Eastern Platinum Limited
TSX : ELR
AIM : ELR
JSE : EPS

Eastern Platinum Limited

February 16, 2009 16:15 ET

Eastplats Reports Early Adoption of International Financial Reporting Standards for the Year Commencing January 1, 2009

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Feb. 16, 2009) - Mr. Ian Rozier, President and CEO of Eastern Platinum Limited ("Eastplats" or the "Company") (TSX:ELR)(AIM:ELR)(JSE:EPS), is pleased to announce that on February 9, 2009, the British Columbia and Ontario Securities Commissions granted the Company exemptive relief to adopt International Financial Reporting Standards ("IFRS") with an adoption date of January 1, 2009 and a transition date of January 1, 2008.

1. IFRS Conversion

Eastplats' comprehensive IFRS conversion plan addresses changes in accounting policies, restatement of comparative periods, organization, internal controls and any required changes to business processes. To facilitate this process and ensure the full impact of the conversion is understood and managed reasonably, Eastplats hired a Manager of Financial Reporting whose time has been largely dedicated to the IFRS conversion project. The Canadian accounting staff has attended several training courses on the adoption and implementation of IFRS and the South African accounting staff is familiar with IFRS due to the local adoption of IFRS in 2005. Through in-depth training and the reconciliation of historical Canadian GAAP financial statements to IFRS, Eastplats believes that its accounting personnel have obtained a thorough understanding of IFRS.

Eastplats has reviewed its accounting system, its internal controls and its disclosure control processes and believes they will not need significant modification as a result of the conversion to IFRS.

2. Initial adoption of International Financial Reporting Standards

IFRS 1 "First-time Adoption of International Financial Reporting Standards" sets forth guidance for the initial adoption of IFRS. Under IFRS 1, the standards are applied retrospectively at the transitional balance sheet date with all adjustments to assets and liabilities taken to retained earnings unless certain exemptions are applied. Eastplats will be applying the following exemptions to its opening balance sheet dated January 1, 2008:

(a) Business Combinations

IFRS 1 indicates that a first-time adopter may elect not to apply IFRS 3 Business Combinations retrospectively to business combinations that occurred before the date of transition to IFRS. Eastplats will take advantage of this election and will apply IFRS 3 to business combinations that occurred on or after January 1, 2008.

(b) Cumulative translation differences

IFRS 1 allows a first-time adopter to not comply with the requirements of IAS 21 The Effects of Changes in Foreign Exchange Rates for cumulative translation differences that existed at the date of transition to IFRS. Eastplats has chosen to apply this election and will deem its cumulative translation differences for all foreign operations to be zero at the date of transition to IFRS. If, subsequent to adoption, a foreign operation is disposed of, the translation differences that arose before the date of transition to IFRS shall be excluded from the gain or loss on disposal.

(c) Share-based payment transactions

IFRS 1 encourages, but does not require, first-time adopters to apply IFRS 2 Share-based Payment to equity instruments that were granted on or before November 7, 2002, or equity instruments that were granted subsequent to November 7, 2002 and vested before the later of the date of transition to IFRS and January 1, 2005. Eastplats has applied the election to apply IFRS 2 prospectively to equity instruments vested prior to January 1, 2008.

(d) IAS 27 - Consolidated and Separate Financial Statements

In accordance with IFRS 1, if a company elects to apply IFRS 3 Business Combinations retrospectively, IAS 27 Consolidated and Separate Financial Statements must also be applied retrospectively. As Eastplats elected to apply IFRS 3 prospectively, the Company has also elected to apply IAS 27 prospectively.

IFRS 1 also outlines specific guidelines that a first-time adopter must adhere to under certain circumstances. Eastplats will be applying the following guidelines to its opening balance sheet dated January 1, 2008:

(a) Assets and liabilities of subsidiaries, associates and joint ventures

In accordance with IFRS 1, if a parent company adopts IFRS subsequent to its subsidiary, associate or joint venture adopting IFRS, the assets and the liabilities of the subsidiary, associate or joint venture are to be included in the consolidated financial statements at the same carrying amounts as in the financial statements of the subsidiary, associate or joint venture. Eastplats will apply this election.

(b) Estimates

In accordance with IFRS 1, an entity's estimates under IFRS at the date of transition to IFRS must be consistent with estimates made for the same date under previous GAAP, unless there is objective evidence that those estimates were in error. Eastplats' IFRS estimates as of January 1, 2008 will be consistent with its Canadian GAAP estimates for the same date unless evidence is obtained that indicates that the estimates were in error.

3. Impact of IFRS

IFRS employs a conceptual framework that is similar to Canadian GAAP. However, significant differences exist in certain matters of recognition, measurement and disclosure. While adoption of IFRS will not change Eastplats' actual cash flows, it will result in changes to Eastplats' reported financial position and results of operations. In order to allow the users of the financial statements to better understand these changes, the following qualitative explanation of the differences between Canadian GAAP and IFRS was completed for Eastplats' net earnings, assets, liabilities, and shareholders equity for the nine month period ended September 30, 2008.

(a) Revenue and interest income

Eastplats settles its metal sales three to five months following the physical delivery of the concentrates.

Canadian GAAP - All sales revenue is recorded as trade revenue with 100% of the receivable recognized on the date of sale. Sales that have not settled by period end are adjusted to the period end market price.

IFRS - The future revenue expected to be received must be present valued. The difference between the present value and the future value is recognized as interest revenue over the term of settlement. The remainder of revenue is recorded as trade revenue. Sales that have not settled by period end are adjusted to the market price at the period end market price unless a lower price is expected in which case the lower prices are applied.

(b) Cost of sales

As discussed below, property, plant and equipment has a different value in accordance with IFRS than in accordance with Canadian GAAP. This results in a different value for amortization expense, and a corresponding change in cost of sales.

(c) Impairment reversals and other income

Canadian GAAP - Impairment losses cannot be reversed.

IFRS - Impairment losses can be reversed. Eastplats' South African subsidiaries' financial statements have been prepared in accordance with IFRS since 2005 and have recognized impairment loss reversals between 2005 and 2008. In accordance with IFRS 1, the Company measured its subsidiaries' assets and liabilities at their IFRS values which included the impairment loss reversals.

(d) Stock based compensation

Canadian GAAP

(i) The fair value of stock-based awards with graded vesting are calculated as one grant and the resulting fair value is recognized on a straight-line basis over the vesting period.

(ii) Forfeitures of awards are recognized as they occur.

IFRS

(i) Each tranche of an award with different vesting dates is considered a separate grant for the calculation of fair value, and the resulting fair value is amortized over the vesting period of the respective tranches.

(ii) Forfeiture estimates are recognized in the period they are estimated, and are revised for actual forfeitures in subsequent periods.

(e) Minority shareholder's interest

Minority shareholder's interest is calculated in the same manner in accordance with Canadian GAAP and IFRS. However, minority shareholder's interest is calculated based on profit after taxation and the adjustments discussed above directly affect profit after taxation. This is expected to result in an adjustment to minority shareholder's interest.

(f) Income tax expense

Income tax expense is calculated in the same manner in accordance with Canadian GAAP and IFRS. However, income tax expense is calculated based on profit or loss and the adjustments discussed above directly affect profit or loss. This is expected to result in an adjustment to income tax expense.

(g) Trade and other receivables

Please refer to the revenue discussion in point (a) above.

(h) Intangible assets

Canadian GAAP - Purchased mineral rights are recorded as property, plant and equipment.

IFRS - Purchased mineral rights are recorded as intangible assets. This results in a corresponding adjustment to property, plant and equipment and intangible assets.

(i) Property, plant and equipment ("PPE")

There are three adjustments made to PPE: reclassification as intangible assets, reversal of impairment losses, and depreciation. The reclassification of mineral properties from PPE to intangible assets has been discussed in point (h), reversal of impairment losses has been discussed in point (c), and changes in depreciation amounts have been discussed in point (b). Please refer to these discussions for further information.

(j) Future income tax asset/liability

Future income tax asset/liability is calculated in the same manner in accordance with Canadian GAAP and IFRS. However, the balances (e.g. PPE) used to calculate the future income tax asset or liability differ under Canadian GAAP and IFRS. This is expected to result in an adjustment to the future income tax asset or liability.

(k) Accounts payable, accrued liabilities and provisions

Canadian GAAP - Accounts payable, accrued liabilities and provisions are disclosed on the balance sheet as a single line item.

IFRS - A provision is a liability of uncertain timing or amount. Provisions are disclosed separately from liabilities and accrued liabilities and require additional disclosure.

(l) Asset retirement obligation ("ARO")

Canadian GAAP - When the ARO is revalued, any difference between the current and previous ARO is recorded against the asset.

IFRS - When the ARO is revalued, any difference between the current and previous ARO is allocated between the environmental asset and the expense.

(m) Accumulated other comprehensive income or loss

Canadian GAAP - Four of Eastplats' subsidiaries are considered to be integrated subsidiaries. The non-monetary assets and liabilities of these subsidiaries are translated using historical rates. The difference resulting from the balance sheet and income statement being translated at different rates is recorded within "Foreign exchange gain or loss" on the income statement.

IFRS - All subsidiaries assets and liabilities are translated at the period end spot rate. The difference resulting from the balance sheet and income statement being translated at different rates is recorded within Cumulative Translation Adjustment on the balance sheet. As well, the IFRS 1 exemption discussed in point (ii) above will result in an adjustment to accumulated other comprehensive income or loss.

(n) Accumulated profit or loss.

As discussed above, the transition to IFRS resulted in adjustments to net income and retained earnings. These adjustments resulted in a corresponding adjustment to accumulated profit or loss.

Total shares issued and outstanding: 680,526,421

Certain statements included herein constitute "forward-looking statements" within the meaning of applicable Canadian securities legislation. These forward-looking statements are based on certain assumptions by Eastplats and as such are not a guarantee of future performance. Actual results could differ materially from those expressed or implied in such forward-looking statements due to factors such as general economic and market conditions, increased costs of production and a decline in metal prices. Eastplats is under no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable laws.

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