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Condensed Interim Consolidated Financial Statements For The Three And Six Months Ended June 30, 2016
EASTERN PLATINUM LIMITED
(Incorporated in Canada)
(Canadian Registration number BC0722783)
(South African Registration number 2007/006318/10)
Share Code TSX: ELR ISIN: CA2768555096
Share Code JSE: EPS ISIN: CA2768555096
Condensed interim consolidated financial statements of
Eastern Platinum Limited
For the Three and Six Months Ended June 30, 2016
(Unaudited)
Eastern Platinum Limited
Condensed interim consolidated statements of loss
(Expressed in thousands of U.S. dollars except for per share amounts - unaudited)
Three months ended Six months ended
June 30 June 30
Note 2016 2015 2016 2015
Expenses
General and administrative $ 1,010 $ 492 $ 2,917 $ 1,130
Care and maintenance 1,455 2,622 3,306 4,958
Care and maintenance depreciation and
amortization 122 411 196 920
Impairment 5 23,357 — 23,357 —
Operating loss (25,944) (3,525) (29,776) (7,008)
Other income (expense)
Gain on disposal of property, plant and
equipment 227 104 418 202
Interest income 214 313 415 695
Other income 391 355 856 943
Finance costs 7 (161) (257) (316) (449)
Foreign exchange (loss) gain (181) (248) (2,229) 208
Loss before income taxes (25,454) (3,258) (30,632) (5,409)
Income tax (expense) recovery (55) 39 153 (22)
Net loss for the period (25,509) (3,219) (30,479) (5,431)
Attributable to
Non-controlling interest 8 (3,302) (553) (3,661) (1,036)
Equity shareholders of the Company (22,207) (2,666) (26,818) (4,395)
Net loss for the period $ (25,509) $ (3,219) $ (30,479) $ (5,431)
Loss per share
Basic and diluted (0.24) (0.03) (0.29) (0.05)
Weighted average number of common
shares outstanding in thousands
Basic and diluted 92,599 92,599 92,599 92,599
The accompanying notes are an integral part of these condensed interim consolidated financial statements
"George Dorin" "Mike Cosic"
George Dorin, Director Mike Cosic, Director
Eastern Platinum Limited
Condensed interim consolidated statements of comprehensive loss
(Expressed in thousands of U.S. dollars - unaudited)
Three months ended Six months ended
June 30 June 30
2016 2015 2016 2015
Net loss for the period $ (25,509) $ (3,219) $ (30,479) $ (5,431)
Other comprehensive income (loss)
Items that may subsequently be reclassified
to loss or profit
- Exchange differences on translating
foreign operations 794 252 11,518 (15,918)
- Exchange differences on translating
non-controlling interest (118) 120 (1,648) 1,825
Comprehensive loss for the period (24,833) (2,847) (20,609) (19,524)
Attributable to
Non-controlling interest (3,420) (433) (5,309) 789
Equity shareholders of the Company (21,413) (2,414) (15,300) (20,313)
Comprehensive loss for the period $ (24,833) (2,847) (20,609) (19,524)
The accompanying notes are an integral part of these condensed interim consolidated financial statements
Eastern Platinum Limited
Condensed interim consolidated statements of financial position
(Expressed in thousands of U.S. dollars - unaudited)
June 30, December 31,
Note 2016 2015
Assets
Current assets
Cash and cash equivalents 9 $ 26,828 $ 8,283
Short-term investments 10 19,003 48,051
Restricted cash 5(a) 5,000 —
Trade and other receivables 11 984 1,159
Inventories 1,858 1,838
53,673 59,331
Non-current assets
Property, plants and equipment 5 99,497 116,733
Other assets 12 8,811 8,049
$ 161,981 $ 184,113
Liabilities
Current liabilities
Trade and other payables 13 $ 1,220 $ 3,615
1,220 3,615
Non-current liabilities
Provision for environmental rehabilitation 14 7,271 6,590
Deferred tax liabilities 2,679 2,488
11,170 12,693
Equity
Issued capital 6 1,230,171 1,230,171
Treasury shares (204) (204)
Equity-settled employee benefits reserve 5,305 5,305
Foreign currency translation reserve (296,950) (308,468)
Deficit (752,492) (725,674)
Capital and reserves attributable to equity
shareholders of the Company 185,830 201,130
Non-controlling interest 8 (35,019) (29,710)
150,811 171,420
$ 161,981 $ 184,113
The accompanying notes are an integral part of these condensed interim consolidated financial statements
Capital and
Equity- reserves
settled Foreign attributable to
employee currency equity Non-
Issued Treasury benefits translation shareholders of controlling
capital shares reserve reserve Deficit the company interest Equity
Balance, December 31, 2014 $ 1,230,171 $ (204) $ 5,305 $ (244,432) $ (706,059) $ 284,781 $ (35,454) $ 249,327
Net loss — — — — (4,395) (4,395) (1,036) (5,431)
Currency translation adjustment — — — (15,918) — (15,918) 1,825 (14,093)
Total comprehensive loss — — — (15,918) (4,395) (20,313) 789 (19,524)
Balance, June 30, 2015 $ 1,230,171 $ (204) $ 5,305 $ (260,350) $ (710,454) $ 264,468 $ (34,665) $ 229,803
Net loss — — — — (15,220) (15,220) (2,702) (17,922)
Currency translation adjustment — — — (48,118) — (48,118) 7,657 (40,461)
Total comprehensive loss — — — (48,118) (15,220) (63,338) 4,955 (58,383)
Balance, December 31, 2015 $ 1,230,171 $ (204) $ 5,305 $ (308,468) $ (725,674) $ 201,130 $ (29,710) $ 171,420
Net loss — — — — (26,818) (26,818) (3,661) (30,479)
Currency translation adjustment — — — 11,518 — 11,518 (1,648) 9,870
Total comprehensive loss — — — 11,518 (26,818) (15,300) (5,309) (20,609)
Balance, June 30, 2016 $ 1,230,171 $ (204) $ 5,305 $ (296,950) $ (752,492) $ 185,830 $ (35,019) $ 150,811
The accompanying notes are an integral part of these condensed interim consolidated financial statements
Three months ended Six months ended
June 30 June 30
2016 2015 2016 2015
Operating activities
Loss before income taxes $ (25,454) $ (3,258) $ (30,632) $ (5,409)
Adjustments to net loss for non-cash items
Care and maintenance depreciation 122 411 196 920
Impairment 23,357 — 23,357 —
Gain on disposal of property, plant and equipment (227) (104) (418) (202)
Interest income (214) (313) (415) (695)
Finance costs 161 257 316 449
Foreign exchange loss (gain) 181 248 2,229 (208)
Net changes in non-cash working capital items
Trade and other receivables 105 52 127 (197)
Inventories 47 42 76 57
Trade and other payables (228) (20) (642) (486)
Cash used in operations (2,150) (2,685) (5,806) (5,771)
Adjustments to net loss for cash items
Interest income received 208 238 523 796
Finance costs paid (1) (70) (4) (70)
Taxes paid (38) (49) (1,587) (114)
Net operating cash flows (1,981) (2,566) (6,874) (5,159)
Investing activities
Net purchases and redemptions of short-term
investments 10,261 9,947 30,193 26,207
Increase in restricted cash (5,000) — (5,000) —
Increase in other assets (179) (255) (317) (672)
Property, plant and equipment expenditures (27) (2) (75) (12)
Disposal of property, plant and equipment 223 176 423 569
Net investing cash flows 5,278 9,866 25,224 26,092
Effect of exchange rate changes on cash and
cash equivalents (89) 33 195 (1,375)
Increase in cash and cash equivalents 3,208 7,333 18,545 19,558
Cash and cash equivalents, beginning of period 23,620 26,191 8,283 13,966
Cash and cash equivalents, end of period $ 26,828 $ 33,524 $ 26,828 $ 33,524
The accompanying notes are an integral part of these condensed interim consolidated financial statements
1. Nature of operations
Eastern Platinum Limited (the “Company”) is a platinum group metal (“PGM”) company engaged in the
mining, exploration and development of PGM properties located in various provinces in South Africa.
Since August 2013, the Company’s projects have been either in care and maintenance or on hold.
The Company’s shares are listed on the Toronto Stock Exchange and the Johannesburg Stock Exchange.
The head office, principal address and records office of the Company are located at 580 – 625 Howe
Street, Vancouver, British Columbia, Canada, V6C 2T6.
These condensed interim consolidated financial statements were approved and authorized for issuance
by the board of directors on August 15, 2016.
2. Basis of preparation
These unaudited condensed interim consolidated financial statements have been prepared in accordance
with International Accounting Standard (“IAS”) 34 Interim Financial Reporting.
The preparation of these unaudited condensed interim consolidated financial statements is based on
accounting principles and methods consistent with those used in the preparation of the audited
consolidated financial statements as at December 31, 2015, amended, where applicable, by the adoption
of the new and amended accounting standards outlined in Note 3. The accompanying unaudited
condensed interim consolidated financial statements should be read in conjunction with the Company’s
audited consolidated financial statements for the year ended December 31, 2015. The Company’s
interim results are not necessarily indicative of its results for a full year.
Going Concern
These unaudited condensed interim consolidated financial statements, including comparatives, have
been prepared on the basis of accounting principles applicable to a going concern, which assumes the
Company will continue in operation for the foreseeable future and will be able to realize its assets and
discharge its liabilities in the normal course of operations.
In late 2012, the Company suspended funding to its Eastern Limb projects and on August 1, 2013, the
Company ceased production at its Crocodile River Mine. As at June 30, 2016, the Company does not
have any producing operations and does not generate income other than interest and other income.
However, as at June 30, 2016, the Company has sufficient funds to satisfy its commitments for more
than one year. Additional funding will be required to develop and bring the Eastern Limb projects into
commercial production. There can be no assurance that additional funding will be available to the
Company when needed or, if available, that this funding will be on acceptable terms.
Judgments and estimates
The preparation of financial statements requires management to make judgments, estimates and
assumptions that affect the application of policies and reported amounts of assets and liabilities, and
revenue and expenses. The estimates and associated assumptions are based on historical experience
and various other factors that are believed to be reasonable under the circumstances, the results of
which form the basis of making the judgments about carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from these estimates. The estimates
and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognized in the period in which the estimate is revised if the revision affects only that period or in the
period of the revision and further periods if the review affects both current and future periods.
Areas of significant judgement and estimates made by management for the three and six months ended
June 30, 2016 includes determination whether selling Crocodile River Mine is considered to be an asset
held for sale in accordance with IFRS 5. Additional judgments made by management in the application
of IFRS that have a significant effect on the financial statements and estimates with a significant risk of
material adjustment in the current and following fiscal years are discussed in Notes 4(w) and 4(x) of
the Company’s audited consolidated financial statements for the year ended December 31, 2015.
3. Application of new and revised International Financial Reporting Standards
Effective January 1, 2016, the Company adopted the following new and amended IFRSs that were issued
by the IASB. The application of these IFRS Standards did not have a material impact to the Company’s
unaudited condensed interim consolidated financial statements.
(i) Amended standard IAS 1, Presentation of Financial Statements
The amendments to IAS 1 deal with clarification of materiality in terms of the presentation
of financial statements, clarification of the disclosure required in the statement of financial
position, statement of loss and statement of other comprehensive income, and addition of
possible ways of ordering the notes in order to increase the understandability and
comparability of the financial statements.
(ii) Amended standards IAS 16, Property, Plant and Equipment and IAS 38, Intangibles
The amendments to IAS 16 “Property, Plant and Equipment” and IAS 38 “Intangible Assets”
prohibit the use of revenue-based depreciation for plant and equipment and significantly
limit the use of revenue-based amortization for intangible assets.
(iii) Amended standard IFRS 11, Joint Arrangements
The amendments to IFRS 11 deal with the accounting for acquisitions of an interest in a
joint operation.
4. Accounting standards issued but not yet effective
(i) Amended standard IAS 7, Statement of Cash Flows
These amendments to IAS 7 “Statement of Cash Flows” were issued to improve information
provided to users of financial statements about an entity’s changes in liabilities arising from
financing activities. Effective for annual periods commencing on or after January 1, 2017.
(ii) Amended standard IAS 12, Income Taxes
These amendments relate to the recognition of deferred tax assets for unrealized losses
associated with debt instruments measured at fair value. Effective for annual periods
commencing on or after January 1, 2017.
(iii) Amended standard IFRS 7, Financial Instruments: Disclosures
The amendments to IFRS 7 outline the disclosures required when initially applying IFRS 9
Financial Instruments. Effective date January 1, 2018.
(iv) New standard IFRS 9, Financial Instruments
Replacement of IAS 39 Financial Instruments: Recognition and Measurement. Effective date
January 1, 2018.
(v) New standard IFRS 15, Revenue from Contracts with Customers
IFRS 15 provides guidance on how and when revenue from contracts with customers is to
be recognized, along with new disclosure requirements in order to provide financial
statement users with more informative and relevant information. Effective as at January 1,
2018.
(vi) New standard IFRS 16, Leases
Effective for annual periods commencing on or after January 1, 2019, this replaces existing
lease accounting guidance. All leases will be required to be reported on the statement of
financial position unless certain requirements for exclusion are met.
The Company has not early adopted these new and amended standards and is currently assessing the
impact that these standards will have on the consolidated financial statements.
5. Property, plant and equipment
Mineral Mineral
Plant and properties properties
equipment being not being Residential Properties
owned depleted depleted properties and land TOTAL
$ $ $ $ $ $
Cost
Balance as at December 31, 2014 410,764 87,920 358,029 13,682 4,206 874,601
Assets acquired 182 — — — — 182
Environmental asset capitalized (1,364) — (74) — — (1,438)
Assets disposed — — — (196) (210) (406)
Foreign exchange movement (104,084) (22,295) (90,784) (3,425) (1,016) (221,604)
Balance as at December 31, 2015 305,498 65,625 267,171 10,061 2,980 651,335
Assets acquired 75 — — — — 75
Assets disposed (925) — — (121) (4) (1,050)
Foreign exchange movement 16,304 3,517 14,320 536 160 34,837
Balance as at June 30, 2016 320,952 69,142 281,491 10,476 3,136 685,197
Accumulated depreciation and impairment losses
Balance as at December 31, 2014 316,807 72,674 305,824 1,790 533 697,628
Depreciation 581 — — 124 — 705
Depreciation of disposed assets — — — (39) — (39)
Impairment loss (reversal) 12,072 (581) 3,023 — — 14,514
Foreign exchange movement (81,428) (18,381) (77,796) (466) (135) (178,206)
Balance as at December 31, 2015 248,032 53,712 231,051 1,409 398 534,602
Depreciation 76 — — 46 — 122
Depreciation of disposed assets (923) — — (46) — (969)
Impairment loss 23,357 — — — — 23,357
Foreign exchange movement 13,228 2,879 12,384 76 21 28,588
Balance as at June 30, 2016 283,770 56,591 243,435 1,485 419 585,700
Carrying amounts
At December 31, 2014 93,957 15,246 52,205 11,892 3,673 176,973
At December 31, 2015 57,466 11,913 36,120 8,652 2,582 116,733
At June 30, 2016 37,182 12,551 38,056 8,991 2,717 99,497
5. Property, plant and equipment (continued)
The following is property, plant and equipment categorized by project:
Kennedy's Other
Crocodile Vale and Spitzkop Mareesburg property
River Mine Concentrator PGM Project Project plant and
(a) (b) (c) (c) equipment TOTAL
$ $ $ $ $ $
Cost
Balance as at December 31, 2014 407,990 364,765 81,631 20,089 126 874,601
Assets acquired 177 2 — — 3 182
Environmental asset capitalized (794) (570) (74) — — (1,438)
Assets disposed (283) (123) — — — (406)
Foreign exchange movement (103,327) (92,464) (20,693) (5,098) (22) (221,604)
Balance as at December 31, 2015 303,763 271,610 60,864 14,991 107 651,335
Assets acquired 75 — — — — 75
Assets disposed (1,048) — — — (2) (1,050)
Foreign exchange movement 16,206 14,558 3,262 803 8 34,837
Balance as at June 30, 2016 318,996 286,168 64,126 15,794 113 685,197
Accumulated depreciation and impairment losses
Balance as at December 31, 2014 345,920 282,939 54,094 14,551 124 697,628
Depreciation 401 304 — — — 705
Depreciation of disposed assets (27) (12) — — — (39)
Impairment loss (reversal) (17,385) 28,876 3,023 — — 14,514
Foreign exchange movement (86,369) (74,163) (13,964) (3,689) (21) (178,206)
Balance as at December 31, 2015 242,540 237,944 43,153 10,862 103 534,602
Depreciation 50 72 — — — 122
Depreciation of disposed assets (969) — — — — (969)
Impairment loss 23,357 — — — — 23,357
Foreign exchange movement 12,928 12,757 2,313 582 8 28,588
Balance as at June 30, 2016 277,906 250,773 45,466 11,444 111 585,700
Carrying amounts
At December 31, 2014 62,070 81,826 27,537 5,538 2 176,973
At December 31, 2015 61,223 33,666 17,711 4,129 4 116,733
At June 30, 2016 41,090 35,395 18,660 4,350 2 99,497
5. Property, plant and equipment (continued)
(a) Crocodile River Mine (“CRM”)
The Company holds directly and indirectly an 87.5% interest in CRM through its South Africa
subsidiary Barplats Mines Limited (“Barplats Mines”), which is located on the eastern portion of
the western limb of the Bushveld Complex. On August 1, 2013, CRM was placed on care and
maintenance.
On June 28, 2016, the Company entered a share purchase agreement (the “CRM Purchase
Agreement”) with Hebei Zhongheng Tianda Platinum Co., Limited (“HZT”), a company
incorporated in People’s Republic of China (“PRC”), whereby HZT will acquire a 100% equity
interest in Barplats Mines and associated intercorporate investments and loans for total
consideration of $50,000. The completion of this transaction is subject to a number of conditions
including but not limited to approvals by the necessary regulatory bodies and governmental
departments or ministries of South Africa and Company’s shareholders. Pursuant to the same
agreement, both HZT and the Company have agreed that certain events, including the failure
to perform certain obligations under the CRM Purchase Agreement, will trigger the payment of
break fees of up to $10,000 in the case of HZT failing to meet its obligations, and $5,000 in the
case of the Company failing to meet its obligations. Both HZT and the Company have agreed
to place the break fee into an escrow account. As at June 30, 2016, restricted cash in the
amount of $5,000 presents the break fee deposit made by the Company.
(b) Kennedy’s Vale Project (“KV”)
The Company holds directly and indirectly an 87.5% interest in KV, which is located on the
eastern limb of the Bushveld Complex, near Steelpoort in the Province of Mpumalanga. It
comprises PGM mineral rights on five farms in the Steelpoort Valley. The design and
construction of a concentrator located on the KV property commenced in 2011 and was
suspended in mid-2012 due to the then negative outlook in the global economic environment
and the operating environment in South Africa. The concentrator project has been on care and
maintenance since the fourth quarter of 2012.
(c) Spitzkop PGM Project and Mareesburg Project
The Company holds directly and indirectly a 93.4% interest in the Spitzkop PGM Project and an
87% interest in the Mareesburg Project. The Company currently acts as the operator of both
the Mareesburg Platinum Project and the Spitzkop PGM Project, both located on the eastern limb
of the Bushveld Complex. The Spitzkop PGM Project was planned to be developed after the
Mareesburg Project went into production. The Mareesburg Project, which was being developed
in conjunction with the construction of the concentrator located on the KV property, has been
on care and maintenance since the fourth quarter of 2012.
5. Property, plant and equipment (continued)
(d) Impairment of property, plant and equipment
The Company assesses the carrying value of its property plant and equipment for indicators of
impairment at each quarter end. For the purpose of the impairment assessment, the Company
has considered that CRM as one cash-generating unit and Kennedy’s Vale, Spitzkop PGM and
Mareesburg Projects (collectively the “Eastern Limb Projects”) as one cash-generating unit.
(i) CRM
The Company considered the sale of CRM, although closing of this transaction is subject
to certain conditions discussed in (a) above, representing an impairment indicator.
Therefore, the Company recorded an impairment charge in the amount of $23,357
during the three months ended June 30, 2016 based on the fair value less cost to sell.
The Fair value less cost to sell was estimated to be $47,400 calculated based on the
HZT’s purchase price pursuant to the CRM Purchase Agreement less estimated costs to
sell of approximately $2,600.
(ii) Eastern Limb
The Company concluded that there were no impairment indicators as at June 30, 2016.
6. Issued capital
(a) Authorized
- Unlimited number of preferred redeemable, voting, non-participating shares without
nominal or par value;
- Unlimited number of common shares with no par value.
(b) Issued and outstanding
As at June 30, 2016 and December 31, 2015, the Company had 92,639,032 common shares
issued and outstanding. There were no changes to the number of common shares issued and
outstanding during the three and six months ended June 30, 2016.
(c) Treasury shares
As at June 30, 2016 and December 31, 2015, the Company had 39,722 treasury shares. There
were no changes to the number of treasury shares during the three and six months ended June
30, 2016.
6. Issued capital (continued)
(d) Share options
The Company has an incentive plan (the “2014 Plan”), approved by the Company’s shareholders
at its annual general meeting held on June 12, 2014, under which options to purchase common
shares may be granted to its directors, officers, employees and others at the discretion of the
Board of Directors. The following is a summary of stock option transactions:
Weighted
average
Number of exercise price
options $
Balance, December 31, 2015 and 2014 3,201,900 2.85
Granted — —
Expired (66,000) 3.83
Balance, June 30, 2016 3,135,900 2.83
The following table summarizes information concerning outstanding and exercisable options at
June 30, 2016:
Remaining
Options Options Exercise Contractual
outstanding exercisable price Life (Years) Expiry date
Cdn$
664,400 664,400 6.00 0.70 March 12, 2017
9,000 9,000 23.10 1.27 October 5, 2017
2,462,500 2,462,500 1.90 1.53 January 8, 2018
3,135,900 3,135,900 1.35
Also see Note 20(b).
7. Finance costs
Three months ended Six months ended
June 30, June 30, June 30, June 30,
2016 2015 2016 2015
$ $ $ $
Interest on provision for environmental
rehabilitation 160 187 312 379
Other interest 1 70 4 70
161 257 316 449
8. Non-controlling interest
The Company has the following black economic empowerment partners (the “BEE Partners”) in South
Africa for the projects it owns:
Effective
% owned interest
BEE holding company, incorporated and operating by BEE South Africa owned by
in South Africa Partner Project BEE Partner
Gubevu Consortium Investment Holdings (Pty) Ltd. 50.01% CRM and KV 12.5%
Lion's Head Platinum (Pty) Ltd. 26% Mareesburg 13%
Afriminerals Holdings (Pty) Ltd. 51% Spitzkop PGM 6.6%
The effective interest owned by the BEE Partners represents the non-controlling interest of the Company.
The proportion of equity and total comprehensive loss is allocated to the non-controlling interest. The
non-controlling interests are comprised of the following amounts:
$
Balance, December 31, 2014 (35,454)
Non-controlling interests' share of loss (3,738)
Foreign exchange movement 9,482
Balance, December 31, 2015 (29,710)
Non-controlling interests' share of loss (359)
Foreign exchange movement (1,530)
Balance, March 31, 2016 (31,599)
Non-controlling interests' share of loss (3,302)
Foreign exchange movement (118)
Balance, June 30, 2016 (35,019)
Also see Note 20.
9. Cash and cash equivalents
Cash and cash equivalents are comprised of:
June 30, December 31,
2016 2015
$ $
Cash in bank 7,236 7,412
Money market instruments 19,592 871
26,828 8,283
10. Short-term investments
Changes to short-term investments for the six months ended June 30, 2016 and the year ended
December 31, 2015 are as follows:
$
Balance, December 31, 2014 61,438
Additional investments 64,875
Redemptions (72,693)
Foreign exchange movement (5,569)
Balance, December 31, 2015 48,051
Additional investments 43,601
Redemptions (74,023)
Foreign exchange movement 1,374
Balance, June 30, 2016 19,003
11. Trade and other receivables
Trade and other receivables are comprised of the following:
June 30, December 31,
2016 2015
$ $
Trade receivables 300 277
VAT receivable 716 663
Other receivables 531 725
Allowance for doubtful debts for other receivables (563) (506)
984 1,159
12. Other assets
Other assets consists of a money market fund investment that is classified as available-for-sale and
serves as security for a guarantee issued to the Department of Mineral Resources of South Africa in
respect of the environmental rehabilitation liability (Note 14). Changes to other assets for the six
months ended June 30, 2016 and the year ended December 31, 2015 are as follows:
$
Balance, December 31, 2014 9,723
Additional investment 570
Service fees (169)
Interest income 590
Foreign exchange movement (2,665)
Balance, December 31, 2015 8,049
Additional investment 94
Service fees (103)
Interest income 325
Foreign exchange movement 446
Balance, June 30, 2016 8,811
13. Trade and other payables
June 30, December 31,
2016 2015
$ $
Trade payables 392 503
Accrued liabilities 122 412
Other 706 2,700
1,220 3,615
14. Provision for environmental rehabilitation
Although the ultimate amount of the environmental rehabilitation provision is uncertain, the best
estimate of these obligations is based on information currently available, including closure plans and
applicable regulations. Significant closure activities include land rehabilitation, demolition of buildings
and mine facilities and other costs.
The provision for environmental rehabilitation at June 30, 2016 is ZAR 106,717 ($7,271) (December
31, 2015 – ZAR 101,912 ($6,590)). The provision was determined using an inflation rate of 6.67%
(December 31, 2015 – 6.67%) and an estimated life of mine of 16 years for Zandfontein (December
31, 2015 – 16 years), 8 years for Maroelabult (December 31, 2015 – 8 years), 10 years for Crocette
(December 31, 2015 – 10 years), 23 years for Kennedy’s Vale (December 31, 2015 – 23 years) and 23
years for Spitzkop (December 31, 2015 – 23 years). A discount rate of 9.43% was used (December
31, 2015 – 9.43%). Zandforntein, Maroelabult and Crocette collectively referred as CRM. A guarantee
of $8,811 (December 31, 2015 - $8,049) has been issued to the Department of Mineral Resources
(Note 12). The guarantee will be utilized to cover expenses incurred to rehabilitate the mining area
upon closure of the mine. The undiscounted value of this liability is approximately ZAR 538,982
($36,721) (December 31, 2015 – ZAR 538,982 ($34,872)).
14. Provision for environmental rehabilitation (continued)
Changes to the environmental rehabilitation provision are as follows:
$
Balance, December 31, 2014 9,816
Revision in estimates (1,438)
Interest expense 711
Foreign exchange movement (2,499)
Balance, December 31, 2015 6,590
Revision in estimates —
Interest expense (Note 7) 312
Foreign exchange movement 369
Balance, June 30, 2016 7,271
15. Commitments
The Company has committed to capital expenditures in South Africa of approximately ZAR 436 ($30) as
at June 30, 2016 (December 31, 2015 – ZAR 517 ($33)), all of which are expected to be payable by
December 31, 2016.
16. Retirement benefit plans
The Barplats Provident Fund is an independent, defined contribution plan administered by Liberty Life
Limited in South Africa. The costs associated with the defined contribution plan included in net loss for
the three and six months ended June 30, 2016 were $38 and $85 (three and six months ended June
30, 2015 - $73 and $146), respectively. The total number of employees in the plan at June 30, 2016
was 66 (December 31, 2015 – 99).
17. Related party transactions
Balances and transactions between the Company and its subsidiaries have been eliminated on
consolidation and are not disclosed in this note. Related party transactions not disclosed elsewhere in
these consolidated financial statements are listed below:
(a) Trading transactions
The Company’s related parties consist of (a) private companies owned by executive officers and
directors, (b) a public company over which a director has significant influence, and (c) the
Company’s black economic empowerment partner as follows:
Nature of transactions
Buccaneer Management Inc. ("Buccaneer") (i) Management
Gubevu Consortium Investment Black economic empowerment
Holdings (Pty) Ltd. ("Gubevu") (ii) Holding company
Jazz Financial Ltd. ("Jazz") (iii) Management
Maluti Services Limited ("Maluti") (iii) Management
Remington Resources Inc. ("Remington") (iii) General and administrative
Sterling West Management Ltd. ("Sterling") (iii) General and administrative
Zinpro Engineering (Pty) Ltd ("Zinpro") (iii) Consulting and mine contractor
The Company incurred the following fees and expenses in the normal course of operations in
connection with companies owned by key management and directors. Expenses have been
measured at the exchange amount which is determined on a cost recovery basis.
17. Related party transactions (continued)
Three months ended Six months ended
June 30, June 30, June 30, June 30,
Note 2016 2015 2016 2015
Consulting fees $ 24 $ 31 $ 47 $ 57
General and administrative
expenses 170 127 369 302
Management fees (i) 114 204 1,688 406
$ 308 $ 362 $ 2,104 $ 765
(i) On January 31, 2016, Ian Rozier stepped down as President and Chief Executive Officer
(“CEO”) of the Company and David Cohen, the then Chairman of the Company, assumed
the role of President and CEO until July 5, 2016. Mr. Rozier remained as a director of
the Company until July 5, 2016. Mr. Rozier’s services were provided pursuant to a
management services contract with Buccaneer, a private company controlled by Mr.
Rozier. In accordance with the management services contract, Buccaneer was paid a
termination amount of $1,442 (Cdn$1.98 million) on January 31, 2016.
(ii) At June 30, 2016, the Company held a loan receivable from Gubevu in the amount of
ZAR761 million ($51,869) (December 31, 2015 – ZAR726 million ($46,972)). This loan
is secured by Gubevu’s interest in Barplats Investments Limited, bears interest at the
Johannesburg Interbank Agreed Rate (“JIBAR”) + 3% and has been provided for in full.
The Company did not record any interest income with regards to this loan or receive
cash from, or lend any further cash to, Gubevu in the three and six months ended June
30, 2016 and 2015.
(iii) Jazz is controlled by the Company’s former chief financial officer who resigned on July
5, 2016. Maluti is controlled by David Cohen, the Company’s former CEO and director
who resigned on July 5, 2016. Both Remington and Sterling are significantly influenced
by the Company’s former officers and directors who resigned on July 5, 2016. Zinpro is
controlled by the Company’s former director of the South Africa subsidiaries who
resigned on July 5, 2016. (Also see Note 20)
Accounts payable at June 30, 2016 included $nil (December 31, 2015 - $13) due to private
companies controlled by officers and directors of the Company. Amounts due to related parties
are unsecured, non-interest bearing and due on demand.
Accounts receivable at June 30, 2016 included $39 (December 31, 2015 - $31) due from
Remington which reimburses the Company for certain general and administrative expenses
incurred by the Company on behalf of Remington.
(b) Compensation of key management personnel
Remuneration and directors’ fees include consulting and management fees disclosed in Note
17(a). The remuneration of directors and other key members of management personnel for the
three and six months ended June 30, 2016 were $167 and $1,809 (three and six months ended
June 30, 2015 - $280 and $553), respectively. As noted above, the total compensation figure
includes a termination payment of $1,442 made in January 2016.
Key management personnel were not paid share-based payments, post-employment benefits
or other long-term benefits during the three and six months ended June 30, 2016 and 2015.
(Note 20)
18. Segmented Information
(a) Operating segments - The Company’s operations are primarily directed towards the acquisition, exploration and production of platinum
group metals in South Africa. The Company has five reportable segments – Crocodile River Mine, Kennedy’s Vale, Spitzkop, Mareesburg
and corporate. Barbados, BVI and Canada collectively are corporate segment.
(b) Geographic segments - The Company’s revenues and expenses by geographic areas for the three and six months ended June 30, 2016
and 2015, and assets by geographic areas as at June 30, 2016 and December 31, 2015, are as follows:
Three months ended June 30, 2016
Total
Crocodile Kennedy's South Barbados
River Mine Vale Spitzkop Mareesburg Africa and BVI Canada TOTAL
$ $ $ $ $ $ $ $
Property, plant and
equipment expenditures 27 — — — 27 — — 27
C ost of property, plant and
equipment disposals 109 — — — 109 — — 109
Impairment (23,357) — — — (23,357) — — (23,357)
Gain on disposal of property,
plant and equipment 227 — — — 227 — — 227
General and administrative
expenses — — — — — (9) (1,001) (1,010)
C are and maintenance (1,296) (150) (9) — (1,455) — — (1,455)
C are and maintenance
depreciation and amortization (94) (28) — — (122) — — (122)
Interest income 111 1 — — 112 — 102 214
Other income 260 131 — — 391 — — 391
Finance costs (111) (44) (6) — (161) — — (161)
Foreign exchange loss (1) — — — (1) (1) (179) (181)
Loss before income taxes (24,261) (90) (15) — (24,366) (10) (1,078) (25,454)
Income tax (expense) recovery (38) — 7 — (31) (24) — (55)
Net loss (24,299) (90) (8) — (24,397) (34) (1,078) (25,509)
18. Segmented Information (continued)
(b) Geographic segments (continued)
Six months ended June 30, 2016
Total
Crocodile Kennedy's South Barbados
River Mine Vale Spitzkop Mareesburg Africa and BVI Canada TOTAL
$ $ $ $ $ $ $ $
Property, plant and
equipment expenditures 75 — — — 75 — — 75
C ost of property, plant and
equipment disposals 1,047 — — — 1,047 — 2 1,049
Impairment (23,357) — — — (23,357) — — (23,357)
Gain on disposal of property,
plant and equipment 418 — — — 418 — — 418
General and administrative
expenses — — — — — (17) (2,900) (2,917)
C are and maintenance (2,948) (337) (20) (1) (3,306) — — (3,306)
C are and maintenance
depreciation and amortization (124) (72) — — (196) — — (196)
Interest income 219 4 — — 223 — 192 415
Other income 589 267 — — 856 — — 856
Finance costs (219) (86) (11) — (316) — — (316)
Foreign exchange loss (5) — — — (5) (3) (2,221) (2,229)
Loss before income taxes (25,427) (224) (31) (1) (25,683) (20) (4,929) (30,632)
Income tax (expense) recovery 189 — (2) — 187 (34) — 153
Net loss (25,238) (224) (33) (1) (25,496) (54) (4,929) (30,479)
18. Segmented Information (continued)
(b) Geographic segments (continued)
Three months ended June 30, 2015
Total
Crocodile Kennedy's South Barbados
River Mine Vale Spitzkop Mareesburg Africa and BVI Canada TOTAL
$ $ $ $ $ $ $ $
Property, plant and
equipment expenditures — 2 — — 2 — — 2
C ost of property, plant and
equipment disposals 27 61 — — 88 — — 88
General and administrative
expenses — — — — — (24) (468) (492)
C are and maintenance (2,340) (271) (14) 3 (2,622) — — (2,622)
C are and maintenance
depreciation and amortization (332) (79) — — (411) — — (411)
Gain (loss) on disposal of
property, plant and equipment 115 (11) — — 104 — — 104
Interest income 134 13 1 — 148 — 165 313
Other income 217 138 — — 355 — — 355
Finance costs (125) (125) (7) — (257) — — (257)
Foreign exchange loss (6) — — — (6) (3) (239) (248)
(Loss) income before
income taxes (2,337) (335) (20) 3 (2,689) (27) (542) (3,258)
Income tax recovery
(expense) — — 2 49 51 (12) — 39
Net (loss) income (2,337) (335) (18) 52 (2,638) (39) (542) (3,219)
18. Segmented Information (continued)
(b) Geographic segments (continued)
Six months ended June 30, 2015
Total
Crocodile Kennedy's South Barbados
River Mine Vale Spitzkop Mareesburg Africa and BVI Canada TOTAL
$ $ $ $ $ $ $ $
Property, plant and
equipment expenditures 7 2 — — 9 — 3 12
C ost of property, plant and
equipment disposals 283 123 — — 406 — — 406
General and administrative
expenses — — — — — (32) (1,098) (1,130)
C are and maintenance (4,381) (550) (29) 2 (4,958) — — (4,958)
C are and maintenance
depreciation and amortization (756) (164) — — (920) — — (920)
Gain (loss) on disposal of
property, plant and equipment 225 (23) — — 202 — — 202
Interest income 271 25 3 1 300 — 395 695
Other income 666 277 — — 943 — — 943
Finance costs (253) (182) (14) — (449) — — (449)
Foreign exchange gain 7 — — — 7 4 197 208
(Loss) income before
income taxes (4,221) (617) (40) 3 (4,875) (28) (506) (5,409)
Income tax recovery
(expense) — — 4 (2) 2 (24) — (22)
Net (loss) income (4,221) (617) (36) 1 (4,873) (52) (506) (5,431)
18. Segmented Information (continued)
(b) Geographic segments (continued)
June 30, 2016
Crocodile Kennedy's Total South Barbados
River Mine Vale Spitzkop Mareesburg Africa and BVI Canada TOTAL
$ $ $ $ $ $ $ $
Assets
C urrent assets 2,527 62 4 — 2,593 10 51,070 53,673
Property, plant and
equipment 41,090 35,395 18,660 4,350 99,495 — 2 99,497
Other assets 8,811 — — — 8,811 — — 8,811
52,428 35,457 18,664 4,350 110,899 10 51,072 161,981
Liabilities
C urrent liabilities 699 153 (8) 22 866 23 331 1,220
Provision for environmental
rehabilitation 5,028 1,984 259 — 7,271 — — 7,271
Deferred tax liabilities — — 776 — 776 1,903 — 2,679
5,727 2,137 1,027 22 8,913 1,926 331 11,170
Net assets (liabilities) 46,701 33,320 17,637 4,328 101,986 (1,916) 50,741 150,811
18. Segmented Information (continued)
(b) Geographic segments (continued)
December 31, 2015
Crocodile Kennedy's Total South Barbados
River Mine Vale Spitzkop Mareesburg Africa and BVI Canada TOTAL
$ $ $ $ $ $ $ $
Assets
C urrent assets 2,961 600 1 — 3,562 11 55,758 59,331
Property, plant and
equipment 61,223 33,666 17,711 4,129 116,729 — 4 116,733
Other assets 8,049 — — — 8,049 — — 8,049
72,233 34,266 17,712 4,129 128,340 11 55,762 184,113
Liabilities
C urrent liabilities 3,020 214 (5) 26 3,255 15 345 3,615
Provision for environmental
rehabilitation 4,556 1,799 235 — 6,590 — — 6,590
Deferred tax liabilities — — 734 — 734 1,754 — 2,488
7,576 2,013 964 26 10,579 1,769 345 12,693
Net assets (liabilities) 64,658 32,253 16,749 4,103 117,762 (1,759) 55,417 171,420
(c) Revenue
The Company’s primary product is platinum group metals (“PGM”) and its by-product is chrome. No revenues were recorded in the
three and six months ended June 30, 2016 and 2015.
19. Financial instruments
(a) Management of capital risk
The capital structure of the Company consists of equity attributable to common shareholders,
comprising issued capital, treasury shares, equity-settled employee benefits reserve, deficit,
and foreign currency translation adjustment. The Company’s objectives when managing capital
are to: (i) preserve capital, (ii) obtain the best available net return, and (iii) maintain liquidity.
The Company manages the capital structure and makes adjustments to it in light of changes in
economic conditions and the risk characteristics of the underlying assets. To maintain or adjust
the capital structure, the Company may attempt to issue new shares.
The Company is not subject to externally imposed capital requirements.
(b) Categories of financial instruments
June 30, December 31,
2016 2015
$ $
Financial assets
Loans and receivables
Cash and cash equivalents 26,828 8,283
Restricted cash 5,000 —
Trade and other receivables (excluding
VAT receivable and prepayments) 676 711
Available for sale financial assets
Short-term investments 19,003 48,051
Other assets 8,811 8,049
60,318 65,094
Financial liabilities
Other financial liabilities
Trade and other payables 1,220 3,615
(c) Fair value of financial instruments
(i) Fair value estimation of financial instruments
The fair values of cash and cash equivalents, short-term investments, restricted cash,
trade and other receivables, other assets and trade and other payables approximate
their carrying values due to the short-term to maturities of these financial instruments.
19. Financial instruments (continued)
(c) Fair value of financial instruments (continued)
(ii) Fair value measurements recognized in the statement of financial position
Financial instruments that are measured subsequent to initial recognition at fair value
are grouped into a hierarchy based on the degree to which the fair value is observable.
Level 1 fair value measurements are derived from unadjusted, quoted prices in active
markets for identical assets or liabilities. Level 2 fair value measurements are derived
from inputs other than quoted prices included within Level 1 that are observable for the
asset or liability directly or indirectly. Level 3 fair value measurements are derived from
valuation techniques that include inputs for the asset or liability that are not based on
observable market data.
At June 30, 2016, there were no financial assets or liabilities recognized at fair value on
a non-recurring basis.
20. Subsequent events
(a) At the Company’s annual general meeting held on July 5, 2016, the shareholders elected a new
board of directors (“New Directors”) and the Company underwent a change in management
(“New Management”) (collectively, the “Change of Control”). The previous directors of the
Company resigned on the same date. Sterling, Maluti and Jazz (collectively, the “Former
Management”) terminated its services with the Company as a result of the Change of Control
and were paid a termination fee totaling $1,231 (Cdn$1.59 million) by the Company.
(b) On June 30, 2016, the Former Management of the Company entered into a number of share
purchase agreements (the “BEE Buyout Agreement”) with certain holders of the BEE Partners’
interests in the Company’s South African projects to acquire all of its interest in the Company’s
South Africa projects except for 17.65% equity interest in Afirminerals Holdings (Pty) Ltd.
(“Afriminerals”) for a total of $13,367. The BEE Buyout Agreement provides for the buy out of:
i) Ingwenya Incorporated’s (“Ingwenya”) 44.12% equity interest in Gubevu for a total of
$8,955 and a 18% equity interest in Lion’s Head Platinum (Pty) Ltd. (“Lion’s Head”) for
$1,099; and
ii) Serina Service AG’s (“Serina”) 8% interest in Lion’s Head for $502, a 5.89% equity interest
in Gubevu for $1,194 and a 33.35% equity interest of Afrimeinerals for $1,617.
Pursuant to the BEE Buyout Agreement, the Company is required to place 100% of the
consideration with an escrow agent (the “Escrow Agent”) on or before July 4, 2016. The funds
held in escrow will be released to Ingwenya and Serina upon the closing. The closing date is
the earlier of any change of control as defined in the BEE Buyout Agreement and December 31,
2016. On June 30, 2016, the Company entered into the escrow agreements with Ingwenya and
Serina in accordance with the BEE Buyout Agreement. On July 4, 2016, the Company deposited
$13,367 with the Escrow Agent. On July 5, 2016, the Company underwent the Change of Control
and the funds held in escrow were automatically released on July 6, 2016. The Company
continues to investigate these transactions undertaken and disclosed by the former
management of the Company and will update the shareholders of the Company as more details
become available.
(c) On July 5, 2016, the Company granted 600,000 stock options to the New Directors of the
Company at an exercise price of $1.05 per share. These stock options vest in 90 days from
the grant date and expire on July 4, 2021.
16 August 2016
JSE Sponsor: PSG Capital Proprietary Limited
Date: 16/08/2016 08:55:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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