Witwatersrand Consolidated Gold Resources Limited

Witwatersrand Consolidated Gold Resources Limited
("Wits Gold" or "the Company")
(Registration Number 2002/031365/06)

JSE Share Code: WGR          
TSX Share Code: WGR  

ISIN: ZAE000079703
CUSIP Number: S98297104

TORONTO, May 30, 2011 /CNW/ -

Reviewed condensed results for the year ended 28 February 2011
All figures quoted in South African Rand unless otherwise stated.
Bank of Canada noon rate at 28 February 2011: R7.14 = CAD$1; (2010: R7.7 = CAD$1)

Condensed statement of financial position as at 28 February 2011

      2011   2010
      R   R
      Reviewed   Audited
Assets          
Non-current assets     423 062 154   107 170 733
Property and equipment     5 023 496   5 279 646
Intangible exploration and evaluation assets     418 038 658   101 891 087
           
Current assets     147 667 283   86 713 462
Other receivables     1 488 679   1 034 134
Cash and cash equivalents     146 178 604   85 679 328
           
Total assets     570 729 437   193 884 195
           
Equity and liabilities          
Capital and reserves     565 729 742   187 045 642
Ordinary share capital     344 903   278 909
Share premium     573 211 583   185 971 589
Equity-settled share-based payment reserve     7 119 295   19 604 280
Revaluation reserve     1 329 449   1 253 981
Accumulated loss     (16 275 488)   (20 063 117)
           
Current liabilities     4 999 695   6 838 553
Trade and other payables     4 699 695   4 447 046
Taxation payable     -   1 991 507
Provisions     300 000   400 000
           
Total equity and liabilities     570 729 437   193 884 195

Condensed statement of comprehensive income for the year ended 28 February 2011

      2011   2010
      R   R
      Reviewed   Audited
Revenue     -   -
           
Other income     6 620   4 666
Administrative expenses     (20 221 949)   (14 759 179)
Loss from operating activities     (20 215 329)   (14 754 513)
           
Net finance income     5 326 307   7 078 523
Finance income     5 326 307   7 525 222
Finance expense     -   (446 699)
           
Loss before income tax     (14 889 022)   (7 675 990)
Income tax expense     -   (98 260)
Loss from operations attributable to owners     (14 889 022)   (7 774 250)
           
Other comprehensive income net of income tax     75 468   66 399
Increase in revaluation of property     75 468   72 208
Deferred tax on revaluation adjustment     -   (10 809)
           
Total comprehensive income attributable to owners of the Company     (14 813 554)   (7 707 851)
           
Basic and headline loss per share (cents)     (50.11)   (28.05)
Diluted basic and headline loss per share (cents)     (50.11)   (45.02)
Supplementary information:          
Number of shares in issue     34  490 265   27 890 916
Weighted average number of shares in issue     29 713 768   27 715 893
Net asset value per share (cents)     1 640,26   670,63
Net tangible asset value per share (cents)     428,21   305,31


Condensed statement of changes in equity for the year ended 28 February 2011

         Ordinary share
capital
Share
premium
Equity-settled share-based payment reserve Revalua-tion reserve Accumulated loss Total capital and reserves  
         R R R R R R  
Audited                
Balance at 28 February 2009   278 909 185 971 589 17 849 857 1 187 582 (12 288 867) 192 999 070  
Total comprehensive loss for the year   - - - 66 399 (7 774 250) (7 707 851)  
Loss  for the year   - - - - (7 774 250) (7 774 250)  
Other comprehensive income   - - - 66 399 - 66 399  
Increase on revaluation of land & buildings   - - - 77 208 - 77 208  
Deferred taxation on revaluation   - - - (10 809) - (10 809)  
                      
                      
Transactions with owners recorded in equity   - - 1 754 423 - - 1 754 423  
Equity-settled share-based payment   - - 1 754 423 - - 1 754 423  
Balance at 28 February 2010   278 909 185 971 589 19 604 280 1 253 981 (20 063 117) 187 045 642  
Total comprehensive loss for the year   - - - 75 468 (14 889 022) (14 813 554)  
Reviewed                
Loss for the year   - - - - (14 889 022) (14 889 022)  
Other comprehensive income for the year   - - - 75 468 - 75 468  
Increase on revaluation of land &  buildings   - - - 75 468 - 75 468  
                 
                      
Transactions with owners recorded directly in equity   65 994 387 239 994 (12 484 985) - 18 676 651 393 497 654  
Issue of share capital   65 994 394 984 376 - - - 395 050 370  
Qualifying costs of share issue   - ( 7 744 382) - - - (7 744 382)  
Share-based payment   - - 6 191 666 - - 6 191 666  
Share-based options fully exercised   - - (18 676 651) - 18 676 651 -  
Balance at 28 February 2011   344 903 573 211 583 7 119 295 1 329 449 (16 275 488) 565 729 742  

Condensed statement of cash flows for the year ended 28 February 2011

    2011   2010
    R   R
    Reviewed   Audited
Cash flows from operating activities        
Cash utilised in operating activities   (13 928 826)   (14 421 318)
Finance income received   5 326 307   7 525 222
Interest paid   -   (446 699)
Taxation paid   (1 991 507)   (3 184 605)
Net cash utilised by operating activities   (10 594 026)   (10 527 400)
         
Cash flows from investing activities        
Additions to property and equipment   (65 115)   (7 851)
Additions to intangible exploration and evaluation assets   (41 147 571)   (20 848 557)
Net cash utilised in investing activities   (41 212 686)   (20 856 408)
         
Cash flows from financing activities        
Proceeds from issue of shares for cash   120 050 370   -
Costs from issue of share capital   (7 744 382)   -
Net cash generated by financing activities   112 305 988   -
         
Increase/(decrease) in cash and cash equivalents   60 499 276   (31 383 808)
Cash and cash equivalents at beginning of the year         85 679 328   117 063 136
Cash and cash equivalents at end of the year   146 178 604   85 679 328

Nature of business

Witwatersrand Consolidated Gold Resources Limited (registration number 2002/031365/06) is a company domiciled in the Republic of South Africa. The Company's shares are publicly traded in South Africa on the JSE Ltd securities exchange (primary listing), and in Canada on the Toronto Stock Exchange (secondary listing). The Company carries on the business of acquiring, preserving, evaluating, trading and developing Prospecting Rights for exploration and investment purposes.

The Company has been granted fourteen Prospecting Rights by the Department of Mineral Resources (the DMR) under the Mineral and Petroleum Resources Development Act of 2002. During the year under review the initial term of five of these rights expired and renewal applications have been submitted and are being processed in terms of the abovementioned Act. Wits Gold has not, and does not in the near future, expect to generate any operating income. Mineral exploration is highly speculative due to a number of significant risks, including the possible failure to discover mineral deposits that are sufficient in quantity and quality to justify the completion of feasibility studies. Additional work will be required in order to determine if any economic deposits occur on any of the Company's properties.

The ongoing exploration of the Company's Prospecting Rights is dependent upon the Company's ability to obtain additional financing through the joint venturing of projects, debt financing, equity financing or other means. In the future, such sources of financing may not be available on acceptable terms, if at all. The Company has, however, been successful in the past in raising the required capital from its shareholders to fund its operating and exploration activities. In November 2010, capital raising of R120 million was concluded by way of a private placement of shares.

Operational review*

During the year under review, the Company focused its exploration efforts predominantly in the southern Free State goldfield, where during September 2010 two transactions were successfully negotiated with Harmony Gold Mining Limited (Harmony). The first concerned the purchase of the Armgold/Harmony Freegold Joint Venture Company (Pty) Limited's option to acquire a 40% interest over selected parts of the southern Free State goldfield. The agreed price for this transaction was R275 million, which was settled by issuing 4 376 194 ordinary shares in Wits Gold to Harmony. At the same time, a second transaction was concluded to acquire the unmined southern portion of the Merriespruit Mine for a cash price of R61 million. Further details of these agreements are contained in the section headed "Non-current assets" and "Capital and reserves". Combined, these two transactions were instrumental in the Company being able to achieve its objective in consolidating its Prospecting Rights in the southern Free State and gaining complete control over its most advanced projects.

Over the period March 2010 to February 2011,  thirteen diamond boreholes have been completed on the Company's Prospecting Rights in the Witwatersrand Basin for a total of 14 045 metres. Most of this drilling (nine boreholes for 8 775 metres) was undertaken in the combined De Bron-Merriespruit South area, currently known as the DBM project, where a total of 88 boreholes have been completed over an area of some 22.0km2.  Considering this density of drilling, the results are thought to be representative of the mineralisation in this area, where the only additional information comes from the adjacent mines.  This resulted in a material increase in the estimated resources with the Indicated Resource growing by 52% to 34.5Mt at 5.3g/t Au (5.9Moz), and the Inferred Resource rising 165% to 25.0Mt at 5.2g/t Au (4.2Moz). This is presented in the Company's NI43-101 and Samrec compliant Independent Technical Report dated 6 April 2011 by Snowden Mining Industry Consultants (Pty) Limited (Snowden) which can be viewed at www.sedar.com and on the Company's web site, www.witsgold.com. These resources were estimated using all of the available borehole data and sample widths corrected for dip.  In addition to gold, a uranium estimate was calculated with an Indicated Resource of 17.0Mt at 0.16Kg/t U308 (6.1Mlb) and an Inferred Resource of 11.9Mt at 0.14Kg/t U308 (3.7Mlb).  No metal equivalent calculations were made.  Analyses of borehole core were undertaken at three accredited laboratories, Anglo Research, ALS Chemex South Africa (Pty) Ltd and SGS South Africa (Pty) Ltd, during which the Company's standard sampling and QA/QC policies were adopted.

Southern Free State goldfield

Exploration in this area has concentrated on the shallow DBM project where gold mineralisation is associated with the Beatrix, Kalkoenkrans, B and Leader Reefs at depths of between 500 metres and 1 250 metres below surface. As a result of the substantial increase in both the size of the DBM gold resource as well as the gold grade, the Company has initiated a preliminary economic assessment of the financial benefit of establishing a mine. This study is being undertaken by Turgis Consultants (Pty) Ltd, with input on the mine scheduling provided by Snowden. The results of this study are expected to become available during the second quarter of 2011 and will provide guidance for future exploration in this area.

Besides the DBM area, the Company has also undertaken further drilling in the Bloemhoek, Beisa North and Beisa South areas, where a single borehole in each of these areas has been completed. No material changes to the existing resource statements were made following the completion of these boreholes.

Bloemhoek and the southern portion of the DBM project occur in the Prospecting Right PR76 which was renewed by the Department of Mineral Resources (DMR) on 11 April 2011.  The Section 102 application to include Merriespruit South can now be lodged with the DMR in order to complete the consolidation of the DBM project.

The Potchefstroom goldfield

No further diamond drilling was undertaken in this area during the year under review. However a reflection seismic survey was completed in the Deelkraal South area, immediately south of Harmony's Kusasalethu Gold Mine. The migrated results from this survey at Deelkraal South produced a well constrained image of the base of the Ventersdorp lavas and therefore the associated Ventersdorp Contact Reef (VCR). An interpretation of these seismic data indicated that the VCR occurs at a depth of 3 100 metres on the northern boundary of the Company's Deelkraal South project where the reef dips southwards at 20-25 degrees and has been subjected to only minor small scale faults.

The Klerksdorp goldfield

Drilling of the single deep borehole which was sited to intersect the Vaal Reef in the Kromdraai area had to be curtailed due to recurring technical problems caused by a shale unit in Gold Estates Formation at 3 613 metres, some 200 metres above the Vaal Reef. Despite several attempts to circum-navigate this problem, this could not be achieved. Consequently, in order to minimise expenditure as well as the possibility of equipment failure at these substantial depths, it was decided to abandon drilling operations.

Qualified Person

The technical and scientific information contained in this release was reviewed by Qualified Person, Dirk Jacobus Muntingh, who is a full time employee of the Company.  Mr Muntingh (MSc Geology) is a registered Professional Natural Scientist (Pr.Sci.Nat) with the South African Council for Natural Scientific Professionals (SACNASP) and has 20 years of experience in gold exploration.

Mineral resources

The Company's declared Mineral Resources are estimated by qualified independent geologists or Competent Persons.  These Resource Estimates are dependent on geological interpretation and statistical inferences drawn from drilling and sampling that may prove to be unreliable.  The Inferred or Indicated Resources outlined in the Company's properties have been calculated from widely-spread borehole data.  No assurance can be given that future exploration will be successful in the improvement of the confidence levels or that any particular level of recovery of minerals will in fact be realised.  It is uncertain whether the identified Mineral Resources will ever qualify as a viable orebody that can be legally or economically exploited.  In addition, the grade and tonnages of any orebody that is ultimately mined may differ from the Mineral Resources currently estimated and such differences could be material.

For further information concerning the Company's resources, including information concerning the geology, mineral occurrences, nature of mineralisation, geological controls, rock types, historical work including data density, the application of quality assurance and quality control measures, sampling and analytical procedures, the names of analytical laboratories employed and the key assumptions, parameter and methods used to estimate the Mineral Resources at the Company's various projects, please see the Company's NI43-101 and Samrec compliant Independent Technical Reports dated November 2007, June 2008, May 2009, June 2009, 20 October 2009, October 2009 and April 2011 which can be viewed at www.sedar.com and on the Company's web site, www.witsgold.com.

Financial review

Operating loss

The loss from operating activities for the year under review increased by R5.5 million compared to the prior year. This increased loss results mainly from the higher employment related expenditure (R5.0 million), which has primarily arisen from an increase in the non-cash cost entries required to account for the employee share scheme (R4.4 million)

Non-current assets

During the year, the Company incurred direct exploration expenditure and acquired rights in the amount of R316.1 million (2010: R20.8 million) which has been capitalised to intangible exploration and evaluation assets. Included in the above was the buyback of the Harmony 40% Participation Right over certain southern Free State assets for R275 million (2010: nil) which was equity-settled.

Current assets

The Company's cash and cash equivalents increased by R60.5 million (2010: R31.4 million decrease) which reflects the normal operational and exploration outflows offset from interest received and the proceeds of the R120 million (2010: nil) capital raising.

Current liabilities

The main contributor to the decrease in current liabilities by R1.8 million was the payment of R2.0 million against the taxation provision.

Capital and reserves

There was no change in the authorised share capital of the Company during the year ended 28 February 2011 (2010: no change). The Company issued a total of 6 599 349 new shares during the year to 28 February 2011 (2010: nil), of which 2 223 155 were issued for cash and 4 376 194 were issued to settle the buyback of the Harmony Participation Right mentioned above.

Commitments

The Company has committed to spend an additional amount of approximately R1.4 million (2010: R0.7 million) on professional consultants during the year. Furthermore the Company has also committed to spend R73.1 million (2010: R27.0 million) on the acquisition of exploration properties and exploration activities during the next five years. All of these commitments will be funded out of existing cash resources.

Basis of preparation

These financial results for the year ended 28 February 2011 comply with the listing requirements of the JSE Limited, the recognition and measurement requirements of International Financial Reporting Standards, the presentation and disclosure requirements of IAS 34, Interim Financial Reporting, AC500 series and the South African Companies Act, 61 of 1973, as amended.  The accounting policies are consistent with those applied in the previous financial year.  They do not include all the information required for full annual financial statements and should be read with the financial statements for the year ended 28 February 2010.

The Company consists of only one segment and there have been no changes to the composition of the entity.  There has been no reclassification or correction of errors and no changes in accounting estimates. The Company does not have any contingent assets or liabilities and no material subsequent events have occurred since the reporting date.  No material related party transactions have been identified.

Dividends

No dividends were declared or paid by the Company during the year under review (2010: Rnil).

Going concern

Due to the inherent risk in the nature of exploration activities, there may be uncertainty regarding the recoverability of the Company's exploration expenditure. To meet its ongoing obligations and maintain its operations, the Company will periodically seek to raise additional equity funding which will be premised on the exploration results and the contingent further exploration plans. This will be in the form of the issue of additional Company shares to both local and international markets.

After making enquiries the directors have reasonable expectation that the Company has adequate funds to continue in operational existence for the next eighteen months and that there are no material uncertainties that lead to significant doubt upon the Company's ability to continue as a going concern.  Accordingly, the directors continue to adopt the going concern basis in preparing the financial statements.

Review report

The unqualified review report issued by KPMG Inc, on the condensed financial statements contained in this report is available for inspection at the Company's registered office.

* - The Information in the first paragraph in the section "Operational review" has been reviewed by KPMG Inc., however the remainder of this section has not been reviewed.

Forward-looking information

Certain statements in this release may constitute forward-looking information within the meaning of securities laws. In some cases, forward looking information can be identified by use of terms such as "may", "will", "should", "expect", "believe", "plan", "scheduled", "intend", "estimate", "forecast", "predict", "potential", "continue", "anticipate" or other similar expressions concerning matters that are not historical facts. Forward-looking information may relate to management's future outlook and anticipated events or results, and may include statements or information regarding the future plans or prospects of the Company. Without limitation, statements about the timing of a preliminary economic assessment are forward-looking information.

Forward looking information involves known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of the Company to be materially different from the future results, performance or achievements expressed or implied by such forward looking information. Such risks, uncertainties and other important factors include among others: economic, business and political conditions in South Africa; decreases in the market price of gold; hazards associated with underground and surface gold mining; the ability to attract and retain qualified personnel; labour disruptions; changes in laws and government regulations, particularly environmental regulations and Mineral Rights legislation including risks relating to the acquisition of the necessary licences and permits; changes in exchange rates; currency devaluations and inflation and other macro-economic factors; risk of changes in capital and operating costs, financing, capitalization and liquidity risks, including the risk that the financing required to fund all currently planned exploration and related activities may not be available on satisfactory terms, or at all; the ability to maximise the value of any economic resources. These forward-looking statements speak only as of the date of this release.

You should not place undue importance on forward-looking information and should not rely upon this information as of any other date. The Company undertakes no obligation to update publicly or release any revisions to these forward-looking statements to reflect events or circumstances after the date of this release or to reflect the occurrence of unanticipated events except where required by applicable laws.

For and on behalf of the Board

MB Watchorn    
Chief Executive Officer  
30 May 2011      
DM Urquhart
Chief Financial Officer
30 May 2011

Sponsor

PricewaterhouseCoopers Corporate Finance (Pty) Ltd

 

SOURCE Wits Gold

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Wits Gold

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