TIDMPTMN
RNS Number : 1931P
Petmin Limited
30 September 2013
PETMIN LIMITED
Incorporated in the Republic of South Africa
Registration Number 1972/001062/06
Share Code JSE: PET & ISIN: ZAE000076014
Share Code AIM: PTMN
("Petmin" or the "Company")
30 September 2013
Somkhele expansion delivering results
Financial highlights
Ø Earnings from continuing operations excluding impairments up
18% to 15.25 cents (2012: 12.98 cents)
Ø Headline earnings per share of 15.25 cents (2012: 19.06 cents
- including 6.68 cents from SamQuarz)
Ø Profit after tax down 22% to R88 million (2012: R113 million)
- excluding Veremo impairment
Ø 92% increase in second-half headline earnings per share
("HEPS") from improved performance compared to first half at
Somkhele
Ø Additional US$6.5 million (2012: US$5 million) invested in
North Atlantic Iron Corporation ("NAIC") to take Petmin
shareholding to 25%
Ø R200 million impairment of investment in the Veremo
project
Ø Dividend of 3 cents per share (20% of HEPS) declared on 30
September 2013 (2012: 5 cents)
Operational highlights
Ø Third plant successfully commissioned and fully operational in
second half - producing 207 238 tonnes of energy product
Ø Successful smelt tests conducted at NAIC pig iron project
Ø Progress towards Preliminary Economic Assessment (PEA) on NAIC
iron sands project
Petmin has reported earnings per share from continuing
operations, excluding impairments, up 18% to 15.25 cents (2012:
12.98 cents) for the financial year ended 30 June 2013.
Profit for the year after tax, excluding a R200m impairment on
the Veremo project, was down 22% to R88 million (2012: R113 million
- includes R57 million from SamQuarz).
Second half profit, excluding the impairment on the Veremo
project, was up 92% to R58 million, after production at the
Somkhele anthracite mine recovered following first half-year
disruptions due to excess rain and unprotected strike action.
Petmin's operations remain strongly cash generative, generating
R392 million in the year to 30 June 2013 (2012: R444 million -
includes R37 million from SamQuarz).
After a R200m impairment against the value of the Veremo
project, a loss for the year of R112m was reported from continuing
operations (2012: profit of R56 million).
During the year under review, Petmin incurred capital
expenditure of R243 million (2012: R460 million) in support of its
growth and diversification strategy, of which R224 million was
spent at Somkhele (2012: R388 million).
With the significant capital investment at Somkhele largely
completed, the mine is now geared to produce up to 1.2 million
tonnes per annum of anthracite and 480 000 tonnes per annum of
energy product.
Petmin invested a further R92m in jointly controlled entities
(2012: R46m). The investment of R43m in NAIC takes Petmin's
interest at 30 June 2013 to 25.15% and provides funding for a
Preliminary Economic Assessment ("PEA"), and recent smelt tests
which successfully produced pig iron.
A net investment of R49m in a joint venture ("JV") with the
mining contractor at Somkhele provides Petmin with a 50% stake in
that business.
"After a challenging first half, Petmin recovered well to post
results which are pleasing under the circumstances," said Petmin
chief executive Jan du Preez. "Our Somkhele anthracite operation is
now demonstrating the impact of our sustained investment and we are
making good progress in our NAIC pig iron project in Canada."
Somkhele operations update
Somkhele reported increased production after a full year of
operations from its second wash plant, together with the
commissioning of a third wash plant in February 2013 to produce
energy product.
During the year ended 30 June 2013, Somkhele produced 822 431
tonnes of anthracite (2012: 637 220 tonnes) and 207 238 tonnes of
energy product (2012: nil).
Anthracite production increased by 80% in the second half to 528
666 tonnes (first half: 293 765 tonnes) after first half production
difficulties were addressed.
Net profit margins reduced to 16% (2012: 26%) for the year ended
30 June 2013 as sales price increases in a subdued market could not
compensate for the increased cost of mining, increased interest
charges on the new debt, the impact of an unprotected strike, and
operational challenges in the first half due to excess rain.
Management continues to seek ways to reduce costs and improve
productivity.
The commissioning of the third plant for a total cost of R62m
provides Somkhele with the capacity to produce 480 000 tonnes per
annum of product as a blend for the energy market.
Tendele Coal Mining (Proprietary) Limited ("Tendele") and its
major customer for this product are in dispute. Tendele and its
legal advisers believe the matter should be resolved in Tendele's
favour and no liability has been recognised at 30 June 2013. Petmin
has engaged a number of additional customers, some of whom have
taken trial shipments of its energy product and have indicated
their willingness to sign off-take agreements.
Exploration and resource definition activities conducted at
Somkhele during the year have borne fruit and management expects to
report substantially increased SAMREC -compliant reserves by
November 2013.
After the granting of a new order 20-year mining right for an
extension to the existing mining area, mining has commenced in the
Luhlanga area. This provides flexibility to blend production to
supply improved yields and quality of product, and reduces the risk
of production delays by having multiple pits in production.
In June 2013, Tendele submitted an application for a mining
right over the remainder of Areas 4 and 5 at Somkhele, following an
extensive drilling programme conducted over the past three
years.
A campaign was undertaken to stockpile an additional 100 000 run
on mine ("ROM") tonnes to ensure an adequate amount of available
coal for the wash plants in the event of a repeat of the production
difficulties incurred in the first half. At 30 June 2013, Somkhele
had 142 298 ROM tonnes on stockpile.
During the year in review, Petmin's 100% owned operating company
at Somkhele, Tendele, entered into a JV with mining contractor
Sandton Plant Hire ("SPH"). The mining JV is jointly controlled by
Tendele and SPH and gives Tendele more control over production,
productivity and efficiency, and ensures that human resources
policies are consistent on the mine.
Somkhele outlook and market review
The export market for anthracite remains soft with downward
pressure on prices. In the domestic market, Petmin has agreed to a
roll-over of prices with its major local customer.
Somkhele has budgeted to produce and sell approximately one
million tonnes of anthracite and 390 000 tonnes of energy product
(approximately 80% of the production capacity) for the year ending
30 June 2014.
Cost pressures remain an issue with demands from labour for
increases exceeding inflation and the impact of a weaker South
African Rand on imported capital equipment, fuel and
explosives.
Management is engaging with labour in an attempt to reach a
workable solution for all parties in the current wage
negotiations.
A key focus for management in the year ahead is to drive mining
efficiencies as mining represents more than 60% of the operating
cost at the mine.
Capital expenditure at Somkhele in FY 2014 is expected to be
approximately R91m (including R40m for infrastructure and roads,
and R10m for exploration). In addition, development cost of the
pits (pre-stripping) is expected to be approximately R6m.
NAIC (iron sands to pig iron project in Canada)
During the year to end-June 2013, Petmin invested an additional
US$6.5 million (2012: US$5 million) in NAIC, acquiring an
additional 8% interest to take Petmin's shareholding in the project
to 25%. NAIC is a highly-prospective iron sands to pig iron project
in Canada's Labrador province, aiming to become one of the lowest
cost pig iron producers in the world.
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.
An updated NI43-101 compliant statement was published by SRK
Consulting in February 2013 which confirms an indicated resource of
334 million tonnes with a further 260 million tonnes in the
inferred category. This resource statement only covers 3% of NAIC's
450km(2) claim.
Significant progress has been made in the project with smelt
tests having been conducted at a smelter commissioned in Forks,
Pennsylvania, for purposes of testing the cold briquetted feed and
also a pre-reduced feed process using a rotary hearth for pre
reduction. Tenova and Hatch are reviewing the smelt test results
and will sign-off on the process.
An alternative coal-fired smelting process using the Outotec
AusIron process was also successfully tested in Outotec's facility
in Australia.
NAIC outlook
Petmin's immediate focus is on the finalisation of the NI43-101
compliant PEA and thereafter to implement the corporate
restructuring of NAIC in readiness for an exchange listing in the
Canadian market.
The PEA will provide detailed information in respect of geology
(resource definition), mining methodology and mine design,
processing, smelting, logistics and market analysis.
The overall project economics look favourable. A number of key
work streams are underway to refine and optimise the project's
initial business plan in the draft PEA, to progress the project to
a bankable level, and to possibly source a strategic development
partner. It is anticipated the final signed off PEA will be
published in late Q4 2013.
Veremo (iron ore project in Mpumalanga, South Africa)
Significant progress has been made at Veremo and development
capital of R112 million has been invested to date by the
controlling shareholders and the previous owners. MCC International
Incorporation Limited ("MCC") was commissioned by Veremo 18 months
ago to perform a feasibility study and, during the year under
review, finalised their report on the project and concluded that it
is economically viable. The Veremo management team is in the
process of evaluating and reviewing the report, and awaits the
approval of a new order mining licence application.
The controlling shareholders of Veremo Holdings (Proprietary)
Limited ("Veremo") were to fund and develop the project to commence
production within 48 months of 30 April 2008. Veremo was to
distribute to Petmin the larger of a cash payment of R65m per year
for three years, or 25% of the profit after tax from Veremo.
The first of the three cash payments of R65 million fell due on
28 February 2013 and this payment has not been received. Petmin has
entered into discussions with the controlling shareholders
regarding the payment due.
Notwithstanding the above, and bearing in mind weakness in
global markets, Petmin has reviewed the economic value of the
project and deemed it prudent to reduce the project value by
R200m.
Iron Bird Resources Plc (iron ore project in Liberia)
Petmin continues to seek a potential merger or acquisition
partner for its iron ore exploration project in Liberia, which is a
50/50 JV with gold explorer Hummingbird.
During the year ended 30 June 2013, an application for a
two-year extension to the exploration permits was made. This
extension is expected to be granted shortly.
Red Crescent Resources Limited ("RCR") (Turkey)
In the year ended 30 June 2013, Petmin invested C$325 000 (2012:
C$5 million) to acquire 6.5 million shares in RCR together with 6.5
million share warrants that provide the holder with the right to
acquire RCR shares for 7 Canadian cents per share for three
years.
The ruling share price of RCR at 30 June 2013 was 10 cents per
share. The investment maintains Petmin's shareholding in RCR at
approximately 10% following a private placement by RCR to
recapitalise the business and to settle debt. Following the
restructuring of its board and senior management, RCR commissioned
a dense media separation plant at its Hakkari Zinc Project in
November 2012, and has produced and sold 6 140 tonnes of direct
shippable ore in the period to 30 June 2013.
Change in role of director
On 1 October 2013, Ian Cockerill will assume the position of
non-executive chairman of Petmin, and will continue to be available
as a consultant to Petmin.
Renewal of cautionary announcement
Further to the cautionary announcement dated 9 September 2013,
Petmin shareholders are advised that negotiations are still in
progress which if successfully concluded, may have a material
effect on the price of the Company's securities. Accordingly,
shareholders are advised to continue exercising caution when
dealing in the Company's securities until a full announcement is
made.
De-listing and termination of Petmin's AIM listing
On 12 September 2013, Petmin announced that it will de-list and
terminate its secondary listing on AIM, as the low volumes of
Petmin shares traded on AIM did not warrant the cost of maintaining
the secondary listing.
Presentation available
A detailed presentation will be made available on the Company's
website www.petmin.co.za from Tuesday 1 October 2013.
Call with management
Investors, analysts and media are invited to join a
teleconference and Q&A with management at 11h00 South African
time on Monday 30 September 2013.
A playback facility will be available after the call. Dial-in
details below.
Live Call Access Numbers For Participants
-------------------------------------------------------
Country Access Number
-------------------------------------- ---------------
Other Countries (Intl Toll) +27 11 535 3600
-------------------------------------- ---------------
Other Countries - Alternate +27 10 201 6800
-------------------------------------- ---------------
South Africa (Toll-Free) 0 800 200 648
-------------------------------------- ---------------
South Africa - Cape Town 021 819 0900
-------------------------------------- ---------------
South Africa - Durban 031 812 7600
-------------------------------------- ---------------
South Africa - Johannesburg 011 535 3600
-------------------------------------- ---------------
South Africa - Johannesburg Alternate 010 201 6800
-------------------------------------- ---------------
UK (Toll-Free) 0808 162 4061
-------------------------------------- ---------------
Playback Access Numbers
---------------------------------------------
Country Access Number
---------------------------- ---------------
Other Countries (Intl Toll) +27 11 305 2030
---------------------------- ---------------
South Africa (Telkom) 011 305 2030
---------------------------- ---------------
UK (Toll-Free) 0 808 234 6771
---------------------------- ---------------
Enquiries:
Petmin
Bradley Doig
+27 11 706 1644
Media
Jonathon Rees
+27 76 185 1827
Sponsor and Corporate Advisor (JSE)
River Group
Andrew Lianos
+27 834 408 365
Nominated Adviser and Broker (AIM)
Macquarie Capital (Europe) Limited
Steve Baldwin, Nicholas Harland
+44 20 3037 2000
This information is provided by RNS
The company news service from the London Stock Exchange
END
MSCLMMITMBAJMMJ
Petmin (LSE:PTMN)
Gráfica de Acción Histórica
De May 2024 a Jun 2024
Petmin (LSE:PTMN)
Gráfica de Acción Histórica
De Jun 2023 a Jun 2024