| Fri 28 Nov 2008, 15:41 | | KCM - Kimberley Consolidated Mining - Reviewed Interim Results For The Six |
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KCM
KCM
KCM - Kimberley Consolidated Mining - Reviewed Interim Results For The Six
Months Ended 31 August 2008
Kimberley Consolidated Mining Limited
(Incorporated in the Republic of South Africa)
(Registration number 2007/010470/06)
JSE share code: KCM
ISIN Number: ZAE000119996
("KCM" or "the Company" or "the Group")
Reviewed interim results for the six months ended 31 August 2008
Condensed income statements
Six months Eleven
ended 31 months
August 2008 ended 29
February
2008
Unaudited Audited
R`000 R`000
Turnover 36 809 40 025
Other income 679 2 711
Operating costs (57 571) (64 634)
Loss from operations (20 083) (21 898)
Net finance costs (356) (832)
Loss before taxation (20 439) (22 730)
Taxation (3 280) (3 336)
Loss after taxation (23 719) (26 066)
Reconciliation of basic to headline (23 719) (26 066)
earnings:
Profit on sale of fixed assets (404) (107)
Impairment of assets 9 500 17 135
Negative Goodwill (2 596)
Headline earnings (14 623) (11 634)
Number of shares in issue (`000) 449 975 403 354
Weighted average number of shares in
issue (`000) 441 319 307 293
Basic loss per share (cents) (5.37) (8.48)
Basic headline loss per share
(cents) (3.31) (3.79)
Fully diluted loss per share (cents)
Fully diluted headline loss per
share (cents)
Condensed balance sheets
As at 31 As at 29
August 2008 February
2008
Unaudited Audited
R`000 R`000
ASSETS
Non-current assets 163 042 169 557
Property, plant and equipment 64 438 67 513
Goodwill 21 114 21 114
Other financial assets 2 813 2 481
Intangible assets 74 677 78 449
Current assets 8 813 4 685
Inventories 0 1 011
Trade and other receivables 8 508 3 045
Cash and cash equivalents 305 629
TOTAL ASSETS 171 855 174 242
EQUITY AND LIABILITIES
Equity and reserves 106 678 120 157
Non-current liabilities 41 201 32 618
Other financial liabilities 2 141 4 584
Finance lease obligations 9 183 1 737
Deferred taxation 27 668 24 388
Provisions 2 209 1 909
Current liabilities 23 976 21 467
Loans from shareholders 512
Other financial liabilities
Current taxes payable 935 935
Finance lease obligations 3 502 3 730
Trade and other payables 19 027 14 183
TOTAL EQUITY AND LIABILITIES 171 855 174 242
Condensed statements of changes in equity
Share Share Retain Total
capital premium ed equity
income
R`000 R`000 R`000 R`000
Balance at 1 April 2007 - - - -
Issue of shares * 146 - 146
Net loss for the period - - (26) (26)
Balance at 29 February
2008 * 146 (26) 120
Issue of shares * 18 18
Start-up costs (7) (7)
Net profit for the period (24) (24)
Balance at 31 August 2008 * 157 (50) 107
* less than R1 000 000
Condensed cash flow statements
Six months Eleven
ended 31 months ended
August 2008 29 February
2008
Unaudited Audited
R`000 R`000
Net cash flows from operating
activities (4 678) 12 459
Cash generated from operations (4 322) 13 261
Interest income - 28
Finance costs (356) (860)
Taxation paid 30
Net cash flows from investing
activities (5 232) (36 264)
Purchases of property, plant and
equipment (11 244) (28 991)
Sale of property, plant and equipment 6 012 1 291
Acquisition of businesses - (8 564)
Net cash flows from financing
activities 9 586 24 434
Proceeds on shares issued 6 690 54 266
Movement in shareholders loans (2 107) (6 327)
Other financial liabilities raised (2 443) (26 727)
Finance lease payments 7 446 (3 222)
Total cash movement for period (324) 629
Cash and cash equivalents at the
beginning of period 629 -
Cash and cash equivalents at end of
period 305 629
Basis of preparation
The reviewed interim results for the six months ended 31 August 2008 have been
prepared in accordance with, and containing the information required by, IAS34:
Interim Financial Reporting, International Financial Reporting Standards and the
International Financial Reporting Interpretations Committee interpretations
adopted by Accounting Practices Board. The accounting policies are consistent
with those applied in the annual financial statements for the eleven months
ended 29 February 2008.
The reviewed interim results for the six months ended 31 August 2008 have been
extracted from the condensed financial statements of KCM for the same period.
Profile
KCM is a diamond mining, exploration and development company with kimberlite and
alluvial diamond projects located primarily in the Kimberley and surrounding
regions of South Africa. The Group was established in 2007, through the
acquisition by KCM of the entire issued ordinary share capital of each of
Kimberley Consolidated Mining and Exploration (Proprietary) Limited ("KCME") and
Channal Mining (Proprietary) Limited ("Channal")("the merger"), two privately
owned diamond exploration companies holding various prospecting rights in the
Northern Cape and North West Provinces of South Africa, both directly and in
terms of joint venture agreements, as follows:
KCME is the holder of a new order prospecting right over the Carter Block area,
which has kimberlite potential in the Northern Cape Province; and
Channal has entered into joint venture agreements ("the original joint venture
agreements") with each of Teehmaneh Trading and Investments (Proprietary)
Limited and Batloung Mining Services CC which are companies representing certain
communities in the Taung and Barkly West regions ("the community companies"), in
respect of two new order prospecting rights in these areas. In terms of the
original joint venture agreements, Channal will provide services to the
community companies in respect of the prospecting rights, and in terms of
subsequent new joint venture agreements entered into with the same parties, KCM
will ultimately hold an effective 70% interest in each of these rights, subject
to the consent of the Department of Minerals and Energy in terms of section 11
of the Minerals and Petroleum Resources Development Act 28 of 2002, as amended.
The original joint venture agreements remain in place until such time as the new
joint venture agreements become unconditional. During the current period under
review, Channal cancelled its joint venture agreement with Taung Giant Diamond
Miners (Proprietary) Limited ("Taung Joint Venture").
Following the merger, KCM acquired 100% of the issued share capital in Bo-Karoo
Diamond Mining (Proprietary) Limited ("Bo-Karoo"), which is the owner of the
operating alluvial Bo-Karoo mine located on the middle Orange River, and the
mining and prospecting assets owned by Graven Mining CC, the mining contractor
at Bo-Karoo, including a cession of the rights of Graven to conduct the
prospecting and mining operations at the Bo-Karoo mine.
KCM also acquired a washing plant in Kimberley to wash tailings from old mined
dumps.
The Group, comprising Bo-Karoo, KCME and Channal, has the resources and
expertise to realise the maximum benefit and economic potential of projects
ranging from early stage exploration to operational mining and has, as a result,
established a diversified portfolio of diamond assets at various stages of their
life cycles.
Financial overview
The new financial year started off well with good production from the Bo-Karoo
operation which produced some larger high quality stones and the diamond prices
were good due to higher demand. However, production by sub-contractors on some
sites did not meet expectations and the power shortages also lowered production
for a limited period. Expenses escalated mainly due to the increase in the price
of diesel from R7,34 per litre in February 2008 to R 11,36 per litre in August
2008 and the higher steel prices also had a major impact on repairs and
maintenance expenditure.
Although the listing expenses were mainly written off against share premium,
they had a bigger negative impact on the Group`s cash resources that had
originally been expected due to the additional costs that were incurred as a
result of that delays experienced with the listing.
As mentioned above, the Group is currently restructuring its cost structures in
order to contain costs and has also ceased with projects that show no or limited
economical viability in the short term. To this end, KCM cancelled the Taung
Joint Venture which resulted in an impairment of assets during the eleven months
ended 29 February 2008 and the expensing of amounts that had previously been
capitalised.
Exploration assets and plant and equipment have been further impaired by R9.5
million during the period under review due to the down turn in the economy,
specifically in the diamond industry.
Prospects and future plans
The current status of the local and international economy has negatively
influenced the availability of investor funds for exploration as well as the
demand for smaller size diamonds resulting in declining prices. This has
impacted on KCM and contributed towards the circumstances which resulted in the
audit opinion for the eleven months ended 29 February 2008 being modified to
include an emphasis of matter in respect of the Group`s ability to continue as a
going concern. As at 29 February 2008 the Group`s current liabilities exceed its
current assets by R16.8 million. Accordingly, KCM has started to restructure its
operations and cost structures and will continue to do so until market
conditions become more favourable. It is the Group`s intension to focus on its
Bo-Karoo operations only and to limit exploration to Carters Block for the
immediate future.
In addition, all excess, redundant and old plant and equipment will be sold off
or stored.
As at 31 August 2008, the Group`s current liabilities exceeded its current
assets by R14.2 million.
Potential projects in other African countries are in an advanced stage of
negotiations and will be taken forward when the Group feel that the timing is
appropriate.
Hein le Riche Koos Pieterse
CEO FD
CORPORATE INFORMATION
Executive directors: HP le Riche, JJ Pieterse, POR Sehunelo, DJS van Tonder and
JJ Cilliers
Non-executive directors: RJ Rakgoale, AS Rodionov and TD Pikwane
Registration number: 2007/010470/06
Registered address: Unit 204B, 2nd Floor, The Colosseum, Century City
Postal address: Suite 04, Private Bag X4, Century City, 7446
Company Secretary: JJ Pieterse
Transfer Secretaries: Computershare Investor Services (Proprietary) Limited
Auditors: Moore Stephens BKV Inc.
Designated Advisor: QuestCo Sponsors (Proprietary) Limited
Cape Town
28 November 2008
Date: 28/11/2008 15:41:02 Produced by the JSE SENS Department.
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