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Annual Report and Accounts 2011

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Notes to the Annual Financial Statements
For the year ended 30 June 2011

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29. Post-balance sheet events

Acquisition of Finsch

On 21 January 2011, the Company announced that it, together with its BEE partners, had entered into an agreement to acquire the Finsch mine in South Africa as a going concern (assets and assumed liabilities) from De Beers for R1.425 billion with the Company's wholly owned subsidiary Afropean Diamonds (Pty) Ltd acquiring a 74% interest and the BEE partners a 26% interest. On 14 September 2011, the Company announced the completion of the Finsch acquisition, which represented the date the Group acquired control of the mine. As part of the transaction, the Company funded its BEE partners' share of the R1.425 billion consideration through loans to the BEE partners. The final cash consideration paid in US$ terms was US$192 million reflecting the benefit of an effective hedging strategy to hedge the foreign exchange risk on the firm commitment to acquire Finsch.

Effect of the acquisition

The acquisition will have the following effect on the Group's assets and liabilities:

Finsch net assets at acquisition date
US$ million
Book
values
Provisional
fair value
adjustments
Provisional
fair values
Mining property, plant and equipment 234.6 (2.5) 232.1
Land 0.7 0.7
Inventory consumables and stores 4.1 (1.0) 3.1
Trade and other receivables 1.6 (1.6)
Environmental liabilities (16.2) (16.2)
Long-term payables (17.1) 0.1 (17.0)
Employee-related payables (5.1) (5.1)
Trade and other payables (5.6) (5.6)
Net assets acquired 197.0 (5.0) 192.0
Non-controlling interest (26%) (49.9)
Fair value of net assets attributable to the parent company 142.1
Satisfied as follows:
Total cash consideration paid by the Company and BEE consortium 192.0

The Company has only recently taken control of the mine and as a result the fair values presented are provisional and subject to revision in accordance with IFRS.