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EPS - EASTERN PLATINUM LIMITED - Condensed consolidated interim financial
statements of Eastern Platinum Limited March 31, 2010
EASTERN PLATINUM LIMITED
(Incorporated in Canada)
(Canadian Registration number BC0722783)
(South African Registration number 2007/006318/10)
Share Code TSX: ELR ISIN: CA 2768551038
Share Code AIM: ELR ISIN: CA 2768551038
Share Code JSE: EPS ISIN: CA 2768551038
Condensed consolidated interim financial
statements of
Eastern Platinum Limited
March 31, 2010
(Unaudited)
Table of contents
Condensed consolidated interim income statements ............................ 3
Condensed consolidated interim statements of comprehensive income (loss)..... 4
Condensed consolidated interim statements of financial position ............. 5
Condensed consolidated interim statements of changes in equity .............. 6
Condensed consolidated interim statements of cash flows .......... .......... 7
Notes to the condensed consolidated interim financial statements ......... 8-23
Eastern Platinum Limited
Condensed consolidated interim income statements
(Expressed in thousands of U.S. dollars, except per share amounts - unaudited)
Three months ended
Note March 31, March 31,
2 010 2009
Revenue $ 34,699 $ 24,903
Cost of operations
Production costs 25,703 17,885
Depletion and depreciation 6 5,315 3,517
31,018 21,402
Mine operating earnings 3,681 3,501
Expenses
General and administrative 3,196 1,636
Share-based payments 13 1,739 132
4,935 1,768
Operating (loss) profit (1,254) 1,733
Other income (expense)
Interest income 372 494
Finance costs 15 (370) (452)
Foreign exchange gain (loss) 268 (75)
(Loss) profit before income
taxes (984) 1,700
Deferred income tax recovery 548 680
Net (loss) profit for the
period $ (436) $ 2,380
Attributable to
Non-controlling interest 14 $ (1,260) $ (784)
Equity shareholders of the
Company 824 3,164
Net (loss) profit for the
period $ (436) $ 2,380
Earnings per share
Basic 16 $ 0.00 $ 0.00
Diluted 16 $ 0.00 $ 0.00
Weighted average number of
common shares
outstanding in thousands
Basic 16 681,200 680,526
Diluted 16 693,830 683,395
Condensed consolidated interim statements of comprehensive income (loss)
(Expressed in thousands of U.S. dollars - unaudited)
Three months ended
March 31, March 31,
2010 2009
Net (loss) profit for the period $ (436) $ 2,380
Other comprehensive income (loss)
Exchange differences on translating
foreign operations 9,879 (13,327)
Exchange differences on translating
non-controlling interest 97 (354)
Comprehensive income (loss) $ 9,540 $ (11,301)
Attributable to
Non-controlling interest $ (1,163) $ (1,138)
Equity shareholders of the Company $ 10,703 $ (10,163)
Condensed consolidated interim statements of financial position
as at March 31, 2010 and December 31, 2009
(Expressed in thousands of U.S. dollars - unaudited)
March 31, December 31,
Note 2010 2009
Assets
Current assets
Cash and cash equivalents $ 3,370 $ 7,249
Short-term investments 13,923 14,409
Trade and other receivables 4 33,262 29,138
Inventories 5 5,653 4,825
56,208 55,621
Non-current assets
Property, plant and equipment 6 643,643 634,778
Refining contract 7 13,941 14,169
Other assets 8 2,581 2,282
$ 716,373 $ 706,850
Liabilities
Current liabilities
Accounts payable and accrued
liabilities 9 $ 20,858 $ 22,919
Current portion of finance leases 10 95 6 926
21,814 23,845
Non-current liabilities
8,410 8,152
Provision for environmental
rehabilitation 11
Finance leases 10 2,939 2,850
Deferred tax liabilities 42,376 42,491
75,539 77,338
Equity
Issued capital 13 890,270 890,150
Equity-settled employee benefits
reserve 33,998 32,336
Currency translation adjustment (43,020) (52,899)
Deficit (249,292) (250,116)
Capital and reserves attributable to
equity shareholders of the Company 631,956 619,471
Non-controlling interest 14 8,878 10,041
640,834 629,512
$ 716,373 $ 706,850
Approved and authorized for issue by the Board on May 10, 2010.
"David Cohen" "Robert Gayton"
David Cohen, Director Robert Gayton, Director
Condensed consolidated interim statements of changes in equity
(Expressed in thousands of U.S. dollars, except number of shares - unaudited)
Issued capital Equity- Currency
Shares Amount settled translation
employee adjustment
benefits
reserve
Balance, December
31, 2008 680,526,454 $ 890,049 $ 31,827 $ (169,577)
Share-based
payments - - 132 -
Comprehensive loss - - - (13,327)
Balance, March
31, 2009 680,526,454 $ 890,049 $ 31,959 $ (182,904)
Stock options
exercised 366,871 101 (73) -
Share-based
payments - - 450 -
Comprehensive
income - - - 130,005
Balance, December
31, 2009 680,893,325 $ 890,150 $ 32,336 $ (52,899)
Stock options
exercised 419,972 120 (77) -
Share-based
payments - - 1,739 -
Comprehensive
income - - - 9,879
Balance, March
31, 2010 681,313,297 $ 890,270 $ 33,998 $ (43,020)
Deficit Capital and Non-controlling Equity
reserves interest
attributable to
equity
shareholders
of the parent
Balance,
December
31, 2008 $ (255,766) $ 496,533 $ 12,002 $ 508,535
Share-based
payments - 132 - 132
Comprehensive
loss 3,164 (10,163) (1,138) (11,301)
Balance,
March
31, 2009 $ (252,602) $ 486,502 $ 10,864 $ 497,366
Stock
options
exercised - 28 - 28
Share-based
payments - 450 - 450
Comprehensive
income 2,486 132,491 (823) 131 ,668
Balance,
December
31, 2009 $ (250,116) $ 619,471 $ 10,041 $ 629,512
Stock
options
exercised - 43 - 43
Share-based
payments - 1,739 - 1,739
Comprehensive
income 824 10,703 (1,163) 9,540
Balance,
March
31, 2010 $ (249,292) $ 631,956 $ 8,878 $ 640,834
Condensed consolidated interim statements of cash flows
(Expressed in thousands of U.S. dollars - unaudited)
Three months ended
Note March 31, March 31,
2010 2009
Operating activities
(Loss) profit before income taxes $ (984) $ 1,700
Adjustments to net profit for
non-cash items
Depletion and depreciation 6 5,315 3,517
Refining contract amortization 7 368 254
Share-based payments 13 1,739 132
Interest income (372) (494)
Finance costs 15 370 452
Foreign exchange (gain) loss (268) 75
Net changes in non-cash working
capital items
Trade receivables (3,808) (13,263)
Inventories (758) 219
Accounts payable and accrued
liabilities (2,269) (16,984)
Cash utilized in operations (667) (24,392)
Adjustments to net profit for cash
items
Interest income received 348 376
Finance costs paid (16) (11)
Acquisition related dividend taxes
paid - (2,422)
Net operating cash flows (335) (26,449)
Investing activities
Maturity of short-term investments 961 20,095
Purchase of other assets (269) (27)
Property, plant and equipment
expenditures (4,295) (10,717)
Net investing cash flows (3,603) 9,351
Financing activities
Common shares issued for cash, net
of share
issue costs 43 -
Advance from current loans - 41
Payment of finance leases (2) (13)
Net financing cash flows 41 28
Effect of exchange rate changes on
cash
and cash equivalents 18 (996)
Decrease in cash and cash
equivalents (3,879) (18,066)
Cash and cash equivalents,
beginning of period 7,249 25,806
Cash and cash equivalents, end of
period $ 3,370 $ 7,740
Cash and cash equivalents are
comprised of:
Cash in bank $ 2,481 $ 6,118
Short-term money market instruments 889 1,622
$ 3,370 $ 7,740
Notes to the condensed consolidated interim financial statements as at March
31, 2010
(Expressed in thousands of U.S. dollars, except number of shares and per share
amounts - unaudited)
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
These unaudited condensed consolidated interim financial statements, including
comparatives, have been prepared using accounting policies consistent with
International Financial Reporting Standards "(IFRS") and in accordance
with International Accounting Standard ("IAS") 34
Interim Financial Reporting.
The 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) of the Company`s audited consolidated financial
statements for the year ended December 31, 2009.
3. Summary of significant accounting policies
The preparation of financial data is based on accounting principles and
practices consistent with those used in the preparation of the audited annual
financial statements as at December 31, 2009 except as noted below. The
accompanying unaudited condensed consolidated interim financial statements
should be read in conjunction with the Company`s audited consolidated financial
statements for the year ended December 31, 2009.
Effective January 1, 2010, the Company adopted a new accounting standard (IFRS
8 Operating Segments) that was issued by the International Accounting Standards
Board ("IASB"). IFRS 8 was revised and now requires disclosure of information
about segment assets. This accounting policy change was adopted on a
prospective basis with no restatement of prior period financial statements.
Notes to the condensed consolidated interim financial statements as at March
31, 2010
(Expressed in thousands of U.S. dollars, except number of shares and per share
amounts - unaudited)
4. Trade and other receivables
Trade and other receivables are comprised of the following:
March 31, December 31,
2010 2009
Trade receivables $ 30,093 $ 25,839
Allowance for doubtful debts (83) (74)
30,010 25,765
Other receivables 2,184 2,316
Current tax receivable 1,068 1,057
$ 33,262 $ 29,138
5. Inventories
March 31, December 31,
2010 2009
Consumables $ 4,748 $ 4,549
Ore and concentrate 905 276
$ 5,653 $ 4,825
Production costs for the three months ended March 31, 2010 was $25,703 (March
31, 2009 - $17,885). Production costs represent the cost of inventories sold
during the period. This expense includes Nil (March 31, 2009 - Nil) with
regards to the write-down of inventory to net realizable value, and a reduction
of Nil (March 31, 2009 - Nil) with regards to the reversal of write-downs.
At March 31, 2010 and December 31, 2009, no inventories were pledged as
security for liabilities.
Notes to the condensed consolidated interim financial statements as at March
31, 2010
(Expressed in thousands of U.S. dollars, except number of shares and per share
amounts - unaudited)
6. Property, plant and equipment
Mineral
Plant and Plant and properties
equipment equipment being
owned leased depleted
Cost
Balance as at December 31, 2008 $ 315,547 $ 4,892 $ 108,680
Additions
Assets acquired 27,593 - (186)
Disposals (1,510) - -
Foreign exchange movement 84,593 1,240 27,606
Balance as at December 31, 2009 $ 426,223 $ 6,132 $ 136,100
Assets acquired 4,261 - -
Foreign exchange movement 4,583 64 1,429
Balance as at March 31, 2010 $ 435,067 $ 6,196 $ 137,529
Accumulated depreciation and
impairment losses
Balance as at December 31, 2008 $ 91,179 $ 1,966 $ 12,397
Depreciation 11,298 1,092 4,646
Foreign exchange movement 24,467 633 3,722
Balance as at December 31, 2009 $ 126,944 $ 3,691 $ 20,765
Depreciation 3,515 303 1,464
Foreign exchange movement 1,422 46 254
Balance as at March 31, 2010 $ 131,881 $ 4,040 $ 22,483
Carrying amounts
At December 31, 2008 $ 224,368 $ 2,926 $ 96,283
At December 31, 2009 $ 299,279 $ 2,441 $ 115,335
At March 31, 2010 $ 303,186 $ 2,156 $ 115,046
properties Mineral
not being Residential Properties
depleted properties and land
Cost
Balance as at December 31, 2008 $ 444,115 $ 7,954 $ 5,299
Additions
Assets acquired 921 88 331
Disposals - - -
Foreign exchange movement 101,086 2,029 1,348
Balance as at December 31, 2009 $ 546,122 $ 10,071 $ 6,978
Assets acquired 34 - -
Foreign exchange movement 8,980 106 73
Balance as at March 31, 2010 $ 555,136 $ 10,177 $ 7,051
Accumulated depreciation and
impairment losses
Balance as at December 31, 2008 $ 273,084 $ 1,726 $ 662
Depreciation - 118 -
Foreign exchange movement 69,238 452 168
Balance as at December 31, 2009 $ 342,322 $ 2,296 $ 830
Depreciation - 33 -
Foreign exchange movement 3,594 25 9
Balance as at March 31, 2010 $ 345,916 $ 2,354 $ 839
Carrying amounts
At December 31, 2008 $ 171,031 $ 6,228 $ 4,637
At December 31, 2009 $ 203,800 $ 7,775 $ 6,148
At March 31, 2010 $ 209,220 $ 7,823 $ 6,212
TOTAL
Cost
Balance as at December 31, 2008 $ 886,487
Additions
Assets acquired 28,747
Disposals (1,510)
Foreign exchange movement 217,902
Balance as at December 31, 2009 $ 1,131,626
Assets acquired 4,295
Foreign exchange movement 15,235
Balance as at March 31, 2010 $ 1,151,156
Accumulated depreciation and
impairment losses
Balance as at December 31, 2008 $ 381,014
Depreciation 17,154
Foreign exchange movement 98,680
Balance as at December 31, 2009 $ 496,848
Depreciation 5,315
Foreign exchange movement 5,350
Balance as at March 31, 2010 $ 507,513
Carrying amounts
At December 31, 2008 $ 505,473
At December 31, 2009 $ 634,778
At March 31, 2010 $ 643,643
Notes to the condensed consolidated interim financial statements as at March
31, 2010
(Expressed in thousands of U.S. dollars, except number of shares and per share
amounts - unaudited)
6. Property, plant and equipment
Crocodile Kennedy`s Spitzkop
River Mine Vale Project PGM Project
(a) (b) (c)
Cost
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
Additions
Assets acquired 4,261 - 2
Foreign exchange movement 6,251 4,201 3,913
Balance as at March 31, 2010 $ 595,888 $ 404,218 $ 122,909
Accumulated depreciation and
impairment
losses
Balance as at December 31, 2008 $ 107,855 $ 273,084 $ -
Depreciation 17,130 - -
Foreign exchange movement 29,432 69,238 -
Balance as at December 31, 2009 $ 154,417 $ 342,322 $ -
Depreciation 5,315 - -
Foreign exchange movement 1,752 3,594 -
Balance as at March 31, 2010 $ 161,484 $ 345,916 $ -
Carrying amounts
At December 31, 2008 $ 334,407 $ 46,025 $ 101,712
At December 31, 2009 $ 430,959 $ 57,695 $ 118,994
At March 31, 2010 $ 434,404 $ 58,302 $ 122,909
Other
Mareesburg property
Project plant and
(c) equipment TOTAL
Cost
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
Additions
Assets acquired 32 - 4,295
Foreign exchange movement 866 4 15,235
Balance as at March 31, 2010 $ 28,009 $ 132 $ 1,151,156
Accumulated depreciation and
impairment
losses
Balance as at December 31, 2008 $ - $ 75 $ 381,014
Depreciation - 24 17,154
Foreign exchange movement - 10 98,680
Balance as at December 31, 2009 $ - $ 109 $ 496,848
Depreciation - - 5,315
Foreign exchange movement - 4 5,350
Balance as at March 31, 2010 $ - $ 113 $ 507,513
Carrying amounts
At December 31, 2008 $ 23,294 $ 35 $ 505,473
At December 31, 2009 $ 27,111 $ 19 $ 634,778
At March 31, 2010 $ 28,009 $ 19 $ 643,643
Notes to the condensed consolidated interim financial statements as at March
31, 2010
(Expressed in thousands of U.S. dollars, except number of shares and per share
amounts - unaudited)
(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 recommenced on April 4, 2010.
(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 March 31, 2010.
7. 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 a total aggregate value of $22,741.
During the year ended December 31, 2008, the Company acquired an additional
2.47% interest in Barplats. The acquisition did not affect the aggregate value
of the contract.
The value of the contract is amortized over the remaining term of the contract
which is 9.25 years as at March 31, 2010.
Cost
Balance as at December 31, 2008 $ 16,850
Foreign exchange movement 4,272
Balance as at December 31, 2009 $ 21,122
Foreign exchange movement 222
Balance as at March 31, 2010 $ 21,344
Accumulated amortization
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
Amortization for the period 368
Foreign exchange movement 82
Balance as at March 31, 2010 $ 7,403
Carrying amounts
At December 31, 2008 $ 12,493
At December 31, 2009 $ 14,169
At March 31, 2010 $ 13,941
8. Other assets
Other assets consist 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 11). Changes to other assets for
the three months ended March 31, 2010 are as follows:
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
Additional investment 231
Service fees (2)
Interest income 40
Foreign exchange movement 30
Balance, March 31, 2010 $ 2,581
9. Accounts payable and accrued liabilities
March 31, December 31,
2010 2009
Trade payables $ 11,101 $ 9,932
Accrued liabilities 4,792 6,849
Other 4,965 6,138
$ 20,858 $ 22,919
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.
10. 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 March 31, 2010, the finance leases are repayable in 3 semi annual
installments (December 31, 2009 - 3) of $617 (December 31, 2009 - $611) and a
top-up payment of $2,476 in December 2011. The fair value of the finance lease
liabilities approximated carrying value.
(a) Minimum lease payments
March 31, December 31,
2010 2009
No later than 1 year $ 1,234 $ 1,221
Later than 1 year, but no later than 5
years 3,093 3 ,061
4,327 4,282
Less: future finance charges (432) (506)
Present value of minimum lease payments $ 3,895 $ 3,776
(b) Present value of minimum lease
payments
March 31, December 31,
2010 2009
No later than 1 year $ 956 $ 926
Later than 1 year, but no later than 5
years 2,939 2 ,850
$ 3,895 $ 3,776
11. 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 March 31, 2010
is approximately ZAR 61.7 million ($8,410). The liability was determined using
an inflation rate of 7.00% (December 31, 2009 - 7.00%) and an estimated life of
mine of 18 years for Zandfontein and Maroelabult (December 31, 2009 - 18
years), 1 year for Kennedy`s Vale (December 31, 2009 - 1 year) and 26 years for
Spitzkop (December 31, 2009 - 26 years). A discount rate of 8.39% was used
(December 31, 2009 - 8.39%). A guarantee of $2,581 (December 31, 2009 - $2,282)
has been issued to the Department of Minerals and Energy (Note 8). The
guarantee will be utilized to cover expenses incurred to rehabilitate the
mining area upon closure of the mine. The undiscounted value of this liability
is approximately ZAR 236.3 million ($32,219).
Changes to the environmental rehabilitation provision are as follows:
Balance, December 31, 2008 $ 5,598
Revision in estimates 629
Interest expense 443
Foreign exchange movement 1,482
Balance, December 31, 2009 $ 8,152
Revision in estimates -
Interest expense (Note 15) 168
Foreign exchange movement 90
Balance, March 31 , 201 0 $ 8 ,410
12. Commitments
The Company has committed to capital expenditures on projects of approximately
ZAR 32.8 million ($4,472) as at March 31, 2010 (December 31, 2009 - ZAR 37
million, $4,959).
13. Issued capital
(a) Authorized
- Unlimited number of preferred redeemable, voting, non-participating shares
without nominal or par value,
- Unlimited number of common shares with no par value.
(b) Share options
The Company has an incentive plan (the "2008 Plan"), approved by the Company`s
shareholders at its annual general meeting held on June 4, 2008, under which
options to purchase common shares may be granted to its directors, officers,
employees and others at the discretion of the Board of Directors. Under the
terms of the 2008 Plan, 75 million common shares are reserved for issuance upon
the exercise of options. All outstanding options at June 4, 2008 granted under
the Company`s previous plan (the "2005 Plan") will continue to exist under the
2008 Plan provided that the fundamental terms governing such options will be
deemed to be those under the 2005 Plan. Upon adoption of the 2008 Plan, options
to purchase a total of 27,525,000 common shares were available for grant under
the 2008 Plan, representing 75,000,000 less the 47,475,000 outstanding options
at June 4, 2008 granted under the 2005 Plan.
Under the 2008 Plan, each option granted shall be for a term not exceeding five
years from the date of being granted and the vesting period is determined based
on the discretion of the Board of Directors. The option exercise price is set
at the date of the grant and cannot be less than the closing market price of
the Company`s common shares on the Toronto Stock Exchange on the day
immediately preceding the day of the grant of the option.
(i) Movements in share options
The changes in share options during the three months ended March 31, 2010
and year ended December 31, 2009 were as follows:
March 31, 2010
Weighted
average
Number of exercise
options price
Cdn$
Balance outstanding,
beginning of year 59,575,834 1.48
Options granted 2,231,000 1.30
Options exercised (520,831) 0.34
Options forfeited (408,334) 2.03
Balance outstanding,
end of period 60,877,669 1.48
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 period 59,575,834 1.48
(ii) Fair value of share options granted
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:
2010
Weighted
January 18 average
Exercise price Cdn$ 1.30 Cdn$ 1.30
Closing market price on day
preceding date of grant Cdn$ 1.30 Cdn$ 1.30
Grant date share price Cdn$ 1.42 Cdn$ 1.42
Risk-free interest rate 1.73% 1 .7 3%
Expected life 3 years 3 years
Annualized volatility 83% 83%
Dividend rate 0% 0%
Grant date fair value Cdn$ 0.80 Cdn$ 0.80
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$0.52
Risk-free interest rate 1.69% 1.84%
Expected life 3 years 3 years
Annualized volatility 78% 79%
Dividend rate 0% 0%
Grant date fair value Cdn$ 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 1.86% 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.
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.
(iii) Share options exercised during the period
The following table outlines share options exercised during the period:
Closing
Number of share price
options at exercise
Date of issue exercised Exercise date date
December 18, 2008 20,000 January 4, 2010 $ 0.96
December 18, 2008 33,333 January 8, 2010 1.24
December 18, 2008 189,833 January 21, 2010 1.20
February 11, 2009 10,000 January 21, 2010 1.20
December 18, 2008 56,000 January 25, 2010 1.25
December 18, 2008 123,332 January 28, 2010 1.21
November 3, 2009 6,667 January 28, 2010 1.21
December 18, 2008 26,666 January 29, 2010 1.18
February 11, 2009 10,000 February 3, 2010 1.31
November 3, 2009 15,000 February 3, 2010 1.31
December 18, 2008 30,000 March 1, 2010 1.34
520,831 $ 1.21
(iv) Share options outstanding at the end of the period
The following table summarizes information concerning outstanding and
exercisable options at March 31, 2010:
Remaining
Options Options Exercise Contractual
outstanding exercisable price Life (Years) Expiry date
Cd n $
6,725,000 6,725,000 1.70 1.15 May 24, 2011
250,000 250,000 1.70 1.66 November 27, 2011
19,987,500 19,987,500 1.82 1.94 March 7, 2012
16,940,836 16,119,169 0.32 3.72 December 18, 2013
40,000 20,000 0.32 3.87 February 11, 2014
400,000 400,000 0.52 4.25 June 30, 2014
193,333 50,000 0.76 4.59 November 3, 2014
13,390,000 13,390,000 2.31 7.52 October 5, 2017
90,000 90,000 2.50 7.71 December 12, 2017
460,000 460,000 3.38 7.90 February 20, 2018
170,000 170,000 3.38 7.99 March 27, 2018
2,231,000 2,231,000 1.30 4.81 January 18, 2015
60,877,669 59,892,669 3.77
The weighted average exercise price of options exercisable at March 31, 2010
is Cdn$1.50.
(c) Share purchase warrants
The changes in warrants during the three months ended March 31, 2010 and the
year ended December 31, 2009 were as follows:
March 31, 2010
Weighted
average
Number of exercise
warrants price
Cdn$
Balance outstanding,
beginning of year - -
Warrants expired - -
Balance outstanding,
end of period - -
December 31, 2009
Weighted
average
Number of exercise
warrants price
Cdn$
Balance outstanding,
beginning of year 58,485,996 1.80
Warrants expired (58,485,996) 1.80
Balance outstanding,
end of period - -
14. Non-controlling interest
The non-controlling interests are comprised of the following:
Balance, December 31, 2008 $ 12,002
Non-controlling interests` share of loss in Barplats (176)
Non-controlling interests` share of interest on advances to
Gubevu (608)
Foreign exchange movement (354)
Balance, March 31, 2009 $ 10,864
Non-controlling interests` share of loss in Barplats (1,732)
Non-controlling interests` share of interest on advances to
Gubevu (1,912)
Foreign exchange movement 2,821
Balance, December 31, 2009 $ 10,041
Non-controlling interests` share of loss in Barplats (590)
Non-controlling interests` share of interest on advances to
Gubevu (670)
Foreign exchange movement 97
Balance, March 31 , 201 0 $ 8,878
15. Finance costs
March 31, March 31,
2010 2009
Interest on revenue advances $ 119 $ 142
Interest on finance leases 77 103
Interest on provision for environmental
rehabilitation 168 93
Interest on tax - 2
Other interest 6 112
$ 370 $ 452
16. 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:
March 31, March 31,
2010 2009
(in thousands)
Weighted average number of ordinary shares
used in the calculation of basic earnings per
share 681,200 680,526
Shares deemed to be issued for no
consideration in
respect of options 12,630 2,869
Weighted average number of ordinary shares used
in the calculation of diluted earnings per
share 693,830 683,395
The following potential ordinary shares, outstanding at March 31, 2010, are
anti-dilutive and are therefore excluded from the weighted average number of
ordinary shares for the purposes of diluted earnings per share:
March 31, March 31,
2010 2009
(in thousands)
Options 41,073 41,937
Warrants - -
17. Retirement benefit plans
The Barplats Provident Fund is an independent, defined contribution plan
administered by Liberty Life Limited in South Africa. The costs associated with
the defined contribution plan included in net (loss) profit were $899 (March
31, 2009 - $521). The total number of employees in the plan at March 31, 2010
was 1,863 (March 31, 2009 - 1,491).
18. 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.
March 31, March 31,
Note 2010 2009
Consulting fees (i) $ 29 $ 31
General and administrative expenses 20 -
Management fees 307 235
$ 356 $ 266
(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 March 31, 2010 included $Nil
(December 31, 2009 - $510) 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 three months ended March 31, 2010 and 2009 were as follows:
March 31, March 31,
Note 2010 2009
Salaries and directors` fees (i) $ 548 $ 474
Share-based payments (ii) 1,627 -
$ 2,175 $ 474
(i) Salaries and directors` fees include consulting and management fees
disclosed in Note 18(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 three
months ended March 31, 2010 and 2009.
19. 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 revenues and expenses by geographic
areas for the three months ended March 31, 2010 and 2009 and assets by
geographic areas as at March 31, 2010 and December 31, 2009 are as
follows:
March 31, 2010
Crocodile Kennedy`s
River Mine Vale Spitzkop Mareesburg
Current assets $ 38,593 $ 83 $ 1,507 $ 45
Property, plant
and equipment 434,404 58,302 122,909 28,009
Refining
contract 13,941 - - -
Other Assets 2,581 - - -
$ 489,519 $ 58,385 $ 124,416 $ 28,054
Property, plant
and
equipment
expenditures $ 4,261 $ - $ 2 $ 32
Sale of
property, plant
and equipment - - - -
Revenue $ 34,699 $ - $ - $ -
Production costs (25,703) - - -
Depreciation
and
amortization (5,315) - - -
General and
administrative
expenses (1,764) (328) - (1)
Share-based
payment (34) - - -
Interest income 337 - - 2
Finance costs (182) (184) (4) -
Foreign
exchange (loss)
gain (9) - - -
Profit (loss)
before
income taxes $ 2,029 $ (512) $ (4) $ 1
Total
Other South Africa Canada TOTAL
Current assets $ 1,016 $ 41,244 $ 14,964 $ 56,208
Property, plant
and equipment - 643,624 19 643,643
Refining contract - 13,941 - 13,941
Other Assets - 2,581 - 2,581
$ 1,016 $ 701,390 $ 14,983 $ 716,373
Property, plant and
equipment
expenditures $ - $ 4,295 $ - $ 4,295
Sale of property,
plant
and equipment - - - -
Revenue $ - $ 34,699 $ - $ 34,699
Production costs - (25,703) - (25,703)
Depreciation and
amortization - (5,315) - (5,315)
General and
administrative
expenses - (2,093) (1,103) (3,196)
Share-based payment - (34) (1,705) (1,739)
Interest income - 339 33 372
Finance costs - (370) - (370)
Foreign exchange
(loss) gain - (9) 277 268
Profit (loss)
before
income taxes $ - $ 1,514 $ (2,498) $ (984)
March 31, 2009
Crocodile Kennedy`s
River Mine Vale Spitzkop Mareesburg
Property, plant and
equipment
expenditures $ 10,300 $ - $ 389 $ 28
Sale of property,
plant
and equipment - - - -
Revenue $ 24,903 $ - $ - $ -
Production costs (17,885) - - -
Depreciation and
amortization (3,517) - - -
General and
administrative
expenses (378) (207) (135) -
Share-based payment (132) - - -
Interest income 354 - - -
Finance costs (347) - - -
Foreign exchange
(loss) gain (18) 23 - -
Profit (loss) before
income taxes $ 2,980 $ (184) $ (135) $ -
Total
Other South Africa Canada TOTAL
Property, plant and
equipment expenditures $ - $ 10,717 $ - $ 10,717
Sale of property, plant
and equipment - - - -
Revenue $ - $ 24,903 $ - $ 24,903
Production costs - (17,885) - (17,885)
Depreciation and
amortization - (3,517) - (3,517)
General and
administrative expenses (38) (758) (878) (1,636)
Share-based payment - (132) - (132)
Interest income - 354 140 494
Finance costs (105) (452) - (452)
Foreign exchange (loss)
gain (99) (94) 19 (75)
Profit (loss) before
income taxes $ (242) $ 2,419 $ (719) $ 1,700
December 31, 2009
Crocodile Kennedy`s
River Mine Vale Spitzkop Mareesburg
Current assets $ 36,749 $ 176 $ 1,509 $ 45
Property, plant
and equipment 430,959 57,695 118,994 27,111
Refining contract 14,169 - - -
Other Assets 2,282 - - -
$ 484,159 $ 57,871 $ 120,503 $ 27,156
Total
Other South Africa Canada TOTAL
Current assets $ 1,003 $ 39,482 $ 16,139 $ 55,621
Property, plant and
equipment - 634,759 19 634,778
Refining contract - 14,169 - 14,169
Other Assets - 2,282 - 2,282
$ 1,003 $ 690,692 $ 16,158 $ 706,850
For the three months ended March 31, 2010 and 2009, substantially all of the
Company`s PGM production was sold to one customer.
20. Events after the reporting period
From April 1, 2010 to May 10, 2010, 1,736,163 stock options were exercised, of
which 1,055,000 were exercised by way of cash payment at a weighted average
exercise price of Cdn$0.32 for proceeds of Cdn$343, and 681,163 were exercised
by way of cashless exercise at a weighted average exercise price of Cdn$0.33.
Date: 12/05/2010 15:46:02 Supplied by www.sharenet.co.za
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