| Thu 25 Oct 2001, 0:00 | | Southern Mining Corporation Limited - Interim Repo |
|
Ended 31 August 2001
Southern Mining Corporation Limited
(Incorporated in the Republic of South Africa)
(Registration number 1996/014149/06)
("Southern Mining")
Share Code:SMC ISIN number: ZAE000029799
INTERIM REPORT FOR THE SIX MONTHS ENDED 31 AUGUST 2001
CONSOLIDATED INCOME STATEMENT Unaudited Audited
six months ended year ended
31 August 28 February
2001 2001
Operating profit before
interest and tax 19 272 342 6 281 177
Net interest received 4 701 385 5 215 127
Exceptional items - 132 002 633
Net profit before taxation 23 973 727 143 498 937
Taxation - -
Net profit after taxation 23 973 727 143 498 937
Accumulated profit/(loss)
at beginning of period 115 000 641 (28 498 296)
Accumulated profit at end of period 138 974 368 115 000 641
CONSOLIDATED BALANCE SHEET Unaudited Audited
31 August 28 February
2001 2001
ASSETS
Non-current assets
Mining rights, prospecting
options and
deferred exploration expenditure 152 155 273 125 100 329
Fixed assets 283 800 235 650
Current assets
Accounts receivable 8 661 223 7 359 211
Cash and short-term investments 192 047 556 172 984 409
Total assets 353 147 852 305 679 599
EQUITY AND LIABILITIES
Capital and reserves
Share capital 899 299 899 299
Share premium 178 298 525 178 298 525
Foreign currency translation reserve 12 530 868 1 136 157
Accumulated profit 138 974 368 115 000 641
Capital and reserves 330 703 060 295 334 622
Non-current liabilities
Long-term borrowings 2 700 054 450 137
Current liabilities
Accounts payable 19 663 966 9 853 068
Short-term liabilities 80 772 41 772
Total equity and liabilities 353 147 852 305 679 599
Weighted average shares in issue 89 929 905 85 889 613
Headline profit per share (cents) 26,7 167,1
Net asset value per share (cents) 367,7 343,9
STATEMENT OF CHANGES Foreign Retained
IN EQUITY currency earnings/
Ordinary Share translation (accumulated
share capital premium reserve loss) Total
Balance at
1 March 2000 815 726 107 462 297 - (28 498 296) 79 779 727
Issues of
share
capital 83 573 70 836 228 70 919 801
Foreign
currency
translation
differences 1 136 157 1 136 157
Net profit for
the year 143 498 937 143 498 937
Balance at
28 February
2001 899 299 178 298 525 1 136 157 115 000 641 295 334 622
Foreign currency
translation
differences 11 394 711 11 394 711
Net profit
for the period 23 973 727 23 973 727
Balance at
31 August
2001 899 299 178 298 525 12 530 868 138 974 368 330 703 060
CONSOLIDATED CASH FLOW STATEMENT Unaudited Audited
six months ended year ended
31 August 28 February
2001 2001
Operating activities 32 524 903 144 032 986
Cash generated by operating activities 27 823 518 2 002 859
Net interest received 4 701 385 5 215 127
Exceptional items - 136 815 000
Investing activities (27 106 384) (62 159 048)
Acquisition of remaining shareholding in
Corridor Sands Limitada - (5 660 000)
Acquisition of fixed assets (200 850) (26 300)
Disposal of fixed assets 149 410 3 000
Prospecting options acquired
and deferred
exploration expenditure (27 054 944) (56 475 748)
Financing activities 2 249 917 71 369 938
Increase in share capital - 70 919 801
Increase in long-term borrowings 2 249 917 450 137
Net movement in cash and cash
Equivalents 7 668 436 153 243 876
Increase in foreign currency
translation reserve 11 394 711 1 136 157
Cash and cash equivalents
at beginning of period 172 984 409 18 604 376
Cash and cash equivalents at
end of period 192 047 556 172 984 409
Represented by:
Cash and short-term investments 192 047 556 172 984 409
COMMENTS
1. FINANCIAL
Financial Results and Notes
R23,4 million was spent on the Bankable Feasibility Study ("BFS") during the
six months under review and these costs are capitalised in the balance sheet
of Corridor Sands Limitada, indirectly a wholly owned subsidiary of Southern
Mining.
Of these costs, R21 million (90%) was paid to the Southern Mining Group by
WMC Limited ("WMC"), which amount, being non-refundable, is recognised in
income. The balance of the BFS costs, R2,4 million, are non-refundable
amounts paid by the Industrial Development Corporation of South Africa
Limited ("the IDC") and are reflected as long-term borrowings. These will be
capitalised for a nominal consideration on go-ahead of the Corridor Sands
Project.
Operating income of R19,27 million reflects the R21 million income less
operating costs for the period.
Cash on hand at 31 August was R192 million. Of this amount, R162 million
(US$19,5 million at R8,31/US$) is held in US dollars which has, inter alia,
given rise to the increase in the foreign currency translation reserve from
R1,1 million to R12,5 million.
2. THE CORRIDOR SANDS PROJECT - MOZAMBIQUE
BFS
The BFS has made steady progress during the period at an aggregate cost of
R35 million. The BFS managers, WMC, intend to complete the BFS in April 2002
to standards that will meet or exceed those of international financing
organisations. A further cost of R57 million is budgeted to complete the
study, which costs are to be financed by WMC (90%) and the IDC (10%).
Work undertaken to date has confirmed and advanced the evaluation undertaken
at the time of the Full Feasibility Study ("FFS") completed in August 2000.
No material adverse technical or economic matters have arisen and that the
Corridor Sands Project remains viable in all respects.
Mineral Resource and Reserves
A further 134 air core drill holes have been completed together with 4
triple tube drill holes. The purpose of this additional drilling is to add
further confirmation to specific aspects of the mineral reserves of the West
Body. The drill holes are concentrated in the initial "box cut" mining area,
but with some also extending and twinning earlier drill holes that stopped
in ore.
Slightly improved core recoveries from recent drilling techniques clearly
demonstrate, and confirm expectations based on the results of test mining,
that the ore grades computed from air core drilling were materially
understated in the FFS. Methods of further improving core recoveries,
especially at depth, are being evaluated.
Engineering and Metallurgical progress
Geotechnical investigations have been completed satisfactorily at the site
of the proposed mining and metallurgical complex, at the export facility at
Matola and over the projected rail spur route. Final metallurgical testwork
related to the detailed designs of the mineral separation plant is being
concluded, together with the ultimate development of enhanced flowsheets for
the separation processes.
Project-specific engineering standards are being developed by WMC
appropriate to the southern African setting. Further smelting tests have
been concluded in Sweden resulting in the production of titanium slag
products for appraisal by pigment producers.
Infrastructure
Significant progress has been made in progressing the technical, commercial
and financing aspects of the infrastructural components of the project.
Marketing
Growth in the TiO2 industry is predictably suffering as a result of the
global economic slowdown, but sentiment in the industry remains positive,
and support for the Corridor Sands Project continues.
3. NEW BUSINESS
Exploration rights have been acquired over an area of 62 906 hectares in
Argentina, covering Parana River sediments. Initial exploration results from
surface sampling and 62 shallow boreholes have confirmed a very large low-
grade ilmenite deposit. Additional work is in progress to locate areas with
higher ilmenite contents.
A number of mineral prospects within southern Africa have been identified
and are at early stages of evaluation.
4. WMC
On 17 October 2001, WMC announced that:
". the Company is in discussions with a number of parties, including Alcoa
Inc., which may lead to an offer being made to acquire all the ordinary
shares in WMC or to a restructuring of WMC."
The Corridor Sands Project, is 100% owned by Corridor Sands Limitada, which
in turn is indirectly owned 100% by Southern Mining. WMC has a non-
transferable participation right in the project, subject to defined
performance criteria.
A change in control of WMC does not directly affect WMC's rights and
obligations with regard to Corridor Sands Limitada.
By order of the board
AMD Gnodde
RG Still Directors
Randburg
25 October 2001
Registered office
Pangea House, Central Park Suites
Cnr Main Street and Orchard Avenue
Bordeaux, Randburg, 2194
(PO Box 3968, Randburg, 2125)
Transfer secretaries
Mercantile Registrars Limited
10th Floor
11 Diagonal Street, Johannesburg, 2001
(PO Box 1053, Johannesburg, 2000)
Investor relations
Tel (+27 11) 781-0375
Fax (+27 11) 886-7020
E-mail general@southern-mining.com
www.southern-mining.com
Southern Mining Media Release
SHARE CODE : SMC
ISIN NUMBER : ZAE000029799
25 October 2001
WMC, IDC and Southern Mining making progress at the Corridor Sands Project
Southern Mining has released its interim report, for the six months to
August this year, with the latest report of progress on the Bankable
Feasibility Study into its Corridor Sands heavy mineral titanium project in
southern Mozambique. Corridor Sands is being advanced under an agreement
between Southern Mining and the major Australian mining house WMC Limited.
The IDC is also playing a significant part in the development of the project
to produce titanium slag for the worldwide pigment industry. The IDC has an
option to take 10% of Corridor Sands directly, in addition to its existing
10% of the shares of Southern Mining. The BFS has not to date found any
flaws in the project and is confirming the results of the previous studies
which demonstrated the very attractive returns and financial robustness of
the project.
Corridor Sands is rightly described as "world class" in terms of size, grade
and quality of product, with mineral resources sufficient for well over a
hundred years of full production at a rate of a million tons of titanium
slag a year. It is planned for Corridor Sands to start production at
375,000 tons per year of slag in 2004, and it is likely to become a major
player in the international industry, as well as becoming a major new
commercial enterprise and exporter for Mozambique and southern Africa.
WMC is managing the Bankable Feasibility Study and is financing 90% of its
costs, with the IDC providing the remaining 10%. This study is expected to
be completed next April at a cost of R92m, of which R35m had already been
spent at the end of August, and builds on the R123m spent on Corridor Sands
to the end of February. Recent media speculation about a possible takeover
of WMC culminated last week in a statement by WMC that it was in discussion
with a number of parties, including Alcoa Inc. Southern Mining has stated
quite clearly that a change in control of WMC does not directly affect WMC's
rights and obligations to the Corridor Sands Project.
Southern mining made a profit in the six months of R24m (R27 cps) and held
cash on hand of R192m at the end of August, but, very significantly, of this
cash US$19,5m is actually held in the form of US dollars. Thus the company
is not only protected against the fall in the Rand, but is registering
substantial increases on its currency translation reserves in the balance
sheet, of R11,4m in the six months to the end of August, in addition to its
stated income. With the Rand at its current levels, these currency
translation reserves will have increased even further (by some R20 m) in the
last few months. Cash on hand at the end of August represented no less than
R2,14 per Southern Mining share.
The "burn rate" of Southern Mining is also now very modest, at R2,8 million
during the six months reported, despite the continuation of an active
exploration initiative aimed at capitalizing on the core expertise and
experience in the company. Southern Mining has now revealed a titanium
project in South America, in addition to its continuing efforts in southern
Africa.
Rob Still, Chief Executive Officer of Southern Mining, commented:
"Southern Mining is in a very strong position now, with the excellent work
that WMC and the IDC are doing to progress Corridor Sands, and with a strong
balance sheet well protected against currency weakness. The work on the
ground, in the design teams and with the Mozambican authorities has been
going well, and the titanium pigment industry worldwide is very supportive
of the potential for this significant new titanium feedstock producer. The
slowdown in the world economy is obviously a concern, and may delay the
project, but the underlying strong financial fundamentals of Corridor Sands
remain in place and Southern Mining can comfortably weather these economic
storms".
Contact Details
Telephone: +27 11 781 0375
Fax +27 11 886 7020
Email general@southern-mining.com
www.southern-mining.com
