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BRE
BRE
BRR - Braemore Resources Plc - Preliminary audited results for the year ended 30
June 2008
BRAEMORE RESOURCES PLC
(A company incorporated in England and Wales with Registration Number 5350550)
(South African registration number: 2008/013973/10)
Share code on the JSE Limited: BRE
Share code on AIM:RR ISIN:GB00B06GJQ01
("Braemore" or "the Company")
PRELIMINARY AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE 2008
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 2008.
Highlights:
- the successful commissioning of the demonstration ConRoast smelting facility
in Johannesburg, resulting in Braemore producing its first PGM ounces,
generating first-time revenues for the Company for the year of GBP9.0 million;
- successful metallurgical test work completed on atmospheric leaching of nickel
sulphide tailings and acid regeneration and recycling;
- firmly establishing the groundwork for the first independent, black-empowered
PGM smelting facility in South Africa;
Post-year end events:
- the appointment of Leon Coetzer as Managing Director and Chief Executive
Officer with effect from 1 July 2008.
- As of 2 July 2008, the Company raised GBP6.5 million gross through the issue
of 100,008,000 ordinary shares at 6.5p
- On 16 July 2008, Braemore commenced trading in the Platinum and Precious
Metals sector of the JSE Ltd in South Africa.
Commenting on these results, Leon Coetzer, Braemore`s Chief Executive, said:
"Braemore has made significant progress over the past year in both its platinum
and nickel operations, despite challenging market conditions. The proceeds of
our recent capital raising will contribute to the development of our first
commercial PGM smelter and the Leinster bankable feasibility study. We remain
convinced that the enhanced recovery processes we can offer potential partners
will enable us, ultimately, to create a fully vertically integrated operation,
right across the mine-to-metals spectrum."
For further information, please contact:
Braemore Resources plc
Leon Coetzer
Chief Executive Officer
Tel: +27 11 875 6540
Qinisele Resources (Pty) Ltd
Advisor - SA
Denni Tucker
Tel: +27 82 492 4957
Investec Bank (UK) Limited
Nomad and Joint broker - UK
Gerard Kisbey-Green
Tel: +4420 7597 5167
Mirabaud Securities
Joint Broker - UK
Rory Scott
Tel: +44 207 878 3360
Parkgreen Communications
Investor Relations - UK
Sue Scott
Tel: +44 20 7933 8780
Russell and Associates
Investor Relations - SA
Charmane Russell
Tel: +27 11 880 3924
CHAIRMAN`S STATEMENT
The past year has seen Braemore Resources make significant progress in both
the nickel and platinum arenas, and I am pleased to report on the forward
momentum achieved amid challenging market conditions.
Our activities and results for the year reflect the continued implementation
of our business strategy; to offer an attractive opportunity to enter into
the platinum group metal (PGM) and nickel businesses, initially through
the mid-stream processing of these metals and, in time, through
mine-to-market production opportunities. This strategy is unique
in the industry and is the non-traditional way of building a vertically
integrated mining company. We are confident of both the quality of our
technologies and the expertise of our people, and the value that this
offering presents.
Progress on the nickel and platinum fronts
The development of our Australian nickel strategy continues at a steady pace.
The initial metallurgical testwork done on the Leinster nickel sulphide
tailings using sophisticated leaching technologies has indicated reduced acid
consumption during the leaching process and produced nickel yields and
dissolution rates greater than 90% in eight hours. Additional testwork
combining technologies has improved on these leaching results. In addition,
testwork on recovery of sulphur for acid regeneration has implications in terms
of reduced acid consumption. These are considerable advantages when applied
to the capital and operating costs of the Leinster project and reinforce our
belief that by having access to such technologies, we have the ability to
transform the environmental impact and financial returns associated with the
treatment of these tailings. Our agreement with BHP Billiton gives us access
to some 164 million tonnes of sulphide nickel tailings, assessed to contain
some 486,000 tonnes of nickel, at their Leinster, Mt Keith and Kambalda
projects.
The platinum arm of our company has had a successful year, and we are delighted
with the progress made at our ConRoast smelting facility in Johannesburg. This
facility has been developed with Mintek, South Africa`s national mineral
research organisation and a world leader in mineral processing and extractive
metallurgy. The smelting facility has been operating since October 2007 and has
to date smelted 8,279 tonnes of low grade PGM, high-chromium content smelter
feed and produced approximately 15,000 ounces of PGMs (3 PGMs + Au) in
granulated alloy form. Most of this material has been successfully sold via
sales contracts to international refiners and South African PGM producers, all
of whom have expressed satisfaction with the PGM and base metal product. The
facility has been upgraded shortly after the financial year end and operation
resumed in September 2008, with expected annual production levels of up to
70,000 PGM ounces, depending on feed grade.
The ConRoast process provides considerable advantages from both an
environmental and operational perspective and we are excited about being able
to offer smelting capacity to the emerging UG2 platinum producers that are
currently hampered by constraints and penalties imposed by traditional smelting
facilities. This is a function of the high-chrome content of the UG2 ore being
mined and its incompatibility with traditional smelters. There are substantial
new platinum producers coming on line in South Africa over the next few years,
both as a result of changes in minerals legislation and steady global demand.
We are well-positioned to provide an independent, black-empowered smelting
option to the market. Discussions with a major BEE partner are well advanced.
Our belief has always been, and remains, that by offering improved processing
alternatives to the market we have the ability to enter into joint ventures or
pool and share agreements with junior and major mining companies. We aim to
use these agreements to leverage Braemore across the mine-to-metals platform to
create a fully vertically integrated mining company.
Braemore and the commodity markets
The resources sector faces a period of uncertainty as fear and confusion
reign across the trading floors of the world`s stock exchanges. The market
turbulence over the past year has been predominantly driven by the sub-prime
crisis, rising oil prices and global recession concerns which continue to affect
sentiment for industrial metals such as PGMs and nickel, amongst other
commodities.
As stated, the PGM and nickel markets have both been negatively affected by
the movements in the markets over the past year. However, the metal charts,
when viewed in light of market supply and demand fundamentals, are not as
foreboding as one can be led to believe. Nickel, despite falling from levels
around US$37,000 per tonne in June 2007 to around the US$17,500 per tonne,
remains in demand as about 65% of all nickel produced is used as the main
alloying metal in manufacturing stainless steel. China and India continue to
require stainless steel to fund their infrastructure drives. There still
exists a huge gap in nickel demand per capita per year between the developed
economies and those of India and China. Nickel peaked at just under US$55,000
per tonne in May 2007 driven predominantly by producer dominance. These prices
were unsustainable in the long term, and the nickel price has fallen sharply.
This collapse has resulted primarily from falling demand as stockpiles rise
and recession fears bite. During the year some Chinese steel producers
substituted nickel metal with nickel containing pig iron to reduce dependency
on the higher priced metal.
The PGMs sector has recently been subject to extreme price volatility, and
platinum and rhodium in particular, have been under close scrutiny in the
market. The platinum price jumped to record levels at US$2,400 per ounce in
late February 2008 as supply concerns were raised due to the power crisis in
South Africa, home to 90% of the world`s platinum resources. However, economic
recession fears have also driven PGM prices dramatically lower. Platinum has
fallen to US$1,097 per ounce and rhodium has followed suit, after touching over
US$10,000 per ounce in June 2008 before falling to US$4,100 per ounce. Fear of
a USA-led auto-catalyst sector demand decline due to the global credit crunch,
has resulted in PGM price levels significantly lower than 12 months ago.
Additional uses for PGMs in the electronics industry, particularly in mobile
phone technology, along with the burgeoning automobile industry in Asia we
believe will sustain global demand.
Our share price has not been immune to the global market weakening, but we
remain confident of Braemore`s intrinsic value. We have been fortunate in this
climate to have been able to complete a fundraising in London on 2 July 2008,
issuing 100,008,000 new ordinary shares and raising GBPGBP6.5 million. The
capital will be used to fund capital expenditure on our first PGM smelter in
South Africa and the Leinster bankable feasibility study.
This was followed by a listing on the Johannesburg Stock Exchange on 16 July
2008. Our JSE listing will supplement our AIM listing and provide us with
access to the South African capital markets and its PGM-savvy, informed investor
base whilst establishing an increasing presence in one of our main countries of
operation.
The way forward
I would like to take this opportunity to thank our board of directors and staff
for their continued efforts, and to offer a warm welcome to our new chief
executive officer, Leon Coetzer, who brings to Braemore over 21 years`
experience in the platinum sector at a crucial juncture in our development on
that front. We thank the acting CEOs, David Russell and Clayton Dodd, who
stepped in on the resignation of the previous incumbent earlier this year. The
year ahead promises to be demanding, particularly from a commodity market
perspective, and we look forward to rising to the challenge.
David Humann
Chairman
29 September 2008
ABRIDGED INCOME STATEMENT FOR THE YEAR ENDED 30 JUNE 2008
Audited Audited
2008 2007
Note GBP`000 GBP`000
Revenue 2 8,963 -
Cost of sales (7,451) -
Gross profit 1,512 -
Administration expenses (2,896) (934)
Finance costs (261) -
Share based payments expense - (257)
Total administrative expenses (1,645) (1,191)
Interest income 236 268
Loss before taxation 2 (1,409) (923)
Income tax expense - -
Loss for the year (1,409) (923)
Attributable to:
Equity holders of the parent (1,409) (921)
Minority interests - (2)
(1,409) (923)
Loss per share expressed in pence
- Basic and diluted 3 (0.21p) (0.16p)
Reconciliation of headline earnings:
Loss for the year attributable to equity (1,409) (921)
holders
Adjustment to loss - -
Headline loss (1,409) (1,409)
Headline loss per share expressed in pence
- Basic (0.21p) (0.16p)
ABRIDGED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2008
Group Share Share Merger Share Foreign Minority Retained Total
capital premium reserve based exchange interest earnings equity
reserve payme reserve
nt
reser
ve
GBP`000 GBP`000 GBP`000 GBP`0 GBP`000 GBP`000 GBP`000 GBP`00
00 0
As at 1 848 4,734 29,395 557 - - (896) 34,638
July
2006
Share 129 7,572 - - - - - 7,701
capital
issued
Share - (316) - - - - - (316)
issue
expenses
Share- - - - 257 - - - 257
based
payments
Minority - - - - - 19 - 19
interest
s in
subsidia
ry
Currency - - - - (6) - - (6)
translat
ion
differen
ces
Loss for - - - - - (2) (921) (923)
the
period
Balance 977 11,990 29,395 814 (6) 17 (1,817) 41,370
at
30 June
2007
Share 16 - 2,440 - - - - 2,456
capital
issued
Exercise 1 89 - (12) - - - 78
of
options
Cancella - 85 - (85) - - - -
tion of
options
Acquisit - - - - - (17) - (17)
ion of
minority
interest
s in
subsidia
ry
Currency - - - - (539) - - (539)
translat
ion
differen
ces
Loss for - - - - - - (1,409) (1,409
the )
period
Balance 994 12,164 31,835 717 (545) - (3,226) 41,939
at
30 June
2008
ABRIDGED BALANCE SHEET AS AT 30 JUNE 2008
Audited Audited
2008 2007
GBP`000 GBP`000
ASSETS
Non-current assets
Intangible assets 40,332 33,191
Plant and equipment 91 36
Trade and other receivables 36 43
Total non-current assets 40,459 33,270
Current assets
Trade and other receivables 1,776 322
Inventory 4,257 -
Cash and cash equivalents 974 8,570
Total current assets 7,007 8,892
TOTAL ASSETS 47,466 42,162
LIABILITIES
Current liabilities
Trade and other payables 5,527 792
NET ASSETS 41,939 41,370
EQUITY
Share capital 994 977
Share premium 12,164 11,990
Merger reserve 31,835 29,395
Share based payments reserve 717 814
Foreign exchange reserve (545) (6)
Retained losses (3,226) (1,817)
Equity attributable to equity 41,939 41,353
holders of parent
Minority interest - 17
TOTAL EQUITY 41,939 41,370
ABRIDGED GROUP CASH FLOW STATEMENT FOR THE YEAR ENDED AS AT 30 JUNE 2008
Audited Audited
2008 2007
GBP`000 GBP`000
Cash flows from operating activities
Loss for the period (1,409) (923)
Less: Interest income (236) (268)
(1,645) (1,191)
Adjustment to reconcile profit before tax
to net cash flows
Non-cash:
Depreciation 31 1
Foreign exchange (103) (43)
Share based payment - 257
Working capital adjustments
(Increase) in inventory (4,257) -
(Increase) in debtors (1,447) (311)
Increase/(decrease) in creditors 3,781 (67)
Net cash used in operating activities (3,640) (1,354)
Cash flows from investing activities
Payments to acquire plant and equipment (86) (27)
Payments to acquire intangible assets (4,183) (1,643)
Interest received 236 268
Net cash used in investing activities (4,033) (1,402)
Cash flows from financing activities
Net proceeds from issue of shares 77 7,404
Net cash generated from financing 77 7,404
activities
Net (decrease)/increase in cash and cash (7,596) 4,648
equivalents
Cash and cash equivalents at beginning of 8,570 3,922
year
Cash and cash equivalents at 30 June 974 8,570
COMMENTARY
NOTE
The financial information contained in this statement does not constitute
the group`s statutory accounts for the years ended 30 June 2008 or 2007 as
defined in Section 240 of the Companies Act 1985, but is derived from those
accounts. Statutory accounts for 2007 have been delivered to the Registrar
of Companies and those for 2008 which were approved by the Board on 29
September 2008 will also be lodged there following the company`s annual
general meeting. The auditors have reported on those accounts; their reports
were unqualified and did not include references to any matters to which the
auditors drew attention by way of emphasis without qualifying their reports
and did not contain a statement under Section 237 (2) or (3) of the Companies
Act 1985.
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. As is common with
many junior mining companies, the company raises money for exploration and
capital projects as and when required. There can be no assurance that the
group`s projects will be fully developed in accordance with current plans or
completed on time or to budget. Future work on the development of these
projects, the levels of production and financial returns arising there from
may be adversely affected by factors outside the control of the group.
These financial statements have been prepared in accordance with IFRS as
adopted for use in the European Union (EU), and with those parts of the
Companies Act, 1985 applicable to companies reporting under IFRS. In
addition, the Group also complied with IFRS as issued by the International
Accounting Standards Board (IASB).
The preparation of financial statements in conformity with adopted IFRS
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 of 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 accounting policies have been applied consistently by group entities.
2. SEGMENT INFORMATION
Segment revenue Segment result
2008 2007 2008 2007
GBP`000 GBP`000 GBP`000 GBP`000
Continuing operations
Australia - - (1,226) (630)
South Africa 8,963 - 873 (45)
United Kingdom - - (1,031) (516)
8,963 - (1,384) (1,191)
Interest revenue 236 268
Finance costs (261) -
Loss before tax (1,409) (923)
Loss after tax (1,409) (923)
3. LOSS PER SHARE
The loss for the year attributed to shareholders is GBP1,409,000 (2007: loss
GBP921,000). This is divided by the weighted average number of Ordinary shares
in issue calculated to be 680.8 million (2007: 592.2 million) to give a basic
loss per share of 0.21p (2007: loss per share of 0.16p).
4. POST BALANCE SHEET EVENTS
On 2 July 2008 the company issued 100,008,000 ordinary shares at 6.5p to raise
gross funds of GBP6,500,520.
On 16 July 2008, the company commenced trading in the Platinum and Precious
Metals sector of the JSE Ltd in South Africa.
The company issued Leon Coetzer with 10,750,000 options on his commencement date
with the company on 1 July 2008.
5. NOTICE OF GENERAL MEETING
The Annual General Meeting will be held at Hilton London Green Park, Half Moon
Street, Mayfair, London W1J 7BN, on 28 November 2008 at 10:30am (GMT). The
annual report will be posted to shareholders on 30 September 2008 and will also
be available via the Company`s website, www.braemoreresources.com.
Sponsor
Sasfin Capital (A division of Sasfin Bank Limited)
29 September 2008
Date: 29/09/2008 08:47:01 Produced by the JSE SENS Department.
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