TIDMPTMN
RNS Number : 6021M
Petmin Limited
19 September 2012
Petmin Limited
(Incorporated in the Republic of South Africa)
(Registration number 1972/001062/06)
JSE code: PET AIM code: PTMN
ISIN: ZAE000076014
("Petmin" or "the Group")
Condensed Preliminary Consolidated Financial Statements
for the year ended 30 June 2012
"R523 million invested to double capacity and to deliver on
strategy despite difficult market conditions"
- Net cash flow from operations up 23% to R443.8 million (2011:
R360.8 million)
- Profit after tax up 12% to R112.7 million (2011: R101.0
million)
- Headline earnings per share up 9% to 19.06 cents (2011: 17.50
cents)
- Dividend up 25% to 5 cents per share (2011: 4 cents)
- Somkhele capacity increased to 1.2 million saleable tonnes per
annum
- New Order Mining Right extended to cover new mining areas at
Somkhele
- Accelerated investment in North Atlantic Iron Corporation
("NAIC") pig iron project
- Sale of SamQuarz concluded for R281 million
Condensed Preliminary Consolidated Income Statement
for the year ended 30 June 2012
Reviewed Audited
------------------------------------------- ------ -------------- -------------
Year ended Year ended
------------------------------------------- ------ -------------- -------------
30 June 30 June
------------------------------------------- ------ -------------- -------------
2012 2011
------------------------------------------- ------ -------------- -------------
Note R'000 R'000
------------------------------------------- ------ -------------- -------------
Revenue 516 303 471 385
------------------------------------------- ------ -------------- -------------
Cost of sales (360 461) (344 303)
------------------------------------------- ------ -------------- -------------
Gross profit 155 842 127 082
------------------------------------------- ------ -------------- -------------
Operating income/(expense) 6 532 (7 177)
------------------------------------------- ------ -------------- -------------
Administration expenses (20 611) (13 694)
------------------------------------------- ------ -------------- -------------
Results from operating activities 141 763 106 211
------------------------------------------- ------ -------------- -------------
- Mark to market of listed securities 8.3 (20 234) 346
------------------------------------------- ------ -------------- -------------
Net finance (expense)/income (6 988) 3 698
------------------------------------------- ------ -------------- -------------
- Finance income 2 936 4 889
------------------------------------------- ------ -------------- -------------
- Finance expenses (9 924) (1 191)
------------------------------------------- ------ -------------- -------------
Separately disclosed items:
------------------------------------------- ------ -------------- -------------
Impairment loss on exploration asset 8.3 (18 841) -
------------------------------------------- ------ -------------- -------------
Fair value gain on investment in jointly 3 404 -
controlled entity
------------------------------------------- ------ -------------- -------------
Share of losses of equity accounted
investees (1 707) (524)
------------------------------------------- ------ -------------- -------------
Profit before income tax 97 397 109 731
------------------------------------------- ------ -------------- -------------
Income tax expense (41 377) (37 060)
------------------------------------------- ------ -------------- -------------
Profit for the year from continuing
------------------------------------------- ------ -------------- -------------
operations 7 56 020 72 671
------------------------------------------- ------ -------------- -------------
Profit for the year from discontinued
------------------------------------------- ------ -------------- -------------
operation (net of income tax) 6 38 517 28 311
------------------------------------------- ------ -------------- -------------
Profit on sale of subsidiary 6 18 145 -
------------------------------------------- ------ -------------- -------------
Profit for the year 112 682 100 982
------------------------------------------- ------ -------------- -------------
Earnings per share
------------------------------------------- ------ -------------- -------------
Basic earnings per ordinary share (cents) 7 19.53 17.50
------------------------------------------- ------ -------------- -------------
Diluted earnings per ordinary share
(cents) 7 19.24 17.40
------------------------------------------- ------ -------------- -------------
Earnings per share from continuing
operations
------------------------------------------- ------ -------------- -------------
Basic earnings per ordinary share (cents) 7 9.71 12.60
------------------------------------------- ------ -------------- -------------
Diluted earnings per ordinary share
(cents) 7 9.56 12.52
------------------------------------------- ------ -------------- -------------
Condensed Preliminary Consolidated Statement of Comprehensive
Income
for the year ended 30 June 2012
Reviewed Audited
------------------------------------------ ------------ ------------
Year ended Year ended
------------------------------------------ ------------ ------------
30 June 30 June
------------------------------------------ ------------ ------------
2012 2011
------------------------------------------ ------------ ------------
R'000 R'000
------------------------------------------ ------------ ------------
Profit for the year 112 682 100 982
------------------------------------------ ------------ ------------
Other comprehensive income
------------------------------------------ ------------ ------------
Foreign currency translation differences 3 877 (319)
------------------------------------------ ------------ ------------
Other comprehensive income for the
year,
------------------------------------------ ------------ ------------
net of income tax 3 877 (319)
------------------------------------------ ------------ ------------
Total comprehensive income for the
year 116 559 100 663
------------------------------------------ ------------ ------------
Condensed Preliminary Consolidated Statement of Financial
Position
at 30 June 2012
Reviewed Audited
------------------------------------------ ------ ------------- ------------
as at as at
------------------------------------------ ------ ------------- ------------
30 June 30 June
2012 2011
------------------------------------------ ------ ------------- ------------
Note R'000 R'000
------------------------------------------ ------ ------------- ------------
ASSETS
------------------------------------------ ------ ------------- ------------
1 541 1 126
Non-current assets 541 251
------------------------------------------ ------ ------------- ------------
1 042
Property, plant and equipment 840 620 662
------------------------------------------ ------ ------------- ------------
Intangible assets - 1 889
------------------------------------------ ------ ------------- ------------
Investment in equity accounted investee 468 757 470 138
------------------------------------------ ------ ------------- ------------
Investments 29 944 33 562
------------------------------------------ ------ ------------- ------------
Current assets 494 701 664 515
------------------------------------------ ------ ------------- ------------
Inventories 100 312 22 134
------------------------------------------ ------ ------------- ------------
Trade and other receivables 111 741 117 496
------------------------------------------ ------ ------------- ------------
Receivable on sale of subsidiary 6 281 064 -
------------------------------------------ ------ ------------- ------------
Current tax assets - 4 656
------------------------------------------ ------ ------------- ------------
Cash and cash equivalents 1 584 227 792
------------------------------------------ ------ ------------- ------------
Assets classified as held for sale 6 - 292 437
------------------------------------------ ------ ------------- ------------
2 036 1 790
Total assets 242 766
------------------------------------------ ------ ------------- ------------
EQUITY AND LIABILITIES
------------------------------------------ ------ ------------- ------------
1 405 1 317
Ordinary share capital and reserves 188 162
------------------------------------------ ------ ------------- ------------
Share capital 143 763 143 398
------------------------------------------ ------ ------------- ------------
Share premium 334 104 337 807
------------------------------------------ ------ ------------- ------------
Share option reserve 3 508 5 627
------------------------------------------ ------ ------------- ------------
Foreign currency translation reserve 3 558 (319)
------------------------------------------ ------ ------------- ------------
Retained earnings 920 255 830 649
------------------------------------------ ------ ------------- ------------
Non-current liabilities 274 984 249 604
------------------------------------------ ------ ------------- ------------
Interest-bearing loans and borrowings 80 556 96 674
------------------------------------------ ------ ------------- ------------
Deferred taxation liabilities 172 233 133 206
------------------------------------------ ------ ------------- ------------
Environmental rehabilitation provision 22 195 19 724
------------------------------------------ ------ ------------- ------------
Current liabilities 356 070 224 000
------------------------------------------ ------ ------------- ------------
Trade and other payables 157 968 88 131
------------------------------------------ ------ ------------- ------------
Current portion of interest-bearing
loans and
------------------------------------------ ------ ------------- ------------
borrowings 47 108 23 466
------------------------------------------ ------ ------------- ------------
Current tax liabilities 34 816 -
------------------------------------------ ------ ------------- ------------
Shareholders for dividend 1 287 996
------------------------------------------ ------ ------------- ------------
Bank overdraft 114 891 -
------------------------------------------ ------ ------------- ------------
Liabilities classified as held for
sale 6 - 111 407
------------------------------------------ ------ ------------- ------------
2 036 1 790
Total equity and liabilities 242 766
------------------------------------------ ------ ------------- ------------
Condensed Preliminary Consolidated Statement of Cash Flows
for the year ended 30 June 2012
Reviewed Audited
-------------------------------------------- ------ ------------ --------------
Year ended Year ended
-------------------------------------------- ------ ------------ --------------
30 June 30 June
2012 2011
-------------------------------------------- ------ ------------ --------------
Note R'000 R'000
-------------------------------------------- ------ ------------ --------------
Profit from operations before finance 193 865 142 018
-------------------------------------------- ------ ------------ --------------
(expense)/income
-------------------------------------------- ------ ------------ --------------
Adjustments for:
-------------------------------------------- ------ ------------ --------------
- depreciation and amortisation 261 041 191 946
-------------------------------------------- ------ ------------ --------------
- transfer of accumulated depreciation
to provisions - (6 154)
-------------------------------------------- ------ ------------ --------------
- impairment charges - 3 735
-------------------------------------------- ------ ------------ --------------
- notional interest 3 014 3 187
-------------------------------------------- ------ ------------ --------------
- (profit)/loss on disposal of property,
plant and (17) 10
-------------------------------------------- ------ ------------ --------------
equipment
-------------------------------------------- ------ ------------ --------------
- share-based payment included in expenses - 22 336
-------------------------------------------- ------ ------------ --------------
- decommissioning asset - new mining
areas - 1 008
-------------------------------------------- ------ ------------ --------------
- management share options granted 962 2 532
-------------------------------------------- ------ ------------ --------------
Operating cash flows before changes
in
-------------------------------------------- ------ ------------ --------------
working capital 458 865 360 618
-------------------------------------------- ------ ------------ --------------
Decrease/(Increase) in trade and other
receivables 12 453 (14 360)
-------------------------------------------- ------ ------------ --------------
(Increase)/Decrease in inventories (88 760) 834
-------------------------------------------- ------ ------------ --------------
Increase in trade and other payables 66 781 13 124
-------------------------------------------- ------ ------------ --------------
Cash generated by operations 449 339 360 216
-------------------------------------------- ------ ------------ --------------
Income tax refunded/(paid) 1 425 (4 590)
-------------------------------------------- ------ ------------ --------------
Finance income 4 010 6 727
-------------------------------------------- ------ ------------ --------------
Finance expenses (10 958) (1 548)
-------------------------------------------- ------ ------------ --------------
Net cash flow from operating activities 443 816 360 805
-------------------------------------------- ------ ------------ --------------
Cash flows from investing activities
-------------------------------------------- ------ ------------ --------------
Long-term rehabilitation expenditure
incurred - (236)
-------------------------------------------- ------ ------------ --------------
Investment in jointly controlled entities 8 (45 716) (13 552)
-------------------------------------------- ------ ------------ --------------
Investment in listed shares (16 616) (8 216)
-------------------------------------------- ------ ------------ --------------
Acquisition of property, plant and
equipment (688 548) (361 431)
-------------------------------------------- ------ ------------ --------------
- to expand operations (270 707) (148 111)
-------------------------------------------- ------ ------------ --------------
- to expand operations - capitalised
pre-strip 9 (405 558) (181 565)
-------------------------------------------- ------ ------------ --------------
- to maintain operations (12 283) (31 755)
-------------------------------------------- ------ ------------ --------------
Proceeds on sale of subsidiary, net
of cash disposed 6 (23 889) -
-------------------------------------------- ------ ------------ --------------
Proceeds from sale of property, plant
and equipment 24 5
-------------------------------------------- ------ ------------ --------------
Net cash flows from investing activities (774 745) (383 430)
-------------------------------------------- ------ ------------ --------------
Cash flows from financing activities
-------------------------------------------- ------ ------------ --------------
Proceeds from specific and general
share issues for
-------------------------------------------- ------ ------------ --------------
cash during the year 3 331 29
-------------------------------------------- ------ ------------ --------------
Treasury shares acquired (9 590) (15 204)
-------------------------------------------- ------ ------------ --------------
Payment on options forfeited (160) -
-------------------------------------------- ------ ------------ --------------
Repayment of borrowings (29 189) (22 718)
-------------------------------------------- ------ ------------ --------------
Increase in borrowings 6 984 80 152
-------------------------------------------- ------ ------------ --------------
Dividends paid (22 785) (33 617)
-------------------------------------------- ------ ------------ --------------
Net cash flows from financing activities (51 409) 8 642
-------------------------------------------- ------ ------------ --------------
Net decrease in cash and cash equivalents (382 338) (13 983)
-------------------------------------------- ------ ------------ --------------
Cash and cash equivalents at beginning
of year 12.1 269 031 283 014
-------------------------------------------- ------ ------------ --------------
Cash and cash equivalents at end of
year (113 307) 269 031
-------------------------------------------- ------ ------------ --------------
Condensed Preliminary Consolidated Statement of Changes in
Equity
for the year ended 30 June 2012
Foreign
------------------------------------------- ---------- -------------- --------- ------------- ----------- ----------
Share currency
------------------------------------------- ---------- -------------- --------- ------------- ----------- ----------
Share Share option translation Retained
------------------------------------------- ---------- -------------- --------- ------------- ----------- ----------
capital premium reserve reserve earnings Total
------------------------------------------- ---------- -------------- --------- ------------- ----------- ----------
GROUP R'000 R'000 R'000 R'000 R'000 R'000
------------------------------------------- ---------- -------------- --------- ------------- ----------- ----------
142 331 3 764 1 241
Balance at 1 July 2010 681 337 121 - 282 421
------------------------------------------- ---------- -------------- --------- ------------- ----------- ----------
Total comprehensive income for the 100 100
year - - - (319) 982 663
------------------------------------------- ---------- -------------- --------- ------------- ----------- ----------
Foreign currency translation differences - - - (319) - (319)
------------------------------------------- ---------- -------------- --------- ------------- ----------- ----------
100 100
Profit for the year - - - - 982 982
------------------------------------------- ---------- -------------- --------- ------------- ----------- ----------
Transactions with owners, recorded 2 (34 (24
directly in equity 717 6 470 506 - 615) 922)
------------------------------------------- ---------- -------------- --------- ------------- ----------- ----------
Shares issued during the year
------------------------------------------- ---------- -------------- --------- ------------- ----------- ----------
- Share options exercised 11 43 (26) - - 28
------------------------------------------- ---------- -------------- --------- ------------- ----------- ----------
20 22
Share-based payments 1 986 350 - - - 336
------------------------------------------- ---------- -------------- --------- ------------- ----------- ----------
Treasury shares acquired during the (1 (13 (15
year 280) 923) - - - 203)
------------------------------------------- ---------- -------------- --------- ------------- ----------- ----------
2
Share options granted - - 546 - - 2 546
------------------------------------------- ---------- -------------- --------- ------------- ----------- ----------
Share options forfeited during the
year - - (14) - - (14)
------------------------------------------- ---------- -------------- --------- ------------- ----------- ----------
(34 (34
Dividend paid - - - - 615) 615)
------------------------------------------- ---------- -------------- --------- ------------- ----------- ----------
143 337 5 830 1 317
Balance at 30 June 2011 398 807 627 (319) 649 162
------------------------------------------- ---------- -------------- --------- ------------- ----------- ----------
Total comprehensive income for the 112 116
year - - - 3 877 682 559
------------------------------------------- ---------- -------------- --------- ------------- ----------- ----------
112 112
Profit for the period - - - - 682 682
------------------------------------------- ---------- -------------- --------- ------------- ----------- ----------
Foreign currency translation differences - - - 3 877 - 3 877
------------------------------------------- ---------- -------------- --------- ------------- ----------- ----------
Transactions with owners, recorded (3 (2 (23 (28
directly in equity 365 703) 119) - 076) 533)
------------------------------------------- ---------- -------------- --------- ------------- ----------- ----------
Shares issued during the period
------------------------------------------- ---------- -------------- --------- ------------- ----------- ----------
(2
- Share options exercised 1 281 4 971 921) - - 3 331
------------------------------------------- ---------- -------------- --------- ------------- ----------- ----------
Share options forfeited during the
year - - (160) - - (160)
------------------------------------------- ---------- -------------- --------- ------------- ----------- ----------
Treasury shares acquired during the (8 (9
year (916) 674) - - - 590)
------------------------------------------- ---------- -------------- --------- ------------- ----------- ----------
Share options granted - - 962 - - 962
------------------------------------------- ---------- -------------- --------- ------------- ----------- ----------
(23 (23
Dividend paid - - - - 076) 076)
------------------------------------------- ---------- -------------- --------- ------------- ----------- ----------
143 334 3 920 1 405
Balance at 30 June 2012 763 104 508 3 558 255 188
------------------------------------------- ---------- -------------- --------- ------------- ----------- ----------
Segment reporting
Segment information is presented in the condensed preliminary
consolidated financial statements in respect of the Group's
segments.
The segment reporting format reflects the Group's management and
internal reporting structure as reviewed by the chief operating
decision-makers.
Segment revenue represents revenue from external customers.
There was no inter-segment revenue.
Segment results include items directly attributable to a segment
as well as those that can be allocated on a reasonable basis.
Reportable segments
The Group comprises the following main reportable segments:
- Silica mining and marketing ("Silica") - Discontinued
operation, sold on 29 June 2012;
- Anthracite mining and marketing ("Anthracite"); and
- Business of Tomorrow, which includes Petmin's exploration and
development projects. This segment has been designated as a
reportable segment in order to achieve fairer presentation due
to its significance.
Segment Report
for the year ended 30 June 2012
Silica (Discontinued) Anthracite Business Other (Corporate Eliminations Consolidated
of Tomorrow office)
--------------------------- ------------ ---------------------------- ---------------------- ---------------------- -------------------- ---------------------- ----------------------
Year Year Year Year Year Year Year Year Year Year Year Year
--------------------------- ------------ --------------- ----------- ---------- ---------- ---------- ---------- --------- --------- ---------- ---------- ---------- ----------
Unit ended ended ended ended ended ended ended ended ended ended ended ended
--------------------------- ------------ --------------- ----------- ---------- ---------- ---------- ---------- --------- --------- ---------- ---------- ---------- ----------
of 30 June 30 June 30 June 30 30 30 30 30 30 30 30 30
June June June June June June June June June
--------------------------- ------------ --------------- ----------- ---------- ---------- ---------- ---------- --------- --------- ---------- ---------- ---------- ----------
measure 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011
---------------------------------------- --------------- ----------- ---------- ---------- ---------- ---------- --------- --------- ---------- ---------- ---------- ----------
Saleable tonnes 1 245 1 325 637 524 1 882 1 849
produced (tonnes) 406 868 220 006 - - - - - - 626 874
--------------------------- ------------ --------------- ----------- ---------- ---------- ---------- ---------- --------- --------- ---------- ---------- ---------- ----------
1 135 1 248 546 579 1 681 1 828
Tonnes sold (tonnes) 807 989 051 087 - - - - - - 858 076
--------------------------- ------------ --------------- ----------- ---------- ---------- ---------- ---------- --------- --------- ---------- ---------- ---------- ----------
174 170 516 471 691 641
Segment revenue R'000 846 082 303 385 - - - - - - 149 467
--------------------------- ------------ --------------- ----------- ---------- ---------- ---------- ---------- --------- --------- ---------- ---------- ---------- ----------
Segment revenue (R/tonne) R153.94 R136.18 R945.52 R814.01
per tonne sold
--------------------------- ------------ --------------- ----------- ---------- ---------- ---------- ---------- --------- --------- ---------- ---------- ---------- ----------
Segment finance
(expense)/
--------------------------- ------------ --------------- ----------- ---------- ---------- ---------- ---------- --------- --------- ---------- ---------- ---------- ----------
income
--------------------------- ------------ --------------- ----------- ---------- ---------- ---------- ---------- --------- --------- ---------- ---------- ---------- ----------
2 4
Finance income R'000 1 074 1 838 - 569 - - 936 320 - - 4 010 6 727
--------------------------- ------------ --------------- ----------- ---------- ---------- ---------- ---------- --------- --------- ---------- ---------- ---------- ----------
Mark to market of (20 (20
listed securities R'000 - - - - 234) 346 - - - - 234) 346
--------------------------- ------------ --------------- ----------- ---------- ---------- ---------- ---------- --------- --------- ---------- ---------- ---------- ----------
(1 (7 (2 (10 (1
Finance expense R'000 034) (357) 201) (852) - - 723) (339) - - 958) 548)
--------------------------- ------------ --------------- ----------- ---------- ---------- ---------- ---------- --------- --------- ---------- ---------- ---------- ----------
Segment profit per (R/tonne) R25.37 R26.47 249.90 R202.05
tonne sold
--------------------------- ------------ --------------- ----------- ---------- ---------- ---------- ---------- --------- --------- ---------- ---------- ---------- ----------
48 33 136 117 (40 61 (2 205 47
- segment result R'000 667 058 458 006 782) (220) 624 825) - - 967 019
--------------------------- ------------ --------------- ----------- ---------- ---------- ---------- ---------- --------- --------- ---------- ---------- ---------- ----------
Segment profit/(loss) 48 33 136 117 (40 61 (2 205 147
before tax R'000 667 058 458 006 782) (220) 624 825) - - 967 019
--------------------------- ------------ --------------- ----------- ---------- ---------- ---------- ---------- --------- --------- ---------- ---------- ---------- ----------
(13 (8 (38 (33 (40 (3 (93 (46
Segment tax (expense) R'000 627) 977) 760) 599) - - 898) 461) - - 285) 037)
--------------------------- ------------ --------------- ----------- ---------- ---------- ---------- ---------- --------- --------- ---------- ---------- ---------- ----------
Segment profit/(loss) 35 24 97 83 (40 20 (6 112 100
after tax R'000 040 081 698 407 782) (220) 726 286) - - 682 982
--------------------------- ------------ --------------- ----------- ---------- ---------- ---------- ---------- --------- --------- ---------- ---------- ---------- ----------
Segment capital 35 63 616 268 3 32 29 688 361
expenditure -combined R'000 858 294 644 069 308 467 738 547 - - 548 377
--------------------------- ------------ --------------- ----------- ---------- ---------- ---------- ---------- --------- --------- ---------- ---------- ---------- ----------
Segment capital 35 63 211 86 3 32 29 283 180
expenditure R'000 858 294 615 718 308 467 738 547 - - 519 026
--------------------------- ------------ --------------- ----------- ---------- ---------- ---------- ---------- --------- --------- ---------- ---------- ---------- ----------
Segment capital 405 181 405 181
expenditure - pre-strip* R'000 - - 029 351 - - - - - - 029 351
--------------------------- ------------ --------------- ----------- ---------- ---------- ---------- ---------- --------- --------- ---------- ---------- ---------- ----------
Segment depreciation 258 172 259 189
- combined R'000 - 16 560 706 460 - - 445 408 - - 151 428
--------------------------- ------------ --------------- ----------- ---------- ---------- ---------- ---------- --------- --------- ---------- ---------- ---------- ----------
16 30 18 30 35
Segment depreciation R'000 - 560 361 980 - - 445 408 - - 806 948
--------------------------- ------------ --------------- ----------- ---------- ---------- ---------- ---------- --------- --------- ---------- ---------- ---------- ----------
Segment depreciation 228 153 228 153
- pre-strip* R'000 - - 345 480 - - - - - 345 480
--------------------------- ------------ --------------- ----------- ---------- ---------- ---------- ---------- --------- --------- ---------- ---------- ---------- ----------
Share option costs
included in segment
--------------------------- ------------ --------------- ----------- ---------- ---------- ---------- ---------- --------- --------- ---------- ---------- ---------- ----------
profit/(loss) before 2
tax R'000 - - - - - - 962 546 - - 962 2 546
--------------------------- ------------ --------------- ----------- ---------- ---------- ---------- ---------- --------- --------- ---------- ---------- ---------- ----------
288 1 106 805 575 527 750 432 (397 (262 2 036 1 790
Segment assets R'000 - 061 627 728 819 676 819 119 023) 818) 242 766
--------------------------- ------------ --------------- ----------- ---------- ---------- ---------- ---------- --------- --------- ---------- ---------- ---------- ----------
111 639 435 2 201 28 (211 (101 631 473
Segment liabilities R'000 - 407 210 167 106 428 580 525 842) 923) 054 604
--------------------------- ------------ --------------- ----------- ---------- ---------- ---------- ---------- --------- --------- ---------- ---------- ---------- ----------
*See note 9.
Notes to the Condensed Preliminary Consolidated Financial
Statements
for the year ended 30 June 2012
1. Reporting entity
Petmin is a company domiciled in South Africa. The condensed
preliminary consolidated financial statements of the Group for the
year
ended 30 June 2012 comprise the Company and its subsidiaries and
the Group's interests in associates and jointly controlled
entities
(together referred to as the "Group").
The condensed preliminary consolidated financial statements were
authorised for issue by the directors on 18 September 2012.
2. Statement of compliance
The condensed preliminary consolidated financial statements have
been prepared under the supervision of Petmin's Financial
Director,
Mr B P Tanner CA(SA) and in accordance with the recognition and
measurement requirements of IFRS and the presentation and
disclosure requirements of IAS 34 - Interim Financial Reporting,
the AC 500 Standards as published by the Accounting Practices
Board
and the South African Companies Act, 2008. The condensed
preliminary consolidated financial statements do not include all of
the
information required for full annual financial statements and
should be read in conjunction with the consolidated annual
financial
statements for the year ended 30 June 2011, which are available
upon request from the Company's registered office at 37 Peter
Place,
Bryanston, 2021, Johannesburg, or at www.petmin.co.za.
3. Significant accounting policies
The accounting policies have been applied consistently by the
Group to all periods presented in these condensed consolidated
preliminary financial statements and are consistent to those
applied by the Group in its consolidated financial statements as at
and for
the year ended 30 June 2011.
Functional and presentation currency
The condensed consolidated preliminary financial statements are
presented in South African Rands ("Rands"), which is the
Company's
functional currency. All financial information presented in
Rands has been rounded to the nearest thousand.
4. Estimates and judgements
The preparation of the condensed preliminary consolidated
reviewed financial statements in conformity with IAS 34 - Interim
Financial
Reporting requires management to make judgements, estimates and
assumptions that affect the application of policies and
reported
amounts of assets and liabilities, income and expenses. The
estimates and associated assumptions are based on historical
experience
and various other factors that are believed to be reasonable
under the circumstances, the results of which form the basis for
making
the judgements about carrying values of assets and liabilities
that are not readily apparent from other sources. Actual results
may differ
from these estimates.
The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in
the
period in which the estimate is revised if the revision affects
only that period or in the period of the revision and future
periods if the
revision affects both current and future periods.
The significant judgements made by management in applying the
Group's accounting policies and the key sources of estimation
uncertainty were the same as those applied to the consolidated
financial statements as at and for the year ended 30 June 2011.
5. Review of results
The results of the Group as set out in these condensed
preliminary consolidated financial statements have been reviewed by
the
Group's auditors, KPMG Inc. The unqualified review report is
available for inspection at the Group's registered offices.
6. Discontinued operation
With the Competition Tribunal's approval received on 29 June
2012, all conditions for the sale of SamQuarz (Pty) Limited were
fulfilled
and the Group recorded a profit after tax on the sale of R18
million at that date. In July 2012, the Group received R258 million
of
the proceeds on the sale. The balance of the proceeds (estimated
to be R23 million) is payable upon completion of all the
formalities
relating to the determination of the net asset value adjustment
calculated as the move in the net assets of SamQuarz from the
reference
date accounts. Taking into account the net sale proceeds and
cash flows to Petmin since acquiring SamQuarz in September
2004,
Petmin has generated a cash return of 39% per year for the 7.75
years that it controlled SamQuarz.
Profit from discontinued operations for the year ended 30 June
2012 increased by R11 million largely as, in accordance with
the
provisions of IFRS 5, depreciation ceased on the assets held for
sale from 1 July 2011. Had this depreciation been recorded in
2012,
profit after tax from discontinued operations would have
amounted to R25 million.
The results from the discontinued operation are presented in the
table below:
Reviewed Audited
-------------------------------------------------------- ------------- --------------
Year Year
ended ended
-------------------------------------------------------- ------------- --------------
30 June 30 June
2012 2011
-------------------------------------------------------- ------------- --------------
R'000 R'000
-------------------------------------------------------- ------------- --------------
Results of discontinued operation
-------------------------------------------------------- ------------- --------------
170
Revenue 174 846 082
-------------------------------------------------------- ------------- --------------
(113 (111
Cost of sales 180) 289)
-------------------------------------------------------- ------------- --------------
Gross profit 61 666 58 793
-------------------------------------------------------- ------------- --------------
(24
Operating expenses (10 902) 515)
-------------------------------------------------------- ------------- --------------
Administration expenses (2 137) (2 701)
-------------------------------------------------------- ------------- --------------
Results from operating activities 48 627 31 577
-------------------------------------------------------- ------------- --------------
Net finance income 40 1 481
-------------------------------------------------------- ------------- --------------
- Finance income 1 074 1 838
-------------------------------------------------------- ------------- --------------
- Finance expenses (1 034) (357)
-------------------------------------------------------- ------------- --------------
Profit before income tax 48 667 33 058
-------------------------------------------------------- ------------- --------------
Income tax expense (13 627) (8 977)
-------------------------------------------------------- ------------- --------------
Profit for the year 35 040 24 081
-------------------------------------------------------- ------------- --------------
Add: Profit on fee income earned in Petrnin Limited 3 477 4 230
-------------------------------------------------------- ------------- --------------
Profit for the year from discontinued operations 38 517 28 311
-------------------------------------------------------- ------------- --------------
Earnings per share
-------------------------------------------------------- ------------- --------------
Basic earnings per share (cents) 6.68 4.90
-------------------------------------------------------- ------------- --------------
Diluted earnings per share (cents) 6.58 4.88
-------------------------------------------------------- ------------- --------------
Cash flows from/(used in) discontinued operation
-------------------------------------------------------- ------------- --------------
Net cash from operating activities 37 366 46 742
-------------------------------------------------------- ------------- --------------
(62
Net cash used in investing activities (35 834) 286)
-------------------------------------------------------- ------------- --------------
Net cash used in financing activities (5 999) (6 200)
-------------------------------------------------------- ------------- --------------
(21
Net cash used in discontinued operation (4 467) 744)
-------------------------------------------------------- ------------- --------------
Effect of disposal on the financial position of
the Group
-------------------------------------------------------- ------------- --------------
(234
Property, plant and equipment 053)
-------------------------------------------------------- ------------- --------------
Inventory (36 549)
-------------------------------------------------------- ------------- --------------
Trade and other receivables (23 852)
-------------------------------------------------------- ------------- --------------
Cash and cash equivalents (13 040)
-------------------------------------------------------- ------------- --------------
Deferred tax liabilities 59 739
-------------------------------------------------------- ------------- --------------
Rehabilitation provision 7 998
-------------------------------------------------------- ------------- --------------
Interest-bearing loans and borrowings 2 994
-------------------------------------------------------- ------------- --------------
Trade and other payables 23 218
-------------------------------------------------------- ------------- --------------
Current tax liability 439
-------------------------------------------------------- ------------- --------------
(213
Net assets and liabilities 106)
-------------------------------------------------------- ------------- --------------
Gross proceeds 281 064
-------------------------------------------------------- ------------- --------------
Less: Selling expenses (10 849)
-------------------------------------------------------- ------------- --------------
Net proceeds 270 215
-------------------------------------------------------- ------------- --------------
Less: Cash disposed (13 040)
-------------------------------------------------------- ------------- --------------
Cash Inflow from sale before change in working capital 257 175
-------------------------------------------------------- ------------- --------------
(281
Increase in debtor on sale of SamQuarz 064)
-------------------------------------------------------- ------------- --------------
Net cash outflow (23 889)
-------------------------------------------------------- ------------- --------------
7. Earnings per share
Earnings per share ("EPS") are based on the Group's profit for
the year, divided by the weighted average number of shares in issue
during the year.
Reviewed Audited
----------------------------------------------------- ------------------------------------- -----------------------------------
Year ended Year ended
----------------------------------------------------- ------------------------------------- -----------------------------------
30 June 2012 30 June 2011
----------------------------------------------------- ------------------------------------- -----------------------------------
Profit Number Per Profit Number Per
for of for of
----------------------------------------------------- ----------- ----------- ----------- ----------- ----------- ---------
the shares share the shares share
year in year in
----------------------------------------------------- ----------- ----------- ----------- ----------- ----------- ---------
R'000 thousands in R'000 thousands in
cents cents
----------------------------------------------------- ----------- ----------- ----------- ----------- ----------- ---------
112 576 100
Basic earnings per share 682 908 19.53 982 576 908 17.50
----------------------------------------------------- ----------- ----------- ----------- ----------- ----------- ---------
Share options and contingent consideration - 8 771 (0.29) - 3 514 (0.10)
----------------------------------------------------- ----------- ----------- ----------- ----------- ----------- ---------
112 585 100
Diluted EPS 682 679 19.24 982 580 422 17.40
----------------------------------------------------- ----------- ----------- ----------- ----------- ----------- ---------
Headline earnings per share
----------------------------------------------------- ----------- ----------- ----------- ----------- ----------- ---------
Headline earnings per share is based on
the Group's headline earnings divided by
the weighted average number of shares in
issue during the year.
----------------------------------------------------- ----------- ----------- ----------- ----------- ----------- ---------
Reconciliation between earnings and headline
earnings per share
----------------------------------------------------- ----------- ----------- ----------- ----------- ----------- ---------
112 576 100
Basic EPS 682 908 19.53 982 576 908 17.50
----------------------------------------------------- ----------- ----------- ----------- ----------- ----------- ---------
Adjustments:
----------------------------------------------------- ----------- ----------- ----------- ----------- ----------- ---------
- Fair value gain on investment in joint (3
venture 404) - (0.59) - - -
----------------------------------------------------- ----------- ----------- ----------- ----------- ----------- ---------
18
- Impairment of exploration asset 841 - 3.27 - - -
----------------------------------------------------- ----------- ----------- ----------- ----------- ----------- ---------
(18
- Profit on sale of subsidiary 145) - (3.15) - - -
----------------------------------------------------- ----------- ----------- ----------- ----------- ----------- ---------
109 576 100
Headline EPS 974 908 19.06 982 576 908 17.50
----------------------------------------------------- ----------- ----------- ----------- ----------- ----------- ---------
Share options and contingent consideration - 8 771 (0.28) - 3 514 (0.10)
----------------------------------------------------- ----------- ----------- ----------- ----------- ----------- ---------
109 585 100
Diluted headline EPS 974 679 18.78 982 580 422 17.40
----------------------------------------------------- ----------- ----------- ----------- ----------- ----------- ---------
Reconciliation between earnings per share
----------------------------------------------------- ----------- ----------- ----------- ----------- ----------- ---------
and earnings per share from continuing
----------------------------------------------------- ----------- ----------- ----------- ----------- ----------- ---------
operations
----------------------------------------------------- ----------- ----------- ----------- ----------- ----------- ---------
112 576 100
Basic EPS 682 908 19.53 982 576 908 17.50
----------------------------------------------------- ----------- ----------- ----------- ----------- ----------- ---------
(38 (28
Profit for the year from discontinued operations 517) - (6.68) 311) - (4.90)
----------------------------------------------------- ----------- ----------- ----------- ----------- ----------- ---------
(18
Profit on sale of discontinued operation 145) - (3.14) - - -
----------------------------------------------------- ----------- ----------- ----------- ----------- ----------- ---------
56 576
EPS from continuing operations 020 908 9.71 72 671 576 908 12.60
----------------------------------------------------- ----------- ----------- ----------- ----------- ----------- ---------
Share options and contingent consideration - 8 771 (0.15) - 3 514 (0.08)
----------------------------------------------------- ----------- ----------- ----------- ----------- ----------- ---------
585
Diluted EPS from continuing operations 56 020 679 9.56 72 671 580 422 12.52
----------------------------------------------------- ----------- ----------- ----------- ----------- ----------- ---------
The Earnings per share from continuing operations in 2012 were
negatively affected by the impairment of the investments in Red
Crescent Resources
Limited and the Sivas project. If the R39 million impairment in
2012 is ignored, EPS from continuing operations would have been
16.48 cents in 2012.
8. Investment in jointly controlled entities
Petmin previously announced its strategy to become a globally
diversified mining company with a focus on those specific
commodities that feed
into the steel value chain. Petmin's investment philosophy is to
reduce risk of entry into new geographic areas and commodities by
contracting on
an earn-in, stepped acquisition basis with joint management
control from inception rather than, and not as, an investor in a
portfolio of minority
stakes with no control. This "value and risk-based approach"
requires that key milestones are agreed upfront for each phase of
the investment and if
these milestones are not met, then Petmin is not obliged to
continue with its investment. As previously announced and in line
with this investment
philosophy. Petmin has made the following investments during the
year ended 30 June 2012:
8.1 Investment in North Atlantic Iron Corporation ("NAIC")
Petmin invested an additional $5 million (2011: $1.5 million) in
the jointly managed NAIC acquiring an additional 12% interest to
take Petmin's
shareholding in NAIC to 17%. Petmin's investment in NAIC has
been proportionately consolidated in accordance with the accounting
policy
for investments in jointly controlled entities.
8.2 Investment in Iron Bird Resources Plc ("Iron Bird")
Petmin invested an additional $1.5 million (2011: $0.5 million)
in the jointly managed Iron Bird, increasing its shareholding in
Iron Bird to 50%.
8.3 Red Crescent Resources Limited ("RCR")
Petmin invested CAD3 055 000 to increase its equity holding in
RCR to approximately 10.1%. The funds were applied to the
exploration
programme at RCR's Sivas copper project and therefore a portion
of the investment has been accounted for as an investment in
mineral assets,
with the balance being reflected as an investment in listed
securities.
9. Capital pre-stripping
It is Petmin's accounting policy to record the pre-strip capital
of R405 million (2011: R181 million) as "capital". In reality the
capital expenditure is the
net amount recognised in property, plant and equipment during
the year, i.e. R177 million (2011: R28 million), being pre-strip
capital of R405 million,
less amortisation of R228 million (2011: capital R181 million,
amortisation R153 million). The amortisation is the direct mining
cost incurred in the
year. The open pit mining profile at Somkhele requires that
overburden be removed from the pit before coal can be extracted.
This overburden
removal is capitalised to the development cost of the open pit
(so called "pre-strip") and is then expensed on a
units-of-production basis as the coal
is extracted from the open pits. The pre-strip expenditure in
2012 reflects the increased expenditure to ensure supply of
run-of-mine coal to feed
both the existing and the newly commissioned second plant at
Somkhele.
10. Related parties
No material related party transactions were entered into.
11. Change in directors
As announced on 13 September 2011, Petmin appointed Mr Trevor
Petersen with effect from 12 September 2011 as an independent
non-executive
director and as a member of Petmin's audit and risk
committee.
Petmin furthermore announced after the AGM held on 25 November
2011, that Mr J Strijdom retired as a director of Petmin on that
date and
did not make himself available for re-election as a director.
Petmin thanks Mr Strijdom for his service to Petmin and his
contribution to its audit
and risk committee.
12. Subsequent events
12.1 Cash proceeds received for the sale of SamQuarz
During July 2012, Petmin received R258 million of the proceeds
on the sale in cash. The balance of the proceeds (estimated to be
R23 million)
is payable upon completion of all the formalities relating to
the determination of the net asset value adjustment calculated as
the move in the
net assets of SamQuarz from the reference date accounts.
12.2 Investment in North Atlantic Iron Corporation
On 16 August 2012, Petmin announced that it had invested a
further US$4.5 million to increase its stake in the North Atlantic
Iron
Corporation from 17% to 22.5% based on the project's technical
and economic viability.
12.3 Petmin secures extension to existing mining right at Somkhele anthracite mine
On 17 July 2012, Petmin announced that it had been granted a
20-year mining right for an expansion to new mining areas at its
flagship
Somkhele anthracite operation in northern KwaZulu-Natal, South
Africa.
The new right is in addition to the existing 20-year right
covering existing reserves, and will facilitate the expansion of
operations by South
Africa's biggest producer of metallurgical anthracite.
12.4 Declaration of dividend
On 19 September 2012, the Company announced that it had declared
a dividend of 5 cents per share which is in line with the
approved
dividend policy.
The record date for payment of the cash dividend is 16 November
2012. Please refer to the separate notice of the declaration of
dividend
dated 19 September 2012 for more details.
12.5 Cancellation of R82 million Black Economic Empowerment ("BEE") surety
In January 2010, Petmin shareholders approved an R82 million
surety by Petmin on behalf of Dark Capital (Pty) Limited, Petmin's
primary
BEE partner. The Petmin Board is pleased to inform shareholders
that the surety has been withdrawn with effect from 24 August
2012
following Dark Capital's payment in full of its R65 million debt
to the Standard Bank of South Africa. Dark Capital expresses its
appreciation
to shareholders for approving the surety. The Petmin Board also
expresses its appreciation to Dark Capital for its continued
commitment
to Petmin.
12.6 Capital expenditure and cash requirements
Although Somkhele has the potential to produce material cash
flows, the Petmin Board believes that during these uncertain times,
it is prudent
to ensure that sufficient cash and facilities are available.
The Group has signed approved term sheets from Standard Bank,
our bankers since inception, securing, in addition to the existing
R100 million
overdraft facilities, new medium-term debt facilities of R225
million and a Rl00 million revolving credit facility.
12.7 Other subsequent events
There have been no other events that have occurred subsequent to
30 June 2012 and before the condensed preliminary consolidated
financial
statements are authorised for issue which require adjustment of,
or disclosure in the financial statements or notes thereto in
accordance with
IAS 10 - Events After the Reporting Period.
Management commentary for the year ended 30 June 2012
(i) General overview of performance
Petmin reported a significant investment of R523 million (2011:
R230 million) to double capacity at its Somkhele anthracite mine
and to
continue to deliver on its growth and diversification
strategy.
Petmin reported stable financial results with operations
performing well and has had a satisfactory year of expansion and
growth despite
difficult trading conditions, with the doubling of capacity at
the Somkhele anthracite mine, accelerated investment in NAIC and
the successful
conclusion of the sale of SamQuarz.
The Group's operations remain strongly cash-generative,
generating R443.8 million in the year to June 2012 (2011: R360.8
million).
Profit after tax was up 12% to R112.7 million (2011: R101.0
million) after including the profit on sale of SamQuarz of R18.2
million and the
write-down of the investments in RCR totalling R39.0
million.
The normalised profit (see table below) from ongoing operations
increased by 23% to R97 million (2011: R79 million).
Reviewed Audited
----------------------------------------------------- ------------- -------------
Year ended Year ended
----------------------------------------------------- ------------- -------------
30 June 30 June
2012 2011
----------------------------------------------------- ------------- -------------
Normalised profit from ongoing operations R'000 R'000
----------------------------------------------------- ------------- -------------
Results from ongoing operations 141 763 106 211
----------------------------------------------------- ------------- -------------
Net finance (expense)/income (6 988) 3 699
----------------------------------------------------- ------------- -------------
Pre-tax results from ongoing operations 134 775 109 910
----------------------------------------------------- ------------- -------------
Assumed tax at 28% (37 737) (30 775)
----------------------------------------------------- ------------- -------------
Assumed profit after tax from ongoing operations 97 038 79 135
----------------------------------------------------- ------------- -------------
576 908
Shares in issue 188 576 908 188
----------------------------------------------------- ------------- -------------
Normalised profit after tax from ongoing operations
per share 16.82 13.72
----------------------------------------------------- ------------- -------------
Results from operations were steady with Somkhele reporting a
profit after tax of R97.7 million (2011: R83.4 million) up 17%, and
SamQuarz
reporting a profit after tax of R35.0 million (2011: R24.1
million). In accordance with the provisions of IFRS 5, depreciation
ceased on the assets
held for sale (SamQuarz) from 1 July 2011. Had this depreciation
been recorded in 2012, profit after tax from SamQuarz would have
been
R20.7 million, down R3.4 million from 2011.
Capital expenditure increased to R460 million (2011: R208
million) of which R177 million (2011: R28 million) was spent on
pre-stripping
the open pits at Somkhele in order to double production rates to
feed the second plant which was fully operational in the last
quarter of
FY2012. The main capital projects at Somkhele included the
second wash plant (R119 million), exploration and resource
definition activities
(R29 million) and completion of new access roads (R3.4
million).
Petmin invested a further R62.3 million (2011: R21.8 million) in
its foreign domiciled, jointly controlled exploration and
development projects,
with its focus on the investment in NAIC which is being
accelerated based on positive exploration results.
Petmin's interest-bearing debt to equity ratio increased to
17.26% (2011: 11.48%) as overdraft facilities of R114.9 were
utilised at 30 June
2012 pending the receipt of the SamQuarz sale proceeds in July
2012.
Anthracite division
Somkhele anthracite mine
Monthly production doubled in May and June 2012 at Somkhele
following the successful commissioning of the second wash plant.
Somkhele
now has an annual production capacity in excess of 1.2 million
saleable tonnes of anthracite.
The impact of the second plant enabled Somkhele to produce 637
220 tonnes (2011: 524 006 tonnes) of saleable anthracite in the
year to
30 June 2012. Somkhele sold 546 051 tonnes (2011: 579 087
tonnes) of anthracite in the year to 30 June 2012.
Net profit margins were stable at 26% (2011: 25%) for the year
ended 30 June 2012 despite increased mining costs as the mine
moved
to exploit deeper reserves with increased strip ratios in the
move to Area1. Mining costs per run of mine tonne increased 21%
mainly due
to the increased strip ratios, but mining costs per saleable
tonne reduced by 3% due to the utilisation of the second wash plant
to process
discard and increase yield.
Construction of a third processing plant at an estimated cost of
R62 million has been approved and is expected to be commissioned in
the
first quarter of CY2013.
The exploration and resource definition activities during the
year indicate that Somkhele has an opencast Life of Mine in excess
of 20 years
with both plants running at full capacity and producing
approximately 1.2 million tonnes of anthracite. During the year
detailed revised
mining plans were developed to reduce the strip ratio to an
average of 3.5 over the remaining Life of Mine and these revised
mine plans will
substantially reduce the capital required to develop the various
pits.
Silica division - SamQuarz silica mine
The sale of the SamQuarz silica mine, for final gross proceeds
of R281.1 million, was concluded on 30 June 2012, with the group
recording
a profit after tax of R18.2 million.
Business of Tomorrow division
Petmin's strategy is to focus on the steel value chain and
commodities required for infrastructure development and
urbanisation.
With the higher level of risk associated with exploration,
Petmin is satisfied that its value and risk-based investment
philosophy potentially
delivered a world-class pig iron project, may deliver a
substantial return on its investment in Iron Bird and, to the
disappointment of
management, RCR Sivas Copper's results did not meet Petmin's
investment criteria. Petmin still believes that Turkey provides
tremendous
potential, and we will work with RCR management in searching for
opportunities.
During the year, Petmin made the following investments:
North Atlantic Iron Corporation ("NAIC")
Petmin invested an additional $5 million (2011: $1.5 million) in
the jointly managed NAIC acquiring an additional 10% interest to
take Petmin's
shareholding in NAIC to 17%.
Petmin has accelerated its investment in NAIC, the iron sands to
pig iron project in Canada, based on its technical and economic
feasibility.
Petmin increased its shareholding to 17% during the year ended
30 June 2012 (2011: 5%) and in August 2012, Petmin further
increased its
stake in NAIC to 22.5%.
Petmin has joint management control of NAIC, with an earn-in
option to acquire up to 40% for a total of US$25 million, plus a
further option
to acquire an additional 9.9% at a market-related price.
In March 2012, NAIC's maiden resource statement indicated that
its iron sands resource provides an abundant low-cost feedstock
for
production of a concentrate which can be converted into
high-purity pig iron. The NAIC resource is 594 million tonnes of
sand at 9.35 wt
% of which 38.02% is Fe2O3 equivalent. The NAIC claim has been
explored to a depth of 15 metres. Aeromagnetic and Lidar surveys,
and
deeper drilling subsequent to the maiden resource statement,
indicate potential for the NAIC iron sands resource to be extended
to well
below this level. An updated resources statement is expected to
be issued during Q4 2012.
A pilot mineral processing plant has been commissioned alongside
the NAIC resource in Goose Bay, Labrador, and the first concentrate
was
produced during August 2012 with results in line with our
expectations.
Iron Bird Resources Plc. ("Iron Bird")
In the year ended 30 June 2012, Petmin invested an additional
$1.5 million (2011: $0.5 million) in the jointly managed Iron Bird
increasing its
shareholding in Iron Bird to 50%.
Following satisfactory results of its exploration programme,
Petmin and its joint venture partners are considering their options
to either merge
with a larger iron ore company or to sell the investment in the
Mt Ginka iron ore project in northern Liberia.
Red Crescent Resources Limited ("RCR")
In the year ended 30 June 2012, Petmin invested CAD3 055 000 to
increase its equity holding in RCR to approximately 10.1%. The
funds
were applied to the exploration programme at RCR's Sivas copper
project and therefore a portion of the investment has been
accounted for
as an investment in mineral assets, with the balance being
reflected as an investment in listed securities.
Exploration for copper and associated minerals at the Sivas
project in Turkey delivered disappointing results and, in line with
Petmin's
investment approach, when the exploration results did not meet
Petmin's investment criteria, the decision was taken to withdraw
from the
Sivas project. Petmin recorded a R39.1 million impairment, with
R20.2 million on the mark-to-market of its investment in the
Toronto-listed
shares of explorer RCR and an impairment of R18.9 million on its
Sivas exploration asset. Petmin retains its investment of 9 280 000
listed
shares in RCR.
Iron ore - South Africa (Veremo project)
Petmin and its partners in the Veremo iron ore project in
Mpumalanga are awaiting the outcome of an application for a mining
licence with
the Department of Mineral Resources.
Kermas Limited, the controlling shareholder of Veremo, is
evaluating development options for potential annual production of a
million tonnes
of pig iron and titanium-rich slag as a by-product. Kermas has
signed an agreement with a Chinese international plant construction
company
MCC International Incorporation Limited to complete a detailed
bankable feasibility study on Veremo before the end of Q1 2013.
(ii) Prospects
Anthracite division
Although world markets remain uncertain, production and sales
levels are expected to significantly increase from those achieved
in FY2012,
with an expected reduction in spot US$ export prices expected to
be offset by a weaker Rand/Dollar exchange rate. Export sale
negotiations
have all indicated extremely difficult trading conditions with
export duff prices (18.5 Ash; 8.5 Volatiles) between US$90 and
US$100 FOB for
the next six months possibly moving to the US$110 Free on Board
("FOB") in second half of the financial year 2013.
We anticipate to sell approximately 900 000 tonnes of anthracite
during the next 12 months, some 300 000 less than capacity as a
result of
a depressed market. We anticipate to sell some 420 000 tonnes
into the export market (and have committed orders for 360 000
tonnes)
and 480 000 into the local market (and have committed orders for
370 000 tonnes).
The construction and commissioning of the third processing plant
at Somkhele with an annual capacity to produce approximately 480
000
tonnes of product for the energy market from the processing of
discard is expected to be completed by Q1 2013. Processing of the
discard
increases Somkhele's yield from 42% to in excess of 50%. We are
in the process of securing a new five-year take-or-pay agreement to
supply
20 000 tonnes per month of into the energy market, commencing in
Q1 2013 at an initial price of R170 per tonne, escalating
annually.
Capital expenditure at Somkhele in FY 2013 is expected to be
approximately R95 million as the construction of the third plant
and the
exploration programmes are finalised. In addition the actual
development cost of the pits (or pre-stripping) is expected to be
approximately
R110 million (see note 9).
Business of Tomorrow division
At NAIC, an updated resources statement is expected to be issued
during Q4 CY2012 followed by a NI43-101 compliant project
statement
in Q1 CY2013. Petmin has budgeted to spend an additional US$10
million to advance the project in FY2013 and to increase its stake
to
30% in the potentially world-class pig iron project.
Work continues on the trial production of an iron concentrate,
design of a pilot processing plant for smelt tests, metallurgical
analysis and a
preliminary economic assessment.
Additional details on Petmin, including a detailed presentation
on the results (which will be available from
20 September 2012) can be found on our website
www.petmin.com.
By order of the Board
I D Cockerill J C du Preez
Executive Chairman Chief Executive Officer
Johannesburg Sponsor
19 September 2012 River Group
Directors: I Cockerill# (Executive Chairman) L Mogotsi (Deputy
Chairman) J du Preez (Chief Executive Officer)
B Doig B Tanner (Financial Director) M Arnold* E de V Greyling*
K Kalyan* A Martin* T Petersen* J Taylor*
*Non-executive #British American
Registered office: 37 Peter Place, Bryanston, 2021
(PO Box 6070, Rivonia, 2128)
Corporate office: 37 Peter Place Bryanston 2021
Tel: (011) 706 1644
Fax: (011) 706 1594
Website: www.petmin.co.za
Sponsor - JSE: River Group
Tel: +27 (0) 12 346 8540
Nominated adviser - AIM: Macquarie Capital (Europe) Limited
Company Secretary: Mondial Consultants (Pty) Limited
Transfer secretaries: JSE: Computershare Investor Services
(Proprietary) Limited
AIM: Computershare Investor Services PLC
Auditors: KPMG Inc.
A PDF version of these results is available on our website:
www.petmin.co.za
This information is provided by RNS
The company news service from the London Stock Exchange
END
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