| Tue 10 Sep 2002, 0:00 | | Union Mines Limited - Group Financial Statement |
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UNION MINES LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1949/032935/06)
("Union" or "the company")
SHARE CODE: UNN ISIN: ZAE000022265
GROUP FINANCIAL STATEMENTS
for the years ended 28 February 2002, 28 February 2001 and 29 February 2000
COMMENTARY
1. NATURE OF THE BUSINESS
The company carries on the business of a holding company for investment in the
mining and technology industries.
2. GENERAL REVIEW
The directors are pleased to present their report, the annual financial statemen
and group financial statements for the period ended 29 February 2000, 28 Februar
2001 and 28 February 2002.This report must be read in the context of the SENS
announcement of 1 July 2002 (particulars to be provided in the circular to share
holders which will be dispatched to members in due course).
On 7 October 1998 Union entered into a scheme of arrangement with its creditors
its members, and was discharged from liquidation on 20 January 1999. The shares
were re-listed on 11 October 1999 based on a detailed circular of 22 September
1999, in terms of which Union acquired new mining assets.
As consideration for all these assets the company issued 294 850 000 shares of n
par value at an average issue price of 16 cents per share.
The development and exploration of the assets required capital but only R 100 00
was realized from the placement of shares at listing. On 22 February 2000 Inkany
Productions Ltd subscribed for 40 683 333 shares in the company at 15 cents per
share partly payable in cash (R 1 800 000) and partly by the acquisition of Vect
Trade 66 (Pty) Ltd which owned certain diamond rights in the Northern Cape. The
was used to pay outstanding listing costs and the funding of the technology and
mining operations.
In order to alleviate the financial position the directors concentrated on
activities at Buffalo, including aggregate sales and the refurbishing of the pla
to beneficiate tin ore, technically successful, negatively due to a dispute betw
Intercoal Mining Co (Pty) Ltd, Medium Targets Ltd and Union.
An agreement with Spring Consultants Ltd was concluded and signed on 7 January 2
for the acquisition of certain assets viz 100 % of International Metal Processor
(Pty) Ltd (IMP) and 100 % of Sdfracht Operating Ltd ("Sdfracht") and including
the business of Fintona Holdings Ltd relating to the beneficiation and sales of
metal ore. The assets would be transferred to Union for a consideration of R 250
000 to be settled by the issue and allotment to or on behalf of Spring Consultan
Ltd as vendor of 2 000 000 000 new ordinary shares of 0.5 cents per share in Uni
issued at 12.5 cents per share.
The acquisition was based on a business plan detailing the development of a
refinery at Brakpan, Gauteng, to produce copper, cobalt, zinc, and nickel in met
form.
A detailed announcement on the acquisition was published in the English and
Afrikaans press on 13 January 2000.
The dispute between Intercoal, Medium Targets and Union continued and threatened
derail the Spring acquisition. To resolve the matter, the affected parties met a
Stellenbosch on 30 May 2000 and signed an encompassing settlement agreement, the
main terms of which were as follows:
- The consideration amended to R275 000 000, to be settled by the issue and
allotment of 2 750 000 000 Union shares at 10 cents per share.
- The acquisition of Transvaal Mining was resolved by accepting that The agreeme
between Intercoal and Medium Targets was cancelled. Spring agreed to arrange wit
Intercoal and/ or Absa to acquire the shares in Intercoal, to re-instate the sal
to Union Mines and to have the shares in Transvaal Mining delivered to Union Min
- The release of Medium Targets from any future commitment to Intercoal. In retu
Medium Targets agreed to forfeit the 96 000 000 Union shares held by Absa,
Pietersburg to Spring.
- The sale of the shares in Riverbend Diamonds and B.Online to the black
empowerment associate, Inkanyamba Productions Ltd which were regarded as non-cor
assets.
- Medium Targets indemnified Transvaal Mining for any damage, loss or claim that
many have been caused by its or Union `s management of the Buffalo Mine.
- The previous directors of Union would appoint two representatives of Spring as
additional directors, whereupon they would resign. The directors of the companie
sold to Inkanyamba would not be affected and would remain in their positions.
On the basis of the settlement Union was in a position to lodge its consolidated
preliminary results for the financial year ended 29 February 2000 with the JSE.
A joint announcement of the settlement as agreed was drafted but not published.
On 29 June a re-drafted announcement was published in both the English and
Afrikaans press.
On 13 July 2000 Spring unilaterally cancelled the settlement agreement. No reaso
were stated. The representatives of Spring namely NS Achterberg and CJ Benadie
subsequently resigned from the board of directors.
On 18 July 2000, DA Sylvester requested the JSE to suspend trade in the shares.
ratification can be found in any minutes relating to this matter. The remainder
the board has managed the company since that date. DA Sylvester acted as chairma
the board They failed to take possession of Buffalo Mine or of any shares in
Transvaal Mining. The shares in Riverbend Diamonds, Medium Mining and B.Online w
not delivered to Inkanyamba Productions and no C-Tech shares were received.
In March 2001 a newly constituted board of Union decided that any lifting of the
suspension on the company`s shares on the JSE Securities Exchange ("JSE") will b
dependent on resolving the problems regarding Transvaal Mining and Finance Co Lt
("Buffalo") and the reactivating of the diamond venture on the Longlands digging
Barkly West.
Linking up with an empowerment partner of repute, a provisional agreement with
Sterling Asset Finance (Pty) Ltd was signed in September 2001.
Union filed a detailed application directly in the name of Union, including a fu
environmental management programme, in September 2001. Union was supported by
Sterling. The Department of Minerals and Energy ("DME") has recommended renewal
the Minister of Minerals and Energy.
When Union Mines established during the latter part of 2001 that it could acquir
the tin operation at Zaaiplaats, Buffalo became superfluous. This opened the w
for the major settlement agreement with the vendor of Buffalo, viz Medium Target
Ltd. A full settlement agreement was signed on 11 December 2001.
The total write down originally reduced the number of issued shares of Union Min
to 300 000 000 by the amendment of a settlement agreement after the 2002 financi
year-end.
With Buffalo no longer an available asset, Union acquired the Zaaiplaats tin pro
from Quickstep 169 (Pty) Ltd on 11 December 2001 as a going concern including th
newly erected spiral treatment plant, the tin metal content in the slimes, grave
and slag on the claims, the right acquired to treat the material, the mining
authorisation granted by DME and the provisional sales agreement with a buyer of
metal.
3. POST BALANCE SHEET EVENTS
On 20 March 2002 the Zaaiplaats agreement was amended, allowing Union to take
possession and joint control of Zaaiplaats on 1 April 2002. The company appointe
MJ ("Kieries") van Zyl as mine manager, arranged with a consortium of Cape inves
to provide not less than R500 000 for working capital by way of a joint venture
arrangement, and entered into negotiations with Fraser Alexander Tailings (Pty)
regarding a possible upgrade of the project.
The Zaaiplaats acquisition although valid and binding, is subject to the resolut
condition that Union`s shares be re-listed on the JSE before or on 31 December 2
The consideration shares for Zaaiplaats have therefore been issued, but are held
escrow by the company`s attorneys viz ML Steenkamp & Co, until such re-listing.
To expand its tin mining and exploration base Union (on 28 June 2002) acquired a
option to acquire Groendoorn CC (after it conversion to a limited company).
Should Union`s exploration programme on the Groendoorn properties be successful,
Union may purchase Groendoorn (and thereby all the properties) before or on 7 Ma
2003 from the original grantor of the option and the sole present member of
Groendoorn.
Union also decided to expand its general empowerment base and therefore entered
an agreement with an empowerment consortium lead by Dyambu Holdings Ltd and Tran
African Development Corporation. In terms of this agreement the consortium would
subscribe to 30 % of the issued share capital of Union (225 000 000 shares at 5
cents per share) in exchange for certain restraints and a claim to major mineral
assets to be acquired by them.
As mentioned in the SENS announcement of 1 July 2002 the mentioned acquisitions
issue of shares for cash are, inter alia subject to the fulfilling of the follow
suspensive conditions:
a)Approval by the JSE;
c) Approval by the Competition Board (to the extent applicable);
d)Approval by the shareholders of Union at a general meeting.
The acquisitions are not conditional on one another.
4. SHARES
On 11 October 1999 the company issued 294 850 000 par value shares at an
average issue price of 16 cents per share as consideration for the listing asset
In addition the company issued 666 667 shares for cash at 15 cents per share.
On 22 February 2000 the company issued a further 40 683 333 shares for cash and
Vecto Trade asset.
A number of issues are to be issued for the acquisitions and for cash (subject t
approval by members at the general meeting called by the circular referred to).
5. DIVIDENDS
No dividends have been declared for the entire period.
6. DIRECTORS AND SECRETARY
The following directors were appointed during the 2000 financial year.
WF Smith (8 February 1999, confirmed on 7 October 1999)
JE van der Burgh (8 February 1999, confirmed on 7 October 1999)
BP Smith (8 February 1999, confirmed on 7 October 1999)
JD Abrahams (7 October 1999)
C Ploos van Amstel (7 October 1999)
PAH du Plessis (28 April 1999, confirmed on 7 October 1999)
No directors resigned during the 2000 financial year review.
On 7 October 1999 C Ploos van Amstel was appointed secretary to the company.
The following directors resigned during the 2001 financial year:
PAH du Plessis (26 May 2000)
WF Smith (2 June 2000)
BP Smith (2 June 2000)
JD Abrahams (2 June 2000)
C Ploos van Amstel (2 June 2000)
The following directors were appointed during the 2001 financial year but
subsequently resigned:
NS Achterberg (2 June 2000, resigned - 13 July 2000)
CJ Benadie (2 June 2000, resigned - 13 July 2000)
DA Sylvester (2 June 2000, resigned - 31 December 2000)
PAH du Plessis was re-appointed a director on 28 June 2000, but has subsequently
resigned.
JF Scott was appointed as director in June 2000 but did not sign the required CM
JD Abrahams was re-appointed director in December 2000.
WF Smith was re-appointed director on 23 February 2001.
The following were directors at the end of the 2001 financial year:
JE van der Burgh
D Reyneke
JD Abrahams
WF Smith
C Ploos van Amstel resigned as secretary on 2 June 2000. WF Smith was appointed
23 February 2001.
The following directors were appointed during the 2002 financial year.
HP Pieters (7 March 2001)
GE Rth (7 March 2001)
C Bruce (16 November 2001)
FH Liedtke (16 November 2001) (alternate director)
BG Mape (16 November 2001)
D Reyneke resigned as director on 4 April 2001.
After the year-end the following directors (appointees of Sterling) resigned on
April 2001:
C Bruce
FH Liedtke
BG Mape
In their stead BJ Hendricks and IA Mamoojee were appointed on the same date. Mr
Mamoojee resigned on 28 June 2002.
AD Paul and TJ Schoeman were appointed to represent the Zaaiplaats vendor on 17
2002.
R Kgomongwe and SH Maphatiane were appointed on behalf of the empowerment consor
subject to ratification at the meeting of members.
GE Rth resigned as director on 13 June 2002.
WF Smith resigned as director on 30 June 2002, but remains as secretary.
The full board of directors therefore consists of:
JD Abrahams
BJ Hendricks
R Kgomongwe
SH Maphatiane
DA Paul
HP Pieters
TJ Schoeman
JE van der Burgh
The registered office of the company is 508 Manhattan Place, 130 Bree Street, Ca
Town, 8001.
7. ACCOUNTING POLICIES
The results for the years ended 29 February 2000, 28 February 2001 and 28 Februa
2002 have been prepared in accordance with South African Statements of Generally
Accepted Accounting Practice and are consistent with the accounting policies use
in the previous year.
8. AUDIT OPINION
The financial statements the years ended 29 February 2000, 28 February 2001 and
February 2002 have been audited by Lombard & Rth. Their unqualified opinion is
available at the company`s registered office for inspection.
9. PROSPECTS
The reconstituted board of directors have entered into an acquisition that will
ensure the continued viability of the company. Details of the agreement were
announced in the media on the 1st of July 2002.
These and certain restructuring proposals are detailed in a circular to be poste
the shareholders in due course.
On behalf of the board of directors
JD Abrahams
Group income statements
Audited Audited Audited
28 February 28 February 29 February
2002 2001 2000
Notes R R R
Turnover - - 4,695
Net loss before taxation and
exceptional items (44,671) (641,337) (1,140,891)
Exceptional item 1 (370) 317,837 (50,180,984)
Net loss before taxation (45,041) (51,321,875)
(323,500)
Taxation - - -
Net loss for the year (45,041) 51,321,875)
(323,500)
Loss per share (cents) 2 (0.01) (31.40)
(0.08)
Headline loss per share (cents) 2 (0.01) (0.70)
(0.16)
Number of shares in issue 395,000,000 395,000,000 395,000,000
Group balance sheets
Audited Audited Audited
28 February 28 February 29 February
2002 2001 2000
R R R
ASSETS
Non-current assets 1,069,593 1,069,650 1,069,650
Investments and loans 19,593 19,650 19,650
Mineral rights 1,050,000 1,050,000 ,050,000
Current assets 110,721 126,321 509,616
Accounts receivable and short-
term loans 110,499 126,221 98,680
Deposits, cash and short-term
investments 222 100 410,936
Total assets 1,180,314 1,195,971 1,579,266
EQUITY AND LIABILITIES
Shareholders` equity 443,702 488,743 812,243
Ordinary share capital 52,506,500 52,506,500 52,506,500
Accumulated loss (52,062,798) (51,694,257)
(52,017,757)
Non-current liabilities
Long-term liabilities 55,242 39,210 39,210
Current liabilities 681,370 668,018 727,813
Accounts payable, taxation and
provisions 681,370 667,950 727,813
Bank overdraft - 68 -
Total equity and liabilities 1,180,314 1,195,971 1,579,266
Net Asset Value per share (cents) 0.11 0.21
0.12
STATEMENT OF CHANGES IN EQUITY
Audited Audited Audited
28 February 28 February 29 February
2002 2001 2000
R R R
Share Capital 1,975,000 1,975,000 1,975,000
Opening balance 1,975,000 1,975,000 319,000
Share issue - - 1,656,000
Share premium 50,531,500 50,531,500 50,531,500
Opening balance 50,531,500 50,531,500 -
Share issue - - 50,531,500
Accumulated loss (52,062,798) (51,694,257)
(52,017,757)
Opening balance 52,017,757 (319,000)
(51,694,257)
Prior year adjustment - - (53,382)
Net loss for the year (45,041) (51,321,875)
(323,500)
Shareholders` equity 443,702 488,743 812,243
Group cash flow statements
Audited Audited Audited
28 February 28 February 29 February
2002 2001 2000
R R R
Cash utilised in operating
activities
Trading operations (15,900) (492,985)
(732,207)
Interest received 8 3,509 1,952
Interest paid (7) (43) (20,725)
Previous year adjustment - - (53,382)
(15,899) (728,741) (565,140)
Cash generated by / (utilised
in) investment activities
Acquisition of investments,
research and development costs
and mineral rights - - (1,069,650)
Decrease / (increase) in loans 57 317,837 -
Acquisition of goodwill - - (50,180,984)
57 317,837 (51,250,634)
cash effects of financing
activities
Issue of share capital - - 52,187,500
Increase in long-term loans 16,032 - 39,210
16,032 - 52,226,710
Net cash retained / (utilised)
for the year 190 (410,904) 410,936
Net cash and cash equivalents
at the beginning of the year 32 410,936 -
Net cash and cash equivalents
at the end of the year 222 32 410,936
NOTES
Audited Audited Audited
28 February 28 February 29 February
2002 2001 2000
R R R
1. Exceptional items
Write off of goodwill - 35,319,312
Investments written off - 14,400,000
Loans written off 500 - 461,372
Loans to subsidiaries written off (130) (317,837) -
Total 370 50,180,984
(317,837)
2. Earnings per share
The earnings per share are
calculated on the weighted
average number of ordinary
shares in issue during the year.
Weighted average number of
shares in issue 395,000,000 395,000,000 163,658,579
R R R
Reconciliation of Headline loss
Net loss for the year (45,041) (51,321,875)
(323,500)
Exceptional items 370 50,180,984
(317,837)
Headline (loss) (45,411) (1,140,891)
(641,337)
3. EVENTS AFTER BALANCE SHEET DATE
Proposed cancellation of shares
In terms of a general
settlement agreement dated
December 2001 the delivery of
the shares in respect of the
acquisition of Transvaal Mining
shall be cancelled or
alternatively transfer to a
nominee of Union Mines Limited,
to be held in trust until the
delivery issue of Transvaal
Mining and Finance Co Ltd has
been resolved.
The effect is that the issued
share capital will be reduced
byR14 400 000 whilst the
write-off will be reversed with
the same amount thereby reducing
the accumulated loss by R14 400
000.
The settlement agreement is
subject to the approval of the
company.
Date: 10/09/2002 10:30:00 AM Produced by the JSE SENS Department
