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EPS - Eastern Platinum Limited - Condensed consolidated interim financial
statements of Eastern Platinum Limited June 30, 2009 (Unaudited)
EASTERN PLATINUM LIMITED
(Incorporated in Canada)
(Canadian Registration number BC0722783)
(South African Registration number 2007/006318/10)
Share Code TSX: ELR ISIN: CA 2768551038
Share Code AIM: ELR ISIN: CA 2768551038
Share Code JSE: EPS ISIN: CA 2768551038
Condensed consolidated interim financial statements of Eastern Platinum Limited
June 30, 2009 (Unaudited)
Eastern Platinum Limited
June 30, 2009
Eastern Platinum Limited
Condensed consolidated interim income statements
(Expressed in thousands of U.S. dollars, except per share amounts - unaudited)
Note June 30, June 30,
2009 2008
(3 months) (3 months)
(Note 15)
Revenue $ 24,838 $ 49,317
Cost of operations
Production costs 18,309 21,058
Depletion and depreciation 4,286 4,480
22,595 25,538
Mine operating earnings 2,243 23,779
Expenses
General and administrative 3,171 5,309
Share-based payments 11 203 480
3,374 5,789
Operating (loss) profit (1,131) 17,990
Other income (expense)
Interest income 495 2,877
Finance costs (375) (2,248)
Foreign exchange (loss) gain (1,372) 71
(Loss) profit before income taxes (2,383) 18,690
Deferred income tax recovery
(expense) 1,609 (5,533)
Net (loss) profit for the period $ (774) $ 13,157
Attributable to
Non-controlling interest 4 $ (1,091) $ 1,009
Equity shareholders of the
Company $ 317 $ 12,148
(Loss) earnings per share
Basic $ 0.00 $ 0.02
Diluted $ 0.00 $ 0.02
Weighted average number of common
shares
outstanding in thousands
Basic 680,538 677,772
Diluted 687,181 713,615
June 30, June 30,
2009 2008
( 6 months) (6 months)
(Note 15)
Revenue $ 49,741 $ 105,112
Cost of operations
Production costs 36,194 40,808
Depletion and depreciation 7,803 8,874
43,997 49,682
Mine operating earnings 5,744 55,430
Expenses
General and administrative 4,807 9,642
Share-based payments 335 1,829
5,142 11,471
Operating (loss) profit 602 43,959
Other income (expense)
Interest income 989 5,684
Finance costs (827) (2,256)
Foreign exchange (loss) gain (1,447) 1,128
(Loss) profit before income taxes (683) 48,515
Deferred income tax recovery
(expense) 2,289 (13,780)
Net (loss) profit for the period $ 1,606 $ 34,735
Attributable to
Non-controlling interest $ (1,875) $ 3,111
Equity shareholders of the
Company $ 3,481 $ 31,624
(Loss) earnings per share
Basic $ 0.01 $ 0.05
Diluted $ 0.01 $ 0.04
Weighted average number of common shares
outstanding in thousands
Basic 680,532 673,822
Diluted 685,597 716,095
See accompanying notes to the unaudited condensed consolidated interim
financial statements
Eastern Plati num Limited
Condensed consolidated interim statements of financial position
as at June 30, 2009 and December 31 , 2008
(Expressed in thousands of U.S. dollars - unaudited )
June 30, December 31,
Note 2009 2008
(Note 15)
Assets
Current assets
Cash and cash equivalents $ 6,482 $ 25,806
Short-term investments 15,428 35,257
Trade receivables 22,401 9,431
Inventories 5 5,312 3,881
49,623 74,375
Property, plant and equipment 6 603,518 508,685
Refining contract 7 14,276 12,493
Other assets 8 1,670 1,017
$ 669,087 $ 596,570
Liabilities
Current liabilities
Accounts payable and accrued
liabilities $ 17,246 $ 35,003
Provisions 1 ,97 6 1,726
Current portion of finance leases 846 649
Current loans 153 2,972
20,221 40,350
Provision for environmental
rehabilitation 9 6,955 5,598
Finance leases 3,478 3,261
Deferred tax liabilities 43,955 38,826
74,609 88,035
Capital and reserves
Issued capital 11 890,061 890,049
Equity reserve 32,155 31,827
Currency translation adjustment (87,535) (169,577)
Deficit (252,285) (255,766)
582,396 496,533
Non-controlling interest 4 12,082 12,002
594,478 508,535
$ 669,087 $ 596,570
Approved by the Board and authorized for issue on August 11, 2009.
"David Cohen " "Robert Gayton "
David Cohen, Director Robert Gayton, Director
See accompanying notes to the unaudited condensed consolidated interim
financial statements
Eastern Platinum Limited
Condensed consolidated interim statements of changes in equity
(Expressed in thousands of U.S. dollars - unaudited)
Issued Capital
Shares Amount
Balance, January 1, 2008
(Note 15) 669,031,691 $ 868,045
Warrants exercised 10,824,077 21,213
Stock options exercised 310,991 596
Share-based payments - -
Currency translation adjustment - -
Net profit for the period - -
Non-controlling interest
for the period - -
Balance, June 30, 2008
(Note 15) 680,166,759 $ 889,854
Warrants exercised - (60)
Stock options exercised 359,695 255
Share-based payments - -
Currency translation adjustment - -
Net loss for the period - -
Non-controlling interest
for the period - -
Balance, December 31 , 2008
(Note 15) 680,526,454 $ 890,049
Stock options exercised 30,948 12
Share-based payments - -
Currency translation adjustment - -
Net profit for the period - -
Non-controlling interest
for the period - -
Balance, June 30, 2009 680,557,402 $ 890,061
Equity Currency
Reserve Translation
Adjustment
Balance, January 1, 2008
(Note 15) $ 27,428 $ -
Warrants exercised - -
Stock options exercised (132) -
Share-based payments 1,829 -
Currency translation adjustment - (74,304)
Net profit for the period - -
Non-controlling interest
for the period - -
Balance, June 30, 2008
(Note 15) $ 29,125 $ (74,304)
Warrants exercised - -
Stock options exercised (94) -
Share-based payments 2,796 -
Currency translation adjustment - (95,273)
Net loss for the period - -
Non-controlling interest
for the period - -
Balance, December 31 , 2008
(Note 15) $ 31,827 $ (169,577)
Stock options exercised (7) -
Share-based payments 335 -
Currency translation adjustment - 82,0 42
Net profit for the period - -
Non-controlling interest
for the period - -
Balance, June 30, 2009 $ 32,155 $ (87,535)
Deficit Subtotal
Balance, January 1, 2008
(Note 15) $ (46,385) $ 84 9,088
Warrants exercised - 21,213
Stock options exercised - 464
Share-based payments - 1,829
Currency translation adjustment - (74,304)
Net profit for the period 31,624 31,624
Non-controlling interest
for the period - -
Balance, June 30, 2008
(Note 15) $ (14,761) $ 829,914
Warrants exercised - (60)
Stock options exercised - 161
Share-based payments - 2,796
Currency translation adjustment - (95,273)
Net loss for the period (241,005) (241,005)
Non-controlling interest
for the period - -
Balance, December 31 , 2008
(Note 15) $ (255,766) $ 496,533
Stock options exercised - 5
Share-based payments - 335
Currency translation adjustment - 82,042
Net profit for the period 3,481 3,481
Non-controlling interest
for the period - -
Balance, June 30, 2009 $ (252,285) $ 582,396
Non-controlling Total
Interest Shareholders`
Equity
Balance, January 1, 2008
(Note 15) $ 23,133 $ 872,221
Warrants exercised - 21,213
Stock options exercised - 464
Share-based payments - 1,829
Currency translation adjustment - (74,304)
Net profit for the period - 31,624
Non-controlling interest
for the period 722 722
Balance, June 30, 2008
(Note 15) $ 23,855 $ 853,769
Warrants exercised - (60)
Stock options exercised - 161
Share-based payments - 2,796
Currency translation adjustment - (95,273)
Net loss for the period - (241,005)
Non-controlling interest
for the period (11,853) (11,853)
Balance, December 31 , 2008
(Note 15) $ 12,002 $ 508,535
Stock options exercised - 5
Share-based payments - 335
Currency translation adjustment - 82,042
Net profit for the period - 3,481
Non-controlling interest
for the period 80 80
Balance, June 30, 2009 $ 12,082 $ 594,478
See accompanying notes to the unaudited condensed consolidated interim
financial statements
Eastern Platinum Limited
Condensed consolidated interim statements of comprehensive income (loss)
(Expressed in thousands of U.S. dollars - unaudited)
June 30, June 30,
2009 2008
(3 months) (3 months)
(Note 15)
Net (loss) profit for the period $ (774) $ 13,157
Other comprehensive income (loss) -
currency translation adjustment 95,369 22,061
Comprehensive income (loss) $ 94,595 $ 35,218
Attributable to
Non-controlling interest $ (1,091) $ 1,009
Equity shareholders of the Company $ 95,686 $ 34,209
June 30, June 30,
2009 2008
( 6 months) (6 months)
(Note 15)
Net (loss) profit for the period $ 1,606 $ 34,735
Other comprehensive income (loss) -
currency translation adjustment 82,042 (74,304)
Comprehensive income (loss) $ 83,648 $ (39,569)
Attributable to
Non-controlling interest $ (1,875) $ 3,111
Equity shareholders of the Company $ 85,523 $ (42,680)
See accompanying notes to the unaudited condensed consolidated interim
financial statements
Eastern Platinum Limited
Condensed consolidated interim statements of cash flows
(Expressed in thousands of U.S. dollars - unaudited)
3 months ended
June 30, June 30,
Note 2009 2008
(Note 15)
Operating activities
Net profit for the period $ (774) $ 13,157
Adjustments tonet profit for non-cash
items
Depletion and depreciation 4,286 4,480
Refining contract amortization 7 356 356
Share-based payments 203 480
Interest income (495) (2,877)
Finance costs 375 2,248
Foreign exchange loss (gain) 1,372 (71)
Deferred income tax (recovery) expense (1,609) 5,533
Adjustments tonet profit for cash items
Interest income received 423 3,496
Finance costs paid - (481)
Income taxes paid - -
4,137 26,321
Net changes in non -cash working capital
items
Trade receivables 5,320 16,502
Inventories (859) (670)
Accounts payable and accrued liabilities (369) 3,871
8,229 46,024
Investing activities
Maturity of short-term investments - 7,783
( 382 ) (25)
Purchase of other assets
Property, plant and equipment
expenditures (8,282) 23,706
Sale of property, plant and equipment 1,552 -
(7,112) 31,464
Financing activities
Common shares issued for cash, net of
share issue costs 12 17,452
Repayment of current loans (3,106) (382)
Payment of finance leases (605) (3,472)
(3,699) 13,598
Effect of exchange rate changes on cash
and
cash equivalents 1,324 (202)
(Decrease) increase in cash and
cash equivalents (1,258) 90,884
Cash and cash equivalents , beginning
of period 7,740 58,199
Cash and cash equivalents, end of period $ 6,482 $ 149,083
Cash and cash equivalents are comprised
of:
Cash in bank $ 1 ,951 $ 40,597
Short-term money market instruments 4 ,531 50,137
$ 6,482 $ 90,734
6 months ended
June 30, June 30,
2009 2008
(Note 15)
Operating activities
Net profit for the period $ 1,606 $ 34,735
Adjustments tonet profit for non-cash items
Depletion and depreciation 7,803 8,874
Refining contract amortization 610 723
Share-based payments 335 1,829
Interest income (989) (5,684)
Finance costs 827 2,256
Foreign exchange loss (gain) 1,447 (1,128)
Deferred income tax (recovery) expense (2,289) 13,780
Adjustments tonet profit for cash items
Interest income received 799 4,939
Finance costs paid (11) (363)
Income taxes paid (2,422) -
7,716 59,961
Net changes in non -cash working capital
items
Trade receivables (7,943) (13,349)
Inventories (640) (356)
Accounts payable and accrued liabilities (17 ,353) 6,233
(18,220) 52,489
Investing activities
Maturity of short-term investments 20,09 5 62,380
(409) (55)
Purchase of other assets
Property, plant and equipment
expenditures (18,999) (58,349)
Sale of property, plant and equipment 1,552 -
2,239 3,976
Financing activities
Common shares issued for cash, net of
share issue costs 12 21,676
Repayment of current loans (3,065) (956)
Payment of finance leases (618) (3,884)
(3,671) 16,836
Effect of exchange rate changes on cash and
cash equivalents 328 (1,385)
(Decrease) increase in cash and
cash equivalents (19,324) 71,916
Cash and cash equivalents , beginning
of period 25,806 18,818
Cash and cash equivalents, end of period $ 6,482 $ 90,734
Cash and cash equivalents are comprised of:
Cash in bank $ 1,951 $ 40,597
Short-term money market instruments 4,531 50,137
$ 6,482 $ 90,734
See accompanying notes to the unaudited condensed consolidated interim
financial statements
Eastern Platinum Limited
Notes to the condensed consolidated interim financial statements
(Expressed in thousands of U.S. dollars, except number of shares and per share
amounts)
1. Nature of operations
Eastern Platinum Limited (the "Company") is a platinum group metal ("PGM")
producer engaged in the mining, exploration and development of PGM properties
located in various provinces in South Africa.
Eastern Platinum Limited is a publicly listed company incorporated in Canada
with limited liability under the legislation of the Province of British
Columbia. The Company`s shares are listed on the Toronto Stock Exchange,
Alternative Investment Market, and the Johannesburg Stock Exchange.
The head office, principal address and registered and records office of the
Company are located at 1075 West Georgia Street, Suite 250, Vancouver, British
Columbia, V6E 3C9.
2. Basis of preparation
In February 2009, the British Columbia and Ontario Securities Commissions
granted the Company exemptive relief to adopt International Financial Reporting
Standards ("IFRS") with an adoption date of January 1, 2009 and a transition
date of January 1, 2008.
These condensed consolidated interim financial statements, including
comparatives, have been prepared using accounting policies consistent with
International Financial Reporting Standards ("IFRS") and in accordance with
International Accounting Standard ("IAS") 34 Interim Financial Reporting. The
disclosures concerning the transition from Canadian Generally Accepted
Accounting Principles ("GAAP") to IFRS are included in Note 15.
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, profit 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.
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 3(e), 3(l), and 3(r).
The standards that will be effective or available for voluntary early adoption
in the financial statements for the year ending December 31, 2009 are subject
to change and may be affected by additional interpretation(s). Accordingly, the
accounting policies will be finalized when the first annual IFRS financial
statements are prepared for the year ending December 31, 2009.
3. Summary of significant accounting policies
The condensed consolidated interim financial statements have been prepared
under the historical cost convention, except for the revaluation of certain
financial instruments. The Company`s principal accounting policies are outlined
below:
(a) Basis of consolidation
These condensed consolidated interim financial statements incorporate the
financial statements of the Company and the entities controlled by the Company
(its subsidiaries, including special purpose entities). Control exists when the
Company has the power, directly or indirectly, to govern the financial and
operating policies of an entity so as to obtain benefits from its activities.
The financial statements of subsidiaries are included in the condensed
consolidated interim financial statements from the date that control commences
until the date that control ceases. All significant intercompany transactions
and balances have been eliminated.
Non-controlling interest in the net assets of consolidated subsidiaries are
identified separately from the Company`s equity. Non-controlling interest
consists of the non- controlling interest at the date of the original business
combination plus the non- controlling interest`s share of changes in equity
since the date of acquisition.
Special Purpose Entities ("SPE`s") as defined by the International Accounting
Standards Board ("IASB") in SIC 12 Consolidation - Special Purpose Entities are
entities which are created to accomplish a narrow and well-defined objective
(e.g. to act as a Black Economic Empowerment ("BEE") partner). SPE`s are
subject to consolidation when there is an indication that an entity controls
the SPE. The Company has determined that its investment in Gubevu Consortium
Holdings (Pty) Ltd. ("Gubevu") is a SPE that the Company controls. The accounts
of Gubevu are consolidated with those of the Company.
(b) Business combinations
Business combinations that occurred prior to January 1, 2008 were not accounted
for in accordance with IFRS 3 Business Combinations or IAS 27 Consolidated and
Separate Financial Statements in accordance with the IFRS 1 First-time Adoption
of International Financial Reporting Standards exemption discussed in Note
15(a).
Acquisitions of subsidiaries and businesses are accounted for using the
purchase method. The cost of the business combination is measured as the
aggregate of the fair values (at the date of exchange) of assets given,
liabilities incurred or assumed, and equity instruments issued by the Company
in exchange for control of the acquiree, plus any costs directly attributable
to the business combination. The acquiree`s identifiable assets, liabilities
and contingent liabilities that meet the conditions for recognition under IFRS
3 Business Combinations are recognized at their fair values at the acquisition
date, except for non-current assets (or disposal groups) that are classified as
held for sale in accordance with IFRS 5 Non-current Assets Held for Sale and
Discontinued Operations, which are recognized and measured at fair value less
costs to sell.
Goodwill arising on acquisition is recognized as an asset and initially
measured at cost, being the excess of the cost of the business combination over
the Company`s interest in the net fair value of the identifiable assets,
liabilities and contingent liabilities recognized. If the Company`s interest in
the net fair value of the acquiree`s identifiable assets, liabilities and
contingent liabilities exceeds the cost of the business combination, the excess
is recognized immediately in profit or loss.
The interest of non-controlling shareholders in the acquiree is initially
measured at the non-controlling shareholders` proportion of the net fair value
of the assets, liabilities and contingent liabilities recognized.
(c) Presentation currency
The Company`s presentation currency is the U.S. dollar ("$"). The functional
currency of Eastern Platinum Limited and its South African subsidiaries is the
Canadian Dollar and South African Rand ("ZAR"), respectively. These condensed
consolidated interim financial statements have been translated to the U.S.
dollar in accordance with IAS 21 The Effects of Changes in Foreign Exchange
Rates. These guidelines require that assets and liabilities be translated using
the exchange rate at period end, and income, expenses and cash flow items are
translated using the rate that approximates the exchange rates at the dates of
the transactions (i.e. the average rate for the period).
Subsequent to the adoption of IFRS, all resulting exchange differences are
reported as a separate component of shareholders` equity titled "Cumulative
Translation Adjustment".
(d) Foreign currency translation
In preparing the financial statements of the individual entities, transactions
in currencies other than the entity`s functional currency (foreign currencies)
are recorded at the rates of exchange prevailing at the dates of the
transactions. At each statement of financial position date, monetary assets and
liabilities are translated using the period end foreign exchange rate.
Non-monetary assets and liabilities are translated using the historical rate on
the date of the transaction. Non-monetary assets and liabilities that are
stated at fair value are translated using the historical rate on the date that
the fair value was determined. All gains and losses on translation of these
foreign currency transactions are included in the condensed consolidated
interim income statements.
(e) Measurement uncertainty
The preparation of financial statements in conformity with IFRS requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosures of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period.
Actual results could differ from those estimates. Significant accounts that
require estimates as the basis for determining the stated amounts include
accounting for doubtful accounts receivable, inventories, property, plant and
equipment, provision for environmental rehabilitations, share-based payments,
allocation of the purchase price of acquisitions and income and mining taxes.
Depreciation and depletion of property, plant and equipment assets are
dependent upon estimates of useful lives and reserve estimates, both of which
are determined with the exercise of judgement. The assessment of any impairment
of property, plant and equipment is dependent upon estimates of recoverable
amount that take into account factors such as reserves, economic and market
conditions and the useful lives of assets. Provisions for environmental
rehabilitations are recognized in the period in which they arise and are stated
as the fair value of estimated future costs. These estimates require extensive
judgement about the nature, cost and timing of the work to be completed, and
may change with future changes to costs, environmental laws and regulations and
remediation practices.
(f) Revenue recognition
Revenue is measured at the fair value of the consideration received or
receivable. The following specific criteria must be met before revenue is
recognized:
(i) Sale of goods
Revenue from the sale of platinum group and other metals is recognized when
all of the following conditions are satisfied:
the specific risks and rewards of ownership have been transferred to the
purchaser;
the Company does not retain continuing managerial involvement to the degree
usually associated with ownership or effective control over the metals
sold;
the amount of revenue can be measured reliably;
it is probable that the economic benefits associated with the transaction
will flow to the entity; and
the costs incurred or to be incurred in respect of the sale can be measured
reliably.
The sale of platinum group metals is provisionally priced such that the price
is not settled until a predetermined future date based on the market price at
that time. Revenue on these sales is initially recognized (when the conditions
above are met) at the current market price. Subsequent to initial recognition
but prior to settlement, sales are marked to market at each reporting date
using the forward price for the period equivalent to that outlined in the
contract. This mark to market adjustment is recorded in revenue.
(ii) Rental income
Rental income from residential properties is recognized as other income on a
straight-line basis over the term of the lease.
(iii) Interest income
Interest income is recognized in the income statement as it accrues, using the
effective interest method.
(g) Share-based payments
The Company grants stock options to buy common shares of the Company to
directors, officers, employees and service providers. The board of directors
grants such options for periods of up to ten years, with vesting periods
determined at its sole discretion and at prices equal to or greater than the
closing market price on the day preceding the date the options were granted.
The fair value of the options is measured at grant date, using the
Black-Scholes option pricing model, and is recognized over the period that the
employees earn the options.
The fair value is recognized as an expense with a corresponding increase in
equity.The amount recognized as expense is adjusted to reflect the number of
share options expected to vest.
(h) Finance costs
Finance costs comprise interest payable on borrowings calculated using the
effective interest rate method and foreign exchange gains and losses on foreign
currency borrowings.
(i) Income taxes
Income tax expense consists of current and deferred tax expense. Income tax
expense is recognized in the income statement.
Current tax expense is the expected tax payable on the taxable income for the
year, using tax rates enacted or substantively enacted at period end, adjusted
for amendments to tax payable with regards to previous years.
Deferred taxes are recorded using the statement of financial position liability
method.
Under the statement of financial position liability method, deferred tax assets
and liabilities are recognized for future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases. Future tax assets and
liabilities are measured using the enacted or substantively enacted tax rates
expected to apply when the asset is realized or the liability settled.
The effect on future tax assets and liabilities of a change in tax rates is
recognized in income in the period that substantive enactment occurs.
A deferred tax asset is recognized to the extent that it is probable that
future taxable profits will be available against which the asset can be
utilized. To the extent that the Company does not consider it probable that a
future tax asset will be recovered, it provides a valuation allowance against
the excess.
The following temporary differences donot result in deferred tax assets or
liabilities:
the initial recognition of assets or liabilities that donot affect
accounting or taxable profit
goodwill
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to set off current tax assets against current tax liabilities
and when they relate to income taxes levied by the same taxation authority and
the Company intends to settle its current tax assets and liabilities on a net
basis.
(j) Earnings (loss) per share
Basic earnings (loss) per share is computed by dividing the net earnings (loss)
available to common shareholders by the weighted average number of shares
outstanding during the reporting year. Diluted earnings (loss) per share is
computed similar to basic earnings (loss) per share except that the weighted
average shares outstanding are increased to include additional shares for the
assumed exercise of stock options and warrants, if dilutive. The number of
additional shares is calculated by assuming that outstanding stock options and
warrants were exercised and that the proceeds from such exercises were used to
acquire common stock at the average market price during the reporting periods.
(k) Comprehensive income (loss)
Comprehensive profit (loss) is the change in the Company`s net assets that
results from transactions, events and circumstances from sources other than the
Company`s shareholders and includes items that would not normally be included
in net profit such as unrealized gains or losses on available-for-sale
investments, gains or losses on certain derivative instruments and foreign
currency gains or losses related to self- sustaining operations. The Company`s
comprehensive income (loss), components of other comprehensive income, and
cumulative translation adjustments are presented in the condensed consolidated
interim statements of comprehensive income (loss) and the condensed
consolidated interim statements of shareholders` equity.
(l) Property, plant and equipment
(i) Mining assets
Mining assets are recorded at cost less accumulated depreciation and
accumulated impairment losses. All direct costs related to the acquisition,
exploration and development of mineral properties are capitalized until the
properties to which they relate are placed into production, sold, abandoned or
management has determined there to be impairment. If economically recoverable
ore reserves are developed, capitalized costs of the related property are
reclassified as mining assets and amortized using the units-of- production
method following commencement of production. Interest on borrowings incurred
tofinance mining assets is capitalized until the asset is capable of carrying
out its intended use.
Mining properties and mining and process facility assets are amortized on a
units-of-production basis which is measured by the portion of the mine`s
economically recoverable and proven ore reserves recovered during the period.
Capital work-in-progress, which is included in mining assets, is not
depreciated until the assets are ready for their intended use.
Although the Company has taken steps to verify title to the properties on which
it is conducting exploration and in which it has an interest, in accordance
with industry standards for the current stage of exploration of such
properties, these procedures donot guarantee the Company`s title. Property
title may be subject to unregistered prior agreements and non-compliance with
regulatory requirements.
(ii) Other assets
Other assets are depreciated using the straight-line method based on estimated
useful lives, which generally range from 5 to 7 years, with the exception of
residential properties and mine houses whose estimated useful lives are 50
years and office buildings whose estimated useful lives are 20 years. Land is
not depreciated.
Where an item of plant and equipment comprises major components with different
useful lives, the components are accounted for as separate items of plant and
equipment.
Expenditures incurred to replace a component of an item of property, plant and
equipment that is accounted for separately, including major inspection and
overhaul expenditures, are capitalized. Directly attributable expenses incurred
for major capital projects and site preparation are capitalized until the asset
is brought to a working condition for its intended use. These costs include
dismantling and site restoration costs to the extent these are recognized as a
provision.
The cost of self-constructed assets includes the cost of materials, direct
labour and an appropriate portion of normal overheads.
The costs of day-to-day servicing are recognized in profit or loss as incurred.
These costs are more commonly referred to as "maintenance and repairs."
Financing costs directly associated with the construction or acquisition of
qualifying assets are capitalized at interest rates relating to loans
specifically raised for that purpose, or at the average borrowing rate where
the general pool of group borrowings is utilized. Capitalization of borrowing
costs ceases when the asset is substantially complete.
The depreciation method, useful life and residual values are assessed annually.
(iii) Leased assets
Leases in which the Company assumes substantially all risks and rewards of
ownership are classified as finance leases. Finance leases are recognized at
the lower of the fair value and the present value of the minimum lease payments
at inception of the lease, less accumulated depreciation and impairment losses.
Lease payments are accounted for as discussed in Note 3(s).
(iv) Subsequent Costs
The cost of replacing part of an item within property, plant and equipment is
recognized when the cost is incurred if it is probable that the future economic
benefits will flow to the group and the cost of the item can be measured
reliably. All other costs are recognized as an expense as incurred.
(v) Impairment
The Company`s tangible and intangible assets are reviewed for an indication of
impairment at each statement of financial position date. If indication of
impairment exists, the asset`s recoverable amount is estimated.
An impairment loss is recognized when the carrying amount of an asset, or its
cash-generating unit, exceeds its recoverable amount. A cash-generating unit is
the smallest identifiable group of assets that generates cash inflows that are
largely independent of the cash inflows from other assets or groups of assets.
Impairment losses are recognized in profit and loss for the period.
Impairment losses recognized in respect of cash-generating units are allocated
first to reduce the carrying amount of any goodwill allocated to cash-
generating units and then to reduce the carrying amount of the other assets in
the unit on a pro-rata basis.
The recoverable amount is the greater of the asset`s fair value less costs to
sell and value in use. In assessing value in use, the estimated future cash
flows are discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and the risks
specific to the asset. For an asset that does not generate largely independent
cash inflows, the recoverable amount is determined for the cash-generating unit
to which the asset belongs.
(vi) Reversal of impairment
An impairment loss is reversed if there is an indication that there has been a
change in the estimates used to determinethe recoverable amount. An impairment
loss is reversed only to the extent that the asset`s carrying amount does not
exceed the carrying amount that would have been determined, net of depreciation
or amortization, if no impairment loss had been recognized. An impairment loss
with respect to goodwill is never reversed.
(m) Refining contract
The Company sells substantially all its concentrate to one customer under the
terms of an off-take or refining contract. The refining contract is amortized
over the original life of the contract, estimated to be fifteen years,
commencing in mid 2004. An evaluation of the carrying value of the contract is
undertaken whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable.
(n) Inventories
Inventories, comprising stockpiled ore and concentrate awaiting further
processing and sale, are valued at the lower of cost and net realizable value.
Consumables are valued at the lower of cost and net realizable value, with
replacement cost used as the best available measure of net realizable value.
Cost is determined using the weighted average method and includes direct mining
expenditures and an appropriate portion of normal overhead expenditure. In the
case of concentrate, direct concentrate costs are also included. Net realizable
value is the estimated selling price in the ordinary course of business, less
the estimated costs of completion and selling expenses. Obsolete, redundant and
slow moving stores are identified and written down tonet realizable values.
(o) Short-term investments
Short-term investments are investments which are transitional or current in
nature, with an original maturity greater than three months.
(p) Cash and cash equivalents
Cash and cash equivalents consist of cash on hand, deposits in banks and highly
liquid investments with an original maturity of three months or less.
(q) Financial assets
Financial assets are classified into one of four categories:
financial assets at fair value through profit or loss ("FVTPL");
held-to-maturity investments;
available for sale ("AFS") financial assets; and,
loans and receivables.
The classification is determined at initial recognition and depends on the
nature and purpose of the financial asset.
(i) Financial assets at FVTPL
Financial assets are classified as FVTPL when the financial asset is held for
trading or it is designated as FVTPL.
A financial asset is classified as held for trading if:
it has been acquired principally for the purpose of selling in the near
future;
it is a part of an identified portfolio of financial instruments that the
Company manages and has an actual pattern of short-term profit-taking; or
it is a derivative that is not designated and effective as a hedging
instrument.
Financial assets classified as FVTPL are stated at fair value with any
resultant gain or loss recognized in profit or loss. The net gain or loss
recognized incorporates any dividend or interest earned on the financial asset.
The Company has classified cash and cash equivalents as held for trading.
(ii) AFS financial assets
Short-term investments held by the Company are classified as AFS and are stated
at fair value. Gains and losses arising from changes in fair value are
recognized directly in equity in the investments revaluation reserve. To date,
these gains and losses have not been significant due to the nature of the
underlying investment. As aresult, the assets` carrying values approximate
their fair values. Impairment losses, interest calculated using the effective
interest method and foreign exchange gains and losses on monetary assets, are
recognized directly in profit or loss rather than equity. When an investment is
disposed of or is determined to be impaired, the cumulative gain or loss
previously recognized in the investments revaluation reserve is included in
profit or loss for the period.
The fair value of AFS monetary assets denominated in a foreign currency is
translated at the spot rate at the statement of financial position date. The
change in fair value attributable to translation differences due to a change in
amortized cost of the asset is recognized in profit or loss, while all other
changes are recognized in equity.
(iii) Effective interest method
The effective interest method calculates the amortized cost of a financial
asset and allocates interest income over the corresponding period. The
effective interest rate is the rate that discounts estimated future cash
receipts over the expected life of the financial asset, or, where appropriate,
a shorter period.
Income is recognized on an effective interest basis for debt instruments other
than those financial assets classified as FVTPL.
(iv) Held-to-maturity investments
Investments are recognized on a trade-date basis and are initially measured at
fair value, including transaction costs. The Company has classified its other
assets as held to maturity.
(v) Loans and receivables
Trade receivables, loans, and other receivables that have fixed or
determinable payments that are not quoted in an active market are classified
as loans and receivables.
Loans and receivables are initially recognized at the transaction value and
subsequently carried at amortized cost less impairment losses. The impairment
loss of receivables is based on areview of all outstanding amounts at year end.
Bad debts are written off during the year in which they are identified.
Interest income is recognized by applying the effective interest rate, except
for short-term receivables when the recognition of interest would be
immaterial.
(vi) Impairment of financial assets
Financial assets, other than those at FVTPL, are assessed for indicators of
impairment at each period end. Financial assets are impaired when there is
objective evidence that, as aresult of one or more events that occurred after
the initial recognition of the financial asset, the estimated future cash flows
of the investment have been impacted.
Objective evidence of impairment could include the following:
significant financial difficulty of the issuer or counterparty;
default or delinquency in interest or principal payments; or
it has become probable that the borrower will enter bankruptcy or financial
reorganization.
For financial assets carried at amortized cost, the amount of the impairment is
the difference between the asset`s carrying amount and the present value of
the estimated future cash flows, discounted at the financial asset`s original
effective interest rate.
The carrying amount of all financial assets, excluding trade receivables, is
directly reduced by the impairment loss. The carrying amount of trade
receivable is reduced through the use of an allowance account. When a trade
receivable is considered uncollectible, it is written off against the allowance
account. Subsequent recoveries of amounts previously written off are credited
against the allowance account. Changes in the carrying amount of the
allowance account are recognized in profit or loss.
(vi) Impairment of financial assets (continued)
With the exception of AFS equity instruments, if, in a subsequent period, the
amount of the impairment loss decreases and the decrease relates to an event
occurring after the impairment was recognized, the previously recognized
impairment loss is reversed through profit or loss. On the date of impairment
reversal, the carrying amount of the financial asset cannot exceed its
amortized cost had impairment not been recognized.
(vii) Derecognition of financial assets
A financial asset is derecognized when:
the contractual right to the asset`s cash flows expire; or
if the Company transfers the financial asset and all risks and rewards of
ownership to another entity.
(r) Environmental rehabilitation
The Company recognizes liabilities for statutory, contractual, constructive or
legal obligations associated with the retirement of property, plant and
equipment, when those obligations result from the acquisition, construction,
development or normal operation of the assets. The net present value of future
rehabilitation cost estimates is capitalized to mining assets along with a
corresponding increase in the rehabilitation provision in the period incurred.
Discount rates using a pre-tax rate that reflect the time value of money are
used to calculate the net present value. The rehabilitation asset is
depreciated on the same basis as mining assets.
The Company`s estimates of reclamation costs could change as aresult of changes
in regulatory requirements and assumptions regarding the amount and timing of
the future expenditures. These changes are recorded directly to mining assets
with a corresponding entry to the rehabilitation provision. The Company`s
estimates are reviewed annually for changes in regulatory requirements, effects
of inflation and changes in estimates.
Changes in the net present value, excluding changes in the Company`s estimates
of reclamation costs, are charged to profit and loss for the period.
The costs of rehabilitation projects that were included in the rehabilitation
provision are recorded against the provision as incurred. The cost of ongoing
current programs to prevent and control pollution is charged against profit and
loss as incurred.
(s) Leases
(i) The Company as lessor
Rental income from operating leases is recognized on a straight-line basis over
the term of the corresponding lease. Initial direct costs incurred in
negotiating and arranging an operating lease are added to the carrying amount
of the leased asset and recognized on a straight-line basis over the lease
term.
(ii) The Company as lessee
Assets held under finance leases are recognized as assets of the Company at the
lower of the fair value at the inception of the lease or the present value of
the minimum lease payments. The corresponding liability is recognized as a
finance lease obligation. Lease payments are apportioned between finance
charges and reduction of the lease obligation to achieve a constant rate of
interest on the remaining liability. Finance charges are charged to profit or
loss, unless they are directly attributable to qualifying assets, in which case
they are capitalized.
Rentals payable under operating leases are expensed on a straight-line basis
over the term of the relevant lease. Incentives received upon entry into an
operating lease are recognized straight-line over the lease term.
(t) Provisions
Provisions are recorded when a present legal or constructive obligation exists
as a result of past events where it is probable that an outflow of resources
embodying economic benefits will be required to settle the obligation, and
areliable estimate of the amount of the obligation can be made.
The amount recognized as a provision is the best estimate of the consideration
required to settle the present obligation at the statement of financial
position date, taking into account the risks and uncertainties surrounding the
obligation. Where a provision is measured using the cash flows estimated to
settle the present obligation, its carrying amount is the present value of
those cash flows. When some or all of the economic benefits required to settle
a provision are expected to be recovered from a third party, the receivable is
recognized as an asset if it is virtually certain that reimbursement will be
received and the amount receivable can be measured reliably.
(u) Employee benefits
(i) Employee post-retirement obligations - defined contribution retirement
plan
The Company`s South African subsidiaries operate a defined contribution
retirement plan for its employees. The pension plans are funded by payments
from the employees and the subsidiaries and payments are charged to profit and
loss for the period as incurred. The assets of the different plans are held by
independently managed trust funds. The South African Pension Fund Act of 1956
governs these funds.
(ii) Leave pay
Employee entitlements to annual leave are recognized as they are earned by the
employees. A provision, stated at current cost, is made for the estimated
liability at period end.
(v) Financial liabilities and equity
Debt and equity instruments are classified as either financial liabilities or
as equity in accordance with the substance of the contractual arrangement.
An equity instrument is any contract that evidences aresidual interest in the
assets of an entity after deducting all of its liabilities. Equity instruments
issued by the Company are recorded at the proceeds received, net of direct
issue costs.
Financial liabilities are classified as either financial liabilities at fair
value through profit or loss or other financial liabilities.
(i) Other financial liabilities
Other financial liabilities are initially measured at fair value, net of
transaction costs, and are subsequently measured at amortized cost using the
effective interest method, with interest expense recognized on an effective
yield basis.
The effective interest method is a method of calculating the amortized cost of
a financial liability and of allocating interest expenses over the
corresponding period. The effective interest rate is the rate that exactly
discounts estimated future cash payments over the expected life of the
financial liability, or, where appropriate, a shorter period.
The Company has classified trade and other payables, short-term financial
liabilities and long-term financial liabilities as other financial liabilities.
(ii) Derecognition of financial liabilities
The group derecognizes financial liabilities when, and only when, the group`s
obligations are discharged, cancelled or they expire.
(w) Accounting standards issued but not yet effective
(i) Effective for annual periods beginning on or after July 1, 2009
IFRS 2 Share Based Payments (revised) - revision of scope
IFRS 3 Business Combinations (revised) - revision of scope and amendments
to accounting for business combinations
IAS 27 Consolidated and Separate Financial Statements (revised) -
amendments due to IFRS 3 Business Combinations revisions
IAS 38 Intangible Assets (revised) - amendments due to IFRS 3 Business
Combinations revisions and measuring the fair value of an intangible asset
acquired in a business combination
(ii) Effective for annual periods beginning on or after January 1, 2010
IFRS 8 Operating Segments (revised) - disclosure of information about
segment assets
The Company has not early adopted these revised standards and is currently
assessing the impact that these standards will have on the consolidated
financial statements.
Eastern Platinum Limited
Notes to the condensed consolidated interim financial statements
(Expressed in thousands of U.S. dollars, except number of shares and per share
amounts)
4. Non-controlling interest
The non-controlling interests are comprised of the following:
Balance, January 1 , 2008 $ 23,133
Non-controlling interests` share of profit in Barplats 4,839
Non-controlling interests` share of interest on advances to
Gubevu (1,728)
Foreign exchange movement (2,389)
Balance, June 30, 2008 $ 23,855
Non-controlling interests` share of loss in Barplats (5,556)
Non-controlling interests` share of interest on advances to
Gubevu (1,290)
Foreign exchange movement (5,007)
Balance, December 31, 2008 $ 12,002
Non-controlling interests` share of loss in Barplats (671)
Non-controlling interests` share of interest on advances to
Gubevu (1,204)
Foreign exchange movement 1,955
Balance, June 30, 2 009 $ 12,082
5. Inventories
June 30, December 31,
2009 2008
Consumables $ 3,535 $ 3,509
Ore and concentrate 1,777 372
$ 5,312 $ 3,881
Eastern Platinum Limited
Notes to the condensed consolidated interim financial statements
(Expressed in thousands of U.S. dollars, except number of shares and per share
amounts)
6. Property, plant and equipment
Mining Crocodile Kennedy`s
plant and River Mine Vale
equipment (a) Project (b)
Cost
Balance as at January 1, 2008 $ 273,483 $ 149,618 $ 386,353
Additions
Assets acquired 134,320 4,285 -
Assets acquired through
business combination - 12,033 53,754
Disposals - - -
Foreign exchange movement (87,635) (40,794) (106,645)
Balance as at December 31, 2008 $ 320,168 $ 125,142 $ 333,462
Additions
Assets acquired - 88 -
Assets under construction
capitalized 18,396 - -
Disposals (1,552) -
Foreign exchange movement 67,497 25,679 69,657
Balance as at June 30, 2009 $ 404,509 $ 150,909 $ 403,119
Accumulated depreciation a nd
impairment
losses
Balance as at January 1, 2008 $ 116,078 $ 11,932 $ 15,666
Depreciation for the period 7,842 6,768 -
Impairment loss - - 313,603
Foreign exchange movement (31,017) (3,907) (41,832)
Balance as at December 31, 2008 $ 92,903 $ 14,793 $ 287,437
Depreciation for the period 5,530 2,272 -
Foreign exchange movement 19,558 4,012 60,459
Balance as at June 30, 2009 $ 117,991 $ 21,077 $ 347,896
Carrying amounts
At January 1, 2008 $ 157,405 $ 137,686 $ 370,687
At December 31, 2008 $ 227,265 $ 110,349 $ 46,025
At June 30, 2009 $ 286,518 $ 129,832 $ 55,223
Spitzkop Mareesburg
PGM Project
Project (c) (c)
Cost
Balance as at January 1, 2008 $ 121,443 $ 28,075
Additions
Assets acquired 4,729 472
Assets acquired through business
combination - 36
Disposals - -
Foreign exchange movement (24,459) (5,284)
Balance as at December 31, 2008 $ 101,713 $ 23,299
Additions
Assets acquired 427 88
Assets under construction capitalized - -
Disposals - -
Foreign exchange movement 5,250 1,130
Balance as at June 30, 2009 $ 107,390 $ 24,517
Accumulated depreciation a nd impairment
losses
Balance as at January 1, 2008 $ - $ -
Depreciation for the period - -
Impairment loss - -
Foreign exchange movement - -
Balance as at December 31, 2008 $ - $ -
Depreciation for the period - -
Foreign exchange movement - -
Balance as at June 30, 2009 $ - $ -
Carrying amounts
At January 1, 2008 $ 121,443 $ 28,075
At December 31, 2008 $ 101,713 $ 23,299
At June 30, 2009 $ 107,390 $ 24,517
Other
property
plant and TOTAL
equipment
Cost
Balance as at January 1, 2008 $ 118 $ 959,090
Additions
Assets acquired 18 143,824
Assets acquired through business
combination - 65,823
Disposals (22) (22)
Foreign exchange movement (21) (264,838)
Balance as at December 31, 2008 $ 93 $ 903,877
Additions
Assets acquired - 603
Assets under construction capitalized - 18,396
Disposals - - (1,552)
Foreign exchange movement 5 169,218
Balance as at June 30, 2009 $ 98 $ 1,090,542
Accumulated depreciation a nd impairment
losses
Balance as at January 1, 2008 $ 24 $ 143,700
Depreciation for the period 52 14,662
Impairment loss - 313,603
Foreign exchange movement (17) (76,773)
Balance as at December 31, 2008 $ 59 $ 395,192
Depreciation for the period 1 7,803
Foreign exchange movement - 84,029
Balance as at June 30, 2009 $ 60 $ 487,024
Carrying amounts
At January 1, 2008 $ 94 $ 815,390
At December 31, 2008 $ 34 $ 508,685
At June 30, 2009 $ 38 $ 603,518
Eastern Platinum Limited
Notes to the condensed consolidated interim financial statements
(Expressed in thousands of U.S. dollars, except number of shares and per share
amounts)
(a) Crocodile River Mine ("CRM")
The Company holds directly and indirectly 87.5% of CRM, which is located on the
eastern portion of the western limb of the Bushveld Complex. The Maroelabult
and Zandfontein sections are currently in production, while development of the
Crocette and Kareespriut sections was put on hold in the fourth quarter of 2008
until PGM prices improve.
(b) Kennedy`s Vale Project ("KV")
The Company holds directly and indirectly 87.5% of 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.
(c) Spitzkop PGM Project and Mareesburg Project
The Company holds directly and indirectly a 93.4% interest in the Spitzkop PGM
Project and a 75.5% interest in the Mareesburg Project. The Company currently
acts as the operator of both the Mareesburg Platinum Project and Spitzkop PGM
Project, both located on the eastern limb of the Bushveld Complex. The
development of these projects was put on hold in the fourth quarter of 2008
until PGM prices improve.
7. Refining Contract
During the year ended June 30, 2006, the Company acquired a 69% interest in
Barplats and assigned a portion of the excess of the purchase price over the
fair value of the identifiable intangible assets acquired to the off-take
contract governing the sales of Barplats` PGM concentrate production. The
initial value of the contract was $17,939. During the year ended June 30,
2007, the Company acquired an additional 5% interest in Barplats resulting in
an additional allocation to the contract of $4,802 for a total aggregate value
of $22,741. During the year ended December 31, 2008, the Company acquired an
additional 2.47% interest in Barplats. The acquisition did not affect the
aggregate value of the contract. The value of the contract is amortized over
the remaining term of the contract which is 10 years.
Cost
Balance as at January 1, 2008 $ 22,741
Foreign exchange movement (4 ,784)
Balance as at December 31, 2008 $ 17,957
Foreign exchange movement 2,436
Balance as at June 30, 2009 $ 20,393
Accumulated depreciation
Balance as at January 1, 2008 $ 4,274
De p re cia tion for the period 1,353
Foreign exchange movement (163)
Balance as at December 31, 2008 $ 5,464
De p recia tion for the period 610
Foreign exchange movement 43
Balance as at June 30, 2009 $ 6 ,117
Carrying amounts
At January 1, 2008 $ 18,467
At December 31 , 2008 $ 12,493
At June 30 , 2009 $ 14,276
Eastern Platinum Limited
Notes to the condensed consolidated interim financial statements
(Expressed in thousands of U.S. dollars, except number of shares and per share
amounts)
8. Other assets
Other assets consists of a money market fund investment that is classified as
held-to-maturity and serves as security for a guarantee issued to the
Department of Minerals and Energy of South Africa in respect of the
environmental rehabilitation liability (Note 9). Changes to other assets for
the six months ended June 30, 2009 are as follows:
Balance, January 1 , 2008 $ 1,247
Additional investment -
Service fees (16)
Interest income 122
Foreign exchange movement (336)
Balance, December 31, 2008 $ 1,017
Additional investment 350
Service fees (5)
Interest income 56
Foreign exchange movement 252
Balance, June 30, 2009 $ 1,670
9. Provision for environmental rehabilitation
Although the ultimate amount of the environmental rehabilitation provision is
uncertain, the fair value 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 liability for the environmental rehabilitation provision at June 30, 2009
is approximately ZAR 53.9 million ($6,955). The liability was determined using
an inflation rate of 5.78% (December 31, 2008 - 5.78%) and an estimated life of
mine of 14 years for Zandfontein and Maroelabult (December 31, 2008 - 14
years), and 1 year for Kennedy`s Vale (December 31, 2008 - 1 year). A discount
rate of 7.09% was used (December 31, 2008 - 7.09%). A guarantee of $1,670
(December 31, 2008 - $1,017) has been issued to the Department of Minerals and
Energy (Note 8). 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 ZAR121 million ($15,588).
Changes to the environmental rehabilitation provision during the six months
ended June 30, 2009 are as follows:
Balance, January 1 , 2008 $ 6,224
Revision in estimates 554
Unwinding of interest 491
Foreign exchange movement (1,671)
Balance, December 31, 2008 $ 5,598
Unwinding of interest 202
Foreign exchange movement 1,155
Balance, June 30, 2009 $ 6,955
10. Commitments
The Company has committed to capital expenditures on projects of approximately
ZAR33 million ($4,236) as at June 30, 2009.
Eastern Platinum Limited
Notes to the condensed consolidated interim financial statements
(Expressed in thousands of U.S. dollars, except number of shares and per share
amounts)
11. Issued capital
(a) Authorized
- Unlimited number of preferred redeemable, voting, non-participating shares
without nominal or par value,
- Unlimited number of common shares with no par value.
(b) Stock options
The Company has an incentive plan (the "2008 Plan"), approved by the Company`s
shareholders at its annual general meeting held on June 4, 2008, under which
options to purchase common shares may be granted to its directors, officers,
employees and others at the discretion of the Board of Directors. Under the
terms of the 2008 Plan, 75 million common shares are reserved for issuance upon
the exercise of options. All outstanding options at June 4, 2008 granted under
the Company`s previous plan (the "2005 Plan") will continue to exist under the
2008 Plan provided that the fundamental terms governing such options will be
deemed to be those under the 2005 Plan. Upon adoption of the 2008 Plan, options
to purchase a total of 27,525,000 common shares were available for grant under
the 2008 Plan, representing 75,000,000 less the 47,475,000 outstanding options
at June 4, 2008 granted under the 2005 Plan.
Under the 2008 Plan, each option granted shall be for a term not exceeding five
years from the date of being granted and the vesting period is determined based
on the discretion of the Board of Directors. The option exercise price is set
at the date of the grant and cannot be less than the closing market price of
the Company`s common shares on the Toronto Stock Exchange on the day
immediately preceding the day of the grant of the option.
The changes in stock options during the six months ended June 30, 2009 and year
ended December 31, 2008 were as follows:
June 30, 2009
Weighted
average
Number of exercise
options price
Cdn$
Balance outstanding ,
beginning of period 64,746,000 1.52
Options granted 480,000 0.49
Options exercised (54,333) 0.32
Options forfeited (4,681,667) 2.09
Balance outstanding ,
end of period 60,490,000 1.47
December 31, 2008
Weighted
average
Number of exercise
options price
Cdn $
Balance outstanding ,
beginning of period 46,360,000 1.94
Options granted 19,856,000 0.55
Options exercised (845,000) 1.26
Options forfeited (625,000) 1.76
Balance outstanding ,
end of period 64,746,000 1.52
Eastern Platinum Limited
Notes to the condensed consolidated interim financial statements
(Expressed in thousands of U.S. dollars, except number of shares and per share
amounts)
The following table summarizes information concerning outstanding and
exercisable options at June 30, 2009:
Options Options Exercise
outstanding exercisable price
Cd n $
187,500 187,500 1.00
6,725,000 6,725,000 1.70
250,000 250,000 1.70
19,987,500 19,987,500 1.82
18,160,000 16,246,667 0.32
60,000 20,000 0.32
400,000 400,000 0.52
14,000,000 13,293,333 2.31
90,000 60,000 2.50
460,000 440,000 3.38
170,000 130,000 3.38
60,490,000 57,740,000
Remaining
Contractual
Life (Years) Expirydate
0.16 August 26, 2009
1.90 May 24, 2011
2.41 November 27, 2011
2.69 March 7, 2012
4.47 December 18, 2013
4.62 February 11, 2014
5.00 June 30, 2014
8.27 October 5, 2017
8.46 December 12, 2017
8.65 February 20, 2018
8.74 March 27, 2018
4.51
(c) Share purchase warrants
The changes in warrants during the six months ended June 30, 2009 and year
ended December 31, 2008 were as follows:
June 30, 2 009
Weighted
average
Number of exercise
warrants price
Cdn$
Balance outstanding ,
beginning of period 58 ,4 85,99 6 1.80
Warrants exercised - -
Warrants expired (58 ,4 85,99 6) 1.80
Balance outstanding ,
end of period - -
December 31, 2008
Weighted
average
Number of exercise
warrants price
Cdn $
Balance outstanding ,
beginning of period 71,248,050 1.83
Warrants exercised (10,824,077) 1.97
Warrants expired (1 ,937,977) 2.00
Balance outstanding ,
end of period 58,485,996 1.80
(d) Share-based payments
The fair value of each option granted is estimated at the time of the grant
using the Black-Scholes option pricing model with weighted average assumptions
for grants as follows:
June 30, 2009
(3 months) ( 6 months)
Risk-free interest rate 1.84 % 1.83%
Expected life 3 years 3 years
Annualized volatility 79 % 79%
Dividend rate 0% 0%
Grant date fair value Cdn$0.27 Cdn$ 0.27
June 30, 2008
(3 months) (6 months)
Risk-free interest rate N/A 3.05%
Expected life N/A 3 years
Annualized volatility N/A 49%
Dividend rate N/A 0%
Grant date fair value N/A Cdn$1.22
Eastern Platinum Limited
Notes to the condensed consolidated interim financial statements
(Expressed in thousands of U.S. dollars, except number of shares and per share
amounts)
12. Related party transactions
The Company`s related parties consist of companies owned by executive officers
and directors as follows:
Nature of transactions
Andrews PGM Consulting Consulting
Buccaneer Management Inc. Management
Ja z z Financial Ltd. Management
Maluti Services Limited General and administrative
Xiste Consulting Ltd. Management
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.
June 30, June 30,
2009 2008
Note (3 months) (3 months)
Consulting fees (i) $ 45 $ 25
General and administrative
expenses 19 82
Management fees 238 311
$ 302 $ 418
June 30, June 30,
2009 2008
( 6 months) (6 months)
Consulting fees $ 76 $ 42
General and administrative
expenses 19 155
Management fees 473 669
$ 568 $ 866
i. The Company paid fees to a private company controlled by a director of
the Company for consulting services performed outside of his capacity as a
director.
ii. Amounts due to related parties are unsecured, non-interest bearing and
due on demand. Accounts payable at June 30, 2009 included $Nil (December
31, 2008 - $35) which were due to private companies controlled by officers
of the Company.
Eastern Platinum Limited
Notes to the condensed consolidated interim financial statements
(Expressed in thousands of U.S. dollars, except number of shares and per share
amounts)
13. Segmented information
(a) Operating segment - The Company`s operations are primarily directed
towards the acquisition, exploration and production of platinum group
metals in South Africa.
(b) Geographic segments - The Company`s assets, revenues and expenses by
geographic areas for the three and six months ended June 30, 2009 and
June 30, 2008 are as follows:
June 30, 2009 (3 months)
South Africa Canada Total
Property, plant and
equipment $ 603,480 $ 38 $ 603,518
Refining contract 14,276 - 14 ,276
Other assets 1,670 - 1,670
Total assets 652,849 16,238 669,087
Property, plant and
equipment expenditures $ 8,282 $ - $ 8,282
Sale of property, plant and
equipment 1,552 - 1,552
Revenues $ 24,838 $ - $24,838
Pro d u ction costs (18,309) - (18,309)
Depletion and depreciation (4,286) - (4,286)
General and administrative
expenses (2,359) (812) (3,171)
Share-based payments (110) (93) (203)
Interest income 416 79 495
Finance costs (375) - (375)
Foreign exchange ga in
(loss) 42 (1,414) (1,372)
Loss before income taxes $ (143) $ (2,240) $ (2,383)
June 30, 2008 (3 months)
South Africa Canada Total
Property, plant and
equipment expenditures $ 34,639 $ 4 $ 34 ,6 43
Revenues $ 49,317 $ - $ 49 ,3 17
Production costs (21,058) - (21,058)
Depletion and depreciation (4,480) - (4,480)
General and
administrative expenses (4,111) (1,198) (5,309)
Share based payments (559) 79 (480)
Interest income 1,927 950 2,877
Finance costs (2,337) 89 (2,248)
Foreign exchange gain 49 22 71
Profit (los s) before
income taxes $ 18,748 $ (58) $ 18,690
Eastern Platinum Limited
Notes to the condensed consolidated interim financial statements
(Expressed in thousands of U.S. dollars, except number of shares and per share
amounts)
June 30, 2009 (6 months)
South Africa Canada Total
Property, plant and
equipment expenditures $ 18,999 $ - $ 18,999
Sale of property,
plant and equipment 1,552 - 1,552
Revenues $ 49,741 $ - $ 49,741
Production costs (36,194) - (36,194)
Depletion and
depreciation (7,803) - (7,803)
General and
administrative
expenses (3,117) (1,690) (4,807)
Share-based payments (242) (93) (335)
Interest income 770 219 989
Finance costs (827) - (827)
Foreign exchange loss (52) (1,395) (1,447)
Profit (loss) before
income taxes $ 2,276 $ (2,959) $ (683)
June 30, 2008 (6 months)
South Africa Canada Total
Property, plant and
equipment expenditures $ 58,331 $ 18 $ 58,349
Revenues $ 105,112 $ - $ 105,112
Production costs (40,808) - (40,808)
Depletion and
depreciation (8,874) - (8,874)
General and
administrative expenses (6,958) (2,684) (9,642)
Share based payments (1,246) (583) (1,829)
Interest income 2,865 2,819 5,684
Finance costs (2,345) 89 (2,256)
Foreign exchange gain 1,106 22 1,1 2 8
Profit (loss) before
income taxes $ 48,852 $ (337) $ 48,515
December 31 , 2008
South Africa Canada Total
Property, plant and
equipment $ 508,648 $ 37 $ 508,685
Refining contract 12,493 - 12,493
Other assets 1,017 - 1,017
Total assets 539,816 56,7 54 596,570
For the three and six months ended June 30, 2009 and June 30, 2008,
substantially all of the Company`s PGM production was sold to one customer.
14. Accounting estimates and judgments
(a) Useful life of assets
The Company engaged an independent third party engineering company in South
Africa to assess the life of mine ("LOM") of Barplats Mines Limited
("Barplats") in December 2007.
Eastern Platinum Limited
Notes to the condensed consolidated interim financial statements
(Expressed in thousands of U.S. dollars, except number of shares and per share
amounts)
14. Accounting estimates and judgments (continued)
(a) Useful life of assets (continued)
At December 31, 2008 the remaining LOM for Barplats was assessed at 153 months
(December 31, 2007 - 165 months). This estimate is based on proven and probable
ore reserves. The change in remaining mine life will be evaluated each year as
the reserves move to the proven and probable category.
(b) Impairment of property, plant and equipment
During the year ended December 31, 2008, the significant decline in platinum
group metal prices triggered an impairment assessment which resulted in an
impairment of $314 million on Kennedy`s Vale. Future cash flows were discounted
to present value at the weighted average cost of capital of 9%.
The foreign exchange rate utilized in the model is ZAR9.51 = US$1.00.
The average forecast prices utilized in the impairment model, in US$ per ounce,
are:
2009 2010 2011 2012 2013+
Platinum 950 1,020 1,055 1,155 1,180
Palladium 210 225 305 385 380
Rhodium 1,000 980 2,785 2,895 2,830
Gold 870 815 650 695 680
Iridium 270 295 345 350 340
Ruthenium 190 215 240 250 245
Nickel 13,850 15,875 16,210 16,285 15,915
Copper 5,180 5,550 5,505 4,265 4,170
Chrome 380 382 400 400 400
15. IFRS
IFRS 1 First-time Adoption of International Financial Reporting Standards sets
forth guidance for the initial adoption of IFRS. Under IFRS 1 the standards are
applied retrospectively at the transitional statement of financial position
date with all adjustment to assets and liabilities taken to retained earnings
unless certain exemptions are applied. The Company has applied the following
exemptions to its opening statement of financial position dated January 1,
2008:
(a) Business Combinations
IFRS 1 indicates that a first-time adopter may elect not to apply IFRS 3
Business Combinations retrospectively to business combinations that occurred
before the date of transition to IFRS. The Company has taken advantage of this
election and has applied IFRS 3 to business combinations that occurred on or
after January 1, 2008.
(b) Cumulative translation differences
IFRS 1 allows a first-time adopter tonot comply with the requirements of IAS 21
The Effects of Changes in Foreign Exchange Rates for cumulative translation
differences that existed at the date of transition to IFRS. The Company has
chosen to apply this election and has eliminated the cumulative translation
difference and adjusted retained earnings by the same amount at the date of
transition to IFRS. If, subsequent to adoption, a foreign operation is disposed
of, the translation differences that arose before the date of transition to
IFRS will not affect the gain or loss on disposal.
Eastern Platinum Limited
Notes to the condensed consolidated interim financial statements
(Expressed in thousands of U.S. dollars, except number of shares and per share
amounts)
(c) Share-based payment transactions
IFRS 1 encourages, but does not require, first-time adopters to apply IFRS 2
Share- based Payment to equity instruments that were granted on or before
November 7, 2002, or equity instruments that were granted subsequent to
November 7, 2002 and vested before the later of the date of transition to IFRS
and January 1, 2005. The Company has elected not to apply IFRS 2 to awards that
vested prior to January 1, 2008.
(d) IAS 27 - Consolidated and Separate Financial Statements
In accordance with IFRS 1, if a company elects to apply IFRS 3 Business
Combinations retrospectively, IAS 27 Consolidated and Separate Financial
Statements must also be applied retrospectively. As the Company elected to
apply IFRS 3 prospectively, the Company has also elected to apply IAS 27
prospectively.
IFRS 1 also outlines specific guidelines that a first-time adopter must adhere
to under certain circumstances. The Company has applied the following
guidelines to its opening statement of financial position dated January 1,
2008:
(e) Assets and liabilities of subsidiaries and associates
In accordance with IFRS 1, if a parent company adopts IFRS subsequent to its
subsidiary or associate adopting IFRS, the assets and the liabilities of the
subsidiary or associate are to be included in the consolidated financial
statements at the same carrying amounts as in the financial statements of the
subsidiary or associate. The Company`s principal operating subsidiary, Barplats
Investments Limited, adopted IFRS in 2005.
(f) Estimates
In accordance with IFRS 1, an entity`s estimates under IFRS at the date of
transition to IFRS must be consistent withestimates made for the same date
under previous GAAP, unless there is objective evidence that those estimates
were in error. The Company`s IFRS estimates as of January 1, 2008 are
consistent with its Canadian GAAP estimates for the same date.
IFRS employs a conceptual framework that is similar to Canadian GAAP. However,
significant differences exist in certain matters of recognition, measurement
and disclosure. While adoption of IFRS has not changed the Company`s actual
cash flows, it has resulted in changes to the Company`s reported financial
position and results of operations. In order to allow the users of the
financial statements to better understand these changes, the Company`s
Canadian GAAP statement of operations, statement of comprehensive profit,
statement of financial position and statement of cash flows for the three and
six months ended June 30, 2008 and the year ended December 31, 2008 have been
reconciled to IFRS, with the resulting differences explained.
(g) Revenue and interest income
The Company settles its metal sales three or five months following the physical
delivery of the concentrates.
Eastern Platinum Limited
Notes to the condensed consolidated interim financial statements
(Expressed in thousands of U.S. dollars, except number of shares and per share
amounts)
The present value of sales revenue expected to be received in three or five
months is recognized on the date of sale. The difference between the present
value and the future value is recognized as interest revenue over the term of
settlement. In its Canadian GAAP financial statements for the year ended
December 31, 2008, the Company recorded the future value as sales revenue, as
opposed to recognizing the difference between the present value and the future
value as interest revenue over the term of settlement. The difference in the
treatment of revenue results in a timing difference in the recognition of
income and is not material to these financial statements.
(h) Property plant and equipment
Due to the adjustments to the provision for environmental rehabilitation
discussed in Note 15(j), the cost of property plant and equipment is different
in accordance with IFRS than in accordance with Canadian GAAP. As aresult, even
though depreciation is calculated in the same manner, the amount of
depreciation differs.
(i) Share-based payments
IFRS
Each tranche of an award with different vesting dates is considered a
separate grant for the calculation of fair value, and the resulting fair value
is amortized over the vesting period of the respective tranches.
Forfeiture estimates are recognized in the period they are estimated, and are
revised for actual forfeitures in subsequent periods.
Canadian GAAP
The fair value of stock-based awards with graded vesting are calculated as
one grant and the resulting fair value is recognized on a straight-line
basis over the vesting period.
Forfeitures of awards are recognized as they occur.
(j) Provision for environmental rehabilitation
IFRS
The provision for environmental rehabilitation must be adjusted for changes
in the discount rate.
Canadian GAAP
The provision for environmental rehabilitation is not adjusted for changes in
the discount rate.
(k) Deferred tax asset/liability
IFRS
All deferred tax assets and liabilities must be classified as non-current.
Canadian GAAP
Deferred tax assets and liabilities can be classified as current or
non-current as appropriate.
Eastern Platinum Limited
Notes to the condensed consolidated interim financial statements
(Expressed in thousands of U.S. dollars, except number of shares and per share
amounts)
(l) Accounts payable, accrued liabilities and provisions
IFRS - a provision is a liability of uncertain timing or amount. Provisions are
disclosed separately from liabilities and accrued liabilities and require
additional disclosure.
Canadian GAAP - Accounts payable, accrued liabilities and provisions are
disclosed on the statement of financial position as a single line item.
(m) Other comprehensive profit (loss)
Other comprehensive profit (loss) consists of the change in the cumulative
translation adjustment ("CTA"). Due to other IFRS adjustments, the balances
that are used to calculate the CTA are different in accordance with IFRS than
in accordance with Canadian GAAP. As aresult, CTA and other comprehensive
profit (loss) are different in accordance with IFRS than in accordance with
Canadian GAAP.
(n) Impairment
IFRS - If indication of impairment is identified, the asset`s carrying value is
compared to the asset`s discounted cash flows. If the discounted cash flows are
less than the carrying value, the asset is impaired by an amount equal to the
difference between the discounted cash flows and the carrying value.
Canadian GAAP - If indication of impairment is identified, the asset`s carrying
value is compared to the asset`s undiscounted cash flows. If the undiscounted
cash flows are less than the carrying value, the asset is impaired by an amount
equal to the difference between the discounted cash flows and the carrying
value.
The Company completed an impairment review of its assets at January 1, 2008 and
concluded that the assets were not impaired in accordance with IFRS. At
December 31, 2008, the carrying value of the Kennedy`s Vale mineral property
was less than the property`s undiscounted cash flows, but greater than the
property`s discounted cash flows. As aresult, the mineral property was
concluded to be impaired in accordance with IFRS, but not impaired in
accordance with Canadian GAAP. An impairment of $314 million and an income tax
recovery of $87 million have been recorded relating to the Kennedy`s Vale
impairment.
(o) Presentation
The presentation of the cash flow statement in accordance with IFRS differs
from the presentation of the cash flow statement in accordance with Canadian
GAAP.
Eastern Platinum Limited
Notes to the condensed consolidated interim financial statements
(Expressed in thousands of U.S. dollars, except number of shares and per share
amounts)
The January 1, 2008 Canadian GAAP statement of financial position has been
reconciled to IFRS as follows:
January 1 , 2008
Note Canadian
GAAP
Assets
Current assets
Cash a nd cash equivalents $ 18,818
Short-term investments 171,038
Trade receivables (e )(g) 33,157
Inventories 6 888
229,901
Property, plant and
equipment (e)(h)(j) 813,461
Refining contract 18,467
Other assets 1,247
$ 1,063,076
Liabilities
Current liabilities
Accounts payable and
accrued liabilities (e)(l) $ 22,967
Provisions (e)(l) -
Current portion of
long-term liability 3,837
Deferred tax (k) 6,416
33,220
Provision for environmental
rehabilitation (e )(j) 2,889
Finance leases 9,127
Deferred tax liabilities (k) 143,616
188,852
Capital and reserves
Issued capital 868,045
Equity reserve 27,428
Curre n cy tra n sla tion
adjustment (b ) 23,481
Deficit (68,132)
850,822
Non -contro lling interest 23,402
874,224
$ 1,063,076
Effect of
transition to IFRS
IFRS
Assets
Current assets
Cash a nd cash equivalents $ - $ 18,818
Short-term investments - 171,038
Trade receivables (597) 32,560
Inventories - 6,888
(597) 229,304
Property, plant and
equipment 1,929 815,390
Refining contract - 18,467
Other assets - 1,247
$ 1,332 $ 1,064,408
Liabilities
Current liabilities
Accounts payable and
accrued liabilities $ (1,460) $ 21,507
Provisions 1,460 1,460
Current portion of
long-term liability - 3,837
Deferred tax (6,416) -
(6,416) 26,804
Provision for environmental
re ha b ilita tion 3,335 6,224
Finance leases - 9,127
Deferred tax liabilities 6,416 150,032
3,335 192,187
Capital and reserves
Issued capital - 868,045
Equity reserve - 27,428
Curre n cy tra n sla tion
adjustment (23,481) -
Deficit 21,747 (46,385 )
(1,734) 849,088
Non -contro lling interest (269) 23,133
(2,003) 872,221
$ 1,332 $ 1,064,408
The Canadian GAAP income statement and statement of comprehensive income for
the three months ended June 30, 2008 have been reconciled to IFRS as follows:
3 months ended June 30, 2008
Canadian
Note GAAP
Revenue (g) $ 50,143
Cost of operations
Production costs 21,058
Depletion and depreciation (h ) 4,450
25,508
Mine operating earnings 24,635
Expenses
General and administrative 5,309
Share-based payments (i) 340
5,649
Operating profit 18,986
Other income (expense)
Interest income (g ) 1,855
Finance costs (j) (1,935 )
Foreign exchange ga in 71
Profit before income taxes 18,977
Deferred income tax expense (k) (5,532)
Net profit for the period $ 13,445
Attributable to
Non-controlling interest $ 740
Equity shareholders of the Company $ 12,705
Effect of
transition IFRS
to IFRS
Revenue $ (826) $ 49,317
Cost of operations
Production costs - 21,058
Depletion and depreciation 30 4,480
30 25,538
Mine operating earnings (856) 23,779
Expenses
General and administrative - 5,309
Share-based payments 140 480
140 5,789
Operating profit (996) 17,990
Other income (expense)
Interest income 1,022 2,877
Finance costs (313) (2,248)
Foreign exchange ga in - 71
Profit before income taxes (287) 18,690
Deferred income tax expense (1) (5,533)
Net profit for the period $ (288) $ 13,157
Attributable to
Non-controlling interest $ 269 $ 1,009
Equity shareholders of the Company $ (557) $ 12,148
3 months ended June 30, 2008
Note Canadian
GAAP
Net profit for the period $ 13,445
Other comprehensive profit - currency
translation a d ju stme n t (m) 22,266
Comprehensive profit $ 35,711
Attributable to
Non-controlling interest $ 740
Equity shareholders of the Company $ 34,971
Effect of IFRS
transition to IFRS
Net profit for the period $ (288) $ 1 3,157
Other comprehensive profit - currency
translation a d ju stme n t (205) 2 2,061
Comprehensive profit $ (493) $ 3 5,218
Attributable to
Non-controlling interest $ 269 $ 1,009
Equity shareholders of the Company $ (762) $ 3 4,209
Eastern Platinum Limited
Notes to the condensed consolidated interim financial statements
(Expressed in thousands of U.S. dollars, except number of shares and per share
amounts)
The Canadian GAAP income statement and statement of comprehensive income for
the six months ended June 30, 2008 have been reconciled to IFRS as follows:
6 months ended June 30, 2008
Canadian
Note GAAP
Revenue (g) $ 106,551
Cost of operations
Production costs 40,808
Depletion and depreciation (h) 8,812
49,620
Mine operating earnings 56,931
Expenses
General and administrative 9,642
Share-based payments (i) 1,567
11,209
Operating profit 45,722
Other income (expense)
Interest income (g) 4,310
Finance costs (j) (2,162)
Foreign exchange ga in 1,128
P rofit before income taxes 48,998
Deferred income tax expense (13,780)
Net profit for the period $ 35,218
Attributable to
Non-controlling interest $ 2,551
Equity shareholders of the Company $ 32,667
Effect of
transition IFRS
to IFRS
Revenue $ (1,439) $ 105,112
Cost of operations
Production costs - 40,808
Depletion and depreciation 62 8,874
62 49,682
Mine operating earnings (1,501) 55,430
Expenses
General and administrative - 9,642
Share-based payments 262 1,829
262 11,471
Operating profit (1,763) 43,959
Other income (expense)
Interest income 1,374 5,684
Finance costs (94) (2,256)
Foreign exchange ga in - 1,128
P rofit before income taxes (483) 48,515
Deferred income tax expense - (13,780)
Net profit for the period $ (483) $ 34,735
Attributable to
Non-controlling interest $ 560 $ 3,111
Equity shareholders of the Company $ (1,043) $ 31,624
6 months ended June 30, 2008
Canadian
Note GAAP
Net profit for the period $ 35,218
Other comprehensive loss - currency
translation a d ju stme n t (m) (74,239)
Comprehensive loss $ (39,021)
Attributable to
Non-controlling interest $ 2,551
Equity shareholders of the Company $ (41,572)
Effect of
transition to IFRS IFRS
Net profit for the period $ (483) $ 34,735
Other comprehensive loss - currency
translation adjustment (65) (74,304)
Comprehensive loss $ (548) $ (39,569)
Attributable to
Non-controlling interest $ 560 $ 3,111
Equity shareholders of the Company $ (1,108) $ (42,680)
The Canadian GAAP income statement and statement of comprehensive income for
the twelve months ended December 31, 2008 have been reconciled to IFRS as
follows:
12 months ended December 31 , 2008
Canadian
Note GAAP
Revenue (g) $ 116,198
Cost of operations
Production costs 79,961
Depletion and depreciation (h) 14,599
94,560
Mine operating earnings 21,638
Expenses
Impairment (n) -
General and a d minis tra tive (e) 19,411
Share-based payments (i) 4,290
23,701
Operating loss (2,063)
Other income (expense)
Interest income (g) 7,081
Finance costs (j) (3,551)
Foreign exchange gain (2,155)
Lo ss before income taxes (688)
Deferred income tax recovery (k) 13,623
Net profit (loss) for the period $ 12,935
Attributable to
Non-controlling interest $ (3,429)
Equity shareholders of the Company $ 16,364
Effect of
transition to IFRS
IFRS
Revenue $ (1,517 ) $ 114,681
Cost of operations
Production costs - 79,961
Depletion and depreciation 63 14,662
63 94,623
Mine operating earnings (1,580) 20,058
Expenses
Imp airmen t 313,603 313,603
General and a d minis tra tive 30 19,441
Share-based payments 335 4,625
313,968 337,669
Operating loss (315,548) (317,611)
Other income (expense)
Interest income 1,863 8,944
Finance costs (174) (3,725)
Foreign exchange ga in - (2,155)
Lo ss before income taxes (313,859) (314,547)
Deferred income tax recovery 87,808 101,431
Net profit (loss) for the period $ (226,051) $ (213,116)
Attributable to
Non-controlling interest $ (306) $ (3,735)
Equity shareholders of the Company $ (225,745) $ (209,381)
12 months ended December 31 , 2008
Canadian
Note GAAP
Net profit (loss ) for the period $ 12,935
Other comprehensive loss - currency
tra n slation ad ju stme n t (m) (197,052)
Comprehensive loss $ (184,117)
Attributable to
Non-controlling interest $ (3,429)
Equity shareholders of the Company $ (180,688)
Effect of
transition to IFRS IFRS
Net profit (loss ) for the period $ (226,051) $ (213,116)
Other comprehensive loss - currency
tra n slation ad ju stme n t 27,475 (169,577)
Comprehensive loss $ (198,576) $ (382,693)
Attributable to
Non-controlling interest $ (306) $ (3,735)
Equity shareholders of the Company $ (198,270) $ (378,958)
The Canadian GAAP statement of financial position at June 30, 2008 has been
reconciled to IFRS as follows:
June 30, 2008
Note Canadian
GAAP
Assets
Current assets
Cash and cash equivalents $ 90,734
Short-term investments 104,653
Trade receivables (g) 42,435
Inventories 6,417
244,239
Property, plant and equipment (h)(j) 778,145
Refining contract 15,562
Other assets 1,152
$ 1,039,098
Liabilities
Accounts payable and accrued
liabilities (l) $ 26,664
Provisions (l) -
Deferred tax liability (k) 9,186
Current portion of long-term liability 4,011
39,861
Provision for environmental
rehabilitation (j) 2,711
Capital le ases and o the r long-term
liabilities 3,976
Deferred tax liability (k) 136,678
183,226
Capital and reserves
Issued capital 889,854
Equity reserve (i) 28,862
Currency tran slation adjustment (m) (50,759)
Deficit (35,465)
832,492
Non-controlling interest 23,380
855,872
$ 1,039,098
Effect of
transition to IFRS
IFRS
Assets
Current assets
Cash and cash equivalents $ - $ 90,734
Short-term investments - 104,653
Trade receivables (616) 41,819
Inventories - 6,417
(616) 243,623
Property, plant and equipment 1,346 779,491
Refining contract - 15,562
Other assets - 1,152
$ 730 $ 1,039,828
Liabilities
Accounts payable and accrued
liabilities $ (1,285) $ 25,379
Provisions 1,285 1,285
Deferred tax liability (9,186) -
Current portion of long-term liability - 4,011
(9,186) 30,675
Provision for environmental
rehabilitation 3,030 5,741
Capital le ases and o the r long-term
liabilities - 3,976
Deferred tax liability 8,989 145,667
2,833 186,059
Capital and reserves
Issued capital - 889,854
Equity reserve 263 29,125
Currency tran slation adjustment (23,545) (74,304)
Deficit 20,704 (14,761)
(2,578) 829,914
Non-controlling interest 475 23,855
(2,103) 853,769
$ 730 $ 1,039,828
Eastern Platinum Limited
Notes to the condensed consolidated interim financial statements
(Expressed in thousands of U.S. dollars, except number of shares and per share
amounts)
15. IFRS (continued)
The Canadian GAAP statement of financial position at December 31, 2008 has been
reconciled to IFRS as follows:
December 3 1 , 2008
Canadian
Note GAAP
Assets
Current assets
Cash and cash equivalents $ 25,806
Short-term investments 35,257
Trade receivables (g) 9,556
Inventories 3,881
Deferred tax asset (k) 1,178
75,678
Property, plant and equipment (h)(j)(n) 783,039
Refining contract 12,493
Other assets 1,017
$ 872,227
Liabilities
Current liabilities
Accounts payable and accrued
liabilities (l) $ 36,729
Provisions (l) -
Current portion capital leases 649
Current loans 2,972
40,350
Non -current liab ilities
Provision for environmental
rehabilitation (j) 2,846
Capital leases 3,261
Deferred tax liabilities (k) 117,234
163,691
Capital and reserves
Issued capital 890,049
Equity reserve (i) 31,491
Currency tran slation
adjustment (m) (173,571)
Deficit (51,768)
696,201
Non -controlling interest 12,335
708,536
$ 872,227
Effect of
transition to IFRS
IFRS
Assets
Current assets
Cash and cash equivalents $ - $ 2 5,806
Short-term investments - 3 5,257
Trade receivables (125) 9,431
Inventories - 3,881
Deferred tax asset (1,178) -
(1,303) 7 4,375
Property, plant and equipment (274,354) 50 8,685
Refining contract - 1 2,493
Other assets - 1,017
$ (275,657) $ 59 6,570
Liabilities
Current liabilities
Accounts payable and accrued
liabilities $ (1,726) $ 3 5,003
Provisions 1,726 1,726
Current portion capital leases - 649
Current loans - 2,972
- 4 0,350
Non -current liab ilities
Provision for environmental
rehabilitation 2,752 5,598
Capital leases - 3,261
Deferred tax liabilities (78,408) 3 8,826
(75,656) 8 8,035
Capital and reserves
Issued capital - 89 0,049
Equity reserve 336 31,827
Currency tran slation
adjustment 3,994 (16 9,577)
Deficit (203,998) (25 5,766)
(199,668) 49 6,533
Non -controlling interest (333) 1 2,002
(200,001) 50 8,535
$ (275,657) $ 59 6,570
The reconciliation of the statement of cash flows for the three months ended
June 30, 2008:
June 30, 2008 (3 months)
Canadian
Note GAAP
Operating activities
Net profit for the period $ 13,445
Adjustments tonet profit for non -cash items
Depreciation (h) 4,536
Refining contract amortization (o) -
Share-based payments (i) 340
Interest income (o) -
Finance costs (o) -
Foreign exchange ga in (71)
Deferred income tax expense (k) 5,532
Adjustments tonet profit for cash items
Interest income received (o) -
Finance costs paid (o) -
23,782
Net changes in non -cash working capital items
Trade receivables (g) 17,480
Inventories (670)
Accounts payable and accrued
liabilities 3,871
44,463
Investing activities
Maturity of short-term investments (o) 7,758
(o) -
Purchase of other assets
Property, plant and equipment
expenditures (34,643)
(26,885)
Financing activities
Common shares issued for cash , net of
share issu e costs 17,452
Repayment of short-term debt (o) (88)
Other long-term liabilities (o) (2,970)
14,394
Effect of exchange rate changes on cash
and cash equivalents 563
Increase in cash and cash equivalents 32,535
Cash and cash equivalents , beginning
of period 58,199
Cash and cash equivalents, end of period $ 90,734
Effect of
transition to IFRS
IFRS
Operating activities
Net profit for the period $ (288) $ 13,157
Adjustments tonet profit for non -cash items
Depreciation (56) 4,480
Refining contract amortization 356 356
Share-based payments 140 480
Interest income (2,877) (2,877)
Finance costs 2,248 2,248
Foreign exchange ga in - (71)
Deferred income tax expense 1 5,533
Adjustments tonet profit for cash items
Interest income received 3,496 3,496
Finance costs paid (481) (481)
2,539 26,321
Net changes in non -cash working capital items
Trade receivables (978) 16,502
Inventories - (670)
Accounts payable and accrued
liabilities - 3,871
1,561 46,024
Investing activities
Maturity of short-term investments 25 7,783
(25) (25)
Purchase of other assets
Property, plant and equipment
expenditures - (34,643)
- (26,885)
Financing activities
Common shares issued for cash , net of
share issu e costs - 17,452
Repayment of short-term debt (294) (382)
Other long-term liabilities (502) (3,472)
(796) 13,598
Effect of exchange rate changes on cash
and cash equivalents (765) (202)
Increase in cash and cash equivalents - 32,535
Cash and cash equivalents , beginning
of period - 58,199
Cash and cash equivalents, end of period $ - $ 90,734
The reconciliation of the statement of cash flows for the six months ended June
30, 2008:
June 30, 2008 ( 6 months)
Canadian
Note GAAP
Operating activities
Net profit for the period $ 35,218
Adjustments tonet profit for non-cash items
Depreciation (h) 8,978
Refining contract amortization (o) -
Share-based payments (i) 1,567
Interest income (o) -
Finance costs (o) -
Foreign exchange gain (1,128)
Deferred income tax expense 1 3,780
Adjustments tonet profit for cash items
Interest income received (o) -
Finance costs paid (o) -
58,415
Net changes in non -cash working capital items
Trade receivables (g) (13,321)
Inventories (356)
Accounts payable and accrued
liabilities 6,233
50,971
Investing activities
Maturity of short-term investments (o) 62,325
Purchase of other assets (o) -
Property, plant and equipment
expenditures (58,349)
3,976
Financing activities
Common shares issued for cash , net of
share issue costs 21,676
Repayment of short-term debt (o) 292
Other long -te rm liabilities (o) (3,270)
18,698
Effect of exchange rate changes on cash
and cash equivalents (1,729)
Increase in cash and cash equivalents 71,916
Cash and cash equivalents, beginning
of period 18,818
Cash and cash equivalents, end of period $ 90,734
Effect of
transition to IFRS
IFRS
Operating activities
Net profit for the period $ (483) $ 34,735
Adjustments tonet profit for non-cash items
Depreciation (104) 8,874
Refining contract amortization 723 723
Share-based payments 262 1,829
Interest income (5,684) (5,684)
Finance costs 2,256 2,256
Foreign exchange gain - (1 ,128)
Deferred income tax expense - 13,780
Adjustments tonet profit for cash items
Interest income received 4,939 4,939
Finance costs paid (363) (363)
1,546 59,961
Net changes in non -cash working capital items
Trade receivables (28) (13,349)
Inventories - (356)
Accounts payable and accrued
liabilities - 6,233
1,518 52,489
Investing activities
Maturity of short-term investments 55 62,380
Purchase of other assets (55) (55)
Property, plant and equipment
expenditures - (58,349)
- 3,976
Financing activities
Common shares issued for cash , net of
share issue costs - 21,676
Repayment of short-term debt (1,248) (956)
Other long -te rm liabilities (614) (3,884)
(1,862) 16,836
Effect of exchange rate changes on cash
and cash equivalents 344 (1,385)
Increase in cash and cash equivalents - 71,916
Cash and cash equivalents, beginning
of period - 18,818
Cash and cash equivalents, end of period $ - $ 90,734
The reconciliation of the statement of cash flows for the twelve months ended
December 31, 2008:
December 31 , 2008 (12 months)
Canadian
Note GAAP
Operating activities
Net profit (loss) for the period $ 12,935
Ad jus tme nts tonet profit (loss) for non-cash items
Depreciation (h) 14,877
Refining contract amortization 1,353
Impairment (n) -
Share-based payments (i) 4,290
Interest income (o) -
Finance costs (o) 2,845
Foreign exchange loss (o) 5,7 3 1
Realized foreign exchange gain (o) -
Deferred inco me tax recovery (k) (13 ,623)
Ad jus tme nts tonet profit (loss) for cash items
Interest income received (o) -
Finance costs paid (o) -
28,408
Net changes in non-cash working capital items
Trade receivables (g) 10,765
Inventories 1 ,391
Accou nts payable and accrued
liabilities 1 2 ,962
53,526
Investing activities
Acquisitions, net of cash acquired (39,589)
Maturity of short-term investments (o) 119,318
Purchase of other assets (o) -
Property, plant and equipment
expenditures (143,373)
(63,644)
Financing activities
Common shares issued for cash net of
share issue costs 22,004
Repayment of short-term debt (o) (892)
Other long-term liabilities (o) (3,411)
17,701
Effect of exchange rate changes on cash
and cash equivalents (595)
Increase in cash and cash equivalents 6,988
Cash and cash equivalents , beginning
of period 18,818
Cash and cash equivalents, end of period $ 25,806
Effect of
transition to IFRS
IFRS
Operating activities
Net profit (loss) for the period $ (226,051) $ (213,116)
Ad jus tme nts tonet profit (loss) for
non-cash items
Depreciation (215) 14,662
Refining contract amortization - 1,353
Impairment 313,603 313,603
Share-based payments 335 4,625
Interest income (8,944) (8,944)
Finance costs 880 3,725
Foreign exchange loss (3,576) 2,155
Realized foreign exchange gain (1,157) (1,157)
Deferred inco me tax recovery (87,808) (101,431)
Ad jus tme nts tonet profit (loss) for cash
items
Interest income received 10,028 10,028
Finance costs paid (375) (375)
(3,280) 25,128
Net changes in non-cash working capital items
Trade receivables 3,266 14,031
Inventories - 1,391
Accou nts payable and accrued
liabilities - 12,962
(14) 53,512
Investing activities
Acquisitions, net of cash acquired - (39,589)
Maturity of short-term investments 42 119,360
Purchase of other assets (42) (42)
Property, plant and equipment
expenditures - (143,373)
- (63,644)
Financing activities
Common shares issued for cash net of
share issue costs - 22,004
Repayment of short-term debt 892 -
Other long-term liabilities (898) (4,309)
(6) 17,695
Effect of exchange rate changes on cash
and cash equivalents 20 (575)
Increase in cash and cash equivalents - 6,988
Cash and cash equivalents , beginning
of period - 18,818
Cash and cash equivalents, end of period $ - $ 25,806
16. Subsequent events
From July 1, 2009 to August 13, 2009 there were no subsequent events.
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