TIDMBRR
RNS Number : 9347Z
Braemore Resources PLC
30 September 2009
Braemore Resources Plc
("Braemore" or "the Company")
PRELIMINARY AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE 2009
POSTING OF ANNUAL REPORT AND NOTICE OF ANNUAL GENERAL MEETING
Braemore Resources plc ("Braemore" or "the Company"; JSE: BRE; AIM: BRR), the
international group focused on mid-stream processing of platinum and nickel,
announces its audited results for the year ended 30 June 2009.
* The processing technologies employed, particularly ConRoast, address key
challenges in the metals processing stream and provide cost-effective,
environmentally-friendly, and independent solutions to processing nickel and PGM
ores, particularly high chrome ores.
* Braemore is working towards establishing the first, independent, black-empowered
PGM smelting operation in South Africa, and is in discussions with various black
empowerment groups to facilitate this process.
* The ConRoast technology has been developed by Mintek, a South African
government-funded institution and it is an integral part of the agreement that
the technology does not only benefit the corporate landscape but the wider
community through partnership with a broad-based empowerment entity.
* Braemore has a highly skilled and entrepreneurial team, focused on delivery and
operating. Technical and metallurgical studies have been conducted in South
Africa and Australia and delivery on the key milestones will be reported on in
due course.
* Braemore is a geographically and metallurgically diversified emerging precious
and base metals company that has made significant progress towards achieving its
key objectives in the year under review.
Highlights
* Braemore and Jubilee Platinum propose to enter into a Scheme of Arrangement that
will result in the merging of the two companies, creating a new force in the
South African PGM sector.
* Successfully renegotiated the ConRoast Agreement with Mintek, ensuring its sole,
global exclusive licence for the technology over the life of the patent.
* Braemore completed a successful placement for GBP6.5m in a difficult market.
* The inward dual listing of the Company on the JSE (Code: BRE) was completed.
* Expanded the ConRoast demonstration smelter capacity.
* Completed various smelter trials demonstrating to industry the safety and
robustness of the process
* Completed Research programme on hydrometallurgical refining of the smelted
alloy.
* Entered into agreement with Jubilee Platinum over chrome tailings with PGMs.
* Completed and formally presented detailed studies as requested by BHP Billiton
on the Leinster and Kambalda Nickel Tailings projects.
* Restructuring of the Company ahead of the merger with Jubilee Platinum plc
("Jubilee") to realise a significant reduction in overhead costs which will flow
through into the next reporting period.
* An implementation agreement with Jubilee on 3 July 2009, whereby Jubilee made
available to Braemore a working capital facility whilst the offer is being
implemented.
Challenges impacting the financial results
* Endured a small smelter break out which was safely contained and importantly
resulted in no injuries to any of our personnel.
* Encountered sharply decreasing smelter margins as a result of declining PGM
prices resulting from the fast appreciating South African Rand.
* Negotiating the conclusion of non-profitable smelting contracts due to the
depressed metal prices and appreciating South African Rand.
* Extended shutdown of smelter at year end to review process options to address
operating margins and facilitate completion of hydrometallurgical refining
process reviews.
The Annual Report for the year ended 30 June 2009 is expected to be posted to
shareholders by 30 September 2009. A Copy will be available on the same date on
the Company's
website: www.braemoreresources.com
CHAIRMAN'S STATEMENT
As anticipated in last year's review, the resources sector has experienced a
period of uncertainty as the global economic crisis unfolds, negatively
affecting commodities, equity markets and financial markets alike.
The recession arrived with a vengeance that resulted in, amongst other things,
significant drops in demand for nickel and platinum group metals ('PGM'). With
the major demand sector for PGMs in autocatalysts in decline, the PGM prices
retracted sharply. Demand for steel produced in China contracted sharply as did
the associated demand for nickel, with record price falls.
In this climate Braemore has proceeded to advance its projects with
determination, applying improved metallurgical alternatives to both nickel and
PGM processing. I will briefly summarise progress made in both the PGM and
nickel projects during the year.
Towards year end our competitive advantage has been confirmed. At the time of
writing Braemore had been approached by two parties regarding the potential for
corporate activity. This led to a formal offer received from Jubilee Platinum to
merge the two entities Braemore and Jubilee into an enlarged Platinum and Nickel
Group comprising of both short term cashflow potential and world class medium
term assets.
The proposed merger of Jubilee's PGM and nickel exploration assets with the
smelting technology package and nickel assets of Braemore presents a compelling
investment opportunity that should appeal to investors in the metals community.
The skills of the combined management team and the enhanced ability to fully
fund and relaunch smelting operations will create an enlarged and liquid South
African mining group.
This fits directly with Braemore's stated 'mine to metal' strategy. The
significant PGM processing ability, with its patented technology is bolstered by
the as yet unrealised nickel potential of Braemore in Australia, and Jubilee in
Madagascar.
The new entity has the potential to become a sustainable force in the South
African platinum industry, which will be well positioned to participate in any
further consolidation in the platinum industry.
FINANCING AND CORPORATE ACTIVITIES
The highlight of the year was the announcement of the proposed transaction
between Braemore and Jubilee Platinum that will lead to a merger of the two
companies.
The start of the financial year was heralded by a placement that raised GBP6.5m
(before expenses). The extremely difficult market conditions made this fund
raising challenging and it was led by the strong support of major shareholders
Atomaer and Best Asset Class (BAC), which both followed their rights. Completion
was important at this time as the full impact of the global financial crisis
started to become evident across equity and commodity markets alike.
In July 2008, Braemore completed its pre-listing statement to meet JSE listing
requirements and subsequently listed, on 16 July 2008, on the main board of the
JSE, in the Platinum Sector. This listing was conducted to fulfil terms in our
ConRoast Agreement with Mintek.
Pan Palladium vote against JV with Braemore
In late July 2008, Braemore was advised by Pan Palladium Limited that its
shareholders had voted against proceeding in a venture with Braemore over its
Platreef Project in South Africa.
Corporate Activity
Braemore completed the research program of the PGM refining process during the
third Quarter of the financial year which enabled the marketing of this
significant component of its technology offering to the Platinum Industry. The
PGM industry acknowledged this significant achievement which led to an increased
interest and to the potential for important strategic and corporate initiatives.
The proposed merger with Jubilee Platinum confirms this interest.
CONROAST PGM CONCENTRATE SMELTING OPERATIONS
During the year we continued to produce under our unique ConRoast process, PGMs
in alloy that was sold to refiners in Japan, Europe and South Africa. However,
this material proved problematic to sell given few refiners were geared to
accept an iron alloy containing PGM, and consequently less attractive PGM price
terms were on offer. Initially some positive cash flow was generated from this
activity but as metal prices fell sharply and the South African Rand appreciated
strongly, margins were constrained.
We were pleased to be able to announce specific off-take agreements with Northam
Platinum and Anglo Platinum, the world's largest producer, relating to
processing high chrome concentrates and other difficult to smelt material. This
certainly added credibility to ConRoast as a commercial smelting technology able
to process material on behalf of global PGM producers.
In August 2008, we announced that the planned smelter expansion programme had
commenced at Mintek. This was to replace the existing 1.5MW smelter with a new
3.2MW smelter and associated concentrate handling infrastructure. This expansion
of smelting capacity was completed by early September 2008 and the commissioning
programme commenced without any problems.
In March 2009 we had an operational incident when molten matte came into contact
with water. The resulting instant vaporisation of water created a loud explosion
but little real damage. Our safety procedures were immediately implemented,
worked seamlessly and an evacuation of the facility was successfully undertaken.
The smelter was repaired at nominal cost and back on line after a few weeks, in
April 2009.
The limited cash flow generated earlier from smelting materials declined sharply
as PGM prices fell, and the decision was taken, in May 2009, to temporarily halt
smelting operations.
The smelter operations have been an unqualified success in terms of physically
proving and commercialising the ConRoast smelting process. We have demonstrated
its ability to process a range of difficult to process high chrome concentrates,
revert tailings and other materials.
As discussed, the margins in the demonstration smelter operation have been under
increasing pressure during the course of the financial year from escalating
costs and declining metal prices. In the run up to the 2010 World Cup the South
African Rand has become one of the strongest performing currencies in the world,
appreciating 24% against the US$ from its lows during the year, adversely
affecting an already lower US$ platinum price. The platinum price fell 40% from
highs of US$2000/oz to US$1200/oz (after touching US$780/oz).
With smelting margins contracting sharply it was concluded that there was little
more for Braemore to learn from the smelting demonstration that has been under
way since September 2007. The smelter was in the process of being ramped up at
the time of the operational incident, operating at less than rated capacity and
hence subject to higher unit costs. For all the reasons set out above, the
decision was subsequently taken to put the smelter on temporary standby.
HYDROMETALLURGICAL REFINING OF SMELTED ALLOY
During the year Braemore was able to complete metallurgical work on the
development of the hydrometallurgical leaching of smelted alloy. This step
removes the iron, extracts base metals for sale and leaves a residual high value
PGM concentrate suitable as direct feed to a PGM refinery. This refining step
increases margins as the value of the product increases significantly. The high
grade PGMs concentrates are an internationally sought after product
The temporary closure of the smelter gives Braemore the opportunity to finalise
its hydrometallurgical refining process with a view to installing a commercially
viable facility in the near future. The planned refining plant will have the
capacity to process smelted material from both the existing smelter at Mintek
and the new smelter under review.
The proposed merger with Jubilee will enhance the terms and availability of
funds to complete the proposed new smelter. In August 2009 Jubilee, with support
from Braemore, successfully raised GBP 13.25 million towards funding the
expansion and ongoing operations of the new enlarged merged entity. In September
2009, Jubilee successfully raised an additional GBP 1.95 million for application
to Braemore's operations.
NICKEL TAILINGS PROJECTS
On the nickel side of Braemore's business there has been significant progress.
Progress has been made in metallurgical testwork, scoping studies and
preparation and formal presentation of detailed reports on the Leinster and
Kambalda nickel tailings projects, as requested by BHP Billiton.
In January 2009 we were able to update shareholders on the progress made on the
Leinster Nickel Project following on from the preliminary results from the
independent consultants who examined all aspects of the project. This work was
described in a scoping study and presented to BHP Billiton. Given the
environment of lower nickel prices and sharply higher sulphur prices that
prevailed during the course of the studies, a focus was kept on reducing both
operating and capital costs where possible. Braemore has been complimented on
the high quality of the technical work presented and we await BHP Billiton's
final review shortly.
THE WAY FORWARD
Such innovative thinking has been at the heart of Braemore's nickel and PGM
projects. The Company is proud of its achievements in these fields. In
conjunction with its technology partner Mintek, the Company has achieved its
stated research and development programme objectives of developing a proven,
industry leading technology for the smelting of high chrome PGM concentrates.
In light of this Braemore has cemented its relationship with Mintek by
renegotiating and extending its global exclusive licence over the patented
ConRoast technology.
It is this technology that is now being recognised by our peers in the PGM
sector. We have received numerous advances seeking access to the ConRoast
smelting technology due to its proven ability to deal with difficult
concentrates efficiently. Off-take agreements increasingly become more onerous
and less available from traditional larger smelters. This was the original
thinking that saw Braemore enter into agreements with Tharisa Minerals and
Jubilee Resources' Maude project over PGM containing chrome concentrates.
It did not take long for cashed up companies with synergies with Braemore to
realise the potential offered by its smelting technology to achieve full
vertical integration of similar projects. Several approaches have been made, due
diligence conducted and offers negotiated. In the closing weeks of June 2009,
Braemore announced that it was in discussions with Jubilee which could lead to a
merger proposal being undertaken of superior long term strategic and current
economic benefit to our shareholders.
We strive to attain the goal of becoming a significant mid-stream processor of
PGM and nickel and to build a vertically integrated mining and processing
company.
It has been a year of maximum effort from all concerned. I would like to thank
our Board of directors and management for all their endeavours on behalf of
Braemore shareholders.
Mathews Phosa
Non-Executive Chairman
29 September 2009
Enquiries:
+----------------------------------------+----------------------------------------+
| Braemore Resources Plc | |
+----------------------------------------+----------------------------------------+
| Leon Coetzer, Chief Executive Officer | +27 (0)11 465 1913 |
| | |
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| WH Ireland: (Nomad and Joint Broker) | |
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| James Joyce | +44 207 220 1666 |
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| | |
+----------------------------------------+----------------------------------------+
| Mirabaud Securities: (Joint Broker) | |
+----------------------------------------+----------------------------------------+
| Rory Scott | +44 207 878 3360 |
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| | |
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| Qinisele Resources: (RSA Corporate | |
| Advisers) | |
+----------------------------------------+----------------------------------------+
| Dennis Tucker | +27 82 492 4957 |
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| | |
+----------------------------------------+----------------------------------------+
| Russell and Associates: (RSA Public | |
| Relations) | |
+----------------------------------------+----------------------------------------+
| Nicola Taylor / Charmane Russell | +27 11 880 3924 |
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| | |
+----------------------------------------+----------------------------------------+
| Walbrook PR: (UK Public Relations) | |
+----------------------------------------+----------------------------------------+
| Louise Goodeve / Leah Kramer | +44 207 933 8780 |
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| | |
+----------------------------------------+----------------------------------------+
| Sasfin: (RSA Corporate Sponsor) | |
+----------------------------------------+----------------------------------------+
| Sharon Owens | +27 11 809 7762 |
+----------------------------------------+----------------------------------------+
Notes to Editors:
Braemore Resources offers investors an attractive opportunity to enter into the
PGMs and nickel business, initially through the mid-stream processing of these
metals and, in time, through mine-to-market production opportunities.
Braemore Resources is principally involved in evaluating, establishing and
operating independent facilities for the roasting, smelting and refining of
concentrates containing PGM and associated base metals and for the reclamation
and processing of sulphide nickel tailings. Diversified both geographically and
in terms of product, the Company is located in two key mining regions - Braemore
Nickel in Western Australia and Braemore Platinum in South Africa. Braemore's
access to proprietary technology, and in particular the Mintek ConRoast
technology, which has successfully operated at test plant level, makes the
Company well-positioned to become a significant player in the burgeoning South
African PGMs sector, offering a more cost-effective, environmentally friendly
and accessible smelting option to many junior mining companies. Unlike
conventional smelters, ConRoast is unaffected by the high-chrome content ores,
which are increasingly being mined.
Braemore's management team, in South Africa and Australia, bring with them
impressive credentials in their respective sectors, combined with a Board that
has experience in metals processing, financial and commodities markets.
CONSOLIDATED INCOME STATEMENT
For the year ended 30 June 2009
+----------------------------------+------------+----------+-------------+--------------+
| | | | Group | Group |
+----------------------------------+------------+----------+-------------+--------------+
| | | | 2009 | 2008 |
| | | | GBP'000 | GBP'000 |
+----------------------------------+------------+----------+-------------+--------------+
| Revenue | | | 3,558 | 8,963 |
+----------------------------------+------------+----------+-------------+--------------+
| Cost of sales | | | (6,670) | (7,451) |
+----------------------------------+------------+----------+-------------+--------------+
| Gross (loss)/profit | | | (3,112) | 1,512 |
+----------------------------------+------------+----------+-------------+--------------+
| | | | | |
+----------------------------------+------------+----------+-------------+--------------+
| Administrative expenses | | | (4,310) | (2,896) |
+----------------------------------+------------+----------+-------------+--------------+
| Loss from operations | | | (7,422) | (1,384) |
+----------------------------------+------------+----------+-------------+--------------+
| | | | | |
+----------------------------------+------------+----------+-------------+--------------+
| Finance income | | | 78 | 236 |
+----------------------------------+------------+----------+-------------+--------------+
| Finance costs | | | (74) | (261) |
+----------------------------------+------------+----------+-------------+--------------+
| Loss before income tax expense | | | (7,418) | (1,409) |
+----------------------------------+------------+----------+-------------+--------------+
| Income tax expense | | | - | - |
+----------------------------------+------------+----------+-------------+--------------+
| Loss for the year | | | (7,418) | (1,409) |
+----------------------------------+------------+----------+-------------+--------------+
| | | | | |
+----------------------------------+------------+----------+-------------+--------------+
| | | | | |
+----------------------------------+------------+----------+-------------+--------------+
| Loss per share expressed in | | | (0.94p) | (0.21p) |
| pence | | | | |
| - Basic,diluted and headline | | | | |
+----------------------------------+------------+----------+-------------+--------------+
| | | | | |
+----------------------------------+------------+----------+-------------+--------------+
| | | | | |
+----------------------------------+------------+----------+-------------+--------------+
All the Group's activities are classed as continuing
BALANCE SHEET
As at 30 June 2009
+----------------------------------------------+----------+--------------+-------------+
| | | | Restated |
+----------------------------------------------+----------+--------------+-------------+
| | | Group | Group |
| | | 2009 | 2008 |
| | | GBP'000 | GBP'000 |
+----------------------------------------------+----------+--------------+-------------+
| ASSETS | | | |
+----------------------------------------------+----------+--------------+-------------+
| Non-current assets | | | |
+----------------------------------------------+----------+--------------+-------------+
| Intangible assets | | 46,797 | 43,382 |
+----------------------------------------------+----------+--------------+-------------+
| Plant and equipment | | 2,881 | 91 |
+----------------------------------------------+----------+--------------+-------------+
| Investment in subsidiaries | | - | - |
+----------------------------------------------+----------+--------------+-------------+
| Other receivables | | 46 | 36 |
+----------------------------------------------+----------+--------------+-------------+
| Total non-current assets | | 49,724 | 43,509 |
+----------------------------------------------+----------+--------------+-------------+
| Current assets | | | |
+----------------------------------------------+----------+--------------+-------------+
| Trade and other receivables | | 1,257 | 1,776 |
+----------------------------------------------+----------+--------------+-------------+
| Inventory | | 907 | 4,257 |
+----------------------------------------------+----------+--------------+-------------+
| Cash and cash equivalents | | 302 | 974 |
+----------------------------------------------+----------+--------------+-------------+
| Total current assets | | 2,466 | 7,007 |
+----------------------------------------------+----------+--------------+-------------+
| TOTAL ASSETS | | 52,190 | 50,516 |
+----------------------------------------------+----------+--------------+-------------+
| | | | |
+----------------------------------------------+----------+--------------+-------------+
| LIABILITIES | | | |
+----------------------------------------------+----------+--------------+-------------+
| Current liabilities | | | |
+----------------------------------------------+----------+--------------+-------------+
| Trade and other payables | | 6,846 | 5,527 |
+----------------------------------------------+----------+--------------+-------------+
| | | | |
+----------------------------------------------+----------+--------------+-------------+
| NET ASSETS | | 45,344 | 44,989 |
+----------------------------------------------+----------+--------------+-------------+
| | | | |
+----------------------------------------------+----------+--------------+-------------+
| EQUITY | | | |
+----------------------------------------------+----------+--------------+-------------+
| Share capital | | 1,094 | 994 |
+----------------------------------------------+----------+--------------+-------------+
| Share premium | | 18,001 | 12,079 |
+----------------------------------------------+----------+--------------+-------------+
| Merger reserve | | 34,885 | 34,885 |
+----------------------------------------------+----------+--------------+-------------+
| Share based payments reserve | | 758 | 717 |
+----------------------------------------------+----------+--------------+-------------+
| Foreign exchange reserve | | 1,003 | (545) |
+----------------------------------------------+----------+--------------+-------------+
| Retained losses | | (10,397) | (3,141) |
+----------------------------------------------+----------+--------------+-------------+
| TOTAL EQUITY | | 45,344 | 44,989 |
+----------------------------------------------+----------+--------------+-------------+
CASH FLOW STATEMENT
For the year ended 30 June 2009
+----------------------------------------------+-----------+-------------+-------------+
| | | Group | Group |
| | | 2009 | 2008 |
| | | GBP'000 | GBP'000 |
+----------------------------------------------+-----------+-------------+-------------+
| Cash flows from operating activities | | | |
+----------------------------------------------+-----------+-------------+-------------+
| Loss for the period | | (7,418) | (1,409) |
+----------------------------------------------+-----------+-------------+-------------+
| Interest expense | | 74 | 261 |
+----------------------------------------------+-----------+-------------+-------------+
| Interest income | | (78) | (236) |
+----------------------------------------------+-----------+-------------+-------------+
| Depreciation | | 534 | 31 |
+----------------------------------------------+-----------+-------------+-------------+
| Share based payment | | 203 | - |
+----------------------------------------------+-----------+-------------+-------------+
| Foreign exchange on loans to controlled | | - | - |
| entities | | | |
+----------------------------------------------+-----------+-------------+-------------+
| Decrease / (Increase) in inventory | | 3,350 | (4,257) |
+----------------------------------------------+-----------+-------------+-------------+
| Decrease / (Increase) in receivables | | 509 | (1,447) |
+----------------------------------------------+-----------+-------------+-------------+
| Increase/(decrease) in payables | | 2,990 | 3,678 |
+----------------------------------------------+-----------+-------------+-------------+
| Net cash used in operating activities | | 164 | (3,379) |
+----------------------------------------------+-----------+-------------+-------------+
| | | | |
+----------------------------------------------+-----------+-------------+-------------+
| Cash flows from investing activities | | | |
+----------------------------------------------+-----------+-------------+-------------+
| Payments to acquire plant and equipment | | (2,485) | (86) |
+----------------------------------------------+-----------+-------------+-------------+
| Payment for investments | | - | (37) |
+----------------------------------------------+-----------+-------------+-------------+
| Loan to controlled entities | | - | - |
+----------------------------------------------+-----------+-------------+-------------+
| Payments to acquire intangible assets | | (4,377) | (4,146) |
+----------------------------------------------+-----------+-------------+-------------+
| Interest received | | 78 | 236 |
+----------------------------------------------+-----------+-------------+-------------+
| Net cash used in investing activities | | (6,784) | (4,033) |
+----------------------------------------------+-----------+-------------+-------------+
| | | | |
+----------------------------------------------+-----------+-------------+-------------+
| Cash flows from Financing activities | | | |
+----------------------------------------------+-----------+-------------+-------------+
| Proceeds from issue of shares | | 6,501 | 77 |
+----------------------------------------------+-----------+-------------+-------------+
| Issue costs paid | | (479) | - |
+----------------------------------------------+-----------+-------------+-------------+
| Interest payable | | (74) | (261) |
+----------------------------------------------+-----------+-------------+-------------+
| Net cash generated from / (used in) | | 5,948 | (184) |
| financing activities | | | |
+----------------------------------------------+-----------+-------------+-------------+
| | | | |
+----------------------------------------------+-----------+-------------+-------------+
| Net increase/(decrease) in cash and cash | | (672) | (7,596) |
| equivalents | | | |
+----------------------------------------------+-----------+-------------+-------------+
| Cash and cash equivalents at beginning of | | 974 | 8,570 |
| year | | | |
+----------------------------------------------+-----------+-------------+-------------+
| Cash and cash equivalents at 30 June | | 302 | 974 |
+----------------------------------------------+-----------+-------------+-------------+
| | | | |
+----------------------------------------------+-----------+-------------+-------------+
| | | | |
+----------------------------------------------+-----------+-------------+-------------+
STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2009
+---------------------------+--------------+-------------------+------------------+
| | Share | Share premium | Merger reserve |
| | capital | reserve | |
+---------------------------+--------------+-------------------+------------------+
| Group | GBP'000 | GBP'000 | GBP'000 |
+---------------------------+--------------+-------------------+------------------+
| As at 1 July 2007 | 977 | 11,990 | 29,395 |
+---------------------------+--------------+-------------------+------------------+
| Correction of prior | - | - | 3,050 |
| period adjustment (refer | | | |
| note 24) | | | |
+---------------------------+--------------+-------------------+------------------+
| | 977 | 11,990 | 32,445 |
+---------------------------+--------------+-------------------+------------------+
| Loss for the period | - | - | - |
+---------------------------+--------------+-------------------+------------------+
| Currency translation | - | - | - |
| differences | | | |
+---------------------------+--------------+-------------------+------------------+
| Total recognised income | - | - | - |
| and expense for the year | | | |
+---------------------------+--------------+-------------------+------------------+
| Share capital issued | 16 | - | 2,440 |
+---------------------------+--------------+-------------------+------------------+
| Acquisition of minority | - | - | - |
| interests in subsidiary | | | |
+---------------------------+--------------+-------------------+------------------+
| Exercise of options | 1 | 89 | - |
+---------------------------+--------------+-------------------+------------------+
| Cancellation of options | - | - | - |
+---------------------------+--------------+-------------------+------------------+
| Balance at 30 June 2008 | 994 | 12,079 | 34,885 |
+---------------------------+--------------+-------------------+------------------+
| | | | |
+---------------------------+--------------+-------------------+------------------+
| Currency translation | - | - | - |
| differences | | | |
+---------------------------+--------------+-------------------+------------------+
| Loss for the period | - | - | - |
+---------------------------+--------------+-------------------+------------------+
| Total recognised income | - | - | - |
| and expense for the year | | | |
+---------------------------+--------------+-------------------+------------------+
| Share capital issued | 100 | 6,401 | - |
+---------------------------+--------------+-------------------+------------------+
| Share issue expenses | - | (479) | - |
+---------------------------+--------------+-------------------+------------------+
| Expiry of options | - | - | - |
+---------------------------+--------------+-------------------+------------------+
| Issue of options | - | - | - |
+---------------------------+--------------+-------------------+------------------+
| Balance at 30 June 2009 | 1,094 | 18,001 | 34,885 |
+---------------------------+--------------+-------------------+------------------+
| | | | |
+---------------------------+--------------+-------------------+------------------+
+---------------------------+-------------+-----------+-----------+------------+-----------+
| | Share based | Foreign | Minority | Retained | Total |
| | payment | exchange | interest | earnings | equity |
| | reserve | reserve | | | |
+---------------------------+-------------+-----------+-----------+------------+-----------+
| Group | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+---------------------------+-------------+-----------+-----------+------------+-----------+
| As at 1 July 2007 | 814 | (6) | 17 | (1,817) | 41,370 |
+---------------------------+-------------+-----------+-----------+------------+-----------+
| Correction of prior | - | - | - | - | 3,050 |
| period adjustment (refer | | | | | |
| note 24) | | | | | |
+---------------------------+-------------+-----------+-----------+------------+-----------+
| | 814 | (6) | 17 | (1,817) | 44,420 |
+---------------------------+-------------+-----------+-----------+------------+-----------+
| Loss for the period | - | - | - | (1,409) | (1,409) |
+---------------------------+-------------+-----------+-----------+------------+-----------+
| Currency translation | - | (539) | - | - | (539) |
| differences | | | | | |
+---------------------------+-------------+-----------+-----------+------------+-----------+
| Total recognised income | - | (539) | - | (1,409) | (1,948) |
| and expense for the year | | | | | |
+---------------------------+-------------+-----------+-----------+------------+-----------+
| Share capital issued | - | - | - | - | 2,456 |
+---------------------------+-------------+-----------+-----------+------------+-----------+
| Acquisition of minority | - | - | (17) | - | (17) |
| interests in subsidiary | | | | | |
+---------------------------+-------------+-----------+-----------+------------+-----------+
| Exercise of options | (12) | - | - | - | 78 |
+---------------------------+-------------+-----------+-----------+------------+-----------+
| Cancellation of options | (85) | - | - | 85 | - |
+---------------------------+-------------+-----------+-----------+------------+-----------+
| Balance at 30 June 2008 | 717 | (545) | - | (3,141) | 44,989 |
+---------------------------+-------------+-----------+-----------+------------+-----------+
| | | | | | |
+---------------------------+-------------+-----------+-----------+------------+-----------+
| Currency translation | - | 1,548 | - | - | 1,548 |
| differences | | | | | |
+---------------------------+-------------+-----------+-----------+------------+-----------+
| Loss for the period | - | - | - | (7,418) | (7,418) |
+---------------------------+-------------+-----------+-----------+------------+-----------+
| Total recognised income | - | 1,548 | - | (7,418) | (5,870) |
| and expense for the year | | | | | |
+---------------------------+-------------+-----------+-----------+------------+-----------+
| Share capital issued | - | - | - | - | 6,501 |
+---------------------------+-------------+-----------+-----------+------------+-----------+
| Share issue expenses | - | - | - | - | (479) |
+---------------------------+-------------+-----------+-----------+------------+-----------+
| Expiry of options | (162) | - | - | 162 | - |
+---------------------------+-------------+-----------+-----------+------------+-----------+
| Issue of options | 203 | - | - | - | 203 |
+---------------------------+-------------+-----------+-----------+------------+-----------+
| Balance at 30 June 2009 | 758 | 1,003 | - | (10,397) | 45,344 |
+---------------------------+-------------+-----------+-----------+------------+-----------+
| | | | | | |
+---------------------------+-------------+-----------+-----------+------------+-----------+
COMMENTARY
NOTE
These consolidated financial statements were authorised for issue by the Board
of Directors on 30 September 2009. These results are extracted from the full
annual report which include all the notes to the accounts. The full audited
accounts are available at the Company's
website www.braemoreresources.com
1. BASIS OF PREPARATION
The financial statements are presented in pounds sterling, rounded to the
nearest thousand.
The accounts have been prepared on a going concern basis. On 3 July 2009
Braemore and Jubilee entered into the Scheme whereby Braemore shareholders will
receive 1 New Jubilee Share for every 15.818 Scheme Shares held. The Scheme is
subject to various conditions including, inter alia, acceptance at a court
meeting and a subsequent shareholder general meeting, currently expected to
occur on 7 October 2009. Jubilee has undertaken to fund the operating costs of
the Group whilst the Scheme is being implemented up to ZAR 7.0 million (GBP0.58
million1), and to settle some of the Group's current liabilities to a maximum of
ZAR 43.0 million (GBP3.58 million1). At the date of this report, the Group has
received ZAR 34.51 million (GBP2.88 million1) in funding under this arrangement,
with ZAR 15.49 million (GBP1.29 million1) in funding still available. These
amounts will be repayable by the Company if the Scheme
is not completed. The
Directors are confident that the shareholders will accept their recommendation
to vote in favour of the Scheme and certain Braemore shareholders have given
irrevocable undertakings to vote in favour of the Scheme resolutions in respect
of shares representing 50.0% of the existing share capital of Braemore. However,
there can be no guarantee that the vote will result in the acceptance of the
Scheme resolutions, whereupon alternative funding for the Group will need to be
sought, and therefore there exists a material uncertainty which may cast
significant doubt on the Group's ability to continue as a going concern.
Notwithstanding this uncertainty, the Directors are confident that based on the
irrevocable undertakings received and enquiries with some of the Company's other
significant shareholders, the Scheme will be approved, and therefore these
financial statements have been prepared on a going concern basis. The financial
statements do not include the adjustments that would result if the Group was
unable to continue as a going concern.
1 Applying the ZAR:GBP exchange rate at 24 September 2009.
These financial statements have been prepared in accordance with IFRS as adopted
for use in the European Union (EU), IAS 34, the JSE Listings Requirements and
with those parts of the South African Companies Act 2006 applicable to companies
reporting under IFRS. In addition, the Group also complied with IFRS as issued
by the International Accounting Standards Board (IASB).
The accounting policies applied are consistent with those of the previous
financial year.
THE AUDIT REPORT
The audited results for the year ended 30 June 2009 have been audited by BDO
Spencer Steward (Johannesburg) Incorporated and their opinion is available for
inspection at the Company's registered office Stoney Ridge Office Park, Cnr
Witkoppen and Waterford rd, Kleve Hill Park, Fourways
Segment revenue and segment result
+---------------------------------------+----------+----------+----------+----------+
| | Segment revenue | Segment result |
+---------------------------------------+---------------------+---------------------+
| Continuing operations | 2009 | 2008 | 2009 | 2008 |
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+---------------------------------------+----------+----------+----------+----------+
| Nickel (Australia) | - | - | (946) | (1,226) |
+---------------------------------------+----------+----------+----------+----------+
| PGM Smelters (South Africa) | 3,558 | 8,963 | (4,720) | 873 |
+---------------------------------------+----------+----------+----------+----------+
| Administration and Corporate (United | - | - | (1,756) | (1,031) |
| Kingdom) | | | | |
+---------------------------------------+----------+----------+----------+----------+
| | 3,558 | 8,963 | (7,422) | (1,384) |
+---------------------------------------+----------+----------+----------+----------+
| Interest revenue | | | 78 | 236 |
+---------------------------------------+----------+----------+----------+----------+
| Finance costs | | | (74) | (261) |
+---------------------------------------+----------+----------+----------+----------+
| Loss before tax | | | (7,418) | (1,409) |
+---------------------------------------+----------+----------+----------+----------+
| Income tax expense | | | - | - |
+---------------------------------------+----------+----------+----------+----------+
| Loss after tax | | | (7,418) | (1,409) |
+---------------------------------------+----------+----------+----------+----------+
Revenue reported above represents revenue generated from external customers.
There were no inter-segment sales in the year (2008: Nil). The share based
payment charge is included within the United Kingdom segment result.
Segment assets and liabilities
+--------------------------------------+-----------+-----------+----------+----------+
| | Total | Total |
| | Assets | Liabilities |
+--------------------------------------+-----------------------+---------------------+
| | 2009 | Restated | 2009 | 2008 |
| | GBP'000 | 2008 | GBP'000 | GBP'000 |
| | | GBP'000 | | |
+--------------------------------------+-----------+-----------+----------+----------+
| Nickel (Australia) | 36,035 | 35,596 | 238 | 544 |
+--------------------------------------+-----------+-----------+----------+----------+
| PGM Smelters (South Africa) | 16,029 | 14,542 | 6,432 | 4,782 |
+--------------------------------------+-----------+-----------+----------+----------+
| Administration and Corporate (United | 126 | 378 | 176 | 201 |
| Kingdom) | | | | |
+--------------------------------------+-----------+-----------+----------+----------+
| Total of all segments | 52,190 | 50,516 | 6,846 | 5,527 |
+--------------------------------------+-----------+-----------+----------+----------+
Other segment information
+---------------------------------------+----------+------------+----------+------------+
| | Depreciation and | Capital expenditure |
| | amortisation | |
+---------------------------------------+-----------------------+-----------------------+
| Continuing operations | 2009 | 2008 | 2009 | 2008 |
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+---------------------------------------+----------+------------+----------+------------+
| Nickel (Australia) | 6 | 1 | 469 | 1,158 |
+---------------------------------------+----------+------------+----------+------------+
| PGM Smelters (South Africa) | 508 | 10 | 5,110 | 6,004 |
+---------------------------------------+----------+------------+----------+------------+
| Administration and Corporate (United | 20 | 20 | - | 58 |
| Kingdom) | | | | |
+---------------------------------------+----------+------------+----------+------------+
| | 534 | 31 | 5,579 | 7,220 |
| | | | | |
+---------------------------------------+----------+------------+----------+------------+
NOTES TO THE FINANCIAL STATEMENTS
1. LOSS PER SHARE
The loss for the year attributed to shareholders is GBP7,418,000 (2008: loss
GBP1,409,000). This is divided by the weighted average number of ordinary shares
in issue calculated to be 788.8 million (2008: 680.8 million) to give a basic
loss per share of 0.94p (2008: loss per share of 0.21p).
The headline loss per share calculation is the same as the basic loss per share.
As inclusion of the potential ordinary shares would result in a decrease in the
loss per share they are considered to be non-dilutive and, as such, the effect
of the dilution has not been applied in the calculation. The potential future
share issues that may dilute the loss per share relate to 305,000,000
performance shares (2008: 305,000,000) and 29,285,899 options on issue (2008:
37,835,889).
2. POST BALANCE SHEET EVENTS
On 3 July 2009, the Group received a notice of firm intention from Jubilee
Platinum Plc ('Jubilee') to make an Offer to acquire the entire issued and to be
issued share capital of the Company. Jubilee has undertaken to fund the
operating costs of the Group whilst the Scheme is being implemented up to ZAR
7.0 million (GBP0.58 million1), and to settle some of the Group's current
liabilities to a maximum of ZAR 43.0 million (GBP3.58 million1). These amounts
will be repayable by the Company if the Offer does not proceed. Additionally, a
1% compensation fee will be payable by Braemore to Jubilee if the Offer does not
proceed for reasons relating to Braemore. Similarly, a 1% compensation fee will
be payable by Jubilee to Braemore if the Offer does not proceed for reasons
relating to Jubilee. As part of the outcome of this transaction will be the
delisting of Braemore Resources from both the JSE and AIM.
At the date of this report, Jubilee has advanced the Group ZAR 34.51 million
(GBP2.88 million1).
1 Applying the ZAR:GBP exchange rate at 24 September 2009.
3. PRIOR PERIOD ADJUSTMENT - PERFORMANCE SHARES AND BUSINESS COMBINATIONS
On 28 July 2005, the Group completed the acquisition of Braemore Nickel Pty Ltd
('Braemore Nickel') (formerly Western Consolidated Nickel Pty Ltd) with a
component of the consideration being 305 million Performance Shares. The
Directors originally valued the Performance Shares at GBPNil, on the grounds
that it was inherently difficult to measure reliably their fair value at the
date of issue.
However, following discussion with the Financial Reporting Review Panel, the
Directors have re-visited this issue as equity instruments issued as
consideration must be measured at their fair value at the date of acquisition
and there is no exemption on the grounds that such fair value could not be
measured reliably. As such, the Directors have used the Black-Scholes Model to
value the Performance Shares.
The Directors have assessed the fair value of the Performance Shares as
GBP3,050,000, as at the date of their issue on 28 July 2005. The key inputs
applied to the Black-Scholes Model included the assessed fair value of ordinary
shares issued for the acquisition of WCN on 28 July 2005 of 10p; risk free
interest rate of 4.20%; and expected volatility of 50%. In assessing the fair
value of the Performance Shares, a discount of 90% has been applied to the
theoretical value calculated by the Black-Scholes Model to take into account the
estimated probability of the Performance Milestones being achieved of 10%. This
applied estimated probability of the Performance Milestones being achieved, took
into account the level of the scoping and desk top technical and economic
studies, including conceptual flow sheet and process, undertaken to the date of
the acquisition of WCN. This applied probability of the achievement of the
Performance Milestone is as at the 28 July 2005, and does not represent the
Director's current assessment.
As a result of this restatement the intangible assets and merger reserve of the
Consolidated Group, and investments and merger reserve of the Company, are
increased by GBP3,050,000. The Income Statement and Statement of Cash Flows in
the current period are unaffected by this restatement.
DIVIDEND
No dividend has been declared for the period.
BOARD CHANGES
Leon Coetzer and Dr Mathews Phosa were appointed to the Board on 1st July 2008
and 2nd of October 2008 respectively.
POSTING OF ANNUAL REPORT AND NOTICE OF ANNUAL GENERAL MEETING
The annual report will be posted to shareholders on 30 September 2009.
Notice is hereby given that the annual general meeting of shareholders will be
held at the offices of Braemore Resources Plc 18-19 Pall Mall London SW1Y5LU on
the 2nd December 2009 at 11:00 Am to transact the business as stated in the
notice of annual general meeting forming part of the annual financial
statements.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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