| Wed 7 Feb 2001, 0:00 | | Ps!gold - Audited And Quarterly Results To Decembe |
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President Steyn Gold Mines Limited
(formerly Mindserv Limited) - ("PS!Gold")
(Incorporated in the Republic of South Africa)
(Registration number 1998/014461/06)
AUDITED RESULTS FOR THE 15 MONTHS ENDED 31 DECEMBER 2000
* Cash cost on target at R50 669/kg (US$ 207/oz)
* Cash operating profit of R66,1 million
* Cost of ore milled at R258/ton
* Recovered grade of 5,0 grams/ton
* Gold production at 5 232 kilograms
COMMENTS ON THE AUDITED RESULTS FOR THE PERIOD
President Steyn's management team is satisfied with the company's maiden
financial results after the reverse take-over of Mindserve Ltd. The present
position creates an ideal springboard for the company to move ahead in pursuing
its vision. Cash operating profit of R66,1 million is a clear indication of the
earnings potential of the present assets. The earnings per share of 8.0 cents
is above expectations.
By focussing on cost management, the management team was able to, through
various initiatives, lower the cash cost of the underground activities. A
hands-on approach delivered handsome dividends and elevated efficiencies to new
levels. Cash costs of R50 669 per kilogram (or US$207 per ounce) for the period
ended 31 December 2000 were in line with expectations. To ensure a quantum step
in reducing underground cost, a dedicated team investigated the possibilities
of introducing continuous mining on a commercial scale at President Steyn. The
key to the introduction of continuous mining was to find the ideal methodology
to consistently liberate ore with minimum impact. Although there are a number
of methods being tested, PS!Gold's investigation team is of the opinion that
propellant-based low energy rock breaking is the best technology available for
the company's needs.
Management had to deal with various challenges during the past financial year.
During the first part of the year the company reverted from mining contracting
to taking effective control over all operational activities. This resulted in a
restructuring of the company's activities. A critical assessment of the
production status at that stage revealed an urgent need to improve equipment
and to accelerate primary development of new mining areas.
Production at the Freddies operational unit was hampered due to flooding during
the last quarter of the year. The problem was solved by upgrading the
underground water reticulation system. With the breakdown at Freddies,
substantial low grade surface ore was milled to substitute some of the lost
production. This resulted in the recovered grade for the year of 5 grams/ton
being lower than expected.
Since mid 99 management has focussed on the efficiency of the President Steyn
processing plant and recovery has now reached acceptable levels. The
introduction and upgrading of plant and equipment, especially Nelson
concentrators and rubber liners in the mills, resulted in enhanced efficiencies
increasing from 94% to 96%.
Detailed care is being taken to utilise the gold reserves in a responsible and
effective manner. Initial planning and structural evaluations have been
concluded to accelerate the development of the "golden triangle". This mining
area, located between Freddies and Lorraine shafts, will in due course form the
backbone of new ounces at attractive grades. President Steyn 1a shaft, which
has not been in operation for a number of years, is being re-equipped to
facilitate the implementation of the continuous mining project.
Gold production is presently unhedged.
SUMMARY OF RESULTS FOR THE QUARTER AND 15 MONTHS ENDED 31 DECEMBER 2000
VISION
The vision of PS!Gold is to grow production to 700 000 ounces per annum and to
reduce cash cost below US$200 per ounce.
* Net profit for the period of R24,6 million at 9,0% above forecast
* Headline EPS of 8,0 cents at 27,0% above expectation
Quarterly results
Period to December 2000 12 months
Mining and to Sept
non-mining Non- consoli- 99
GOLD PRODUCTION to Dec to Sept Mining mining dated Non-
(12 MONTHS) 2000 2000 12 months* 15 months 15 months mining
Ore milled 000mt 291 271 1053 1053
Gold produced kg 1 264 1 318 5 232 5 232
oz 40 632 42 375 168 198 168 198
Yield:
total g/t 4,3 4,9 5,0 5,0
underground g/t 5,1 5,1 5,2 5,2
Cash operating
costs R/kg 55 125 51 251 50 669 50 669
US$/oz 225 213 207 207
Gold price
received R/kg 65 708 62 346 62 616 62 616
ABRIDGED INCOME
STATEMENT (R'000)
Sales: gold 83 041 82 173 327 574 327 574
other 4 169 3 855 19 751 17 696 25 961
Cash operating costs:
gold (73 167) (67 549) (274 032) (271 977)
gold stock
movement 3 501 2 183 8 959 8 959
other (3 639) (3 460) (16 190) (16 190) (10 391)
Cash operating
profit 13 905 17 202 62 501 3 561 66 062 15 570
Amortisation:
fixed assets (767) (5 331) (15 668) (640) (16 308) (337)
goodwill (2 319) (2 320) (9 277) (9 277)
Corporate
expenditure (1 426) (656) (3 338) (3 338) (1 407)
Net finance
charges (2 889) (2 294) (9 390) (32) (9 422) 483
Profit before
tax 6 504 6 601 28 166 (449) 27 717 14 309
Taxation 356 (1 042) (3 021) (88) (3 109) (4 053)
Net profit 6 860 5 559 25 145 (537) 24 608 10 256
Weighted average
shares in issue
('000) 503 380 503 380 423 080 98 978
Earnings per
share (cents) 1,4 1,1 5,8 10,4
Headline earnings
per share (cents) 1,8 1,6 8,0 10,4
* Gold mining results are only included since January 2000, which is the
effective date of acquisition of the gold mining operations.
31 Dec 30 Sept
ABRIDGED 2000 1999
BALANCE SHEET (R'000) (R'000)
ASSETS
Property, plant and equipment 182 882 9 957
Goodwill 176 262 1 762
Current assets 56 029 11 771
Total assets 415 173 23 490
EQUITY AND LIABILITIES
Shareholders' equity 278 126 16 175
Long-term liabilities 55 419 -
Deferred tax 11 108 -
Provision for environmental rehabilitation 19 567 -
Current liabilities 50 953 7 315
415 173 23 490
Capital expenditure
- incurred for the period 24 722 10 636
- committed but not contracted 33 750 -
Number of shares in issue (000) 503 380 101 880
Net asset value per share (cents) 55,3 15,9
15 months to 12 months to
31 Dec 30 Sept
STATEMENT OF 2000 1999
CHANGES IN EQUITY (R'000) (R'000)
Balance at beginning of period 16 175 -
Issue of share capital and premium
less expenses 239 618 79 386
Goodwill on acquistion of subsidiaries
written-off premium - (69 869)
Write-off of intellectual property
against premium - (6 236)
Non-distributable reserve on
acquisition of business - 1 138
Distribution in specie on disposal
of businesses (2 274) -
Retained income for the period 24 608 11 756
Balance at end of period 278 127 16 175
Represented by:
Share capital 5 034 1 019
Share premium 235 591 2 262
Non-distributable reserve 1 138 1 138
Retained income 36 364 11 756
278 127 16 175
15 months to 12 months to
31 Dec 30 Sept
ABRIDGED 2000 1999
CASH FLOW STATEMENT (R'000) (R'000)
Cash flow from operating activities (35 363) 6 682
Cash flow from investing activities (23 729) (10 398)
Cash flow from financing activities 49 912 4 574
Net increase in cash resources (9 180) 858
Net overdraft included in subsidiaries
acquired and sold (11 926) (247)
Cash and cash equivalents at
beginning of period 611 -
Cash and cash equivalents at the
end of period (20 495) 611
QUARTERLY RESULTS
Quarter Quarter Quarter
ended ended ended
31 Dec 31 Dec 30 Sept
actual pro-forma* actual
Gold production kg 1 264 1 306 1 318
Recovered grade g/t 4,3 5,3 4,9
Cash operating cost R/kg 55 125 52 822 51 251
US$/oz 225 210 213
Cash operating profit R000 13 905 17 400 17 202
Net profit R000 6 860 9 100 5 559
* Included for ease of comparison
Cash operating cost per kg was higher than the previous quarter due to lower
gold production and abnormal maintenance as a result of the flooding at the
Freddies shaft, which caused a production loss of 42kg.
The overall yield of 4,3 grams per ton was below target. This was a result of
60 000 tons of low grade surface ore which was processed during the period when
the Freddies shafts were out of production. However, the underground recovery
of 5,1 grams per ton was very consistent with annual performance.
In order to make a meaningful comparison against the previous quarter, the
once-off maintenance and production problems should be eliminated. This effect
is shown in the pro-forma quarterly comparison in the table above. The
sensitivity of production problems to the results of PS!Gold clearly
illustrates the need for the company to add critical mass to its operations. To
this end, the company is aggressively pursuing the already stated strategy of
increasing its capacity.
Production at newly developed areas contributed for the first time in the
quarter, although these areas will only be in full operation during the first
half of 2001.
PROSPECTS
Management is striving towards merging synergistic assets to create an entity
with bigger critical mass. All endeavours in this regard will be evaluated for
added economic value and management will refrain from pursuing an increase in
gold capacity without a comparable increase in shareholder value. Various
alternatives are being investigated and considered.
Attempts are still being made to initiate black empowerment on a partnership
basis. Negotiations in this regard have been hampered by the inability to
secure funding for the introduction of empowerment partners. PS!Gold is ideally
positioned to play a meaningful role in effective black empowerment in the Free
State.
PS!Gold is also seeking a mentorship relationship with leading gold producers.
Management is of the opinion that the experience and management resources of
some of the major producers can add to the optimum utilisation of the company's
mineable reserves.
Increased gold production is forecast for the new year through the development
of the "golden triangle", the introduction of continuous mining and further
focus on selective "old gold" projects.
On behalf of the Board
JS (Mac) van der Merwe
Chief Executive Officer
6 February 2001
Transfer secretaries
Mercantile Registrars Limited, 7th Floor, 11 Diagonal Street, Johannesburg 2001
Registered office
7 Main Reef Road, Germiston 1401
Directors
JS van der Merwe, CR de Wet, FN Lotz, DL Parodi
