| Thu 19 Jul 2001, 0:00 | | Palabora Mining Company Limited - Interim Report F |
|
June 2001
Palabora Mining Company Limited
and its Subsidiaries
(Incorporated in the Republic of South Africa)
(Reg. No. 1956/002134/06)
Interim Report for the six months ended 30 June 2001
Commentary
Consolidated Group Profit for the first half of 2001 was R157 million,
compared with R92 million achieved for the equivalent period last year. The
increase in profit was attributable to an increase in revenue on account of
the benefit derived from a weakening of the Rand/US$ exchange rate and an
increase in the contained copper sold. Operating costs were R759 million
compared to R497 million for the first six months in 2000. The increase was
attributable to the increase in sales volumes and increased operating costs
due to industrial action.
The Company and the National Union of Mineworkers failed to reach agreement
on wages and conditions of employment negotiations in May 2001. This
resulted in a protracted strike by the union and a simultaneous lockout by
the company, which lasted 24 days from 22 May to 14 June 2001. Sales and
production volumes of all products were impacted by the industrial action.
The Rand copper price achieved for the first half of 2001 was R14 446/ton
against R11 983/ton for the equivalent period in 2000. Revenue of R1 119
million was R400 million more than the R719 million achieved for the
equivalent period in 2000. Contained copper sold increased from 37 583 tons
in 2000 to 54 323 tons over the comparable period. There is a concern that
the current low copper price of approximately US$0,70 per lb and the
inventory effects of the strike will have an impact on second half earnings.
Copper in concentrate produced was 29 307 tons, a decrease of 49% compared
with the same period in 2000. This decrease was mainly the result of low
concentrate grades associated with the processing of reverberatory slag and
low matte grades linked to high pyrrhotite levels in the ex-pit ores and the
flooding of the open pit in the first quarter of the year. The last two
months of the period under review were dominated by the strike and
previously stockpiled concentrate was used to maintain smelter production at
a reduced level. Production of copper cathode increased from 32 170 to 44
503 tons over the comparable period due to improved smelter performance
compared to the first six months of 2000 when production was down due to
smelter operational problems coupled with a planned extensive smelter
overhaul.
The company announced in April 2001 that mining in its present form in the
open pit would come to an end on 31 January 2002. By this date, the pit will
be virtually exhausted and will have reached its final planned depth
although some "scavenging" of the ramps will subsequently take place. It was
also announced at the same time that the Zirconium Sulphate Tetrahydrate
(ZST) plant would cease operations in its current form on 31 May 2001 as the
expected reduction in zirconia available to the baddeleyite plants is
occurring earlier than anticipated and has rendered the ZST plant
uneconomic.
In anticipation of reduced copper output it was also determined that across
the property there would be a number of positions which will no longer be
required over the next two years. As a consequence of the above it was
decided to offer voluntary early retirement to all employees who had reached
the age of 53 years by 30 April 2001, and had 10 years' service with the
company. A total of 261 employees took up this offer.
The company was successful in arranging a new four-and-a-half year unsecured
syndicated loan of US$125 million with a consortium of nine local and
international banks. The loan has been used to repay the Chase Manhattan
loan outstanding of US$50 million and other short-term loans incurred to
finance the underground mine development. The first of six half-yearly
instalments is due on 11 June 2003.
On 25 April 2001 the Company announced on the declaration of Dividend No.
136 that the payment of future dividends may be deferred in the light of the
continuing need to finance the development of the underground mining
project. One of the conditions pertaining to the granting of the
aforementioned loan was that of dividend control. The company undertook that
it would not, in respect of either of the calendar years 2001 and 2002,
distribute any of its Distributable Profits for each such calendar year
except for the dividends already declared on 25 January 2001 and 25 April
2001. The directors ratified this agreement at the Board meeting held on 19
July 2001.
It is with regret that we have to report that a fatality occurred in the
underground mine on 14 June 2001. A total of 11 lost time injuries
(including the fatality) were reported during the first half of 2001. This
is a small improvement over the 12 lost time injuries reported in the first
half of 2000.
The overall underground mine project schedule for the achievement of a
sustainable production rate of 30 000 tons per day by November 2002 is on
target. A total of 39 262 square metres have been undercut to date. Hand
over of drawpoints has been consistent at a rate of one per week, since the
end of April. This will enable the target of 100 drawpoints/drawbells to be
achieved by November 2002. A total of ten drawbells are now available for
production. Civil work to the first crusher is almost complete. The civil
contractor has taken over the second crusher chamber and has commenced
concrete placement.
Z.W. Ntuli D.S. Sadler
Chairman Managing Director 19 July 2001
Directors:
Z.W. Ntuli (Chairman), D.S. Sadler* (Managing Director),
D.A. Farnaby, O.L. Groeneveld*, M.D. Humphries, R.M. Maruma, R.G. Mills
(Alt. D.P.C. Heugh) G.M. Negota, J. E. Rickus**, R. M. Whyte (Alt.B.K.
Wood),
* Australian ** British
Transfer Secretaries: Registered Office:
Computershare Services Ltd 1 Copper Road
41 Fox Street Phalaborwa
Johannesburg 2001 1389
Postal Address: Postal Address:
P O Box 61051 P O Box 65
Marshalltown 2107 Phalaborwa 1390
unaudited Group results
Abridged income statement
Six Six
Months Months Year
30.6.01 30.6.00 2000
R000 R000 R000
Revenue 1 118 741 719 039 1 747 685
Operating costs 758 754 496 574 1 305 600
Depreciation 83 802 66 294 124 302
Operating profit 276 185 156 171 317 783
Interest received 351 5 636 12 723
Interest payable (15 560) (11 516) (11 545)
Foreign exchange
gains/(losses) (6 172) (1 306) 28 081
Amortisation of discount
related to provisions (9 812) (918) (19 642)
Profit before taxation 244 992 148 067 327 400
Taxation 88 253 56 521 90 658
Current 13 169 24 717 7 738
Deferred tax 75 084 31 804 82 920
Profit after taxation 156 739 91 546 236 742
Abridged balance sheet
Six
Months Year
30.6.01 2000
R000 R000
Employment of capital
Current assets 740 991 945 748
Mining assets 3 189 841 2 935 660
Deferred expenditure 14 813 26 126
Investments - (unlisted) 41 967 41 967
Total Assets 3 987 612 3 949 501
Liabilities and
shareholders' equity
Current liabilities 246 029 1 250 497
Provision for
close-down and
restoration costs 151 913 142 092
Provision for
post-retirement
medical benefits 147 994 141 490
Deferred taxation 773 944 701 506
Long-term loans 1 002 230 189 250
Total liabilities 2 322 110 2 424 835
Total shareholders' equity 1 665 502 1 524 666
Total equity and liabilities 3 987 612 3 949 501
Summarised cash flow
Six Six
Months Months Year
30.6.01 30.6.00 2000
R000 R000 R000
Cash flow from
operating activities 366 827 174 207 317 239
Cash flow from investing
activities (250 648) (288 395) (599 423)
Replacement of mining assets (36 314) (48 911) (132 447)
Development expenditure (214 455) (248 089) (476 673)
Other investing activities 121 8 605 9 697
Cash flow from financing
activities 396 868 65 684 (225 192)
Long-term loans raised - net 407 130 82 673 (191 213)
Other financing activities (10 262) (16 989) (33 979)
Net increase in cash and
cash equivalents 513 047 (48 504) (507 376)
Cash and cash equivalents
at beginning of period (587 168) (79 792) (79 792)
Cash and cash equivalent
at end of period (74 121) (128 296) (587 168)
Notes:
1. Accounting principles
The accounting policies used in the preparation of the interim report are
consistent with those used in the audited financial statements for the year
ended 31 December 2000. The interim report has been prepared in accordance
with accounting standard AC127, "Interim Reports".
Six Months Year
30.06.01 2000
2. Long-term loan
Long-term loan 1 002 230 595 100
Current portion - (405 850)
1 002 230 189 250
The company has arranged a long-term loan with a group of national and
international banks for an unsecured facility agreement of US$125 million.
This facility, which is being used for the underground mine development and
the repayment of other short-term loans, is repayable in six equal half
yearly instalments starting on 11 June 2003 and the interest rate is based
on Libor/Jibor + 1,5%. The balance owing on the Chase Manhattan loan, being
US$50 million was repaid on 29 June 2001.
Statement of changes in equity for the six months ended
30 June 2001
Share
Capital & Other Distributable
Premium Reserves Reserves Total
R000 R000 R000 R000
Balance
1 January 2001 28 891 109 419 1 386 356 1 524 666
Net gains and
losses not
recognised
in income statement:
Currency
translation
difference 1 087 1 087
Net profit for
the period 156 739 156 739
Dividends (16 990) (16 990)
Balance 30
June 2001 28 891 110 506 1 526 105 1 665 502
Comparative
statement of
changes in equity
for the six
months ended
30 June 2000
Balance
1 January 2000 28 891 79 648 1 183 593 1 292 132
Net gains and
losses not
recognised in
income statement:
Currency translation
difference (1 269) (1 269)
Net profit for the
period 91 546 91 546
Dividends (16 990) (16 990)
Balance
30 June 2000 28 891 78 379 1 258 149 1 365 419
Selected statistics
Six Six
Months Months Year
30.6.01 30.6.00 2000
R000 R000 R000
Production and sales
Materials mined
(millions of tons) 7,7 10,1 21,8
Copper in concentrate
(thousands of tons) 29,3 57,9 117,0
Cathode produced
(thousands of tons) 44,5 32,2 87,7
Cathode sold
(thousands of tons) 53,5 36,7 84,2
Contained copper sold
(thousands of tons) 54,3 37,6 89,7
Average rand/dollar
exchange rate 7,93 6,58 6,93
Average copper price realised
per ton (ZAR) 14 446 11 983 12 949
Cash Cost - delivered (ZAR) 10 426 8 830 7 682
Average copper price
realised (USc/lb) 82,6 82,6 84,8
All tons are metric tons
Capital expenditure
(R million) 251 262 505
Capital commitments (R million)
Approved expenditure at end
of each period 828 958 999
Contracts placed at end of
each period 391 607 621
Share capital (R000)
Ordinary shares of R1 each
(thousands) - Authorised 28 500 28 500 28 500
Ordinary shares of R1 each
(thousands) - Issued 28 316 28 316 28 316
The directors are authorised
to issue unissued shares until
the next annual general meeting
Investments - (unlisted)
Fair value of unlisted
investments 75 728 60 947 70 078
Dividends paid (R000)
2000 final dividend
30 cents per share 8 495
(1999 : 30 cents per share) 8 495
2000 total dividend
120 cents per share 33 980
2001 first interim dividend
30 cents per share 8 495
(2000 : 30 cents per share) 8 495
Earnings per share, based on
the net profit after tax R5,54 R3,23 R8,36
Fully diluted earnings
per share, based on
the net profit after tax R5,54 R3,23 R8,36
Headline earnings per share,
based on the net profit after
tax adjusted for non-operational
gains/losses R5,54 R3,23 R7,91
Net asset value per share R58,82 R48,22 R53,85
Segmental reporting
Industrial
Copper Minerals
R000 R000
30.6.01 30.6.00 30 6.01 30.6.00
Profit and
Loss
Revenues 784 728 450 345 228 797 171 745
Cost and
Expenses 633 693 392 617 164 727 106 901
Operating
profit
before tax 151 035 57 728 64 070 64 844
Taxation
Net income for
the six months
Segmental reporting
Other Total
R000 R000
30.6.01 30.6.00 30.6.01 30.6.00
Profit and
Loss
Revenues 105 216 96 949 1 118 741 719 039
Cost and
expenses 75 329 71 455 873 749 570 972
Operating
profit
before tax 29 887 25 494 244 992 148 067
Taxation 88 253 56 521
Net income
for the
six months 156 739 91 546
The segmental split on a geographical basis is based on the country in which
the order is received.
Total assets are presented by geographical area according to where the
assets are located.
South Africa America United Kingdom
R000 R000 R000
30.6.01 30.6.00 30.6.01 30.6.00 30.6.01 30.6.01
Profit
and Loss
Revenues 892 358 486 463 82 742 79 190 109 464 124 880
Cost and
expenses 698 487 398 593 72 261 68 605 82 480 88 345
Operating
profit
before tax 193 871 87 870 10 481 10 585 26 984 36 535
Taxation 72 495 37 988 4 055 4 041 8 523 11 271
Net income
for the
six months 121 376 49 882 6 426 6 544 18 461 25 264
Balance sheet
Total
assets 3 780 137 3 157 137 76 274 77 604 110 027 166 537
Total
liabilities 2 283 487 1 633 165 7 868 12 665 27 382 32 315
Singapore Total
R000 R000
30.6.01 30.6.00 30.6.01 30.6.00
Profit
and Loss
Revenues 34 177 28 506 1 118 741 719 039
Cost and
expenses 20 521 15 429 873 749 570 972
Operating
profit
before tax 13 656 13 077 244 992 148 067
Taxation 3 180 3 221 88 253 56 521
Net income
for the
six months 10 476 9 856 156 739 91 546
Balance sheet
Total
assets 21 174 34 288 3 987 612 3 435 566
Total
liabilities 3 373 6 018 2 322 110 2 070 147
