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Atlatsa announces audited consolidated financial statements for the years ended 31 December 2012, 2011 and 2010
ATLATSA RESOURCES CORPORATION
Atlatsa Resources Corporation
(previously Anooraq Resources Corporation)
(Incorporated in British Columbia, Canada)
(Registration number 10022-2033)
TSXV/JSE share code: ATL
NYSE MKT share code: ATL
ISIN: CA0494771029
(”Atlatsa” or the “Company”)
ATLATSA ANNOUNCES AUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED 31 DECEMBER
2012, 2011 AND 2010
Atlatsa announces its audited consolidated financial results for the years ended 31 December 2012, 2011 and 2010. This
announcement should be read with the Company`s full Annual Financial Statements, Management Discussion & Analysis and
the Form 20-F, available at www.atlatsaresources.com and filed on www.sedar.com.
Independent audit by the auditors
The consolidated financial statements of Atlatsa Resources Corporation, which comprise the consolidated statement of financial
position as at 31 December 2012 and 2011 and the consolidated statements of comprehensive income, changes in equity and
cash flows for each of the years ended 31 December 2012, 2011 and 2010, and the notes to the consolidated
financial statements were audited by KPMG Inc. The individual auditor assigned to perform the audit is Mr J Erasmus. KPMG`s
modified audit report is available for inspection at the registered office of the company.
28 March 2013
Johannesburg
JSE Sponsor
Macquarie First South Capital (Pty) Ltd
Consolidated Statements of Financial Position
As at 31 December 2012 and 2011
(Expressed in Canadian Dollars, unless otherwise stated)
Note 2012 2011
Assets
Non-current assets
Property, plant and equipment 7 748,456,905 798,924,420
Capital work-in-progress 8 20,027,764 20,826,290
Intangible assets 9 801,928 1,895,205
Mineral property interests 10 8,036,659 8,268,783
Goodwill 11 10,234,394 10,994,115
Platinum Producers'Environmental Trust 12 3,250,760 2,927,591
Other non-current assets 231,425 367,825
Total non-current assets 791,039,835 844,204,229
Current assets
Assets classified as held for sale 10 3,867,259 4,101,654
Inventories 13 769,447 787,084
Trade and other receivables 14 3,272,400 27,048,591
Current tax receivable - 136,109
Cash and cash equivalents 15 14,580,886 15,945,008
Restricted cash 16 535,502 786,291
Total current assets 23,025,494 48,804,737
Total assets 814,065,329 893,008,966
Equity and Liabilities
Equity
Share capital 17 71,967,083 71,967,083
Treasury shares 17 (4,991,726) (4,991,726)
Convertible preference shares 17 162,910,000 162,910,000
Foreign currency translation reserve (9,797,657) (11,238,333)
Share-based payment reserve 25,285,851 24,042,711
Accumulated loss (264,166,155) (245,448,316)
Total equity attributable to equity holders of the Company (18,792,604) (2,758,581)
Non-controlling interest 224,049,827 (25,326,683)
Total equity 205,257,223 (28,085,264)
Liabilities
Non-current liabilities
Loans and borrowings 18 434,968,189 744,456,487
Deferred taxation 19 142,341,072 144,032,213
Provisions 20 9,786,479 8,383,708
Total non-current liabilities 587,095,740 896,872,408
Current liabilities
Trade and other payables 21 20,888,635 23,125,587
Short-term portion of loans and borrowings 18 823,731 1,096,235
Total current liabilities 21,712,366 24,221,822
Total liabilities 608,808,106 921,094,230
Total equity and liabilities 814,065,329 893,008,966
The accompanying notes are an integral part of these consolidated financial statements.
Approved by the Board of Directors on 28 March 2013
Consolidated Statements of Comprehensive Income
For the years ended 31 December 2012, 2011 and 2010
(Expressed in Canadian Dollars, unless otherwise stated)
Note 2012 2011 2010
Revenue 22 117,557,331 144,406,716 148,286,833
Cost of sales 23 (195,387,551) (209,966,805) (173,151,188)
Gross loss (77,830,220) (65,560,089) (24,864,355)
Administrative expenses (14,589,526) (23,788,855) (18,291,753)
Transaction costs (822,621) - (1,811,294)
Other income 105,177 116,191 426,617
Fair value gain on consolidated facility 24 90,589,136 - -
Operating (loss)
(2,548,054) (89,232,753) (44,540,785)
Finance income 25 382,262 745,590 1,113,642
Finance expense 26 (82,837,200) (92,044,884) (67,521,703)
Net finance expense (82,454,938) (91,299,294) (66,408,061)
Loss before income tax 27 (85,002,992) (180,532,047) (110,948,846)
Income tax 28 (10,563,878) 32,667,499 17,290,040
Loss for the year (95,566,870) (147,864,548) (93,658,806)
Other comprehensive (loss)/income
Foreign currency translation differences for foreign operations 2,415,302 (7,913,856) 6,237,524
Effective portion of changes in fair value of cash flow hedges - 1,602,501 (3,121,650)
Reclassification to profit or loss on settlement of cash flow hedge - 2,521,654 -
Other comprehensive (loss)/income for the year, net of 29 2,415,302 (3,789,701) 3,115,874
income tax
Total comprehensive loss for the year (93,151,568) (151,654,249) (90,542,932)
Loss attributable to:
Owners of the Company (18,717,839) (81,928,814) (51,721,410)
Non-controlling interest (76,849,031) (65,935,734) (41,937,396)
Loss for the year (95,566,870) (147,864,548) (93,658,806)
Total comprehensive loss attributable to:
Owners of the Company (17,236,373) (83,923,552) (50,921,216)
Non-controlling interest (75,915,195) (67,730,697) (39,621,716)
Total comprehensive loss for the year (93,151,568) (151,654,249) (90,542,932)
Basic and diluted loss per share 30 (4 cents) (19 cents) (12 cents)
Headline and diluted earnings per share 40 (4 cents) (19 cents) (12 cents)
The accompanying notes are an integral part of these consolidated financial statements.
Consolidated Statements of Changes in Equity
For the years ended 31 December 2012, 2011 and 2010
(Expressed in Canadian Dollars, unless otherwise stated)
Attributable to equity holders of the Company
Share capital Treasury shares
Number of Number of
Note shares Amount shares Amount
Balance at 1 January 2010 201,743,472 71,713,114 (4,497,062) (4,991,726)
Total comprehensive loss for the year
Loss for the year – – – –
Total other comprehensive loss 29 – – – –
Total comprehensive loss for the year – – – –
Transactions with owners, recognised directly in equity
Contributions by and distributions to owners
Common shares issued 70,000 139,474 – –
Share-based payment transactions – – – –
Total contributions by and distributions to owners 70,000 139,474 – –
Balance at 31 December 2010 201,813,472 71,852,588 (4,497,062) (4,991,726)
Total comprehensive loss for the year
Loss for the year – – – –
Total other comprehensive loss 29 – – – –
Total comprehensive loss for the year – – – –
Transactions with owners, recognised directly in equity
Contributions by and distributions to owners
Common shares issued 75,000 114,495 – –
Share-based payment transactions – – – –
Total contributions by and distributions to owners 75,000 114,495 – –
Balance at 31 December 2011 201,888,472 71,967,083 (4,497,062) (4,991,726)
Acquisition of shares in Bokoni Platinum Holdings (Pty) Ltd 24 – – – –
Total comprehensive loss for the year
Loss for the year – – – –
Total other comprehensive loss 29 – – – –
Total comprehensive loss for the year – – – –
Transactions with owners, recognised directly in equity
Contributions by and distributions to owners
Common shares issued – – – –
Fair value gain on de-recognition of debt facility in relation to the first phase 24
of debt restructuring – – – –
Share-based payment transactions – – – –
Total contributions by and distributions to owners – – – –
Balance at 31 December 2012 201,888,472 71,967,083 (4,497,062) (4,991,726)
The accompanying notes are an integral part of these consolidated financial statements.
Consolidated Statements of Changes in Equity (continued)
For the years ended 31 December 2012, 2011 and 2010
(Expressed in Canadian Dollars, unless otherwise stated)
Attributable to equity holders of the Company
Foreign Share-
Convertible currency based
preference translation payment Hedging
shares reserve reserve reserve
Note
Balance at 1 January 2010 162,910,000 (9,390,899) 19,770,786 (731,293)
Total comprehensive loss for the year
Loss for the year – – – –
Total other comprehensive loss 29 – 4,193,056 – (3,392,862)
Total comprehensive loss for the year – 4,193,056 – (3,392,862)
Transactions with owners, recognised directly in equity
Contributions by and distributions to owners
Common shares issued – – (71,665) –
Share-based payment transactions – – 2,333,450 –
Total contributions by and distributions to owners – – 2,261,785 –
Balance at 31 December 2010 162,910,000 (5,197,843) 22,032,571 (4,124,155)
Total comprehensive loss for the year
Loss for the year – – –
Total other comprehensive loss 29 – (6,040,490) (78,403) 4,124,155
Total comprehensive loss for the year – (6,040,490) (78,403) 4,124,155
Transactions with owners, recognised directly in equity
Contributions by and distributions to owners
Common shares issued – – (51,495) –
Share-based payment transactions – – 2,140,038 –
Total contributions by and distributions to owners – – 2,088,543 –
Balance at 31 December 2011 162,910,000 (11,238,333) 24,042,711 –
Acquisition of shares in Bokoni Platinum Holdings (Pty) Ltd 24 – – – –
Total comprehensive loss for the year
Loss for the year – – – –
Total other comprehensive loss 29 – 1,440,676 40,790 –
Total comprehensive loss for the year – 1,440,676 40,790 –
Transactions with owners, recognised directly in equity
Contributions by and distributions to owners
Common shares issued – – – –
Fair value gain on de-recognition of debt facility in relation to the first phase 24
of debt restructuring – – – –
Share-based payment transactions – – 1,202,350 –
Total contributions by and distributions to owners – – 1,202,350 –
Balance at 31 December 2012 162,910,000 (9,797,657) 25,285,851 –
Consolidated Statements of Changes in Equity (continued)
For the years ended 31 December 2012, 2011 and 2010
(Expressed in Canadian Dollars, unless otherwise stated)
Attributable to equity holders of the Company
Non-
Accumulated controlling
loss Total interest Total equity
Note
Balance at 1 January 2010 (111,798,092) 127,481,890 82,025,730 209,507,620
Total comprehensive loss for the year
Loss for the year (51,721,410) (51,721,410) (41,937,396) (93,658,806)
Total other comprehensive loss 29 – 800,194 2,315,680 3,115,874
Total comprehensive loss for the year (51,721,410) (50,921,216) (39,621,716) (90,542,932)
Transactions with owners, recognised directly in equity
Contributions by and distributions to owners
Common shares issued – 67,809 – 67,809
Share-based payment transactions – 2,333,450 – 2,333,450
Total contributions by and distributions to owners – 2,401,259 – 2,401,259
Balance at 31 December 2010 (163,519,502) 78,961,933 42,404,014 121,365,947
Total comprehensive loss for the year
Loss for the year (81,928,814) (81,928,814) (65,935,734) (147,864,548)
Total other comprehensive loss 29 – (1,994,738) (1,794,963) (3,789,701)
Total comprehensive loss for the year (81,928,814) (83,923,552) (67,730,697) (151,654,249)
Transactions with owners, recognised directly in equity
Contributions by and distributions to owners
Common shares issued – 63,000 – 63,000
Share-based payment transactions – 2,140,038 – 2,140,038
Total contributions by and distributions to owners – 2,203,038 – 2,203,038
Balance at 31 December 2011 (245,448,316) (2,758,581) (25,326,683) (28,085,264)
Acquisition of shares in Bokoni Platinum Holdings (Pty) Ltd 24 – – 197,477,602 197,477,602
Total comprehensive loss for the year
Loss for the year (18,717,839) (18,717,839) (76,849,031) (95,566,870)
Total other comprehensive loss 29 – 1,481,466 933,836 2,415,302
Total comprehensive loss for the year (18,717,839) (17,236,373) (75,915,195) (93,151,568)
Transactions with owners, recognised directly in equity
Contributions by and distributions to owners
Common shares issued – – – –
Fair value gain on de-recognition of debt facility in relation to the first phase 24
of debt restructuring – – 127,814,103 127,814,103
Share-based payment transactions – 1,202,350 – 1,202,350
Total contributions by and distributions to owners – 1,202,350 127,814,103 129,016,453
Balance at 31 December 2012 (264,166,155) (18,792,604) 224,049,827 205,257,223
Notes to the Consolidated Financial Statements
For the years ended 31 December 2012, 2011 and 2010
(Expressed in Canadian Dollars, unless otherwise stated)
Note 2012 2011 2010
Cash flows from operating activities
Cash receipts from customers 140,085,828 148,279,469 138,546,181
Cash paid to suppliers and employees (171,351,040) (189,597,810) (154,336,968)
Cash utilised by operations 31 (31,265,212) (41,318,341) (15,790,787)
Interest received 296,187 544,825 985,573
Interest paid (158) (510,447) (13,731)
Tax paid (2,079,516) - (299,394)
Cash utilised by operating activities (33,048,699) (41,283,963) (15,118,339)
Cash flows from investing activities
Investment in environmental trusts (461,681) (505,440) -
Acquisition of property, plant and equipment 7 (2,563) (2,238) (494,095)
Acquisition of capital work-in-progress 8 (38,917,145) (28,678,042) (28,193,472)
Acquisition of intangible assets 9 - (236,304) (3,328,100)
Other - - (335,800)
Cash utilised by investing activities (39,381,389) (29,422,024) (32,351,467)
Cash flows from financing activities
Loans and borrowings raised – OCSF 18 72,872,141 68,543,022 41,382,644
Loans and borrowings raised – Funding loan 18 315,612,211 - -
Acquisition of shares in Bokoni Platinum Holdings (Pty) Ltd 197,477,614 63,000 67,809
Settlement of interest rate swap - (3,691,604) -
"A" Preference shares repaid (401,782,311) - -
Loans repaid – OCSF (110,074,287) - -
Loans repaid – Funding loan (1,233,228) - -
Interest-free loan raised 18 - - 599,442
Loans repaid – Interest-free Loan 18 - - (590,537)
Other loans repaid 18 (1,048,243) (716,371) -
Cash generated from financing activities 71,823,897 64,198,047 41,459,358
Effect of foreign currency translation (757,931) (3,311,642) 827,527
Net decrease in cash and cash equivalents (1,364,122) (9,819,582) (5,182,921)
Cash and cash equivalents, beginning of the year 15,945,008 25,764,590 30,947,511
Cash and cash equivalents, end of the year 15 14,580,886 15,945,008 25,764,590
The accompanying notes are an integral part of these consolidated financial statements.
1. NATURE OF OPERATIONS
Atlatsa Resources Corporation ("Company" or "Atlatsa") is incorporated in the Province of British Columbia, Canada. The
Company has a primary listing on the TSX Venture Exchange (“TSX-V”) and a secondary listing on the New York Stock
Exchange (“NYSE”) and the JSE Limited (“JSE”). The consolidated financial statements of the Company as at 31 December 2012
and 2011 and for the years ended 31 December 2012, 2011 and 2010 comprise the Company and its subsidiaries (together
referred to as the “Group” and individually as “Group entities”) and the Group's interest in associates, special purpose entities and
jointly controlled entities. Its principal business activity is the mining and exploration of Platinum Group Metals (“PGM”) through its
mineral property interests. The Company focuses on mineral property interests located in the Republic of South Africa in the
Bushveld Complex. Atlatsa operates in South Africa through its wholly-owned subsidiary Plateau Resources Proprietary Limited (“Plateau”)
which owns the Group’s various mineral property interests and conducted the Group’s business in South Africa.
2. GOING CONCERN
The Group incurred a net loss for the year ended 31 December 2012 of $95.6 million (2011: $147.9 million) and as of that date its
total assets exceeded its total liabilities by $205.3 million (2011: total liabilities exceeded total assets by $28.1 million). The
company continues to incur losses.
The company embarked on a restructuring and recapitalising plan during 2012 and on 28 September 2012 the first phase of the restructuring
plan was completed. The effect was a consolidation of all loan facilities into one facility at a more favourable interest rate of 6.27%
compared to 12.31% of the previous facility. The funds available from this facility are expected to meet the Group’s projected cash flow
requirements until approximately June 2013. The company is currently engaged in negotiations with Anglo American Platinum Limited (“Anglo”)
to implement the second phase of the plan to reduce the debt by $287.1 million (ZAR2.45 billion) and for additional funds to be made available
from Anglo to meet the Group’s projected cash flow requirements until approximately the end of 2015. Under the proposed plan the new restructured
debt will only be repayable once the company generates sufficient free cash flow.
Anglo has currently extended financial support until 31 August 2013.
The financial statements are prepared on the basis of accounting policies applicable to a going concern. This basis presumes that
debt restructuring and accompanying funding arrangements as described above are successfully negotiated and approved by the
shareholders by June 2013, refer note 37.
In the event that the negotiations are not successful, these conditions give rise to a material uncertainty which may cast si gnificant
doubt about the ability of the Company and its subsidiaries to continue as going concerns and, therefore that they may be unable
to realise their assets and discharge their liabilities in the normal course of business.
3. BASIS OF PRESENTATION
3.1 Statement of compliance
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards
(“IFRS”) as issued by the International Accounting Standards Board and the SAICA Financial Reporting Guides as issued by the
Accounting Practices Committee.
3.2 Basis of measurement
The consolidated financial statements have been prepared on the historical cost basis as set out in the accounting policies below.
Certain items, including derivative financial instruments, are stated at fair value.
3.3 Use of estimates and judgements
The preparation of the consolidated financial statements in accordance 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.
Information about critical judgements in applying accounting policies that have the most significant effect on the amounts
recognised in the consolidated financial statements is included in the notes to the financial statements where applicable.
4. ACCOUNTING POLICIES
These consolidated financial statements are presented in (unless stated otherwise) Canadian Dollars (“$”), which is also the
Company's functional currency. All financial information presented in $ has been rounded to the nearest dollar, except when
otherwise indicated.
The accounting policies set out below are applied consistently to all years presented in these consolidated financial
statements and have been applied consistently by Group entities.
4.1 Basis for consolidation
(i) Business combinations
All business combinations are accounted for by applying the acquisition method.
Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In
assessing control, consideration is given to potential voting rights that are currently exercisable. The acquisition date is the date
on which control is transferred to the acquirer. Judgment is applied in determining the acquisition date and determining
whether control is transferred from one party to another.
Goodwill is measured as the fair value of the consideration transferred including the recognised amount of any non-controlling
interest in the acquiree, less the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities
assumed, all measured at the acquisition date. To the extent that the fair value exceeds the consideration transferred, the
excess is recognised in profit or loss.
Consideration transferred includes the fair values of the assets transferred, liabilities incurred by the Group to the previous
owners of the acquiree, and equity interests issued by the Group. Consideration transferred also includes the fair value of any
contingent consideration and share-based payment awards of the acquiree that are replaced mandatorily in the business
combination.
A contingent liability of the acquiree is assumed in a business combination only if such a liability represents a present
obligation and arises from a past event, and its fair value can be measured reliably.
Non-controlling interest is measured at its proportionate interest in the fair value of the identifiable net assets of the acquiree.
Transaction costs incurred in connection with a business combination, such as legal fees, due diligence fees and other
professional and consulting fees are expensed as incurred, unless it is debt related. Directly attributable transaction costs
related to debt instruments are capitalised.
If the Group obtains control over one or more entities that are not businesses, then the bringing together of those entities are
not business combinations. The cost of acquisition is allocated among the individual identifiable assets and liabilities of such
entities, based on their relative fair values at the date of acquisition. Such transactions do not give rise to goodwill and no non-
controlling interest is recognised.
(ii) Acquisitions of non-controlling interests
Acquisitions of non-controlling interests are accounted for as transactions with equity holders in their capacity as equity holders
and therefore no goodwill is recognised as a result of such transactions.
(iii) Subsidiaries
Subsidiaries are entities controlled by the Group. The financial statements of subsidiaries are included in the consolidated
financial statements from the date that control commences until the date that control ceases. The accounting policies of
subsidiaries have been changed where necessary to align them with the policies adopted by the Group.
(iv) Investments in jointly controlled entities (equity accounted investees)
Jointly controlled entities are those entities over whose activities the Group has joint control, established by contractual
agreement and requiring unanimous consent for strategic financial and operating decisions.
Investments in jointly controlled entities are accounted for using the equity method (“equity accounted investees”) and are
recognised initially at cost. The Group’s equity investment includes goodwill identified on acquisition, net of any accumulated
impairment losses. The consolidated financial statements include the Group’s share of the income and expenses and equity movements
of equity accounted investees, after adjustments to align accounting policies with those of the Group, from the date that significant
influence or joint control commences until the date that significant influence or joint control ceases. When the Group’s share of
losses exceeds its interest in an equity accounted investee, the carrying amount of that interest, including any long-term investments,
is reduced to nil, and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has
made payments on behalf of the investee.
(v) Special purpose entities
A Special Purpose Entity (“SPE”) is consolidated if, based on an evaluation of the substance of its relationship with the Group and
the SPE’s risks and rewards, the Group concludes that it controls the SPE. SPE’s controlled by the Group were established
under terms that impose strict limitations on the decision-making powers of the SPE’s management and that result in the Group receiving
the majority of the benefits related to the SPE’s operations and net assets, being exposed to the majority of risks incident to the SPE’s
activities, and retaining the majority of the residual or ownership risks related to the SPE’s or their assets.
(vi) Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated in
preparing the consolidated financial statements. Unrealised gains arising from transactions with equity accounted investees are eliminated
against the investment to the extent of the Group’s interest in the investee. Unrealised losses are eliminated in the same way as unrealised
gains, but only to the extent that there is no evidence of impairment.
4.2 Foreign currencies
(i) Foreign currency transactions
Transactions in foreign currencies are translated to the respective functional currencies of Group entities at exchange rates at
the date of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are
translated to the functional currency at the exchange rate at that date. The foreign currency gain or loss on monetary items is
the difference between amortised cost in the functional currency at the beginning of the year, adjusted for effective interest
and payments during the year, and the amortised cost in foreign currency translated at the exchange rate at the end of the
year. Such gains and losses are recognised in profit or loss.
Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the
functional currency at the exchange rate at the date that the fair value was determined. Non-monetary items in a foreign
currency that are measured in terms of historical cost are translated using the exchange rate at the date of the transaction.
Foreign currency differences arising on retranslation are recognised in profit or loss, except for differences arising on the
retranslation of available-for-sale equity investments, a financial liability designated as a hedge of the net investment in a foreign
operation that is effective, or qualifying cash flow hedges, which are recognised in other comprehensive income.
(ii) Foreign operations
The financial results of Group entities that have a functional currency different from the presentation currency are translated
into the presentation currency. The presentation currency of the Company is Canadian Dollars. Income and expenditure
transactions of foreign operations are translated at the average rate of exchange for the year except for significant individual
transactions which are translated at the rate of exchange in effect at the transaction date. All assets and liabilities, including fair
value adjustments and goodwill arising on acquisition, are translated at the rate of exchange ruling at the reporting date.
Foreign currency differences are recognised in other comprehensive income, and presented in the foreign currency translation
reserve (“FCTR”) in equity. However, if the foreign operation is a non-wholly owned subsidiary, then the relevant proportion of the
translation difference is allocated to non-controlling interests.
When the settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor likely in the
foreseeable future, foreign exchange gains and losses arising from such a monetary item are considered to form part of the net
investment in a foreign operation and are recognised in other comprehensive income and are included in the foreign currency
translation reserve.
On disposal of part or all of the operations, the proportionate share of the related cumulative gains and losses previously
recognised in the FCTR through the statement of comprehensive income are included in determining the profit or loss on
disposal of that operation recognised in profit or loss.
4.3 Financial instruments
(i) Non-derivative financial assets
Non-derivative financial assets comprise loans and receivables.
Loans and receivables are recognised on the date of origination. All other financial assets are recognised initially on the trade
date at which the Group becomes a party to the contractual provisions of the instrument.
Financial assets are derecognised when the contractual rights to the cash flows from the asset expire, or the Group transfers
the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and
rewards of ownership of the financial assets are transferred. Any interest in transferred financial assets that is created or retained
is recognised as a separate asset or liability.
Financial assets and financial liabilities are offset and the net amount presented in the statement of financial position when,
and only when, the Group has a legal right to offset the amounts and intends either to settle on a net basis or to realise the
asset and settle the liability simultaneously.
Loans and receivables
Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Such
assets are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition
loans and receivables are measured at amortised cost using the effective interest method, less any impairment losses.
Loans and receivables comprise trade and other receivables, restricted cash, investment in the Platinum Producer’s Environmental
Trust and cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits with original maturities of three months or less. Bank overdrafts
that are repayable on demand and form an integral part of the Group’s cash management are included as a component of cash and cash
equivalents for the purpose of the statement of cash flows.
(ii) Non-derivative financial liabilities
The Group initially recognises debt securities issued and subordinated liabilities on the date that they originated. All other
financial liabilities are recognised initially on the trade date at which the Group becomes a party to the contractual provisions of
the instrument.
Financial liabilities are derecognised when the contractual obligations are discharged, cancelled or expire.
Non-derivative financial liabilities comprise loans and borrowings, bank overdrafts, trade and other payables.
Financial liabilities are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial
recognition these financial liabilities are measured at amortised cost using the effective interest method.
(iii) Derivative financial instruments, including hedge accounting
The Group held derivative financial instruments to hedge its interest rate risk exposures. Embedded derivatives are separated
from the host contract and accounted for separately if the economic characteristics and risks of the host contract and the
embedded derivative are not closely related, a separate instrument with the same terms as the embedded derivative would
meet the definition of a derivative, and the combined instrument is not measured at fair value through profit or loss.
On initial designation of the hedge, the Group formally documents the relationship between the hedging instrument(s) and
hedged item(s), including the risk management objectives and strategy in undertaking the hedge transaction, together with the
methods that will be used to assess the effectiveness of the hedging relationship. The Group makes an assessment, both at
the inception of the hedge relationship as well as on an ongoing basis, whether the hedging instruments are expected to be
“highly effective” in offsetting the changes in the fair value or cash flows of the respective hedged items during the year for
which the hedge is designated, and whether the actual results of each hedge are within a range of 80-125 percent. For a cash
flow hedge of a forecast transaction, the transaction should be highly probable to occur and should present an exposure to
variations in cash flows that could ultimately affect reported net income.
Derivatives are recognised initially at fair value; attributable transaction costs are recognised in profit or loss as incurred.
Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are accounted for as described
below.
Cash flow hedges
When a derivative is designated as the hedging instrument in a hedge of the variability in cash flows attributable to particular risk
associated with a recognised asset or liability or a highly probable forecast transaction that could affect profit or loss, the
effective portion of changes in the fair value of the derivative is recognised in other comprehensive income and presented in
the hedging reserve in equity. The amount recognised in other comprehensive income is removed and included in profit or loss
in the same period as the hedged cash flows affects profit or loss under the same line item in the statement of
comprehensive income as the hedged item. Any ineffective portion of changes in the fair value of the derivative is recognised
immediately in profit or loss.
If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated, exercised, or the
designation is revoked, then hedge accounting is discontinued prospectively. The cumulative gain or loss previously
recognised in other comprehensive income and presented in the hedging reserve in equity remains there until the
forecast transaction affects profit or loss. When the hedged item is a non-financial asset, the amount recognised
in other comprehensive income is transferred to the carrying amount of the asset when the asset is recognised. If the
forecast transaction is no longer expected to occur, then the balance in other comprehensive income is recognised immediately
in profit or loss. In other cases the amount recognised in other comprehensive income is transferred to profit or loss in the same
period that the hedged item affects profit or loss.
Separate embedded derivatives
Changes in the fair value of separated embedded derivatives are recognised immediately in profit or loss.
Other derivatives
When a derivative financial instrument is not held for trading purposes and is not designated in a qualifying hedge relationship, all
changes in its fair value are recognised immediately in profit or loss.
(iv) Share capital
Common shares
Common shares are classified as equity. Incremental costs directly attributable to the issue of common shares and share
options are recognised as a deduction from equity, net of any tax effects.
Preference share capital
Preference share capital is classified as equity if it is non-redeemable, redeemable for a fixed number of the Company’s shares, or
redeemable only at the Company’s option, and any dividends are discretionary. Dividends thereon are recognised as distributions within
equity upon approval by the Company’s Board of Directors.
Preference share capital is classified as a liability if it is redeemable on a specific date or at the option of the holders, or if
dividend payments are not discretionary. Dividends thereon are recognised as finance expense in profit or loss as accrued.
Treasury shares
Shares issued to subsidiaries or SPE’s are reflected as treasury shares on consolidation.
4.4 Accounting for borrowing costs
In respect of borrowing costs relating to qualifying assets the Group capitalises borrowing costs that are directly attributable to
the acquisition, construction or production of a qualifying asset as part of the cost of that asset. The Group has capitalised
borrowing costs with respect to property, plant and equipment under construction.
4.5 Property, plant and equipment
Mining assets, including mine development cost and infrastructure costs, mine plant facilities and buildings are measured at
historical cost less accumulated depreciation and impairment losses.
Mining assets are capitalised to capital work-in-progress and transferred to mining property, plant and equipment when the
mining venture reaches commercial production.
Capitalised mine development and infrastructure costs include expenditure incurred to develop new mining operations and to
expand the capacity of the mine to the extent that it gives rise to future economic benefit. Costs include borrowing costs
capitalised during the construction period where qualifying expenditure is financed by borrowings, the cost of materials and
direct labour, any other costs directly attributable to bringing the asset to a working condition for its intended use as well as an
estimate of the costs of dismantling and removing the items and restoring the site on which they are located. Items of mining
property, plant and equipment, excluding capitalised mine development and infrastructure costs, are depreciated on a straight -
line basis over their expected useful life. Capitalised mine development and infrastructure are depreciated on a units of
production basis. Depreciation is charged on mining assets from the date on which they are available for use.
When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items
(major components) of property, plant and equipment.
Property, plant and equipment are depreciated over their estimated useful lives as follows:
Mine development and infrastructure units of production
Plant and equipment 1 – 30 years
Buildings 5 – 30 years
Motor vehicles 1 – 5 years
Furniture and fittings 1 – 10 years
Items of property, plant and equipment that are withdrawn from use, or have no reasonable prospect of being recovered
through use or sale, are regularly identified and written off.
The assets' residual values, depreciation methods and useful lives are reviewed, and adjusted if appropriate, at each reporting
date.
Non-mining assets are measured at historical cost less accumulated depreciation and impairment losses. Depreciation is
charged on the straight-line basis over the useful lives of these assets.
Subsequent expenditure relating to an item of property, plant and equipment is capitalised when it is probable that future
economic benefits from the use of the assets will be increased.
Repairs and maintenance are recognised in profit or loss during the period in which they are incurred.
Gains and losses on disposal of property, plant and equipment are determined by comparing the proceeds from disposal
with the carrying amount of the asset and are recognised net within profit or loss.
4.6 Intangible assets
(i) Goodwill
Goodwill is measured at cost less accumulated impairment losses and is not amortised. In respect of equity accounted
investees, the carrying amount of goodwill is included in the carrying amount of the investment, and an impairment loss on
such an investment is not allocated to any asset, including goodwill, that forms part of the carrying amount of the equity
accounted investee.
(ii) Other intangible assets
Other intangible assets include mineral property interests (refer note 4.18 below) and purchased software. These intangible
assets are recognised if it is probable that future economic benefits will flow to the entity from the intangible assets and the costs
of the intangible assets can be reliably measured.
Mineral property interests are carried at cost less impairment losses.
Purchased software is stated at cost less amortisation and impairment losses and is amortised on a straight line basis over its
estimated useful life. The amortisation method and estimated useful life are reviewed at least annually.
4.7 Impairment of assets
(i) Non-financial assets
The carrying amounts of the Group’s non-financial assets, other than inventories and deferred tax assets, are reviewed at each
reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s
recoverable amount is estimated. For goodwill and intangible assets that have indefinite lives or that are not yet available
for use, the recoverable amount is estimated each year at the same time.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of
impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing
use that are largely independent of the cash inflows of other assets or groups of assets (the “cash-generating unit”). The
goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to cash-generating units that
are expected to benefit from the synergies of the combination.
An impairment loss is recognised if the carrying amount of an asset or its cash-generating units exceeds its estimated recoverable
amount. Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of cash- generating units are
allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amounts of
the other assets in the unit (group of units) on a pro rata basis.
An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior years
are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed
if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent
that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation,
if no impairment loss had been recognised.
(ii) Financial assets (including receivables)
A financial asset not measured at fair value through profit or loss is assessed at each reporting date to determine whether there
is objective evidence that it is impaired. A financial asset is impaired if objective evidence indicates that a loss event has
occurred after the initial recognition of the asset, and that the loss event had a negative effect on the estimated future cash
flows of that asset that can be estimated reliably.
The Group considers evidence of impairment for loans and receivables at both a specific asset and collective level. All individually
significant assets are assessed for specific impairment. Those found not to be specifically impaired are then collectively assessed
for any impairment that has been incurred but not yet identified. Assets that are not individually significant are collectively assessed
for impairment by grouping together assets with similar risk characteristics. In assessing collective impairment the Group uses historical
trends of the probability of default, the timing of recoveries and the amount of loss incurred, adjusted for management’s judgment as to
whether current economic and credit conditions are such that the actual losses are likely to be greater or less that suggested by
historical trends.
An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount
and the present value of the estimated future cash flows discounted at the asset’s original effective interest rate. Losses are recognised
in profit or loss and reflected in an allowance account against receivables. Interest on the impaired asset continues to be recognised through
the unwinding of the discount. When a subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss
is reversed through profit or loss.
4.8 Inventories
Inventories, comprising ore stockpiles and consumables, are measured at the lower of cost and net realisable value.
The cost of inventories is based on the average cost of ore in stockpiles and comprises all costs incurred to the stage immediately
prior to stockpiling, including costs of extraction and crushing, as well as processing costs associated with ore stockpiles, based on
the relevant stage of production.
Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and
selling expenses.
4.9 Employee benefits
(i) Defined contribution plans
A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate
entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined
contribution pension plans are recognised as an employee benefit expense in profit or loss in the years during which services
are rendered by employees. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in
future payments is available. Contributions to a defined contribution plan that are due more than 12 months after the end of the
year in which the employees render the service are discounted to their present value.
(ii) Short-term employee benefits
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is
provided.
A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has
a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the
obligation can be estimated reliably.
(iii) Share-based payment transactions
The grant date fair value of share-based payment awards granted to employees is recognised as an employee cost, with a
corresponding increase in equity, over the period that the employees unconditionally become entitled to the awards. The
amount recognised as an expense is adjusted to reflect the number of awards for which the related service and non-market
vesting conditions are expected to be met, such that the amount ultimately recognised as an expense is based on the number
of awards that do meet the related service and non-market performance conditions at the vesting date.
For share-based payment awards with non-vesting conditions, the grant date fair value of the share-based payment is
measured to reflect such conditions and there is no true-up for differences between expected and actual outcomes.
The fair value of the amount payable to employees in respect of the share appreciation rights (SARs), which are settled in
cash, is recognised as an expense with a corresponding increase in liabilities over the period that the employees
unconditionally become entitled to payment. The liability is remeasured at each reporting date and at settlement date. Any
changes in the fair value of the liability are recognised as employee costs in profit or loss.
Share-based payment arrangements in which the Group receives goods or services as consideration for its own equity
instruments are accounted for as equity-settled share-based payment transactions, regardless of how the equity instruments
are obtained by the Group.
(iv) Termination benefits
Termination benefits are recognised as an expense as and when the Group is committed demonstrably, without realistic
possibility of withdrawal, to a formal detailed plan to either terminate employment before the normal retirement date, or to provide
termination benefits as a result of an offer made to encourage voluntary redundancy.
Termination benefits for voluntary redundancies are recognised as an expense if the Group has made an offer of voluntary
redundancy, it is probable that the offer will be accepted, and the number of acceptances can be estimated reliably.
If benefits are payable more than 12 months after the reporting year, the benefits are discounted to their present value.
4.10 Provisions
A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be
estimated reliably and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are
determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time
value of money and the risks specific to the liability. The unwinding of the discount is recognised as finance expense (“notional
interest”).
Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. If it is no longer probable that an
outflow of economic benefits will be required, the provision is reversed.
(i) Environmental rehabilitation provisions
Estimated environmental provisions, comprising pollution control, rehabilitation and mine closure, are based on the Group’s environmental
policy taking into account current technological, environmental and regulatory requirements. The provision for rehabilitation is
recognised as and when the environmental liability arises. To the extent that the obligations relate to the construction of an asset, they
are capitalised as part of the cost of those assets. The effect of subsequent changes to assumptions in estimating an obligation for which
the provision was recognised as part of the cost of the asset is adjusted against the asset. Any subsequent changes to an obligation which
did not relate to the initial construction of a related asset are recognised in profit or loss.
(ii) Restructuring
A provision for restructuring is recognised when the Group has approved a detailed and formal restructuring plan, and the
restructuring has either commenced or has been announced publically. Future operating losses are not provided for.
4.11 Platinum Producers’ Environmental Trust
The Group contributes to the Platinum Producers’ Environmental Trust annually. The trust was created to fund the estimated cost of pollution
control, rehabilitation and mine closure at the end of the lives of the Group’s mines. Contributions are determined on the basis of the estimated
environmental obligation over the life of a mine. Contributions made are reflected in non-current investments held by the Platinum Producers’
Environmental Trust. Interest earned on monies paid to rehabilitation trust funds is accrued on a time proportion basis and is recognised
as finance income.
4.12 Revenue
Revenue arising from the sale of metals and intermediary products is recognised when the price is determinable, the product
has been delivered in accordance with the terms of the contract, the significant risks and rewards of ownership have been
transferred to the customer and collection of the sales price is reasonably assured. These criteria are typically met when the
concentrate reaches the smelter.
Revenue from the sale of metals and intermediary products in the course of ordinary activities is measured at the fair value of
the consideration received or receivable. Revenue further excludes value-added tax and mining royalties.
4.13 Lease payments
(i) Operating leases - Lessor
Operating lease income is recognised as income on a straight-line basis over the lease term.
Initial direct costs incurred in negotiating and arranging operating leases are added to the carrying amount of the leased asset
and recognised as an expense over the lease term on the same basis as the lease income. Income for leases is disclosed
under other income in profit or loss.
(ii) Operating leases - Lessee
Operating lease payments are recognised as an expense on a straight-line basis over the lease term. The difference between
the amounts recognised as an expense and the contractual payments are recognised as an operating lease liability. This liability
is not discounted.
Any contingent rents are expensed in the period they are incurred.
4.14 Finance income and finance expense
Finance income comprises interest income on funds invested and interest received on loans and receivables. Interest
income is recognised as it accrues in profit or loss, using the effective interest method.
Finance expense comprises interest expense on borrowings, unwinding of the discount on provisions, dividends on preference
shares classified as liabilities and gains/losses on hedging instruments that are recognised in profit or loss. Borrowing costs
that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in profit or
loss using the effective interest method.
Foreign currency gains and losses are reported on a net basis.
4.15 Income tax
Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognised in profit or loss except t o
the extent that it relates to a business combination, or items recognised directly in equity or in other comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or
substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary
differences: the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither
accounting nor taxable profit or loss, and differences relating to investments in subsidiaries and jointly controlled entitie s to the
extent that it is probable that they will not reverse in the foreseeable future. In addition, deferred tax is not recognised for taxable
temporary differences arising on the initial recognition of goodwill. The Group is able to control the timing of the reversal of the
temporary differences. The ability to control the timing of reversal is a key part of the recognition exemption from recogniz ing
deferred tax related to temporary differences related to investment in subsidiaries, associate and jointly co ntrolled entities.
Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based o n
the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabil ities 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 for unused tax losses, tax credits and deductible temporary differences, to the extent tha t it is
probable that future taxable profits will be available against which they 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.
4.16 Earnings/(Loss) and headline earnings/(loss) per share
The Group presents basic and diluted earnings/(loss) per share (“EPS”) data for its common shares. Basic EPS is calculated by
dividing the profit or loss attributable to owners of the Company by the weighted average number of common shares
outstanding during the year, adjusted for own shares held. Diluted EPS is determined by adjusting the profit or loss
attributable to owners of the Company and the weighted average number of common shares outstanding, adjusted for
own shares held and for the effects of all dilutive potential common shares, which include share options granted to employees.
The weighted average number of shares is adjusted for the weighted average number of treasury shares.
The calculation of headline earnings per share is based on the net profit attributable to owners of the Company, after
excluding all items of a non-trading nature, divided by the weighted average number of common shares in issue during the year.
The presentation of headline earnings is not an IFRS requirement, but is mandated under the JSE Listing Requirements and
in accordance with Circular 3/2009 ‘Headline Earnings’, as issued by the South African Institute of Chartered Accountants.
4.17 Segment reporting
An operating segment is a component of the Group that engages in business activities from which it may earn revenues and
incur expenses, including revenues and expenses that relate to transactions with any of the Group's other components. All
operating segments' operating results are reviewed regularly by the Group's Chief Executive Officer (who is considered the
chief operating decision maker) to make decisions about resources to be allocated to the segment and assess its performance,
and for which discrete financial information is available.
4.18 Exploration expenditure and mineral property interests
The acquisitions of mineral property interests are initially measured at cost. Mineral property acquisition costs and development
expenditures incurred subsequent to the determination of the feasibility of mining operations and approval of development by
the Group are capitalised until the property to which they relate is placed into production, sold or allowed to lapse.
Exploration and evaluation costs incurred prior to determination of the feasibility of mining operations are expensed as
incurred. Re-imbursement of previously expensed exploration and evaluation costs are recognised as other income in profit
or loss.
Mineral property acquisition costs include the cash consideration and the fair market value of shares issued for mineral
property interests pursuant to the terms of the relevant agreements. These costs will be amortised over the estimated life of the
property following commencement of commercial production, or written off if the property is sold, allowed to lapse, or when an
impairment of value has been determined to have occurred.
4.19 Non-current assets held for sale or distribution
Non-current assets, or disposal groups comprising assets and liabilities, that are expected to be recovered primarily through sale
or distribution rather than through continuing use, are classified as held for sale or distribution. Immediately before classification as
held for sale or distribution, the assets, or components of a disposal group are remeasured in accordance with the Group?s
accounting policies. Thereafter generally the assets, or disposal group, are measured at the lower of their carrying amount and fair
value less costs to sell. An impairment loss on a disposal group first is allocated to goodwill, and then to remaining assets and
liabilities on a pro rata basis, except that no loss is allocated to inventories and deferred tax assets, which continue to be
measured in accordance with the Group's accounting policies.
Impairment losses on initial classification as held for sale or distribution and subsequent gains and losses on remeasurement are
recognised in profit or loss. Gains are not recognised in excess of any cumulative impairment loss.
Once classified as held for sale or distribution, intangible assets and property, plant and equipment are no longer amortised or
depreciated.
4.20 New standards and interpretations
Standards and interpretations issued but not yet effective and applicable to the Group:
- IAS 19, Employee benefits: Defined benefit plans (effective 1 January 2013)
- IAS 27, Separate Financial Statements (effective 1 January 2013)
- IAS 28, Investment in Associates and Joint ventures (effective 1 January 2013)
- IAS 32, Offsetting Financial Assets and Financial Liabilities (effective 1 January 2014)
- Amendment to IFRS 7, Disclosures – Offsetting Financial Assets and Financial Liabilities (effective 1 January 2013)
- IFRS 9, Financial Instruments (effective 1 January 2015)
- IFRS 9, Additions to IFRS 9 Financial instruments (effective 1 January 2015)
- IFRS 10, Consolidated Financial Statements (effective 1 January 2013)
- IFRS 11, Joint Arrangements (effective 1 January 2013)
- IFRS 12, Disclosure of Interests in Other Entities (effective 1 January 2013)
- IFRS 13, Fair Value Measurement (effective 1 January 2013)
- Amendment to IFRS 10, IFRS 11 and IFRS 12, Consolidated Financial Statements, Joint Arrangements and Disclosure of
Interests in Other Entities: Transition Guidance (Effective 1 January 2013)
- IFRIC 20, Stripping costs in the Production Phase of a Surface Mine (effective 1 January 2013)
- 7 individual amendments to 5 standards, Improvements to International Financial Reporting Standards 2012 (effective 1
January 2013)
The Group is currently evaluating the impact, if any, that these new standards will have on the consolidated financial statements.
Standards and interpretations adopted in the current year by the Group:
- Amendment to IAS1, Presentation of Financial Statements: Presentation of Items of Other Comprehensive Income
- Amendments to IAS 12, Deferred Tax: Recovery of Underlying assets
There was no significant impact on these consolidated financial statements as a result of adopting these standards and
interpretations as IAS1 refers to the presentation which is already reflected and the amendments to IAS 12 is not applicable.
5. DETERMINATION OF FAIR VALUES
A number of the Group's accounting policies and disclosures require the determination of fair value, for both financial and non-
financial assets and liabilities. Fair values have been determined for measurement and/or disclosure purposes based on the
following methods. When applicable, further information about the assumptions made in determining fair values is disclosed in
the notes specific to that asset or liability.
5.1 Property, plant and equipment
The fair value of property, plant and equipment recognised as a result of a business combination is based on market values.
The market value of property is the estimated amount for which a property could be exchanged on the date of valuation between a
willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties had each acted
knowledgeably and willingly. The fair value of items of plant, equipment, fixtures and fittings is based on the market approach
and cost approach using quoted market prices for similar items when available and replacement cost when appropriate.
The fair value of mining rights included in property, plant and equipment acquired as part of a business combination is
determined using the multi-year excess earnings method, whereby the subject asset is valued after deducting a fair return on all
other assets that are part of creating the related cash flows.
5.2 Mineral property interest
The fair value of mineral property interests acquired in a business combination is determined using a market comparative
approach. In applying a market comparative approach, a selection of appropriate historic transactions is used to determine an
average transaction value.
5.3 Trade and other receivables
The fair value of trade and other receivables is estimated as the present value of future cash flows, discounted at the market
rate of interest at the reporting date. This fair value is determined for disclosure purposes.
5.4 Derivatives
The fair value of interest rate swaps is based on the fair value of the cash flows of the swap using the ZAR zero-coupon swap
curve and the fair value of the projected shifted cash flows discounted using the shifted zero-coupon rates.
Fair values reflect the credit risk of the instrument and exclude the credit risk of the Group entity and counterparty when
appropriate.
5.5 Non-derivative financial liabilities
Fair value is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of
interest at the reporting date. This fair value is determined for disclosure purposes.
5.6 Share-based payment transactions
The fair value of the employee share options is measured using the Black-Scholes option pricing model. Measurement inputs
include share price on measurement date, exercise price of the instrument, expected volatility (based on weighted average
historic volatility adjusted for changes expected due to publicly available information), weighted average expected life of the
instruments (based on historical experience and general option holder behaviour), expected dividends, and the risk-free
interest rate (based on government bonds). Service and non-market performance conditions attached to the transactions are
not taken into account in determining fair value.
The fair value of the cash-settled SARs is measured using the binomial valuation model. Measurement inputs include share
price on measurement date, strike price of the instrument, expected volatility (based on weighted average historic volatility
adjusted for changes expected due to publicly available information), vesting, expiry and exercise dates, expected dividends
and the risk free interest rate (based on the Bond Exchange of South Africa).
5.7 Equity and debt securities
The fair value of equity and debt securities is determined by reference to their quoted closing bid price at reporting date, or if
unquoted, determined using a valuation technique such as market multiples and discounted cash flow analysis using expected
future cash flows and a market-related discount rate.
5.8 Other non-derivative financial liabilities
Fair value, which is determined for disclosure purposes, is calculated based on the present value of future principal and interest
cash flows, discounted at the market rate of interest at the reporting date.
6. FINANCIAL RISK MANAGEMENT
The Board of Directors has overall responsibility for the establishment and oversight of the Group's risk management framework.
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..
Overview
The Group has exposure to the following risks from its use of financial instruments:
- credit risk
- liquidity risk
- interest rate risk
- foreign currency risk
- commodity price risk
This note presents information about the Group’s exposure to each of the above risks, the Group’s objectives, policies and processes
for measuring and managing risk and the Group’s management of capital. Further quantitative disclosures are included throughout these
consolidated financial statements.
(i) Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual
obligations, and arises principally from the Group’s receivables from customers, and cash and equivalents. Management has evaluated treasury
counterparty risk and does not expect any treasury counterparties to fail in meeting their obligations
Trade and other receivables
Trade receivables represents sale of concentrate to Rustenburg Platinum Mines Limited (“RPM”) in terms of a concentrate
off-take agreement. The carrying value represents the maximum credit risk exposure. The Group has no collateral against these
receivables.
100% of the Group’s revenue is generated in South Africa from sale of concentrate by Bokoni Mine to RPM.
Cash and cash equivalents
At times when the Group’s cash position is positive, cash deposits are made with financial institutions having superior local credit ratings.
(ii) Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group ensures that
there is sufficient capital in order to meet short term business requirements, after taking into account cash flows from operations and
the Group’s holdings of cash and cash equivalents. This is facilitated via the Senior Term Facility, as amended on 26 September 2012.
The Group’s cash and cash equivalents are invested in business accounts which are available on demand.
The Group operates in South Africa and is subject to currency exchange controls administered by the South African Reserve
Bank (“SARB”). South African law provides for exchange control regulations that restrict the export of capital. The exchange
control regulations, which are administered by SARB, regulate transactions involving South African residents, including legal
entities, and limit a South African company's ability to borrow from and repay loans to non-residents and to provide guarantees
for the obligations of its affiliates with regard to funds obtained from non-residents.
A portion of the Company's funding for its South African operations consist of loans advanced to its South African subsidiaries
from subsidiaries that are non-residents of South Africa. The Company is in compliance with SARB regulations and is therefore not
subject to restrictions on the ability of its South African subsidiaries to transfer funds to the Company or to other subsidiaries.
In addition, the SARB has introduced various measures in recent years to relax the exchange controls in South Africa to entice foreign
investment in the country. However, if more burdensome exchange controls were proposed or adopted by the SARB in the future, or if the
Company was unable to comply with existing SARB regulations, such exchange control regulations could restrict the ability of the Company
and its subsidiaries to repatriate funds needed to effectively finance the Company’s operations.
The maturity profile of the contractual undiscounted cash flows of financial instruments, including scheduled interest payments
on loans and borrowings, at 31 December were as follows:
2013 2014 2015 2016 Thereafter Total
2012
Non-derivative financial liabilities
Loans and borrowings 754,531 4,142,905 562,335 190,021,619 562,416,835 757,898,225
Trade and other payables 14,319,136 - - - - 14,319,136
Total 2012 15,073,667 4,142,905 562,335 190,021,619 562,416,835 772,217,361
2012 2013 2014 2015 Thereafter Total
2011
Loans and borrowings 1,027,035 4,201,292 44,553,903 44,553,903 1,510,996,207 1,605,332,340
Trade and other payables 13,497,013 - - - - 13,497,013
Total 2011 14,524,048 4,201,292 44,553,903 44,553,903 1,510,996,207 1,618,829,353
(iii) Interest rate risk
As a result of the Group acquiring the Bokoni business during 2009, the Group had secured loan facilities with Standard
Chartered Bank plc (“Standard Chartered”) and RPM. Standard Chartered provided a loan of $58.6 million (ZAR500 million)
and RPM provided a loan of $56.3 million (ZAR480 million) to the Group which was subject to interest rate risk. On 28 April
2011, the Standard Chartered loan was ceded to RPM with revisions to certain terms of the loan including a reduction in the
interest rate to 3 month JIBAR plus 4% (9.585% at 31 December 2011) from a 3 month JIBAR plus applicable margin (4.5%)
and mandatory cost (1.27%) (refer to note18).
The Group previously entered into an interest rate swap arrangement with Standard Chartered to fix the variable interest rate on
$58.6 million (ZAR500 million) of the principal amount of the loan at 14.695% which arrangement was settled on 28 April 2011
with funding obtained from RPM. This funding has the same terms as the debt ceded to RPM and is also subject to interest rate
risk.
On 28 September 2012, Atlatsa entered into an Amendment and Interim Implementation Agreement pursuant to which Atlatsa
implemented the first phase of the broader restructuring, recapitalization and refinancing transaction, which was first announced by
Atlatsa in a news release dated February 2, 2012.The first phase of the Restructure Plan involved an amendment to the terms of
the Senior Term Loan Facilities Agreement (now a consolidated facility) dated June 12, 2009 between Plateau, as borrower and
RPM, as lender to increase the total loan facility available by approximately $310.6 million (ZAR2.65 billion). The additional loan
proceeds were used to repay the existing OCSF and fund share subscriptions by Plateau into Bokoni Platinum Holdings
Proprietary Limited (“Bokoni Holdco”) and by Bokoni Holdco into Bokoni Mine (the “Share Subscriptions”) for the purpose of
repayment of certain existing loan facilities by Plateau, Bokoni Holdco and Bokoni Mine.
The interest rate payable on the debt owing will be reduced to an annual effective rate of 6.27% (linked to the 3-month JIBAR)
from the current effective rate of 12.31%. These revised loans are also subject to interest rate risk.
The method used in the sensitivity analysis is to assume a change in basis points. A 100 basis point increase in the interest rate
at 31 December 2012 on the RPM loans would have changed the loss for the year by approximately $2,478,813 (2011:
($1,210,659)) and a 100 basis point decrease by ($3,694,508) (2011: $1,210,659). This analysis assumes that all other
variables remain constant.
(iv) Foreign currency risk
The Group, from time to time, enters into transactions for the purchase of supplies and services denominated in
foreign currency. As a result, the Group is subject to foreign exchange risk from fluctuations in foreign exchange rates. The
Group has not entered into any derivative or other financial instruments to mitigate this foreign exchange risk.
Within the Group, certain loans between Group entities amounting to $50.6 million (2011: $49.9 million) are exposed to foreign
exchange fluctuations. The method used in the sensitivity analysis is to assume a change in the $/ZAR exchange rate. The
closing ZAR to $ exchange rate for the year ending 31 December 2012 was ZAR8.53 (2011:ZAR7.94). A 10% change in the
$/ZAR exchange rate at 31 December 2012 would have resulted in an increase/decrease of $5.1 million (2011: $5.0 million) in
equity. The Group has no significant external exposure to foreign exchange risk. All loans and borrowings are denominated in
ZAR (refer note 18).
(v) Commodity price risk
The value of the Group’s revenue and resource properties depends on the prices of PGM’s and their outlook. The Group does not
hedge its exposure to commodity price risk. PGM prices historically have fluctuated widely and are affected by numerous factors
outside of the Group’s control, including, but not limited to, industrial and retail demand, forward sales by producers and speculators,
levels of worldwide production, and short-term changes in supply and demand because of hedging activities.
(vi) Capital risk management
The primary objective of managing the Group’s capital is to ensure that there is sufficient capital available to support the funding
and operating requirements of the Group in a way that optimises the cost of capital, maximizes shareholders’ returns, matches the current
strategic business plan and ensures that the Group remains in a sound financial position.
The Group manages and makes adjustments to the capital structure which consists of debt and equity as and when borrowings mature or
when funding is required. This may take the form of raising equity, market or bank debt or hybrids thereof. The Group may also adjust
the amount of dividends paid, sell assets to reduce debt or schedule projects to manage the capital structure. Atlatsa ’s ability to
raise new equity in the equity capital markets is subject to the mandatory requirement that Atlatsa Holdings Proprietary Limited
(“Atlatsa Holdings”) (formerly Pelawan Investments Proprietary Limited), its majority Black Economic Empowerment (“BEE “) shareholder,
retain a 51% fully diluted shareholding in the Company up until 1 January 2015, as required by covenants given by Atlatsa Holdings and
Atlatsa in favour of the Department of Mineral Resources (“DMR”), the SARB and Anglo.
There were no changes to the Group’s approach to capital management during the year.
(vii) Summary of the carrying value of the Group’s financial instruments
At 31 December 2012 Financial
Loans and liabilities at
receivables amortised cost
Platinum Producers'Environmental Trust 3,250,760 -
Trade and other receivables 1,154,526 -
Cash and cash equivalents 14,580,886 -
Restricted cash 535,502 -
Loans and borrowings 230,283 435,791,920
Trade and other payables - 14,319,136
At 31 December 2011 Financial
Loans and liabilities at
receivables amortised cost
Platinum Producers'Environmental Trust 2,927,591 -
Trade and other receivables 24,999,127 -
Cash and cash equivalents 15,945,008 -
Restricted cash 786,291 -
Loans and borrowings 367,178 745,552,722
Trade and other payables - 13,497,013
The loans and borrowings carrying value (financial liabilities at amortised cost) compared to fair value is as follows:
2012 2011
Carrying Fair value Carrying Fair value
value value
Loans and borrowings 435,791,920 435,791,920 745,552,722 822,304,338
The fair value of all other non-derivative financial instruments approximates carrying value due to the short-term to maturity.
The contractual value of the loans and borrowings (financial liabilities at amortised cost) at 31 December 2012 was $554,659,611
(ZAR4,732,590,541) (2011:$745,552,722 (ZAR5,921,784,925)).
7. PROPERTY, PLANT AND EQUIPMENT
Summary
2012 2011
Cost
Balance at beginning of year 876,764,628 1,032,647,854
Additions 2,563 2,238
Transferred from capital work-in-progress 40,632,355 17,168,350
Disposals (934) (1,087,212)
Adjustment to rehabilitation assets 1,391,080 1,050,670
Effect of translation (62,240,040) (173,017,272)
Closing Balance 856,549,652 876,764,628
Accumulated depreciation and impairment losses
Balance at beginning of year 77,840,208 47,741,321
Depreciation for the year 37,091,152 42,075,759
Disposals (353) (748,144)
Effect of translation (6,838,260) (11,228,728)
Closing Balance 108,092,747 77,840,208
Carrying value 748,456,905 798,924,420
2012 Total Mining Plant and Buildings Motor Furniture
Development Equipment Vehicles and
and Fittings
Infrastructure
Cost
Balance at beginning of year 876,764,628 723,436,727 99,012,259 50,028,250 3,708,511 578,881
Additions 2,563 - - - - 2,563
Transferred from capital work-in- 40,632,355 34,744,984 5,158,567 123,021 595,206 10,577
progress
Disposals (934) - - - (934) -
Adjustment to rehabilitation assets 1,391,080 1,391,080 - - - -
Effect of translation (62,240,040) (51,413,006) (7,044,951) (3,461,915) (279,649) (40,519)
Closing Balance 856,549,652 708,159,785 97,125,875 46,689,356 4,023,134 551,502
Accumulated depreciation and
impairment losses
Balance at beginning of year 77,840,208 64,473,077 7,812,645 2,941,882 2,198,682 413,922
Depreciation for the year 37,091,152 27,506,955 6,113,731 2,603,784 772,849 93,833
Disposals (353) - - - (353) -
Effect of translation (6,838,260) (5,537,489) (780,413) (305,735) (182,328) (32,295)
Closing Balance 108,092,747 86,442,543 13,145,963 5,239,931 2,788,850 475,460
Carrying Value 748,456,905 621,717,242 83,979,912 41,449,425 1,234,284 76,042
2011 Total Mining Plant and Buildings Motor Furniture
Development Equipment Vehicles and
and Fittings
Infrastructure
Cost
Balance at beginning of year 1,032,647,854 849,610,976 117,821,913 60,002,112 4,521,033 691,820
Additions 2,238 - - - - 2,238
Transferred from capital work-in- 17,168,350 16,309,016 842,437 - 16,897 -
progress
Disposals (1,087,212) (1,004,020) - - (83,192) -
Adjustment to rehabilitation assets 1,050,670 1,050,670 - - - -
Effect of translation (173,017,272) (142,529,915) (19,652,091) (9,973,862) (746,227) (115,177)
Closing Balance 876,764,628 723,436,727 99,012,259 50,028,250 3,708,511 578,881
Accumulated depreciation and
impairment losses
Balance at beginning of year 47,741,321 43,172,561 1,989,265 483,279 1,733,011 363,205
Depreciation for the year 42,075,759 31,624,591 6,686,843 2,758,749 884,868 120,708
Disposals (748,144) (682,274) - - (65,870) -
Effect of translation (11,228,728) (9,641,801) (863,463) (300,146) (353,327) (69,991)
Closing Balance 77,840,208 64,473,077 7,812,645 2,941,882 2,198,682 413,922
Carrying Value 798,924,420 658,963,650 91,199,614 47,086,368 1,509,829 164,959
Certain assets are encumbered (refer to note 18).
The recoverable amount of mining assets and goodwill reviewed for impairment is determined based on value-in-use calculations.
All mining assets and goodwill are allocated to one cash-generating-unit (“CGU”). Key assumptions relating to this valuation
include the discount rate and cash flows used to determine the value-in-use. Future cash flows are estimated based on financial
budgets approved by management which is based on the mine’s life-of-mine plan. Management determines the expected performance of
the mine based on past performance and its expectations of market developments which are incorporated into a life-of-mine plan.
Key assumptions used in the value-in-use calculation of the impairment assessment of mining assets were the following:
- Life-of-mine – 31 years
- South African real discount rate – 9.64% (the weighted average cost of capital for Bokoni)
- Range of PGM prices – based on market expectations. Initial price of US$1,735/oz for platinum in 2013 with US inflation
parity from 2017 onwards.
- South African inflation – based on market expectations. Long-term inflation rate of 6.10%
- Production of 4E ounces starts at 197,101 ounces in 2013, building up to 412,000 ounces in 2020 and gradually scales
down towards the end of the life of mine.
8. CAPITAL WORK-IN-PROGRESS
Capital work-in-progress consists of mine development and infrastructure costs relating to the Bokoni Mine and will be
transferred to property, plant and equipment when the relevant projects are commissioned.
2012 2011
Balance at beginning of year 20,826,290 10,311,973
Additions 38,917,145 28,678,042
Transfer to property, plant and equipment (40,632,355) (17,168,350)
Capitalisation of borrowing costs 2,382,069 1,777,431
Effect of translation (1,465,385) (2,772,806)
20,027,764 20,826,290
Capital work-in-progress is funded through cash generated from operations and available loan facilities (refer note 18).
9. INTANGIBLE ASSETS
Cost
Balance at beginning of year 3,113,175 3,473,000
Additions - 236,304
Effect of translation (215,128) (596,129)
Balance at end of year 2,898,047 3,113,175
Accumulated amortisation and impairment losses
Balance at beginning of year 1,217,970 192,944
Amortisation for the year 1,001,726 1,148,618
Effect of translation (123,577) (123,592)
Balance at end of year 2,096,119 1,217,970
Carrying value 801,928 1,895,205
The intangible asset relates to the implementation of a SAP system throughout the Group during 2011. The asset is amortised on
a straight line basis over three years.
10. MINERAL PROPERTY INTERESTS
Balance at beginning of year 12,370,437 13,716,383
Effect of translation (466,519) (1,345,946)
11,903,918 12,370,437
Assets classified as available for sale:
Ga-Phasha (3,836,670) (4,068,794)
Boikgantsho (30,589) (32,860)
(3,867,259) (4,101,654)
8,036,659 8,268,783
The Group’s mineral property interest consists of various early stage exploration projects as detailed below:
Ga-Phasha
In January 2004, Atlatsa and Atlatsa Holdings combined their respective PGM assets, comprising Atlatsa ’s Northern and
Western Limb PGM projects and Atlatsa Holding's 50% participation interest in the Ga-Phasha Project (“Ga-Phasha Project”)
on the Eastern Limb of the Bushveld Complex in South Africa. The Ga-Phasha Project property consists of four farms – Portion 1
of Paschaskraal 466KS, and the whole of farms Klipfontein 465KS, De Kamp 507KS and Avoca 472KS – covering an area of
approximately 9,700 hectares.
As of 1 July 2009, the joint venture agreements terminated and Ga-Phasha Platinum Mines Proprietary Limited (“GPM”), a
wholly-owned subsidiary of Bokoni Holdco, acquired the respective interest in the assets relating to the Ga-Phasha Project.
Atlatsa owns an effective 51% interest in the Ga-Phasha Project.
Atlatsa increased its interest in the GPM exploration project assets from 50% to 51% on 1 July 2009.
The mineral title relating to the Ga-Phasha Project is held by GPM.
During 2011, the Group’s management committed to a plan to sell two (Pashaskraal and De Kamp) of the four farms in Ga-Phasha
as part of the refinancing and restructuring plan of the Group (refer note 38). Efforts to sell these mineral properties have
commenced and a sale is expected during 2013. The disposal relates to the projects segment.
Platreef
As of 1 July 2009, the Group holds an effective 51% in Platreef properties located on the Northern Limb of the Bushveld
Igneous Complex (“BIC”) in South Africa. The Group has received conversion to new order prospecting rights in respect of all
Platreef mineral properties.
Boikgantsho
As of 1 July 2009, the Boikgantsho joint venture agreements terminated and Boikgantsho Platinum Mine Proprietary Limited
(“BPM”), a private company incorporated under the laws of South Africa, a wholly-owned subsidiary of Bokoni Holdco, acquired
the interest in and assets relating to the Boikgantsho Project (“Boikgantsho Project”). Atlatsa owns an effective 51% interest in
the Drenthe 778LR (“Drenthe”) and Witrivier 777LR (“Witrivier”) farms and a portion of Mogalakwena's adjacent Overysel 815LR
farm. These farms are located on the Northern Limb of the Bushveld Complex. The Group has received new order prospecting
rights in respect of the Drenthe and Witrivier mineral properties which have been transferred to BPM.
During 2011, the Group’s management committed to a plan to sell the BPM asset as part of the refinancing and restructuring plan
of the Group (refer note 38). Efforts to sell these mineral properties have commenced and a sale is expected during 2013.
The disposal relates to the projects segment.
Kwanda
As of 1 July 2009, the Kwanda joint venture agreements terminated and Kwanda Platinum Mine Proprietary Limited, a private
company incorporated under the laws of South Africa, a wholly-owned subsidiary of Bokoni Holdco, a cqui red the interest in
assets relating to the Kwanda Project (“Kwanda Project”). Atlatsa owns an effective 51% interest in this project. The Group
received conversion to new order prospecting rights for the Kwanda North and Kwanda South properties.
Rietfontein
The Group has entered into a settlement agreement (the "Agreement") effective 11 December 2009 with Ivanhoe Nickel &
Platinum Ltd. ("Ivanplats") to replace and supersede the 2001 agreement relating to the Rietfontein property located on the
Northern Limb of the BIC. The Agreement settles the arbitration process relating to disagreements with respect to the exploration
activities undertaken at the Rietfontein property. Salient terms of the new Agreement are as follows:
- Both parties abandon their respective claims under dispute forming the subject matter of arbitration.
- The existing joint venture (“JV”) between the parties is amended such that the current Rietfontein JV is extended to
incorporate a defined area of Ivanplats' adjacent Turfspruit mineral property. Both parties retain their existing prospecting
rights in respect of mineral properties in their own names but make these rights and technical information available to the
extended JV ("the Extended JV").
- Atlatsa will be entitled to appoint a member to the Extended JV technical committee and all technical programmes going
forward will be carried out with input from Atlatsa.
- Atlatsa is awarded a 6% free carried interest in the Extended JV, provided that the Extended JV contemplates an open pit
mining operation, incorporating the Rietfontein mineral property. Atlatsa has no financial obligations under the Extended JV
terms and Ivanplats is required to fund the entire exploration programme to feasibility study with no financial recourse to
Atlatsa. On delivery of the feasibility study, Atlatsa may elect to either:
- Retain a participating interest of 6% in the Extended JV and finance its pro rata share of the project development going
forward; or
- Relinquish its participating interest of 6% in the Extended JV in consideration for a 5% net smelter return royalty in
respect of mineral products extracted from those areas of the Rietfontein mineral property forming part of the Extended
JV mineral properties.
11. GOODWILL
2012 2011
Balance at beginning of the year 10,994,115 13,185,952
Effect of translation (759,721) (2,191,837)
10,234,394 10,994,115
For impairment considerations, refer note 7. The goodwill relates to the acquisition of Bokoni Mine.
12. PLATINUM PRODUCERS’ ENVIRONMENTAL TRUST
The Group contributes to the Platinum Producers' Environmental Trust annually. The Trust was created to fund the estimated cost
of pollution control, rehabilitation and mine closure at the end of the lives of the Group’s mines. Contributions are determined
on the basis of the estimated environmental obligation over the life of a mine. The Group’s share of the cash deposits made is
reflected in non-current cash deposits held by Platinum Producers' Environmental Trust.
The non-current cash deposits are restricted in use as it is to be used exclusively for pollution control, rehabilitation and
mine closure at the end of lives of the Group’s mines
13. INVENTORIES
Consumables and ore stock piles 769,447 787,084
14. TRADE AND OTHER RECEIVABLES
Financial assets
Trade receivables 913,558 24,230,043
Other trade receivables 240,968 769,084
1,154,526 24,999,127
Non-financial assets
Prepayments 1,213,925 1,385,976
Lease debtor - 1,925
Value added tax 564,953 2,014
Employee receivables 337,901 657,564
Other receivables 1,095 1,985
3,272,400 27,048,591
The Group has one major customer with an outstanding account within the agreed payment terms. As a result, no allowance for
impairment losses has been recognised.
15. CASH AND CASH EQUIVALENTS
Bank balances 14,530,030 15,927,937
Cash on hand 50,856 17,071
14,580,886 15,945,008
16. RESTRICTED CASH
Restricted cash – ESOP Trust 535,502 786,291
Restricted cash consist of cash and cash equivalents held by the Bokoni Platinum Mine ESOP Trust, a consolidated SPE, which is
not available to fund operations.
During the year there was no cash distribution to beneficiaries in terms of the trust deed (2011: $386,191 (ZAR3,067,439)).
17. SHARE CAPITAL
Authorised and issued
2012 2011
Number of shares
Common shares with no par value 201,888,472 201,888,472
B2 Convertible Preference shares of $0.1481 (ZAR1) each 115,800 115,800
B3 Convertible Preference shares of $0.1481 (ZAR1) each 111,600 111,600
The Company's authorised share capital consists of an unlimited number of common shares without par value. During 2009
cumulative convertible redeemable “B” preference shares were issued to facilitate the acquisition of the 51% shareholding in
Bokoni Holdco.
Share capital
Share capital 74,150,116 74,150,116
Share issue costs (2,183,033) (2,183,033)
71,967,083 71,967,083
Treasury shares 4,991,726 4,991,726
Treasury shares relate to shares held by the ESOP Trust in Atlatsa, which is consolidated by the Group.
Preference shares
B2 Convertible Preference shares 17,150 17,150
B3 Convertible Preference shares 16,528 16,528
Share premium 162,876,322 162,876,322
162,910,000 162,910,000
$162.9 million (ZAR 1.1 billion) was raised through share-settled financing with the issue of cumulative mandatory convertible
“B” preference shares (“B Prefs”) to RPM and a subsidiary of Atlatsa Holdings to finance the 51% acquisition in Bokoni Holdco
on 1 July 2009. The final effects of the share settled financing will result in RPM receiving a fixed number of 115.8 million
common shares of Atlatsa and Atlatsa Holdings, Atlatsa's controlling shareholder, receiving a fixed number of 111.6 million
common shares.
These preference shares are convertible upon the earlier of the date of receipt of a conversion notice from RPM and
1 July 2018.
A dividend will be declared on the last business day immediately prior to the conversion date, in terms of a formula set out in
the preference share subscription agreement.
18. LOANS AND BORROWINGS
2012 2011
Redeemable “A” preference shares (related party) - 392,191,315
RPM – Funding loans (related party) - 172,650,283
RPM – Consolidated facility (related party) 430,570,710 -
RPM – OCSF (related party) - 172,991,980
RPM – Interest free loan (related party) 3,388,374 3,639,900
RPM – commitment fees (related party) - 1,298,865
Other 1,832,836 2,780,379
435,791,920 745,552,722
Short-term portion
Other (823,731) (1,096,235)
(823,731) (1,096,235)
Non-current liabilities 434,968,189 744,456,487
The carrying value of the Group’s loans and borrowings changed during the year as follows:
Balance at beginning of the year 745,552,722 716,936,362
Loan from RPM – OCSF 72,872,141 64,851,418
Loan repaid - RPM (111,307,515) -
Loans repaid - other (1,048,243) (716,317)
Commitment fee capitalised (82,457) (394,063)
Finance expenses accrued 84,546,911 88,648,310
Funding loan raised – RPM (related party) 315,612,211 3,691,604
Redemption of A Preference shares (401,782,311) -
Capitalisation transaction costs written-off - 3,834,378
Commitment fee liability 82,457 394,063
Interest rate swap adjustment - 355,852
De-recognition of OCSF and Senior funding loan (682,365,807) -
Recognition of consolidated facility 682,365,807 -
Fair value gain on recognition of consolidated facility and
subsequent adjustments (215,470,758) -
Other - 86,938
Effect of translation (53,183,238) (132,135,823)
Balance at end of the year 435,791,920 745,552,722
Short-term portion
Other (823,731) (1,096,235)
(823,731) (1,096,235)
Non-current portion 434,928,189 744,456,487
The fair value gain on recognition of consolidated facility and subsequent adjustments is made up of the following:
2012 2011
Day 1 gain – owners of the company (102,291,808) -
Day 1 gain – Non-controlling interest (refer note 24) (127,814,103) -
Subsequent adjustments* (refer note 24) 14,635,153 -
(215,470,758) -
* The subsequent adjustments relate to changes in estimate due to cash flows used in the fair value calculation.
The terms and conditions for the outstanding borrowings at 31 December 2012 are as follows:
Senior Term Loan Facility (now recognised as part of the “Consolidated facility”)
On 28 April 2011, the Senior Term Loan Facility with Standard Chartered Bank (“SCB”) and FirstRand Bank acting through its
division, Rand Merchant Bank (“RMB”) was ceded to Anglo through its subsidiary, RPM. The outstanding interest rate swap was
settled with funding obtained from RPM.
The debt ceded to RPM had similar terms as the Senior Term Loan Facility except for certain revisions. The revised terms of the
loan was a reduction in the interest rate from a 3 month JIBAR plus applicable margin (4.5%) and mandatory cost (11.735% at 31
December 2010) to 3 month JIBAR plus 4% (9.575% at 31 December 2011). The total facility had also been increased from $94.4
million (ZAR750 million) to $117.1 million (ZAR930 million). The commencement of re-payments was then deferred by one year
from 31 January 2013 to 31 January 2014. RPM also waived the loan covenants on the debt as of 31 December 2011 and until 31
January 2013.
On 28 September 2012, Atlatsa entered into an Amendment and Interim Implementation Agreement pursuant to which Atlatsa
implemented the first phase of the broader restructuring, recapitalization and refinancing transaction, which was first announced by
Atlatsa in a news release dated 2 February 2012.
The first phase of the Restructure Plan involved an amendment to the terms of the Senior Term Loan Facilities Agreement (now a
consolidated facility) dated 12 June 2009 between Plateau, as borrower and RPM, as lender to increase the total loan facility
available by approximately $310.6 million (ZAR2.65 billion). The additional loan proceeds were used to repay the existing OCSF
and fund share subscriptions by Plateau into Bokoni Holdco and by Bokoni Holdco into Bokoni Mine (the “Share Subscriptions”) for
the purpose of repayment of certain existing loan facilities by Plateau, Bokoni Holdco and Bokoni Mine.
The interest rate payable on the debt owing will be reduced to an annual effective rate of 6.27% (linked to the 3-month JIBAR)
from the current effective rate of 12.31%. Due to the significant change in the terms of the loan, the Senior Term Loan Facility was
derecognised and a new loan recognised at fair value – the Consolidated facility.
RPM - Funding Loans (now recognised as part of the “Consolidated facility”)
This loan was between RPM and Bokoni Holdco and consisted of the retention of the original RPM loans for an amount of $56.3
million (ZAR480.3 million)
As a result of the changes to the Senior Term Loan Facility, the commencement of the repayments of the $56.3 million was also
deferred by one year from 31 January 2013 to 31 January 2014 and is payable in semi-annual instalments. The unpaid principal
balance would bear interest at the interest rate and on the same terms as the revised Senior Term Loan Facility ceded by SCB to
Anglo. The total facility had also been increased from $84.4 million (ZAR720 million) to $104.7 million (ZAR893 million).
On 28 September 2012, the loan was derecognised as a result of the significant change in the terms of the loan and a new loan
was recognised at fair value – now called the Consolidated facility.
RPM – OCSF (now recognised as part of the “Consolidated facility”)
Under the Operating Cash flow Shortfall Facility (“OCSF”), if funds are requested by Bokoni (and authorised by Bokoni Holdco),
RPM shall advance such funds directly to Bokoni. At 31 December 2012, $200.8 million (ZAR1.71 billion) of the available $252.8
million (ZAR2.16 billion) has been advanced by RPM. The remaining facility may be utilised only for the purposes of operating or
capital expenditure cash shortfalls at Bokoni. In addition, RPM has extended the terms of the OCSF facility to fund cash shortfalls
up to 31 January 2013.
The OCSF Loan was originally payable in semi-annual instalments starting 31 January 2013 to the extent cash is available after
payment of the Senior Term Facility and the RPM funding loan. The unpaid principal balance on the OCSF will bear interest at a
fixed rate of 15.84%, compounded quarterly in arrears. Based on the revised terms on the Senior Facility with RPM, repayment will
also be deferred by one year from 31 January 2013 to 31 January 2014.
On 28 September 2012, the loan was derecognised as a result of the significant change in the terms of the loan and a new loan
was recognised at fair value – now called the Consolidated facility
RPM – Standby Facility
The Group secured an agreement with RPM to access RPM's attributable share of the Bokoni Holdco cash flows (“the Standby
Facility”) up to a maximum of 29% of all free cash flow generated from the Bokoni Mine to meet its repayment obligations in terms
of the Senior Term Loan Facility. This facility will bear interest at the prime rate of interest in South Africa (currently 9%). The
standby facility has a final maturity date on 1 July 2018. As at 31 December 2012, no draw-down was made on the standby facility.
RPM – Interest-free loan
This loan is between RPM and Bokoni Holdco. The loan is interest-free and repayable 12 months and 1 day after requested by
RPM.
Other
This loan is between Plateau and the Deloitte Mining Shared Service Centre (“DMSSC”) relating to the financing of the new SAP
system (refer note 9). The loan bears interest at prime (8.5% at 31 December 2012) plus 2% and is payable in quarterly
instalments starting 31 March 2011.
Security
The Senior Term Loan Facility is secured through various security instruments, guarantees and undertakings provided by the
Group against 51% of the cash flows generated by the Bokoni Mine, together with 51% of the Bokoni Mine asset base. The
Standby Facility, OCSF and the “A” preference shares rank behind the Senior Term Loan Facility for security purposes.
Refer note 38 for events after the reporting date.
The Group’s debt is denominated in ZAR, which is translated to the presentation currency of the Company.
19. DEFERRED TAX
Deferred tax liabilities and assets on the statement of financial position relate to the following:
2012 2011
Deferred tax liabilities
Property plant and equipment (including capital work-in-progress) 214,355,251 228,912,376
Prepayments 289,060 339,869
Environmental trust fund contributions 742,633 664,358
Inventories - 220,384
Fair value gain on consolidated debt facility 20,552,705 -
Gross deferred tax liability 235,939,649 230,136,987
Deferred tax assets
Provision for environmental liabilities (2,740,214) (2,347,438)
Unredeemed capital expenditure (41,839,861) (34,485,988)
Accrual for employee leave liabilities (1,080,158) (1,924,872)
Liability for share-based compensation (154,345) (165,801)
Calculated tax losses (47,783,999) (47,180,675)
Gross deferred tax asset (93,598,577) (86,104,774)
Net deferred tax liability 142,341,072 144,032,213
The movement in the net deferred tax liability recognised in the statement of financial position is as follows:
2012 2011
Balance at beginning of year 144,032,213 208,805,557
Current year 6,069,415 (32,667,499)
Prior year adjustment 2,530,794 -
Fair value gain recognised directly in equity 34,261,529 -
Effect of translation (44,552,879) (32,105,845)
142,341,072 144,032,213
As at 31 December the Group had not recognised the following net deferred tax assets:
Deferred tax assets 16,098,160 13,736,801
The unrecognised temporary differences are:
Unredeemed capital expenditure 1,644,438 1,766,508
Tax losses 12,930,100 12,052,145
Other deductible temporary differences 2,536,651 2,426,322
Foreign exchange losses (1,013,029) (2,508,174)
16,098,160 13,736,801
Deferred tax assets have not been recognised for the above temporary differences as it is not probable that the respective Group
entities to which they relate will generate future taxable income against which to utilise the temporary differences.
Gross calculated tax losses expire as follows:
2012-2016 - (4,456,781)
2013-2017 (4,456,781) -
Thereafter (11,271,792) (9,939,500)
Indefinitely (200,495,074) (140,157,235)
(216,223,647) (154,553,516)
20. PROVISIONS
Non-current provisions
Rehabilitation provision
Balance at beginning of the year 8,383,708 8,184,494
Capitalised to property, plant and equipment 1,391,080 1,050,670
Unwinding of interest 672,204 644,045
Effect of translation (660,513) (1,495,501)
Balance at end of year 9,786,479 8,383,708
Future net obligations
Undiscounted rehabilitation cost 13,511,417 12,963,704
Amount invested in environmental trust fund (refer note 12) (3,250,760) (2,927,591)
Total future net obligation - Undiscounted 10,260,657 10,036,113
The Group intends to finance the ultimate rehabilitation costs from the money invested in environmental trust funds, ongoing
contributions as well as the proceeds on sale of assets and metals from plant clean-up at the time of mine closure.
Key assumptions used in determining the provision:
2012 2011
Discount period 27.5 years 20 years
South African discount rate (risk free rate) 7.2% 8.4%
South African inflation 6.0% 5.2%
The method used in the sensitivity analysis is to assume a change in basis points. The change in basis point is applied to one
variable while the other variable remains constant.
2012 2011
Sensitivity – change in provision Inflation rate Inflation rate
(discount rate (discount rate
constant) constant)
1% increase 2,883,347 1,866,759
1% decrease (2,245,647) (1,558,336)
Discount rate Discount rate
(inflation rate (inflation rate
constant) constant)
1% increase (2,204,478) (1,307,110)
1% decrease 2,875,672 1,545,655
21. TRADE AND OTHER PAYABLES
Financial liabilities
Trade payables 4,737,638 7,508,854
Other payables 9,581,498 5,988,159
14,319,136 13,497,013
Non-financial liabilities
Payroll accruals 1,579,747 1,546,767
Leave liabilities 4,504,703 7,328,438
Share-appreciation rights 376,648 404,607
Lease accrual 2,690 53,667
Other accruals - 6,847
Deferred income - 9,596
Value added tax 105,711 278,652
20,888,635 23,125,587
22. REVENUE
Revenue from mining operations by commodity:
2012 2011 2010
Platinum 72,048,362 85,146,242 89,250,257
Palladium 19,887,921 23,999,481 20,185,949
Rhodium 6,097,887 9,910,678 14,033,214
Nickel 9,870,789 14,414,240 15,120,505
Other 9,652,372 10,936,075 9,696,908
117,557,331 144,406,716 148,286,833
Revenue consists of the sale of concentrate to RPM (a related party).
23. COST OF SALES
Cost of sales includes:
2012 2011 2010
Labour costs 80,915,283 86,226,560 79,399,203
Stores costs 29,147,878 33,519,868 25,468,848
Power and compressed air 12,057,211 11,871,488 9,619,321
Contractors cost 14,723,372 18,059,940 9,171,193
Other costs 21,581,660 19,174,646 17,135,596
Inventory movement (38,257) (855,227) 1,084,930
Depreciation 37,000,404 41,969,530 31,272,097
195,387,551 209,966,805 173,151,188
24. FAIR VALUE GAIN ON CONSOLIDATED FACILITY
On 28 September 2012 Atlatsa and Anglo announced the completion of the first phase (“Phase One”) of the restructure plan for
the refinancing, recapitalisation and restructure of the Group. In terms of Phase One of the Restructure Plan, the Senior Term
Loan Facilities Agreement dated 12 June 2009 (the “2009 Senior Debt Facility”) between the Company as borrower, and RPM as
lender, was amended to increase the total amount available, and this amount was utilised to repay the amounts owed to Anglo
under the Operating Cash Shortfall Facility (“OCSF”).
Atlatsa and Anglo subscribed for ordinary share capital in Bokoni Holdco ($205,537,924 and $197,477,602 respectively) and the
proceeds were used to redeem the existing “A” Preference Share Facility that was outstanding to RPM. These transactions resulted
in all outstanding debt owing to Anglo being consolidated into one single facility (the “Consolidated Debt Facility”) on terms
and conditions agreed between the parties, including an interest rate adjustment, which lowered the Company’s cost of borrowing
from an effective annual cash flow interest rate of 12,31% to 6.27% (linked to the 3 month JIBAR rate – 5.13% at 31 December 2012).
As a result of this debt consolidation and associated interest rate adjustment the Company has recognised a fair value gain of $90,589,136
(ZAR 742,533,902) in its 2012 financial statements, representing the fair value difference between the Company’s new costs of borrowing
under the Consolidated Debt Facility when compared to a market related cost of borrowing available to the Company.
Through Through Total – Directly in
profit/loss profit/loss through equity (Non-
(Owners of the (Non- profit/loss controlling
Company) Controlling interest)
interest)
Day 1 fair value gain on Consolidated Debt 102,291,808 - 102,291,808 127,814,103
Facility
Effect of translation 2,932,480 - 2,932,480 -
Movement – subsequent measurement (10,725,589) (3,909,563) (14,635,152) -
94,498,699 (3,909,563) 90,589,136 127,814,103
The subsequent measurement adjustment relates to revised estimates of payments and receipts (cash flows) by the end of 31
December 2012 as compared to cash flows used in computing the fair value at 28 September 2012.
25. FINANCE INCOME
Interest received – Financial assets at amortised
cost
Platinum Producers'Environmental Trust 85,312 82,685 108,504
Bank accounts 296,950 662,905 1,005,138
382,262 745,590 1,113,642
26. FINANCE EXPENSES
2012 2011 2010
Financial liabilities at amortised cost
Bank and short-term facilities - - 13,617
“A” Preference shares (related party) 33,258,103 47,409,220 39,661,792
OCSF and funding facilities (related party) 24,209,389 30,903,663 22,779,618
Senior Term Loan Facility (related party) 12,274,479 9,132,826 11,512,806
Consolidated debt facility 14,180,371 - -
Interest on fair value of interest rate swap - 546,169 (195,702)
Other 244,314 702,438 563,219
84,166,656 88,694,316 74,335,350
Non-financial liabilities
Notional interest – rehabilitation provision 672,204 644,045 515,626
Commitment fees on OCSF 380,409 631,838 310,177
Transaction costs - 3,852,116 631,929
1,052,613 5,127,999 1,457,732
Total finance costs before interest capitalised 85,219,269 93,822,315 75,793,082
Interest capitalised (2,382,069) (1,777,431) (8,271,379)
Total finance costs 82,837,200 92,044,884 67,521,703
The capitalisation rate used to determine the amount of borrowing costs eligible for capitalisation during the year is 12.6% (2011:
12.4%).
27. LOSS BEFORE INCOME TAX
Loss before income tax as stated includes the following:
Operating lease expense – buildings 227,869 275,450 387,131
Restructuring costs - 44,323 1,784,452
Share-based payment expense – equity settled 309,769 2,140,038 2,185,812
Share-based payments expense – cash settled (389,858) (437,152) 145,199
Bonus settled via shares - - 895,625
Interest rate swap fair value - 2,550,958 (636,529)
Depreciation and amortisation 38,092,878 43,224,377 13,557,111
28. INCOME TAX
SA normal taxation
Current tax – prior year 162,375 - -
Deferred tax – prior year 6,069,415 - (1,578,080)
Deferred tax – current year 2,530,794 32,667,499 18,868,120
Securities Transfer Tax 1,801,294 - -
10,563,878 32,667,499 17,290,040
Tax rate reconciliation:
2012 2011 2010
Statutory Canadian tax rate 25% 26.50% 28.5%
Other disallowed expenditure 0.96% (0.17%) (0.13%)
Transaction costs disallowed (0.20%) (0.57%) (0.63%)
Preference dividends disallowed (10.96%) (6.92%) (8.89%)
Equity settled share based compensation (0.51%) (0.32%) (1.10%)
Investment income not taxable 0.03% 0.01% 0.03%
Tax adjustments – prior year (7.32%) - (1.45%)
Deferred tax assets not recognised (2.27%) (1.81%) (0.47%)
Securities Transfer Tax (2.12%) - -
Recoupment of finance expense (18.17%) - -
Effect of rate differences 3.12% 1.04% (0.28%)
Effective taxation rate (12.44%) 17.76% 15.58%
29. OTHER COMPREHENSIVE INCOME NET OF INCOME TAX
Components of other comprehensive income:
Foreign currency translation differences for foreign operations 2,415,302 (7,913,856) 6,237,524
Effective portion of changes in fair value of cash flow hedges - 1,602,501 (3,121,650)
Reclassification to profit or loss on settlement of cash flow - 2,521,654 -
hedge
2,415,302 (3,789,701) 3,115,874
Attributable to:
Owners of the Company 1,481,466 (1,994,738) 800,194
Non-controlling interest * 933,836 (1,794,963) 2,315,680
2,415,302 (3,789,701) 3,115,874
*- Relates to the foreign currency translation differences for foreign operations in 2012, 2011 and 2010.
30. EARNINGS PER SHARE
The calculation of basic loss per share for the year ended 31 December 2012 was based on the loss attributable to owners of the
Company of $18,717,839 (2011: $81,928,814; 2010: $51,721,410), and a weighted average number of common shares of
424,791,411 (2011: 424,783,603; 2010: 424,665,314).
At 31 December 2012, 2011 and 2010, share options were excluded in determining diluted weighted average number of common
shares as their effect would have been anti-dilutive.
Issued common shares at 1 January 201,888,473 201,813,473 201,813,472
Effect of shares issued in financial year - 67,192 18,904
Treasury shares (4,497,062) (4,497,062) (4,497,062)
Convertible “B” Preference shares - issued on 1 July 2009 227,400,000 227,400,000 227,400,400
Weighted average number of common shares at 31 December 424,791,411 424,783,603 424,665,314
The basic and diluted loss per share for the year ended 31 December 2012 was 4 cents (2011: 19 cents; 2010:12 cents).
31. CASH UTILISED BY OPERATIONS
2012 2011 2010
Loss before income tax (85,002,992) (180,532,047) (110,948,846)
Adjustments for:
Finance expense 82,837,200 92,044,884 67,521,703
Finance income (382,262) (745,590) (1,113,642)
Non-cash items:
Depreciation and amortisation 38,092,878 43,224,377 31,577,561
Equity-settled share-based compensation 1,346,509 2,140,038 2,333,450
Loss on disposal of property, plant and equipment 581 339,068 45,179
Derivative (profit)/loss - - (223,727)
Settlement of cash flow hedge - 2,550,958 -
Fair value gain on recognition of new facility (90,589,136) - -
Impairment of assets - - 345,123
Other - 69,200 135
Cash utilised before ESOP transactions (53,697,222) (40,909,112) (10,463,064)
ESOP cash transactions (restricted cash) 312,510 836,081 -
Cash utilised before working capital changes (53,384,712) (40,073,031) (10,463,064)
Working capital changes
Decrease/(increase) in trade and other receivables (i) 22,816,980 3,357,055 (8,719,410)
(Decrease)/increase in trade and other payables (ii) (659,223) (3,747,138) 2,306,757
(Increase)/decrease in inventories (iii) (38,257) (855,227) 1,084,930
Cash utilised by operations (31,265,212) (41,318,341) (15,790,787)
(i) Decrease/(increase) in trade and other receivables
Opening balance 27,048,591 36,190,110 23,466,503
Closing balance (3,272,400) (27,048,591) (36,190,110)
Movement for the year 23,776,191 9,141,519 (12,723,607)
Effect of translation (959,211) (5,784,464) 4,004,197
22,816,980 3,357,055 (8,719,410)
(ii) (Decrease)/increase in trade and other payables
Opening balance (23,125,587) (31,844,332) (26,948,647)
Closing balance 20,888,631 23,125,587 31,844,332
Movement for the year (2,236,956) (8,718,745) 4,895,685
Effect of translation 1,577,733 4,971,607 (2,588,928)
(659,223) (3,747,138) 2,306,757
(iii) (Increase)/decrease in inventories
2012 2011 2010
Opening balance 787,084 - 1,091,860
Closing balance (769,447) (787,084) -
Movement for the year (17,637) (787,084) 1,091,860
Effect of translation (20,620) (68,143) (6,930)
(38,257) (855,227) 1,084,930
32. SEGMENT INFORMATION
The Group has two reportable segments as described below. These segments are managed separately based on the nature of operations. For each of the segments,
the Group’s CEO (the Group’s chief operating decision maker) reviews internal management reports monthly. The following summary describes the operations in
each of the Group’s reportable segments:
- Bokoni Mine - Mining of PGM's.
- Projects - Mining exploration in Boikgantsho, Kwanda, and Ga-Phasha exploration projects.
The majority of operations and functions are performed in South Africa. An insignificant portion of administrative functions are performed in the Company’s
country of domicile.
The CEO considers earnings before net finance expense, income tax, depreciation and amortisation (“EBITDA”) to be an appropriate measure of each segment’s performance.
Accordingly, the EBITDA for each segment has been included. All external revenue is generated by the Bokoni Mine segment.
31 December 2012 31 December 2011
Bokoni Mine Projects Total Bokoni Mine Projects Total Note
Revenue 117,557,331 - 117,557,331 144,406,716 - 144,406,716
Cost of sales (196,735,768) - (196,735,768) (212,137,181) - (212,137,181) (i)
EBITDA (60,985,577) (36,943) (61,022,520) (36,767,412) (632,855) (37,400,267) (ii)
Loss before income tax (170,083,832) (36,943) (170,120,775) (163,883,532) (632,855) (164,516,387) (iii)
Income tax 14,049,927 - 14,049,927 30,006,122 - 30,006,122 (iv)
Depreciation (35,567,022) - (35,567,022) (41,020,865) - (41,020,865) (v)
Finance income 280,872 - 280,872 281,868 - 281,868 (vi)
Finance expense (73,812,106) - (73,812,106) (86,377,123) - (86,377,123) (vii)
Total assets 827,304,772 114,373,668 941,678,440 901,154,720 9,703,357 910,858,077 (viii)
Additions to non-current assets 38,917,145 - 38,917,145 268,678,042 - 268,678,042 (ix)
Total Liabilities (270,285,274) (13,877,671) (284,162,945) (770,025,392) (14,862,260) (784,887,652) (x)
Reconciliations of reportable segment cost of sales, EBITDA, loss before income tax, income tax, depreciation, finance income,
finance expense, assets, addition to non-current assets and liabilities:
2012 2011
(i) Cost of sales
Total cost of sales for reportable segments (196,735,768) (212,137,181)
Corporate and consolidation adjustments 1,348,217 2,170,376
Consolidated cost of sales (195,387,551) (209,966,805)
(ii) EBITDA 2012 2011
Total EBITDA for reportable segments (61,022,520) (37,400,267)
Net finance expense (82,454,938) (91,299,294)
Depreciation and amortisation (38,092,878) (43,224,377)
Corporate and consolidation adjustments 96,567,344 (8,608,109)
Consolidated loss before income tax (85,002,992) (180,532,047)
(iii) Loss before income tax
Total loss before tax for reportable segments (170,120,775) (164,516,387)
Corporate and consolidation adjustments 85,117,783 (16,015,660)
Consolidated loss before income tax (85,002,992) (180,532,047)
(iv) Income tax
Taxation for reportable segments 14,049,927 30,006,122
Corporate and consolidation adjustments (24,613,805) 2,661,377
Consolidated taxation (10,563,878) 32,667,499
(v) Depreciation
Depreciation for reportable segments (35,567,022) (41,020,865)
Corporate and consolidation adjustments (2,525,856) (2,203,512)
Consolidated depreciation (38,092,878) (43,224,377)
(vi) Finance income
Finance income for reportable segments 280,872 281,868
Corporate and consolidation adjustments 101,390 463,722
Consolidated finance income 382,262 745,590
(vii) Finance expenses
Finance expense for reportable segments (73,812,106) (86,377,123)
Corporate and consolidation adjustments (9,025,094) (5,667,761)
Consolidated finance expense (82,837,200) (92,044,884)
(viii) Total assets
Assets for reportable segments 941,678,440 910,858,077
Corporate and consolidation adjustments (127,613,111) (17,849,111)
Consolidated assets 814,065,329 893,008,966
(ix) Additions to non-current assets
Additions to non-current assets for reportable segments 38,917,145 28,678,042
Corporate and consolidation adjustments 21,010 238,542
Consolidated additions to non-current assets 38,938,155 28,916,584
(x) Total liabilities
Liabilities for reportable segments (284,162,945) (784,887,652)
Corporate and consolidation adjustments (324,645,161) (136,206,578)
Consolidated liabilities (608,808,106) (921,094,230)
33. SHARE OPTIONS
33.1 Equity-settled options
The Group has a share option plan approved by the shareholders that allows it to grant options, subject to regulatory terms and
approval, to its directors, employees, officers, and consultants to acquire up to 32,600,000 (2011: 32,600,000) common shares. As
at 31 December 2012, 7,933,000 options were outstanding and 24,667,000 options remained available to be granted. On 30 June
2009 the Company obtained shareholder and stock exchange approval to decrease the exercise price to C$1.29 per option for
8,061,000 share options, including stock options granted to certain insiders of the Company pursuant to repricing. The exercise
price of each option is set by the Board of Directors at the time of grant but cannot be less than the market price (less permissible
discounts) on the TSX Venture Exchange. Options have a term of up to a maximum of ten years (however, the Company has
historically granted options for up to a term of five years), and terminate 30 to 90 days following the termination of the optionee's
employment or term of engagement, except in the case of retirement or death. Vesting of options is at the discretion of the Board
of Directors at the time the options are granted. The continuity of share purchase options is as follows:
Contractual
weighted average
Weighted average remaining life
exercise price Number of options (years)
Balance - 31 December 2010 $ 1.11 13,241,000 3.97
Granted - -
Exercised 0.84 (75,000)
Cancelled 1.05 (593,333)
Expired 1.24 (410,000)
Balance – 31 December 2011 $ 1.11 12,162,667 2.89
Granted - -
Exercised - -
Cancelled 1.09 (246,667)
Expired 1.27 (3,983,000)
Balance – 31 December 2012 $ 1.03 7,933,000 2.14
Options outstanding and exercisable at 31 December 2012 were as follows:
Number of Number of Weighted
options options average life
Expiry date Option price outstanding vested (years)
25 June 2013 $ 1.29 # 916,000 916,000 0.5
30 June 2013 $ 1.29 # 1,410,000 1,410,000 0.5
25 June 2014 $ 0.96 562,000 562,000 1.5
30 November 2016 $ 0.84 4,545,000 4,545,000 3.9
1 May 2017 $1.61 500,000 333,000 4.3
Total 7,933,00 7,766,000
Weighted average exercise price $ 1.03 $ 1.05
# - The options were re-priced to $1.29 on 30 June 2009
The exercise prices of all share purchase options granted during the year were equal to or greater than the market price at the
grant date. Using the Black-Scholes option pricing model with the assumptions noted below, the estimated fair value of all options
granted have been reflected in the statement of changes in equity.
The share-based payments expense recognised during the year ended 31 December 2012 was $309,769 (2011: $1,156,036;
2010: $2,333,450).
The assumptions used to estimate the fair value of options granted during the year were:
2012 2011 2010
Canadian risk- free interest rate 2.8% 2.8% 3%
Expected life 5-7 years 5- 7 years 5 - 7 years
Volatility 83% 83% 83%
Forfeiture rate 0% 0% 0%
Expected dividends Nil Nil Nil
The volatility of the shares was calculated over the expected life of the option. Volatility was calculated by using available historical
information on the share price for Atlatsa equal to the expected life of the scheme.
The risk free rate for periods within the contractual term of the share right is based on the Government of Canada benchmark bond
yield.
33.2 Cash-settled share-based payments
The Group also currently has a scheme in place to award SARs to recognise the contributions of senior staff to the Group’s financial
position and performance and to retain key employees. These SARs are linked to the share price of the Group on the JSE and are settled
in cash on the exercise date.
A third of the SARs granted are exercisable annually from the grant date with an expiry date of 4 years from the grant date. The
offer price of these SARs equaled the closing market price of the underlying shares on the trading date immediately preceding the
granting of the SARs.
2012 2011 2010
Share appreciation rights granted (all unvested at year-end) 17,324,869 6,294,869 3,737,103
Vesting year of unvested share appreciation rights:
Vested already 1,997,268 - -
Within one year 5,636,401 2,396,801 1,575,035
One to two years 5,273,200 2,025,134 1,575,035
Two to three years 4,418,000 1,872,934 587,033
Total number of shares unvested 17,324,869 6,294,869 3,737,103
The value of the SARs expensed in the year ended 31 December 2012 was calculated as $ Nil (2011: $437,152; 2010: $947,176;
2009: $145,199).
The assumptions used to estimate the fair value of the SARS granted during the year were:
South African risk-free rate 4.9% - 5.8% 6.4% 6.7%
Volatility 82% - 106% 85.1% 82% - 86%
Forfeiture rate 0% 0% 0%
Expected dividends Nil Nil Nil
The only vesting conditions for the scheme are that the employees should be in the employment of the Group.
The volatility of the shares were calculated with the equally weighted standard approach of calculating volatility by using available
historical information on the share price for Atlatsa equal to the term to maturity of the scheme.
The risk-free rate for periods within the contractual term of the share right is based on the South African Government Bonds in
effect at the time.
33.3 Bonus settled via shares
The Group issued 806,898 shares to key members of management at a cost of $895,625 during the year ended 31 December
2009 as consideration for finalising the acquisition as discussed in note 33 (2012, 2011 and 2010: Nil).
33.4 Bokoni Platinum Mine ESOP Trust
Prior to the acquisition of Bokoni on 1 July 2009, certain employees of Bokoni were part of the Anglo Group Employee
Empowerment Scheme (“Kotula Scheme”). When Atlatsa acquired Bokoni, Anglo American Platinum Limited and Atlatsa replaced
the Kotula Scheme with the Bokoni Platinum Mine ESOP Trust (“ESOP Trust”), which has similar participation benefits to the
Kotula Scheme.
The purpose of the ESOP Trust scheme is to incentivize and retain employees, promote BEE and increase broad-based and
effective participation in the equity of Atlatsa by historically disadvantaged persons.
The ESOP Trust holds and utilises ordinary shares in Atlatsa (refer note 17) for the benefit of the beneficiaries.
Any units that the employees held in the Kotula Scheme were exchanged into units in the ESOP Trust at a ratio of 15 units in the
ESOP Trust for every Kotula unit held. The remaining units in the ESOP Trust are allocated to the employees in five equal annual
installments beginning 31 March 2010 and for the next four years thereafter. Employees will receive an equal allocation of units.
Any units held by a beneficiary that are forfeited shall be added back to the number of unallocated units available for future
allocation.
The ESOP Trust shall dispose of the shares held in Atlatsa to the beneficiaries as follows:
- One third shall vest in proportion to the beneficiaries units on 16 May 2013;
- Half of the remaining balance of ordinary shares will vest in proportion to their interest on 16 May 2014; and
- The remaining balance of ordinary shares will vest in proportion to their interest on 16 May 2015.
The trustees (acting as agent on behalf of the beneficiaries) shall dispose of and sell as many shares as will be necessary to settle
all taxes payable by the beneficiaries. The beneficiaries may also direct the trustees to sell the distribution shares on behalf of the
beneficiaries and the proceeds of such sale, net of all expenses, shall be distributed to the beneficiaries.
If a beneficiary’s employment is terminated due to death, retrenchment, retirement, disability or ill-health, Bokoni will pay a cash
amount equal to the fair value of the beneficiary’s units to the beneficiary who will then cease to be a beneficiary of the ESOP Trust.
The units will be transferred to Bokoni who will become a beneficiary of the ESOP Trust. Where the beneficiary’s employment is terminated
prior to the termination date for any other reason, the beneficiary shall forfeit all his rights under the scheme. The forfeited units
will be added back to the number of unallocated units for future allocation.
At 31 December the following units were allocated:
2012 2011 2010
Total units available for allocation 70,000,000 70,000,000 70,000,000
Allocation 1 July 2009 (20,078,634) (20,078,634) (20,078,634)
Allocation 31 March 2010 (10,282,759) (10,282,759) (10,282,759)
Allocation 31 March 2011 (10,666,586) (10,666,586) -
Total units available for allocation at 31 December 28,972,021 28,972,021 39,638,607
Units forfeited 1,535,309 1,535,309 1,492,429
Forfeiture rate 5% 5% 5%
Expected dividends Nil Nil Nil
Exercise price Nil Nil Nil
Share price at grant date (ZAR) 7.00 7.00 11.10
The share-based payment expense recognised during the year ended 31 December 2012 was $877,546 (2011: $984,002; 2010:
Nil).
34. CONTINGENCIES
There are no contingencies that the directors are aware of at the reporting date.
35. RELATED PARTIES
Relationships
Related party Nature of relationship
RPM The Group concluded a number of shared services agreements between Bokoni
mine and RPM, a wholly owned subsidiary of Anglo 49% shareholder in Bokoni
Holdco. Pursuant to the terms of various shared services agreements, the Anglo
group of companies will continue to provide certain services to Bokoni Mines at a
cost that is no greater than the costs charged to any other Anglo group company
for the same or similar services. It is anticipated that, as Atlatsa builds its internal
capacity, and makes the transformation to a fully operational PGM producer,
these services will be phased out and replaced either with internal services or
third party services. RPM also provides debt funding to the Group and purchases
all of the Group's PGM concentrate.
Atlatsa Holdings Atlatsa Holdings is the Company's controlling shareholder
Key management All directors directly involved in the Atlatsa Group and certain members of top
management at Bokoni and Plateau.
Related party balances
2012 2011
RPM Loans and Borrowings (refer note 18) (433,959,084) (742,772,344)
Trade and other payables (1,149,533) (5,384,861)
Trade and other receivables 913,558 24,230,043
Convertible preference shares (refer
note 17)
Atlatsa Holdings Convertible preference shares (refer
note 17)
Related party transactions
RPM Revenue (refer note 22 ) (117,557,331) (144,406,715)
Finance expense (before interest 81,115,550 84,762,114
capitalised)
Administration expenses 661,494 1,272,406
Cost of sales 45,901,635 40,967,150
Costs capitalised to capital work-in- 7,851,315 7,852,805
progress
Fair value gain on Consolidated 90,589,136 -
Debt Facility (refer note 24)
Included in non-controlling interest is a fair value gain on de-recognition of the debt facility between Bokoni Holdco and RPM of
$127,814,103.
Also refer to note 37 for a proposed transaction with Anglo, RPM's holding company.
Key Management Compensation
Remuneration for executive directors and key management
- Salaries 3,483,677 3,998,042
- Short-term benefits 723,609 1,094,315
- Restructuring - 76,334
- Share options 259,387 994,729
- Cash settled share-based payments - (437,152)
- Remuneration for non-executives 334,985 304,454
4,801,658 6,030,722
36. COMMITMENTS
2012 2011
Contracted for 3,417,123 32,761,664
Not yet contracted for 10,831,638 38,474,167
Authorised capital expenditure 14,248,761 71,235,831
The committed expenditures relate to property, plant and equipment and will be funded through cash generated from operations
and available loan facilities.
37. EVENTS AFTER THE REPORTING DATE
On 27 March 2013, Phase Two and thus completion of the Restructure Plan was announced. Phase Two involves Anglo subscribing for 125 million
ordinary shares of the Company for $87.9million (ZAR750 million), the sale of Boikgantsho and the Eastern section of Ga-Phasha for an effective
consideration of ZAR1.7 billion ($199.2 million) as well as the capitalization of debt between Bokoni Holdco and RPM. The net effect after
Phase Two of the Restructure Plan is that the Company’s debt owing to RPM will reduce by approximately $287.1 million (ZAR2,450 million) plus
the debt owing between Bokoni Holdco and RPM ($91.3 million (ZAR 778.7 million) at 31 December 2012).
In addition to this debt reduction, Anglo Platinum has agreed to make additional facilities available to the Company to finance the
Bokoni Mine operational and project plan going forward as per the new agreements under the Consolidated Facility. The Company
will also convert all “B” Preference shares, into Atlatsa common shares. Atlatsa Holdings has agreed to acquire 115.8 million
Atlatsa common shares from RPM on a vendor finance basis, resulting in Atlatsa Holdings owing $54.3 million (ZAR463 million) to
RPM, to be repaid in stages by 31 December 2020. This also includes an extension of the Concentrate Sale Agreement until 2020.
The net effect of the recapitalization and refinancing plan for Atlatsa is a significant reduction in the Company's debt.
The Restructure Plan is conditional upon the satisfaction (or waiver) of various conditions precedent, including:
- the receipt of the approval of the South African Competition Authorities;
- obtaining shareholder approval from Atlatsa shareholders;
- the receipt of the approval of the Disinterested Shareholders of Atlatsa for each of the Related Party Transactions;
- the receipt of approvals of the applicable regulatory authorities;
- the receipt by RPM, and to the extent necessary, each of its shareholders, of the written unconditional consent of the United
Kingdom Treasury in respect of the Restructuring Plan;
- RPM acquiring unconditional title to the Asset Sale Properties. This would include obtaining Ministerial consent in respect
of The Mineral and Petroleum Resources Royalty Act for transfer of the mineral rights to RPM; and
- The Phase Two Restructure Plan transaction agreements becoming unconditional through the satisfaction of all other
conditions precedent (except to the extent that the completion of any one transaction is conditional upon the completion of
the other transactions).
38. EMPLOYEE COSTS
Employee costs included in loss for the year are as follows:
2012 2011 2010
Salaries and wages and other benefits 83,552,252 90,109,090 82,309,144
Retirement benefit costs 366,621 442,633 372,975
Medical aid contributions 14,570 17,853 14,088
Employment termination costs - 44,323 56,486
Share-based compensation – equity-settled 1,329,857 1,991,277 2,333,450
Share-based compensation – cash-settled - (437,152) 947,176
85,263,300 92,168,024 86,033,319
39. GROUP ENTITIES
The following are the shareholdings of the Company in the various group entities:
Company Country of Incorporation
2012 2011
N1C Resources Incorporation Cayman Islands 100 % 100 %
N2C Resources Incorporation * Cayman Islands 100 % 100 %
Plateau Resources Proprietary Limited * South Africa 100 % 100 %
Bokoni Holdings Proprietary Limited * South Africa 51 % 51 %
Bokoni Mine Proprietary Limited * South Africa 51 % 51 %
Boikgantsho Proprietary Limited * South Africa 51 % 51 %
Kwanda Proprietary Limited * South Africa 51 % 51 %
Ga-Phasha Proprietary Limited * South Africa 51 % 51 %
Lebowa Platinum Mine Limited * # South Africa 51 % 51 %
Middlepunt Hill Management Services Proprietary Limited * # South Africa 51 % 51 %
*- Indirectly held
#- These entities are dormant
40. HEADLINE AND DILUTED HEADLINE EARNINGS PER SHARE
Headline earnings per share is calculated by dividing headline earnings attributable to owners of the Company by the weighted
average number of ordinary shares in issue during the period. Diluted headline earnings per share is determined by adjusting the
headline earnings attributable to owners of the Company and the weighted average number of ordinary shares in issue during the
period, for the effects of all dilutive potential ordinary shares, which comprise share options granted to employees.
Headline earnings per share
The calculation of headline loss per share for the year ended 31 December 2012 of 4 cents (2011: 19 cents; 2010: 12 cents) is
based on headline loss of $18,717,258 (2011: $81,589,746; 2010: $51,331,108) and a weighted average number of shares of
424,791,411 (2011: 424,783,603; 2010: 424,665,314).
The following adjustments to loss attributable to owners of the Company were taken into account in the calculation of headline
loss attributable to owners of the Company:
2012 2011 2010
Loss attributable to shareholders of the Company (18,717,839) (81,928,814) (51,721,410)
- Loss on disposal of property, plant and equipment 581 339,068 45,179
- Impairment - - 345,123
Headline loss attributable to owners of the Company (18,717,258) (81,589,746) (51,331,108)
Diluted headline earnings per share
The calculation of diluted headline loss per share for the year ended 31 December 2012 of 4 cents (2011: 19 cents; 2010: 12
cents) is based on headline loss of $18,717,258 (2011: $81,589,746; 2010: $51,331,108) and a diluted weighted average
number of shares of 424,791,411 (2011: 424,783,603; 2010: 424,665,314).
At 31 December 2012, 2011 and 2010 share options were excluded in determining diluted weighted average number of common
shares as their effect would have been anti-dilutive.
Refer to note 30 for the calculation of the weighted average number of shares.
Date: 28/03/2013 03:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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