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EPS - Eastern Platinum Limited - Condensed consolidated interim financial

Release Date: 11/08/2010 15:11
Code(s): EPS
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EPS - Eastern Platinum Limited - Condensed consolidated interim financial statements of Eastern Platinum Limited June 30, 2010 (Unaudited) EASTERN PLATINUM LIMITED (Incorporated in Canada) (Canadian Registration number BC0722783) (South African Registration number 2007/006318/10) Share Code TSX: ELR ISIN: CA 2768551038 Share Code AIM: ELR ISIN: CA 2768551038 Share Code JSE: EPS ISIN: CA 2768551038 Condensed consolidated interim financial statements of Eastern Platinum Limited June 30, 2010 (Unaudited) Eastern Platinum Limited Condensed consolidated interim income statements (Expressed in thousands of U .S. dollars, except per share amounts - unaudited) Three months ended Note June 30, June 30,
2010 2009 Revenue $ 36,612 $ 24,838 Cost of operations Production costs 26,855 18,309 Depletion and depreciation 7 5,528 4,286 32,383 22,595 Mine operating earnings 4,229 2,243 Expenses General and administrative 2,037 3,171 Share-based payments 14 13 203 2,050 3,374 Operating profit (loss) 2,179 (1,131) Other income (expense) Interest income 421 495 Finance costs 16 (593) (375) Foreign exchange (loss) gain (36) (1,372) Profit (loss) before income taxes 1,971 (2 ,383) Deferred income tax recovery 548 1,609 Net profit (loss) for the period $ 2,519 $ (774) Attributable to Non-controlling interest 15 $ (929) $ (1,091) Equity shareholders of the Company 3,448 317 Net profit (loss) for the period $ 2,519 $ (774) Earnings per share Basic 17 $ 0.01 $ 0.00 Diluted 17 $ 0.00 $ 0.00 Weighted average number of common shares outstanding in thousands Basic 17 682,792 680,538 Diluted 17 693,988 687,181 Six months ended
June 30, June 30, 2010 2009 Revenue $ 71,311 $ 49,741 Cost of operations Production costs 52,558 36,194 Depletion and depreciation 10,843 7,803 63,401 43,997 Mine operating earnings 7,910 5,744 Expenses General and administrative 5,233 4,807 Share-based payments 1,752 335 6,985 5,142
Operating profit (loss) 925 602 Other income (expense) Interest income 793 989 Finance costs (963) (827) Foreign exchange (loss) gain 232 (1 ,447) Profit (loss) before income taxes 987 (683) Deferred income tax recovery 1,096 2,289 Net profit (loss) for the period $ 2,083 $ 1,606 Attributable to Non-controlling interest $ (2,189) $ (1 ,875) Equity shareholders of the Company 4,272 3,481 Net profit (loss) for the period $ 2,083 $ 1,606 Earnings per share Basic $ 0.01 $ 0.01 Diluted $ 0.01 $ 0.01 Weighted average number of common shares outstanding in thousands Basic 682,000 680,532 Diluted 693,909 685,597 See accompanying notes to the unaudited condensed consolidated interim financial statements Eastern Platinum Limited Condensed consolidated interim statements of comprehensive (loss) income (Expressed in thousands of U.S. dollars - unaudited) Three months ended June 30, June 30, 2010 2009
Net profit (loss) for the period $ 2,519 $ (774) Other comprehensive (loss) income Exchange differences on translating foreign operations (27,398) 95,369 Exchange differences on translating non-controlling interest (364) 2,309 Comprehensive (loss) income $ (25,243) $ 96,904 Attributable to Non-controlling interest $ (1,293) $ 1,218 Equity shareholders of the Company $ (23,950) $ 95,686 Six months ended June 30, June 30,
2009 2010 Net profit (loss) for the period $ 2,083 $ 1,606 Other comprehensive (loss) income Exchange differences on translating foreign operations (17,519) 82,042 Exchange differences on translating non-controlling interest (267) 1,955 Comprehensive (loss) income $ (15,703) $ 85,603 Attributable to Non-controlling interest $ (2,456) $ 80 Equity shareholders of the Company $ (13,247) $ 85,523 See accompanying notes to the unaudited condensed consolidated interim financial statements Eastern Platinum Limited Condensed consolidated interim statements of financial position as at June 30, 2010 and December 31, 2009 (Expressed in thousands of U.S. dollars - unaudited) June 30, December 31, Note 2010 2009
Assets Current assets Cash and cash equivalents 4 $ 6,280 $ 7,249 Short-term investments 13,285 14,409 Trade and other receivables 5 29,629 29,138 Inventories 6 5,621 4,825 54,815 55,621 Non-current assets Property, plant and equipment 7 616,758 634,778 Refining contract 8 12,989 14,169 Other assets 9 2,739 2,282 $ 687,301 $ 706,850
Liabilities Current liabilities Accounts payable and accrued liabilities 10 $ 19,882 $ 22,919 Current portion of finance leases 11 936 926 20,818 23,845 Non-current liabilities Provision for environmental rehabilitation 12 8,219 8,152 Finance leases 11 2,280 2,850 Deferred tax liabilities 40,041 42,491 71,358 77,338
Equity Issued capital 14 890,876 890,150 Equity-settled employee benefits reserve 33,744 32,336 Currency translation adjustment (70,418) (52,899) Deficit (245,844) (250,116) Capital and reserves attributable to equity shareholders of the Company 608,358 619,471 Non-controlling interest 15 7,585 10,041 615,943 629,512 $ 687,301 $ 706,850 Approved and authorized for issue by the Board on August 9, 2010. "David Cohen" "Robert Gayton" David Cohen, Director Robert Gayton, Director See accompanying notes to the unaudited condensed consolidated interim financial statements Eastern Platinum Limited Condensed consolidated interim statements of changes in equity (Expressed in thousands of U.S. dollars, except number of shares - unaudited) Issued capital
Common Amount Shares Balance, December 31, 2008 680,526,454 $ 890,049 Stock options exercised 30,948 12 Share-based payments - - Comprehensive income - - Balance, June 30, 2009 680,557,402 $ 890,061 Stock options exercised 335,923 89 Share-based payments - - Comprehensive income - - Balance, December 31, $ 890,150 2009 680,893,325 Stock options exercised 2,124,257 726 Share-based payments - - Comprehensive loss - - Balance, June 30, 2010 683,017,582 $ 890,876 Equity- Currency settled translation employee adjustment benefits
reserve Balance, December 31, 2008 $ 31,827 $ (169,577) Stock options exercised (7) - Share-based payments 335 - Comprehensive income - 82,042 Balance, June 30, 2009 $ 32,155 $ (87,535) Stock options exercised (66) - Share-based payments 247 - Comprehensive income - 34,636 Balance, December 31, $ 32,336 $ (52,899) 2009 Stock options exercised (344) - Share-based payments 1,752 - Comprehensive loss - (17,519) Balance, June 30, 2010 $ 33,744 $ (70,418) Deficit Capital and
reserves attributable to equity shareholders
of the parent Balance, December 31, 2008 $ (255,766) $ 496,533 Stock options exercised - 5 Share-based payments - 335 Comprehensive income 3,481 85,523 Balance, June 30, 2009 $ (252,285) $ 582,396 Stock options exercised - 23 Share-based payments - 247 Comprehensive income 2,169 36,805 Balance, December 31, $ (250,116) $ 619,471 2009 Stock options exercised - 382 Share-based payments - 1,752 Comprehensive loss 4,272 (13,247) Balance, June 30, 2010 $ (245,844) $ 608,358 Non-controlling Equity
interest Balance, December 31, 2008 $ 12,002 $ 508,535 Stock options exercised - 5 Share-based payments - 335 Comprehensive income 80 85,603 Balance, June 30, 2009 $ 12,082 $ 594,478 Stock options exercised - 23 Share-based payments - 247 Comprehensive income (2,041) 34,764 Balance, December 31, $ 10,041 $ 629,512 2009 Stock options exercised - 382 Share-based payments - 1,752 Comprehensive loss (2,456) (15,703) Balance, June 30, 2010 $ 7,585 $ 615,943 See accompanying notes to the unaudited condensed consolidated interim financial statements Eastern Platinum Limited Condensed consolidated interim statements of cash flows (Expressed in thousands of U.S. dollars - unaudited) Three months ended Note June 30, June 30, 2010 2009 Operating activities Profit (loss) before income taxes $ 1,971 $ (2,383) Adjustments to net profit for non-cash items Depletion and depreciation 7 5,528 4,286 Refining contract amortization 8 367 356 Share-based payments 14 13 203 Interest income (421) (495) Finance costs 16 593 375 Foreign exchange loss (gain) 36 1,372 Net changes in non-cash working capital items Trade receivables 2,153 5,320 Inventories (211) (859) Accounts payable and accrued liabilities (148) (369) Cash generated from (utilized in) operations 9,881 7,806 Adjustments to net profit (loss) for cash items Interest income received 389 423 Finance costs paid (231) - Acquisition related dividend taxes paid - - Net operating cash flows 10,039 8,229 Investing activities Maturity of short-term investments - - Purchase of other assets (272) (382) Property, plant and equipment expenditures (6,416) (8,282) Sale of property, plant and equipment - 1,552 Net investing cash flows (6,688) (7,112) Financing activities Common shares issued for cash, net of share issue costs 339 12 Payment of current loans - (3,106) Payment of finance leases (626) (605) Net financing cash flows (287) (3,699) Effect of exchange rate changes on cash and cash equivalents (154) 1,324 Increase (decrease) in cash and cash equivalents 2,910 (1,258) Cash and cash equivalents, beginning of period 3,370 7,740 Cash and cash equivalents, end of period $ 6,280 $ 6,482 Six months ended
June 30, June 30, 2010 2009 Operating activities Profit (loss) before income taxes $ 987 $ (683) Adjustments to net profit for non-cash items Depletion and depreciation 10,843 7,803 Refining contract amortization 735 610 Share-based payments 1,752 335 Interest income (793) (989) Finance costs 963 827 Foreign exchange loss (gain) (232) 1,447 Net changes in non-cash working capital items Trade receivables (1,655) (7,943) Inventories (969) (640) Accounts payable and accrued liabilities (2,417) (17,353) Cash generated from (utilized in) operations 9,214 (16,586) Adjustments to net profit (loss) for cash items Interest income received 737 799 Finance costs paid (247) (11) Acquisition related dividend taxes paid - (2,422) Net operating cash flows 9,704 (18,220) Investing activities Maturity of short-term investments 961 20,095 Purchase of other assets (541) (409) Property, plant and equipment expenditures (10,711) (18,999) Sale of property, plant and equipment - 1,552 Net investing cash flows (10,291) 2,239 Financing activities Com mon shares issued for cash, net of share issue costs 382 12 Payment of current loans - (3,065) Payment of finance leases (628) (618) Net financing cash flows (246) (3,671) Effect of exchange rate changes on cash and cash equivalents (136) 328 Increase (decrease) in cash and cash equivalents (969) (19,324) Cash and cash equivalents, beginning of period 7,249 25,806 Cash and cash equivalents, end of period $ 6,280 $ 6,482 See accompanying notes to the unaudited condensed consolidated interim financial statements Eastern Platinum Limited Notes to the condensed consolidated interim financial statements as at June 30, 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. 4. Cash and cash equivalents Cash and cash equivalents are comprised of: June 30, December 31, 2010 2009 Cash in bank $ 3,518 $ 7,249 Short-term money market instruments 2,762 - $ 6,280 $ 7,249 5. Trade other and receivables Trade and other receivables are comprised of the following: June 30, December 31, 2010 2009 Trade receivables $ 26,815 $ 25,839 Allowance for doubtful debts (105) (74) 26,710 25,765 Other receivables 1,896 2,316 Current tax receivable 1,023 1,057 $ 29,629 $ 29,138
6. Inventories June 30, December 31, 2010 2009 Consumables $ 4,798 $ 4,549 Ore and concentrate 823 276 $ 5,621 $ 4,825 Production costs for the three and six months ended June 30, 2010 was $26,855 and $52,558 (June 30, 2009 - $18,309 and $36,194), respectively. Production costs represent the cost of inventories sold during the period. This expense includes Nil (June 30, 2009 - Nil) with regards to the write-down of inventory to net realizable value, and a reduction of Nil (June 30, 2009 - Nil) with regards to the reversal of write-downs. At June 30, 2010 and December 31, 2009, no inventories were pledged as security for liabilities. 7. 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 10,637 - - Foreign exchange movement (13,956) (199) (4,398) Balance as at June 30, 2010 $ 422,904 $ 5,933 $ 131,702 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 7,379 605 2,793 Foreign exchange movement (4,230) (130) (721) Balance as at June 30, 2010 $ 130,093 $ 4,166 $ 22,837 Carrying amounts At December 31, 2008 $ 224,368 $ 2,926 $ 96,283 At December 31, 2009 $ 299,279 $ 2,441 $ 115,335 At June 30, 2010 $ 292,811 $ 1,767 $ 108,865 Mineral
properties Residential not being properties depleted Cost Balance as at December 31, 2008 $ 444,115 $ 7,954 Additions Assets acquired 921 88 Disposals - - Foreign exchange movement 101,086 2,029 Balance as at December 31, 2009 $ 546,122 $ 10,071 Assets acquired 85 - Foreign exchange movement (15,040) (325) Balance as at June 30, 2010 $ 531,167 $ 9,746 Accumulated depreciation and impairment losses Balance as at December 31, 2008 $ 273,084 $ 1,726 Depreciation - 118 Foreign exchange movement 69,238 452 Balance as at December 31, 2009 $ 342,322 $ 2,296 Depreciation - 66 Foreign exchange movement (11,062) (75) Balance as at June 30, 2010 $ 331,260 $ 2,287 Carrying amounts At December 31, 2008 $ 171,031 $ 6,228 At December 31, 2009 $ 203,800 $ 7,775 At June 30, 2010 $ 199,907 $ 7,459 Properties and land TOTAL
Cost Balance as at December 31, 2008 $ 5,299 $ 886,487 Additions Assets acquired 331 28,747 Disposals - (1,510) Foreign exchange movement 1,348 217,902 Balance as at December 31, 2009 $ 6,978 $ 1,131,626 Assets acquired - 10,722 Foreign exchange movement (226) (34,144) Balance as at June 30, 2010 $ 6,752 $ 1,108,204 Accumulated depreciation and impairment losses Balance as at December 31, 2008 $ 662 $ 381,014 Depreciation - 17,154 Foreign exchange movement 168 98,680 Balance as at December 31, 2009 $ 830 $ 496,848 Depreciation - 10,843 Foreign exchange movement (27) (16,245) Balance as at June 30, 2010 $ 803 $ 491,446 Carrying amounts At December 31, 2008 $ 4,637 $ 505,473 At December 31, 2009 $ 6,148 $ 634,778 At June 30, 2010 $ 5,949 $ 616,758 7. 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 10,637 - 8 Foreign exchange movement (19,102) (12,926) (1,688) Balance as at June 30, 2010 $ 576,911 $ 387,091 $ 117,314 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 10,843 - - Foreign exchange movement (5,182) (11,062) - Balance as at June 30, 2010 $ 160,078 $ 331,260 $ - Carrying amounts At December 31, 2008 $ 334,407 $ 46,025 $ 101,712 At December 31, 2009 $ 430,959 $ 57,695 $ 118,994 At June 30, 2010 $ 416,833 $ 55,831 $ 117,314 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 77 - 10,722 Foreign exchange movement (426) (2) (34,144) Balance as at June 30, 2010 $ 26,762 $ 126 $ 1,108,204 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 - - 10,843 Foreign exchange movement - (1) (16,245) Balance as at June 30, 2010 $ - $ 108 $ 491,446 Carrying amounts At December 31, 2008 $ 23,294 $ 35 $ 505,473 At December 31, 2009 $ 27,111 $ 19 $ 634,778 At June 30, 2010 $ 26,762 $ 18 $ 616,758 (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. 8. 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 years as at June 30, 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 (682) Balance as at June 30, 2010 $ 20,440 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 735 Foreign exchange movement (237) Balance as at June 30, 2010 $ 7,451 Carrying amounts At December 31, 2008 $ 12,493 At December 31, 2009 $ 14,169 At June 30, 2010 $ 12,989 9. 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 12). Changes to other assets for the six months ended June 30, 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 $ 2,282 460 Additional investment Service fees (4) Interest income 84 Foreign exchange movement (83) Balance, June 30, 2010 $ 2,739 10. Accounts payable and accrued liabilities June 30, December 31, 2010 2009 Trade payables $ 10,326 $ 9,932 Accrued liabilities 5,004 6,849 Other 4,552 6,138 $ 19,882 $ 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. 11. 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 June 30, 2010, the finance leases are repayable in 2 semiannual installments (December 31, 2009 - 3) of $585 (December 31, 2009 - $611) and a top-up payment of $2,365 in December 2011. The fair value of the finance lease liabilities approximated carrying value. (a) Minimum lease payments June 30, December 31, 2010 2009 No later than 1 year $ 1,169 $ 1,221 Later than 1 year, but no later than 5 years 2,365 3,061 3,534 4,282 Less: future finance charges (318) (506) Present value of minimum lease payments $ 3,216 $ 3,776 (b) Present value of minimum lease payments June 30, December 31, 2010 2009 No later than 1 year $ 936 $ 926 Later than 1 year, but no later than 5 years 2,280 2,850 $ 3,216 $ 3,776 12. Provision for environmental rehabilitation Although the ultimate amount of the environmental rehabilitation provision is uncertain, the fair value of these obligations is based on information currently available, including closure plans and applicable regulations. Significant closure activities include land rehabilitation, demolition of buildings and mine facilities and other costs. The liability for the environmental rehabilitation provision at June 30, 2010 is approximately ZAR 62.9 million ($8,219). 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 $2,739 (December 31, 2009 - $2,282) has been issued to the Department of Minerals and Energy (Note 9). 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 ($30,854). 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 16) 336 Foreign exchange movement (269) Balance, June 30, 2010 $ 8,219 13. Commitments The Company has committed to capital expenditures on projects of approximately ZAR 40.1 million ($5,230) as at June 30, 2010 (December 31, 2009 - ZAR 37 million, $4,959). 14. Issued capital (a) Authorized - Unlimited number of preferred redeemable, voting, non-participating shares without nominal or par value, - Unlimited number of common shares with no par value.
(b) Share options The Company has an incentive plan (the "2008 Plan"), approved by the Company`s shareholders at its annual general meeting held on June 4, 2008, under which options to purchase common shares may
be granted to its directors, officers, employees and others at the discretion of the Board of Directors. Under the terms of the 2008 Plan, 75 million common shares are reserved for issuance upon the exercise of options. All outstanding options at June 4,
2008 granted under the Company`s previous plan (the "2005 Plan") will continue to exist under the 2008 Plan provided that the fundamental terms governing such options will be deemed to be those under the 2005 Plan. Upon adoption of the 2008 Plan,
options to purchase a total of 27,525,000 common shares were available for grant under the 2008 Plan, representing 75,000,000 less the 47,475,000 outstanding options at June 4, 2008 granted under the 2005 Plan.
Under the 2008 Plan, each option granted shall be for a term not exceeding five years from the date of being granted and the vesting period is determined based on the discretion of the Board of Directors. The option exercise price is set at the date
of the grant and cannot be less than the closing market price of the Company`s common shares on the Toronto Stock Exchange on the day immediately preceding the day of the grant of the option. (i) Movements in share options
The changes in share options during the six months ended June 30, 2010 and year ended December 31, 2009 were as follows: June 30, 2010
Weighted average Number of exercise options price
Cdn$ Balance outstanding, beginning of year 59,575,834 1.48 Options granted 2,231,000 1.30 Options exercised (2,412,994) 0.33 Options forfeited (666,668) 1.74 Balance outstanding, end of period 58,727,172 1.52 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% 1.73% 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 Weighted February 11 June 30 November 3 average
Exercise price Cdn$0.32 Cdn$0.52 Cdn$0.76 Cdn$0.57 Closing market price on day preceding date of grant Cdn$0.32 Cdn$0.52 Cdn$0.76 Cdn$0.57 Grant date share price Cdn$0.38 Cdn$0.52 Cdn$0.81 Cdn$0.59 Risk-free interest rate 1.69% 1.84% 1.86% 1.83% Expected life 3 years 3 years 3 years 3 years Annualized volatility 78% 79% 82% 80% Dividend rate 0% 0% 0% 0% Grant date fair value Cdn$0.21 Cdn$0.27 Cdn$0.45 Cdn$0.32 Exercise price is the closing market price on the day preceding the date the options were granted, as defined by the Company`s 2008 share option plan. Grant date share price is the closing market price on the day the options were granted. Expected volatility is based on the historical share price volatility since Eastern Platinum Limited completed its acquisition of Barplats Investment Limited on May 2, 2006, or for 3 years prior to the date of grant, whichever is shorter. (iii) Share options outstanding at the end of the period The following table summarizes information concerning outstanding and exercisable options at June 30, 2010: Remaining Options Options Exercise Contractual outstanding exercisable price Life (Years) Expiry date Cdn$ 6,725,000 6,725,000 1.70 0.90 May 24, 2011 250,000 250,000 1.70 1.41 November 27, 2011 19,987,500 19,987,500 1.82 1.69 March 7, 2012 14,987,005 14,230,338 0.32 3.47 December 18, 2013 20,000 - 0.32 3.62 February 11, 2014 400,000 400,000 0.52 4.00 June 30, 2014 141,667 28,334 0.76 4.34 November 3, 2014 2,226,000 2,226,000 1.30 4.56 January 18, 2015 13,270,000 13,270,000 2.31 7.27 October 5, 2017 90,000 90,000 2.50 7.46 December 12, 2017 460,000 460,000 3.38 7.65 February 20, 2018 170,000 170,000 3.38 7.74 March 27, 2018 58,727,172 57,837,172 3.52 The weighted average exercise price of options exercisable at June 30, 2010 is Cdn$1.54. (c) Share purchase warrants The changes in warrants during the six months ended June 30, 2010 and the year ended December 31, 2009 were as follows: June 30, 2010
Weighted average Number of exercise warrants price
Cdn$ 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 - - 15. 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 (671) Non-controlling interests` share of interest on advances to Gubevu (1,204) Foreign exchange movement 1,955 Balance, June 30, 2009 $ 12,082 Non-controlling interests` share of loss in Barplats (1,237) Non-controlling interests` share of interest on advances to Gubevu (1,316) Foreign exchange movement 512 Balance, December 31, 2009 $ 10,041 Non-controlling interests` share of loss in Barplats (865) Non-controlling interests` share of interest on advances to Gubevu (1,324) Foreign exchange movement (267) Balance, June 30, 2010 $ 7,585 16. Finance costs Three months ended June 30, June 30, 2010 2009 Interest on revenue advances $ 138 $ 128 Interest on finance leases 72 99 Interest on provision for environmental rehabilitation 168 109 Interest on tax 209 - Other interest 6 39 $ 593 $ 375 Six months ended June 30, June 30,
2010 2009 Interest on revenue advances $ 257 $ 270 Interest on finance leases 149 202 Interest on provision for environmental rehabilitation 336 202 Interest on tax 209 2 Other interest 12 151 $ 963 $ 827
17. 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: Three months ended June 30, June 30, 2010 2009 (in thousands)
Weighted average number of ordinary shares used in the calculation of basic earnings per share 682,792 680,538 Shares deemed to be issued for no consideration in respect of in the money options 11,196 6,643 Weighted average number of ordinary shares used in the calculation of diluted earnings per share 693,988 687,181 Six months ended June 30, June 30, 2010 2009 (in thousands)
Weighted average number of ordinary shares used in the calculation of basic earnings per share 682,000 680,532 Shares deemed to be issued for no consideration in respect of in the money options 11,909 5,065 Weighted average number of ordinary shares used in the calculation of diluted earnings per share 693,909 685,597 The following potential ordinary shares, outstanding at June 30, 2010, are anti-dilutive and are therefore excluded from the weighted average number of ordinary shares for the purposes of diluted earnings per share: Three months ended Six months ended
June 30, June 30, June 30, June 30, 2010 2009 2010 2009 (in thousands) (in thousands) Options 43,179 41,073 40,953 41,473 Warrants - - - - 18. 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 for the three and six months, respectively, were $969 and $1,868 (June 30, 2009 - $616 and $1,137). The total number of employees in the plan at June 30, 2010 was 1,804 (June 30, 2009 - 1,807). 19. 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. Three months ended
June 30, June 30, Note 2010 2009 Consulting fees (i) $ 36 $ 45 General and administrative expenses 42 19 Management fees 313 238 $ 391 $ 302 Six months ended
June 30, June 30, 2010 2009 Consulting fees $ 65 $ 76 General and administrative expenses 62 19 Management fees 620 473 $ 747 $ 568 (i) The Company paid fees to a private company controlled by a director of the Company for consulting services performed outside of his capacity as a director. (ii) Amounts due to related parties are unsecured, non-interest bearing and due on demand. Accounts payable at June 30, 2010 included $40 (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 and six months ended June 30, 2010 and 2009 were as follows: Three months ended June 30, June 30, Note 2010 2009
Salaries and directors` fees (i) $ 568 $ 506 Share-based payments (ii) - 93 $ 568 $ 599 Six months ended
June 30, June 30, 2010 2009 Salaries and directors` fees $ 1,116 $ 980 Share-based payments 1,627 93 $ 2,743 $ 1,073 (i) Salaries and directors` fees include consulting and management fees disclosed in Note 19(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 and six months ended June 30, 2010 and 2009. 20. 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 and six months ended June 30, 2010 and 2009 and assets by geographic areas as at June 30,
2010 and December 31, 2009 are as follows: Three months ended June 30, 2010 Crocodile Kennedy`s River Mine Vale Spitzkop Mareesburg
Current assets$ 38,519 $ 97 $ 1,444 $ 25 Property, plant and equipment 416,833 55,831 117,314 26,762 Refining contract 12,989 - - - Other Assets 2,739 - - - $ 471,080 $ 55,928 $ 118,758 $ 26,787
Property, plant and equipment expenditures $ 6,376 $ - $ 6 $ 45 Sale of property, plant and equipment - - - - Revenue $ 36,612 $ - $ - $ - Production costs (26,855) - - - Depreciation and amortization (5,528) - - - General and administrativ e expenses (603) (479) (7) (1) Share-based payment (13) - - - Interest income 387 - - 2 Finance costs (402) (182) (9) - Foreign exchange loss - - - - Profit (loss) before income taxes $ 3,598 $ (661) $ (16) $ 1 Total South Other Africa Canada TOTAL Current assets $ 992 $ 41,077 $ 13,738 $ 54,815 Property, plant and equipment - 616,740 18 616,758 Refining contract - 12,989 - 12,989 Other Assets - 2,739 - 2,739 $ 992 $ 673,545 $ 13,756 $ 687,301 Property, plant and equipment expenditures $ - $ 6,427 $ - $ 6,427 Sale of property, plant and equipment - - - - Revenue $ - $ 36,612 $ - $ 36,612 Production costs - (26,855) - (26,855) Depreciation and amortization - (5,528) - (5,528) General and administrative expenses (3) (1,093) (944) (2,037) Share-based payment - (13) - (13) Interest income - 389 32 421 Finance costs - (593) - (593) Foreign exchange loss - - (36) (36) Profit (loss) before income taxes $ (3) $ 2,919 $ (948) $ 1,971 Three months ended June 30, 2009 Crocodile Kennedy`s River Mine Vale Spitzkop Mareesburg
Property, plant and equipment expenditures $ 8,184 $ - $ 38 $ 60 Sale of property, plant and equipment 1,552 - - - Revenue $ 24,838 $ - $ - $ - Production costs (18,309) - - - Depreciation and amortization (4,286) - - - General and administrative expenses (2,086) (47) (197) (4) Share-based payment (110) - - - Interest income 383 - 31 - Finance costs (281) (55) - - Foreign exchange gain (loss) 70 (28) - - Profit (loss) before income taxes $ 219 $ (130) $ (166) $ (4) Total South
Other Africa Canada TOTAL Property, plant and equipment expenditures $ - $ 8,282 $ - $ 8,282 Sale of property, plant and equipment - 1,552 - 1,552 Revenue $ - $ 24,838 $ - $ 24,838 Production costs - (18,309) - (18,309) Depreciation and amortization - (4,286) - (4,286) General and administrative expenses (25) (2,359) (812) (3,171) Share-based payment - (110) (93) (203) Interest income 2 416 79 495 Finance costs (39) (375) - (375) Foreign exchange gain (loss) - 42 (1,414) (1,372) Profit (loss) before income taxes $ (62) $ (143) $ (2,240) $ (2,383) Six months ended June 30, 2010 Crocodile Kennedy`s River Mine Vale Spitzkop Mareesburg
Property, plant and equipment expenditures $ 10,637 $ - $ 8 $ 77 Sale of property, plant and equipment - - - - Revenue $ 71,311 $ - $ - $ - Production costs (52,558) - - - Depreciation and amortization (10,843) - - - General and administrative expenses (2,367) (807) (7) (2) Share-based payment (47) - - - Interest income 724 - - 4 Finance costs (584) (366) (13) - Foreign exchange (loss) gain (9) - - - Profit (loss) before income taxes $ 5,627 $ (1,173) $ (20) $ 2 Total South Other Africa Canada TOTAL Property, plant and equipment expenditures $ - $ 10,722 $ - $ 10,722 Sale of property, plant and equipment - - - - Revenue $ - $ 71,311 $ - $ 71,311 Production costs - (52,558) - (52,558) Depreciation and amortization - (10,843) - (10,843) General and administrative expenses (3) (3,186) (2,047) (5,233) Share-based payment - (47) (1,705) (1,752) Interest income - 728 65 793 Finance costs - (963) - (963) Foreign exchange (loss) gain - (9) 241 232 Profit (loss) before income taxes $ (3) $ 4,433 $ (3,446) $ 987 Six months ended June 30, 2009 Crocodile Kennedy`s
River Mine Vale Spitzkop Mareesburg Property, plant and equipment expenditures $ 18,484 $ - $ 427 $ 88 Sale of property, plant and equipment 1,552 - - - Revenue $ 49,741 $ - $ - $ - Production costs (36,194) - - - Depreciation and amortization (7,803) - - - General and administrative expenses (2,464) (254) (332) (4) Share-based payment (242) - - - Interest income 737 - 31 - Finance costs (628) (55) - - Foreign exchange gain (loss) 52 (5) - - Profit (loss) before income taxes $ 3,199 $ (314) $ (301) $ (4) Total South Other Africa Canada TOTAL Property, plant and equipment expenditures $ - $ 18,999 $ - $ 18,999 Sale of property, plant and equipment - 1,552 - 1,552 Revenue $ - $ 49,741 $ - $ 49,741 Production costs - (36,194) - (36,194) Depreciation and amortization - (7,803) - (7,803) General and administrative expenses (63) (3,117) (1,690) (4,807) Share-based payment - (242) (93) (335) Interest income 2 770 219 989 Finance costs (144) (827) - (827) Foreign exchange gain (loss) (99) (52) (1,395) (1,447) Profit (loss) before income taxes $ (304) $ 2,276 $ (2,959) $ (683) 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 Canada TOTAL Africa
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 and six months ended June 30, 2010 and 2009, substantially all of the Company`s PGM production was sold to one customer. 21. Events after the reporting period From July 1, 2010 to August 9, 2010, 20,000 stock options were exercised by way of cashless exercise at a weighted average exercise price of Cdn$0.32. Date: 11/08/2010 15:11:02 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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