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Metorex - Consolidated unaudited interim results for the period ended 31
December 2004
Metorex Limited
Registration number 1934/005478/06
Incorporated in RSA
JSE alpha code MTX
ISIN ZAE000022745
Issuer code MEMTX
Listed on the JSE Securities Exchange South Africa and London Stock Exchange
Consolidated unaudited interim results for the period ended 31 December 2004
Ruashi feasibility study yields encouraging results
Coal major revenue/profit contributor
Cash generated increases by 44% to R71,9 million from R50,1 million
Interest-bearing debt reduces by R46 million to R115 million
Debt/Equity ratio improves to 31% from 38%
Group restructuring and repositioning nearing completion
Consolidated income statement
Six months Six months
31 December 31 December
2004 2003
(Unaudited) (Unaudited)
R000 R000
Revenue - mineral sales
Copper 43 012 31 510
Coal 186 039 95 626
Fluorspar 48 729 50 473
Gold - Barberton 148 124 175 007
Gold - other 31 486 29 484
Antimony 44 084 41 770
Other 788 3 349
Gross revenue 502 262 427 219
Realisation costs 38 129 43 375
On-mine revenue 464 133 383 844
Cost of production 425 792 367 269
Operating costs 401 348 344 142
Depreciation 24 444 23 127
Mining profit 38 341 16 575
Discontinued operations (9 600) (14 731)
Other income 484 1 541
Income before finance costs 29 225 3 385
Finance income 282 3 311
Finance costs (8 039) (17 133)
Income/(loss) before taxation 21 468 (10 437)
Taxation - normal and STC 2 353 1 753
Taxation - deferred 8 087 3 257
Income/(loss) after taxation 11 028 (15 447)
Income attributable to outside
shareholders 3 060 6 190
Income/(loss) attributable to ordinary
shareholders 7 968 (21 637)
Basic earnings per share (cents) 4,24 (12,36)
Diluted earnings per share (cents) 4,24 (12,36)
Headline earnings per share (cents) 7,17 (3,49)
Diluted headline earnings
per share (cents) 7,17 (3,49)
Dividend per share (cents) - 3,0
Income/(loss) attributable to ordinary
shareholders 7 968 (21 637)
Profit on sale of assets (4 090) (1 030)
Discontinued operations 9 600 14 731
Goodwill amortisation - 1 830
Headline earnings 13 478 (6 106)
Weighted average shares in issue (000`s) 187 874 175 019
Number of shares in issue at end
of period (000`s) 188 098 175 019
Consolidated cash flow statement
Six months Six months
31 December 31 December
2004 2003
(Unaudited) (Unaudited)
R000 R000
Cash generated before working
capital changes 53 669 34 395
Working capital changes 18 227 15 686
Cash generated by operations 71 896 50 081
Taxation (paid)/refunded (2 930) 2 592
Dividends paid (1 500) (6 631)
Net finance costs (7 757) (12 870)
Cash inflow from operating activities 59 709 33 172
Cash outflow from investing activities (38 384) (21 351)
Cash outflow from financing activities (35 509) (22 043)
Net decrease in cash and cash equivalents (14 184) (10 222)
Net cash balance at beginning of period (1 041) (2 056)
Effect of foreign exchange rate changes (102) (39)
Cash equivalents at end of period (15 327) (12 317)
Commodity sales statistics
Six months Six months
31 December 31 December
2004 2003
Copper (t) 2 383 2 435
Coal - local (t) 1 136 029 737 644
Coal - Eskom (t) 722 060 -
Fluorspar (all grades) (dmt) 56 502 66 191
Gold - Barberton Mines (kg) 1 561 1 747
Gold - other (kg) 381 370
Antimony (mtu) 239 429 263 049
Commodity prices achieved (averaged)
Six months Six months
31 December 31 December
2004 2003
Copper ($/t) 2 893 1 823
Coal - local (R/t) 147 130
Coal - Eskom (R/t) 26 n/a
Fluorspar (all grades) ($/t) 138 107
Gold - Barberton Mines ($/oz) 473 439
Gold - other ($/oz) 412 359
Antimony ($/mtu) 30 22
Exchange rate (average) (R/$) 6,2 7,1
Consolidated balance sheet
31 December 30 June
2004 2004
(Unaudited) (Audited)
R000 R000
ASSETS
Non-current assets
Property, plant and equipment 503 751 495 742
Mineral rights 202 010 218 527
Goodwill 18 309 18 309
Investments 7 501 891
Deferred tax asset 38 684 40 441
Rehabilitation trust funds 43 421 44 374
813 676 818 284
Current assets
Inventories 51 730 37 246
Trade and other receivables 114 349 166 276
Taxation prepaid 4 759 4 829
Bank balances and cash 21 330 29 530
192 168 237 881
Total assets 1 005 844 1 056 165
EQUITY AND LIABILITIES
Capital and reserves
Ordinary share capital and premium 503 753 501 811
Hedging and translation reserve (60 017) (50 750)
Retained income 104 428 96 460
Reverse acquisition reserve (128 066) (128 066)
420 098 419 455
Minority interest 127 158 118 960
Non-current liabilities
Long-term borrowings - interest bearing 71 653 95 826
Long-term provisions 71 431 74 109
Deferred tax liabilities 67 946 67 895
211 030 237 830
Current liabilities
Trade and other payables 139 575 150 301
Short-term borrowings - interest bearing 43 121 64 306
Short-term provisions 27 689 33 579
Bank overdraft 36 657 30 571
Taxation 516 1 163
247 558 279 920
Total equity and liabilities 1 005 844 1 056 165
Net asset value per share (cents) 223 224
Net tangible asset value per share (cents) 214 214
Statement of changes in equity
Six months Six months
31 December 31 December
2004 2003
(Unaudited) (Unaudited)
R000 R000
Shareholder` equity at start of period 419 455 428 816
Ordinary shares issued 1 942 -
Hedging and translation reserve (9 267) (25 267)
Net income/(loss) for the period 7 968 (21 637)
Dividends distributed - (5 251)
420 098 376 661
COMMENTARY
The Group has had a pleasing six months with improved earnings and Group
restructuring, the main features being:
1. The conclusion of the Ruashi/Etoile feasibility study with encouraging
results;
2. The first full six months of operations at Middelburg Townlands coal
colliery;
3. A 44% increase in cash generation;
4. A significant reduction in interest bearing debt;
5. The sale of two non-core operations, being Metmin Manganese Mine and the
Perkoa Zinc project in Burkina Faso and successful closure of the O`Okiep
and Maranda operations.
OPERATING PERFORMANCE
The Group`s revenue for the six months was significantly attributable to the
doubling of coal sales. While other revenues were enhanced by increased
commodity prices, the strength of the Rand/Dollar exchange rate, which averaged
USD1/ZAR6,2 (7,1) for the period, negated the full benefit of these increased
prices.
Vergenoeg fluorspar mine continued to improve product qualities, the result of
which has been increased prices and a full order book for 2005.
Chibuluma West mine continued to operate during the period albeit at reducing
volumes. This mine will cease operations during the forthcoming six months as
the Chibuluma South Mine builds up production.
Barberton and Consolidated Murchison both experienced lower headgrades during
the period.
Expenditure relating to discontinued operations (O`Okiep and Maranda) amounted
to R9,6 million and the disposal of non-core operations generated a profit of
R4,1 million during the period.
FINANCIAL POSITION AND CASH FLOW
The Group`s net asset value increased to R420,1 million from 30 June 2004, which
was negatively affected by a R9,3 million conversion of the Chibuluma balance
sheet at a closing exchange rate of US$1/ZAR5,7.
Interest bearing debt reduced by R46 million, which arose from applying the
surplus derived from early closure of a portion of the Barberton Mines gold
hedges to outstanding debt. The early repayment of debt and lower interest rates
reduced the finance charges by 53% from the comparable period.
The increase in total operating costs of 17% was mainly due to increased volumes
of coal production and the inclusion of a full six month period of Middelburg
Townlands Colliery.
Cash generated from operations increased to R71,9 million for the six months
from R50,1 million during the previous period. The cash generated was largely
applied to the Group capital programs and debt servicing.
CURRENT DEVELOPMENTS
Ruashi/Etoile Project
The documentation and supporting independent reports required for the Circular
to Shareholders are nearing completion with distribution planned during March
2005. Further technical evaluation work has been carried out, which augments the
previously established robust nature of the project. Meetings with Gecamines and
local government have taken place, site inspections and data evaluation has
occurred and plant relocation planning has commenced. Metorex has also acquired
Sable Zinc (Pty) Limited, which owns a Leach/Electrowinning plant situated in
Zambia, which is to be converted to treat the copper/cobalt concentrate produced
at Ruashi.
Metorex is seeking to raise approximately US$40 million through a private
placing to finance this capital project.
Chibuluma South
The Chibuluma South decline shaft is expected to become operational early in the
final quarter of the current financial year with production building up to
design capacity of 40 000 tons per month during the following twelve months. The
orebody intersection and ongoing development is progressing with production
being sourced through the ventilation shaft. The poor ground conditions in the
decline shaft will increase the capital development cost by approximately 10%.
FUTURE PROSPECTS
Whilst the Group`s exposure to sustained strength of the Rand/Dollar exchange
rate has reduced with the rationalisation that has been implemented during the
past six months, management`s focus on improved productivity from the operations
is continuing.
Finalisation of the fund raising for the Ruashi project is expected to be
complete during March 2005, site establishment and plant relocation and
construction will follow immediately thereafter.
Subject to continued firm commodity prices being sustainable for the forthcoming
year, it augers well for the production buildup at Chibuluma South.
Ongoing regional exploration programs are continuing at Barberton and
Consolidated Murchison to increase the ore resources and extend the lives of
those mines.
BOARD OF DIRECTORS
Mr. Jan Vestrum has decided to resign from the board of directors to focus his
attention on developing the Crew Group of Companies and Mr. Tony Trollip, after
having served on the Metorex board for 30 years has decided to retire. The Group
appreciates the advice and support it has received from these directors.
The Company welcomes to the board Mr. Rob Still as an independent, non-executive
director and Mr. Edward Legg as an executive director.
SAFETY
The Group strives to conduct its activities with due regard to the safety and
health of its employees and is pleased to report that no fatalities occurred
during the period ended 31 December 2004.
CAPITAL EXPENDITURE AND COMMITMENTS
Group capital expenditure totalled R36,4 million (2003: R42,2 million), which
mainly related to the Chibuluma South project. This project is funded by the
IDC and Metorex in predetermined ratios and constitutes an equity investment
with no interest charges or repayment terms.
Contracted capital commitments at 31 December 2004 amounted to R11,9 million
(2003: R98,1 million), whilst uncontracted commitments amounted to R33,6 million
(2003: R45,9 million).
Operating lease commitments, which fall due within the next year, amount to R4,3
million (2003: R2,2 million), whilst commitments of R10,8 million (2003: R3,3
million) fall due in years two to five.
SHARES ISSUED
Metorex Limited issued a further 864 537 shares at an average price of 225 cents
per share to acquire an increased shareholding in Ruashi Holdings (Pty) Limited.
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 2004, except for the application of IFRS 3: Business Combinations.
Comparative figures on the consolidated income statement have been reclassified
to reflect the comparable losses from discontinued operations.
These interim results have not been audited or reviewed by the Company`s
auditors.
By order of the board
A S MALONE
Chairman
C D S NEEDHAM
Financial Director
15 February 2005
Contact details for Metorex Limited:
Postal: PO Box 2814
Saxonwold 2132
South Africa
Telephone (+27 11) 880-3155
Facsimile (+27 11) 880-3322
Transfer Secretaries:
Ultra Registrars (Pty) Limited
11 Diagonal Street
Johannesburg 2001
South Africa
Telephone (+27 11) 834-2266
Capita Group plc:
The Registry
34 Beckenham Road
Beckenham
Kent
BR 34TU
England
Telephone +44 (208) 639-2157
Secretaries:
Moore Stephens MWM Inc.
7 West Street
Houghton 2198
South Africa
Telephone (+27 11) 728-7240
Sponsor:
Barnard Jacobs Mellet Corporate Finance (Pty) Limited
PO Box 62200
Marshalltown 2107
Telephone (+27 11) 283-0300
Auditors:
Deloitte & Touche
Private Bag X6
Gallo Manor 2052
South Africa
Telephone (+27 11) 806-5000
ADR Programme - North America and Canada:
The Bank of New York
101 Barclay Street
New York NY 10286
USA
Telephone +1 212 815 5133
website: www.metorexgroup.com
e-mail: ir@metorexgroup.com
Date: 15/02/2005 04:00:13 PM
Produced by the JSE SENS Department
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