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PALABORA MINING COMPANY LIMITED - INTERIM REPORT FOR THE SIX MONTHS ENDED 30
JUNE 2002
PALABORA MINING COMPANY LIMITED AND ITS SUBSIDIARIES
(Incorporated in the Republic of South Africa)
(Reg. No. 1956/002134/06)
Share code: PAM ISIN: ZAE000005245
Interim Report for the six months ended 30 June 2002
Commentary
Group profit for the first half of 2002 was R166 million, compared with R157
million for the equivalent period in 2001. The increase in profit was
attributable to a decrease in operating costs which compensated for increased
depreciation and lower revenue.
Group operating expenditure decreased by R40 million. This reduction reflects
reduced volumes as well as the realisation of cost savings achieved through the
Total Operational Performance programme (TOP). These reductions were partly
offset by increased redundancy costs, mainly in the open pit, and the cost of
pension fund contributions which have arisen because of the recent pension fund
legislation.
The rand copper price achieved for the first half of 2002 was R18 187/ton
against R14 446/ton for the equivalent period in 2001. Revenue of R1 088 million
was R31 million less than the R1 119 million achieved for the equivalent period
in 2001. This was as a result of lower copper sales. Contained copper sold
decreased from 54 323 tons in 2001 to 43 071 tons in 2002.
Large-scale mining of the open pit ceased on 30 April 2002 as planned. A
successful redeployment programme was undertaken to ensure that employees
working in the pit were either redeployed elsewhere in the company or accepted
voluntary retrenchment / retirement. Smaller scale contract mining of the open
pit began in May. This will continue for up to a year, providing a valuable
source of ore to the downstream operations.
The underground mine project achieved a number of milestones in the first half
of 2002. A total of 78 380 square metres have been undercut to date. A total of
71 drawbells have been excavated to date. Crusher Number 2 was successfully
commissioned, whilst the excavation of the Number 3 crusher has been completed
and civil construction is now in progress. The excavation of Number 4 crusher is
in progress. During the first half of 2002 the second phase of the ore handling
system was commissioned, including the second crusher and related underground
conveying systems. Commissioning of the south side winder and deflection testing
of both winders at full speed was successfully completed. The ramp up of
production of the underground project will occur steadly through the year and is
expected to be close to forecast by the end of the year.
Copper in concentrate production was 28 753 tons, a decrease of 2% compared with
the same period in 2001. The decrease was mainly due to the low mill throughput
in both the conventional and auto milling sections following closure of the open
pit. Production of copper cathode decreased from 44 503 tons in the first half
of 2001 to 38 170 tons, due to lower anode supply from the smelter.
The weighted average unit cost of copper cathode delivered to customers was R10
613 per ton. This was 19% higher than the R8 928 achieved in 2001 as a result of
lower production volumes.
Industrial minerals profits are lower due to the closure of the zirconia plant
in August 2001 and the commissioning of the new ZBS plant during the first half
of the year. Production of saleable vermiculite improved as a result of improved
recovery in the entire plant. Palabora has recently signed a contract with a
major vermiculite customer to supply up to 100 000 tons per annum of DDM grade
vermiculite by 2004. This represents a significant opportunity to improve the
value achieved from the vermiculite deposit. The upgrade and commissioning of
the ZBS plant were completed. With effect from January 2002 Palabora`s
subsidiary company in Singapore was closed. The group maintains a marketing
presence although sales into Asia are now made directly from South Africa.
Net debt decreased by R404 million to R1 187 million as a result of the weaker
US dollar, reduced inventories and reduced costs.
A total of 11 lost time injuries were reported during the first half of 2002.
This was the same as for the lost time injuries reported in the first half of
2001. Palabora`s goal remains the elimination of all injuries. Significant
effort is continuing to ensure that this is achieved
Z.W. Ntuli D.S. Sadler
Chairman Managing Director
24 July 2002
Unaudited Group results
Abridged Income Statement
Six months Six months Year
30.6.02 30.6.01 2001
R000 R000 R000
Revenue 1 088 140 1 118 741 1 985 038
Operating costs 718 961 758 754 1 461 140
Depreciation 93 730 83 802 163 535
Operating profit 275 449 276 185 360 363
Interest received 992 351 4 001
Interest payable (14 093) (15 560) (31 436)
Foreign exchange gains/(losses) (15 067) (6 172) 38 361
Amortisation of discount
related to provisions (8 076) (9 812) (31 910)
Profit before taxation 239 205 244 992 339 379
Taxation 73 675 88 253 119 546
Current 7 001 13 169 36 432
Deferred tax 66 674 75 084 83 114
Profit after taxation 165 530 156 739 219 833
Earnings per share, based on
the net profit after tax R5,85 R5,54 R7,76
Fully diluted earnings per
share, based on the net profit
after tax R5,85 R5,54 R7,76
Headline earnings per share,
based on the net profit after
tax adjusted for non-
operational gains/losses R5,85 R5,54 R7,76
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 2001. The interim report has been prepared in accordance with
accounting standard AC127, "Interim Reports".
30.6.02 31.12.01
2. Long-term loan
Long-term loan 1 230 677 1 393 218
Current portion (206 000) (1 823)
1 024 677 1 391 395
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. The
facility consists of a US$90 million tranche and a rand tranche of R283 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%.
Balance sheet as at
30.6.02 31.12.01
R000 R000
Employment of capital
Current assets:
Stores 46 151 46 976
Product Inventories 183 215 240 368
Accounts Receivable 383 614 398 699
Taxation 1 190 1 417
Cash & cash equivalents 45 159 66 475
659 329 753 935
Mining assets 4 083 215 3 959 841
Deferred expenditure - 6 534
Investments - (unlisted) 47 915 47 915
Total Assets 4 790 459 4 768 225
Liabilities and shareholders` equity
Current liabilities:
Accounts payable 156 413 165 821
Provisions 58 383 29 781
Current portion of long-term loans 206 000 1 823
Taxation 9 744 10 593
Group companies - related parties 11 948 13 568
Bank overdraft 207 680 266 211
650 168 487 797
Provision for close-down and
restoration costs 170 952 162 877
Provision for post-retirement medical
benefits 156 564 148 803
Deferred taxation 849 156 784 620
Long-term loans 1 024 677 1 391 395
Total liabilities 2 851 517 2 975 492
Total shareholders` equity 1 938 942 1 792 733
Total equity and liabilities 4 790 459 4 768 225
Summarised cash flow
Six months Six months Year
30.6.02 30.6.01 2001
R000 R000 R000
Cash flow from operating
activities 389 452 366 827 771 378
Cash flow from investing
activities (353 611) (250 648) (800 407)
Replacement of mining assets (62 824) (36 314) (108 242)
Development expenditure (291 993) (214 455) (687 679)
Other investing activities 1 206 121 (4 486)
Cash flow from financing
activities 1 373 396 868 416 461
Long-term loans raised - 1 006 255 1 032 575
Long- and short-term loans
repaid - (599 125) (599 125)
Other financing activities 1 373 (10 262) (16 989)
Net increase in cash and cash
equivalents 37 214 513 047 387 432
Cash and cash equivalents at
beginning of period (199 736) (587 168) (587 168)
Cash and cash equivalent at end
of period (162 522) (74 121) (199 736)
Statement Of Changes In Equity For The Six Months Ended 30 June 2002
Share Distri-
Capital & Other butable
Premium Reserves Reserves Total
R000 R000 R000 R000
Balance 1 January
2002 28 891 174 642 1 589 200 1 792 733
Net gains and losses
not recognised in
income statement:
Currency translation
difference (19 321) (19 321)
Net profit for the
period 165 530 165 530
Dividends - -
Balance 30 June 2002 28 891 155 321 1 754 730 1 938 942
Comparative statement
of changes in equity
for the six months
ended 30 June 2001
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
Selected Statistics
Six months Six months Year
30.6.02 30.6.01 2001
R000 R000 R000
Production and sales
Ore mined (millions of tons)
- Surface 3,4 7,3 12,9
- Underground 1,2 0,4 1,0
Copper in concentrate produced
(thousands of tons) 28,8 29,3 78,4
Cathode produced 38,1 44,5 86,9
(thousands of tons) 42,0 53,5 95,9
Cathode sold (thousands of tons)
Contained copper sold 43,1 54,3 100,2
(thousands of tons) 90 82 186
Vermiculite sold (thousands of
tons) 0,8 0,3 1,0
ZBS sold (thousands of tons) 11,00 7,93 8,54
Average rand/dollar exchange rate
Average copper price realised 18,187 14 446 14 006
per ton (ZAR)
Cash Cost per ton - delivered 10 613 10 426 8 928
(ZAR)
Average copper price realised 75,0 82,6 74,4
(USc/lb)
All tons are metric tons
Average vermiculite prices 1 981 1 491 1 571
realised per ton (ZAR)
Average ZBS prices realised 7 263 15 892 17 338
per ton (ZAR) 354 251 702
Capital expenditure (R million)
Capital commitments (R million)
Approved expenditure at end of 694 828 844
each period
Contracts placed at end of each 397 391 402
period
Share capital (R thousands)
Ordinary shares of R1 each 28 500 28 500 28 500
(thousands) - Authorised
Ordinary shares of R1 each 28 316 28 316 28 316
(thousands) - Issued
The directors are authorised to
issue unissued shares until the
next annual general meeting
Investments - (unlisted) 81 923 75 728 81 857
Fair value of unlisted investments 33 015 26 409 53 927
Interest capitalised (R thousands)
Dividends paid (R thousands)
2001 total dividend: 60 cents 16 989
per share
2001 first interim dividend: 8 495
30 cents per share R68,47 R58,82 R63,31
Net asset value per share
Segmental reporting
Copper Industrial
Minerals
R000 R000
30.6.02 30.6.01 30.6.02 30.6.01
Profit and Loss
Revenues 774 509 784 728 250 726 228 797
Cost and expenses
575 168 602 500 218 126 164 727
Operating profit
199 341 182 228 32 600 64 070
Finance cost
Profit before tax
Taxation
Net income for the
six months
The segmental split on a geographical basis is based on the country in which the
order is received.
Other Total
R000 R000
30.6.02 30.6.01 30.6.02 30.6.01
Profit and Loss
Revenues 62 905 105 216 1 088 140 1 118 741
Cost and expenses 19 397 75 329 812 691 842 556
Operating profit 43 508 29 887 275 449 276 185
Finance cost (36 244) (31 193)
Profit before tax 239 205 244 992
Taxation 73 675 88 253
Net income for the 165 530 156 739
six months
The segmental split on a geographical basis is based on the country in which the
order is received.
South Africa America United Kingdom
R000 R000 R000
30.6.02 30.6.01 30.6.02 30.6.01 30.6.02 30.6.01
Profit and
Loss
Revenues 850 674 892 358 126 720 82 742 110 746 109 464
Cost and
expenses 641 321 698 487 118 148 72 261 89 466 82 480
Operating
profit
before tax
209 353 193 871 8 572 10 481 21 280 26 984
Taxation 63 675 72 495 3 262 4 055 6 738 8 523
Net income
for the six
months 145 678 121 376 5 310 6 426 14 542 18 461
Singapore Total
R000 R000
30.6.02 30.6.01 30.6.02 30.6.01
Profit and Loss
Revenues - 34 177 1 088 140 1 118 741
Cost and expenses
- 20 521 848 935 873 749
Operating profit before
tax
- 13 656 239 205 244 992
Taxation - 3 180 73 675 88 253
Net income for the six
months - 10 476 165 530 156 739
Directors:
Z W Ntuli (Chairman),
J H K Sachikonye+ (Deputy Chairman),
D S Sadler** (Managing Director),
D A Farnaby, O L Groeneveld**, M D Humphries,
S Langa, R M Maruma, G M Negota, J E Rickus*,
J C M van Gaalen# (Alt: B K Wood), R M Whyte*
(Alt: F.B. Weldon), C N Zungu
* British **Australian + Zimbabwean # Dutch
Transfer Secretaries: Registered Office:
Computershare Investor 1 Copper Road
Services Limited Phalaborwa
41 Fox Street 1389
Johannesburg 2001
Postal Address: Postal Address:
P O Box 61051 P O Box 65
Marshalltown 2107 Phalaborwa 1390
These results are also available on our website at:
www.palabora.co.za
Date: 24/07/2002 05:30:00 PM Produced by the JSE SENS Department
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