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EPS - Eastern Platinum Limited - Consolidated financial statements of Eastern

Release Date: 31/03/2010 16:42
Code(s): EPS
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EPS - Eastern Platinum Limited - Consolidated financial statements of Eastern Platinum Limited December 31, 2009 and 2008 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 Consolidated financial statements of Eastern Platinum Limited December 31, 2009 and 2008 Table of contents Consolidated income statements .............................................. 3 Consolidated statements of comprehensive income (loss) ...................... 4 Consolidated statements of financial position ............................... 5 Consolidated statements of changes in equity................................. 6 Consolidated statements of cash flows ....................................... 7 Notes to the consolidated financial statements............................ 8-54 Deloitte & Touche LLP 2800 - 1055 Dunsmuir Street 4 Bentall Centre P.O. Box 49279 Vancouver BC V7X 1P4 Canada Tel: 604-669-4466 Fax: 604-685-0395 www.deloitte.ca Auditors` Report To the Shareholders of Eastern Platinum Limited We have audited the consolidated statements of financial position of Eastern Platinum Limited ("the Company") as at December 31, 2009, 2008 and January 1, 2008 and the consolidated statements of income, comprehensive income (loss), changes in equity and cash flows for the years ended December 31, 2009 and 2008. These consolidated financial statements are the responsibility of the Company`s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on atest basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2009, 2008 and January 1, 2008 and the results of its operations and its cash flows for the years ended December 31, 2009 and 2008 in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board. Chartered Accountants March 24, 2010 Eastern Platinum Limited Consolidated income statements (Expressed in thousands of U.S. dollars, except per share amounts) Year ended Year ended Note December 31 , De cember 31, 2009 2008 (Note 25)
Revenue $ 111,365 $ 114,681 Cost of operations Production costs 82,839 79,961 Depletion and depreciation 8 17,154 14,662 99,993 94,623 Mine operating earnings 11,372 20,058 Expenses Impairment 8 - 297,285 General and administrative 10,528 19,441 Share-based payments 17 582 4,625 11,110 321,351 Operating profit (loss) 262 (301,293) Other income (expense) Interest income 1,786 8,944 Finance costs 19 (1,691) (3,725) Foreign exchange loss (758) (2,155) Loss before income taxes (401) (298,229) Deferred income tax recovery 15 1,623 85,113 Net profit (loss) for the year $ 1,222 $ (213,116) Attributable to Non-controlling interest 18 $ (4,428) $ (3,735) Equity shareholders of the Company 5,650 (209,381) Net profit (loss) for the year $ 1,222 $ (213,116) Earnings (loss) per share Basic 20 $ 0.01 $ (0 .31) Diluted 20 $ 0.01 $ (0 .31) Weighted average number of common shares outstanding in thousands Basic 20 680,577 677,117 Diluted 20 687,790 677,117 See accompanying notes to the consolidated financial statements Eastern Platinum Limited Consolidated statements of comprehensive income (loss) (Expressed in thousands of U.S. dollars) December 3 1, December 31, 2009 2008 (Note 25)
Net profit (loss) for the year $ 1,222 $ (213,116) Other comprehensive income (loss) Exchange differences on translating foreign operations 116,678 (169,577) Exchange differences on translating non-controlling interest 2,467 (7,396) Comprehensive income (loss) $ 120,367 $ (390,089) Attributable to Non-controlling interest $ (1,961) $ (11,131) Equity shareholders of the Company $ 122,328 $ (378,958) See accompanying notes to the consolidated financial statements Eastern Platinum Limited Consolidated statements of financial position as at December 31, 2009 and 2008, and January 1, 2008 (Expressed in thousands of U.S. dollars) December 31, December 31, January 1,
Note 2009 2008 2008 (Note 25) (Note 25) Assets Current assets Cash and cash equivalents $ 7,249 $ 25,806 $ 18,818 Short-term investments 14,409 35,257 171,038 Trade and other receivables 6 29,138 9,431 32,560 Inventories 7 4,825 3,881 6,888 55,621 74,375 229,304
Non-current assets Property, plant and equipment 8 634,778 505,473 815,390 Refining contract 9 14,169 12,493 18,467 Other assets 10 2,282 1,017 1,247 $ 706,850 $ 593,358 $ 1,064,408 Liabilities Current liabilities Accounts payable and accrued liabilities 11 $ 22,919 $ 36,729 $ 22,967 Current portion of finance leases 12 926 649 748 Current loans 13 - 3,219 3,837 23,845 40,597 27,552 Non-current liabilities Provision for environmental rehabilitation 14 8,152 5,598 6,224 Finance leases 12 2,850 3,014 5,057 Loans 13 - - 3,322 Deferred tax liabilities 15 42,491 35,614 150,032 77,338 84,823 192,187 Equity Issued capital 17 890,150 890,049 868,045 Equity-settled employee benefits reserve 32,336 31,827 27,428 Currency translation adjustment (52,899) (169,577) - Deficit (250,116) (255,766) (46,385) Capital and reserves attributable to equity shareholders of the Company 619,471 496,533 849,088 Non-controlling interest 18 10,041 12,002 23,133 629,512 508,535 872,221
$ 706,850 $ 593,358 $ 1,064,408 Approved and authorized for issue by the Board on March 24, 2010. "David Cohen" "Robert Gayton" David Cohen, Director Robert Gayton, Director See accompanying notes to the consolidated financial statements Eastern Platinum Limited Consolidated statements of changes in equity (Expressed in thousands of U.S. dollars, except number of shares) Issued capital Equity- Currency Shares Amount settled translation employee adjustment benefits
reserve Balance, January 1 , 2008 (Note 25) 669,031,691 $ 868,045 $ 27,428 $ - Warrants exercised 10,824,077 21,153 - - Stock options exercised 670,686 851 (22 6) - Share-based payments - - 4,625 - Comprehensive loss - - - (169,577) Balance, December 31, 2008 (Note 25) 680,526,454 $ 890,049 $ 31,827 $ (169,577) Stock options exercised 366,871 101 (73) - Share-based payments - - 582 - Comprehensive income - - - 116,678 Balance, December 31, 2009 680,893,325 $ 890,150 $ 32,336 $ (52,899) Deficit Capital and Non-controlling Equity reserves interest attributable to
equity shareholders of the parent Balance, January 1 , 2008 (Note 25) $ (46,385) $ 849,088 $ 23,133 $ 872,221 Warrants exercised - 21,153 - 21,153 Stock options exercised - 625 - 625 Share-based payments - 4,625 - 4,625 Comprehensive loss (209,381) (378,958) (11,131) (390,089) Balance, December 31, 2008 (Note 25) $ (255,766) $ 496,533 $ 12,002 $ 508,535 Stock options exercised - 28 - 28 Share-based payments - 582 - 582 Comprehensive income 5,650 122,328 (1,961) 120,367 Balance, December 31,2009 $ (250,116) $ 619,471 $ 10,041 $ 629,512 See accompanying notes to the consolidated financial statements Eastern Platinum Limited Consolidated statements of cash flows (Expressed in thousands of U.S. dollars) Year ended Year ended
December 31, December 31, Note 2009 2008 (Note 25) Operating activities Loss before income taxes $ (401) $ (298,229) Adjustments to net profit for non-cash items Depletion and depreciation 8 17,154 14,662 Refining contract amortization 9 1,332 1,353 Impairment 8 - 297,285 Share-based payments 17 582 4,625 Interest income (1,786) (8,944) Finance costs 19 1,691 3,725 Foreign exchange loss 758 2,155 Environmental expense 301 - Net changes in non-cash working capital items Trade receivables (13,169) 14,031 Inventories 22 1,391 Accounts payable and accrued liabilities (15,135) 12,962 Cash (utilized in) generated from operations (8,651) 45,016 Adjustments to net profit for cash items Realized foreign exchange gain - (1,157) Interest income received 1,855 10,028 Finance costs paid (69) (375) Acquisition related dividend taxes paid (2,422) - Net operating cash flows (9,287) 53,512 Investing activities Acquisitions, net of cash acquired 5 - (39,589) Maturity of short-term investments 22,647 119,360 Purchase of other assets (929) (42) Property, plant and equipment expenditures (28,955) (143,373) Sale of property, plant and equipment 1,552 - Net investing cash flows (5,685) (63,644) Financing activities Common shares issued for cash, net of share issue costs 32 22,004 Repayment of current loans (3,065) - Payment of finance leases (1,223) (4,309) Net financing cash flows (4,256) 17,695 Effect of exchange rate changes on cash and cash equivalents 671 (575) (Decrease) increase in cash and cash equivalents (18,557) 6,988 Cash and cash equivalents, beginning of year 25,806 18,818 Cash and cash equivalents, end of year $ 7,249 $ 25,806 Cash and cash equivalents are comprised of: Cash in bank $ 7,249 $ 9,123 Short-term money market instruments - 16,683 $ 7,249 $ 25,806 See accompanying notes to the consolidated financial statements Eastern Platinum Limited Notes to the consolidated financial statements - years ended December 31, 2009 and 2008 (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 records office of the Company are located at 1075 West Georgia Street, Suite 250, Vancouver, British Columbia, Canada, V6E 3C9. The Company`s registered address is 1055 West Georgia Street, Suite 1500, Vancouver, British Columbia, Canada, V6E 4N7. 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 atransition date of January 1, 2008. These consolidated financial statements, including comparatives, have been prepared using accounting policies in compliance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"). The disclosures concerning the transition from Canadian Generally Accepted Accounting Principles ("GAAP") to IFRS are included in Note 25. The preparation of financial statements requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, and revenue and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and further periods if the review affects both current and future periods. 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(l), 3(v), and 3(w). 3. Summary of significant accounting policies The consolidated 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 consolidated 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 consolidated 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 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 Investment 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 in accordance with the IFRS 1 First- time Adoption of International Financial Reporting Standards exemption
discussed in Note 25(a). Acquisitions of subsidiaries and businesses on, or after, January 1, 2008 are accounted for using the purchase method. The consideration for each acquisition 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 acquisition 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 acquisition, 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 currencies of Eastern Platinum Limited and its South African subsidiaries are the Canadian Dollar and South
African Rand ("ZAR"), respectively. These consolidated financial statements have been translated to the U.S. dollar in accordance with IAS 21 The Effects of Changes in Foreign Exchange Rates. This standard requires 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 translation differences are reported as aseparate 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 consolidated income statements. (e) 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 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 Company; 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. The difference between the present value and the future value of the current market price
is recognized as interest income over the term of settlement. 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
on astraight-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.
(f) Share-based payments The Company grants stock options to buy common shares of the Company to directors, officers and employees. 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. (g) 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. (h) 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 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, the deferred tax asset is reduced.
The following temporary differences donot result in deferred tax assets or liabilities: the initial recognition of assets or liabilities, not arising in a business combination, that does not affect
accounting or taxable profit goodwill investments in subsidiaries, associates and jointly controlled entities where the timing of reversal of the
temporary differences can be controlled and reversal in the foreseeable future is not probable. 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. (i) 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 period. 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.
(j) 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 are not 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 consolidated statements of comprehensive income (loss) and the consolidated statements of changes in equity.
(k) Property, plant and equipment (i) Mining assets Assets owned, mineral properties being depleted, and mineral properties not being depleted 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 ready for their intended use, 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 mineral properties being depleted 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 proven and probable
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 in which it has an interest, in accordance with industry standards for properties in the exploration stage, these procedures donot guarantee the Company`s
title. Property title may be subject to unregistered prior agreements and non- compliance with regulatory requirements.
(ii) Residential properties and other property, plant and equipment Residential properties and other property, plant and equipment are recorded at cost less accumulated
depreciation and impairment losses. These 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
significant 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 weighted 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. Assets held under 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(r). (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. The carrying amount of the part that has been replaced is expensed.
All other costs are recognized as an expense as incurred. (v) Impairment The Company`s tangible and intangible assets are reviewed for indications 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. (l) 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. (m) 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. (n) Short-term investments Short-term investments are investments which are transitional or current in nature, with an original maturity greater than three
months. (o) 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. (p) 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 does not have any assets classified as FVTPL financial assets.
(ii) HTM investments HTM investments are recognized on a trade-date basis and are initially measured at fair value, including transaction costs. The Company does not have any assets
classified as HTM investments. (iii) AFS financial assets Short-term investments and other assets 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 on amortized cost of the asset is recognized in profit or loss, while other changes are recognized in equity.
(iv) 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 period 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. (v) 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, to the net carrying amount on initial recognition. Income is recognized on an effective interest basis for debt instruments other than those financial assets
classified as FVTPL. (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 receivables 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 substantially all risks and rewards of ownership to another entity. (q) 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 arising from the decommissioning of plant and other site preparation work 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, discount rates 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, discount rates, 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 net present value of restoration costs arising from
subsequent site damage that is incurred on an ongoing basis during production are charged to the income statement in the period incurred. 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.
(r) 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.
Operating lease payments 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.
(s) 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. (t) 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 plan is 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. (u) 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, to the net carrying
amount on initial recognition. 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 Company derecognizes financial liabilities when, and only when, the Company`s obligations are discharged, cancelled or they expire.
(v) Critical accounting estimates Critical accounting estimates are estimates and assumptions made by management that may result in material adjustments to the carrying amount of assets and liabilities within the next
financial year. (i) Impairment of property, plant and equipment Please refer to Note 8(d). (ii) Rehabilitation provision
The future value of the provision for environmental rehabilitation was determined using an inflation rate of 7.00% (December 31, 2008 - 5.78%) and an estimated life of mine of 18 years for Zandfontein and Maroelabult
(December 31, 2008 - 14 years), 1 year for Kennedy`s Vale (December 31, 2008 - 1 year) and 26 years for Spitzkop. A provision for environmental rehabilitation was not recognized for Spitzkop as at December 31, 2008.
The provision has been discounted to present value at a discount rate of 8.39% (December 31, 2008 - 7.09%). (w) Critical accounting judgments Critical accounting judgements are accounting policies that have
been identified as being complex or involving subjective judgments or assessments. (i) Determination of functional currency In accordance with IAS 21 The Effects of Changes in
Foreign Exchange Rates, management determined that the functional currencies of Eastern Platinum Limited and its South African subsidiaries are the Canadian Dollar and South African Rand ("ZAR"), respectively.
(ii) 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, 2009. At December 31, 2009 the remaining LOM for Barplats was assessed at 211 months (December 31, 2008 - 171 months) 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. (iii) Depreciation rates The estimated maximum useful lives of property, plant
and equipment are: Mining assets owned Underground and other assets Life of mine Mine houses 50 years Office buildings 20 years Plant Life of mine Computer equipment 3 years Mining assets leased 5 years Mineral properties being depleted Life of mine Residential properties 50 years Properties and land 50 years (x) 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 (iii) Effective for annual periods beginning on or after January 1, 2011
IAS 24 Related Party Disclosures (revised) - clarification of the definition of a related party (v) Effective for annual periods beginning on or after January 1, 2013
IFRS 9 Financial Instruments (new) - partial replacement of IAS 39. All of IAS 39 is expected to be replaced in its entirety by the end of 2010 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. Subsidiaries and associates (a) Subsidiaries Details of the Company`s subsidiaries at December 31, 2009 are as follows: Place of incorporation
Name of subsidiary Principal activity and operation Eastern Platinum Holdings Limited Holding company BVI (i) Eastplats Holdings Limited Holding company BVI (i) Eastplats Acquisition Co. Ltd. Holding company BVI (i) Eastplats International Incorporated Holding company Barbados Royal Anthem Investments 134 (Pty) Ltd. Holding company South Africa Spitzkop Joint Venture Mining South Africa Barplats Investments Limited Mining South Africa Spitzkop Platinum (Pty) Ltd. Mining South Africa Mareesburg Joint Venture Mining South Africa Lion`s Head Platinum (Pty) Ltd. Holding company South Africa Gubevu Consortium Investment Holdings (Pty) Ltd. (ii) Holding company South Africa Proportion of ownership interest and voting power held December 31, December 31, January 1,
Name of subsidiary 2009 2008 2008 Eastern Platinum Holdings Limited 100% 100% 1 00% Eastplats Holdings Limited 100% 100% 1 00% Eastplats Acquisition Co. Ltd. 100% 100% 1 00% Eastplats International Incorporated 100% 100% 1 00% Royal Anthem Investments 134 (Pty) Ltd. 100% 100% 1 00% Spitzkop Joint Venture 93.37% 93 .37% 93.37 % Barplats Investments Limited 87.49% 87 .49% 85.02 % Spitzkop Platinum (Pty) Ltd. 86.74% 86 .74% 86.74 % Mareesburg Joint Venture 75.5% 75 .5 % 7 5 .5% Lion`s Head Platinum (Pty) Ltd. 51 % 51% 51% Gubevu Consortium Investment Holdings (Pty) Ltd. (ii) 49.99% 49 .99% 42.39 % (i) British Virgin Islands ("BVI") (ii) The Company has determined that its investment in Gubevu Consortium Investment Holdings (Pty) Ltd. is a Special Purpose Entity.
(b) Associates Details of the Company`s associates at December 31, 2009 are as follows: Place of
incorporation Name of associate Principal activity and operation Afrimineral Holdings (Pty) Ltd. Holding company South Africa Proportion of ownership interest and
voting power held December 31, December 31, January 1, Name of associate 2009 2008 2008 Afrimineral Holdings (Pty) Ltd. 49% 49 % 49% See accompanying notes to the consolidated financial statements Eastern Platinum Limited Notes to the consolidated financial statements - years ended December 31, 2009 and 2008 (Expressed in thousands of U.S. dollars, except number of shares and per share amounts) 5. Acquisitions (a) Acquisitions during the year ended December 31, 2008 On December 8, 2008 the Company acquired a further 2.47% of Barplats Investments Limited ("Barplats") to increase its direct and indirect interest to 87.49%. Of the 2.47%
interest, the Company acquired 0.99% directly from Barplats through the acquisition of 12,155,814 shares issued from Barplats` treasury in exchange for net cash of $6,422. This increased the Company`s direct ownership in Barplats from 74%
to 74.99%. The Company acquired the other 1.48% indirectly from Gubevu through the acquisition of 1,519 shares in Gubevu in exchange for net cash of $33,167. This increased the Company`s direct ownership in Gubevu from 42.39% to 49.99%,
and the Company`s indirect ownership in Barplats from 11.02% to 12.50%. Following these acquisitions, the Company owns directly and indirectly 87.49% of Barplats, a PGM producing company in
South Africa. Purchase price Acquisition of 2.47% interest in Barplats Cash $ 39,589 Net assets acquired $ 39,589 Property, plant and equipment 39,589 $ 39,589 6. Trade and other receivables Trade and other receivables are comprised of the following: December 31, December 31, January 1, 2009 2008 2008 Trade receivables $ 25,839 $ 1,450 $ 27,690 Allowance for doubtful debts (74) (85) (111) 25,765 1,365 27,579 Other receivables 2,316 8,066 4,981 Current tax receivable 1,057 - - $ 29,138 $ 9,431 $ 32,560 (a) Aging of past due, but not impaired The average credit period of PGM sales is 4 months. The Company has the right to request up to a 90% advance on
payment, payable 1 month subsequent to sale. The Company has financial risk management policies in place to ensure that all receivables are received within the pre-agreed credit terms.
Included in trade and other receivables are receivables with a carrying value of $276 (December 31, 2008 - Nil; January 1, 2008 - $1,201) that are past due but have not been provided for. For the years ended December 31, 2009 and 2008,
substantially all of the Company`s PGM production was sold to one customer and there was no significant change in the credit quality of this customer over that time. The past due amounts are considered recoverable.
December 31, December 31, January 1, 2009 2008 2008 Less than 6 months $ 276 $ - $ - 6 months to less than 7 months - - 152 7 months to less than 8 months - - 751 8 months and greater - - 298 $ 276 $ - $ 1,201 (b) Movement in the allowance for doubtful debts December 31, December 31, 2009 2008 Opening balance $ 85 $ 111 Impairment losses recognized on receivables 42 10 Amounts written off during the year as uncollectible (26) - Amounts recovered during the year (43) (7) Foreign exchange translation gains and losses 16 (29) Closing balance $ 74 $ 85 (c) Aging of impaired trade receivables December 31, December 31, January 1, 2009 2008 2008 Less than 4 months 6 1 4 Greater than 4 months 68 84 107 $ 74 $ 85 $ 111 At December 31, 2009, receivables of $74 (December 31, 2008 - $85; January 1, 2008 - $111) were impaired and provided for. These receivables were for rental income, and impairment was determined based on payment history. 7. Inventories December 31, December 31, January 1, 2009 2008 2008
Consumables $ 4,549 $ 3,509 $ 5,446 Ore and concentrate 276 372 1,442 $ 4,825 $ 3,881 $ 6,888 Production costs for the year ended December 31, 2009 was $82,839 (December 31, 2008 - $79,961). Production costs represent the cost of inventories sold during the period. This expense includes Nil (December 31, 2008 - Nil) with regards to the write-down of inventory to net realizable value, and a reduction of Nil (December 31, 2008 - Nil) with regards to the reversal of write-downs. At December 31, 2009 and 2008, no inventories have been pledged as security for liabilities. Eastern Platinum Limited Notes to the consolidated financial statements - years ended December 31, 2009 and 2008 (Expressed in thousands of U.S. dollars, except number of shares and per share amounts) 8. Property, plant and equipment Plant and Plant and equipment equipment owned leased
Cost Balance as at January 1, 2008 $ 267,210 $ 6,603 Additions Assets acquired 133,650 - Assets acquired through step acquisition - - Foreign exchange movement (85,313) (1,711) Balance as at December 31, 2008 $ 315,547 $ 4,892 Assets acquired 27,593 - Disposals (1,510) - Foreign exchange movement 84,593 1,240 Balance as at December 31, 2009 $ 426,223 $ 6,132 Accumulated depreciation and impairment losses Balance as at January 1, 2008 $ 114,993 $ 1,333 Depreciation for the year 6,791 1,112 Impairment loss - - Foreign exchange movement (30,605) (479) Balance as at December 31, 2008 $ 91,179 $ 1,966 Depreciation for the year 11,298 1,092 Foreign exchange movement 24,467 633 Balance as at December 31, 2009 $ 126,944 $ 3,691 Carrying amounts At January 1, 2008 $ 152,217 $ 5,270 At December 31, 2008 $ 224,368 $ 2,926 At December 31, 2009 $ 299,279 $ 2,441 Mineral Mineral properties properties being not being
depleted depleted Cost Balance as at January 1, 2008 $ 136,818 $ 535,883 Additions Assets acquired - 4,985 Assets acquired through step acquisition 7,236 32,353 Foreign exchange movement (35,374) (129,106) Balance as at December 31, 2008 $ 108,680 $ 444,115 Assets acquired (186) 921 Disposals - - Foreign exchange movement 27,606 101,086 Balance as at December 31, 2009 $ 136,100 $ 546,122 Accumulated depreciation and impairment losses Balance as at January 1, 2008 $ 8,840 $ 15,666 Depreciation for the year 6,648 - Impairment loss - 297,285 Foreign exchange movement (3,091) (39,867) Balance as at December 31, 2008 $ 12,397 $ 273,084 Depreciation for the year 4,646 - Foreign exchange movement 3,722 69,238 Balance as at December 31, 2009 $ 20,765 $ 342,322 Carrying amounts At January 1, 2008 $ 127,978 $ 520,217 At December 31, 2008 $ 96,283 $ 171,031 At December 31, 2009 $ 115,335 $ 203,800 Residential Properties properties and land TOTAL
Cost Balance as at January 1, 2008 $ 8,903 $ 3,897 $ 959,314 Additions Assets acquired 1,543 2,742 142,920 Assets acquired through step acquisition - - 39,589 Foreign exchange movement (2,492) (1,340) (255,336) Balance as at December 31, 2008 $ 7,954 $ 5,299 $ 886,487 Assets acquired 88 331 28,747 Disposals - - (1,510) Foreign exchange movement 2,029 1,348 217,902 Balance as at December 31, 2009 $ 10,071 $ 6,978 $ 1,131,626 Accumulated depreciation and impairment losses Balance as at January 1, 2008 $ 2,198 $ 894 $ 143,924 Depreciation for the year 111 - 14,662 Impairment loss - - 297,285 Foreign exchange movement (583) (232) (74,857) Balance as at December 31, 2008 $ 1,726 $ 662 $ 381,014 Depreciation for the year 118 - 17,154 Foreign exchange movement 452 168 98,680 Balance as at December 31, 2009 $ 2,296 $ 830 $ 496,848 Carrying amounts At January 1, 2008 $ 6,705 $ 3,003 $ 815,390 At December 31, 2008 $ 6,228 $ 4,637 $ 505,473 At December 31, 2009 $ 7,775 $ 6,148 $ 634,778 Eastern Platinum Limited Notes to the consolidated financial statements (Expressed in thousands of U.S. dollars, except number of shares and per share amounts) 8. Property, plant and equipment Crocodile Kennedy`s Spitzkop
River Mine Vale Project PGM Project (a) (b) (c) Cost Balance as at January 1, 2008 $ 423,315 $ 386,352 $ 121,443 Additions Assets acquired 137,917 257 4,728 Assets acquired through step acquisition 7,236 32,353 - Foreign exchange movement (126,206) (99,853) (24,459) Balance as at December 31, 2008 $ 442,262 $ 319,109 $ 101,712 Additions Assets acquired 27,826 - 826 Disposals (1,510) - - Foreign exchange movement 116,798 80,908 16,456 Balance as at December 31, 2009 $ 585,376 $ 400,017 $ 118,994 Accumulated depreciation and impairment losses Balance as at January 1, 2008 $ 128,223 $ 15,666 $ - Depreciation for the period 14,609 - - Impairment loss - 297,285 - Foreign exchange movement (34,977) (39,867) - Balance as at December 31, 2008 $ 107,855 $ 273,084 $ - Depreciation for the period 17,130 - - Foreign exchange movement 29,432 69,238 - Balance as at December 31, 2009 $ 154,417 $ 342,322 $ - Carrying amounts At January 1, 2008 $ 295,092 $ 370,686 $ 121,443 At December 31, 2008 $ 334,407 $ 46,025 $ 101,712 At December 31, 2009 $ 430,959 $ 57,695 $ 118,994 Other Mareesburg property
Project plant and (c) equipment TOTAL Cost Balance as at January 1, 2008 $ 28,088 $ 116 $ 959,314 Additions Assets acquired - 18 142,920 Assets acquired through step acquisition - - 39,589 Foreign exchange movement (4,794) (24) (255,336) Balance as at December 31, 2008 $ 23,294 $ 110 $ 886,487 Additions Assets acquired 95 - 28,747 Disposals - - (1,510) Foreign exchange movement 3,722 18 217,902 Balance as at December 31, 2009 $ 27,111 $ 128 $ 1,131,626 Accumulated depreciation and impairment losses Balance as at January 1, 2008 $ - $ 35 $ 143,924 Depreciation for the period - 53 14,662 Impairment loss - - 297,285 Foreign exchange movement - (13) (74,857) Balance as at December 31, 2008 $ - $ 75 $ 381,014 Depreciation for the period - 24 17,154 Foreign exchange movement - 10 98,680 Balance as at December 31, 2009 $ - $ 109 $ 496,848 Carrying amounts At January 1, 2008 $ 28,088 $ 81 $ 815,390 At December 31, 2008 $ 23,294 $ 35 $ 505,473 At December 31, 2009 $ 27,111 $ 19 $ 634,778 Eastern Platinum Limited Notes to the consolidated financial statements - years ended December 31, 2009 and 2008 (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. Development of the Crocette section was
on hold as at December 31, 2009. (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 on hold as at December 31, 2009. (d) 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 $297 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$1.00. The average forecast prices utilized in the impairment model
were: 2009 2010 2011 Platinum US$/oz 950 1,020 1,055 Palladium US$ /oz 210 225 305
Rhodium US$ /oz 1,000 980 2,785 Gold US$/oz 870 815 650 Iridium US$ /oz 270 295 345 Ruthenium US$ /oz 190 215 240
Nicke l US$/tonne 13,850 15,875 16,210 Copper US$ /tonne 5,180 5,550 5,505 Chrome US$/tonne 380 382 400 2012 2013 +
Platinum US$/oz 1,155 1,180 Palladium US$ /oz 385 380 Rhodium US$ /oz 2,895 2,830 Gold US$/oz 695 680
Iridium US$ /oz 350 340 Ruthenium US$ /oz 250 245 Nicke l US$/tonne 16,285 15,915 Copper US$ /tonne 4,265 4,170
Chrome US$/tonne 400 400 9. Refining Contract During the year ended June 30, 2006, the Company acquired a 69% interest in Barplats and assigned a portion of the purchase price 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 atotal 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 9.5 years as at December 31, 2009. Cost Balance as at January 1, 2008 $ 22,741 Foreign exchange movement (5,891) Balance as at December 31, 2008 $ 16,850 Foreign exchange movement 4,272 Balance as at December 31, 2009 $ 21,122 Accumulated amortization Balance as at January 1, 2008 $ 4,274 Amortization for the period 1,353 Foreign exchange movement (1,270) Balance as at December 31, 2008 $ 4,357 Amortization for the period 1,332 Foreign exchange movement 1,264 Balance as at December 31, 2009 $ 6,953 Carrying amounts At January 1, 2008 $ 18,467 At December 31, 2008 $ 12,493 At December 31, 2009 $ 14,169 10. Other assets Other assets consists of a money market fund investment that is classified as available-for- sale and serves as security for a guarantee issued to the Department of Minerals and Energy of South Africa in respect of the environmental rehabilitation liability (Note 14). Changes to other assets for the year ended December 31, 2009 are as follows: Balance , January 1, 2008 $ 1,247 Service fees (16) Interest income 122 Foreign exchange movement (336) Balance , December 31, 2008 $ 1,017 Additional investment 811 Service fees (6) Interest income 123 Foreign exchange movement 337 Balance, December 31, 2009 $ 2,282 11. Accounts payable and accrued liabilities December 31, December 31, January 1, 2009 2008 2008 Trade payables $ 9,932 $ 9,976 $ 6,467 Accrued liabilities 6,849 16,767 14,544 Taxes payable - 2,388 732 Other 6,138 7,598 1,224 $ 22,919 $ 36,729 $ 22,967
The average credit period of purchases is 1 month. The Company has financial risk management policies in place to ensure that all payables are paid within the pre-agreed credit terms. Eastern Platinum Limited Notes to the consolidated financial statements (Expressed in thousands of U.S. dollars, except number of shares and per share amounts) 12. Finance leases Finance leases relate to mining vehicles with lease terms of 5 years payable half yearly in advance. The Company has the option to purchase the vehicles for a nominal amount at the conclusion of the lease agreements. The Company`s obligations under finance leases are secured by the lessor`s title to the leased assets. Interest is calculated at the South African prime rate plus 1%. At December 31, 2009, the finance leases are repayable in 3 semi annual installments (December 31, 2008 - 5) of $611 (December 31, 2008 - $544) and atop-up payment of $2,450 in December 2011. The fair value of the finance lease liabilities approximated carrying value. (a) Minimum lease payments December 31, December 31, January 1, 2009 2008 2008
No later than 1 year $ 1,221 $ 1,102 $ 1,565 Later than 1 year, but no later than 5 years 3,061 3,644 5,599 4,282 4,746 7,164
Less: future finance charges (506) (1,083) (1,359) Present value of minimum lease payments $ 3,776 $ 3,663 $ 5,805 (b) Present value of minimum lease payments December 31, December 31, January 1, 2009 2008 2008 No later than 1 year $ 926 $ 649 $ 748 Later than 1 year, but no later than 5 years 2,850 3,01 4 5,057 $ 3,776 $ 3,663 $ 5,805 13. Loans December 31, December 31, January 1,
Note 2009 2008 2008 Short-term portion (i) $ - $ 3,219 $ 3,837 Long-term portion (i) - - 3,322 $ - $ 3,219 $ 7,159
(i) Pursuant to the Company`s acquisition of a 42.39% interest in Gubevu Consortium Investment Holdings (Pty) Ltd. ("Gubevu") during the year ended June 30, 2007, the Company entered into an agreement to pay an unrelated third party certain amounts
that existed in the underlying Gubevu agreements as an obligation of Gubevu. As at June 30, 2007, the total payable was ZAR 55.4 million of which half was paid in June, 2008, and the remaining amount was paid in June, 2009. The fair value of
loans approximated carrying value. 14. 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 December 31, 2009 is approximately ZAR 60 million ($8,152). The liability was determined using an inflation rate of 7.00% (December 31, 2008 - 5.78%) and an estimated life of mine of 18 years for Zandfontein and Maroelabult (December 31, 2008 - 14 years), 1 year for Kennedy`s Vale (December 31, 2008 - 1 year) and 26 years for Spitzkop. A provision for environmental rehabilitation was not recognized for Spitzkop as at December 31, 2008. A discount rate of 8.39% was used (December 31, 2008 - 7.09%). A guarantee of $2,282 (December 31, 2008 - $1,017) has been issued to the Department of Minerals and Energy (Note 10). 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 ZAR236.3 million ($31,885). Changes to the environmental rehabilitation provision are as follows: Balance , January 1, 2008 $ 6,224 Revision in estimates 554 Interest expense (Note 19) 491 Foreign exchange movement (1,671) Balance , December 31, 2008 $ 5,598 Revision in estimates 629 Interest expense (Note 19) 443 Foreign exchange movement 1,482 Balance, December 31 , 2009 $ 8,152 15. Income taxes The income tax recognized in profit or loss comprises of: December 31, December 31, 2009 2008 Deferred tax recovery relating to the origination and reversal of temporary differences $ (1,623) $ (79,730) Effect of changes in tax rates - (5,383) Total deferred income tax recovery $ (1,6 23) $ (85,113) The provision for income taxes reported differs from the amounts computed by applying the cumulative Canadian federal and provincial income tax rates to the loss before tax provision due to the following: December 31, December 31,
2009 2008 Statutory tax rate 30.00% 31.00% Expected tax recovery on net income (loss) before income tax $ (120) $ (92,452) Difference in tax rates between foreign jurisdictions and Canada (9,057) (15,534) Items not deductible for income tax purposes 1,986 2,840 Effective change in tax rates - (5,383) Tax losses not recognized 5,568 32,883 Change in tax estimates - (7,467) Deferred income tax recovery $ (1,623) $ (85,113) The approximate tax effect of each item that gives rise to the Company`s deferred tax liabilities are as follows: December 31, December 31, January 1, 2009 2008 2008
Non-capital loss carry forwards $ 5,175 $ 5,160 $ 5,304 Share issue costs 1,013 2,119 2,919 Accumulated cost base difference on assets and other (36,877) (36,880) (143,505) Deferred receipts (5,461) 1,213 (6,416) Deferred tax liabilities before valuation $ (36,150) $ (28,388) $ (141,698) allowance Less valuation allowance (6,341) (7,226) (8,334) Total deferred tax liabilities $ (42,491) $ (35,614) $ (150,032) The movement between the opening and closing balances was recognized in profit or loss. At December 31, 2009, the Company has non-capital losses of approximately Cdn$21,713 available to apply against future Canadian income for tax purposes. In South Africa, the Company has unredeemed capital expenditures available for utilization against future mining taxable income of approximately R3,127 million, and estimated assessable tax losses of approximately R9.3 million. The South African losses do not expire unless the Company`s mining activities cease. The non-capital losses will expire as follows (in thousands of Canadian dollars): 2009 2008 Cdn$ Cdn$
(000`s) (000`s) 2011 $ 1,115 $ 1,115 2012 272 272 2013 1,592 1,595 2014 916 916 2025 3,224 3,101 2026 6,105 6,106 2027 3,393 2,551 2028 4,217 4,614 2029 879 - $ 21,713 $ 20,270 The Company does not have any capital losses available to apply against future capital gains in Canada. The Company is subject to assessments by various taxation authorities which may interpret tax legislation and tax filing positions differently from the Company. The Company provides for such differences when it is probable that ataxation authority will not sustain the Company`s filing position and the amount of the tax exposure can be reasonably estimated. As at December 31, 2009, no provisions have been made in the financial statements for any estimated tax liability. 16. Commitments The Company has committed to capital expenditures on projects of approximately ZAR37 million ($4,959) as at December 31, 2009 (December 31, 2008 - ZAR 259 million, $27,925). 17. Issued capital (a) Authorized - Unlimited number of preferred redeemable, voting, non-participating shares without nominal or par value,
- Unlimited number of common shares with no par value. (b) Share options The Company has an incentive plan (the "2008 Plan"), approved by the Company`s shareholders at its annual general meeting
held on June 4, 2008, under which options to purchase common shares may be granted to its directors, officers, employees and others at the discretion of the Board of Directors. Under the terms of the 2008 Plan, 75 million common shares are
reserved for issuance upon the exercise of options. All outstanding options at June 4, 2008 granted under the Company`s previous plan (the "2005 Plan") will continue to exist under the 2008 Plan provided that the fundamental terms
governing such options will be deemed to be those under the 2005 Plan. Upon adoption of the 2008 Plan, options to purchase a total of 27,525,000 common shares were available for grant under the 2008 Plan, representing 75,000,000 less
the 47,475,000 outstanding options at June 4, 2008 granted under the 2005 Plan. Under the 2008 Plan, each option granted shall be for a term not exceeding five years from the date of being granted and
the vesting period is determined based on the discretion of the Board of Directors. The option exercise price is set at the date of the grant and cannot be less than the closing market price of the Company`s common shares on the Toronto
Stock Exchange on the day immediately preceding the day of the grant of the option. (i) Movements in share options during the year The changes in share options during the years ended
December 31, 2009 and 2008 were as follows: December 31, 2009 Weighted average
Number of exercise options price Cdn$ Balance outstanding, beginning of year 64,746,000 1.52 Options granted 695,000 0.57 Options exercised (535,999) 0.32 Options forfeited (5,329,167) 2.00 Balance outstanding, end of year 59,575,834 1.4 8 December 31 , 2008 Weighted
average Number of exercise options price Cdn$
Balance outstanding, beginning of year 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 year 64 ,746,000 1.52 (ii) Fair value of share options granted in the year
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:
2009 February 11 June 30 Exercise price Cdn$ 0.32 Cdn$ 0.52 Closing market price on day preceding date of grant Cdn$ 0.32 Cdn$ 0.52 Grant date share price Cdn$ 0.38 Cdn$ 0.52 Risk-free interest rate 1.69 % 1.8 4% Expected life 3 years 3 years Annualized volatility 78 % 79% Dividend rate 0% 0% Grant date fair value Cdn$ 0.21 Cdn$ 0.27 Weighted
November 3 average Exercise price Cdn$ 0.76 Cdn$ 0.57 Closing market price on day preceding date of grant Cdn$ 0.76 Cdn$ 0.57 Grant date share price Cdn$ 0.81 Cdn$ 0.59 Risk-free interest rate 1.8 6 % 1.83 % Expected life 3 years 3 years Annualized volatility 82% 80% Dividend rate 0% 0% Grant date fair value Cdn$ 0.45 Cdn$ 0.32 Exercise price is the closing market price on the day preceding the date the options were granted, as defined
by the Company`s 2008 share option plan. Grant date share price is the closing market price on the day the options were granted. (ii) Fair value of share options granted in the year
(continued) Expected volatility is based on the historical share price volatility since Eastern Platinum Limited completed its acquisition of Barplats Investment Limited
on May 2, 2006, or for 3 years prior to the date of grant, whichever is shorter. 2008 February 19 March 26
Exercise price Cdn$ 3.38 Cdn$ 3.38 Closing market price on day preceding date of grant Cdn$ 3.38 Cdn$ 3.32 Grant date share price Cdn$ 3.38 Cdn$ 3.38 Risk-free interest rate 3.2 4% 2 .67 % Expected life 3 years 3 years Annualized volatility 49% 49% Dividend rate 0% 0% Grant date fair value Cdn$ 1.22 Cdn$ 1.20 Weighted December 18 average Exercise price Cdn$ 0.32 Cdn$ 0.55 Closing market price on day preceding date of grant Cdn$ 0.32 Cdn$ 0.55 Grant date share price Cdn $0.30 Cdn$ 0.53 Risk-free interest rate 1.42 % 1.54 % Expected life 3 years 3 years Annualized volatility 76% 74 % Dividend rate 0% 0% Grant date fair va lue Cdn$ 0.15 Cdn$ 0.23 (iii) Share options exercised during the year The following table outlines share options exercised during the year: Closing
Number of share price options at exercise Date of issue exercised Exercise date date December 18, 2008 6,000 May 8, 2009 $ 0.55 December 18, 2008 15,000 May 22, 2009 0.45 December 18, 2008 33,333 June 3, 2009 0.65 December 18, 2008 10,000 Sept ember 22, 2009 0.59 December 18, 2008 15,000 November 4, 2009 0.83 December 18, 2008 44,999 November 13, 2009 0.84 December 18, 2008 20,000 November 16, 2009 0.91 December 18, 2008 266,667 November 23, 2009 1.00 December 18, 2008 10,000 November 26, 2009 0.96 December 18, 2008 115,000 Dec ember 23, 2009 0.88 535,999 $ 0.90 (iv) Share options outstanding at the end of the year The following table summarizes information concerning
outstanding and exercisable options at December 31, 2009: Options Options Exercise outstanding exercisable price
Cdn$ 6,725,000 6,725,000 1.70 250,000 250,000 1.70 19,987,500 19,987,500 1.82
17,478,334 16,598,334 0.32 60,000 20,000 0.32 400,000 400,000 0.52 215,000 71,667 0.76
13,740,000 13,740,000 2.31 90,000 90,000 2.50 460,000 440,000 3.38 170,000 130,000 3.38
59,575,834 58,452,501 1.50 Remaining Contractual Life (Years) Expiry date 1.40 May 24 , 2011 1.91 November 27 , 2011 2.19 March 7, 2012 3.97 December 18, 2013
4.12 February 11, 2014 4.50 June 30, 2014 4.84 November 3, 2014 7.77 October 5, 2017
7.96 December 12, 2017 8.15 February 20 , 2018 8.24 March 27, 2018 4.01
(c) Share purchase warrants The changes in warrants during the years ended December 31, 2009 and 2008 were as follows: December 31, 2009
Weighted average Number of exercise warrants price
Cdn$ Balance outstanding, beginning of year 58,485,996 1.80 Warrants exercised - - Warrants expired (58,485,996) 1.80 Balance outstanding, end of year - - December 31, 2008
Weighted average Number of exercise warrants price
Cdn$ Balance outstanding, beginning of year 71,248,050 1.83 Warrants exercised (10,824,077) 1.97 Warrants expired (1,937,977) 2.00 Balance outstanding, end of year 58,485,996 1.80 18. Non-controlling interest The non-controlling interests are comprised of the following: Balance , January 1, 2008 $ 23,133 Non-controlling interests` share of loss in Barplats (717) Non-controlling interests` share of interest on advances to Gubevu (3,018) Foreign exchange movement (7,396) Balance , December 31, 2008 $ 12,002 Non-controlling interests` share of loss in Barplats (1,908) Non-controlling interests` share of interest on advances to Gubevu (2,520) Foreign exchange movement 2,467 Balance, December 31 , 2009 $ 10,041 19. Finance costs December 31, December 31, 2009 2008 Interest on revenue advances $ 482 $ 1,784 Interest on finance leases 377 604 Interest on provision for environmental rehabilitation 443 491 Interest on tax 2 395 Other interest 387 451 $ 1 ,691 $ 3,725 20. Diluted earnings per share The weighted average number of ordinary shares for the purposes of diluted earnings per share reconciles to the weighted average number of ordinary shares used in the calculation of basic earnings per share as follows: December 31, December 31,
2009 2008 (in thousands) Weighted average number of ordinary shares used in the calculation of basic earnings per share 680,577 677,117 Shares deemed to be issued for no consideration in respect of: Options 7,213 - Weighted average number of ordinary shares used in the calculation of diluted earnings per share 687,790 677,117 The following potential ordinary shares, outstanding at December 31, 2009, are anti-dilutive and are therefore excluded from the weighted average number of ordinary shares for the purposes of diluted earnings per share: December 31, December 31, 2009 2008 (in thousands)
Options 41,434 61,053 Warrants - 58,486 21. Retirement benefit plans The Barplats Provident Fund is an independent, defined contribution plan administered by Liberty Life Limited in South Africa. The costs associated with the defined contribution plan included in net profit (loss) were $2,705 (December 31, 2008 - $2,308). The total number of employees in the plan at December 31, 2009 was 1,800 (December 31, 2008 - 1,460). 22. Related party transactions Balances and transactions between the Company and its subsidiaries have been eliminated on consolidation and are not disclosed in this note. Details of the transactions between the Company and other related parties are disclosed below. (a) Trading 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. Expenses have been measured at the exchange amount which is determined on a cost recovery basis.
December 31, December 31, Note 2009 2008 Consulting fees (i) $ 232 $ 90 General and administrative expenses 48 254 Management fees 1,429 1,205 $ 1,709 $ 1,549 (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 December 31, 2009 included $510 (December 31, 2008 - $35) which were due to private companies controlled by officers of the Company. (b) Compensation of key management personnel The remuneration of directors and other members of key management personnel during the years ended December 31, 2009 and 2008 were as follows: December 31, December 31,
Note 2009 2008 Salaries and directors` fees (i) $ 2,695 $ 2,133 Share-based payments (ii) 93 2,374 $ 2,788 $ 4,507
(i) Salaries and directors` fees include consulting and management fees disclosed in Note 22(a). (ii) Share-based payments are the fair value of options granted to key management personnel, translated at the
grant date foreign exchange rate. (iii) Key management personnel were not paid post-employment benefits, termination benefits, or other long-term benefits during the years ended December 31, 2009 and
2008. 23. 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 years ended December 31, 2009 and 2008 are as follows:
December 31, 2009 Crocodile Kennedy`s River Mine Vale Spitzkop Current assets $ 36,749 $ 176 $ 1,509 Property, plant and equipment 430,959 57,695 118,994 Refining contract 14,169 - - Other Assets 2,282 - - $ 484,159 $ 57,871 $ 120,503
Property, plant and equipment expenditures $ 27,826 $ - $ 826 Sale of property, plant and equipment (1,510) - - Revenue $ 111,365 $ - $ - Production costs (82,839) - - Depreciation and amortization (17,130) - - General and administrative expenses (3,397) (2,286) (510) Share-based payment (489) - - Interest income 1,388 - 38 Finance costs (1,547) - - Foreign exchange gain (loss) 28 - - Profit (loss) before income taxes $ 7,379 $ (2,286) $ (472) Total
Mareesburg Other South Africa Current assets $ 45 $ 1,003 $ 39,482 Property, plant and equipment 27,111 - 634,759 Refining contract - - 14,169 Other Assets - - 2,282 $ 27,156 $ 1,003 $ 690,692 Property, plant and equipment expenditures $ 95 $ - $ 28,747 Sale of property, plant and equipment - - (1,510) Revenue $ - $ - $ 111,365 Production costs - - (82,839) Depreciation and amortization - - (17,130) General and administrative expenses (157) (26) (6,376) Share-based payment - - (489) Interest income - - 1,426 Finance costs - - (1,547) Foreign exchange gain (loss) - - 28 Profit (loss) before income taxes $ (157) $ (26) $ 4,438 Canada TOTAL Current assets $ 16,139 $ 55,621 Property, plant and equipment 19 634,778 Refining contract - 14,169 Other Assets - 2,282 $ 16,158 $ 706,850
Property, plant and equipment expenditures $ - $ 28,747 Sale of property, plant and equipment - (1,510) Revenue $ - $ 111,365 Production costs - (82,839) Depreciation and amortization (24) (17,154) General and administrative expenses (4,152) (10,528) Share-based payment (9 3) (582) Interest income 360 1 ,7 8 6 Finance costs (144) (1,691) Foreign exchange gain (loss) (786) (758) Profit (loss) before income taxes $ (4,839) $ (401) December 31, 2008
Crocodile Kennedy`s Spitzkop River Mine Vale Current assets $ 13,636 $ 2,047 $ 1,839 Property, plant and equipment 334,407 46,025 101,712 Refining contract 12,493 - - Other Assets 1,017 - - $ 361,553 $ 48,072 $ 103,551 Property, plant and equipment expenditures $ 137,917 $ 257 $ 4,728 Sale of property, plant and equipment - - - Revenue $ 114,681 $ - $ - Production costs (79,961) - - Depreciation and amortization (14,609) - - Impairment - (297,285) - General and administrative expenses (12,317) (1,415) (588) Share-based payment (1,979) - - Interest income 3,770 42 7 Finance costs (3,068) (86) - Foreign exchange gain (loss) (8) - 343 Profit (loss) before income taxes $ 6,509 $ (298,744) $ (238) Total South
Mareesburg Other Africa Current assets $ 132 $ 1 $ 17,655 Property, plant and equipment 23,294 - 505,438 Refining contract - - 12,493 Other Assets - - 1,017 $ 23,426 $ 1 $ 536,603 Property, plant and equipment expenditures $ - $ 18 $ 142,920 Sale of property, plant and equipment - - - Revenue $ - $ - $ 114,681 Production costs - - (79,961) Depreciation and amortization - - (14,609) Impairment - - (297,285) General and administrative expenses - (18) (14,338) Share-based payment - - (1,979) Interest income - - 3,819 Finance costs - - (3,154) Foreign exchange gain (loss) 55 2 392 Profit (loss) before income taxes $ 55 $ (16) $ (292,434) Canada TOTAL Current assets $ 56,720 $ 74,375 Property, plant and equipment 35 505,473 Refining contract - 12,493 Other Assets - 1,017 $ 56,755 $ 593,358
Property, plant and equipment expenditures $ - $ 142,920 Sale of property, plant and equipment - - Revenue $ - $ 114,681 Production costs - (79,961) Depreciation and amortization (53) (14,662) Impairment - (297,285) General and administrative expenses (5,103) (19,441) Share-based payment (2,646) (4,625) Interest income 5,125 8,944 Finance costs (571) (3,725) Foreign exchange gain (loss) (2,547) (2,155) Profit (loss) before income taxes $ (5,795) $ (298,229) For the years ended December 31, 2009 and 2008, substantially all of the Company`s PGM production was sold to one customer. 24. Financial instruments (a) Management of capital risk The capital structure of the Company consists of equity attributable to common shareholders, comprising issued capital, equity-settled employee benefits reserve, deficit and currency translation adjustment. The Company`s objectives when managing
capital are to: (i) preserve capital, (ii) obtain the best available net return, and (iii) maintain liquidity. The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk
characteristics of the underlying assets. To maintain or adjust the capital structure, the Company may attempt to issue new shares. The Company is not subject to externally imposed capital
requirements. (b) Categories of financial instruments December 31, December 31, January 1, 2009 2008 2008
Financial assets Cash and cash equivalents $ 7,249 $ 25,806 $ 18,818 Loans and receivables Trade receivables 29,138 9,431 32,560 Available for sale financial assets Short-term investments 14,409 35,257 171,038 O t h e r assets 2,282 1,017 1 ,2 4 7 $ 53,078 $ 71,511 $ 223,663 Financial liabilities Other financial liabilities Accounts payable and accrued liabilities $ 22,919 $ 36,729 $ 22,967 Current portion of finance leases 926 649 748 Current loans - 3,219 3,837 Long-term portion of finance leases 2,850 3,014 5,057 Long-term loans - - 3,322 $ 26,695 $ 43,611 $ 35,931 (c) Fair value of financial instruments (i) Fair value estimation of financial instruments
The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. The fair values of cash and cash equivalents,
short-term investments, trade receivables and accounts payable approximate their carrying values due to the short-term to maturities of these financial instruments.
The fair value of short-term debt was determined using discounted cash flows at prevailing market rates and the fair value is considered to approximate carrying value.
(ii) Fair value measurements recognized in the statement of financial position Financial instruments that are measured subsequent to initial recognition at fair value are grouped into a
hierarchy based on the degree to which the fair value is observable. Level 1 fair value measurements are derived from unadjusted, quoted prices in active markets for identical assets or liabilities.
Level 2 fair value measurements are derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability directly or indirectly. Level 3 fair value measurements are derived
from valuation techniques that include inputs for the asset or liability that are not based on observable market data. The Company`s short-term investments and other assets
are measured subsequent to initial recognition at fair value and are Level 2 financial instruments at December 31, 2009. There were no transfers between levels during the year ended December 31, 2009.
(d) Reclassification of financial assets During the year ended December 31, 2008, ashort-term investment classified as held-to-maturity was sold prior to its maturity date. This tainted the Company`s held- to-maturity investments
and resulted in the reclassification of the Company`s held-to- maturity investments, short-term investments ($35,257) and other assets ($1,017), to available for sale financial assets. The short-term investments were re-measured at fair value with any
gains or losses recorded directly to other comprehensive income. The impact of the reclassification was insignificant. (e) Financial risk management The Company`s financial instruments are exposed to certain
financial risks, including currency risk, interest rate risk, price risk, credit risk and liquidity risk. The Company`s exposure to these risks and its methods of managing the risks remain consistent.
(i) Currency risk The Company is exposed to the financial risk related to the fluctuation of foreign exchange rates. The Company`s revenues are based on US dollar PGM prices, but the
Company receives revenue in South African Rand. A significant change in the currency exchange rates between the South African Rand relative to the US dollar could have an effect on the Company`s results of
operations, financial position and cash flows. The Company has not entered into any derivative financial instruments to manage exposures to currency fluctuations.
The carrying amount of the Company`s foreign-currency denominated monetary assets at December 31, 2009, is as follows: December31, 2009 December 31, 2008
(000`s (000`s (000`s (000`s Cdn) ZAR) Cdn$) ZAR Financial assets Loans and receivables 320 213,701 552 83,410 The sensitivity of the Company`s net earnings and other comprehensive income due to changes in the exchange rate between the South African Rand and the United States dollar, and between the Canadian dollar and the United
States dollar are summarized in the tables below. The increase (decrease) in other comprehensive income is due to the effect of the exchange rate on financial instruments.
Year ended Dec. 31, 2009 10% 10% increase in decrease in ZAR to USD ZAR to USD
FX rate FX rate Increase (decrease) in other comprehensive income (2,621) 3,204 Year ended Dec. 31, 2009
10% 10% increase in decrease in Cdn to USD Cdn to USD FX rate FX rate
Increase (decrease) in other comprehensive income (2,914) 2,914 (ii) Interest rate risk Interest rate risk is the risk that the fair value or
future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is exposed to interest rate risk on its short-term investments.
The risk that the Company will realize a loss as a result of a decline in the fair value of short-term investments is limited because these investments, although available for sale, are generally not sold
before maturity. The Company monitors its exposure to interest rates and has not entered into any derivative financial instruments to manage this risk. A sensitivity analysis has not been completed for interest rate risk
as it is immaterial. (iii) Price risk The Company is exposed to price risk with respect to fluctuations in the prices of platinum group metals.
These fluctuations directly affect revenues and trade receivables. As at December 31, 2009, the Company`s financial assets subject to metal price risk consist of trade receivables of $25,765 (December 31, 2008 -
$1,365). Historically, the Company has not entered into any derivative financial instruments to manage exposures to price fluctuations. No such derivative financial instruments existed at December 31, 2009 and 2008.
The Company has not included a sensitivity analysis of price risk at year-end as it does not reflect the exposure experienced during the twelve months ended December 31, 2009. Presenting such an analysis would be
misleading. (iv) Credit risk Credit risk is the risk of an unexpected loss if a customer or third party to a financial instrument fails
to meet its contractual obligations, and arises principally from the Company`s trade receivables. The carrying value of the financial assets represents the maximum credit exposure.
The Company currently sells substantially all of its concentrate production to one customer under an off-take contract. At December 31, 2009, the Company had receivable balances associated with this one customer of
$25,765 (December 31, 2008 - $1,365). The loss of this customer or unexpected termination of the off-take contract could have a material adverse effect on the Company`s results of operations, financial condition and
cash flows. The Company has not experienced any bad debts with this customer. The Company minimizes credit risk by reviewing the credit risk of the counter party to the arrangement and has made
any necessary provisions related to credit risk at December 31, 2009. (v) Liquidity risk Liquidity risk is the risk that the Company will not be
able to meet its financial obligations as they fall due. The Company has a planning and budgeting process in place to help determine the funds required to support the Company`s normal operating requirements on an ongoing
basis and its expansionary plans. The Company ensures that there are sufficient funds to meet its short-term business requirements, taking into account its anticipated cash flows from operations and its holdings
of cash and cash equivalents. The Company`s policy is to invest its excess cash in highly liquid, fully guaranteed, bank-sponsored instruments. The Company staggers the maturity dates of
its investments over different time periods and dates to minimize exposure to interest rate changes. This strategy remains unchanged from 2008. In the normal course of business, the Company enters into
contracts that give rise to commitments for future minimum payments. The following table summarizes the Company`s significant commitments and corresponding maturities.
December 31, 2009 Tota l <1 year 1-3 years Accounts payable $ 22,919 $ 22,919 $ - Finance leases 4,282 1,221 3,061 Purchase commitments 8 81 881 - Capital expenditures 4,077 4,077 - $ 32,159 $ 29,098 $ 3,061 December 31, 2008
Total <1 year 1-3 years Accounts payable $ 36,729 $ 36,729 $ - Finance leases 4,746 1,102 3,644 Loans 3,219 3,219 - Purchase commitments 4,751 4,751 - Capital expenditures 23,174 22,725 449 $ 72,619 $ 68,526 $ 4,093 January 1, 2008
Total <1 year 1-3 years Accounts payable $ 22,967 $ 22,967 $ - Finance leases 7,164 1,565 5,599 Loans 7,159 3,837 3,322 Purchase commitments 2,407 2,407 - Capital expenditures 22,741 22,741 - $ 62,438 $ 53,517 $ 8,921 25. 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 adjustments 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, which have been accounted for in accordance with Canadian GAAP. (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. (e) IAS 23 - Borrowing Costs In accordance with IFRS 1, the Company has elected to prospectively apply IAS 23 effective January 1, 2009.
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:
(f) 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.
(g) 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 year ended December 31, 2008 have been reconciled to IFRS, with the resulting differences explained. (h) Revenue and interest income The Company settles its metal sales three or five months,
depending on the type of metal, 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 atiming difference in the recognition of
income and is not material to these financial statements. (i) Property plant and equipment Due to the adjustments to the provision for environmental rehabilitation discussed in Note 25(k), 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.
(j) 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. (k) 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. (l) Deferred tax asset/liability IFRS All deferred tax assets and liabilities must be classified
as non-current. Canadian GAAP Deferred tax assets and liabilities are classified as current or non-current as appropriate.
(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 $297.3 million and an income tax recovery of $71.5 million have been recorded relating to the Kennedy`s Vale impairment. (o) Presentation The presentation in accordance with IFRS differs from the
presentation 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
Canadian GAAP Assets Current assets Cash and cash equivalents Notes $ 18,818 Short-term investments 171,038 Trade and other receivables (f)(h) 33,157 Inventories 6,888 229,901 Property, plant and equipment (f)(i)(k) 813,461 Refining contract 18,467 Other assets 1,247 $ 1,063,076 Liabilities Current liabilities Accounts payable and $ 22,967 accrued liabilities Current portion of finance (o) $ - leases Current portion of long-term liability 3,837 Deferred tax (l) 6,416 33,220 Provision for environmental (f)(k) 2,889
rehabilitation Capital leases and other long-term liabilities (o) 9,12 7 Finance leases (o) - Loans (o) - Deferred tax liabilities (l) 143,616 188,852 Equity Issued capital 868,045 Equity-settled employee benefits reserve 27,428 Currency translation adjustment (b) 23,481 Deficit (68,132) Capital and reserves attributable to equity shareholders of the Company 850,822 Non-controlling interest 23,402 874,224 $ 1,063,076
Effect of IFRS transition to IFRS Assets Current assets Cash and cash equivalents $ - $ 18,818 Short-term investments - 171,038 Trade and other 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 $ - $ 2 2,96 7 accrued liabilities Current portion of finance $ 748 $ 748 leases Current portion of long-term liability - 3,83 7 Deferred tax (6,416) - (5,668) 27,552 Provision for environmental 3,335 6,224 rehabilitation Capital leases and other long-term liabilities (9,127) - Finance leases 5,057 5,057 Loans 3,322 3,322 Deferred tax liabilities 6,416 150,032 3,335 192,187
Equity Issued capital - 868,045 Equity-settled employee benefits reserve - 27,428 Currency translation adjustment (23,481) - Deficit 21,747 (46,385) Capital and reserves attributable to equity shareholders of the Company (1,734) 849,088 Non-controlling 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 twelve months ended December 31, 2008 have been reconciled to IFRS as follows: 12 months ended December 31, 2008 Canadian Note GAAP Revenue (h) $ 116,198 Cost of operations Production costs 79,961 Depletion and de preciation (i) 14,599 94,560
Mine operating earnings 21,638 Expenses Impairment (n) - General and administrative (f) 19,411 Share-based payments (j) 4,290 23,701 Operating loss (2,063) Other income (expense) Interest income (h) 7,081 Finance costs (k) (3,551) Foreign exchange gain (2,155) Loss before income taxes (688) Deferred income tax recovery (n) 13,623 Net profit (loss) for the year $ 12,935 Attributable to Non-controlling interest $ (3,429) Equity shareholders of the Company $ 16, 364 Net profit (loss) for the year $ 12,935 Effect of transition to IFRS
IFRS Revenue $ (1,517) $ 114,681 Cost of operations Production costs - 79,961 Depletion and de preciation 63 14,662 63 94,623 Mine operating earnings (1,580) 20,058 Expenses Impairment 297,285 297,285 General and administrative 30 19,441 Share-based payments 335 4,625 297,650 321,351
Operating loss (299,230) (301,293) Other income (expense) Interest income 1,863 8,944 Finance costs (174) (3 ,725) Foreign exchange gain - (2 ,155) Loss before income taxes (297,541) (298,229) Deferred income tax recovery 71,490 8 5 ,1 1 3 Net profit (loss) for the year $ (226,051) $ (213,116) Attributable to Non-controlling interest $ (306) $ (3 ,735) Equity shareholders of the Company $ (225,745 ) $ (209 ,381 ) Net profit (loss) for the year $ (226,051) $ (213,116) 12 months ended December 31 , 2008 Note Canadian GAAP Net profit (loss) for the year $ 12,935 Other comprehensive loss - currency translation adjustment (m) (197,052) Exchange differences on translating non-controlling interest (o) - Comprehensive loss $ (184,117) Attributable to Non-controlling interest (o) $ (3,429) Equity shareholders of the Company $ (180,688) Effect of transition to IFRS IFRS Net profit (loss) for the year $ (226,05 1) $ (213 ,116) Other comprehensive loss - currency translation adjustment 27,4 75 (169 ,577) Exchange differences on translating non-controlling interest (7,3 96) (7 ,396) Comprehensive loss $ (205,97 2) $ (390 ,089) Attributable to Non-controlling interest $ (7,7 02) $ (1 1,131) Equity shareholders of the Company $ (198,27 0) $ (378 ,958) The Canadian GAAP statement of financial position at December 31, 2008 has been reconciled to IFRS as follows: Note Canadian GAAP Assets Current assets Cash and cash equivalents $ 25,806 Short-term investments 35,257 Trade receivables (h) 9,556 Inventories 3,881 Deferred tax asset (l) 1,178 75,678 Property, plant and equipment (i)(k)(n) 783,039 Re fining contract 12,493 Other assets 1,017 $ 872,227 Liabilities Current liabilities Accounts payable and accrued $ 36,729 liabilities Current portion of finance leases 649 Current loans (o) 2,972 40,350 Non-current liabilities Provision for environmental (k) 2,846 rehabilitation Finance leases (o) 3,261 Deferred tax liabilities (l)(n) 117,234 1 63,691 Equity Issued capital 890,049 Equity-settled employee benefits reserve (j) 31,491 Currency translation adjustment (m) (173,571 ) Deficit (51,768) Capital and reserves attributable to equity shareholders of the Company 696,201 Non-controlling interest 12,335 708,536 $ 872,227 December 31, 2008
Effect of transition to IFRS IFRS Assets Current assets Cash and cash equivalents $ - $ 25,806 Short-term investments - 35,257 Trade receivables (125) 9,431 Inventories - 3,881 Deferred tax asset (1,178) - (1,303) 74,375 Property, plant and equipment (277,566) 505,473 Re fining contract - 12,493 Other assets - 1,017 $ (278,869) $ 593,358 Liabilities Current liabilities Accounts payable and accrued $ - $ 36,729 liabilities Current portion of finance leases - 649 Current loans 247 3,219 247 40,597 Non-current liabilities Provision for environmental 2,752 5,598 rehabilitation Finance leases (247) 3,014 Deferred tax liabilities (81,620) 35,614 (78,868) 84,823 Equity Issued capital - 890,049 Equity-settled employee benefits reserve 336 31,827 Currency translation adjustment 3,994 (169,577) Deficit (203 ,998) (255,766) Capital and reserves attributable to equity shareholders of the Company (199,668) 496,533 Non-controlling interest (333) 12,002 (200,001) 508,535 $ (278,869) $ 593,358 The reconciliation of the statement of cash flows for the twelve months ended December 31, 2008: December 31, 2008 (12 months) Note Canadian GAAP
Operating activities Net profit (loss) for the year $ (688) Adjustments to net profit (loss) for non-cash items Depreciation (i) 14,877 Re fining contract amortization 1,353 Impairment (n) - Share-based payments (j) 4,290 Interest income (o) - Finance costs (o) 2,845 Foreign exchange loss (o) 5,731 Net changes in non-cash working capital items Trade receivables (h) 10,765 Inventories 1 ,3 9 1 Accounts payable and accrued liabilities 12,962 Cash generated from operations 53,526 Adjustments to net profit for cash items Realized foreign exchange gain (o) - Interest income received (o) - Finance costs paid (o) - Net operating cash flows 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) Net investing cash flows (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) Net financing cash flows 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 year 18,818 Cash and cash equivalents, end of year $ 25,806 Effect of IFRS
transition to IFRS Operating activities Net profit (loss) for the year $ (297,541) $ (298,229) Adjustments to net profit (loss) for non-cash items Depreciation (215) 14,662 Re fining contract amortization - 1,353 Impairment 297,285 297,285 Share-based payments 335 4,625 Interest income (8 ,944) (8,944) Finance costs 880 3,725 Foreign exchange loss (3,576) 2,155 Net changes in non-cash working capital items Trade receivables 3,266 14,031 Inventories - 1,391 Accounts payable and accrued liabilities - 12,962 Cash generated from operations (8,510) 45,016 Adjustments to net profit for cash items Realized foreign exchange gain (1,157) (1,157) Interest income received 10,028 10,028 Finance costs paid (375) (375) Net operating cash flows (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) Net investing cash flows - (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) Net financing cash flows (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 year - 18,818 Cash and cash equivalents, end of year $ - $ 25,806 26. Events after the reporting period From January 1, 2010 to March 24, 2010: (a) The Company granted 2,231,000 options with an exercise price of Cdn$1.30 per share expiring on January 18, 2015. (b) 444,831 stock options were exercised, of which 83,333 were exercised by way of cash payment at a weighted average exercise price of Cdn$0.32 for proceeds of Cdn$27, and 361,498 were
exercised by way of stock appreciation rights at a weighted average exercise price of Cdn$0.35. Date: 31/03/2010 16:42:01 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.

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