Wrap Text
Condensed Consolidated Interim Financial Information for the Six Months Ended 30 June 2018
WESIZWE PLATINUM LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2003/020161/06)
JSE code: WEZ ISIN: ZAE000075859
(the “Company” or “Wesizwe” or the “Group”)
Condensed Consolidated Interim Financial Information
for the Six Months Ended 30 June 2018
Highlights
• SizweNtsalubaGobodo Grant Thornton Inc. have been appointed as external
auditors of the Wesizwe Platinum Limited group, replacing KPMG.
• The BPM project remains viable, an impairment assessment was done and the
project continues to yield promising future prospects.
• The flat development and construction contractor for 69 and 72 levels commenced
with preparations for production and construction. The first blast was achieved
on the 10th of August 2018.
• Tender proposals for the 77 and 81 levels flat development and construction
are currently being adjudicated.
• The commissioning of the hoisting system as well as conveyor belts CV 002 on
77 level and CV001 on surface has been completed.
• The Company continues to review the life of mine plan. Revision 6.2 is currently
applicable after approval by the Board. Approval was essential due to
operational as well as strategic delays in the full implementation of Rev6.1.
The new revision is a response to deferred works in line with cash preservation
measures that were implemented. Focus was placed on critical Phase 1 work in
order to preserve cash. Under revision 6.2, plan peak production date shifts
from June 2022 to April 2023.
• The Company completed the construction of civil and electrical services for
the Gabonewe Housing Estate, an integrated community and employee future
residential estate.
• The Company continues to deliver of its current SLP program, with the focus on
its community water delivery project.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Note Six months Six months Year ended
ended ended December
30 June 30 June 2017
2018 2017 Audited
Reviewed Reviewed
R’000 R’000 R'000
ASSETS
Non-current assets 8 130 889 7 413 248 7 512 870
Property, plant and equipment 5 8 046 342 6 974 025 7 454 753
Intangible assets 1 139 2 466 1 709
Available-for-sale financial
6
asset 10 564 331 100 10 564
Restricted cash 7 72 844 105 657 45 844
Current assets 927 836 758 233 466 707
Other receivables 94 424 69 051 51 244
Inventories 9 338 10 258 -
Taxation receivable 344 - 293
Restricted cash 7 - 57 000 27 000
Cash and cash equivalents 823 730 621 924 388 170
TOTAL ASSETS 9 058 725 8 171 481 7 979 577
EQUITY AND LIABILITIES
Capital and reserves 2 997 940 3 126 168 3 012 923
Stated capital 8 3 425 544 3 425 544 3 425 544
Accumulated loss (427 604) (299 376) (412 621)
Non-current liabilities 6 002 751 4 936 346 4 868 607
Deferred tax liability 206 400 322 612 379 867
Interest-bearing borrowings 5 733 976 4 550 522 4 426 426
Mine closure and environmental
13
rehabilitation obligation 60 313 56 239 58 691
Deferred bonus plan provision 2 062 6 973 3 623
Current liabilities 58 034 108 967 98 047
Trade and other payables 58 034 108 668 98 047
Taxation - 299 -
TOTAL EQUITY AND LIABILITIES 9 058 725 8 171 481 7 979 577
CONDENSED CONSOLIDATED STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME
Note Six months Six months Year ended
ended ended December
30 June 30 June 2017
2018 2017 Audited
Reviewed Reviewed
R’000 R’000 R'000
Administration expenditure (132 661) (174 440) (346 192)
Project related expenses
capitalised 122 367 168 525 335 974
Profit on sale of property,
Plant and equipment - - 1 803
Loss on scrapping of property,
plant and equipment - (5) (5)
Net operating costs (10 294) (5 920) (8 420)
Impairment of available-for-sale
financial asset reclassified from
other comprehensive income - (179 800) (500 336)
Finance income 10 256 29 754 48 859
Finance expense (127 604) (120 443) (249 127)
Net foreign exchange (loss)/gain (496 464) 210 736 460 990
Finance costs capitalised 435 655 106 937 232 955
Net finance (loss)/income (178 156) 226 984 493 677
Profit/(loss) before tax (188 450) 41 264 (15 079)
Income tax 9 173 467 (22 221) (79 123)
Profit/(loss) for the period (14 983) 19 043 (94 202)
Other comprehensive income
Items that are or may be
reclassified subsequently to
profit or loss
Loss on fair value movements of
available-for-sale financial
asset 6 - (179 800) (500 336)
Tax on other comprehensive income - 40 275 56 613
Reclassification of available-
for-sale financial asset to
profit or loss - 179 800 500 336
Related tax - (40 275) (56 613)
Total other comprehensive income - - -
Total comprehensive income/(loss)
for the period (14 983) 19 043 (94 202)
Basic and diluted (loss)/earnings
per share (cents) 16 (0.92) 1.17 (5.79)
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Stated Accumu- Total
/ share lated loss
capital
R’000 R’000 R’000
Balance at 1 January 2017 3 425 544 (318 419) 3 107 125
- 19 043 19 043
Profit for the period
- 19 043 19 043
Balance at 30 June 2017 3 425 544 (299 376) 3 126 168
Loss for the period - (113 245) (113 245)
- (113 245) (113 245)
Balance at 31 December 2017 3 425 544 (412 621) 3 012 923
Loss for the period - (14 983) (14 983)
- (14 983) (14 983)
Balance at 30 June 2018 3 425 544 (427 604) 2 997 940
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Six months Six months Year ended
ended ended December
30 June 30 June 2017
2018 2017
Reviewed Reviewed Audited
R’000 R’000 R'000
Cash flows (utilised)/generated by
operating activities (99 609) (54 124) 19 143
Finance income 11 191 17 235 39 300
Finance expense (1) (2) (377)
Taxation paid (53) (3 003) (3 245)
Taxation received - - 3
Cash (utilised)/generated in operations (88 472) (39 894) 54 824
Cash flows utilised by investing
activities
Acquisition of property, plant and
equipment (315 323) (576 032) (1 101 882)
Net cash outflow from investing
activities (315 323) (576 032) (1 101 882)
Cash flows from financing activities
Interest-bearing borrowings raised 840 290 781 034 891 769
Net cash inflow from financing
activities 840 290 781 034 891 769
Net increase/(decrease) in cash and
cash equivalents 436 495 165 108 (155 289)
Cash and cash equivalents at the
beginning of the period 460 079 615 368 615 368
Cash and cash equivalents at the end of
the period 896 574 780 476 460 079
Cash at end of year comprises:
Cash balances 823 730 621 924 388 170
Less: Interest accrued - (4 105) (935)
Cash and cash equivalents 823 730 617 819 387 235
Restricted cash 72 844 162 657 72 844
Cash at the end of the period 896 574 780 476 460 079
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION
For the six months ended 30 June 2018
1. Reporting entity
Wesizwe is a company domiciled in the Republic of South Africa. The condensed
consolidated interim financial information of the Company as at 30 June 2018
comprises the Company and its subsidiaries (together referred to as the
“Group”). The consolidated financial statements of the Group for the year ended
31 December 2017 are available at www.wesizwe.com.
2. Basis of preparation
The condensed consolidated interim financial statements are prepared in
accordance with International Financial Reporting Standard,(IAS) 34 Interim
Financial Reporting, the SAICA Financial Reporting Guides as issued by the
Accounting Practices Committee and Financial Pronouncements as issued by
Financial Reporting Standards Council and the requirements of the Companies Act
of South Africa. The accounting policies applied in the preparation of these
interim financial statements are in terms of International Financial Reporting
Standards and are consistent with those applied in the previous annual financial
statements.
3. Estimates
The preparation of the interim financial information requires management to
make judgements, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets and liabilities, as well
as income and expense. Actual results may differ from these estimates. The
significant unobservable inputs are:
Six months Year ended
ended December
June 2018 2017
Reviewed Audited
US$ exchange rate (ZAR) up to
2025/2021 13.23 – 14.97 13.64 – 14.21
US$ exchange rate (ZAR) long-term 15.87 14.64
Pt price (US$/oz) up to 2025/2021 1 059 – 1 191 1 011 – 1 048
Pt price (US$/oz) long-term 1 353 1 383
Pd price (US$/oz) up to 2025/2021 1 097 – 1 340 923 – 925
Pd price (US$/oz) long-term 1 138 925
Rh price (US$/oz) up to 2025/2021 1 931 – 1 995 1 030 – 1 054
Rh price (US$/oz) long-term 1 584 1 030
Au price (US$/oz) up to 2025/2021 1 138 – 1 302 1 200 – 1268
Au price (US$/oz) long-term 1 296 1 200
Weighted Average Cost of Capital (%)
(Real) 11.11 11.22
Except as described below, in preparing the condensed consolidated interim
financial information, the significant judgements made by management in
applying the Group’s accounting policies and the key sources of estimation are
consistent with those that applied to the consolidated financial statements for
the year ended 31 December 2017.
4. Going concern
The Group’s cash resources at the reporting date of R824 million (June 2017:
R622 million) together with the available drawdown facility from the loan
funding secured from China Development Bank (“CDB”) are sufficient, based on
current budgets, to conduct operations and develop the Bakubung Platinum Mine
Project (“BPM”) up to the fourth quarter of 2019.
5. Property, plant and equipment
During the period under review an amount of R595 million was capitalised to
property, plant and equipment as part of the activities to develop the mine and
related construction activities.
At the reporting date, property, plant and equipment consisted of the following
categories of assets:
Property, Construction Mineral TOTAL
plant and Work-in- Rights
equipment progress
R’000 R’000 R'000 R'000
Opening balance 68 099 6 328 925 1 057 729 7 454 753
Acquisitions during the
period 658 595 136 - 595 794
Disposals - - - -
Depreciation (4 199) (6) (4 205)
Closing balance 64 558 6 924 055 1 057 729 8 046 342
No additions have been made in respect of mineral rights during the period
under review.
6. Available-for-sale financial asset
Six months Six months Year ended
ended ended December
June 2018 June 2017 2017
Reviewed Reviewed Audited
R’000 R’000 R'000
Opening Balance 10 564 510 900 510 900
Impairment/fair value
adjustment - (179 800) (500 336)
Closing balance 10 564 331 100 10 564
7. Restricted cash
Restricted cash covers the following guarantees:
Non-current:
• R44.8 million (December 2017: R44.8 million) in favour of Eskom for phase
1 and phase 2 bulk power supply to the BPM; and
• R28 million (December 2017: R1 million non-current and R27 million current)
in favour of the Department of Mineral Resources for environmental
obligation.
8. Stated capital
Six months Six months Year ended
ended ended December
June 2018 June 2017 2017
Reviewed Reviewed Audited
R’000 R’000 R’000
Authorised
2 000 000 000 no par value ordinary
shares (2017: 2 000 000 000 no par value
ordinary shares) - - -
Issued
1 627 827 058 no par value ordinary
shares (2017: 1 627 827 058 no par value
ordinary shares) 3 425 544 3 425 544 3 425 544
9. Taxation
Six months Six months Year ended
ended ended December
June 2018 June 2017 2017
Reviewed Reviewed Audited
R’000 R’000 R'000
Current year - normal taxation - (1 745) (1 391)
Current year - deferred taxation 173 467 (20 476) (77 732)
Total 173 467 (22 221) (79 123)
Reconciliation of effective tax
rate % % %
Standard tax rate 28.0 28.0 28.0
Non-deductible expenses 1.1 (8.2)
Deferred tax asset not raised 0.4 (450.6)
Fair value gain/loss on
available-for-sale financial
asset at CGT rate in the
subsidiary - 24.4 (93.9)
Effect of changes in unredeemed
capital expenditure 64.0 - -
Effective rate 92.0 53.9 (524.7)
10. Report of the Independent Auditor
The condensed consolidated interim financial statements for the six months
ended 30 June 2018 have been reviewed by SizweNtsalubaGobodo Grant Thornton
Inc., who expressed an unmodified review conclusion. The auditor’s report does
not necessarily report on all of the information contained in these financial
results. Shareholders are therefore advised that in order to obtain a full
understanding of the nature of the auditor’s engagement they should obtain a
copy of the auditor’s report together with the accompanying financial
information from the issuer’s registered office.
11. Segment reporting
No segment reporting has been produced as the group is conducting construction
activities in one geological location which represents it’s only business
activity with no revenue yet.
An operating segment is a component of the Group that engages in business
activities from which it may earn revenues and incur expenses, including
revenues and expenses that relate to transactions with any of the Group’s other
components. The operating results for the Group as a whole are reviewed
regularly by the Group’s CEO to make decisions about resources to be allocated
and to assess its performance.
12. Mineral resources
There were no changes to the mineral resources for the six months ended 30 June
2018.
13. Mine closure and environmental rehabilitation obligation
The change in the obligation is due to the time value of money adjustment for
the period of R1.6 million being recognised.
14. Subsequent events
No material events have occurred after the reporting period and up to the date
of this report that required further disclosure in these financial results.
15. Commitments
At 30 June 2018 the Group had commitments to the value of R385 million (December
2017: R356.5 million). This amount includes capital commitments amounting to
R382 million.
16. (Loss)/earnings per share
Six months Six months Year ended
ended ended December
June 2018 June 2017 2017
Reviewed Reviewed Audited
The basis of calculation of
basic earnings/(loss) per share
is:
Attributable earnings/(loss) to
ordinary shareholders (Rand) (14 983 004) 19 043 281 (94 202 401)
Weighted average number of
ordinary shares in issue
(shares) 1 627 827 058 1 627 827 058 1 627 827 058
Basic earnings/(loss) share
(cents) (0.92) 1.17 (5.79)
The basis of calculation of
diluted earnings/(loss) per
share is:
Attributable earnings/(loss) to
ordinary shareholders (Rand) (14 983 004) 19 043 281 (94 202 401)
Weighted average number of
ordinary shares in issue
(shares) 1 627 827 058 1 627 827 058 1 627 827 058
Diluted earnings/(loss) per
share (cents) (0.92) 1.17 (5.79)
The basis of calculation of
headline earnings/(loss) per
share is:
Attributable earnings/(loss) to
ordinary shareholders (Rand) (14 983 004) 19 043 281 (94 202 401)
Adjustments: - 139 528 148 442 429 125
Loss on scrapping of property,
plant and equipment Profit on
disposal of property, - 3 348 3 348
Loss on fair value adjustment
of available-for-sale financial
asset net of tax - 139 524 800 443 723 625
Headline earnings/(loss) (Rand) (14 983 004) 158 571 429 348 226 724
Weighted average number of
ordinary shares in issue 1 627 827 058 1 627 827 058 1 627 827 058
(shares)
Headline and diluted headline
earnings per share (cents) (0.92) 9.74 21.39
Commentary
1. Financial overview
The Group is currently in development phase of the BPM.
The loss for the six months under review is R14.983 million (compared to a profit
of R19.0 million for the same period in 2017) as set out in the condensed
consolidated statement of profit and loss and other comprehensive income.
Administration expenses of R132.7 million (June 2017: R174.4 million) include the
following:
• Depreciation and amortisation – R4.8 million (June 2017: R6.0 million);
• Professional fees – R23.9 million (June 2017: R57.5 million);
• Directors’ expenses – R5.7 million (June 2017: R4.8 million);
• Salaries and payroll related expenses – R71.5 million (June 2017:
R67.2 million);
• Marketing expenses and investor relations – R0.3 million (June 2017:
R0.8 million);
• Electricity and water – R21.4 million (June 2017: R13.6 million);
• Consumables utilised – R1.4 million (June 2017: R13.3 million); and
• Other administrative overheads – R3.7 million (June 2017: R11.2 million).
During the six months under review, the administration expenses decreased by 23.9%
compared to the corresponding period in 2017 as a result of cost measures put in
place.
The basic loss per share for the period was 0.92 cents per share (2017: 1.17 cents
earnings per share for the same period). The headline loss per share was 0.92cents
per share (2017: 9.74 earnings cents per share for the same period).
1.1 These interim financial statements were prepared by Titus Khiba (Financial
Accountant) and the preparation was supervised by Mr Feng Tao (Financial
Director).
1.2 The directors take full responsibility for the preparation of the report and that
the financial information has been correctly extracted from the underlying interim
financial statements.
2. Project funding
As previously reported, Wesizwe concluded and signed all Project Financing
Agreements for the US$650 million loan facility with CDB. As at the 30th of June
2018, drawdowns amounting to $428.8 million have occurred.
3. Project update – Bakubung Platinum Mine
3.1 Concentrator plant
Delivery of the concentrator plant conveyors commenced and construction of the
plant is expected to commence in the first quarter of 2019.
3.2. Services
Approval for the appointment of the Engineering and Design consultant was
finalized, the consultants are focusing on delivering designs, which are critical
to the commissioning of essential services, and systems i.e. rock handling systems,
water and compressed air systems.
The recommendation for the process plant EPC was approved and contract negotiations
have started.
3.3. Safety and Health
Zero injuries were reported during the period under review. The project received
eight (8) visits from the Department of Mineral Resources (DMR); one (1) Section
55 order was issued.
3.4. Bulk power supply
All installed transformers (2 x 40MVA) have been commissioned, and currently the
mine has the flexibility to get power transmission from either of the 40MVA
transformer. The need to install the third transformer is under review.
3.5. Bulk water supply
Bulk water supply has been commissioned and the mine has connected to the pipeline
from Mafenya Reservoir. The new off-take agreement has not been finalised between
the mine and Magalies Water. This is preceded by the project account closeout,
which is under review by Magalies Water.
3.6. Human resources
The Company successfully concluded the 2018 wage settlement with its recognized
union, the National Union of Mineworkers.
Disciplinary incidents have stabilised and on average two disciplinary cases are
held per month, this is below industry average for the sector and for the size of
the operation.
The average attrition rate for core and critical employees for the period is 0.92%.
This indicates stable working conditions for core staff within a turbulent and
unstable platinum mining industry.
3.7. Environmental
Environmental monitoring is in compliance for 2018; Surface and Ground water
quality are within the limits as stipulated in the Water Use licence.
Air Quality results are within the Industrial and Residential limits prescribed
by the National Ambient Air Quality Standards.
Environmental Management monitoring is ongoing in terms of waste recycling,
environmental inspection and Biodiversity management. Actions and Environmental
risks continue to be monitored.
4. Dividends
No dividends were declared in the current period.
5. Board changes
• Ms Xiaoyin Zhou resigned effective 31 January 2018
• Mr Indresen Pillay appointed effective 07 February 2018
• Mr Pingan Sun appointed effective 07 February 2018
• Mr Indresen Pillay resigned effective 31 July 2018
Johannesburg
28 September 2018
Sponsor:
PSG Capital
By order of the board:
Dawn Mokhobo (Chairperson) Zhimin Li (Chief Executive Officer)
Wesizwe Platinum Limited
Directors: DNM Mokhobo (Chairman), Z li (Chief Executive Officer), F Tao
(Financial Director), P Li, LV Ngculu, TV Mabuza, P Sun, F Qiao
Non-Executive Chinese
Company Secretary: V Mhlongo
Transfer Secretaries:
4 Africa Exchange, First Floor, Cedarwood House
Ballywoods Office Park
33 Ballyclare Drive
Bryanston, 2191
Registered address: Wesizwe House, Devcon Park, 9 Autumn Road Rivonia Ext 3, 2128,
South Africa
Date: 28/09/2018 03:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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