| Tue 8 Sep 2009, 14:14 | | PET - Petmin Limited - Condensed Preliminary Consolidated Financial Statements |
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PET
PET
PET - Petmin Limited - Condensed Preliminary Consolidated Financial Statements
for the year ended 30 June 2009 and withdrawal of cautionary announcement
Petmin Limited
(Incorporated in the Republic of South Africa)
(Registration number 1972/001062/06)
JSE code : PET AIM code: PTMN
ISIN: ZAE000076014
("Petmin" of "the Company" or "the Group")
Condensed Preliminary Consolidated Financial Statements for the year ended 30
June 2009 and withdrawal of cautionary announcement
Headline earning per share increase by 46% to 22.29 cents despite difficult
trading conditions
Achievements:
- Profit before tax and seperately disclosed items increased by 52% to R173
million.
- Revenue increased by 18% from R667 million to R789 million.
- Petmin has cash resources of R176 million and undrawn bank facilities of R150
million.
- Net cash flow from operating activities increased by 43% to R225 million
Condensed Preliminary Consolidated Income Statement
for the year ended 30 June 2009
GROUP Reviewed Audited
Year ended Year ended
30 June 2009 30 June 2008
Note R` 000 R` 000
Revenue 788 624 666 879
Cost of sales (578 419) (502 753)
Gross profit 210 205 164 126
Administration expenses (36 311) (46 335)
Results from operating activities 173 894 117 791
Net finance expense (969) (3 773)
- Finance income 11 270 7 676
- Finance expenses (12 239) (11 449)
Profit before tax and separately
disclosed items 172 925 114 017
Separately disclosed items:
Loss on sale of subsidiary (79 170) -
Impairment loss on goodwill acquired (1 327) -
Share of profit of equity accounted
investee 78 185 303 133
Profit before income tax 170 613 417 150
Income tax expense (52 627) (36 736)
Profit for the year 117 986 380 414
Attributable to:
- Equity holders of Petmin 118 364 380 353
- Minority interest (378) 61
Profit for the year 117 986 380 414
Basic earnings per ordinary share
(cents) 6 21.86 75.43
Diluted earnings per ordinary share
(cents) 6 20.68 74.15
Condensed Preliminary Consolidated Balance Sheet
at 30 June 2009
GROUP Reviewed Audited
30 June 2009 30 June 2008
Note R` 000 R` 000
ASSETS
Non-current assets 1 131 688 1 003 860
Property, plant and equipment 629 102 580 200
Intangible assets 6 925 15 034
Investment in equity accounted
investee 470 661 375 888
Investments 25 000 2
Restricted investments - 11 236
Long term receivables - 21 500
Current assets 341 642 338 175
Inventories 30 373 69 261
Trade and other receivables 214 239 179 410
Current tax assets 5 934 793
Cash and cash equivalents 91 096 88 711
Total assets 1 473 330 1 342 035
EQUITY AND LIABILITIES
Ordinary share capital and reserves 1 119 101 1 005 424
Share capital 134 686 133 704
Share premium 304 745 304 545
Share option reserve 23 741 27 494
Contingent consideration reserve - 1 480
Hedging reserve (636) -
Retained earnings 656 565 538 201
Minority interest - 2 434
Total equity 1 119 101 1 007 858
Non-current liabilities 188 828 178 021
Interest bearing loans and borrowings 65 300 55 067
Deferred taxation liabilities 100 901 89 146
Environmental rehabilitation
provision 22 627 33 808
Current liabilities 165 401 156 156
Trade and other payables 119 101 132 292
Current portion of non-current
liabilities 46 300 15 386
Current tax liabilities - 8 478
Total equity and liabilities 1 473 330 1 342 035
Net asset value ("NAV") per share
(cents) 7 205.51 187.74
Fully diluted NAV per share (cents) 7 190.14 170.46
Condensed Preliminary Consolidated Cash Flow Statement
for the year ended 30 June 2009
GROUP Reviewed Audited
Year ended Year ended
30 June 2009 30 June 2008
R` 000 R` 000
Net cash flow from operating activities 225 364 157 154
Cash flows from investing activities
Acquisition of subsidiary net of cash acquired - 502
Increase in investment in rehabilitation funds (5 115) (1 064)
Increase in equity accounted investee (41 589) (11 064)
Acquisition of property, plant and equipment (290 991) (228 767)
- to expand operations (274 500) (216 155)
- to maintain operations (16 491) (12 612)
Proceeds from sale of subsidiary net of cash
disposed 77 723 -
Net cash flow from investing activities (259 972) (240 393)
Cash flows from financing activities
Proceeds from specific and general share
issues for cash during the period 4 907 91 896
Treasury shares acquired (8 775) -
Payment of contingent consideration (3 990) (132)
Repayment of borrowings (16 776) (11 509)
Increase in borrowings 61 627 31 345
Net cash flows from financing activities 36 993 111 600
Net increase in cash and cash equivalents 2 385 28 361
Cash and cash equivalents at beginning of year 88 711 60 350
Cash and cash equivalents at end of year 91 096 88 711
Condensed Preliminary Consolidated Statement of Changes in Equity
for the year ended 30 June 2009
GROUP
Share
Share Share option
capital premium reserve
R`000 R`000 R`000
Balance at 1 July 2007 119 972 155 995 15 736
Shares issued during the year
- To acquire Petmin Logistics (Pty) Ltd 438 7 437 -
- To acquire 25% of Veremo Holdings (Pty)
Ltd 5 538 68 978 -
- General issue for cash 7 000 72 968 -
- Share options exercised 938 1 566 (820)
- Share options forfeited - - (55)
Costs capitalis ed to share premium - (982) -
Treasury shares acquired during the year (182) (1 418) -
Contingent consideration settled in c ash
in the year - - -
Share options granted - - 12 633
Minority interest recognised on
acquisition of
Petmin Logistics (Pty) Ltd - - -
Profit for the year - - -
Balance at 30 June 2008 133 704 304 545 27 494
Shares issued during the year
- To acquire 30% of Petmin Logistics
(Pty) Ltd 188 3 188 -
- Share options exercised 1 945 7 161 (4 199)
- Issued to Springlake Vendors 117 163 -
Treasury shares acquired during the year (1 768) (11 012) -
Treasury shares transferred to Springlake
Vendors 500 700 -
Share options granted - - 446
Effective portion of changes in fair
value of cash flow - - -
hedges
Profit for the year - - -
Balance at 30 June 2009 134 686 304 745 23 741
Contingent
consideration Hedging Retained
reserve reserve earnings
R` 000 R`000 R`000
Balance at 1 July 2007 1 500 - 157 848
Shares issued during the year
- To acquire Petmin Logistics (Pty) Ltd - - -
- To acquire 25% of Veremo Holdings
(Pty) Ltd - - -
- General issue for cash - - -
- Share options exercised - - -
- Share options forfeited - - -
Costs capitalis ed to share premium - - -
Treasury shares acquired during the year - - -
Contingent consideration settled in
c ash in the year (20) - -
Share options granted - - -
Minority interest recognised on
acquisition of
Petmin Logistics (Pty) Ltd - - -
Profit for the year - - 380 353
Balance at 30 June 2008 1 480 - 538 201
Shares issued during the year
- To acquire 30% of Petmin Logistics
(Pty) Ltd - - -
- Share options exercised - - -
- Issued to Springlake Vendors (280) - -
Treasury shares acquired during the year - - -
Treasury shares transferred to
Springlake Vendors (1 200) - -
Share options granted - - -
Effectiv e portion of changes in
fair value of cash flow - (636) -
hedges
Profit for the year - - 118 364
Balance at 30 June 2009 - (636) 656 565
Minority
Total interest Total equity
R`000 R`000 R`000
Balance at 1 July 2007 451 051 - 451 051
Shares issued during the year
- To acquire Petmin Logistics
(Pty) Ltd 7 875 - 7 875
- To acquire 25% of Veremo Holdings
(Pty) Ltd 74 516 - 74 516
- General issue for cash 79 968 - 79 968
- Share options exercised 1 684 - 1 684
- Share options forfeited (55) - (55)
Costs capitalis ed to share premium (982) - (982)
Treasury shares acquired during
the year (1 600) - (1 600)
Contingent consideration settled in
cash in the year (20) - (20)
Share options granted 12 633 - 12 633
Minority interest recognised on
acquisition of
Petmin Logistics (Pty) Ltd - 2 373 2 373
Profit for the year 380 353 61 380 414
Balance at 30 June 2008 1 005 424 2 434 1 007 858
Shares issued during the year
- To acquire 30% of Petmin
Logistics (Pty) Ltd 3 375 (2 056) 1 319
- Share options exercised 4 907 - 4 907
- Issued to Springlake Vendors 0 - 0
Treasury shares acquired during
the year (12 780) - (12 780)
Treasury shares transferred to
Springlake Vendors - - -
Share options granted 446 - 446
Effectiv e portion of changes in
fair value of cash flow (636) - (636)
hedges
Profit for the year 118 364 (378) 117 986
Balance at 30 June 2009 1 119 101 - 1 119 101
Condensed Preliminary Consolidated Financial Statements
For the year ended 30 June 2009
Segment reporting
Segment information is presented in the condensed preliminary consolidated
financial statements in respect of the Group`s business segments, which are
primary basis of segment reporting. The Business segment reporting format
reflects the Group`s management and internal reporting structure.
Inter-segment pricing is determined on arm`s length basis.
Segment results included items directly attributable to a segment as well as
those that can be allocated on a reasonable basis.
Business segments
The Group comprises the following main business segment:
- Silica mining and marketing ("Silica");
- Iron ore mining and beneficiation ("Piglron"); and
- Anthracite mining and marketing ("Anthracite")
Silica Anthracite
Reviewed Audited Reviewed Audited
Year Year Year Year
ended ended ended ended
30 June 30 June 30 June 30 June
2009 2008 2009 2008
R` 000 R` 000 R` 000 R` 000
Saleable tonnes
produced 1 333 613 1 385 906 1 016 940 1 219 601
Tonnes sold 1 511 850 1 434 853 960 764 1 188 519
Segment revenue 180 796 153 034 607 829 513 845
Segment profit/(loss)
before tax
- Segment result 47 524 46 742 128 840 90 973
- Impairment loss on
goodwill (1 327)
acquired
- Loss on sale of subsidiary - - - -
- Share of profit of equity - - - -
accounted inves tee
Segment profit/(loss)
before 47 524 46 742 127 513 90 973
tax
Segment capital
expenditure 16 327 27 362 277 327 198 110
Segment depreciation 10 335 7 688 120 702 93 680
Share option costs
included in
segment profit/(loss )
before tax - 190 - -
Segment assets 228 612 228 076 653 148 663 356
Segment liabilities 66 931 100 288 451 964 449 750
PigIron Other (corporate office)
Reviewed Audited Rev iewed Audited
Year Year Year Year
ended ended ended ended
30 June 30 June 30 June 30 June
2009 2008 2009 2008
R` 000 R` 000 R` 000 R` 000
Saleable tonnes produced - - - -
Tonnes sold - - - -
Segment revenue - - - -
Segment profit/(loss) before tax
- Segment result - - 507 (23 698)
- Impairment loss on
goodwill
acquired
- Loss on sale of subsidiary - - (79 170) -
- Share of profit of equity 78 185 303 133 - -
accounted investee
Segment profit/(loss) before 78 185 303 133 (78 663) (23 698)
tax
Segment capital expenditure - - 2 598 3 295
Segment depreciation - - 177 108
Share option costs
included in
segment profit/(loss )
before tax - - 446 12 443
Segment assets 495 661 375 888 355 908 401 566
Segment liabilities - - 42 497 21 947
Eliminations Consolidated
Reviewed Audited Reviewed Audited
Year Year Year Year
ended ended ended ended
30 June 30 June 30 June 30 June
2009 2008 2009 2008
R` 000 R` 000 R` 000 R` 000
Saleable tonnes produced - - 2 360 553 2 605 507
Tonnes sold - - 2 472 614 2 623 372
Segment revenue - - 788 625 666 879
Segment profit/(loss)
before tax
- Segment result (3 946) - 172 925 114 017
- Impairment loss on
goodwill (1 327)
acquired
- Loss on sale of
subsidiary - - (79 170) -
- Share of profit of
equity - - 78 185 303 133
accounted investee
Segment profit/(loss)
before (3 946) - 170 613 417 150
tax
Segment capital
expenditure (2 289) - 293 964 228 767
Segment depreciation - - 131 214 101 476
Share option costs
included in
segment profit/(loss)
before tax - - 446 12 633
Segment assets (259 999) (326 851) 1 473 330 1 342 035
Segment liabilities (207 163) (237 808) 354 229 334 177
The losses in the corporate office in 2008 included a once-off impairment
charge of R4.7 million and share option costs of R12.7 million.
The sale of Springlake Holdings (Pty) Ltd to Shanduka Coal (Pty) Ltd was
concluded on 29 June 2009. Due to adverse international financial market
conditions, the selling price was renegotiated to R85 million, resulting in a
loss on the sale amounting to R79 million.
The R78 million (2008: R303 million) share of profit on equity accounted
investee reflects the financial impact of the capitalisation of Petmin`s loan
to Veremo whereby Petmin increased its effective economic interest in the
Veremo Group, refer to item (ii) in the management commentary.
Notes to the Condensed Preliminary Consolidated Financial Statements
for the year ended 30 June 2009
1. Reporting entity
Petmin is a company domiciled in South Africa. The condensed preliminary
consolidated financial statements of the Group for the year ended 30 June 2009
comprise the Company and its subsidiaries (together referred to as the "Group")
and the Group`s interests in associates.
The condensed preliminary consolidated financial statements were authorised for
issue by the directors on 7 September 2009.
2. Statement of compliance
The condensed preliminary consolidated financial statements have been prepared
in accordance with the recognition and measurement requirements of
International Financial Reporting Standards (IFRSs) and the presentation and
disclosure requirements of IAS 34 - Interim Financial Reporting, the JSE
Limited ("JSE") Listings Requirements and the South African Companies Act,
1973. The condensed preliminary consolidated financial statements do not
include all of the information required for full annual financial statements
and should be read in conjunction with the consolidated annual financial
statements for the year ended 30 June 2008.
3. Significant accounting policies
The condensed preliminary consolidated financial statements are prepared on the
historical cost basis, except for financial instruments which are stated at
fair value, where applicable, in terms of IAS 32 - Financial Instruments:
Presentation and IAS 39 - Financial Instruments: Recognition and Measurement.
The accounting policies have been applied consistently by Group entities and
have been applied consistently to all periods presented in these condensed
preliminary consolidated financial statements.
4. Estimates and judgements
The preparation of reviewed financial statements in conformity with IAS 34 -
Interim Financial Reporting, 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 for 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 significant judgements made by management in applying the Group`s
accounting policies and the key sources of estimation uncertainty were the same
as those applied to the consolidated financial statements as at and for the
year ended 30 June 2008.
5. Review of results
The results of the Group as set out above have been reviewed by the Group`s
auditors, KPMG Inc. The review report is available for inspection at the
Group`s registered office.
6. Earnings per share
Earnings per share ("EPS") are based on the Group`s profit for the period,
divided by the weighted average number of shares in issue during the year.
Reviewed
Year ended
30 June
2009
Profit for Number of
the year shares in Per share
R` 000 thousands in cents
Basic earnings per share 118 365 541 354 21.86
Share options and contingent
consideration - 31 035 (1.18)
Diluted EPS 118 365 572 389 20.68
Audited
Year ended
30 June
2008
Profit for Number of
the year shares in Per share
R` 000 thousands in cents
Basic earnings per share 380 353 504 280 75.43
Share options and contingent
consideration - 8 701 (1.28)
Diluted EPS 380 353 512 981 74.15
Headline earnings per share
Headline earnings per share is based on the Group`s headline earnings divided
by the weighted average number of shares in issue during the year.
Reviewed
Year ended
30 June
2009
Profit for Number of
the year shares in Per share
R` 000 thousands in cents
Reconciliation between earnings and
headline earnings per share
Basic EPS 118 364 541 354 21.86
Adjustments:
- Impairment of goodwill 1 327 - 0.25
- Loss on sale of subsidiary 79 170 - 14.62
- Share of profit of equity
accounted
investee (78 185) - (14.44)
Headline EPS 120 676 541 354 22.29
Share options and contingent
consideration - 31 035 (1.21)
Diluted headline EPS 120 676 572 389 21.08
Audited
Year ended
30 June
2008
Profit for Number of
the year shares in Per share
R` 000 thousands in cents
Reconciliation between earnings and
headline earnings per share
Basic EPS 380 353 504 280 75.43
Adjustments:
- Impairment of goodwill - - -
- Loss on sale of subsidiary - - -
- Share of profit of equity
accounted
investee (303 133) - (60.12)
Headline EPS 77 220 504 280 15.31
Share options and contingent
consideration - 8 701 (0.26)
Diluted headline EPS 77 220 512 981 15.05
EPS decreased by 53.57 cents or 71% compared with 30 June 2008. This was mainly
due to the inclusion of R303 million recognised in income in 2008 on the
initial acquisition of the investment in Veremo Holdings (Pty) Ltd.
7. Net asset value ("NAV") per share
Reviewed Audited
Year ended Year ended
30 June 30 June
2009 2008
Ordinary share capital and reserves (R`000) 1 119 101 1 005 424
Total number of shares in issue (`000) 544 538 535 541
NAV per share (cents) 205.51 187.74
Ordinary share capital and reserves (R`000) 1 119 101 1 005 424
Total number of shares in issue (`000) 544 538 535 541
Share options and contingent consideration (`000) 44 019 54 299
Fully diluted number of shares (`000) 588 557 589 840
Fully diluted NAV per share (cents) 190.14 170.46
NAV per share increased by 17.77 cents to 205.51 cents or 9.5% compared with 30
June 2008. Fully diluted NAV per share rose by 19.68 cents to 190.14 cents or
11.5% compared with 30 June 2008.
The NAV above includes the value of assets on an historical cost and fair value
at acquisition basis. The director`s valuation of the investments in the
various subsidiaries amounts to R2.2 billion or approximately 374 fully diluted
cents per share.
8. Related parties
Dark Capital (Pty) Limited ("Dark Capital"), Petmin`s anchor black economic
empowerment shareholder, increased its shareholding in Petmin by acquiring 7
million Petmin shares on exercising their share options in October 2008.
The NAV above includes the value of assets on an historical cost and fair value
at acquisition basis. The director`s valuation of the investments in the
various subsidiaries amounts to R2.2 billion or approximately 374 fully diluted
cents per share.
Dark Capital is a material shareholder in Petmin and is therefore a related
party as defined by Section 10 of the Listings Requirements.
8.1 Petmin Executive Committee Remuneration Scheme and Share Option Trust
As disclosed in the annual financial statements for the year ended 30 June
2008, the Petmin Executive Committee Remuneration Scheme and Share Option
Scheme affects the executive directors of the Company and constitutes a related
party transaction. The Petmin Executive Committee Remuneration Scheme was a
three-year agreement that terminated on 30 June 2008. As reported in the Annual
Report for the year ended 30 June 2008, management has reached agreement with
the Remuneration Committee on a new three-year scheme with similar terms and
conditions.
8.2 Other transactions with related parties
Johan Strijdom, Enrico Greyling and Lebo Mogotsi, all directors of the company,
were issued 250 000 Petmin shares each upon their exercising of options,
granted in 2005, to acquire shares at 45 cents each. At the time of the grant,
Ms Mogotsi was a non-executive director.
The Springlake Vendors, all of whom are employed by Petmin, were issued with 2
467 000 Petmin shares in final settlement of the warranty shares due in terms
of the Springlake acquisition that was concluded in November 2005, resulting in
the reduction of the contingent consideration reserve to R nil (2008: R1.48
million).
9. Change in directors
On 28 February 2009, Dawie Warmenhoven announced his resignation as a director
of Petmin. He will remain a significant shareholder and continues to provide
Petmin with consulting services. The Board of Directors expresses its gratitude
to Dawie for his valuable contribution during the formative years of Petmin.
10. Subsequent events
10.1 Appointment of director
On 7 July 2009, Petmin announced the appointment of Bruce Tanner as Financial
Director of Petmin with effect from 1 July 2009. Bruce joined Petmin in 2005 as
Group Financial Manager and CFO and has served on the Executive Committee since
joining the Group.
10.2 Exercise of options
On 30 June 2009, the Company was informed that Lebo Mogotsi and Bradley Doig
(both executive dir ectors) directly exercised 4 000 000 options each at an
exercise price of 65 cents per share. Dawie Warmenhoven, who resigned as a
director of the Company on 28 February 2009, indirectly exercised 3 000 000
options at an exercise price of 65 cents per share. Johan Gloy (a director of a
subsidiary company) directly exercised 1 000 000 options at an exercise price
of 65 cents per share and 500 000 options at an exercise price of 45 cents per
share. The shares were issued in July 2009.
The options were awarded in terms of a share incentive scheme approved by
shareholders on 19 July 2005. On 30 June 2009, the Company was informed that
Numis Securities Limited exercised 4 798 900 options at an exercise price of 9
British pence per share. These options were granted pursuant to the placement
agreement on Petmin`s admission to AIM in December 2006. The shares were issued
in July 2009.
(i) Operations
Revenue for the year ended 30 June 2009 increased by R122 million or 18% to
R789 million compared with the R667 million in 2008. Gross profi t was R210
million, an increase of R46 million or 28% compared with R164 million in 2008.
This was as a result of improved sales prices achieved at Somkhele for the year
under review and as a result of Springlake securing exceptional sales prices on
export vessels in the first half of the year under review. There was a
consistently strong performance from the silica mine, SamQuarz (Pty) Ltd
("SamQuarz") which generated a profit before tax of R48 million compared with
R47 million in 2008. Administration expenses were R36 million, down from R46
million in 2008 due to a reduction in share option expenses to R0.4 million
compared with R12.7 million in 2008, there being no further share options
issued in the year under review.
Cash of R255 million (2008: R168 million) was generated by operations after
outflows from changes in working capital of R59 million (2008: R84 million).
Capital expenditure of R291 million was incurred in the year to 30 June 2009
(2008: R229 million). R184 million (2008: R133 million) was spent on
exploration drilling and mine development programmes to expand operations and
R91 million (2008: R80 million) on plant and mining equipment. The main focus
of the capital expenditure was the delineation of additional reserves and
resources at Somkhele and SamQuarz, the construction and erection of a rotary
crusher at Somkhele to increase plant throughput, the development of pit room
at Somkhele, and the construction of workshops and terraces for product
stockpiles and terraces for a possible second wash plant at Somkhele.
The ratio of interest bearing debt to equity at 30 June 2009 was 9.97% (2008:
7.01%). An amount of R24 million (2008: R31 million) was drawn on the plant
finance facility at Somkhele in the year ended 30 June 2009 to fund the
expansion of the project and the construction of the rotary crushing plant.
The Group has negotiated additional debt facilities of approximately R150
million with its bankers which are currently not utilised. With significant
cash resources, low gearing and available debt facilities Petmin has created a
platform for growth.
Anthracite Division
Somkhele anthracite mine, Springlake Colliery (sold effective 29 June 2009) and
Petmin Logistics
Management is pleased to report that the Anthracite Division produced 1,016,940
tonnes (2008: 1,219,601 tonnes) and sold 960,764 tonnes (2008: 1,188,512
tonnes) of anthracite in the year to 30 June 2009.
As previously reported in the Interim Results for the six months ended 31
December 2008, there was a significant decline in the international market for
metallurgical coal in the latter part of calendar 2008 and the South African
ferrochrome industry reduced production levels in the six months ended 30 June
2009. Somkhele was shielded from the reduced international demand by the sale
of coal in terms of its long-term export agreement. Subsequent to 30 June 2009,
there has been an increase in demand from the South African ferrochrome market
and other metallurgical producers as additional smelters are brought back into
production.
Mining at Somkhele is progressing well and sufficient "pre-stripping" of the
overburden in the pits has been done to ensure that reduced levels of
development expenditure can be maintained in the year ahead, without reducing
the production of Anthracite. Commencement of extraction of Anthracite from
Area 1 has been delayed, pending a visible sustainable increase in market
demand.
The exploration drilling programme at Somkhele has been verified by Snowden
Mining Industry Consultants in their report dated June 2009. The drilling
programme resulted in an additional 23.97 million tonnes of resources being
delineated as follows: 11.9 million tonnes measured resources, 3.37 million
tonnes indicated resources and 0.2 million tonnes inferred resources in the
Luhlanga area and an additional 8.5 million tonnes inferred resources in the
Kwaqubuka and Emalehlene areas, all of which are contiguous with current
operations.
At 30 June 2009, Somkhele had reserve of 31.61 million run of mine tonnes
which, at current production levels, provides for a life of mine in excess
of 30 years. This reserve figure excludes the additional 23.97 million
tonnes of resources declined during the year.
The long-term export contract has been renegotiated for the period after 30
June 2009 to accommodate the reduced short-term demand in the international
market for anthracite. The terms have been amended to refl ect 200,000 tonnes
per year over four years from the current 350,000 tonnes in 2010 and 400,000
tonnes in 2011 at an average price of $119 per tonne.
The Group acquired the remaining 30% interest in Petmin Logistics from the
minority shareholders. The Group now holds 100% of Petmin Logistics. Petmin
Logistics has contracted with the South African Port Authorities to provide a
dedicated export facility at Richards Bay for a minimum of 600,000 tonnes per
year for four years.
The Company has concluded the sale of Springlake Holdings (Pty) Limited
("Springlake") and all outstanding conditions precedent were met on 29 June
2009. As a result of delays in meeting all the conditions precedent, during
which period global market conditions dramatically declined, the final
sale/purchase consideration was adjusted in line therewith and as a result the
Company received proceeds of R85 million (included in current receivables at 30
June 2009), resulting in an IFRS accounting loss on sale of R79 million being
recognised at 30 June 2009.
Silica Division
SamQuarz silica mine
SamQuarz produced 1,333,613 tonnes (2008: 1,385,906 tonnes) and sold 1,511,850
tonnes (2008: 1,434,853 tonnes) of silica and chert in the year ended 30 June
2009.
The Silica Divis ion`s profit before tax was steady at R48 million (2008: R47
million).
Capital expenditure has been focused on increasing production capacity both in
the open-pit and the plant to ensure that customers` demand levels can be
reliably attained. The installation of an emergency generator was completed in
the six months to 31 December 2008. The exploration programme culminated in the
production of a SAMREC-compliant Reserve and Resource Statement that confirmed
proven and probable reserves of 60.64 million tonnes of quartzite, an increase
of 33% from 45.75 million tonnes and 11.48 million tonnes of chert, a rise of
88% from 6.11 million tonnes, resulting in a life-of-mine in excess of 40
years.
SamQuarz was granted a new order mining right conversion for its mining license
on 30 April 2009.
(ii) Investment in the Veremo pig-iron project
During the year under review Petmin capitalised its R25 million loan to Veremo
Holdings (Pty) Limited whereby its interest in Veremo Minerals (Pty) Ltd
increased to an effective 34.9% (2008: 25%). The resultant fair value on
acquisition of the additional interest in Veremo Minerals resulted in a share
of profit of equity accounted investee of R78 million (2008: R303 million)
being recognised in income.
Renewals of new order prospecting rights for all the Veremo prospecting areas
were approved and executed on 7 May 2009.
During period under review the Veremo project feasibility study made solid
progress. In view of this the board of Veremo commissioned a further infill
drilling programme of 1 000 metres using triple-tube drilling, and appointed
industry consultants to manage the programme.
The scope of the programme is to define the orebody clearly and delineate the
weathered and fresh ore zones from a quantity and quality perspective which,
once clearly understood, will determine the ultimate process to be selected.
The outcome will be an updated CPR with measured, indicated and inferred
resources which we anticipate will be released in mid-December 2009.
Petmin views legislative compliance as the basic standard and strives to ensure
it adheres, as a minimum, to all legislation and legal aspects of its EMPR`s in
place or applied for and is constantly seeking sustainable solutions to ensure
harmony between the communities within which we operate, the natural
environment and our operations.
(iii) Prospects
Anthracite Division
Subsequent to the 30 June 2009 reporting period, indications are that the South
African ferrochrome and other metallurgical producers are increasing production
levels and returning mothballed smelters to production. Somkhele is well-placed
to increase production levels to meet any increased demand. The level of
planned capital expenditure at the operation has been reduced in the 2010
budget year as sufficient pre-stripping of overburden in the open pits has been
done in the 2008 and 2009 financial years to support the required coal
delivery for the year ahead.
Silica Division
We anticipate improved demand from the metallurgical sector, in particular the
ferrochrome industry, in the second half of the year and stable off-take from
our glass customers.
Pig Iron Division
Concurrently with the drill and sampling programme, extensive metallurgical
testing will commence on the representative ore samples taken from both
weathered and fresh zones. The conclusion of this test work will lead into the
pilot plant testing programme in 2010. Thereafter it is anticipated the final
flow sheets for the process will be determined.
(iv) General
Management is of the view that trading conditions will improve slowly in the
year ahead and, while operations were appropriately scaled during the reporting
period, operations are well-positioned to take advantage of any increase in
demand.
We are well-positioned for acquisitive growth with low gearing and cash
resources, as well as numerous opportunities presented by virtue of the global
financial crisis.
Our key investment criteria are:
mining assets that are cash producing or projects that could be cash
producing within 24 months;
key commodities include anthracite, coking coal, steam coal, industrial
minerals, iron ore, chrome, manganese and base metals;
mining assets must have reserve and resource statements supported by
SAMREC-or JORC-compliant Competent Persons` Reports.
minimum project Internal rate of return of 20%; and
minimum life of mine of 10 years.
More details on Petmin can be found on our website (www.petmin.co.za). We
welcome shareholders and/or potential sellers of assets to contact us.
Withdrawal of cautionary announcement
Shareholders are advised that the negotiations referred to in the cautionary
announcement published on 19 August 2009 have been terminated as Petmin`s due
diligence process indicated that the potential investment did not meet the
investment criteria listed above.
Therefore, caution is no longer required to be exercised by shareholders when
dealing in their securities.
By order of the Board
P J Nel J C du Preez
Chairman Chief Executive Officer
Pretoria
7 September 2009
Directors
P J Nel* (Chairman), L Mogotsi (Deputy Chairman), J C du Preez
(Chief Executive Officer), B B Doig (Chief Operating Officer), I Cockerill*#,
E de V Greyling*, A Martin*, J A Strijdom*, J Taylor*, B P Tanner
(Financial Director) *Non-executive #British
Registered Office
Parc Nouveaux, First Floor, Block C
225 Veale Street, Brooklyn, Pretoria, 0002
(PO Box 899, Groenkloof, 0027)
Secretary and Sponsor - JSE
River Group
Transfer Secretaries
JSE: Computershare Investor Services (Proprietary) Limited
Corporate Office
37 Peter Place
Bryanston, 2021
Tel: (011) 706 1644 Fax: (011) 706 1594
website: www.petmin.co.za
Nominated Adviser - AIM
Numis Securities Limited (John Harrison)
Tel: +44 (0) 207 260 1000
Auditors
KPMG Inc.
AIM: Computershare Investor Services PLC
A PDF version of these results is available on our website: www.petmin.co.za
Date: 08/09/2009 14:14:03 Produced by the JSE SENS Department.
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