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WESIZWE PLATINUM LIMITED - Reviewed Condensed Consolidated Interim Financial Information For The Six Months Ended 30 June 2013

Release Date: 16/09/2013 17:15
Code(s): WEZ     PDF:  
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Reviewed Condensed Consolidated Interim Financial Information For The Six Months Ended 30 June 2013

WESIZWE PLATINUM LIMITED
(Incorporated in the Republic of South Africa)
(Registration no. 2003/020161/06)
JSE code: WEZ ISIN: ZAE000075859
("the Company" or “the Group” or "Wesizwe")

REVIEWED CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION
FOR THE SIX MONTHS ENDED 30 JUNE 2013

Highlights

-   350 338 fatality free shifts achieved up to end June 2013 on the Bakubung Project.
-   Both the Main and Ventilation shafts have been fully commissioned, licensed and are in the main
    sink phase.
-   Main shaft achieved a depth of 120m and Vent shaft a depth of 206m by the end of the reporting
    period.
-   Drawdown of US$100 million project loan from China Development Bank (CDB) concluded as part of the
    US$650 million project funding facility.
-   Cash on hand as of 30 June 2013 is R2.0 billion.
-   Significant progress on a mine wide optimisation study. The study will be finalised by the end of
    2013.
-   Definitive metallurgical plant study underway, which may include synergistic options with
    neighbouring mines, aimed at delivering both capital and operating cost savings.
-   Services projects are on track and progressing well.
-   Commissioned Phase 1 Eskom Power supply of 20MVa sufficient for the full development of the
    project.
-   Bulk Water Supply Agreement signed off with Magalies Water, and a number of supply projects have
    been initiated.
-   Housing project pre-feasibility concluded, with the focus now being on the securing of land in
    partnership with local communities for the development of housing.



                                        Note   Six months    Six months   Year ended
                                                    ended         ended     December
                                                June 2013     June 2012         2012
                                                 Reviewed      Reviewed      Audited
                                                    R’000         R’000        R'000
ASSETS
Non-current assets                              3 708 882     2 886 939    3 334 789
Property, plant and        
equipment                                 6     2 766 929     1 951 091    2 395 964
Available-for-sale
financial asset                                    21 670        15 719       18 910
Investment in equity-
accounted investee                        7       920 283       920 129      919 515
Deferred tax asset                                      -             -          400

Current assets                                  2 185 142     1 126 632    1 526 484
Other receivables                                  32 141        31 859       21 590
Taxation receivable                                13 788         4 724       11 231
Restricted cash                           8        95 189        61 494       95 189
Cash and cash
equivalents                                     2 044 024     1 028 555    1 398 474
 

TOTAL ASSETS                                    5 894 024     4 013 571    4 861 273


EQUITY AND LIABILITIES
Capital and reserves                            3 542 866     3 629 641    3 636 332
Stated / Share capital                    9     3 425 544            16    3 425 544
Share premium                             9             -     3 425 528            -
Share-based payment
reserve                                           472 179       472 179      472 179
Available-for-sale
financial asset reserve                             3 811         1 948        2 891
Accumulated loss                                (358 668)     (270 030)    (264 282)


Non-current liabilities                           298 645       281 977      287 413
Deferred tax liability                            265 987       268 846      267 265
Environmental
rehabilitation
obligation                                         32 658        13 131       20 148


Current liabilities                             2 052 513       101 953      937 528
Interest-bearing
liabilities                                     1 974 839            -      847 916
Trade and other
payables                                           75 752       100 673       87 690
Taxation payable                                    1 922         1 280        1 922

TOTAL EQUITY AND
LIABILITIES                                     5 894 024     4 013 571    4 861 273


CONDENSED CONSOLIDATED STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME

                                          Note       Six months          Six months      Year ended
                                                          ended               ended        December
                                                      June 2013           June 2012            2012
                                                       Reviewed            Reviewed         Audited

                                                          R’000               R’000          R'000


Administration expenditure                             (45 762)            (27 173)       (61 322)
Share of profit of equity- accounted
investee (net of tax)                       7               768               3 581          4 622
Impairment of loan to the Bakubung
community                                                     -             (2 741)        (2 744)
Impairment of investment in equity-
accounted investee                                            -                   -        (1 655)
Profit on sale of property, plant and
equipment                                                    70                                 91
Project related expenses capitalised                     17 546                   -         20 738
Net operating costs                                    (27 378)            (26 333)       (40 270)

Finance income                                           28 977              35 225         56 612
Foreign exchange loss                      18          (83 351)                   -              -
Finance expense                                        (13 723)                 (1)        (1 955)
Net financial (expense) / income
                                                       (68 097)              35 224         54 657

(Loss) / profit before tax                             (95 475)               8 891         14 387

Income tax                                 10             1 089             (4 891)        (4 639)

(Loss) / profit for the period                         (94 386)               4 000          9 748

Other comprehensive income
Items that are or may be reclassified
subsequently to profit or loss
Increase in fair value of the
available-for-sale financial asset                        1 131                 419          2 026
Tax on other comprehensive income                         (211)                   -          (664)
Total other comprehensive income                            920                 419          1 362


Total comprehensive (loss) / income
for the period                                         (93 466)               4 419         11 110


Basic (loss) / earnings per share
(cents)                                    17            (5.80)                0.25           0.60
Diluted (loss) / earnings per share
(cents)                                    17            (5.80)                0.25           0.60
Headline (loss) / earnings per share
(cents)                                    17            (5.80)                0.25           0.70

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

                            Stated            Share Share-based   Available     (Accumu-      Total
                           / share          premium     payment   -for-sale lated loss)/
                           capital                      reserve    reserves     retained
                                                                                earnings

                             R’000            R’000       R’000      R’000         R’000      R’000

Balance at
1 January 2012                  16        3 425 528     472 179      1 529     (274 030)   3 625 222


Other comprehensive
income
                                 -                -           -        419             -        419
Profit for the
period                           -                -           -          -         4 000      4 000
                                 -                -           -        419         4 000      4 419
Balance at
30 June 2012                    16        3 425 528     472 179      1 948      (270 030)  3 629 641


Other comprehensive
income
                                 -                -           -        943             -        943
Profit for the
period                           -                -           -          -         5 748      5 748
Transfer of share
premium to stated
                         3 425 528      (3 425 528)           -          -             -          -
capital
                         3 425 528      (3 425 528)           -        943         5 748      6 691
Balance at
31 December 2012         3 425 544                -     472 179      2 891     (264 282)   3 636 332

Other comprehensive
income                           -                -           -        920             -         920
Loss for the period              -                -           -          -       (94 386)    (94 386)

Balance at
30 June 2013             3 425 544                -     472 179      3 811     (358 668)   3 542 866

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS


                                            Note   Six months   Six months            Year
                                                        ended        ended           ended
                                                    June 2013    June 2012   December 2012

                                                     Reviewed    Reviewed         Audited
                                                        R’000       R’000           R'000


Cash flows from operating activities                 (15 985)      36 423        (25 905)
Finance income                                         29 449      37 008          75 148
Finance expense                                      (13 030)         (1)           (200)
Taxation paid                                         (2 557)           -         (9 418)
Cash (utilised) / generated in operations             (2 123)      73 430          39 625

Cash flows utilised by investing
activities
Acquisition of property, plant and
equipment as a result of increase in
operations                                         (372 686)     (216 858)      (605 615)
Purchase of available-for-sale financial
asset                                                 (1 629)     (1 540)         (3 124)
Proceeds on disposal of property, plant
and equipment                                               -           -               7
Net cash outflow from investing
activities                                         (374 315)     (218 398)      (608 732)

Cash flows from financing activities
Interest-bearing borrowings raised                 1 022 460            -         849 810
Loans paid on behalf of related party                       -           -         (2 744)
Net cash inflow from financing activities          1 022 460            -         847 066

Net increase / (decrease) in cash and
cash equivalents                                      646 022    (144 968)        277 959
Effects of exchange rate fluctuation on
cash held                                                   -           -         (2 560)
Cash and cash equivalents at the
beginning of the period                            1 492 012     1 216 613      1 216 613
Cash and cash equivalents at the end of
the period                                         2 138 034     1 071 645      1 492 012


Restricted cash                                        95 189      61 494          95 189
Cash and cash equivalents                          2 044 024     1 028 555      1 398 474
Total cash & cash equivalents                      2 139 213     1 090 049      1 493 663
Less: Interest accrued                                (1 179)    (18 404)         (1 651)
Net cash on hand                                   2 138 034     1 071 645      1 492 012

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION
For the six months ended 30 June 2013

1.   Reporting entity
     Wesizwe is a company domiciled in the Republic of South Africa. The condensed consolidated interim
     financial information of the Company as at 30 June 2013 comprises the Company, its subsidiaries
     and the Group’s interest in its equity-accounted investee (together referred to as the “Group”).
     The consolidated financial statements of the Group for the year ended 31 December 2012 are
     available upon request from the Company’s registered office at Unit 13, 2nd Floor, 3 Melrose
     Boulevard, Melrose Arch, Johannesburg, 2076 or at www.wesizwe.com.

2.   Statement of compliance
     The condensed consolidated interim financial information has been prepared in accordance with IAS
     34 Interim Financial Reporting issued by the International Accounting Standards Board and the
     SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial
     Reporting Pronouncements as issued by Financial Reporting Standards Council, the requirements of
     the Companies Act of South Africa, No 71 of 2008, as amended and the JSE Limited Listings
     Requirements. It does not include all of the information required for full annual financial
     statements, and should be read in conjunction with the consolidated financial statements of the
     Group for the year ended 31 December 2012. The condensed consolidated interim financial
     information was approved by the Board of Directors on 13 September 2013. The financial statements
     have been prepared under the supervision of the Finance Director, Mr W Ma.

3.   Significant accounting policies
     The accounting policies applied by the Group in the condensed consolidated interim financial
     information are consistent with those applied by the Group in its consolidated annual financial
     statements for the year ended 31 December 2012.

4.   Estimates
     The preparation of the interim financial information requires management to make judgements,
     estimates and assumptions that affect the application of accounting policies and the reported
     amounts of assets and liabilities, as well as income and expense. Actual results may differ from
     these estimates.

     Except as described below, in preparing the condensed consolidated interim financial information,
     the significant judgements made by management in applying the Group’s accounting policies and the
     key sources of estimation are consistent with those that applied to the consolidated financial
     statements for the year ended 31 December 2012.

     During the six months ended 30 June 2013 management reassessed its estimates in respect of:
      - The investment in Maseve (note 7); and
      - Rehabilitation liability.

5.   Going concern
     The current cash resources are adequate to fund the project development and administrative cost up
     to the end of the first quarter 2014. At that stage the Company will become dependent on the
     availability of the loan funding in the amount of US$650 million that the China-Africa consortium
     is committed to provide in terms of the subscription agreement signed in May 2011. The loan is
     scheduled for finalisation before the end of this year.

     Given the timeframe to the realisation of the US$650 million project finance loan, a local
     bridging facility consisting of two US$100 million loan facilities were agreed with CDB in 2012,
     and both loans have been drawn down. The Company will maintain a minimum cash reserve to ensure
     cash commitments can be met at all times.
6.   Property, plant and equipment
     During the period under review an amount of R371.8 million was capitalised to property, plant and
     equipment as part of the activities to develop the mine and related construction activities.

     At the reporting date, property, plant and equipment consisted of the following categories of
     assets:


                                               Property,     Construction
                                               plant and         Work-in-            Mineral
                                               equipment         progress             Rights         Total
                                                   R’000               R’000           R'000         R'000

                         Opening balance          24 294           1 313 941        1 057 729     2 395 964

          Acquisitions during the period           1 069             370 759                -      371 828
                                Disposals              -                   -                -            -
                            Depreciation           (863)                   -                -        (863)
                         Closing balance          24 500           1 684 700        1 057 729     2 766 929

     No additions have been made in respect of mineral rights during the period under review.


7.   Investment in equity-accounted investee

                                                       Six months              Six months       Year ended
                                                            ended                   ended         December
                                                        June 2013               June 2012             2012
                                                         Reviewed                Reviewed          Audited


                                                             R’000                 R’000            R'000

     Opening balance                                       919 515               916 548          916 548

     Share of profit of equity-
     accounted investee                                        768                 3 581            4 622
     Impairment of investment                                    -                     -          (1 655)
     Closing balance                                       920 283               920 129          919 515

     The Investment refers to the Group’s 26% investment in Maseve Investments 11 (Pty) Ltd (“Maseve”).


8.   Restricted cash
     Restricted cash covers the following guarantees:
      - R27 million (June 2012: R28.7 million) in favour of the DMR on issue of the mining licence;
      - R0.9 million (June 2012: R0.9 million) guaranteed to the landlord for the operating lease
        agreement;
      - R10.3 million (June 2012: R31.8 million) in favour of Eskom for phase 1 bulk power supply to the
        Bakubung Platinum Mine Project; and
      - R57 million (June 2012: nil) guaranteed to Aveng Mining Ltd for the mine shaft sinking project.

9.   Stated / Share capital and share premium

     Stated / Share capital
                                                         Six months     Six months        Year ended
                                                                ended        ended          December
                                                            June 2013    June 2012              2012
                                                             Reviewed     Reviewed           Audited
                                                                R’000        R’000             R’000

     Authorised
     2 000 000 000 no par value ordinary shares (2012:
     2 000 000 000 ordinary shares of R0.00001 each)
                                                                    -           20                 -

     Issued
     1 627 827 058 no par value ordinary shares (2012:
     1 627 827 058 ordinary shares of R0.00001 each)        3 425 544           16         3 425 544

     Share premium

                                                          Six months    Six months        Year ended
                                                               ended         ended          December
                                                           June 2013     June 2012              2012
                                                            Reviewed      Reviewed           Audited
                                                               R’000         R’000             R’000

     Opening balance                                               -    3 425 528          3 425 528
     Transfer of share premium to stated capital
                                                                   -            -        (3 425 528)
     Total                                                         -    3 425 528                 -


10. Taxation

                                                           Six months    Six months       Year ended
                                                                ended         ended         December
                                                            June 2013     June 2012             2012
                                                             Reviewed      Reviewed          Audited


                                                                R’000         R’000            R'000


     Current year - normal taxation                                 -       (4 820)          (7 213)
     Current year - deferred taxation                           1 089          (71)            2 574
     Total                                                      1 089       (4 891)          (4 639)


     Reconciliation of effective tax rate                           %                %             %
     Standard tax rate                                         (28.0)          28.0             28.0
     Non-deductible expenses                                      1.3          27.0             16.2
     Deferred tax asset not raised                               26.9                -           0.6
     Share of profit of equity- accounted
     investee                                                   (1.1)                -         (9.0)
     Prior year deferred tax asset not raised                   (0.2)                -         (2.0)
     Under-provision prior year                                                      -         (1.5)
     Effective rate                                             (1.1)          55.0             32.3

11. Independent review
    The condensed consolidated statement of financial position at 30 June 2013 and related condensed
    consolidated statements of comprehensive income, changes in equity and cash flows for the period
    have been reviewed by KPMG Inc. Their unqualified review opinion is available for inspection at
    the Company’s registered office.

12. Segment reporting
    No segmental report has been produced as the Group is conducting activities in one geological
    location which represents its only business activity.

    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. The operating results for the Group as a whole are
    reviewed regularly by the Group’s CEO to make decisions about resources to be allocated and to
    assess its performance.
 
13. Mineral resources
    There were no material changes to the mineral resources for the six months ended 30 June 2013.

14. Judgements by directors and management
    The management of Wesizwe is confident that the assets of the Group are not impaired.

15. Subsequent events
    There were no events that occurred after the reporting date that required further disclosure in
    these financial results.

16. Commitments
    At 30 June 2013 the Group had commitments to the value of R1.3 billion. This amount includes the
    commitment in respect of the shaft sinking agreement, which amounts to R1.1 billion (more than 85%
    of the total commitments). This amount will be incurred over the next 5 years until June 2018,
    and payments are to be made on physical progress.

17. (Loss) / Earnings per share

                                                     Six months   Six months ended        Year ended
                                                          ended          June 2012          December
                                                      June 2013           Reviewed              2012
                                                       Reviewed                              Audited



  The basis of calculation of basic
  (loss) / earnings per share is:

  Attributable profit / (loss) to
  ordinary shareholders (Rand)                     (94 385 761)          4 000 355         9 747 918

  Weighted average number of ordinary
  shares in issue (shares)                        1 627 827 058      1 627 827 058     1 627 827 058

  Basic (loss) / earnings per share
  (cents)                                                (5.80)               0.25              0.60



  The basis of calculation of diluted
  (loss) / earnings per share is:

  Attributable profit / (loss) to
  ordinary shareholders (Rand)                     (94 385 761)          4 000 355         9 747 918

  Weighted average number of ordinary
  shares in issue (shares)                        1 627 827 058      1 627 827 058     1 627 827 058

  Diluted (loss) / earnings per share
  (cents)                                                (5.80)               0.25              0.60



  The basis of calculation of headline
  (loss) / earnings per share is:
  Attributable (loss) / profit to
  ordinary shareholders (Rand)                     (94 385 761)          4 000 355         9 747 918

  Adjustments:                                         (70 175)                  -         1 647 528
  Profit on disposal of property, plant
  and equipment                                        (70 175)                  -           (7 000)
  Impairment of investment in equity-
  accounted investee                                          -                  -         1 654 528


  Headline (loss) / earnings   (Rand)
                                                   (94 455 936)          4 000 355        11 395 446

  Weighted average number of ordinary
                                                  1 627 827 058      1 627 827 058     1 627 827 058
  shares in issue (shares)

  Headline and diluted headline (loss) /
  earnings per share (cents)                             (5.80)               0.25              0.70




 18. Foreign exchange loss
     The foreign exchange losses arose as a result of the draw-down of the two unsecured loans of
     US$100 million each from the CDB on 21 December 2012 and 21 June 2013 respectively, and the
     volatility of the Rand-Dollar exchange rate during this period.



Commentary

1. Financial overview
   As the Group is currently in development phase of the Bakubung Platinum Mine, it will not earn
   revenue from mining activities until such time as a mine is brought into production.

  The loss for the six months under review was R94.4 million (compared to a profit of R4.0 million for
  the same period in 2012). The loss for the 6 month period comprises administration expenditure of
  R45.8 million (2012: R27.1 million), net interest income R15.3 million (2012: R35.2 million) and an
  equity-accounted share of profit of Maseve Investments 11 (Pty) Ltd of R0.8 million (2012: profit of
  R3.6 million.
  Administration expenses of R45.6 million include the following:
   - Depreciation - R0.9 million (June 2012: R0.7 million);
   - Professional fees – R5.0 million (June 2012: R2.9 million);
   - Directors’ expenses – R4.4 million (June 2012: R3.5 million);
   - Salaries and payroll related expenses – R22.6 million (June 2012: R11.2 million);
   - Marketing expenses and investor relations – R1.1 million (June 2012: R2.7 million);
   - Community sustainability projects – R1.8 million (June 2012: R1.8 million); and
   - Other administrative overheads – R10.0 million (June 2012: R4.5 million).

  During the six months under review the administration expenses increased by 68.4% compared to the
  corresponding period in 2012. This was as a result of the ramp up of the Bakubung Platinum Mine
  project. R371.8 million was capitalised to the cost of the mine, represented by work on the common
  surface infrastructure, bulk services and preparatory work for the shaft sinking activities. Wesizwe
  aims to contain administrative cost and control the capital expenditure on the Bakubung Platinum Mine
  to deliver the project on time and within budget.

  The basic loss per share for the period was 5.80 cents per share (2012: basic earnings of 0.25 cents
  per share for the same period). The headline loss per share was 5.80 cents per share (2012: headline
  earnings of 0.25 cents per share for the same period).

  The basic loss per share in June 2013 is as a result of interest expense and foreign exchange loss
  recognised in the Statement of Comprehensive Income for the period under review.

2. Project funding
   Wesizwe announced the approval   of the CDB US$650 million loan facility on 21 January 2013. As part of
   this funding, Wesizwe obtained   two bridging loan facilities of US$100 million each. As at the end of
   the reporting period Wesizwe     had R2.0 billion in cash available for utilisation in the Project.
   Wesizwe plans to finalise all    terms and condition of the US$650 million project funding before the
   end of this financial year.

3. Project update – Bakubung Platinum Mine

   Wesizwe is developing its 100% owned Bakubung Platinum Mine on the northern section of the western
   limb of the Bushveld Complex in South Africa. The mine is expected to initiate production ramp up
   early in 2018. At a steady state, the mine will produce 350 koz of 4E platinum group metals. Wesizwe
   also owns a 26% interest in the developing Maseve Platinum mine, managed by Platinum Group Metals
   Limited. The Maseve project will commission early in 2015 and will produce 270 koz of 4E platinum
   group metals.

   3.1. Safety and Health
   As at the end of the reporting period, the project had achieved 350 338 fatality free shifts. The
   project site and the mine continue to achieve good health and safety performance with injury
   frequency rate below the industry average. This is due to concerted efforts by the site management
   and employees and increased safety awareness. The average number of people on site for the period was
   881. Unfortunately 4 lost time injuries (LTI’s) where reported for the period under review, resulting
   in a lost time injury frequency rate (LTIFR) for the period of 0.91.

   3.2. Main shaft
   The period saw the successful conversion from pre-sink to slow sinking on the 8.5m diameter main
   shaft. The main shaft headgear, winder-house and winders were commissioned during this period. Slow
   sink was started at a depth of 120m below collar and commenced on 9 July 2013, approximately 2 weeks
   ahead of schedule. All shaft bank steel work and services were commissioned at the same time, the 4
   gate ventilation system was also extended to the face to provide sufficient ventilation for
   operations.

   3.3. Ventilation shaft
   Sinking on the Ventilation shaft started in October 2012 with the headgear being commissioned in
   January 2013. The stage and kibble winders were commissioned and licensed in February 2013.      Slow
   sink commenced on 22 March 2013. As at the end of June 2013, the shaft depth from collar was 206 m.
   The progress to main sink and the main sink rate has been less than satisfactory in the period under
   review. The key issues hindering the main sink were Eskom delays on the first phase power delivery, a
   delay in the commissioning of the Kibble winder and a lack of sinking readiness on the part of the
   sinking contractor. Certain negative geological factors also contributed to the delay in achieving
   the target main sink rate (cycle times). The factors contributing to a slower than expected sink-rate
   have been addressed aggressively, with positive results currently being demonstrated.

   3.4. Metallurgical plant
   The process plant feasibility study originally undertaken has been substantially reviewed post the
   conclusion of definitive metallurgical test work done by Mintek. A process option analysis study
   commenced in May 2013 and the recommended process option is being finalised to a definitive
   feasibility (DFS) study level. The feasibility study is being conducted by WP-TWP Projects and a Mill
   sizing modelling study was completed by UCT Process plant division. The DFS will be concluded by
   March 2014, to then form the basis to the commencement in ordering of long lead items and the
   construction of the plant.

   3.5. Services
   Mine services such as power, water and housing are critical to the overall success of the developing
   project. Wesizwe is running parallel projects in these areas, to ensure the availability of these
   services well within the critical path of the developing project.
 
   3.6. Power
   The permanent bulk power supply of 8MVa was commissioned in January 2013. This allowed the
   commissioning on the Bakubung substation from an 88kV line dropped to 33kV mine substation. The power
   availability allowed sinking winders on the ventilation shaft to be commissioned. Power reticulation
   to all winders on site was also completed in the period under review inclusive of an additional 12MVa
   supply from Eskom. The additional 12MVa has substantially de-risked the mine from a power perspective
   during its development phase till early 2016 by which time the Phase 2 power supply project will be
   concluded to supply the full power requirement of 60MVa. Phase2 power supply will come from the new
   500MVa Ngwedi substation that has to be built to supply Wesizwe and neighbouring projects currently
   being developed. Eskom has confirmed the national importance of the Ngwedi substation and Wesizwe
   have been fully appraised of the project plan and delivery time on the substation. Regular project
   progress meetings are held between Wesizwe and Eskom, inclusive of two other neighbouring mines under
   development. Wesizwe is confident that power delivery will not be a limiting factor to the
   commissioning of operations going forward.

   3.7. Water
   Wesizwe successfully signed off a long term Bulk Water Supply Agreement with Magalies Water on the
   19 June 2013. The signature of the Agreement will see the implementation of a number of projects by
   Magalies Water and Wesizwe to upgrade the existing infrastructure to deliver the required quantity of
   water for the Project.

   3.8. Housing project
   Wesizwe concluded a pre-feasibility study on employee housing in January 2013. Wesizwe is currently
   evaluating a number of housing site options in the local area. Wesizwe’s preference is to partner
   with local municipalities in the development of housing estates. Further to this, Wesizwe is
   developing a funding “blue print” for the financing of the construction of housing units. The funding
   blue print will make use of a number of state supported housing financing institutions currently
   available to organisations developing large housing projects. Wesizwe will focus on housing ownership
   by employees as a priority, with a certain amount of rental stock being made available to persons who
   choose to rent over house acquisition.

   3.9. Project expenditure and commitments to date
   Total capital expenditure to the end of June 2013 was R1.11 billion. Commitments remaining as at the
   end of the period were R1.3 billion. The project is 14% complete relative to a planned completion of
   15%. The slight shortfall in percentage completion relates to the shaft sinking rate which is behind
   schedule. This situation has been addressed and the positive results are currently being seen.

   3.10. Project optimization and synergy strategies with neighbouring mines
   Wesizwe implemented a very significant mine optimisation study early in the period under    review. The
   optimisation process is designed to maximise mine efficiency and minimise project capital   expenditure
   and in time, operating costs. The study is scheduled to be completed at the end of 2013,    and will be
   in time to implement key changes to the shaft infrastructure and mine capital foot-print    design. The
   study will also focus on realising an earlier commissioning date for the project, which      may have a
   material impact on the value of the overall project.

   Wesizwe is currently in advanced discussions with its neighbouring mines on key synergistic projects
   involving Metallurgical processing of ore, power and water infrastructure and housing initiatives.
   Wesizwe will be in a position to provide definitive details on the synergy discussions in the near
   future.

   3.11. Stakeholder Relations
   Maintaining good stakeholder relations and ensuring proactive, on-going communications and engagement
   with all the individual stakeholder groups that are critical to the success of Wesizwe, is a
   strategic priority for the Company.     The implementation phase of the Company’s fully integrated
   stakeholder relations and corporate communications strategy is now fully underway and bearing fruit,
   with tangible results being achieved in all spheres of activity.

   Wesizwe is progressing transaction options to recover its historically disadvantaged South Africans
   (“HDSA”) equity ownership objective for its current level of around 16% HSDA ownership. The options
   under review are aimed at minimising the dilution of existing shareholders.

4. Maseve Investments 11 (Pty) Ltd
   Wesizwe holds a 26% interest in the WBJV Project 1 (Maseve Platinum Mine) currently under
   development. The Maseve project is 74% held by Platinum Group Metals Limited (PTM) and is managed by
   PTM. The project, at steady state should produce 270 koz 4E platinum group metals. The mine
   commissioning is planned for early 2015. The project is in its second phase of development. As of the
   end of the review period the North twin declines had intersected the Merensky reef and was developed
   to 1 300m. The North Mine is now focusing on lateral development. The South twin declines are in
   early stage development, with development of 60m achieved. The South declines are 1.8km south of the
   North Mine. The Services projects are progressing well and the Concentrator plant project feasibility
   study has been concluded with the construction phase of the concentrator project 7.3% completed at
   the end of June 2013.

   Maseve Investments 11 (Pty) Ltd continues to finalise the required project financing for the funding
   of the Maseve project. It is anticipated that this funding will be finalised in the near future. The
   finalisation of the project funding may require additional equity funding being provided by the
   Maseve shareholders. The timing and magnitude of this funding will be finalised shortly.

5. Board and management changes
   Wesizwe is pleased to announce that two critical positions were filled during the period under
   review. The Company welcomed Molaoli Edwin Mohlabi as General Manager: Mining on 1 February 2013 and
   Jan Johannes Hattingh as Resident Engineering Manager on 01 May 2013.

Johannesburg
16 September 2013

By order of the board

Sponsor: PSG Capital Proprietary Limited

Directors: DNM Mokhobo (Chairman)*, D Chen (Deputy Chairman)*", J Gao (Chief Executive Officer)",
W Ma (Financial Director)", WM Eksteen *, J Li", LV Ngculu*, L Teng*", BJ van der Merwe*
- *Non Executive "Chinese

Company Secretary: Vasta Mhlongo

Transfer Secretaries: Computershare Investor Services (Proprietary) Limited, 70 Marshall street,
Johannesburg, 2001, PO Box 61051

Registered address: Unit 13, 2nd Floor, 3 Melrose Boulevard, Melrose Arch, 2076

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