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African Rainbow Mineral Gold Limited - Financial Report
AFRICAN RAINBOW MINERALS GOLD LIMITED
(Incorporate in the Republic of South Africa)
(Registration number 1997/015869/06)
JSE Share code AOD ISIN ZAE000039244
("ARMgold" or "the Company")
HIGHLIGHTS FOR THE QUARTER
* Cash operating income rises by 17% to R467 million
* Cash costs down:
* R/kg reduced by 11% to R52 143/kg
* $/oz down 2% to $156/oz
* Gold production up 9% to 284 000oz
* Headline earnings per share for six months to June of 742 cent
per share
PRODUCTION RESULTS - TOTAL OPERATIONS - RAND/METRIC
Attributable ARMgold
Freegold Company
Quarter Quarter Quarter Quarter
ended ended ended ended
March June Change March June
2002 2002 % 2002 2002
Area mined -m2 `000 88 110 24 102 101
Ore milled -tonnes `000
-underground 463 524 13 581 585
-surface 581 617 6 - -
-total 1,044 1,142 9 581 585
Yield -g/t
-underground 7.70 7.94 3 7.17 7.06
-surface 0.70 0.88 25 - -
-total 3.81 4.13 8 7.17 7.06
Gold produced -kg
-underground 3,563 4,167 17 4,165 4,132
-surface 407 542 33 - -
total 3,971 4,709 19 4,165 4,132
Gold price received
-R/kg 107,631 104,166 (3) 106,936 105,973
Cash operating costs
-R/kg 56,914 43,662 (23) 59,656 61,810
-R/tonne 217 180 (17) 428 437
ARMgold
Consolidated
Quarter Quarter
ended ended
Change March June Change
% 2002 2002 %
Area mined -m2 `000 (2) 190 210 10
Ore milled -tonnes `000
-underground 1 1,044 1,109 6
-surface - 581 617 6
-total 1 1,625 1,727 6
Yield -g/t
-underground (1) 7.40 7.48 1
-surface - 0.70 0.88 25
-total (1) 5.01 5.12 2
Gold produced -kg
-underground (1) 7,728 8,299 7
-surface - 407 542 33
total (1) 8,135 8,841 9
Gold price received
-R/kg (1) 107,279 105,011 (2)
Cash operating costs
-R/kg 4 58,320 52,143 (11)
-R/tonne 2 292 267 (9)
PRODUCTION RESULTS - TOTAL OPERATIONS
Attributable ARMgold
DOLLAR/IMPERIAL Freegold Company
Quarter Quarter Quarter Quarter
ended ended ended ended
March June Change March June
2002 2002 % 2002 2002
Area mined -ft2 `000 948 1,180 24 1,101 1,084
Ore milled -tons`000
-underground 511 578 13 641 645
-surface 640 680 6 - -
-total 1,151 1,258 9 641 645
Yield -oz/t
-underground 0.224 0.232 3 0.209 0.206
-surface 0.020 0.026 25 - -
-total 0.111 0.120 8 0.209 0.206
Gold produced -oz`000
-underground 115 134 17 134 133
-surface 13 17 33 - -
-total 128 151 19 134 133
Gold price received
-US$/oz 290 311 7 291 316
Cash operating costs
-US$/oz 154 130 (15) 162 184
-US$/tons 17 16 (8) 34 38
Exchange US$1=R 11.52 10.43 (9) 11.43 10.44
ARMgold
Consolidated
Quarter Quarter
ended ended
Change March June Change
% 2002 2002 %
Area mined -ft2 `000 (2) 2,050 2,264 10
Ore milled -tons`000
-underground 1 1,151 1,223 6
-surface - 640 680 6
-total 1 1,791 1,903 6
Yield -oz/t
-underground (1) 0.216 0.218 1
-surface - 0.020 0.026 25
-total (1) 0.146 0.149 2
Gold produced -oz`000
-underground (1) 248 267 7
-surface - 13 17 33
-total (1) 262 284 9
Gold price received
-US$/oz 8 291 313 8
Cash operating costs
-US$/oz 13 158 156 (2)
-US$/tons 12 23 23 1
Exchange US$1=R (9) 11.47 10.43 (9)
PRODUCTIVITY EFFICIENCIES - TOTAL OPERATIONS
Attributable ARMgold
Freegold Company
Quarter Quarter Quarter Quarter
ended ended ended ended
March June Change March June
2002 2002 % 2002 2002
Total costs of sales
R/Kg 60,296 49,590 (18) 60,945 66,361
R/tonne 229 205 (11) 437 469
US$/oz 163 148 (9) 166 198
Corporate cost - % of
Gold sales - - 2% 2%
Efficiencies and production
Per employee -g/tec 171 224 31 183 181
-m2/tec 3.8 5.2 37 4.5 4.4
-tonnes/tec 45 54 21 26 26
ARMgold
Consolidated
Quarter Quarter
ended ended
Change March June Change
% 2002 2002 %
Total costs of sales
R/Kg 9 60,628 57,427 (5)
R/tonne 7 304 294 (3)
US$/oz 19 164 171 4
Corporate cost % of Gold sales 1% 1%
Efficiencies and production
Per employee -g/tec (1) 177 202 14
-m2/tec (2) 4.1 4.8 16
-tonnes/tec - 35 39 11
FREEGOLD
ABRIDGED INCOME STATEMENT
FINANCIAL RESULTS - ATTRIBUTABLE TO ARMgold
Unaudited
Six Quarter Quarter
months FOR THE PERIOD ENDED ended ended Change
June 2002 March 2002 June 2002 %
Rm Attributable Freegold Rm Rm -
918.0 Gold sales 427.4 490.6 15
431.6 Cash operating costs 226.0 205.6 (9)
486.4 Cash operating income 201.4 285.0 41
30.2 Amortisation 13.4 16.8 25
10.0 Rehabilitation provision - 10.0 -
1.1 Post-retirement benefits provided - 1.1 -
445.1 Mining income 188.0 257.1 37
(23.0) Other expenses/income - net (17.7) (5.3) (70)
422.1 Income before taxation 170.3 251.8 48
135.8 Taxation 51.1 84.7 66
286.3 Income for the period 119.2 167.1 40
ARMgold
ABRIDGED INCOME STATEMENT
FINANCIAL RESULTS - COMPANY
Unaudited
Six Six Quarter Quarter Quarter
months months FOR THE PERIOD ENDED ended ended Change ended
June June March June % June
2001 2002 2002 2002 2001
Rm Rm Total Orkney & Welkom Rm Rm - Rm
555.6 883.3 Gold sales 445.4 437.9 (2) 278.4
445.6 503.9 Cash operating costs 248.5 255.4 3 221.8
110.0 379.4 Cash operating income 196.9 182.5 (7) 56.6
13.5 20.7 Amortisation 5.4 15.3 183 6.9
2.9 3.5 Rehabilitation provision - 3.5 0 1.4
93.6 355.2 Operating income 191.5 163.7 (15) 48.3
10.1 17.9 Corporate expenditure 9.0 8.9 (1) 5.1
53.7 0.0 Tribute expenditure - - - 31.1
29.8 337.3 Mining income 182.5 154.8 (15) 12.1
8.6 3.8 Other expenses/income-net 2.7 1.1 (59) 4.5
38.4 341.1 Income before taxation 185.2 155.9 (16) 16.6
5.7 144.7 Taxation 74.3 70.4 (5) 1.5
32.7 196.4 Income for the period 110.9 85.5 (23) 15.1
ARMgold
ABRIDGED INCOME STATEMENT
FINANCIAL RESULTS - CONSOLIDATED
Unaudited
Six Six Quarter Quarter Quarter
months months FOR THE PERIOD ENDED ended ended Change ended
June June March June % June
2001 2002 2002 2002 2001
Rm Rm Total ARMgold Rm Rm - Rm
555.6 1,801.3 Gold sales 872.8 928.5 6 278.4
445.6 935.5 Cash operating costs 474.5 461.0 (3) 221.8
110.0 865.8 Cash operating income 398.3 467.5 17 56.6
13.5 50.9 Amortisation 18.8 32.1 71 6.9
2.9 13.5 Rehabilitaion provision - 13.5 - 1.4
Post-retirement
- 1.1 benefits provided - 1.1 - 0.0
93.6 800.3 Operating income 379.5 420.8 11 48.3
10.1 17.9 Corporate expenditure 9.0 8.9 (1) 5.1
53.7 - Tribute expenditure - - - 31.1
29.8 782.4 Mining income 370.5 411.8 12 12.1
8.6 (19.2) Other expenses/income-net(15.0) (4.2) (72) 4.5
38.4 763.2 Income before taxation 355.5 407.6 15 16.6
5.7 280.5 Taxation 125.4 155.1 24 1.5
32.7 482.7 Income for the period 230.1 252.5 10 15.1
Adjustments:
- Profit on sale of
- 1.1 mining assets - 1.1 - -
32.7 481.6 Headline earnings 230.1 251.4 9 15.1
Earnings per share - Cents
65 743 - Basic earnings 460 316 - 30
65 742 - Headline earnings 460 315 - 30
Dividends per share - Cents
0 0.036 - Capitalisation issue 0 0.036 0
Calculated number of
shares in issue
- Weighted average
50.00 64,92 (million) 50.00 79.84 50.00
STATEMENTS OF CHANGES IN EQUITY
Unaudited
ARMgold
Company Consolidated
FOR THE PERIOD ENDED 30 June 30 June 30 June 30 June
2001 2002 2001 2002
R`000 R`000 R`000 R`000
Share capital
Ordinary shares
Balance at beginning of period 50.0 50.0 50.0 50.0
Ordinary shares issued during
the period - 45.5 - 45.5
Balance at end of the period 50.0 95.5 50 95.5
Share premium
Balance at beginning of period - - - -
Share premium raised on issue
of shares - 1,209,973 - 1,209,973
Expenses written-off against
share premium - (77,482) - (77,482)
Balance at end of the period - 1,132,491 - 1,132,491
Retained earnings
Balance at beginning of period 76,142 119,511 76,142 238,730
Net earnings for the period 32,784 85,485 32,784 252,518
Dividends paid during the period - (18) - (18)
Balance at end of period 108,926 204,978 108,926 491,230
ABRIDGED CASH FLOW STATEMENTS
ARMgold
Company Consolidated
Audited Unaudited Audited Unaudited
Twelve Six Twelve Six
months months months months
FOR THE PERIOD ENDED 31 Dec 30 June 31 Dec 30 June
2001 2002 2001 2002
R`000 R`000 R`000 R`000
Net cash flow from
operating activities 5,316 278,032 5,316 788,927
Net cash flow from
investing activities (38,235) (1,018,439) (38,235) (1,025,886)
Net cash flow from
financing activities 0 1,616,301 0 1,616,301
Net increase in cash
and cash equivalents (32,919) 875,894 (32,919) 1,379,342
Cash and cash equivalents
at the beginning of the year 150,499 117,580 150,499 117,580
Cash and cash equivalents
at the end of the year 117,580 993,474 117,580 1,496,922
ABRIDGED BALANCE SHEETS
ARMgold
Company Consolidated
Audited Unaudited Audited Unaudited
AS AT 31 Dec 30 June 31 Dec 30 June
2001 2002 2001 2002
R`000 R`000 R`000 R`000
ASSETS
Non-current assets
Property, plant and equipment 77,219 87,725 77,219 1,166,783
Investments 18,268 1,006,325 18,268 321,098
Deferred taxation (9,539) (11,897) (9,539) 203,785
85,948 1,082,153 85,948 1,691,666
Current assets
Cash & cash equivalents 117,580 993,474 117,580 1,496,922
Accounts receivable 78,217 98,167 78,217 157,462
Gold inventories 10,833 15,448 10,833 21,357
Stores and materials - 6,863 - 8,826
206,630 1,113,952 206,630 1,684,567
TOTAL ASSETS 292,578 2,196,105 292,578 3,376,233
EQUITY & LIABILITIES
Capital & Reserves
Share capital 50 96 50 96
Share premium - 1,132,491 - 1,132,491
Retained earnings 8,614 204,978 8,614 491,230
8,664 1,337,565 8,664 1,623,817
Non-current liabilities
Borrowings - 514,550 - 1,030,340
Provision for rehabilitation 41,540 45,008 41,540 245,135
Provision for post-retirement
liability - - - 1,113
41,540 559,558 41,540 1,276,588
Current liabilities
Accounts payable 144,970 171,016 144,970 343,546
Short-term portion of borrowings 30,786 - 30,786 -
Current tax liability 66,618 127,966 66,618 132,282
242,374 298,982 242,374 475,827
TOTAL EQUITY AND LIABILITIES 292,578 2,196,105 292,578 3,376,233
REPORT TO SHAREHOLDERS FOR THE QUARTER ENDED 30 JUNE 2002
SOLID OPERATIONAL PERFORMANCE IN FIRST QUARTER AFTER SUCCESSFUL LISTING
"The higher cash operating profits, in both rand and dollar terms, which we
have achieved during the second quarter, clearly endorse our stated strategy of
increasing output as cost-efficiently as possible."
- Patrice Motsepe, Executive Chairman
ACCOUNTING POLICIES
The unaudited financial results, for the period ended 30 June 2002, have been
prepared on the historical cost basis in accordance with South African
Statements of Generally Accepted Accounting Practice.
The accounting policies are, in all meterial respects, consistent with the
annual financial statements for the year ended 31 December 2001.
SHARE CAPITAL
The Company listed on the JSE on 16 May 2002 and issued 25 million shares of
R0,001 each at R44,00 each. In terms of the underwriting agreement, the
underwriters exercised their option and another 2,5 million shares of R0,001
each were issued at R44,00 on 27 May 2002.
The issued share capital of the Company comprises 95,5 million ordinary shares
of R0,001 each at 30 June 2002 (500 000 ordinary shares of R0,10 at 30 June
2001, 31 December 2001 and 30 June 2002).
CAPITAL EXPENDITURE
The Company invested R31,2 million on capital projects during the last six
months period and the Group invested R1 162,1 million during the same period.
The capital commitments at 30 June 2002 were:
Company R24,493 million
Consolidated R154,493 million
STRATEGIC OVERVIEW
1. ARMgold had another successful quarter.
2. Preparations for ADR programme in US continuous. A level two sponsored
programme is envisaged.
3. Freegold will acquire St Helena Mine from Gold Fields Limited at a cost of
R120 million, subject to certain conditions precedent being fulfiled. It is
expected that the sale will be unconditional by the end of the quarter.
Approximately 50 000 ounces per annum will be attributable to ARMgold from the
St Helena Mine.
4. The ARMgold Board had in principle approved the deepening of Tshepong North
Shaft. This project will add two further additional operating levels below the
present level of the Shaft. Capital cost of the project is estimated at R260
million (R130 million attributable to ARMgold). The project will commence as
soon as detailed documentation has been completed, and estimated full production
should be achieved by December 2005. The Shaft deepening project will add 75 000
attributable ounces per annum, to ARMgold. ARMgold will fund its share of the
expenditure from the proceeds of the listing.
5. Nyala Shaft, at Freegold, is in the process of being restarted, and will
yield some 30 000 attributable ounces per annum, for ARMgold.
6. Negotiations with the unions, regarding continuous operations at Freegold are
progressing. Continuous operations will create 2 500 additional jobs
opportunities and should significantly reduce the cost of production, enabling
improved utilisation of the ore body.
7. The mining operation at Orkney No. 5 Shaft has been discontinued, as
previously indicated. All employees have been re-deployed to other operations.
8. Re-opening of Orkney No. 3 Shaft is progressing according to plan and the
shaft will be in operation by the end 2002. Mining at this shaft will replace
about 30% of the ounces lost from No. 5 Shaft.
9. Drilling of the GK block at ARM4, No. 1 Shaft in Welkom has been completed.
The extent of the mining block has been established, and the development, to
realise the ore body, has commenced. This project will add between 4 and 6 years
to the life expectancy of this shaft. Estimated cost of capital required for
this project is approximately R50 million, of which R30 million has been
included in the 2003 budget.
10. A capitalisation issue of 18 million ordinary shares of R0,001 each was done
on 9 April 2002 as part of the capital restructuring for listing purposes. As
advised in the prospectus, no dividends will be declared for this quarter.
CORPORATE GOVERNANCE
The ARMgold Board currently consists of eight executive and nine
non-executive directors.
The Company substantially complies with the principles of the Code of
Corporate Practices and Conduct set out in the King Report on Corporate
Governance.
The Board has established a number of committees that are chaired as follows:
Executive Committee Mr PT Motsepe
Steering Committee Mr AJ Wilkens
Audit Committee Mr MW King
Remuneration Committee Mr CML Savage
Investment Committee Dr SP Sibisi
Health, Safety and Environment Committee Mr RJ Fisher
Employment Equity Committee Adv KD Moroka
Each of the committees have held meetings during the past quarter.
OPERATIONS
Safety
Regrettably, four ARMgold employees died as a result of work-related incidents
during the quarter, and another four died at the Freegold Joint Venture
operations. Our condolences are extended to the families, friends and
communities of the deceased. Safety is a prime concern at ARMgold and every
effort is being made to eliminate accidents.
A comprehensive Safety and Health strategy is being implemented under the
direction of the Safety and Health Sub-Committee of the Board, which is chaired
by Mr Fisher.
OPERATIONS REVIEW
Overall
Cash operating income increased by 17% from R398 million to
R467 million. The gold price received decreased by 2%, from R107 279/kg to R105
011/kg. Gold produced increased by 9%, from 8 135 to 8 841 kg.
Freegold Joint Venture Operations
The Freegold Joint Venture took over operational control of the Assets on 1
January 2002.
Cash operating income from Freegold attributable to ARMgold increased by 41%,
from R201 million to R285 million. Gold produced increased by 19%, from 3 971kg
to 4 709kg and cash operating cost R/kg decreased by 23%, from R56 914/kg to R43
662/kg.
Operational restructuring is proceeding according to plan. Highlights of the
results achieved by the Freegold Joint Venture were as follows:
Bambanani Mine recorded a cash operating income of R211,6m (an increase of
34%). Cash operating cost was R42 960/kg (a decrease of 24%).
Grade at the Bambanani Mine is being reduced, as development becomes
available, in order to optimally utilise the ore body.
Tshepong recorded a cash operating income of R207,7 million (an increase of
31%). Cash operating cost for the quarter was R39 763/kg
(a decrease of 21%).
Eland Shaft recorded a cash operating income of R60.1 million (an increase
of 85%). Cash operating cost was R40 267/kg (a decrease of 37%).
Restarting of operations at Kudu and Sable Shafts are in progress. Start-up
costs of R1,6 million were incurred during the quarter.
West Shaft (Bambanani West) was successfully re-commissioned, and recorded a
cash operating income of R8.8 million.
Joel Mine recorded a cash operating income of R14 million.
Surface operations recorded a cash operating income of
R74,1 million.
Orkney Operations
Gold production increased by 3%, from 3 545kg to 3 659kg. Operations at No. 5
Shaft had been discontinued during the quarter. The remaining ore reserves at
No. 5 shaft will be rezoned into the
No. 2 Shaft life of mine plan.
Welkom Operations
Gold production decreased by 24% , from 620kg to 473kg, mainly as a result of
toll treatment for a third party being discontinued. Cash operating cost for the
quarter was R90 853/kg. Overall cash operating cost reduced from R56,2 million
to R42,9 million (a decrease of 24%).
This report was approved by the board of directors on 29 July 2002 and was
signed on its behalf by:
P T Motsepe A J Wilkens
(Executive Chairman) (Chief executive officer)
BUSINESS ADDRESS SHARE TRANSFER SECRETARIES
ARM House Ultra Registrars (Pty) LTD
29 Impala Road 11 Diagonal Street
Chislehurston, Sandton Johannesburg 2001
South Africa
Directors: P T Motsepe (Executive Chairman), A J Wilkens
(Chief executive officer), Dr M M M M Bakane-Tuoane*, J G Cockburn* (British),
R J Fisher*, L P Fourie, W M Gule, M W King*, Adv P J Manda*, R A Matube,
Adv K D Moroka*, C M L Savage*, D V Simelane, Dr R V Simelane, Dr S P Sibisi*,
P W Steenkamp, P Taljaard (*non executive)
Date: 30/07/2002 09:05:03 AM Produced by the JSE SENS Department
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