To view the PDF file, sign up for a MySharenet subscription.

EPS - Eastern Platinum Limited - Condensed consolidated interim financial

Release Date: 13/11/2009 08:34
Code(s): EPS
Wrap Text

EPS - Eastern Platinum Limited - Condensed consolidated interim financial statements of Eastern Platinum Limited September 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 September 30, 2009 (Unaudited) Eastern Platinum Limited September 30, 2009 Table of contents Condensed consolidated interim income statements ........................... 3 Condensed consolidated interim statements of financial position ............ 4 Condensed consolidated interim statements of changes in equity ............. 5 Condensed consolidated interim statements of comprehensive income (loss).... 6 Condensed consolidated interim statements of cash flows .................... 7 Notes to the condensed consolidated interim financial statements ........ 8-42 Eastern Platinum Limited Condensed consolidated interim income statements (Expressed in thousands of U.S. dollars, except per share amounts - unaudited) Note September September 30, 2009 30, 2008
(3 months) (3 months) (Note 15) Revenue $ 27,365 $ 9,224 Cost of operations Production costs 22,394 20,629 Depletion and depreciation 4,308 4,743 26,702 25,372 Mine operating earnings (loss) 663 (16,148) Expenses General and administrative 2,336 5,585 Share-based payments 11 109 411 2,445 5,996
Operating (loss) profit (1,782) (22,144) Other income (expense) Interest income 448 2,297 Finance costs (332) (701) Foreign exchange gain (loss) 652 (28) (Loss) profit before income taxes (1,014) (20,576) Deferred income tax recovery (expense) 1,645 6,363 Net profit (loss) for the period $ 631 $ (14,213) Attributable to Non-controlling interest 4 $ (1,208) $ (3,384) Equity shareholders of the Company $ 1,839 $ (10,829) Earnings (loss) per share Basic $ 0.00 $ (0.02) Diluted $ 0.00 $ (0.02) Weighted average number of common shares outstanding in thousands Basic 68 0,558 680,245 Diluted 68 7,018 680,245 September September 30, 2009 30, 2008
(9 months) (9 months) (Note 15) Revenue $ 77,106 $ 114,336 Cost of operations Production costs 58,588 61,437 Depletion and depreciation 12,111 13,617 70,699 75,054 Mine operating earnings (loss) 6,407 39,282 Expenses General and administrative 7,143 15,227 Share-based payments 444 2,240 7,587 17,467
Operating (loss) profit (1,180) 21,815 Other income (expense) Interest income 1,437 7,981 Finance costs (1,159) (2,957) Foreign exchange gain (loss) (795) 1,100 (Loss) profit before income taxes (1,697) 27,939 Deferred income tax recovery (expense) 3,934 (7,417) Net profit (loss) for the period $ 2,237 $ 20,522 Attributable to Non-controlling interest $ (3,083) $ (273) Equity shareholders of the Company $ 5,320 $ 20,795 Earnings (loss) per share Basic $ 0.01 $ 0.03 Diluted $ 0.01 $ 0.03 Weighted average number of common shares outstanding in thousands Basic 680,541 675,979 Diluted 686,112 705,249 Condensed consolidated interim statements of financial position as at September 30 , 2009 and December 31 , 2008 (Expressed in thousands of U.S. dollars - unaudited) September 30, December 31, Note 2009 2008 (Note 15)
Assets Current assets Cash and cash equivalents $ 8,762 $ 25,806 Short-term investments 14,144 35,257 Trade receivables 24,484 9,431 Inventories 5 4,066 3,881 51,456 74,375 Property, plant and equipment 6 627,437 508,685 Refining contract 7 14,315 12,493 Other assets 8 1,983 1,017 $ 695,191 $ 596,570 Liabilities Current liabilities Accounts payable and accrued liabilities $ 18,049 $ 35,003 2,086 1,726
Provisions Current portion of finance leases 893 649 Current loans 157 2,972 21,185 40,350
Provision for environmental rehabilitation 9 7,275 5,598 Finance leases 3,644 3,261 Deferred tax liabilities 43,506 38,826 75,610 88,035 Capital and reserves Issued capital 11 890,062 890,049 Equity reserve 32,265 31,827 Currency translation adjustment (63,523) (169,577) Deficit (250,446) (255,766) 608,358 496,533 Non-controlling interest 4 11,223 12,002 619,581 508,535 $ 695,191 $ 596,570 Approved by the Board and authorized for issue on November 9, 2009. "David Cohen" "Robert Gayton" Daid Cohen , Director Robert Gayton , Director Condensed consolidated interim statements of changes in equity (Expressed in thousands of U.S. dollars - unaudited) Issued Capital Equity Currency
Shares Amount Reserve Translation Adjustment Balance, January 1, 2008 (Note 15) 669,031,691 $ 868,045 $ 27,428 $ - Warrants exercised 10,824,077 21,213 - - Stock options exercised 395,686 462 (236) - Share-based payments - - 2,240 - Currency translation - - - (119,671) Net profit for the period - - - - Non-controlling interest for the period - - - - Balance, September 30, 2008 (Note 15) 680,251,454 $ 889,720 $ 29,432 $ (119,671) Warrants exercised - (60) - - Stock options exercised 275,000 389 10 - Share-based payments - - 2,385 - Currency translation - - - (49,906) Net loss for the period - - - - Non-controlling interest for the period - - - - Balance, December 31 , 2008 (Note 15) 680,526,454 $ 890,049 $ 31,827 $ (169,577) Stock options exercised 35,659 13 (6) - Share-based payments - - 444 - Currency translation adjustment - - - 106,054 Net profit for the period - - - - Non-controlling interest for the period - - - - Balance, September 30, 2009 680,562,113 $ 890,062 $ 32,265 $ (63,523) Deficit Sub total
Balance, January 1, 2008 (Note 15) $ (46,385) $ 849,088 Warrants exercised - 21,213 Stock options exercised - 226 Share-based payments - 2,240 Currency translation - (119,671) Net profit for the period 20,795 20,795 Non-controlling interest for the period - - Balance, September 30, 2008 (Note 15) $ (25,590) $ 773,891 Warrants exercised - (60) Stock options exercised - 399 Share-based payments - 2,385 Currency translation - (49,906) Net loss for the period (230,176) (230,176) Non-controlling interest for the period - - Balance, December 31 , 2008 (Note 15) $ (255,766) $ 496,533 Stock options exercised - 7 Share-based payments - 444 Currency translation adjustment - 106,054 Net profit for the period 5,320 5,320 Non-controlling interest for the period - - Balance, September 30, 2009 $ (250,446) $ 608,358 Non-controlling Total Interest Share holders` Equity
Balance, January 1, 2008 (Note 15) $ 23,133 $ 872,221 Warrants exercised - 21,213 Stock options exercised - 226 Share-based payments - 2,240 Currency translation - (119,671) Net profit for the period - 20,795 Non-controlling interest for the period (3,896) (3,896) Balance, September 30, 2008 (Note 15) $ 19,237 $ 793,128 Warrants exercised - (60) Stock options exercised - 399 Share-based payments - 2,385 Currency translation - (49,906) Net loss for the period - (230,176) Non-controlling interest for the period (7,235) (7,235) Balance, December 31 , 2008 (Note 15) $ 12,002 $ 508,535 Stock options exercised - 7 Share-based payments - 444 Currency translation adjustment - 106,054 Net profit for the period - 5,320 Non-controlling interest for the period (779) (779) Balance, September 30, 2009 $ 11,223 $ 619,581 Condensed consolidated interim statements of comprehensive income (loss) (Expressed in thousands of U.S. dollars - unaudited) September September September September
30, 2009 30, 2008 30, 2009 30, 2008 (3 months) (3 months) (9 months) (9 months) (Note 15) (Note 15) Net profit (loss) for the period $ 631 $ (14,213) $ 2,237 $ 20,522 Other comprehnsive income (loss) - currency translation adjustment 24,012 (45,367) 106,054 (119,671) Comprehensive income (loss) $24,643 $ (59,580) $ 108,291 $ (99,149) Attributable to Non-controlling interest $ (1,208) $ (3,384) $ (3 ,083) $ (273) Equity shareholders of the Company $ 25,851 $ (56,196) $ 111,374 $ (98,876) Condensed consolidated interim statements of cash flows (Expressed in thousands of U.S. dollars - unaudited) 3 months ended September September
Note 30, 2009 30, 2008 (Note 15) Operating activities Net profit (loss) for the period $ 631 $ (14,213) Adjustments to net profit for non-cash items Depletion and depreciation 4,308 4,743 Refining contract amortization 7 354 355 Share-based payments 109 411 Interest income (448) (2,297) Finance costs 332 701 Foreign exchange (gain) loss (652) 28 Deferred income tax (recovery) expense (1,645) (6,363) Adjustments to net profit for cash items Interest income received 491 2,864 Finance costs paid - (35) Income taxes paid - - 3,480 (13,806) Net changes in non-cash working capital items Trade receivables (1,492) 35,806 Inventories 1,348 (832) Accounts payable and accrued liabilities 333 6,229 3,669 27,397 Investing activities Maturity of short-term investments 2,552 101,224 Purchase of other assets (256) (29) Property, plant and equipment expenditures (3,930) (42,896) Sale of property, plant and equipment - - (1,634) 58,299
Financing activities Common shares issued for cash, net of share issue costs - - Repayment of current loans - (74) Payment of finance leases (1) 42 (1) (32) Effect of exchange rate changes on cash and cash equivalents 246 (7,104) Increase (decrease) in cash and cash equivalents 2,280 78,560 Cash and cash equivalents, beginning of period 6,482 90,734 Cash and cash equivalents, end of period $ 8,762 $ 169,294 Cash and cash equivalents are comprised of: Cash in bank $ 4,022 $ 9 ,916 Short-term money market instruments 4,740 159 ,378 $8,762 $ 169,294 9 months ended
September September 30, 2009 30, 2008 (Note 15) Operating activities Net profit (loss) for the period $ 2,237 $ 20,522 Adjustments to net profit for non-cash items Depletion and depreciation 12,111 13,617 Refining contract amortization 964 1,078 Share-based payments 444 2,240 Interest income (1,437) (7,981) Finance costs 1,159 2,957 Foreign exchange (gain) loss 795 (1,100) Deferred income tax (recovery) expense (3,934) 7,417 Adjustments to net profit for cash items Interest income received 1,290 7,803 Finance costs paid (11) (398) Income taxes paid (2,422) - 11,196 46,155 Net changes in non-cash working capital items Trade receivables (9,435) 22,457 Inventories 708 (1,188) Accounts payable and accrued liabilities (17 020) 12,462 (14,551) 79,886 Investing activities Maturity of short-term investments 22,647 163,604 Purchase of other assets (665) (84) Property, plant and equipment expenditures (22,929) (101,245) Sale of property, plant and equipment 1,552 - 605 62,275 Financing activities Common shares issued for cash, net of share issue costs 12 21,440 Repayment of current loans (3,065) (1,030) Payment of finance leases (619) (3,842) (3,672) 16,568 Effect of exchange rate changes on cash and cash equivalents 574 (8,253) Increase (decrease) in cash and cash equivalent (17,044) 150,476 Cash and cash equivalents, beginning of period 25,806 18,818 Cash and cash equivalents, end of period $ 8,762 $ 169,294 Cash and cash equivalents are comprised of: Cash in bank $ 4,022 $ 9,916 Short-term money market instruments 4,740 159,378 $ 8,762 $ 169,294
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, Canada, 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 deferred tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred 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 deferred 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 deferred tax asset will be recovered, it provides a valuation allowance against the excess. The following temporary differences do not result in deferred tax assets or liabilities: the initial recognition of assets or liabilities that do not 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 income (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 changes in 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 to finance 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 do not 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. (ii) Other assets (continued) 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. (v) Impairment (continued) 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 determine the 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 to net 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: fair value through profit or loss ("FVTPL"); held-to-maturity ("HTM"); available for sale ("AFS"); and, loans and receivables. The classification is determined at initial recognition and depends on the nature and purpose of the financial asset. (i) FVTPL financial assets 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 a result, 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. (iii) Effective interest method (continued) 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 a review 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 a result 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. 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 a result 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 a reliable 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 a residual 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 FVTPL 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. 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 2,404 Non-controlling interests` share of interest on advances to Gubevu (2,677) Foreign exchange movement (3,623) Balance , September 30, 2008 $ 19,237 Non-controlling interests` share of loss in Barplats (3,121) Non-controlling interests` share of interest on advances to Gubevu (341) Foreign exchange movement (3,773) Balance , December 31, 2008 $ 12,002 Non-controlling interests` share of loss in Barplats (1,228) Non-controlling interests` share of interest on a vances to Gubevu (1,855) Foreign exchange movement 2,304 Balance, September 30, 2009 $ 11,223 5. Inventories September 30, December 31, 2009 2008 Consumables $ 3,672 $ 3,509 Ore and concentrate 394 372 $ 4,066 $ 3,881 6. Property, plant and equipment Mining Crocodile plant and River Mine
equipment (a) Cost Balance as at January 1, 2008 $ 273,483 $ 149,618 Additions Assets acquired 134,320 4,285 Assets acquired through business combination - 12,033 Disposals - - Foreign exchange movement (87,635) (40,794) Balance as at December 31, 2008 $ 320,168 $ 125,142 Additions Assets acquired 13,786 1,415 Assets under construction capitalized 7,295 - Disposals (1,580) - Foreign exchange movement 79,103 30,019 Balance as at September 30, 2009 $ 418,772 $ 156,576 Accumulated depreciation and impairment losses Balance as at January 1, 2008 $ 116,078 $ 11,932 Depreciation for the period 7,842 6,768 Impairment loss - - Foreign exchange movement (31,017) (3,907) Balance as at December 31, 2008 $ 92,903 $ 14,793 Depreciation for the period 8,585 3,525 Foreign exchange movement 23,031 4,657 Balance as at September 30, 2009 $ 124,519 $ 22,975 Carrying amounts At January 1, 2008 $ 157,405 $ 137,686 At December 31, 2008 $ 227,265 $ 110,349 At September 30, 2009 $ 294,253 $ 133,601 Kennedy`s Spitzkop Vale Project PGM Project (b) (c) Cost Balance as at January 1, 2008 $ 386,353 $ 121,443 Additions Assets acquired - 4,729 Assets acquired through business combination 53,754 - Disposals - - Foreign exchange movement (106,645) (24,459) Balance as at December 31, 2008 $ 333,462 $ 101,713 Additions Assets acquired - 365 Assets under construction capitalized - - Disposals - - Foreign exchange movement 81,122 14,086 Balance as at September 30, 2009 $ 414,584 $ 116,164 Accumulated depreciation and impairment losses Balance as at January 1, 2008 $ 15,666 $ - Depreciation for the period - - Impairment loss 313,603 - Foreign exchange movement (41,832) - Balance as at December 31, 2008 $ 287,437 $ - Depreciation for the period - - Foreign exchange movement 70,353 - Balance as at September 30, 2009 $ 357,790 $ - Carrying amounts At January 1, 2008 $ 370,687 $ 121,443 At December 31, 2008 $ 46,025 $ 101,713 At September 30, 2009 $ 56,794 $ 116,164 Mareesburg Other property
Project plant and (c) equipment TOTAL Cost Balance as at January 1, 2008 $ 28,075 $ 118 $959,090 Additions Assets acquired 472 18 143,824 Assets acquired through business combination 36 - 65,823 Disposals - (22) (22) Foreign exchange movement (5,284) (21) (264,838) Balance as at December 31, 2008 $ 23,299 $ 93 $ 903,877 Additions Assets acquired 68 - 15,634 Assets under construction capitalized - - 7,295 Disposals - - (1,580) Foreign exchange movement 3,217 13 207,560 Balance as at September 30, 2009 $ 26,584 $ 106 $ 1,132,786 Accumulated depreciation and 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 12,111 Foreign exchange movement - 5 98,046 Balance as at September 30, 2009 $ - $ 65 $ 505,349 Carrying amounts At January 1, 2008 $ 28,075 $ 94 $ 815,390 At December 31, 2008 $ 23,299 $ 34 $ 508,685 At September 30, 2009 $ 26,584 $ 41 $ 627,437 (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 2,841 Balance as at September 30, 2009 $ 20,798 Accumulated depreciation Balance as at January 1, 2008 $ 4,274 Depreciation for the period 1,353 Foreign exchange movement (163) Balance as at December 31, 2008 $ 5,464 Depreciation for the period 964 Foreign exchange movement 55 Balance as at September 30, 2009 $ 6,483 Carrying amounts At January 1, 2008 $ 18,467 At December 31, 2008 $ 12,493 At September 30, 2009 $ 14,315 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 nine months ended September 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 571 Service fees 5 Interest income 88 Foreign exchange movement 302 Balance, September 30, 2009 $ 1,983 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 September 30, 2009 is approximately ZAR 54.8 million ($7,275). 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 $1,983 (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 ($16,031). Changes to the environmental rehabilitation provision during the nine months ended September 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 319 Foreign exchange movement 1,358 Balance, September 30, 2009 $ 7,275 10. Commitments The Company has committed to capital expenditures on projects of approximately ZAR31 million ($4,122) as at September 30, 2009. 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 nine months ended September 30, 2009 and year ended December 31, 2008 were as follows: September 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 (64,333) 0.32 Options forfeited (5,154,167) 2.02 Balance outstanding, end of period 60,007,500 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 The following table summarizes information concerning outstanding and exercisable options at September 30, 2009: Remaining Options Options Exercise Contractual outstanding exercisable price Life (Years) Expiry date Cdn $
6,725,000 6,725,000 1.70 1.65 May 24, 2011 250,000 250,000 1.70 2.16 November 27, 2011 19,987,500 19,987,500 1.82 2.44 March 7, 2012 18,045,000 16,201,667 0.32 4.22 December 18, 2013 60,000 20,000 0.32 4.37 February 11, 2014 400,000 400,000 0.52 4.75 June 30, 2014 13,820,000 13,183,333 2.31 8.02 October 5, 2017 90,000 60,000 2.50 8.21 December 12, 2017 460,000 440,000 3.38 8.40 February 20, 2018 170,000 130,000 3.38 8.49 March 27, 2018 60,007,500 57,397,500 4.26 (c) Share purchase warrants The changes in warrants during the nine months ended September 30, 2009 and year ended December 31, 2008 were as follows: September 30, 2009 Weighted
average Number of exercise warrants price Cdn$
Balance outstanding, beginning of period 58,485,996 1.80 Warrants exercised - - Warrants expired (58,485,996) 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: September 30, 2009 September 30, 2008 (3 months) (9 months) (3 months) (9 months)
Risk-free interestrate N/A 1.83% N/A 3.05 % Expected life N/A 3 years N/A 3 years Annualized volatility N/A 79% N/A 49% Dividend rate N/A 0% N/A 0% Grant date fair value N/A Cdn$0.27 N/A Cdn $1.22 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 Jazz 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. have been measured at the exchange amount which is determined on a cost recovery basis. September September 30, 2009 30, 2008 Note (3 months) (3 months)
Consulting fees (i) $ 27 $ 20 General and administrative expenses 26 73 Managementfees 253 302 $ 306 $ 395 September September 30, 2009 30, 2008 (9 months) (9 months)
Consulting fees $ 103 $ 62 General and administrative expenses 45 228 Managementfees 726 971 $ 874 $ 1,261 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 September 30, 2009 included $Nil (December 31, 2008 - $35) which were due to private companies controlled by officers of the Company. 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 nine months ended September 30, 2009 and September 30, 2008 are as follows: September 30, 2009 (3 months)
South Africa Canada Total Current assets $ 34,632 $ 16,824 $ 51,456 Property, plant and equipment 627,396 41 627,437 Refining contract 14,315 - 14,315 Other assets 1,983 - 1,983 Total assets $ 678,326 $ 16,865 $ 695,191 Property, plant and equipment expenditures $ 3,930 $ - $ 3,930 Sale of property, plant and equipment - - - Revenues $ 27,365 $ - $ 27,365 Production costs (2 2,394) - (22,394) Depletion and depreciation (4,308) - (4,308) General and administrative expenses (1,457) (879) (2,336) Share-based payments (109) - (109) Interest income 380 68 448 Finance costs (332) - (332) Foreign exchange gain (loss) (6) 658 652 Loss before income taxes $ (861) $ (153) $ (1,014) September 30, 2008 (3 months) South Africa Canada Total
Property, plant and equipment expenditures $ 42,896 $ - $ 42,896 Revenues $ 9,224 $ - $ 9,224 Production costs (20,629) - (20,629) Depletion and depreciation (4,743) - (4,743) General and administrative expenses (4,269) (1 316) (5,585) Share based payments (417) 6 (411) Interest income 551 1,746 2,297 Finance costs (612) (89) (701) Foreign exchange gain (71) 43 (28) Profit (loss) before income taxes $ (20,966) $ 390 $ (20,576) (b) Geographic segments (continued) September 30, 2009 (9 months) South Africa Canada Total Property, plant and equipment expenditures $ 22,929 $ - $ 22,929 Sale of property, plant and equipment 1,552 - 1,552 Revenues $ 77,106 $ - $ 77,106 Production costs (58,588) - (58,588) Depletion and depreciation (12,111) - (12,111) General and administrative expenses (4,574) (2,569) (7,143) Share-based payments (351) (93) (444) Interest income 1,150 287 1,437 Finance costs (1,159) - (1,159) Foreign exchange loss (58) (737) (795) Profit (loss) before income taxes $ 1,415 $ (3,112) $ (1,697) September 30, 2008 (9 months)
South Africa Canada Total Property, plant and equipment expenditures $ 101,227 $ 18 $ 101,245 Revenues $ 114,336 $ - $ 114,336 Production costs (61,437) - (61,437) Depletion and depreciation (13,617) - (13,617) General and administrative expenses (11,227) (4,000) (15,227) Share based payments (1,663) (577) (2,240) Interest income 3,416 4,565 7,981 Finance costs (2,957) - (2,957) Foreign exchange gain 1,035 65 1,100 Profit before income taxes $ 27,886 $ 53 $ 27,939 December 31, 2008 South Africa Canada Total Current assets $ 17,658 $ 56,717 $ 74,375 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 56,754 596,570 For the three and nine months ended September 30, 2009 and September 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. 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$1.00. The average forecast prices utilized in the impairment model are: 2009 2010 2011 2012 2013 + Platinum US$/oz 950 1,020 1,055 1,155 1,180 Palladium US$/oz 210 225 305 385 380 Rhodium US$/oz 1,000 980 2,785 2,895 2,830 Gold US$/oz 870 815 650 695 680 Iridium US$/oz 270 295 345 350 340 Ruthenium US$/oz 190 215 240 250 245 Nickel US$/tonne 13,850 15,875 16,210 16,285 15,915 Copper US$/tonne 5,180 5,550 5,505 4,265 4,170 Chrome US$/tonne 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 to not 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. (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 with estimates 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 income, statement of financial position and statement of cash flows for the three and nine months ended September 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. 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 a result, 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. (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 income (loss) Other comprehensive income (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 a result, CTA and other comprehensive income (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 a result, 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. The January 1, 2008 Canadian GAAP statement of financial position has been reconciled to IFRS as follows: January 1 , 2008
Effect of Note Canadian transition to IFRS GAAP IFRS Assets Current assets Cash and cash equivalents $ 18,818 $ - $ 18,818 Short-term investments 171,038 - 171,038 Trade receivables (e)(g) 33,157 (597) 32,560 Inventories 6,888 - 6,888 229,901 (597) 229,304 Property, plant and equipment (e)(h)(j) 813,461 1,929 815,390 Refining contract 18,467 - 18,467 Other assets 1,247 - 1,247 $ 1,063,076 $ 1,332 $ 1,064,408
Liabilities Current liabilities Accounts payable and accrued liabilities (e)(l) $ 22,967 $ (1,460) $ 21,507 Provisions (e)(l) - 1,460 1,460 Current portion of long-term liability 3,837 - 3,837 Deferred tax (k) 6,416 (6,416) - 33,220 (6,416) 26,804
Provision for environmental rehabilitation (e)(j) 2,889 3,335 6,224 Finance leases 9,127 - 9,127 Deferred tax liabilities (k) 143,616 6,416 150,032 188,852 3,335 192,187 Capital and reserves Issued capital 868,045 - 868,045 Equity reserve 27,428 - 27,428 Currency translation adjustment (b) 23,481 (23,481) - Deficit (68,132) 21,747 (46,385) 850,822 (1,734) 849,088
Non-controlling interest 23,402 (269) 23,133 874,224 (2,003) 872,221 $ 1,063,076 $ 1,332 $ 1,064,408
The Canadian GAAP income statement and statement of comprehensive income for the three months ended September 30, 2008 have been reconciled to IFRS as follows: 3 months ended September 30, 2008
Canadian Effect of Note GAAP transition IFRS to IFRS Revenue (g) $ 9,291 $ (67) $ 9,224 Cost of operations Production costs 20,629 - 20,629 Depletion and depreciation (h) 4,716 27 4,743 25,345 27 25,372
Mine operating loss (16,054) (94) (16,148) Expenses General and administrative 5,585 - 5,585 Share-based payments (i) 278 133 411 5,863 133 5,996 Operating loss (21,917) (227) (22,144) Other income (expense) Interest income (g) 1,975 322 2,297 Finance costs (j) (659) (42) (701) Foreign exchange gain (28) - (28) Loss before income taxes (20,629) 53 (20,576) Deferred income tax recovery 6,363 - 6,363 Net loss for the period $ (14,266) $ 53 $ (14,213) Attributable to Non-controlling interest $ (3,705) $ 321 $ (3,384) Equity shareholders of the Company $ (10,561) $ (268) $ (10,829) 3 months ended September 30, 2008 Canadian Effect of
Note transition to IFRS GAAP IFRS Net loss for the period $ (14,266) $ 53 $ (14,213) Other comprehensive loss - currency translation adjustment (m) (45,656) 289 (45,367) Comprehensive loss $ (59,922) $ 342 $ (59,580) Attributable to Non-controlling interest $ (3,705) $ 321 $ (3,384) Equity shareholders of the Company $ (56,217) $ 21 $ (56,196) The Canadian GAAP income statement and statement of comprehensive income for the nine months ended September 30, 2008 have been reconciled to IFRS as follows: 9 months ended September 30, 2008
Canadian Effect of Note GAAP transition to IFRS IFRS Revenue (g) $ 115,842 $ (1,506) $ 114,336 Cost of operations Production costs 61,437 - 61,437 Depletion and depreciation (h) 13,528 89 13,617 74,965 89 75,054
Mine operating earnings 40,877 (1,595) 39,282 Expenses General and administrative 15,227 - 15,227 Share-based payments (i) 1,845 395 2,240 17,072 395 17,467 Operating profit 23,805 (1,990) 21,815 Other income (expense) Interest income (g) 6,285 1,696 7,981 Finance costs (j) (2,821) (136) (2,957) Foreign exchange gain 1,100 - 1,100 Profit before income taxes 28,369 (430) 27,939 Deferred income tax expense (7,417) - (7,417) Net profit for the period $ 20,952 $ (430) $ 20,522 Attributable to Non-controlling interest $ (1,154) $ 881 $ (273) Equity shareholders of the Company $ 22,106 $ (1,311) $ 20,795 9 months ended September 30, 2008 Effect of Note Canadian transition to
GAAP IFRS IFRS Net profit for the period $ 20,952 $ (430) $ 20,522 Other comprehensive loss - currency translation adjustment (m) (119,895) 224 (119,671) Comprehensive loss $ (98,943) $ (206) $ (99,149) Attributable to Non-controlling interest $ (1 ,154) $ 881 $ (273) Equity shareholders of the Company $ (97,789) $ (1,087) $ (98,876) 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
Effect of Canadian transition to Note GAAP IFRS IFRS Revenue (g) $ 116,198 $ (1,517) $ 114,681 Cost of operations Production costs 79,961 - 79,961 Depletion and depreciation (h) 14,599 63 14,662 94,560 63 94,623 Mine operating earnings 21,638 (1,580) 20,058 Expenses Impairment (n) - 313,603 313,603 General and administrative (e) 19,411 30 19,441 Share-based payments (i) 4,290 335 4,625 23,701 313,968 337,669
Operating loss (2,063) (315,548) (317,611) Other income (expense) Interest income (g) 7,081 1,863 8,944 Finance costs (j) (3,551) (174) (3,725) Foreign exchange gain (2,155) - (2,155) Loss before income taxes (688) (313,859) (314,547) Deferred income tax recovery (k) 13,623 87,808 101,431 Net profit (loss) for the period $ 12,935 $ (226,051) $ (213,116) Attributable to Non-controlling interest $ (3,429) $ (306) $ (3,735) Equity shareholders of the Company $ 16,364 $ (225,745) $ (209,381) 12 months ended December 31, 2008 Effect of Note Canadian transition to GAAP IFRS IFRS
Net profit (loss) for the period $ 12,935 $ (226,051) $ (213,116) Other comprehensive loss - currency translation adjustment (m) (197,052) 27,475 (169,577) Comprehensive loss $ (184,117) $ (198,576) $ (382,693) Attributable to Non-controlling interest $ (3,429) $ (306) $ (3,735) Equity shareholders of the Company $ (180,688) $ (198,270) $ (378,958) The Canadian GAAP statement of financial position at September 30, 2008 has been reconciled to IFRS as follows: September 30, 2008 Effect of
Note Canadian transition to IFRS GAAP IFRS Assets Current assets Cash and cash equivalents $ 169,294 $ - $ 169,294 Short-term investments 2,766 - 2,766 Trade receivables (g) 5,533 (309) 5,224 Inventories 6,771 - 6,771 Future income taxes (k) 2,753 (2,753) - 187,117 (3,062) 184,055 Property, plant and equipment (h)(j) 766,611 1,502 768,113 Refining contract 14,226 - 14,226 Other assets 1,104 - 1,104 $ 969,058 $ (1,560) $ 967,498
Liabilities Accounts payable and accrued liabilities (l) $ 30,688 $ (1,203) $ 29,485 Provisions (l) - 1,203 1,203 Current portion of finance leases 681 - 681 Current loans 3,195 - 3,195 34,564 - 34,564 Provision for environmental rehabilitation (j) 2,613 2,877 5,490 Capital leases 3,842 - 3,842 Deferred tax liability (k) 133,227 (2,753) 130,474 174,246 124 174,370 Capital and reserves Issued capital 889,720 - 889,720 Equity reserve (i) 29,037 395 29,432 Currency translation adjustment (m) (96,414) (23,257) (119,671) Deficit (46,026) 20,436 (25,590) 776,317 (2,426) 773,891 Non-controlling interest 18,495 742 19,237 794,812 (1,684) 793,128 $ 969,058 $ (1,560) $ 967,498 The Canadian GAAP statement of financial position at December 31, 2008 has been reconciled to IFRS as follows: December 31, 2008 Effect of Note Canadian transition to GAAP IFRS IFRS
Assets Current assets Cash and cash equivalents $ 25,806 $ - $ 25,806 Short-term investments 35,257 - 35,257 Trade receivables (g) 9,556 (125) 9,4 31 Inventories 3,881 - 3,881 Deferred tax asset (k) 1,178 (1,178) - 75,678 (1,303) 74,375 Property, plant and equipment (h)(j)(n) 783,039 (274,354) 508,685 Refining contract 12,493 - 12,493 Other assets 1,017 - 1,017 $ 872,227 $ (275,657) $ 596,570 Liabilities Current liabilities Accounts payable and accrued liabilities (l) $ 36,729 $ (1,726) $ 35,003 Provisions (l) - 1,726 1,726 Current portion capital leases 649 - 649 Current loans 2,972 - 2,972 40,350 - 40,350 Non-current liabilities Provision for environmental rehabilitation (j) 2,846 2,752 5,598 Capital leases 3,261 - 3,261 Deferred tax liabilities (k) 117,234 (78,408) 38,826 163,691 (75,656) 88,035 Capital and reserves Issued capital 890,049 - 890,049 Equity reserve (i) 31,491 336 31,827 Currency translation adjustment (m) (173,571) 3,994 (169,577) Deficit (51,768) (203,998) (255,766) 696,201 (199,668) 496,533 Non-controlling interest 12,335 (333) 12,002 708,536 (200,001) 508,535
$ 872,227 $ (275,657) $ 596,570 The reconciliation of the statement of cash flows for the three months ended September 30, 2008: September 30, 2008 (3 months)
Effect of Canadian transition to Note GAAP IFRS IFRS Operating activities Net loss for the period $ (14,266) $ 53 $ (14,213) Adjustments to net profit for non-cash items Depreciation (h) 4,783 (40) 4,743 Refining contract amortization (o) - 355 355 Share-based payments (i) 278 133 411 Interest income (o) - (2,297) (2,297) Finance costs (o) - 701 701 Foreign exchange gain 28 - 28 Deferred income tax expense (6,363) - (6,363) Adjustments to net profit for cash items Interest income received (o) - 2,864 2,864 Finance costs paid (o) - (35) (35) (15,540) 1,734 (13,806)
Net changes in non-cash working capital items Trade receivables (g) 37,226 (1,420) 35,806 Inventories (832) - (832) Accounts payable and accrued liabilities 6,229 - 6,229 27,083 314 27,397 Investing activities Maturity of short-term investments (o) 101,195 29 101,224 (o) - (29) (29) Purchase of other assets Property, plant and equipment expenditures (42,896) - (42,896) 58,299 - 58,299
Financing activities Repayment of short-term debt (o) 56 (130) (74) Other long-term liabilities (o) 1,533 (1,491) 42 1,589 (1,621) (32) Effect of exchange rate changes on cash and cash equivalents (8,411) 1,307 (7,104) Increase in cash and cash equivalents 78,560 - 78,560 Cash and cash equivalents, beginning of period 90,734 - 90,734 Cash and cash equivalents, end of period $ 169,294 $ - $ 169,294 The reconciliation of the statement of cash flows for the nine months ended September 30, 2008: September 30, 2008 (9 months) Effect of Canadian transition to Note GAAP IFRS IFRS
Operating activities Net profit for the period $ 20,952 $ (430) $ 20,522 Adjustments to net profit for non-cash items Depreciation (h) 13,761 (144) 13,617 Refining contract amortization (o) - 1,078 1,078 Share-based payments (i) 1,845 395 2,240 Interest income (o) - (7,981) (7,981) Finance costs (o) - 2,957 2,957 Foreign exchange gain (1,100) - (1,100) Deferred income tax expense 7,417 - 7,417 Adjustments to net profit for cash items Interest income received (o) - 7,803 7,803 Finance costs paid (o) - (398) (398) 42,875 3,280 46,155
Net changes in non-cash working capital items Trade receivables (g) 23,905 (1,448) 22,457 Inventories (1,188) - (1,188) Accounts payable and accrued liabilities 12 ,462 - 12,462 78,054 1,832 79,886
Investing activities Maturity of short-term investments (o) 163,520 84 163,604 Purchase of other assets (o) - (84) (84) Property, plant and equipment expenditures (101,245) - (101,245) 62,275 - 62,275
Financing activities Common shares issued for cash, net of share issue costs 21,440 - 21,440 Repayment of short-term debt (o) 348 (1,378) (1,030) Other long-term liabilities (o) (1,737) (2,105) (3,842) 20,051 (3,483) 16,568 Effect of exchange rate changes on cash and cash equivalents (9,904) 1,651 (8,253) Increase in cash and cash equivalents 150,476 - 150,476 Cash and cash equivalents, beginning of period 18,818 - 18,818 Cash and cash equivalents, end of period $ 169,294 $ - $ 169,294 The reconciliation of the statement of cash flows for the twelve months ended December 31, 2008: December 31, 2008 (12 months) Effect of
Canadian transition to Note GAAP IFRS IFRS Operating activities Net profit (loss) for the period $ 12,935 $ (226,051) $ (213,116) Adjustments to net profit (loss) for non-cash items Depreciation (h) 14,877 (215) 14,662 Refining contract amortization 1,353 - 1,353 Impairment (n) - 313,603 313,603 Share-based payments (i) 4,290 335 4,625 Interest income (o) - (8,944) (8,944) Finance costs (o) 2,845 880 3,725 Foreign exchange loss (o) 5,731 (3,576) 2,155 Realized foreign exchange gain (o) - (1,157) (1,157) Deferred income tax recovery (k) (13,623) (87,808) (101,431) Adjustments to net profit (loss) for cash items Interest income received (o) - 10,028 10,028 Finance costs paid (o) - (375) (375) 28,408 (3,280) 25,128 Net changes in non-cash working capital items Trade receivables (g) 10,765 3,266 14,031 Inventories 1,391 - 1,391 Accounts payable and accrued liabilities 12,962 - 12,962 53,526 (14) 53,512
Investing activities Acquisitions, net of cash acquired (39,589) - (39,589) Maturity of short-term investments (o) 119,318 42 119,360 Purchase of other assets (o) - (42) (42) Property, plant and equipment expenditures (143,373) - (143,373) (63,644) - (63,644) Financing activities Common shares issued for cash, net of share issue costs 22,004 - 22,004 Repayment of short-term debt (o) (892) 892 - Other long-term liabilities (o) (3,411) (898) (4,309) 17,701 (6) 17,695
Effect of exchange rate changes on cash and cash equivalents (595) 20 (575) Increase in cash and cash equivalents 6,988 - 6,988 Cash and cash equivalents, beginning of period 18,818 - 18,818 Cash and cash equivalents, end of period $ 25,806 $ - $ 25,806 16. Subsequent events From October 1, 2009 to November 12, 2009 there were no subsequent events. Date: 13/11/2009 08:34:03 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.

Share This Story