| Thu 28 Aug 2003, 8:25 | | BARPLATS INVESTMENTS LIMITED - CONSOLIDATED ANNUAL |
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BARPLATS INVESTMENTS LIMITED - CONSOLIDATED ANNUAL RESULTS FOR THE YEAR ENDED 30
JUNE 2003 (AUDITED)
BARPLATS INVESTMENTS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1987/004830/06)
Share code: BPL
ISIN: ZAE000028692
("Barplats")
Consolidated Annual Results for the year ended 30 June 2003 (audited)
Key features
* Disappointing operational results with tonnes milled declining by 38%
* Platinum in concentrate declines by 37%
* Net loss of R67 million
* Lost time injury frequency rate of 3.22
Income Statement
(R thousand) 2003 2002
Sales 154 558 262 949
Cost of sales 198 185 193 162
Contract mining costs 100 004 92 843
Contract concentrating costs 44 511 50 219
Amortisation 45 257 41 794
Other costs 8 413 8 306
(Loss)/profit from operations (43 627) 69 787
Profit on disposal of mineral rights 1 611 -
Net exploration income/(expense) 266 (18 919)
Other expenses (4 744) (1 553)
Finance (costs)/income - net (20 346) 5 777
(Loss)/profit before taxation (66 840) 55 092
Income tax expense 127 133
Net (loss)/profit (66 967) 54 959
Basic (loss)/earnings per share (cents) (30) 25
Headline (loss)/earnings per share (cents) (31) 25
Balance Sheet
(R thousand) 2003 2002
ASSETS
Non-current assets 217 866 219 378
Property, plant and equipment 217 866 219 378
Current assets 30 785 69 776
Inventories 1 535 1 455
Receivables and prepayments 29 046 68 224
Cash and cash equivalents 204 97
Total assets 248 651 289 154
EQUITY AND LIABILITIES
Capital and reserves 102 215 169 182
Ordinary shares 2 225 2 225
Share premium 1 049 928 1 049 928
Accumulated loss (949 938) (882 971)
Non-current liabilities 29 299 32 908
Provision for environmental obligations 29 299 32 908
Current liabilities 117 137 87 064
Trade and other payables 36 015 36 828
Current taxation liabilities 26 87
Borrowings 81 096 50 149
Total equity and liabilities 248 651 289 154
These financial statements have been approved for issue by the Board of
Directors on 28 August 2003.
Statement of Changes in Equity
Accumu-
Share Share lated
(R thousand) capital premium deficit Total
Balance at 30 June 2001 2 225 1 049 928 (937 930) 114 223
Net profit 54 959 54 959
Balance at 30 June 2002 2 225 1 049 928 (882 971) 169 182
Net loss (66 967) (66 967)
Balance at 30 June 2003 2 225 1 049 928 (949 938) 102 215
Cash Flow Statement
(R thousand) 2003 2002
Cash flows from operating activities
Cash generated from (used in) operations 29 154 137 602
Financial income 422 444
Interest paid (10 126) (8 434)
Taxation paid (188) (62)
Rehabilitation costs (15 326) -
Net cash generated from operating activities 3 936 129 550
Cash flows from investing activities
Purchase of property, plant and equipment (43 603) (68 621)
Proceeds from sale of fixed assets 7 216 7 663
Net proceeds from sale of mineral rights 1 611 -
Net cash used in investing activities (34 776) (60 958)
Cash flows from financing activities
Proceeds from/(repayment of) borrowings 30 947 (68 584)
Net cash generated from/(used in) financing 30 947 (68 584)
activities
Net increase in cash and cash equivalents 107 8
Cash and cash equivalents at beginning of year 97 89
Cash and cash equivalents at end of year 204 97
Notes
The principal accounting policies used by the group which are in accordance with
International Financial Reporting Standards of the International Accounting
Standards Board, South African Statements of Generally Accepted Accounting
Practice and the South African Companies Act, are consistent with those of the
previous year and are set out below.
The financial statements have been audited by PricewaterhouseCoopers Inc. whose
opinion, including an emphasis on matter regarding going concern, is available
for inspection at the registered office of Barplats. The calculation of headline
earnings per share is derived from a net loss of R69,9 million (2002: R55
million profit) adjusted for profit on disposal of mineral rights of R1,6
million divided by the number of shares in issue.
Net finance costs includes an amount of R8,9 million for exchange adjustments as
well as an interest expense of R10,1 million.
Capital expenditure for the period under review amounted to R51 million. Capital
expenditure approved and committed at 30 June 2003 amounted to R3,9 million.
This expenditure will be funded internally and from existing borrowing
facilities.
Current liabilities includes a loan facility from Impala Platinum Limited of
R200 million of which R81,1 million has been utilised. This facility bears
interest at the Johannesburg Interbank Acceptance Rate plus 2%. Non-current
liabilities comprises the provision for environmental obligations.
Year at a glance
2003 2002 Var %
Financial
Sales R(m) 154.6 262.9 (41)
(Loss)/profit from operations (43.6) 69.8 (163)
Net (loss)/profit (67.0) 55.0 (222)
Production
Tonnes milled (000t) 472 757 (38)
Platinum in concentrate (000ozs) 24.5 39.1 (37)
PGM production in concentrate 48.8 75.9 (36)
Key statistics
2003 2002 Var %
Sales volumes in concentrate
Platinum (000oz) 24.5 39.1 (37.3)
Palladium (000oz) 11.0 17.3 (36.4)
Rhodium (000oz) 3.9 6.1 (36.1)
Nickel (t) 37.1 50.1 (25.9)
Prices achieved in
concentrate
Platinum ($/oz) 513 410 25.1
Palladium ($/oz) 213 298 (28.5)
Rhodium ($/oz) 426 595 (28.4)
Nickel ($/t) 5 443 4 370 24.6
Exchange rate achieved ex- (R/$) 9.46 10.28 (8.0)
mine
Production
Tonnes milled ex-mine (000t) 472 757 (37.6)
Platinum in concentrate (000oz) 24.5 39.1 (37.3)
Palladium in concentrate (000oz) 11.0 17.3 (36.4)
Rhodium in concentrate (000oz) 3.9 6.1 (36.1)
Nickel in concentrate (t) 37.1 50.1 (25.9)
PGM in concentrate (000oz) 48.8 75.9 (35.7)
Total cost
per tonne milled (R/t) 324.0 200.0 (62.0)
($/t) 35.9 19.7 (82.2)
per PGM ounce in concentrate (R/oz) 3 134 1 994 (57.2)
($/oz) 347 197 (76.1)
per platinum ounce in (R/oz) 6 242 3 871 (61.3)
concentrate
($/oz) 692 382 (81.2)
Capital expenditure (Rm) 51.0 68.6 25.7
($m) 5.7 6.8 16.2
Extracts from the Annual Report
It is with regret that I have to report on a very disappointing year for
Barplats and a failure to meet the targets set at the end of the previous
financial year. Net profit declined from R55 million in the 2002 financial year
to a net loss of R67 million in the 2003 financial year. Contributing factors
were the strength of the rand, the state of the platinum group metals (PGMs)
markets and poor operational results.
The market
While the strength in the platinum price for the 2003 financial year was
underpinned by solid fundamental demand, palladium and rhodium were less
buoyant. Demand for palladium continued to shrink and producer selling of
rhodium flooded the market. Consequently, palladium and rhodium prices fell
sharply, balancing out the gains in the platinum price. Compounding these price
declines was the effect of the stronger rand and as a result, the average market
price per platinum ounce received in rands declining.
Crocodile River
The year under review was a challenging one, particularly from an operational
perspective. The poor production results were largely a result of the
unexpectedly difficult and frequently dangerous mining conditions encountered as
the operations at Crocodile River moved from being primarily opencast to
underground. Development slowed as a result and there was insufficient mining
face available. This led to a sharp drop in tonnes mined, which in turn caused a
marked fall-off of 38% in tonnes milled. Consequently, sales volumes of platinum
in concentrate also fell by 37% to 24 500 ounces.
In addition to the sharply lower sales volumes, sales revenue was also hampered
by low prices, particularly for palladium and rhodium, whose prices per
concentrate ounce both declined by 28%. Gains in the price received per platinum
concentrate ounce of 25% were insufficient to offset both the volume declines
and the effects of the reduced palladium and rhodium prices. The net result of
all this was a 41% decline in sales revenue.
Higher costs contributed to gross margins being squeezed even more and declining
from a positive 27% to negative 28%. Unit costs were aggravated by the lower
tonnages produced as most costs at Barplats are fixed. Increased stripping
ratios at the opencast operations and more expensive tonnes mined underground
also played a part, as did the decreased mining widths which were necessitated
by the difficult hangingwall conditions.
On the positive side, there was a relative improvement in metallurgical
performance, despite erratic concentrator operations caused by the lack of ore;
concentrator recoveries were satisfactory at just over 70%.
Kennedy"s Vale
Around R41 million has been spent on exploration on the Kennedy"s Vale project
in the last three and a half years, culminating in a feasibility study this
year. Regrettably this study confirms that, given current market conditions and
the low palladium and rhodium prices in particular, this project is not viable.
Prospects
When the Crocodile River operations were restarted in 2000, the Maroelabult
property was expected to be operational for four to five years. Cash flows
generated here were to be used to further evaluate the remaining resources
available to Barplats on the remainder of the Crocodile River properties and at
Kennedy"s Vale. We had hoped to be able to increase mining rates and throughput
so as to be able to benefit from economies of scale in the 2003 financial year.
However, this was not to be. Although we knew that Crocodile River was always
going to be at the upper end of the cost curve, we had not bargained on the
unexpectedly difficult mining conditions encountered as the operations moved
underground, and all that this entailed.
We have evaluated the resource at Crocodile River - Krokodilfdrift and the trial
mining at Zandfontein - and at Kennedy"s Vale, and the indications are that,
given current market conditions and the oversupply of palladium and rhodium, as
well as the nature of the resources and the operational challenges to be
overcome, the long-term viability of the operation is in doubt, especially given
current cost structures. The current strength in the rand is expected to
continue for the foreseeable future and this too will have a negative effect on
the outlook and on revenues in particular. It is therefore likely that the
losses experienced in the 2003 financial year will continue for the foreseeable
future.
Previous reports have highlighted the fact that the company is reliant on the
R200 million loan facility made available by Impala Platinum Limited (Impala),
of which R81 million has currently been utilised. Under the current operating
and financial conditions, this loan will be fully utilised within the 2004
financial year. Consequently, the business could be under threat as a going
concern in the event that alternative funding cannot be secured.
The Board is sensitive to the cash losses that are incurred and as a result,
various options are being considered by the board on the way forward.
Shareholders" attention is drawn to the cautionary notice issued by Barplats
Limited on 28 July 2003, indicating that Impala Platinum Holdings Limited
(Implats) is in discussions regarding its shareholding. Further announcements
will be made in due course.
On behalf of the board
KCRumble Johannesburg
Chairman 28 August 2003
Registered office
3rd Floor, Old Trafford 4, Isle of Houghton, Boundary Road, Houghton 2198(PO Box
61386, Marshalltown 2107)
Transfer secretaries
Computershare Investor Services Limited, 8th Floor, 70 Marshall Street,
Marshalltown, 2107
(PO Box 10651, Johannesburg 2000)
A copy of the Annual Report is available on Internet website:
http://www.barplatsinvestments.co.za
