TIDMPPN
RNS Number : 1851W
Platmin Limited
15 November 2010
PLATMIN LIMITED
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2010
November 15, 2010
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Management's Discussion and Analysis of Financial Condition and Results of
Operations ("MD&A") for the three and nine months ended September 30, 2010
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, and its mineral projects, the future price of platinum or other
Platinum Group Elements ("PGEs"), PGE production levels, mining rates, the
future price of other base metals, 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 remaining project development
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 MD&A include, amongst others, forecast
production and sales for the 2010 financial year of between 60,000 and 65,000
ounces of 3PGE+Au, the Company's forecasts of net cash expenses for the balance
of calendar 2010 of between US$25 million and US$30 million; statements
regarding 90% of net cash expenses being operationally incurred at PPM, recovery
rates and grade; targets, estimates and assumptions in respect of platinum and
other PGE prices and production; the quantum of PPM development shortfalls; and
the timing and completion of definitive feasibility work 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 timeframes, 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 functions 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
Platmin and/or its subsidiaries and/or its affiliated companies 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 platinum or other
PGEs; 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
The 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 and nine months
ended September 30, 2010, in comparison to corresponding periods. Certain
information in this MD&A must be read in conjunction with the audited
consolidated financial statements of Platmin for the year ended December 31,
2009 (prepared in accordance with International Financial Reporting Standards
("IFRS")).
The MD&A should also be read in conjunction with the condensed consolidated
interim financial statements for the three and nine months ended September 30,
2010 and supporting notes. The Group changed its financial year end from the
last day of February in each calendar year to the last day of December,
effective for the period ending December 31, 2009. As a result of the change in
year end, and the requirements of the Ontario Securities Commission ("OSC") for
comparable quarters, the comparatives for the quarter ending August 31, 2009,
are not directly comparable with the current balances for the quarter ended
September 30, 2010.
The MD&A should also be read in conjunction with 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.
All dollar amounts in this MD&A are expressed in United States dollars ("US$"),
unless otherwise specified. When used, C$ refers to Canadian dollars. References
to quarters are to financial quarters and not to calendar quarters, unless
otherwise specified.
2. Overview
Platmin Limited (the "Company" or "Platmin") is continued under the laws of
British Columbia, Canada and its 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 TSX and AIM, whilst the symbol
"PLN"
identifies the shares on the JSE.
Platmin is a mineral exploration, development and operating company engaged in
the exploration for, development and operation of mines exploiting Platinum
Group Element ("PGE") deposits in South Africa. The Company has developed and
completed the construction of PPM, which is currently building up to full
production, and is exploring for PGEs on its other three key projects namely
Mphahlele, Grootboom and Loskop.
3. Overall Performance
The Company recorded a loss for the quarter ended September 30, 2010 of
US$26.034 million, or a loss per share of US$0.05, compared with a net profit of
US$6.620 million or a net profit per share of US$0.02, for the quarter ended
August 31, 2009. The increase in loss quarter on quarter was principally the
result of a foreign exchange loss due to the strengthening of the South African
rand against the US dollar and the subsequent revaluation of cash held in a
currency other than the functional currency of the group.
The Company recorded a loss for the nine months ended September 30, 2010 of
US$21.778 million before taking into account the US$23.668 million share based
payment expense (fair value adjustment) relating to the convertible debenture
issued and the foreign exchange loss of US$9.795 million due to the
strengthening of the South African rand against the US dollar and the subsequent
revaluation of cash held in a currency other than the functional currency of the
group. In total the loss for the nine months ended September 30, 2010 was
US$55.241 million or a loss per share of US$0.09, compared with a net loss of
US$19.453 million or a net loss per share of US$0.05, for the nine months ended
August 31, 2009.
The principal focus of the Company's operations is the development and operation
of PPM. For a full description of the activities in the quarter, please refer to
section 7.1 of this MD&A. As at the quarter ended September 30, 2010, total mine
development capital expenditure at PPM amounted to US$283.911 million (ZAR1.971
billion) compared to US$256.430 million (ZAR1.951 billion) at the financial year
ended December 31, 2009. As at September 30, 2010, the total outstanding mine
development capital expenditure to completion of the development was US$14.284
million (ZAR99.182 million) which will bring the total projected mine
development expenditure to US$298.195 million (ZAR2.071 billion). This amount is
higher than the original amount per the BFS of ZAR1.670 billion (which equated
to US$231.940 million based on an exchange rate of ZAR7.20 at the time of the
study), due to changes in scope, particularly the inclusion of a 10MVA standby
power station (see page 7 of this MD&A), cost increases experienced in general
terms by the global mining industry over the past two years and variances in
foreign exchange rates.
As at September 30, 2010, the total project expenditure, for the development of
PPM, including capitalised pre-production costs, plant capital expenditure and
offsetting revenue from metal sales during the pre-production phase amounted to
US$541.948 million (ZAR3.763 billion). Outstanding mine development expenditure
to completion of the construction phase of US$14.284 million (ZAR99.182 million)
will bring the total project expenditure spent to US$556.232 million (ZAR3.862
billion). During the quarter under review, the build-up of mining operations to
commercial production continued with associated costs, net of revenue from metal
sales, capitalized as part of the total project capital expenditure.
On May 13, 2010, the Company issued, by way of a prospectus offering, a total of
205,761,317 new common shares of Platmin at a price of US$1.215 per common share
for gross proceeds of US$250 million. Underwriting fees and costs associated
with the capital raising of US$8.740 million were capitalized and offset against
share capital resulting in net proceeds of US$241.260 million. As part of the
fund-raising process US$135 million of Convertible Debentures have been placed,
subject to conversion by December 31, 2010 at a price of US$1.215. The total
funding from the prospectus offering and private placement was US$385 million.
In light of the fact that the board has decided to focus cash resources and
capacity on bringing the PPM into full production, the Mphahlele, Grootboom and
Loskop projects continue on a reduced work program. In the short term, Platmin
will commit sufficient expenditure to these projects to ensure that the new
order Prospecting Rights and Mining Rights are preserved. This expenditure will
be funded from existing cash on hand.
Significant developments in the three months ended September 30, 2010 were as
follows:
· On July 29, 2010, the Company provided an update on the status of
agreements with Barrick regarding Sedibelo. As initially announced on April 16,
2010, Platmin would have acquired a 10% interest in Sedibelo for US$15 million
from Barrick and in a separate agreement, Platmin had also agreed to acquire
various long lead items required for the development of Sedibelo from Barrick
for a consideration of US$45 million. The conditions precedent for the
transactions, were not fulfilled. Accordingly, the transactions did not close;
· On August 12, 2010, a guarantee of US$45.608 million (ZAR346.464 million)
was provided to the Department of Mineral Resources ("DMR") in respect of the
rehabilitation obligation for the year ended December 31, 2009; and
· On September 6, 2010, the management of Northam Platinum Limited
("Northam"), a third party smelting and refining operation located approximately
60 kilometres from PPM by road, announced that the majority of employees (80%)
at its Zondereinde mine near Thabazimbi in the Limpopo province, embarked on
strike action effectively halting all PGE concentrate dispatches to the smelter;
Important events which occurred subsequent to September 30, 2010 include:
· On October 18, 2010, the six week strike at Northam ended and dispatches
of PGE concentrate to the smelter resumed on October 25, 2010.
4. Selected Quarterly Results
Expressed in US$'000 except per share amounts.
+----------+---------+--------+--------+--------+---------+--------+--------+---------+
| | In accordance with IFRS |
+----------+--------------------------------------------------------------------------+
| | Sept'10 | Jun'10 | Mar'10 | Nov'09 | Aug'09 | May | Feb | Nov |
| | | | | | | '09 | '09 | '08 |
+----------+---------+--------+--------+--------+---------+--------+--------+---------+
| Loss / | 26,034 | 24,026 | 5,181 | 2,276 | (6,620) | 13,585 | 12,490 | (6,686) |
| (profit) | | | | | | | | |
| for the | | | | | | | | |
| period | | | | | | | | |
+----------+---------+--------+--------+--------+---------+--------+--------+---------+
| Basic | 0.05 | 0.04 | 0.01 | 0.01 | (0.02) | 0.03 | 0.07 | (0.06) |
| and | | | | | | | | |
| diluted | | | | | | | | |
| loss / | | | | | | | | |
| (profit) | | | | | | | | |
| per | | | | | | | | |
| share | | | | | | | | |
+----------+---------+--------+--------+--------+---------+--------+--------+---------+
5. Results of Operations
Quarter ended September 30, 2010 compared to the quarter ended August 31, 2009
For the quarter ended September 30, 2010, mining and processing activities
continued in the build-up phase to commercial production and the delivery of PGE
concentrate to Northam continued at regular intervals until September 2, 2010
when strike action at Northam commenced and temporary halted deliveries of PGE
concentrate to their smelter. As an interim measure, a short term Offtake
Agreement was entered into with Impala Refining Services ("Impala") to process
concentrate until such time that the Northam strike ended. As a development
stage company, Platmin will offset revenue from mining activities against
capitalised operating costs until such time as PPM is brought into commercial
production. In accordance with IFRS, revenue is recognised when the transfer of
the risks and rewards of ownership takes place. During the quarter under review,
revenue recognised in respect of concentrate deliveries made to Northam was
offset against capitalized project development costs.
For the period ended September 30, 2010, net development expenditures at PPM
that were capitalized to the balance sheet are summarized as follows:
+----------------------+-----------+----------+-----------+-----------+
| | For the three | Life to date |
| | months ended | |
+----------------------+----------------------+-----------------------+
| Net development | Sep | Aug | Sep | Aug |
| expenditure | 30, | 31, | 30, | 31, |
| capitalised in ZAR | 2010 | 2009 | 2010 | 2009 |
| | ZAR'000 | ZAR'000 | ZAR'000 | ZAR'000 |
+----------------------+-----------+----------+-----------+-----------+
| Revenue | (128,758) | (85,322) | (622,202) | (85,322) |
+----------------------+-----------+----------+-----------+-----------+
| Operating costs | 264,866 | 134,451 | 1,791,822 | 821,353 |
+----------------------+-----------+----------+-----------+-----------+
| Net operating costs | 136,108 | 49,129 | 1,169,620 | 736,031 |
| capitalised | | | | |
+----------------------+-----------+----------+-----------+-----------+
| Capital development | 14,544 | 283,991 | 1,971,395 | 1,665,000 |
| expenditure | | | | |
+----------------------+-----------+----------+-----------+-----------+
| Rehabilitation asset | 84,098 | 42,366 | 622,109 | 212,392 |
+----------------------+-----------+----------+-----------+-----------+
| NET DEVELOPMENT | 234,750 | 375,486 | 3,763,124 | 2,613,423 |
| EXPENDITURE | | | | |
| CAPITALISED | | | | |
+----------------------+-----------+----------+-----------+-----------+
| | | | | |
+----------------------+-----------+----------+-----------+-----------+
| | For the three | Life to date |
| | months ended | |
+----------------------+----------------------+-----------------------+
| Net development | Sep | Aug | Sep | Aug |
| expenditure | 30, | 31, | 30, | 31, |
| capitalised in USD | 2010 | 2009 | 2010 | 2009 |
| | USD'000 | USD'000 | USD'000 | USD'000 |
+----------------------+-----------+----------+-----------+-----------+
| Revenue | (18,543) | (12,288) | (89,607) | (10,970) |
+----------------------+-----------+----------+-----------+-----------+
| Operating costs | 38,145 | 19,363 | 258,050 | 105,600 |
+----------------------+-----------+----------+-----------+-----------+
| Net operating costs | 19,602 | 7,075 | 168,443 | 94,630 |
| capitalised | | | | |
+----------------------+-----------+----------+-----------+-----------+
| Capital development | 2,095 | 40,899 | 283,911 | 214,065 |
| expenditure | | | | |
+----------------------+-----------+----------+-----------+-----------+
| Rehabilitation asset | 12,111 | 6,101 | 89,594 | 27,309 |
+----------------------+-----------+----------+-----------+-----------+
| NET DEVELOPMENT | 33,808 | 54,075 | 541,948 | 336,004 |
| EXPENDITURE | | | | |
| CAPITALISED | | | | |
+----------------------+-----------+----------+-----------+-----------+
The Company recorded a loss for the quarter ended September 30, 2010 of
US$26.034 million, or a loss per share of US$0.05, compared with a net profit of
US$6.620 million or a net profit per share of US$0.02, for the quarter ended
August 31, 2009. The increase in loss quarter on quarter was principally the
result of a foreign exchange loss due to the strengthening of the South African
rand against the US dollar and the subsequent revaluation of cash held in a
currency other than the functional currency of the group.
The results are summarized as follows:
+------------------------+----------+---------+----------+----------+
| | For the three | For the nine |
| | months ended | months ended |
+------------------------+--------------------+---------------------+
| | Sep | Aug | Sep | Aug |
| | 30, | 31, | 30, | 31, |
| | 2010 | 2009 | 2010 | 2009 |
| | US$'000 | US$'000 | US$'000 | US$'000 |
+------------------------+----------+---------+----------+----------+
| General expenses | (6,918) | (4,684) | (16,233) | (20,751) |
+------------------------+----------+---------+----------+----------+
| Other (expenses) and | (17,338) | 11,169 | (33,754) | 2,459 |
| income | | | | |
+------------------------+----------+---------+----------+----------+
| - Share-based | (213) | - | (23,668) | - |
| payment expense (fair | | | | |
| value adjustment) | | | | |
+------------------------+----------+---------+----------+----------+
| - Foreign | (17,090) | 11,169 | (9,795) | 2,458 |
| exchange (loss) / gain | | | | |
+------------------------+----------+---------+----------+----------+
| - Other | (35) | (89) | (291) | 1 |
+------------------------+----------+---------+----------+----------+
| Net finance (costs) / | (1,778) | 138 | (5,254) | (1,158) |
| income | | | | |
+------------------------+----------+---------+----------+----------+
| (Loss) / profit before | (26,034) | 6,623 | (55,241) | (19,450) |
| taxation | | | | |
+------------------------+----------+---------+----------+----------+
| Income tax | - | (3) | - | (3) |
+------------------------+----------+---------+----------+----------+
| (LOSS) / PROFIT FOR | (26,034) | 6,620 | (55,241) | (19,453) |
| THE PERIOD | | | | |
+------------------------+----------+---------+----------+----------+
General expenses totalled US$6.918 million for the quarter ended September 30,
2010, compared to the US$4.684 million for the quarter ended August 31, 2009.
The increase in general operating expenses was principally the result of
increased employee and admin costs.
Other income and expenses includes foreign exchange losses of US$17.090 million
for the quarter ended September 30, 2010, compared to foreign exchange gains of
US$11.169 million for the quarter ended August 31, 2009. The movement in foreign
exchange rates for the respective periods can be summarised as follows:
+--------------------------+-------+-------+-------+--------+
| | For the three | For the nine |
| | months ended | months ended |
| | (US$1.00 = | (US$1.00 = |
| | ZAR) | ZAR) |
+--------------------------+---------------+----------------+
| | Sep | Aug | Sep | Aug |
| | 30, | 31, | 30, | 31, |
| | 2010 | 2009 | 2010 | 2009 |
+--------------------------+-------+-------+-------+--------+
| Minimum | 6.924 | 7.639 | 6.924 | 7.639 |
+--------------------------+-------+-------+-------+--------+
| Maximum | 7.682 | 8.274 | 7.947 | 10.537 |
+--------------------------+-------+-------+-------+--------+
| Closing spot | 6.943 | 7.778 | 6.944 | 7.778 |
+--------------------------+-------+-------+-------+--------+
| Average for the quarter | 7.298 | 7.960 | 7.430 | 9.165 |
+--------------------------+-------+-------+-------+--------+
Finance costs of US$1.778 million were recorded in the quarter ended September
30, 2010, compared to finance income of US$0.138 million in the quarter ended
August 31, 2009. The net increase in finance costs is due to increased debt
(Pallinghurst Resources Limited promissory note), the amortization of the fair
value adjustment on the non-interest bearing convertible debenture, the ESKOM
finance lease and the unwinding of interest relating to the environmental
rehabilitation provision, offset by interest received.
A total of US$0.107 million (ZAR0.744 million) of deferred exploration
expenditure on Mphalele, Grootboom and Loskop was capitalized in the quarter
ended September 30, 2010 compared with US$0.326 million (ZAR2.266 million) in
the quarter ended August 31, 2009. This decrease in costs is due to reduced
activities on all projects other than PPM, whilst PPM builds up to commercial
production.
6. Liquidity and Capital Resources
The Company had unrestricted cash and cash equivalents of US$131.082 million at
September 30, 2010, as compared with US$60.871 million at August 31, 2009. The
net increase in cash and cash equivalents is primarily due to the US$250 million
capital raising completed during May 2010.
As at September 30, 2010, provision has been made for a total of US$88.179
million of current commitments that will be settled from the US$131.082 million
unrestricted cash and cash equivalents as follows:
· US$15.000 million have been committed to fund current liabilities due in
the normal course of business;
· US$27.700 million have been allocated for the repayment of the short term
Pallinghurst promissory note due on December 31, 2010 unless extended beyond
this date;
· US$45.479 million provided for the environmental rehabilitation
liabilities incurred for the nine months ended September 30, in terms of the
current approved Environmental Management Program ("EMP") that would fall due
for payment in early 2011. An application to amend the current EMP in currently
in progress in order to reduce the current and ongoing rehabilitation
liabilities. Refer to Note 13 of this MD&A for discussion on the application to
amend.
The Company had restricted cash of US$212.997 million at September 30, 2010, as
compared with US$5.537 million at August 31, 2009. The net increase in
restricted cash is primarily due to the cash collateral of US$135.079 secured as
part of the convertible debenture issued of US$135 million and the increase in
rehabilitation guarantees of US$72.381 million.
On April 22, 2010, the Company entered into a ZAR191.000 million (an equivalent
of US$26.000 million at an exchange rate of ZAR7.38 =US$1.00) short term lending
facility with Pallinghurst. This facility was initially for a period of 3 months
but has been extended until December 31, 2010.
The Company's principal subsidiary, Boynton, operates in South Africa and as a
result is subject to the South African Reserve Bank ("SARB") exchange control
regulations. Shareholder loans from Platmin to Boynton, amounted to US$561.175
million (which includes capitalised interest of US$25.515 million) at September
30, 2010. Any repayment of foreign currency loans by a South African company to
an offshore company, are subject to prior approval by the SARB.
New equity raisings
On May 13, 2010, the Company completed an issuance of 205,761,317 new common
shares at a price of US$1.215 per common share for a total consideration of
US$250 million, and the issuance of US$135 million of non-interest bearing
convertible debentures. Proceeds from the convertible debenture financing have
been deposited to restricted cash collateralized accounts, and in the event the
convertible debentures are not converted in part or full prior to the maturity
date of December 31, 2010, the unconverted principal amount will be returned to
the holders. The net proceeds to the Company from the Offering, after payment of
the Underwriters Fee but before deducting the expenses of the Offering was
estimated to be US$244.016 million.
In accordance with the disclosure in Platmin's Short Form Prospectus dated May
5, 2010 for the Offering, the table below reflects the actual use of proceeds
against the planned use of proceeds from the financings as follows:
+------------------------------------+-----------+-----------+
| | Total | Total |
| | planned | actual |
| | use of | use of |
| | proceeds | proceeds |
| | | to |
| | | Sep 30, |
| | | 2010 |
+------------------------------------+-----------+-----------+
| Financing use of proceeds | US$'000 | US$'000 |
+------------------------------------+-----------+-----------+
| PPM operational and working | 150,000 | 140,595 |
| capital funding requirements | | |
+------------------------------------+-----------+-----------+
| Other corporate activities | 45,000 | - |
+------------------------------------+-----------+-----------+
| Repayment of loan from | 26,000 | - |
| Pallinghurst | | |
+------------------------------------+-----------+-----------+
| Acquisition of 10% equity interest | 15,000 | - |
| in Sedibelo West | | |
+------------------------------------+-----------+-----------+
| Offering expenses | 2,250 | 3,216 |
+------------------------------------+-----------+-----------+
| Exploration, general & | 5,766 | 3,221 |
| administrative expenses | | |
+------------------------------------+-----------+-----------+
| | 244,016 | 147,032 |
+------------------------------------+-----------+-----------+
| Underwriting fees | 5,984 | 5,984 |
+------------------------------------+-----------+-----------+
| | 250,000 | 153,016 |
+------------------------------------+-----------+-----------+
As at September 30, 2010, Platmin's total working capital was US$119.503 million
(June 30, 2010 - US$205.921 million). Working capital is calculated as the total
of unrestricted cash and cash equivalents (US$131.082 million), inventory
(US$12.539 million) and accounts receivable (US$36.936 million) less accounts
payable and accrued liabilities (US$20.430 million) and short-term loans
(US$40.625 million). Platmin's cash and cash equivalents comprise of cash in
interest earning accounts and are fully liquid deposits held at major European
and South African banks.
Working capital decreased by US$86.419 million for the three months ended
September 30, 2010 due primarily to PPM operational costs and payment of
US$45.608 million in respect of the rehabilitation guarantee for the year ended
December 31, 2010.
Based on current production forecasts for PPM for the balance of the calendar
2010, the Company forecasts net cash expenses (net of forecasted revenue from
metal sales) of between US$25 million to US$30 million. This net cash outflow
will be financed from Platmin'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 September 30, 2010, the Company had 650,779,668
common shares in issue compared to 445,018,352 common shares in issue as at
August 31, 2009.
7. Results of Operations by Project
In the quarter ended September 30, 2010, the Company spent US$38.145 million
(ZAR264.866 million) on development expenditure in the form of operating costs
on PPM that were capitalized as project costs and US$0.107 million (ZAR0.744
million) on other exploration expenditure. Amounts spent on exploration were
capitalized with exploration expenditure on the various key projects as follows:
38% was spent on the Mphahlele Project, 33% was spent on the Grootboom Project;
22% was spent on the Pilanesberg Exploration projects, 3% was spent on the
Loskop project and 4% on other projects. A summary of the expenditures by
project along with the current proposed programs is set forth below.
7.1 Pilanesberg Platinum Mine
The Company has developed the Pilanesberg Project into the PPM, which
constitutes an open-cast mining operation on the farm Tuschenkomst in the
Pilanesberg region of the Northwest Province, which includes a processing plant,
producing a PGE concentrate for sale to Northam.
Due to the close proximity of the 'PGE-bearing' Merensky and UG2 reef horizons
in this part of the Bushveld Complex, these two ore bodies are exploited in one
open-cast mining operation at PPM. Other economically viable reefs, commonly
known as the Pseudo reefs, are also present between the two aforementioned reef
horizons, and are extracted along with the Merensky reef as an overall Silicate
Package. The Silicate Package is processed in the Merensky circuit and the UG2
reef horizon is processed in the UG2 circuit, resulting in a concentrate ready
for smelting and refining Both concentrates are blended and forwarded to
Northam's smelter in South Africa, for further processing into final metals
under the current Concentrate Agreement entered into on June 30, 2008 with
Northam.
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 PGE-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.
The mine is still in the build-up phase, and expects to reach the planned steady
state extraction rates of over 400,000 tonnes of ore per month or over 5 million
tonnes per annum. Based on a revised, detailed mining plan, compiled by a new
geological and planning team during Q2 FY2010, these targets are expected to be
reached during the 2011 financial year. Forecast production and sales for the
2010 financial yearis anticipated to be between 60,000 and 65,000 ounces of
PGE+Au. Intense management focus is being applied to the volumes and sequencing
of waste stripping by the mining contractor in order to ensure that adequate
volumes of reef are exposed. A Reverse Circulation ("RC") grade control
drilling program at 10 meter centers was put in place on the initial mining
blocks of the Tuschenkomst pit and is maintained a minimum of three months ahead
of reef mining. Mine planning continues to take place at PPM to continuously
update the mine scheduling on a short-term and long-term basis. The target is to
accumulate 2-3 months' stockpiles of broken ore at the Run of Mine ("ROM") tips
and expose 2-3 months of ore in the pit.
The total project development expenditures, net of revenue from metal sales and
including capital expenditure, for the quarter ended September 30, 2010 of
US$33.808 million (ZAR234.750 million) has been capitalized. Total capitalized
project development expenditure, net of revenue from metal sales, to date now
stands at US$168.443 million (ZAR1.170 billion).
As part of the construction of PPM, a commitment was secured from ESKOM for the
supply of the 37MVA of new power by mid 2009 that is required for the full
operation of the processing plant. The first phase of the implementation plan
was completed by ESKOM in March 2009, with the installation of 14MVA of new
power supply for the operation of the UG2 circuit of the plant. Installation of
the remaining 23MVA of installed power was completed on June 7, 2009 allowing
for the commencement of the commissioning phase of the Merensky Reef circuit.
In addition to the regular power supply from ESKOM, the construction of a
complete 10MVA standby diesel generator power plant ("power plant") at a cost of
US$20.789 million (ZAR144.350 million), has been completed at PPM. This facility
is capable of providing sufficient power to run the UG2 section of the
processing plant on an ongoing basis in the event that ESKOM is unable to
provide constant power to the mine over an extended period of time, it is also
able to provide sufficient additional power if ESKOM reduce the contracted power
supply to the mine by up to 10MVA. This 10 MVA power plant was commissioned on
December 2, 2009.
Construction of the processing plant commenced in October 2007 and was completed
during the first quarter of the current financial year. In March 2009, the
processing of material through the UG2 circuit commenced, signalling the
commencement of the plant operation to produce a metal in concentrate ready for
smelting, refining and sale under the Concentrate Agreement to Northam. In June
2009, following the installation by ESKOM of the additional 22MVA of power, the
processing of material through the Merensky circuit commenced. Final
commissioning will take place subsequent to quarter end.
Important features of the performance for the period ended September 30, 2010,
were:
+----------------------+---------+----------+---------+-----------+-----------+
| | | For the | For the nine |
| | | three months | months ended |
| | | ended | |
+----------------------+---------+--------------------+-----------------------+
| | Unit | Sep | Aug | Sep | Aug |
| | | 30, | 31, | 30, | 31, |
| | | 2010 | 2009 | 2010 | 2009 |
+----------------------+---------+----------+---------+-----------+-----------+
| Reef delivered to | tonnes | 645,008 | 553,946 | 1,992,898 | 1,465,461 |
| the ROM pad | | | | | |
+----------------------+---------+----------+---------+-----------+-----------+
| Reef milled | tonnes | 773,683 | 410,872 | 2,214,250 | 566,118 |
+----------------------+---------+----------+---------+-----------+-----------+
| Total stock pile | | 887,856 | 716,372 | 887,856 | 716,372 |
+----------------------+---------+----------+---------+-----------+-----------+
| - Merensky and | tonnes | 84,813 | 122,102 | 84,813 | 122,102 |
| UG2 | | | | | |
+----------------------+---------+----------+---------+-----------+-----------+
| - DMS | tonnes | 803,043 | 594,270 | 803,043 | 594,270 |
+----------------------+---------+----------+---------+-----------+-----------+
| | | | | | |
+----------------------+---------+----------+---------+-----------+-----------+
| Average head grade | g/t | 1.73 | 2.71 | 1.70 | 2.72 |
+----------------------+---------+----------+---------+-----------+-----------+
| Average recovery | % | 39.7 | 28.2 | 36.4 | 22.3 |
| rate | | | | | |
+----------------------+---------+----------+---------+-----------+-----------+
| | | | | | |
+----------------------+---------+----------+---------+-----------+-----------+
| 4E ounces produced | oz | 17,041 | 8,781 | 42,300 | 10,588 |
| | | | | * | |
+----------------------+---------+----------+---------+-----------+-----------+
| 4E ounces dispatched | oz | 13,788 | 8,781 | 39,051 | 10,588 |
| and sold | | | | | |
+----------------------+---------+----------+---------+-----------+-----------+
| 4E basket price | | | | | |
+----------------------+---------+----------+---------+-----------+-----------+
| - USD | US$ | 1,333 | 1,036 | 1,384 | 1,014 |
+----------------------+---------+----------+---------+-----------+-----------+
| - ZAR | ZAR | 9,726 | 8,246 | 10,289 | 8,642 |
+----------------------+---------+----------+---------+-----------+-----------+
| Revenue from metal | | | | | |
| sales (capitalised | | | | | |
| to development cost) | | | | | |
+----------------------+---------+----------+---------+-----------+-----------+
| - USD |US$'mil | 18.543 | 10.970 | 54.923 | 10.970 |
+----------------------+---------+----------+---------+-----------+-----------+
| - ZAR |ZAR'mil | 128.758 | 85.322 | 381.371 | 85.322 |
+----------------------+---------+----------+---------+-----------+-----------+
* 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.
As at the quarter ended September 30, 2010, total mine development capital
expenditure at PPM amounted to US$283.911 million (ZAR1.971 billion) compared to
US$256.430 million (ZAR1.951 billion) at the financial year ended December 31,
2009. As at September 30, 2010, the total outstanding mine development capital
expenditure to completion of the development was US$14.284 million (ZAR99.182
million) which will bring the total projected mine development expenditure to
US$298.195 million (ZAR2.071 billion). This amount is higher than the original
amount per the BFS of ZAR1.670 billion (which equated to US$231.940 million
based on an exchange rate of ZAR7.20 at the time of the study), due to changes
in scope, particularly the inclusion of a 10MVA standby power station (see page
7 of this MD&A), cost increases experienced in general terms by the global
mining industry over the past two years and variances in foreign exchange rates.
As at September 30, 2010, the total project expenditure, for the development of
PPM, including capitalised pre-production costs, plant capital expenditure and
offsetting revenue from metal sales during the pre-production phase amounted to
US$541.948 million (ZAR3.763 billion). Outstanding mine development expenditure
to completion of the construction phase of US$14.284 million (ZAR99.182 million)
will bring the total project expenditure spent to US$556.232 million (ZAR3.862
billion).
PPM is ideally situated to place Platmin in a favourable position to participate
in regional consolidation of the Western Limb of the Bushveld Complex.
7.2 Pilanesberg Exploration projects
The total exploration expenditure on various Pilanesberg exploration projects
was US$0.024 million (ZAR0.163 million) for the quarter ended September 30,
2010. Total exploration expenditure since the inception of the Pilanesberg
Exploration Project of US$16.076 million (ZAR111.625 million), has been
capitalized. In accordance with the Group's accounting policies, these costs are
capitalised 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 Project area where these rights are held.
7.3 Mphahlele Project
In the quarter ended September 30, 2010, a total of US$0.040 million (ZAR0.281
million) was spent on the Mphahlele project bringing the cumulative expenditure
to date on the project by the Company to US$13.713 million (ZAR95.220 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 have 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 2010 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.
7.4 Grootboom Project
In the quarter ended September 30, 2010, the Company spent US$0.035 million (ZAR
0.245 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$6.214 million (ZAR43.150
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. The DFS
is expected to be completed in the third quarter of fiscal 2010.
Work program
In light of the fact that the board have decided to focus cash resources and
management on bringing PPM into full production, this project has been put on a
reduced work program. The reduced primary expenditure at Grootboom during the
2010 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.
7.5 Loskop Project
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.
In the quarter ended September 30, 2010, the Company incurred less than US$0.004
million (ZAR0.025 million) on the Loskop Project. Total cumulative exploration
expenditure on this project since inception is US$0.063 million (ZAR0.438
million). In accordance with the Group's accounting policies, these costs are
capitalised as part of "Exploration and evaluation assets".
Work program
Lonmin Plc announced in a press release on November 18, 2008 that their
management has decided, given their focus on cash management and the current
state of the worldwide credit markets, to put a number of their projects,
including Loskop, on a reduced work program for the short term. Although work
has continued during the year in order to assist in increasing our understanding
of the Loskop mineralization, the mineral resources were not revised during the
quarter ended September 30, 2010.
8. Contractual Obligations
The Company's contractual obligations are as follows:
+-----------------+-----------------+--------+---------+---------+---------+
| Contractual | Payments due by period as at September |
| obligations | 30, 2010 |
| US$'000 | |
+ +--------------------------------------------------------+
| | Total | < 1 | 1-3 | 4-5 | After |
| | | year * | years | years | 5 |
| | | | | | years |
+-----------------+-----------------+--------+---------+---------+---------+
| Employee | 494 | 494 | - | - | - |
| entitlements | | | | | |
| (1) | | | | | |
+-----------------+-----------------+--------+---------+---------+---------+
| Operating lease | 306 | 48 | 258 | - | - |
| (2) | | | | | |
+-----------------+-----------------+--------+---------+---------+---------+
| Finance lease | 19,646 | 450 | 2,698 | 2,698 | 13,800 |
| (3) | | | | | |
+-----------------+-----------------+--------+---------+---------+---------+
| Committed | 14,284 | 11,052 | 3,232 | - | - |
| Capital Cost | | | | | |
| (4) | | | | | |
+-----------------+-----------------+--------+---------+---------+---------+
| Asset | 120,641 | - | - | - | 120,641 |
| Retirement | | | | | |
| Obligation (5) | | | | | |
+-----------------+-----------------+--------+---------+---------+---------+
| Mining and | 439,051 | 26,184 | 308,130 | 104,737 | - |
| Processing | | | | | |
| costs (6) | | | | | |
+-----------------+-----------------+--------+---------+---------+---------+
| Total | 594,422 | 38,228 | 314,318 | 107,435 | 134,441 |
| Contractual | | | | | |
| Obligations | | | | | |
+-----------------+-----------------+--------+---------+---------+---------+
(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
electrical installation at PPM. Please refer to note 10 of the condensed
consolidated financial statements.
(4) The Committed Capital Cost includes outstanding amounts in respect of
mine development expenditure to the completion of the plant construction phase
of the project.
(5) This amount of US$120.641 million (ZAR837.695 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
licence. The amount disclosed in note 11 of the condensed consolidated interim
financial statements of US$91.484 million (ZAR635.239 million) represents the
discounted value of such amount. Refer to note 13 in this MD&A for discussion of
the funding requirements for this obligation.
(6) Committed mining and processing expenses include the contracts with
Minopex for managing the plant operations and maintenance of the Merensky and
UG2 metallurgical concentrator plants, and MCC for carrying out the opencast
mining operations.
9. Off-Balance Sheet Arrangements
The Company has not entered into any off-balance sheet transactions.
10. Related Party Transactions
On April 22, 2010, the Company entered into a ZAR191.000 million (an equivalent
of US$26.000 million at an exchange rate of ZAR7.38 =US$1.00) short term lending
facility with Pallinghurst. The loan, accrued interest and structuring fees is
repayable by December 31, 2010, unless extended. On May 13, 2010, the Company
entered into zero percent convertible debentures of US$35 million with
Pallinghurst (US$30 million) and Investec Bank Limited ("Investec") (US$5
million).
11. 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. Black Economic Empowerment ("BEE")
Pursuant to the investors and subscription agreement entered into in December
2008 with, among others, Ivy Lane Capital Limited, being the South African
investment vehicle of the Pallinghurst Investor Consortium, the
Bakgatla-Ba-Kgafela Tribe 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$9.536 million on behalf of its BEE partners for
exploration activities, by way of loan account to date. All such amounts remain
outstanding on inter-company loan accounts.
13. Environmental Matters
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.
In respect of PPM, the DMR required a rehabilitation guarantee of US$7.027
million (ZAR50 million) before approving the application for a Mining Right.
This guarantee has been provided by Guardrisk Insurance Company Limited
("Guardrisk") on an insurance basis, with an amount of US$1.835 million
(ZAR13.500 million) paid over into a separate PPM bank account and ceded in
favour of Guardrisk as collateral against the issuance of this guarantee.
Ongoing contributions are made by PPM to fund the balance of the liability over
the remaining life of mine. During the quarter ended June 30, 2010, bank
guarantees to the value of USD$23.001 million (ZAR125.000 million) were provided
to the DMR in respect of the rehabilitation liability as at February 28,
2009.These guarantees are secured by cash deposited as collateral with the
issuing bank. A further guarantee of US$45.608 million (ZAR346.464 million) in
respect of the year ended December 31, 2009, was issued on August 12, 2010.
For the nine months ended September 30, 2010, in accordance with the current EMP
the estimated rehabilitation obligation for the current financial year is
US$45.479 million (ZAR315.789 million). An application to amend the EMP to
convert the open void into a water storage facility is currently in progress and
is expected to be lodged with the DMR by the end of the current financial year.
The application to amend the current EMP will be subject to the normal
regulatory approval process l by the DMR and various other government
departments. Further insurance guarantees in the amount of US$14.268 million
(ZAR104.987 million) have been provided to ESKOM for the supply of power and
certain related infrastructure.
In respect of the Mphahlele Project, the DMR required a rehabilitation guarantee
of US$2.135 million (ZAR16.609 million) to be lodged before the issuing of the
Mining Right. This guarantee has been provided by Guardrisk on an insurance
basis, with an amount of US$1.576 million (ZAR11.600 million) paid over into a
separate Boynton bank account and ceded in favour of Guardrisk as collateral
against the issuance of this guarantee. Ongoing contributions are made by
Boynton 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.
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.
14. 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 legislation was passed on November 17, 2008 and was due to come into
operation on May 1, 2009. During his budget speech in February 2009, the South
African Minister of Finance deferred the implementation of the Royalty Act to
March 1, 2010. In terms of the legislation resulting from the Royalty Act, a
royalty will be levied for the benefit of the National Revenue Fund of the
government of the Republic of South Africa. The amount levied will be based on a
percentage calculated by means of a formula, from a minimum of 0.5% up to a
maximum of 5% on gross sales of refined mineral resources or 7% on gross sales
of unrefined mineral resources.
During the nine months ended September 30, 2010, Royalty Tax amounting to
US$0.122 million (ZAR0.916 million) has been paid to the South African
government in respect of metals sold from March to June 2010 and US$0.072
million (ZAR0.533 million) has been provided for payment at the end of the
financial year in respect of metals sold from July to September 2010.
15. 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, 2009. 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 United States
Dollars ("USD") 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.
Capitalized 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 through
profit and loss immediately.
Inventory
Inventories are measured at the lower of cost and net realizable 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 recognizes 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.
No revenue is recorded in the condensed consolidated interim statement of income
and comprehensive income as the Pilanesberg Mine has not yet reached commercial
production.
16. Financial Instrument and Other Instruments
The Company has the following financial instruments: cash and cash equivalents,
other receivables, accounts payable, accrued liabilities, borrowings and
convertible debentures. These instruments are short-term financial instruments
whose fair value approximates their carrying value given that their maturity
period is short.
17. Outstanding Share Data
As at September 30, 2010, the Company had 650,779,669 issued and outstanding
common shares.
As at September 30, 2010, there were 8,660,932 outstanding options exercisable
for common shares and a further 10,070,801 unvested share options, which, if
exercised, would result in the issue of an additional 18,731,733 common shares.
The total options outstanding at September 30, 2010, totalled 18,731,733
options.
As at November 15, 2010, the Company had 650,779,669 issued and outstanding
common shares.
18. 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 this business 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, 2009, which can
be viewed at www.sedar.com.
19. 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 September 30, 2010. 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, 2009 or in the quarter ended
September 30, 2010, that has materially affected, or is reasonably likely to
materially affect, Platmin's internal controls over financial reporting.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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