041
Non-controlling interests` share of loss in Barplats (1,033)
Non-controlling interests` share of interest on advances to Gubevu (2,007)
Foreign exchange movement 358
Balance, September 30, 2010 $ 7,359
16. Finance costs
Three months ended
September 30,
2010 2009
Interest on revenue advances $ 153 $ 110
Interest on finance leases 66 87
on provision for
Interest
environmental rehabilitation 173 118
Interest on tax - -
Other interest - 17
$ 392 $ 332
Nine months ended
September 30,
2010 2009
Interest on revenue advances $ 410 $ 380
Interest on finance leases 215 289
on provision for
Interest
environmental rehabilitation 509 320
Interest on tax 209 2
Other interest 12 168
$ 1 ,355 $ 1,159
17. Earnings per share
The weighted average number of ordinary shares for the purposes of diluted
earnings per share reconciles to the weighted average number of ordinary shares
used in the calculation of basic earnings per share as follows:
Three months ended
September 30,
2010 2009
(in thousands)
Weighted average number of ordinary shares
used in the calculation of basic earnings per share 683 ,038 680 ,558
Shares deemed to be issued for no consideration in
respect of in the money options 10 ,371 6 ,460
Weighted average number of ordinary shares used
in the calculation of diluted earnings per share 693 ,409 687,018
Nine months ended
September 30,
2010 2009
(in thousands)
Weighted average number of ordinary shares used in the
calculation of basic earnings per share 68 2 ,350 680 ,541
Shares deemed to be issued for no consideration in
respect of in the money options 11 ,404 5 ,571
Weighted average number of ordinary shares used in the
calculation of diluted earnings per share 69 3,754 686,112
The following potential ordinary shares, outstanding at September 30, 2010, are
anti-dilutive and are therefore excluded from the weighted average number of
ordinary shares for the purposes of diluted earnings per share:
Three months ended Nine months ended
September 30, September 30,
2010 2009 2010 2009
(in thousands) (in thousands)
Options 43,099 40,766 43,099 41,176
Warrants - - - -
18. Retirement benefit plans
The Barplats Provident Fund is an independent, defined contribution plan
administered by Liberty Life Limited in South Africa. The costs associated with
the defined contribution plan included in net profit for the three and nine
months, respectively, were $991 and $2,859 (September 30, 2009 - $758 and
$1,895). The total number of employees in the plan at September 30, 2010 was
1,805 (September 30, 2009 - 1,884).
19. Related party transactions
Balances and transactions between the Company and its subsidiaries have been
eliminated on consolidation and are not disclosed in this note. Details of the
transactions between the Company and other related parties are disclosed below.
(a) Trading transactions
The Company`s related parties consist of companies owned by executive officers
and directors as follows:
Nature of transactions
Andrews PGM Consulting Consulting
Buccaneer Management Inc. Management
Jazz Financial Ltd. Management
Maluti Services Limited General and administrative
Xiste Consulting Ltd. Management
The Company incurred the following fees and expenses in the normal course of
operations in connection with companies owned by key management and directors.
Expenses have been measured at the exchange amount which is determined on a cost
recovery basis.
Three months ended Nine months ended
September 30, September 30,
Note 2010 2009 2010 2009
Consulting fees (i) $ 53 $ 27 $ 118 $ 103
General and administrative
expenses 29 26 91 45
Management fees 280 253 900 726
$ 362 $ 306 $ 1,109 $ 874
(i) The Company paid fees to a private company controlled by a director of the
Company for consulting services performed outside of his capacity as a director.
(ii) Amounts due to related parties are unsecured, non-interest bearing and due
on demand. Accounts payable at September 30, 2010 included $30 (December 31,
2009 - $510) which were due to private companies controlled by officers of the
Company.
(b) Compensation of key management personnel
The remuneration of directors and other members of key management personnel
during the three and nine months ended September 30, 2010 and 2009 were as
follows:
Three months ended Nine months ended
September 30, September 30,
Note 2010 2009 2010 2009
Salaries and directors` fees (i) $ 583 $ 530 $ 1,699 $ 1,510
Share-based payments (ii) - - 1,627 93
$ 583 $ 530 $ 3,326 $ 1,603
(i) Salaries and directors` fees include consulting and management fees
disclosed in Note 19(a).
(ii) Share-based payments are the fair value of options granted to key
management personnel, translated at the grant date foreign exchange rate.
(iii) Key management personnel were not paid post-employment benefits,
termination benefits, or other long-term benefits during the three and nine
months ended September 30, 2010 and 2009.
20. Segmented Information
(a) Operating segment - The Company`s operations are primarily directed towards
the acquisition, exploration and production of platinum group metals in South
Africa.
(b) Geographic segments - The Company`s revenues and expenses by geographic
areas for the three and nine months ended September 30, 2010 and 2009 and assets
by geographic areas as at September 30, 2010 and December 31, 2009 are as
follows:
Three months ended September 30, 2010
Crocodile Kennedy`s
River Mine Vale Spitzkop Mareesburg
Current assets $ 44,172 $ 182 $ 1,578 $ 30
Property, plant and
equipment 460,465 61,128 121,892 27,717
Refining contract 13,827 - - -
Other assets 3,296 - - -
$ 521,760 $ 61,310 $ 123,470 $ 27,747
Property, plant and
equipment expenditures $ 9,681 $ - $ 30 $ 13
Sale of property, plant
and equipment - - - -
Revenue $ 38,073 $ - $ - $ -
Production costs (26,953) - - -
Depreciation and
amortization (5,782) - - -
General and administrative
expenses (909) (274) (5) (3)
Share-based payment (16) - - -
Interest income 423 - - 2
Finance costs (194) (191) (7) -
Foreign exchange gain (loss) 21 - - -
Profit (loss) before
income taxes 4,663 (465) (12) (1)
Deferred income tax recovery 561 - - -
Net profit (loss) for
the period $ 5,224 $ (465) $ (12) $ (1)
Total
South
Other Africa Canada TOTAL
Current assets $ 1,050 $ 47,012 $ 13,137 $ 60,149
Property, plant and equipment - 671,202 18 671,220
Refining contract - 13,827 - 13,827
Other assets - 3,296 - 3,296
$ 1,050 $ 735,337 $ 13,155 $ 748,492
Property, plant and
equipment expenditures $ - $ 9,724 $ - $ 9,724
Sale of property, plant
and equipment - - - -
Revenue $ - $ 38,073 $ - $ 38,073
Production costs - (26,953) - (26,953)
Depreciation and amortization - (5,782) - (5,782)
General and administrative
expenses (3) (1,194) (992) (2,186)
Share-based payment - (16) - (16)
Interest income - 425 34 459
Finance costs - (392) - (392)
Foreign exchange gain (loss) - 21 (597) (576)
Profit (loss) before
income taxes (3) 4,182 (1,555) 2,627
Deferred income tax recovery - 561 - 561
Net profit (loss) for
the period $ (3) $ 4,743 $ (1,555) $ 3,188
20. Segmented Information (continued)
(b) Geographic segments (continued)
Three months ended September 30, 2009
Crocodile Kennedy`s
River Mine Vale Spitzkop Mareesburg
Property, plant and
equipment expenditures $ 3,930 $ - $ - $ -
Sale of property, plant
and equipment 28 - - -
Revenue $ 27,365 $ - $ - $ -
Production costs (22,394) - - -
Depreciation and
amortization (4,308) - - -
General and
administrative expenses (1,453) - - (4)
Share-based payment (109) - - -
Interest income 373 - 5 -
Finance costs (302) (30) - -
Foreign exchange (loss) gain (19) - - -
(Loss) profit before
income taxes $ (847) $ (30) $ 5 $ (4)
Deferred income tax
recovery 1,639 - - -
Net profit (loss) for the
period $ 792 $ (30) $ 5 $ (4)
Total South
Other Africa Canada TOTAL
Property, plant and
equipment expenditures $ - $ 3,930 $ - $ 3,930
Sale of property, plant
and equipment - 28 - 28
Revenue $ - $ 27,365 $ - $ 27,365
Production costs - (22,394) - (22,394)
Depreciation and amortization - (4,308) - (4,308)
General and administrative
expenses - (1,457) (879) (2,336)
Share-based payment - (109) - (109)
Interest income 2 380 68 448
Finance costs - (332) - (332)
Foreign exchange (loss) gain 13 (6) 658 652
(Loss) profit before income
taxes $ 15 $ (861) $ (153) $ (1,014)
Deferred income tax recovery - 1,639 6 1,645
Net profit (loss) for the
period $ 15 $ 778 $ (147) $ 631
20. Segmented Information (continued)
(b) Geographic segments (continued)
Nine months ended September 30, 2010
Crocodile Kennedy`s
River Mine Vale Spitzkop Mareesburg
Property, plant and
equipment expenditures $ 20,318 $ - $ 38 $ 90
Sale of property, plant
and equipment - - - -
Revenue $ 109,384 $ - $ - $ -
Production costs (79,511) - - -
Depreciation and
amortization (16,625) - - -
General and administrative
expenses (3,276) (1,081) (12) (5)
Share-based payment (63) - - -
Interest income 1,147 - - 6
Finance costs (778) (557) (20) -
Foreign exchange gain (loss) 12 - - -
Profit (loss) before
income taxes $ 10,290 $(1,638) $ (32) $ 1
Deferred income tax recovery 1,657 - - -
Net profit (loss) for
the period $ 11,947 $ (1,638) $ (32) $ 1
Total
Other South Canada TOTAL
Africa
Property, plant and
equipment expenditures $ - $ 20,446 $ - $ 20,446
Sale of property, plant
and equipment - - - -
Revenue $ - $ 109,384 $ - $ 109,384
Production costs - (79,511) - (79,511)
Depreciation and amortization - (16,625) - (16,625)
General and administrative
expenses (6) (4,380) (3,039) (7,419)
Share-based payment - (63) (1,705) (1,768)
Interest income - 1,153 99 1,252
Finance costs - (1,355) - (1,355)
Foreign exchange gain (loss) - 12 (356) (344)
Profit (loss) before
income taxes $ (6) $ 8,615 $ (5,001) $ 3,614
Deferred income tax recovery - 1,657 - 1,657
Net profit (loss) for
the period $ (6) $ 10,272 $ (5,001) $ 5,271
Eastern Platinum Limited
Notes to the condensed consolidated interim financial statements as at September
30, 2010 (Expressed in thousands of U.S. dollars, except number of shares and
per share amounts)
20. Segmented Information (continued)
(b) Geographic segments (continued)
Nine months ended September 30, 2009
Crocodile Kennedy`s
River Mine Vale Spitzkop Mareesburg
Property, plant and
equipment expenditures $ 22,496 $ - $ 365 $ 68
Sale of property, plant
and equipment 1,580 - - -
Revenue $ 77,106 $ - $ - $ -
Production costs (58,588) - - -
Depreciation and
amortization (12,111) - - -
General and
administrative expenses (3,917) (254) (332) (8)
Share-based payment (351) - - -
Interest income 1,110 - 36 -
Finance costs (930) (85) - -
Foreign exchange gain (loss) 33 (5) - -
Profit (loss) before
income taxes $ 2,352 $ (344) $ (296) $ (8)
Deferred income tax recovery 3,928 - - -
Net profit (loss) for the
period $ 6,280 $ (344) $ (296) $ (8)
Total South
Other Africa Canada TOTAL
Property, plant and
equipment expenditures $ - $ 22,929 $ - $ 22,929
Sale of property, plant
and equipment - 1,580 - 1,580
Revenue $ - $ 77,106 $ - $ 77,106
Production costs - (58,588) - (58,588)
Depreciation and amortization - (12,111) - (12,111)
General and administrative
expenses (63) (4,574) (2,569) (7,143)
Share-based payment - (351) (93) (444)
Interest income 4 1,150 287 1,437
Finance costs (144) (1,159) - (1,159)
Foreign exchange gain (loss) (86) (58) (737) (795)
Profit (loss) before
income taxes $ (289) $ 1,415 $ (3,112) $ (1,697)
Deferred income tax recovery - 3,928 6 3,934
Net profit (loss) for the
period $ (289) $ 5,343 $ (3,106) $ 2,237
December 31, 2009
Crocodile Kennedy `s
River Mine Vale Spitzkop Mareesburg
Current assets $ 36,749 $ 176 $ 1,509 $ 45
Property, plant and
equipment 430,959 57,695 118,994 27,111
Refining contract 14,169 - - -
Other Assets 2,282 - - -
$ 484,159 $ 57,871 $ 120,503 $ 27,156
Total
Other South Canada TOTAL
Africa
Current assets $ 1,003 $ 39,482 $ 16,139 $ 55,621
Property, plant and equipment - 634,759 19 634,778
Refining contract - 14,169 - 14,169
Other Assets - 2,282 - 2,282
$ 1,003 $ 690,692 $ 16,158 $ 706,850
For the three and nine months ended September 30, 2010 and 2009, substantially
all of the Company`s PGM production was sold to one customer.
Eastern Platinum Limited
Notes to the condensed consolidated interim financial statements as at September
30, 2010 (Expressed in thousands of U.S. dollars, except number of shares and
per share amounts)
21. Events after the reporting period
From October 1, 2010 to November 9, 2010:
(a) 102,000 stock options were exercised, of which 62,000 were exercised by way
of cash payment at a weighted average exercise price of Cdn$0.32 for proceeds of
Cdn$20, and 40,000 were exercised by way of stock appreciation rights at a
weighted average exercise price of Cdn$0.32.
(b) On October 28, 2010 the Company signed a mandate letter with two financial
institutions to arrange and underwrite a US$100 million corporate debt facility
through Eastplats International Inc., a subsidiary of the Company. The mandated
lead arrangers are UniCredit Bank AG, London Branch and The Standard Bank of
South Africa Limited.
Date: 15/11/2010 16:45:01 Supplied by www.sharenet.co.za
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