REPORT
2013
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Report profile
This annual report presents a review of the operational and financial performance of Sylvania Platinum Limited (Sylvania or the
Company) for the 12 months ended 30 June 2013. The report includes an analysis of the Company’s material issues and the steps
taken to operate successfully and sustainably within its governance and risk framework.
The consolidated financial statements, set out on pages 24 to 78, were approved and published on 23 August 2013. They include
the Company’s financial results and were prepared in accordance with International Financial Reporting Standards (IFRS) as issued
by the International Accounting Standards Board (IASB). The consolidated financial statements represent the ongoing activities of
the Sylvania Group.
Throughout the report, financial data is reported in US dollars.
Sylvania is listed on AIM and is not required to comply with the UK Corporate Governance Code as issued in May 2010. However,
the Company gives due consideration to the provisions set out in Section 1 of the Code annexed to the Financial Services Authority
Listing Rules. The corporate governance statement can be found on pages 22 to 23.
This annual report is available on http://www.sylvaniaplatinum.com/ and printed copies can be requested from the Company at the
address listed on the inside back cover.
www.sylvaniaplatinum.com
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Annual Report 2013 Contents
Overview
Financial and operational highlights for the year, an
overview of the group and a description of our vision,
mission and values.
Business review
Statements from our Chairman and Executive
Directors, an overview of our markets, strategy,
business model, the way we manage risk and how
Sylvania operations are performed.
Report profile
Company profile
Financial and operating snapshot
Our vision, mission and values
Chairman’s letter
CEO’s and Deputy CEO’s review
Governance
An introduction to the board and executive committee
and details of the Group’s approach to corporate
governance and remuneration.
Directors’ report
Corporate governance statement
Overview
IFC
2
4
5
6
9
14
22
Financial statements
Audited financial statements, notes and other key data.
Consolidated statement of comprehensive income 24
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the consolidated financial statements
Directors’ responsibilities
Independent auditor’s report
25
26
27
28
77
78
Shareholder information
Information, dates and contact details for shareholders,
and glossary of terms.
Additional information for listed public companies 79
Glossary of terms 2013
Corporate directory
80
IBC
1
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Company profile
Sylvania Platinum Limited is a low-cost producer of platinum
group metals (PGMs) including platinum, palladium and
rhodium. The Company’s core business is the retreatment of
PGM rich chrome tailings material. The Company also holds
prospecting rights for a number of PGM projects on the
Northern Limb of the Bushveld Igneous Complex.
Sylvania is listed on London’s Alternative Investment Market
(AIM: SLP).
In order to strengthen the Company’s position as a low-
risk specialist in the low-cost production of PGMs, Sylvania
operates according to the following business priorities:
• identifying projects that balance minimal operational and
financial risk with the potential for high margins;
• ensuring that the management teams are always well
resourced with the right combination of skills;
• focus on cash generation during uncertain economic times; and
• continually apply appropriate practices/technology to
maintain the Company as a lower quartile producer.
Following the completion of the seventh plant, the Company is
now focusing on cash generation and will return dividends to
shareholders according to the announced dividend policy.
Sylvania is a low-cost producer of
PGMs. The Company maintains a strong
position as a low-risk specialist in the
low-cost production of PGMs.
The Company is now
focusing on cash
generation and
will return dividends to
shareholders according
to the announced
dividend policy.
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2
Annual Report 2013“” Overview
Location of
operations and
projects
Sylvania’s tailings retreatment
operations and shallow mining
exploration interests are located
on South Africa’s PGM-rich
Bushveld Igneous Complex.
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3
Financial and operating snapshot
• Full year lost-time injury (LTI) free
• $4,053,083 cash generated from operations
• Tweefontein, the seventh plant, commissioned
• Ironveld transaction completed
• Chrome Tailings Retreatment Plant (CTRP) placed on care and maintenance
• General and administrative costs down 41% from $9,226,614 to $5,467,202
PrOduCtIOn OF OunCeS
decreased 3% to 44,255oz
(FY2012: 45,735oz)
CaPItaL exPendIture
decreased 32% to $10,310,413
(FY2012: $15,102,282)
SyLvanIa dumP OPeratIOnS
cost of production increased 25% to
$708/oz (FY2012: $568/oz)
Operations
influenced
by external
industrial action
and section 54
stoppages.
We have
reduced
exploration
activities on
the northern
limb of the BIC.
Largely on the
back of South
african on-mine
inflation.
3%
32%
Decreased{
Decreased{
Increased{
25%
net PrOFIt aFter tax
increased 210% to $4,369,231
(FY2012: net loss of $3,971,803)
Our focus is on dump reprocessing and
on generating cash flows. Assisted by
sale of iron ore assets.
net BaSket PrICe
$867/oz (FY2012: $876/oz)
Reflects ongoing weakness in
platinum and rhodium prices.
4
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Annual Report 2013 Our
vision, mission and values
Overview
To be the leading mid-tier, lowest
unit cost, PGMs mining company.
We generate wealth for all of our
stakeholders using safe and innovative
processes with a focus on PGMs
while exploiting any value-adding
associated minerals.
We value the safety and health of all
• Employees are at the heart of our company; we place their
safety and health above all else in everything that we do.
We value the fundamental rights of people
• We treat all people with dignity and respect.
We value honesty and integrity
• We act honestly and show integrity by continually striving
towards “doing what we say we are going to do” and
showing commitment towards our accountabilities of
delivering high performance outcomes, thus projecting an
image of professionalism and meeting the expectations of our
colleagues, investors, business partners and social partners.
We respect the environment
• We act in a manner that is sustainable and environmentally
friendly, applying professional and innovative methods.
We value the culture, traditional rights and society in which
we operate
• Our actions will support the communities in which we work
while honouring their heritage and traditions.
5
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VisionMissionValues Chairman’s letter
Sylvania
is a company now firmly
focused on its core
competency, a company
dedicated to delivering
value to shareholders and
a company not tempted
into ventures that might
detract from that aim.
Stuart murray
Chairperson
dear SharehOLderS and Other
StakehOLderS
Although I have only been with your Company since April
this year, it did not take me long to appreciate the potential of
Sylvania and the many characteristics that make it stand out.
These drew me to the chair of the Company, although I have
had a tenuous association with Sylvania for some time.
Sylvania is a company now firmly focused on its core
competency, a company dedicated to delivering value to
shareholders and a company not tempted into ventures that
might detract from that aim.
Sylvania has survived in the small to mid-cap market space
where others in the platinum sector have faltered, with
our strategic focus on the re-treatment of tailings having
been intensified. It bears recalling that the platinum mining
and exploration space is going through torrid and almost
unprecedentedly difficult times. The prices of our principal
metals (platinum and rhodium) have been falling all year
and many administered costs that cannot be controlled
(for example, electricity) are rising inexorably. In addition,
the platinum industry as a whole – most of it concentrated
in South Africa – has still to resolve the problems of
labour discord and violence that have marred operational
performances virtually across the board, not only in platinum.
industry’s lowest. With our refocus on our core business, and
considering the prevailing market climate, we have no plans to
come calling on shareholders for additional capital.
Our differentiation was shown in 2012 when our operations
were not directly affected by the mining sector’s turmoil and
violence. While none of our employees went on strike, many
were prevented from work by threats of violence by strikers
on mines whose dumps we reprocess, or by our neighbours.
This, in its turn, contributed to cutting our production below
the annual 60,000 ounces we had targeted.
We have reduced our exploration activities on the Northern
Limb of the Bushveld Igneous Complex. Results from the
drilling that we have completed so far will be evaluated, but
I envisage no early resumption of exploratory drilling – and in
the current climate we do not need cash-consuming ventures
that are ancillary to our core dump recovery operations.
Furthermore, there is no need for an early start to mine
development at our Volspruit property. Given current cost
and metal price parameters, the returns on investment in
the project would be significantly below what we consider
acceptable and well below those we can earn from dump
reprocessing. The Board is considering its options in respect of
this asset.
Sylvania differs markedly from others in this space. With
our current focus on dump reprocessing and on generating
cash flows, our costs per unit of platinum are among the
While these changes might give rise to the misconception
that Sylvania’s life prospects are limited, this is not correct.
One third of the material we process comes from the current
6
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Annual Report 2013 Business review
residues arising from long-life chrome mining. Two thirds
derive from older, existing dumps and many of these exist,
untapped. In other words, our operations are long life, and
they will be further extended as our in-house research and
development delivers the capacity to recover metals left
behind by existing technology.
The mining industry’s problems across the globe have
not gone unnoticed by investors who have become
progressively nervous of cash-hungry small-cap minerals
companies. Institutions that have been affected by
withdrawals have been selling small-cap miners into a
market that has become increasingly reliant on individual
investors. While the selling urge has focused on companies
with cash-hungry development projects, our share price
has not been unaffected.
In the few months since I joined the Company I have
spoken to most of our institutional investors, and their
message was clear. They would sooner hold shares in
lower-risk, cash-generative companies that deliver cash
returns to shareholders than in more-speculative ventures
seeking new shareholder funds to finance comparatively
risky mining operations.
To put it crisply, we have paid attention to our shareholders’
investment preferences and are acting accordingly. From an
investor’s viewpoint, I believe that Sylvania is more secure
than many others in the sector, and that our company will
be well positioned to distribute dividends to shareholders as
cash balances grow. Sylvania is a less labour-intensive producer
than those that mine ore and our operations are inherently
safer than those of the platinum miners. Our employees are
also generally more skilled and productive than those in the
labour-intensive sectors of the industry.
Furthermore, there are several other ways of delivering
shareholder value. Last year we spun off our iron ore assets
into Ironveld, and passed shares in the venture directly to
our shareholders. Ironveld was non-core, it would most likely
have lain idle in our hands and therefore been valued at next
to nothing in Sylvania’s market rating. Distributing our holding
in specie to our shareholders is allowing the project to be
developed by others. Since then, the price of Ironveld shares
has risen by at least a quarter, again underscoring the tangible
worth of releasing value to shareholders.
As for PGM prices, it would, in my opinion, be foolhardy
to expect any truly significant rises from current levels.
The market has been distorted in recent years by perceptions
that platinum and palladium are safe-haven investments,
much the same as gold used to be perceived. Nothing could
be further from the truth. Unlike gold, PGMs are industrial
metals, principally used as catalysts. Certainly, the past few
years have seen any excess of supply over fundamental
fabrication demand being mopped up by speculative or
investor purchases. However, speculative holdings of platinum
and palladium metal – as bullion coins, jewellery or, more
importantly, in holdings of exchange traded funds (ETFs)
backed by metal – are currently roughly equal to a year’s
supply of newly mined material. Platinum tied up in these
investment products offers no returns apart from price rises.
They have an opportunity cost and, when prices show signs
of correcting or turning down, the likelihood is that bullion
investors will seek to limit their downside by selling into a
relatively small market.
Several traders and analysts report that the platinum market
has moved from oversupply to deficit and is likely to remain
there for some time. That may be true looking at the overall
picture, but why, then, has the platinum price fallen from the
$1,800/ounce region to its current level in the mid $1,300s
at the time of writing? If we consider simply industrial and
fabrication needs (on the demand side), the market is in
surplus. So-called investment buying driven by the entry
of ETFs into the market, trading on the back of rising gold
prices, has merely contributed to putting off the day when
the market has to return to the stability of prices being
determined by the fundamentals of supply (new and recycled
metal) and underlying industrial or fabrication demand. True
market fundamentals of supply and industrial demand have,
temporarily at least, given way to investment demand. But,
I believe, the day is fast coming when ETFs will, if anything,
turn to being net sellers and that the market for PGMs now
has to contend with a great deal of fundamental change before
it settles down to sensible pricing. I expect major divestment
of speculative bullion positions.
At $1,350/ounce as I write, the platinum price is at its lowest
for the year and is almost 25% lower than the year’s peak of
$1,736 reached on 7 February. If we need further evidence
of just how volatile a speculative platinum market can be, let
us cast our minds back to 2008 when industrial demand fell
sharply. Platinum peaked at a speculative high of $2,273/ounce
in March of that year before collapsing to a low of $763/ounce in
October, as the global financial crisis took its toll on confidence.
That was a fall of two thirds in less than eight months.
7
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Chairman’s letter continued
High cost and prospective mine capacity have to be
removed from the market. To be blunt, shaft closures will
be called for as well as the shelving or abandoning of new
mine projects that are only viable at unsustainably high
metal prices. Interventions to defer cuts in production and
employee numbers are counterproductive. As far as Sylvania
is concerned, under my watch we will remain ultra-cautious
before venturing beyond our core competency of cost-
effective dump reprocessing.
We are well aware of our responsibility to deliver
satisfactory returns to our shareholders through all of the
market’s phases, and we will not be sinking shareholders’
money into projects that lie beyond our core competency
and that might offer inadequate returns on investment.
Too many minerals companies have pursued size for
size’s sake. Our approach is to maximise cash flows to
shareholders. We will continue to achieve that by focusing
on dump reprocessing, which delivers on that aim and places
us at the very lowest end of the cost curve.
Looking forward, I am confident about our company’s
performance into the new financial year. In the past year,
disruptions indirectly caused by the platinum industry’s
labour difficulties contributed to our costs rising to some
$700/ounce. The start of this new financial year coincided
with the annual round of wage increases. However, we are
continuing to reduce overheads while containing other costs.
Our aim is to produce 51,000 ounces at an average group
cash cost of $700/ounce, thereby continuing the Company’s
cash-generative position. The mothballed joint venture at
the CTRP and a decision to defer capital expenditures at
Tweefontein are instrumental in delaying the ramp-up to
prior targeted levels.
My colleagues and I are highly sensitive to the investment
demands of our shareholders. We shall not in the near future
be seeking additional capital from shareholders as our internal
cash flows are sufficient to finance the Company’s needs.
We are determined to distribute everything that exceeds
those needs, in the absence of alternative investment
opportunities in our space.
It remains for me to express my thanks for the unstinting
support and dedication of Sylvania’s management and
employees, that of our business associates and, not least, that
of my Board colleagues. The Company is now structured
correctly to move forward confidently and to deliver growing
value to shareholders and other stakeholders.
Stuart murray
Chairperson
We are continuing
to reduce overheads
while containing other
costs. Our aim is to
produce 51,000 ounces
at an average group
cash cost of
$700/ounce.
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8
Annual Report 2013 CEO’s and Deputy CEO’s review
Business review
Once again
Sylvania has managed
to complete a year
with results which
many other platinum
companies would be
pleased to present.
terry mcConnachie
Chief Executive Officer
nigel trevarthen
Deputy Chief Executive Officer
OvervIeW
Once again, Sylvania has managed to complete a year
with results which many other platinum companies would
be pleased to present. Early in the year, the Company
announced the sale of Ironveld that allowed the issuance of a
dividend in specie to shareholders, and recognised a profit of
$9,911,779 from the transaction. The final few months in the
2013 financial year saw production from operations recover
after the impact of sector-wide industrial action and saw the
Company complete a year without an LTI. The Company
also completed the construction of its seventh plant, paid for
in full from internal funds and generated a net cash inflow
from operations of $4,053,083.
It is impossible to ignore the issues in the South African
mining industry and our 2012 annual repor t noted that
the platinum sector had experienced some par ticularly
disruptive events during the year. This industrial action
progressed into the 2013 financial year and peaked at
Marikana. While none of the Sylvania staff under took
any industrial action, the indirect impact on the Group
production saw ounces from all sources decrease
by 1,480 ounces compared to 2012, with the biggest
variance coming from the placement of the CTRP onto
care and maintenance in August 2012. In September, the
Tweefontein plant produced its first ounces with this
additional capacity, offsetting the negative impact placed
on the operations by strikes and other work stoppages.
The Sylvania plants increased production by 507 ounces
year-on-year.
Following the road show held in January 2013 where a
platinum price of $1,800/ounce was forecast by the market,
and a dividend payout expected to occur in December 2013,
the Company has seen a marked drop in the metal price.
This drop in revenue due to lower than planned metal prices,
coupled with additional disruption to operations in March,
and ongoing uncertainties in the industry led the Company
to focus on extracting value from the dump operations
and generating cash, while curtailing expenditure in other
areas. The status of all the Northern Limb projects and
Everest North is such that the mining right applications
(MRAs) were submitted without the need for any significant
additional expenditure. Work also continued on the Volspruit
Environmental Impact Assessment (EIA) in terms of its MRA.
In terms of SDO, the Board decided to delay the expenditure
on the planned Tweefontein phase 2 and the Mooinooi
stockpile until cash reserves are strong enough to weather
any future potential industry-wide disruptions. The impact of
this approach on the production for the Group is evident in
the latest production plan that sees a slowing of the ramp-up
rate to the targeted 60,000 ounces. The production outlook
for the coming year has been moderated to 51,000 ounces
at SDO. We are working on alternatives with our partners at
CTRP to see if we can bring CTRP back into operation, which
would boost this production target.
Work on the Northern Limb projects, Volspruit and Everest
North, has been slowed. However all the necessary work to
obtain the mining rights applied for is still under way.
9
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CEO’s and Deputy CEO’s review continued
During the year, the Company has been able to lower its unit
costs per tonne treated and made good progress in reducing
the general and administration cost. Moreover, the Company
has almost completed its planned move out of Australia
and placed more focus on the primary listing in London.
This has allowed the Company to announce total general
and administration costs for the year of only $5,467,202.
It is certainly pleasing to note that the Company SDO
continue to be profitable, and remains in an excellent position
to cash in on an upturn in the world economy.
2013 FInanCIaL PerFOrmanCe
While the South African mining industry as a whole has
been hard hit financially during FY2013, Sylvania remained
cash positive with $6,564,885 (FY2012: $15,696,899) on the
balance sheet at year end, and well positioned to exploit
opportunities in the future. The Company generated a net
cash inflow from operations of $4,053,083.
In line with our strategy, capital expenditure was scaled back
by 32% from $15,102,282 in FY2012 to $10,310,413 in FY2013.
Group EBITDA was down only 8% from $3,723,744 in FY2012
to $3,440,875 (excluding the Ironveld transaction) in FY2013.
Despite the volatile metal prices and exchange rates over the
year, as well as a 16% increase in total operating costs, the
Group still managed to maintain a positive EBITDA.
2013 OPeratIOnaL PerFOrmanCe
Because of the Company’s cautious approach to ramping-up
production, coupled with lower feed grades, total production
for the year was down by 3% from 45,735 ounces in FY2012
to 44,255 ounces in FY2013.
Revenue remained flat year-on-year despite the lower total
Group ounces.
The final few months in FY2013 saw production from
operations recover and it is encouraging that despite the
issues that occurred during the year, the ounces from the
Sylvania plants alone grew by 507 ounces year-on-year and
operations remained profitable.
emPLOyee SaFety, heaLth and the
envIrOnment
The Company completed the 2013 financial year without a
single LTI, and remains committed to maintaining this level of
performance. As would be expected, Sylvania works closely
with the host mines at all times in all aspects of safety, health
and the environment.
dumP and run-OF-mIne OPeratIOnS
During the year under review, the SDO plants alone
produced 43,812 ounces compared to 43,305 ounces for
the previous year. This was augmented by 443 ounces from
the CTRP and ad hoc sources, giving a total production
volume of 44,255 ounces for the year. During FY2012, the
CTRP and ad hoc sources produced 2,430 ounces, yielding
a total production volume of 45,735 ounces. Despite the
tough conditions experienced during FY2013, the production
volumes recovered during May and June 2013, with operations
producing at a rate of 4,250 ounces/month and the Mooinooi
plants producing over 1,000 ounces combined for each month.
This bodes well for the future as Mooinooi has by far the
largest resource and production potential.
The Company has matured over the past six years and, during
FY2013, the fourth of the seven plants began treating material
for a second time. During the forthcoming year, the Steelpoort
plant will be treating solely second pass material while the
plants at Millsell, Doornbosch and Lannex will treat a blend of
first and second pass material.
millsell
Since 2007, the Millsell plant has been one of the most
consistent production plants within the Group. Total ounce
production for the financial year was 6,727 ounces at a cash
cost of $539/ounce. The plant processes the current arisings
from the Millsell mine as well as dump material from a number
of different sources. During FY2013, the plant started to
process some material for the second time, combined with
primary pass material from more distant dumps. As expected
from this mature plant, when the operations are not hindered
in any way, the plant produced at a rate of 700 ounces/month.
This is expected to move towards 580 ounces/month during
2014 as the primary pass material is finished.
mooinooi
Of all our operations, Mooinooi is arguably the best example
of the robustness of our business model, despite external
factors largely beyond our control. It also shows how two
companies can benefit from designing operations that
complement each other by recovering metals that, individually,
would be only marginally profitable.
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10
Annual Report 2013 Business review
The Mooinooi facility began with a dump reprocessing
operation, but a separate plant to process run-of-mine (ROM)
ore delivered by our host mine has expanded its output.
Though the new plant that processes ROM was completed
in the second half of FY2012, its start-up was inauspicious.
In the first few months, revenues were negatively affected
by a sharp decline in metal prices, followed by the effects
of strikes and Section 54 stoppages at the host mine.
Major stoppages occurred in August and October 2012 and
March 2013. Since the Mooinooi plant has by far the longest
life, with the first pass treatment of dumps expected to go to
2028, and following the recent upturn in production volumes,
the Company remains confident that the Mooinooi operations
will generate the expected returns in the future. The combined
ounce production for the Mooinooi dump plant and the ROM
plant for the financial year was 8,374 ounces at a cash cost of
$965/ounce.
It has been identified that the Mooinooi ROM plant requires
an in-plant stockpile to allow for a more steady feed of ore to
the mills. As alluded to earlier, the design for this stockpile has
been completed and the Company is currently reviewing the
market to determine a date when construction will begin.
The production from both the Mooinooi plants has been
showing steady improvements during the year and, for the
first time, exceeded 1,000 ounces during May and June 2013.
This level of production is likely to be maintained into FY2014
and will be enhanced when the stockpile is completed.
Steelpoort
As FY2013 progressed, the focus of Steelpoort’s operations
was increasingly directed towards second-pass treatment of
tailings from Steelpoort Dam 1. Over the full year, the host
company’s Steelpoort mine remained idle and thus did not
supply any current arisings to the plant. The second-pass
treatment of the Steelpoort dam has taken place according to
plan and the plant remains profitable. A total of 6,943 ounces
were produced at a cash cost of $673/ounce.
The Steelpoort plant showed similar production results to
Millsell during the year when not hindered by external forces
and is expected to produce around 570 ounces/month during
the forthcoming year.
Lannex
A lot of work has been put into improving the mechanical
reliability of the Lannex plant during the year and this has
allowed throughput figures to improve gradually. Production
output from Lannex was disappointing during the year, with
the plant only producing 7,850 ounces at a cash cost of
$686/ounce. Initially this was due to lack of throughput
and, more recently, due to the feed grade from the dumps
and lower current arisings from the host mine. While an
improvement in the feed grade is anticipated, lower current
arisings are expected to continue since the chrome market
requires the host mine to sell its ore directly from the
open pit without processing it further. However, we are in
discussions with mine management to divert this material to
us so that the symbiotic relationship of sharing costs will not
impact on our ounce production going forward.
Based on the improving chrome market, the aforementioned
plan could change at any moment. Should suspended mining
operations start up again, this would dramatically extend the
life of this operation and allow us to ramp up production.
Although production volumes in FY2013 were disappointing,
at below 600 ounces/month, the influence of better
mechanical reliability at the plant, and the expected improved
grades for the sampled dumps, should see the plant producing
over 900 ounces/month during FY2014.
doornbosch
Doornbosch has been one of the best performing plants for
FY2013, consistently out-performing its target. The Doornbosch
plant was originally built to treat only current arisings, with
the Montrose dump material, which is almost depleted, as an
additional bonus. Total ounce production for the financial year
was 10,384 ounces at a cash cost of $480/ounce.
The Doornbosch plant will be entering into a new phase of
second-pass treatment of the Doornbosch dump along with
the current arisings in the early part of FY2014. The host mine
is swiftly building up and the current arising are increasing
rapidly. As this is a long-term operation for the host mine,
we strongly believe that this plant will continue to produce
excellent recoveries well into the future.
Recovery efficiencies achieved in the second-pass operations
thus far are encouraging and should allow the plant to operate
at a level of 550 ounces/month during FY2014.
tweefontein
Construction of the first phase of the Tweefontein plant saw
the first ounces delivered in September 2012. The original
design for Tweefontein planned for completion of the Klarinet
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11
CEO’s and Deputy CEO’s review continued
open-pit mine in January 2013, thus allowing the nearby dumps
to be treated by the plant while it was preparing to treat the
ROM ore from the Mooigenoeg adit. With the continuation
of the Klarinet mine, the Tweefontein plant is seeing much
lower PGM grades in the feed sources than envisaged and this,
coupled with the drop in the commodities prices, has caused
phase 2 of the project to be redesigned and deferred. The
plant produced 3,816 ounces for the year at a cash cost of
$869/ounce.
It is planned that the plant will process current arising and
dump material. The host mine’s Tweefontein operation
is intending to increase the current arisings stream by
implementing a new Klarinet chrome processing plant, thus
providing fur ther tailings to the Sylvania plant. The cash
costs are also expected to decrease significantly per ounce
as the Klarinet material is replaced by the Tweefontein
dump material.
Chrome tailings retreatment Project
The CTRP, which is operated by 50% shareholder Aquarius
Platinum and in which Sylvania has a 25% interest, remains
on care and maintenance. Sylvania is in the process of
demonstrating that CTRP is a viable operation and is currently
running various scenarios. Once the studies have been
completed and the results are available, Sylvania will initiate a
debate on restarting the operation.
Far nOrthern LImB OPeratIOnS
Since we reported on the situation at our exploration drilling
and possible mine development prospects on the Northern
Limb of the Bushveld Igneous Complex in our FY2012
review, the platinum industry and market have undergone
fundamental changes. Taking these into account, and how
these affect our ability to deliver on shareholder expectations,
we have made important strategic decisions on projects that
lie outside our core competencies.
Our strategy involves deferring capital expenditure and
project development until there are fundamental and long-
term improvements in the platinum industry. Projects have not
been dropped; their development will simply be reconsidered
at a more appropriate time. Sufficient work is continuing
to ensure compliance with the terms and conditions of our
exploration permits.
volspruit
Volspruit is envisaged as a shallow, low-cost mine that
will eventually be the key to unlocking the full potential of
the Northern Limb. When the appropriate time comes,
the mine will be developed by a wholly owned subsidiary,
Volspruit Mining Company (Pty) Ltd, with the participation
of a group of black economic empowerment (BEE) partners
who include local communities, business entrepreneurs and
an employee trust.
There has been no change to the previously published
resource of more than 3 million ounces of PGMs, 74 million
pounds of copper and some 270 million pounds of nickel
reported at the start of FY2013. The figures comply with the
South African Code for Reporting of Exploration Results,
Mineral Resources and Reserves (SAMREC).
Further planning will only be finalised once mining rights have
been granted.
During the third quarter of FY2013, the Company completed
the purchase of the Grasvally and Zoetveld farms adjacent to
Volspruit. The two farms are considered critical extensions
and parts of the Volspruit project. As a part of the MRA,
the EIA was delayed due to the failure of the Nyl River to
Despite the uncertainty
over the future of
several of South Africa’s
platinum producers, we
remain confident that
Sylvania’s corporate
strategy will deliver
sustainable value to
shareholders.
7012_13_Sylvania AR_Front_Final_11Nov13.indd 12
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12
Annual Report 2013 Business review
OutLOOk
The immediate outlook for the platinum industry appears,
if anything, less certain than a year ago. As our Chairperson
Stuart Murray explains, the market has to return to a balance
between supply and demand. Platinum producers cannot
continue to rely on investment buying to support PGM prices.
We as a company, and our country as a whole, cannot tolerate
any repeat of the events at Marikana – events that indirectly
marred our operations during the first half of FY2013. While
competition for members by competing unions persists,
industrial peace will remain uncertain. Competing unions have
sought to attract members by progressively increasing wage
demands – demands that cannot be met if South Africa’s
mines are to remain profitable and capable of providing jobs.
Despite the uncertainty over the future of several of South
Africa’s platinum producers, we remain confident that
Sylvania’s corporate strategy will deliver sustainable value to
shareholders. Sylvania’s cash costs for each PGM are among
the platinum industry’s lowest which, to a considerable extent,
protect the Company from the vagaries of the PGM market
and from rising costs. The immediate future may appear
cloudy, but we are confident that Sylvania will thrive despite
these pending challenges.
thankS
We extend our thanks to everyone who has contributed
to Sylvania’s progress in a year with more than its share
of difficulties – to our employees who have withstood
operating in an environment plagued by strikes and
intimidation, to the members of our management team who
have planned and delivered on appropriate strategies, and to
our business partners and colleagues who have unstintingly
backed our company.
Finally, we must welcome and thank Stuart Murray, Sylvania’s
newly appointed Chairperson, who has brought a wealth of
experience and fresh insights into our business and is driving
the strategies that will build our company.
terry mcConnachie nigel trevarthen
Chief Executive Officer
Deputy Chief Executive Officer
13
produce the ‘annual flood’ event. To ensure the process would
be handled in the most efficient manner, Sylvania decided
to withdraw and re-submit its MRA, thus giving more time
for the EIA process to be completed. The approach taken
now will not require the flood event to occur to obtain the
expected permissions.
This MRA, as well as the EIA process, is at least a year away so
no decisions on progressing this project will be made until the
mining right and EIA have been approved.
harriet’s Wish
Our confidence in the excellent PGM mineralisation of the
Harriet’s Wish property remains undiminished, though
drilling has been completely scaled back along with our other
Northern Limb exploration work.
PGM grades indicated by drilling at Harriet’s Wish were
particularly high, with the highest being 8.22g/t over a width
of 3.31 metres. This indicated promising extensions to the
resource of 4.99 million ounces of combined platinum and
palladium indicated at Kransplaats and Nonnenwerth lying to
the south. However, the Harriet’s Wish PGM mineralisation
lies some 350 metres below surface, at depths that preclude
opencast mining. Underground mining lies outside the scope
of our competency and, depending on the state of the PGM
market, our intention is to sell the properties or to find joint
venture partners to finance a new mine.
In April 2013, our subsidiary Hacra Mining and Exploration
Company (Pty) Ltd submitted a MRA covering the extended
Harriet’s Wish properties to the Department of Mineral
Resources (DMR). As this is potentially an underground
mine and not in the scope of dump retreatment, the Board is
considering the option of selling this opportunity.
everest north
Earlier proposals to develop the Everest North property
using Aquarius Platinum’s Everest South processing plant are
on hold, and will remain so for the near future. This is despite
the fact that in the preceding year a MRA was lodged with
the DMR and an EIA completed. During FY2013, Aquarius
placed the Everest South property and plant on care and
maintenance, rendering the Everest North project unviable as
a stand-alone project at present.
However, we are investigating various options of merging,
selling or entering into a pool and share agreement for the
rights to this measured resource. In the meantime, our
strategy is to maintain these properties in their currently
scaled-back state, incurring minimum expenses.
7012_13_Sylvania AR_Front_Final_11Nov13.indd 13
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Directors’ report
Your directors present their report on the consolidated
entity (the Group) consisting of Sylvania Platinum Limited
(the Company or Sylvania) and the entities it controlled at
the end of, or during, the financial year ended 30 June 2013.
Unless otherwise stated, the consolidated financial information
contained in this report is presented in US dollars.
the Johannesburg Stock Exchange. He is well known for
identifying mining opportunities and has started many
new greenfields operations in gold, manganese, aluminium,
graphite and tantalite. He has been chief executive officer of
a number of mining, mining services and smelting companies
in South Africa.
dIreCtOrS
The names of the directors who held office during or since the
end of the year and until the date of this report are as follows.
SA Murray
(Non-executive Chairman, appointed
1 April 2013)
TM McConnachie (Chief Executive Officer)
GM Button
(Executive Director)
RA Williams
(Independent Non-executive Director)
RD Rossiter
(Non-executive Chairman, resigned
14 January 2013)
LM Carroll
(Finance Director, resigned 14 January 2013)
The directors of Sylvania were in office from 1 July 2012 unless
otherwise stated.
InFOrmatIOn On dIreCtOrS
SA Murray
Mr Murray has over 25 years of executive experience in
the Southern African platinum sector, having started his
career at Impala Platinum’s Refineries in 1984. He held a
number of positions at Impala Platinum, Rhodium Reefs
Limited, Barplats, and Middelburg Steel and Alloys, before
joining Aquarius Platinum Limited in 2001 as Chief Executive
Officer, holding that position until 2012. He is currently a
Non-executive Director of Talvivaara Mining Company Plc,
the Finnish nickel miner.
Special responsibilities
Non-executive Chairman of the Board
Member of the Remuneration Committee
TM McConnachie
Mr McConnachie has over 26 years of experience in
mining, beneficiation of ferroalloys and precious metals.
He was the founder of Merafe Resources Limited (formerly
South African Chrome & Alloys Limited), a successful
chrome mining company, black empowered and listed on
Special responsibilities
Chief Executive Officer
GM Button
Mr Button was a director and Company Secretary of Sylvania
Resources Limited for four years until June 2007. He re-joined
the Sylvania Group as Company Secretary in January 2009
and was appointed to the Board in May 2009. Mr Button is
a qualified accountant with 20 years’ experience at a senior
management level in the resources industry. He has acted as
an executive director, managing director, finance director, chief
financial officer and company secretary for a range of publicly
listed companies.
Special responsibilities
Joint Assistant Company Secretary
Member of the Audit and Remuneration Committees
RA Williams
Mr Williams was appointed to the Board on 29 December 2011.
He is a Chartered Accountant with over 20 years’ international
experience in mining finance, and with an honours degree
in French and Spanish. After joining Randgold Resources in
1997, he was appointed Group Finance Director in 2002.
Mr Williams went on to become Chief Financial Officer of
JSE-listed AECI Limited before moving to BSG Resources
Limited. He is currently a director of Shaft Sinkers
Holdings plc (LSE: SHFT) and consults to companies in
the mining sector.
Special responsibilities
Chairman of the Audit and Remuneration Committees
COmPany SeCretary
The Company Secretary role is held by Codan Services
Limited and they are jointly assisted by LM Carroll and
GM Button. Mr Carroll was a director of Sylvania until
14 January 2013. He has over 40 years’ experience in the
resources industry and has served as executive and non-
executive director on a number of private and publicly
listed companies. Please refer to the above information on
directors for further details on Mr Button.
14
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Annual Report 2013 Governance
PrInCIPaL aCtIvItIeS
Mitigation
The principal activity of the Group during the financial year
was the low cost extraction of PGMs from chrome dumps
and current arisings. Further information is given in the CEO’s
and Deputy CEO’s review.
BuSIneSS revIeW
Principal risks and uncertainties
The Company is subject to a variety of risks, specifically those
relating to the mining and exploration industry. The executive
directors, assisted by senior management, undertakes ongoing
risk assessments to identify and consider major internal and
external risks to the business model of the Company. Risks
identified are linked to the Group deliverables in order to
ensure continuous mitigation of these risks, which is aligned
with corporate objectives.
Outlined below is a description of the principal risk factors
that the Board feel may affect performance. The risks
detailed below are not exhaustive and further risks and
uncertainties may exist which are currently unidentified or
considered to be immaterial. The risks are not presented in
any order of priority.
Commodity price
Risk and impact
Commodity prices are subject to high levels of volatility and
are impacted by a number of factors that are outside of the
control of the Group. Low PGM prices may affect the ability
of the Company to fund its growth. Given the contractions
in the world economies and changes in the market sentiment
towards the resources industry, the Company’s ability to
raise sufficient capital, through debt or equity, for further
exploration, investment or development is uncertain.
Mitigation
Directors and management constantly monitor the market
in which the Group operates. Long-term financial planning
is undertaken on a regular basis and production is focussed
on the extraction of low-cost ounces. Sylvania has largely
completed and financed all capital expansion and is not
planning to construct any new retreatment plants. Any major
exploration capital for the Northern Limb, Volspruit and
Everest North projects remains on hold for the short term
and will be reassessed by the Board on an ongoing basis.
Sustained resources
Risk and impact
The retreatment of dump material has a finite life and it is
essential for the long-term continuation of the SDO that
additional feed material is found and committed to the plants.
All operations have dump resources which will provide
several years of production. The risk is further mitigated by
the current arisings and ROM from the host mines which are
fed through the SDO. These feed sources will be available to
Sylvania for the life of the mine and are currently not at risk.
Opportunities to acquire additional resources and the ability
to expand the SDO are continually being investigated by the
Board and senior management.
Failure to attract and retain key staff
Risk and impact
Sylvania relies on a small team of experienced professionals
for its success. The loss of key personnel and the failure to
attract appropriate staff may cause short-term disruption to
the business.
Mitigation
In order to reduce this risk, key staff have been given enhanced
notice periods and a share option scheme. Succession planning
also features on the agenda at Board meetings.
Country risk
Risk and impact
The Company’s operations are all in South Africa. Operations
have been disrupted in recent months by labour disputes
and safety stoppages on host mines and at refineries, as
well as power outages. The mining labour environment in
South Africa continues to be a concern for the sector in
general. Consistent power supply to the operations is key
to the stability of the plants. Tweefontein in particular has
experienced a number of stoppages as a result of power
failures from the national electricity provider.
Mitigation
Directors and management place great emphasis on
maintaining constructive relations with labour. Safety is a top
priority on all sites as evidenced by the safety statistics. Back-
up generators have been acquired and discussions continue
with the power utility to ensure a more stable power supply.
GrOuP FInanCIaL reSuLtS
results for the year
The consolidated profit of the Group for the year before
income tax expense was $5,361,767 (FY2012: loss $2,502,975).
The cash balance at 30 June 2013 was $6,564,885 (FY2012:
$15,696,899). Despite the challenges the Company has
faced during the current financial year, the directors are
pleased that the Group has generated a net cash inflow from
operations of $4,053,083.
15
7012_13_Sylvania AR_Front_Final_11Nov13.indd 15
2013/11/21 4:04 PM
Directors’ report continued
Production throughput increased by 39% from 1,445,235 tonnes
COrPOrate matterS
to 2,012,633 tonnes. However, with the placement of the
CTRP onto care and maintenance in August 2012, coupled
with lower feed grades, total ounces produced were 44,255
PGM ounces (including CTRP) for the year, a 3% decrease
on the prior year. Revenue remained flat year-on-year. Cost
of sales (direct and indirect costs of production) increased
16% due to the increased volumes, the change in allocation of
general and administration cost attributable to the operations,
and the start-up of the Tweefontein plant in September 2012.
Capital spend was scaled back during the current financial
year. Construction and start-up of the Tweefontein plant was
completed at a total cost of $11,489,772, $8,110,413 of which
was incurred during FY2013. The purchase of the Zoetveld
properties was completed in January 2013 at a cost of
R22,000,000 (~$2,200,000).
The completion of the iron ore transaction yielded a
$9,911,779 profit in the current financial year. Details of this
transaction are provided under the corporate matters section
of this report.
revIeW OF OPeratIOnS
A detailed review of operations has been included in the CEO
and Deputy CEO’s report.
appointment of Stuart murray
On 17 January 2013, the Company announced that Mr Stuart
Murray would join the Sylvania Board from 1 April 2013 as
Chairman of Sylvania.
The Board believes that Mr Murray’s experience and
knowledge of the sector will be an asset to the Company in
achieving its strategic goals.
IrOn Ore aSSetS
On 16 August 2012, the disposal of the iron ore assets
was completed, and readmission of the enlarged Mercury
Group (now renamed Ironveld Plc) to the AIM took place.
Distribution of the Ironveld Plc shares to the Sylvania
shareholders was also completed on 16 August 2012
on the basis that for every Sylvania ordinary share held
by Sylvania shareholders, 0.675 of an ordinary share in
Mercury was received.
Sylvania has also entered into a facility agreement with
Ironveld Plc whereby Sylvania (through its South African
subsidiary, Sylvania Metals (Pty) Ltd) will provide a loan
facility of up to R15 million (approximately $1.8 million) (at
30 June 2013 drawn to $460,117) to Ironveld Holdings (Pty)
Ltd (Ironveld), the company which holds the iron ore assets
Despite the challenges
the Company has faced
during the current
financial year, the
directors are pleased
that the Group has
generated a net cash
inflow from operations of
$4,053,083.
7012_13_Sylvania AR_Front_Final_11Nov13.indd 16
2013/11/21 4:04 PM
16
Annual Report 2013 Governance
(facility). Ironveld Plc has guaranteed all obligations of Ironveld
under the facility. The funds made available under the facility
are to be used to further fund the development of the iron
ore assets.
The facility will mature on 30 June 2016, at which time the
amount utilised under the facility (and all accrued interest)
will be repayable. As security for the amount due under the
facility, Ironveld Plc issued to Sylvania warrants to subscribe for
up to £1.5 million ($2.3 million) of ordinary shares in Ironveld
Plc at a price equal to the 90 day VWAP on the business day
preceding the exercise of the warrants. The warrants are
exercisable only if the facility is not fully repaid by 30 June 2016
and may be exercised post 30 June 2016 up until the date that is
five years from admission (although the warrants will lapse once
repayment has been made). Any proceeds derived from exercise
of the warrants will be used by Ironveld Plc to repay the facility.
For so long as any amount remains owing under the facility,
Sylvania has the right to appoint a director to the board of
Ironveld Plc. Pursuant to this right, Sylvania has appointed
Terry McConnachie (CEO of Sylvania) as a non-executive
director of Ironveld Plc. The appointment became effective on
15 August 2012.
The Company has recognised a profit on disposal of
$9,911,779 on completion of the transaction, calculated as the
difference between the share price of Ironveld Plc multiplied
by the number of shares received and the net liabilities
transferred to Ironveld Plc plus costs incurred.
nOrthern LImB OPeratIOnS
As detailed in the Company’s quarterly announcements, the
Company’s short- to medium-term strategy is to maximise
profits from the low-cost tailings retreatment business.
Since adequate information is available to submit an MRA,
exploration on the Northern Limb has been scaled back.
The MRA for PGMs on the Harriett’s Wish farm was
submitted to the DMR by Hacra Mining and Exploration
Company (Pty) Ltd, a Sylvania Platinum subsidiary, on
19 April 2013. A notice of acceptance of the application
was received from the DMR on 25 May 2013.
On 10 May 2013, the Company announced that it planned to
withdraw and re-submit the Volspruit MRA. The reason for
the withdrawal was the failure of the expected regular Nyl
river flood event. This prevented the information required
to complete the EIA from being available. A technical
study approach was commissioned to obtain the necessary
information to complete the EIA but this could not be
completed by the deadline set for the process by government.
The MRA resubmission has been accepted by the DMR and
the study work is being finalised for the EIA.
dIvIdendS
A dividend in specie was declared on 16 August 2012 to all
Sylvania shareholders following the conclusion of the sale of
the iron ore assets to Ironveld Plc (formerly Mercury Recycling
Group Plc). The distribution was made on the basis that, for
every Sylvania share held, a Sylvania shareholder received
0.675 of an ordinary share in Ironveld Plc. Shareholders on
the Sylvania share register who held less than 2,000 ordinary
shares and any Sylvania holders who had registered addresses
in the United States, Canada and Japan did not receive
consideration shares, but instead received a cash dividend
based on the equivalent value of the dividend in specie.
On 21 January 2013, the Company announced its new
dividend policy. After years of intensive capital investment,
the Company is now moving towards steady-state operations.
The dividend policy is in line with the change in strategy from
capital investment and growth to a strategy of returning
surplus cash back to shareholders.
The dividend policy allows for a semi-annual dividend payment
to shareholders of 25% of the previous half-year’s earnings,
provided the resultant company cash balance following the
payment of any dividend is greater than $8 million.
Share Buy-BaCk and CanCeLLatIOn OF
LOan ShareS
On 27 November 2012, Sylvania bought back and cancelled
2,533,000 shares (plan shares) which were issued under the
terms of the Company’s share plan.
The plan shares were acquired by certain employees of the
Company (and one director, as referred to below) with a loan
provided by the Company to each employee for the purpose
of the acquisition (loan). The plan shares were not able to be
sold or otherwise dealt with until inter alia, the relevant loan
was repaid to the Company in full.
In accordance with the terms of the share plan and the
agreement pursuant to which each relevant employee
acquired their plan shares, the Company is entitled to buy
back the plan shares from employees and apply the proceeds
otherwise payable to the employee to satisfy fully the
employee’s loan.
17
7012_13_Sylvania AR_Front_Final_11Nov13.indd 17
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Directors’ report continued
Accordingly, the Company bought back the plan shares at a
price of 9.10 pence per plan share, being the closing price of the
Company’s shares on AIM on 26 November 2012. This was a
cash neutral transaction as the consideration received by each
employee under the buy-back was applied in repayment of
their loan so that upon completion of the buy-back the relevant
loans are fully satisfied. Note that for accounting purposes these
shares were treated as in substance options.
It is noted that 1,000,000 of the plan shares were held by
Richard Rossiter, the Company’s previous Chairman. These
plan shares were included in the buy-back on the basis set
out above.
On 27 March 2013, the Company bought back a further
250,000 ordinary shares of $0.10 each at 9.94 pence per
ordinary share. These shares were cancelled.
Grant OF OPtIOnS
On 11 June 2013, 1,000,000 options were issued in terms
of the Sylvania option plan approved by the shareholders
on 29 December 2011.
SummOnS reCeIved FrOm PLatmIn SOuth
aFrICa (Pty) Ltd
On 12 September 2012, Sylvania announced that a
summons was received by the Company regarding a
claim being brought by Platmin South Africa (Pty) Ltd
(Platmin) (previously known as Boynton Investments (Pty)
Ltd (Boynton)), a subsidiary of Platmin Limited, declaring
Platmin as the co-owner of the tailings, or, alternatively, the
co-owner of the PGMs contained in the Lannex Tailings
Dam situated on the Farm Grootboom in the District of
Lydenburg, Mpumulanga, South Africa.
A similar case was brought to Sylvania by Boynton in 2009
and later withdrawn, with Boynton paying all costs. The
Board of Sylvania continues to refute these claims and the
matter is being vigorously opposed. Court pleadings have
now been finalised and the matter was set down for a
hearing on 1 August 2014.
aCquISItIOn OF POrtIOnS OF the FarmS
ZOetveLd and GraSvaLLy
Sylvania, through a wholly owned subsidiary, Zoetveld
Mining and Prospecting (Pty) Ltd (Zoetveld) concluded the
purchase of portions of the farms Zoetveld and Grasvally (the
properties), located adjacent to Sylvania’s proposed Volspruit
Mine in the Mokopane District of the Limpopo Province.
In May 2012, Zoetveld entered into a partnership deal
with a locally empowered company who has submitted an
application for the prospecting rights over the area such that,
should the prospecting rights be granted, 50% of these rights
would be swapped for 50% of the surface rights.
In January 2013, the final conditions for this R22,000,000
(~$2,200,000) purchase of the properties were concluded
and the 2,817 hectare property was transferred to
Zoetveld. As part of the purchase, Zoetveld has accepted
the rehabilitation responsibility of the previous holder of
the mining right at the old chrome mine to the extent of
R12,000,000 (~$1,200,000). Sylvania believes that the planned
adjacent Volspruit Mine will be able to place its future tailings
dams on the existing chrome tailings dams, thus transferring
the rehabilitation liability. An additional benefit is that it will
reduce the environmental impact of the future Volspruit Mine.
LIkeLy deveLOPmentS and exPeCted reSuLtS
Additional comments on expected results of certain operations
of the Group are included in the review of operations and
activities in the CEO’s and deputy CEO’s review.
envIrOnmentaL LeGISLatIOn
The Group is subject to significant environmental legal
regulations in respect of its exploration and evaluation activities
in South Africa. There have been no known significant breaches
of these regulations and principles by the Group.
meetInGS OF dIreCtOrS
During the financial year, there were three formal directors’
meetings. All other matters that required formal Board
resolutions were dealt with via written circular resolutions
and through the holding of conference calls. In addition,
the directors met on an informal basis at regular intervals
during the year to discuss the Group’s affairs.
7012_13_Sylvania AR_Front_Final_11Nov13.indd 18
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18
Annual Report 2013 Governance
volspruit mine
will be able to place
its future tailings
dams on the existing
chrome tailings
dams – transferring
rehabilitation liability.
The number of formal meetings of the Company’s Board of Directors attended by each director were:
Board
Audit Committee
Remuneration Committee
Number of
meetings
eligible to
attend
Number of
meetings
attended
Number of
meetings
eligible to
attend
Number of
meetings
attended
Number of
meetings
eligible to
attend
Number of
meetings
attended
TM McConnachie
SA Murray
RD Rossiter
LM Carroll
GM Button
RA Williams
3
1
–
1
3
3
3
1
–
1
3
3
–
–
–
2
2
2
–
–
–
2
2
2
2
–
–
–
2
2
2
–
–
–
2
2
dIreCtOrS’ IntereSt In ShareS and OPtIOnS
The following relevant interests in the shares and options of the Company or related body corporate were held by the directors as
at the date of this report:
Shares and options
2013
TM McConnachie
SA Murray
GM Button
RA Williams
Common shares
Share options
500,000
–
300,000
173,000
2,000,000
1,000,000
1,000,000
500,000
7012_13_Sylvania AR_Front_Final_11Nov13.indd 19
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19
Directors’ report continued
dIreCtOrS and key manaGement PerSOnneL
The key management personnel of the Group are the directors of the Company and those executives that report directly to the
CEO or as determined by the Board. Details of directors and key personnel remuneration is as follows:
directors and key management remuneration
Short-term benefits
Post-
employment
benefits
Share-based
payment
Cash salary/
Consulting fees
$
Bonus1
$
Directors’
fees
$
Super-
annuation
$
Equity shares/
share options
$
2013
Directors
TM McConnachie
386,283
SA Murray 2
RD Rossiter 3
LM Carroll 3
GM Button
RA Williams
Other key
management
–
–
274,078
254,485
–
914,846
–
–
–
–
–
–
–
60,000
25,000
30,798
30,798
60,000
60,000
266,596
64,522
331,118
–
–
–
–
–
–
–
–
–
Total
$
666,541
27,906
140,927
470,070
424,614
115,065
1,845,123
220,258
2,906
110,129
165,194
110,129
55,065
663,681
1,364,177
2,279,023
16,622
16,622
556,001
1,219,682
2,001,322
3,846,445
1 Cash bonuses were awarded to directors and key personnel based on individual performance.
2 SA Murray appointment as Chairman of the Board effective 1 April 2013.
3 RD Rossiter and LM Carroll resigned as directors of the Company on 14 January 2013.
7012_13_Sylvania AR_Front_Final_11Nov13.indd 20
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20
Annual Report 2013 Governance
IndemnIFICatIOn and InSuranCe OF
dIreCtOrS and OFFICerS
Statement aS tO dISCLOSure OF InFOrmatIOn
tO audItOrS
During the year, the Company paid premiums in respect
of a contract, insuring all directors and officers of the
Company against liabilities incurred as directors or
officers. Due to confidentiality clauses in the contract,
the amount of the premium has not been disclosed. The
Company has no insurance policy in place that indemnifies
the Company’s auditors.
GOInG COnCern
The Board of Directors are satisfied that the Company and
the Group have adequate resources to continue in operational
existence for the foreseeable future. It is for this reason
that the consolidated annual financial statements have been
prepared on the going concern basis.
eventS aFter the rePOrtInG PerIOd
The directors are not aware of any matter or circumstance
arising since the end of the financial year, not otherwise dealt
with in the annual financial statements, which significantly
affects the financial position of the Company or the results of
its operations.
The directors who were in office on the date of approval
of these financial statements have confirmed, as far as they
are aware, that there is no relevant audit information of
which the auditors are unaware. Each of the directors has
confirmed that they have taken all the steps that they ought
to have taken as directors in order to make themselves
aware of any relevant audit information and to establish that
it has been communicated to the auditor.
audItOrS
In view of the Company’s focus on cash generation and
reducing overheads, the Board has decided to tender the audit
for the forthcoming year. A resolution to appoint auditors will
be proposed at the next annual general meeting (AGM).
Signed in accordance with a resolution of the directors.
terry mcConnachie
Chief Executive Officer
23 August 2013
7012_13_Sylvania AR_Front_Final_11Nov13.indd 21
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21
Corporate governance statement
IntrOduCtIOn
rISk aSSeSSment
The Company, being listed on AIM, is not required to comply
with the UK Corporate Governance Code (the Code) issued
in May 2010. However, the Company has given consideration
to the provisions set out in Section 1 of the Code annexed to
the Financial Services Authority Listing Rules. The directors
support the objectives of the Code and intend to comply with
those aspects that they consider relevant to the Group’s size
and circumstances. Details of these are set out below.
the BOard OF dIreCtOrS
The Board is accountable to its shareholders for good
governance and for leading, developing and protecting the
interests of the Company. The Board currently comprises
four members being the independent non-executive
chairman, one independent non-executive director and two
executive directors, the details of whom are outlined in the
directors’ report.
There is a clear division of responsibilities at the head of
the Company through the separation of the positions of
Chairman and the Chief Executive Officer. The Company
holds regular Board meetings at which financial and
operational reports are considered and, where necessary,
voted upon. All requests for capital expenditure by the
Company are included in Board papers and each decision
on capital expenditures is contemplated and voted upon
by the full Board of Directors. The Board is responsible
for monitoring and reviewing the activities of executive
management. The Board is also responsible for developing
corporate and operational strategy as well as reviewing
planning, operational and financial performance.
BOard evOLutIOn
It is the Board’s intention, over a period of time, to
reconstitute the Board of Directors by increasing the number
of independent non-executive directors and reducing the
number of executive directors currently on the Board.
This process has been ongoing with the appointment of the
Company’s first Independent Non-executive Director,
Roger Williams, and the appointment of an Independent
Non-executive Chairman, Stuart Murray. As part of this
process, two directors, Richard Rossiter and Louis Carroll
have resigned from the Board of Directors.
The Board undertakes ongoing risk assessments to identify
and consider major internal and external risks to the business
model of the Company.
SharehOLder reLatIOnS
Management meets regularly with major shareholders and
seeks where possible to respond to their concerns.
The directors have established Audit, Remuneration and
Nominations Committees. Corporate governance and
sustainability issues are dealt with by the full Board of Directors.
audIt COmmIttee
The membership of the Audit Committee comprises Roger
Williams (Chairman), Grant Button and Louis Carroll. All
members of the Audit Committee are fully qualified accountants.
The Audit Committee meets at least twice annually. The
committee reviews the financial reports and accounts and
the half-yearly and annual financial statements in light of the
Company’s accounting policies to monitor the integrity of the
Company’s financial statements and announcements. The
committee reviews internal control and risk management
systems and compliance procedures and makes any necessary
recommendations to the Board.
In addition, the committee is charged with reviewing the
independence, performance, terms of engagement and
level of fees for the auditors, as well as monitoring the level
of non-audit fees incurred with the audit firm. The Audit
Committee invites representatives of the external auditor to
all committee meetings. The Audit Committee is satisfied that
the Company’s auditors are independent.
remuneratIOn COmmIttee
The Remuneration Committee is chaired by Roger Williams
and includes Stuart Murray and Grant Button as members.
During FY2013, the Remuneration Committee met formally
twice and it is intended that the committee will meet twice
in FY2014.
Under its terms of reference, the Remuneration Committee
assists the Board in determining the remuneration
arrangements and contracts of the executive directors and
senior employees. It also reviews the Board and executive
7012_13_Sylvania AR_Front_Final_11Nov13.indd 22
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22
Annual Report 2013 Governance
the board
undertakes ongoing risk
assessments to identify
and consider major
internal and external
risks to the business
model of the Company.
staff’s key performance indicators, as well as performance-
related pay and option scheme allocations.
No director is involved in reviewing his own remuneration.
The directors’ remuneration report, which includes details of the
directors’ interest in options and shares as well as information
on service contracts, is set out in the directors’ report.
The independent non-executive directors may, if needed, seek
independent professional advice, at the Company’s expense, in
the execution of their duties.
nOmInatIOnS COmmIttee
The role of the Nominations Committee is under taken by
the full Board of Directors. Under its terms of reference,
the Nominations Committee is charged with finding
suitable candidates for nomination for appointment to the
Board of Directors.
Refer to the directors’ report for the attendance register table.
InternaL COntrOLS
The Board is responsible for establishing the Group’s
system of internal controls and for reviewing the
effectiveness of such controls. The controls have been
designed to safeguard the assets of the Company and
to ensure the reliability of financial information both for
internal use and external publication. Controls cover
the financial, operational, compliance and management
functions and are reviewed on a regular basis. However,
this can only provide reasonable and not absolute
assurance against material errors, losses or fraud.
Due to the relatively small size of the Group’s operations,
the directors are very closely involved in the day-to-
day running of the business and as such have less need
for a detailed formal system of internal financial control.
The directors have reviewed the effectiveness of the
procedures presently in place and consider that they are
appropriate to the nature and scale of the operations of
the Group.
7012_13_Sylvania AR_Front_Final_11Nov13.indd 23
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23
Consolidated statement of comprehensive income
(for the year ended 30 June 2013)
Revenue
Cost of sales
Gross profit
Other income
Losses on sale of property, plant and equipment
Foreign exchange gain/(loss)
Gain/(loss) on financial assets at fair value through profit and loss
Impairment of available-for-sale financial assets
Share of loss of jointly controlled entities
General and administrative costs
Operating profit/(loss) before finance costs and tax expense
Finance revenue
Finance costs
Profit/(loss) before income tax expense
Income tax expense
Net profit/(loss) for the year
Other comprehensive income
Items that may be subsequently reclassified to profit and loss:
Impairment of available-for-sale investments transferred to profit and loss
Foreign currency translation
Total comprehensive loss for the year
Profit/(loss) attributable to:
Owners of the parent
Non-controlling interest
Total comprehensive loss attributable to:
Owners of the parent
Non-controlling interest
Profit/(loss) per share for profit/(loss) attributable to the ordinary equity holders of
the Company:
Basic earnings/(loss) per share
Diluted earnings/(loss) per share
The accompanying notes form part of these financial statements.
Notes
2013
$
2012
$
4(a)
39,981,761
40,078,158
(39,137,783)
(33,651,912)
843,978
6,426,246
4(b)
10,014,714
(1,629)
165,164
4,106
71,157
(8,669)
(25,359)
(24,770)
(44,394)
(368,797)
7
(201,040)
(475,413)
(5,467,202)
(9,226,614)
5,313,697
(3,632,219)
268,634
1,274,892
(220,564)
(145,648)
5,361,767
(2,502,975)
5
(992,536)
(1,468,828)
4,369,231
(3,971,803)
17
17
–
195,114
(18,087,729)
(17,211,584)
(13,718,498)
(20,988,273)
4,369,231
(3,971,803)
–
–
4,369,231
(3,971,803)
(13,718,498)
(20,988,273)
–
–
(13,718,498)
(20,988,273)
Cents
Cents
6
6
1.45
1.39
(1.32)
(1.32)
7012_13_Sylvania AFS_MM29_Final.indd 24
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24
Annual Report 2013 Consolidated statement of financial position
(as at 30 June 2013)
Assets
Non-current assets
Equity accounted investments in joint ventures
Investments in associates
Other financial assets
Exploration and evaluation assets
Property, plant and equipment
Total non-current assets
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Current tax asset
Non-current assets classified as held-for-sale
Total current assets
Total assets
Equity and liabilities
Shareholders' equity
Issued capital
Reserves
Retained profit
Equity attributable to the owners of the parent
Non-controlling interest
Total equity
Non-current liabilities
Interest-bearing loans and borrowings
Provisions
Deferred tax liability
Total non-current liabilities
Current liabilities
Trade and other payables
Interest-bearing loans and borrowings
Current tax liability
Liabilities directly associated with the non-current assets classified as held-for-sale
Total current liabilities
Total liabilities
Total liabilities and shareholders' equity
The accompanying notes form part of these financial statements.
Notes
2013
$
2012
$
7
8
9
10
11
12
13
14
15
16
17
18
19
20
5
21
19
15
1,698,531
2,048,635
11
–
1,547,514
93,235
67,276,715
75,602,341
60,289,304
68,492,697
130,812,075
146,236,908
6,564,885
15,696,899
11,860,948
12,942,343
612,866
49,846
596,719
403,527
–
1,343,889
19,088,545
30,983,377
149,900,620
177,220,285
29,515,534
29,557,290
71,055,566
98,204,246
20,847,888
16,478,657
121,418,988
144,240,193
–
–
121,418,988
144,240,193
170,287
256,063
2,578,036
1,257,235
18,728,253
23,623,156
21,476,576
25,136,454
6,828,169
7,623,192
169,151
7,736
–
174,654
9,317
36,475
7,005,056
7,843,638
28,481,632
32,980,092
149,900,620
177,220,285
7012_13_Sylvania AFS_MM29_Final.indd 25
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25
Financial statements Consolidated statement of changes in equity
(for the year ended 30 June 2013)
Issued
capital
Share
premium
reserve
Retained
profit
Net
unrealised
gains reserve
Share-based
payment
reserve
Foreign
currency
translation
reserve
Non-
controlling
interest
reserve
Equity
reserve
Owners of
the parent
Non-
controlling
interest
$
$
$
$
$
$
$
$
$
29,639,275 160,044,225
20,450,460
(195,114)
669,633
23,603,839
(39,779,293)
(29,741,213) 164,691,812
Balance as at
1 July 2011
Loss for the year
Other comprehensive
income
Total comprehensive
income for the year
Share transactions
– Shares issued
(3,971,803)
–
–
195,114
(3,971,803)
195,114
–
–
–
–
–
–
–
–
– Share buy-back
(48,690)
(105,842)
– Capital raising costs
(33,295)
– Share-based payments
–
–
–
Balance as at
30 June 2012
Balance as at
1 July 2012
Profit for the year
Other comprehensive
income
Total comprehensive
income for the year
Share transactions
29,557,290
159,938,383
16,478,657
29,557,290 159,938,383
16,478,657
–
–
–
–
–
–
4,369,231
–
4,369,231
– Share buy-back
(40,000)
(21,992)
– Capital transaction costs
(1,756)
– Share-based payments
–
–
–
In specie distribution
(note 15)
Balance as at
30 June 2013
–
(10,308,198)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Total
equity
$
164,691,812
(3,971,803)
(17,016,470)
$
–
–
–
–
–
(3,971,803)
(17,016,470)
– (20,988,273)
– (20,988,273)
–
–
–
–
–
(154,532)
(33,295)
724,481
–
–
–
–
–
(154,532)
(33,295)
724,481
–
–
–
–
–
–
724,481
–
(17,211,584)
(17,211,584)
–
–
–
–
–
–
–
–
–
–
–
1,394,114
6,392,255
(39,779,293)
(29,741,213) 144,240,193
– 144,240,193
1,394,114
6,392,255
(39,779,293)
(29,741,213) 144,240,193
–
4,369,231
– 144,240,193
–
4,369,231
–
–
–
–
–
1,269,239
–
–
(18,087,729)
(18,087,729)
–
–
–
–
–
–
–
–
–
–
–
–
(18,087,729)
–
(18,087,729)
–
(13,718,498)
–
(13,718,498)
–
–
–
(61,992)
(1,756)
1,269,239
–
(61,992)
(1,756)
1,269,239
–
–
–
–
(10,308,198)
–
(10,308,198)
29,515,534 149,608,193
20,847,888
2,663,353
(11,695,474)
(39,779,293)
(29,741,213) 121,418,988
– 121,418,988
The accompanying notes form part of these financial statements.
7012_13_Sylvania AFS_MM29_Final.indd 26
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26
Annual Report 2013 Consolidated statement of cash flows
(for the year ended 30 June 2013)
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Finance income
Realised foreign exchange gain/(loss)
Exploration expenditure
Finance costs
Taxation received
Notes
2013
$
2012
$
37,921,910
44,399,216
(34,222,019)
(32,554,455)
255,111
165,164
(11,488)
(60,687)
1,282,317
(25,359)
(23,411)
(145,649)
5,092
1,355,826
Net cash inflow from operating activities
22
4,053,083
14,288,485
Cash flows from investing activities
Purchase of property, plant and equipment
Payments for exploration and evaluation
Cash attributable to disposal of non-current assets held-for-sale
Payments for equity accounted investments
Net cash outflow from investing activities
Cash flows from financing activities
Repayment of borrowings
Payment of loans to Ironveld Holdings
Repayment of loans from related parties
Proceeds from loans from related parties
Payment for share buy-back
Capital transaction costs
Net cash outflow from financing activities
Net decrease in cash and cash equivalents
Effect of exchange fluctuations on cash held
Cash and cash equivalents beginning of period
Cash and cash equivalents, end of period
The accompanying notes form part of these financial statements.
(10,310,413)
(15,102,282)
(549,463)
(4,871,128)
(19,313)
(198,275)
–
(161,000)
(11,077,464)
(20,134,410)
(235,361)
(495,945)
(5,271)
–
(61,992)
(1,756)
(800,325)
(170,434)
–
–
6,765
(154,532)
(33,295)
(351,496)
(7,824,706)
(6,197,421)
(1,327,089)
(1,582,991)
15,716,680
23,497,092
12
6,564,885
15,716,680
7012_13_Sylvania AFS_MM29_Final.indd 27
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27
Financial statements
Notes to the consolidated financial statements
(for the year ended 30 June 2013)
1. Corporate information
The consolidated financial statements of Sylvania Platinum Limited (Sylvania) for the year ended 30 June 2013 were authorised for issue in
accordance with a resolution of the directors on 23 August 2013. Sylvania is a limited company incorporated and domiciled in Bermuda
whose shares are publicly traded.
The principal activity of the Group during the financial year was investment in mineral exploration and mineral treatment projects. As new
mineral treatment plants became operational, focus is being concentrated on operations. Operational focus during the financial year was
concentrated on the retreatment plants.
The consolidated financial statements represent the ongoing activities of the Sylvania Group.
2. SignifiCant aCCounting poliCieS
2.1 Basis of preparation
The consolidated financial statements have been prepared on a historical cost basis, except for available-for-sale investments, embedded
derivatives and investments carried at fair value through profit and loss, which have been measured at fair value. The consolidated financial
information is presented in US dollars and the parent’s functional currency is Australian dollars. The presentation currency differs from the
functional currency of the parent as the sales of platinum metals are denominated in US dollars; and alignment of the functional currency
with the sales price is considered to provide more useful information to the users of the financial statements.
Statement of compliance
The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards
(IFRS) as issued by the International Accounting Standards Board (IASB).
New and amended standards and interpretations
The accounting policies adopted are consistent with those in the previous financial year except that, in the current year, the Group has
adopted all new and revised Standards and Interpretations issued by the IASB and the International Financial Reporting Interpretation
Committee (IFRIC) of the IASB that are relevant to its operations and effective for the accounting periods beginning on or before
1 July 2012, including:
IAS 1 Presentation of Financial Statements
The amendment requires companies preparing financial statements in accordance with IFRS to group together items within other
comprehensive income to be presented as:
• those which will be reclassified to profit or loss; and
• those which will not be reclassified to profit or loss.
The related tax disclosures are also required to follow the presentation allocation.
The amendment affects presentation only and has no impact on the Group’s financial position or performance.
Basis of consolidation
The consolidated financial statements comprise the financial statements of the Group and its subsidiaries as at 30 June 2013.
Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be
consolidated until the date when such control ceases.
The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using consistent
accounting policies.
All intra-group balances, transactions, unrealised gains and losses resulting from intra-group transactions and dividends are eliminated in full.
Where ownership of a subsidiary is less than 100%, and therefore a non-controlling interest/s exists, any losses of that subsidiary are
attributed to the non-controlling interest/s even if that results in a deficit balance.
7012_13_Sylvania AFS_MM29_Final.indd 28
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28
Annual Report 2013 A change in ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group loses control
over a subsidiary, it:
• derecognises the assets (including goodwill) and liabilities of the subsidiary;
• derecognises the carrying amount of any non-controlling interest;
• derecognises the cumulative translation differences, recognised in equity;
• recognises the fair value of the consideration received;
• recognises the fair value of any investment retained;
• recognises any surplus or deficit in profit or loss; and
• reclassifies the parent’s share of the components previously recognised in other comprehensive income to profit or loss or retained
earnings, as appropriate.
2.2 Significant accounting judgments, estimates and assumptions
The preparation of the Group’s consolidated financial statements in conformity with IFRS requires management to make judgements,
estimates and assumptions that affect the reported amounts of assets, liabilities and contingent liabilities at the date of the consolidated
financial statements and reported amounts of revenues and expenses during the reporting period.
Estimates and assumptions are continuously evaluated, including expectations of future events that are believed to be reasonable under the
circumstances. However, actual outcomes can differ from these estimates.
Information about significant areas of estimation uncertainty considered by management in preparing the consolidated financial statements
is described below.
Revenue recognition
The accounting policy for sale of PGM concentrates is set out in note 2.3(a). The determination of revenue from the time of initial
recognition of the sale through to final pricing requires management to re-estimate continuously the fair value of the price adjustment
feature. Management determines this with reference to estimated forward prices.
Share-based payment transactions
The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at
the date at which they are granted. The fair value is determined by using a Black-Scholes-Merton model, using the assumptions detailed in
note 23.
Exploration and evaluation carrying values
The application of the Group’s accounting policy for exploration and evaluation expenditure requires judgement in determining whether
it is likely that future economic benefits are likely either from future exploitation or sale or where activities have not reached a stage
which permits a reasonable assessment of the existence of reserves. The determination of a Joint Ore Reserves Committee (JORC)
resource or South African Code for Reporting of Exploration Results, Mineral Resources and Mineral Reserves (SAMREC) is itself an
estimation process that requires varying degrees of uncertainty depending on sub-classification and these estimates directly impact the
point of deferral of exploration and evaluation expenditure. The deferral policy requires management to make certain estimates and
assumptions about future events or circumstances, in particular, whether an economically viable operation can be established. Estimates
and assumptions made may change if new information becomes available. If, after expenditure is capitalised, information becomes available
that suggests that the recovery of expenditure is unlikely, the amount capitalised is written off to profit or loss in the period in which the
new information becomes available.
Production start date
The Group assesses the stage of each plant under construction to determine when it moves into the production stage being when the plant
is substantially complete and ready for its intended use. The criteria used to assess the start date are determined based on the unique nature
of each plant construction project, such as the complexity of a plant and its location. The Group considers various relevant criteria to assess
when the production phases are to begin and all related amounts are reclassified from ‘construction in progress’ to ‘plant and equipment’.
7012_13_Sylvania AFS_MM29_Final.indd 29
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29
Financial statements Notes to the consolidated financial statements
(for the year ended 30 June 2013)
2. SiGNifiCANT ACCOuNTiNG POliCiES (continued)
2.2 Significant accounting judgments, estimates and assumptions (continued)
Some of the criteria used will include, but are not limited to, the following:
• level of capital expenditure incurred compared to the original construction cost estimates;
• completion of a reasonable period of testing of the plant and equipment;
• ability to produce concentrate in saleable form (within specifications); and
• ability to sustain ongoing production of concentrate.
When a construction project moves into the production stage, the capitalisation of certain construction costs ceases and costs are either
regarded as forming part of the cost of inventory or expensed, except for costs that qualify for capitalisation relating to asset additions or
improvements, or reserve development. It is also at this point that depreciation/amortisation commences.
Provision for restoration and rehabilitation, and decommissioning of plant and equipment
The Group assesses its restoration and rehabilitation and decommissioning of plant and equipment provision annually. Significant estimates
and assumptions are made in determining the provision as there are numerous factors that will affect the ultimate liability payable. These
factors include estimates of the extent and costs of rehabilitation activities, technological changes, regulatory changes, cost increases as
compared to the inflation rates, and changes in discount rates. These uncertainties may result in future actual expenditure differing from
the amounts currently provided.
If the change in estimate results in an increase in the restoration and rehabilitation liability and therefore an addition to the carrying value
of the asset, the entity is required to consider whether this is an indication of impairment of the asset as a whole and test for impairment in
accordance with IAS 36.
The provision at reporting date represents management’s best estimate of the present value of the future rehabilitation costs required.
Impairment of assets
The Group assesses each asset or cash generating unit (CGU) every reporting period to determine whether any indication of impairment
exists. Where an indicator of impairment exists, a formal estimate of the recoverable amount is made, which is considered to be the higher
of the fair value less costs to sell and value in use. These assessments require the use of estimates and assumptions such as long-term
commodity prices, discount rates, operating costs, future capital requirements, exploration potential, closure and rehabilitation costs and
operating performance. These estimates and assumptions are inherently uncertain and could change over time, which may impact the
recoverable amount of assets and/or CGUs.
Fair value is determined as the amount that would be obtained from the sale of the asset in an arm’s length transaction between
knowledgeable and willing parties. Fair value for mineral assets is generally determined as the present value of estimated future cash flows
arising from the continued use of the asset, which includes estimates such as the cost of future expansion plans and eventual disposal,
using assumptions that an independent market participant may take into account. Cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Management
has assessed its CGUs as being an individual mine site or retreatment plant, which is the lowest level for which cash inflows are largely
independent of those of other assets.
Key assumptions used in the assessment of impairment of assets
The recoverable amounts of the Sylvania retreatment plants have been based on cash flow projections as at 30 June 2013. The internal
financial model is based on the known and confirmed resources for each plant, and no allowance has been made for expansion capital in
accordance with International Accounting Standards (IAS 36 Impairment of assets).
The calculation of value in use is sensitive to changes in the available resources, discount rates, commodity price and operating costs.
Changes in key assumptions could cause the carrying value of assets to exceed their recoverable amounts.
Resources – The resources for each plant, including the PGM grade and expected recoveries that have been modelled are based on
extensive test work, sampling and surveying. Where the useful life of a plant is possibly longer than the material currently available to be
processed, alternative feed sources have been considered and the likelihood of these materialising assessed by management.
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Annual Report 2013 Discount rate – The discount rate reflects management’s estimate of the time value of money and the risk associated with the plants.
The base discount rate of 7.5% is the risk free rate as determined by five-year South African retail bonds and this has been increased by a
risk premium of between 2.5% and 7.5%.
Commodity price – The Company has used the prices received from the refineries at 30 June 2013 to model cash flows for the 2014
financial year. This includes platinum at $1,450/oz and palladium at $730/oz. Subsequent to 2014, forecast commodity prices obtained from
reputable financial institutions have been used and these range between $1,750 and $1,800/oz for platinum and $780 to $925/oz for palladium.
Operating costs – Operating costs are calculated on a R/tonne basis, known contractor rates and planned labour.
Exchange rates – Platinum group metals are priced in US$. The US$/rand exchange rate used in the discounted cash flow model
ranges from R9.56 to US$1 to R10.00 to US$1.
Impairment of available-for-sale financial assets
The Group follows the guidance of IAS 39 Financial Instruments: Recognition and Measurement to determine when an available-for-sale
financial asset is impaired. This determination requires significant judgement. In making this judgement, the Group evaluates, among other
factors, the duration and extent to which the fair value of an investment is less than its cost and the financial health of and short-term
business outlook for the investee, including factors such as industry and sector performance, changes in technology and operational and
financing cash flows.
Recovery of deferred income tax assets
Judgement is required in determining whether deferred tax assets are recognised on the statement of financial position. Deferred tax
assets, including those arising from unutilised tax losses, require management to assess the likelihood that the Group will generate sufficient
taxable earnings in future periods, in order to utilise recognised deferred tax assets. Estimates of future taxable income are based on
forecast cash flows from operations and the application of existing tax laws in each jurisdiction. To the extent that future cash flows and
taxable income differ significantly from estimates, the ability of the Group to realise the net deferred tax assets recorded at the reporting
date could be impacted.
Additionally, future changes in tax laws in the jurisdictions in which the Group operates could limit the ability of the Group to obtain tax
deductions in future periods. Deferred tax assets are only raised in jurisdictions where it is unlikely that tax laws will change.
Contingencies
By their nature, contingencies will only be resolved when one or more uncertain future events occur or fail to occur. The assessment of
contingencies inherently involves the exercise of significant judgement and estimates of the outcome of future events.
Inventories
Net realisable value tests are performed at least annually and represent the estimated future sales price of the product based on prevailing
spot metals prices at the reporting date, less estimated costs to complete production.
Stockpiles are measured by estimating the number of tonnes added and removed from the stockpile, the number of contained PGM
ounces based on assay data, and the estimated recovery percentage based on the expected processing method.
Stockpile tonnages are verified by periodic surveys.
Fair value hierarchy
Where the fair value of financial assets and financial liabilities recorded in the statement of financial position cannot be derived from active
markets, their fair value is determined using valuation techniques including the use of discounted cash flow models. The inputs to these
models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing
fair values. The judgements include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about
these factors could affect the reported fair value of financial instruments.
Assessment of inter-company loans as net investments in foreign operations
Settlement of inter-company loans to South African entities denominated in Australian dollars is neither planned nor likely to occur in the
foreseeable future and the loans are therefore considered to be in substance, part of the Group’s net investment in the foreign operations.
The exchange differences arising on these loans are recognised in the Group’s other comprehensive income.
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Financial statements Notes to the consolidated financial statements
(for the year ended 30 June 2013)
2. SiGNifiCANT ACCOuNTiNG POliCiES (continued)
2.3 Summary of significant accounting policies
(a) Revenue recognition
Revenue is recognised and measured at the fair value of the consideration received or receivable to the extent that it is probable that
the economic benefits will flow to the Group and the revenue can be reliably measured. The following specific recognition criteria
must also be met before revenue is recognised:
Sale of goods
Revenue is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer and the costs
incurred or to be incurred in respect of the transaction can be measured reliably. Risks and rewards of ownership are considered to
be passed to the buyer at the time of delivery of the goods to the customer.
For PGM concentrate sales, the sales are initially recognised at the date of delivery. Adjustments to the sale price occur based on
movements in the metal market price up to the date of final pricing. Final pricing is based on the monthly average market price in the
month of settlement. The period between initial recognition and final pricing is typically between two and four months. Revenue is
initially recorded at the estimated fair value of the consideration receivable. The revenue adjustment mechanism embedded within sales
arrangements has the characteristics of a commodity derivative. Accordingly the fair value of the final sales price adjustment is
re-estimated continuously and changes in fair value recognised as an adjustment to revenue in the statement of comprehensive income
and trade debtors in the statement of financial position. In all cases, fair value is determined with reference to estimated forward prices.
Interest income
For all financial instruments measured at amortised cost and interest-bearing financial assets classified as available-for-sale, interest
income is recorded using the effective interest rate (EIR), which is the rate that exactly discounts the estimated future cash payments
or receipts through the expected life of the financial instrument or a shorter period, where appropriate, to the net carrying amount of
the financial asset or liability. Interest income is included in finance income in the statement of comprehensive income.
(b) Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial
period of time to get ready for its intended use or sale are capitalised as part of the cost of the respective assets. All other borrowing
costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection
with the borrowing of funds.
The Group capitalises borrowing costs for all eligible assets where construction was commenced on or after 1 January 2009. Where
funds are borrowed specifically to finance a project, the amount capitalised represents the actual borrowing costs incurred.
Where surplus funds are available for a short term, out of money borrowed specifically to finance a project, the income generated
from the temporary investment of such amounts is also capitalised and deducted from the total capitalised borrowing cost. Where the
funds used to finance a project form part of general borrowings, the amount capitalised is calculated using a weighted average of rates
applicable to relevant general borrowings of the Group during the period
(c) Leases
The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at inception date;
whether fulfilment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use
the asset, even if that right is not explicitly specified in an arrangement.
For arrangements entered into prior to 1 January 2005, the date of inception is deemed to be 1 January 2005 in accordance with the
transitional requirements of IFRIC 4 ‘Determining whether an Arrangement contains a Lease’.
Group as a lessee
Finance leases, which transfer to the Group substantially all the risks and benefits incidental to ownership of the leased item, are
capitalised at the commencement of the lease at the fair value of the leased property or, if lower, at the present value of the minimum
lease payments. Lease payments are apportioned between finance charges and reduction of the lease liability so as to achieve a
constant rate of interest on the remaining balance of the liability. Finance charges are recognised in finance costs in profit or loss, unless
they are directly attributable to qualifying assets, in which case they are capitalised in accordance with the general policy on borrowing
costs – refer note 2.3(b).
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Annual Report 2013 A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Group will
obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset
and the lease term.
Operating lease payments are recognised as an operating expense in profit or loss on a straight-line basis over the lease term.
(d) Employee benefits
Wages, salaries, annual leave and sick leave
Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave due to be settled within
12 months of the reporting date are recognised in other payables in respect of employees’ services up to the reporting date. They are
measured at the amounts expected to be paid when the liabilities are settled. Liabilities for non-accumulating sick leave are recognised
when the leave is taken and are measured at the rates paid or payable.
(e) Share-based payment transactions
Equity settled transactions
The Group provides benefits to employees and consultants (including senior executives) of the Group in the form of share-based
payments, whereby employees render services in exchange for shares or rights over shares (equity-settled transactions).
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the
performance and/or service conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the
award (the vesting period).
The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects (i) the extent to
which the vesting period has expired and (ii) the Group’s best estimate of the number of equity instruments that will ultimately vest.
No adjustment is made for the likelihood of market performance conditions being met as the effect of these conditions is included in
the determination of fair value at grant date. The statement of comprehensive income charge or credit for a period represents the
movement in cumulative expense recognised as at the beginning and end of that period.
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is only conditional upon a market
condition or non-vesting condition. These are treated as vesting irrespective of whether or not the market or non-vesting condition is
satisfied, provided that all other performance and/or service conditions are satisfied.
If the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been modified, if
the original terms of the award are met. In addition, an expense is recognised for any modification that increases the total fair value of
the share-based payment arrangement, or is otherwise beneficial to the employee, as measured at the date of modification.
If an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised
for the award is recognised immediately. However, if a new award is substituted for the cancelled award and designated as a
replacement award on the date that it is granted, the cancelled and new awards are treated as if they were a modification of the
original award, as described in the previous paragraph.
The dilutive effect of outstanding shares and options issued is reflected as additional share dilution in the computation of earnings per
share (see note 6).
(f) Foreign currency translation
The Group’s consolidated financial statements are presented in US dollars. Each entity in the Group determines its own functional
currency and items included in the financial statements of each entity are measured using that functional currency.
Transactions and balances
Transactions in foreign currencies are initially recorded by the Group entities at their respective functional currency by applying the
exchange rates ruling at the date the transaction first qualifies for recognition. Monetary assets and liabilities denominated in foreign
currencies are retranslated at the functional currency rate of exchange ruling at the reporting date.
All exchange differences are taken to profit and loss.
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Financial statements Notes to the consolidated financial statements
(for the year ended 30 June 2013)
2. SiGNifiCANT ACCOuNTiNG POliCiES (continued)
2.3 Summary of significant accounting policies (continued)
Group companies
As at the reporting date on consolidation, the assets and liabilities of foreign subsidiaries are translated into the presentation currency
of the Group at the rate of exchange ruling at the reporting date and their statements of comprehensive income are translated at the
weighted average exchange rate for the year. The exchange differences arising on the translation for consolidation are recognised in
other comprehensive income. On disposal of a foreign entity, the deferred cumulative amount recognised in equity relating to that
particular foreign operation is recognised in profit or loss.
(g) Income tax
Current income tax
Current income tax assets and liabilities for the current period are measured at the amount expected to be recovered from or paid to
the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted,
at the reporting date, in the countries where the Group operates and generates taxable income.
Current income tax relating to items recognised directly in other comprehensive income or equity is recognised in other
comprehensive income or equity and not in profit or loss. Management periodically evaluates positions taken in the tax returns with
respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
Deferred income tax
Deferred income tax is provided using the liability method on temporary differences at the reporting date between the tax bases of
assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred income tax liabilities are recognised for all taxable temporary differences, except:
• when the deferred income tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not
a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
• in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures,
when the timing of the reversal of the temporary differences can be controlled by the parent, investor or venturer and it is probable
that the temporary differences will not reverse in the foreseeable future.
Deferred income tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and
any unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary
differences, and the carry forward of unused tax credits and unused tax losses can be utilised, except:
• where the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset
or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit
nor taxable profit or loss; and
• in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures,
deferred income tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the
foreseeable future and taxable profit will be available against which the temporary differences can be utilised.
The carrying amount of deferred income tax assets is reviewed at the end of each reporting period and reduced to the extent that it
is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.
Unrecognised deferred income tax assets are reassessed at the end of each reporting period and are recognised to the extent that it
has become probable that future taxable profits will be available to allow the deferred tax asset to be recovered.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is
realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the
reporting period.
Deferred income tax assets and deferred income tax liabilities are offset, if a legally enforceable right exists to set off current
tax assets against current income tax liabilities and the deferred income taxes relate to the same taxable entity and the same
taxation authority.
Tax benefits acquired as part of a business combination, but not satisfying the criteria for separate recognition at that date, would
be recognised subsequently if new information about facts and circumstances arose. The adjustment would either be treated as a
reduction to goodwill (as long as it does not exceed goodwill) if it was incurred during the measurement period or in profit or loss.
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Annual Report 2013 Royalties, resource rent taxes and revenue-based taxes
Royalties, resource rent taxes and revenue-based taxes are accounted for under IAS 12 when they have the characteristics of an
income tax. This is considered to be the case when they are imposed under government authority and the amount payable is based
on taxable income – rather than based on quantity produced or as a percentage of revenue – after adjustment for temporary
differences. For such arrangements, current and deferred income tax is provided on the same basis as described above for other
forms of taxation. Obligations arising from royalty arrangements that do not satisfy these criteria are recognised as current provisions
and included in expenses.
Sales tax
Revenues, expenses and assets are recognised net of the amount of sales tax, except:
• where the sales tax incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case, the
sales tax is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and
• receivables and payables that are stated with the amount of sales tax included.
The net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the
statement of financial position.
(h) Business combinations
Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the
consideration transferred, measured at acquisition date fair value and the amount of any non-controlling interest in the acquiree. For
each business combination, the acquirer measures the non-controlling interest in the acquiree either at fair value or at the proportionate
share of the acquiree’s identifiable net assets. Acquisition costs incurred are expensed and included in administrative expenses.
When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and
designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date.
This includes the separation of embedded derivatives in host contracts by the acquiree.
If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s previously held equity interest in the
acquiree is remeasured to fair value as at the acquisition date through profit or loss.
Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Subsequent
changes to the fair value of the contingent consideration that is deemed to be an asset or liability will be recognised in accordance with
IAS 39 either in profit or loss or as a change to other comprehensive income. If the contingent consideration is classified as equity, it is
not remeasured until it is finally settled within equity.
Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognised
for non-controlling interest over the fair value of the net identifiable assets acquired and liabilities assumed. If this consideration is
lower than the fair value of the net identifiable assets of the subsidiary acquired, the difference is recognised in profit or loss.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing,
goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash-generating units
that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to
those units.
Where goodwill forms part of a cash-generating unit and part of the operation within that unit is disposed of, the goodwill associated
with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of
the operation. Goodwill disposed of in this circumstance is measured based on the relative values of the operation disposed of and the
portion of the cash-generating unit retained.
(i)
Interest in jointly controlled entities
The Group has interests in joint ventures, which are jointly controlled entities. A jointly controlled entity is a corporation, partnership
or other entity in which each venturer holds an interest and operates in the same way as other entities, except that a contractual
arrangement establishes joint control over the economic activities of the entity. The agreement requires unanimous agreement for
financial and operating decisions among the venturers. A jointly controlled entity controls the assets of the joint venture, earns its own
income and incurs its own liabilities and expenses. Interests in joint ventures are accounted for using the equity method.
Under the equity method, the investment in the joint venture is carried in the statement of financial position at cost plus post
acquisition changes in the Group’s share of net assets of the joint venture. Goodwill relating to the joint venture is included in the
carrying amount of the investment and is neither amortised nor individually tested for impairment.
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Financial statements Notes to the consolidated financial statements
(for the year ended 30 June 2013)
2. SiGNifiCANT ACCOuNTiNG POliCiES (continued)
2.3 Summary of significant accounting policies (continued)
(i)
Interest in jointly controlled entities (continued)
The statement of comprehensive income reflects the Group’s share of the results of operations of the joint venture. Where there has
been a change recognised directly in other comprehensive income or equity of the joint venture, the Group recognises its share of any
changes and discloses this, when applicable, in other comprehensive income and the statement of changes in equity. Unrealised gains
and losses resulting from transactions between the Group and the joint venture are eliminated to the extent of the interest in the joint
venture. The results of joint ventures are included from the effective dates of acquisition and up to the effective dates of disposal.
The Group’s share of the joint venture’s net profit/(loss) is shown on the face of the statement of comprehensive income. The financial
statements of the jointly controlled entity are prepared for the same reporting period as the Group. Where necessary, adjustments
are made to bring the accounting policies in line with those of the Group.
(j)
Investments in associates
The Group’s investments in associates, entities in which the Group has significant influence, are accounted for using the equity method.
Under the equity method, the investment in the associate is initially recognised at cost. The carrying amount of the investment is
adjusted to recognise changes in the Group’s share of net assets of the associate since the acquisition date.
The income statement reflects the Group’s share of the results of operations of the associate. Where there has been a change
recognised directly in the equity of the associate, the Group recognises its share of any changes, when applicable, in the statement of
changes in equity. Unrealised gains and losses resulting from transactions between the Group and the associate are eliminated to the
extent of the interest in the associate.
The Group’s share of profit or loss of an associate is shown on the face of the statement of comprehensive income. The financial
statements of the associate are prepared for the same reporting period as the Group. When necessary, adjustments are made to
bring the accounting policies in line with those of the Group.
After application of the equity method, the Group determines whether it is necessary to recognise an impairment loss on its investments
in associates. At each reporting date, the Group determines whether there is objective evidence that the investment in the associate is
impaired. If there is such evidence, the Group calculates the amount of impairment as the difference between the recoverable amount of
the associate and its carrying value, then recognises the loss as ‘Share of losses of an associate’ in the income statement.
Upon loss of significant influence over the associate, the Group measures and recognises any retained investment at its fair value.
Any difference between the carrying amount of the associate upon loss of significant influence and the fair value of the retained
investment and proceeds from disposal is recognised in profit or loss.
(k) Property, plant and equipment
Property, plant and equipment and mine properties are stated at cost, less accumulated depreciation and accumulated impairment
losses, if any.
The initial cost of an asset comprises its purchase price or construction cost, any costs directly attributable to bringing the asset
into operation, the initial estimate of the rehabilitation obligation and, for qualifying assets, borrowing costs. The purchase price or
construction cost is the aggregate amount paid and the fair value of any other consideration given to acquire the asset. The capitalised
value of a finance lease is also included within property, plant and equipment.
Upon completion of mine construction, the assets are transferred into property, plant and equipment or mine properties. When a
mine construction project moves into the production stage, the capitalisation of certain mine construction costs ceases and costs are
either regarded as part of the cost of inventory or expensed, except for costs which qualify for capitalisation relating to mining asset
additions or improvements, underground mine development or mineable reserve development.
Depreciation/amortisation
Accumulated mine/plant development costs are depreciated/amortised on a unit-of-production basis over the economically
recoverable reserves of the mine concerned, except in the case of assets whose useful life is shorter than the life of the mine, in which
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Annual Report 2013 case the straight-line method is applied. The unit of account for run-of-mine (ROM) costs are tonnes of ore whereas the unit of
account for post-ROM costs are recoverable ounces of platinum group metals. Rights and concessions are depleted on the unit-of-
production basis over the total reserves of the relevant area. The unit-of-production rate for the depreciation/amortisation of mine
development costs takes into account expenditures incurred to date, together with sanctioned future development expenditure.
The premium paid in excess of the intrinsic value of land to gain access is amortised over the life of mine.
Other plant and equipment such as mobile mine equipment is generally depreciated on a straight-line basis over their estimated useful
lives as follows:
• mining properties, plant and equipment – 10 years;
• leasehold improvements – three years;
• computer equipment and software – three years;
• furniture and fittings – six years;
• office equipment – five years; and
• motor vehicles – five years.
An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal or when no
future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as
the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss when the asset is
derecognised.
The asset’s residual values, useful lives and methods of depreciation/amortisation are reviewed at each reporting period, and adjusted
prospectively if appropriate.
Major maintenance and repairs
Expenditure on major maintenance refits or repairs comprises the cost of replacement assets or parts of assets and overhaul costs.
Where an asset or part of an asset that was separately depreciated and is now written off is replaced, and it is probable that future
economic benefits associated with the item will flow to the Group through an extended life, the expenditure is capitalised.
Where part of the asset was not separately considered as a component, the replacement value is used to estimate the carrying
amount of the replaced assets which is immediately written off. All other day-to-day maintenance costs are expensed as incurred.
(l) Exploration and evaluation assets
Exploration and evaluation activity involves the search for mineral resources, the determination of technical feasibility and the
assessment of commercial viability of an identified resource. Exploration and evaluation expenditures in relation to each separate area
of interest are recognised as an exploration and evaluation asset in the year in which they are incurred when the following conditions
are satisfied:
the rights to tenure of the area of interest are current; and
(i)
(ii) at least one of the following conditions is also met:
• the exploration and evaluation expenditures are expected to be recouped through successful development and exploration of
the area of interest, or alternatively, by its sale; or
• exploration and evaluation activities in the area of interest have not at the reporting date, reached a stage which permits
a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant
operations in, or in relation to, the area of interest are continuing.
Exploration and evaluation assets are initially measured at cost and include acquisition of rights to explore, gathering exploration
data through geophysical studies, exploratory drilling, trenching and sampling and associated activities and an allocation of
depreciation and amor tisation of assets used in exploration and evaluation activities. General and administrative costs are only
included in the measurement of exploration and evaluation costs where they are related directly to operational activities in a
par ticular area of interest.
Where a decision has been made to proceed with development in respect of a par ticular area of interest and once JORC-
compliant reserves are established, the relevant exploration and evaluation assets are tested for impairment and the balance is
then transferred to mine ‘construction in progress’. No amor tisation is charged during the exploration and evaluation phase.
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Financial statements Notes to the consolidated financial statements
(for the year ended 30 June 2013)
2. SiGNifiCANT ACCOuNTiNG POliCiES (continued)
2.3 Summary of significant accounting policies (continued)
(l) Exploration and evaluation assets (continued)
Upon transfer of ‘exploration and evaluation assets’ into ‘construction in progress’, all subsequent expenditure on the
construction, installation or completion of infrastructure facilities is capitalised.
Exploration and evaluation assets acquired in a business combination are initially recognised at fair value. They are subsequently
measured at cost less accumulated impairment.
(m) Impairment of non-financial assets
The Group assesses at each reporting date whether there is an indication that an asset (or CGU) may be impaired. If any indication
exists, or when annual impairment testing for an asset is required, the Group estimates the asset’s or CGU’s recoverable amount.
An asset’s recoverable amount is the higher of an asset’s or CGU’s fair value less costs to sell and its value in use and is determined for
an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups
of assets, in which case the asset is tested as part of a larger CGU.
When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered to be impaired and is written
down to its recoverable amount. In calculating value in use, the estimated future cash flows are discounted to their present value using
a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU.
In determining fair value less costs to sell, recent market transactions are taken into account, if available. If no such transactions can be
identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for
publicly traded subsidiaries or other available fair value indicators.
The Group bases its impairment calculation on detailed budgets and forecast calculations which are prepared separately for each of
the Group’s CGUs to which the individual assets are allocated.
Impairment losses of continuing operations, including impairment of inventories, are recognised in profit or loss in those expense
categories consistent with the function of the impaired asset.
For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously
recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Group estimates the asset’s or
CGU’s recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions
used to determine the asset’s recoverable amount since the last impairment loss was recognised. The reversal is limited so that
the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been
determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in
profit or loss unless the asset is carried at a revalued amount, in which case the reversal is treated as a revaluation increase and is
recognised through other comprehensive income.
Exploration and evaluation assets are assessed for impairment when facts and circumstances suggest that the carrying amount of an
exploration and evaluation asset may exceed its recoverable amount. The recoverable amount of the exploration and evaluation asset
(for the CGU(s) to which it has been allocated being no larger than the relevant area of interest) is estimated to determine the extent
of the impairment loss (if any). Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the
revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying
amount that would have been determined had no impairment loss been recognised for the asset in previous years.
(n) Financial instruments – initial recognition and subsequent measurement
Financial assets
Initial recognition and measurement
Financial assets within the scope of IAS 39 Financial Instruments: Recognition and Measurement are classified as financial assets at fair
value through profit or loss, loans and receivables, held-to-maturity investments, available-for-sale financial assets, or as derivatives
designated as hedging instruments in an effective hedge, as appropriate. The Group determines the classification of its financial assets
at initial recognition.
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Annual Report 2013 All financial assets are recognised initially at fair value plus, in the case of financial assets not at fair value through profit or loss, directly
attributable transaction costs.
Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the
marketplace (regular way trades) are recognised on the trade date, i.e., the date that the Group commits to purchase or sell the asset.
The Group’s financial assets include cash and short-term deposits, trade and other receivables, loans and other receivables, quoted
and unquoted financial instruments and derivative financial instruments.
Subsequent measurement
The subsequent measurement of financial assets depends on their classification as follows:
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss include financial assets held for trading and financial assets designated upon initial
recognition at fair value through profit or loss. Financial assets are classified as held for trading if they are acquired for the purpose of
selling or repurchasing in the near term. This category includes any derivative financial instruments entered into by the Group that
are not designated as hedging instruments in hedge relationships as defined by IAS 39. Derivatives, including separated embedded
derivatives are also classified as held for trading unless they are designated as effective hedging instruments as defined by IAS 39.
Financial assets at fair value through profit or loss are carried in the statement of financial position at fair value with changes in fair
value recognised in finance income or finance costs in profit or loss.
The Group evaluated its financial assets as held for trading, other than derivatives, to determine whether the intention to sell them
in the near term is still appropriate. When in rare circumstances the Group is unable to trade these financial assets due to inactive
markets and management’s intention to sell them in the foreseeable future significantly changes, the Group may elect to reclassify
these financial assets. The reclassification to loans and receivables, available-for-sale, or held to maturity depends on the nature
of the asset. This evaluation does not affect any financial assets designated at fair value through profit or loss using the fair value
option at designation.
Derivatives embedded in host contracts are accounted for as separate derivatives and recorded at fair value if their economic
characteristics and risks are not closely related to those of the host contracts and the host contracts are not held for trading or
designated at fair value though profit or loss. These embedded derivatives are measured at fair value with changes in fair value
recognised in profit or loss. Reassessment only occurs if there is a change in the terms of the contract that significantly modifies the
cash flows that would otherwise be required.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.
After initial measurement, such financial assets are subsequently measured at amortised cost using the EIR method, less impairment.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part
of the EIR. The EIR amortisation is included in finance income in profit or loss. The losses arising from impairment are recognised in
profit or loss in finance costs for loans and in cost of sales or other operating expenses for receivables.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognised when:
• the rights to receive cash flows from the asset have expired; and
• the Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash
flows in full without material delay to a third party under a ‘pass-through’ arrangement; and either (a) the Group has transferred
substantially all the risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks
and rewards of the asset, but has transferred control of the asset.
When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, and
has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the asset
is recognised to the extent of the Group’s continuing involvement in the asset. In that case, the Group also recognises an associated
liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Group
has retained.
39
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Financial statements Notes to the consolidated financial statements
(for the year ended 30 June 2013)
2. SiGNifiCANT ACCOuNTiNG POliCiES (continued)
2.3 Summary of significant accounting policies (continued)
Derecognition (continued)
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying
amount of the asset and the maximum amount of consideration that the Group could be required to repay.
Impairment of financial assets
The Group assesses, at each reporting date, whether there is any objective evidence that a financial asset or a group of financial
assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence
of impairment as a result of one or more events that has occurred after the initial recognition of the asset (an incurred ‘loss event’)
and that loss event has an impact on the estimated future cash flows of the financial asset or the Group of financial assets that can be
reliably estimated.
Evidence of impairment may include indications that the debtors or a group of debtors are experiencing significant financial
difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial
reorganisation and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as
changes in arrears or economic conditions that correlate with defaults.
Financial assets carried at amortised cost
For financial assets carried at amortised cost, the Group first assesses individually whether objective evidence of impairment exists
individually for financial assets that are individually significant, or collectively for financial assets that are not individually significant.
If the Group determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant
or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for
impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be, recognised
are not included in a collective assessment of impairment.
If there is objective evidence that an impairment loss has been incurred, the amount of the loss is measured as the difference between
the asset’s carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not
yet been incurred). The present value of the estimated future cash flows is discounted at the financial asset’s original effective interest
rate. If a loan has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate.
The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognised in profit
or loss. Interest income continues to be accrued on the reduced carrying amount and is accrued using the rate of interest used to
discount the future cash flows for the purpose of measuring the impairment loss. The interest income is recorded as part of finance
income in profit or loss. Loans together with the associated allowance are written off when there is no realistic prospect of future
recovery and all collateral has been realised or has been transferred to the Group.
If, in a subsequent year, the amount of the estimated impairment loss increases or decreases because of an event occurring after the
impairment was recognised, the previously recognised impairment loss is increased or reduced by adjusting the allowance account.
If a future write-off is later recovered, the recovery is credited to finance costs in profit or loss.
Financial liabilities
Initial recognition and measurement
Financial liabilities within the scope of IAS 39 are classified as financial liabilities at fair value through profit or loss, loans and
borrowings, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. The Group determines the
classification of its financial liabilities at initial recognition.
All financial liabilities are recognised initially at fair value plus, in the case of loans and borrowings, directly attributable transaction costs.
The Group’s financial liabilities include trade and other payables, bank overdrafts, loans and borrowings, financial guarantee contracts,
and derivative financial instruments.
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40
Annual Report 2013 Subsequent measurement
The measurement of financial liabilities depends on their classification as follows:
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon
initial recognition as at fair value through profit or loss.
Financial liabilities are classified as held for trading if they are acquired for the purpose of selling in the near term. This category
includes derivative financial instruments entered into by the Group that are not designated as hedging instruments in hedge
relationships as defined by IAS 39. Separated embedded derivatives are also classified as held for trading unless they are designated as
effective hedging instruments.
Gains or losses on liabilities held for trading are recognised in profit or loss.
The Group has not designated any financial liabilities upon initial recognition as at fair value through profit or loss.
Loans and borrowings
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method.
Gains and losses are recognised in profit or loss when the liabilities are derecognised, as well as through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part
of the EIR. The EIR amortisation is included in finance costs in profit or loss.
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing
financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are
substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a
new liability. The difference in the respective carrying amounts is recognised in the statement of comprehensive income.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount reported in the consolidated statement of financial position if, and
only if, there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or
to realise the assets and settle the liabilities simultaneously.
Fair value of financial instruments
The fair value of financial instruments that are traded in active markets at each reporting date is determined by reference to quoted
market prices or dealer price quotations (bid price for long positions and ask price for short positions), without any deduction for
transaction costs.
For financial instruments not traded in an active market, the fair value is determined using appropriate valuation techniques. Such
techniques may include using recent arm’s length market transactions; reference to the current fair value of another instrument that is
substantially the same; a discounted cash flow analysis or other valuation models.
An analysis of fair values of financial instruments and further details as to how they are measured are provided in note 24.
Current versus non-current classification
Derivative instruments that are not designated as effective hedging instruments are classified as current or non-current or
separated into a current and non-current portion based on an assessment of the facts and circumstances (i.e., the underlying
contracted cash flows):
• when the Group will hold a derivative as an economic hedge (and does not apply hedge accounting) for a period beyond 12 months
after the reporting date, the derivative is classified as non-current (or separated into current and non-current portions) consistent
with the classification of the underlying item;
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41
Financial statements Notes to the consolidated financial statements
(for the year ended 30 June 2013)
2. SiGNifiCANT ACCOuNTiNG POliCiES (continued)
2.3 Summary of significant accounting policies (continued)
Current versus non-current classification (continued)
• embedded derivatives that are not closely related to the host contract are classified consistent with the cash flows of the host
contract; and
• derivative instruments that are designated as, and are effective hedging instruments, are classified consistently with the classification
of the underlying hedged item. The derivative instrument is separated into a current portion and a non-current portion only if a
reliable allocation can be made.
Normal purchase or sale exemption
Contracts that were entered into and continue to be held for the purpose of the receipt or delivery of a non-financial item in
accordance with the Group’s expected purchase, sale or usage requirements fall within the exemption from IAS 32 and IAS 39, which
is known as the ‘normal purchase or sale exemption’ (with the exception of those with quotation period clauses, which result in the
recognition of an embedded derivative. Refer note 2.3(n) Financial assets – Financial assets at fair value through profit or loss for
more information). For these contracts and the host part of the contracts containing embedded derivatives, they are accounted for as
executory contracts. The Group recognises such contracts in its statement of financial position only when one of the parties meets its
obligation under the contract to deliver either cash or a non-financial asset.
(o) Cash and cash equivalents
Cash comprises cash at bank and on hand. Cash equivalents are short-term, highly liquid investments that are readily convertible to
known amounts of cash and which are subject to an insignificant risk of changes in value. Bank overdrafts are shown within borrowings
in current liabilities in the statement of financial position.
For the purpose of the consolidated statement of cash flows, cash and cash equivalents consist of cash and cash equivalents as defined
above, net of outstanding bank overdrafts.
(p) Trade and other receivables
Trade receivables include actual invoiced sales of PGM concentrate as well as sales not yet invoiced for which deliveries have been
made and the risks and rewards of ownership have passed. The receivable amount calculated for the PGM concentrate delivered but
not yet invoiced is recorded at the fair value of the consideration receivable at the date of delivery. At each subsequent reporting
date and at the date of settlement, the receivable is restated to reflect the fair value movements in the pricing mechanism which is
considered to represent an embedded derivative.
Other receivables are stated at cost less any allowance for uncollectable amounts. An allowance is made when there is objective
evidence that the Group will not be able to collect debts. Bad debts are written off when identified.
(q) Inventories
Inventories are valued at the lower of cost and net realisable value.
Costs incurred in bringing each product to its present location and condition, are accounted for as follows:
• raw materials – purchase cost on a first-in, first-out basis; and
• finished goods and work in progress – cost of direct materials and labour and a proportion of manufacturing overheads based on
normal operating capacity but excluding borrowing costs.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the
estimated costs necessary to make the sale.
(r) Trade and other payables
Trade payables and other payables are carried at amortised cost and represent liabilities for goods and services provided to the Group
prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to make future payments in respect
of the purchase of these goods and services.
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42
Annual Report 2013 (s) Provisions
Where applicable, provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past
event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable
estimate can be made of the amount of the obligation.
When the Group expects some or all of a provision to be reimbursed, for example, under an insurance contract, the reimbursement
is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is
presented in the statement of comprehensive income net of any reimbursement.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects the risks specific
to the liability.
When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
Rehabilitation provision
The Group records the present value of estimated costs of legal and constructive obligations required to restore operating locations in
the period in which the obligation is incurred. The nature of these restoration activities includes dismantling and removing structures,
rehabilitating mines and tailings dams, dismantling operating facilities, closure of plant and waste sites, and restoration, reclamation and
re-vegetation of affected areas.
The obligation generally arises when the asset is installed or the ground/environment is disturbed at the production location. When
the liability is initially recognised, the present value of the estimated costs is capitalised by increasing the carrying amount of the related
mining assets to the extent that it was incurred by the development/construction of the mine. Over time, the discounted liability is
increased for the change in present value based on the discount rates that reflect current market assessments and the risks specific to
the liability.
The periodic unwinding of the discount is recognised in profit or loss as a finance cost. Additional disturbances or changes in
rehabilitation costs will be recognised as additions or charges to the corresponding assets and rehabilitation liability when they occur.
For closed sites, changes to estimated costs are recognised immediately in profit or loss.
(t)
Issued capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in
equity as a deduction, net of tax, from the proceeds.
Treasury shares (employee share plan shares) are deducted from equity and no gain or loss is recognised in profit and loss on
purchase, sale, issue or cancellation of the Groups’ own equity instruments.
(u) Earnings per share
Basic earnings per share is calculated as net profit or loss attributable to members of the parent, adjusted to exclude any costs of
servicing equity (other than dividends) and preference share dividends, divided by the weighted average number of ordinary shares.
Diluted earnings per share are calculated as net profit or loss attributable to members of the parent, adjusted for:
• costs of servicing equity (other than dividends) and preference share dividends;
• the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as
expenses; and
• other non-discretionary changes in revenues or expenses during the period that would result from the dilution of potential
ordinary shares;
• divided by the weighted average number of ordinary shares and dilutive potential ordinary shares.
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43
Financial statements Notes to the consolidated financial statements
(for the year ended 30 June 2013)
2. SiGNifiCANT ACCOuNTiNG POliCiES (continued)
2.4 New standards and interpretations
Future Accounting Standards
Certain IFRS and IFRIC Interpretations have recently been issued or amended but are not yet effective and have not been adopted by
the Group as at the annual reporting period ended on 30 June 2013.
Application
date of
standard
Application
date for
Group
1 January 2013
1 July 2013
1 January 2015
1 July 2015
Reference
Title
Summary
IFRS 7 and
IAS 32
IFRS 9
Financial
Instruments:
Disclosures
and Financial
Instruments:
Presentation
Financial
Instruments
The amendments require entities to disclose gross amounts
subject to rights of set-off, amounts set off in accordance with the
accounting standards followed, and the related net credit exposure.
The impact of the amendments to these standards is currently
being assessed.
IFRS 9 Financial Instruments includes requirements for the
classification, measurement and derecognition of financial
assets and financial liabilities resulting from the first part
of Phase 1 of the IASB’s project to replace IAS 39 Financial
Instruments: Recognition and Measurement.
These requirements improve and simplify the approach for
classification and measurement of financial assets and liabilities
compared with the requirements of IAS 39. The main changes
from IAS 39 are described below.
(a) IFRS 9 requires financial assets to be classified at initial
recognition into two measurement categories: those
measured at fair value and those measured at amortised
cost. The classification is based on (1) the objective of the
entity’s business model for managing the financial assets;
(2) the characteristics of the contractual cash flows. This
replaces the numerous categories of financial assets in IAS
39, each of which had its own classification criteria.
(b) For financial liabilities, IFRS 9 retains most of the IAS
39 requirements. The main change is that, for financial
liabilities designated at fair value through profit or loss, the
amount of fair value change attributable to the credit risk
of the liability is recorded in other comprehensive income
rather than profit or loss, unless this creates an accounting
mismatch. Changes in fair value attributable to the financial
liability’s credit risk are not subsequently reclassified to
profit or loss.
(c) IFRS 9 allows an irrevocable election on initial recognition
to present gains and losses on investments in equity
instruments that are not held for trading in other
comprehensive income. Dividends in respect of these
investments that are a return on investment can be
recognised in profit or loss and there is no impairment or
recycling on disposal of the instrument.
(d) Financial assets can be designated and measured at fair
value through profit or loss at initial recognition if doing
so eliminates or significantly reduces a measurement or
recognition inconsistency that would arise from measuring
assets or liabilities, or recognising the gains and losses on
them, on different bases.
The impact of this standard is currently being assessed.
44
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Annual Report 2013 Reference
Title
Summary
IFRS 10
Consolidated
Financial
Statements
IFRS 10 Consolidated Financial Statements is a new standard
that replaces the consolidation requirements in IAS 27
Consolidated and Separate Financial Statements and SIC-12
Consolidation – Special Purpose Entities.
Application
date of
standard
Application
date for
Group
1 January 2013
1 July 2013
IFRS 11
Joint
Arrangements
IFRS 12
Disclosure of
Interests in
Other Entities
The standard builds on existing principles by identifying the
concept of control as the determining factor in whether an
entity should be included within the consolidated financial
statements of the parent company and provides additional
guidance for applying the model to specific situations,
including when acting as a manager may give control, the
impact of potential voting rights and when holding less than
a majority voting rights may give control. IFRS 10 includes a
new definition of control that contains three elements: power
over an investee; exposure, or rights, to variable returns from
its involvement with the investee; and the ability to use its
power over the investee to affect the amount of the investor’s
returns. The new control model broadens the situations when
an entity is considered to be controlled by another entity.
It is unlikely that the adoption of this standard will have
a material impact on the Group’s financial position or
performance.
IFRS 11 Joint Arrangements is a new standard that replaces
IAS 31 Interests in Joint Ventures and SIC-13 Jointly Controlled
Entities that deal with the accounting for joint arrangements
and focuses on the rights and obligations of the arrangement,
rather than its legal form.
IFRS 11 uses the principles of control in IFRS 10 to define joint
control, and therefore the determination of whether joint
control exists may change. The standard removes the option
to account for jointly controlled entities using proportionate
consolidation and requires joint ventures to be accounted for
using the equity method of accounting.
It is unlikely that the adoption of this standard will have
a material impact on the Group’s financial position or
performance
IFRS 12 Disclosure of Interests in Other Entities is a new
standard on disclosure requirements for all forms of interests
in other entities, including joint arrangements, associates,
special purpose vehicles and other off balance sheet vehicles.
New disclosures have been introduced about the judgements
made by management to determine whether control
exists, and to require summarised information about any
joint arrangements, associates and structured entities and
subsidiaries with non-controlling interests. The disclosure
requirements in the standard are more extensive than those
in current standards.
The adoption of this standard will not impact the results
of the Group, but may result in more disclosure than is
currently provided.
45
1 January 2013
1 July 2013
1 January 2013
1 July 2013
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Financial statements Notes to the consolidated financial statements
(for the year ended 30 June 2013)
2. SiGNifiCANT ACCOuNTiNG POliCiES (continued)
2.4 New standards and interpretations (continued)
Reference
Title
Summary
IFRS 13
Fair Value
Measurement
IAS 19
(Revised)
Employee
Benefits
Amendments
to IAS 32
Financial
Instruments –
Presentation
Improvements
to IFRS: IAS 1
Presentation
of Financial
Statements
Improvements
to IFRS: IAS 16
Property, Plant
and Equipment
Improvements
to IFRS: IAS 32
Financial
Instruments –
Presentation
Levies
IFRIC
Interpretation
21
IFRS 13 Fair Value Measurement establishes a single source
of guidance on fair value measurement and disclosure
requirements. The standard defines fair value, establishes a
framework for measuring fair value, and requires disclosures
about fair value measurements. Application of this definition
may result in different fair values being determined for the
relevant assets.
IFRS 13 also expands the disclosure requirements for all assets
or liabilities carried at fair value. This includes information
about the assumptions made and the qualitative impact of
those assumptions on the fair value determined.
The impact of this standard is currently being assessed.
The distinction between short-term and other long-term
employee benefits under the revised standard is now based
on expected timing of settlement rather than employee
entitlement.
The revised standard also requires termination benefits
(outside of a wider restructuring) to be recognised only when
the offer becomes legally binding and cannot be withdrawn.
It is unlikely that the amendment will have a material impact
on the Group’s financial position or performance.
The amendment requires entities to disclose additional
information relating to the offsetting of financial assets and
financial liabilities.
The impact of this amendment is currently being assessed.
The amendment clarifies the requirements for comparative
information including minimum and additional comparative
information required.
It is unlikely that the amendment will have a material impact
on the Group’s financial position, performance, or disclosures.
The amendments relate to the recognition and classification of
servicing equipment.
It is unlikely that the amendment will have a material impact
on the Group’s financial position, performance, or disclosures.
The amendment clarifies the tax effect of distribution to
holders of equity instruments.
It is unlikely that the amendment will have a material impact
on the Group’s financial position, performance, or disclosures.
The interpretation provides guidance on when to recognise a
liability for a levy imposed by a government.
The impact of this amendment is currently being assessed.
Application
date of
standard
Application
date for
Group
1 July 2013
1 July 2013
1 January 2013
1 July 2013
1 January 2014
1 July 2014
1 January 2013
1 July 2013
1 January 2013
1 July 2013
1 January 2013
1 July 2013
1 January 2014
1 July 2014
7012_13_Sylvania AFS_MM29_Final.indd 46
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46
Annual Report 2013 3. Segment reporting
Segment information
For management purposes the chief operating decision maker, being the Board of Directors of Sylvania Platinum Limited, reports its results
per project. The Group currently has the following segments:
• seven operational retreatment processing plants:
• Millsell
• Steelpoort
• Lannex
• Mooinooi (two plants reported as a single unit)
• Doornbosch
• Tweefontein (new segment in 2013); and
• an open cast mining exploration project and a Northern Limb exploration project which is currently in the drilling stage.
The operating results of each project are monitored separately by the Board in order to assist them in making decisions regarding resource
allocation as well as enabling them to evaluate performance. Segment performance is evaluated on PGM ounce production and operating
costs. The Group’s financing (including finance costs and finance income) and income taxes are managed on a group basis and are not
allocated to operating segments.
The accounting policies used by the Group in reporting segments internally are the same as those contained in note 2.3 of the financial statements.
Transfer prices between operating segments are on an arm’s length basis in a manner similar to transactions with third parties.
The following items are not allocated to any segment, as they are not considered part of the core operations of any segment:
• interest revenue
• interest expense; and
• unallocated expenses (note 3(d))
The following tables present revenue and profit information and certain asset and liability information regarding reporting segments for the
years ended 30 June 2013 and 30 June 2012.
Millsell
Steelpoort
Lannex
Mooinooi
$
$
$
$
Doorn-
bosch
$
Twee-
fontein
$
Exploration
Corporate/
Consoli-
projects
unallocated
$
$
dated
$
2013
Segment assets
Capital expenditure*
2,997,907
3,471,660
11,828,031
18,772,339
7,070,879 11,489,772
70,039,802
1,895,629 (a) 127,566,019
Other assets
2,230,129
1,255,089
1,373,931
3,336,866
2,827,413
850,788
92,255
10,368,130 (b) 22,334,601
Segment liabilities
980,727
1,080,366
1,518,376
1,795,623
1,369,072
858,749
1,286,581
19,592,138 (c)
28,481,632
Segment revenue
6,204,724
6,071,221
6,986,313
7,787,492
9,665,053
3,266,958
Segment result
2,356,019
1,079,120
515,934
(2,824,442)
4,319,065
(584,325)
Net profit for the year
after tax
Included within the
segment results:
Depreciation
711,194
754,458
1,725,683
2,543,924
1,049,490
891,339
Direct operating costs
3,137,510
4,237,643
4,744,696
8,068,010
4,296,499
2,959,944
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
268,634
40,250,395
(492,140) (d)
4,369,231
4,369,231
103,583
7,779,671
3,710,672
31,154,974
268,634
992,536
268,634
992,536
Interest revenue
Income tax expense
Other items
Capital expenditure
additions
54,883
22,669
54,577
1,380,291
272,038
6,098,513
4,404,755
245,082
12,532,808
* Capital expenditure consists of property, plant and equipment, mine properties and exploration and evaluation assets.
47
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Financial statements Notes to the consolidated financial statements
(for the year ended 30 June 2013)
3. Segment reporting (continued)
Millsell
Steelpoort
Lannex
Mooinooi
Doornbosch
Exploration
projects
Corporate/
unallocated
Consolidated
$
$
$
$
$
$
$
$
2012
Segment assets
Capital expenditure*
4,458,232
4,954,645
16,001,772
23,669,323
9,272,734
75,240,758
11,811,337 (a)
145,408,801
Other assets
1,509,004
2,980,996
2,528,657
1,984,814
1,998,489
383,018
20,426,506 (b)
31,811,484
Segment liabilities
895,258
916,272
1,104,732
1,897,137
913,309
294,126
26,959,258 (c)
32,980,092
Segment revenue
6,843,876
10,839,608
7,454,996
4,676,660
9,326,817
Segment result
2,183,963
5,931,045
863,701
(5,742,966)
4,526,841
Net loss for the year
after tax
Included within the
segment results:
Depreciation
804,756
849,753
2,029,620
2,339,834
Direct operating costs
3,855,157
4,058,810
4,561,675
8,079,792
–
–
–
–
–
–
–
–
1,144,943
3,655,033
–
–
–
–
–
–
–
–
2,211,093
41,353,050
(11,734,387) (d)
(3,971,803)
(3,971,803)
7,273,991
26,377,921
1,274,892
1,468,828
105,085
2,167,454
1,274,892
1,468,828
Interest revenue
Income tax expense
Other items
Capital expenditure
additions
182,679
150,962
706,009
6,749,153
100,094
4,871,128
7,716,737
20,476,762
* Capital expenditure consists of property, plant and equipment, mine properties and exploration and evaluation assets.
Major items included in corporate /unallocated
(a) Capital expenditure
Property
Fixed assets for Tweefontein
Fixed assets for Elandsdrift
Exploration expenses Everest North
Other
(b) Other assets
Cash and cash equivalents
Equity accounted investments in joint ventures
Investments in associates
Other assets in Tweefontein
Current tax asset
Other financial assets
Other
(c) Liabilities
Deferred tax
Interest-bearing loans and borrowings
VAT/GST payable
Other liabilities in Tweefontein
Other
48
2013
$
2012
$
–
–
–
1,455,432
440,197
1,895,629
6,518,542
1,698,531
11
–
49,846
1,547,514
553,686
10,368,130
18,728,253
87,756
63,863
–
712,266
19,592,138
1,077,499
7,446,216
1,207,787
1,680,360
399,475
11,811,337
15,444,334
2,048,635
–
884,957
403,527
–
1,645,053
20,426,506
23,623,156
36,878
16,212
289,753
2,993,259
26,959,258
7012_13_Sylvania AFS_MM29_Final.indd 48
2013/11/21 4:06 PM
Annual Report 2013 (d) Unallocated expenses
Administrative salaries and wages
Auditors’ remuneration
Consulting fees
Indirect general and administration costs
Depreciation
(Gain)/loss on financial assets at fair value through profit or loss
Impairment on available-for-sale financial assets
Write-off of property, plant and equipment
Legal expenses
Overseas travelling expenses
Premises leases
Profit on disposal (note 15)
Share-based compensation expense
Termination of consultancy agreements
Tax expense
Other
Total segment revenue
Sales
Other revenue from continuing activities
Total revenue
Revenue from external customers by geographical location is detailed below. Revenue is attributed
to geographic location based on the location of the customers. The Company does not have
external revenues from external customers that are attributable to any foreign country other than
as shown.
South Africa
Total revenue
Interest revenue by geographical location is detailed below:
Australia
South Africa
Total revenue
The majority of sales of concentrate are to two specific customers. Revenue is split according to
segment as detailed below:
Customer 1
Customer 2
Analysis of location of non-current assets:
Australia
South Africa
Total non-current assets
2013
$
2012
$
1,781,294
324,543
757,759
3,814,255
56,146
(4,106)
44,394
203,138
480,010
212,452
202,042
(9,911,779)
1,269,239
–
992,536
270,217
492,140
2,236,872
493,207
1,591,017
1,336,338
81,972
24,770
368,797
–
823,320
294,717
273,707
–
724,481
480,814
1,468,828
1,535,547
11,734,387
39,981,761
268,634
40,250,395
40,078,158
1,274,892
41,353,050
39,981,761
39,981,761
40,078,158
40,078,158
99,071
169,563
268,634
40,250,395
934,016
340,876
1,274,892
41,353,050
14,097,719
25,884,042
39,981,761
28,557,622
11,520,536
40,078,158
59,272
130,752,803
130,812,075
64,712,849
81,524,059
146,236,908
7012_13_Sylvania AFS_MM29_Final.indd 49
2013/11/21 4:06 PM
49
Financial statements Notes to the consolidated financial statements
(for the year ended 30 June 2013)
4. revenue and expenSeS
(a) Revenue
Sale of goods
PGM price adjustment
(b) Other income
Scrap sales
Recoveries
Insurance claims
Rent received
Profit on disposal (note 15)
Profit on sale of available-for-sale financial assets
(c) Expenses
Profit/(loss) from ordinary activities before income tax expense includes the following
specific expenses:
Included in cost of sales:
Depreciation – plant and equipment
Write-off of property, plant and equipment
Included in general and administrative costs:
Consulting
Depreciation – other assets
Operating lease payments
Exploration and evaluation costs expensed
Termination of consultancy contracts *
(d) Staff costs
Salaries and wages
Superannuation
Share-based payments
2013
$
2012
$
39,400,662
581,099
39,981,761
41,299,346
(1,221,188)
40,078,158
12,119
83,630
–
7,186
9,911,779
–
10,014,714
17,145
38,699
14,330
–
–
983
71,157
7,779,671
203,138
7,273,991
–
757,759
56,146
236,949
11,488
–
1,781,294
8,479
1,269,239
3,059,012
1,591,017
81,972
242,887
23,411
480,814
2,236,872
12,089
724,481
2,973,442
* In prior financial years, key management had been contracted through fixed term consultancy agreements so as to reduce the administration of the Group, however when
the Group moved into a more operational phase, permanent employees were appointed by the Board and the consulting agreements terminated. As a result, termination
fees were incurred in the year to 30 June 2012.
5.
inCome tax
Major components of tax expense for the years ended 30 June 2013 and 2012
income tax recognised in profit or loss
Current income tax:
Current income tax charge
Adjustments in respect of current income tax of previous year
Deferred income tax:
Relating to recognition, origination and reversal of temporary differences
Total tax expense
2013
$
2012
$
46,940
245,659
699,937
992,536
280,224
221,918
966,686
1,468,828
7012_13_Sylvania AFS_MM29_Final.indd 50
2013/11/21 4:06 PM
50
Annual Report 2013 The prima facie income tax expense on pre-tax accounting profit/loss from
operations reconciles to the income tax expense in the financial statements
as follows:
Accounting profit/(loss) before income tax
Tax expense/(benefit) at rate of 28%
Non-deductible expenses
Under provision in respect of prior year
Benefit of tax losses and timing differences not brought to account
Recoupment of tax losses for current year taxable income
Income tax expense
income tax recognised directly in equity:
The following amounts were charged directly to equity during the period:
Deferred tax
Revaluation of financial assets
2013
$
2012
$
5,361,767
1,501,295
1,228,454
253,644
729,079
(2,719,936)
992,536
(2,502,975)
(700,833)
1,474,514
69,049
626,098
–
1,468,828
–
13,552
Sylvania Platinum is a Bermudan incorporated company and has no tax liability under that jurisdiction with respect to income derived.
Certain foreign subsidiaries generated income that is subject to the applicable tax in the countries from which such income is derived.
The tax rate used in the above reconciliation is the corporate tax rate of 28% payable by South African entities on taxable profits under
South African tax law.
Deferred tax assets comprise:
Unrealised gains and losses on foreign exchange
Losses available for offset against future taxable income
Other
Set-off against deferred tax liabilities
Deferred tax liabilities comprise:
Exploration and evaluation assets
Property, plant and equipment
Other
Set-off deferred tax assets
Deferred tax liabilities net
2013
$
2012
$
4,453,998
–
460,557
4,914,555
(4,914,555)
–
14,235,764
9,395,356
11,688
23,642,808
(4,914,555)
18,728,253
2,351,245
2,628
448,923
2,802,796
(2,802,796)
–
15,951,637
10,471,685
2,630
26,425,952
(2,802,796)
23,623,156
The Group has estimated tax losses arising in Australia of $8,472,778 (FY2012: $18,670,603) and capital losses of $2,240,529
(FY2012: $2,510,586) that are available for offset against future taxable profits of the tax consolidated group in Australia. These losses are
subject to specific tests under Australian tax legislation before they can be set off against future taxable income. In addition, the Group has
estimated tax losses arising in South Africa of $8,796,112 (FY2012: $9,523,879) that are available indefinitely for offset against future taxable
profits of the Company in which the losses arose.
7012_13_Sylvania AFS_MM29_Final.indd 51
2013/11/21 4:06 PM
51
Financial statements Notes to the consolidated financial statements
(for the year ended 30 June 2013)
5.
inCome tax (continued)
unrecognised deferred tax assets
Deferred tax assets have not been recognised in respect of the following items:
Deductible temporary differences
Tax losses
Capital losses
2013
$
2012
$
10,929,939
4,835,289
627,348
16,392,576
18,375,537
8,016,606
702,964
27,095,107
The deductible temporary differences and tax losses do not expire under current tax legislation. Deferred tax assets have not been
recognised in respect of these items because at this time it is not probable that future tax profits will be available against which the Group
can utilise the benefits thereof.
Tax consolidation
Sylvania Resources Limited and its 100% owned Australian resident controlled entities have formed a tax consolidated group with effect
from 1 July 2003. Sylvania Resources is the head entity of the tax consolidated group. Members of the Group have entered into a tax
sharing arrangement in order to allocate income tax expense to the wholly owned controlled entity on a pro rata basis. In addition, the
agreement provides for the allocation of income tax liabilities between the entities should the head entity default on its tax payment
obligations. At the balance sheet date, the possibility of default is remote.
Reconciliation of deferred tax assets/
(liabilities):
2013
Other temporary differences
Plant and equipment
Exploration and evaluation
Tax losses
2012
Other temporary differences
Plant and equipment
Exploration and evaluation
Tax losses
Opening
balance
$
2,800,168
(10,471,687)
(15,951,637)
–
(23,623,156)
(1,057,879)
(11,017,444)
(21,509,772)
6,136,901
(27,448,194)
Charged
to income
statement
$
2,889,230
(785,257)
(2,803,910)
–
(699,937)
965,246
(882,668)
–
(1,049,265)
(966,687)
Charged to
equity
$
Exchange
difference
$
Closing
balance
$
–
–
–
–
–
(786,529)
1,861,586
4,519,783
–
5,594,840
4,902,869
(9,395,358)
(14,235,764)
–
(18,728,253)
17,973
–
–
(4,421)
13,552
2,874,828
1,428,425
5,558,135
(5,083,215)
4,778,173
2,800,168
(10,471,687)
(15,951,637)
–
(23,623,156)
6. earningS per Share
Basic earnings per share amounts are calculated by dividing the net profit for the year by the weighted average number of shares
outstanding during the year.
Basic earnings/(loss) per share – cents per share
Diluted earnings/(loss) per share – cents per share
2013
Cents per
share
1.45
1.39
2012
Cents per
share
(1.32)
(1.32)
7012_13_Sylvania AFS_MM29_Final.indd 52
2013/11/21 4:06 PM
52
Annual Report 2013 Reconciliation of earnings used in calculating earnings per share
Earnings attributable to the ordinary equity holders of the Company used in calculating basic
earnings per share
Earnings attributable to the ordinary equity holders of the Company used in calculating diluted
earnings per share
Weighted average number of shares used as the denominator
2013
$
2012
$
4,369,231
(3,971,803)
4,369,231
(3,971,803)
Weighted average number of ordinary shares used as the denominator in calculating basic earnings
per share
301,258,882
301,750,079
Effect of dilution:
Share options
12,802,740
–
Weighted average number of ordinary shares and potential ordinary shares used as the denominator
in calculating diluted earnings per share
314,061,622
301,750,079
In the financial year to 30 June 2010 SA Metals Pty Ltd (SAM), a wholly owned subsidiary of Sylvania, negotiated the cancellation of a royalty
agreement between SA Metals and Minex Projects (Pty) Ltd (Minex), whereby Minex was to receive R5,000,000 (approximately $657,000)
in cash and 3,000,000 shares in the listed parent entity subject to certain conditions. The conditions have subsequently been met and the
cash payment was made. The shares will only be issued when Minex obtain South African Reserve Bank approval, which to date has not
been obtained. The value of the shares at the date of signing the agreement was $0.84, and has been raised against share capital.
There have been no other transactions involving ordinary shares or potential ordinary shares between the reporting date and the date of
authorisation of these financial statements.
7. equity aCCounted inveStmentS in joint ventureS
The Group has a 25% interest in the assets, liabilities and output of a joint venture, CTRP, which operates a chrome tailings retreatment
plant at Kroondal in South Africa (FY2012: 25%).
Carrying amount of investment in jointly controlled entity
Balance at beginning of the financial year
Advances made to jointly controlled entity
Share of jointly controlled entity’s loss from ordinary activities, after income tax
Balance at end of the financial year
foreign currency translation movements
Balance at beginning of the financial year
Movement during the financial year
Balance at end of the financial year
2013
$
2012
$
1,233,478
1,547,891
198,275
(201,040)
161,000
(475,413)
1,230,713
1,233,478
815,157
1,266,922
(347,339)
467,818
(451,765)
815,157
1,698,531
2,048,635
7012_13_Sylvania AFS_MM29_Final.indd 53
2013/11/21 4:06 PM
53
Financial statements
Notes to the consolidated financial statements
(for the year ended 30 June 2013)
7. equity aCCounted inveStmentS in joint ventureS (continued)
Share of joint venture entity’s results and financial position
Non-current assets
Current assets
Total assets
Non-current liabilities
Current liabilities
Total liabilities
Revenue
Expenses
Loss from ordinary activities before income tax
Income tax expense
Loss from ordinary activities after income tax
Contingencies & commitments
The jointly controlled entity does not have any contingencies or capital commitments.
2013
$
452,210
355,156
807,366
–
12,149
12,149
2012
$
645,704
743,434
1,389,138
–
428,285
428,285
158,152
1,085,804
(359,192)
(1,561,217)
(201,040)
(475,413)
–
–
(201,040)
(475,413)
inveStmentS in aSSoCiateS
8.
The Group has a 26% (FY2012: 100%) interest in Lapon Mining (Pty) Ltd (Lapon) and a 29% (FY2012: 100%) interest in HW Iron (Pty) Ltd
(HW Iron), both of which are involved in mining and prospecting in South Africa. Lapon and HW Iron are subsidiaries of Ironveld Plc, which
was disposed of on 16 August 2012 (refer to note 15). The investments in the associates were acquired as consideration for the sale of
future mining rights of the iron ore assets from Pan Palladium South Africa (Pty) Ltd and Hacra Mining & Exploration Company (Pty) Ltd,
both controlled entities of the Group.
Carrying amount of investment in associate
Balance at beginning of the financial year
Acquisition of associates
Share of associates loss from ordinary activities, after income tax
Balance at end of the financial year
Share of associate entity’s results and financial position
Non-current assets
Current assets
Total assets
Non-current liabilities
Current liabilities
Total liabilities
Revenue
Expenses
Loss from ordinary activities before income tax
Income tax expense
Loss from ordinary activities after income tax
54
2013
$
–
11
–
11
–
22
22
–
274,206
274,206
–
(307,307)
(307,307)
–
(307,307)
2012
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
7012_13_Sylvania AFS_MM29_Final.indd 54
2013/11/21 4:06 PM
Annual Report 2013 9. other finanCial aSSetS
Available-for-sale investments carried at fair value
Listed shares
financial assets at fair value through profit and loss
Listed shares
loans and receivables
Loans receivable
Total
2013
$
2012
$
29,100
76,861
18,266
16,374
1,500,148
1,547,514
–
93,235
Available-for-sale financial assets consist of investments in ordinary shares and options, and therefore have no fixed maturity date or
coupon rate.
Loans and receivables consist of loans granted to Ironveld Holdings (Pty) Ltd from Sylvania SA (Pty) Ltd and from Sylvania Metals (Pty) Ltd,
both South African subsidiaries of the Group. The loan from Sylvania SA is unsecured, bears no interest until 31 December 2013 and
thereafter bears interest at the rate of 1% over Libor and is repayable on 31 December 2015. The loan from Sylvania Metals bears interest
at the prime lending rate in South Africa and is repayable on 30 June 2016 (refer to note 15).
10. ExPlORATiON AND EvAluATiON ASSETS
2013
Balance at beginning of financial year
Foreign currency movements
Direct expenditure for the year
Balance at end of financial year
2012
Balance at beginning of financial year
Foreign currency movements
Direct expenditure for the year
Asset held for sale (note 15)
Balance at end of financial year
Deferred
exploration
expenditure
Mineral rights
$
$
Total
$
288,854
75,313,487
75,602,341
(49,016)
(8,826,073)
(8,875,089)
–
549,463
549,463
239,838
67,036,877
67,276,715
346,601
75,776,843
76,123,444
(57,747)
(4,030,628)
(4,088,375)
–
–
4,871,128
4,871,128
(1,303,856)
(1,303,856)
288,854
75,313,487
75,602,341
Ultimate recovery of exploration and evaluation expenditure carried forward is dependent upon the recoupment of costs through
successful development and commercial exploitation, or alternatively, by sale of the respective areas.
7012_13_Sylvania AFS_MM29_Final.indd 55
2013/11/21 4:06 PM
55
Financial statements Notes to the consolidated financial statements
(for the year ended 30 June 2013)
11. PROPERTy, PlANT AND EquiPMENT
Property
Mining
property
Construction in
progress
Plant and
equipment Equip-ment
Leasehold
improve-ments
Computer
equipment and
software
Furniture and
fittings
Office
equipment
Motor
vehicles
$
$
$
$
$
$
$
$
$
$
Total
$
2013
At 1 July 2012
Cost
1,089,392
8,394,171
14,487,031
67,669,500
728,466
37,054
368,666
66,966
182,574
526,024
93,549,844
Accumulated
depreciation
(11,893)
(5,199,487)
–
(18,657,444)
(372,864)
(31,879)
(233,112)
(56,580)
(104,139)
(389,749)
(25,057,147)
Net book value
1,077,499
3,194,684
14,487,031
49,012,056
355,602
5,175
135,554
10,386
78,435
136,275
68,492,697
year ended
30 June 2013
Opening net
book value
Exchange
differences
Additions
Disposals
Re-allocation
between asset
classes
Write-off
Depreciation
charge
Net book value
4,214,524
2,340,487
At 30 June
2013
1,077,499
3,194,684
14,487,031
49,012,056
355,602
5,175
135,554
10,386
78,435
136,275
68,492,697
(583,828)
(504,416)
(1,005,468)
(9,849,892)
(47,171)
(966)
(26,052)
5,676,917
2,168,863
–
–
(19,158,480)
19,158,480
–
(203,138)
–
–
–
–
3,480
151,831
2,882
3,631
(12,743)
1,026
(12,026,628)
1,702
124,721
11,983,345
–
(6,333)
(1,409)
–
–
(121,155)
–
–
–
–
–
–
–
–
–
–
–
(203,138)
3,852,200
(113,413)
–
–
–
–
–
–
(17,934)
(349,781)
–
–
(7,160,085)
(122,234)
(2,656)
(59,435)
(8,932)
(24,538)
(90,222)
(7,835,817)
53,126,284
186,197
5,033
195,565
6,558
42,856
171,800
60,289,304
Cost
4,239,859
3,315,716
–
73,786,362
586,340
32,487
424,066
65,944
140,999
521,582
83,113,355
Accumulated
depreciation
(25,335)
(975,229)
–
(20,660,078)
(400,143)
(27,454)
(228,501)
(59,386)
(98,143)
(349,782)
(22,824,051)
Net book value
4,214,524
2,340,487
–
53,126,284
186,197
5,033
195,565
6,558
42,856
171,800
60,289,304
2012
At 1 July 2011
Cost
1,190,780
9,093,996
9,289,347
69,331,682
659,985
35,761
245,008
68,686
137,052
500,975
90,553,272
Accumulated
depreciation
–
(4,743,954)
–
(12,072,577)
(254,453)
(24,776)
(175,612)
(44,603)
(80,200)
(313,127)
(17,709,302)
Net book value
1,190,780
4,350,042
9,289,347
57,259,105
405,532
10,985
69,396
24,083
56,852
187,848
72,843,970
year ended
30 June 2012
Opening net
book value
Exchange
differences
Additions
Disposals
Asset held for sale
(note 15)
Depreciation
charge
1,190,780
4,350,042
9,289,347
57,259,105
405,532
10,985
69,396
24,083
56,852
187,848
72,843,970
(203,324)
(699,825)
(1,938,289)
(9,612,588)
(68,587)
(1,600)
(16,357)
(3,965)
(7,621)
(32,069)
(12,584,225)
101,936
–
–
–
–
–
7,135,973
7,950,406
137,068
2,893
158,250
8,847
53,143
57,118
15,605,634
–
–
–
–
–
–
–
–
(6,812)
–
(4,270)
(5,637)
–
–
–
–
(6,812)
(9,907)
(11,893)
(455,533)
–
(6,584,867)
(118,411)
(7,103)
(64,653)
(12,942)
(23,939)
(76,622)
(7,355,963)
Net book value
1,077,499
3,194,684
14,487,031
49,012,056
355,602
5,175
135,554
10,386
78,435
136,275
68,492,697
At 30 June
2012
Cost
1,089,392
8,394,171
14,487,031
67,669,500
728,466
37,054
368,666
66,966
182,574
526,024
93,549,844
Accumulated
depreciation
(11,893)
(5,199,487)
–
(18,657,444)
(372,864)
(31,879)
(233,112)
(56,580)
(104,139)
(389,749)
(25,057,147)
Net book value
1,077,499
3,194,684
14,487,031
49,012,056
355,602
5,175
135,554
10,386
78,435
136,275
68,492,697
56
7012_13_Sylvania AFS_MM29_Final.indd 56
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Annual Report 2013
Impairment of mining properties
On 27 April 2008, Sylvania announced that it had signed an amendment to an existing Services and Supply Agreement to treat ROM
from the Brokenhill, Spitzkop and Buffelsfontein East mining operations. Subsequent to the agreement being signed, the world economy
went into a slump resulting in a change to the chrome market with the annual demand for chrome products being dramatically reduced.
This resulted in the plans for mining of ROM material at the Lannex plant serving Brokenhill and Spitzkop and the Mooinooi plant serving
Buffelsfontein East being stopped. The Sylvania Board of Directors can in no way determine whether or not these mines will resume
operations.
The right to treat the ROM material from Brokenhill, Spitzkop and Buffelsfontein East Chrome mines cannot be sold to a third party and
Sylvania is in no way entitled to any form of compensation for operations at these mines ceasing.
Based on the above information it was resolved by the directors of Sylvania to impair the asset value attributable to this transaction at
30 June 2010, resulting in an impairment of R32,799,630 ($4,313,495). As at 30 June 2013, there has been no change to the situation and
therefore no change in the impairment was identified.
Leased assets
Equipment, motor vehicles and computer equipment include the following amounts where the Group is a lessee under a finance lease:
Equipment
Cost
Accumulated depreciation
Motor vehicles
Cost
Accumulated depreciation
Computer equipment
Cost
Accumulated depreciation
At 30 June 2013
Due within one year
Due between one and five years
At 30 June 2012
Due within one year
Due between one and five years
2013
$
2012
$
427,335
(258,144)
169,191
141,597
(28,044)
113,553
47,709
(14,072)
33,637
Finance
charges
$
(18,695)
(9,590)
(28,285)
(27,861)
(20,093)
(47,954)
612,375
(273,216)
339,159
85,799
(30,180)
55,619
–
–
–
Present value
of minimum
lease
payments due
$
169,151
170,287
339,438
202,187
229,216
431,403
Future
minimum
lease
payments due
$
187,846
179,877
367,723
230,048
249,309
479,357
Non-current assets pledged as security
Leased assets are pledged as security for the related finance lease liability. No other non-current assets are pledged as security for
any liabilities.
57
7012_13_Sylvania AFS_MM29_Final.indd 57
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Financial statements Notes to the consolidated financial statements
(for the year ended 30 June 2013)
12. CaSh and CaSh equivalentS
Cash at bank and on hand
Short-term deposits
2013
$
2012
$
6,379,887
5,675,606
184,998
10,021,293
6,564,885
15,696,899
Cash at banks earns interest at floating rates on daily bank deposit rates. Short-term deposits are made for varying periods of between
one day and three months, depending on the immediate cash requirements of the Group, and earn interest at the respective short-term
deposit rates. The fair value of cash and short-term deposits is $6,564,885 (FY2012: $15,696,899).
At 30 June 2013 the Group had available $3,538,150 (FY2012: $NIL) of undrawn borrowing facilities.
The Group only deposits cash surpluses with major banks of high quality credit standing.
Bank guarantees are held as follows:
Eskom
The Department of Mineral Resources
Mervyn Taback Inc *
* The group has pledged a part of its short-term deposits as a guarantee for the payment of the purchase price of properties in
Zoetveld Mining and Prospecting (Pty) Ltd. Refer to note 25 for details.
for the purposes of the Statement of Cash flows, cash and cash equivalents
comprise the following at 30 June:
Cash at bank and on hand
Short-term deposits
Cash at banks and short-term deposits attributable to assets held for sale (note 15)
13. trade and other reCeivableS
Trade receivables
Other receivables
2013
$
2012
$
1,209,097
1,456,203
24,059
28,977
–
2,678,500
6,379,887
5,675,606
184,998
10,021,293
–
19,781
6,564,885
15,716,680
2013
$
2012
$
11,504,456
11,246,738
356,492
1,695,605
11,860,948
12,942,343
Trade receivables are due from major minerals mining and processing companies. None of the amounts are past due or impaired.
At 30 June 2013 gross sales of $8,172,409 (FY2012: $9,218,185) were subject to price adjustments.
Other receivables are non-interest-bearing and are generally on 30-90 day terms. No other receivables are considered to be past due or
impaired.
14. inventorieS
Stores and materials
Stores and materials
2013
$
2012
$
612,866
596,719
Strategic spares are held in stock for engineering breakdowns. Spares and materials are carried at the lower of cost or net realisable value.
7012_13_Sylvania AFS_MM29_Final.indd 58
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58
Annual Report 2013 15. NON-CuRRENT ASSETS ClASSifiED AS hElD-fOR-SAlE
On 8 July 2011, Sylvania announced its decision to dispose of a significant portion of its magnetite iron ore assets, subject to shareholder
and regulatory approvals. SA Metals and GAU, both wholly owned subsidiaries of Sylvania, held the prospecting rights to the magnetite iron
ore assets, which are located on the Northern Limb of the Igneous Bushveld Complex.
On 7 March 2012, Sylvania announced that it had entered into a conditional, legally binding agreement with Mercury Recycling Group
PLC (Mercury) whereby Mercury would acquire the rights to the iron ore assets in exchange for 203,022,285 fully paid Mercury shares
(consideration shares).
On 16 August 2012, the disposal of the iron ore assets was completed and readmission of the enlarged Mercury Group (now renamed
Ironveld Plc (Ironveld)) to the AIM took place. Distribution of the consideration shares to the Sylvania shareholders was also made on
16 August 2012 on the basis that for every Sylvania ordinary share held by Sylvania shareholders, 0.675 of an ordinary share in Mercury
was received.
Ironveld shares transferred to Sylvania shareholders 203,022,285 shares at 3.25 pence
Plus/(minus) net liabilities of subsidiaries transferred to Ironveld (i)
Disposal costs incurred by Sylvania
Profit on disposal
(i) Net liabilities of subsidiaries transferred are reconciled as:
Assets held for disposal at 30 June 2012
Liabilities held for disposal at 30 June 2012
Inter-company loans/liabilities at 30 June 2012 maintained in the companies on transfer to Ironveld
Movement in net liabilities from 1 July 2012 to 16 August 2012
Net liabilities at date of transfer
The major classes of assets and liabilities of Ironveld classified as held for sale as at 30 June 2012 are as follows:
Assets
Exploration and evaluation assets
Property, plant and equipment
Trade and other receivables
Cash and cash equivalents
Non-current assets classified as held-for-sale
liabilities
Trade and other payables
Liabilities directly associated with assets classified as held-for-sale
Net assets directly associated with assets held-for-sale
Profit on
disposal
2013
$
10,308,198
73,270
(469,689)
9,911,779
1,343,889
(36,475)
(1,234,921)
777
73,270
2012
$
1,303,856
9,907
10,345
19,781
1,343,889
36,475
36,475
1,307,414
7012_13_Sylvania AFS_MM29_Final.indd 59
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59
Financial statements Notes to the consolidated financial statements
(for the year ended 30 June 2013)
15. NON-CuRRENT ASSETS ClASSifiED AS hElD-fOR-SAlE (continued)
Sylvania also entered into a facility agreement with Ironveld whereby Sylvania (through its South African subsidiary, Sylvania Metals (Pty)
Ltd) has made available a loan facility (facility) of up to ZAR15 million (approximately $1.8 million) (at 30 June 2013 drawn to $460,117) to
Ironveld Holdings (Pty) Ltd, the company which holds the iron ore assets. Ironveld Plc has guaranteed all obligations of Ironveld Holdings
(Pty) Ltd under the facility. The funds made available under the facility will be used to further fund the development of the iron ore assets.
The facility will mature on 30 June 2016, at which time the amount utilised under the facility (and all accrued interest) will be repayable.
As security for the amount due under the facility, Ironveld issued to Sylvania warrants to subscribe for up to £1.5 million ($2.3 million)
of ordinary shares in Ironveld Plc at a price equal to the 90 day VWAP on the business day preceding the exercise of the warrants. The
warrants are exercisable only if the facility is not fully repaid by 30 June 2016 and may be exercised post 30 June 2016 up until the date that
is five years from admission (although the warrants will lapse once repayment has been made). Any proceeds derived from the exercise of
the warrants will be used by Ironveld to repay the facility.
For so long as any amount remains owing under the facility, Sylvania has the right to appoint a director to the board of Ironveld Plc.
Pursuant to this right, Sylvania has appointed Terry McConnachie (CEO of Sylvania) as a non-executive director of Ironveld Plc. Peter Cox
(former CEO of Iron Ore Assets) was appointed a director, and serves as CEO of Ironveld Plc. These appointments became effective on
15 August 2012.
The Group has recognised a profit on disposal of $9,911,779 on completion of the transaction, which was calculated based on the difference
between the share price of Ironveld Plc multiplied by the number of shares received and the net liabilities transferred to Ironveld Plc plus
costs incurred.
16. iSSued Capital
Authorised capital
Ordinary shares with a par value of $0.10
Issued capital
Share capital
Ordinary shares
Ordinary shares fully paid
Shares reserved for employee share plan shares
2013
No. of shares
1,000,000,000
2013
$
100,000,000
2013
No. of shares
2012
No. of shares
2013
$
2012
$
297,981,896
–
297,981,896
298,381,896
2,383,000
300,764,896
29,515,534
–
29,515,534
29,557,290
–
29,557,290
Holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at
shareholders’ meetings. In the event of winding up of the parent entity, ordinary shareholders rank after all creditors and are fully entitled to
any proceeds on liquidation.
Movements in ordinary share capital
Date
1 July 2011
2 April 2012
30 June 2012
1 July 2012
27 November 2012
15 April 2013
30 June 2013
Details
Opening balance
Share buy-back
Transaction costs
Closing balance
Opening balance
Share buy-back
Share buy-back
Transaction costs
Closing balance
Number of
shares
298,868,805
(486,909)
–
298,381,896
298,381,896
(150,000)
(250,000)
–
297,981,896
$
29,639,275
(48,690)
(33,295)
29,557,290
29,557,290
(15,000)
(25,000)
(1,756)
29,515,534
7012_13_Sylvania AFS_MM29_Final.indd 60
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60
Annual Report 2013
Movements in shares reserved for employee share plan shares
Date
1 July 2012
Details
On issue at beginning of the year
27 November 2012
Cancelled shares
30 June 2013
On issue at the end of the year
Share options
Employee option plan options exercisable (refer note 23)
– At $Nil per share on or before 29 December 2021
– At $Nil per share on or before 11 June 2023
Number of
shares
2,383,000
(2,383,000)
–
2013
$
2012
$
12,000,000
13,000,000
1,000,000
–
13,000,000
13,000,000
17. reServeS
Balance as at
1 July 2011
Included in other
comprehensive income:
Impairment on available-
for-sale financial assets
Currency translation
differences
Total other
comprehensive
income
Share and option-based
payments expense
Share buy-back
Balance as at
30 June 2012
Balance as at
1 July 2012
Included in other
comprehensive income:
Impairment on available-
for-sale financial assets
Currency translation
differences
Share
premium
reserve
$
Net
unrealised
gains reserve
$
Share- based
payments
reserve
$
Foreign
currency
translation
reserve
$
Non-
controlling
interest
reserve
$
Equity
reserve
$
Total
$
160,044,225
(195,114)
669,633
23,603,839
(39,779,293)
(29,741,213) 114,602,077
–
–
–
195,114
–
195,114
–
(105,842)
159,938,383
159,938,383
–
–
–
–
–
–
–
–
–
–
–
–
(17,211,584)
(17,211,584)
724,481
–
–
–
–
–
–
–
–
–
–
–
–
–
195,114
(17,211,584)
(17,016,470)
724,481
(105,842)
1,394,114
6,392,255
(39,779,293)
(29,741,213)
98,204,246
1,394,114
6,392,255
(39,779,293)
(29,741,213)
98,204,246
–
–
–
(18,087,729)
–
–
–
–
–
(18,087,729)
7012_13_Sylvania AFS_MM29_Final.indd 61
2013/11/21 4:06 PM
61
Financial statements
Notes to the consolidated financial statements
(for the year ended 30 June 2013)
17. reServeS (continued)
Share
premium
reserve
$
Net
unrealised
gains reserve
$
Share- based
payments
reserve
$
Foreign
currency
translation
reserve
$
Non-
controlling
interest
reserve
$
Total other
comprehensive loss
Share and option-based
payments expense
Share buy-back
In specie distribution
Balance as at
30 June 2013
–
–
(21,992)
(10,308,198)
149,608,193
Nature and purpose of reserves
• Net unrealised gains reserve
–
–
–
–
–
–
(18,087,729)
1,269,239
–
–
–
–
–
–
–
–
–
Equity
reserve
$
Total
$
–
–
–
–
(18,087,729)
1,269,239
(21,992)
(10,308,198)
2,663,353
(11,695,474)
(39,779,293)
(29,741,213)
71,055,566
This reserve records fair value changes on available-for-sale investments.
• foreign currency translation reserve
The foreign currency translation reserve is used to record exchange differences arising from the translation of financial statements of
foreign controlled entities.
• Share-based payment reserve
This reserve is used to record the value of equity benefits provided to employees, consultants and directors as part of their
remuneration. Refer to note 23.
• Non-controlling interests reserve
This reserve is used to record differences between the carrying value of non-controlling interests and the consideration paid/received,
where there has been a transaction involving non-controlling interests that do not result in a loss of control. The reserve is attributable
to the equity of the parent.
• Equity reserve
This reserve arises from the reinstatement of the recyclable reserves in the former parent (Sylvania Resources) as at the date of the
insertion of Sylvania Platinum as the ultimate holding company.
18. retained profit
Balance as at 1 July
Profit/(loss) for the year
Balance as at 30 June
Repatriation of funds from South Africa is subject to regulatory approval.
19. iNTEREST-BEARiNG lOANS AND BORROWiNGS
Secured
Current liabilities
Payable within one year
Non-current liabilities
Payable within one to five years
2013
$
16,478,657
4,369,231
20,847,888
2012
$
20,450,460
(3,971,803)
16,478,657
2013
$
2012
$
169,151
174,654
170,287
256,063
These loans are secured over various motor vehicles and equipment and are repayable in monthly instalments of $15,654 (FY2012;
$20,899) and bear interest at rates varying between 7.25% and 8.5% (FY2012: 7.75% and 9%) p.a. Refer to note 11 for further detail on
non-current assets pledged as security.
62
7012_13_Sylvania AFS_MM29_Final.indd 62
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Annual Report 2013
20. PROviSiONS
Provision for rehabilitation
Movement in provision
Balance at beginning of financial year
Foreign currency movements
Unwinding of discount factor
Arising during the year
Balance at end of financial year
2013
$
2,578,036
2012
$
1,257,235
1,257,235
(252,122)
99,448
1,473,475
2,578,036
974,832
(188,174)
41,807
428,770
1,257,235
Provision is made for the present value of closure, restoration and environmental rehabilitation costs (which include the dismantling and
demolition of infrastructure, removal of residual materials and remediation of disturbed areas) in the financial period when the related
environmental disturbance occurs, based on the estimated future costs using information available at the reporting date. These estimates
are reviewed regularly to take into account any material changes to the assumptions. However, actual costs will ultimately depend on future
market prices for the rehabilitation work required.
Rehabilitation is performed and paid for on an ongoing basis as mining properties are depleted. The majority of the rehabilitation will be
undertaken progressively over the life of the mine during the depletion of each respective mining property. It is expected that the life of
each mine could vary between five and 50 years. The timing of rehabilitation work is therefore inherently uncertain.
21. trade and other payableS
Trade payables
Other payables
2013
$
5,111,385
1,716,784
6,828,169
2012
$
4,766,503
2,856,689
7,623,192
Trade and other payables are non-interest-bearing and are normally settled on 60 day terms, predominately payable in ZAR and located in
South Africa.
22. RECONCiliATiON Of PROfiT/(lOSS) BEfORE TAx TO NET CASh flOW fROM OPERATiNG ACTiviTiES
Profit/(loss) before tax
Adjusted for:
Equity accounted net loss from joint venture
Capital loss on sale of non-current assets
Gain on disposal of iron ore assets (note 15)
Write-off of property, plant and equipment
(Gain)/loss on financial assets at fair value through profit and loss
Impairment of available-for-sale financial assets
Finance costs
Depreciation
Provisions
Share-based payments
Net operating profit before working capital changes
2013
$
5,361,767
2012
$
(2,502,975)
201,040
1,629
(9,911,779)
203,138
(4,106)
44,394
159,874
7,835,818
125,381
1,269,239
5,286,395
475,413
8,669
–
–
24,770
368,797
41,807
7,355,963
116,847
724,481
6,613,772
7012_13_Sylvania AFS_MM29_Final.indd 63
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63
Financial statements Notes to the consolidated financial statements
(for the year ended 30 June 2013)
22. RECONCiliATiON Of PROfiT/(lOSS) BEfORE TAx TO NET CASh flOW fROM OPERATiNG ACTiviTiES
(continued)
Changes in working capital:
(Increase)/decrease in trade receivables
Increase in inventories
Increase in trade and other payables
Interest received
Income tax refunded
23. ShARE-BASED PAyMENT PlAN
Employee option plan
2013
$
2012
$
(2,059,851)
(131,585)
966,555
4,061,514
(13,523)
5,092
4,053,083
4,321,058
(77,540)
2,067,945
12,925,235
7,424
1,355,826
14,288,485
On 29 December 2011, an employee incentive option plan (the Sylvania Platinum Option Plan) was approved by the shareholders at the
AGM. This plan replaces the employee incentive option plan and employee incentive share plan as approved as part of the implementation
of the Scheme of arrangement by the Group shareholders in 2007.
Participants of the option plan are determined by the Board and can be employees and directors of, or consultants to, the Company or a
controlled entity. The Board considers the length of service, seniority and position, record of employment, potential contribution and any
other relevant matters in determining eligibility of potential participants. The Board has sole responsibility to determine the number of
options and terms and conditions of options granted to any participant.
The options issued under the option plan will be granted free of charge. The exercise price (if any) for the options is to be determined by
the Board at its absolute discretion.
The expiry date of the options, unless otherwise determined by the Board, is ten years after the grant date and will also lapse within one
month of the participant ceasing to be a director, employee or consultant of the Company or a controlled entity during the exercise period
(subject to certain exceptions); or immediately if the participant ceases to be a director, employee or consultant prior to the commencement
of the exercise period. The Board at its discretion may apply certain vesting conditions upon any options issued under the plan.
Subject to any vesting conditions applied by the Board, the options can only be exercised after the expiry of the following periods:
• as regards 20% of those options granted, the date which is two years after the grant date;
• as regards 40% of those options granted, the date which is three years after the grant date; and
• as regards the remaining 40% of those options granted, the date which is four years after the grant date.
The options are not transferable without prior written approval from the Board.
On 29 December 2011, 13,000,000 share options were granted to directors, employees and consultants under the Sylvania Platinum
Option Plan with a nil exercise price and an expiry date of 29 December 2021. Exercise of the options is subject to time-based vesting with
20% of the options vesting on 30 December 2013, a further 40% of the options vesting on 30 December 2014 and the remaining 40% of
the options vesting on 30 December 2015, subject to the participant’s continued employment. On 11 June 2013 a further 1,000,000 share
options were granted with a nil exercise price and an expiry date of 11 June 2023. Exercise of the options is subject to time-based vesting
with 20% of the options vesting on 12 June 2015, a further 40% of the options vesting on 12 June 2016 and the remaining 40% of the
options vesting on 12 June 2017, subject to the participant’s continued employment.
The fair values of the options granted are determined at the grant date using a Black Scholes Merton model, taking into account the
terms and conditions upon which the options were granted (the exercise price, the term of the option), the share price at grant date and
expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option.
The following assumptions were used to estimate the fair value of the options granted during the year ended 30 June 2013:
Expected volatility (%)
Risk-free rate (%)
Expected life (years)
Share price ($)
Exercise price ($)
Expected dividend yield ($)
66.1
5.5
10 years
0.17
Nil
Nil
64
7012_13_Sylvania AFS_MM29_Final.indd 64
2013/11/21 4:06 PM
Annual Report 2013 Financial statements
Exercise
price
Fair value
at grant
date
Balance at
start of the
year
Granted
during the
year
Forfeited/
expired
during the
year
Balance at the
end of the
year
Vested and
exercisable at
end of year
Number
Number
Number
Number
Number
Grant date
Expiry date
Options 2013
29 Dec 2011
29 Dec 2021
11 Jun 2013
11 Jun 2023
Nil
Nil
$0.33
13,000,000
–
(1,000,000)
12,000,000
$0.17
–
1,000,000
–
1,000,000
Total
Weighted average exercise price
Options 2012
10 Jun 2009
30 Jun 2012
29 Dec 2011
29 Dec 2021
$1.05
Nil
$1.55
$0.33
Total
13,000,000
1,000,000
(1,000,000)
13,000,000
–
6,000,000
–
–
–
(6,000,000)
–
–
–
13,000,000
–
13,000,000
6,000,000
13,000,000
(6,000,000)
13,000,000
Weighted average exercise price
$1.05
–
$1.05
–
–
–
–
–
–
–
–
–
The weighted average remaining contractual life of the share options is 10 years (FY2012: 10 years).
The weighted average share price at the date of exercise of options during the year ended 30 June 2013 was nil as no options were
exercised during the current financial year (FY2012: $Nil).
Employee share plan
On 27 November 2012, Sylvania bought back and cancelled 2,533,000 shares (plan shares) which were issued under the terms of the
Company’s share plan (share plan), (buy-back).
The plan shares were acquired by certain employees of the Company (and one director) with a loan provided by the Company to each
employee for the purpose of the acquisition (loan). The plan shares could not be sold or otherwise dealt with until inter alia, the relevant
loan was repaid to the Company in full.
In accordance with the terms of the share plan and the agreement pursuant to which each relevant employee acquired their plan shares,
the Company is entitled to buy back the plan shares from employees and apply the proceeds otherwise payable to the employee to fully
satisfy the employee’s loan.
Accordingly, the Company bought back the plan shares at a price of 9.10 pence per plan share, being the closing price of the Company’s
shares on AIM on 26 November 2012. This was a cash neutral transaction as the consideration received by each employee under the
buy-back was applied in repayment of their loan so that upon completion of the buy-back the relevant loans are fully satisfied. Note that for
accounting purposes these shares were treated as in substance options.
Expense recognised through profit and loss
Expense arising from equity-settled share-based payment transactions
Total expense
2013
$
1,269,239
1,269,239
2012
$
724,481
724,481
7012_13_Sylvania AFS_MM29_Final.indd 65
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65
Notes to the consolidated financial statements
(for the year ended 30 June 2013)
24. finanCial riSk management objeCtiveS and poliCieS
The Group’s principal financial liabilities comprise trade and other payables, loans, finance leases and other borrowings. The main
purpose of these financial instruments is to manage short-term cash flow and raise finance for the Group’s capital expenditure program.
The Group has various financial assets such as accounts receivable and cash and short-term deposits, which arise directly from its
operations. The Group also holds available-for-sale investments and financial assets at fair value through profit or loss.
Risk exposures and responses
The Group manages its exposure to key financial risks in accordance with the Group’s financial risk management policy. The objective of
the policy is to support the delivery of the Group’s financial targets while protecting future financial security. The main risks that could
adversely affect the Group’s financial assets, liabilities or future cash flows are market risks (comprising commodity price risk, interest rate
risk and foreign currency risk), liquidity risk and credit risk. Management reviews and agrees policies for managing each of these risks, which
are summarised below.
The Group’s senior management oversees the management of financial risks. The Board provides assurance to the Group’s senior
management that the Group’s financial risk-taking activities are governed by appropriate policies and procedures and that financial risks are
identified, measured and managed in accordance with Group policies and the Group’s risk appetite. It is the Group’s policy that no trading
in derivatives for speculative purposes shall be undertaken. At this stage, the Group does not currently apply any form of hedge accounting.
The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below.
The sensitivity analyses have been prepared on the basis that the amount of net debt, the ratio of fixed-to-floating interest rates on the
debt and the proportion of financial instruments in foreign currencies are all constant.
The following assumptions have been made in calculating the sensitivity analysis:
• The statement of financial position sensitivity relates to receivables subject to commodity price risk, available-for-sale financial assets and
financial assets at fair value through profit or loss and interest-bearing loans and borrowings.
• The impact on equity is the same as the impact on profit before tax, unless stated otherwise.
Capital risk management
The Group manages its capital to ensure that all companies within the Group will be able to continue as a going concern while maximising
the return to stakeholders through the optimisation of the debt and equity balance. Due to the inherent risks involved in mining, the
directors prefer not to utilise funding from financing institutions.
The Group’s overall strategy remains unchanged during the years ended 30 June 2013 and 30 June 2012.
The capital structure of the Group consists of equity attributable to equity holders of the parent comprising issued capital, reserves and
retained earnings/accumulated losses.
None of the Group’s companies are subject to externally imposed capital requirements.
Operating cash flows are used to maintain and expand operations, as well as to make routine expenditures such as tax, dividends and
general administrative outgoings.
Categories of financial instruments
financial assets
Loans and receivables
Trade and other receivables *
Cash and cash equivalents
Loans receivable
Financial assets at fair value through profit and loss
Available-for-sale financial assets
financial liabilities
Other financial liabilities at amortised cost
Interest-bearing loans and borrowings
Trade and other payables
2013
$
2012
$
11,726,101
6,564,885
1,500,148
18,266
29,100
19,838,500
12,864,530
15,716,680
–
16,374
76,861
28,674,445
(339,438)
(6,828,169)
(7,167,607)
(430,717)
(7,659,667)
(8,090,384)
* Prepayments are excluded from the trade and other receivables balance as this analysis is required only for financial instruments.
66
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Annual Report 2013
Financial statements
Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices.
Market prices comprise four types of risk: commodity price risk, interest rate risk, equity price risk and currency risk. Financial instruments
affected by market risk include receivables, loans, borrowings, deposits, available-for-sale financial instruments and financial assets at fair
value through profit or loss.
There has been no change at the reporting date to the Group’s exposure to market risks or the manner in which it manages and measures
the risk from the previous period.
Commodity price risk
The Group is exposed to the risk of commodity price fluctuations, in particular movements in the price of PGMs. The Group regularly
measures exposure to commodity price risk by stress testing the Group’s forecast financial position to changes in PGM prices. The Group
does not hedge commodity prices.
The financial instruments exposed to movements in metal prices are as follows:
financial assets
Trade receivables
2013
$
2012
$
8,172,409
9,218,185
These receivables contain quotational period embedded derivatives that are carried at fair value in accordance with the policy set out in
Note 2.3(p).
The following table summarises the sensitivity of financial instruments held at reporting date to movements in the relevant forward
commodity price, with all other variables held constant. The sensitivities are based on reasonably possible changes, over a financial year,
using observed ranges of actual historical rates.
10% (FY2012: 10%) increase in PGM prices
10% (FY2012: 10%) decrease in PGM prices
2013
2012
Equity
increase/
(decrease)
588,413
(588,413)
Profit/(loss)
809,765
(809,765)
Equity
increase/
(decrease)
809,765
(809,765)
Profit/(loss)
588,413
(588,413)
Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign
exchange rates. The Group’s exposure to the risk of changes in foreign exchange rates relates primarily to the Group’s operating activities
(when revenue or expense is denominated in a different currency from the Group’s functional currency).
As at 30 June 2012 and 2013 the Group had no exposure to foreign currency risk.
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market
interest rates. The Group’s exposure to interest rate risk arises from cash balances and interest-bearing borrowings, relating to finance
leases on motor vehicles and equipment.
Cash and cash equivalents are exposed to AUD, ZAR and GBP deposit rates.
The Group does not engage in any hedging transactions to manage interest rate risk. In conjunction with external advice, management
consideration is given on a regular basis to alternative financing structures with a view to optimising the Group’s funding structure.
The risk is managed by the Group by maintaining an appropriate mix between fixed and floating rate liquid funds.
7012_13_Sylvania AFS_MM29_Final.indd 67
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67
Notes to the consolidated financial statements
(for the year ended 30 June 2013)
24. finanCial riSk management objeCtiveS and poliCieS (continued)
The financial instruments exposed to movements in variable interest rates are as follows:
financial assets
Cash and cash equivalents
Loans receivable
financial liabilities
Interest-bearing loans and borrowings
2013
$
2012
$
6,564,885
1,500,148
15,716,680
–
(339,438)
(430,717)
A 50 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents
management’s assessment of the change in interest rates. At reporting date, if interest rates had been 50 basis points higher or lower
and all other variables were held constant, there would have been a decrease/increase in profit before tax of $7,597 (FY2012: $48,683).
The impact on equity would have been the same.
Equity price risk
The Group’s listed equity securities are susceptible to market price risk arising from uncertainties about future values of the investment
securities. The Group’s Board of Directors reviews and approves all equity investment decisions. At the reporting date, the exposure to
listed equity securities at fair value was $47,366 (FY2012: $93,235).
At reporting date, if the equity prices had been 5% higher or lower, the impact on net loss for the year ended 30 June 2013 and equity
would have been immaterial.
Credit risk
Credit risk is the risk that a contracting entity will not meet its obligation under a financial instrument or customer contract that will
result in a financial loss to the Group. The Group is exposed to credit risk from its financing activities, including deposits with banks and
financial institutions and its operating activities, primarily for trade receivables. The carrying amount of these financial assets represents the
maximum credit exposure. Receivables balances are monitored on an ongoing basis with the result that the Group’s exposure to bad debts
is not significant.
At reporting date there is a significant concentration of credit risk represented in the cash and trade receivables balance. With respect to
trade receivables, this is due to the fact that the majority of sales are made to two specific customers as per contractually agreed terms.
The two customers have complied with all contractual sales terms and have not at any stage defaulted on amounts due. The Group
manages its credit risk on trade debtors, cash and financial instruments by predominantly dealing with counterparties with a credit rating
equal to or better than the Group.
Liquidity risk
Ultimate responsibility for liquidity risk management rests with the Board of Directors, who have built an appropriate liquidity risk
management framework for the management of the Group’s short-, medium- and long-term funding and liquidity management
requirements.
The table below summarises the maturity profile of the Group’s financial liabilities based on contractual undiscounted payments based on
the earliest date on which the Group can be required to pay. The table includes both interest and principal cash flows.
7012_13_Sylvania AFS_MM29_Final.indd 68
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68
Annual Report 2013 2013
Non-interest bearing
Finance lease liability
2012
Non-interest bearing
Finance lease liability
Carrying
amount
$
Contractual
cash flows
$
Less than
1 year
$
6,828,169
339,438
7,167,607
7,659,667
430,717
8,090,384
6,828,169
367,723
7,195,892
7,659,667
479,357
8,139,024
6,828,169
187,846
7,016,015
7,659,667
230,048
7,889,715
1 – 5
years
$
–
179,877
179,877
–
249,309
249,309
5+
years
$
–
–
–
–
–
–
Total
$
6,828,169
367,723
7,195,892
7,659,667
479,357
8,139,024
Fair value of financial instruments
For financial assets and liabilities, the net fair value approximates their carrying value. No financial assets and financial liabilities are readily
traded on organised markets in standardised form, other than listed investments. The Group has no financial assets where carrying amount
exceeds net fair value at balance sheet date.
The following methods and assumptions were used to estimate fair values:
• Cash and short-term deposits, trade receivables, trade payables and other current liabilities approximate their carrying amounts largely
due to the short-term maturities of these instruments.
• Long-term variable-rate receivables and borrowings are evaluated by the Group based on parameters such as interest rates. As at
30 June 2013 the carrying amounts of such receivables and borrowings were not materially different from their calculated fair values.
• The fair values of listed shares is based on quoted prices at reporting date.
Fair value hierarchy
The table below presents the Group’s financial assets and liabilities measured and recognised at fair value, by valuation method in the
hierarchy defined below:
• quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1);
• inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (as prices) or indirectly
(derived from prices) (level 2); and
• inputs for the asset or liability that are not based on observable market data (unobservable inputs) (level 3).
2013 Assets
Available-for-sale financial assets
Financial assets at fair value through profit or loss
2012 Assets
Available-for-sale financial assets
Financial assets at fair value through profit or loss
Level 1
$
29,100
18,266
47,366
76,861
16,374
93,235
Level 2
$
Level 3
$
–
–
–
–
–
–
–
–
–
–
–
–
Total
$
29,100
18,266
47,366
76,861
16,374
93,235
7012_13_Sylvania AFS_MM29_Final.indd 69
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69
Financial statements Notes to the consolidated financial statements
(for the year ended 30 June 2013)
25 CommitmentS and ContingenCieS
Operating lease commitments
Future minimum lease payments (net of GST) as at 30 June are as follows:
Office premises
The Group has a number of commercial lease arrangements whereby it leases its current office
premises, both in Perth and Johannesburg. These leases have an average life of five years with an option
to renew at the end of the lease term.
Within one year
After one year but not more than five years
More than five years
Office equipment
The Group has a number of lease agreements during the period in respect to office equipment.
These leases have an average life of five years and no renewal option included in the contract.
Within one year
After one year but not more than five years
More than five years
Finance lease commitments
The Group has instalment sale agreements for various items of motor vehicles, plant and equipment
and computer equipment.
Motor vehicles
Within one year
After one year but not more than five years
More than five years
Plant and equipment
Within one year
After one year but not more than five years
More than five years
Computer equipment
Within one year
After one year but not more than five years
More than five years
Commitments for plant construction
At 30 June 2013 commitments were signed for continued improvements of Millsell,
Steelpoort, Mooinooi, Lannex, Doornbosch and Tweefontein plants as well as exploration
on the Northern Limb.
Within one year
After one year but not more than five years
More than five years
70
2013
$
2012
$
227,251
347,268
–
173,508
140,488
–
574,519
313,996
27,794
55,302
–
31,742
100,079
–
83,096
131,821
29,585
88,893
–
118,478
118,109
69,418
–
7,928
30,622
–
38,550
194,259
198,595
–
187,527
392,854
21,456
11,976
–
33,432
–
–
–
–
399,063
7,988,659
–
–
–
–
399,063
7,988,659
7012_13_Sylvania AFS_MM29_Final.indd 70
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Annual Report 2013 Commitments for property
An agreement was entered into by subsidiary company Zoetveld Mining and Prospecting (Pty) Ltd
on 23 April 2012 to purchase properties consisting of farms. The purchase price is based on fair
values of those properties at that date.
Within one year
After one year but not more than five years
More than five years
2013
$
2012
$
–
–
–
–
2,678,500
–
–
2,678,500
Legal matters
Summons received from Platmin South Africa (Pty) Ltd
On 13 September 2012 Sylvania announced that a summons was received by the Company regarding a claim being brought by Platmin
South Africa (Pty) Ltd (Platmin) (previously known as Boynton Investments (Pty) Ltd (Boynton)), a subsidiary of Platmin Limited.
The summons declared that Platmin is the co-owner of the tailings, or, alternatively, the co-owner of the PGMs contained in the Lannex
tailings dam situated on the Farm Grootboom in the District of Lydenburg, Mpumulanga, South Africa.
This claim is the same in nature as a motion put before the North Gauteng High Court, Pretoria by Boynton against Sylvania in 2009.
On 14 April 2009, Boynton withdrew that application and was ordered by the North Gauteng High Court, Pretoria to pay Sylvania’s legal
costs including the costs of two legal counsels appointed by Sylvania to oppose the matter.
The Board of Sylvania continues to refute these claims and intends again to defend them vigorously.
26. key management diSCloSure
Shareholding of key management personnel
The number of shares in the Company held during the year by each Director of the Group, including their personally related parties, is set
out below:
Director 2013
TM McConnachie
RD Rossiter
GM Button
RA Williams
Director 2012
TM McConnachie
RD Rossiter
GM Button
Balance at the
start of the
year
Issued under
share and
option plan
Other changes
during the year
Balance at the
end of the year
500,000
1,032,000
300,000
–
500,000
1,032,000
300,000
–
–
–
–
–
–
–
–
(1,000,000)
–
173,000
500,000
32,000
300,000
173,000
–
–
–
500,000
1,032,000
300,000
All equity transactions with key management personnel other than those arising under the Group’s incentive option plan have been
entered into under terms and conditions no more favourable than those the Group would have adopted if dealing at arm’s length.
7012_13_Sylvania AFS_MM29_Final.indd 71
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71
Financial statements Notes to the consolidated financial statements
(for the year ended 30 June 2013)
26. key management diSCloSure (continued)
The number of options in the Company held during the year by each Director of the Group, including personally related parties is set
out below:
Balance at the
start of the
year
Issued under
share and
option plan
Other changes
during the year
Balance at the
end of the year
Director 2013
TM McConnachie
RD Rossiter
GM Button
LM Carroll
RA Williams
SA Murray
Director 2012
TM McConnachie
RD Rossiter
GM Button
LM Carroll
RA Williams
Key management personnel compensation
Short-term
Post-employment
Share-based payments
Consultants previously considered key management:
Termination payments
Share-based payments
Total
2,000,000
1,000,000
1,000,000
1,500,000
500,000
–
–
–
–
–
–
–
–
–
–
–
1,000,000
2,000,000
1,000,000
1,000,000
1,500,000
500,000
–
–
–
–
–
–
–
–
–
–
–
2,000,000
1,000,000
1,000,000
1,500,000
500,000
1,000,000
2,000,000
1,000,000
1,000,000
1,500,000
500,000
2013
$
2012
$
2,626,763
3,605,619
–
1,219,682
3,846,445
–
49,557
–
38,682
637,738
4,282,039
295,000
55,215
350,215
3,896,002
4,632,254
Compensation options: granted under the employee option plan
Options provided as remuneration and shares issued on exercise of such options
Details of options provided as remuneration and shares issued on the exercise of such options, together with terms and conditions of the
options, can be found in note 23.
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72
Annual Report 2013 27. related party tranSaCtionS
The consolidated financial statements include the financial statements of Sylvania Platinum Limited and the controlled entities listed in the
following table:
Name of Entity
Sylvania Resources Pty Ltd
Twinloop Nominees Pty Ltd
Great Australian Resources Pty Ltd
SA Metals Pty Ltd
Platinum Mining Ventures Limited
Sylvania Holdings Limited
Aralon Holdings Limited
Sylvania (Mauritius) Limited (previously Ironveld Holdings
(Mauritius) Limited)
Ironveld Mauritius Limited
Sylvania South Africa (Pty) Ltd
Sylvania Metals (Pty) Ltd
Sylvania Properties (Pty) Ltd
Sylvania Mining (Pty) Ltd
Great Australian Resources SA (Pty) Ltd
Hacra Mining & Exploration Company (Pty) Ltd
Pan Palladium SA (Pty) Ltd
Ironveld Holdings (Pty) Ltd
Ironveld Mining (Pty) Ltd
Lapon Mining (Pty) Ltd
HW Iron (Pty) Ltd
Luge Prospecting and Mining Company (Pty) Ltd
Volspruit Mining Company (Pty) Ltd
Zoetveld Mining and Prospecting (Pty) Ltd
Country of
incorporation
Class of shares
Equity Holding
%
2013
2012
Australia
Australia
Australia
Australia
Australia
Mauritius
Mauritius
Mauritius
Mauritius
South Africa
South Africa
South Africa
South Africa
South Africa
South Africa
South Africa
South Africa
South Africa
South Africa
South Africa
South Africa
South Africa
South Africa
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
100
100
100
100
–
100
100
100
–
74
100
100
100
100
100
100
–
–
(a)
(a)
–
100
100
100
100
100
100
100
100
100
100
100
74
100
100
100
100
100
100
100
100
100
100
100
100
100
a) The Group has a 26% interest in Lapon Mining (Pty) Ltd and a 29% interest in HW Iron (Pty) Ltd as a result of the sale of the future mining rights of the iron ore assets
(refer to note 8).
Sylvania Platinum Limited is the ultimate parent of the Group. Transactions between Sylvania Platinum Limited and its controlled
entities during the year consisted of loan advances between Group companies. All intergroup transactions and balances are eliminated
on consolidation.
Other related parties relationships
Entities controlled or significantly influenced by key management
Summer Sun Trading 210 (Pty) Ltd
Southridge Properties (Pty) Ltd
Realm Resources Ltd
Ferrum Crescent Ltd
7012_13_Sylvania AFS_MM29_Final.indd 73
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73
Financial statements
Notes to the consolidated financial statements
(for the year ended 30 June 2013)
27. related party tranSaCtionS (continued)
Loans to/(from) related parties
There are no outstanding balances with related parties as at 30 June 2013.
Terms and conditions with related parties
All loans were granted on normal commercial terms and conditions and at market rates, except that there are no fixed terms for the
repayment of loans between related parties.
Outstanding balances are unsecured and are repayable in cash.
Jointly controlled entity
The Group has a 25% interest in the assets, liabilities and output of an un-incorporated joint venture, CTRP, which operates a chrome
tailings retreatment plant at Kroondal in South Africa (FY2012: 25%).
Terms and conditions with jointly controlled entity
Payments made on behalf of CTRP are made in arm’s length transactions both at normal market prices and on normal commercial terms.
Outstanding balances at year-end are unsecured, interest free and settlement occurs in cash.
Transactions with related parties
Administration recoveries were received from and service fees paid to the following related parties during the year ended 30 June for
expenses incurred on their behalf:
Service fees paid to related parties
Realm Resources SA (Pty) Ltd
Summer Sun Trading 210 (Pty) Ltd
Southridge Properties (Pty) Ltd
Recoveries from related parties
Realm Resources Limited
Ferrum Crescent Limited
2013
$
(27,192)
(21,736)
(1,583)
4,408
69,864
23,761
2012
$
–
(16,811)
(2,178)
15,832
84,020
80,863
28. CloSed group ClaSS order diSCloSure
The consolidated financial statements of Sylvania Platinum Limited (Sylvania Platinum) includes its wholly owned subsidiary Sylvania
Resources Proprietary Limited (Sylvania Resources).
Name
Sylvania Resources Proprietary Limited
Country of
incorporation
Australia
Equity interest
%
100
Investment
$
173,848,845
Pursuant to Class Order 98/1418, relief has been granted to Sylvania Resources from the Corporations Act 2001 requirements for the
preparation, audit and lodgement of their financial report.
As a condition of the Class Order, Sylvania Platinum and Sylvania Resources entered into a Deed of Cross Guarantee on 23 June 2011.
The effect of the deed is that Sylvania Platinum has guaranteed to pay any deficiency in the event of winding up of a controlled entity or if
they do not meet their obligations under the terms of overdraft, loans, leases or other liabilities subject to the guarantee. The controlled
entity has also given a similar guarantee in the event that Sylvania Platinum is wound up or if it does not meet its obligations under the
terms of the overdrafts, loans, leases or other liabilities subject to the guarantee.
7012_13_Sylvania AFS_MM29_Final.indd 74
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74
Annual Report 2013 The consolidated statement of comprehensive income and statement of financial position of the entities that are members of the closed
group are as follows:
Consolidated Statement of Comprehensive Income
2013
2012
Revenue
Cost of sales
Gross profit
Other income
Foreign exchange gain/(loss)
Impairment of available-for-sale financial assets
Share-based payment expense
General and administrative costs
Operating profit/(loss)
Finance revenue
Profit/(loss) before income tax expense
Income tax (expense) / benefit
Net profit/(loss) for the year
Consolidated Statement of Financial Position
Assets
Non-current assets
Investments
Available-for-sale financial assets
Loans receivable
Property, plant and equipment
Total non-current assets
Current assets
Cash and cash equivalents
Trade and other receivables
Total current assets
Total assets
Equity and liabilities
Shareholders' equity
Issued capital
Reserves
Accumulated losses
Equity attributable to the owners of the parent
Non-controlling interest
Total equity
Current liabilities
Trade and other payables
Total current liabilities
Total liabilities
Total liabilities and shareholders' equity
75
$
–
–
–
$
–
–
–
9,912,732
160,811
(44,394)
(861,912)
32,504
(24,248)
(368,797)
(430,513)
(2,767,462)
(4,425,776)
6,399,775
(5,216,830)
90,708
324,015
6,490,483
(4,892,815)
–
–
6,490,483
(4,892,815)
89,075,277
99,811,753
29,100
76,861
69,355,829
77,630,055
11,906
19,971
158,472,112
177,538,640
1,814,745
281,003
2,095,748
5,148,594
357,901
5,506,495
160,567,860
183,045,135
29,515,539
29,557,290
132,414,719
161,441,644
(1,950,218)
(8,440,701)
159,980,040
182,558,233
–
–
159,980,040
182,558,233
587,820
587,820
587,820
486,902
486,902
486,902
160,567,860
183,045,135
7012_13_Sylvania AFS_MM29_Final.indd 75
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Financial statements Notes to the consolidated financial statements
(for the year ended 30 June 2013)
29. eventS after the balanCe Sheet date
The directors are not aware of any matter or circumstance arising since the end of the financial year, not otherwise dealt with in the annual
financial statements, which significantly affects the financial position of the Company or the results of its operations.
7012_13_Sylvania AFS_MM29_Final.indd 76
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76
Annual Report 2013 Directors’ responsibilities in the preparation of the
financial statements
(for the year ended 30 June 2013)
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law
and regulations.
The directors have elected to prepare the Group financial statements under International Financial Reporting Standards (IFRS).
International Accounting Standard 1 requires that financial statements present fairly for each financial year the Company’s financial
position, financial performance and cash flows. This requires the faithful representation of the effects of transactions, other events and
conditions in accordance with the definitions and recognition criteria for assets, liabilities, income and expenses set out in the International
Accounting Standards Board’s ‘Framework for the Preparation and Presentation of Financial Statements’. In virtually all circumstances, a fair
presentation will be achieved by compliance with all applicable IFRSs. The directors are also responsible for:
• properly selecting and applying accounting policies;
• presenting information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable
information;
• providing additional disclosures when compliance with the specific requirements in IFRSs is insufficient to enable users to understand the
impact of particular transactions, other events and conditions on the entity’s financial position and financial performance; and
• making an assessment of the Company’s ability to continue as a going concern.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions
and disclose with reasonable accuracy at any time the financial position of the Company. They are also responsible for safeguarding assets of
the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website.
Legislation in Bermuda governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
DiRECTORS’ RESPONSiBiliTy STATEMENT
We confirm that to the best of our knowledge:
1. the financial statements, prepared in accordance with International Financial Reporting Standards, give a true and fair view of the assets,
liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and
2. the sections of the annual report include a fair review of the development and performance of the business and the position of the
Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and
uncertainties that they face.
By order of the Board
TM McConnachie
Chief Executive Officer
23 August 2013
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Financial statements Ernst & Young
11 Mounts Bay Road
Perth WA 6000 Australia
GPO Box M939 Perth WA 6843
Tel: +61 8 9429 2222
Fax: +61 8 9429 2436
ey.com/au
iNDEPENDENT AuDiTOR’S REPORT TO Th E MEMBERS O f SylvANiA PlATiNuM liMiTED
We have audited the accompanying financial report of Sylvania Platinum Limited, which comprises the statement of financial position as at
30 June 2013, and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year ended
on that date, a summary of significant accounting policies, other explanatory notes and the directors’ declaration of the consolidated entity
comprising the company and the entities it controlled at the year’s end or from time to time during the financial year.
DiRECTORS’ RESPONSiBiliTy fOR ThE fiNANCiAl REPORT
The directors of the company are responsible for the preparation and fair presentation of the financial report in accordance with
International Financial Reporting Standards as issued by the International Accounting Standards Board and for such internal controls as the
directors determine are necessary to enable the preparation of the financial report that is free from material misstatement, whether due to
fraud or error.
AuDiTOR’S RESPONSiBiliTy
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with
International Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit engagements
and plan and perform the audit to obtain reasonable assurance about whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The
procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the financial report,
whether due to fraud or error. In making those risk assessments, we consider internal controls relevant to the entity’s preparation and
fair presentation of the financial report in order to design audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the entity’s internal controls. An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall
presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
independenCe
In conducting our audit we have complied with the independence requirements of the Australian professional accounting bodies.
opinion
In our opinion, the financial report presents fairly, in all material respects, the financial position of the consolidated entity as of 30 June 2013,
and its financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards as
issued by the International Accounting Standards Board.
Ernst & Young
Perth
23 August 2013
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
RK:DJ:Sylvania:035
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Annual Report 2013
Additional information for listed public companies
SHAREHOLDERS PROFILE AS AT 3 JULY 2013
Shareholder information
ShareholderS holding 3% or more fully paid ShareS
Shareholder
Africa Asia Capital
Audley Capital
M&G Investment Management
JP Morgan Asset Management
Legal & General Investment Management
Odey Asset Management
Capital Research & Management
UBS
1
2
3
4
5
6
7
8
Number of shares
%
shareholding
58,882,551
32,196,816
28,915,850
18,675,507
17,872,376
17,367,657
15,000,000
11,737,900
200,648,657
19.76
10.80
9.70
6.27
6.00
5.83
5.03
3.94
67.33
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79
Glossary of terms 2013
The following definitions apply throughout the annual financial statements:
aaCl
agm
aim
aqpSa
aSx
aud
bee
Africa Asia Capital Limited
Annual General Meeting
Alternative Investment Market of the London Stock Exchange
Aquarius Platinum (South Africa) (Pty) Ltd
Australian Securities Exchange
Australian dollar
Black economic empowerment
Boynton
Boynton Investments (Pty) Ltd
Cgu
Ctrp
di
dmr
Cash generating unit
Chrome Tailings Retreatment Plant
Depository interests
Department of Mineral Resources
ebitda
Earnings before interest, tax, depreciation and amortisation
eia
eir
empr
gau
gbp
iaSb
ifriC
ifrS
ironveld
jorC
jv
lSe
lti
Mercury
mprda
nomr
pgm
Platmin
rom
Sam
Sdo
Shares
Sylvania
Environmental Impact Assessment
Effective interest rate
Environmental Management Programme Report
Great Australian Resources Pty Ltd (formerly Great Australian Resources Limited)
Great British pound
International Accounting Standards Board
International Financial Reporting Interpretation Committee
International Financial Reporting Standards
Ironveld Holdings (Pty) Ltd
Joint Ore Reserves Committee
Joint venture
London Stock Exchange
Lost-time injury
Mercury Recycling Group plc
Mineral and Petroleum Resources Development Act
New Order Mining Right
Platinum group metals comprising mainly platinum, palladium, rhodium and gold
Platmin South Africa (Pty) Ltd
Run-of-mine
SA Metals Pty Ltd (formerly SA Metals Limited)
Sylvania dump operations
Common shares
Sylvania Platinum Limited, a company incorporated in Bermuda
The Code
UK Corporate Governance Code
uSd
Zar
United States dollar
South African rand
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80
Annual Report 2013 Shareholder information
SoliCitorS
Allen & Overy
Level 27, Exchange Plaza
2 The Esplanade
Perth, Western Australia, 6000
Australia
nominated adviSor and broker
Liberum Capital
Ropemaker Place
Level 12, 25 Ropemaker Street
London, EC2Y 9LY
United Kingdom
StoCk exChange liSting
Sylvania Platinum Limited is listed on the AIM market of the
London Stock Exchange (shares: SLP)
WebSite
www.sylvaniaplatinum.com
Corporate directory
direCtorS
SA Murray – Non-executive Chairman
TM McConnachie – Chief Executive Officer
GM Button – Executive Director
RA Williams – Independent Non-executive Director
Company SeCretary
Codan Services Limited
prinCipal regiStered offiCe
Clarendon House
in Bermuda
2 Church Street
Hamilton HM11
Bermuda
regiStrar
Computershare Services Plc
The Pavilions, Bridgewater Road
Bedminster Down
Bristol, BS99 7NH
United Kingdom
auditorS
Ernst & Young
11 Mounts Bay Road
Perth, Western Australia, 6000
Australia
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ANNUAL REPORT 2013
Clarendon House, 2 Church Street,
Hamilton HMII, Bermuda
www.sylvaniaplatinum.com
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