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TBX
TBX
TBX - Thabex - Condensed Interim Reviewed Group Results for the six months
ended 31 August 2010
THABEX LIMITED
("Thabex" or "the Company" or "the Group")
Registration Number 1988/000763/06
(Incorporated in the Republic of South Africa)
JSE share code: TBX ISIN Code: ZAE000013686
Young Lions Exploring Africa
CONDENSED INTERIM REVIEWED GROUP RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST
2010
CONDENSED CONSOLIDATED As at As at As at
STATEMENT OF FINANCIAL
POSITION
31 August 31 August 28
2010 2009 February
2010
Reviewed Reviewed Audited
Notes R`000 R`000 R`000
Assets
Non-current assets
17 962 18 845 18 448
Plant and equipment
3 723 4 606 4 209
Exploration and
evaluation assets 14 239 14 239 14 239
Current assets
1 992 2 227 2 088
Inventories
900 1 530 1 516
Short-term trading
investments 24 36 33
Trade and other
receivables 742 502 486
Short-term loans
- 77 -
Cash and cash
equivalents 326 82 53
Total assets
19 954 21 072 20 536
Equity and liabilities
Capital and reserves
Share capital
2 399 2 279 2 399
Share premium
27 975 27 260 27 975
Accumulated loss
(22 935) (19 928) (21 493)
Total equity attributable
to the equity holders of 7 439 9 611 8 881
the parent
Non-controlling
shareholders` interest 2 560 - 2 431
Total equity 9 999 9 611 11 312
Non-current liabilities
1 937 2 057 1 937
Current liabilities
8 018 9 404 7 287
Bank overdraft
170 - -
Trade and other
payables 3 553 2 660 3 442
Short-term loans 2
3 820 5 844 3 370
Taxation payable
475 900 475
Total equity and
liabilities 19 954 21 072 20 536
CONDENSED CONSOLIDATED Six months Six months Year ended
STATEMENT OF ended ended
COMPREHENSIVE INCOME
31 August 31 August 28
2010 2009 February
2010
Reviewed Reviewed Audited
R`000 R`000 R`000
Revenue
121 120 421
Cost of sales
(99) (144) (293)
Gross profit
22 (24) 128
Other operating income
345 3 488 4 490
Administration expenses
(224) (939) (2 579)
Other operating
expenses/income (1 943) (2 275) (5 715)
Operating (loss)/profit
(1 800) 250 (3 676)
Finance income
- 3 463
Finance expenses
(14) (120) (6)
(Loss)/Profit before
taxation (1 814) 133 (3 219)
Taxation
- - 285
(Loss)/Profit for the (1 814) 133 (2 934)
period
Other comprehensive
income
Net change in fair value
of available for sale
financial assets - -
82
Net change in fair value
of available for sale
financial assets - -
reclassified to profit or (82)
loss
Other comprehensive - -
income for the period -
(Loss)/Profit and total
comprehensive income for (1 814) 133 (2 934)
the period
Attributable to:
Equity holders of the
parent (1 741) 133 (1 431)
Non-controlling
shareholders` interest (73) - (1 503)
Weighted average of 3
number of shares in issue 239 868 227 868 227 901
870 870 747
Basic (loss)/earnings per
share (cents) (0.73) 0.06 (0.63)
Diluted loss per share
(cents) (0.73) 0.06 (0.63)
CONDENSED CONSOLIDATED Six months Six months Year ended
STATEMENT OF CASH FLOWS ended ended
31 August 31 August 28
2010 2009 February
2010
Reviewed Reviewed Audited
R`000 R`000 R`000
Net cash (outflow)/inflow (406)
from operating activities (2 772) (7 931)
Net cash inflow from 509
investing activities 2 806 4 003
Net cash inflow from -
financing activities - 3 933
Increase in cash and cash
equivalents 103 34 5
Cash at beginning of
period 53 48 48
Cash at end of period
156 82 53
CONDENSED CONSOLIDATED Six months Six months Year ended
STATEMENT OF CHANGES IN ended ended
EQUITY
31 August 31 August 28
2010 2009 February
2010
Reviewed Reviewed Audited
R`000 R`000 R`000
Share Capital 2 399 2 279 2 399
Issue of ordinary - - 120
shares
Share capital at the 2 399 2 279 2 279
beginning of the period
Share Premium 27 975 27 260 27 975
Share premium on issue - - 720
of ordinary shares
Share issue expenses - - (5)
Share premium at the 27 975 27 260 27 260
beginning of the period
Accumulated loss at end (22 935) (19 928) (21 492)
of the period
(Loss)/Profit and total (1 741) 133 (1 431)
comprehensive income for
the period
Changes in ownership
interests in subsidiaries
that do not result in a
loss of control 298 - -
Accumulated loss at the (21 492) (20 061) (20 061)
beginning of the period
Total equity attributable
to the equity holders of 7 439 9 611 8 882
the parent
Non-controlling 2 560 - 2 430
shareholders` interest at
end of the period
(Loss)/Profit and (73) - (1 503)
total comprehensive
income for the period
Changes in ownership
interests in subsidiaries
that do not result in a 3 933
loss of control 203 -
Non-controlling 2 430 - -
shareholders` interest at
beginning of the period
Total equity
9 999 9 611 11 312
SEGMENTAL ANALYSIS
Total segment assets
Thabex Ltd - exploration 16 792 21 901
and management services 16 377
Tradepost 121 (Pty) Ltd - 7 466 3 921
Monastery kimberlite 4 791
project
Salt River Resources Ltd 7 356 7 597
- base mineral project 7 356
Angel Diamonds (Pty) Ltd 3 512 4 535
- Kolo kimberlite project 1 824
Minnex Exploration (Pty) 822 3 819
Ltd - alluvial and 4 712
kimberlite projects
Reportable assets 35 948 41 773
35 060
Assets not allocated to 159 200
segments 110
Consolidation adjustments (16 153) (20 901)
and inter-company (14 634)
eliminations
Total assets 19 954 21 072
20 536
Total segment liabilities
Thabex Ltd - exploration 6 972 9 062
and management services 6 708
Tradepost 121 (Pty) Ltd - 2 722 4 746
Monastery kimberlite 2 349
project
Salt River Resources Ltd 8 785 8 378
- base mineral project 159
Angel Diamonds (Pty) Ltd 2 873 11 636
- Kolo kimberlite project 413
Minnex Exploration (Pty) 847 1 262
Ltd - alluvial and 564
kimberlite projects
Reportable liabilities 22 199 35 084
10 193
Liabilities not allocated 2 981 2 701
to segments 134
Consolidation adjustments (15 225) (26 324)
and inter-company (1 103)
eliminations
Total liabilities 9 955 11 461
9 224
External revenue
Thabex Ltd 121 120
421
Finance income
Thabex Ltd - 3
353
Salt River Resources Ltd - -
3
Minnex Exploration (Pty) - -
Ltd 107
- 3
463
Finance expense
Thabex Ltd 5 3
5
Tradepost 121 (Pty) Ltd - 89
-
Angel Diamonds (Pty) Ltd 9 -
1
Minnex Exploration (Pty) - 28
Ltd -
14 120
6
Segment profit/(loss)
Thabex Ltd 151 2033
(2 319)
Tradepost 121 (Pty) Ltd (362) (215)
(530)
Salt River Resources Ltd (2) (20)
(664)
Angel Diamonds (Pty) Ltd (65) (1 624)
(3 820)
Minnex Exploration (Pty) - (62)
Ltd (125)
Reportable profit/(loss) (278) 112
(7 458)
Other subsidiaries (36) (109)
(342)
Consolidation adjustments (1 500) 130
and inter-company 4 124
eliminations
(Loss)/Profit before (1 814) 133
interest and taxation (3 676)
The Group has five operating segments, as described below. For each of the
segments, the Group`s Chief Executive reviews internal management reports on
at least a monthly basis. The five segments are listed in order of priority
for the Group`s overall operations namely:
- Thabex Ltd: Includes exploration and management services to the Group`s
companies.
- Tradepost 121 (Pty) Ltd: Includes Monastery Mine (Pty) Ltd and Monastery
Holdings (Pty) Ltd and these companies are involved in the prospecting
and development of Monastery Kimberlite pipe in the district of Marquard
in the Free State Province.
- Salt River Resources Ltd: Includes the Salt River base mineral project in
the Northern Cape Province.
- Angel Diamonds (Pty) Ltd: Includes the Kolo Kimberlite project in the
Mafateng district of the Kingdom of Lesotho.
- Minnex Exploration (Pty) Ltd: Includes the Middelwater alluvial diamonds
project, with a 2.5% royalty agreement on commencement of mining
operations, and the search for primary kimberlite deposits in Northern
Namibia.
Notes:
1. Surplus on disposal of 0.66% in Salt River Resources ("SRR") has been
recognised directly in equity.
2. Short term loans decreased from R5.84 million in 2009 to R3.82 million as a
result of the capitalisation of directors and shareholders loans in Angel
Diamonds (Pty) Ltd ("Angel Diamonds") on 26 February 2010, as approved by the
board of Angel Diamonds on 17 December 2009. The shareholders, represented in
person and by proxy, also approved the special resolution to increase the
authorised share capital of Angel Diamonds on 27 January 2010 during the
Annual General Meeting. The remaining short term loan has been advanced by Dr
JA Cruise, a related party (Non-executive Chairman of SRR a subsidiary of
Thabex), who has undertaken not to request repayment for a period of twelve
months from the date of the publication of these financial results or until
such date that the Group`s current assets reasonably exceed its current
liabilities.
3. On 23 April 2010 the Company`s shares were sub-divided in 1 to 10 as per
the Special resolution approved on 19 February 2010.
Review of results
Operating results
The Group incurred a loss for the period of R1.8 million (2009: profit of
R0.13 million). The headline loss per share changed from 1.17 cents per share
(2009) to 0.73 cents per share and the net asset value per share of the Group
decreased from 4.21 cents per share (2009) period to 4.17 cents per share for
the interim period.
Headline earnings per share
Six months Six months Year ended
ended ended
31 August 31 August 28
2010 2009 February
2010
Reviewed Reviewed Audited
R`000 R`000 R`000
Headline (loss)/earnings
per share (cents) (0.73) (1.17) (2.21)
Diluted headline (1.17) (2.21)
(loss)/earnings per share (0.73)
(cents)
RECONCILIATION OF
HEADLINE EARNINGS/(LOSS)
Reconciliation between
profit/loss and
headline earnings/loss
Profit/(loss)
attributable to ordinary (1 741) 133 (1 431)
shareholders
Impairment of unlisted
investments - - -
Loss on disposal of plant
and equipment - - 45
Loss on disposal of -
interest in subsidiary (2 806) (3 647)
Headline loss
(1 741) (2 673) (5 033)
Net asset value per share
Shares in issue
239 868 227 868 239 868
870 870 870
Net asset value per share
(cents) 4.17 4.21 4.72
Net tangible asset value
per share (cents) (1.77) (2.03) (1.22)
Going concern
The Group incurred a net loss of R1.81 million (2009: profit of R0.13 million)
for the six month period ended 31 August 2010. At that date, the Group`s
current liabilities exceeded its current assets by R6.03 million (2009:
current liabilities exceeded current assets by R7.18 million) (see note 2
above).
The board has considered the ability of the Company and its subsidiaries to
continue as going concerns and based on reasonable and supportable
assumptions, have concluded that the forecast levels of production and the
future benefits of the continuing prospecting operations of Monastery Mine, an
indirect subsidiary of Thabex, will produce sufficient cash flows to allow the
Company and its subsidiaries to meet their obligations in the normal course of
business for the foreseeable future.
Should the operations of the subsidiary fail to achieve forecast cash flows,
there will be a material uncertainty that may cast doubt on the ability of the
Company and its subsidiaries to continue as going concerns. The cash flow
assumptions are based on a production rate of 10 000 tons per month at an
average grade of 25cpht (carats per hundred tons) and a conservatively
modelled rough diamond price of US$150/ct and an exchange rate of R/US$7.00.
Contingent liabilities
In the annual financial statements for the year ended 28 February 2010, the
Group reported a contingent liability of R5.81 million against possible legal
action from Mantle Diamonds Limited ("Mantle Diamonds") for expenditure
incurred by that company for their own account and risk on the Kolo Kimberlite
project in Angel Diamonds (Proprietary) Limited ("Angel Diamonds"). Mantle
Diamonds withdrew from the Kolo Kimberlite project on 14 November 2009 and
also declined to respond to the legal disputes between the major and non-
controlling shareholders of Angel Diamonds in which they were cited as
respondents. The possibility for a liability has diminished to such an extent
that Thabex`s board do not consider there to be a likelihood of success by
Mantle Diamonds should they institute a claim especially as Mantle Diamonds
did not oppose the liquidation application of Angel Diamonds.
Basis of preparation
The Group`s condensed interim financial results for the six months ended 31
August 2010 are prepared in accordance with the JSE Listings Requirements, the
South African Companies Act (Act 61 of 1973) as amended, the recognition,
measurement, presentation and disclosure requirements of International
Accounting Standard 34 Interim Financial Reporting (IAS 34) and the AC 500
interpretations as issued by the Accounting Practices Board of the South
African Institute of Chartered Accountants. The Group has applied the IFRS`s
applicable to the six months ended 31 August 2010.
These condensed 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 financial statements of the Group as at
and for the year ended 28 February 2010.
The accounting policies applied by the Group in these condensed consolidated
financial statements are consistent with those applied in the previous year,
except for the following:
From 1 March 2010 the Group has applied IAS 27 Consolidated and Separate
Financial Statements (2008) in accounting for changes in ownership interest in
subsidiaries without loss of control. The change in accounting policy has been
applied prospectively and has had no impact on the prior periods presented.
The surpluses on disposal of shares in subsidiaries which do not result in a
loss of control were previously credited/charged to the statement of
comprehensive income whereas they are now recognised directly in equity.
Dividends
No dividend has been declared during the period under review (2009: nil).
Review
These condensed consolidated financial statements have been reviewed by the
Company`s auditors, KPMG Inc. The Company`s auditors have expressed a
disclaimer of opinion on the going concern assumption on the condensed
consolidated financial statements of the Group as at and for the six month
period ended 31 August 2010, from which these results have been derived. The
reviewed report on these summary results is available for inspection at the
Company`s registered office. The disclaimer of opinion on these summary
results is set out below:
"Basis for Disclaimer of Conclusion
The going concern note in the condensed group interim results for the six
month period ended 31 August 2010 indicates that the board has considered the
ability of the company and its subsidiaries to continue as going concerns and,
based on reasonable and supportable assumptions, have concluded that the
forecast level of production and future benefits of the continuing prospecting
operations of Monastery Mine (Pty) Limited, a subsidiary, will produce
sufficient cash flows to allow the company and its subsidiaries to meet their
obligations in the normal course of business for the foreseeable future. We
were unable to obtain sufficient appropriate evidence to satisfy ourselves
that the assumptions applied by the board in preparing the going concern
assessment are reasonable and supportable. The possible effects of this matter
are considered material and pervasive to the financial position, financial
performance and cash flows of the company and its subsidiaries reflected in
this financial information.
Disclaimer of Conclusion
Because of the significance of the matter described in the Basis for
Disclaimer of Conclusion paragraph, we have not been able to obtain sufficient
appropriate evidence to provide a basis for a review conclusion on the
accompanying financial information. Accordingly, we do not express a
conclusion on the financial information."
Commentary
Diamonds in the Kingdom of Lesotho
Angel Diamonds submitted an application for a Mining License ("ML") to the
Commissioner of Mines in Lesotho on 12 December 2008. As in the case of many
exploration projects, when value is unlocked and prior to mining operations
commencing, the expectations of possible vast amounts to be made from such a
project overcomes the agreed process to achieve the gains for shareholders and
personal greed takes over. Having reported the legal matters regarding Angel
Diamonds in detail on SENS. Even though the Liquidation Application on 8
October 2010 by Mr TP Mosebo, a director of Angel Diamonds, was discharged
with costs, it has come to the attention of the board that, on the very same
day Mr Mosebo applied for liquidation of Angel Diamonds, a new company, Reskol
Diamond Mining (Proprietary) Limited ("Reskol") was registered in the Kingdom
of Lesotho, with Messrs Mosebo and Engelbrecht as shareholders and directors.
Any purported granting of a ML to Reskol is considered as sub judice.
The most disturbing aspect of the legal route taken by three non-controlling
shareholders is the fact that neither these non-controlling shareholders, the
provisional liquidators nor the Commissioner of Mines and Geology of Lesotho
are able or willing to account for the 1 000 carats produced during the period
Mantle Diamonds was involved in the project. Furthermore, it appears that all
fiduciary duties owing by Messrs Mosebo and Engelbrecht, as High Court
appointed managers of Angel Diamonds to that company, at the time, were
flouted by them.
Diamonds in South Africa
Minnex Exploration (Proprietary) Limited ("Minnex")
Minnex has a 2.5% royalty agreement on turnover with Steyn Diamante CC once
alluvial diamond mining commences the Farm Middelwater about 40km north of
Prieska in the Northern Cape Province.
Monastery Mine (Proprietary) Limited ("Monastery")
Monastery is situated about 15km south of the town of Marquard in the Free
State Province. Prospecting activities have so far consisted of sampling,
analysis and metallurgical test. Dry Harts Diamonds has commenced processing
the oxidised dump south of the open pit area of the Monastery Kimberlite pipe.
Since the commencement of the oxidised dump testing during July 2010 to date,
a total of 515ct rough diamonds have been produced, including the production
by Dry Harts Diamonds. The largest rough diamond produced was a high quality
9.95ct pure diamond.
Diamonds in Namibia
Minnex Exploration Namibia (Proprietary) Limited ("Minnex Namibia") (an 80%
subsidiary of Minnex)
Minnex Namibia has applied for an extension of the prospecting rights to the
two Exclusive Prospecting License areas during July 2011.
Directorate
The following changes to the board of Thabex occurred during the period under
review, up to and including the date of this report, Mr Joseph Ratchedi was
appointed as an executive director on 14 May 2010 and Mr CJ Engelbrecht
resigned from the board as an executive director on 15 April 2010.
Subsequent events
On 7 November 2010, a non-controlling shareholder of Angel Diamonds, Mr CV du
Plessis ("the Applicant") holding 4.33% of the issued share capital, applied
for the liquidation of Thabex. The matter was heard on 24 and 26 August 2011
and judgment was reserved. Other than this matter and the information
disclosed in the Commentary paragraph above relating to the diamonds in the
Kingdom of Lesotho and the Monastery Mine, the board of Thabex is not aware of
any material events or circumstances that have occurred between the end of the
2010 financial year and the date of this report, which may have a material
impact on the Group.
Future prospects
Although production results from the oxidised dump at Monastery Mine confirms
that the number of gem quality rough diamonds in the Monastery Kimberlite are
at least 20% as previously reported, further metallurgical testing at
Monastery is necessary to ensure the turning to account of this project. SRR
is continuing to conduct a pre-feasibility study of the Salt River Base
Mineral Project. SRR has not been able to secure funding to complete a
Bankable Feasibility Study of its poly-metallic (Cu-Pb-Zn-Ag-Au) project in
the Kenhardt district of the Northern Cape Province and is considering several
funding options to proceed. Save for the litigation regarding the granting of
the Mining License in the Kingdom of Lesotho, no other changes in the mineral
information of the Company have occurred during year under review.
On behalf of the board
Jeffrey Raymond Rapoo
Chairman
Marius Welthagen
Chief Executive
Johannesburg
1 September 2011
Registered office:
51 Austin Street, Northcliff, Johannesburg, 2195
Auditors: KPMG Inc. KPMG Forum, 1226 Schoeman Street, Hatfield, Pretoria, 0083
Company secretaries: SA Mineral Investments (Pty) Ltd
51 Austin Street, Northcliff, Johannesburg, 2195
Transfer secretaries: Link Market Services South Africa (Pty) Ltd
11 Diagonal Street, Johannesburg, 2001
Telephone number: +27 11 678 0791
Website: www.thabex.com
E-mail: info@thabex.com
Sponsor:
Merchantec Capital, 2nd Floor, North Block, Hyde Park Office Tower, Corner 6th
Rd and Jan Smuts Ave, Hyde Park
Directorate: JR Rapoo (Chairman), M Welthagen (CEO)*, Dr JW Kruger#, M
Kamwanga (Financial Director)*##, RM Ratchedi*, Prof DL Reid**, AP Roux
*Executive director, #Independent director, ** New Zealand, ##Democratic
Republic of the Congo
Date: 01/09/2011 17:31:03 Produced by the JSE SENS Department.
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howsoever arising, from the use of SENS or the use of, or reliance on,
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