ANNUAL REPORT 2013

Transcription

ANNUAL REPORT 2013

ANNUAL REPORT
2013
Contents
2
Group profile
2
Forward looking statements
2
Salient features
3
Administration
4
Location of operations
5
Mineral Resources and Reserves
17
Corporate governance
19
Five-year review
20 – 58
Annual financial statements
Assmang Limited Annual Report 2013
1
Group profile
Assmang Limited (“Assmang” or “Company”), a company incorporated in the Republic of
South Africa (Company registration number 1935/007343/06) and its joint venture and
subsidiary companies (“Group”).
The Company mines manganese ore at Black Rock Mine, iron ore at Khumani and Beeshoek Mines in the Northern Cape province and
chrome ore at Dwarsrivier Mine in the Mpumalanga province. The Company also produces manganese alloys at its works at Cato Ridge
in the KwaZulu-Natal province and at Machadodorp in the Mpumalanga province.
Cato Ridge Alloys Proprietary Limited, a joint venture between the Company and Mizushima Ferroalloys Company Limited (40%) and
Sumitomo Corporation (10%), both of Japan, produces refined manganese alloys at Cato Ridge Works.
Manganese ore is also transferred to the works at Cato Ridge and Machadodorp where it is used in the production of manganese alloys.
Incorporated in 1935, the Group employs 6 567 (2012: 6 734) permanent employees and operates as three divisions, namely iron ore,
manganese and chrome. Assmang is controlled jointly by African Rainbow Minerals Limited (“ARM”) and Assore Limited (“Assore”),
which each holds 50% of the issued share capital and voting rights of the Company. Both shareholders are listed on the JSE Limited (“JSE”).
The bulk of the Group’s production is exported to the Far East, Europe and the United States of America.
Forward looking statements
Certain statements included in this report may constitute “forward looking statements”. Inevitably such forward looking statements
involve known and unknown risks and uncertainties and other factors that may cause the actual results, performance or achievements
of the Group to be materially different from future results, performance or achievements expressed or implied by those forward looking
statements. The business of the Group is subject to fluctuations in world commodity prices, exchange rates and interest rates as well, as
the risks inherent in mining and smelting operations. While every effort is made to anticipate and counter the adverse impacts of these
risks on the Group’s performance, it is not possible to forecast the outcome of future results with any certainty.
Salient features
Year ended
30 June
2012
R’000
25 003 167
23 688 390
Profit for the year
6 209 902
6 883 987
Dividends paid
3 000 000
2 000 000
Capital expenditure
4 064 103
4 517 413
Turnover
2
Year ended
30 June
2013
R’000
Administration
DIRECTORS
MANAGEMENT AT THE OPERATIONS
Desmond Sacco – Chairman
J C Steenkamp – Deputy Chairman
M Arnold*
C J Cory*
A Joubert*
S M Langa
F T Olivier
P E Sacco
M P Schmidt
A D Stalker‡
B H van Aswegen
A J Wilkens
Executive Mines
W S Grobbelaar
ALTERNATE DIRECTORS
R Avenant-Buys (Mrs)
C Els
W M Gule
P G W Henderson
F H Kalp
G C T Karsten
B R Mashiane (Mrs)
A McAdam‡
G R Pieterse
H L Smith
J C Venter
* Audit Committee
‡ British
MANAGEMENT SERVICES
African Rainbow Minerals Limited (“ARM”)
29 Impala Road
Chislehurston, 2196
South Africa
PO Box 786136
Sandton, 2146
South Africa
Telephone: +2711 779 1300
Telefax: +2711 779 1318
TECHNICAL ADVISERS
African Rainbow Minerals Limited
African Mining and Trust Company Limited
SOLE SELLING AGENTS AND DISTRIBUTORS
Ore & Metal Company Limited
Assore House
15 Fricker Road
Illovo Boulevard, 2196
South Africa
Private Bag X03
Northlands, 2116
South Africa
Telephone: +2711 770 6800
Telefax: +2711 268 6440
Iron ore
D Selemo, Senior General Manager – Khumani
W Smith, Financial Manager
M A Oosthuizen, Senior General Manager – Beeshoek
W Jansen van Rensburg, Financial Manager
Manganese ore
P Becker, Senior General Manager
M Smit, Financial Manager
Chrome ore
M Mtshengu, Senior General Manager
R Burger, Financial Manager
Executive Smelters
L Meyer
Manganese alloys
Cato Ridge Works
C Padayachee, Senior General Manager
A Santhilal, Financial Manager
Machadodorp Works
A Mcleod, Senior General Manager
L R Wohlberg, Financial Manager
AUDITORS
Ernst & Young Incorporated
BANKERS
The Standard Bank of South Africa Limited
ABSA Bank Limited
REGISTERED OFFICE
24 Impala Road
Chislehurston, 2196
South Africa
PO Box 782058
Sandton, 2146
South Africa
Telephone: +2711 779 1000
Telefax: +2711 779 1019
RESPONSIBILITY FOR THE FINANCIAL STATEMENTS
The financial statements were prepared under the supervision of
George Karsten BCom, FCMA, MBL Executive Finance
COMPANY SECRETARY
3
Location of operations
CrChrome
Fe
Iron ore
MnManganese
FeCrFerrochrome
FeMnFerromanganese
Mine
Processing plant
City/Town
Export chain
Dwarsrivier
Maputo
Johannesburg Machadodorp
Black Rock
Nchwaning
Gloria
Khumani
Beeshoek
Kathu
Cato Ridge
Richards Bay
Postmasburg
Durban
East London
Saldanha Bay
Cape Town
4
Port Elizabeth
Mineral Resources and Reserves
COMPETENT PERSON’S REPORT ON MINERAL
RESOURCES AND MINERAL RESERVES
The report is issued as the annual update of the Mineral Resources
and Reserves to inform shareholders of the mineral assets held
by Assmang.
CHROMITE
MEASURED AND
INDICATED
PROVED AND
PROBABLE
Mineral Resources
Mineral Reserves
Mt Cr2O3% FeO %
Mt Cr2O3% FeO %
Salient features F2013
DWARSRIVIER 53,14
Khumani
In-fill drilling at King and Bruce confirmed the
continuation of the ore-bodies towards the west
and north respectively.
Nchwaning
Mineral Reserves of 3,85 million tonnes have been
declared for Manganese Seam 2 where mining has
commenced.
General statement
Assmang’s method of reporting Mineral Resources and Mineral
Reserves conforms to the South African Code for Reporting
Mineral Resources and Mineral Reserves (SAMREC Code).
Gloria
Measured Mineral Resources increased by 4% to
35.44 million tonnes due to additional geological
data and remodelling of Gloria Manganese
Seam 1.
F2013 MINERAL RESOURCES/RESERVES SUMMARY
MANGANESE
MEASURED AND
INDICATED
PROVED AND
PROBABLE
Mineral Resources
Mineral Reserves
Mt Mn %
Fe %
Mt Mn %
Fe %
NCHWANING
No 1 Seam
136,76
43,7
9,1 104,1
43,7
9,1
No 2 Seam
180,71
42,4
15,5
3,85
44,5
15,6
No 1 Seam
43,60
40,6
18,1
–
–
–
No 2 Seam
26,81
38,6
19,8
–
–
–
No 1 Seam
128,35
37,8
No 2 Seam
29,40
29,9
4,7 102,64
37,7
4,7
–
–
BLACK ROCK
GLORIA
IRON ORE
10,1
–
MEASURED AND
INDICATED
PROVED AND
PROBABLE
Mineral Resources
Mineral Reserves
Mt
Fe %
Mt
Fe %
110,04
63,53
47,75
63,91
–
–
7,04
55,08
Bruce
211,11
64,36
173,05
64,31
King
470,61
64,17
315,68
64,64
–
–
4,94
55,75
BEESHOEK
Open Pit
Dumps
KHUMANI
Dumps
38,10 22,54 37,31
34,04 21,27
The convention adopted in this report is that Mineral Resources
are reported inclusive of that portion of the total Mineral Resource
converted to a Mineral Reserve. Resources and reserves are
quoted as at 30 June 2013.
External consulting firms audit the resources and reserves of
the Assmang operations on a three-to-four year cycle basis.
Underground resources are in-situ tonnages at the postulated
mining width, after deductions for geological losses. Underground
Mineral Reserves reflect milled tonnages while surface Mineral
Reserves (dumps/stockpiles) are in-situ tonnages without dilution.
Both are quoted at the grade fed to the plant. Open-pit Mineral
Resources are quoted as in-situ tonnages and Mineral Reserves
are tonnages falling within an economic pit-shell.
The evaluation method is generally Ordinary Kriging with
mining block sizes ranging from 10 x 10 metres to 100 x 100
metres to 250 x 250 metres in the plan view. The blocks vary in
thickness from 2,5 to 10 metres. The evaluation process is fully
computerised, generally using the CAE Studio 3 software package.
The classification into Measured, Indicated and Inferred Mineral
Resources is done by means of geostatistical parameters such
as kriging efficiency, kriging variance, slope of regression and a
combination of the number of samples used and the dynamic
search volume. The spacing of boreholes as well as the geological
structures are also considered in the classification.
The Mineral Resources and Mineral Reserves are reported on
a total basis regardless of the attributable beneficial interest
that Assmang has on the individual projects or mines. When the
attributable beneficial interest on a mine or project is less than
100%, the actual percentage of the attributable interest is specified.
Maps, plans and reports supporting resources and reserves are
available for inspection at Assmang’s registered office and at the
relevant mines.
In order to satisfy the requirements of the Minerals and Petroleum
Resources Development Act, Assmang’s operations will have to
obtain new order mining rights for all properties required to
support the planned operations over the next 30 years. The act
was effective from 1 May 2004. Certain operations have already
had their conversions approved while some are still in various
stages of application.
Rounding of figures may result in computational discrepancies on
the Mineral Resource and Reserve tabulations.
5
Mineral Resources and Reserves (continued)
Definitions
The definitions of Mineral Resources and Reserves, quoted from
the SAMREC Code (2009), are as follows:
exploration, sampling and testing of material from locations such as
outcrops, trenches, pits, workings and drill holes. The locations are
spaced closely enough to confirm geological and grade continuity.
A ‘Mineral Resource’ is a concentration or occurrence of
material of economic interest in or on the earth’s crust in such
form, quality and quantity that there are reasonable and realistic
prospects for eventual economic extraction. The location,
quantity, grade, continuity and other geological characteristics
of a Mineral Resource are known, or estimated from specific
geological evidence, sampling and knowledge interpreted from
an appropriately constrained and portrayed geological model.
Mineral Resources are subdivided, and must be so reported, in
order of increasing confidence in respect of geoscientific evidence,
into Inferred, Indicated or Measured categories.
A ‘Mineral Reserve’ is the economically mineable material derived
from a Measured or Indicated Mineral Resource or both. It includes
diluting and contaminating materials and allows for losses that
are expected to occur when the material is mined. Appropriate
assessments to a minimum of a Pre-Feasibility Study for a project
and a Life-of-Mine Plan for an operation must have been completed,
including consideration of, and modification by, realistically assumed
mining, metallurgical, economic, marketing, legal, environmental,
social and governmental factors (the modifying factors). Such
modifying factors must be disclosed.
An ‘Inferred Mineral Resource’ is that part of a Mineral Resource
for which volume or tonnage, grade and mineral content can be
estimated with only a low level of confidence. It is inferred from
geological evidence and sampling and assumed but not verified
geologically or through analysis of grade continuity. It is based
on information gathered through appropriate techniques from
locations such as outcrops, trenches, pits, workings and drill holes
that may be limited in scope or of uncertain quality and reliability.
An ‘Indicated Mineral Resource’ is that part of a Mineral Resource
for which tonnage, densities, shape, physical characteristics, grade
and mineral content can be estimated with a reasonable level of
confidence. It is based on information from exploration, sampling
and testing of material gathered from locations such as outcrops,
trenches, pits, workings and drill holes. The locations are too widely
or inappropriately spaced to confirm geological or grade continuity
but are spaced closely enough for continuity to be assumed.
A ‘Measured Mineral Resource’ is that part of a Mineral Resource
for which tonnage, densities, shape, physical characteristics,
grade and mineral content can be estimated with a high level of
confidence. It is based on detailed and reliable information from
A ‘Probable Mineral Reserve’ is the economically mineable
material derived from a Measured or Indicated Mineral Resource
or both. It is estimated with a lower level of confidence than a
Proved Mineral Reserve. It includes diluting and contaminating
materials and allows for losses that are expected to occur when
the material is mined. Appropriate assessments to a minimum of
a Pre-Feasibility Study for a project or a Life-of-Mine Plan for an
operation must have been carried out, including consideration
of, and modification by, realistically assumed mining, metallurgical,
economic, marketing, legal, environmental, social and governmental
factors. Such modifying factors must be disclosed.
A ‘Proved Mineral Reserve’ is the economically mineable material
derived from a Measured Mineral Resource. It is estimated with
a high level of confidence. It includes diluting and contaminating
materials and allows for losses that are expected to occur when
the material is mined. Appropriate assessments to a minimum of
a Pre-Feasibility Study for a project or a Life-of-Mine Plan for an
operation must have been carried out, including consideration
of, and modification by, realistically assumed mining, metallurgical,
economic, marketing, legal, environmental, social and governmental
factors. Such modifying factors must be disclosed.
RELATIONSHIP BETWEEN EXPLORATION RESULTS, MINERAL RESOURCES AND MINERAL RESERVES
6
Competence
The Competent Person with overall responsibility for the
compilation of the Mineral Resources and Reserves report is
Shepherd Kadzviti, Pr.Sci.Nat, an African Rainbow Minerals (ARM)
employee.
Shepherd Kadzviti graduated with a BSc and MSc in Geology from the
University of Zimbabwe. He later completed a Graduate Diploma
in Mining Engineering (GDE) at the University of Witwatersrand.
He worked at RioZim’s Renco Gold Mine for fourteen years in
various capacities of Geologist, Technical Services Superintendent
and Mine Manager. In 2005 he joined Anglo American Platinum as
an Evaluation Geologist with responsibilities for geological database
management and mineral resource estimation. After two years
at Union Mine he was transferred to Anglo American Platinum
Corporate office where he was appointed Resource Geologist. He
then joined African Rainbow Minerals (ARM) as Mineral Resource
Specialist in 2008 where he was involved in the evaluation of the
various mineral deposits. In 2012 he was appointed Group Mineral
Resources Manager for ARM. He is registered with the South
African Council for Natural Scientific Professions (SACNASP) as
a Professional Natural Scientist in the field of practice of geological
science, registration number 400164/05, and as such is considered
to be a Competent Person.
All Competent Persons at the operations have sufficient relevant
experience in the type of deposit and in the activity for which they
have taken responsibility. Details of the Competent Persons are
available from the Company Secretary on written request.
The following Competent Persons were involved in the calculation
of Mineral Resources and Reserves:
P J van der Merwe Pr.Sci.Nat
(SACNASP)
M Burger
S van Niekerk
B Ruzive
A Pretorius*
(SACNASP)
(SACNASP)
(SACNASP)
(SACNASP)
Pr.Sci.Nat
Pr.Sci.Nat
Pr.Sci.Nat
Pr.Sci.Nat
* External consultant
S Kadzviti
24 Impala Road, Chislehurston, Sandton
2 September 2013
Iron/Manganese/
Chrome
Iron
Iron
Manganese
Chrome
MANGANESE MINES
LOCALITY – The manganese mines are situated in the Northern
Cape Province in South Africa, approximately 80 kilometres NorthWest of the town of Kuruman. Located at latitude 27°07’50”S and
longitude 22°50’50”E, the site is accessed via the national N14
route between Johannesburg and Kuruman, and the provincial
R31 road.
HISTORY – In 1940, Assmang acquired a manganese ore outcrop
on a small hillock known as Black Rock. Several large properties
underlain by ore were subsequently found and acquired. Today the
Black Rock area is considered to be one of the largest and richest
manganese deposits in the world. Manganese ore operations
were extended and today include the Gloria and Nchwaning
underground mines. Manganese ore is supplied locally to Assmang
owned smelters, but is mainly exported through Port Elizabeth as
well as Durban and Richards Bay.
MINING AUTHORISATION – The Nchwaning mining lease
(ML10/76) comprises an area of 1 986 hectares and is located
on the farms Nchwaning (267), Santoy (230) and Belgravia (264).
The Gloria mining lease (ML11/83) comprises an area of
1 713 hectares and is located on portion 1 of the farm Gloria
(266). The new order mining right for Nchwaning and Gloria was
executed on 13 July 2011. Registration of right is in process.
GEOLOGY – The manganese ores of the Kalahari Manganese
field are contained within sediments of the Hotazel Formation of
the Griqualand West Sequence, a subdivision of the Proterozoic
Transvaal Supergroup. At Black Rock, Belgravia and Nchwaning, the
Hotazel, Mapedi and Lucknow Formations have been duplicated by
thrusting. The thrusted ore bodies comprising Black Rock (Koppie),
Belgravia 1 and Belgravia 2 are collectively known as Black Rock
ore bodies. The average thickness of the Hotazel Formation is
approximately 40 metres.
The manganese orebodies exhibit a complex mineralogy and
more than 200 mineral species have been identified to date. The
hydrothermal upgrading has resulted in a zoning of the orebody
with regard to fault positions. Distal areas exhibit more original
and low grade kutnohorite and braunite assemblages, while areas
immediately adjacent to faults exhibit a very high-grade hausmannite
rich ore. The intermediate areas exhibit a very complex mineralogy,
which includes bixbyite, braunite and jacobsite amongst a host of
other manganese bearing minerals. A similar type of zoning also
exists in the vertical sense. At the top and bottom contacts it is
common to have high iron (Fe) and low manganese (Mn) contents
while the reverse is true towards the centre of the seam. This
vertical zoning has given rise to a mining practice where only the
centre 3,5 to 4,5 metre-high portion of the seam is being mined.
At the Gloria Mine the intensity of faulting is much less, which also
explains the lower grade.
Two manganese seams are present. The number 1 seam is up to
6 metres in thickness, of which up to 4,5 metres are mined, using a
manganese marker zone for control. There is, therefore, minimum
dilution. Limited mining of Nchwaning Seam 2 has been done, while
no mining has been undertaken to date on Gloria Seam 2.
Nchwaning Mineral Resources and Reserves
Mineral Resource classification at Nchwaning Mine is based on
consideration of a number of parameters: kriging variance, kriging
efficiency, regression slope, geological structures and quality of
assay data. Each of these parameters contributes to the overall
classification depending on weighting assigned to each of the
parameters. Measured and Indicated Resources have been defined
for Nchwaning. Geological losses are incorporated into the
grade models.
7
The Nchwaning Mine was diamond drilled from surface at 330
metre centres and the data is captured in a Geological Database
Management System (GDMS) developed by CAE Mining. The
core was logged and 0,5-metre-long, half-core, diamond-saw cut
samples were submitted to Assmang’s laboratory at Black Rock
for X-ray fluorescence (XRF) analyses. Mn and Fe values were
checked by Wet Chemical analyses. Several standards were used to
calibrate the XRF equipment, and results are compared with other
laboratories on a regular basis.
At Nchwaning a total of 322 boreholes and 24 085 underground
sample sections were considered in the grade estimation for
Nchwaning Seam 1. The data was optimised over a thickness of
4,5 metres (Nchwaning 3) and 3,5 metres for the rest of Nchwaning,
and exported into data files for computerised statistical and
geostatistical manipulation to determine the grades of Mn, Fe, silica
(SiO2), calcium (CaO) and magnesium (MgO). Ordinary Kriging
interpolation within Studio 3 was used to estimate the grade of
each 50 x 50 x 3,5/4,5 metre block generated within the geological
model. Sub-cell splitting of the 50 x 50 metre blocks was allowed to
follow the geological boundaries accurately.
The relative density of the Nchwaning manganese ore was
determined as 4,3 t/m3.Trackless mechanised equipment is used
in the board and pillar mining method. Mining in the eastern
extremity of Nchwaning occurs at a depth of 200 metres while
the deepest (current) excavations can be found at a depth of
519 metres below surface. Ore from Nchwaning No 2 Mine is
crushed underground before being hoisted to a surface stockpile
via a vertical shaft. Similarly, ore from the Nchwaning No 3 Mine is
crushed underground before being conveyed to a surface stockpile
via a declined conveyor system. Ore is withdrawn from the surface
stockpile and forwarded to two stages of crushing, dry screening
and wet screening to yield lumpy and fine products.
At the plant the finer fractions are stockpiled while the coarser
fractions are extracted from the respective product boxes into road
haulers, sampled, weighed and stored on stacks ahead of despatch.
Samples from each stack are analysed for chemical content and size
distribution. This ensures good quality control and enables the ore
control department to blend various stacks according to customer
demand.
NCHWANING YEAR-ON-YEAR CHANGE – The Mineral
Resources for Seam 1 decreased from 142,38 to 136,76 million
tonnes mainly due to the Nchwaning 3 North West section
being excluded from the Mineral Resource as Seam 1 is poorly
developed due to intense thrusting in the area as well as mining
depletion. Nchwaning Seam 2 Mineral Resources marginally
reduced to 180,71 from 180,8 million tonnes due to mining which
was undertaken during the year.
Mineral Reserves for Nchwaning Seam 1 decreased by 6% to
104,10 million tonnes mainly due to the exclusion of the Nchwaning
3 North West block as well as mining depletion.
Nchwaning Mine: Seam 1 Manganese Resources and Reserves
Mineral Resources
Measured
Indicated
Mt
Mn %
Fe %
41,10
45,6
9,5
Proved
Mt
Mn %
Fe %
31,35
45,6
9,4
95,66
42,9
8,9
Probable
72,75
42,9
8,9
Total Resources (Seam 1) 2013
136,76
43,7
9,1
Total Reserves (Seam 1) 2013
104,10
43,7
9,1
142,38
43,9
9,0
110,34
43,9
9,0
Mineral Resources are inclusive of Mineral Reserves.
Totals are rounded off.
Modifying factors: pillar losses.
8
Mineral Reserves
Nchwaning Mine: Seam 2 Manganese Mineral Resources and Reserves
Mineral Resources
Mineral Reserves
Mt
Mn %
Fe %
Mt
Mn %
Fe %
Measured
53,28
42,0
16,3
Indicated
127,43
42,6
15,2
Proved
1,04
44,3
15,7
Probable
2,81
44,6
15,6
180,71
42,4
15,5
Total Reserves (Seam 2) 2013*
3,85
44,5
15,6
180,80
42,4
15,5
Modifying factors: pillar losses.
* Seam 2 Mineral Reserves were confined to 150m around existing mining area.
Black Rock Mineral Resources
The Black Rock ore bodies occur in the Black Rock (Koppie),
Belgravia 1 and Belgravia 2 areas. They are all part of a large thrust
complex. Modelling of these ore bodies was undertaken using
151 Nchwaning boreholes that intersected the thrust complex
and 174 Black Rock infill boreholes. A 38% manganese cut-off was
used in the modelling. Seam 1 and 2 were modelled at variable
thicknesses.
Mt
Mn%
Fe%
Measured
9,03
40,3
18,1
Indicated
34,57
40,7
18,1
43,60
40,6
18,1
43,60
40,6
18,1
Mineral Resources
Measured
Mt
Mn%
Fe%
8,23
37,4
19,8
Indicated
18,58
39,2
19,8
26,81
38,6
19,8
26,81
38,6
19,8
Black Rock : Seam 1 Manganese Mineral Resources
Mineral Resources
Black Rock: Seam 2 Manganese Mineral Resources
Gloria Mineral Resources and Reserves
Procedures for drilling and assaying at Gloria Mine are the
same as at Nchwaning. A total of 172 boreholes and 6 628
underground samples were considered in the evaluation of
the Gloria Seam 1. The underground sampling values were
used in evaluating areas close to current mining. The boreholes
were optimised over an evaluation width of 3,5 metres and
the relative density was determined as 3,8 t/m3. The seams
9
were evaluated by means of statistical and geostatistical methods to determine the grades of Mn, Fe, SiO2, CaO and MgO. Ordinary
Kriging interpolation within CAE Studio 3 was used to estimate the grade of each 50 x 50 x 3,5 metre block generated within the
geological model. Sub-cell splitting of the 50 x 50 metre blocks was allowed to follow the geological boundaries. Mineral resource
classification techniques are the same as for Nchwaning. Gloria Mine is extracting manganese at depths that vary between
180 to 250 metres. Ore is crushed underground before being conveyed to surface stockpile via a decline shaft. Ore is withdrawn from the
surface stockpile and forwarded to two stages of crushing, dry screening, and wet screening to yield lumpy and fine products. At the plant
the ore is processed in a similar way as at Nchwaning.
GLORIA YEAR-ON-YEAR CHANGE – Gloria Measured and Indicated Mineral Resources for Seam 1 increased by 1% to
128,35 million tonnes. Inferred Resources decreased from 48,49 to 46,99 million tonnes due to upgrade to Indicated Mineral Resources.
Mineral Reserves increased from 93,82 to 102,64 million tonnes due to changes in the mining extraction factors. The Mineral Resources
for Gloria Seam 2 remained the same. There are no markets for Gloria Seam 2 ore at this time.
Gloria Mine: Seam 1 Manganese Mineral Resources and Reserves
Mineral Resources
Mt
Mn %
Measured
35,44
37,7
Indicated
92,91
Mt
Mn %
Fe %
4,9 Proved
28,34
37,7
4,9
37,8
4,6 Probable
74,30
37,7
4,6
128,35
37,8
4,7 Total Reserves (Seam 1) 2013
102,64
37,7
4,7
126,79
37,6
4,7 Total Reserves (Seam 1) 2012
93,82
37,6
4,7
Inferred 2013
46,99
36,8
5,0
Inferred 2012
48,49
36,7
5,0
Modifying factors: pillar losses and mining losses.
10
Mineral Reserves
Fe %
Gloria Mine: Seam 2 Manganese Mineral Resources
Mineral Resources
Mt
Measured
Mn %
Fe %
–
–
–
Indicated
29,40
29,9
10,1
29,40
29,9
10,1
29,40
29,9
10,1
Inferred 2013
128,24
Inferred 2012
128,24
Historical manganese production at Nchwaning and Gloria Mines (saleable product)
Year
Nchwaning Mt
Gloria Mt
2008/2009
2,63
0,51
2009/2010
1,30
0,67
2010/2011
2,35
0,70
2011/2012
2,46
0,84
2012/2013
2,40
0,75
IRON ORE MINES
LOCALITY – The iron ore division is made up of the Beeshoek
Mine located on the farms Beeshoek 448 and Olynfontein 475,
and the Khumani Mine situated on the farms Bruce 544, King
561 and Mokaning 560. All properties are in the Northern Cape
approximately 200 kilometres west of Kimberley. The Beeshoek
open-pit operations are situated 7 kilometres west of Postmasburg
and the Khumani open pits are adjacent to, and south-east of,
the Sishen mine, which is operated by Kumba Iron Ore Limited.
Beeshoek and Khumani are located at latitude 28°30’00”S/
longitude 23°01’00”E, and latitude 27°45’00”S/ longitude 23°00’00”E
respectively. Khumani Mine supplies iron ore to the export
markets. Exports are railed to the iron ore terminal at Saldanha
Bay. Beeshoek ore is mainly supplied to local customers, with some
exported via Khumani.
HISTORY – Mining of iron ore (mainly specularite) was undertaken
as early as 40 000 BC on the farm Doornfontein which is due north
of Beeshoek. The potential of iron ore in this region was discovered
in 1909, but, due to lack of demand and limited infrastructure, this
commodity was given little attention. In 1929 the railway line was
extended from Koopmansfontein (near Kimberley) to service a
manganese mine at Beeshoek. In 1935 The Associated Manganese
Mines of South Africa Limited (Assmang) was formed, and in 1964
the Beeshoek iron ore mine was established, with a basic hand
sorting operation. In 1975 a full washing and screening plant was
installed. The Khumani Iron Ore Mine was commissioned in 2007.
MINING AUTHORISATION – The Beeshoek mining lease
(ML3/93) comprises an area of 5 686 hectares and is located on
the farms Beeshoek (448) and Olynfontein (475). The converted
mining right was executed on 16 March 2012 and was registered
on 29 May 2013.
The Khumani new order mining right comprises an area of 7 388
hectares and is located on the farms Bruce (544), King (561) and
Mokaning (560).The mining right was executed on 25 January 2007
and was registered on 5 March 2007.
GEOLOGY – The iron ore deposits are contained within
a sequence of early Proterozoic sediments of the Transvaal
Supergroup deposited between 2 500 and 2 200 million years ago.
In general two ore types are present, namely laminated hematite ore
forming part of the Manganore Iron Formation and conglomerate
ore belonging to the Doornfontein Conglomerate Member at the
base of the Gamagara Formation.
The older laminated ore types occur in the upper portion of the
Manganore Iron Formation as enriched high-grade hematite bodies.
The boundaries of high-grade hematite orebodies crosscut primary
sedimentary bedding, indicating that secondary hematitisation of the
iron formation took place. In all of these, some of the stratigraphic
and sedimentological features of the original iron formation are
preserved. The conglomeratic ore is found in the Doornfontein
Conglomerate Member of the Gamagara Formation and is
lenticular and not persistently developed along strike. It consists of
stacked, upward fining conglomerate-gritstone- shale sedimentary
cycles. The lowest conglomerates and gritstones tend to be rich
in sub-rounded to rounded hematite ore pebbles and granules
and form the main orebodies. The amount of iron ore pebbles
decreases upwards in the sequence so that upper conglomerates
normally consist of poorly sorted, angular to rounded chert and
banded iron formation pebbles.
The erosion of the northern Khumani deposit is less than that in the
southern Beeshoek area. The result is that Khumani is characterised
by larger stratiform bodies and prominent hangingwall outcrops.
The down-dip portions are well preserved and developed, but
in outcrop the deposits are thin and isolated. Numerous deeper
extensions occur into the basins due to karst development. A
prominent north-south strike of the orebodies is notable. The
southern Beeshoek orebodies were exposed to more erosion and
are hence more localised and smaller. Outcrops are limited to the
higher topography on the eastern side of the properties. Down dip
to the west, the ore is thin and deep. The strike of the orebodies is
also in a north south direction, but less continuous.
11
Haematite is the predominant ore mineral, but limonite and
specularite also occur. Mining operations are all open pit, based on
the conventional drill -and-blast, truck-and-shovel operations. Runof-mine ore is crushed and stored as ‘on’ or ‘off grade’ on blending
stockpiles. Ore from the stockpiles is either sent to the wash-andscreen plants or, if off grade, to the beneficiation plants.The washing
and screening plants consist primarily of tertiary crushing, washing,
screening, conveying and stacking equipment. The beneficiation
plants consist of tertiary crushers; scrubbers; coarse and fine jigs;
lumpy and fines product stockpiles; and a rapid load-out facility. No
chemicals are being used in any of the treatment plants.
MINERAL RESOURCES AND RESERVES – Only Measured
and Indicated Resources are converted to Proved and Probable
Reserves respectively. Modifying factors were applied to these
resources and financially optimised. The optimized financial
parameters are used to define the optimal pit. The resources
within this mining constraint are defined as reserves. These are
categorised into different product types, destined for the different
plant processes and then scheduled for mining.
The methodology followed to identify targets is initiated with
geological mapping, followed by geophysics (ground magnetics and
gravity). Percussion drilling is used to pilot holes through overlying
waste rock down to the iron orebodies. Diamond drilling is the
next phase, which is usually on a 200 x 200 metre grid. Further
infill drilling is carried out at spacing ranging from 100 x 100
metres to 25 x 25 metres, depending on the complexity of the
geological structures. Numerous exploration programmes have
been completed in the last 40 years. Core samples are logged and
split by means of a diamond saw and the half-core is sampled every
0,5 metres. Before submission for assaying, the half-cores are
crushed, split and pulverised. Samples with values larger than
60% are included in the definition of the orebodies.
Any lower-grade samples inside the orebody are defined as
internal waste and modelled separately. Each zone is modelled per
section, and then wire framed to get a three-dimensional (3D)
model. Ordinary Kriging interpolation within Studio 3 is used to
estimate the grade of each 25 x 25 x 10 metre block generated
within the geological model. Densities in the resource model are
calculated using a fourth degree polynomial fit applied to the
estimated Fe grade. Densities range from 4,38 t/m3 (60% Fe) to
5,01 t/m3 (68% Fe). All blast holes are sampled on a metre basis,
but composited per hole. All holes are analysed for density and
blast holes in ore are sampled and analysed for Fe, potassium
oxide (K2O), sodium oxide (Na2O), silica (SiO2), aluminium oxide
(Al2O3), phosphorus (P), sulphur (S), CaO, MgO, Mn and barium
oxide (BaO). Every fifth blast hole is geologically logged per metre,
which is used to update the geological model. The chemical results
of these holes are used to update the ore block model. The major
analytical technique for elemental analyses is XRF spectroscopy.
Volumetric titration is used as verification method for the
determination of total iron in the ore. International standards (e.g.
SARM11) and in-house iron standards are used for calibration of
the XRF spectrometer. The Khumani laboratory participates in a
round robin group that includes eleven laboratories for verification
of assay results.
BEESHOEK IRON ORE MINE: RESOURCES AND RESERVES
Measured
Resources
Pit/Area
Indicated
Resources
Total Resources
Measured and
Indicated
Inferred
Resources
Probable
Reserves
Total
Reserves
Mt
Fe %
Mt
Fe %
Mt
Fe %
Mt
Fe %
Mt
Fe %
Mt
Fe %
Mt
Fe %
BN
20,38
63,39
–
–
–
–
20,38
63,39
11,41
63,55
–
–
11,41
63,55
HF/HB
16,00
64,10
–
–
–
–
16,00
64,10
6,87
64,27
–
–
6,87
64,27
BF
8,45
63,51
0,23
63,54
0,001
65,24
8,68
63,51
1,02
61,59
–
–
1,02
61,59
East Pit
8,71
64,83
0,04
64,23
8,75
64,83
5,86
64,79
0,01
63,64
5,87
64,79
Village
39,90
63,10
0,64
61,40
0,180
61,40
40,54
63,07
22,50
63,86
0,08
64,56
22,58
63,86
GF
3,13
63,81
0,09
61,80
–
–
3,22
63,75
–
–
–
–
–
–
HH Ext
0,28
62,63
–
–
–
–
0,28
62,63
–
–
–
–
–
–
HL
2,69
64,93
0,05
65,03
–
–
2,74
64,93
–
–
–
–
–
–
West Pit
9,45
63,19
–
–
0,050
61,88
9,45
63,19
–
–
–
–
–
–
–
–
–
–
2,500
60,00
–
–
–
–
–
–
–
–
Total 2013
108,99
63,54
1,05
62,18
2,731
60,13 110,04
63,53
47,66
63,91
0,09
64,46
47,75
63,91
Total 2012
114,06
63,73
3,39
63,55
2,553
60,04
63,73
53,99
64,05
0,01
63,64
54,00
64,05
Detrital*
117,45
Modifying factors: economic pit design, fines generated and customer product specifications.
* Detrital comprise loose and fragmented material occurring in various areas at Beeshoek.
12
Proved
Reserves
Beeshoek Dumps
Proved Reserves
Area
Probable Reserves
Total Reserves
Mt
Fe%
Mt
Fe%
Mt
Fe%
North Mine (ROM On-Grade)
–
–
0,06
64,00
0,06
64,00
North Mine (B Dump Off-Grade)
–
–
0,22
55,00
0,22
55,00
South Mine (B Dump Off-Grade)
–
–
0,01
55,00
0,01
55,00
South Mine (C Dump)
–
–
6,75
55,00
6,75
55,00
Total 2013 Dumps*
–
–
7,04
55,08
7,04
55,08
Total 2012 Dumps*
–
–
12,50
55,44
12,50
55,44
* Dumps are beneficiated to produce a saleable product.
BEESHOEK YEAR-ON-YEAR CHANGE – Measured and
Indicated resources for Beeshoek Mine decreased by 6% to
110,04 million tonnes, mainly due remodelling of the Village
orebody and mining of East and BN pits. Mineral Reserves
consequently reduced from 54,00 to 47,75 million tonnes.
A total of 7,04 million tonnes of ore dumps have been
declared as Probable Reserves. The dumps are beneficiated
to produce a saleable product. Village pit Feasibility Study was
completed and capital application is awaited.
13
KHUMANI IRON ORE MINE: RESOURCES AND RESERVES
Measured
Resources
Pit/Area
Bruce A
Bruce B
Bruce C
King/Mokaning
Total 2013
Total 2012
Mt
19,29
70,16
14,63
285,47
389,55
476,90
Fe %
Indicated
Resources
Mt
64,53 86,87
64,43 20,16
64,29
–
64,52 185,14
64,50 292,17
64,48 232,07
Fe %
Inferred
Resources
Mt
Fe %
64,41
–
63,81 6,52
–
–
63,64 16,28
63,88 22,80
63,82 23,86
–
63,88
–
63,14
63,35
62,73
Measured
and
Indicated
Proved
Reserves
Mt Fe %
106,16
90,32
14,63
470,61
681,72
708,97
Mt
64,43 16,84
64,29 60,03
64,29
8,79
64,17 254,95
64,23 340,61
64,26 334,50
Probable
Reserves
Fe %
Mt
Fe %
Total
Reserves
Mt Fe %
64,46 75,94 64,43 92,78 64,44
64,31 11,45 63,63 71,48 64,20
63,96
–
–
8,79 63,96
64,66 60,73 64,57 315,68 64,64
64,57 148,12 64,43 488,73 64,53
64,55 178,36 64,27 512,86 64,46
Modifying factors: economic pit design, fines generated and customer product specifications.
Khumani Dumps
Proved Reserves
Area
Bruce (ROM On Grade)
Bruce (B Dump Off-grade)
King (ROM On Grade)
King (B Dump Off-grade)
King (Detrital)
Total 2013 Dumps*
Total 2012 Dumps
Probable Reserves
Total Reserves
Mt
Fe%
Mt
Fe%
Mt
Fe%
–
–
–
–
–
–
–
–
–
–
–
–
–
–
0,18
3,56
0,06
0,83
0,31
4,94
1,76
64,00
55,00
64,00
55,00
60,00
55,75
56,22
0,18
3,56
0,06
0,83
0,31
4,94
1,76
64,00
55,00
64,00
55,00
60,00
55,75
56,22
* Dumps are beneficiated to produce a saleable product.
KHUMANI YEAR-ON-YEAR CHANGE – Measured and Indicated
resources decreased by 4% to 681,72 million tonnes mainly due
remodelling of King and Bruce orebodies. Total reserves decreased
to 488,73 from 512,86 million tonnes due to remodelling of
orebodies and depletion by mining. Ore dumps amounting to
4,94 million tonnes at 55,75% Fe have been reported as Probable
Reserves.
HISTORICAL PRODUCTION AT BEESHOEK AND
KHUMANI MINES (SALEABLE PRODUCT)
Beeshoek
Mt
Khumani
Mt
2008/2009
2,66
6,65
2009/2010
0,52
8,77
2010/2011
0,96
8,73
2011/2012
2,10
11,60
2012/2013
2,94
13,17
Financial year
14
CHROMITE MINE
an important source of chromite ore and is the orebody being
mined at Dwarsrivier Mine. In the Eastern Lobe, in the vicinity
of Dwarsrivier, the strike is nearly north-south, with a dip of
approximately 10 degrees towards the west. Average thickness of
the LG6 seam is about 1,86 metres in the Dwarsrivier area. Pipelike dunite intrusions are evident in the area, as well as dolerite
dykes that normally strike northeast southwest. No significant
grade variation is evident, especially not vertically in the ore seam
in the Dwarsrivier resource.
LOCALITY – Chromite operations at Dwarsrivier Mine form part
of the chrome division of Assmang Limited. The mine is situated
on the farm Dwarsrivier 372KT, approximately 30 kilometres from
Steelpoort and 60 kilometres from Lydenburg, in Mpumalanga
province in South Africa. Located at longitude 30°05’00”E/latitude
24°59’00”S, Assmang purchased the farm from Gold Fields Limited,
together with all surface and mineral rights in October 1998.
HISTORY – Neighbouring properties to the north and south of
Dwarsrivier had existing chrome mining operations at the time of
purchase. The feasibility study of the plant, tailings dam and designs
for the open pit and underground mines then commenced. After
the completion of the feasibility study, approval to proceed with
the final design and construction work was given in July 1999.
Chromite was obtained from the open pit mining areas at a rate
of approximately 0,9 million tonnes a year and these areas were
mined out within five years. Underground mining commenced in
2005 at a rate of 1,2 million tonnes ROM a year. Dwarsrivier Mine
was specifically geared to deliver high quality metallurgical grade
chromite to the Machadodorp smelter. In addition, the plant has
been designed to produce chemical grade products for export.
MINERAL RESOURCES AND RESERVES – Mineral Resources
were estimated from boreholes on 150 to 300 metre grid
spacing. All possible resources down to a mineable depth of
350 metres below surface have been considered. Vertical diamond
drill holes are used for geological and grade modelling. The
Mineral Resources at Dwarsrivier Mine are based on a total of
284 diamond boreholes, that have been used for grade estimation
and orebody modelling purposes. The drill core is NQ size and is
geologically and geotechnically logged. The collar positions of the
drill holes are surveyed, but no down-hole surveys are done, and
the holes are assumed to have minimal deflection. The chromitite
seam is bounded above and below by pyroxenites and as such, the
ore horizon is clearly defined. The core is sampled from the top
contact downwards at 0.5 metre intervals. The core is split and half
is retained as reference material in the core sheds. The other half
is crushed and split into representative samples, which are crushed
and pulverised for chemical analysis.The samples are analysed using
fusion/ICP-OES for chrome oxide (Cr2O3), SiO2, FeO, Al2O3, MgO
and CaO. Three laboratories, all ISO 17025 accredited for this
method, are used. Every tenth sample is analysed in duplicate. The
density for each sample is measured using a gas pycnometer.
MINING AUTHORISATION – An old order Mining Licence 21/99
was granted in October 1999. The new mining right was executed
on 15 May 2013. Registration of the right is in process.
GEOLOGY – Dwarsrivier Mine is situated in the eastern limb of
the Bushveld Complex, which comprises persistent layers of mafic
and ultramafic rocks, containing the world’s largest known resources
of platinum group metals, chromium and vanadium. The mafic
rocks termed the Rustenburg Layered Suite, are approximately
8 kilometres thick in the eastern lobe, and are divided formally
into five zones. The rocks of the Marginal Zone at the base of the
succession consist mainly of pyroxenites with some dunites and
harzburgites. Above the Marginal Zone, the Lower Zone comprises
mainly pyroxenites, harzburgites and dunite, and is present only in
the northern part of the Eastern Lobe, and only as far south as
Steelpoort.
Mineral Resources have been estimated using Ordinary Kriging,
where Cr2O3, FeO, Al2O3, MnO and MgO-contents of the LG6
seam and densities were determined, using block sizes of 50 x 50 x
4 metres. During mining, a slightly diluted run of mine ore inclusive
of the ‘false’ hanging wall is fed to the beneficiation plant. In the
dense media separation part of the plant, the coarse fraction is
upgraded to 40 per cent Cr2O3, with a yield of 80%. In the spiral
section of the plant the finer fraction is upgraded for metallurgical
grade fines and chemical grade fines to 44% Cr2O3, and 46% Cr2O3
respectively. A 67% yield is achieved in the spiral circuit.
The appearance of chromitite layers marks the start of the Critical
Zone, economically the most important zone. The layers are
grouped into three sets termed the Lower, Middle and Upper
Groups. The sixth chromitite seam in the Lower Group, LG6, is
DWARSRIVIER CHROME MINE: CHROME RESOURCES AND RESERVES
Mineral Resources
Mineral Reserves
Mt
Cr2O3
Mt
Cr2O3
FeO %
Measured
18,56
38,48
22,62 Proved
11,19
33,80
21,13
Indicated
34,58
37,90
22,50 Probable
26,12
34,14
21,33
Total Measured and Indicated 2013
53,14
38,10
22,54 Total Reserves 2013
37,31
34,04
21,27
Total Measured and Indicated 2012
55,03
38,11
22,54 Total reserves 2012
39,15
34,01
21,27
Inferred 2013
48,07
38,35
22,96
Inferred 2012
48,17
38,35
22,96
FeO %
Modifying factors: pillar losses and mining losses.
15
YEAR-ON-YEAR CHANGE – Measured Mineral Resources
decreased by 9% to 18,56 million tonnes due to depletion related
to mining. A re-interpretation of a 40 metre thick dyke on the
southern portion of the Mine marginally reduced Indicated and
Inferred Mineral Resources by less than 1%.
HISTORICAL PRODUCTION AT DWARSRIVIER
CHROME MINE (ROM)
Financial year
16
Mt
2008/2009
1,03
2009/2010
0,78
2010/2011
1,25
2011/2012
1,50
2012/2013
1,60
Corporate governance
The board of Assmang is committed to maintaining the standards
of integrity, accountability and openness advocated in the King
Report on Corporate Governance for South Africa 2009 (King
III Report).
BOARD OF DIRECTORS
Details of the board of directors are set out on page 3 of
this report.
The chairman is a non-executive director and the board meets at
least four times a year on predetermined dates and none of the
directors have a service contract with the Company.
During the year Mr L S Matsimela and Mr P C Crous resigned from
the board of directors. Mr F T Olivier and B H van Aswegen has
been appointed as executive director in their place.
Meetings
The board met on four occasions in the year under review and
attendance at these meetings was as follows:
Possible
Attended
Desmond Sacco
4
4
M Arnold
4
4
C J Cory
4
4
P C Crous
2
2
A Joubert*
4
4
S M Langa*
4
3
L S Matsimela
3
3
F T Olivier*
1
1
P E Sacco
4
4
M P Schmidt
4
4
A D Stalker*
4
4
J C Steenkamp*
4
4
B H van Aswegen*
2
2
A J Wilkens
4
4
* Executive
EXCO COMMITTEE
J C Steenkamp (Presiding Officer), A Joubert, S M Langa, F T Olivier,
H L Smith, A D Stalker, P Thwala (Mrs) and B H van Aswegen.
This board-appointed committee is mandated to consider and
implement strategy and maintain effective management of the
Group’s operations. The committee meets at least quarterly on
predetermined dates, but during the year under review has met
on 14 occasions (2012: 12 times). The members of the committee
include six executive directors, and committee members contribute
a diverse range of professional skills across a broad spectrum of
the Group’s activities.
During the year Mr L S Matsimela was replaced by Mr H L Smith
and Mr P C Crous was replaced by Mr F T Olivier as Operations
Committee members.
AUDIT COMMITTEE
C J Cory (Chairman), M Arnold and A Joubert.
The Audit Committee comprises of two non-executive directors.
The committee meets at least three times a year on predetermined
dates to consider the interim and final financial statements,
recommends dividend declarations and monitors the internal and
external audit functions. The committee operates under a boardapproved charter and met three times during the year under
review.
The main responsibilities of this committee include the
safeguarding of the Group’s assets and shareholders’ investments,
the maintenance of high standards of record keeping and systems
of internal control as well as monitoring compliance with standards
of corporate governance. In addition, the committee pursues
the objective of ensuring that effective policies and practices are
adopted in the preparation of financial information. Audit plans are
based on relative risk and the committee conducts reviews of audits,
undertaken by both internal and external auditors. It examines
their respective plans and reports to ensure effectiveness. Both
external and internal auditors have unrestricted access to the
chairman of the Audit Committee who is a non-executive director.
The provision of a ‘whistle-blowing’ facility is in operation.
The Audit Committee, after due consideration, is of the view that
the independent registered audit firm, which is responsible for
expressing an opinion on the conformity of the audited financial
statements with International Financial Reporting Standards (IFRS),
is independent of the Group and its management.
Based on the results of the formal documented review of the design,
implementation and effectiveness of the Group’s system of internal
financial controls conducted by the internal audit function during
the 2013 financial year and, in addition, considering information and
explanations given by management plus discussions held with the
external auditors on the results of their audit, the committee is of
the opinion that the Group’s system of internal financial controls is
effective and forms a basis for the preparation of reliable financial
statements.
The committee reviewed the Group and Company financial
statements and is satisfied that they comply with International
Financial Reporting Standards.
17
Corporate governance (continued)
SOCIAL AND ETHICS COMMITTEE
The Group has appointed a Social and Ethics Committee and is
made up of three members (Mr S M Langa (Chairman), A Joubert
and B H van Aswegen).
The key aspects of its terms of reference include the monitoring
of the Group’s activities relating to relevant legislation, other legal
requirements or prevailing codes of best practice with regard to
matters relating to:
• s ocial and economic development;
• g ood corporate citizenship;
• the environment, health and public safety, including the impact
of the Group’s activities and of its products or services;
• c onsumer relationships, including the Group’s advertising, public
relations and compliance with consumer protection laws; and
• labour and employment.
INTERNAL AUDIT
The Group’s internal audit function, which has been outsourced,
operates with full authority of the Audit Committee and under
guidance of the directors. The engagement director reports
directly to the chairman of the Audit Committee and has
unrestricted access to the chairman of the board and other
members of the Audit Committee. The internal auditors examine
and evaluate the effectiveness of internal control in all operating
sectors of the Group’s businesses. Through this process, significant
business risks are highlighted and the systems of operating
18
and financial controls are monitored. Issues are brought to
the attention of the Audit Committee and external auditors,
and issues that require corrective action are discussed with
senior management and acted upon under the auspices of the
Audit Committee.
REMUNERATION
The board-appointed Operations Committee (refer above)
ensures appropriate levels of remuneration for senior management
of the Group. This committee determines policy for individual
remuneration and benefits to maintain a compensation policy
which is both competitive and equitable.
Directors of the Company are not remunerated for their services
other than by way of directors’ fees paid in terms of the Company’s
Memorandum of Incorporation.
Details of emoluments paid to directors are disclosed on page 24
of this report.
EMPLOYEE PARTICIPATION
The Group has for many years entered into collective bargaining
arrangements and recognition agreements with various employee
organisations and unions.
CODE OF ETHICS
The Group is committed to the highest standards of integrity,
behaviour and ethics in dealing with all its stakeholders.
Five-year review
FINANCIAL INFORMATION FOR THE YEAR
ENDED 30 JUNE
2013
2012
2011
2010
2009
R’000
R’000
R’000
R’000
R’000
Revenue
25 289 897
24 126 289
19 222 134
13 071 591
15 736 562
Turnover
25 003 167
23 688 390
19 074 942
12 869 713
15 263 603
Profit before taxation
8 700 829
9 468 516
8 560 999
4 161 748
9 923 181
Income tax expense
2 490 927
2 584 529
2 774 191
1 429 526
3 604 023
Comprehensive income for the year
6 209 902
6 883 987
5 786 808
2 732 222
6 319 158
Ordinary dividends declared
3 000 000
2 000 000
2 000 000
1 000 297
4 302 732
Retained profit
3 209 902
4 883 987
3 786 808
1 731 923
2 016 426
Property, plant and equipment and
intangible assets
19 477 734
17 636 497
14 659 840
11 553 410
9 181 181
Other non-current financial assets
579 766
301 057
106 203
154 024
84 268
Current assets
14 417 612
12 269 154
9 647 584
7 864 229
7 627 762
Total assets
34 475 112
30 206 708
24 413 627
19 571 663
16 893 211
25 601 215
22 391 313
17 507 326
13 720 518
11 988 593
Deferred tax liabilities
4 771 611
4 475 790
3 980 043
3 146 243
2 438 340
Long-term provisions
797 987
646 133
407 769
394 532
378 417
3 304 299
2 693 472
2 518 489
2 310 370
2 087 861
34 475 112
30 206 708
24 413 627
19 571 663
16 893 211
Statements of comprehensive income
Statements of financial position
Assets
Total equity and liabilities
Shareholders’ equity
Current liabilities
Sales volumes:
– Iron ore
tonnes ’000
16 070
14 753
10 006
9 799
7 409
– Manganese ore (excluding sales to Cato
Ridge Works and Machadodorp Works)
tonnes ’000
2 856
2 905
2 882
3 095
2 152
– Manganese alloys (excluding sales to
Cato Ridge Alloys Proprietary Limited)
tonnes ’000
260
270
218
238
117
– Chrome ore (excluding sales to
Machadodorp Works)
tonnes ’000
1 054
521
373
272
256
– Chrome alloys
tonnes ’000
77
174
238
189
144
R’000
4 064 103
4 517 413
4 150 047
3 336 315
2 779 776
Capital expenditure
19
Annual financial statements
20
21
Approval of annual financial statements
21
Certificate by secretary
22
Independent auditors’ report
23
Directors’ report
26
27
28
Statements of cash flows
29
Statements of changes in equity
30
Notes to the financial statements
46
Accounting Policies
Approval of annual financial statements
for the year ended 30 June 2013
The annual financial statements of Assmang Limited and Group annual financial statements for the year ended 30 June 2013 as set out
on pages 20 to 58 have been prepared under the supervision of Mr GCT Karsten (BCom, FCMA, MBL), have been audited in accordance
with section 30(2)(a) of the Companies Act of 2008, as amended, were approved by the board of directors on 28 October 2013 and are
signed on its behalf by:
Desmond Sacco
Chairman
JC Steenkamp
Deputy Chairman
Johannesburg
28 October 2013
Certificate by secretary
We certify that the requirements as stated in section 88(2)(e) of the Companies Act have been met and that all returns and notices, as
are required of a public company in terms of the aforementioned Act, have been submitted to the Companies and Intellectual Property
Commission and that such returns and notices are true, correct and up to date.
Company Secretary
per: GCT Karsten
Johannesburg
28 October 2013
21
Independent auditors’ report
to the shareholders of Assmang Limited
Report on the financial statements
We have audited the consolidated and separate financial statements of Assmang Limited set out on pages 26 to 58, which comprise
the consolidated and separate statements of financial position as at 30 June 2013, and the consolidated and separate statements of
comprehensive income, consolidated and separate statements of changes in equity and consolidated and separate statements of cash
flows for the year then ended, and the notes, comprising a summary of significant accounting policies and other explanatory information.
Directors’ responsibility for the financial statements
The Company’s directors are responsible for the preparation and fair presentation of these financial statements in accordance with
International Financial Reporting Standards and the requirements of the Companies Act of South Africa, and for such internal control
as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement,
whether due to fraud or error.
Auditors’ responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance
with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements.
The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of
the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control
relevant to the entity’s preparation and fair presentation of the financial statements 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
control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting
estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the consolidated and separate financial statements present fairly, in all material respects, the consolidated and separate
financial position of Assmang Limited as at 30 June 2013, and its consolidated and separate financial performance and consolidated
and separate cash flows for the year then ended in accordance with International Financial Reporting Standards and the requirements
of the Companies Act of South Africa.
Other reports required by the Companies Act
As part of our audit of the consolidated and separate financial statements for the year ended 30 June 2013, we have read the
Directors’ Report, Audit Committee report, within the Corporate Governance report, and the Certificate by secretary for the
purpose of identifying whether there are material inconsistencies between these reports and the audited consolidated and separate
financial statements. These reports are the responsibility of the preparers. Based on reading these reports we have not identified
material inconsistencies between these reports and the audited consolidated and separate financial statements. However, we have
not audited these reports and accordingly do not express an opinion on these reports.
Ernst & Young Inc.
Director: Dawid Petrus Venter
Registered Auditor
Chartered Accountant (SA)
Wanderers Office Park
52 Corlett Drive, Illovo
Johannesburg
28 October 2013
22
Directors’ report
Business of the Group
The Company and its subsidiaries and joint venture companies are incorporated in the Republic of South Africa (Company Registration
number 1935/007343/06). The Company mines manganese ore at Black Rock Mine and iron ore at Beeshoek and Khumani Mines in the
Northern Cape province and chrome ore at Dwarsrivier Mine in the Mpumalanga province. The Company also produces manganese
alloys at its works at Cato Ridge in the KwaZulu-Natal province and at its works in Machadodorp, in the Mpumalanga province. Cato Ridge
Alloys Proprietary Limited, a joint venture between the Company and Mizushima Ferroalloys Company Limited (40%) and Sumitomo
Corporation (10%), both of Japan, produces refined ferromanganese at the Cato Ridge Works.
Incorporated in 1935 – the Group employs 6 567 (2012: 6 734) permanent employees and is operated as three divisions, namely iron
ore, manganese and chrome. Assmang is controlled jointly by African Rainbow Minerals Limited and Assore Limited which each hold 50%
of the issued share capital and both of which are listed on the JSE Limited (“JSE”).
Most of the Group’s production is exported to the Far East, Europe and the United States of America. Manganese ore is also transferred
to the works at Cato Ridge and Machadodorp where it is used in the production of manganese alloys.
Directors’ responsibility relating to the annual financial statements
It is the directors’ responsibility to prepare annual financial statements that fairly present the state of affairs and the results of the Company
and the Group. The independent auditors are responsible for auditing and reporting on these annual financial statements. The annual
financial statements set out in this report have been prepared by management in accordance with International Financial Reporting
Standards. They are based on appropriate accounting policies which have been consistently applied. The accounting policies are supported
by reasonable and prudent judgements and estimates. The annual financial statements have been prepared on a going-concern basis and
the directors have no reason to believe that the business will not be a going concern in the foreseeable future.
In fulfilling its responsibilities, management ensures that adequate accounting records are maintained and has developed and continues
to maintain systems of internal accounting controls which are designed to provide reasonable, although not absolute, assurance as to the
integrity and reliability of the annual financial statements and to adequately safeguard, verify and maintain the assets of the Group. These
controls are monitored throughout the Group and nothing has come to the directors’ attention to indicate that any material breakdown
in the functioning of these controls, procedures and systems has occurred to the date of this report.
Group operations for the year ended 30 June
Ore and alloys dispatched for export and local markets were as follows:
Iron ore
Manganese ore (excluding sales to Cato Ridge Works and Machadodorp Works)
Chrome ore (excluding sales to Machadodorp Works)
Manganese alloys (excluding sales to Cato Ridge Alloys (Pty) Limited)
Chrome alloys
Group expenditure on property, plant and equipment was as follows:
Iron ore mines
Manganese ore mines
Chrome ore mine
Ferromanganese alloy plant
Ferrochrome alloy plant
2013
2012
tonnes ’000
tonnes ’000
16 070
2 856
1 054
260
77
14 753
2 905
521
270
174
R’000
R’000
2 709 138
776 604
132 015
446 346
–
4 064 103
3 339 900
469 815
211 224
415 946
80 528
4 517 413
Borrowing powers
In accordance with the Memorandum of Incorporation the borrowing powers of the Group at 30 June 2013 were limited to
R25,6 billion (2012: R22,39 billion). Group borrowings at that date were Rnil (2012: Rnil) (refer note 16).
Investments
Information regarding the Company’s interests in subsidiaries and joint controlled entities are provided in notes 5 and 6 to the financial
statements.
Directorate and Secretary
The names and details of the directors and secretary of the company at the end of the year are reflected on page 3. There are no service
contracts between the company and any of its directors.
Internal control
Based on the information and explanations given by management, and reports presented by the internal and external auditors on the
results of their audits, the directors are of the opinion that the internal accounting controls are adequate to address risks as identified by
management.
Nothing has come to the attention of the directors or the internal auditors to indicate that any material breakdown in the functioning of
the controls, procedures and systems has occurred during the year under review.
23
Directors’ report (continued)
Directors’ emoluments
The table below sets out directors’ emoluments paid by the Company during the year under review. No emoluments were paid to
alternate directors.
2013
2012
R’000
R’000
Executive directors
G C Butler* (Resigned 17 November 2011)
P C Crous (Resigned 31 August 2012)
A Joubert*
S M Langa*
F T Olivier (Appointed 1 February 2013)
A D Stalker
J C Steenkamp*
B H van Aswegen (Appointed 1 September 2012)
Non-executive directors
Desmond Sacco (Chairman)
M Arnold*
C J Cory
L S Matsimela (Resigned on 31 January 2013)
P E Sacco
M P Schmidt*
A J Wilkens*
189
–
18
36
36
9
36
36
18
257
50
36
36
27
36
36
36
189
9
36
36
36
–
36
36
–
257
50
36
36
36
36
27
36
Total
446
446
* Fees paid to African Rainbow Minerals Limited.
Key management personnel
All of the directors, including alternate directors, are employees of one of the two controlling shareholders (African Rainbow Minerals
Limited and Assore Limited) and are remunerated by the controlling shareholder concerned. The controlling shareholders provide a
combination of management, marketing and administration services to the group for which they are compensated by way of fee income
(refer note 30).
Major shareholders
As at the date of this report, the shareholders of the company were as follows:
Assore Limited
Number
1 774 103
1 774 103
Percentage
50,0
50,0
Special resolutions
Special resolutions passed by the company, its subsidiary and joint venture companies during the period 1 July 2012 to the
date of this report:
Memorandum of Incorporation
Approval of the revised Memorandum of Incorporation in terms of Section 16 of the Companies Act 71 of 2008, on 29 April 2013 for
the company, its subsidiary and joint venture companies.
PROJECTS
Khumani Iron Ore Mine Expansion Project
The commissioning of the WHIMS (Wet High Intensity Magnetic Separation) plant at Khumani which is designed to improve the recovery
of very fine and high grade ore, currently lost to the slimes dam, is in progress and the first units have been commissioned within budget
and ahead of time. Building of additional final product stockpile area at the mine has been completed.The diversion of the Transnet Freight
Rail main line which runs through the King mining areas will be completed and handed over by April 2014.
Beeshoek Iron Ore Mine
The R885 million development of the East pit to extend production by July 2018 is in progress and 15 million tons of overburden was
moved from the pit this year. The diversion of the R385 road between Postmasburg and Olifantshoek to allow for the mining of the future
Beeshoek Villlage pit has been completed. The servicing of the stands for housing in Postmasburg was completed and the construction of
housing is in progress.
Manganese Ore Expansion
A complete review of the initial scope to expand the Black Rock Mine operations from 3 million tonnes per annum to above 4 million
tonnes of ore per annum is underway. This review was necessitated following a marketing study on the demand for the various grades
of ore which can be mined from the Nchwaning Mine. Several trade-off studies are underway to ensure that the scope is re-defined to
capitalise on this opportunity and to ensure that capital will be spent efficiently.The operating expenditure, capital expenditure and financial
modelling for the revised scope will be completed by Q2 F2014.
Sakura Manganese Project
Assmang (54%), Sumitomo Corporation (27%) and China Steel Corporation (19%) have agreed to establish a joint venture ferromanganese
alloy smelting facility in the Sarawak State of Malaysia, Sakura Ferroalloys SDN.BHD (“Sakura”).
24
Sakura is a greenfields project and the facility will be constructed in the Samalaju Industrial Park in Sarawak. The intention is to commission
and operate two 81MVA furnaces complete with all related infrastructure, equipment and services to allow for the production of
ferromanganese alloy.
Besides being the majority shareholder, Assmang will provide marketing and technical services to Sakura. The project is estimated to cost
US$328 million and due to start in the 2014 calendar year and to be commissioned in the second half of 2015.
Logistics
Iron ore export sales were 14 million tonnes due to the excellent performance and co-operation between Transnet, the marketing team
and the operational team at Khumani Mine. Transnet also railed 270 000 tonnes of ore for a new BEE entrant by utilising the rapid load-out
facility at Khumani.
The Manganese ore export channel to Port Elizabeth continued to operate under difficult conditions and many challenges were overcome
allowing increased volumes of ore to be transported by rail. This reduced the ore tonnages transported by road however manganese ore
exported through the port of Durban increased.
Assmang and Transnet continue to engage regarding future export capacity and growth for both iron ore and manganese ore. To this effect
Transnet concluded the feasibility study to expand its manganese ore export capacity to 12 mtpa through the Port of Ngqura from April
2018. This schedule and capacity allocation is aligned with the Assmang growth plan and ramp-up schedule for the Black Rock mine.
Assmang and Transnet will engage on a new manganese ore export contract through the port of Port Elizabeth which will cater for future
allocation through this channel for the period 1 October 2013 until 31 March 2018.
Safety
During the year Beeshoek Mine achieved 2,4 million (2012: 2,0 million) fatality-free shifts.
Khumani Mine achieved 3,4 million (2012: 2,5 million) fatality-free shifts.
Black Rock Mine achieved 2,3 million (2012: 1,7 million) fatality-free shifts.
Cato Ridge Works and Dwarsrivier Mine also achieved significant safety milestones during 2013 reaching 1,5 million and 1,9 million fatalityfree shifts respectively.
Mining rights status
Khumani Iron Ore mine: New order mining right was executed and registered during 2008 for 30 years.
Beeshoek Iron Ore mine: Converted Mining Rights were executed on 16 March 2012 and registered on 29 May 2013.
Black Rock Manganese mine: Converted Mining Rights (for manganese ore) was executed on 13 July 2012 and now awaits registration.
Dwarsrivier Chrome mine: Mining Rights (for chrome ore) was executed on 15 May 2013 and now awaits registration.
Occupational health and wellnesss
Medical surveillance done periodically and medical examinations on exit from employment were conducted at all operations according to
the requirements of the relevant legislation. Audiometric tests were also conducted at all operations.
Hearing conservation remains a major focus at all operations as part of the occupational health surveillance and management programmes.
Chronic conditions are managed as a risk issue, especially the newly diagnosed medical cases. Hypertension is the main concern at all
operations and is monitored.
Operations keep a chronic disease register to monitor and manage employees who are on treatment as required by the Department of
Mineral Resources (“DMR”).
TB has become a national focus area for the Department of Health especially at Mining operations. Employees who visit the site clinic for
any medical surveillance are passively screened for TB as required by the Department of Health. Employees who are suspected of having
TB are referred to the public health facilities for active screening and management. Operations conduct passive TB screening to contacts
at the workplace and contact the local clinic to conduct screening for contacts at the employee’s family.
HIV&AIDS forms part of the comprehensive wellness management at all operations. All operations, except for Machadodorp, provide HIV
counselling to employees visiting the clinic for any medical surveillance, but HIV testing remains voluntary.
Impairment of Assets
The carrying value of furnace 5 and the pelletising plant at Machadodorp Works were impaired by R152,4 million as no
further chrome beneficiation will be done in the foreseeable future. Furnaces 3 and 4 were impaired at Cato Ridge Works by
R159,4 million as these furnaces have become uneconomical to operate due to current market conditions.
Dividends
On 5 August 2012, the board of directors declared dividend number 147 of R422,75 per share amounting to R1,5 billion, which was
paid on 19 August 2012. On 1 February 2013, the board of directors declared dividend number 148 of R422,75 per share amounting to
R1,5 billion, which was paid on 11 February 2013 making a total dividend of R3,0 billion (2012: R2,0 billion).
Events subsequent to year-end
Dividend
On 22 August 2013, the board declared dividend number 149 of R422,75 per share amounting to R1,5 billion, which was paid to
shareholders on 28 August 2013.
25
as at 30 June 2013
GROUP
Note
COMPANY
2013
2012
2013
2012
R’000
R’000
R’000
R’000
ASSETS
20 057 500
17 937 554
20 546 168
18 232 988
Property, plant and equipment
Non-current assets
1
19 476 155
17 634 558
19 430 208
17 592 340
Intangible assets
2
1 579
1 939
–
–
Loans and long-term receivables
3
389 452
213 332
866 491
495 084
Non-current financial assets
4
190 314
87 725
190 314
87 725
Investments in and loans to subsidiary companies
5
20 933
19 617
Interest in a joint venture
6
38 222
38 222
14 417 612
12 269 154
13 606 502
11 706 801
Inventories
Current assets
7
4 252 382
3 802 470
3 652 443
3 401 080
Trade and other receivables
8
4 831 525
4 008 193
4 692 131
3 902 664
Cash and cash equivalents
9
5 333 705
4 458 491
5 261 928
4 403 057
34 475 112
30 206 708
34 152 670
29 939 789
1 774
1 774
1 774
1 774
Total assets
EQUITY AND LIABILITIES
Equity
Issued capital
10
Share premium
10
11 612
11 612
11 612
11 612
Retained earnings
25 587 829
22 377 927
25 414 102
22 211 031
Total equity
25 601 215
22 391 313
25 427 488
22 224 417
5 569 598
5 121 923
5 569 498
5 122 388
Non-current liabilities
Deferred tax liability
11
4 771 611
4 475 790
4 771 511
4 476 255
Long-term provisions
12
797 987
646 133
797 987
646 133
3 304 299
2 693 472
3 155 684
2 592 984
Current liabilities
Short-term provisions
13
504 599
506 840
504 599
506 840
Trade and other payables
14
2 238 269
2 010 882
2 095 028
1 915 116
South African Revenue Service
27
561 431
175 750
556 057
171 028
34 475 112
30 206 708
34 152 670
29 939 789
26
GROUP
2013
COMPANY
2012
2013
2012
Note
R’000
R’000
R’000
R’000
Revenue
17
25 289 897
24 126 289
24 986 805
23 939 736
Turnover
17
25 003 167
23 688 390
24 726 674
23 523 199
(14 542 367)
(13 380 796)
(14 257 968)
(13 195 626)
Cost of sales
10 460 800
10 307 594
10 468 706
10 327 573
Other operating income
Gross profit
18
1 149 082
1 602 365
1 134 670
1 540 903
Other operating expenses
19
(3 131 354)
(2 660 536)
(3 113 657)
(2 640 342)
Profit from operations
20
8 478 528
9 249 423
8 489 719
9 228 134
Income from investments
21
273 399
247 380
251 162
244 317
Finance costs
22
(51 098)
(28 287)
(51 036)
(28 285)
Taxation
Total comprehensive income for the year, net of tax
23
8 700 829
9 468 516
8 689 845
9 444 166
(2 490 927)
(2 584 529)
(2 486 774)
(2 575 314)
6 209 902
6 883 987
6 203 071
6 868 852
27
Statements of cash flows
GROUP
Note
COMPANY
2013
2012
2013
2012
R’000
R’000
R’000
R’000
25 183 833
24 307 741
24 926 790
24 147 900
Cash flow from operating activities
Cash received from customers
(15 454 123)
Cash paid to suppliers and employees
Cash generated from operations
26
Net cash outflow from operating activities
(14 296 434) (15 003 878)
(14 032 349)
9 729 710
10 011 307
9 922 912
10 115 551
(4 536 108)
(3 995 990)
(4 555 347)
(3 990 869)
273 399
Interest received
21
Interest paid
22
(82)
Dividends received
21
–
Taxation paid
27
247 380
(415)
–
251 162
(20)
–
231 817
(413)
12 500
(1 809 425)
(2 242 955)
(1 806 489)
(2 234 773)
Dividends paid
(3 000 000)
(2 000 000)
(3 000 000)
(2 000 000)
Net cash outflow from investing activities
(4 318 388)
(4 615 185)
(4 508 694)
(4 685 120)
– to maintain operations
(1 655 863)
(1 401 226)
(1 649 381)
(1 386 221)
– to expand operations
(2 429 887)
(3 116 187)
(2 430 070)
(3 116 652)
Increase in long-term receivables
(176 120)
(107 127)
(372 723)
(191 602)
Net (increase)/decrease in non-current financial assets
(100 583)
7 091
(100 583)
7 091
Proceeds on disposal of property, plant and equipment
44 065
2 264
44 063
2 264
Capital expenditure:
Net cash outflow from financing activities
–
(4 717)
–
(4 717)
Decrease in short-term borrowings
–
(4 717)
–
(4 717)
875 214
– net increase for the year
– at beginning of year
– at end of year
28
9
1 395 415
858 871
1 434 845
4 458 491
3 063 076
4 403 057
2 968 212
5 333 705
4 458 491
5 261 928
4 403 057
Statements of changes in equity
GROUP
COMPANY
2013
2012
2013
2012
Note
R’000
R’000
R’000
R’000
Issued capital
10
1 774
1 774
1 774
1 774
Share premium
10
11 612
11 612
11 612
11 612
13 386
13 386
13 386
13 386
22 377 927
17 493 940
22 211 031
17 342 179
Issued capital and share premium
Total
Retained earnings
Balance at beginning of year
Total comprehensive income for the year, net of tax
Ordinary dividends paid
6 209 902
6 883 987
6 203 071
6 868 852
(3 000 000)
(2 000 000)
(3 000 000)
(2 000 000)
No 145 totalling 28 183 cents per share
(1 000 000)
(1 000 000)
(1 000 000)
(1 000 000)
(1 500 000)
(1 500 000)
(1 500 000)
(1 500 000)
Balance at end of year
25 587 829
22 377 927
25 414 102
22 211 031
Total equity
25 601 215
22 391 313
25 427 488
22 224 417
29
Notes to the financial statements
1.
Furniture,
equipment,
Mineral vehicles and
rights
other
R’000
R’000
Mine
development
R’000
Plant and
machinery
R’000
Land and
buildings
R’000
2 826 991
15 127 556
760 874
141 509
4 456 756
16 233
(75 999)
–
–
59 766
–
–
115 755
–
936 935
4 064 103
4 517 413
2013
Total
R’000
2012
Total
R’000
Property, plant and
equipment
GROUP
Cost
Reclassifications
Additions
644 207
2 367 206
3 487 431
17 286 515
856 912
141 509
5 295 659
523 951
3 251 016
143 974
53 627
1 706 560
5 679 128
4 576 672
–
302 032
9 737
–
69
311 838
138 312
39
5 084
–
–
191 036
951 314
1 814 800
1 395 984
Disposals
23 313 686 19 234 213
(132 248)
(19 717)
–
(157 798)
(309 763)
(437 940)
27 068 026 23 313 686
Accumulated depreciation
At beginning of year
Impairments
Reclassifications
Depreciation
Disposals
Carrying value at 30 June
–
(2)
29 136
(106 680)
(10 981)
–
6 077
–
(5 121)
637 237
(96 234)
(213 895)
7 591 871
(431 840)
715 026
4 402 766
171 864
59 704
2 242 511
5 679 128
2 772 405
12 883 749
685 048
81 805
3 053 148
19 476 155 17 634 558
2 826 991
15 044 234
745 442
139 327
4 446 602
23 202 596 19 137 663
16 231
(79 307)
11 182
–
51 894
–
–
115 592
–
935 922
4 057 804
4 502 873
(19 717)
–
(152 122)
COMPANY
Cost
Reclassifications
Additions
644 207
Disposals
2 362 083
(131 659)
(303 498)
(437 940)
26 956 902 23 202 596
3 487 429
17 195 351
852 499
139 327
5 282 296
523 951
3 192 122
143 439
53 627
1 697 117
5 610 256
4 516 493
–
302 032
9 737
–
69
311 838
138 312
39
2 400
43
–
–
–
949 156
28 920
6 077
1 812 232
1 387 291
(106 093)
(10 981)
Impairments
Reclassifications
Depreciation
191 036
Disposals
–
–
(2 482)
637 043
(90 558)
715 026
4 339 617
171 158
59 704
2 241 189
2 772 403
12 855 734
681 341
79 623
3 041 107
(207 632)
7 526 694
(431 840)
5 610 256
19 430 208 17 592 340
A register containing details of land and buildings is available for inspection, by members or their duly authorised agents during
normal business hours at the registered address of the company.
Borrowing costs
No borrowing costs were capitalised during the year (2012: Nil).
Capital work-in-progress
Included in mine development, plant and machinery and furniture and equipment is capital work-in-progress costing R2,37 million
(2012: R2,32 million), mainly related to the Khumani Iron Ore Mine.
Impairment
The carrying value of three furnaces and a pelletising plant at Cato Ridge Works and Machododorp Works were fully impaired at
year-end by the amount of R311,8 million as no future benefit will arise from these assets.
30
GROUP
2.
COMPANY
2013
2012
2013
2012
R’000
R’000
R’000
R’000
7 203
7 203
–
–
7 203
7 203
–
–
5 264
4 904
–
–
360
360
5 624
5 264
–
–
1 579
1 939
–
–
–
–
866 491
495 084
Intangible assets
Cost
Amortisation
–
Intangible assets consist of licensing and proprietary technical
information.
3.
Khumani Housing Development Company Proprietary Limited
(refer note 5)
Long-term housing loans repayable by Company employees
389 452
213 332
–
–
389 452
213 332
866 491
495 084
87 725
–
87 725
–
100 583
86 802
100 583
86 802
2 006
923
2 006
923
190 314
87 725
190 314
87 725
The receivables consist of long-term housing loans granted to
employees by the Company, the repayment terms of which vary
between 5 and 20 years and bear interest at the prime lending
rate, less 2%.
Loans are secured by means of instalment sale agreements.
4.
Non-current financial asset
New investment relating to retention scheme
Fair value adjustment through profit and loss
Closing balance
Current year investment: R100,58 million
The investment is a structured product, vesting over a fixed term, offering a remuneration incentive to attract, retain, motivate and
reward middle and senior management. A new investment with a maturity date of 1 July 2015 was made which guarantees the
capital amount invested.
Prior year investment: R86,80 million
The investment is a structured product, vesting over a fixed term, offering a remuneration incentive to attract, retain, motivate and
reward middle and senior management. The capital growth for the investment is 10% guaranteed growth. The investment maturity
date is 1 July 2014.
31
Notes to the financial statements (continued)
Name and nature
of business
5.
Issued
capital
2012 and
2013
Interest in
capital
2012 and
2013
Shares at
cost
2012 and
2013
R’000
%
R’000
2013
R’000
2012
R’000
2013
R’000
2012
R’000
1 950
100
1 520
19 413
18 097
20 933
19 617
*
100
*
866 491
495 084
866 491
495 084
Indebtedness
Book value of the
Company’s interests
Investment in and loans to
subsidiary companies
Cato Ridge Development
Company Limited
– township development
Khumani Housing Development
Company Proprietary Limited
– township development (Note 3)
* Amount is less than a thousand rand
The subsidiaries are incorporated and carry on operations in the Republic of South Africa.
The loan to Cato Ridge Development Company Limited is interest free with no fixed repayment terms. Assmang does not intend
to recall the loan within the next 12 months. Loans to Khumani Housing Development Company Proprietary Limited are interest
free and will not be repaid in the next 12 months. Assmang does not intend to recall the loans within the next 12 months.
GROUP
6.
COMPANY
2013
2012
2013
2012
R’000
R’000
R’000
R’000
–
–
38 222
38 222
307 083
280 191
32 563
29 314
(96 170)
(73 566)
(5 329)
(4 547)
Interest in a joint venture
The Company has a 50% interest in Cato Ridge Alloys
Proprietary Limited (CRA): at cost
The venture is controlled jointly by the Company, Mizushima
Ferroalloys Company Limited and Sumitomo Corporation and
produces refined ferromanganese at the Cato Ridge Works.
The financial statements include the following amounts relating
to CRA, which were proportionately consolidated.
Share of the joint venture’s statement of financial position:
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Equity
238 147
231 392
369 630
322 073
(352 101)
(298 623)
Other operating income
12 684
29 433
Other operating expense
(20 831)
(29 738)
9 382
23 145
(2 627)
(10 606)
6 755
12 539
Share of the joint venture’s revenue and profit:
Revenue
Cost of sales
Taxation
Profit for the year from continuing operations
Commitments for future capital expenditure amount to R6,74 million (2012: R4,53 million) at year-end and there were no
contingent liabilities relating to the company’s interest in the joint venture at year end.
32
GROUP
7.
2013
2012
2013
2012
R’000
R’000
R’000
R’000
Raw materials at cost
240 141
253 300
239 665
271 016
Work-in-progress at cost
264 369
230 769
264 369
230 769
Inventories
838 944
519 998
836 748
518 138
2 908 928
2 798 403
2 311 661
2 381 157
4 252 382
3 802 470
3 652 443
3 401 080
3 012 620
2 701 598
2 803 934
2 613 262
35 822
113 020
35 822
113 020
Trade receivables
3 402 541
3 147 398
3 313 811
3 091 140
Other receivables
1 428 984
860 795
1 378 320
811 524
4 831 525
4 008 193
4 692 131
3 902 664
Consumables stores at cost
Finished goods (cost or net realiasable value)
Cost of inventory recognised as an expense included in
cost of sales
Cost of inventory written down during the year recognised
in cost of sales
8.
COMPANY
3 976 233
3 375 807
3 837 405
3 270 278
Outstanding, more than 30 days
396 711
346 290
396 711
346 290
276 507
118 535
276 507
118 535
Current
Total due, not impaired
70 523
119 414
70 523
119 414
111 551
4 831 525
48 147
4 008 193
110 985
4 692 131
48 147
3 902 664
5 175 819
4 320 071
5 104 042
4 264 637
Trade and other receivables are non-interest bearing and are
generally on 30 – 60 day payment terms.
No provision is currently necessary for trade receivables that
are 90- and 120 days outstanding as they are regarded as
recoverable in full. Other receivables consist mostly of VAT
receivables as well as payments in advance and deposits, all of
which are considered recoverable in full.
9.
Cash at bank and on deposit
157 886
138 420
157 886
138 420
5 333 705
4 458 491
5 261 928
4 403 057
3 636 260 ordinary shares of 50 cents each
1 818
1 818
1 818
1 818
63 740 unclassified shares of 50 cents each
Issued
32
32
32
32
3 548 206 ordinary shares of 50 cents each
1 774
1 774
1 774
1 774
11 612
11 612
11 612
11 612
Rehabilitation Trust Fund – subject to legal use restrictions
All cash earns interest at deposit rates linked to prime.
10. Issued capital and share premium
Authorised
Share premium
33
GROUP
COMPANY
2013
R’000
2012
R’000
2013
R’000
2012
R’000
5 085 218
4 674 364
5 080 014
4 674 960
11. Deferred tax liability
At year-end:
Raised on the following:
Accelerated capital allowances
Provisions raised
Other
(262 312)
(51 295)
(220 045)
21 471
(262 312)
(46 191)
(220 045)
21 340
4 771 611
4 475 790
4 771 511
4 476 255
Movement for the year
4 475 790
3 980 043
4 476 255
3 979 722
Adjusted as follows:
295 821
495 747
295 256
496 533
Accelerated capital allowances
410 854
584 876
405 054
589 293
Provisions raised
(42 267)
(107 229)
(42 267)
(110 729)
Other
(72 766)
18 100
(67 531)
17 969
4 771 611
4 475 790
4 771 511
4 476 255
350 878
289 425
350 878
289 425
2 636
61 453
2 636
61 453
12. Long-term provision
Environmental obligations:
Provisions for decommissioning costs
(21 647)
73 500
(21 647)
73 500
Unwinding of discount rate
32 526
19 353
32 526
19 353
Transferred from decommissioning assets
(8 243)
(31 400)
(8 243)
(31 400)
Provisions (reversed)/raised during the year
353 514
350 878
353 514
350 878
200 554
82 182
200 554
82 182
17 989
118 372
17 989
118 372
Provisions (reversed)/raised for the year
(8 744)
78 453
(8 744)
78 453
Unwinding of discount rate
18 490
8 519
18 490
8 519
8 243
31 400
8 243
31 400
218 543
200 554
218 543
200 554
26 903
23 705
26 903
23 705
Provisions for restoration costs
Restoration costs
Transferred to restoration provision
Post-retirement health care benefits
2 016
3 198
2 016
3 198
28 919
26 903
28 919
26 903
67 798
12 457
67 798
12 457
129 562
57 313
129 562
57 313
Deferred investment for senior employees
Provision raised for the period
Transferred to short-term provisions (refer note 13)
34
(349)
197 011
(1 972)
67 798
(349)
197 011
(1 972)
67 798
GROUP
COMPANY
2013
R’000
2012
R’000
2013
R’000
2012
R’000
646 133
407 769
646 133
407 769
Total provision raised during the year
101 187
212 464
101 187
212 464
51 016
27 872
51 016
27 872
–
–
–
–
12. Long-term provision (continued)
Summary of long-term provisions:
Total unwinding of discount rate
Total payments made for the year
Total transfer to short-term provision
Total long-term provision at year-end
(349)
(1 972)
(349)
(1 972)
797 987
646 133
797 987
646 133
506 840
163 168
506 840
163 168
346 913
397 601
346 913
397 601
(349 503)
(55 901)
(349 503)
(55 901)
The net present value of the provision for decommissioning
and restoration cost is based on a discount rate of 7,5%
(2012: 8,4%) inflation rate of 6% (2012: 6%) and life of mine
from 5 and 25 years (2012: 4 and 25 years). The provision is
based on estimates of cash flows which are expected to occur
at the end of the life of the mines. These calculations include
inherent uncertainties as they are derived from future estimates
of commodity prices, exchange rates and inflation.
13. Short-term provisions
Provisions raised during the year
Less: Payments made during the year
349
1 972
349
1 972
504 599
506 840
504 599
506 840
1 363 485
1 094 868
1 272 450
1 024 614
Capital project payables
153 940
386 026
153 940
386 007
Other payables
720 844
529 988
668 638
504 495
2 238 269
2 010 882
2 095 028
1 915 116
– contracted for
1 868 998
3 289 512
1 862 258
3 282 772
– not contracted for
1 766 041
405 659
1 766 041
405 659
3 635 039
3 695 171
3 628 299
3 688 431
Transfer from long-term provisions (refer note 12)
Short-term provisions relate to leave pay, short-term incentive
bonuses and deferred bonus provision obligations.
14. Trade and other payables
Trade payables
Trade and other payables are non-interest bearing and are
initially recorded at fair value. Trade payables are normal day to
day creditors for the Group. These creditors are mostly on a
30 – 60 day payment term.
15. Capital commitments
Approved by directors
It is anticipated that this expenditure, which relates to the
acquisition of plant and equipment, will be incurred over a two
year period and will be financed from the Group’s operating
cash flows and by utilising existing borrowing facilities.
35
GROUP
COMPANY
2013
R’000
2012
R’000
2013
R’000
2012
R’000
25 601 215
22 391 313
25 003 167
273 399
–
7 128
6 203
25 289 897
23 688 390
247 380
–
185 117
5 402
24 126 289
24 726 674
251 162
–
6 520
2 449
24 986 805
23 523 199
231 817
12 500
170 236
1 984
23 939 736
990 894
105 425
7 128
2 006
43 629
1 149 082
1 229 195
30 793
185 117
923
156 337
1 602 365
981 050
105 425
6 520
2 006
39 669
1 134 670
1 219 171
30 793
170 236
923
119 780
1 540 903
494 571
42 493
391 122
51 803
299 973
892 447
311 838
647 107
3 131 354
700 711
51 209
350 105
3 836
91 915
874 965
138 312
449 483
2 660 536
491 242
42 493
391 122
51 803
299 038
892 447
311 838
633 674
3 113 657
696 833
50 493
350 105
3 836
90 878
874 965
138 312
434 920
2 640 342
16. Borrowing powers
The borrowing powers of the Group, in terms of its
Memorandum of Incorporation, are as follows:
Borrowing powers
The borrowing powers of the Group are limited to the aggregate
of the issued and paid-up share capital, the share premium of the
Company and the consolidated retained earnings.
17. Revenue
Revenue comprises
– Revenue derived from the sale of ore and alloy products
– Interest received (note 21)
– Dividend received (note 21)
– Insurance proceeds
– Other
Turnover comprises of the sale of iron, manganese, chrome ores,
ferrochrome, ferromanganese and other products at invoice value,
net of value added tax, trade discounts and intragroup sales.
18. Other operating income
Foreign exchange gains
– realised
– unrealised
Proceeds on insurance claim
Fair value adjustments of non-current financial asset
Sundry income
19. Other operating expenses
Foreign exchange losses
– realised
– unrealised
Management fees
Loss on disposal of assets
Short workings
Mining royalty paid
Impairment charge
Other
36
GROUP
COMPANY
2013
R’000
2012
R’000
2013
R’000
2012
R’000
360
360
–
–
Auditors’ remuneration
9 509
5 580
8 949
5 347
– audit fees
8 277
5 167
8 703
4 951
– other services
1 232
413
246
396
1 814 800
1 395 984
1 812 232
1 387 291
– mine development
191 036
105 314
191 036
105 314
– plant and machinery
951 314
738 245
949 156
738 243
29 136
22 680
28 920
22 508
6 077
4 890
6 077
4 890
637 237
524 855
637 043
516 336
20. Profit from operations
Profit from operations is stated after taking into account the
following items of income and expenditure:
Expenditure:
Amortisation of intangible assets
Depreciation
– land and buildings
– mineral rights
– furniture, equipment, motor vehicles and other assets
446
446
446
446
Increase in provisions
448 100
610 065
448 100
610 065
– long-term
101 187
212 464
101 187
212 464
– short-term
346 913
397 601
346 913
397 601
Loss on impairment of furnaces and plant
311 838
138 312
311 838
138 312
35 822
113 020
35 822
113 020
3 012 620
2 701 598
2 803 934
2 613 262
51 803
3 836
51 803
3 836
23 869
23 586
23 869
22 121
403 599
347 083
403 599
347 083
2 369 953
2 097 653
2 357 577
2 097 653
95 811
82 719
95 811
82 719
132 404
116 753
132 404
116 753
273 399
247 380
251 162
231 817
–
–
–
12 500
273 399
247 380
251 162
244 317
– decommissioning provision
32 526
19 353
32 526
19 353
– restoration provision
18 490
8 519
18 490
8 519
Directors’ emoluments for services as directors
Inventory written down
Raw materials and consumables included in cost of sales
Loss on disposal of property, plant and equipment
Remuneration for services
– advisory
– secretarial, management, administration and technical
Staff costs
– salaries and wages
– healthcare
– retirement/provident fund contributions
21. Income from investments
Interest received
Dividends received from joint-venture entity
22. Finance costs
Unwinding of the discount rate used in calculating:
Finance charge
82
415
20
413
51 098
28 287
51 036
28 285
37
GROUP
COMPANY
2013
R’000
2012
R’000
2013
R’000
2012
R’000
2 195 106
1 990 657
2 191 518
1 980 656
295 821
495 747
295 256
496 533
23. Taxation
South African normal taxation
– current year
Deferred taxation
– temporary differences (refer note 11)
–
98 125
–
98 125
2 490 927
2 584 529
2 486 774
2 575 314
Secondary tax on companies
Reconciliation of rate of taxation
Standard rate of company taxation
%
%
%
%
28,00
28,00
28,00
28,00
Adjusted for:
State’s share of profits
Secondary tax on companies
Non deductible permanent differences
Effective rate of taxation
Estimated losses available for the reduction of future taxable
income arising in certain joint-venture and subsidiary companies
–
(0,74)
–
(0,77)
–
0,04
–
0,04
0,63
–
0,62
–
28,63
27,30
28,62
27,27
R’000
R’000
R’000
R’000
27 300
25 981
–
–
24. Retirement benefit information
The Group has made provision for pension plans covering all employees. These comprise of a defined-contribution retirement
fund, which is governed by the Pension Funds Act, 1956, and two defined-contribution provident funds administered by employee
organisations within the industries in which members are employed. The contributions paid by the Group for retirement benefits
are charged to the statement of comprehensive income as they are incurred.
The above defined-contribution plans are determined based on accumulated contributions and returns on investments.
Members contribute 7,5% and the company 12,5% of pensionable salaries to the funds.
25. Post-retirement health care benefits
The Group has obligations to fund a portion of certain retiring employees’ medical aid contributions based on the cost of benefits.
The anticipated liabilities arising from these obligations have been actuarially determined using the projected unit credit method,
and a corresponding liability has been raised (refer note 12). 2013
R’000
2012
R’000
2011
R’000
2010
R’000
2009
R’000
348
552
548
498
737
2 275
2 277
2 124
1 886
1 638
Group
Current service cost
Interest cost on benefit obligation
Benefits paid
Net actuarial loss/(gain)
Shortfall/(surplus) charged/(credited) to the statement
of comprehensive income
38
(605)
(951)
(769)
(709)
(664)
–
1 320
605
(1 776)
1 064
2 018
3 198
2 508
(101)
2 775
25. Post-retirement health care benefits (continued)
Sensitivity of accounting provisions to changes in inflation rate for year ended 30 June 2013:
Service cost
Change in inflation
Interest cost
Accrued liability
R’000
% change
R’000
% change
R’000
% change
1% increase
671
22,60
2 603
15,30
30 885
14,80
1% decrease
(448)
(17,80)
(1 972)
(12,40)
(23 648)
(12,10)
The liability is assessed periodically by an independent actuarial survey based on the following principal actuarial assumptions:
– A net discount rate of 1,0% (2012: 1,0%) per annum
– Healthcare cost increasing at a rate of 8,51% (2012: 8,51%) per annum.
– Assumed rate of return on assets at 9,6% (2012: 9,6%) per annum.
The liabilities raised in the financial statements are based on the present value of the post retirement benefits and have been
recognised in full.
The most recent actuarial valuation was conducted for the year ended 30 June 2012.
GROUP
COMPANY
2013
R’000
2012
R’000
2013
R’000
2012
R’000
8 478 528
9 249 423
8 489 719
9 228 134
Non-cash items included in profit from operations:
2 269 929
2 225 169
2 267 001
2 215 400
– depreciation of property, plant and equipment
1 814 800
1 395 984
1 812 232
1 387 291
360
360
–
–
26. Reconciliation of profit from operations to cash
generated from operations
Profit from operations
Adjusted for:
– amortisation of intangible asset
– unrealised foreign exchange (gains)/losses net
(62 932)
20 416
(62 932)
19 700
– inventory written down to net realisable value
35 822
113 020
35 822
113 020
– loss on disposal of property, plant and equipment
51 803
3 836
51 803
3 836
– net movement in long- and short-term provisions
120 244
554 164
120 244
554 164
– fair value adjustment of non current financial assets
– impairment charge
Adjusted operating profit before working capital changes
Increase in inventories
Increase/(decrease) in payables
Increase in receivables
(2 006)
(923)
(2 006)
(923)
311 838
138 312
311 838
138 312
10 748 457
11 474 592
10 756 720
11 443 534
(485 734)
227 387
(760 400)
9 729 710
(495 261)
(9 799)
(958 225)
10 011 307
(287 185)
(383 673)
179 912
(23 273)
(726 535)
9 922 912
(921 037)
10 115 551
27. Taxation paid
Balance due at beginning of year
Amounts charged to the statement of comprehensive income
(175 750)
(329 923)
(171 028)
(327 020)
(2 490 927)
(2 584 529)
(2 486 774)
(2 575 314)
Adjustment for deferred taxation
295 821
495 747
295 256
496 533
Balance due at end of year
561 431
175 750
556 057
171 028
(1 809 425)
(2 242 955)
(1 806 489)
(2 234 773)
39
28. Segmental information
The Groups’ operations are managed by divisions determined by commodity mined, and where applicable, beneficiated at
various works operations as follows:
– Iron ore (iron ore division)
– Manganese ore and alloys (manganese division)
– Chrome ore and alloys (chrome division)
Iron ore
division
R’000
Manganese
division
R’000
Chrome
division
R’000
Total
R’000
15 690 490
7 436 563
1 876 114
25 003 167
5 517 176
827 117
Segment analysis
Year to 30 June 2013
Turnover of ore and alloy products
Contributions to profit/(loss) after taxation
(134 391)
6 209 902
Other information
23 185 870
10 513 131
776 111
34 475 112
Consolidated total liabilities
5 985 484
2 555 835
332 578
8 873 897
Capital expenditure
2 709 138
1 222 950
132 015
4 064 103
Depreciation
1 180 239
532 832
101 729
1 814 800
15 295 969
6 352 392
2 040 029
23 688 390
5 835 547
1 223 279
19 718 533
9 316 287
1 171 888
30 206 708
Consolidated total liabilities
5 042 603
1 934 427
838 365
7 815 395
Capital expenditure
3 339 900
885 761
291 752
4 517 413
909 707
323 768
162 519
1 395 984
Consolidated total assets
Turnover of ore and alloys products
Contributions to profit/(loss) after taxation
(174 839)
6 883 987
Other information
Consolidated total assets
Depreciation
Group turnover by
segment
2013
2012
R’000
R’000
16 812 336
18 771 635
Europe
3 569 145
1 916 673
USA
1 222 223
1 132 882
South Africa
2 409 675
1 774 766
989 788
92 434
25 003 167
23 688 390
Turnover by geographical location to which product is supplied is set out below:
Far and Middle East
Other
Total turnover of ore and alloy products
All the Group’s property, plant and equipment is located in South Africa.
40
GROUP
2013
R’000
2012
R’000
28 124
28 298
390 677
413 999
418 801
442 297
29. Contingent liabilities
The following guarantees have been issued in the Group:
Eskom: Electricity supply
Department of Mineral Resources: Rehabilitation liabilities
30. Related-party transactions
Related parties transaction are concluded at arm’s length and
under terms and conditions that are no less favourable than
those arranged with third parties.
The following entities were identified as related parties to
the Group:
Major shareholder
Ore and Metal Company Limited
Wholly-owned subsidiary of
Assore Limited
Cato Ridge Development Company Proprietary Limited
Wholly owned subsidiary
Cato Ridge Alloys Proprietary Limited
Jointly controlled entity
Khumani Housing Development Company
Proprietary Limited
Wholly owned subsidiary
Kingfisher Insurance
Captive Insurance Company of
ARM Ltd
Key Management Personnel
The following significant related-party transactions occurred
during the year:
– fees for provision of services
565 175
523 651
Ore and Metal Company Limited
– fees for provision of services
812 012
757 707
Cato Ridge Development Company Proprietary Limited
– housing rental received
875
1 220
Cato Ridge Alloys Proprietary Limited
– purchases of molten metal
563 892
493 018
– infrastructure rental received
6 929
6 558
Khumani Housing Development Company Proprietary Limited
– housing rental received
3 754
3 419
Kingfisher Insurance
– captive insurance company
of ARM Ltd
109 497
155 912
Key Management Personnel
– remuneration paid to
67 424
53 619
– African Rainbow Minerals Limited
76 653
72 865
– Ore and Metal Company Limited
4 705
15 319
Amounts owed to related parties on current account at end
of year:
Amounts owed by related parties at end of year:
– Khumani Housing Development Company Proprietary
Limited
– Refer to note 5
866 491
495 084
– Cato Ridge Development Company Proprietary Limited
– Refer to note 5
20 933
18 097
6 174
5 276
– Cato Ridge Alloys Proprietary Limited
41
31. Financial instruments and risk management
The Group is exposed to certain financial risks in the normal course of its operations. To manage these risks, a treasury
risk management committee monitors transactions involving financial instruments. The Group does not acquire, hold or issue
derivative instruments for trading purposes.
The above risks are managed in accordance with the policies set out below:
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 are affected by the following types of risks: interest rate risk, foreign currency risk, commodity price risk and other price risk,
such as equity price risk.
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
revenue activities.
The Group’s markets are predominantly priced in US dollars which exposes the Group’s cash flows to foreign exchange currency
risks. In addition there is currency risk on long-lead time items which are denominated in US dollars, Euros or other currencies.
The following table illustrates the sensitivity of the Group’s profit before tax to a change in the US dollar exchange rate, with all
other variables held constant.
GROUP
At year-end the foreign currency value of accounts receivables amounted to:
Accounts receivable balance
Year-end exchange rate
Movement in accounts receivable balance if the R/$ exchange rate increases by R1
Movement in accounts receivable balance if the R/$ exchange rate decreases by R1
2013
R’000
2012
R’000
3 158 674
9,93
318 094
(318 094)
2 371 488
8,15
290 980
(290 980)
There were no forward exchange contracts as at 30 June 2013 (2012: nil).
The table below summarises the maturity profile of the Group’s financial liabilities at 30 June 2013 based on undiscounted
cash flows:
Trade and other payables (refer note 14)
South African Revenue Service (refer note 27)
Within
one year
R’000
2–5
years
R’000
Total
R’000
2 238 269
561 431
2 799 700
–
–
–
2 238 269
561 431
2 799 700
2 010 882
175 750
2 186 632
–
–
2 010 882
175 750
2 186 632
The table below summarises the maturity profile of the Company’s financial liabilities at 30 June 2013 based on undiscounted
cash flows:
42
Within
one year
R’000
2–5
years
R’000
Total
R’000
2 095 028
556 057
2 651 085
–
–
–
2 095 028
556 057
2 651 085
1 915 116
171 028
2 086 144
–
–
–
1 915 116
171 028
2 086 144
31. Financial instruments and risk management (continued)
Commodity risk
Commodity price risk arises from the possible adverse effect of fluctuations in commodity prices on current and future earnings.
Most of these prices are US dollars and euro-based and determined internationally on the open market.The Group does not actively
hedge future commodity revenue of the commodities that it produces against price fluctuations for the commodities that it produces.
Fair value risk
Except for interest-free loans provided by the Company to its subsidiaries, the carrying amounts of trade receivables, cash and
cash equivalents and trade and other payables approximate fair value because of the short-term duration of these instruments.
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
prime interest rates.
GROUP
Cash and cash equivalent balances at year-end
Effect on profit before tax if interest rate increases by 1%
Effect on profit before tax if interest rate decreases by 1%
Effect on net cash flow if interest rate increases by 1%
Effect on net cash flow if interest rate decreases by 1%
Carrying
value at
year-end
R’000
Exposure of the Group to interest rate risk at year-end was as follows:
Financial assets
Year ended 30 June 2013
Cash on deposit with financial institutions
389 452
5 333 705
213 332
2013
R’000
2012
R’000
5 333 705
53 337
(53 337)
38 403
(38 403)
4 458 491
44 585
(44 585)
32 101
(32 101)
Maturity
dates
Effective
interest
rate
5 – 20 years Prime less 2%
Overnight
Current
call deposit
Overnight
Current
call deposit
4 458 491
Financial liabilities
Trade payables
2 238 269
561 431
F2014
F2014
–
–
Trade payables
2 010 882
F2013
–
175 750
F2013
–
43
31. Financial instruments and risk management (continued)
Carrying
value at
year-end
R’000
Maturity
dates
Effective
interest
rate
Exposure of the Company to interest rate risk at year-end were as follows:
Financial assets
866 491
Overnight
5 261 928
Current
call deposit
495 084
Overnight
4 403 057
Maturity date
call deposit
2 095 028
F2014
–
556 057
F2014
–
1 915 116
F2013
–
171 028
F2013
–
Financial liabilities
Trade payables
South African Revenue Services
Trade payables
South African Revenue Services
Fair value of financial instruments
The estimated fair value of the Group’s financial instruments as at 30 June 2013 was estimated to approximate the carrying
amounts reflected in the statement of financial position.
Treasury risk management
The treasury function is outsourced to a third-party specialist who, together with the Group executives, coordinate the daily cash
requirements of the Group in the South African domestic money market.
A treasury committee, consisting of senior managers in the Group and representatives from the third party meet on a regular basis
to analyse currency and interest rate exposure as well as future funding requirements with the Group. The committee reviews the
treasury operations dealings to ensure compliance with the Group’s policies and counterparty exposure limits.
Capital management
Capital includes equity attributable to the equity holders of the holding company.
No external capital requirements.
The primary objective of the Group’s capital management is to ensure that it maintains a strong rating and healthy capital ratios
in order to support its business and ensure significant funding levels for capital projects.
The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions.
No changes were made in the objectives, policies or processes relating to capital management during the year.
44
Group financial assets and liabilities by category
Fair value
through
profit
and loss
R’000
Loans and
receivables
R’000
Other
liabilities at
amortised
cost
R’000
GROUP
–
190 314
–
–
–
–
389 452
–
4 831 525
5 333 705
–
–
–
–
–
–
(561 431)
(2 238 269)
389 452
190 314
4 831 525
5 333 705
(561 431)
(2 238 269)
–
87 725
–
–
–
–
213 332
–
4 008 193
4 458 491
–
–
–
–
–
–
(175 750)
(2 010 882)
213 332
87 725
4 008 193
4 458 491
(175 750)
(2 010 882)
–
190 314
–
–
–
–
866 491
–
4 692 131
5 261 928
–
–
–
–
(556 057)
(2 095 028)
866 491
190 314
4 692 131
5 261 928
(556 057)
(2 095 028)
–
87 725
–
–
–
–
495 084
–
3 902 664
4 403 057
–
–
–
–
–
–
(171 028)
(1 915 116)
495 084
87 725
3 902 664
4 403 057
(171 028)
(1 915 116)
Total
R’000
COMPANY
Long-term loans and receivables
–
Fair value hierarchy
The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:
Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities;
Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either
directly or other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either
directly or indirectly; and
Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable
market data. techniques which use inputs which have a significant effect on the recorded fair value that are not based on
observable market data.
Currently the only financial asset measured at fair value is the financial asset which is disclosed in note 4 which falls within level 2 of
the hierarchy.
During the year there were no transfers between any of the levels of fair value measurements. There are currently no financial
liabilities measured at fair value.
45
Accounting policies
46
47
Basis of preparation
51
Implementation
52
Significant accounting judgement, estimates and
assumptions
53
Basis of consolidation
53
Intragroup transactions and balances
53
Property, plant and equipment and depreciation
54
Leased assets and capitalisation of leases
54
Production stripping cost
55
Intangible assets
55
Financial instruments
55
Impairment of financial assets
55
Derecognition of financial assets
55
Interest-bearing loans and borrowings
55
Derecognition of financial liabilities
55
Inventories
56
Impairment of non-financial assets
56
Provisions
56
Contingent liabilities
56
Revenue recognition
57
Cost of sales
57
Exploration expenditure
57
Borrowing Costs
57
Foreign currency transaction and balances
57
Employee benefits
58
Taxation
58
Set-off
58
Definitions
Accounting policies
Basis of preparation
The Group and Company financial statements have been prepared on the historical-cost basis except for the revaluation of financial assets
and financial liabilities (including derivative instruments if any) measured at fair value through profit or loss.
The principal accounting policies as set out below are consistent in all material aspects with those applied in the previous year except as
stated under the heading “Changes in accounting policies” below.
The financial statements are presented in South African Rand and all values are rounded to the nearest thousand unless otherwise indicated.
Statement of compliance
The Group and Company annual financial statements are prepared in accordance with and comply with International Financial Reporting
Standards (IFRS) and interpretations of those standards, as adopted by the International Accounting Standards Board (IASB) and applicable
legislation.
Changes in accounting policies
The accounting policies adopted are consistent with those of the previous financial year.
Amendments resulting from Improvements to IFRSs to the following standards did not have any impact on the accounting policies, financial
position or performance of the Group and Company:
• IAS 1 Financial statement presentation (Amendment) – 1 January 2012
• IAS 12 Income taxes (Amendment) – 1 January 2012
• Improvements to IFRSs (issued in 2011)
Standards or interpretations adopted during the year:
IAS 1 Financial statement presentation (Amendment)
The amendment is effective for annual periods beginning on or after 1 January 2012 and requires that items of other comprehensive
income be grouped in items that would be reclassified to profit or loss at a future point (for example, upon derecognition or settlement)
and items that will never be reclassified. This amendment only effects the presentation in the financial statements and had no impact on
the Group as they have no other comprehensive income.
IAS 12 Income taxes (Amendment)
The amendment is effective for annual periods beginning on or after 1 January 2012 and introduces a rebuttable presumption that
deferred tax on investment properties measured at fair value will be recognised on a sale basis, unless an entity has a business model that
would indicate the investment property will be consumed in the business. If consumed a use basis should be adopted. Furthermore, it
introduces the requirement that deferred tax on non-depreciable assets that are measured using the revaluation model in IAS 16 always
be measured on a sale basis of the asset. This amendment has had no impact on the financial statements after initial application.
Standards issued but not yet effective
Standards issued but not yet effective up to the date of issuance of the Group and Company financial statements are listed below.
This listing is of standards and interpretations issued, which the Group reasonably expects to be applicable at a future date. The Group
intends to adopt those standards when they become effective. The Group expects that adoption of these standards, amendments and
interpretations in most cases will not have any significant impact on the Group’s financial position or performance in the period of initial
application but in certain cases, additional disclosures will be required. In cases where it will have an impact the Group is still assessing the
possible impact.
STANDARD DESCRIPTION
Post-employee
IAS 19
Benefits
(Amendment)
EFFECTIVE FOR
FINANCIAL
PERIODS
COMMENCING IMPACT
1 January 2013
The revised standard includes a number of amendments that range from
fundamental changes to simple clarifications and re-wording. The more
significant changes include the following:
• For defined benefit plans, the ability to defer recognition of actuarial gains and
losses (i.e., the corridor approach) has been removed. As revised, amounts
recorded in profit or loss are limited to current and past service costs, gains
or losses on settlements, and net interest income (expense). All other changes
in the net defined benefit asset (liability), including actuarial gains and losses
are recognised in other comprehensive income with no subsequent recycling
to profit or loss.
• Termination benefits will be recognised at the earlier of when the offer of
termination cannot be withdrawn, or when the related restructuring costs
are recognised under IAS 37 Provisions, Contingent Liabilities and Contingent
Assets.
• The distinction between short-term and other long-term employee benefits
will be based on the expected timing of settlement rather than the employee’s
entitlement to the benefits.
47
Accounting policies (continued)
Separate Financial
IAS 27
Statements
(as revised in 2011)
IAS 28
Investments in
Associates and
Joint Ventures
(as revised in 2011)
IAS 32
Financial Instruments: 1 January 2014
Presentation –
Offsetting Financial
Assets and Financial
Liabilities
IFRS 1
Time Adoption of
1 January 2013
international Financial
Reporting Standards
(Amendment) –
Government Loans
IFRS 7
48
EFFECTIVE FOR
FINANCIAL
PERIODS
COMMENCING IMPACT
1 January 2013
As a consequence of the new IFRS 10 and IFRS 12, what remains of IAS 27 is
limited to accounting for subsidiaries, jointly controlled entities, and associates
in separate financial statements. The Group does not present separate financial
statements.
1 January 2013
As a consequence of the new IFRS 11 and IFRS 12. IAS 28 has been renamed IAS
28 Investments in Associates and Joint Ventures, and describes the application
of the equity method to investments in joint ventures in addition to associates.
Disclosures –
Offsetting Financial
Assets and Financial
Liabilities –
Amendments to
IFRS 7
1 January 2013
Refer “IFRS 11” below.
The amendments clarify the meaning of ‘currently has a legally enforceable
right of set-off ’; and that some gross settlement systems may be considered
equivalent to net settlement. The amendments clarify that rights of set-off must
not only be legally enforceable in the normal course of business, but must also
be enforceable in the event of default and the event of bankruptcy or insolvency
of all of the counterparties to the contract, including the reporting entity itself.
The amendments also clarify that rights of set-off must not be contingent on a
future event.
The IASB has added an exception to the retrospective application of IFRS
9 Financial Instruments (or IAS 39 Financial Instruments: Recognition and
Measurement, as applicable) and IAS 20 Accounting for Government Grants
and Disclosure of Government Assistance. These amendments require firsttime adopters to apply the requirements of IAS 20 prospectively to government
loans existing at the date of transition to IFRS. However, entities may choose
to apply the requirements of IFRS 9 (or IAS 39, as applicable) and IAS 20 to
government loans retrospectively if the information needed to do so had been
obtained at the time of initially accounting for those loans.
This standard will have no impact on the Group as the Group is not a first time
adopter.
These amendments require an entity to disclose information about rights of
set-off and related arrangements (e.g., collateral agreements). The disclosures
would provide users with information that is useful in evaluating the effect of
netting arrangements on an entity’s financial position. The new disclosures are
required for all recognised financial instruments that are set off in accordance
with IAS 32 Financial Instruments: Presentation. The disclosures also apply to
recognised financial instruments that are subject to an enforceable master
netting arrangement or ‘similar agreement’, irrespective of whether they are set
off in accordance with IAS 32.
EFFECTIVE FOR
FINANCIAL
PERIODS
COMMENCING IMPACT
The classification
IFRS 9
1 January 2015
IFRS 9 for financial assets was first published in November 2009 and was
and measurement of
updated in October 2010 to include financial liabilities.
financial assets
These pronouncements initially required the adoption of the standard for
annual periods on or after 1 January 2013. Amendments to IFRS 9 Mandatory
Effective Date of IFRS 9 and Transition Disclosures, issued in December 2011,
moved the mandatory effective date of both the 2009 and 2010 versions of
IFRS 9 from 1 January 2013 to 1 January 2015.
IFRS 9 is being developed in phases with a view to replacing IAS 32 and IAS 39
in its entirety.
Phase 1 of IFRS 9 addressed the classification and measurement of financial
assets. All financial assets are measured at fair value at initial recognition.
Debt instruments may, if the fair value option (FVO) is not invoked, be
subsequently measured at amortised cost if:
• The asset is held within a business model that has the objective to hold the
assets to collect the contractual cash flows; and
• The contractual terms of the financial asset give rise, on specified dates, to
cash flows that are solely payments of principal and interest on the principal
outstanding.
All other debt instruments are subsequently measured at fair value.
All equity investment financial assets are measured at fair value either through
other comprehensive income (OCI) or profit or loss. Equity instruments held
for trading must be measured at fair value through profit or loss. Entities have
an irrevocable choice of recognising changes in fair value either in OCI or profit
or loss by instrument for all other equity investment financial assets.
Phase 2 of IFRS 9 addressed the classification and measurement of financial
liabilities. All financial assets are measured at fair value at initial recognition.
For FVO liabilities, the amount of change in the fair value of a liability that is
attributable to changes in credit risk must be presented in OCI. The remainder
of the change in fair value is presented in profit or loss, unless presentation of
the fair value change in respect of the liability’s credit risk in OCI would create
or enlarge an accounting mismatch in profit or loss.
All other IAS 39 classification and measurement requirements for financial
liabilities have been carried forward into IFRS 9, including the embedded
derivative separation rules and the criteria for using the FVO.
The Board’s work on the other phases is ongoing, and includes impairment of
financial instruments and hedge accounting.
The adoption of the first phase of IFRS 9 will primarily have an effect on the
classification and measurement of the Group’s financial assets but will potentially
have no impact on classification and measurements of financial liabilities. The
Group is currently assessing the impact of adopting IFRS 9, however, the impact
of adoption depends on the assets held by the Group at the date of adoption,
it is not practical to quantify the effect.
49
EFFECTIVE FOR
FINANCIAL
PERIODS
COMMENCING IMPACT
IFRS
10;
Consolidated
IFRS 10
1 July 2013
IFRS 10 replaces the portion of IAS 27 Consolidated and Separate Financial
Financial Statements;
IFRS 11
Statements that addresses the accounting for consolidated financial statements.
IFRS 11 Joint
IFRS 12
It also includes the issues raised in SIC 12 Consolidation – Special Purpose
Arrangements; IFRS
Entities. IFRS 10 establishes a single control model with a new and broader
12 Disclosure of
definition of control that applies to all entities. It does not change consolidation
Interest in Other
procedures but rather whether an entity is consolidated. The changes will
Entities.
require management to make significant judgement to determine which
entities are controlled and therefore required to be consolidated by the parent.
Therefore, IFRS 10 may change which entities are within a Group.
IFRS 11 replaces IAS 31 Interest in Joint Ventures and SIC 13 Jointly Controlled
Entities – Non-monetary Contributions by Ventures. IFRS 11 uses some of the
terms that were used in IAS 31 but with different meanings which may create
some confusion as to whether there are significant changes. IFRS 11 focuses on
the nature of the rights and obligations arising from the arrangement compared
to the legal form in IAS 31. IFRS 11 uses the principle of control in IFRS 10 to
determine joint control which may change whether joint control exists. IFRS
11 addresses only two forms of joint arrangements; joint operations where the
entity recognises its assets, liabilities, revenues and expenses and/or its relative
share of those items and joint ventures which is accounted for on the equity
method (no more proportional consolidation).
IFRS 12 includes all the disclosures that were previously required relating to an
entity’s interests in subsidiaries, joint arrangements, associates and structured
entities as well as extensive qualitative and quantitative new disclosures. The
new disclosure requirements are to help the users of financial statements
understand:
• The effects of an entity’s interests in other entities on its financial position,
financial performance and cash flows and
• The nature of, and the risks associated with, the entity’s interest in other entities
An entity is now required to disclose the judgements made to determine
whether it controls another entity.
IFRS 10
IFRS 12
IAS 27
IFRS 10 Consolidated 1 January 2014
Financial Statements;
IFRS 12 Disclosure
of Interest in Other
Entities; IAS 27
Separate Financial
Statements –
Investment entities
(Amendment)
The Group will need to consider the new definition of control to determine
which entities are controlled or jointly controlled and then to account for them
under the new standards.
The investment entities amendments apply to investments in subsidiaries, joint
ventures and associates held by a reporting entity that meets the definition of
an investment entity.
The exception to consolidation requires investment entities to account for
subsidiaries at fair value through profit or loss in accordance with IFRS 9 (or
IAS 39, as applicable), except for investments in subsidiaries, associates and joint
ventures that provide services that relate only to the investment entity, which
must be consolidated (investments in subsidiaries) or accounted for using the
equity method (investments in associates or joint ventures).
The amendment will have no impact on the Group as the parent Company
does not meet the definition of an investment entity.
50
Fair Value
IFRS 13
Measurement
IFRIC 21
Levies
EFFECTIVE FOR
FINANCIAL
PERIODS
COMMENCING IMPACT
1 January 2013
IFRS 13 establishes a single framework for all fair value measurement (financial
and non-financial assets and liabilities) when fair value is required or permitted
by IFRS. IFRS 13 does not change when an entity is required to use fair value but
rather describes how to measure fair value under IFRS when it is permitted or
required by IFRS. There are also consequential amendments to other standards
to delete specific requirements for determining fair value. Fair value under IFRS
13 is defined as “the price that would be received to sell an asset or paid
to transfer a liability in an orderly transaction between market participants at
the measurement date” (i.e., an ‘exit price’). New disclosures related to fair
value measurements are also required to help users understand the valuation
techniques and inputs used to develop fair value measurements and the effect
of fair value measurements on profit or loss.
1 January 2014
The Group will need to consider the new requirements to determine fair values
going forward.
This new interpretation clarifies the accounting for levies imposed by
governments by the entity that is paying the levy.The scope of the interpretation
is broad and covers all levies, except outflows that are in the scope of IAS 12
and penalties for breaches of legislation.
Improvements to IFRSs – 2009 – 2011 Cycle (issued in 2012 effective for annual periods beginning on or after 1 January 2013):
• IFRS 1 First-time Adoption of International Financial Reporting Standards (Amendments):
– Repeated application of IFRS 1 – clarifies that an entity that has stopped applying IFRS may choose to either:
(i) Re-apply IFRS 1, even if the entity applied IFRS 1 in a previous reporting period; or
(ii) Apply IFRS retrospectively in accordance with IAS 8 (i.e., as if it had never stopped
applying IFRS)
in order to resume reporting under IFRS. If the entity re-applies IFRS 1 or applies IAS 8, it must disclose the reasons why it
previously stopped applying IFRS and subsequently resumed reporting in accordance with IFRS.
–Borrowing costs – clarifies that, upon adoption of IFRS, an entity that capitalised borrowing costs in accordance with its previous
GAAP, may carry forward, without adjustment, the amount previously capitalised in its opening statement of financial position at the
date of transition. Once an entity adopts IFRS, borrowing costs are recognised in accordance with IAS 23, including those incurred
on qualifying assets under construction.
• IAS 1 Presentation of Financial Statements (Amendments). The amendment clarifies the difference between voluntary additional
comparative information and the minimum required comparative information. Generally, the minimum required comparative period is
the previous period.
• IAS 16 Property, Plant and Equipment (Amendment). The amendment clarifies that major spare parts and servicing equipment that
meet the definition of property, plant and equipment are not inventory.
• IAS 32 Financial Instruments: Presentation. The amendment removes existing income tax requirements from IAS 32 and requires
entities to apply the requirements in IAS 12 to any income tax arising from distributions to equity holders.
• IAS 34 Interim Financial Reporting The amendment clarifies the requirements in IAS 34 relating to segment information for total assets
and liabilities for each reportable segment to enhance consistency with the requirements in IFRS 8 Operating Segments. Total assets
and liabilities for a particular reportable segment need to be disclosed only when the amounts are regularly provided to the chief
operating decision maker and there has been a material change in the total amount disclosed in the entity’s previous annual financial
statements for that reportable segment.
Implementation project
In addition to the major IFRS projects, the IASB also has a number of items on its work plan dealing with implementation issues. These
include narrow scope amendments and interpretations. Below is a listing of the current implementation projects based on the IASB’s work
plan as at 21 June 2013, as well as those that have been completed since the March 2013 edition of the pocketbook guide.
IAS 36 Recoverable Amount Disclosures for Non-Financial Assets (Amendments)
The amendments relate to the disclosure in respect of fair value less costs of disposal. The amendments are intended to clarify the IASB’s
original intentions when amendments were made to IAS 36 as a result of the issuance of IFRS 13 Fair Value Measurement.
The amendments also require additional information about the fair value measurement of impaired assets when the recoverable amount
is based on fair value less costs of disposal and the discount rates that have been used when the recoverable amount.
The amendment is effective for annual periods beginning on or after 1 January 2014.
51
IAS 39 Novation of Derivatives and Continuation of Hedge Accounting (Amendments)
The IASB amended IAS 39 to provide relief from discontinuing hedge accounting when novation of a derivative designated as a hedging
instrument meets certain criteria. Novation indicates that parties to a contract agree to replace their original counterparty with a new one.
The amendment is effective for annual periods beginning on or after 1 January 2014.
Significant accounting judgements, estimates and assumptions
The preparation of the Group and Company 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 financial
statements and reported amounts of revenues and expenses during the reporting period. Estimates and assumptions are continuously
evaluated and are based on management’s experience and other factors, including expectations of future events that are believed to be
reasonable under the circumstances. However, actual outcomes can differ from these estimates.
Set out below are the areas where management considers significant estimation uncertainty exists in preparing the financial statements.
Mine rehabilitation provision
Each entity in the Group assesses its mine rehabilitation provision annually. Significant estimates and assumptions are made in determining
the provision for mine rehabilitation 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 and changes in
discount rates. These uncertainties may result in future actual expenditure differing from the amounts currently provided. Provision at
the reporting date represents management’s best estimate of the present value of the future rehabilitation costs required. Changes to
estimated future costs are recognised in the statement of financial position by adjusting the rehabilitation asset and liability. If, for mature
mines, the revised valued mine assets, net of rehabilitation provisions, exceeds the carrying value, that portion of the increase is charged
directly to profit and loss. For closed sights, changes to estimated costs are recognised immediately in profit or loss.
Ore reserve and resource estimates
Ore reserves are estimates of the amount of ore that can be economically and legally extracted from the Group’s mining properties. The
Group estimates its ore reserves and mineral resources based on information compiled by appropriately qualified persons relating to
the geological data on the size, depth and shape of the ore body, and requires complex geological judgements to interpret the data. The
estimation of recoverable reserves is based upon factors such as estimates of foreign exchange rates, commodity prices, future capital
requirements, and production costs along with geological assumptions and judgements made in estimating the size and grade of the ore
body. Changes in the reserve or resource estimates may impact upon carrying value of exploration and evaluation assets, mine properties,
property, plant and equipment, provisions for rehabilitation, recognition of deferred tax assets, and depreciation and amortisation charges.
Unit of production depreciation
Estimated recoverable reserves are used in determining the annual depreciation and/or amortisation of mine specific assets. This results
in a depreciation/amortisation charge proportional to the depletion of the anticipated remaining life of mine production. Each item’s
life, which is assessed annually, has regard to both its physical life limitations and to present assessments of economically recoverable
reserves of the mine property at which the asset is located. These calculations require the use of estimates and assumptions, including
the amount of recoverable reserves and estimates of future capital expenditure.
The application of the accounting policy for exploration expenditure requires judgement in determining whether it is likely that future
economic benefits are likely, which may be based on assumptions about future events or circumstances. Estimates and assumptions
made may change if new information becomes available. If, after expenditure is capitalised, information becomes available suggesting that
the recovery of expenditure is unlikely, the amount capitalised is written off in profit or loss in the period when the new information
becomes available.
Impairment of assets
The Group assesses each cash-generating unit annually to determine whether any indications of impairment exist. Where an indicator
of impairment exists, a formal estimate of the recoverable amount is made, which is considered 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 commodity prices, discount rates, future
capital requirements, exploration potential and operating performance. 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 at an appropriate discount rate to determine the net present value. For the purposes
of calculating the impairment of any asset, management regards an individual mine or works site as a cash-generating unit.
Capitalised stripping costs
The Group incurs waste removal costs (stripping costs) during the development and production phases of its surface mining operations.
Furthermore, during the production phase, stripping costs are incurred in the production of inventory as well as in the creation of future
benefits by improving access and mining flexibility in respect of the ore to be mined, the latter being referred to as a ‘stripping activity asset’.
Judgement is required to distinguish between these two activities at each of the surface mining operations.
In addition, the Group is required to identify the various separately identifiable components of the ore bodies for each of its surface mining
operations. An identifiable component is described in IFRIC 20 as, a specific volume of the ore body that is made more accessible by the
stripping activity. Judgement is required to identify and define these components, and also to determine the expected volumes (tonnes)
of waste to be stripped and ore to be mined in each of these components. These assessments may vary between mines because the
assessments are undertaken for each individual mine and are based on a combination of information available in the mine plans, specific
characteristics of the ore body, the milestones relating to major capital investment decisions, and the type of mineral(s) being mined.
Judgement is also required to identify a suitable production measure that can be applied in the calculation and allocation of production
stripping costs between inventory and the stripping activity asset. The Group considers the ratio of expected volume (tonnes) of waste
52
to be stripped for an expected volume (tonnes) of ore to be mined for a specific component of the ore body, compared to the current
period ratio of actual volume (tonnes) of waste to the volume (tonnes) of ore be the most suitable production measure.
These judgements and estimates are used to calculate and allocate the production stripping costs to inventory and/or the stripping activity
asset(s). Furthermore, judgements and estimates are also used to apply the units of production method in determining the depreciable
lives of the stripping activity asset(s).
Basis of consolidation
The consolidated financial statements comprise the financial statements of the Company, subsidiary companies and a jointly controlled
entity, both of which were prepared for the same reporting year as the parent company, using consistent accounting policies.
Subsidiary companies
Subsidiary companies are investments in entities in which the Company has control over the financial and operating decisions of the entity.
Subsidiaries are consolidated in full from the date of acquisition, being the date on which the Group obtains control and continue to be
consolidated until the date such control ceases. Investments in subsidiaries in the Company’s financial statements are accounted for at cost
less impairments.
Joint ventures
The Group has an interest in a joint venture which is a jointly controlled entity, whereby the parties have a contractual arrangement that
establishes joint control over the economic activities of the entity.The agreement requires unanimous agreement for financial and operating
decisions among the parties. The Group recognises its interest in the joint venture using the proportionate consolidation method. The
Group combines its proportionate share of each of the assets, liabilities, income and expenses of the joint venture with similar items, line
by line, in its consolidated financial statements. The financial statements of the joint venture are prepared for the same reporting period as
the Group and adjustments are made where necessary to bring the accounting policies in line with those of the Group.
Adjustments are made in the consolidated financial statements to eliminate the Group’s share of intergroup balances, transactions and
unrealised gains and losses on such transactions between the Group and its jointly controlled entity. Losses on transactions are recognised
immediately if the loss provides evidence of a reduction in the net realisable value of current assets or an impairment loss.The joint venture
is proportionately consolidated until the date on which the Group ceases to have joint control over the joint venture.
Upon loss of joint control the Group measures and recognises its remaining investment at its fair value. Any difference between the
carrying amount of the former joint controlled entity upon loss of joint control and the fair value of the remaining investment and proceeds
from disposal are recognised in profit or loss. When the remaining investment constitutes significant influence, it is accounted for as an
investment in an associate.
Intragroup transactions and balances
Consolidation principles relating to the elimination of intercompany transactions and balances and adjustments for unrealised intercompany
profits and losses are applied to all intragroup dealings, for all transactions with subsidiaries and associated companies or joint ventures.
Property, plant and equipment and depreciation
Property, plant and equipment is stated at cost excluding the day-to-day maintenance costs, less accumulated depreciation and any
accumulated impairment in value. Costs include the cost of replacing part of the plant and equipment when incurred, if the recognition
criteria are met.
The remaining useful life and residual value of assets is reviewed on an annual basis and depreciation rates are adjusted if required.
An item of property, plant and equipment 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 in the year in which the asset is derecognised.
Specific asset categories are accounted for as follows:
Mine development Costs to develop new ore bodies, to define further mineralisation in existing ore bodies and to expand the capacity of a mine, or its
current production are capitalised. Assets representing the future economic benefits relating to environmental rehabilitation provisions
for decommissioning are recognised and capitalised when the obligation arises. Development costs to maintain production are expensed
as incurred.
Mine development and decommissioning costs are amortised using the lesser of their estimated useful life or the units-of-production
method based on proven and probable ore reserves. Proven and probable ore reserves reflect estimated quantities of economically
recoverable reserves which can be recovered in future from known mineral deposits. These reserves are reassessed annually. Where the
reserves are not determinable due to their scattered nature, the straight-line method of amortisation is applied based on the estimated
life of the mine. The maximum period of amortisation using these methods is 25 years.
Plant and machinery
Mining plant and machinery is amortised over its estimated useful life using the units-of-production method based on estimated proved
and probable ore reserves. Non-mining plant and machinery is depreciated over its useful life or life of mine.The maximum life of any single
item of plant and machinery, used in the amortisation calculation, is 25 years.
The carrying values of plant and machinery are reviewed for impairment when events or changes in circumstances indicate that the
carrying value may not be recoverable.
An item of plant and machinery 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 of the year in which the asset is derecognised.
53
The asset’s residual values, useful lives and methods are reviewed, and adjusted if appropriate, at each financial year-end. When each major
inspection is performed, its cost is recognised in the carrying amount of the plant and machinery as a replacement if the recognition criteria
are satisfied. When plant and equipment comprises major components with different useful lives, these components are accounted for as
separate items. Expenditure incurred to replace or modify a significant component of plant is capitalised and any remaining book value of
the component replaced is written off in profit or loss.
Land and buildings
Land and buildings are carried at cost. Land is not depreciated. Buildings are depreciated on a straight-line basis over their estimated useful
lives to an estimated residual value. The annual depreciation rates used vary between 2 to 5%.
Mineral rights
Mineral rights are carried at cost less depreciation and impairments in value. Mineral rights that are being depleted are amortised over
their estimated useful lives using the units-of-production method based on proven and probable ore reserves. Where the reserves are
not determinable, due to their scattered nature, the straight-line method is applied. The maximum rate of depletion of any mineral right is
25 years. Mineral rights are written off in full when they no longer have any commercial value.
Furniture, equipment and vehicles
Furniture, equipment, vehicles and other properties are depreciated on the straight-line basis over their expected useful lives, to estimated
residual values. The residual value is the estimated realisation value of the asset at the end of its useful life, after deducting expected costs
of disposal.
The annual depreciation rates for vehicles and furniture and office equipment are:
Motor vehicles 20%
Furniture and office equipment 10 to 33%
Leased assets and capitalisation of leases
The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement and requires an
assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement
conveys a right to use the asset.
A reassessment is made after inception of the lease only if one of the following applies:
• there is a change in contractual terms, other than a renewal or extension of the arrangement;
• a renewal option is exercised or extension granted, unless the term of the renewal or extension was initially included in the lease term;;
• there is a change in the determination of whether fulfilment is dependent on a specific asset; or
• there is a substantial change to the asset.
Where a reassessment is made, lease accounting shall commence or cease from the date when the change in circumstances gives rise to
the reassessment.
Finance leases, which transfer to the Group substantially all the risks and benefits incidental to ownership of the leased item, are capitalised
at the inception of the lease either 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 the 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 charged directly against income as incurred.
Operating lease payments are recognised as an expense in the statement of comprehensive income on a straight-line basis over the lease
term. Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are classified as operating leases.
Production stripping costs
The capitalisation of pre-production stripping costs as part of Mine development and decommissioning assets ceases when the mine is
commissioned and ready for production. Subsequent stripping activities that are undertaken during the production phase of a surface mine
may create two benefits, being either the production of inventory or improved access to the ore to be mined in the future.
Where the benefits are realised in the form of inventory produced in the period, the production stripping costs are accounted for as part
of the cost of producing those inventories. Where production stripping costs are incurred and where the benefit is the creation of mining
flexibility and improved access to ore to be mined in the future, the costs are recognised as a non-current asset, referred to as a ‘stripping
activity asset’, if:
• future economic benefits (being improved access to the ore body) are probable;
• the component of the ore body for which access will be improved can be accurately identified; and
• the costs associated with the improved access can be reliably measured.
If all the criteria are not met, the production stripping costs are charged to the statement of comprehensive income as operating costs.
The stripping activity asset is initially measured at cost, which is the accumulation of costs directly incurred to perform the stripping activity
that improves access to the identified component of ore, plus an allocation of directly attributable overhead costs. If incidental operations
are occurring at the same time as the production stripping activity, but are not necessary for the production stripping activity to continue
as planned, these costs are not included in the cost of the stripping activity asset. If, the costs of the stripping activity asset and the inventory
produced are not separately identifiable, a relevant production measure is used to allocate the production stripping costs between the
inventory produced and the stripping activity asset.
The stripping activity asset is subsequently depreciated over the life of the identified component of the ore body that became more
accessible as a result of the stripping activity. Based on proven and probable reserves, the units-of-production method is used to determine
the expected useful life of the identified component of the ore body that became more accessible. As a result, the stripping activity asset
is carried at cost less depreciation and any impairment losses.
54
Intangible assets
Intangible assets represent proprietary technical information acquired from third parties. Intangible assets are reflected at cost and are
amortised on a straight-line basis over the anticipated useful life of the assets up to a maximum of 20 years.
Financial instruments
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable repayments that are not quoted in an active market.
Such assets are initially recognised at fair value and subsequently carried at amortised cost using the effective interest method less any
allowance for impairment. Gains and losses are recognised in profit and loss when the loans and receivables are derecognised or impaired,
as well as through the amortisation process.
• Cash and cash equivalents are measured at amortised cost.
• Cash that is subject to legal or contractual restrictions in use is classified separately.
Trade receivables
Trade receivables, which generally have 30 to 60-day terms, are initially recognised at fair value and subsequently at amortised cost.
Receivables are classified as loans and receivables for the purposes of IAS 39 disclosures. An impairment is recognised when there is
evidence that an entity will not be able to collect all amounts due according to the original terms of the receivable. The impairment is the
difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective
interest rates. The amount of the impairment is charged to profit or loss when it occurs.
Payables
Trade and other payables are not interest-bearing and are initially recorded at fair value and subsequently at amortised cost.
Impairment of financial assets
The Group assesses at each reporting date whether a financial asset or Group of financial assets is impaired. If there is objective evidence
that an impairment loss has been incurred on loans and receivables carried at amortised cost, 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 credit losses
that have not been incurred) discounted at the financial asset’s original effective interest rate (ie the effective interest rate computed at
initial recognition).
The carrying amount of the asset shall be reduced either directly or through use of an allowance account. The amount of the loss
shall be recognised in profit or loss. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be
related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed. Any
subsequent reversal of an impairment loss is recognised in profit or loss, to the extent that the carrying value of the asset does not exceed
its amortised cost at the reversal date.
Derecognition of financial assets
A financial asset (or, where applicable, a part of a financial asset or part of a Group of similar financial assets) is derecognised where:
• the rights to receive cash flows from the asset have expired; or
• the Group retains the right to receive cash flows from the asset, but has assumed an obligation to pay them in full without material
delay to a third party under a ‘pass-through’ arrangement; or
• the Group has transferred it rights to receive cash flows from the asset and either (a) has transferred substantially all the risk and
rewards of the asset, or (b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred
control of the asset.
Where the Group has transferred its right to receive cash flows from an asset 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. 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.
Interest-bearing loans and borrowings
All loans and borrowings are initially recognised at the fair value of the consideration received net of issue costs associated with the
borrowing. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective
interest rate method. Amortised cost is determined by using the effective interest rate (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 the statement of comprehensive income. The losses arising from impairment are recognised
in profit or loss.
Derecognition of financial liabilities
A financial liability is derecognised when the obligation under the liability is discharged, cancelled or expired.
Where 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, and the difference in the respective carrying amounts is recognised in profit or loss.
Inventories
Inventories are valued at the lower of cost and net realisable value with due allowance being made for obsolete and slow moving items.
Cost includes the costs incurred in bringing each product to its present location and condition and is determined as follows:
Raw materials – weighted average cost;
Consumable stores – average cost; 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 on an average cost basis.
55
Impairment of non-financial assets
The Group assesses at each reporting date whether there is an indication that non-financial assets may be impaired. If any such indication
exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the asset’s recoverable amount. An
asset’s recoverable amount is the higher of an asset’s or a cash-generating unit’s fair value less estimated selling costs, and its value in use.
Recoverable amount is determined for assets individually, unless the asset does not generate cash inflows that are largely independent
of those from other assets or Groups of assets. Where the carrying amount of an asset exceeds its recoverable amount, the asset
is considered impaired and is written down to its recoverable amount. In assessing 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. Impairment losses of continuing operations are recognised in profit or loss in those expense categories
consistent with the function of the impaired asset.
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 recoverable amount is estimated. A previously recognised impairment loss
is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment
loss was recognised. If that is the case the carrying amount of the asset is increased to its recoverable amount. That increased amount
cannot 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 revalued amount, in which case the reversal
is treated as a revaluation increase. After such a reversal, the depreciation charge is adjusted in future periods to allocate the asset’s revised
carrying amount, less any residual value, on a systematic basis over its remaining useful life.
Provisions
Provisions are recognised when the following conditions have been met:
• a present legal or constructive obligation, to transfer economic benefits as a result of past events exists; and
• a reasonable estimate of the obligation can be made.
A present obligation is considered to exist when there is no realistic alternative but to make the transfer of economic benefits.The amount
recognised as a provision is the best estimate at the reporting date of the expenditure required to settle the obligation. Only expenditure
related to the purpose for which the provision is raised is charged against the provision. If the effect of the time value of money is material,
provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the
time value of money and, where appropriate, the risks specific to the liability.
Environmental rehabilitation obligation
The estimated cost of rehabilitation, comprising liabilities for decommissioning and restoration, is based on current legal requirements and
existing technology and is reassessed annually. Cost estimates are not reduced by the potential proceeds from the sale of assets.
Decommissioning
The present value of estimated decommissioning obligations, being the cost to dismantle all structures and rehabilitate the land on which
the mine is located is included in long-term provisions. The unwinding of the discount used in the calculation of the obligation is included
in the statement of comprehensive income under finance costs. The initial related decommissioning asset is recognised in property, plant
and equipment.
Restoration
The present value of the estimated cost of restoration, being the cost to correct damage caused by ongoing mining operations, is included
in long-term provisions. This estimate is revised annually and any movement is charged against income.
Expenditure on ongoing rehabilitation is charged against the statement of comprehensive income as incurred.
Environmental rehabilitation trust fund
The Group makes annual contributions to an environmental rehabilitation trust fund which was created to fund the estimated cost of
pollution control, rehabilitation and mine closure at the end of the life of each of the Group’s mines. Annual contributions are determined
on the basis of the estimated environmental obligation divided by the remaining life of a mine. Income earned on monies paid to the trust
is accounted for as investment income in the trust. These contributions are made in accordance with the legal requirements, and with the
approval, of the Department of Mineral Resources.
The rehabilitation cost relating to the alloy smelters are estimated annually and carried on the statement of financial position.
Contingent liabilities
A contingent liability is a possible obligation that arises from past events, the existence of which will be confirmed only by the occurrence
or non-occurrence of one or more uncertain future events not wholly within the control of the Group. These include present obligations
that arise from past events, but are not recognised because it is not probable that outflows of resources embodying economic benefits will
be required to settle the obligations, or the amounts of the obligations cannot be measured with sufficient reliability.
Revenue recognition
Revenue is recognised when the risks and rewards of ownership have been transferred and when it is probable that the economic benefits
associated with a transaction flow to the Group and the amount of revenue can be measured reliably. Revenue is measured at the fair
value of the amount received or receivable net of VAT, cash discounts and rebates.
56
The following specific criteria are taken into account in recognition of revenue:
Sales
Revenue from the sale of mining and related products is recognised when the significant risk and rewards of ownership of the goods have
passed to the buyer.
Interest
Interest is recognised on a time-proportion basis that takes account of the effective yield on the asset and an appropriate accrual is made
at each accounting reference date.
Rental income
Rental income on investment properties is accounted for on a straight-line basis over the term of the lease.
Dividends
Revenue is recognised when the right to receive the payments is established.
Cost of sales
All costs directly related to the producing of products are included in cost of sales. Costs that cannot be directly linked are included
separately or under other operating expenses.
When inventories are sold, the carrying amount is recognised in cost of sales. Any write-down, losses or reversals of previous write-downs
or losses are recognised in cost of sales.
Costs related to property acquisitions and mineral and surface rights related to exploration are capitalised.
All exploration expenditures are expensed until they result in projects that are evaluated as being technically and commercially feasible and
a future economic benefit is highly probable. In evaluating whether expenditures meet the criteria to be capitalised, the Company utilises
several different sources of information and also differentiates projects by levels of risks including:
• degree of certainty over the mineralisation of the ore body;
• commercial risks including but limited to country risks; and
• prior exploration knowledge available about the target ore body.
Exploration expenditure on greenfield sites is expensed as incurred until a bankable feasibility study has been completed, after which the
expenditure is capitalised.
Exploration expenditure on brownfield sites is only expensed as incurred until the Company has obtained sufficient information from all
available sources by means of a pre-feasibility study that the future economic benefits are highly probable.
Exploration expenditure relating to extensions of mineral deposits which are already being mined or developed, including expenditure on
the definition of mineralisation of such mineral deposits, is capitalised.
Activities in relation to evaluating the technical feasibility and commercial viability of mineral resources are treated as forming part of
exploration expenditures.
Borrowing costs
Borrowing costs that are directly attributable to the acquisition, construction or development of a qualifying asset, which require a
substantial period of time to be prepared for its intended use are capitalised. Capitalisation of borrowing costs as part of the cost of a
qualifying asset commence when:
• expenditures for the asset are being incurred;
• borrowing costs are being incurred; and
• activities that are necessary to prepare the asset for its intended use or sale are in process.
Capitalisation is suspended when the active development is interrupted and ceases when the activities necessary to prepare the asset for
its use are complete.
Other borrowing costs are charged to finance costs in the statement of comprehensive income as incurred.
Foreign currency transactions and balances
Transactions in foreign currencies are converted to South African Rand at the rate of exchange ruling at the date that the transaction is
initially recorded.
Foreign denominated monetary assets and liabilities (including those linked to a forward exchange contract) are stated in South African
Rand using the exchange rate at the reporting date with the resulting exchange differences being recognised in profit or loss.
Employee benefits
Current service contributions in respect of defined contribution pension plans are expensed as incurred.
The Group also has unfunded liabilities in respect of post-retirement medical health care benefits for certain employees. The entitlement
to these benefits is dependent upon the employee remaining in service until retirement age. These benefits have been provided for but
are unfunded. The actuarially determined costs of providing these benefits are expensed as incurred and a corresponding liability is raised.
Actuarial gains and losses are expensed in the period in which they are determined.
57
Taxation
Current income tax
Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from
or paid to the taxation authorities within legislative periods. The tax rates and tax laws used to compute the amount are those that are
enacted or substantively enacted by the reporting date.
Deferred income tax
Deferred 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 tax liabilities are recognised for all taxable temporary differences, except:
• where the deferred tax liability arises from the initial recognition of goodwill or 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 taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, where
the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not
reverse in the foreseeable future.
Deferred tax assets are recognised for all deductible temporary differences, carry-forward of unused tax credits and 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 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 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 tax assets is reviewed at each financial position date 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 tax asset to be utilised. Unrecognised deferred
tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profit
will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to 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 at the reporting date. Income tax
relating to items recognised directly in equity is recognised in equity and not in profit or loss.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax
liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
Value added tax
Revenues, expenses and assets are recognised net of the amount of value added tax except:
• where the value added tax incurred on the purchase of goods or services is not recoverable from the taxation authority, in which case
the value added tax is recognised as part of the cost of the asset or as an expense item; and
• receivables and payables that are stated with the amount of value added tax included.
The net amount of value added tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables
in the statement of financial position.
Mining royalty taxation
Provision for mining royalties is made with reference to the conditions specified as contained in the Mining and Petroleum Royalty Act, for
the transfer of refined and unrefined royalty mined resources, upon the date such transfer is effected. These costs are included in other
expenses.
Set-off
If a legally enforceable right exists to set off recognised amounts of financial assets and liabilities and the Group intends to settle on a net
basis or to realise the asset and settle the liability simultaneously, all related financial effects are netted.
Definitions
Cash and cash equivalents include cash on hand and call deposits as well as short-term, highly liquid investments that are readily convertible
to known amounts of cash and are subject to an insignificant risk of changes in value. For cash flow purposes overdrafts are excluded from
cash and cash equivalents.
Cash restricted in use
Cash which is subject to restrictions in its use is stated separately at the carrying value in the notes.
Fair value
Where an active market is available it is used to determine fair value. Where there is no active market, fair value is determined using
valuation techniques. Such techniques include using recent arm’s length market transactions, reference to the current market of another
instrument which is substantially the same, discounted cash flow analysis or other valuation models.
58
Notes
59
w w w.as s m an g .c o.za

ANNUAL REPORT 2013

Transcription

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