| Tue 31 Mar 2009, 8:00 | | BRE - Braemore - Interim Results For The Six Months To 31 December 2008 |
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BRE
BRE
BRE - Braemore - Interim Results For The Six Months To 31 December 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: BRR ISIN: GB00B06GJQ01
("Braemore" or "the Company")
INTERIM RESULTS FOR THE SIX MONTHS TO 31 DECEMBER 2008
Braemore Resources plc (AIM: BRR, JSE: BRE), the international group
currently focussed on mid-stream processing of platinum group metals (PGMs)
and nickel, announces its unaudited results for the six months to 31 December
2008.
HIGHLIGHTS:
Corporate
- July 2008 - Successful placing of 100,008,000 new ordinary shares at a
price of 6.5 pence raising approximately GBP6,500,000
- July 2008 - Braemore commenced trading on the JSE Ltd in the Platinum and
Precious Metals sector
- September 2008 - Leon Coetzer appointed full time to the board as CEO
- October 2008 - Dr Mathews Phosa appointed to the Board of Directors as Non-
Executive Chairman, with responsibility for steering the selection of a
suitable BEE partner
- October 2008 - Braemore completed a relationship agreement between the
Company and its major shareholder Atomaer Holdings Pty Ltd
- October 2008 - Appointment of WH Ireland as Nominated Adviser and joint
broker to the company
Operations
- August 2008 - Braemore commenced expansion of the Mintek ConRoast smelting
facility in Johannesburg
-September 2008 - Successful installation of the new 3.2MW smelter at the
Mintek facility, with smelting capacity of 2,000 tonnes of concentrate per
month. This has been operating at 99.52% recovery of PGMs from high-chrome
content PGM concentrate feed and produced 6,892 PGM ounces during the
period.
-October 2008 - Braemore announced significant progress towards establishing
itself as a mid-tier metal producer and achieving key milestones in its
"mine-to-metal" strategy. Discussions held with BHP Billiton ("BHPB")
regarding the way forward on the Leinster nickel project resulted in a
decision to proceed with detailed scoping studies over all aspects of the
project for presentation to BHPB.
-November 2008 - Two key off-take agreements secured guaranteeing PGM
concentrate feed supply from Northam Platinum Limited ("Northam) and Anglo
Platinum Limited ("Anglo Platinum"), the world`s leading primary producer of
PGMs
-The Company has made sustained progress on its projects and production from
its newly-expanded ConRoast smelter in South Africa totalled 6,892 PGM
ounces for the period.
Investor relations
During the period Braemore continued its practice of pro-active communication
with the market and its shareholders, presenting at the following
conferences:
-BAC Platinum Day Conference, Switzerland
-JSE Ltd Showcase, South Africa
-Australian Nickel Conference, Perth
-Nickel 20:20 Day, London
POST REPORTING PERIOD HIGHLIGHTS:
January 2009 - Braemore announced PGM production for the initial start up
period from its new 3.2MW smelter.
- January 2009 - Braemore announced that it had concluded its research on
the establishment of an intermediate refining process to further refine
the PGM iron alloy produced from its smelting process. The design of a
demonstration plant began immediately. Once constructed and
commissioned, the refinery process will assist in increasing the margins
of the PGM processing business.
- January 2009 - Braemore announced further progress on the Leinster
Nickel project following the completion of the Leinster Nickel scoping
study and its delivery to BHPB.
- March 2009 - Braemore confirmed an operational incident at Mintek`s
ConRoast smelting facility in Johannesburg, South Africa on Friday, 27
March. Preliminary investigations suggested superficial damage to the
plant and minimal impact on production. Safety procedures were strictly
adhered to and no personnel were injured in the incident.
Leon Coetzer, Chief Executive Officer and Managing Director of Braemore
Resources commented:
"In a difficult global market with share prices and metal prices retracting
sharply, the Company is pleased to be able to report strong progress on
several fronts.
On the corporate front, the Company completed a successful fundraising,
commenced trading on the Johannesburg Stock Exchange and further strengthened
its Board.
The unaudited financial results for the six months ended 31 December 2008
show revenue of GBP1,988,000 from its smelting activities. However
extraordinary items, including the smelter shutdown and installation of the
new smelter reduced PGM production for nearly three months whilst overheads
were still incurred, resulted in an after-tax loss for this period of
GBP4,400,000 (loss per share: 0.56p). Specific events that contributed to
the increased expenditure and losses are:
- About 50% of the after-tax loss can be attributed to the recent settlement
of a single old-order contract that may have exposed the Company to market
volatility around PGM prices and unfavourable processing terms. This contract
has been concluded and replaced by new contracts from both Anglo Platinum
Limited ("Anglo Platinum") and Northam Platinum Limited ("Northam"). The new
contracts in place are cash positive, with significantly reduced price
exposure.
- The JSE listing completed in July 2008 with the associated legal and
compliance expense at a cost of GBP351,000
- The decommissioning of the 1.5MW smelter and the subsequent construction
and commissioning of the larger 3.2MW ConRoast smelter expansion, as part of
the commercialisation of the technology. During this period there was
reduced production as the previous smelter was taken offline to replace it
with the new smelter. Consequently no production resulted in September 2008
and extraordinary unit costs were incurred during this phase.
- The commitments for the Leinster Nickel Project testwork and reports
required by BHP Billiton (BHPB) to conclude the scoping study.
- The acceleration of the research programme to conclude the process flow
sheet for the hydrometallurgical refining of the PGM iron alloy.
Operationally, Braemore Platinum completed the successful installation of its
3.2MW ConRoast smelter in Johannesburg and secured two new off-take
agreements from well-established PGM producers, Northam and Anglo Platinum,
thereby guaranteeing PGM concentrate feed supply for its proven smelting
technology. These new off-take agreements allowed the company to replace
older contracts that have been completed. These older contracts may have
exposed the company to PGM market volatility, at a time when decreasing
prices are sharply reducing margins.
Braemore Nickel continued to engineer the design of a cost effective
processing solution for the Leinster Tailings Project. The quality of this
work assisted in strengthening the relationship between BHPB and Braemore.
Braemore has continued to accelerate towards the completion of its research
and development phase for both its nickel and platinum projects. It attained
this critical goal for the platinum division in March 2009 with the
completion of its refining strategy, allowing the Company to now focus on the
full commercialisation of the smelting and refining process."
The Company`s interim financial results are appended, and are also available
on the Company`s website; www.braemoreresources.com
Enquiries:
Braemore Resources Plc
Leon Coetzer, Chief Executive Officer
+27 11 557 6413
WH Ireland: (Nomad and Joint Broker)
James Joyce
+44 207 220 1666
Mirabaud Securities: (Joint Broker)
Rory Scott
+44 207 878 3360
Qinisele Resources: (RSA Corporate Advisers)
Dennis Tucker
+27 82 492 4957
Russell and Associates: (RSA Public Relations)
Nicola Taylor or Charmane Russell
+27 11 880 3924
Parkgreen Communications: (UK Public Relations)
Louise Goodeve/Leah Kramer
+44 207 933 8780
Sasfin: (RSA Corporate Sponsor)
Sharon Owens
+27 11 809 7762
Statement from Non-Executive Chairman, Dr Mathews Phosa
It is on reflection that we see the great strides made by Braemore in the
past months. It has not been an easy period to be an emerging platinum group
and nickel metal company, as share prices have fallen across the board and
many institutional investors have left the junior end of the market. However,
Braemore has continued with its operational focus to advance both its
platinum and nickel projects during the period.
As previously announced, the proceeds of the placement during this period
were applied to both corporate and operational goals. On a corporate level,
the company achieved its listing on the Johannesburg Stock Exchange and
operationally expanded the smelting capacity at Mintek to a commercial scale.
This included developing the hydrometallurgical refinery process and funding
the various studies necessary to advance the Leinster nickel project. In both
instances, the enhanced recovery processes that we have developed offer
potential partners access to fully vertically integrated operations.
This use of the placing proceeds highlights the commitment to expenditure
necessary to advance these projects. Whilst the stockmarket appears not to
have priced in the progress made to date, the Company is confident that its
value will prevail and be duly recognised in time. Indeed, this is already
evidenced by approaches made by existing PGM producers as well as new
developers of projects seeking access to our unique assets and smelting
technology, endorsing our view as to the exciting potential for Braemore in
the consolidation of the PGM sector.
The financial results from smelting operations at Mintek reflect in part, the
decommissioning of the original 1.5MW furnace operations in order to install
and commission the new, expanded 3.2MW, commercial-scale smelter, over a
three month period. Two new off-take agreements were secured from well-
established PGM producers, Northam and Anglo Platinum, thereby guaranteeing
PGM concentrate feed supply for our proven smelting technology. These new
off-take agreements allowed the company to replace older contracts that may
have exposed the company to, market volatility around PGM prices and
unfavourable processing terms. These contributed to approximately 50% of the
loss for the period. These old order contracts are now completed.
Smelting operations were ramping up and conducted over less than half of the
reporting period (from October to December 2008). The ramp-up period was
used to resolve early and not-unusual teething operational problems
associated with the commissioning of a new facility. The first PGM alloy tap
from the new furnace took place on 21 October 2008. The first shipment of
alloy produced from the new furnace was exported to Europe shortly thereafter
in December 2008.
The reduced smelter throughput during shutdown and commissioning was in line
with expectations and during the period to 31 December 2008, 6,892 PGM ounces
were produced with excellent recoveries of around 99.5%.
Increased pressure on profit margins was experienced as the downturn in the
global economy affected our end clients` refining margins and in turn, the
Company`s own margins. This margin squeeze is beyond the Company`s control
though Braemore has reacted decisively by accelerating its move into
downstream hydrometallurgical refining of the smelted PGM alloy. The refined
product from the hydrometallurgical refining of the PGM alloy offers
significant increases in operating margins. Braemore has achieved a critical
milestone by concluding the required hydrometallurgical process flowsheet
from its research programmes and has committed to the accelerated
construction of the refining facility.
As indicated to the market, the smelter is now approaching a position from
which it can generate positive cash flow, dependant on feed grade and
margins. Braemore has additional expenditure requirements in South Africa
over and above its smelting operations, including final payments for the
expansion of the smelter and funding the hydrometallurgical refining
component. Smelter output revenues from toll processing alone will not fund
our progress hence the decision to accelerate the hydrometallurgical refinery
development with a view to improving our production margins and becoming self-
funding. This development programme includes studies to engineer the full
commercialisation of the processes.
Our relationship with BHPB continues and we look forward to their response to
our positive findings on the Leinster nickel tailings project. As previously
announced, we anticipate receiving their feedback towards the middle of 2009.
The Company has reported a pre-tax loss for the period ended 31 December 2008
of GBP4,400,000 (2007: loss of GBP1,015,000). Specific events that
contributed to the increased loss, as discussed above, include:
- the recent settlement of a single old-order contract at a cost of
GBP2,044,000 that may have exposed the Company to market volatility around
PGM prices and unfavourable processing terms;
- the JSE listing completed in July 2008 with the associated legal and
compliance expense at a cost of GBP351,000; and
- the period of decommissioning of the 1.5MW smelter and the subsequent
construction and commissioning of the larger 3.2MW ConRoast smelter
expansion, during which there was reduced or no production.
Braemore`s cash position at 31 December 2008 was GBP2,538,000 (2007:
GBP3,358,000).
Despite the challenging world we find ourselves operating in, Braemore is
committed to the continued implementation of its mine-to-metals strategy. We
are confident that the coming months will realise benefits of the hard work
and foundations laid at a corporate level through black economic empowerment,
operational progress and commercial transactions.
Dr Mathews Phosa
Non-Executive Chairman
Braemore Resources
31 March 2009
Consolidated Income Statement
For the six months to 31st December 2008
Notes Unaudited Unaudited Audited
Half-year Half-year Year
ended ended ended
31 Dec 31 Dec 30 June
2008 2007 2008
GBP`000 GBP`000 GBP`000
Revenue 1,988 - 8,963
Cost of sales 2 (4,181) - (7,451)
Gross profit / (loss) (2,193) - 1,512
Administration expenses (1,850) (1,197) (2,896)
Finance costs - - (261)
JSE listing costs (351) - -
Share based payments (81) - -
expense
Operating loss (4,475) (1,197) (1,645)
Interest income 75 182 236
Loss before taxation (4,400) (1,015) (1,409)
Income tax expense 3 - - -
Loss for the financial (4,400) (1,015) (1,409)
period
Loss per share : 5
Basic - expressed in (0.56p) (0.15p) (0.21p)
pence
Reconciliation of headline
earnings:
Loss for the year (4,400) (1,015) (1,409)
attributable to equity
holders
Adjustment to loss - - -
Headline loss (4,400) (1,015) (1,409)
Headline loss per share
expressed in pence
- Basic (0.56p) (0.15p) (0.21p)
All of the operations are considered to be continuing
Consolidated Balance Sheet
At 31st December 2008
Notes Unaudited As As
31 Dec restated restated
2008 31 Dec 30 June
GBP`000 2007 2008
GBP`000 GBP`000
ASSETS
Non-current assets
Intangible assets 6 44,762 39,719 43,077
Plant and equipment 7 2,881 103 91
Trade and other 36 37 36
receivables
47,679 39,859 43,204
Current assets
Trade and other 736 679 1,776
receivables
Cash and cash equivalents 2,538 3,358 974
Inventory 1,681 4,387 4,257
4,955 8,424 7,007
TOTAL ASSETS 52,634 48,283 50,211
LIABILITIES
Current liabilities
Trade and other payable 4,764 2,547 5,527
NET ASSETS 47,870 45,736 44,684
EQUITY
Share capital 8 1,094 993 994
Share premium 18,248 11,995 12,164
Merger reserve 34,580 34,580 34,580
Share-based payment 636 812 717
reserve
Foreign exchange reserve 938 188 (545)
Retained losses (7,626) (2,832) (3,226)
TOTAL EQUITY 47,870 45,736 44,684
Consolidated Cash Flow Statement
For the six months to 31st December 2008
Unaudited Unaudited Audited
Half-year Half-year Year
ended ended ended
31 Dec 2008 31 Dec 2007 30 June
2008
GBP`000 GBP`000 GBP`000
OPERATING ACTIVITIES
Operating loss (4,475) (1,197) (1,645)
Adjustment to reconcile profit
before tax to net cash flows
Non-cash:
Depreciation 174 5 31
Foreign exchange adjustment 647 87 (103)
Share based payment 81 - -
Working capital adjustments
(Increase) / decrease in debtors 1,040 (351) (1,447)
Increase / (decrease) in (208) 1,771 3,781
creditors
(Increase) / decrease in 2,576 (4,387) (4,257)
inventory
Net cash inflows used in (165) (4,072) (3,640)
operating activities
INVESTING ACTIVITIES
Payments to acquire plant and (1,675) (72) (86)
equipment
Payments to acquire intangible (2,693) (1,253) (4,183)
assets
Interest received 75 182 236
Net cash outflow from investing (4,293) (1,143) (4,033)
activities
FINANCING ACTIVITIES
Net proceeds from issue of 6,022 3 77
shares
Net cash inflow from financing 6,022 3 77
Net increase / (decrease) in 1,564 (5,212) (7,596)
cash and cash equivalents
Cash and cash equivalents at 974 8,570 8,570
beginning of period
Cash and cash equivalents at end 2,538 3,358 974
of period
Consolidated Statement of Changes in Equity
For the six months to 31st December 2008
Issu Shar Merg Share Fore Mino Reta Total
ed e er based ign rity ined shareh
capi prem rese payme exch inte earn olders
tal ium rve nt ange rest ings equity
rese reser rese
rve ve rve
GBP` GBP` GBP` GBP`0 GBP` GBP` GBP`00
000 000 000 00 000 000 0
As at 1 July
2007
Balance as 977 11,9 29,3 814 (6) 17 (1,8 41,370
previously 90 95 17)
reported
Correction of - - 2,74 - - - - 2,745
prior period 5
adjustment
(Note 8)
977 11,9 32,1 814 (6) 17 (1,8 44,115
90 40 17)
Share capital 16 3 2,44 - - - - 2,459
issued 0
Exercise of - 2 - (2) - - - -
options
Purchase of - - - - - (17) - (17)
minority
interests
Currency - - - - 194 - - 194
translation
differences
Loss for the - - - - - - (1,0 (1,015
period 15) )
Balance at 31 993 11,9 34,5 812 188 - (2,8 45,736
December 2007 95 80 32)
Exercise of 1 86 - (10) - - - 77
options
Cancellation - 83 - (85) - - - (2)
of options
Currency - - - - (733 - - (733)
translation )
differences
Loss for the - - - - - - (394 (394)
period )
Balance at 30 994 12,1 34,5 717 (545 - (3,2 44,684
June 2008 64 80 ) 26)
Share capital 100 6,40 - - - - - 6,501
issued 1
Share issue - (479 - - - - - (479)
expenses )
Cancellation - 162 - (162) - - - -
of options
Share based - - - 81 - - - 81
payments
Currency - - - - 1,48 - - 1,483
translation 3
reserve
Loss for the - - - - - - (4,4 (4,400
period 00) )
Balance at 31 1,09 18,2 34,5 636 938 - (7,6 47,870
December 2008 4 48 80 26)
Notes to the Interim Report
For the six months to 31st December 2008
1. PRESENTATION OF INTERIM RESULTS
The unaudited condensed consolidated interim financial statements have
been prepared using the recognition and measurement principles of
International Accounting Standards, International Reporting Standards
and Interpretations adopted for use in the European Union (collectively
EU IFRSs), including IAS 34 `Interim Financial Reporting`. In addition,
the Group also complied with IFRS as issued by the International
Accounting Standards Board (IASB). The principal accounting policies
used in preparing the interim results are unchanged from those disclosed
in the Group`s Annual Report for the year ended 30 June 2008 and are
expected to be consistent with those policies that will be in effect at
the year end.
The condensed financial statements for the six months ended 31 December
2008 and 31 December 2007 are unreviewed and unaudited, and do not
constitute statutory financial statements as defined by Section 240 of
the Companies Act 1985. The comparative financial information for the
year ended 30 June 2008 is not the company`s full statutory accounts for
that period. A copy of those statutory financial statements has been
delivered to the Registrar of Companies. The auditors` report on those
accounts was unqualified, did not include references to any matters to
which the auditors drew attention by way of emphasis without qualifying
their report and did not contain a statement under section 237(2)-(3) of
the Companies Act 1985.
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.
This interim financial report was approved by the Board of Directors on
XX March 2009.
2. COST OF SALES
Included in the cost of sales is the final settlement of the old order
contracts to the value of GBP2,044,000, and the metal price volatility
and foreign exchange costs incurred on all metal sales in the period.
3. TAXATION
No taxation has been provided due to losses in the period.
4. DIVIDENDS
The Directors do not recommend the payment of a dividend.
5. LOSS PER SHARE
The basic loss per share is derived by dividing the loss for the period
attributable to ordinary shareholders by the weighted average number of
shares in issue.
Unaudited Unaudited Audited
31 Dec 31 Dec 30 June
2008 2007 2008
GBP`000 GBP`000 GBP`000
Loss for the period (4,400) (1,015) (1,409)
Basic loss per share - (0.56p) (0.15p) (0.21p)
expressed in pence
Weighted average number of 788.2m 672.5m 680.8m
shares - expressed in
millions
As the inclusion of the potential ordinary shares would result in a
decrease in the loss per share they are considered anti-dilutive and, as
such, the diluted loss per share calculation is the same as the basic
loss per share.
6. INTANGIBLE ASSET
Unaudited As As
31 Dec restated restated
2008 31 Dec 30 June
GBP`000 2007 2008
GBP`000 GBP`000
Exploration and evaluation
Cost
Opening carrying value 35,197 34,051 34,051
Additions 381 229 984
Currency translation (21) 42 162
adjustment
35,557 34,322 35,197
Amortisation - - -
Net book value 35,557 34,322 35,197
Development costs
Cost
Opening carrying value 7,880 1,885 1,885
Arising on acquisition of - 2,438 2,438
shares in subsidiary
Costs of acquisition of - 37 37
subsidiaries
Additions 1,246 972 3,718
Transfer to plant and equipment (778) - -
Currency translation adjustment 857 65 (198)
9,205 5,397 7,880
Amortisation - - -
Net book value 9,205 5,397 7,880
Total cost 44,762 39,719 43,077
Total amortisation - - -
Net book value 44,762 39,719 43,077
Exploration and evaluation relates to the Australian project and
development costs relate to the South African project. The directors
undertook an impairment review as at 31 December 2008 and as a result of
this review no provision was required.
Refer to Note 8 for further explanation regarding the restatement of the
intangible assets in the comparative period.
7. PLANT AND EQUIPMENT
Cost
Opening carrying value 91 36 36
Additions 2,186 72 86
Transfers from intangible 778 - -
assets
Disposals - - -
Depreciation (174) (5) (31)
2,881 103 91
Notes to the Interim Report
For the six months to 31st December 2008
8. CALLED UP SHARE CAPITAL
Authorised
GBP`000
1,695,000,000 Ordinary shares of 0.1p 1,695
each
305,000,000 Performance shares of 0.1p 305
each
Total 2,000
The Performance shares do not entitle the holder to vote, receive dividends
declared by the Company, or receive any distribution on liquidation or
otherwise, and are not transferable. The 305 million Performance shares will
convert into 305 million Ordinary shares when the following occurs:
- Braemore enters into an agreement with BHP Billiton Nickel West Pty
Limited for the exploitation of the Leinster Nickel Sulphide Tailings
Project.
Allotted, called up and fully paid
GBP`000
789,333,036 Ordinary shares of 0.1p each 789
305,000,000 Performance shares of 0.1p 305
each
Total 1,094
Share options and warrants
The following equity instruments have been issued by the
Company and have not been exercised at 31 December 2008:
Number of Exercise
ordinary price Expires
shares
IPO options 1,385,899 GBP0.010 10/03/2010
Director options 9,000,000 GBP0.150 08/09/2010
Other 8,200,000 GBP0.150 08/09/2010
consultant/contracto
r options
Director options 3,000,000 GBP0.100 30/11/2011
Director options 3,000,000 GBP0.200 30/11/2011
Director options 3,000,000 GBP0.300 30/11/2011
Notes to the Interim Report
For the six months to 31st December 2008
9. SHARE BASED PAYMENTS
The accessed fair value at the grant date has been determined using the
Black-Scholes Model that takes into account the exercise price, the term
of the option, the share price at grant date, the expected price
volatility of the underlying share, the expected dividend yield and the
risk free interest rate for the term of the option.
Director Options
During the current period, the company granted options to Leon Coetzer
(Managing Director) as tabled below. Under IFRS 2 `Share Based
Payments`, the company determines the fair value of options issued to
Directors as remuneration and recognises the amount as an expense in the
income statement with a corresponding increase in equity.
Date Granted Number Exercise Expiry Fair Fair Value
Price Date Value GBP`000
per
Option
01/09/2008 3,000,000 10.0p 30/11/2011 2.4p 72
01/09/2008 3,000,000 20.0p 30/11/2011 1.5p 45
01/09/2008 3,000,000 30.0p 30/11/2011 1.1p 33
9,000,000 150
The fair value of the options granted to Directors during the period is
GBP150,000. The key inputs applied to the Black-Scholes Model included:
the closing share price on 1 September 2008 of 5.6p; risk free interest
rate of 4.35%; and expected volatility of 0.80.
The above options contained a 12 month vesting period over which the
option expense will be recognised. At 31 December 2008, GBP50,000 has
been recognised, with GBP100,000 to be recognised in future periods.
Director Shares
During the current period, the company granted 1,700,000 shares to Leon
Coetzer (Managing Director), to be issued on their vesting date 1
September 2009. Under IFRS 2 `Share Based Payments`, the company
determines the fair value of shares issued to Directors as remuneration
and recognises the amount as an expense in the income statement with a
corresponding increase in equity.
Date Granted Number Vesting Fair Fair Value
Date Value GBP`000
per
Option
01/09/2008 1,700,000 01/09/2009 5.6p 95
The fair value of the shares granted to Directors during the period is
GBP95,000. The key inputs applied to the Black-Scholes Model included:
the closing share price on 1 September 2008 of 5.6p; risk free interest
rate of 4.35%; and expected volatility of 0.80.
expense will be recognised. At 31 December 2008, GBP31,000 has been
recognised, with GBP64,000 to be recognised in future periods.
10. REVENUE AND SEGMENTAL INFORMATION
The Group operates in one business segment, the evaluation of minerals
processing and production. The Group has material interests in three
geographical segments, Australia, South Africa and the United Kingdom.
The Group assets are substantially attributable to the evaluation of
nickel activities in Australia and nickel and platinum activities in
South Africa. The parent Company operates a head office based in the
United Kingdom which incurred certain administration and corporate
costs.
Segment revenue and segment result
Segment revenue Segment result
Continuing operations 31 Dec 2008 31 Dec 2008
GBP`000 GBP`000
Australia - (585)
South Africa 1,988 (2,851)
United Kingdom - (1,039)
1,988 (4,475)
Interest revenue 75
Loss before tax (4,400)
Income tax expense -
Loss after tax (4,400)
Revenue reported above represents revenue generated from external customers.
There were no inter-segment sales in the year.
Segment assets and liabilities
Assets Liabilities
31 Dec 2008 31 Dec 2008
GBP`000 GBP`000
Australia 35,865 134
South Africa 15,337 4,568
United Kingdom 1,432 62
52,634 4,764
Other segment information
Depreciation Additions to non-
and current assets
amortisation
31 Dec 2008 31 Dec 2008
GBP`000 GBP`000
Australia 3 381
South Africa 161 3,432
United Kingdom 10 -
174 3,813
11. PRIOR PERIOD ADJUSTMENT - PERFORMANCE SHARES AMD BUSINESS COMBINATIONS
On 28 July 2005, the Group completed the acquisition of Western
Consolidated Nickel Pty Ltd ("WCN") with a component of the
consideration being 305 million Performance Shares. The Directors
originally valued the Performance Shares at their par value of 0.1p, or
GBP305,000, on the grounds that it was inherently difficult to measure
reliably their fair value at the date of issue.
However, in accordance with the requirements of IFRS 3 `Business
Combinations`, and following discussion with the Financial Reporting
Review Panel, the Directors have re-visited this issue as IFRS 3 states
that equity instruments issued as consideration must be measured at
their fair value at the date of acquisition and there is no exemption on
the grounds that such fair value could not be measured reliably. As
such, the Directors have used the Black-Scholes Model to value the
Performance Shares.
For the purposes of IFRS 3, the Directors have assessed the fair value
of the Performance Shares as GBP3,050,000, as at the date of their issue
on 28 July 2005. In assessing the fair value of the Performance Shares,
the Directors have utilised the Black-Scholes Model. The key inputs
applied to the Black-Scholes Model included the assessed fair value of
ordinary shares issued for the acquisition of WCN on 28 July 2005 of
10p; risk free interest rate of 4.20%; and expected volatility of 0.50.
In assessing the fair value of the Performance Shares, a discount of 90%
has been applied to the theoretical value calculated by the Black-
Scholes Model to take into account the estimated probability of the
Performance Milestones being achieved of 10%. This applied estimated
probability of the Performance Milestones being achieved, took into
account the level of the scoping and desk top technical and economic
studies, including conceptual flow sheet and process, undertaken to the
date of the acquisition of WCN. This applied probability of the
achievement of the Performance Milestone is as at the 28 July 2005, and
does not represent the Director`s current assessment.
As a result of this restatement the intangible assets and merger reserve
of the Consolidated Group are increased by GBP2,745,000 (GBP3,050,000
less GBP305,000 par value). The Income Statement and Statement of Cash
Flows are unaffected by this restatement.
DIRECTORS
Dr Mathews Phosa (Non Executive Chairman)
Christopher Lambert (Non Executive Deputy Chairman)
Leon Coetzer (Managing Director & Chief Executive Officer)
Clayton Dodd (Executive Director)
Anthony Samaha (Non Executive Finance Director)
Michael Elias (Non Executive Technical Director)
David Humann (Non Executive Director)
SECRETARY
London
Stephen Ronaldson
South Africa
Fusion Corporate Secretarial Services (Pty) Ltd (Represented by Melinda van
den Berg)
REGISTERED OFFICE
London
First Floor
18-19 Pall Mall
London SW1Y 5LU
South Africa
Stoney Ridge Office Park
Cnr Witkoppen and Wateford place
Kleve Hill Park
Fourways
Johannesburg
AUDITORS
London
Chapman Davis LLP
2 Chapel Court
London SE1 1HH
South Africa
Moore Stephens MWM Incorporated
PO Box 1574
Houghton 2041
SOLICITORS
London
Ronaldsons
55 Gower Street
London WC1E 6HQ
Australia
Blakiston & Crabb
1202 Hay Street
West Perth WA 6005
South Africa
Routledges Modise in association with Eversheds.
22 Fredman Drive
Sandton Johannesburg
South Africa 2123
NOMINATED ADVISOR AND JOINT BROKER
London
WH Ireland Group Plc
24 Mardin Lane
London EC4R ODR
JOINT BROKER
London
Mirabaud Securities
21 St James Square
London SW1Y 4JP
SPONSOR
South Africa
Sasfin Capital
Sasfin Place
13-15 Scott Street
Waverley 2090
REGISTRARS
London
Share Registrars Limited
Craven House
West Street, Farnham
SURREY GU9 7EN
South Africa
Computershare Investor Services (Pty) Ltd
Ground Floor, 70 Marshall Street
Johannesburg 2001
31 March 2009
Sponsor
Sasfin Capital (A division of Sasfin Bank Limited)
Date: 31/03/2009 08:00:01 Produced by the JSE SENS Department.
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