| Mon 7 Apr 2003, 9:41 | | Avgold Limited - Unaudited Results For The Quarter |
|
Avgold Limited - Unaudited Results For The Quarter And Nine Months Ended 31
March 2003
Avgold Limited
(Incorporated in the Republic of South Africa)
(Registration Number: 1990/007025/06)
(Share code: AVG)
(ISIN: ZAE000012175)
("Avgold")
UNAUDITED RESULTS FOR THE QUARTER AND NINE MONTHS ENDED 31 MARCH 2003
* Operating profit increased by 188 per cent during the quarter
R94 million cash generated from operating activities during the quarter
* Negative mark-to-market value of hedge book declines to R149 million
* most production issues at Target addressed
* ETC sold for R300 million
INCOME STATEMENT - Rand thousand
Unaudited Unaudited Audited
Quarter ended Year to date Year ended
March March Dec March March June
2003 2002 2002 2003 2002 2002
Revenue 278 020 64 885 241 635 780 383 193 040 363 802
- gold revenue 277 770 64 885 241 170 779 478 193 040 362 709
- by-products 250 - 465 905 - 1 093
Costs and expenses 230 785 56 811 225 230 683 569 170 635 346 468
- gold operating 174 636 46 071 176 053 524 769 142 425 265 137
- retrenchments - - - - - 4 747
- amortisation 48 291 6 257 42 918 140 322 18 325 57 389
- administration
and general 7 858 4 483 6 259 18 478 9 885 19 195
Operating profit 47 235 8 074 16 405 96 814 22 405 17 334
Investment income 3 073 1 3 469 9 655 165 2 147
Finance cost 15 008 - 14 991 44 136 - 8 419
Unrealised foreign
exchange gain 14 111 - 62 573 66 186 - 30 335
Income before taxation 49 411 8 075 67 456 128 519 22 570 41 397
Taxation 8 207 - - 8 207 5 000 5 000
Net earnings for the
period 41 204 8 075 67 456 120 312 17 570 36 397
Headline earnings 41 204 8 075 67 456 120 312 17 570 36 397
Headline earnings
per share (cents) 6 1 10 18 3 5
Earnings per share (cents) 6 1 10 18 3 5
Weighted number of
shares in issue (million) 675 671 674 674 670 670
BALANCE SHEET - Rand thousand
Unaudited Unaudited Audited
31 March 31 March 30 June
2003 2002 2002
ASSETS
Non-current assets 2 880 041 2 926 966 2 931 207
Fixed assets 2 831 692 2 881 325 2 883 336
Investments 48 349 45 641 47 871
Current assets 239 852 191 527 208 742
Inventories 47 202 48 198 44 761
Trade and other receivables 53 040 36 963 55 171
Derivative instruments 5 797 - -
Deposits and cash 133 813 106 366 108 810
Total assets 3 119 893 3 118 493 3 139 949
EQUITY AND LIABILITIES
Capital and reserves
Share capital 6 755 6 713 6 729
Share premium 2 215 988 2 201 059 2 206 385
Reserves 143 067 1 871 16 958
Total shareholders" equity 2 365 810 2 205 901 2 230 072
Non-current liabilities 4 25186 721 212 630 105
Long-term loans 337 886 643 261 548 072
Deferred tax liability 5 550 - -
Long-term provisions 81 750 77 951 82 033
Current liabilities 328 897 191 380 279 772
Trade and other payables 122 184 115 725 153 343
Short-term borrowings 206 713 75 655 126 429
Total equity and liabilities 3 119 893 3 118 493 3 139 949
CASH FLOW STATEMENT - Rand thousand
Unaudited Unaudited Audited
Quarter ended Year to date Year ended
March Dec March March June
2003 2002 2003 2002 2002
Cash generated from/
(utilised by) operations
Operating profit 47 235 16 405 96 814 22 405 17 334
Non-cash items and adjustments:
Amortisation and depreciation 48 291 42 918 140 322 18 325 57 389
Provisions 524 (187) (283) 3 704 7 788
96 050 59 136 236 853 44 434 82 511
Retrenchment payments - - - (1 126) (5 873)
Payments to environmental trust fund - - - (1 897) (4 151)
Investment income 3 073 3 469 9 655 165 2 147
Finance charges (15 008)(14 991) (44 136) - (8 419)
84 115 47 614 202 372 41 576 66 215
Cash provided by/(reinvested in)
working capital
Inventories 8 300 (293) (2 441) (14 951) (11 514)
Payables and provisions 641 1 809 (33 816) (22 193) 10 155
Receivables 1 088 3 251 2 131 10 904 (7 303)
Net cash generated from
operating activities 94 144 52 381 168 246 15 336 57 553
Cash utilised in investment
activities
Fixed assets acquired (32 583)(38 026) (91 168)(300 261)(345 645)
Investments acquired (478) - (478) (1 149) (1 124)
Fixed assets sold 713 581 2 490 2 471 5 531
(32 348)(37 445) (89 156)(298 939)(341 238)
Cash provided by financing
activities
Net increase in shareholders"
funding 1 719 6 247 9 629 17 525 22 868
Leased assets (363) (350) (1 054) (1 320) (1 634)
(Decrease)/increase in
long-term loans (48 269) - (48 269) 251 232 191 952
(Decrease)/increase in
overdrafts and short-term
borrowings (5 904) 1 540 (2 128) 66 625 123 402
(52 817) 7 437 (41 822) 334 062 336 588
Increase in cash balances 8 979 22 373 37 268 50 459 52 903
Cash and cash equivalents at
beginning of period 133 387 114 688 108 810 55 907 55 907
Translation adjustment (8 553) (3 674) (12 265) - -
Cash and cash equivalents at
end of period 133 813 133 387 133 813 106 366 108 810
STATEMENT OF SHAREHOLDERS" EQUITY - Rand thousand
Unaudited Audited
Ordinary Year to Year
Share date ended
capital and Retained Equity March March June
premium income reserves 2003 2002 2002
Changes in
shareholders"
equity
Balance at
Beginning
of period 2 213 114 16 958 2 230 072 2 170 808 2 170 808
Share
Options
exercised 9 655 9 655 17 523 22 867
Expenses
written off
against share
premium (26) (26) - -
Transfers
to equity
reserves 5 797 5 797 - -
Net earnings
for the
period 120 312 120 312 17 570 36 397
Balance at
end of
period 2 222 743 137 270 5 797 2 365 810 2 205 901 2 230 072
SALIENT FEATURES - SALES AND COSTS
Quarter ended Year to date
March December March March
2003 2002 2003 2002
Avgold total:
Revenue received - Rand per kilogram 85 036 82 197 84 033 91 438
- US$ per ounce 310 296 303 240
Average spot price - Rand per kilogram 101 570 104 885 103 228 107 458
- US$ per ounce 321 314 317 288
Cash cost - Rand per kilogram 53 386 59 838 56 502 69 199
- US$ per ounce 197 189 184 217
Total gold sales - kilograms 3 267 2 934 9 276 2 111
- ounces 105 021 94 332 298 225 67 875
ETC:
Cash cost - Rand per kilogram 74 786 65 027 72 259 69 199
- US$ per ounce 276 205 235 217
Total gold sales - kilograms 683 784 2 169 2 111
- ounces 21 975 25 192 69 742 67 875
Target:
Cash cost - Rand per kilogram 47 723 57 948 51 692 -
- US$ per ounce 176 183 168 -
Total gold sales - kilograms 2 583 2 150 7 107 -
- ounces 83 045 69 140 228 484 -
COMMENTARY
Avgold: three months ended 31 March 2003
Avgold Limited"s revenue increased 15 per cent to R278,0 million (31 December
2002: R241,6 million) during the quarter as a result of a significant
improvement in yield at Target after most of the production issues affecting the
mine were addressed. Headline earnings declined to R41,2 milion (R67,5 million),
which equates to earnings of 6 cents a share (10 cents a share). The decrease in
headline earnings in this quarter reflected the exceptional unrealised foreign
exchange gain of R62,6 million recorded in the prior quarter (R14,1 million in
the current quarter).
Operating income increased by 188 per cent from R16,4 million to R47,2
million. An improvement in Avgold"s yield to 9,93g/t (7,79g/t) resulted in total
gold sold during the quarter increasing to 3 267kg (2 934kg), including 141kg
(355kg) of gold from the old Loraine mine"s cleanup. Avgold"s cash costs
decreased in Rand terms to R53 386/kg from the prior quarter"s R59 838/kg, but
increased in US dollar terms to US$197/oz from US$189/oz as a result of the Rand
strengthening against the US dollar.
The mark-to-market value of Avgold"s hedge book as at 31 March 2003 was a
negative R149 million, significantly lower than the prior quarter"s negative
R485 million - as a result of the strengthening of the Rand against the US
dollar and delivery into the hedge book.
Avgold signed a Sale of Business Agreement with Metorex Limited ("Metorex")
on 14 February 2003, whereby a subsidiary of Metorex will acquire Avgold"s ETC
assets for R300 million, subject to certain conditions precedent being met. The
proceeds will be paid to Avgold in cash after the completion of certain
conditions precedent, including Competition Commission approval. Metorex has
included a significant Black Economic Empowerment component in the ownership of
ETC. This transaction is scheduled to complete before 30 June 2003.
Avgold: nine months ended 31 March 2003
The commencement of operations at the Target gold mine in May 2002
fundamentally changed the profile of Avgold. As a result, the figures are not
comparable with the 2002 equivalent period.
Avgold"s headline earnings were R120,3 million, which equate to 18 cents a
share, including unrealised foreign exchange gain of R66,2 million. Avgold
recorded an operating profit of R96,8 million. Total gold sold during the period
was 9 276kg at a yield of 8,69g/t, including 665kg of gold from the old Loraine
mine"s cleanup. Avgold"s cash costs were R56 502/kg, or US$184/oz.
Target"s Life of Mine Plan was updated during the period. The new Life of
Mine is 18 years, compared to the previous life of 13 years. The revised Life of
Mine has resulted in a reduction in the amortisation rate per kilogram produced.
Target: three months ended 31 March 2003
Target addressed most of the issues that adversely affected production in the
previous quarter. As a result, total gold sold increased to 2 583kg (2 150kg),
including 141kg (355kg) from the old Loraine mine"s cleanup. A significantly
higher yield of 10,36g/t (7,33g/t) offset the decrease in the amount of ore
milled, which fell to 249 417 tonnes (293 516 tonnes). Following waste
separation underground, cash costs decreased to R47 723/kg (R57 948/kg), or
US$176/oz (US$183/oz).
Capital expenditure was R25,7 million (R30,8 million).
Target: nine months ended 31 March 2003
During the nine months Target milled a total of 825 827 tonnes of ore at a
yield of 8,61g/t. Total gold sold amounted to 7 107kg, of which 665kg was from
the old Loraine mine"s cleanup. Cash costs were R51 692/kg, or US$168/oz.
Capital expenditure decreased significantly to R72,2 million (R345,9 million).
ETC: three months ended 31 March 2003
The Sheba, New Consort and Fairview mines milled 79 378 tonnes of ore at an
average yield of 8,61g/t during the quarter, compared to 83 107 tonnes at an
average yield of 9,43g/t during the prior quarter. Cash costs increased to R74
786/kg (R65 027/kg), or US$276/oz (US$205/oz). Gold sold totalled 683kg (784kg).
Capital expenditure decreased to R2,1 million (R3,8 million).
ETC: nine months ended 31 March 2003
Gold sold increased to 2 169kg from the prior nine-month period"s 2 111kg,
with 242 126 tonnes (244 156 tonnes) of ore milled. Yields improved to 8,96g/t
(8,65g/t). Cash costs increased to R72 259/kg (R69 199/kg), or US$235/oz
(US$217/oz). Capital expenditure decreased to R9 million (R14,7 million).
Northern Free State Exploration
Exploration work continued on the Paradise area, immediately north of the
Target mine. The pre-feasibility on a mine design continues. The completed
design and report will be presented to the board by 30 June 2003.
Change of directors
Avgold is pleased to announce the appointment of Mr Vincent Uren as a
director of the company following the resignation of Mrs J Thomas. Mr Ian Botha
and Mr Willan Abel have been appointed as alternate directors to Messrs Vincent
Uren and Bill Nairn respectively.
Borrowings
Avgold has reached a preliminary agreement to refinance its existing US
dollar and Rand term loan facility using a R600 million bridge facility,
including a R200 million facility for general corporate purposes, from a South
African bank. No new hedging will be required and existing cash resources and
the proceeds from the sale of ETC will be used to partially repay the bridge
facility.
Accounting policies
The accounting policies used are in accordance with South African Statement
of Generally Accepted Accounting Practice and are consistent with those applied
in the previous financial year.
On behalf of the Board
Rick Menell Jan Steenkamp
Chairman Managing Director
Johannesburg
7 April 2003
A booklet incorporating a more detailed review of the unaudited results for the
quarter and nine months ended 31 March 2003 will be posted to all shareholders.
Copies of this booklet can be obtained by contacting Carol Loggenberg on (011)
634-0424 or by e-mail at caroll@avmin.co.za. The full results are available at
www.avgold.co.za or www.avmin.co.za.
DIRECTORATE:
Executive: Jan Steenkamp (Managing), Doug Campbell, Arn Lewis,
Gerhard Potgieter
Non-executive: Rick Menell (Chairman), Jurie Geldenhuys, David Murray,
Bill Nairn, Gerry Robbertze, Vincent Uren
Alternate directors: Willan Abel, Ian Botha
Company secretary: Essop Sather
Registered office
56 Main Street
Johannesburg 2001
PO Box 62379
Marshalltown 2107
Tel: (011) 634-9111
Fax: (011) 634-0038
Website: www.avgold.co.za
TRANSFER SECRETARIES
Computershare Investor Services Limited
70 Marshall Street
Johannesburg 2001
Tel: (011) 370-7810
Fax: (011) 370-5271
Website: www.computershare.com
AUDITORS
KPMG Inc
85 Empire Road
Parktown 2193
Tel: (011) 647-7111
Fax: (011) 484-0536
Website: www.kpmg.co.za
SPONSORING BROKER
Deutsche Securities (SA) (Proprietary) Limited
3 Exchange Square
87 Maude Street
Sandton 2196
Tel: (011) 775-7000
Fax: (011) 775-7618
Website: www.db.co.za
