1 |
Cost of sales |
|
|
| |
|
SA rand |
| |
Figures in million |
2011 |
2010 |
| |
Production costs (a) |
1 819 |
2 274 |
| |
Amortisation and depreciation of mining properties, mine development costs
and mine plant facilities |
169 |
249 |
| |
Amortisation and depreciation of assets other than mining and mining related assets (b) |
53 |
34 |
| |
Rehabilitation (credit)/expenditure (c) |
(38) |
35 |
| |
Care and maintenance cost of restructured shafts |
96 |
27 |
| |
Employment termination and restructuring costs (d) |
82 |
71 |
| |
Share-based payments (e) |
31 |
38 |
| |
Impairment of assets (f) |
203 |
249 |
| |
Other (g) |
31 |
1 |
| |
Total cost of sales |
2 446 |
2 978 |
| |
(a) |
Production costs include mine production, transport and refinery costs, applicable general and administrative costs, movement in inventories and ore stockpiles and ongoing environmental rehabilitation costs. Ongoing employee termination costs are included, however employee termination costs associated with major restructuring and shaft closures are excluded. Production costs, analysed by nature, consist of the following: |
| |
|
|
SA rand |
| |
|
Figures in million |
2011 |
2010 |
| |
|
Labour costs, including contractors |
1 097 |
1 512 |
| |
|
Consumables |
402 |
545 |
| |
|
Water and electricity |
265 |
281 |
| |
|
Insurance |
21 |
47 |
| |
|
Transportation |
58 |
68 |
| |
|
Changes in inventory |
20 |
(14) |
| |
|
Capitalisation of mine development costs |
(172) |
(239) |
| |
|
Royalty expense |
25 |
5 |
| |
|
Other |
103 |
69 |
| |
|
Total production cost |
1 819 |
2 274 |
| |
(b) |
Amortisation and depreciation of assets other than mining and mining related assets, consist of the following: |
| |
|
|
SA rand |
| |
|
Figures in million |
2011 |
2010 |
| |
|
Other non-mining assets |
2 |
2 |
| |
|
Intangible assets |
46 |
30 |
| |
|
Amortisation of issue costs |
5 |
2 |
| |
|
Total amortisation and depreciation |
53 |
34 |
| |
(c) |
Rehabilitation (credit)/expenditure |
| |
|
For the assumptions used to calculate the rehabilitation costs, refer to note 3.4 of the group financial statements.
|
| |
(d) |
Employment termination and restructuring costs |
| |
|
During the 2011 financial year Merriespruit 1 shaft was closed and placed on care and maintenance due to mining no longer being economically viable. The voluntary retrenchment process which the company commenced in the 2010 financial year was finalised during the latter part of the 2011 financial year. |
| |
|
During the 2010 financial year, Brand 3, Harmony 2 and Merriespruit 3 shafts were closed and placed on care and maintenance due to mining not being economically viable. The closure contributed to the employment termination and restructuring costs. The company also engaged in a voluntary retrenchment process during the 2010 financial year resulting in additional retrenchment cost for the company. |
| |
(e) |
Share-based payments |
| |
|
Refer to note 27 for details on the share-based payment schemes operated by the group of which the company is a member. |
| |
(f) |
Impairment of assets |
SA rand |
| |
|
Figures in million |
2011 |
2010 |
| |
|
Steyn 1 |
99 |
– |
| |
|
Steyn 2 |
104 |
– |
| |
|
Harmony 2 |
– |
38 |
| |
|
Merriespruit 1 |
– |
125 |
| |
|
Merriespruit 3 |
– |
48 |
| |
|
Brand 2/3 complex |
– |
38 |
| |
|
Total impairment of assets |
203 |
249 |
| |
|
In 2011 impairments amounting to R104 million were recognised as a result of the revised business (life-of-mine) plans, which are completed in June of each year, and included increases in electricity and labour costs and a decrease in reserves declared as a result of revised cut-off grades. The remaining R99 million impairment in 2011 relates to Steyn 1, where a decision was made not to mine in future. In 2010 this included impairments as a result of shaft closures discussed in 1(d) above as well as the revised business (life-of-mine) plans, which affected Merriespruit 1 shaft. |
| |
|
These adjustments impacted negatively on the recoverable amount of property, plant and equipment and contributed to the recognition of the impairments at the shafts. Impairment tests were performed as required by IAS 36, Impairment of Assets, and as a result these impairments were recorded. For assumptions used to calculate the recoverable amount, refer to note 3.1 of the group financial statements.
|
| |
(g) |
Included in Other for the 2011 financial year are certain inventory adjustments. Refer to note 16. |
|
|
