TIDMPPN
RNS Number : 5715G
Platmin Limited
13 May 2011
PLATMIN LIMITED
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2011
May 13, 2011
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Management's Discussion and Analysis of Financial Condition
and Results of Operations ("MD&A") for the three months ended
March 31, 2011 contains "forward-looking information" which may
include, but is not limited to, statements with respect to the
future financial and operating performance of Platmin Limited (the
"Company" or "Platmin"), its subsidiaries and affiliated companies
(which together with Platmin is referred to as "the Platmin Group"
or "the Group"), and its mineral projects, the future price of 4E
metals (commonly used to refer to platinum, palladium, rhodium and
gold), 4E production levels, mining rates, the future price of
copper and nickel, future exchange rates, the estimation of mineral
resources and reserves, the realization of mineral resource
estimates or their conversion into reserves, costs and future costs
of production, capital and exploration expenditures, including
ongoing capital expenditure at the Pilanesberg Platinum Mine
("PPM"), costs and timing of the development of new deposits, costs
and timing of the development of new mines, costs and timing of
future exploration, requirements for additional capital, government
regulation of mining operations and exploration operations, timing
and receipt of approvals, licenses, and conversions under South
African mineral legislation, environmental risks, title disputes or
claims, limitations of insurance coverage and the timing and
outcome of regulatory matters. Often, but not always,
forward-looking statements can be identified by the use of words
such as "plans", "expects", "is expected", "budget", "scheduled",
"estimates", "forecasts", "intends", "anticipates", "targeted" or
"believes" or variations (including negative variations) of such
words and phrases, or state that certain actions, events or results
"may", "could", "would", "might" or "will" be taken, occur or be
achieved.
Forward-looking statements in this market release, amongst
others, forecast production reaching a monthly rate of 12,000 4E
ounces by end FY2011 and 20,000 4E ounces by end FY2012 provided
the planned volumes of waste stripping can be achieved; lodging of
an amended Environmental Management Plan in May 2011; recovery
rates and grade; targets, estimates and assumptions in respect of
4E metal prices and production; allocation of funds for current
commitments; and the timing and completion of definitive
feasibility engineering studies at the Mphahlele, Grootboom and
Loskop Projects.
Such forward-looking statements are based on a number of
material factors and assumptions, including, that contracted
parties provide goods and/or services on the agreed time frames,
that budgets and production forecasts are accurate, that equipment
necessary for construction and development is available as
scheduled and does not incur unforeseen break downs, that no labour
shortages or delays are incurred, that plant and equipment function
as specified, that geological or financial parameters do not
necessitate future mine plan changes, that no unusual geological or
technical problems occur, and that grades and recovery rates are as
anticipated in mine planning.
Forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of the Platmin Group to be materially
different from any future results, performance or achievements
expressed or implied by the forward-looking statements. Such
factors include, among others, general business, economic,
competitive, political and social uncertainties; the actual results
of current exploration and mining activities; development and
operational risks; title risks; regulatory risks; conclusions of
economic evaluations and studies; fluctuations in the value of the
United States dollar relative to the Canadian dollar or South
African rand; changes in project parameters as plans continue to be
refined; future prices of 4E metals; possible variations of ore
grade or recovery rates (including the existence of potholes,
faults and other geological conditions that may affect the
existence or recovery of resources and reserves); failure of plant,
equipment or processes to operate as anticipated; accidents, labour
disputes, industrial unrest and strikes and other risks of the
mining industry; political instability, insurrection or war; the
effect of HIV/AIDS on labour force availability and turnover;
delays in obtaining governmental approvals or financing or in the
completion of development or construction activities, as well as
those factors communicated in the section entitled "Risk Factors"
of Platmin's current annual information form ("AIF") and its final
short form prospectus dated May 5, 2010, which can both be viewed
at www.sedar.com. Although Platmin has attempted to identify
important factors that could cause actual actions, events or
results to differ materially from those described in
forward-looking statements, there may be other factors that cause
actions, events or results to differ from those anticipated,
estimated or intended.
Forward-looking statements contained herein are made as of the
date of this MD&A and Platmin disclaims any obligation to
update any forward-looking statements, whether as a result of new
information, future events or results or otherwise. There can be no
assurance that forward-looking statements will prove to be
accurate, as actual results and future events could differ
materially from those anticipated in such statements. Accordingly,
readers should not place undue reliance on forward-looking
statements due to the inherent uncertainty therein.
1. Introduction
1.1 Incorporation and listing of Platmin's shares
Platmin Limited ("Platmin" or "the Company") was incorporated
under the Canada Business Corporation Act on May 29, 2003. It has
continued as a company under the Business Corporations Act of
British Columbia, Canada, effective April 1, 2009.
Platmin's common shares are listed on the Toronto Stock Exchange
("TSX"), the Alternative Investment Market of the London Stock
Exchange ("AIM") and the Johannesburg Securities Exchange Limited
("JSE"). The Company trades under the symbol "PPN" on both the TSX
and the AIM and under the symbol "PLN" on the JSE.
1.2 Nature of business
The Platmin Group, consisting of Platmin and its subsidiaries
and affiliated companies, is a natural resources group engaged in
the acquisition, exploration, development and operation of Platinum
Group Metals ("PGM") properties in South Africa.
1.3 Pilanesberg Platinum Mines
Through its 72.39% owned subsidiary, Pilanesberg Platinum Mines
(Proprietary) Limited, Platmin has established the Pilanesberg
Platinum Mines ("PPM") on the Western Limb of the Bushveld Complex.
PPM declared commercial production from January 1, 2011 which means
the results of operations are now reported in the statement of
income (as opposed to being capitalised to development cost, as was
the case until December 31, 2010).
PPM is the Group's primary asset and consists of:
(i) the open-cast Tuschenkomst Pit; and
(ii) an adjacent PGM concentrator.
The principal focus of the Platmin Group is to build up the
PPM's production from the Tuschenkomst Pit to the levels forecast
in the bankable feasibility study.
Mining at PPM has been contracted to MCC Contracts (Proprietary)
Limited ("MCC"), a wholly-owned subsidiary of Eqstra Holdings
Limited.
The operation of the concentrator, which entails crushing,
milling and flotation of the ore to produce a PGM concentrate has
been contracted to Mineral Operations Executive (Proprietary)
Limited ("Minopex"), a division of DRA Engineering (Proprietary)
Ltd. The plant has capacity to process 417,000 tonnes of material
per month and mill 285,000 tonnes of ore per month.
The PGM concentrate is refined under contract by Northam
Platinum Limited ("Northam") to produce platinum, palladium,
rhodium, and gold (collectively referred to as "4E"), plus iridium,
ruthenium, copper and nickel.
The PGMs contributed in excess of 90% of the gross revenue
earned by the PPM during the quarter ended March 31, 2011.
1.4 Consolidation of the Western Limb of the Bushveld
Complex
Due to common shareholders in other PGM properties on the
Western Limb, its recent acquisition of the Sedibelo West PGM
property dealt with in 2.1 below and its recent acquisition of a
50% interest in the power and water rights and certain other assets
pertaining to the Sedibelo area (see 2.2 below), Platmin is ideally
placed to participate in the consolidation of several adjacent
properties within the Western Limb of the Bushveld Complex.
1.5 Acquisition, exploration and development of other PGM
properties
The Platmin Group holds valuable interests in PGM deposits on
the Eastern Limb of the Bushveld Complex through its three
exploration and development projects namely Mphahlele, Grootboom
and Loskop.
1.6 Purpose of this MD&A
This Management's Discussion and Analysis of Financial Condition
and Results of Operations ("MD&A") is provided to enable the
reader to assess and understand the financial position and results
of operations for the three months ended March 31, 2011, in
comparison to corresponding periods. Certain information in this
MD&A must be read in conjunction with:
(i) the audited consolidated financial statements of Platmin for
the year ended December 31, 2010 and the notes thereto
(collectively, the annual financial statements) prepared in
accordance with International Financial Reporting Standards
("IFRS");
(ii) the condensed consolidated interim financial statements for
the three months ended March 31, 2011 and supporting notes; and
(iii) the Company's Annual Information Form ("AIF") and the
technical reports prepared by qualified persons in accordance with
NI 43-101 on file with the Canadian provincial securities
regulatory authorities.
These documents can be found at www.sedar.comand at
www.platmin.com.
1.7 Reporting currency and periods
Whilst the mining and exploration activities are conducted in
South Africa and reported in South African rand ("ZAR"), in this
MD&A the financial amounts have been converted to and are
reported in United States dollars ("US$").
2. The Sedibelo West and related transactions
2.1 The acquisition of 5.99 million 4E ounces
On March 23, 2011 Platmin announced the acquisition of an
incremental 5.99 million 4E inferred resource ounces, (42.57
million tonnes at a grade of 4.38 g/t) contained within the western
portion of the Sedibelo PGM Project concession ("Sedibelo West")
from the Bakgatla Ba Kgafela Tribe ("Bakgatla") and Itereleng
Bakgatla Mineral Resources (Proprietary) Limited ("IBMR"), for a
total purchase consideration payable in cash of US$82.000 million
(US$75.000 million including VAT of US$7.000 million). This is
equivalent to US$12.50 per 4E inferred resource ounce.
Sedibelo West is contiguous with and down-dip of the eastern
boundary of the Tuschenkomst property, where the PPM opencast
mining operation is currently taking place.
The acquisition of the Sedibelo West property will add value to
PPM by:
-- materially increasing the PGM resource base accessible from
the existing opencast pit;
-- accessing sulphide material at depth from the down dip
contiguous section of the ore body;
-- providing operational flexibility, particularly in the north
pit;
-- extending the current life of mine; and
-- creating economy of scale with the existing plant
infrastructure.
Optimisation and mine planning studies to maximize the value of
the enlarged PPM/Sedibelo West property have begun, and should be
concluded during the 2011 financial year.
Kgosi Molefe John Pilane, the appointed traditional leader of
the Bakgatla, has been invited to join the board of Platmin.
2.2 The acquisition of an effective 50% interest in an
infrastructure vehicle
On March 23, 2011 Platmin also announced the acquisition, for an
aggregate consideration of US$12.025 million, of an effective 50%
interest in the Special Purpose Vehicle ("SPV") that acquired from
Barrick Platinum South Africa (Proprietary) Limited ("Barrick") all
of its power and water rights as well as certain other assets
originally purchased by Barrick to develop a PGM project in the
Sedibelo area, contiguous to the Sedibelo West property which
Platmin has acquired. The acquisition was completed in partnership
with the Bakgatla (25.05%) and Ivy Lane Capital Limited
(24.95%).
Through this transaction, Platmin has positioned itself ideally
for participation in further regional consolidation.
2.3 The conversion of the convertible debentures into equity
As a consequence of the above transactions the convertible
debentures issued on May 13, 2010, in principal amount of
US$135.000 million, were converted into 160,714,286 new common
shares in Platmin on March 31, 2011. Upon conversion, the proceeds
from the convertible debentures previously held in a collateralized
bank account and classified as "restricted cash" in the
Consolidated Statement of Financial Position as at December 31,
2010 totaling US$135.131 million, was released to the Company in
full.
2.4 Payment to the Bakgatla and IBMR
On April 20, 2011 the purchase consideration and VAT, a total of
US$82.000 million, was placed in an escrow account pending the
approval by the Department of Mineral Resources ("DMR") to
incorporate the Sedibelo West area as part of PPM's Tuschenkomst
Mining.
3. Overall performance
3.1 Financial condition
At March 31, 2011 the Group was adequately funded and possessed
sufficient liquidity to fund the operations. The following is a
summary of key financial indicators as at March 31, 2011:
Mar 31, Dec 31,
2011 2010
US$ million US$ million
------------------------------------------ ------------- -------------
Equity 926.289 834,396
Net current assets, including
cash 209.236 192.232
Cash and cash equivalents (unrestricted) 177.248 188.596
An application to amend the Environmental Management Plan to
convert the open void being created at the Tuschenkomst Pit into a
water storage facility will be lodged with the DMR during May 2011.
Should such application be granted, the cost of rehabilitating the
pit will reduce and a portion of the US$80.549 million (ZAR523.249
million) held in restricted cash at March 31, 2011 to meet the
rehabilitation costs would be released. Such amount will be
determined upon final approval by the DMR.
3.2 Cashflows
Unrestricted cash and cash equivalents decreased by US$11.348
million from December 31, 2010 to March 31, 2011. This net decrease
is primarily due to the following significant transactions during
the quarter:
-- US$135.131 million cash inflow on March 31, 2011, upon
conversion of the convertible debentures plus interest received
(see 2.3 above);
-- US$82.000 million cash outflow for payment into escrow of the
total purchase consideration for the Sedibelo West transaction (see
2.1 and 2.4 above);
-- US$28.822 million cash outflow for the repayment in full of
the Pallinghurst Resources Limited ("Pallinghurst") promissory
note, including interest and costs;
-- US$17.999 million cash outflow used in operating
activities;
-- US$12.025 million cash outflow for the payment of the
purchase consideration for a 50% interest in the SPV (see 2.2
above);
-- US$5.331 million cash outflow for the incremental
rehabilitation liability for the year ended December 31, 2010;
3.3 Results of operations
Mining operations commenced in December 2008 with mining of the
oxidized layer and the first concentrate was delivered for smelting
and processing on April 1, 2009. Operational costs, net of revenue
from metal sales, for PPM were capitalized until December 31, 2010.
From January 1, 2011, PPM declared commercial production and the
results of operations are now reported in the statement of income.
Key operational statistics for the quarter are summarized as
follows:
Q1 FY2011 Q1 FY2010
------------------------------- ------------- ---------- ----------
Averaged milled head grade g/t 1.84 1.70
Average concentrator recovery
rate % 50.9 34.3
Average recovered grade g/t 0.93 0.59
Total 4E ounces produced ounces 19,148 14,393
Total 4E ounces dispatched
and sold ounces 17,469 14,393
Total losses US$'million 34.834 5.181
3.4 Market trends and outlook
Average PGM prices increased by 15% in US dollar terms during
the quarter ended March 31, 2011 compared to the quarter ended
March 31, 2010. The strengthening of the South African rand offset
the stronger dollar prices, resulting in a net 7% increase in the
rand PGM basket over the same period. The rand has continued to
strengthen after the end of the quarter and continues to impact
negatively on operating margins.
The global outlook for PGM demand remains positive.
3.5 Events or uncertainties
During the three months ended March 31, 2011
-- PPM declared commercial production with effect from January
1, 2011, prior to which all losses were capitalised to development
cost and from which date all losses and profits will be disclosed
in the statement of income;
-- On February 18, 2011, the Company announced that conditional
agreements have been executed with the holders of all the zero
percent convertible debentures issued on May 13, 2010, in principal
amount of US$135.000 million, to convert the convertible debentures
into 160,714,286 new common shares, subject to certain conditions
and the conversion price was reduced from US$1.215 to US$0.84; this
meant that, on conversion, the convertible debenture holders would
receive 160,714,286 new Platmin common shares as compared to the
111,111,111 shares they would have received at the earlier
conversion price;
-- On February 28, 2011, the Pallinghurst promissory note of
US$26.000 million entered into on March 22, 2010 was repaid in
full, together with accrued interest and structuring fees,
totalling US$28.822 million;
-- On February 28, 2011, Mr Wayne Koonin the Chief Financial
Officer of the Company, resigned effective May 31, 2011;
-- On March 23, 2011, it was announced that the Company had
successfully concluded the Sedibelo West acquisition detailed above
in 2.1. and acquired an effective 50% interest in an infrastructure
vehicle detailed above in 2.2.;
-- On March 23, 2011, Platmin announced that Kgosi Molefe John
Pilane had been invited to join the board of Platmin. He is the
appointed traditional leader of the Bakgatla;
-- On March 31, 2011, the Company announced that all the
conditions precedent for the conversion of the $135.000 million in
convertible debentures had been fulfilled and that conversion had
taken place at US$0.84 per share. A total of 160,714,286 new common
shares are to be issued resulting in a total of 910,395,053 Common
Shares in issue.
Subsequent to March 31, 2011
-- On April 5, 2011, Mr Craig Shaw was appointed as Chief
Financial Officer, with effect from May 1, 2011;
-- On April 20, 2011, the Company transferred the total purchase
consideration totalling US$82.000 million including VAT of US$7
million for the Sedibelo West acquisition to an escrow account as
detailed above in 2.4.
4. Results of operations
4.1 Financial performance for the quarter ended March 31,
2011
The Group recorded a net loss for the quarter ended March 31,
2011 of US$34.834 million, or US$0.04 per share, compared to a net
loss of US$5.181 million, or a loss of US$0.01 per share, for the
quarter ended March 31, 2010. PPM declared commercial production
with effect from January 1, 2011 and the results are summarized as
follows:
For the three months
ended
March 31, March 31,
2011 2010
$ 000 $ 000
--------------------------------- -------------- --------------
Revenue 26,038 -
Cost of operations (50,294) -
-------------- --------------
On mine operations 29,776 -
Concentrator plant operations 11,759 -
Beneficiation and transport 1,955 -
Salaries 1,219 -
-------------- --------------
Subtotal 44,709 -
Depreciation of operating
assets 6,039 -
Change in inventories (454) -
-------------- --------------
Operating loss (24,256) -
Operating expenses (3,327) (4,393)
-------------- --------------
Employee expenses (1,166) (2,103)
Mining overheads (950) -
Amortization and depreciation (440) (136)
General and administrative
expenses (315) (1,290)
Consulting and professional
fees (245) (172)
Royalty tax (153) -
Audit fees (146) (180)
Share based payments expense 88 (512)
Other expenses (6,752) (9)
-------------- --------------
Other income 54 -
Non cash share-based payment
expense* (14,618) -
Foreign exchange gain (loss) 7,812 (9)
-------------- --------------
Net finance costs (499) (779)
-------------- --------------
Finance income 1,790 316
Finance costs (2,289) (1,095)
-------------- --------------
Loss before taxation (34,834) (5,181)
Income tax - -
-------------- --------------
LOSS FOR THE PERIOD (34,834) (5,181)
-------------- --------------
*Fair value adjustment on the convertible debenture, a non-cash
item. See below for detailed explanation.
The Group generated revenue of US$26.038 million based on 17,469
4E ounces dispatched and sold in Q1 FY2011 of which US$23.404
million relates to 4E revenue and US$2.634 million relates to
iridium, ruthenium, copper and nickel. Revenues represent the
amounts recorded when PGM concentrates are physically delivered to
the smelter, which are provisionally priced on the date of
delivery. In certain circumstances, metal prices and assayed
quantities at the point of sale may be provisional. Adjustments in
respect of final assayed quantities and/or prices arising between
the date of recognition and the date of settlement are recognised
in the period in which the adjustment arises and reflected through
revenue and receivables.
The Group recorded an average delivered basket price of US$1,570
per 4E ounce in Q1 FY2011 compared to US$1,370 per 4E ounce in Q1
FY2010. As a result of the adjustments in respect of final assayed
quantities and/or prices arising between the date of recognition
and the date of settlement, the Group recorded a net positive
provisional price adjustment of US$0.627 million for the quarter
ended March 31, 2011.
The following table shows a reconciliation of revenue and
provisional price adjustments:
For the
three
months
ended
March
31,
2011
$ 000
---------------------------------------------- --------
Revenue before provisional price adjustments 26,665
Net provisional price adjustments (627)
--------
- Mark-to-market adjustment on sales
not yet settled at end of the current
quarter (627)
--------
Revenue as reported in the statement
of income 26,038
========
Administrative and general expenses totalled US$3.327 million
for the quarter ended March 31, 2011, compared to the US$4.393
million for the quarter ended March 31, 2010. The decrease in
operating expenses was principally the result of decrease in
employee expenses in the quarter under review, classified as cost
of operations since commencing commercial production.
Other expenses totalled US$6.752 million for the quarter ended
March 31, 2011, compared to US$0.009 million for the quarter ended
March 31, 2010. The increase in other expenses was primarily due to
the one-time non-cash fair value adjustment of US$14.618 million
resulting from the change in the maturity date of the convertible
debenture from February 28, 2011 to March 31, 2011, and the change
in the conversion price (from US$1.215 per Platmin common share to
US$0.84 per share) offset by:
-- a foreign exchange gain of US$1.448 million which was
realised upon the repayment of the Pallinghurst promissory note.
For more details on the promissory note, refer to section 7 of this
MD&A;
-- a foreign exchange gain of US$1.281 million which was
realised upon converting dollars to rands at above market
rates;
-- a foreign exchange loss of US$4.330 million upon revaluation
of the convertible debenture during the quarter; and
-- a foreign exchange gain of US$9.413 million upon revaluation
of cash held in a currency other than the functional currency of
the group
The increase in finance income of US$1.790 million during the
quarter ended March 31, 2011, compared to US$0.316 million during
the quarter ended March 31, 2010, was due to the interest earned on
the cash collateral held in bank accounts as security against the
convertible debentures and generally higher interest bearing
balances as a result of the capital raising exercises completed
during the year.
The increase in finance costs of US$2.289 million during the
quarter ended March 31, 2011, compared to US$1.095 million during
the quarter ended March 31, 2010, was due to interest charges on
the Pallinghurst promissory note entered into on April 22, 2010 and
repaid in full on February 28, 2011.
A total of US$0.447 million (ZAR3.027 million) of deferred
exploration expenditure was capitalized during the quarter ended
March 31, 2011 compared to US$0.457 million (ZAR3.092 million) in
the quarter ended March 31, 2010. This decrease in costs is due to
reduced activities on all projects in the short term, whilst PPM
focus on building up to production levels as per the bankable
feasibility study.
4.2 Pilanesberg Platinum Mine
History
In March 2008, the removal of overburden and waste rock
materials from the open pit commenced. This was followed in
December 2008 with the start-up of reef mining. The stock-piling of
PGM-bearing ore ahead of the processing plant commenced in December
2008 with milling operations commencing in March 2009. The delivery
of the first concentrate to Northam took place on April 1, 2009.
Commercial production was declared on January 1, 2011.
Site establishment commenced in October 2007 and construction
was completed in February 2009. In March 2009, the processing of
material through the UG2 circuit commenced, signalling the
commencement of the plant operation to produce metals in
concentrate ready for smelting, refining and sale to Northam under
the Concentrate Agreement. In June 2009, following the installation
by ESKOM of an additional 23MVA of power for a total of 37MVA, the
processing of material through the Merensky circuit commenced.
As part of the construction of PPM, the supply of 37MVA of new
power from ESKOM was completed on June 7, 2009. In addition, a
complete 10MVA standby diesel generator power plant ("power plant")
was constructed at a cost of US$20.789 million (ZAR144.350 million)
in the event that ESKOM is unable to provide constant power to the
mine over an extended period of time. The construction of the power
plant was completed on December 2, 2009. Insurance guarantees in
the amount of US$16.039 million (ZAR105.718 million) have been
provided to ESKOM for the supply of power and certain related
infrastructure.
Extraction and processing of ore
Due to the close proximity of the PGM bearing silicate package,
comprising the Merensky and Pseudo reefs ("the silicate package")
and the UG2 package reef in this part of the Bushveld Complex,
these two ore bodies are exploited in the open-cast Tuschenkomst
Pit. The silicate package is processed in the Merensky circuit of
the concentrator and the UG2 package is processed in the UG2
circuit. Both concentrates are blended and forwarded to Northam's
smelter located in the North West Province of South Africa, for
further processing into refined metals under a current Concentrate
Agreement entered into with Northam on June 30, 2008.
Operational issues, management actions and outlook
The Bankable Feasibility Study envisaged upgrading the silicate
package through the Dense Media Separator ("DMS") circuit. At the
end of Q4 FY2010 a bulk test of faulted UG2 package material was
also directed through the DMS circuit as is common practice. The
results of this test are most promising. In addition, UG2 samples
from 20 diamond drill boreholes have been forwarded to Mintek for
DMS test work and analysis. As the concentrator was not designed
for this strategy, this will place stress on the belt, screening
and crushing feed arrangements into the concentrator until
permanent modifications are completed.
Far reaching changes to the management of mining operations were
implemented during FY2010 which are expected to positively
influence metal production during H2 FY2011:
Q1 FY2010: Additional mining engineers were introduced into the
organisations of both the PPM and the mining contractor; the mining
contractor was challenged to deliver results.
Q2 FY2010: The PPM geological team was strengthened by the
appointment of senior, experienced platinum geologists; an on-site
open pit planner was appointed; industrial relations skills were
bolstered. A revised H2 FY 2010 mining plan was compiled. This
predicted operating break-even during Q4 FY2010 provided waste
stripping could be delivered.
Q3 FY2010: The revised mining plan formed the basis of control
of the mining contractor.
Q4 FY2010: The senior management of the mining contractor was
changed. Vibrating feeders were installed to replace the
dysfunctional inclined grizzlies at the run-of-mine pads feeding
the concentrator.
Q1 FY2011: PPM took managerial control of the plant concentrator
from the party contracted to operate the concentrator.
Revised planning by this team at mid-year, which had forecast
break-even during H2 FY2010, identified a significant waste
stripping backlog as the principal production challenge. To date,
the mining contractor has been unable to achieve the volumes
required to address this, despite radical re-structuring of their
organization. However, powerful interventions in the areas of
critical spares for the fleet, preventative maintenance, standby
machinery and shift rostering are expected to produce significantly
better waste volumes, exposing higher reef tonnages, shortly.
Based on the improvements made to date and provided the planned
volumes of waste stripping can be achieved, it is expected that
(i) Production will reach 12,000 4E ounces per month by end
FY2011; and
(ii) Full production according to the Bankable Feasibility Study
of 20,000 4E ounces by end FY2012.
Operational performance during the March 31, 2011 quarter
Important features of the performance for the quarter ended
March 31, 2011, were:
For the three
months ended
March March
31, 31,
Unit 2011 2010
-------------------------------- --------- -------- -----------
Reef delivered to the
ROM pad tonnes 628,942 796,217
Reef processed tonnes 725,624 904,195
Reef milled tonnes 648,506 832,385
Total stockpile 842,479 883,535
-------- -----------
- UG2 tonnes 2,322 9,336
- Merensky tonnes 235,131 61,273
- DMS and other low grade
material tonnes 605,026 812,926
-------- -----------
Average milled head grade g/t 1.84 1.70
Average recovery rate % 50.9% 34.3%
Average recovered grade g/t 0.93 0.59
4E ounces produced oz 19,148 14,393
4E ounces dispatched and 17,469
sold oz * 14,393
4E basket price **
- USD US$ 1,570 1,370
- ZAR ZAR 10,959 10,249
Gross revenue from metal
sales
- USD US$'mil 26.038 18.503***
- ZAR ZAR'mil 181.476 138.506***
* Ounces produced and declared are based on provisional assay
results and the cumulative number is therefore subject to changes
until such time that final assay results are received. These
changes are not considered to be material.
** Basket price for 4E i.e. platinum, palladium, rhodium and
gold.
*** Gross revenue includes the proceeds from the sales of
platinum, palladium, rhodium, iridium, ruthenium, gold, copper and
nickel, and was capitalised to offset development costs as PPM has
not yet commenced commercial production.
4.3 Exploration and development of other PGM properties
4.3.1 Pilanesberg exploration projects (on the Western Limb of
the Bushveld Complex)
The total exploration expenditure on various Pilanesberg
exploration projects was US$0.010 million (ZAR0.069 million) for
the quarter ended March 31, 2011. Total exploration expenditure
since the inception of the Pilanesberg exploration projects of
US$7.219 million (ZAR48.888 million), has been capitalized in
accordance with the Group's accounting policies as part of
"Exploration and evaluation assets".
Work program
The Pilanesberg exploration projects consist of properties
adjacent to PPM. The focus is on advancing earlier stage
properties, through programs of soil sampling, trenching,
percussion drilling and ultimately diamond drilling. Platmin is
also conducting limited chrome exploration on properties in the
Pilanesberg exploration projects area where these rights are
held.
4.3.2 Mphahlele Project (on the Eastern Limb of the Bushveld
Complex)
During the quarter ended March 31, 2011, a total of US$0.092
million (ZAR0.623 million) was spent on the Mphahlele Project
bringing the cumulative expenditure to date on the project by the
Group to US$14.308 million (ZAR96.885 million), excluding
acquisition costs. In accordance with the Group's accounting
policies, these costs are capitalised as part of "Exploration and
evaluation assets".
During the quarter under review, the Company continued with the
Definitive Feasibility Study ("DFS)" on the Mphahlele Project.
Work program
In light of the fact that the board has decided to focus cash
resources and management on bringing PPM into full production, this
project has been put on a reduced work program for the short term.
The reduced primary expenditure at Mphahlele during the 2011 fiscal
year is expected to be limited to activities related to the DFS
including metallurgical test work, and revision of resource models
to include mining dilution (various scenarios), mining design,
geotechnical investigations and the environmental impact
assessment/management program.
4.3.3 Grootboom Project (on the Eastern Limb of the Bushveld
Complex)
During the quarter ended March 31, 2011, the Company spent
US$0.001 million (ZAR0.065 million) on Grootboom and Annex
Grootboom (upon which Platmin has an option to acquire the PGE
rights on completion of a DFS), bringing the cumulative expenditure
to date on the project to US$6.404 million (ZAR43.362 million). In
accordance with the Group's accounting policies, these costs are
capitalised as part of "Exploration and evaluation assets".
The project advanced to the DFS stage during the quarter under
review and is subject to further engineering refinements that are
ongoing due to the recent economic background.
Work program
In light of the fact that the board has decided to focus cash
resources and management on bringing PPM into full production, this
project has been put on a reduced work program for the short term.
The reduced primary expenditure at Grootboom during the 2011 fiscal
year is expected to be limited to activities related to the DFS
including metallurgical test work, and the revision of resource
models to include mining dilution (various scenarios), mining
design, geotechnical investigations and the environmental impact
assessment / management program.
4.3.4 Loskop Project (on the Eastern Limb of the Bushveld
Complex)
Lonmin Plc is the operator of the Loskop Project and funds all
exploration expenditures on the project (except for a portion of
Rietfontein as mentioned below), as part of their option to acquire
50% in the joint venture. As a result thereof, limited expenditure
has been incurred by Platmin.
During the quarter ended March 31, 2011, the Company incurred
less than US$0.001 million (ZAR0.005 million) on the Loskop
Project. Total cumulative exploration expenditure on this project
since inception is US$1.264 million (ZAR8.561 million). In
accordance with the Group's accounting policies, these costs are
capitalised as part of "Exploration and evaluation assets".
5. Summary of Quarterly Results
PPM commenced commercial production on January 1, 2011, prior to
which all losses were capitalised to capitalised development
cost.
In accordance with IFRS
May
Mar'11 Dec'10 Sept'10 Jun'10 Mar'10 Nov'09 Aug'09 '09
$ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000
------------ --------- ------- -------- ------- ------- ------- -------- -------
Revenue (26,038) - - - - - - -
Cost of
operations 50,294 - - - - - - -
--------- ------- -------- ------- ------- ------- -------- -------
Operating
loss 24,256 - - - - - - -
Other
operating
costs /
(income) 10,079 10,435 24,256 21,329 4,402 1,635 (6,482) 13,571
Net finance
costs /
(income) 499 (234) 1,778 2,697 779 641 (138) 14
--------- ------- -------- ------- ------- ------- -------- -------
Loss /
(profit)
for the
period 34,834 10,201 26,034 24,026 5,181 2,276 (6,620) 13,585
--------- ------- -------- ------- ------- ------- -------- -------
Basic and
diluted
loss /
(profit)
per share 0.04 0.02 0.05 0.04 0.01 0.01 (0.02) 0.03
6. Capital Resources
6.1 New equity raisings
During the period ended December 31, 2010, Platmin completed two
significant equity capital financing deals:
-- On May 13, 2010 the Company issued 205,761,317 new common
shares at a price of US$1.215 per common share for a total
consideration of US$250.000 million, raising US$241.260 million net
of brokerage and legal fees. These funds were used for additional
working capital facilities and general funding requirements.
In accordance with the disclosure in Platmin's Short Form
Prospectus dated May 5, 2010 for the Offering, the table below
reflects the actual use of proceeds against the planned use of
proceeds from the financings as follows:
Total
actual
use of
Total proceeds
planned to
use of Mar 31,
proceeds 2011
Financing use of proceeds US$'000 US$'000
------------------------------- ---------- ----------
PPM operational and working
capital funding requirements 150,000 150,000
Other corporate activities 45,000 58,409*
Repayment of loan from
Pallinghurst 26,000 28,822
Acquisition of 10% equity
interest in IBMR 15,000 -
Offering expenses 2,250 3,564
Exploration, general &
administrative expenses 5,766 3,221
---------- ----------
244,016 244,016
Underwriting fees 5,984 5,984
---------- ----------
250,000 250,000
========== ==========
* An additional US$35.616 million from subsequent capital
raisings has been used to fund other corporate activities bringing
the total amount spent on other corporate activities to US$94.025
million. This includes $82.000 million for the purchase of Sedibelo
West (including $7.000 million in VAT on a portion of the purchase
consideration) and $12.025 million for a 50% interest in the
SPV.
-- As part of the May 13, 2010 capital raising, US$135.000
million of zero percent convertible debentures were placed,
initially subject to conversion by December 31, 2010 at a price of
US$1.215 per Platmin common share that would have resulted in
111,111,111 Platmin common shares being issued. The maturity date
of the convertible debentures was extended from December 31, 2010
to February 28, 2011 and subsequently to March 31, 2011, and the
conversion price reduced from US$1.215 per Platmin common share to
US$0.84 per share. The reduction of the conversion price would
result in 160,714,286 shares being issued. Although the maturity
date and conversion price were subsequently changed, the principle
amount of US$135.000 million remained unchanged.
-- On December 17, 2010 the Company issued 98,901,099 new common
shares at a price of US$0.91 (C$0.93) per common share, raising
US$90.000 million gross or US$89.785 million net of legal fees.
-- On March 31, 2011 the zero percent convertible debentures
were converted and 160,714,286 Platmin new common shares were
issued at a price of US$0.84 per share for a gross amount of
US$135.000 million.
Based on current production forecasts for PPM for the twelve
months ending on December 31, 2011, the Group forecasts net cash
expenses (net of forecast revenue from metal sales) of between
US$50.000 million to US$75.000 million. This net cash outflow will
be financed from the Group's available unrestricted cash and cash
equivalents. Platmin expects approximately 90% of net cash expenses
will be operationally incurred at PPM, with the balance being
exploration and administrative costs.
As at March 31, 2011, Platmin's total working capital was
US$209.236 million (December 31, 2010 - US$192.232 million).
Working capital is calculated based on the total of unrestricted
cash and cash equivalents (US$177.248 million), inventory
(US$12.303 million) and accounts receivable (US$42.839 million)
less accounts payable and accrued liabilities (US$23.154 million).
Platmin's cash and cash equivalents are held in fully liquid
interest earning deposits at major European and South African
banks.
Working capital increased by US$17.004 million for the quarter
ended March 31, 2011 primarily due to the conversion of the
convertible debentures of US$135.131 million (including interest
received of US$0.131 million), offset by the US$82.000 million
allocated as total purchase consideration and VAT thereon for the
Sedibelo West transaction; PPM operational losses and working
capital costs of US$17.999 million, the increase in the
rehabilitation liability of US$5.331 million and the US$12.025
million for the acquisition of a 50% interest in the SPV.
As at March 31, 2011, the Company had 910,395,053 common shares
in issue compared to 749,680,767 common shares in issue as at
December 31, 2010.
6.2 Debt facilities concluded in the period ended December 31,
2010
On March 22, 2010, the Company entered into a US$26.000 million
(an equivalent of ZAR192.000 million at an exchange rate of ZAR7.38
=US$1.00) short term lending facility with Pallinghurst. As at
December 31, 2010, the full facility had been drawn. This facility
was initially for a period of 3 months, but was extended until and
repaid in full (including accrued interest and cost) on February
28, 2011 to the amount of US$28.822 million (ZAR202.856
million).
A bridge loan facility for PPM of US$35.000 million (ZAR350.000
million) was concluded with Standard Bank in May 2008. The term of
the bridge loan facility was initially to August 31, 2008 but
subsequently extended and repaid in full on August 31, 2009 in the
amount of US$51.987 million (ZAR404.354 million), including
interest accrued.
In relation to the original bridge loan facility, the Company
issued 300,000 warrants exercisable at US$6.95 per common share,
exercisable from September 15, 2008 until expiry on May 14, 2011.
The Company has classified this facility as held to maturity, and
the fair value of the warrants of US$0.846 million has been treated
as a cost of the loan transaction. In the year ended February 28,
2009, the fair value of these warrants was fully amortized to net
income over the original loan term of 6 months, using the effective
interest method.
6.3 Restrictions on the repayments of inter-group loans
The Company's principal subsidiary, Boynton Investments
(Proprietary) Limited ("Boynton"), operates in South Africa and as
a result is subject to the South African Reserve Bank ("SARB")
Exchange Control Regulations. Any repayment of foreign currency
loans by a South African company to an offshore company is subject
to prior approval by the SARB.
The shareholder loan from Platmin to Boynton amounted to
US$678.026 million (which includes capitalised interest of
US$31.016 million) at March 31, 2011, and has primarily been used
to fund the development of PPM.
7. Liquidity
7.1 Unrestricted cash
The Company had unrestricted cash and cash equivalents of
US$177.248 million at March 31, 2011.
As at March 31, 2011, provision has been made for a total of
US$43.600 million of current commitments that will be settled from
the US$177.248 million unrestricted cash and cash equivalents as
follows:
-- US$22.600 million have been committed to fund current
liabilities due in the normal course of business;
-- US$20.000 million have been allocated for the estimated
future obligation relating to the Magalies Water project. This
represents the 50% of the SPV commitment in the pipeline project
acquired by the Company on March 23, 2011;
-- US$1.000 million have been allocated for the advisory fees
related to the Sedibelo West transaction.
An application to amend the Environmental Management Plan to
convert the open void being created at the Tuschenkomst Pit into a
water storage facility will be lodged with the DMR during May 2011.
Should such application be granted, the cost of rehabilitating the
pit will reduce and a portion of the US$80.549 million (ZAR523.249
million) held in restricted cash at March 31, 2011 to meet the
rehabilitation costs would be released. Such amount will be
determined upon final approval by the DMR.
7.2 Restricted cash
The Group had no restricted cash forming part of its current
assets at March 31, 2011 (US$135.131 million at December 31, 2010)
and had restricted cash forming part of its non-current assets
totalling US$170.841 (US$84.471 million at December 31, 2010).
The decrease in restricted cash forming part of its current
assets is due to the cash collateral of US$135.131 million secured
as part of the zero percent convertible debentures issued on May
13, 2010, being released upon conversion of the debentures on March
31, 2011.
The net increase of US$86.370 million in restricted cash forming
part of non-current assets is primarily the provision for the
acquisition consideration, including VAT thereon, of US$82.000
million for the Sedibelo West transaction. This amount was placed
into an escrow account on April 20, 2011 (see 2.4 above).
7.3 Contractual Obligations
The Group's contractual obligations are as follows:
Contractual obligations Payments due by period as at
US$ '000 March 31, 2011
-------------------------
< 1 1-3 4-5 After
Total year years years 5 years
------------------------- -------- -------- -------- -------- ---------
Employee entitlements
(1) 442 442 - - -
Operating lease
(2) 286 228 58 - -
Finance lease
(3) 19,983 1,072 3,572 3,572 11,767
Asset Retirement
Obligation (4) 92,828 - - - 92,828
Mining costs
(5) 379,380 75,876 202,336 101,168 -
Processing costs
(6) 17,148 4,677 12,471 - -
Acquisition of
Sedibelo West
(7) 82,000 82,000 - - -
Total Contractual
Obligations 592,067 164,295 218,437 104,740 104,595
-------- -------- -------- -------- ---------
(1) The employee entitlements include the leave pay due to
employees in terms of their employment contracts.
(2) This includes the contractual monthly payments for the
rental of the Company's corporate office.
(3) These amounts constitute the minimum lease payments due to
ESKOM for the substation and related infrastructure supplied at
PPM. Please refer to note 12 of the condensed consolidated interim
financial statements.
(4) This amount of US$92.828 million (ZAR628.568 million)
represents the gross asset retirement obligation incurred to date,
to rehabilitate the opencast pit and plant at PPM at the end of
life of mine, in accordance with the mining license. The amount
disclosed in note 13 of the condensed consolidated interim
financial statements of US$76.077 million (ZAR515.142 million)
represents the discounted value of such amount. Refer to note 8 in
this MD&A for discussion of the funding requirements for this
obligation.
(5) Committed mining expenses include the contract with MCC for
carrying out the opencast mining operations.
(6) Committed processing expenses include the contracts with
Minopex for managing the plant operations and maintenance of the
Merensky and UG2 metallurgical concentrator plants.
(7) US$82.000 for the acquisition and incorporation of the
Sedibelo West Mining Right into the PPM Mining Rights and
commission, was placed in escrow on April 20, 2011.
8. Environmental Matters
8.1 Overview
The Company conducts exploration on its key projects and
prospects subject to mineral exploration permit applications made
to and issued by the DMR. For each exploration program, a
rehabilitation plan is included with the application and where
required, the appropriate bond or funds are lodged with the
relevant agent of the DMR in respect of the rehabilitation work
which may have to be carried out when the exploration program is
completed and no further work is planned on the property. All such
environmental plans or bonds are in the normal course of the
business.
During the year under review, PPM was still in the commissioning
phase and the environmental liability represents the quantum of
closure costs (relating to the increase in pit volume and
dismantling the plant) necessary in order to fulfil the
requirements of the DMR, as well as meeting specific closure
objectives outlined in the mine's Environmental Management
Programme ("EMP").
Environmental guarantees are released by the DMR on completion
of the obligations in terms of the rehabilitation plans contained
within either the application for the prospecting permits, or the
Mining Right.
8.2 PPM rehabilitation
The DMR required a rehabilitation guarantee in respect of PPM of
US$7.586 million (ZAR50.000 million) before approving the
application for a Mining Right. This guarantee has been provided by
Guardrisk Insurance Company Limited ("Guardrisk") on an insurance
basis. To date, an amount of US$2.731 million (ZAR18.000 million)
has been paid to Guardrisk as collateral against the issuance of
this guarantee. Ongoing contributions are made by PPM to fund the
balance of the ZAR50.000 million Guardrisk guarantee over the
remaining life of mine.
On May 8, 2009, the DMR placed a moratorium on insurance-backed
guarantees and as a result the subsequent increase in the
rehabilitation liability had to be funded by way of cash-backed
guarantees. On January 25, 2011, the DMR lifted the moratorium.
As at March 31, 2011, the funding of all cash-backed guarantees
can be summarised as follows:
Collateral provided
----------------------
Cumulative Annual
Rehabilitation Increase
liability in liability Date
Date ZAR'000 ZAR'000 ZAR'000 Nature provided
--------- --------------- -------------- --------- ----------- ----------
Oct 31, Insurance Oct 31,
2007 50,000 50,000 50,000 and cash 2007
Feb 28, June
2009 175,000 125,000 125,000 Cash 21, 2010
Dec 31, Aug 10,
2009 521,905 346,905 346,464 Cash 2010
Dec 31, Mar 22,
2010 571,251 49,346(a) 49,345 Cash 2011
--------- --------------- -------------- --------- ----------- ----------
Total 571,251 570,809
--------- --------------- -------------- --------- ----------- ----------
(a) For the year ended December 31, 2010, the methodology of
back-filling the pit was changed from "load and haul" to the less
expensive "load and convey" system.
An application to amend the Environmental Management Plan to
convert the open void being created at the Tuschenkomst Pit into a
water storage facility will be lodged with the DMR during May 2011.
The application will be subject to the normal regulatory approval
process by the DMR and various other government departments. Should
such application be granted, the cost of rehabilitating the pit
will reduce and a portion of the US$80.549 million (ZAR523.249
million) held in restricted cash at March 31, 2011 to meet the pit
rehabilitation costs would be released. Such amount will be
determined upon final approval by the DMR.
8.3 Rehabilitation of other development projects
In respect of the Mphahlele Project, the DMR required a
rehabilitation guarantee of US$2.520 million (ZAR16.609 million) to
be lodged before the issuing of the Mining Right. Of this amount
US$1.077 million (ZAR7.099 million) has been paid over by the Group
into a separate bank account and ceded in favour of Guardrisk as
collateral against the issuance of the guarantee. Ongoing
contributions are made by the Group to fund the balance of the
liability over the remaining life of the prospecting permit.
In respect of the Grootboom Project, negotiations with the DMR
are currently in progress to determine the amount of the
rehabilitation guarantee required by the DMR before issuing the
Mining Right.
9. Mineral and Petroleum Resources Royalty Act, 2008 (Act no. 28
of 2008)
The South African Government has enacted the Mineral and
Petroleum Resources Royalty Act (the "Royalty Act"), which imposes
a royalty payable to the South African Government by businesses
based upon financial profits made through the transfer of mineral
resources. The royalty has been payable from March 1, 2010 and is
based on a percentage calculated by means of a formula, from a
minimum of 0.5% up to a maximum of 5% of gross sales of refined
mineral resources or 7% on gross sales of unrefined mineral
resources.
During the quarter ended March 31, 2011, Royalty Tax amounting
to US$0.153 million (ZAR1.071 million) was accrued for in respect
of metals sold from January 1, 2011 to March 31, 2011. The Royalty
tax is payable on June 30, 2011.
10. Black Economic Empowerment ("BEE")
Pursuant to the investors and subscription agreement entered
into in December 2008 with, among others, Ivy Lane Capital Limited,
the Bakgatla and the Bakgatla Pallinghurst JV (Proprietary)
Limited, the Moepi Group was required by March 31, 2010, subject to
certain conditions precedent, to exchange its 27.61% interest in
Boynton for common shares in Platmin ("the Moepi Exchange"). Not
all the conditions were satisfied by March 31, 2010 and the parties
to the agreement agreed not to extend the fulfilment date thereof
and accordingly the Moepi Exchange was not completed.
Platmin has funded a total of US$7.906 million on behalf of its
BEE partners for exploration activities, and US$150.092 million for
mine development. All such amounts remain outstanding on
inter-company loan accounts.
11. Transactions with related parties
On March 22, 2010, the Company entered into US$26.000 million
short term lending facility with Pallinghurst. This facility was
initially for a period of 3 months but was extended until February
28, 2011. The loan together with accrued interest and fees was
repaid in full on this date, to the amount of US$28.822 million
(ZAR202.857 million).
On May 13, 2010, the Company issued zero percent convertible
debentures to raise US$135.000 million. Pallinghurst Investor
Consortium (Lux) S.a.r.l. and Investec Bank Limited subscribed for
convertible debentures to the value of US$30.000 million and
US$5.000 million respectively. These debentures were converted into
Platmin new common shares on March 31, 2011 (see 6.1 above).
12. Critical accounting estimates
The Company's significant accounting principles and methods of
application are disclosed in the notes of the Company's
consolidated financial statements for the year ended December 31,
2010. The following is a discussion of the critical accounting
policies and estimates which management believes are important for
an understanding of the Company's financial results.
Functional and presentation currency
Items included in the financial statements of each of the
Group's entities are measured using the currency of the primary
economic environment in which the entity operates ("the functional
currency"). The Group's functional currency, as determined at the
transition date of March 1, 2008, is the South African rand
("ZAR"). The consolidated financial statements are presented in US
dollars ("US$") which is the Group's presentation currency for
purposes of dual listing and foreign shareholders.
The results and financial position of all the Group entities
(none of which has the currency of a hyper-inflationary economy)
that have a functional currency different from the presentation
currency are translated into the presentation currency as
follows:
- assets and liabilities for each statement of financial
position presented are translated at the closing rate at the date
of that financial period end;
- income and expenses for each statement of income and
comprehensive income are translated at average exchange rates
(unless this average is not a reasonable approximation of the
cumulative effect of the rates prevailing on the transaction dates,
in which case income and expenses are translated at the rate on the
dates of the transactions);
- equity transactions are translated using the exchange rate at
the date of the transaction; and all resulting exchange differences
are recognized as a separate component of equity.
Share based payment transactions
Transactions which may result in the entity issuing its own
equity are within the scope of IFRS2 - Share based payments when
the fair value of the instrument is greater than the proceeds
received. On this basis the convertible debentures have been
accounted for under IFRS 2.
The fair value of the instruments granted is measured using
generally accepted valuation techniques and is recognised as an
expense with a corresponding increase in equity. The fair value is
measured at grant date.
Exploration and evaluation assets and development
expenditure
Exploration and evaluation costs, including the cost of
acquiring licenses, are capitalized as exploration and evaluation
assets on a project-by-project basis pending determination of the
technical feasibility and the commercial viability of the project.
The capitalized costs are presented as either tangible, or
intangible exploration and evaluation assets according to the
nature of the assets acquired.
Capitalised costs include costs directly related to exploration
and evaluation activities in the area of interest. General and
administrative costs are only allocated to the asset to the extent
that those costs can be directly related to operational activities
in the relevant area of interest. When a license is relinquished or
a project is abandoned, the related costs are recognized in profit
and loss immediately.
Inventory
Inventories are measured at the lower of cost and net realisable
value. The cost of inventories includes expenditure incurred in
acquiring the inventories, production or conversion costs and other
costs incurred in bringing them to their existing location and
condition.
Provisions
Provisions are measured at the present value of the expenditures
expected to be required to settle the obligation using a pre-tax
rate that reflects current market assessments of the time value of
money and the risks specific to the obligation. The increase in the
provision due to passage of time is recognized as interest
expense.
The costs for the restoration of site damage, which arises
during production, are provided at their net present values and
charged against their operating profit as extraction progresses.
Changes in the measurement of a liability which arises during
production are charged against operating profit.
The discount rate used to measure the net present value of the
obligations is the pre-tax rate that reflects the current market
assessments of the time value of money and the risks specific to
the obligation.
In accordance with the Group's policy and applicable legal
requirements, a provision for decommissioning liabilities is
recognized when the asset is installed and rehabilitation
liabilities are recognized when the land is disturbed.
Revenue
The Group recognises revenue when the amount of revenue can be
reliably measured, it is probable that future economic benefits
will flow to the entity and when specific criteria have been met
for each of the Group's activities as described below. The amount
of revenue is not considered to be reliably measurable until all
contingencies relating to the sale have been resolved.
Revenue from the sale of goods is recognized when the
significant risks and rewards of ownership have been transferred to
the buyer. Revenue is not recognized if there are significant
uncertainties regarding recovery of the consideration due.
12. Other
12.1 Off-Balance Sheet Arrangements
The Group has not entered into any off-balance sheet
arrangements.
12.2 Proposed Transactions
The Company continues to evaluate opportunities in the market
with a view to expand the current business. At the current time
there are no reportable proposed transactions.
12.3 Financial Instruments and Other Instruments
The Group has the following financial instruments: cash and cash
equivalents, other receivables, accounts payable, accrued
liabilities. These instruments are short-term financial instruments
whose fair value approximates their carrying value given that their
maturity period is short.
12.4 Changes in Accounting Policies including Initial
Adoption
There were no changes in accounting policies.
13. Outstanding share data
As at March 31, 2011, there were 8,179,231 outstanding options
exercisable for common shares and a further 8,234,668 unvested
share options. In total there were thus 16,413,698 options
outstanding at March 31, 2011, which, if exercised, would result in
the issue of an equal number of additional common shares.
As at March 31, 2011, the Company had 910,395,053 issued and
outstanding common shares. This number had remained unchanged until
the date of this report (May 13, 2011).
14. Risks and uncertainties
The Company is in the business of the exploration and
development of mineral properties and the operation of mines
directly or through third parties. There are numerous risks
associated with these activities and specific risks with regards to
the South African mining environment.
Readers are urged to review the section titled "Risk Factors"
appearing in Platmin's current AIF for the financial year ended
December 31, 2010, which can be viewed at www.sedar.com.
15. Internal control over financial reporting
Management has evaluated or caused to be evaluated, the
effectiveness of the Company's disclosure controls and procedures
and the internal control over financial reporting and concluded
that the Company's disclosure and internal control over financial
reporting was effective as of the end of the financial quarter
ended March 31, 2011. Platmin has identified no material weakness
in the design of its internal controls over financial reporting.
There has been no change in Platmin's internal controls over
financing reporting since its year-end MD&A for the period
ended December 31, 2010 or in the quarter ended March 31, 2011,
that has materially affected, or is reasonably likely to materially
affect, Platmin's internal controls over financial reporting.
For further information:
Charmane Russell Russell & Associates +27 11 880 3924
+27 82 372 5816
Charles Batten
Investec Bank plc (Nominated Advisor)
+44 20 7 597 4000
This information is provided by RNS
The company news service from the London Stock Exchange
END
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