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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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