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WESIZWE PLATINUM LIMITED - Abridged Group Financial Statements and Notice of Annual General Meeting

Release Date: 26/03/2014 08:00
Code(s): WEZ     PDF:  
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Abridged Group Financial Statements and Notice of Annual General Meeting

WESIZWE PLATINUM LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 2003/020161/06)
JSE code: WEZ ISIN: ZAE000075859
(the "company" or "Wesizwe")

ABRIDGED GROUP FINANCIAL STATEMENTS AND NOTICE OF ANNUAL GENERAL MEETING

HIGHLIGHTS

  - 469 590 fatality free shifts at the Bakubung Platinum Mine (BPM)
    project achieved to end December 2013.
  - Both the Main and Ventilation shafts have been fully commissioned,
    licensed and are in the main sink phase.
     - Main shaft achieved a depth of 345m and Ventilation shaft 506m
       by the end of the reporting period.
  - Wesizwe concluded and signed all Project Financing Agreements for
    the USD650 million loan facility from China Development Bank (CDB).
     The first drawdown on this loan occurred in early January 2014.
     - Cash on hand at the end of the reporting period was
       R865.1 million.
  - The optimisation project (“optimisation”) initiated at the start of
    2013 was concluded and its findings approved for implementation by
    board of directors of Wesizwe (“the board”). The optimisation
    focuses on a much improved mine design, a shortened production ramp
    up time and a reduction in nominal capital expenditure. The results
    of the optimisation have delivered a significant improvement in the
    project valuation. Project NPV (Net Present Value) increased to
    R6.5billion from R4.4billion in the 2009 Bankable Feasibility Study. 
    Included in the optimisation was a 20% increase in annual production 
    to 420 000 oz PGM (4E), at steady state.
  - Definitive metallurgical plant feasibility study is well underway
    and will be concluded in the first half of 2014.
  - Services projects are on track and progressing well.
     - Commissioned Phase 1 Eskom Power supply of 20MVa has been
       achieved and is sufficient for the full underground 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 was concluded, with the focus
       now on the securing of land in partnership with local communities 
       for the development of housing, inclusive of possible innovative 
       off balance sheet funding options. Definitive feasibility study 
       has been initiated on Phase 1 of the housing project.

NOTICE OF ANNUAL GENERAL MEETING

Shareholders are hereby advised that the integrated annual report was
posted today, which incorporates the notice of annual general meeting to
be held at Holiday Inn Sandton, 123 Rivonia Road, Sandton, Johannesburg
on Tuesday, 1 July 2014 at 09h00. The date on which shareholders must be
recorded as such in the share register for purposes of being entitled to
attend and vote at this meeting is Friday, 20 June 2014 with the last
day to trade being Thursday, 12 June 2014.

The financial statements have been prepared under the supervision of the
Finance Director, Mr Wenliang Ma.

ABRIDGED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 December 2013


                                                    2013           2012
                                     Notes         R’000          R’000
ASSETS
Property, plant and equipment          6       3 241 329      2 395 964
Available-for-sale financial
                                                         -       18 910
asset
Investment in equity-accounted
                                       7         920 750        919 515
investee
Restricted cash                        8          80 670              -
Deferred tax asset                    11               -            400
Non-current assets                             4 242 749      3 334 789

Other receivables                                 11  606       21   590
Taxation                              11           2  557       11   231
Restricted cash                        8          34  458       95   189
Cash and cash equivalents                        751  423    1 398   474
Current assets                                   800  044    1 526   484
Total assets                                   5 042  793    4 861   273

EQUITY AND LIABILITIES
Stated capital                         9       3 425 544      3 425 544
Share premium                         10               -              -
Share-based payment reserve                            -        472 179
Available-for-sale financial
                                                         -        2 891
asset reserve
Retained income/(accumulated
                                                 198 886      (264 282)
loss)
Capital and reserves                           3 624 430      3 636 332

Deferred tax liability                11         264 289        267 265
Mine closure and environmental
                                                  29 395         20 148
rehabilitation obligation
Non-current liabilities                          293 684        287 413

Interest-bearing borrowings           15       1 049   552      847   916
Trade and other payables                          73   104       87   690
Taxation                              11           2   023        1   922
Current liabilities                            1 124   679      937   528
Total equity and liabilities                   5 042   793    4 861   273

ABRIDGED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2013

                                                    2013      2012
                                       Notes       R’000     R’000
Operations
Administration expenses                        (87 290)    (61 322)
Impairment of loan to Bakubung
                                         5             -   (2 744)
community
Impairment of investment in equity-
                                                       -   (1 655)
accounted investee
Project-related expenses capitalised              53 691    20 738
Loss on scrapping of property, plant
                                                    (18)         -
and equipment
Profit on sale of property, plant
                                                      70        91
and equipment
Share of profit in equity-accounted
                                                   1 235     4 622
investee
Net operating costs                            (32 312)    (40 270)
Financial income/(expense)
Finance income                                    77 970    56 612
Foreign exchange loss                          (144 890)         -
Finance expense                                 (42 050)   (1 955)
Available-for-sale financial asset
                                                   1 651         -
reclassified to profit or loss
Profit on disposal of available-for-
                                                     412         -
sale financial asset
Finance costs capitalised                       127 865          -
Net finance income                               20 958     54 657
(Loss)/profit before tax                       (11 354)     14 387
Income tax income/(expense)                       2 343    (4 639)
(Loss)/profit for the year                      (9 011)      9 748
(Loss)/gain on fair value movements
                                                (1 525)      2 026
of available-for-sale asset
Tax on other comprehensive income                    285     (664)
Available-for-sale financial asset
                                                (1 651)          -
reclassified to profit or loss
Total other comprehensive (loss)/
                                                (2 891)      1 362
income
Total comprehensive (loss)/income
                                               (11 902)     11 110
for the year
(Loss)/earnings per share
Basic (loss)/earnings per share
                                                  (0.55)      0.60
cents)
Diluted (loss)/earnings per share
                                                  (0.55)      0.60
cents)

ABRIDGED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2013

                       Stated/          Share   Available-      Share-    Retained       Total
                         Share        Premium     for-sale       based     Income/
                       Capital                    Reserves     Payment    (Accumu-
                                                               Reserve     lated /
                                                                             Loss)
                         R’000          R’000        R’000       R’000       R’000       R’000
Balance at
                            16     3 425 528         1 529     472 179   (274 030)   3 625 222
1 January 2012
Total
comprehensive
income for the
year
Profit for the
                             -              -            -           -       9 748       9 748
year
Total other
comprehensive                -              -        1 362           -           -       1 362
income
Transactions
with owners
recorded
directly in
equity
Transfer of
share premium to     3 425 528   (3 425 528)             -           -           -           -
stated capital
Balance at
                     3 425 544              -        2 891     472 179   (264 282)   3 636 332
31 December 2012
Total
comprehensive
income for the
year
Loss for the
                             -              -            -           -     (9 011)     (9 011)
year
Total other
comprehensive                -              -      (2 891)           -           -     (2 891)
income
Transactions
with owners
recorded
directly in
equity
Transfer of
share-based
payment reserve              -              -            -   (472 179)     472 179           -
to retained
income
Balance at
                     3 425 544              -            -           -     198 886   3 624 430
31 December 2013

ABRIDGED CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 December 2013

                                                     2013       2012
                                        Note        R’000      R’000
Cash flows from operating activities
Cash receipts from customers                           -           -
Cash paid to suppliers and employees            (19 734)    (25 905)
Cash utilised in operations                     (19 734)    (25 905)
Finance income received                           19 731      75 148
Finance cost paid                                  (666)       (200)
Taxation paid                                    (2 557)     (9 418)
Taxation received                                 13 408           -
Cash generated from operating
                                                  10 182      39 625
activities

Cash flows from investing activities
Acquisition of property, plant and
equipment as a result of increase in            (829 673)   (605 615)
operations
Available-for-sale investment
                                                 (2 744)      (3 124)
contributions
Proceeds on available-for-sale
                                                  20 162            -
investment
Proceeds on disposal of property,
                                                        -           7
plant and equipment
Net cash outflow from investing
                                                (812 255)   (608 732)
activities

Cash flows from financing activities
Interest-bearing borrowings raised              1 022 460    849 810
Interest-bearing borrowings repaid              (847 250)          -
Loans paid on behalf of related party     5             -    (2 744)
Net cash inflow from financing
                                                 175 210     847 066
activities

Net (decrease)/increase in cash and
                                                (626 863)    277 959
cash equivalents
Effects of exchange rate fluctuation
                                                        -    (2 560)
on cash held
Cash at beginning of year                       1 492 012   1 216 613
Cash at end of year                               865 149   1 492 012

Cash at end of year comprises:
Cash balances                                    751 423    1 398 474
Less: interest accrued                           (1 402)      (1 651)
Cash and cash equivalents                        750 021    1 396 823
Restricted cash                           8      115 128       95 189
Cash at end of year                              865 149    1 492 012

ABRIDGED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2013


 1. Reporting entity
    Wesizwe is a company domiciled in the Republic of South Africa. The
    abridged consolidated financial statements for the year 31 December
    2013 comprise the company, its subsidiaries and the group’s
    interest in its equity accounted investee (together referred to as
    the “group”). The audited consolidated financial statements of the
    group for the year ended 31 December 2013 are available at
    www.wesizwe.com.

 2. Statement of compliance
    These abridged consolidated financial statements (“abridged report”) 
    are prepared in accordance with the recognition and measurement 
    principles of International Financial Reporting Standards, the 
    presentation and disclosure requirements of IAS 34 Interim Financial 
    Reporting, the Companies Act, 2008 (as amended) and the SAICA Financial 
    Reporting Guides as issued by the Accounting Practices Committee and 
    Financial Reporting Pronouncements as issued by Financial Reporting 
    Standards Council.

    These abridged financial statements have been extracted from the
    complete set of financial statements, but is not itself audited, on
    which the auditors, KPMG Inc, have expressed an unqualified audit
    opinion. A copy of the auditor’s report is available for inspection
    at the company’s registered office.

    The directors of Wesizwe take full responsibility for the preparation 
    of the abridged report and that the financial information has been 
    correctly extracted from the underlying audited annual financial 
    statements.

 3. Accounting policies
    The accounting policies used to prepare this report are consistent
    with those used in the previous annual financial statements.

 4. Estimates
    The financial statements and commentary contain information and is
    based on calculations that require management to make judgments,
    estimates and assumptions that affect the application of accounting
    policies and the reported amounts of assets and liabilities, income
    and expenses. Actual results may differ from these estimates.

    In preparing these abridged consolidated financial statements, the
    significant judgments made by management in applying the group’s
    accounting policies and the key sources of estimation, except as
    listed below, were the same as those that applied to the
    consolidated financial statements for the year ended 31 December
    2012.

    Management engaged the services of various professional research
    and forecasting experts, including that of SFA Oxford Limited for
    product prices to prepare projections and forecasts regarding
    future economic outlook, exchange rates and product prices.

    The following economic parameters were assumed:
                                                       2013      2012
    US$ exchange rate (ZAR)                           10.79      9.06
    Pt price (US$/oz)                                 2 098     2 297
    Pd price (US$/oz)                                 1 190       761
    Rh price (US$/oz)                                 2 091     5 656
    Au price (US$/oz)                                 1 355     1 400
    MR basket price (US$/oz)                          1 825     2 040
    Discount rate/weighted average cost of
    capital (%) (Real)                                 9.77      8.20

    Management acknowledges that the ZAR/US$ exchange rate and commodity 
    prices have been volatile and movements would have an impact on the 
    values as determined by management. Management is of the opinion that, 
    given the fact that the net asset value of the mining assets at year-end 
    were below the determined fair values, the assets of the group are not 
    impaired.
 
5.  Impairment of loan to the Bakubung community

                                                2013             2012
                                               R’000            R’000
    Opening balance                                -                -
    Loan advanced                                  -            2 744
    Impairment                                     -          (2 744)
    Closing balance                                -                -

    As previously reported, the company was requested by the Department
    of Mineral Resources (“DMR”) to assist the community and the Royal
    Family of the Bakubung Ba-Ratheo in their efforts to obtain proper
    accounting for the community’s assets in relation to Wesizwe.
    Consequently, funds were advanced by way of direct payment to
    service providers. In 2010 the courts made a ruling in favour of
    the community that the cost of legal proceedings be paid by the
    respondents.

    In evaluating the recoverability of the loan, management is of the
    opinion that recoverability is doubtful and, has accordingly
    impaired the loan for accounting purposes.

6.  Property, plant and equipment
 
                                         Mine
                                       Assets      Other       Total
                                        R'000      R'000       R'000
    Balance at 1 January 2012       1 721 244     13 139   1 734 383
    Additions and transfers           650 426     12 704     663 130
    Disposals                               -        (7)         (7)
    Depreciation                            -    (1 542)     (1 542)
    Balance at 1 January 2013       2 371 670     24 294   2 395 964
    Additions                         823 272     24 110     847 382
    Disposals                               -       (18)        (18)
    Depreciation                            -    (1 999)     (1 999)
    Balance at 31 December 2013     3 194 942     46 387   3 241 329

7.  Investment in equity accounted investee

                                                    2013           2012
                                                   R'000          R'000
    Opening balance                              919 515        916 548
    Share of profit in equity-accounted
    investee                                       1 235          4 622
    Impairment of investment                           -        (1 655)
    Closing balance                              920 750        919 515

8.  Restricted cash

                                                         2013        2012
                                                        R'000       R'000
    Non-Current
    Eskom — Connection guarantees                      23 670           -
    Aveng Mining Limited — Performance payment
                                                      57 000            -
    guarantee
                                                      80 670            -
    Current
    Department of Mineral Resources —
                                                      27 000       27 000
    Rehabilitation obligation
    Landlord — Operating lease agreement                  611         940
    Eskom — Connection guarantees                       6 847      10 249
    Aveng Mining Limited — Performance payment
                                                           -       57 000
    guarantee
                                                       34 458      95 189
    Total                                              115 128     95 189

9. Stated capital

                                                            2013       2012
                                                           R'000      R'000
   Authorised
   2 000 000 000 no par value ordinary shares                  -          -

   Issued
   1 627 827 058 no par value ordinary shares          3 425 544   3 425 544

   On 3 September 2012 it was resolved in terms of regulation 31 of the 
   Companies Act Regulations 2011, that all the ordinary shares in
   the share capital of the company, comprising 2 000 000 000 authorized 
   and 1 627 827 058 issued ordinary shares having a par value of R0.00001 
   be converted into ordinary shares having no par value and that the whole 
   of the amounts in the share capital account and the share premium account 
   of the company be transferred to the stated capital account.

10.Share premium

   Refer note 9 above.
                                           2013             2012
                                          R'000            R'000
   Opening balance                                 -      3 425 528
   Transfer of share premium to
   stated capital                                  -    (3 425 528)
   Closing balance                                 -              -

11.Taxation

11.1 Income tax receivable

                                                  2013        2012
                                                 R'000       R'000

   Balance at the beginning of the year         (9 309)    (8 264)
   Profit or loss charge                          (430)      7 213
   Additional charges                           (1 646)      1 160
   Taxation paid                                (2 557)    (9 418)
   Taxation refund received                      13 408          -
   Balance at the end of the year                 (534)    (9 309)

11.2 Deferred tax

                                              2013        2012
                                             R'000       R'000
   Deferred tax liability
   Balance at the beginning of the year     267 265     268 775
   Current year charges                     (2 976)     (1 510)
   Unredeemed exploration expenditure       (1 191)           -
   Property, plant and equipment            230 796     182 448
   Available-for-sale financial asset         (664)         664
   Unredeemed mining capex                (229 329)   (182 505)
   Provisions                               (2 588)     (2 117)
   Balance at the end of the year           264 289     267 265

   Deferred tax asset
   Balance at the beginning of the year      (400)           -
   Current year charges - provisions           400       (400)
   Balance at the end of the year                -       (400)

   Net deferred tax liability              264 289     266 865


12.Mine closure and environmental rehabilitation obligation
   This long-term obligation reflects the net present value of closure, 
   restoration and environmental rehabilitation (which include the 
   dismantling and demolition of infrastructure, removal of residual 
   materials and remediation of disturbed areas) cost. The annual changes 
   can be ascribed to additional disturbances caused during the year and 
   changes in the escalation and discount rates. This estimate is based on 
   the current cost estimate and escalated to the future planned closure 
   date and then discounted at an appropriate rate. The current estimates 
   are based on environmental plans in accordance with current technology, 
   environmental and regulatory requirements and the measurements of an 
   independent professional surveyor. The discount rate is based on a pre-tax
   risk-free rate available in the current market.

   At the time of establishing the provision, a corresponding asset is
   recognised that will be depreciated over the future life of the asset 
   to which it relates. The provision is re-assessed on an annual basis for 
   changes in cost estimates, discount rates and useful lives.

   As required by the Department of Mineral Resources a deposit of R27.0 
   million (2012: R27.0 million) is held with a financial institution. 
   The deposit has been guaranteed to the Department of Mineral Resources 
   for the mine closure and environmental rehabilitation.

13.Segment reporting
   No segment reporting has been included as the group is conducting
   activities in one geological location which represents only one
   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 companies. 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.

14.Subsequent events
   The first draw down of US$100 million was received by the group
   from the US$650 million loan facility that was secured from the
   China Development Bank. No other material events have occurred
   after the reporting period and up to the date of this report that
   required further disclosure in these financial results.

15.Interest bearing borrowings

                                                  2013      2012
                                                 R’000     R’000
   Opening balance                             847 916         -
   China Development Bank – drawdown         1 022 460   849 810
   Interest accrual                             40 820       666
   China Development Bank – loan repayment   (847 250)         -
   China Development Bank – interest
                                             (40 725)          -
   repayment
   Foreign exchange loss                        26 331   (2 560)
   Closing balance                           1 049 552   847 916

   The group has an unsecured loan with a carrying amount of US$100 
   million at 31 December 2013 (2011: US$100 million). According to 
   the terms of the agreement, this loan is repayable on 21 June 2014. 
   Interest is payable six monthly in arrears at a rate equal to the 
   six month LIBOR on the first day of the interest cycle plus 2.3% per 
   annum. The facility will be used for on-going capital development of 
   the Bakubung Platinum Mine.

16.Headline earnings per share

   The basis of calculation of headline (loss)/earnings and diluted
   headline (loss)/earnings per share is:
                                                   2013           2012
                                                      R              R
   (Loss)/profit attributable to
   ordinary shareholders (rand)             (9 011 003)      9 747 918
   Profit on disposal of property plant
   and equipment                               (70 175)        (7 000)
   Profit on disposal of available-for-
   sale financial asset                     (2 062 634)              -
   Loss on scrapping of property, plant
   and equipment                                 17 514              -
   Impairment of investment in equity-
   accounted investee                                 -      1 654 528
   Total tax effects of adjustments             404 674              -
   Headline (loss)/earnings                (10 721 624)     11 395 446
   Weighted average number of ordinary
   shares in issue (shares)               1 627 827 058  1 627 827 058
   Headline (loss)/earnings and diluted
   headline (loss)/earnings per share
   (cents)                                        (0.66)          0.70

17.Contingencies

   Wesizwe Platinum Limited is defending a claim brought by an advisory firm. 
   Although liability is not admitted, if the defence against the claim is 
   unsuccessful, then commission costs could amount to US$2 million. The 
   directors do not expect the claim to be successful.

18.Capital Commitments

   Capital commitments for the next 12 months amounts to R448.8 million 
   (2012: R428.1 million).


By order of the board:

Dawn Mokhobo (Chairman)          Jianke Gao (Chief Executive Officer)

Sponsors: 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*, CWN Molope *
*Non Executive #Chinese
Company secretary: V Mhlongo

Registered address: Wesizwe House, Devcon Park, 9 Autumn Road Rivonia
Ext 3, 2128, South Africa
www.wesizwe.com

26 March 2014
Johannesburg

Date: 26/03/2014 08:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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