| Tue 7 Apr 2009, 7:30 | | MMH - Miranda - Unaudited financial results for the six months ended 28 February |
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MMH
MMH
MMH - Miranda - Unaudited financial results for the six months ended 28 February
2009
Miranda Mineral Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1998/001940/06)
Share code: MMH ISIN: ZAE000074019
("Miranda" or "the company" or "the group")
Unaudited Financial Results
for the six months ended 28 February 2009
Highlights
* Strategic investment in Miranda by Yakani
* Developed and strengthened portfolio of coal assets in KwaZulu-Natal
* First coal mining right granted and executed on the Sesikhona Kliprand project
in KZN
* Updated CPR released on Amajuba and Uithoek projects
* Mining right applications submitted on Amajuba and Uithoek projects
* Two further coal exploration permits granted in KZN
CONSOLIDATED BALANCE SHEETS
(Figures in R`000) Unaudited Unaudited Audited at
at at 31 Aug 2008
28 Feb 2009 29 Feb 2008
ASSETS
Non-current assets 325 638 317 271 323 852
Property, plant and equipment 7 091 321 6 639
Goodwill 11 714 10 109 10 609
Intangible assets 306 833 306 833 306 832
Investments in associates - - (228)
Other financial assets - 8
Current assets 23 848 28 711 21 387
Trade and other receivables 556 330 905
Cash and cash equivalents 23 292 28 381 20 482
Total Assets 349 486 345 982 345 239
EQUITY AND LIABILITIES
Capital and Reserves 344 392 344 931 337 817
Share capital and share 91 812 75 681 74 645
premium
Reserves 284 522 284 522 284 522
Retained earnings (30 931) (15 272) (20 799)
Minority interest (1 011) - (551)
Non-current liabilities
Finance lease obligation 3 129 1 004 3 614
Current liabilities 1 965 47 3 808
Finance lease obligation 718 - 1 614
Trade and other payables 546 47 1 190
Other financial liabilities 700 - 1 004
Bank overdraft 1 - -
Total equity and liabilities 349 486 345 982 345 239
Net asset value per share 139.20 160.34 157.0
(cents)
Net tangible asset value per 10.45 13.01 9.5
share (cents)
Shares in issue - closing 247 400 215 131 215 131
number (`000)
CONSOLIDATED INCOME STATEMENTS
(Figures in R`000) Unaudited Unaudited Audited
Six months Six months Year
ended ended 31 Aug 2008
28 Feb 2009 29 Feb 2008
Revenue - 263 372
Cost of sales - - (298)
Gross profit - 263 74
Other income - - 548
Operating expenses (11 219) (4 370) (11 674)
Operating loss (11 219) (4 107) (11 052)
Investment revenue 1 156 817 2 108
Income from equity accounted - - (229)
investments
Finance costs (291) (229) (423)
Net loss before taxation (10 354) (3 519) (9 596)
Taxation - - -
Net loss for the period (10 354) (3 519) (9 596)
Attributable to:
Equity holders of the parent (10 133) (3 519) (9 119)
Minority interest (221) - (477)
Loss per share (cents) (4.4) (1.8) (4.5)
Headline loss per share (4.4) (1.8) (4.5)
(cents)
Shares in issue - weighted 231 266 192 053 203 547
average number (`000)
CONSOLIDATED CASH FLOWS STATEMENTS
(Figures in R`000) Unaudited Unaudited Audited
Six months Six months Year ended
ended ended 31 Aug 2008
28 Feb 2009 29 Feb 2008
Cash flows from operating (10 509) (4 267) (9 103)
activities
Cash utilised in operating (11 374) (4 855) (10 789)
activities
Interest income 1 156 588 2 108
Finance cost (291) - (422)
Cash flows from investing (2 164) (91) (7 346)
activities
Purchase of property, plant (1 164) (90) (6 854)
and equipment
Acquisition of businesses (1 000) (1) (500)
Loans advanced to group - -
companies
Sale of financial assets - - 8
Cash flows from financing 15 482 20 719 24 911
activities
Proceeds on share issue 17 167 20 719 19 684
Finance lease payments (1 381) - 5 227
Repayment of other financial (304) - -
liabilities
Increase in cash and cash 2 809 16 361 8 462
equivalents
Cash and cash equivalents at 20 482 12 020 12 020
beginning of year
Cash and cash equivalents at 23 291 28 381 20 482
end of year
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Figures in R`000) Share Share Accumulated
capital premium loss
Balance at 1 Sep 2007 1 871 53 090 (11 679)
Net loss for the period - - (9 119)
Issue of shares 280 20 440 -
Share issue costs - (1 036) -
Business combinations - - -
Balance at 1 Sep 2008 2 151 72 494 (20 799)
Net loss for the period - - (10 133)
Issue of shares 323 16 845 -
Business combinations - - -
Balance at 28 Feb 2009 2 474 89 338 (30 931)
(Figures in R`000) Revaluation Minority Total
reserve interest
Balance at 1 Sep 2007 284 522 (73) 327 730
Net loss for the period - (477) (9 596)
Issue of shares - - 20 720
Share issue costs - - (1 036)
Business combinations - (1) (1)
Balance at 1 Sep 2008 284 522 (551) 337 817
Net loss for the period - (221) (10 354)
Issue of shares - - 17 167
Business combinations - (238) (238)
Balance at 28 Feb 2009 284 522 (1 011) 344 392
COMMENTARY
1. STRATEGIC REVIEW
During the six months under review, Miranda has developed and strengthened its
portfolio of coal assets in KwaZulu-Natal ("KZN").
1.1 Strategy to deal with financial market upheavals
The board has responded to the downturn in the commodity cycle and the
volatility in financial markets in two ways:
* Firstly, the company will continue to focus fully on the development of the
group`s core KZN coal assets but has decided to delay further large exploration
spending in its other divisions until commodity market conditions improve. This
course of action takes into account the current challenging conditions for
obtaining exploration funding, as well as the fact that Miranda`s coal assets
are the most advanced and developed assets in the group. In addition, Miranda
will produce high grade coking coal and anthracite for the export market, which
means that the group`s coal projects are not dependent on local Eskom demand
fluctuations. A significant "first mover" advantage has been achieved in KZN
which will allow these projects to progress rapidly up the value curve.
* Secondly, the board views the current financial and commodity market turmoil
as presenting an unique and exciting opportunity to build and develop the
group`s asset base further. The group will continue to consider possible
opportunistic-type acquisitions and/ or joint ventures with minimum cash
requirements that provide a strategic fit with the Miranda business model,
which is to build a pipeline of prospects and projects with different
maturities. Acquisitions will be sought within its four existing divisions of
coal, diamonds, precious metals and industrial minerals. Miranda is strongly
placed to grow its asset base by accumulating and, where necessary,
"warehousing" projects in this manner, thereby positioning the group ideally in
the medium-term for the next recovery phase in the commodity cycle. This
approach fits astutely with the holding company`s function as an incubator of
maturing mining exploration and development projects within its targeted
commodity sectors.
1.2 Strategic investment in Miranda by Yakani
In November 2008, the board secured a strategic investment in Miranda by
black-owned Yakani Resources (Pty) Ltd ("Yakani"). Yakani is a wholly-owned
subsidiary of the Yakani Group (Pty) Ltd, and is a young and dynamic empowerment
group of companies operating in Southern Africa. Headed by Messrs Gilbert
Phalafala and Siswe Tati, the Yakani Group provides both financial and
intellectual capital to investments meeting its criteria and strategic vision.
The initial investment took the form of a general issue of shares for cash in
the amount of R17.2 million. Yakani has since increased its stake in Miranda to
34% by buying shares in the open market. For Miranda shareholders, the exciting
strategic and potential operational reasons for the transaction include the
following:
* Yakani will deepen and extend the BEE status of Miranda at its holding
company level. This will greatly complement Miranda`s own BEE initiatives,
which have focused on implementing broad-based structures at operational
subsidiary level.
* Yakani is an active player in the mining and exploration arena with a
resource focus broadly aligned with that of Miranda, being a coal, diamonds,
precious and industrial minerals portfolio. The strategic association between
Miranda and Yakani is anticipated to provide a platform for future
investigations into asset-related transactions and opportunities.
* The operations of Yakani in complementary business areas provide for
potential operational synergies. For instance, its interests in the building
and construction industry make Yakani ideally suited as a potential joint
venture partner for the development of Miranda`s clay and aggregate resources.
* The additional cash resources emanating from the issue of shares for cash
afford Miranda greater flexibility both in the exploration of existing core
prospects and in considering potential acquisitions.
2. OPERATIONAL REVIEW
During the last six months, Miranda completed its internal financial
evaluations on the economic viability of the KZN coal properties where second
phase drilling and exploration had been concluded. The outcome revealed
positive results for the majority of the projects considered.
2.1 Sesikhona Kliprand Colliery
During the period under review, Sesikhona was granted a mining right by the DME
over four contiguous farms covering 884 hectares in the Dannhauser district of
KZN. As the group`s first coal mining license, this represents a significant
achievement for the coal division. The Sesikhona project is the first in
Miranda`s pipeline of coal projects in KZN to move into production phase.
Shareholders are also referred to the project update announcement dated 3 April
2009 for further information.
2.2 Amajuba project
The group successfully concluded its second phase drilling program on Miranda
Coal`s Amajuba coal project in KZN in November 2008. The Amajuba proje
ct consists of four prospecting permits covering five farms of over 3,700
hectares in the Newcastle area. The results of the exploration program that
consisted of 23 new cored boreholes are contained in an updated Competent
Person`s Report. These findings were reported on 5 March 2009. The aim of the
exploration program was to upgrade the resource status, confirm the historic
data and improve the quality of the database. The CPR confirmed the following
resource statement:
Inferred resource 21.5 million tons
Measured resource 16.6 million tons
Total resource 38.1 million tons
Following the positive results of the exploration program, the group
submitted a mining right application to the DME, which is presently under
appeal.
2.3 Uithoek
A mining right application has been submitted to and accepted by the DME
for the group`s Uithoek project in the Glencoe area. The scoping report has been
completed and an environmental impact assessment is currently being undertaken
for submission by June. It is estimated that approximately 40% of the measured
resource of 6.6 million tons is open-castable.
2.4 Majestic Silver
Miranda Coal subsidiary, Majestic Silver Trading (Pty) Ltd, has been awarded
a a prospecting permit over approximately 823 hectares, covering 5 farms in the
district of Dannhauser in KZN. The farms are contiguous to the group`s other
coal projects in the area and the exploration program has been designed to test
for confirmation of the continuation of the coal seams through the properties.
The initial results from the drilling, which include both percussion and core
drilling, have been positive.
3. FINANCIAL REVIEW
3.1 Financial results
On 28 February 2009, the net asset value and net tangible asset value of the
company amounted to R344.4 million and R25.8 million respectively (2008: R344.9
million and R28.0 million). This was equivalent to 139.2 cents per share ("cps")
and 10.4 cps (2008: 160.3 cps and 13.0 cps), which represents a decline of 13.2%
and 19.7%, respectively.
Indicative of the group`s stepped-up exploration activities is the increase in
operating expenses to R11.2 million (2008: R 4.4 million). The group has
incurred material expenditure in the period as a direct result of its ongoing
exploration program and the preparation of new exploration and mining right
applications. Net income from investment and financing activities amounted to
R0.8 million (2008: R0.6 million). The resultant net loss for the period was
R10.4 million (2008: R3.5 million).
3.2 Valuation of Rozynenbosch base metal project
In terms of International Financial Reporting Standards ("IFRS") the board is
required to test on a regular basis for any impairment or material change in the
value of the company`s assets. Consistent with its conservative valuation
approach for the Rozynenbosch project per the 2008 annual financial statements,
the board uses long-term sustainable commodity prices and exchange rates that
are considered to be realistically achievable over the life of the project. The
board is satisfied that commodity price and exchange rate movements during the
last six months have not adjusted its long-term outlook and has therefore
maintained the value of the project at R284 million at the reporting date.
4. PROSPECTS
The company continues to attain further success in consolidating its coal
interests in KwaZulu-Natal with pleasing exploration results achieved and
concentrated expenditure on key assets. The outcome of the private placing
and the potential revenue that will be generated from current and future JV
partnerships has placed the group in a position to continue with the development
of its targeted coal projects and considerable pipeline. The impact of this
strategy is expected to yield positive results to our cash flow in the next
6 to 12 months.
5. STATEMENT ON GOING CONCERN
The financial statements have been prepared on the going-concern basis since the
directors have every reason to believe that the company has adequate resources
in place to continue in operation for the foreseeable future. The funds raised
through the strategic investment by Yakani will be used primarily to continue
with the planned exploration program for the group`s KZN coal prospects. The
company will continue with its strategy of "just in time" capital raising as and
when required. Additional cash flow requirements will be funded internally from
future revenue generated from joint venture and other projects.
6. BASIS OF PREPARATION AND ACCOUNTING POLICIES
The interim financial statements have been prepared in accordance with IFRS and
IAS34 on International Financial Reporting. The financial statements have been
prepared under the historical cost convention and the accounting policies are
consistent with those of the previous year except as modified by IFRS for the
period ending 29 February 2009. As previously reported, the application of IFRS
to the financial statements required no adjustment to the historical financial
results. The value of the Rozynenbosch mineral resource is stated at fair value
and is in accordance with IFRS6 and its interpretation adopted by the
International Accounting Standards Board.
7. DIVIDENDS
No dividends were recommended or declared for the period under review
(2008: nil).
For and on behalf of the Board
AR Thompson RJ Nel 7 April 2009
Chairman Chief Executive Officer Pretoria
Transfer secretaries
Computershare
Computershare Investor Services (Pty) Ltd
Registration number 2004/003647/07
Sponsor
PricewaterhouseCoopers Corporate Finance(Pty) Ltd
Computershare Investor Services (Pty) Ltd
Registration number 2004/003647/07
Corporate adviser
Touchstone Capital (Pty) Ltd
Date: 07/04/2009 07:30:02 Produced by the JSE SENS Department.
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