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EPS - Eastern Platinum Limited - Condensed consolidated interim financial

Release Date: 15/08/2011 15:52
Code(s): EPS
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EPS - Eastern Platinum Limited - Condensed consolidated interim financial statements of Eastern Platinum Limited June 30, 2011 (Unaudited) EASTERN PLATINUM LIMITED (Incorporated in Canada) (Canadian Registration number BC0722783) (South African Registration number 2007/006318/10) Share Code TSX: ELR ISIN: CA2768551038 Share Code AIM: ELR ISIN: CA2768551038 Share Code JSE: EPS ISIN: CA2768551038 Condensed consolidated interim financial statements of Eastern Platinum Limited June 30, 2011 (Unaudited) Eastern Platinum Limited June 30, 2011 Table of contents Condensed consolidated interim income statements ........................... 3 Condensed consolidated interim statements of comprehensive 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 ........ 8-28 Condensed consolidated interim income statements (Expressed in thousands of U.S. dollars, except per share amounts - unaudited) Three months ended June 30, June 30,
Note 2011 2010 Revenue $ 26,876 $ 36,612 Cost of operations Production costs 31,156 26,855 Depletion and depreciation 8 5,259 5,528 36,415 32,383 Mine operating (loss) earnings (9,539) 4,229 Expenses General and administrative 8 2,932 2,037 Share-based payments 15 46 13 2,978 2,050 Operating (loss) profit (12,517) 2,179 Other income (expense) Interest income 1,413 421 Finance costs 17 (353) (593) Foreign exchange gain (loss) 113 (36) (Loss) profit before income taxes (11,344) 1,971 Deferred income tax recovery 471 548 Net (loss) profit for the period $ (10,873) $ 2,519 Attributable to Non-controlling interest 16 $ (2,922) $ (929) Equity shareholders of the Company (7,951) 3,448 Net (loss) profit for the period $ (10,873) $ 2,519 (Loss) earnings per share Basic 18 $ (0.01) $ 0.01 Diluted 18 $ (0.01) $ 0.00 Weighted average number of common shares outstanding in thousands Basic 18 908,183 682,792 Diluted 18 908,183 693,988 Six months ended June 30, June 30,
2011 2010 Revenue $ 62,578 $ 71,311 Cost of operations Production costs 60,446 52,558 Depletion and depreciation 10,378 10,843 70,824 63,401 Mine operating (loss) earnings (8,246) 7,910 Expenses General and administrative 6,027 5,233 Share-based payments 8,269 1,752 14,296 6,985 Operating (loss) profit (22,542) 925 Other income (expense) Interest income 2,922 793 Finance costs (875) (963) Foreign exchange gain (loss) 1,677 232 (Loss) profit before income taxes (18,818) 987 Deferred income tax recovery 593 1,096 Net (loss) profit for the period $ (18,225) $ 2,083 Attributable to Non-controlling interest $ (4,641) $ (2,189) Equity shareholders of the Company (13,584) 4,272 Net (loss) profit for the period $ (18,225) $ 2,083 (Loss) earnings per share Basic $ (0.01) $ 0.01 Diluted $ (0.01) $ 0.01 Weighted average number of common shares outstanding in thousands Basic 908,099 682,000 Diluted 908,099 693,909 Condensed consolidated interim statements of comprehensive loss (Expressed in thousands of U.S. dollars - unaudited) Three months ended June 30, June 30, 2011 2010 Net (loss) profit for the period $ (10,873) $ 2,519 Other comprehensive income Exchange differences on translating foreign operations 1,257 (27,398) Exchange differences on translating non-controlling interest (11) (364) Comprehensive loss for the period $ (9,627) $ (25,243) Attributable to Non-controlling interest (2,933) (1,293) Equity shareholders of the Company (6,694) (23,950) Comprehensive loss for the period $ (9,627) $ (25,243) Six months ended June 30, June 30, 2011 2010
Net (loss) profit for the period $ (18,225) $ 2,083 Other comprehensive income Exchange differences on translating foreign operations (472) (17,519) Exchange differences on translating non-controlling interest (203) (267) Comprehensive loss for the period $ (18,900) $ (15,703) Attributable to Non-controlling interest (4,844) (2,456) Equity shareholders of the Company (14,056) (13,247) Comprehensive loss for the period $ (18,900) $ (15,703) Eastern Platinum Limited Condensed consolidated interim statements of financial position as at June 30, 2011 and December 31, 2010 (Expressed in thousands of U.S. dollars - unaudited) June 30, December 31, Note 2011 2010
Assets Current assets Cash and cash equivalents 5 $ 76,159 $ 107,846 Short-term investments 251,614 242,446 Trade and other receivables 6 26,886 33,787 Inventories 7 7,852 8,832 362,511 392,911 Non-current assets Property, plant and equipment 8 728,933 715,976 Refining contract 9 13,084 14,265 Other assets 10 8,810 3,823 $ 1,113,338 $ 1,126,975
Liabilities Current liabilities Trade and other payables 11 $ 26,965 $ 27,009 Finance leases 12 2,584 3,211 29,549 30,220 Non-current liabilities Provision for environmental rehabilitation 13 9,068 8,934 Deferred tax liabilities 44,538 46,642 83,155 85,796 Equity Issued capital 15 1,219,969 1,219,869 Treasury shares 15(e) (334) - Equity-settled employee benefits reserve 41,528 33,390 Foreign currency translation reserve 16,984 17,456 Deficit (250,348) (236,764) Capital and reserves attributable to equity shareholders of the Company 1,027,799 1,033,951 Non-controlling interest 16 2,384 7,228 1,030,183 1,041,179
$ 1,113,338 $ 1,126,975 Approved and authorized for issue by the Board on August 11, 2011. "David Cohen" "Robert Gayton" David Cohen, Director Robert Gayton, Director See accompanying notes to the unaudited condensed consolidated interim financial statements Condensed consolidated interim statements of changes in equity (Expressed in thousands of U.S. dollars, except number of shares - unaudited) Issued Treasury Equity- Foreign capital shares settled currency employee translation benefits reserve
reserve December 31, 2009 $ 890,150 $ - $ 32,336 $ (52,899) Net profit (loss) - - - - Currency translation adjustment - - - (17,519) Total comprehensive loss - - - (17,519) Stock options exercised 726 - (344) - Share-based payments - - 1,752 - June 30, 2010 $ 890,876 $ - $ 33,744 $ (70,418) Net profit (loss) - - - - Currency translation adjustment - - - 87,874 Total comprehensive income - - - 87,874 Public offering 345,391 - - - Share issuance costs (16,501) - - - Stock options exercised 103 - (54) - Share-based payments - - (300) - December 31, 2010 $ 1,219,869 $ - $ 33,390 $ 17,456 Net loss - - - - Currency translation adjustment - - - (472) Total comprehensive loss - - - (472) Stock options exercised 100 - (100) - Share-based payments - - 8,190 - Treasury shares - (334) 48 - June 30, 2011 $ 1,219,969 $ (334) $ 41,528 $ 16,984 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 Net profit (loss) 4,272 4,272 (2,189) 2,083 Currency translation adjustment - (17,519) (267) (17,786) Total comprehensive loss 4,272 (13,247) (2,456) (15,703) Stock options exercised - 382 - 382 Share-based payments - 1,752 - 1,752 June 30, 2010 $ (245,844) $ 608,358 $ 7,585 $ 615,943 Net profit (loss) 9,080 9,080 (1,386) 7,694 Currency translation adjustment - 87,874 1,029 88,903 Total comprehensive income 9,080 96,954 (357) 96,597 Public offering - 345,391 - 345,391 Share issuance costs - (16,501) - (16,501) Stock options exercised - 49 - 49 Share-based payments - (300) - (300) December 31, 2010 $ (236,764) $ 1,033,951 $ 7,228 $ 1,041,179 Net loss (13,584) (13,584) (4,641) (18,225) Currency translation adjustment - (472) (203) (675) Total comprehensive loss (13,584) (14,056) (4,844) (18,900) Stock options exercised - - - - Share-based payments - 8,190 - 8,190 Treasury shares - (286) - (286) June 30, 2011 $ (250,348) $ 1,027,799 $ 2,384 $ 1,030,183 See accompanying notes to the unaudited condensed consolidated interim financial statements Condensed consolidated interim statements of cash flows (Expressed in thousands of U.S. dollars - unaudited) Three months ended
June 30, June 30, Note 2011 2010 Operating activities (Loss) profit before income taxes $ (11,344) $ 1,971 Adjustments to net (loss) profit for non-cash items Depletion and depreciation 8 5,853 5,528 Refining contract amortization 9 407 367 Share-based payments 15 46 13 Interest income 17 (1,413) (421) Finance costs 353 593 Foreign exchange (gain) loss (113) 36 Net changes in non-cash working capital items Trade and other receivables 7,858 2,153 Inventories 792 (211) Trade and other payables (2,072) (148) Cash generated from operations 367 9,881 Adjustments to net loss for cash items Interest income received 1,023 389 Finance costs paid (2) (231) Income taxes received (paid) 250 - Net operating cash flows 1,638 10,039 Investing activities Maturity (purchase) of short-term investments 3,576 - Purchase of other assets (4,304) (272) Property, plant and equipment expenditures (19,193) (6,416) Net investing cash flows (19,921) (6,688) Financing activities Common shares issued for cash - exercise of stock options - 339 Payment of finance leases (648) (626) Net financing cash flows (648) (287) Effect of exchange rate changes on cash and cash equivalents (756) (154) (Decrease) increase in cash and cash equivalents (19,687) 2,910 Cash and cash equivalents, beginning of period 95,846 3,370 Cash and cash equivalents, end of period $ 76,159 $ 6,280 Six months ended June 30, June 30, 2011 2010 Operating activities (Loss) profit before income taxes $ (18,818) $ 987 Adjustments to net (loss) profit for non-cash items Depletion and depreciation 10,972 10,843 Refining contract amortization 802 735 Share-based payments 8,269 1,752 Interest income (2,922) (793) Finance costs 875 963 Foreign exchange (gain) loss (1,677) (232) Net changes in non-cash working capital items Trade and other receivables 7,541 (1,655) Inventories 754 (969) Trade and other payables 356 (2,417) Cash generated from operations 6,152 9,214 Adjustments to net loss for cash items Interest income received 1,673 737 Finance costs paid (195) (247) Income taxes received (paid) (33) - Net operating cash flows 7,597 9,704 Investing activities Maturity (purchase) of short-term investments (1,495) 961 Purchase of other assets (4,995) (541) Property, plant and equipment expenditures (33,516) (10,711) Net investing cash flows (40,006) (10,291) Financing activities Common shares issued for cash - exercise of stock options - 382 Payment of finance leases (648) (628) Net financing cash flows (648) (246) Effect of exchange rate changes on cash and cash equivalents 1,370 (136) (Decrease) increase in cash and cash equivalents (31,687) (969) Cash and cash equivalents, beginning of period 107,846 7,249 Cash and cash equivalents, end of period $ 76,159 $ 6,280 See accompanying notes to the unaudited condensed consolidated interim financial statements 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. 3. Application of new and revised International Financial Reporting Standards (continued) (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. (a) Accounting standards issued but not yet effective During the quarter ended June 30, 2011, four new standards were issued effective for annual periods beginning on or after January 1, 2013. (i) IFRS 10 Consolidated Financial Statements IFRS 10 outlines the principles for the presentation and preparation of consolidated financial statements. (ii) IFRS 11 Joint Arrangements IFRS 11 defines the two types of joint arrangements (joint operations and joint ventures) and outlines how to determine the type of joint arrangement entered into and the principles for accounting for each type of joint arrangement. (iii) IFRS 12 Disclosure of Involvement with Other Entities IFRS 12 outlines the disclosures required in order to provide users of financial statements with the information necessary to evaluate an entity`s interest in other entities, the corresponding risks related to those interests and the effects of those interests on the entity`s financial position, financial performance and cash flows. (iv) IFRS 13 Fair Value Measurement IFRS 13 defines fair value, summarizes the methods of determining fair value and outlines the required fair value disclosures. IFRS 13 is utilized when another IFRS standard requires or allows fair value measurements or disclosures about fair value measurements. (b) Accounting standards amended but not yet effective During the quarter ended June 30, 2011, two standards were amended with the amendments effective for annual periods beginning on or after January 1, 2013. (i) IAS 27 Separate Financial Statements IAS 27 outlines the accounting principles to be applied with regards to investments in subsidiaries, joint ventures and associates when an entity elects or is required by local regulations to present separate, non-consolidated, financial statements. The previous standard was titled IAS 27 Consolidated and Separate Financial Statements. (ii) IAS 28 Investments in Associates and Joint Ventures IAS 28 outlines the accounting treatment and corresponding application of the equity method of accounting in investments in associates and joint ventures. The previous standard was titled IAS 28 Investments in Associates. The Company has not early adopted these standards and is currently assessing the impact that these standards will have on the consolidated financial statements. IFRS 10, IFRS 11, IAS 27 and IAS 28 cannot be early adopted on a stand-alone basis and may only be early adopted as a group along with IFRS 12. Early adoption must be disclosed. IFRS 12 disclosure is encouraged prior to adoption of the standard. This early disclosure does not require the entity to apply IFRS 10, IFRS 11, IAS 27 or IAS 28. IFRS 13 may be early adopted on a stand-alone basis so long as this fact is disclosed and the standard is applied prospectively as at the beginning of the annual reporting period in which the standard is initially applied. 5. Cash and cash equivalents Cash and cash equivalents are comprised of: June 30, December 31, 2011 2010
Cash in bank $ 74,423 $ 102,654 Short-term money market instruments 1,736 5,192 $ 76,159 $ 107,846 6. Trade and other receivables Trade and other receivables are comprised of the following: June 30, December 31, 2011 2010
Trade receivables $ 19,636 $ 30,142 Current tax receivable 1,159 1,283 Other receivables 6,377 2,556 Allowance for doubtful debts for other receivables (286) (194) $ 26,886 $ 33,787 7. Inventories June 30, December 31,
2011 2010 Consumables $ 6,212 $ 6,607 Ore and concentrate 742 477 Chrome inventory 898 1,748 $ 7,852 $ 8,832 Production costs for the three and six months ended June 30, 2011 was $31,156 and $60,446 (June 30, 2010 - $26,855 and $52,558), respectively. Production costs represent the cost of inventories sold during the period. For the three months and six months ended June 30, 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 June 30, 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 33,501 - - 15 Foreign exchange movement (12,506) (175) (3,893) (7,163) Balance as at June 30, 2011 $ 536,182 $ 6,725 $ 149,247 $ 598,136 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 7,689 659 2,303 - Foreign exchange movement (3,917) (128) (707) (9,804) Balance as at June 30, 2011 $ 163,742 $ 6,064 $ 31,261 $ 375,380 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 June 30, 2011 $ 372,440 $ 661 $ 117,986 $ 222,756 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 - - 33,516 Foreign exchange movement (297) (201) (24,235) Balance as at June 30, 2011 $ 11,335 $ 7,651 $ 1,309,276 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 321 - 10,972 Foreign exchange movement (68) (24) (14,648) Balance as at June 30, 2011 $ 2,986 $ 910 $ 580,343 Carrying amounts At December 31, 2009 $ 7,775 $ 6,148 $ 634,778 At December 31, 2010 $ 8,899 $ 6,918 $ 715,976 At June 30, 2011 $ 8,349 $ 6,741 $ 728,933 8. Property, plant and equipment Kennedy`s Vale Project
and Spitzkop Crocodile Concentrator PGM Project River Mine (a) (b) (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 24,328 9,171 - Foreign exchange movement (17,112) (11,421) 3,412 Balance as at June 30, 2011 $ 701,790 $ 447,849 $ 129,769 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 10,378 594 - Foreign exchange movement (4,848) (9,804) - Balance as at June 30, 2011 $ 204,243 $ 375,973 $ - Carrying amounts At December 31, 2009 $ 430,959 $ 57,695 $ 118,994 At December 31, 2010 $ 495,861 $ 64,916 $ 126,357 At June 30, 2011 $ 497,547 $ 71,876 $ 129,769 Other Mareesburg 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 33,516 Foreign exchange movement 881 5 (24,235) Balance as at June 30, 2011 $ 29,724 $ 144 $ 1,309,276 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 - - 10,972 Foreign exchange movement - 4 (14,648) Balance as at June 30, 2011 $ 1 $ 126 $ 580,343 Carrying amounts At December 31, 2009 $ 27,111 $ 19 $ 634,778 At December 31, 2010 $ 28,827 $ 15 $ 715,976 At June 30, 2011 $ 29,723 $ 18 $ 728,933 (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") and Concentrator 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 June 30, 2011. However, the design and construction of a concentrator located on the KV property has commenced. The concentrator will initially be used to process ore from the Mareesburg Project. (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. Planning for the development of these projects recommenced in late 2010. (d) Depreciation Depreciation of $594 is included in general and administrative expenses for the three months ended June 30, 2011. This depreciation pertains to assets which are not currently being used for mining operations. 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 8.00 years as at June 30, 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 (605) Balance as at June 30, 2011 $ 23,162 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 802 Foreign exchange movement (226) Balance as at June 30, 2011 $ 10,078 Carrying amounts At December 31, 2009 $ 14,169 At December 31, 2010 $ 14,265 At June 30, 2011 $ 13,084 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 six months ended June 30, 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 4,925 Service fees (4) Interest income 124 Foreign exchange movement (58) Balance, June 30, 2011 $ 8,810 11. Trade and other payables June 30, December 31, 2011 2010 Trade payables $ 11,845 $ 10,604 Accrued liabilities 9,915 10,240 Other 5,205 6,165 $ 26,965 $ 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%. The finance leases are repayable in full in December 2011. The fair value of the finance lease liabilities approximated carrying value. (a) Minimum lease payments June 30, December 31, 2011 2010
No later than 1 year $ 2,668 $ 3,405 Less: future finance charges (84) (194) Present value of minimum lease payments $ 2,584 $ 3,211 June 30, December 31, 2011 2010 No later than 1 year $ 2,584 $ 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 June 30, 2011 is approximately ZAR 61.2 million ($9,068). 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 $8,810 (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 ($31,862). Changes to the environmental rehabilitation provision are as follows: Balance, December 31, 2009 $ 8,152 (961)
Revision in estimates Interest expense (Note 17) 694 Foreign exchange movement 1,049 Balance, December 31, 2010 $ 8,934 Revision in estimates - Interest expense (Note 17) 354 Foreign exchange movement (220) Balance, June 30, 2011 $ 9,068 14. Commitments The Company has committed to capital expenditures on projects of approximately ZAR 199.6 million ($29,526) as at June 30, 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. (b) Issued and outstanding Changes to the number of shares issued and outstanding are as follows: June 30, 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 598,240 2,446,242 Balance outstanding, end of period 908,187,807 907,589,567 (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$16,501 were incurred. (d) Share options The Company has an incentive plan (the "2011 Plan"), approved by the Company`s shareholders at its annual general meeting held on June 9, 2011, under which options to purchase common shares may be granted to its directors, officers, employees and others at the discretion of the Board of Directors. Under the terms of the 2011 Plan: - 79 million common shares are reserved for issuance upon the exercise of options, of which 18,684,497 remain available for issuance at June 30, 2011. - All outstanding options at June 9, 2011 granted under the Company`s previous plan (the "2008 Plan") will continue to exist under the 2011 plan provided that the fundamental terms governing such options will be deemed to be those under the 2008 Plan. - Each option granted shall be for a term not exceeding five years from the date of being granted and the vesting period is determined based on the discretion of the Board of Directors. Vesting is dependent on continued employment with the Company. - The option exercise price is set at the date of the grant and cannot be less than the closing market price of the Company`s common shares on the Toronto Stock Exchange on the day immediately preceding the day of the grant of the option. - The 2011 Plan includes share appreciation rights providing for an optionee to elect to exercise options and to receive an amount in common shares equal to the difference between fair market value at the time of exercise and the exercise price for the options exercised. (i) Movements in share options during the period The changes in share options during the six months ended June 30, 2011 and year ended December 31, 2010 were as follows: June 30, 2011 December 31, 2010
Weighted Weighted average average Number of exercise Number of exercise options price options price
Cdn$ 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 (741,333) 0.32 (2,794,995) 0.33 Options forfeited (6,795,000) 1.69 (1,035,003) 1.82 Balance outstanding, end of period 60,315,503 1.53 57,976,836 1.52 741,333 share options were exercised during the six months ended June 30, 2011. The weighted average closing share price at the date of exercise was Cdn$1.66. (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$0.80 Exercise price for the March 25, 2011 option issuance is the December 30, 2010 public offering price. Exercise price for the January 18, 2010 option issuance is the closing market price on the day preceding the date the options were granted, as defined by the 2008 Plan. Grant date share price is the closing market price on the day the options were granted. (iii) Share options outstanding at the end of the period The following table summarizes information concerning outstanding and exercisable options at June 30, 2011: Remaining Options Options Exercise Contractual outstanding exercisable price Life (Years) Expiry date Cdn$ 250,000 250,000 1.70 0.41 November 27, 2011 19,987,500 19,987,500 1.82 0.69 March 7, 2012 13,782,001 13,782,001 0.32 2.47 December 18, 2013 400,000 400,000 0.52 3.00 June 30, 2014 95,002 45,000 0.76 3.34 November 3, 2014 2,226,000 2,226,000 1.30 3.56 January 18, 2015 9,875,000 9,875,000 1.55 4.74 March 25, 2016 13,070,000 13,070,000 2.31 6.27 October 5, 2017 460,000 460,000 3.38 6.65 February 20, 2018 170,000 170,000 3.38 6.74 March 27, 2018 60,315,503 60,265,501 3.16 The weighted average exercise price of options exercisable at June 30, 2011 is Cdn$1.53. (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. In February, 2011, the Trust purchased 198,563 shares pursuant to the plan which resulted in a share-based payment expense of $43 and $80 in the three and six months ended June 30, 2011, respectively, and a share-based payment liability of $32 at June 30, 2011. 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 (3,271) Non-controlling interests` share of interest on advances to Gubevu (1,370) Foreign exchange movement (203) Balance, June 30, 2011 $ 2,384 17. Finance costs Three months ended Six months ended
June 30, June 30, June 30, June 30, 2011 2010 2011 2010 Interest on revenue advances $ 121 $ 138 $ 247 $ 257 Interest on finance leases 52 72 103 149 Interest on provision for environmental rehabilitation 180 168 354 336 Interest on tax - 209 171 209 Other interest - 6 - 12 $ 353 $ 593 $ 875 $ 963 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: Three months ended Six months ended June 30, June 30, June 30, June 30, 2011 2010 2011 2010
(in thousands) (in thousands) Weighted average number of ordinary shares used in the calculation of basic earnings per share 908,183 682,792 908,099 682,000 Shares deemed to be issued for no consideration in respect of options - 11,196 - 11,909 Weighted average number of ordinary shares used in the calculation of diluted earnings per share 908,183 693,988 908,099 693,909 The loss used to calculate basic and diluted earnings per share for the three and six months ended June 30, 2011 was $7,951 and $13,584 (June 30, 2010 - earnings of $3,448 and $4,272), respectively. The following potential ordinary shares, outstanding at June 30, 2011, 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,
2011 2010 2011 2010 (in thousands) (in thousands) Options 46,039 43,179 43,813 40,953 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 (loss) profit for the three and six months were $1,087 and $2,110 (June 30, 2010 - $969 and $1,868), respectively. The total number of employees in the plan at June 30, 2011 was 1,646 (June 30, 2010 - 1,804). 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. Eastern Platinum Limited Notes to the condensed consolidated interim financial statements (Expressed in thousands of U.S. dollars, except number of shares and per share amounts - unaudited) 20. Related party transactions (continued) (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 Six months ended June 30, June 30, June 30, June 30, Note 2011 2010 2011 2010 Consulting fees (i) $ 42 $ 36 $ 84 $ 65 General and administrative expenses 37 42 55 62 Management fees 411 313 761 620 $ 490 $ 391 $ 900 $ 747
(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 June 30, 2011 included $2 (December 31, 2010 - $1,089) which was 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, 2011 and 2010 were as follows: Three months ended Six months ended June 30, June 30, June 30, June 30, Note 2011 2010 2011 2010
Salaries and directors` fees (i) $ 705 $ 568 $ 1,352 $ 1,116 Share-based payments (ii) - - 7,996 1,627 $ 705 $ 568 $ 9,348 $ 2,743
(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 and six months ended June 30, 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 and six months ended June 30, 2011 and 2010 and assets by geographic areas as at June 30, 2011 and December 31, 2010 are as follows: Three months ended June 30, 2011 Crocodile Kennedy`s
River Mine Vale Spitzkop Current assets $ 33,799 $ 5,348 $ 1,863 Property, plant and equipment 497,547 71,876 129,769 Refining contract 13,084 - - Other Assets 8,810 - - $ 553,240 $ 77,224 $ 131,632 Property, plant and equipment expenditures $ 10,022 $ 9,171 $ - Revenue $ 26,876 $ - $ - Production costs (31,156) - - Depletion and depreciation (5,259) - - General and administrative expenses (1,069) (690) 240 Share-based payment (46) - - Interest income 334 18 - Finance costs (306) (47) - Foreign exchange gain (loss) 297 - - (Loss) profit before income taxes (10,329) (719) 2 40 Deferred income tax recovery 471 - - Net (loss) profit $ (9,858) $ (719) $ 240 Three months ended June 30, 2011
Total South Mareesburg Other Africa Current assets $ 92 $ 882 $ 41,984 Property, plant and equipment 29,723 - 728,915 Refining contract - - 13,084 Other Assets - - 8,810 $ 29,815 $ 882 $ 792,793
Property, plant and equipment expenditures $ - $ - $ 19,193 Revenue $ - $ - $ 26,876 Production costs - - (31,156) Depletion and depreciation - - (5,259) General and administrative expenses (7) (1) (1,527) Share-based payment - - (46) Interest income - - 3 52 Finance costs - - (353) Foreign exchange gain (loss) - - 2 97 (Loss) profit before income taxes (7) (1) (10,816) Deferred income tax recovery - - 4 71 Net (loss) profit $ (7) $ (1) $ (10,345) Three months ended June 30, 2011 Barbados and BVI Canada TOTAL
Current assets $ 1,365 $ 319,162 $ 362,511 Property, plant and equipment - 18 728,933 Refining contract - - 13,084 Other Assets - - 8,810 $ 1,365 $ 319,180 $ 1,113,338 Property, plant and equipment expenditures $ - $ - $ 19,193 Revenue $ - $ - $ 26,876 Production costs - - (31,156) Depletion and depreciation - - (5,259) General and administrative expenses (33) (1,372) (2,932) Share-based payment - - (46) Interest income - 1,061 1,413 Finance costs - - (353) Foreign exchange gain (loss) - (184) 113 (Loss) profit before income taxes (33) (495) (11,344) Deferred income tax recovery - - 471 Net (loss) profit $ (33) $ (495) $ (10,873) Three months ended June 30, 2010 Crocodile Kennedy`s
River Mine Vale Spitzkop Property, plant and equipment expenditures $ 6,376 $ - $ 6 Revenue $ 36,612 $ - $ - Production costs (26,855) - - Depreciation and amortization (5,528) - - General and administrative expenses (603) (479) (7) Share-based payment (13) - - Interest income 387 - - Finance costs (402) (182) (9) Foreign exchange loss - - - Profit (loss) before income taxes 3,598 (661) (16) Deferred income tax recovery 548 - - Net profit (loss) $ 4,146 $ (661) $ (16) Three months ended June 30, 2010 Total South
Mareesburg Other Africa Property, plant and equipment expenditures $ 45 $ - $ 6,427 Revenue $ - $ - $ 36,612 Production costs - - (26,855) Depreciation and amortization - - (5,528) General and administrative expenses (1) (3) (1,093) Share-based payment - - (13) Interest income 2 - 389 Finance costs - - (593) Foreign exchange loss - - - Profit (loss) before income taxes 1 ( 3) 2,919 Deferred income tax recovery - - 548 Net profit (loss) $ 1 $ (3) $ 3,467 Three months ended June 30, 2010 Canada TOTAL Property, plant and equipment expenditures $ - $ 6,427 Revenue $ - $ 36,612 Production costs - (26,855) Depreciation and amortization - (5,528) General and administrative expenses (944) (2,037) Share-based payment - (13) Interest income 32 4 21 Finance costs - (593) Foreign exchange loss (36) (36) Profit (loss) before income taxes (948) 1,971 Deferred income tax recovery - 5 48 Net profit (loss) $ (948) $ 2,519 Six months ended June 30, 2011
Crocodile Kennedy`s River Mine Vale Spitzkop Property, plant and equipment expenditures $ 24,328 $ 9,171 $ - Revenue $ 62,578 $ - $ - Production costs (60,446) - - Depletion and depreciation (10,378) - - General and administrative expenses (2,541) (947) 171 Share-based payment (293) - - Interest income 729 18 - Finance costs (628) (247) - Foreign exchange gain 788 - - (Loss) profit before income taxes (10,191) (1,176) 171 Deferred income tax recovery 593 - - Net (loss) profit $ (9,598) $ (1,176) $ 171 Six months ended June 30, 2011
Total South Mareesburg Other Africa Property, plant and equipment expenditures $ 15 $ - $ 33,514 Revenue $ - $ - $ 62,578 Production costs - - (60,446) Depletion and depreciation - - (10,378) General and administrative expenses (36) (2) (3,355) Share-based payment - - (293) Interest income - - 747 Finance costs - - (875) Foreign exchange gain - - 788 (Loss) profit before income taxes (36) (2) (11,234) Deferred income tax recovery - - 593 Net (loss) profit $ (36) $(2) $ (10,641) Six months ended June 30, 2011 Barbados and BVI Canada TOTAL Property, plant and equipment expenditures $ - $ 2 $ 33,516 Revenue $ - $ - $ 62,578 Production costs - - (60,446) Depletion and depreciation - - (10,378) General and administrative expenses (38) (2,634) (6,027) Share-based payment - (7,976) (8,269) Interest income - 2,175 2,922 Finance costs - - (875) Foreign exchange gain - 889 1,677 (Loss) profit before income taxes (38) (7,546) (18,818) Deferred income tax recovery - - 593 Net (loss) profit $ (38) $ (7,546) $ (18,225) Six months ended June 30, 2010 Crocodile Kennedy`s River Mine Vale Spitzkop Property, plant and equipment expenditures $ 10,637 $ - $ 8 Revenue $ 71,311 $ - $ - Production costs (52,558) - - Depreciation and amortization (10,843) - - General and administrative expenses (2,367) (807) (7) Share-based payment (47) - - Interest income 724 - - Finance costs (584) (366) (13) Foreign exchange (loss) gain (9) - - Profit (loss) before income taxes 5,627 (1,173) (20) Deferred income tax recovery 1,096 - - Net profit (loss) $ 6,723 $ (1,173) $ (20) Six months ended June 30, 2010 Total South Mareesburg Other Africa
Property, plant and equipment expenditures $ 77 $ - $ 10,722 Revenue $ - $ - $ 71,311 Production costs - - (52,558) Depreciation and amortization - - (10,843) General and administrative expenses (2) (3) (3,186) Share-based payment - - (47) Interest income 4 - 728 Finance costs - - (963) Foreign exchange (loss) gain - - (9) Profit (loss) before income taxes 2 (3) 4,433 Deferred income tax recovery - - 1,096 Net profit (loss) $ 2 $ (3) $ 5,529 Six months ended June 30, 2010 Canada TOTAL Property, plant and equipment expenditures $ - $ 10,722 Revenue $ - $ 71,311 Production costs - (52,558) Depreciation and amortization - (10,843) General and administrative expenses (2,047) (5,233) Share-based payment (1,705) (1,752) Interest income 65 793 Finance costs - (963) Foreign exchange (loss) gain 24 1 232 Profit (loss) before income taxes (3,446) 987 Deferred income tax recovery - 1,096 Net profit (loss) $ (3,446) $ 2,083 December 31, 2010 Crocodile Kennedy`s
River Mine Vale Spitzkop Current assets $ 45,787 $ 445 $ 1,669 Property, plant and equipment 495,861 64,916 126,357 Refining contract 14,265 - - Other Assets 3,823 - - $ 559,736 $ 65,361 $ 128,026 December 31, 2010 Total South
Mareesburg Other Africa Current assets $ 61 $ 997 $ 48,959 Property, plant and equipment 28,827 - 715,961 Refining contract - - 14,265 Other Assets - - 3,823 $ 28,888 $ 997 $ 783,008 December 31, 2010 Canada TOTAL
Current assets $ 343,952 $ 392,911 Property, plant and equipment 15 715,976 Refining contract - 14,265 Other Assets - 3,823 $ 343,967 $ 1,126,975 For the three and six months ended June 30, 2011 and 2010, substantially all of the Company`s PGM production was sold to one customer. 22. Contingency During the three months ended June 30, 2011, the Company became aware that the law firm of Siskinds LLP of London, Ontario, had filed a "Notice of Application" under the Class Action Proceedings Act, 1992, in the Ontario Superior Court of Justice against the Company and three of its directors and officers. The Notice of Application seeks permission of the Court to grant leave or permission to commence a lawsuit under the Securities Act of Ontario and other provinces in respect to certain alleged breaches of disclosure obligations. Subsequent to June 30, 2011, the Company and its officers and directors were served with court documents. The Company believes the proposed action has no merit and intends to vigorously defend the action. Date: 15/08/2011 15:52:02 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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