| Thu 17 Sep 2009, 8:00 | | MVL - Mvelaphanda Resources - Reviewed Results for the year ended 30 June 2009 |
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MVL
MVL
MVL - Mvelaphanda Resources - Reviewed Results for the year ended 30 June 2009
MVELAPHANDA RESOURCES LIMITED
(Registration number: 1980/001395/06
Incorporated in the Republic of South Africa
Share code: MVL
ISIN number: ZAE000050266
Reviewed Results for the year ended 30 June 2009
FEATURES
- Booysendal Transaction successfully concluded
- Gold Fields Transaction matures and mezzanine debt successfully refinanced
- R2 billion of debt repaid
- Solid operational performance by Northam
- Unbundling strategy on track
GROUP BALANCE SHEET
As at
R`000 Notes Reviewed Audited
30 June 2009 30 June 2008
ASSETS
Non-current assets
Property, plant and
equipment 2 9,800,902 483
Investment in associate
companies 180,056 1,074,617
Environmental and social
investments 146,735 -
Deferred taxation 20,464 57,170
GFI-SA loan 3 - 5,080,000
Goodwill 2 - 75,869
Total non-current
assets 10,148,157 6,288,139
Current assets
Inventories 468,254 -
Accounts receivable
and prepayments 227,688 65,120
Cash and cash equivalents 4 1,148,865 1,919,586
Total current assets 1,844,807 1,984,706
Non-current assets
classified as held for sale
Shares in
Gold Fields Limited 3 3,732,695 -
Other listed investments 6 7,047
Booysendal Platinum project 2 - 315,892
Total non-current assets
classified as held
for sale 3,732,701 322,939
TOTAL ASSETS 15,725,665 8,595,784
EQUITY AND LIABILITIES
Share capital and reserves 6,980,175 6,093,342
Minority interest in
Northam Platinum Limited 3,636,629 -
Total share capital and
reserves 10,616,804 6,093,342
Non-current liabilities
Preference share funding
(Booysendal Transaction) 5 2,000,000 -
"A" ordinary shares
(held by Afripalm 2) 700 700
Long-term provisions 53,838 23,733
Deferred taxation 7 1,386,679 136,445
Total non-current
liabilities 3,441,217 160,878
Current liabilities
Bridging loan
(refinanced mezzanine loan) 6 904,171 -
Short-term portion of
preference share funding
(Booysendal Transaction) 5 44,711 -
Short-term portion of
senior bank loan (GFI-SA) - 230,736
Short-term portion of
mezzanine finance (GFI-SA) 6 - 1,839,477
Accounts payable and
accruals 525,235 80,777
Short-term provisions 188,513 173,407
Current taxation payable 5,014 17,167
Total current liabilities 1,667,644 2,341,564
TOTAL EQUITY AND LIABILITIES 15,725,665 8,595,784
GROUP INCOME STATEMENT
Reviewed Audited
Notes 12 months to 12 months to
30 June 2009 30 June 2008
R`000
Operating mining income
derived from Northam Platinum
Limited since acquisition
(ten months)
Sales revenue 2,514,294 -
Cost of sales (2,192,023) -
Operational mining profit
derived from Northam
Platinum Limited since
acquisition (ten months) 1 322,271 -
OTHER OPERATING
INCOME (68,360) 154,728
Earnings from
associate companies (65,532) 303,948
- Northam
Platinum
Limited (equity
accounted
results for
two months) 27,033 308,550
- Trans Hex Group
Limited (165,171) (4,602)
- Pandora 72,606 -
Exploration and project
development costs (38,259) (12,032)
Corporate expenses (49,061) (51,219)
Share-based incentive costs 8 76,893 (90,023)
Net sundry income 21,189 4,054
Costs associated with pursuing
transaction opportunities (13,590) -
Investment income 498,672 620,255
- Interest earned on GFI-SA loan 309,779 437,405
- Other interest earned 188,893 182,850
Finance costs (514,135) (331,850)
- Coupon on preference
shares (Booysendal Transaction) (221,899) -
- Senior bank loan (GFI-SA) (13,660) (48,118)
- Mezzanine finance (GFI-SA) (218,551) (282,882)
- Bridging loan
(refinanced mezzanine loan) (59,325) -
- Other (700) (850)
Other income/(expenses) 848,380 (265,033)
Net effect of the
Booysendal Transaction 2 328 -
Impairment write-back/
(write-down) on Trans
Hex Group Limited 23,446 (32,542)
Impairment write-back
on Tirisano mine project - 19,891
Unrealised profit/(loss)
on revaluation of
the GFI-SA loan 9 865,000 (193,000)
Unrealised profit/(loss)
on revaluation of the Trans
Hex Group Limited forward
purchased shares - (59,382)
Fair value loss on disposal
of Gold Fields shares 9 (37,797) -
Loss on disposal of
Etruscan shares (3,013) -
Gain on disposal of
AngloGold Ashanti shares 416 -
PROFIT BEFORE TAXATION 1,086,828 178,100
TAXATION 176,232 7,221
- Normal (248,880) (39,151)
- Deferred 7 425,112 46,372
NET PROFIT 1,263,060 185,321
Profit/(loss) attributable to:
- Owners of Mvelaphanda
Resources Limited 1,591,421 185,321
- Minority interest in
Northam Platinum Limited (328,361) -
NET PROFIT 1,263,060 185,321
EARNINGS PER ORDINARY SHARE
(cents)
- Basic 10 742 89
- Diluted 10 738 86
- Headline 10 1,663 93
ABRIDGED GROUP SEGMENTAL RESULTS*
R`000 Reviewed Audited
12 months to 12 months to
30 June 2009 30 June 2008
Net profit/(loss) after taxation
- Platinum 493,365 304,305
- Gold 869,069 (90,729)
- Diamonds (148,760) (74,355)
- Other 49,386 46,100
NET PROFIT 1,263,060 185,321
* A detailed segmental income statement is available on the company`s website:
www.mvelares.co.za.
GROUP CASH FLOW STATEMENT
R`000 Notes Reviewed Audited
12 months to 12 months to
30 June 2009 30 June 2008
CASH FLOWS FROM OPERATING ACTIVITIES
Cash generated by/
(utilised in) operations 867,735 (85,548)
Interest received 498,672 620,255
Finance costs (1,223,113) (114,581)
Taxation paid (428,335) (22,634)
Net cash (utilised in)/
generated by
operating activities (285,041) 397,492
CASH FLOWS FROM INVESTING ACTIVITIES
Dividends received 1,080 220,999
Additions to property,
plant and equipment (333,174) (181)
Acquisition of Booysendal
(Booysendal Transaction) 2 (2,390,994) -
Acquisition of Northam
Platinum Limited shares
(Booysendal Transaction) 2 (1,596,864) -
Take-on cash balance from
Northam Platinum Limited 1,379,240 -
GFI-SA loan repaid to
the group 4,139,000 -
Investment in Gold
Fields Limited (4,139,000) -
Proceeds on disposal
of Gold Fields
Limited shares 1,161,507 -
Additions to township
development (17,720) -
Investment in associate
company (Pandora) 7,500 -
Proceeds on disposal
of investments and assets 5,336 14,768
Net cash (utilised in)/
generated by investing
activities (1,784,089) 235,586
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issue
of preference shares
(Booysendal Transaction) 2,500,000 -
Bridging finance raised
(refinanced mezzanine debt) 2,023,600 -
Capital repayment in
respect of loans (2,935,954) (301,688)
- Preference shares
(Booysendal Transaction) (500,000) -
- Senior bank loan (GFI-SA) 3 (230,736) (301,688)
- Mezzanine finance (GFI-SA)3 (1,085,788) -
- Bridging finance
(refinanced mezzanine debt) 6 (1,119,430) -
Net proceeds from
shares issued 3,774 84,870
Dividends paid to Northam
Platinum Limited
minority shareholders (298,443) -
Increase in social and
environmental investments 5,432 -
Net cash generated by/
(utilised in) financing
activities 1,298,409 (216,818)
Net (decrease)/increase in
cash and cash equivalents (770,721) 416,260
Cash and cash equivalents
at beginning of the year 1,919,586 1,503,326
CASH AND CASH EQUIVALENTS
AT END OF THE YEAR 4 1,148,865 1,919,586
GROUP STATEMENT OF CHANGES IN EQUITY
R`000 Total
Restated balance at 30 June 2007 5,814,376
Attributable profit for the year 185,321
Equity compensation reserve 4,086
Net proceeds from shares issued 84,870
Equity accounted portion of share-based
payments of associates 3,782
Equity accounted portion of foreign
currency translation reserve of associates (748)
Equity accounted portion of fair value
adjustment on available-for-sale financial
assets of associates 5,352
Unrealised loss on revaluation of listed
investments (3,697)
Audited balance at 30 June 2008 6,093,342
Attributable profit for the year 1,591,421
Net proceeds from shares issued 147,171
Equity compensation reserve 3,563
Equity accounted portion of share-based
payments of associates 17,315
Equity accounted portion of foreign
currency translation reserve of associates (1,076)
Unrealised loss on revaluation of
listed investments (871,561)
Reviewed balance at 30 June 2009 6,980,175
NOTES
1. Basis of preparation
These condensed consolidated financial statements have been prepared on the
historical cost basis, except for financial instruments that are fair valued,
in accordance with the group`s accounting policies which are consistent with
those adopted in the financial year ended 30 June 2008 and which are compliant
with International Financial Reporting Standards ("IFRS") and in accordance
with IAS 34: "Interim Financial Reporting", the South African Companies Act,
1973, as amended, and the JSE Listings Requirements.
The group applied all the relevant new and revised standards and
interpretations that were in issue and effective for the year ended 30 June
2009. This had no material impact on the financial results of the group.
The results as presented for the year are not directly comparable to the
previous year as a result of the Mvela Resources group ("the group")
increasing its shareholding in Northam Platinum Limited ("Northam") from 22%
to 63%, resulting in Northam being a subsidiary of the group and therefore
being fully consolidated from the end of August 2008, the effective date of
acquisition. In line with previous practice, Northam has been equity accounted
until the end of August 2008. The financial results for the year ended 30 June
2009 therefore reflect equity accounting of 22% of Northam for the first two
months of the year (resulting in Northam contributing R27 million to equity
accounted "Earnings from associate companies") and full consolidation of
Northam`s financial results for the final ten months (resulting in fully
consolidated "Operational mining profit derived from Northam" of R322
million).
2. The Booysendal Transaction
On 20 August 2008, the group acquired 53.1 million Northam shares and 50% of
Booysendal, from Anglo Platinum Limited, for a total consideration of R4
billion. Subsequently, the group sold 100% of Booysendal to Northam, resulting
in the group gaining a controlling interest of 63% in Northam ("the Booysendal
Transaction").
The property, plant and equipment of R9.8 billion reflected on the balance
sheet primarily consists of assets consolidated from Northam, which include
the Northam property, plant and equipment, and mineral rights as well as the
Booysendal project. The difference between the fair value of Northam`s
identifiable net assets acquired at date of acquisition and the deemed
purchase price, resulted in goodwill of R1.5 billion. The difference between
the deemed purchase price (being the fair value of the assets acquired on the
effective date of acquisition) and the actual purchase consideration of R4
billion paid for the Booysendal Transaction, was R2.7 billion and has been
accounted for as a credit in the Income Statement. Due to the weaker outlook
for global growth and PGM demand and the impact this had on metal prices, the
fair value of Northam`s assets reduced subsequent to August 2008. This
resulted in an impairment provision of R1.2 billion and a goodwill write-off
of R1.5 billion.
The net effect of the Booysendal Transaction, as disclosed under "other
income/(expenses)" in the income statement, is summarised as follows:
Reviewed Audited
to 12 months to 12 months
R`000 30 June 2009 30 June 2008
Difference between
fair value and purchase
consideration on the
Booysendal Transaction 2,691,274 -
Impairment write-down
on goodwill (1,498,908) -
Impairment due to the
difference between the
fair value and book
value of the Northam assets (1,192,038) -
Total 328 -
3. Investment in Gold Fields Limited
The Gold Fields Transaction that was concluded in March 2004 matured on 17
March 2009. On this date, the GFI-SA loan of R4.1 billion was repaid to Mvela
Gold, a subsidiary of Mvela Resources, which immediately used the proceeds to
subscribe for 50 million shares in Gold Fields Limited ("Gold Fields"). At
year-end, approximately 11 million of these shares had been sold and the
proceeds were applied towards reducing the bridging finance raised in March
2009 (refer to note 6). The remaining 39 million Gold Fields shares were fair
valued (using a closing share price of R93.52) at R3.7 billion at year-end.
4. Cash and cash equivalents
R`000 Reviewed Audited
30 June 2009 30 June 2008
Cash and cash equivalents
attributable to:
Mvela Resources group 227,962 1,919,586
Northam Platinum Limited 920,903 -
Total cash and
cash equivalents 1,148,865 1,919,586
5. Preference share funding
The preference share funding, originally amounting to R2.5 billion, was
advanced by Nedbank Limited pursuant to the Booysendal Transaction that was
concluded in August 2008. The preference shares are redeemable over a period
of 5.5 years at a dividend rate of 73.3% (nacs) of the South African Prime
overdraft lending rate. The year end balance comprises a capital balance of
R2.0 billion and accrued interest of R44.7 million.
6. Bridging loan
The mezzanine funding that was raised pursuant to the Gold Fields Transaction
had rolled up to approximately R2 billion as at 17 March 2009 and was fully
refinanced with a short-term bridging facility. As at year-end, R1.1 billion
of the facility had been repaid from the sale of approximately 11 million Gold
Fields shares, resulting in a closing loan balance of R904 million.
7. Deferred taxation
The deferred tax provision on the balance sheet mainly relates to the deferred
tax raised on the fair value adjustment on the Northam assets acquired
pursuant to the Booysendal Transaction (R1.3 billion) as well as the fair
value adjustment on the Gold Fields shares (R60 million).
8. Share-based incentive costs
The credit to the income statement is primarily attributable to the decrease
in the share price of Mvela Resources from R64.95 (as at 30 June 2008) to
R30.51 (as at 30 June 2009) as well as the impact of the exercise of certain
share appreciation rights.
9. Gain on the Gold Fields investment
Fair value adjustments on the Gold Fields investment have been taken to the
income statement until 17 March 2009. The unrealised fair value gain of R865
million is due to the increase in the share price of Gold Fields from R99.50
at 30 June 2008, to R118.90 on 17 March 2009. A realised profit of R326
million (which represents the difference between the average selling price
realised of R115.50 per share and an original cost price of R82.78 per share)
was made on the disposal of some 11 million Gold Fields shares between 17
March 2009 and 30 June 2009. From an IFRS perspective, however, a fair value
loss of R37.8 million on the sold shares has been recognised, being the
difference between the recorded fair vale of the shares on 17 March 2009 (at
R118.90 per share) and the average price realised on disposal (R115.50 per
share).
10. Earnings per ordinary share are calculated as follows:
Reviewed Audited
12 months to 12 months to
30 June 2009 30 June 2008
(a) Basic earnings per
ordinary share (cents) 742 89
R`000
Attributable profit 1,591,421 185,321
Weighted average number
of shares in issue 214,510,049 209,167,285
(b) Diluted earnings per
ordinary share (cents) 738 86
R`000
Attributable profit 1,591,421 185,321
Diluted weighted average
number of shares in issue 215,538,859 216,415,759
(c) Headline earnings per
ordinary share (cents) 1,663 93
R`000
Attributable profit 1,591,421 185,321
Attributable impairment
write-downs 1,973,445 12,651
Attributable income from
joint venture in
prior periods (32,504) -
Attributable loss/(profit)
on sale of assets 34,706 (3,881)
Headline earnings 3,567,068 194,091
Weighted average number
of shares in issue 214,510,049 209,167,285
11. Post balance sheet events
Northam Platinum Limited declared a final dividend of 40 cents per share paid
on 14 September 2009 and Gold Fields Limited declared a final dividend of 80
cents per share. The combined dividends have resulted in an additional cash
inflow of R122.3 million for the Mvela Resources group.
12. Capital commitments (Northam Platinum Limited)
Reviewed Audited
12 months to 12 months to
30 June 2009 30 June 2008
Authorised but
not contracted 191,504 -
Contracted 45,046 -
236,550 -
These commitments will be financed from the group`s operating cash flows.
13. Audit review opinion
These preliminary financial results have been reviewed by the group`s external
auditors, PricewaterhouseCoopers Inc., and their unqualified review opinion is
available for inspection at the company`s registered office. The preliminary
financial results of Northam have also been reviewed by their external
auditors, Ernst & Young Inc..
MVELA RESOURCES INDICATIVE NET ASSET VALUE
Share Share
owned Percentage price2 Value Value
(million) owned (R/share) (Rm) (R/share)
Gold Fields1 39 5.5% 106.52 3,903 18.16
Northam 226 62.7% 38.55 8,706 40.50
Trans Hex 22 20.3% 3.35 72 0.33
Total
listed assets 12,681 58.99
Unlisted assets3 648 3.01
Net cash/(debt) (2,820) (13.12)
Cash and cash equivalents4 129 0.60
Mezz debt (904) (4.21)
Nedbank Pref Debt (2,045) (9.51)
TOTAL 10,509 48.88
Premium/(discount) to NAV (13%)
MVL share price2 (R/share) 42.55
MVL shares in issue5 (million) 214.961
Notes
1. Adjusted for tax
2. Close of business on 14 September 2009
3. Management estimates
4. Includes dividends from Northam and Gold Fields and adjusted for short-term
liabilities
5. Undiluted
NORTHAM OPERATING STATISTICS
R`000 % Change Year ended Year ended
30 June 30 June
2009 2008
Development metres (7) 11,841 12,732
Square metres mined (0.5) 361,569 363,545
Tonnes milled 4.1 2,105,091 2,022,657
Head grade(g/ton-3 PGEs +Au) 1.2 5.1 5.0
NORTHAM FINANCIAL STATISTICS
R`000 % Change Year ended Year ended
30 June 30 June
2009 2008
Precious metals
in concentrates
produced * kg 3.2 9,408 9,113
Precious metals
in concentrates
purchased * kg 487 -
Precious
metals sold * kg 20.7 10,362 8,586
Average price
realised * R/kg (31.4) 280,609 409,161
Operating costs * R/kg 13.6 219,691 193,409
Cash operating
costs * R/kg 14 199,680 175,197
Precious metals
in concentrates
produced * oz 3.2 302,474 292,989
Precious metals
sold * oz 20.7 333,159 276,059
Average price
realised * US$/oz (41.9) 1,001 1,722
Operating costs * US$/oz (6.7) 766 821
Cash operating
costs * US$/oz (6.5) 696 744
Average exchange
rate realised US$1.00 = R 18 8.72 7.39
Operating cost
per tonne milled R/tonne 12.7 982 871
Cash cost per
tonne milled
R/tonne 13.1 892 789
* - 3PGE + Au
COMMENTARY
CORPORATE ACTIVITY
From a corporate perspective, FY2009 was both a rewarding and yet, at times, a
challenging year. Rewarding - because FY2009 saw the successful culmination of
the Gold Fields Transaction and the conclusion of the Booysendal Transaction,
which transformed Northam into a leading, independent PGM producer with
meaningful growth potential. Challenging - because the same economic headwinds
which have bedevilled companies globally, required significant strategic
flexibility and adaptability from Mvela Resources.
Gold
The Gold Fields Transaction that was concluded in 2004 was one of the largest
and financially innovative
BEE transactions in the South African resources sector. The R4.1 billion
acquisition price was financed through a blend of senior bank debt, mezzanine
debt and new equity capital, raised globally. Despite the size and complexity
of the transaction and in the face of severely depressed global debt and
equity capital markets, by the maturity date on 17 March 2009, Mvela Resources
managed to repay all the senior bank debt and refinanced the accumulated R2
billion mezzanine debt. The value of the 50 million shares in Gold Fields
Limited that it received also exceeded the gross value of all its liabilities.
During H2 2009, 11 million of the Gold Fields shares were disposed of and half
of the associated debt expunged. The remaining 39 million Gold Fields shares
continue to trade at market prices well above the implied R82.78 per share
2004 acquisition price and offer an opportunity for Mvela Resources to cancel
all of its outstanding debt and unlock further value inherent in its structure
through its stated unbundling strategy.
Platinum
The completion of the Booysendal Transaction in August 2008 and the exciting
potential offered by the combined Northam and Booysendal, attracted
unsolicited expressions of interest from a number of industry majors. Impala
Platinum Limited ("Impala") expressed an intention to make an offer for both
Northam and Mvela Resources and this was pursued further as it offered the
most compelling value and investment case for stakeholders, at the time. Due
to the global economic crisis and volatility in commodity and equity prices,
the parties could not ultimately agree on equitable share ratios for the
transaction proposed by Impala, and discussions
were finally terminated in January 2009.
The unbundling strategy
The termination of the proposed Impala Transaction, the pyramid structure that
resulted from the Booysendal Transaction and the continued global economic
uncertainty, prompted an internal strategic review in January 2009, which
ultimately led to the adoption of the unbundling strategy.
These strategic factors included:
- the JSE Limited ("JSE") requiring Mvela Resources to provide a solution to
the pyramid holding company structure by August 2009. The proposed unbundling
strategy was communicated to the JSE before this date;
- corporate debt was attracting a significant risk premium in the market and
this contributed to the large discount to net asset value that Mvela Resources
attracted in the market;
- the gold price was less affected by the economic turmoil and significantly
outperformed all other asset classes through the market pullback. Mvela
Resources was able to capture the relative premium gold shares were trading
at, by monetising its Gold Fields investment and reducing its debt;
- while the short term outlook for the PGM market was negatively impacted by
the economic downturn, the longer term fundamentals remained sound and
applying excess cash to finance the Booysendal project would secure growth and
additional value for stakeholders.
The first strategic step was to refinance the R2.1 billion mezzanine debt
associated with the Gold Fields Transaction. This was done before 17 March
2009, removing the need to sell the Gold Fields shares to service the
mezzanine debt, allowing a slower and orderly disposal of some of the Gold
Fields shares to capitalise on the positive outlook for gold.
Gains realised from the sale of the 50 million Gold Fields shares could then
be:
- applied to repay all of Mvela Resources debt, reducing the perceived risks
of servicing the debt from uncertain cash flow; and
- apply excess cash to the Booysendal project through a possible rights issue
by Northam, ensuring financing and optimal development of this world class
project.
Mvela Resources would then unbundle all of its shares in Northam to its
shareholders (including any which may have been received in a rights issue),
thereby:
- addressing the pyramid holding company structure (and so satisfying the JSE
requirements); and
- unlocking the market trading discount to net asset value.
In March 2009, Mvela Resources successfully refinanced the mezzanine debt. The
sale of 11 million Gold Field shares resulted in the redemption of more than
half of the refinanced debt.
Financials
Northam`s operating performance in the year ended 30 June 2009 was solid,
although the slump in metal prices impacted on its financial performance. The
42% drop in the average US dollar PGM basket price to US$1,001/oz, caused an
18% decline in Northam`s revenue from R3.9 billion in FY2008 to R3.2 billion
in FY2009. Lower metal prices were partly offset by a weaker rand, which
depreciated 18% to R8.72/US$ and a 21% increase in sales to 333,159 ounces.
Northam`s cost of sales increased 47% from R1.6 billion to R2.3 billion due to
a 17% increase in operating costs (an increase that was driven mainly by
increased production, coupled with inflationary increases in the cost of
labour, consumables and services) and a 60% increase in refining costs (which
increased mainly due to toll treatment charges that were incurred during the
smelter rebuild), although unit costs only increased 14%. Profit attributable
to Northam`s shareholders was 58% lower at R630 million and the company
declared
a final dividend of 40 cents per share, a total of 78 cents per share for the
year. Mvela Resources` attributable dividend from Northam is thus R176
million.
The significant change in "Earnings from associate companies" is a result of
consolidating Northam`s financials for ten months and equity accounting for
Northam for only the first two months of the financial year. The first time
inclusion of earnings from the Pandora joint venture by Northam added R73
million. Mvela Resources attributable share of losses from Trans Hex widened
to R165 million, as Trans Hex`s reported loss widened from R18.5 million to
R797.6 million, reflecting the collapse in demand for luxury goods globally
and with it rough diamond prices. This situation resulted in major impairment
write-offs for Trans Hex, of R537 million for the year.
Before 17 March 2009, the date on which the Gold Fields Transaction matured,
the Gold Fields investment was fair valued as in previous reporting periods.
The increase in Gold Fields` share price from R99.50/share at 30 June 2008 to
R118.90/share at 17 March 2009, resulted in an unrealised fair value gain of
R865 million in the income statement.
From 17 March 2009, the investment in Gold Fields is classified as an asset
held for sale, with an accounting value of R5.95 billion (at R118.90/share).
The sale of the Gold Fields shares resulted in a realised profit of R326
million (being the difference between the realised average selling price of
R115.50 per share and the implied original cost of R82.78 per share) and
allowed Mvela Resources to redeem some R1.1 billion of the bridging finance
(refinanced mezzanine debt) raised in March 2009. However, the treatment under
IFRS, because the Gold Fields shares had been fair valued at R118.90 (17 March
2009) and were subsequently sold at an average price of R115.50, results in a
non-cash, fair value loss of R37 million. With the maturing of the Gold Fields
Transaction and the change in classification of the Gold Fields stake under
IFRS, items such as interest received on the GFI-SA loan and finance costs
relating to GFI-SA will not occur in future.
Major movements on the balance sheet reflect the reclassification of the Gold
Fields investment from a non-current asset in the form of a loan to GFI-SA to
a non-current asset held for sale in the form of listed shares in Gold Fields.
The fair value difference between the accounting value of the unsold Gold
Fields shares (at R118.90/share) and the value at 30 June 2009 (at
R93.52/share), is reflected in capital and reserves as "other reserves" and in
the group statement of changes in equity amounting to R871 million.
At year end, the refinanced mezzanine debt had been reduced to R904 million.
The preference share funding (originally R2.5 billion) that was raised
pursuant to the Booysendal Transaction in August 2008 has also been reduced by
a R500 million repayment resulting in a closing balance of R2 billion at year-
end.
The balance sheet reflects a combined cash balance of R1.1 billion at 30 June
2009 - R921 million for Northam and R228 million for Mvela Resources. After
year end, Mvela Resources received approximately R123 million in dividends
(R91 million from Northam and R32 million from Gold Fields).
Prospects
The board remains committed to the unbundling strategy and Mvela Resources
will continue to dispose of Gold Fields shares in a manner that ensures that
maximum value is received by shareholders. The period between September and
year-end is traditionally a period of strong fundamental demand for gold, and
coupled with anticipated weakness in the US Dollar and continued economic
volatility globally, the outlook for gold remains positive. This should enable
the group to realise significant value from the investment in Gold Fields.
The proceeds from the Gold Fields shares will first be applied to redeeming
Mvela Resources` outstanding debt, with excess cash being returned to
shareholders or applied to grow Booysendal, should that be warranted by the
current feasibility study being carried out by Northam. A rights issue by
Northam would ensure the optimal development of Booysendal, with limited
recourse to cash flow from the Zondereinde mine or Northam`s balance sheet,
which is currently debt free.
Unbundling the Northam shares will give Mvela Resources shareholders direct
exposure to the PGM market, through Northam`s Zondereinde mine which continues
to generate cash, as well as future exciting growth from Booysendal. At the
same time, the discount inherent in the holding company structure will be
unlocked, releasing approximately R1.5 billion of value trapped in the current
structure to shareholders, by the third quarter of the current financial year.
for and on behalf of the board
PL Zim NS Ntsaluba Sponsor
Chairman Financial Director JP Morgan
17 September 2009
Johannesburg
Full details of our results are available at: www.mvelares.co.za
Contact Details
James Wellsted
Investor Relations Officer
Tel: +27 (11) 325 5323
Fax: +27 (11) 325 5324
email: james@mvelares.co.za
Directors
PL Zim (Chairman); NS Ntsaluba* (FD); SW Mofokeng*; BR van Rooyen*; ME Beckett
(British)**; P M Buthelezi; CK Chabedi**; YZ Cuba; R Moonsamy; MJ Wilcox; MSMM
Xayiya
(* Executive Directors)
(**Independent)
Transfer Secretaries
Computershare Investor
Services 2004 (Pty) Limited
70 Marshall Street
P O Box 61051,
Marshalltown, 2107
Johannesburg, 2001
Registered Office
1A Albury Park
Dunkeld West, 2196
Magalieszicht Avenue
P O Box 413420, Craighall, 2024
Date: 17/09/2009 08:00:01 Produced by the JSE SENS Department.
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