| Thu 3 Jun 2004, 16:08 | | RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2004 |
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MVELAPHANDA RESOURCES LIMITED - GROUP INTERIM RESULTS FOR THE SIX MONTHS ENDED
31 MARCH 2004
Mvelaphanda Resources Limited
(Registration number 1980/001395/06)
(Incorporated in the Republic of South Africa)
JSE Share code: MVL
ISIN number: ZAE000050266
GROUP INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2004
Issued share capital: 166 403 140 shares
Highlights
* 15% of Gold Fields Limited`s South African assets successfully acquired for
R4 139 million.
* 86,6 million new shares issued and placed internationally and domestically,
to raise R1 969 million to fund the equity portion of the Gold Fields
transaction (R1 690 million) and raise cash for strategic investment
purposes.
* The acquisition of Khumama Platinum (Proprietary) Limited, a BEE company
with rights to 50% of the Booysendal project. Currently in negotiations
with Northam on the purchase of a 50% interest in the Booysendal Platinum
Project from Mvela Resources.
* The option to purchase 5 million Trans Hex Group Limited shares from Remgro
exercised, increasing Mvela Resources stake in the company to 20,7% on a
fully diluted basis
* Mvelaphanda Exploration has entered into an agreement with Etruscan
Diamonds to fund the expansion of its Tirisano Diamond Mine and develop the
Blue Gum deposit.
CONDENSED GROUP INCOME 6 months to 6 months to 12 months
to
STATEMENT 31 March 31 March 30 Sept
2004 2003 2003
Notes R`000 R`000 R`000
Revenue 21 568 5 739 12 833
Dividends received from
non-strategic investments 5 9 15
Profit on disposal of
slimes material - 2 750 2 750
Interest received - cash
and cash equivalents 3 037 2 980 10 068
Interest received - GFI-
SA loan advanced 6 18 526 - -
Costs 95 478 15 261 30 934
Exploration and project
costs
- Ndowana 664 704 1 781
- Dwaalkop 4 910 - 883
- Mvelaphanda 1 606 - 1 014
Exploration
- Other 295 - 1 901
Corporate expenditure 8 464 5 199 17 083
Finance costs 3
- Mvelaphanda Gold 12 853 - -
loans`
- Other 2 537 8 668 7 582
Non-recurring costs
Mvela Gold stamp duties 4 224 - -
Participation rights
purchased from
Mvelaphanda Holdings 2 59 925 - -
Linked unit debenture
interest paid - 690 690
Loss before income of
associate companies (73 910) (9 522) (18 101)
Attributable profit of
associate companies 19 397 50 502 68 995
- Northam 14 970 46 473 61 580
- Trans Hex 4 427 4 029 7 415
Amortisation of goodwill
- net 4 616 4 616 9 233
(Loss)/profit before
unrealised gain on
financial instruments (49 897) 45 596 60 127
Unrealised gain/(loss) on
financial instruments 32 255 (125 239) 3 575
- Remgro options on
Trans Hex shares 15 380 (30 570) (8 469)
- Trans Hex forward
purchased shares 66 875 (94 669) 12 044
- GFI-SA loan advanced (50 000) - -
(Loss)/profit before
taxation (17 642) (79 643) 63 702
Taxation
- Current (6 543) 20 (821)
- Deferred (7 497) 18 786 (536)
Attributable
(loss)/profit for the (31 682) (60 837) 62 345
period/year
Basic (loss)/earnings per
ordinary share (cents) (39,93) (91,36) 91,98
Headline (loss)/earnings
per ordinary share 4 (45,74) (98,28) 78,35
(cents)
Diluted (loss)/earnings
per ordinary share (39,45) (90,23) 91,03
(cents)
Dividends per share
(cents) - 29,00 29,00
CONDENSED GROUP BALANCE 31 March 31 March 30 Sept
SHEET 2004 2003 2003
Notes R`000 R`000 R`000
Assets
Goodwill arising from reverse
acquisition 122 587 129 461 126 024
Property, plant and equipment 201 241 217
Investment in associate
companies
- Northam 383 848 389 564 402 353
- Trans Hex 123 790 36 892 39 408
Loan advanced to GFI-SA 6 4 089 000 - -
Derivative financial
instruments
- Trans Hex forward purchased
shares 7 373 207 199 620 306 332
- Trans Hex options 7 - 43 207 65 309
Booysendal Joint Venture 8 304 603 - -
Non-strategic investments 5 2 137 1 384 2 192
Non-current assets 5 399 373 800 369 941 835
Accounts receivable
- Interest receivable on GFI-
SA loan advanced 18 225 - -
- Sundry debtors 2 960 1 077 1 453
Cash and cash equivalents 238 239 138 692 83 478
Current assets 259 424 139 769 84 931
Total assets 5 658 797 940 138 1 026 766
Equity and liabilities
Shareholders equity (2003:
before linked debentures) 3 051 438 5 677 129 833
Linked debentures and debenture
premium - 793 484 793 484
Shareholders` equity (2003: and
linked debentures) 3 051 438 799 161 923 317
Interest bearing borrowings
Mvela Gold loans
- Commercial bank loans 1 244 937 - -
- Mezzanine financing 1 082 081 - -
Other - 45 467 -
Deferred taxation 52 123 25 262 44 625
Non-current liabilities 2 379 141 70 729 44 625
Accounts payable 13 791 23 256 11 880
Interest bearing borrowings 46 361 45 777 45 787
Short-term portion of Mvela
Gold commercial bank loans 111 024 - -
Booysendal Joint Venture 50 000 - -
accrual
Taxation 7 042 1 215 1 157
Current liabilities 228 218 70 248 58 824
Total equity and liabilties 5 658 797 940 138 1 026 766
CONDENSED Accu- Acquisi-
tion
GROUP STATEMENT Share Share mulated equity Other
OF CHANGES capita premium profit Adjust- reserve Total
l ment s
IN EQUITY R`000 R`000 R`000 R`000 R`000 R`000
Balance 1 October 690 86 115 467 637 (421 947) (2 662) 129 833
2003
Scheme of 690 792 794 793 484
arrangement
Mvelaphanda 51 59 874 59 925
Holdings share
issue
Khumama share 185 224 814 224 999
issue
Shares issued for 1 556 1 788 443 1 789 999
cash
Shares issued for
cash over 156 178 828 178 984
allotment option
Share issue (93 370) (93 370)
expenses
Equity portion of
foreign currency (575) (575)
translation
reserve
Equity portion of
fair value
adjustment on
available-for-
Sale financial (103) (103)
assets
Unrealised loss on
revaluation of (56) (56)
listed investment
Attributable
profit for the (31 682) (31 682)
period
Balance 31 March 3 328 3 037 498 435 955 (421 947) (3 396) 3 051 438
2004
Balance 1 October 653 67 924 409 792 (421 947) (1 062) 55 360
2002
Sale of linked
units in Mvela 37 18 191 18 228
Share Scheme
Profit on sale of
linked units in 15 306 15 306
Mvela Share Scheme
Unrealised loss on
revaluation of (1 558) (1 558)
listed investment
Equity portion of
foreign currency (787) (787)
translation
reserve
Equity portion of
fair value
adjustment on
available-for-
Sale financial (34) (34)
assets
Dividends declared (20 001) (20 001)
Attributable
profit for the (60 837) (60 837)
period
Balance 31 March 690 86 115 344 260 (421 947) (3 441) 5 677
2003
Balance 1 April 690 86 115 344 260 (421 947) (3 441) 5 677
2003
Profit on sale of
linked units in 195 195
Mvela Share Scheme
Unrealised loss on
revaluation of 572 572
listed investment
Equity portion of
foreign currency (34) (34)
translation
reserve
Equity portion of
fair value
adjustment on
available-for-
sale financial 241 241
assets
Attributable
profit for the 123 182 123 182
period
Balance at 30 690 86 115 467 637 (421 947) (2 662) 129 833
September 2003
CONDENSED GROUP 6 months to 6 months to 12 months to
CASH FLOW 31 March 31 March 30 September
STATEMENT 2004 2003 2003
R`000 R`000 R`000
Cash flows from operating
activities
Cash (utilised in)/generated
by operations (19 737) (1 822) (12 053)
Corporate expenses (8 492) (3 521) (11 335)
Exploration and project costs (7 021) (1 051) (3 468)
Proceeds on disposal of
slimes material - 2 750 2 750
Mvela Gold stamp duty (4 224) - -
Interest received 3 338 2 980 10 068
Finance costs on external
borrowings (17) (6 724) (7 582)
Debenture interest paid - - (690)
Dividends paid - - (20 001)
Taxation paid (658) (95) (994)
Net cash (used in)/generated
by operating activities (17 074) (5 661) (31 252)
Cash flows from investing
activities
Loan advanced to GFI-SA (4 139 000) - -
Exercise of Remgro options on
Trans Hex shares (54 021) - -
Proceeds on disposal of Trans
Hex shares 53 710 - -
Capital repayment by
associate companies 17 257 - 10 346
Dividends from associate
companies 22 684 42 177 48 225
Payment in respect of
Booysendal Joint Venture (29 603) - -
Dividends received from non-
strategic investments 5 465 15
Purchase of additional
Northam shares - - (111)
Net cash (used in)/generated
by investing activities (4 128 968) 42 642 58 475
Cash flows from financing
activities
Shares issued for cash 1 968 984 - -
Loans raised in Mvela Gold 2 449 360 91 243 45 787
Transaction costs (117 542) - -
Sale of linked units in Mvela
Share Scheme - 75 791 75 791
Repayment of external
borrowings - (179 178) (179 178)
Net cash generated by/(used
in) financing activities 4 300 802 (12 144) (57 600)
Net increase/(decrease) in
cash and cash equivalents 154 760 24 837 (30 377)
Cash and cash equivalents at
beginning of period 83 478 113 855 113 855
Cash and cash equivalents at
end of period/year 238 238 138 692 83 478
NOTES
1. The financial information has been prepared in accordance with South
African Statements of Generally Accepted Accounting Practice and
incorporate accounting policies which are consistent with the previous
year.
2. Refer to paragraph 7 in commentary section.
3. Finance costs have increased due to the commercial bank loans and mezzanine
financing referred to in paragraph 2.1 in commentary.
4. Headline earnings per share is calculated using the following:
6 months to 6 months to 12 months to
31 March 31 March 30 September
2004 2003 2003
R`000 R`000 R`000
(Loss)/profit after taxation (31 682) (60 837) 62 345
Net goodwill amortised (4 616) (4 616) (9 233)
Headline loss (36 299) (65 453) 53 112
Weighted average number of
shares 79 350 368 66 597 487 67 784 050
5. Loans and investments R`000
Balance as at 1 October 2003 2 192
Fair value adjustment (55)
Fair value as at 31 March 2004 2 137
Balance as at 1 October 2002 3 835
Fair value adjustment (1 643)
Fair value as at 30 September 2003 2 192
6. Loan to GFI-SA R`000
Loan advanced to GFI-SA 4 139 000
Fair value adjustment (50 000)
Fair value as at 31 March 2004 4 089 000
A loan of R4 139 million has been advanced to GFI-SA by Mvela Gold. The
loan bears interest at 10,57% nominal annual compounded semi-annually over
a 5 year period, following which Mvela Gold will subscribe for 15% of the
share capital of GFI-SA. This loan is treated as a financial instrument for
accounting purposes and its fair value is determined by calculating the
portion of the Gold Fields Limited market capitalisation that related to
15% of its South African mining operations, and the present value of the
difference between receiving fixed interest income instead of dividends.
The value of this investment is sensitive to the following key drivers:
- Rand/US Dollar exchange rate
- US Dollar gold price
- Relative portion of GFI-SA mark capitalisation attributable to its
South African mining operation
7. Derivative financial instruments
*Trans Hex Trans Hex Total
forward
purchased shares options
R`000 R`000 R`000
Balance as at 1 October 2003 306 332 65 309 371 641
Fair value adjustment 66 875 15 380 82 255
Exercised options (80 689) (80 689)
Fair value as at 31 March 2004 373 207 - 373 207
Balance as at 1 October 2002 74 414 - 306 332
Fair value adjustment 231 918 65 309 297 227
Fair value as at 30 September
2003 306 332 65 309 371 641
* The fair value is based on the market price of Trans Hex shares as at 31
March 2004 and the contingent liability relating to the debenture coupon.
Refer Note 9.
8. Refer paragraph 3.1 in commentary.
9. The company has purchased and fully paid for the Trans Hex shares that will
be issued when the 16 million debentures, currently held by a financial
institution, convert into shares at the end of its six year term (28
February 2008). The company has guaranteed the Trans Hex Group Limited
debenture coupon payments under the debenture issue agreement. The maximum
potential contingent liability as at 31 March 2004 is R62 793 207. This
amount reduces to Rnil over the six-year term of the debenture, in
accordance with each semi-annual coupon payment made by Trans Hex Group
Limited.
10. (a) The obligations under the Commercial Bank Loan is secured by a cession
of Mvela Gold`s rights to the interest and capital under the GFI-SA
Loan.
(b) Mvela Gold`s right to receive the GFI-SA shares and Mvela Gold`s right
to exchange the GFI-SA shares for Gold Fields ordinary shares and a
guarantee of R200 million from Mvela Resources for the benefit of the
Mezzanine Financiers (other than GFL Mining Services) is secured by a
cession and pledge of all the ordinary shares in Mvela Gold in the
event that amounts are still owed to Mezz SPV after exhaustion of the
security cession. Other than the Mvela Resources Guarantee, there is
no further recourse against the Mvela Resources Group.
11. Post balance sheet events:
* Trans Hex Group Limited declared a dividend of 53 cents per share to
be paid on 5 July 2004, which represents a dividend payment to Mvela
of R2.9 million.
Transfer Secretaries Registered Office
Computershare Investor Services 1 Albury Park
2004 (Pty) Limited First Floor, South Wing
70 Marshall Street Magalieszicht Avenue
Johannesburg, 2001 Dunkeld West, 2196
(PO Box 61051, Johannesburg, (PO Box 413420, Craighall, 2024)
2000)
Johannesburg
4 June 2004
COMMENTS
1. FINANCIAL REVIEW
Revenue rose by R15.8 million compared with the six-month period to March
2003, due to interest earned on the loan to GFI-SA and higher cash levels
following the private placement and over allotment. Costs also increased
significantly with the inclusion of interest paid on the Mvela Gold loan to
commercial and mezzanine debt financiers for the first time, as well as
rising exploration and project costs associated with joint venture
transactions concluded in the interim period. A non-recurring cost of R60
million was incurred as a result of the acquisition from Mvelaphanda
Holdings, of certain participation rights held by it. Losses before income
of associate companies, increased frpm R9.5 million to R73.9 million -
excluding non-recurring items, losses before income of associated companies
would have been flat year-on-year.
A 22% decline in the average PGM basket price received by Northam due to
the strong rand, inflationary and labour related cost increases, as well as
a sharp increase in currency hedge losses, resulted in the attributable
profit contribution from Northam declining by 68% to
R15 million. Despite the negative impact of the strong rand, stronger
diamond prices and the inclusion of the Angolan operations in Trans Hex,
profit attributable to Mvela Resources increased by 10% to R4.4 million.
The group posted a net loss before accounting for financial instruments of
R50 million, compared with a R46 million profit in the previous
corresponding period.
Unrealised gains on Trans Hex options and forward purchased shares, offset
a R50 million decline in the marked-to-market value of the GFI-SA loan,
reducing pre tax losses to R17.6 million. These instruments will continue
to be impacted on by variables such as Rand/US Dollar exchange rate, US
Dollar gold price and the underlying share prices of Gold Fields and Trans
Hex.
Losses attributable to shareholders declined by R29 million to R32 million,
with headline losses reducing from 98c in the interim period to March 2003
to 46c in the current reporting period. The weighted average number of
shares in issue rose 19% period on period, to 79,4 million, with issued
capital, post the Gold Fields transaction increasing to 166,4 million
ordinary shares.
The Rand/Dollar exchange rate is an important driver of earnings and should
it remain at current levels, earnings are likely to be significantly lower.
2. SIGNIFICANT INVESTMENTS
2.1 GFI Mining South Africa Limited (GFI-SA)
On 10 June 2003, it was announced that Mvelaphanda Resources Limited
(`Mvela Resources` or `the company`) had entered into an agreement in
principle with Gold Fields Limited in terms of which Mvela Resources
(through a wholly owned subsidiary, Mvelaphanda Gold (Pty) Limited)
would acquire a 15% beneficial interest in GFI-SA, a newly formed
company, which houses the South African assets of Gold Fields Limited.
The transaction was successfully concluded on 15 March 2004, after
gaining shareholder approval at a General Meeting on 8 March 2004. The
acquisition consideration of R4 139 million was financed by means of a
commercial bank loan (R1 363 million), mezzanine financing (loans and
preference shares mounting to R1 086 million) and equity raised
through a specific private placement (R1 690 million).
A loan of R4 139 million has been advanced to GFI-SA by Mvela Gold
(Pty) Ltd (`Mvela Gold`). The loan will be repayable on commercial
terms over a five year period, following which Mvela Gold will
subscribe for 15% of GFI-SA.
As a result of this transaction, Mvela Resources acquires a
significant interest in quality gold assets, with limited recourse to
the company.
2.2 Northam Platinum Limited (`Northam`)
Mvelaphanda Platinum (Pty) Limited, a wholly owned subsidiary of Mvela
Resources, effectively owns 51 738 305 shares in Northam which
constitutes a 22,4% equity interest in that company. On completion of
the sale of Mvela Resources` 50% interest in the Booysendal
transaction to Northam, Mvela Resources will own an effective 34% of
Northam.
2.3 Trans Hex Group Limited (`Trans Hex`)
In October 2001, the company acquired an option to purchase 5 million
Trans Hex ordinary shares from Remgro. On 6 February 2004 Mvela
Resources exercised this option. The net result, after funding the
acquisition cost, was that the company now owns 5 530 263 Trans Hex
shares which constitutes a 6% equity interest in that company. With
the 16 million shares due for delivery on 28 February 2008, the
effective stake in Trans Hex is 20,7% on a fully diluted basis.
3. PROJECTS
3.1 Booysendal Joint Venture
Mvela has acquired the issued share capital and loan accounts of
Khumama Platinum (Pty) Limited. The purchase consideration comprises 9
274 527 new shares in Mvela ranking as fully paid and R80 million in
cash of which R5 million is a redemption of professional fees paid by
the vendor.
Khumama`s only asset is the right to enter into a 50/50 joint venture
with Anglo American Platinum Corporation Limited (`AngloPlats`) in
respect of the Booysendal Project (`Booysendal`). Booysendal embraces
138 square kilometres on ten contiguous farms at the Southern end of
the Eastern Limb of the Bushveld Igneous Complex.
Booysendal is underlain by the Merensky and UG2 horizons and has been
thoroughly explored by AngloPlats. The UG2 horizon reports grades of
4,93 g/ton (3PGE + AU) over an average width of 127 centimetres, while
the Merensky horizon grades of 4,72 g/ton over an average width of 100
centimetres.
Measured, indicated and inferred resource - after a 24% allowance for
geological losses - total 76,8 million oz on the UG2 horizon (38,4
million oz attributable to Khumama) and 47,6 million oz on the
Merensky horizon (23,8 million oz attributable to Khumama).
Subject to the consent of its shareholders and certain other
conditions precedent, Northam Platinum Limited (`Northam`) has
acquired Khumama`s right to enter into the Booysendal joint venture.
The consideration comprises 20,4 million new shares in Northam ranking
as fully paid, 18 million deferred shares in Northam (which will not
rank for dividends until the fourth anniversary of their issue), R80
million in cash and R10 million for acquisition costs. An independent
technical committee will advise the Northern Board and unrelated
shareholders on the proposed transaction.
3.2 Mvelaphanda Exploration/Etruscan Diamonds
Mvelaphanda Exploration (Pty) Limited (`Mvela Exploration`) conducts
exploration in South Africa and is jointly owned with Trans Hex.
During the period under review Mvela Resources` share of expenditure
incurred by Mvela Exploration was R2.0 million. Mvela Exploration has
concluded an agreement with Etruscan Diamonds (Pty) Limited to fund a
capital expansion of the Tirisano Diamond Mine near Ventersdorp and
the nearby Blue Gum deposit. Mvela Exploration has until 31 July 2005
to earn a 50% interest in the mine and property by funding and
carrying out an expansion of the current plant at Tirisano. The
estimated cost of the expansion to Mvela Exploration is approximately
R41 million, which will be funded by the Joint Venture partners. Mvela
Exploration may earn a 50% interest in the Blue Gum deposit by
carrying out a bulk sampling programme and a feasibility study and
incurring capital expenditures on the properties estimated at R190
million.
3.3 Pandora Joint Venture
Mvela Resources has reached an agreement in principle with Anglo
Platinum and Northam, whereby a 7,5% interest in the Pandora Joint
Venture will vest in Mvela Resources until such time as the
Historically Disadvantaged South African (`HDSA`) stake in Northam is
in compliance with the requirements of the Department of Minerals and
Energy (DME). Mvela Resources will then redeploy the 7,5% interest in
Pandora at cost to Northam or to Northam`s nominee. The DME required
that the total HDSA participation in the Pandora JV should be
increased from the original 10% proposed, to 15% and also indicated
that it was of the view that Northam would not be recognised as an
HDSA controlled company for the purposes of the Minerals and Petroleum
Resources Development Act as less than the minimum required percentage
of the company`s issued shares was held by HDSA entities.
3.4 Ndowana Exploration Joint Venture
In terms of the Shareholders Agreement signed on 17 July 2002 the
company secured a 33,3% interest in a joint venture with De Beers to
undertake primary kimberlite exploration in a defined area of the
Limpopo and Mpumalanga Provinces. During the period under review the
company funded R704 000 as its contribution to its 33,3% share in the
joint venture expenditure.
3.5 GFL Mining Services Limited (`Gold Fields`)
Mvela acquired, in terms of an agreement which became effective on 1
March 2002, the right but not the obligation to acquire an interest of
between 5% and 15% in the beneficial interest and a corresponding
share of the obligations, of Gold Fields in the development, financing
or construction of any precious metal mine which is developed by Gold
Fields in Africa after 1 March 2002.
In addition to the initial grant of options to subscribe for 380 102
shares in Mvela Resources at a strike price of R26.30, Gold Fields
was, in terms of its agreement with Mvela Resources, granted an
additional 373 435 options to subscribe for shares in Mvela at a
strike price of R19.34 on 5 May 2003 and 521 812 shares in Mvela
Resources at a strike price of R25.03 on 30 May 2004. The number of
options was calculated with reference to one half of the exploration
costs incurred by Gold Fields on those projects in Africa, which are
covered by the agreement during the twelve-month periods to 28
February 2003 and 28 February 2004.
3.6 Dwaalkop (SouthernEra Resources)
The company entered into a formal agreement with SouthernEra Resources
on 9 October 2002 whereby the company acquired a 50% interest in the
exploitation of platinum group metals (`PGMs`) on certain properties
which adjoin the Messina Platinum Mines Limited mining area.
Prospecting rights in respect of the project were granted on 3 July
2003 and an infill drilling programme, comprising an estimated 17 240
metres of core drilling has commenced. The results to date of this
programme have been encouraging and it is currently estimated that the
project contains 9,94 million oz of PGM resources. A feasibility
study, to bankable standards, will be undertaken.
4. SCHEME OF ARRANGEMENT
At a scheme meeting, a general meeting of linked unit holders (in their
capacity as holders of ordinary shares) and the meeting of linked units
holders (in their capacity as holders of debentures) dated 24 October 2003
the following was approved by the requisite majority.
* The scheme of arrangement in terms of Section 311 of the Companies
Act, No 61 of 1973, as amended, between the company and its linked
unit holders in their capacity as holders of variable rate debentures
with a nominal value of 1 cent each.
* All resolutions proposed at the general meeting and at the debenture
holders` meeting as detailed in the circular dated 26 September 2003.
In terms of the scheme, shareholders redeemed their debentures in
consideration for R11,50467 (rounded to five decimal places), which
redemption amount was compulsorily utilised to settle the subscription
price of each ordinary share issued pursuant to the scheme of R11,50467
(rounded to five decimal places).
Thereafter, in order to maintain the same number of listed instruments as
were in issue prior to the scheme, the ordinary shares were consolidated so
that each linked unit holder received one ordinary share having a par value
of 2 cents each for every linked unit held.
On Tuesday, 4 November 2003 the scheme of arrangement was sanctioned by the
High Court of South Africa (Witwatersrand Local Division) and registered on
5 November 2003 with the Registrar of Companies.
The listing of the linked units on the JSE Securities Exchange was
suspended at the commencement of trading on Monday, 17 November 2003 and
terminated at the commencement of trading on Monday, 24 November 2003.
Trading in the shares on the JSE commenced on Monday, 17 November 2003.
5. EMPOWERMENT STATUS
A consequence of the private equity placement in the Gold Fields
transaction, is the dilution of HDSA ownership from 51% to 29%, based on
current issued share capital. A minimum HDSA ownership level of 26% and
HDSA control is required to confer continued empowerment status on Mvela
Resources. By virtue of its current ownership levels, HDSA board
representation and management agreement with Mvela Holdings, the company
thus meets the requirements.
6. RECONSTITUTION OF THE BOARD AND MANAGEMENT APPOINTMENTS
In the interests of good corporate governance and as required by covenants
related to the various transactions carried out by the company and the
Companies Act, the board of directors of Mvela Resources has been
reconstituted. Five new non-executive directors have been appointed being O
Mabandla, M Mtshotshisa, P Ncholo, R Ramaite and M Beckett and three new
executive directors, namely LN Angel (Chief executive of Mvela Resources),
PC Pienaar and C Johnson. Mr BR van Rooyen has now been appointed an
executive director and Mr WJDI Scott has resigned from the board of
directors.
7. THE MVELAPHANDA HOLDINGS (PTY) LIMITED (`Mvela Holdings`) TRANSACTION
In an announcement on 27 November 2003, Mvela Resources announced that it
had reached an agreement with Mvela Holdings, in terms of which Mvela
Resources would acquire participation rights in future mining projects
offered to Mvela Resources held by Mvela Holdings, from Mvela Holdings. The
consideration paid in respect of these rights was settled by way of an
issue of 2 550 000 ordinary shares at R23,50, being the ruling market price
at the effective date of the transaction on 4 December 2003. For accounting
purposes this transaction has been treated as a non-cash expense in the
income statement.
8. INCREASE IN AUTHORISED SHARE CAPITAL
To facilitate the Specific Issue and the Greenshoe Specific Issue and the
ability of the Company to fulfil its obligations in terms of the Mvela
Resources Warrant, authority was obtained at the General Ordinary
Shareholders Meeting on 8 March 2004, to increase the authorised ordinary
share capital of Mvela Resources from 129 200 000 Ordinary Shares to 250
000 000 Ordinary Shares. The Preference Shares were also cancelled at the
same meeting.
9. INCREASE IN ISSUED SHARE CAPITAL
During the period under review the company increased its issued share
capital as follows:
* To Mvela Holdings in settlement of certain rights, 2 550 000 at
R23.50.
* To Khumama shareholders for the share capital and loans, 9 274 527 at
R24.26
* Private placement for cash from domestic and international markets, 77
826 100 at R23.00.
* Private placement of over allotment, 7 781 900 at R23.00.
10. ADOPTION OF NEW ARTICLES
In light of the change in Mvela Resources` capital structure from linked
units to ordinary shares pursuant to the implementation of the Gold Fields
transaction and in order to incorporate recent amendments to the Act and
the JSE Listings Requirements, Mvela Resources has adopted new Articles of
Association. The new articles were adopted at the General Meeting held on 8
March 2004.
11. DIVIDENDS
Further acquisitive and organic growth opportunities are likely to arise
for Mvela Resources in the coming period. As such, the Directors have
elected not to pay a dividend for the six-month period to 31 March 2004.
12. PROSPECTS
The Mineral and Petroleum Resources Development Act has created
opportunities for HDSA mining companies such as Mvela Resources to play a
role in the transformation of the South African mining sector. Mvela
Resources has the financial capacity and management expertise which should
advantageously position it to participate in future BEE mining
transactions. Management will continue to seek and evaluate growth
opportunities which will enhance stakeholder value in the short to medium
term with exploration joint ventures expected to add longer term value.
For and on behalf of the board
TMG Sexwale LN Angel
Chairman Chief Executive Officer
Directors:
TMG Sexwale (Chairman), LN Angel* (Chief Executive Officer), PC Pienaar*,
C Johnson*, BR van Rooyen*, M Beckett (British), O Mabandla, E Molobi,
M Mtshotshisa, P Ncholo, R Ramaite, RB Shead, MJ Willcox, MSM Xayiya
*Executive Directors
03 June 2004
Date: 03/06/2004 03:18:31 PM Produced by the JSE SENS Department
