| Mon 18 Feb 2002, 0:00 | | Metorex Limited - Consolidated Interim Results For |
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December 2001
Metorex Limited
Registration number 1934/005478/06
Incorporated in the Republic of South Africa
Listed on the JSE Securities Exchange South Africa
and London Stock Exchange
JSE Share code: MTX ISIN: ZAE000022745
www.metorexgroup.com
* Headline earnings of 10,76 cps
* O'Okiep Slag Retreatment Plant construction on schedule
* Leeuwfontein reserve extension being developed
* Commodity prices improving
* Chibuluma assets impaired
* Dollar debt exposures hedged
Consolidated interim results for the period ended 31 December 2001
Consolidated income statement
Six months Six months
31 December 31 December
2001 2000
Unaudited Unaudited
R000 R000
Revenue
Mineral Sales
135 701 - copper 137 114
50 566 - zinc 52 237
61 859 - coal 54 817
52 566 - fluorspar 39 422
43 522 - gold 35 941
16 216 - antimony 17 702
9 005 - cobalt 9 775
2 995 - other 4 821
372 430 Gross revenue 351 829
90 958 Realisation costs 82 773
281 472 On-mine revenue 269 056
254 046 Cost of production 203 033
241 446 - cash costs 215 220
(3 801) - stock movement (26 179)
16 401 - depreciation 13 992
27 426 Mining profit 66 023
(112 368) Impairment - Chibuluma assets -
1 578 Other income 866
(83 364) Income before finance income 66 889
(1 380) Finance (expense) income 838
(84 744) Income before taxation 67 727
12 091 Taxation 16 856
8 150 - normal 15 700
1 754 - deferred (900)
2 187 - secondary 2 056
(96 835) Income after taxation 50 871
3 687 Income attributable to
outside shareholders 2 463
(100 522) Net (deficit) income
for the period 48 408
120 805 Weighted average shares
in issue (000's) 120 483
(83,21) Basic earning
per share (cents) 40,18
10,76 Basic headline earnings
per share (cents) 40,45
- Dividend per share (cents) 10,00
(100 522) Income attributable to
ordinary shareholders 48 408
112 368 Impairment provision -
1 151 Goodwill Amortisation 331
12 997 Headline earnings (R000's) 48 739
Statement of movement in equity
Six months Six months
31 December 31 December
2001 2000
Unaudited Unaudited
R000 R000
355 428 Shareholders' equity
at beginning of period 258 051
203 Shares issued 102
10 711 Foreign exchange reserve 25 927
(100 522) Net (deficit) income
for the period 48 408
(14 497) Dividend distributed (12 048)
251 323 320 440
Consolidated balance sheets
31 December 30 June
2001 2001
Unaudited Unaudited
R000 R000
ASSETS
Non-current assets
494 692 Property, plant and equipment 433 602
17 269 Goodwill 69 785
891 Investments 891
20 437 Rehabilitation trust funds 19 993
533 289 524 271
Current Assets
58 447 Inventories 46 178
113 448 Trade and other receivables 120 370
625 Taxation prepaid 605
24 784 Bank balances and cash 75 423
197 304 242 576
730 593 Total Assets 766 847
EQUITY AND LIABILITIES
Capital and reserves
12 080 Share capital 12 073
313 774 Share premium 313 578
5 808 Non-distributable reserves (4 903)
47 727 Retained income 162 746
(128 066) Equity reserve (128 066)
251 323 355 428
15 298 Minority interest 14 611
Non-current liabilities
132 792 Long-term liabilities 68 181
38 556 Long-term provisions 34 279
97 703 Deferred taxation 72 089
15 167 Post retirement medical aid 14 776
284 218 189 325
Current liabilities
104 444 Trade and other payables 139 554
37 989 Short-term borrowings 28 667
24 668 Provisions 18 501
7 921 Bank overdraft 7 230
4 732 Taxation 13 531
179 754 207 483
730 593 Total equity and liabilities 766 847
Cash flow
Six months Six months
31 December 31 December
2001 2000
Unaudited Unaudited
R000 R000
27 624 Profit before taxation and impairment provision 67 727
16 401 Non-cash items 13 992
44 025 81 719
(19 136) Taxation paid (9 029)
(17 497) Dividends paid (7 788)
(32 179) Working capital movement 38 510
(24 787) NET CASH FLOW FROM OPERATING ACTIVITIES 103 412
(48 791) NET CASH FLOW FROM INVESTING ACTIVITIES (68 173)
22 692 NET CASH FLOW FROM FINANCING ACTIVITIES (10 529)
(50 886) NET (DECREASE)/INCREASE IN CASH AND CASH
EQUIVALENTS 24 710
88 186 NET CASH BALANCE AT BEGINNING OF PERIOD 26 303
37 300 NET CASH BALANCE AT END OF PERIOD 51 013
RESULTS OF OPERATIONS
Safety
Awards for 1 000 fatality free shifts presented by the Department of
Minerals and Energy, have been received by Consolidated Murchison, O'Okiep
Copper mine and the group's Collieries. O'Okiep Copper mine has also been
awarded the most improved mine, the best safety record and the DME Safety
Flag for the "best mine" in the base metal category in the Northern Cape.
Financial
The six months ended 31 December 2001 has been a difficult trading period
for the base metal industry, brought about by declining demand and mineral
prices in the Western World and exacerbated by the dramatic events of 11
September 2001. Whilst the headline earnings per share have increased
significantly from the September 2001 quarter, the comparative to the
previous year is lower.
Gross revenue increased by 6% from the comparative period. Sales volumes
were generally higher, but the depressed metal prices resulted in lower unit
revenue per ton. The major decline in the Rand/Dollar exchange rate occurred
during December, with limited impact on the group's revenue.
Should the recent firmness in mineral prices and depreciation in the
Rand/Dollar exchange rate continue, revenue and earnings should increase and
this increase will emerge in forthcoming reporting periods. Cash costs
increased by 12% which includes annual remuneration adjustments.
As a result of the "care and maintenance" decision on Chibuluma South,
brought about by the continuing low metal prices, and high operating costs
in Zambia, an impairment provision of R112,4 million, including pre-
production expenditure of R20 million, has been made against the Chibuluma
assets.
The difficult trading situation experienced during the last six months
and the group's debt levels require cash conservation, and it has been
decided to retain group funds and pass the interim dividend. The dividend
policy of declaring a portion of the group's earnings to shareholders has,
however, not changed but has been deferred until trading conditions improve
when distributions will be resumed. It is believed this will occur at the
end of this financial year.
OPERATING PERFORMANCE
Despite generally satisfactory production and sales volumes, the
financial results were affected by low commodity prices. In particular, the
low copper price led to the decision to place Chibuluma South on "care and
maintenance". This decision was taken early to prevent resultant erosion of
shareholder value.
Chibuluma West
Chibuluma West has operated at a loss due to low mineral prices for the
past six months. Management action has been taken to increase production
which, combined with certain proposed concessions from ZCCM and a "levelling
of the playing fields" by the Zambian Government, should return the mine to
profitability. The full effects of the Anglo American decision to withdraw
from Zambia are not yet clear, but shareholders may be assured that they
will be kept informed as the issue clarifies.
Consolidated Murchison Division
The antimony price showed continued weakness despite the reduction in the
Chinese antimony production levels. Notwithstanding the prices, the mine
remained profitable. The continued low production levels from China,
combined with the changed exchange rate should be reflected in improved
profits for the balance of the year.
Maranda Mining Company
The mine enjoyed a good six month period and contributed to group
profitability. The change in the exchange rate should enhance profitability
for the balance of the year.
O'Okiep Copper Company
Despite the low mineral prices, the mine produced well and the company
enjoyed a solid six months of profits. The construction of the slag
processing plant commenced and it is envisaged that it will be commissioned
in the first quarter of this calendar year. A limited hedging programme to
protect slag plant revenues for the first phase of its operation has been
implemented.
Vergenoeg Mine
The benefits of the plant improvements began to show during the six month
period, and further refinements to the metallurgical plant continue to be
implemented, enabling a higher portion of Vergenoeg's output to reach the
required quality standards. The combined effects of the recovery and quality
improvements, together with the current Rand price for fluorspar, indicate
improved profits for the balance of the year.
Wakefield Coal
Production from the underground operations was disappointing whilst that
from the Bankfontein mine exceeded expectations. Management action to return
the underground operations to profitability was taken during the six month
period and the collieries should return to profitability during the
forthcoming six month period.
CAPITAL EXPENDITURE
Capital expenditure of R48,8 million was incurred during the period of
which R25 million related to Chibuluma expenditure and a further R8,9
million on the O'Okiep Slag Retreatment Plant, R10,8 million to acquiring
coal resources and equipment in Wakefield and R3 million on the Vergenoeg
plant upgrade.
ACCOUNTING POLICIES
The interim financial statements have been prepared under the historical
cost convention in accordance with International Accounting Standards.
IAS39, which became effective 1 July 2001. The group has not applied this
standard in this report but shall have in its annual finacial statements at
30 June 2002.
CURRENT DEVELOPMENTS
O'Okiep Slag Dump
The Slag Dump Retreatment Plant construction has progressed well with
final commissioning expected during March 2002. Production of copper from
this plant will replace the production from the mine's underground
operations on their closure.
Middelburg Townlands
Wakefield, together with Umnotho weSizwe Investments (Pty) Limited, has
acquired the Middelburg Townlands coal resource from the Middelburg Town
Council for which an EMPR is being prepared, prior to applying for a mining
licence. Planning of this project is being finalised.
Leeuwfontein Reserve Extension - Anglo Reserve
The coal reserve adjacent to Leeuwfontein Colliery is being developed
both as an opencast and an underground operation. Saleable production
tonnage will build up during the forthcoming quarter.
Perkoa Zinc
The draft Memorandum of Understanding setting out the conditions of a
"Mining Convention" has been received from the Burkinabe Government, which
largely follow the Metorex proposals. Negotiations to finalise the MOU
continue.
Chibuluma Mine
Extended negotiations with the Government to achieve "level playing
fields" have continued. A Zambian Government decision is anticipated
shortly.
Agreement has been reached with Investec Bank to provide a hedge
mechanism for the Chibuluma project finance loan of $8,1 million to prevent
further exposure to a decline in the Rand/Dollar exchange rate.
FUTURE PROSPECTS
The recent increase in the Rand prices of commodities, particularly
copper, is encouraging. We see no reason why these should not be sustained
and possibly even improved, and if this happens then the group's operations
should produce significantly better results for the remainder of the year.
By order of the board
A.S. Malone C.D.S. Needham
Chairman Financial Director
18 February 2002
Secretaries Transfer secretaries
Meyer Wilson Marsh Inc Mercantile Registrars
7 West Street 11 Diagonal Street
Houghton Johannesburg
