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EPS - Eastern Platinum Limited - Condensed consolidated interim financial

Release Date: 12/05/2011 13:50
Code(s): EPS
Wrap Text

EPS - Eastern Platinum Limited - Condensed consolidated interim financial statements of Eastern Platinum Limited March 31, 2011 (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 March 31, 2011 (Unaudited) Condensed consolidated interim income statements (Expressed in thousands of U.S. dollars, except per share amounts - unaudited) Three months ended March 31, March 31, Note 2011 2010
Revenue $ 35,702 $ 34,699 Cost of operations Production costs 29,290 25,703 Depletion and depreciation 8 5,119 5,315 34,409 31,018 Mine operating earnings 1,293 3,681 Expenses General and administrative 3,095 3,196 Share-based payments 15 8,223 1,739 11,318 4,935 Operating loss (10,025) (1,254) Other income (expense) Interest income 1,509 372 Finance costs 17 (522) (370) Foreign exchange gain 1,564 268 Loss before income taxes (7,474) (984) Deferred income tax recovery 122 548 Net loss for the period $ (7,352) $ (436) Attributable to Non-controlling interest 16 $ (1,719) $ (1,260) Equity shareholders of the Company (5,633) 824 Net loss for the period $ (7,352) $ (436) (Loss) earnings per share Basic 18 $ (0.01) $ 0.00 Diluted 18 $ (0.01) $ 0.00 Weighted average number of common shares outstanding in thousands Basic 18 908,015 681,200 Diluted 18 908,015 693,830 Condensed consolidated interim statements of comprehensive (loss) income (Expressed in thousands of U.S. dollars - unaudited) Three months ended March 31, March 31, 2011 2010 Net loss for the period $ (7,352) $ ( 436) Other comprehensive income Exchange differences on translating foreign operations (1,729) 9,879 Exchange differences on translating non-controlling interest (192) 97 Comprehensive (loss) income for the period$ (9,273) $ 9,540 Attributable to Non-controlling interest (1,911) (1,163) Equity shareholders of the Company (7,362) 10,703 Comprehensive (loss) income for the period$ (9,273) $ 9,540 Condensed consolidated interim statements of financial position as at March 31, 2011 and December 31, 2010 (Expressed in thousands of U.S. dollars - unaudited) March 31, December 31, Note 2011 2010 Assets Current assets 5 Cash and cash equivalents $ 95,846 $ 107,846 Short-term investments 253,873 242,446 Trade and other receivables 6 34,221 33,787 Inventories 7 8,656 8,832 392,596 392,911 Non-current assets Property, plant and equipment 8 715,365 715,976 Refining contract 9 13,507 14,265 Other assets 10 4,498 3,823 $ 1,125,966 $ 1,126,975
Liabilities Current liabilities Accounts payable and accrued liabilities 11 $ 29,055 $ 27,009 Finance leases 12 3,185 3,211 32,240 30,220 Non-current liabilities Provision for environmental rehabilitation 13 8,897 8,934 Deferred tax liabilities 45,049 46,642 86,186 85,796 Equity Issued capital 15 1,219,950 1,219,869 Treasury shares 15(e) (334) - Equity-settled employee benefits reserve 41,517 33,390 Currency translation adjustment 15,727 17,456 Deficit (242,397) (236,764) Capital and reserves attributable to equity shareholders of the Company 1,034,463 1,033,951 Non-controlling interest 16 5,317 7,228 1,039,780 1,041,179 $ 1,125,966 $ 1,126,975
Approved and authorized for issue by the Board on May 9, 2011. "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 Treasury Equity- Currency capital shares settled translation employee adjustment
benefits reserve December 31, 2009$ 890,150 $ - $ 32,336 $ (52,899) Stock options exercised 120 - (77) - Share-based payments - - 1,739 - Net profit - - - - Currency translation adjustment - - - 9,879 March 31, 2010 $ 890,270 $ - $ 33,998 $ (43,020) Public offering 345,391 - - - Share issuance costs (16,501) - - - Stock options exercised 709 - (321) - Share-based payments - - (287) - Net profit - - - - Currency translation adjustment - - - 60,476 December 31, 2010 $ 1,219,869 $ - $ 33,390 $ 17,456 Stock options exercised 81 - (81) - Share-based payments - - 8,186 - Treasury shares - (334) 22 - Net loss - - - - Currency translation adjustment - - - (1,729) March 31, 2011 $ 1,219,950 $ (334) $ 41 ,517 $ 15,727 Deficit Capital and Non-controlling Equity reserves interest
attributable to equity shareholders of the Company
December 31, 2009 $ (250,116) $ 619,471 $ 10,041 $ 629,512 Stock options exercised - 43 - 43 Share-based payments - 1,739 - 1,739 Net profit 824 824 (1,260) (436) Currency translation adjustment - 9,879 97 9,976 March 31, 2010 $ (249,292) $ 631,956 $ 8,878 $ 640,834 Public offering - 345,391 - 345,391 Share issuance costs - (16,501) - (16,501) Stock options exercised - 388 - 388 Share-based payments - (287) - (287) Net profit 12,528 12,528 (2,315) 10,213 Currency translation adjustment - 60,476 665 61,141 December 31, 2010 $ (236,764) $ 1,033,951 $ 7,228 $ 1,041,179 Stock options exercised - - - - Share-based payments - 8,186 - 8,186 Treasury shares - (312) - (312) Net loss (5,633) (5,633) (1,719) (7,352) Currency translation adjustment - (1,729) (192) (1,921) March 31, 2011 $ (242,397) $ 1,034,463 $ 5,317 $ 1,039,780 Condensed consolidated interim statements of cash flows (Expressed in thousands of U.S. dollars - unaudited) Three months ended March 31, March 31, Note 2011 2010 Operating activities Loss before income taxes $ (7,474) $ (984) Adjustments to net loss for non-cash items Depletion and depreciation 8 5,119 5,315 Refining contract amortization 9 395 368 Share-based payments 15 8,223 1,739 Interest income 17 (1,509) (372) Finance costs 522 370 Foreign exchange gain (1,564) (268) Net changes in non-cash working capital items Trade and other receivables (317) (3,808) Inventories (38) (758) Accounts payable and accrued liabilities 2,428 (2,269) Cash generated from (utilized in) operations 5,785 (667) Adjustments to net loss for cash items Interest income received 650 348 Finance costs paid (193) (16) Income taxes paid (283) - Net operating cash flows 5,959 (335) Investing activities (Purchase) maturity of short-term investments (5,071) 961 Purchase of other assets (691) (269) Property, plant and equipment expenditures (14,323) (4,295) Net investing cash flows (20,085) (3,603) Financing activities Common shares issued for cash - exercise of stock options - 43 Payment of finance leases - (2) Net financing cash flows - 41 Effect of exchange rate changes on cash and cash equivalents 2,126 18 Decrease in cash and cash equivalents (12,000) (3,879) Cash and cash equivalents, beginning of period 107,846 7,249 Cash and cash equivalents, end of period $ 95,846 $ 3,370 Notes to the condensed consolidated interim financial statements (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 4(v) and 4(w) of the Company`s audited consolidated financial statements for the year ended December 31, 2010. 3. Application of new and revised International Financial Reporting Standards Effective January 1, 2011, the Company adopted new and revised International Financial Reporting Standards ("IFRSs") that were issued by the International Accounting Standards Board ("IASB"). The application of these new and revised IFRSs has not had any material impact on the amounts reported for the current and prior years but may affect the accounting for future transactions or arrangements. (a) Amendment to IAS 32 Financial Instruments: Presentation Rights, options or warrants to acquire a fixed number of the Company`s equity instruments for a fixed amount of any currency will be allowed to be classified as equity instruments so long as the Company offers the rights, options or warrants pro rata to all of the Company`s existing owners of the same class of the Company`s non-derivative equity instruments. (b) Amendments to IFRS 3 Business Combinations Clarification that the contingent consideration arising in a business combination previously accounted for in accordance with IFRS 3 that is outstanding at the adoption date continues to be accounted for in accordance with IFRS 3. Limiting the accounting policy choice to measure non-controlling interests upon initial recognition at fair value or at the non-controlling interest`s proportionate share of the acquiree`s identifiable net assets to instruments that give rise to a present ownership interest and that currently entitle the holder to a share of net assets in the event of liquidation. Expansion of the guidance with regards to the attribution of the market-based measure of an acquirer`s share-based payment awards issued in exchange for acquiree awards. (c) Amendments to IAS 27 Consolidated and Separate Financial Statements Clarification that the amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates, IAS 28 Investments in Associates, and IAS 31 Interests in Joint Ventures resulting from IAS 27 should be applied prospectively, except for amendments resulting from renumbering. (d) Amendments to IFRS 7 Financial Instruments: Disclosures Amendment to disclosure requirements, specifically, ensuring qualitative disclosures are made in close proximity to quantitative disclosures in order to better enable financial statement users to evaluate an entity`s exposure to risks arising from financial instruments. (e) Amendments to IAS 1 Presentation of Financial Statements Clarification that the breakdown of changes in equity resulting from transactions recognized in other comprehensive income is required to be presented in the statement of changes in equity or in the notes to the financial statements. (f) Amendments to IAS 24 Related Party Disclosures Amendment of the definition for related parties. (g) Amendments to IAS 34 Interim Financial Reporting Addition of further examples of events or transactions that require disclosure and removal of references to materiality when discussing other minimum disclosures. 4. 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 consolidated financial statements as at December 31, 2010. 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, 2010. 5. Cash and cash equivalents Cash and cash equivalents are comprised of: March 31, December 31, 2011 2010 Cash in bank $ 94,641 $ 102,654 Short-term money market instruments 1,205 5,192 $ 95,846 $ 107,846 6. Trade and other receivables Trade and other receivables are comprised of the following: March 31, December 31,
2011 2010 Trade receivables $ 28,486 $ 30, 142 Current tax receivable 1,410 1,283 Other receivables 4,534 2,556 Allowance for doubtful debts for other receivables (209) ( 194) $ 34,221 $ 33, 787 7. Inventories March 31, December 31, 2011 2010 Consumables $ 6,438 $ 6,607 Ore and concentrate 818 477 Chrome inventory 1,400 1,748 $ 8,656 $ 8,832 Production costs for the three months ended March 31, 2011 was $29,290 (March 31, 2010 - $25,703). Production costs represent the cost of inventories sold during the period. For the three months ended March 31, 2011 and 2010, production costs did not include any amounts with regards to the write-down of inventory to net realizable value or with regards to the reversal of write- downs. At March 31, 2011 and December 31, 2010, no inventories have been pledged as security for liabilities. 8. Property, plant and equipment Mineral Mineral
Plant and Plant and properties properties equipment equipment being not being owned leased depleted depleted Cost Balance as at December 31, 2009 $ 426,223 $ 6,132 $ 136,100 $ 546,122 Assets acquired 32,444 - - 261 Foreign exchange movement 56,520 768 17,040 58,901 Balance as at December 31, 2010 $ 515,187 $ 6,900 $ 153,140 $ 605,284 Assets acquired 14,308 - - 15 Foreign exchange movement (12,026) (168) (3,737) (7,464) Balance as at March 31, 2011 $ 517,469 $ 6,732 $ 149,403 $ 597,835 Accumulated depreciation and impairment losses Balance as at December 31, 2009 $ 126,944 $ 3,691 $ 20,765 $ 342,322 Depreciation 15,452 1,244 5,676 - Foreign exchange movement 17,574 598 3,224 42,862 Balance as at December 31, 2010 $ 159,970 $ 5,533 $ 29,665 $ 385,184 Depreciation 3,561 324 1,197 - Foreign exchange movement (3,764) (123) (679) (9,404) Balance as at March 31, 2011 $ 159,767 $ 5,734 $ 30,183 $ 375,780 Carrying amounts At December 31, 2009 $ 299,279 $ 2,441 $ 115,335 $ 203,800 At December 31, 2010 $ 355,217 $ 1,367 $ 123,475 $ 220,100 At March 31, 2011 $ 357,702 $ 998 $ 119,220 $ 222,055 Residential Properties
properties and land TOTAL Cost Balance as at December 31, 2009 $ 10,071 $ 6,978 $ 1,131,626 Assets acquired 286 - 32,991 Foreign exchange movement 1,275 874 135,378 Balance as at December 31, 2010 $ 11,632 $ 7,852 $ 1,299,995 Assets acquired - - 14,323 Foreign exchange movement (285) (193) (23,873) Balance as at March 31, 2011 $ 11,347 $ 7,659 $ 1,290,445 Accumulated depreciation and impairment losses Balance as at December 31, 2009 $ 2,296 $ 830 $ 496,848 Depreciation 135 - 22,507 Foreign exchange movement 302 104 64,664 Balance as at December 31, 2010 $ 2,733 $ 934 $ 584,019 Depreciation 37 - 5,119 Foreign exchange movement (65) (23) (14,058) Balance as at March 31, 2011 $ 2,705 $ 911 $ 575,080 Carrying amounts At December 31, 2009 $ 7,775 $ 6,148 $ 634,778 At December 31, 2010 $ 8,899 $ 6,918 $ 715,976 At March 31, 2011 $ 8,642 $ 6,748 $ 715,365 8. Property, plant and equipment Kennedy`s Crocodile Vale Project Spitzkop PGM River Mine (a) (b) Project (c)
Cost Balance as at December 31, 2009 $ 585,376 $ 400,017 $ 118,994 Assets acquired 32,728 - 47 Foreign exchange movement 76,470 50,082 7,316 Balance as at December 31, 2010 $ 694,574 $ 450,099 $ 126,357 Assets acquired 14,306 - - Foreign exchange movement (16,413) (10,989) 2,794 Balance as at March 31, 2011 $ 692,467 $ 439,110 $ 129,151 Accumulated depreciation and impairment losses Balance as at December 31, 2009 $ 154,417 $ 342,322 $ - Depreciation 22,500 - - Foreign exchange movement 21,796 42,861 - Balance as at December 31, 2010 $ 198,713 $ 385,183 $ - Depreciation 5,119 - - Foreign exchange movement (4,657) (9,404) - Balance as at March 31, 2011 $ 199,175 $ 375,779 $ - Carrying amounts At December 31, 2009 $ 430,959 $ 57,695 $ 118,994 At December 31, 2010 $ 495,861 $ 64,916 $ 126,357 At March 31, 2011 $ 493,292 $ 63,331 $ 129,151 Mareesburg Other property Project plant and (c) equipment TOTAL Cost Balance as at December 31, 2009 $ 27,111 $ 128 $ 1,131,626 Assets acquired 214 2 32,991 Foreign exchange movement 1,503 7 135,378 Balance as at December 31, 2010 $ 28,828 $ 137 $ 1,299,995 Assets acquired 15 2 14,323 Foreign exchange movement 731 4 (23,873) Balance as at March 31, 2011 $ 29,574 $ 143 $ 1,290,445 Accumulated depreciation and impairment losses Balance as at December 31, 2009 $ - $ 109 $ 496,848 Depreciation - 7 22,507 Foreign exchange movement 1 6 64,664 Balance as at December 31, 2010 $ 1 $ 122 $ 584,019 Depreciation - - 5,119 Foreign exchange movement - 3 (14,058) Balance as at March 31, 2011 $ 1 $ 125 $ 575,080 Carrying amounts At December 31, 2009 $ 27,111 $ 19 $ 634,778 At December 31, 2010 $ 28,827 $ 15 $ 715,976 At March 31, 2011 $ 29,573 $ 18 $ 715,365 8. Property, plant and equipment (continued) (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. The development of this project was on hold as at March 31, 2011. (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 east ern limb of the Bushveld Complex. Planning for the development of these projects commenced in late 2010. 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 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 8.25 years as at March 31, 2011. Cost Balance as at December 31, 2009 $ 21,122 Foreign exchange movement 2,645 Balance as at December 31, 2010 $ 23,767 Foreign exchange movement (580) Balance as at March 31, 2011 $ 23,187 Accumulated amortization Balance as at December 31, 2009 $ 6,953 Amortization 1,513 Foreign exchange movement 1,036 Balance as at December 31, 2010 $ 9,502 Amortization 395 Foreign exchange movement (217) Balance as at March 31, 2011 $ 9,680 Carrying amounts At December 31, 2009 $ 14,169 At December 31, 2010 $ 14,265 At March 31, 2011 $ 13,507 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 Mineral Resources of South Africa in respect of the environmental rehabilitation liability (Note 13). Changes to other assets for the three months ended March 31, 2011 are as follows: Balance, December 31, 2009 $ 2,282 Additional investment $ 955 Service fees (8) Interest income 185 Foreign exchange movement 409 Balance, December 31, 2010 $ 3,823 Additional investment 691 Service fees (2) Interest income 52 Foreign exchange movement (66) Balance, March 31, 2011 $ 4,498 11. Accounts payable and accrued liabilities March 31, December 31,
2011 2010 Trade payables $ 15,786 $ 10,604 Accrued liabilities 7,877 10,240 Other 5,392 6,165 $ 29,055 $ 27,009 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. 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 March 31, 2011, the finance leases are repayable in 1 semiannual installment (December 31, 2010 - 1) of $652 (December 31, 2010 - $667) and a top-up payment of $2,670 in December 2011. The fair value of the finance lease liabilities approximated carrying value. (a) Minimum lease payments March 31, December 31,
2011 2010 No later than 1 year $ 3,322 $ 3, 405 Less: future finance charges (137) ( 194) Present value of minimum lease payments $ 3,185 $ 3, 211 March 31, December 31, 2011 2010 No later than 1 year $ 3,185 $ 3, 211 13. 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 provision for environmental rehabilitation at March 31, 2011 is approximately ZAR 60.1 million ($8,897). The provision was determined using an inflation rate of 5.49% (December 31, 2010 - 5.49%) and an estimated life of mine of 20 years for Zandfontein (December 31, 2010 - 20 years), 11 years for Maroelabult (December 31, 2010 - 11 years), 14 years for Crocette (December 31, 2010 - 14 years), 1 year for Kennedy`s Vale (December 31, 2010 - 1 year) and 22 years for Spitzkop (December 31, 2010 - 22 years). A discount rate of 8.29% was used (December 31, 2010 - 8.29%). A guarantee of $4,498 (December 31, 2010 - $3,823) has been issued to the Department of Mineral Resources (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 ZAR 215.4 million ($31,896). Changes to the environmental rehabilitation provision are as follows: Balance, December 31, 2009 $ 8 ,1 52 Revision in estimates (961) Interest expense (Note 17) 694 Foreign exchange movement 1,049 Balance, December 31, 2010 $ 8,934 Revision in estimates - Interest expense (Note 17) 174 Foreign exchange movement (211) Balance, March 31, 2011 $ 8,897 14. Commitments The Company has committed to capital expenditures on projects of approximately ZAR 155.7 million ($23,065) as at March 31, 2011 (December 31, 2010 - ZAR 86 million, $13,056). 15. 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. 15. Issued capital (b) Issued and outstanding Changes to the number of shares issued and outstanding are as follows: March 31, 2011 December 31, 2010 Number of Number of shares shares Balance outstanding, beginning of period 907,589,567 680,893,325 Public offering - 224,250,000 Shares issued upon option exercise 482,358 2,446,242 Balance outstanding, end of period 908,071,925 907,589,567 (c) December 30, 2010 Public Offering On December 30, 2010, the Company completed a public offering (the "Public Offering"). The Public Offering consisted of 224,250,000 common shares, of which 195,361,476 common shares were sold at a price of Cdn$1.55 and 28,888,524 common shares were sold at a price of GBP0.9568. Share issue costs of Cdn$16,501 were incurred. (d) Share options The Company has an incentive plan (the "2008 Plan"), approved by the Company`s shareholders at its annual general meeting held on June 4, 2008, under which options to purchase common shares may be granted to its directors, officers, employees and others at the discretion of the Board of Directors. Under the terms of the 2008 Plan: - 75 million common shares are reserved for issuance upon the exercise of options. - All outstanding options at June 4, 2008 granted under the Company`s previous plan (the "2005 Plan") will continue to exist under the 2008 plan provided that the fundamental terms governing such options will be deemed to be those under the 2005 Plan. - Each option granted shall be for a term not exceeding five years from the date of being granted and the vesting period is determined based on the discretion of the Board of Directors. Vesting is dependent on continued employment with the Company. - The option exercise price is set at the date of the grant and cannot be less than the closing market price of the Company`s common shares on the Toronto Stock Exchange on the day immediately preceding the day of the grant of the option. - The 2008 Plan includes share appreciation rights providing for an optionee to elect to exercise options and to receive an amount in common shares equal to the difference between fair market value at the time of exercise and the exercise price for the options exercised. (i) Movements in share options during the period The changes in share options during the three months ended March 31, 2011 and year ended December 31, 2010 were as follows: March 31, 2011 December 31, 2010
Weighted Weighted average average Number of exercise Number of exercise options price options price
Cdn$ Cdn$ Balance outstanding, beginning of period 57,976,836 1.52 59,575,834 1.48 Options granted 9,875,000 1.55 2,231,000 1.30 Options exercised (590,000) 0.32 (2,794,995) 0.33 Options forfeited (30,000) 0.32 (1,035,003) 1.82 Balance outstanding, end of period 67,231,836 1.54 57,976,836 1.52 590,000 share options were exercised during the three months ended March 31, 2011. The weighted average closing share price at the date of exercise was Cdn$1.75. (ii) Fair value of share options granted in the period 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: 2011
March 25 Exercise price Cdn$1.55 Closing market price on day preceding date of grant Cdn$1.38 Grant date share price Cdn$1.39 Risk-free interest rate 2.69% Expected life 5 Annualized volatility 73% Dividend rate 0% Grant date fair value Cdn$0.82 2010 January 18
Exercise price Cdn$1.30 Closing market price on day preceding date of grant Cdn$1.30 Grant date share price Cdn$1.42 Risk-free interest rate 1.73% Expected life 3 years Annualized volatility 83% Dividend rate 0% Grant date fair value Cdn$0.80 Exercise price for the March 25, 2011 option issuance is the December 30, 2010 public offering price. Exercise price for the January 18, 2010 option issuance is the closing market price on the day preceding the date the options were granted, as defined by the 2008 Plan. Grant date share price is the closing market price on the day the options were granted. (iii) Share options outstanding at the end of the period The following table summarizes information concerning outstanding and exercisable options at March 31, 2011: Remaining Options Options Exercise Contractual outstanding exercisable price Life (Years) Expiry date Cdn$ 6,725,000 6,725,000 1.70 0.15 May 24, 2011 250,000 250,000 1.70 0.66 November 27, 2011 19,987,500 19,987,500 1.82 0.94 March 7, 2012 13,963,334 13,963,334 0.32 2.72 December 18, 2013 10,000 10,000 0.32 2.87 February 11, 2014 400,000 400,000 0.52 3.25 June 30, 2014 95,002 45,000 0.76 3.59 November 3, 2014 2,226,000 2,226,000 1.30 3.81 January 18, 2015 9,875,000 9,875,000 1.55 4.99 March 25, 2016 13,070,000 13,070,000 2.31 6.52 October 5, 2017 460,000 460,000 3.38 6.90 February 20, 2018 170,000 170,000 3.38 6.99 March 27, 2018 67,231,836 67,181,834 3.08 The weighted average exercise price of options exercisable at March 31, 2011 is Cdn$1.54. (e) Key skills retention plan In 2010, the Company`s South African subsidiary, Barplats Investments Limited ("BIL"), implemented a key skills retention plan for its senior employees in South Africa, in response to the growing skills shortage in the country. The purpose of the plan is to retain key employees, attract new employees as the need arises and remain competitive with other South African mining companies. The plan operates through a trust ("the Trust") which purchases shares of the Company on behalf of the employees. These shares then vest to the employees over time. During the 3 months ended March 31, 2011, the Trust purchased 198,563 shares pursuant to the plan which resulted in a share-based payment expense of $37 and a share-based payment liability of $15. 16. Non-controlling interest The non-controlling interests are comprised of the following: Balance, December 31, 2009 $ 10,041 Non-controlling interests` share of loss in Barplats (866) Non-controlling interests` share of interest on advances to Gubevu (2,709) Foreign exchange movement 762 Balance, December 31, 2010 $ 7,228 Non-controlling interests` share of loss in Barplats (1,056) Non-controlling interests` share of interest on advances to Gubevu (663) Foreign exchange movement (192) Balance, March 31, 2011 $ 5,317 17. Finance costs March 31, March 31,
2011 2010 Interest on revenue advances $ 126 $ 119 Interest on finance leases 51 77 Interest on provision for environmental rehabilitation 174 168 Interest on tax 171 - Other interest - 6 $ 522 $ 370
18. 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, 2011 2010 (in thousands) Weighted average number of ordinary shares used in the calculation of basic earnings per share 908,015 681,200 Shares deemed to be issued for no consideration in respect of options - 12,630 Weighted average number of ordinary shares used in the calculation of diluted earnings per share 908,015 693,830 The loss used to calculate basic and diluted earnings per share for the three months ended March 31, 2011 was $5,633 (March 31, 2010 - earnings of $824). The following potential ordinary shares, outstanding at March 31, 2011, 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, 2011 2010 (in thousands) Options 40,663 41,073 19. 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 were $1,023 (March 31, 2010 - $899). The total number of employees in the plan at March 31, 2011 was 1,854 (March 31, 2010 - 1,863). 20. 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 (a) Trading transactions 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 2011 2010 Consulting fees (i) $ 42 $ 29 General and administrative expenses 18 20 Management fees 350 307 $ 410 $ 356
(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. Amounts due to related parties are unsecured, non-interest bearing and due on demand. Accounts payable at March 31, 2011 included $13 (December 31, 2010 - $1,089) 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, 2011 and 2010 were as follows: March 31, March 31, Note 2011 2010
(i) $ 647 $ 548 Salaries and directors` fees (ii) 7,996 1,627 Share-based payments $ 8,643 $ 2,175 (i) Salaries and directors` fees include consulting and management fees disclosed in Note 20(a). (ii) Share-based payments are the fair value of options granted to key management personnel. (iii) Key management personnel were not paid post-employment benefits, termination benefits, or other long-term benefits during the three months ended March 31, 2011 and 2010. 21. 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, 2011 and 2010 and assets by geographic areas as at March 31, 2011 and December 31, 2010 are as follows: March 31, 2011 Crocodile Kennedy`s River Mine Vale Spitzkop Current assets $ 48,446 $ 387 $ 1,616 Property, plant and equipment 493,292 63,331 129,151 Refining contract 13,507 - - Other Assets 4,498 - - $ 559,743 $ 63,718 $ 130,767 Property, plant and equipment expenditures $ 14,306 $ - $ - Revenue $ 35,702 $ - $ - Production costs (29,290) - - Depletion and depreciation (5,119) - - General and administrative expenses (1,472) (257) (69) Share-based payment (247) - - Interest income 395 - - Finance costs (322) (200) - Foreign exchange gain 491 - - Profit (loss) before income taxes 138 (457) (69) Deferred income tax recovery 122 - - Net profit (loss) $ 260 $ (457) $ (69) Total South Mareesburg Other Africa
Current assets $ 132 $ 882 $ 51,463 Property, plant and equipment 29,573 - 715,347 Refining contract - - 13,507 Other Assets - - 4,498 $ 29,705 $ 882 $ 784,815 Property, plant and equipment expenditures $ 15 $ - $ 14,321 Revenue $ - $ - $ 35,702 Production costs - - (29,290) Depletion and depreciation - - (5,119) General and administrative expenses (29) (1) (1,828) Share-based payment - - (247) Interest income - - 395 Finance costs - - (522) Foreign exchange gain - - 491 Profit (loss) before income taxes (29) (1) (418) Deferred income tax recovery - - 122 Net profit (loss) $ (29) $ (1) $ (296) Barbados and BVI Canada TOTAL
Current assets $ 1,178 $ 339,955 $ 392,596 Property, plant and equipment - 18 715,365 Refining contract - - 13,507 Other Assets - - 4,498 $ 1,178 $ 339,973 $ 1,125,966 Property, plant and equipment expenditures $ - $ 2 $ 14,323 Revenue $ - $ - $ 35,702 Production costs - - (29,290) Depletion and depreciation - - (5,119) General and administrative expenses (5) (1,262) (3,095) Share-based payment - (7,976) (8,223) Interest income - 1,114 1,509 Finance costs - - (522) Foreign exchange gain - 1,073 1,564 Profit (loss) before income taxes (5) (7,051) (7,474) Deferred income tax recovery - - 122 Net profit (loss) $ (5) $ (7,051) $ (7,352) For the three months ended March 31, 2011 and 2010, substantially all of the Company`s PGM production was sold to one customer. March 31, 2010 Crocodile Kennedy`s River Mine Vale Spitzkop Mareesburg Property, plant and equipment expenditures $ 4,261 $ - $ 2 $ 32 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 Deferred income tax recovery 548 - - - Net profit (loss) $ 2,577 $ (512) $ (4) $ 1 Total South Other Africa Canada TOTAL
Property, plant and equipment expenditures $ - $ 4,295 $ - $ 4,295 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) Deferred income tax recovery - 548 - 548 Net profit (loss) $ - $ 2,062 $ (2,498) $ (436) December 31, 2010
Crocodile Kennedy`s River Mine Vale Spitzkop Mareesburg Current assets $ 45,787 $ 445 $ 1,669 $ 61 Property, plant and equipment 495,861 64,916 126,357 28,827 Refining contract 14,265 - - - Other Assets 3,823 - - - $ 559,736 $ 65,361 $ 128,026 $ 28,888 Total South Other Africa Canada TOTAL
Current assets $ 997 $ 48,959 $ 343,952 $ 392,911 Property, plant and equipment - 715,961 15 715,976 Refining contract - 14,265 - 14,265 Other Assets - 3,823 - 3,823 $ 997 $ 783,008 $ 343,967 $ 1,126,975 22. Events after the reporting period From April 1, 2011 to May 9, 2011: (a) 151,333 stock options were exercised by way of stock appreciation rights at a weighted average exercise price of Cdn$0.32. Date: 12/05/2011 13:50:01 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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