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RARECO -
RARE EARTH EXTRACTION CO LIMITED
Incorporated in the Republic of South Africa
(Registration number 1989/003212/06)
Share code: RCO
ISIN: ZAE000038329
AUDITED INTERIM GROUP RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2002
Income statement
Audited Unaudited Audited
6 months ended 6 months 12 months ended
ended
31 December 31 December 30 June
2002 2001 2002
R"000 R"000 R"000
Revenue - - -
Profit for the - - -
year
Number of shares 39,300,000 28,852,269 39,300,000
in issue
Earnings per share - - -
(cents)
Headline earnings - - -
per share (cents)
Net asset value 39 50 37
per share (cents)
Note: As is consistent
with prior periods, the
net income/
expense of the company is
capitalised directly to
mining assets.
Summarised balance sheet
Assets
Non-current assets 15,359 13,949 14,800
Current assets 37 397 75
15,396 14,346 14,875
Equity and
liabilities
Shareholders" 14,561 11,814 14,561
funds
Non-current 640 1,380 -
liabilities
Current 195 1,152 314
liabilities
15,396 14,346 14,875
Statement of Changes in Equity
Shareholders"
funds
At beginning of 14,561
period
Net profit -
At end of period 14,561
Cash flow statement
Audited Unaudited Audited
6 months ended 6 months 12 months ended
ended
31 December 31 December 30 June
2002 2001 2002
R"000 R"000 R"000
Cash flows from (968) 1,026 35
operating
activities
Cash flows from (1,409) (848) (1,696)
investing
activities
Cash flows from 2,007 168 1,636
financing
activities
Net decrease in (370) 346 (25)
cash and bank
balances
Cash and bank 343 (3) (3)
balances at the
beginning of the
period
Cash and bank (27) 343 (28)
balances at the
end of the period
COMPLIANCE WITH STATEMENTS OF GENERALLY ACCEPTED ACCOUNTING PRACTICE AND
ACCOUNTING POLICIES
The interim results have been prepared in accordance with South African
Statements of Generally Accepted Accounting Practice.
Accounting policies, which have been applied, are consistent with those applied
in the previous year.
AUDIT OPINION
The interim results have been audited by the company"s auditors, Loubser du
Plessis Inc., and their unqualified opinion is available for inspection at the
registered office of the company. The audit opinion includes an emphasis of
matter paragraph indicating the existence of a material uncertainty, which may
cast doubt about the group"s ability to continue as a going concern. The
financial statements do not include any adjustments relating to the
recoverability of assets or to the amount and classification of liabilities that
might be necessary should the company be unable to continue as a going concern.
COMMENTS
Over the last year, rare earth prices have been too low to justify the
construction of RARECO"s rare earth mine, and to fulfill the conditions for the
R16 million loan offered by the IDC.
However, this situation is expected to change in 2003.
China, which accounts for over 80% of global supplies of these vital minerals,
recently consolidated its fragmented, and largely loss-making, rare earth
industry into two, State-controlled groups. These two groups are expected to
rationalize the mining, processing and marketing of rare earth products; close
mines and factories that are inefficient, insolvent, pollute the environment, or
threaten the health and safety of workers; and curtail the dumping of rare earth
products carried out by the previous one-hundred-plus producers. It is therefore
expected that Chinese supplies will diminish, that demand will continue to grow,
and that prices will rise.
RARECO will proceed with its rare earth project when market conditions improve
and when prices reach an acceptable level.
OTHER PROSPECTS AND CAUTIONARY ANNOUNCEMENT
Meanwhile, RARECO is evaluating a second project.
RARECO has always been interested in rare metals with characteristics and
applications similar to rare earths, such as tantalum and lithium. RARECO is
studying a project that will involve the mining of a pegmatite deposit that
contains tantalum and lithium, as well as beryllium, bismuth, feldspar and mica,
the processing of some of these minerals, and the marketing of these minerals in
South Africa and overseas. Negotiations have been concluded for the acquisition
of a deposit with substantial reserves, and negotiations with respect to
beneficiation and marketing are taking place, which, if successfully concluded,
may have an effect on the share price at which RARECO shares trade on the JSE
Securities Exchange South Africa.
Accordingly, shareholders are advised to exercise caution when dealing in their
RARECO shares until a further announcement is made.
TA BLENCH
Chairman
Cape Town
25 March, 2003
Registered Office
5A Pastorie Park
Cnr Lourens & Reitz Streets
Somerset West
7130
Directors
TA Blench (Chairman)
RT Louw (Managing)
KL Bright (non-executive)
G Paolucci (Italian) (non-executive)
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