Witwatersrand Consolidated Gold Resources Limited
TORONTO, May 30, 2011 /CNW/ --
Witwatersrand Consolidated Gold Resources Limited
('Wits Gold' or 'the Company')
(Registration Number 2002/031365/06)
JSE Share Code: WGR ISIN: ZAE000079703
TSX Share Code: WGR CUSIP Number: S98297104
TORONTO, May 30, 2011 /CNW/ -
Reviewed condensed results for the year ended 28 February 2011
All figures quoted in South African Rand unless otherwise stated.
Bank of Canada noon rate at 28 February 2011: R7.14 = CAD$1; (2010: R7.7
= CAD$1)
Condensed statement of financial position as at 28 February 2011
2011 2010
R R
Reviewed Audited
Assets
Non-current assets 423 062 154 107 170 733
Property and equipment 5 023 496 5 279 646
Intangible exploration and evaluation 418 038 658 101 891 087
assets
Current assets 147 667 283 86 713 462
Other receivables 1 488 679 1 034 134
Cash and cash equivalents 146 178 604 85 679 328
Total assets 570 729 437 193 884 195
Equity and liabilities
Capital and reserves 565 729 742 187 045 642
Ordinary share capital 344 903 278 909
Share premium 573 211 583 185 971 589
Equity-settled share-based payment 7 119 295 19 604 280
reserve
Revaluation reserve 1 329 449 1 253 981
Accumulated loss (16 275 488) (20 063 117)
Current liabilities 4 999 695 6 838 553
Trade and other payables 4 699 695 4 447 046
Taxation payable - 1 991 507
Provisions 300 000 400 000
Total equity and liabilities 570 729 437 193 884 195
Condensed statement of comprehensive income for the year ended 28
February 2011
2011 2010
R R
Reviewed Audited
Revenue - -
Other income 6 620 4 666
Administrative expenses (20 221 949) (14 759 179)
Loss from operating activities (20 215 329) (14 754 513)
Net finance income 5 326 307 7 078 523
Finance income 5 326 307 7 525 222
Finance expense - (446 699)
Loss before income tax (14 889 022) (7 675 990)
Income tax expense - (98 260)
Loss from operations attributable to (14 889 022) (7 774 250)
owners
Other comprehensive income net of 75 468 66 399
income tax
Increase in revaluation of property 75 468 72 208
Deferred tax on revaluation adjustment - (10 809)
Total comprehensive income attributable (14 813 554) (7 707 851)
to owners of the Company
Basic and headline loss per share (50.11) (28.05)
(cents)
Diluted basic and headline loss per (50.11) (45.02)
share (cents)
Supplementary information:
Number of shares in issue 34 490 265 27 890 916
Weighted average number of shares in 29 713 768 27 715 893
issue
Net asset value per share (cents) 1 640,26 670,63
Net tangible asset value per share 428,21 305,31
(cents)
Condensed statement of changes in equity for the year ended 28 February
2011
Ordinary Share Equity-settled Total
share premium share-based capital
capital payment Revalua-tion Accumulated and
reserve reserve loss reserves
R R R R R R
Audited
Balance at 28 278 909 185 971 17 849 857 1 187 582 (12 288 192 999
February 2009 589 867) 070
Total - - - 66 399 (7 774 250) (7 707
comprehensive 851)
loss for the
year
Loss for the - - - - (7 774 250) (7 774
year 250)
Other - - - 66 399 - 66 399
comprehensive
income
Increase on - - - 77 208 - 77 208
revaluation of
land &
buildings
Deferred - - - (10 809) - (10 809)
taxation on
revaluation
Transactions - - 1 754 423 - - 1 754
with owners 423
recorded in
equity
Equity-settled - - 1 754 423 - - 1 754
share-based 423
payment
Balance at 28 278 909 185 971 19 604 280 1 253 981 (20 063 187 045
February 2010 589 117) 642
Total - - - 75 468 (14 889 (14 813
comprehensive 022) 554)
loss for the
year
Reviewed
Loss for the - - - - (14 889 (14 889
year 022) 022)
Other - - - 75 468 - 75 468
comprehensive
income for the
year
Increase on - - - 75 468 - 75 468
revaluation of
land &
buildings
Transactions 65 994 387 239 (12 484 985) - 18 676 651 393 497
with owners 994 654
recorded
directly in
equity
Issue of share 65 994 394 984 - - - 395 050
capital 376 370
Qualifying - ( 7 744 - - - (7 744
costs of share 382) 382)
issue
Share-based - - 6 191 666 - - 6 191
payment 666
Share-based - - (18 676 651) - 18 676 651 -
options fully
exercised
Balance at 28 344 903 573 211 7 119 295 1 329 449 (16 275 565 729
February 2011 583 488) 742
Condensed statement of cash flows for the year ended 28 February 2011
2011 2010
R R
Reviewed Audited
Cash flows from operating activities
Cash utilised in operating activities (13 928 826) (14 421 318)
Finance income received 5 326 307 7 525 222
Interest paid - (446 699)
Taxation paid (1 991 507) (3 184 605)
Net cash utilised by operating (10 594 026) (10 527 400)
activities
Cash flows from investing activities
Additions to property and equipment (65 115) (7 851)
Additions to intangible exploration (41 147 571) (20 848 557)
and evaluation assets
Net cash utilised in investing (41 212 686) (20 856 408)
activities
Cash flows from financing activities
Proceeds from issue of shares for 120 050 370 -
cash
Costs from issue of share capital (7 744 382) -
Net cash generated by financing 112 305 988 -
activities
Increase/(decrease) in cash and cash 60 499 276 (31 383 808)
equivalents
Cash and cash equivalents at 85 679 328 117 063 136
beginning of the year
Cash and cash equivalents at end of 146 178 604 85 679 328
the year
Nature of business
Witwatersrand Consolidated Gold Resources Limited (registration number
2002/031365/06) is a company domiciled in the Republic of South Africa.
The Company's shares are publicly traded in South Africa on the JSE Ltd
securities exchange (primary listing), and in Canada on the Toronto
Stock Exchange (secondary listing). The Company carries on the business
of acquiring, preserving, evaluating, trading and developing
Prospecting Rights for exploration and investment purposes.
The Company has been granted fourteen Prospecting Rights by the
Department of Mineral Resources (the DMR) under the Mineral and
Petroleum Resources Development Act of 2002. During the year under
review the initial term of five of these rights expired and renewal
applications have been submitted and are being processed in terms of
the abovementioned Act. Wits Gold has not, and does not in the near
future, expect to generate any operating income. Mineral exploration is
highly speculative due to a number of significant risks, including the
possible failure to discover mineral deposits that are sufficient in
quantity and quality to justify the completion of feasibility studies.
Additional work will be required in order to determine if any economic
deposits occur on any of the Company's properties.
The ongoing exploration of the Company's Prospecting Rights is dependent
upon the Company's ability to obtain additional financing through the
joint venturing of projects, debt financing, equity financing or other
means. In the future, such sources of financing may not be available on
acceptable terms, if at all. The Company has, however, been successful
in the past in raising the required capital from its shareholders to
fund its operating and exploration activities. In November 2010,
capital raising of R120 million was concluded by way of a private
placement of shares.
Operational review*
During the year under review, the Company focused its exploration
efforts predominantly in the southern Free State goldfield, where
during September 2010 two transactions were successfully negotiated
with Harmony Gold Mining Limited (Harmony). The first concerned the
purchase of the Armgold/Harmony Freegold Joint Venture Company (Pty)
Limited's option to acquire a 40% interest over selected parts of the
southern Free State goldfield. The agreed price for this transaction
was R275 million, which was settled by issuing 4 376 194 ordinary
shares in Wits Gold to Harmony. At the same time, a second transaction
was concluded to acquire the unmined southern portion of the
Merriespruit Mine for a cash price of R61 million. Further details of
these agreements are contained in the section headed 'Non-current
assets' and 'Capital and reserves'. Combined, these two transactions
were instrumental in the Company being able to achieve its objective in
consolidating its Prospecting Rights in the southern Free State and
gaining complete control over its most advanced projects.
Over the period March 2010 to February 2011, thirteen diamond boreholes
have been completed on the Company's Prospecting Rights in the
Witwatersrand Basin for a total of 14 045 metres. Most of this drilling
(nine boreholes for 8 775 metres) was undertaken in the combined De
Bron-Merriespruit South area, currently known as the DBM project, where
a total of 88 boreholes have been completed over an area of some 22.0km(2). Considering this density of drilling, the results are thought to be
representative of the mineralisation in this area, where the only
additional information comes from the adjacent mines. This resulted in
a material increase in the estimated resources with the Indicated
Resource growing by 52% to 34.5Mt at 5.3g/t Au (5.9Moz), and the
Inferred Resource rising 165% to 25.0Mt at 5.2g/t Au (4.2Moz). This is
presented in the Company's NI43-101 and Samrec compliant Independent
Technical Report dated 6 April 2011 by Snowden Mining Industry
Consultants (Pty) Limited (Snowden) which can be viewed at www.sedar.com and on the Company's web site, www.witsgold.com. These resources were estimated using all of the available borehole
data and sample widths corrected for dip. In addition to gold, a
uranium estimate was calculated with an Indicated Resource of 17.0Mt at
0.16Kg/t U(3)0(8 )(6.1Mlb) and an Inferred Resource of 11.9Mt at 0.14Kg/t U(3)0(8) (3.7Mlb). No metal equivalent calculations were made. Analyses of
borehole core were undertaken at three accredited laboratories, Anglo
Research, ALS Chemex South Africa (Pty) Ltd and SGS South Africa (Pty)
Ltd, during which the Company's standard sampling and QA/QC policies
were adopted.
Southern Free State goldfield
Exploration in this area has concentrated on the shallow DBM project
where gold mineralisation is associated with the Beatrix, Kalkoenkrans,
B and Leader Reefs at depths of between 500 metres and 1 250 metres
below surface. As a result of the substantial increase in both the size
of the DBM gold resource as well as the gold grade, the Company has
initiated a preliminary economic assessment of the financial benefit of
establishing a mine. This study is being undertaken by Turgis
Consultants (Pty) Ltd, with input on the mine scheduling provided by
Snowden. The results of this study are expected to become available
during the second quarter of 2011 and will provide guidance for future
exploration in this area.
Besides the DBM area, the Company has also undertaken further drilling
in the Bloemhoek, Beisa North and Beisa South areas, where a single
borehole in each of these areas has been completed. No material changes
to the existing resource statements were made following the completion
of these boreholes.
Bloemhoek and the southern portion of the DBM project occur in the
Prospecting Right PR76 which was renewed by the Department of Mineral
Resources (DMR) on 11 April 2011. The Section 102 application to
include Merriespruit South can now be lodged with the DMR in order to
complete the consolidation of the DBM project.
The Potchefstroom goldfield
No further diamond drilling was undertaken in this area during the year
under review. However a reflection seismic survey was completed in the
Deelkraal South area, immediately south of Harmony's Kusasalethu Gold
Mine. The migrated results from this survey at Deelkraal South produced
a well constrained image of the base of the Ventersdorp lavas and
therefore the associated Ventersdorp Contact Reef (VCR). An
interpretation of these seismic data indicated that the VCR occurs at a
depth of 3 100 metres on the northern boundary of the Company's
Deelkraal South project where the reef dips southwards at 20-25 degrees
and has been subjected to only minor small scale faults.
The Klerksdorp goldfield
Drilling of the single deep borehole which was sited to intersect the
Vaal Reef in the Kromdraai area had to be curtailed due to recurring
technical problems caused by a shale unit in Gold Estates Formation at
3 613 metres, some 200 metres above the Vaal Reef. Despite several
attempts to circum-navigate this problem, this could not be achieved.
Consequently, in order to minimise expenditure as well as the
possibility of equipment failure at these substantial depths, it was
decided to abandon drilling operations.
Qualified Person
The technical and scientific information contained in this release was
reviewed by Qualified Person, Dirk Jacobus Muntingh, who is a full time
employee of the Company. Mr Muntingh (MSc Geology) is a registered
Professional Natural Scientist (Pr.Sci.Nat) with the South African
Council for Natural Scientific Professionals (SACNASP) and has 20 years
of experience in gold exploration.
Mineral resources
The Company's declared Mineral Resources are estimated by qualified
independent geologists or Competent Persons. These Resource Estimates
are dependent on geological interpretation and statistical inferences
drawn from drilling and sampling that may prove to be unreliable. The
Inferred or Indicated Resources outlined in the Company's properties
have been calculated from widely-spread borehole data. No assurance
can be given that future exploration will be successful in the
improvement of the confidence levels or that any particular level of
recovery of minerals will in fact be realised. It is uncertain whether
the identified Mineral Resources will ever qualify as a viable orebody
that can be legally or economically exploited. In addition, the grade
and tonnages of any orebody that is ultimately mined may differ from
the Mineral Resources currently estimated and such differences could be
material.
For further information concerning the Company's resources, including
information concerning the geology, mineral occurrences, nature of
mineralisation, geological controls, rock types, historical work
including data density, the application of quality assurance and
quality control measures, sampling and analytical procedures, the names
of analytical laboratories employed and the key assumptions, parameter
and methods used to estimate the Mineral Resources at the Company's
various projects, please see the Company's NI43-101 and Samrec
compliant Independent Technical Reports dated November 2007, June 2008,
May 2009, June 2009, 20 October 2009, October 2009 and April 2011 which
can be viewed at www.sedar.com and on the Company's web site, www.witsgold.com.
Financial review
Operating loss
The loss from operating activities for the year under review increased
by R5.5 million compared to the prior year. This increased loss results
mainly from the higher employment related expenditure (R5.0 million),
which has primarily arisen from an increase in the non-cash cost
entries required to account for the employee share scheme (R4.4
million)
Non-current assets
During the year, the Company incurred direct exploration expenditure and
acquired rights in the amount of R316.1 million (2010: R20.8 million)
which has been capitalised to intangible exploration and evaluation
assets. Included in the above was the buyback of the Harmony 40%
Participation Right over certain southern Free State assets for R275
million (2010: nil) which was equity-settled.
Current assets
The Company's cash and cash equivalents increased by R60.5 million
(2010: R31.4 million decrease) which reflects the normal operational
and exploration outflows offset from interest received and the proceeds
of the R120 million (2010: nil) capital raising.
Current liabilities
The main contributor to the decrease in current liabilities by R1.8
million was the payment of R2.0 million against the taxation provision.
Capital and reserves
There was no change in the authorised share capital of the Company
during the year ended 28 February 2011 (2010: no change). The Company
issued a total of 6 599 349 new shares during the year to 28 February
2011 (2010: nil), of which 2 223 155 were issued for cash and 4 376 194
were issued to settle the buyback of the Harmony Participation Right
mentioned above.
Commitments
The Company has committed to spend an additional amount of approximately
R1.4 million (2010: R0.7 million) on professional consultants during
the year. Furthermore the Company has also committed to spend R73.1
million (2010: R27.0 million) on the acquisition of exploration
properties and exploration activities during the next five years. All
of these commitments will be funded out of existing cash resources.
Basis of preparation
These financial results for the year ended 28 February 2011 comply with
the listing requirements of the JSE Limited, the recognition and
measurement requirements of International Financial Reporting
Standards, the presentation and disclosure requirements of IAS 34,
Interim Financial Reporting, AC500 series and the South African
Companies Act, 61 of 1973, as amended. The accounting policies are
consistent with those applied in the previous financial year. They do
not include all the information required for full annual financial
statements and should be read with the financial statements for the
year ended 28 February 2010.
The Company consists of only one segment and there have been no changes
to the composition of the entity. There has been no reclassification
or correction of errors and no changes in accounting estimates. The
Company does not have any contingent assets or liabilities and no
material subsequent events have occurred since the reporting date. No
material related party transactions have been identified.
Dividends
No dividends were declared or paid by the Company during the year under
review (2010: Rnil).
Going concern
Due to the inherent risk in the nature of exploration activities, there
may be uncertainty regarding the recoverability of the Company's
exploration expenditure. To meet its ongoing obligations and maintain
its operations, the Company will periodically seek to raise additional
equity funding which will be premised on the exploration results and
the contingent further exploration plans. This will be in the form of
the issue of additional Company shares to both local and international
markets.
After making enquiries the directors have reasonable expectation that
the Company has adequate funds to continue in operational existence for
the next eighteen months and that there are no material uncertainties
that lead to significant doubt upon the Company's ability to continue
as a going concern. Accordingly, the directors continue to adopt the
going concern basis in preparing the financial statements.
Review report
The unqualified review report issued by KPMG Inc, on the condensed
financial statements contained in this report is available for
inspection at the Company's registered office.
* - The Information in the first paragraph in the section 'Operational
review' has been reviewed by KPMG Inc., however the remainder of this
section has not been reviewed.
Forward-looking information
Certain statements in this release may constitute forward-looking
information within the meaning of securities laws. In some cases,
forward looking information can be identified by use of terms such as
'may', 'will', 'should', 'expect', 'believe', 'plan', 'scheduled',
'intend', 'estimate', 'forecast', 'predict', 'potential', 'continue',
'anticipate' or other similar expressions concerning matters that are
not historical facts. Forward-looking information may relate to
management's future outlook and anticipated events or results, and may
include statements or information regarding the future plans or
prospects of the Company. Without limitation, statements about the
timing of a preliminary economic assessment are forward-looking
information.
Forward looking information involves known and unknown risks,
uncertainties and other important factors that could cause the actual
results, performance or achievements of the Company to be materially
different from the future results, performance or achievements
expressed or implied by such forward looking information. Such risks,
uncertainties and other important factors include among others:
economic, business and political conditions in South Africa; decreases
in the market price of gold; hazards associated with underground and
surface gold mining; the ability to attract and retain qualified
personnel; labour disruptions; changes in laws and government
regulations, particularly environmental regulations and Mineral Rights
legislation including risks relating to the acquisition of the
necessary licences and permits; changes in exchange rates; currency
devaluations and inflation and other macro-economic factors; risk of
changes in capital and operating costs, financing, capitalization and
liquidity risks, including the risk that the financing required to fund
all currently planned exploration and related activities may not be
available on satisfactory terms, or at all; the ability to maximise the
value of any economic resources. These forward-looking statements speak
only as of the date of this release.
You should not place undue importance on forward-looking information and
should not rely upon this information as of any other date. The Company
undertakes no obligation to update publicly or release any revisions to
these forward-looking statements to reflect events or circumstances
after the date of this release or to reflect the occurrence of
unanticipated events except where required by applicable laws.
For and on behalf of the Board
MB Watchorn DM Urquhart
Chief Executive Officer Chief Financial Officer
30 May 2011 30 May 2011
Sponsor
PricewaterhouseCoopers Corporate Finance (Pty) Ltd
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