| Mon 19 Feb 2001, 0:00 | | Kroondal - Interim Results For Six Months Ended 31 |
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Kroondal Platinum Mines Limited
(Incorporated in the Republic of South Africa)
(Registration number 1977/002213/06)
("Kroondal" or "the company")
INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2000
HIGHLIGHTS
* Interim net profits exceed full year to June 2000
* Cash operating profit margin - 71.1%
* Earnings per share - 430 cents
* Earnings R167.7 million
* Cash on hand - R125.2 million
* $16 million debt repaid
INCOME STATEMENT
(Unaudited) (Unaudited)
Six months to Six months to
December 2000 December 1999
R'000 R'000
Sales 347 712 58 999
Cost of mining operations 112 217 41 193
On-mine 100 314 38 024
Amortisation and depreciation 9 821 3 169
Royalties 2 082 1 579
Operating profit 235 495 16 219
Other income/(expenses) 7 387 (1 196)
Income before interest and taxation 242 882 15 023
Net interest expense 2 987 3 168
Interest paid 7 114 4 002
Interest received 4 127 834
Income before taxation 239 895 11 855
Taxation - deferred 72 199 2 753
Attributable income 167 696 9 102
Weighted average number of shares
in issue at balance sheet date (000) 38 976.5 35 837.9
Earnings per share
Headline (cents) 430.3 25.4
Fully diluted (cents) 333.3 20.9
STATEMENT OF CHANGES IN EQUITY
(Unaudited) (Unaudited)
To Dec To Dec
2000 1999
total total
R'000 R'000
Balance at 1 July 2000 303 212 193 428
Shares issued 31 153 600
Net profit for period 167 696 9 101
Balance at end December 2000 502 061 203 129
BALANCE SHEET
(Unaudited) (Unaudited)
Six months Six months
to December to December
2000 1999
R'000 R'000
Capital employed
Shareholders' funds 502 061 203 129
Long-term borrowings - 151 955
Provision for closure costs 7 500 5 000
Deferred tax 117 402 2 753
626 963 362 837
Employment of capital
Mining assets 347 764 310 336
Net current assets/(liabilities) 279 199 52 501
Current assets 379 221 78 735
Inventory 6 956 1 955
Accounts receivable 247 109 63 339
Cash 125 156 13 441
Current liabilities 100 022 26 234
Accounts payable 34 232 26 234
Short-term portion of US$ loan 65 790 -
626 963 362 837
CASH FLOW STATEMENT
(Unaudited) (Unaudited)
Six months Six months
to December to December
2000 1999
R'000 R'000
Net cash inflow/(outflow) from
operating activities 207 477 (46 539)
Net cash outflow from
investing activities (30 662) (67 521)
176 815 (114 060)
Net cash inflow/(outflow)
from financing activities (95 257) 118 466
Increase in cash resources 81 558 4 406
Cash resources at beginning of period 43 598 9 035
Cash resources at end of period 125 156 13 441
COMMENTARY
Review of operations
The company continued with its business of mining platinum group metals (PGMs)
and selling the associated concentrate derived to Impala Refining Services
Limited.
The company continued to optimise its operations during the period. Particular
attention was given to the mining practice underground in order to reduce the
waste dilution to the plant. Significant improvements have been made in this
area with increased ounces of PGMs being produced in the last two months of the
period.
Generally the operations reported a satisfactory performance with plant
recovery improvements expected on commissioning of the regrind project in June
2001.
The company is pleased to report that the best production month experienced at
the operations was for the first month of the second half, during a time when
year-end holidays adversely affected South African mining production.
CORPORATE ACTIVITIES
Merger with/Offer by Aquarius Platinum Limited
On 24 July 2000 a joint announcement was made proposing a scheme of arrangement
between Kroondal and Aquarius Platinum Limited at a switch ratio of 1:1. The
switch ratio was subsequently revised to 1.2 Aquarius shares for every Kroondal
share, subject to certain conditions precedent. On 20 December 2000 it was
announced that the approvals to which the scheme of arrangement was subject had
not been obtained from the regulatory authorities.
As the conditions precedent had not been fulfilled, the scheme of arrangement
could not proceed. In the same announcement Aquarius stated that it proposed
to offer to acquire all the KPM shares and KPM "T" options held by the KPM
minorities. Essentially Aquarius offered to acquire all the KPM shares and the
KPM "T" options, not already held by Aquarius, at 3 200 cents and 2 280 cents
each, respectively. The offer opened on Monday, 15 January 2001 and closed at
16:00 on Monday, 5 February 2001, details of which were set out in a circular
to shareholders of the same date.
The latest results of the Aquarius offer indicate that on a fully diluted
basis, it owns 74,6% of all shares in issue and 78.3% along with concert
parties.
Joint venture with Anglo Platinum
On 18 January 2001a joint announcement was made that KPM, Aquarius Platinum
Limited and Rustenburg Platinum Limited would enter into a joint venture to
effectively treble the current capacity of KPM to 300 000 oz platinum per
annum. Finalisation of the joint venture was subject to certain suspensive
conditions, and the approval of the development plan by the respective boards
being the main condition. After reviewing the financial benefits to KPM the
boards of KPM and Aquarius Platinum decided not to proceed with this venture.
Rustenburg Platinum were accordingly advised on 1 February 2001.
Expression of interest by Northam Platinum Limited
On 18 January 2001, the board of directors of Northam Platinum Limited
announced that Northam expressed an interest in acquiring 100% of the Kroondal
shares in issue at 4 000 cents per share and 100% of the KPM "T" options in
issue at 3 080 cents per option. After Aquarius Platinum and other concert
parties advised in writing that their shareholdings in Kroondal were not for
sale, Northam withdrew its interest.
OPERATIONAL STATISTICS FOR PERIOD
Production
Plant feed ROM tons 1 005 700
Metal production
Six months to Year to
December 2000 June 2000
Platinum oz 41 479 49 299
Palladium oz 20 077 22 737
Rhodium oz 7 368 7 599
Gold oz 528 557
Total PGM oz 69 452 80 192
Iridium oz 2 779 3 000
Ruthenium oz 11 398 11 906
Nickel tons 63.1 70.4
Copper tons 32.6 36.5
Chrome tailings tons 85 000 88 000
Six months to
December 2000
Cash cost statistics
ROM R/t 97
Milled R/t 116
Platinum (Pt) ounce refined R/oz 2 958
PGM ounce refined R/oz 1 767
Pt net of by-products R/oz (2 779)
Average metal prices
Platinum $/oz 585
Palladium $/oz 772
Rhodium $/oz 1 950
Gold $/oz 273
Average ROE R/$ 7.25
COMMENTS ON FINANCIAL RESULTS
The directors are very pleased with the operating results for the first six
months of the year as set out on the above income statement. Comparative
figures for the period ending 31 December 1999 are relatively meaningless as
the company was in a capital development phase during that period.
Diluted earnings per share takes into account the full potential dilutionary
effect of some 15.8 million options (including employees' and directors' share
options) which may be converted into ordinary shares.
Accounts receivable in the balance sheet include the effect of four months of
pipeline required from date of concentrate delivery, when sales are recognised,
to date of cash received.
FUTURE PROSPECTS
The second half results are expected to be similar to those in the first half
provided the favourable metal prices remain along with the weak ZAR : US$
exchange. The regrind project which was initiated during the period is expected
to be complete by June 2001 at a cost of R84 million. This project has two
benefits, these being:
* increase in plant recovery by +/- 10%; and
* an increase in capacity of 50%
The board has indicated an interest in expanding the mining operations to
utilise the 50% extra capacity being created in the concentrator by the regrind
circuit. Management is conducting a study on the benefits of such an expansion
along with the reduction in mine life, especially during a time of high metal
prices.
The boards of KPM and Aquarius are working together on assessing how KPM can
participate in Aquarius' growth projects, in particular the Marikana project.
SIGNIFICANT ACCOUNTING POLICIES
Financial statements are prepared in accordance with International Accounting
Standards (IAS) and incorporate the following important accounting policies:
Turnover and revenue recognition
Revenue is recognised where the significant risks and rewards of ownership have
been transferred to the purchaser by the end of the mineral month and comprises
the sale of PGMs as well as chrome as a by-product.
As pricing of PGMs is based on the average market price for the calendar month
ruling three months after the month of delivery, revenue for the months for
which final pricing has not yet been established is recognised using 90% of the
latest available average market price for a calendar month as basis.
Amortisation
Significant mining assets, including mineral rights, mining claims, mine
development and concentrator plant are amortised over their estimated useful
lives using the unit of production method based on proven and probable ore
reserves. Less significant assets are depreciated on a straight-line basis at
rates which will reduce their book values to estimated residual values over
their expected useful lives.
Closure costs
In order to comply with International Accounting Standards, a provision of R7.5
million has been raised for the present value of environmental damage incurred
on the initial set-up of assets and other long-term capital projects. These
costs are included in the costs of the related asset. The obligation to restore
environmental damage caused by operations is raised as the relevant operations
take place.
INTEREST BEARING BORROWINGS
The company utilised US$24.7 million of a US$35.0 million facility which was
made available to the company by a consortium from Dresdner and RMB Resources
in Australia. The company repaid US$16.0 million during this period and intends
repaying the remaining US$8.7 million by the end of March 2001.
CAPITAL COMMITMENTS
At the balance sheet date the directors have approved the following capital
commitments:
Contracted for: R79.9m
Non-committed R34.9m
R114.6m
"T" OPTIONS TRADING ON JSE SECURITIES EXCHANGE SOUTH AFRICA ("JSE")
All remaining KPM "T" options trading on the JSE will expire on Wednesday,
28 February 2001. Optionholders are reminded that those holders who wish to
exercise their options should complete a form of exercise and surrender in the
prescribed form obtainable from transfer secretaries, Computershare Services
Limited. Such completed forms, together with their "T" option certificates, and
the strike price of 920 cents per unit should be submitted to Computershare
Services Limited, 2nd Floor, Edura, 41 Fox Street, Johannesburg, (PO Box 61051,
Marshalltown, 2107) before close of business on Wednesday, 28 February 2001.
KPM "T" options not exercised at that date will be forfeited.
DIVIDENDS
No dividend has been declared by the directors.
By order of the board
Graham Ferreira
Company Secretary
19 February 2001
Registered office
KPMG Forum, 427 Hilda Street, Pretoria, 0002, PO Box 11265, Hatfield, 0028
Transfer secretaries
Computershare Services Limited, 1st Floor, Edura, 41 Fox Street, Johannesburg,
2001, PO Box 61051, Marshalltown, 2107
Directors:
A B McKerron (Chairman), M A P Adams (Deputy Chairman) (British), D B Evans
(Managing Director) (British), C R Munro (Non-executive) (Australian), E F G
Nealon (Non-executive) (Australian),
R B Sutherland (Non-executive)
e-mail address:
general@kpm.co.za
