| Thu 30 Aug 2001, 0:00 | | Mining Limited: Report For The Year Ended 30 June |
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ANGLOVAAL MINING LIMITED
(Registration No 1933/004580/06)
Incorporated in the Republic of South Africa
Share code: AIN ISIN code: ZAE000017141
("Avmin" or "the Company")
REPORT FOR THE YEAR ENDED 30 JUNE 2001
HIGHLIGHTS
Comparable year on year headline earnings rose 102% to R281 million
Strong performances from Nkomati and Assmang
Earnings turnaround at Avgold
Significant stake in Iscor acquired
GROUP BALANCE SHEET
at 30 June 2001
2001 2000
Audited Audited
Rm Rm
ASSETS
Non-current assets
Tangible assets 5 987 3 924
Intangible assets 9 (8)
Loans and long-term receivables - 2
Deferred tax assets 47 22
Environmental rehabilitation
trust funds 59 51
Investments 1 186 57
7 288 4 048
Current assets
Inventories 722 586
Trade and other receivables 664 640
Taxation 1 3
Deposits and cash 439 4 160
1 826 5 389
Total assets 9 114 9 437
EQUITY AND LIABILITIES
Capital and reserves
Ordinary share capital 6 5
Preference share capital - 4
Share premium 56 51
Non-distributable reserves 679 56
Distributable reserves 3 267 2 971
Shareholders' interest in capital
and reserves 4 008 3 087
Minority interest 1 483 1 185
Total shareholders' interest 5 491 4 272
Non-current liabilities
Long-term borrowings 921 208
Deferred tax liabilities 360 289
Long-term provisions 196 202
1 477 699
Current liabilities
Trade and other payables 387 388
Provisions 116 105
Taxation 78 194
Shareholders for dividends - 1 208
Shareholders for distribution - 1 697
Financial liabilities 11 -
Overdrafts and short-term borrowings 1 554 874
2 146 4 466
Total equity and liabilities 9 114 9 437
GROUP INCOME STATEMENT
for the year ended 30 June 2001
2001 2000
Audited Audited
Rm Rm
Revenue 2 806 2 934
Cost of sales 2 083 2 119
Gross profit 723 815
Other operating income 211 76
Other operating expenses 338 289
Profit from operations 596 602
Income from investments 108 183
Finance costs 132 72
Profit before taxation and
exceptional items 572 713
Exceptional items - 3 648
Profit before taxation 572 4 361
Taxation 167 324
Profit from ordinary activities 405 4 037
Minority interest 124 57
Earnings 281 3 980
Headline earnings 281 486
Earnings per share (cents) 259 3 723
Headline earnings per share (cents) 259 455
Dividends per share (cents) - 1 123
Capital distribution per share (cents) - 1 577
Number of shares in issue at end of
year (thousands) 110 105 107 610
Weighted average number of shares
in issue (thousands) 108 379 106 889
GROUP CASH FLOW STATEMENT
for the year ended 30 June 2001
2001 2000
Audited Audited
Rm Rm
CASH FLOW FROM OPERATING ACTIVITIES
Cash receipts from customers 2 967 2 878
Cash paid to suppliers and employees 2 441 2 246
Cash generated from operations 526 632
Interest received 106 172
Interest paid (132) (72)
Dividends received 2 11
Dividends paid (1 222) (41)
Capital distribution (1 697) -
Taxation paid (237) (68)
Net cash (outflow)/inflow from
operating activities (2 654) 634
CASH FLOW FROM INVESTING ACTIVITIES
Proceeds from sale of Hartebeestfontein - 304
Proceeds from sale of joint venture and
subsidiary 6 17
Additions to fixed assets to maintain
operations (291) (312)
Additions to fixed assets to expand
operations (1 793) (973)
Proceeds on disposal of fixed assets 2 43
Proceeds on disposal of investments 12 3 617
Decrease in investment loans and
receivables 4 117
Other investments acquired (497) (63)
Net cash (outflow)/inflow from
investing activities (2 557) 2 750
CASH FLOW FROM FINANCING ACTIVITIES
Increase in shareholder funding - 9
Funding received from minority
shareholders 182 14
Long-term borrowings raised 726 160
Long-term borrowings repaid (4) (6)
Increase in short-term borrowings 599 163
Decrease in treasury liabilities (13) -
Net cash inflow from
financing activities 1 490 340
Net (decrease)/increase in cash and
cash equivalents (3 721) 3 724
Cash and cash equivalents at
beginning of year 4 160 436
Cash and cash equivalents at
end of year 439 4 160
Cash generated from operations
per share (cents) 485 591
NOTES TO THE FINANCIAL STATEMENTS
CHANGE IN ACCOUNTING POLICY
During the year the Group changed its accounting policy to account for
financial instruments in terms of AC 133: Financial Instruments -
Recognition and Measurement. This change affected the revaluation of listed
investments other than subsidiaries and the recognition and measurement of
financial instruments at fair value. The change in accounting policy
relating to investments resulted in the transfer of the excess of the fair
value of investments over the original value being transferred to a
revaluation reserve.
This change, which has no effect on earnings, was applied prospectively
in accordance with AC 133: Financial Instruments - Recognition and
Measurement. Where necessary, opening balances have been adjusted to comply
with this change. Comparative figures relating to the change in accounting
policy have not been restated. Certain other comparative figures have been
regrouped and restated where necessary.
The annual financial statements are prepared on the historical cost basis
as adjusted for the revaluation of certain freehold land and buildings, and
the fair value revaluation of non-current listed investments and are in
accordance with South African Statements of Generally Accepted Accounting
Practice.
SEGMENTAL INFORMATION
Precious Copper Ferrous Dia- Corporate
Rm metals Cobalt Nickel metals monds and other Total
Year to 30 June 2001
External revenue 218 326 327 1 926 - 9 2 806
Contribution to
earnings 39 (64) 130 153 - 23 281
Contribution to
headline earnings 39 (64) 130 153 - 23 281
Consolidated
total assets 2 688 2 080 206 2 589 - 1 551 9 114
Consolidated
total liabilities 517 1 704 58 1 400 - (56) 3 623
Capital expenditure 600 834 21 626 - 3 2 084
Year to 30 June 2000
External revenue 290 232 264 1 592 339 217 2 934
Contribution to
earnings 9 (33) 91 98 347 3 468 3 980
Contribution to
headline earnings (3) (33) 91 98 347 (14) 486
Consolidated
total assets 2 032 1 000 262 1 878 - 4 265 9 437
Consolidated
total liabilities 415 606 130 890 - 3 124 5 165
Capital expenditure 469 426 15 407 - 6 1 323
GROUP STATEMENT OF CHANGES IN EQUITY
Foreign Re-
Share capital currency valuation Retained
Rm and premium translation surplus Other profit Total
Balance at
30 June 2000
as reported 60 6 3 47 2 971 3 087
Earnings - - - - 281 281
Revaluation of
listed investments - - 635 - - 635
Conversion of
preference shares 2 - - - - 2
Reallocation of
reserves - - - (12) 12 -
Other movements - - - - 3 3
Balance at
30 June 2001 62 6 638 35 3 267 4 008
Balance at
30 June 1999
restated 1 701 (2) 3 94 199 1 995
Foreign currency
translation reserve - 8 - - - 8
Earnings - - - - 3 980 3 980
Special distribution (1 697) - - - (1 208) (2 905)
Share issues net
of expenses 9 - - - - 9
Share election
reserve
- utilised 47 - - (47) - -
- encashed - - - (9) - (9)
Other movements - - - 9 - 9
Balance at
30 June 2000 60 6 3 47 2 971 3 087
COMMENTARY
INTRODUCTION
During the year under review, considerable effort was directed at ensuring
that Avmin is well positioned to achieve maximum value for its shareholders
by bringing to fruition various capital growth projects and implementing the
current strategy of being a mining company focused on ferrous, precious and
base metals.
Attributable borrowings increased from R1 082 million at 30 June 2000 to R2
475 million. The net increased long-term debt of R713 million has been
applied to Avgold Limited, R302 million, and Chambishi Metals plc R411
million. Short-term borrowings of R437 million were utilised by Assmang
Limited, Chambishi and the Company accounted for R106 million and R137
million, respectively. The interest payable on those borrowings applied to
capital expenditure has been capitalised and R60 million (equating to 39
cents on earnings per share) was charged to income.
Headline earnings for the year ended June 2001 totalled R281 million (R486
million) which equates to 259 cents (455 cents) per share. The previous
year's headline earnings included a contribution to Avmin of R347 million by
way of diamond royalty income from The Saturn Partnership, which was sold to
De Beers Consolidated Mines Limited during the latter part of fiscal 2000.
Excluding diamond royalty income, headline earnings rose by 102 per cent.
Costs were well contained throughout the Company's operating entities.
Sales were higher in all sectors of the business with the exception of
precious metals as a result of the inclusion in the prior year results of
gold sales of Hartebeestfontein mine prior to its disposal on 16 August
1999. The pleasing bottom line result was achieved in a period of intensive
capital investment and capacity building.
Results for the operations are reflected below:
FERROUS METALS
Assmang Limited's (Assmang), 50,3 per cent owned, total headline earnings
rose 82 per cent to R231 million (R127 million). The results benefited from
the weaker rand, better efficiencies at all operations and well-controlled
operating costs. Manganese sales rose to 979 000 tons (926 000 tons) and
iron ore sales were 145 000 tons higher at 4,3 million tons. The manganese
alloy operations sold 193 000 tons (206 000 tons), inclusive of refined
ferro-manganese, and despite weak market conditions chrome alloy sales were
slightly higher at 125 000 tons (114 000 tons). Chrome ore production from
the newly commissioned Dwarsrivier chrome mine, totalled 254 000 tons, was
delivered to Assmang's chrome alloy operation.
Capital expenditure rose to R626 million (R407 million), which was spent
on Assmang's major projects that all remained on or ahead of schedule, costs
being within budget. The iron ore jig plant at the Beeshoek mine was
commissioned, the chrome smelter expansion at Assmang's chrome alloys plant
will be commissioned this calendar year, and the new shaft complex at the
Nchwaning manganese mine remains on schedule for commissioning in 2003.
PRECIOUS METALS
Major progress was made during the year at Avgold Limited (Avgold), 61 per
cent owned, with the implementation of a revised Target mine plan, the
conclusion of equity and loan financing agreements, clearer definition of
the Target North/Paradise potential and the turnaround of ETC. Avgold's
headline earnings amounted to R39 million (R32 million - loss). A
revitalised ETC achieved earnings of R32 million (R13 million - loss).
Consistent mining tonnages and an improved Biox(r) plant performance
produced 2 800kg or 91 400oz (2 300kg or 73 200oz) of gold at a cash cost of
R58 700/kg or US$241/oz (R58 100/kg or US$286/oz). The cash operating costs
by year-end had reduced to below US$220 an ounce of gold.
The Target mine remains on schedule to reach full production during the
first quarter calendar 2002 and within budget. The production from Target
during the latter part of this financial year will see the return of
significant operating profits for Avgold.
The formation of Two Rivers Platinum (Proprietary) Limited, following the
acquisition, for R551 million, of platinum group metal (PGM) rights from
Assmang during the year, achieved an Avmin objective of entering the PGM
market. Impala Platinum Holdings Limited (Implats) is a 45 per cent partner
in this venture, with Avmin holding the balance. Implats is the ideal
partner for Avmin, given its PGM expertise, processing knowledge and
infrastructure. Subject to the Competition Commission approval, an
exploratory drilling programme and detailed designs will be undertaken over
the succeeding twelve months. A post feasibility study decision could result
in a new mine with an annual run-of-mine output of some 1,4 million tons,
producing between 160 000 and 170 000 ounces of PGMs a year, over a life of
approximately 20 years. It is estimated that the capital cost for the new
mine will be between R500 and R700 million.
NICKEL
Earnings from the Nkomati mine, 75 per cent owned, of R173 million (R144
million) were very pleasing. Nkomati's total profit before tax rose
significantly to R249 million (R207 million). Mining and mill tonnages
increased, but a slightly reduced nickel grade led to sales being constant
at 4 000 tons. Costs were well controlled and favourable prices were
achieved, particularly from the by-product PGMs. The PGM and other by-
product benefits to Nkomati enabled the mine to produce nickel, net of by-
products, at minus US$0,82/lb for the year (minus US$0,01/lb).
The Nkomati expansion study will be completed and decisions taken by the
two joint venture partners in the coming year. It is expected that this
study will recommend the expansion of nickel output to approximately 17 500
tons of refined nickel a year and over 80 000 ounces of PGMs.
COPPER/COBALT
Chambishi Metals Plc's (Chambishi), 90 per cent owned, loss of R64 million
(R21 million - loss) reflects an unsatisfactory year from both an operating
and a project perspective.
The current cobalt tolling operation suffered from poor availability and
quality of both concentrate feed and pyrite from contract suppliers. These
problems were resolved by year end, resulting in a return to profitability
for the existing operations. Production achieved was 2 700 tons (1 900 tons)
of cobalt, of which 500 tons was for Chambishi's own account. Copper
production was 10 000 tons (7 700 tons) of which 400 tons was for
Chambishi's own account.
The new smelter, built to treat the slag material, was commissioned
earlier this year. Initial commissioning was interrupted by a water leak
from the copper coolers that resulted in the necessity to rebrick the
furnace. Commissioning of the furnace resumed in the first quarter of the
new financial year, approximately six months behind schedule, and full
production is expected in 2002.
ACQUISITION OF ISCOR SHARES
During the middle of the financial year, Avmin acquired 35 million shares in
Iscor Limited for a cash consideration of R494 million. The Company
continues to evaluate its best options with respect to this asset, which has
shown considerable appreciation.
DIVIDEND
The directors have resolved that in view of the Company's substantial
capital expenditure programme and certain bank covenants no final dividend
be paid for the year ended 30 June 2001.
THE YEAR AHEAD
The Company is expecting a year of weakness in the economies of Japan,
Europe and the United States of America and accordingly the prices for
commodities that Avmin produces will either remain under pressure or will
not be materially different for the coming year. It is therefore anticipated
that this year's results are not expected to show an improvement over those
for 2001.
This year Avmin will be undertaking significant development expenditure
as the Target mine and the Chambishi smelter and refinery build up to full
production. The new platinum acquisition and the Nkomati mine expansion will
be evaluated. Also, within the Assmang group, the new chrome alloy smelter
and pelletising plant will be fully commissioned and the Nchwaning shaft
complex will be further developed.
DIRECTORATE AND MANAGEMENT
During the year, Messrs D N Murray and R Oron were welcomed to the board.
Subsequent to the year end Messrs B Frank and N Livnat were appointed non-
executive directors. Mr Murray was also appointed as chief operating
officer and the subsequent reshaping of the Company impacted on the
operational structure, which has now been split into four business units
each headed by a senior vice president. The head office functions include a
chief financial officer and three vice presidents covering technical
services, human resources as well as safety, health and the environment.
For and on behalf of the board
K W Maxwell, Chairman
R P Menell, Deputy chairman and chief executive officer
Johannesburg
30 August 2001
Directors:
K W Maxwell (chairman), R P Menell (deputy chairman and chief executive
officer), D N Murray (chief operating officer), B Frank, D E Jowell, N
Livnat, Dr T V Maphai, J R McAlpine, B M Menell, Dr M Z Nkosi, R Oron.
Group company secretary:
R H Phillips
Registered Office:
Anglovaal Mining Limited, 56 Main Street, Johannesburg 2001 (PO Box 62379,
Marshalltown 2107)
For further information:
e-mail juliang@avmin.co.za. www.avmin.co.za
