SALLIES PLANS INCREASED PRODUCTION TO RESTORE PROF
SALLIES PLANS INCREASED PRODUCTION TO RESTORE PROFITABILITY
SALLIES LIMITED
(Incorporated in the Republic of South Africa)
Registration number 1903/001879/06
JSE Share Code: SAL
ISIN: ZAE000022588
For further information call
Peter Flack on (011) 268 5700 or 082 800 4291
Lindsay Robertson on (011) 268 5700 or 082 807 7709
SALLIES PLANS INCREASED PRODUCTION TO RESTORE PROFITABILITY
Johannesburg, 18 September 2003 - Fluorspar miner Sallies today said it would
insource its mining operations and increase production by more than 50% in order
to achieve a return to profitability.
The company announced details of its recovery plan as it posted a net loss of
R14.5 million for the year to June (2002: profit of R4.6 million) on the back of
a 27% decline in revenue to R83.3 million. It attributed this primarily to a
decrease in production volumes due to a deterioration in the head grade,
aggravated by plant breakdowns and inefficiencies. With 90% of its production
exported at US dollar-denominated prices, the company also suffered from the
impact of the strong rand in the latter half of the year.
Remedial actions recently initiated under the aegis of FRM Strategies, appointed
in February to devise a performance improvement plan, have already had some
beneficial effects, and the company"s Witkop operation is now consistently
achieving its target volumes and product quality. Long-term customer
relationships have been secured, management has been strengthened through the
recruitment of Izak Marais from Gold Fields as managing director of Witkop, and
the company"s Johannesburg head office has been closed.
"A return to sustainable profitability will only be achieved by reducing unit
costs through a substantial increase in production," said chairman Peter Flack.
"As we announced earlier, the Sallies board has therefore decided to raise some
R30 million through a rights offer. The necessary approval still has to be
obtained and the circular will be out in due course. This will be used to fund
the insourcing of the mining activities at Witkop, thus reducing mining costs,
as well as to expand Witkop"s plant capacity from 350 tons to 550 tons per day.
Witkop has the mineral resources to support the proposed production increase,
and there is a ready and secure market for the additional output."
Flack said part of the rights offer proceeds would be used to strengthen
Sallies" balance sheet to repay debt, and the exercise would also provide it
with the opportunity to bring a black economic empowerment partner on board.
Issued by du Plessis Associates on behalf of Sallies Limited.
dPA contact Kathy du Plessis on Tel : +27 11 728 4701, Fax: +27 11 728 2547 or e
mail: sallies@dpapr.com
Date: 18/09/2003 12:16:03 PM Produced by the JSE SENS Department
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