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METOREX LIMITED - CONSOLIDATED INTERIM RESULTS FOR THE PERIOD ENDED 31 DECEMBER
2003
METOREX LIMITED
Registration number 1934/005478/06
Incorporated in the Republic of South Africa
JSE alpha code MTX
ISIN ZAE000022745
Issuer code MEMTX
Listed on the JSE Securities Exchange South Africa and London Stock Exchange
www.metorexgroup.com
("the Group")
Consolidated interim results for the period ended 31 December 2003
Rand strength affects earnings
Positive group cash generation
Middelburg Townlands project progressing
Chibuluma South shaft sinking commenced
Issue of shares for cash proposed
Consolidated income statement
Six months Six months
31 December 2003 31 December 2002
(Unaudited) (Unaudited)
R000 R000
Revenue - Mineral sales
Copper 91 943 166 006
Zinc 36 519 48 278
Coal 95 626 92 834
Fluorspar 50 473 50 978
Gold - Barberton 175 007 -
Gold - other 30 309 49 105
Antimony 41 770 69 794
Other 3 949 10 008
Gross revenue 525 596 487 003
Realisation costs 70 707 85 302
On-mine revenue 454 889 401 701
Cost of production 459 237 347 239
Cash costs 421 835 326 883
Stock movement 3 477 474
Depreciation 33 925 19 882
Mining (loss)/profit (4 348) 54 462
Retrenchments - O"Okiep
and Maranda (5 054) -
Other income/(expenses) 8 042 (3 010)
(Loss)/income before
finance costs (1 360) 51 452
Finance income 3 369 8 663
Finance costs (18 805) (15 668)
(Loss)/income before taxation (16 796) 44 447
Taxation - normal and STC 1 753 8 893
Taxation - deferred (3 102) 4 986
(Loss)/income after taxation (15 447) 30 568
Income attributable to outside
shareholders 6 190 1 822
(Loss)/income attributable
to ordinary shareholders (21 637) 28 746
Basic and diluted earnings
per share (cents) (12,36) 20,68
Headline and diluted headline
earnings per share (cents) (12,18) 22,00
Dividend per share (cents) 3,0 10,00
(Loss)/income attributable
to ordinary shareholders (21 637) 28 746
Profit on sale of assets (1 712) -
Tax effect 205 -
Goodwill amortisation 1 830 1 830
Headline earnings (21 314) 30 576
Weighted average shares
in issue (000"s) 175 019 138 985
Number of shares in issue
at end of period (000"s) 175 019 139 019
Consolidated balance sheet
31 December 2003 30 June 2003
(Unaudited) (Audited)
R000 R000
ASSETS
Non-current assets
Property, plant and equipment 506 903 499 952
Mineral rights 193 233 218 288
Goodwill 20 141 21 971
Investments 891 891
Rehabilitation trust funds 42 537 41 063
763 705 782 165
Current assets
Inventories 45 105 53 074
Trade and other receivables 102 164 109 912
Taxation prepaid 5 105 9 550
Bank balances and cash 12 978 23 498
165 352 196 034
Total assets 929 057 978 199
EQUITY AND LIABILITIES
Capital and reserves
Ordinary share capital
and premium 473 204 473 204
Hedging and translation
reserve (57 658) (32 391)
Retained income 89 181 116 069
Reverse acquisition reserve (128 066) (128 066)
376 661 428 816
Minority interest 67 346 16 699
Non-current liabilities
Long-term liabilities -
interest bearing 136 796 179 974
Long-term provisions 71 980 72 424
Deferred tax liabilities 48 485 56 370
257 261 308 768
Current liabilities
Trade and other payables 132 190 124 582
Short-term borrowings -
interest bearing 42 843 45 080
Short-term provisions 27 067 28 168
Bank overdraft 25 295 25 554
Taxation 394 532
227 789 223 916
Total equity and liabilities 929 057 978 199
Net asset value per
share (cents) 215 245
Net tangible asset value
per share (cents) 204 233
Consolidated cash flow statement
Six months Six months
31 December 2003 31 December 2002
(Unaudited) (Unaudited)
R000 R000
Cash generated before working
capital changes 34 395 73 164
Working capital changes 15 686 (36 222)
Cash generated by operations 50 081 36 942
Taxation refunded/(paid) 2 592 (16 587)
Dividends paid (6 631) (15 698)
Net finance costs (12 870) (7 005)
Cash inflow/(outflow) from
operating activities 33 172 (2 348)
Cash outflow from investing
activities (21 351) (14 899)
Cash outflow from financing
activities (22 043) (34 268)
Net decrease in cash and
cash equivalents (10 222) (51 515)
Net cash balance at beginning
of period (2 056) 95 269
Effect of foreign exchange
rate changes (39) (813)
Cash equivalents at end
of period (12 317) 42 941
Commodity sales statistics
Six months Six months
31 December 2003 31 December 2002
Copper (t) 7 322 10 729
Zinc (t) 6 147 6 288
Coal (t) 737 644 742 931
Fluorspar (all grades) (dmt) 66 191 56 696
Gold - Barberton Mines (kg) 1 747 -
Gold - other (kg) 370 478
Antimony (mtu) 263 049 286 840
Commodity prices achieved (averaged)
Six months Six months
31 December 2003 31 December 2002
Copper ($/t) 1 769 1 538
Zinc ($/t) 837 763
Coal (R/t) 130 125
Fluorspar (all grades) ($/t) 107 89
Gold - Barberton Mines ($/oz) 439 -
Gold - other ($/oz) 359 318
Antimony ($/mtu) 22 24
Exchange rate (average) (R/$) 7,1 10,1
Statement of changes in equity
Six months Six months
31 December 2003 31 December 2002
(Unaudited) (Unaudited)
R000 R000
Shareholders" equity at
start of period 428 816 391 116
Ordinary shares issued - 121
Hedging and translation
reserve (25 267) (22 442)
Net (loss)/income for
the period (21 637) 28 746
Dividends distributed (5 251) (13 898)
376 661 383 643
COMMENTARY
RESULTS OF OPERATIONS
The comparative figures for the six months include the acquisition of Barberton
Mines Limited (BML) for the first time. The production increase and cost
containments at BML has been most satisfactory and BML was a major contributor
to profits for the six months.
The coal and fluorspar operations performed well, but the 30% strengthening of
the Rand affected revenues and profits. The smelter motballing at O"Okiep,
orebody problems at Chibuluma and Consolidated Murchison contributed to further
revenue declines and the reduced profit for the period can be attributed
approximately equally to Rand strength and reduced sales volumes.
The Group generated R50 million of cash during the period (2002: R37 million),
which was applied to capital debt repayment and a dividend. A major portion of
the Group"s resources was applied to funding the BML acquisition as well as
funding of the Group"s share of capital at Chibuluma South and Middelburg Coal.
This has prompted the Board, subject to JSE approval, to propose an issue of
shares for cash.
The change in minority interest is a result of the conversion of R35 million of
shareholder loans in BML to preference shares and an equity advance from the
Industrial Development Corporation (IDC) into the Chibuluma South project.
CURRENT DEVELOPMENTS
Barberton Mines
Work on collating mine exploration data, preparatory to a regional exploration
programme is ongoing and an investigation into a possible opencast deposit
between Fairview and Sheba has been initiated.
Chibuluma South
The decline has been advanced 25 metres through poor ground and is now in the
basement gneiss where conditions are expected to improve and budgeted
development should now be achieved. It is anticipated that the Sulphide Ore
Body will be intersected in the last quarter of the financial year, with initial
production building up to a planned scale of 40 000 tons per month of ore over
the next 12 to 15 months.
Middelburg Townlands
Construction of the processing plant is progressing well with completion
expected during May 2004. Tenders have been invited for the opencast mining
contract, which is planned to commence at the same time as the washing plant is
commissioned. The planned production of 600 000 to 700 000 tons of saleable coal
will increase current production levels by 30% to 40%.
FUTURE PROSPECTS
The recent strength of commodity prices has partially offset the current Rand
strength and should result in increased revenues and earnings during the
forthcoming period, providing these prices are maintained. Sustained management
efforts aimed at increasing production and reducing costs on all the operations
are beginning to impact.
QUARTERLY REPORTING
As no statutory requirement exists for quarterly reporting the Board has
resolved to discontinue such reporting. This is due to the fact that changes in
mining operations tend to have longer lead times than other industries, and the
cost of producing quarterly reports will be also eliminated.
CAPITAL EXPENDITURE AND COMMITMENTS
Group capital expenditure for the period totalled R42,2 million (2002: R14,9
million), which mainly related to underground development and equipment at
Barberton Mines, Chibuluma South development and expenditure on Middelburg
Townlands. The Group funded R21,4 million from internal sources, with the
balance of R20,8 million being funded by the IDC through their involvement in
the Chibuluma South and Middelburg Townlands projects.
Contracted capital commitments at 31 December 2003 amount to R98,1 million (30
June 2003: R1,3 million), whilst uncontracted commitments amount to R45,9
million (30 June 2003: R7,4 million). The contracted and uncontracted capital
commitments mainly relate to the Chibuluma South and Middelburg Townlands
projects. The IDC is funding the Middelburg Townlands project through an
interest bearing loan and 87% of the Chibuluma South development through equity
contributions.
Operating lease commitments, which fall due within one year amount to R2,2
million (30 June 2003: R3,4 million), whilst commitments of R3,3 million (30
June 2003: R4,7 million) fall due in years two and five.
O"OKIEP SMELTER MOTHBALLING
The O"Okiep smelter was mothballed during late 2003 due to uneconomic world
treatment charges. Since closure these charges have deteriorated further. An
impairment charge over the smelter will be considered at year-end. At current
copper prices (+$2 800/ton) the audit committee does not believe an impairment
charge is warranted.
BOARD OF DIRECTORS
The directors regret to announce the untimely death of Jomo King, an alternate
director of Metorex, who had been employed by the Group for 18 years. His
contribution to the growth and development of the Group is appreciated and
condolences are extended to his family.
Mr Qvist resigned as a director at the annual general meeting.
These changes to the composition of the Board were previously announced on SENS.
SAFETY
It is with regret that the Group has to report two fatal accidents both of which
occurred after the end of the quarter. The directors and staff express their
sincere condolences to the family and friends of the deceased.
ACCOUNTING POLICIES
The interim results have been prepared in accordance with International
Financial Reporting Standards applicable to Interim Financial Reporting. The
accounting policies are consistent with those adopted in the financial year
ended 30 June 2003.
Copper refining and antimony realisation charges, totalling R24,7 million,
previously charged against sales revenue have been reclassified to realisation
costs, which is consistent with classifications adopted in the financial year
ended 30 June 2003.
By order of the Board
A.S. MALONE
Chairman
C.D.S. NEEDHAM
Financial Director
19 February 2004
Secretaries
Moore Stephens MWM Inc
7 West Street
Houghton, 2198
Transfer secretaries
Ultra Registrars
11 Diagonal Street
Johannesburg, 2001
Contact details for Metorex Limited
Postal: PO Box 2814 Saxonwold 2132 South Africa
Telephone: (+27 11) 880-3155 Facsimile: (+27 11) 880-3322
website: www.metorexgroup.com e-mail: info@metorexgroup.com
Registrars: South African and United Kingdom Computershare Limited
PO Box 1053 Johannesburg 2000 South Africa Telephone: (+27 11) 370-5000
Capita Group plc The Registry 34 Beckenham Road Beckenham Kent BR 34TU
England Telephone: 0944 208 639-2486 Fax: 0944 208 639-2279
Company Secretaries: Moore Stephens MWM PO Box 1574 Houghton, 2041
Telephone (+27 11) 728-7240
Auditors: Deloitte & Touche Private Bag X6 Gallo Manor, 2052 RSA
Telephone: (+27 11) 806-5000
Date: 19/02/2004 04:00:11 PM Produced by the JSE SENS Department
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