| Fri 1 Jul 2005, 9:42 | | Results For The Year Ended 31 December 2004 |
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Messina - Abriged Audited Results For The Year Ended 31 December 2004
Messina Limited
and its subsidiary
(Registration number 1950/035912/06)
Share code: MES ISIN: ZAE000004438
(`Messina` or `the company`)
Abriged Audited Results For The Year Ended 31 December 2004
Condensed Consolidated Income Statements
For the years ended 31 December
2004 2003
R`000 R`000
Revenue 276 131 65 747
Cost of sales (274 138) (72 255)
Gross profit/(loss) 1 993 (6 508)
Other operating income 45 080 1 881
Distribution expenses (7 220) (2 031)
Administrative expenses (42 555) (14 126)
Other operating expenses (113 987) (29 313)
Loss from operations (116 689) (50 097)
Net finance cost (78 748) (23 090)
Loss before tax (195 437) (73 187)
Taxation (365) -
Net loss (195 802) (73 187)
Earnings per share (cents)
- basic (975.59) (437.12)
- headline (972.98) (430.66)
RECONCILIATION OF HEADLINE EARNINGS
Net loss attributable to shareholders (195 802) (73 187)
Adjustments:
Net (profit)/loss on disposal of assets (873) 625
Assets written off 1 397 456
Headline earnings (195 278) (72 106)
Headline earnings per share (cents) (972.98) (430.66)
Weighted average number of ordinary shares
in issue (`000) 20 070 16 743
Condensed Consolidated Balance Sheets at 31 DECEMBER
2004 2003
R`000 R`000
Assets
Non-current Assets 1 093 551 1 128
105
Property, plant and equipment 174 113 208 699
Mining assets and development cost 885 001 902 236
Exploration projects 29 090 16 492
Investments 5 347 678
Current Assets 66 331 70 133
Inventories 10 767 7 960
Receivables and pre-payments 48 735 61 036
Cash and cash equivalents 6 829 1 137
1 159 882 1 198
238
Equity and Liabilities
Capital and Reserves 232 859 428 661
Ordinary shares 10 035 10 035
Share premium 442 384 442 384
Reserves (219 560) (23 758)
Non-current Liabilities 452 497 435 244
Ultimate shareholder`s loan 391 001 53 914
Loan from fellow subsidiary 45 976 -
Interest bearing borrowings 5 448 372 127
Environmental obligation provision 10 072 9 203
Current Liabilities 474 526 334 333
Trade and other payables 91 076 110 393
Current portion of borrowings 383 019 106 852
Bank overdraft 431 117 088
1 159 882 1 198
238
Net asset value per share (rand) 11.60 21.36
Number of shares in issue (000`s) 20 070 20 070
Consolidated Statement of Changes in Equity
For the year ended 31 December 2004
Capital
Share Share Redemption Retained
Capital Premium Reserve Earnings Total
R`000 R`000 R`000 R`000 R`000
Balance at
1 January 10 035 442 384 2 002 (25 760) (23 758)
2004
Loss for (195 802) (195 802)
the year
Balance at
31 December 10 035 442 384 2 002 (221 562) (219 560)
2004
Condensed Consolidated Cash Flow Statements
for the years ended 31 December
2004 2003
R`000 R`000
Cash flows from operating activities
Loss before tax (195 437) (73 187)
Adjustment for:
Net finance cost 78 748 23 090
Depreciation 20 226 4 629
Amortisation 75 906 19 554
Unrealised foreign exchange gains (44 026) (1 194)
(Profit)/loss from disposal of assets (873) 169
Assets written off 1 397 456
Loss from operations (64 059) (26 483)
Changes in working capital (10 908) (13 441)
(Increase)/decrease in inventories (2 807) 943
(Increase)/decrease in receivables and
pre-payments 11 581 (27 006)
Increase/(decrease) in trade and other (19 682) 12 622
payables
Net finance cost (75 232) (21 656)
Net cash flow from operating activities (150 199) (61 580)
Cash outflows from investment activities (61 382) (271 814)
Purchase of property, plant and equipment (1 774) (9 808)
Proceeds from disposal of property,
plant and equipment 2 499 804
Increase in mining assets and development (44 163) (246 317)
cost
Increase in exploration projects (12 598) (16 492)
(Increase)/decrease in non-current (5 346) (1)
investments
Cash inflows from financing activities 333 930 313 160
Ultimate shareholder`s loan
Increase during the year 377 597 207 631
Converted to ordinary shares - (207 809)
Proceeds from issue of ordinary shares - 269 347
Increase in loan from fellow subsidiary 45 976 -
Increase/(decrease) in interest bearing
Borrowings (90 512) 43 232
Increase in environmental obligation 869 759
Net (decrease)/increase in cash and
cash equivalents 122 349 (20 234)
Cash and cash equivalents at beginning of (115 951) (95 717)
year
Cash and cash equivalents at end of year 6 398 (115 951)
Notes to the Abridged Audited Results
Review of operations
At the Messina Platinum Phase 1 Mine (Voorspoed Section) steady progress
continued during the period under review, with production coming from the 200,
275 and 350 metre levels. Production was below expectations as a consequence of
a number of human resources related factors, including illegal industrial action
in late May, the impact of the implementation of continuous operations and
continuing labour inefficiencies as a result of the relative inexperience of the
workforce. Messina produced approximately
2 671 (2003 - 1 760) kg`s 5 PGE`s plus gold from approximately 766 270 (2003 -
311 414) tonnes milled. The average head grade for the period was 3.97 (2003 -
4.15) grams per tonne (5 PGE`s + Au) and the plant recoveries were 88.5 (2003 -
85) percent.
The results for the year reflect a headline loss per share of 973 cents
primarily due to the continued strength of the Rand and the mine still being in
a build up stage to full production, expected to be achieved during 2005.
Over the past three and a half years since production at the mine commenced, the
mine`s management team has sought continuous improvements as its knowledge of
the orebody has improved. The materially lower levels of faulting of the reefs
compared to what was anticipated in the 2000 feasibility study, resulted in a
decision to trial conventional long-hole stoping, which was undertaken on the
Merensky reef on the 275 meter level. Based on this experience, Messina is now
implementing mechanised long-hole stoping on the lower levels of the mine.
Compared to conventional down-dip stoping, which is the primary mining method on
the three upper levels, mechanised long-hole stoping is a safer, more efficient
and less costly mining method.
Development to support the build-up to full production is progressing well on
the new 370 and 390-meter sub-levels. These levels have been designed to support
mechanised long-hole stoping. During the period under review, the first long-
hole blast was taken on the UG2 reef between the 350 and 370 meter levels.
Results from this blast exceeded expectation with the hanging and footwalls
holding up well and very satisfactory fragmentation being achieved. The long-
hole drilling and blasting on these new levels is now being implemented on an
accelerated basis.
The activities described above have been funded by extended advances made and
guarantees given by the company`s ultimate holding company, Southern Platinum
Corp. (`SouthPlats`) (previously the platinum division of SouthernEra Resources
Limited) of Canada, which holds a 91.5% equity interest in the company.
During the fourth quarter we exceeded our 80 000 tonne per month target and in
November also reported our first operating profit at Messina despite the
continuing strength of the South African Rand. By the end of 2005 approximately
70 percent of the Phase 1 mine`s production will come from long-hole mining and
Messina will have developed into one of the largest mechanised underground
platinum mining operations in South Africa. This lays a strong foundation for
our eventual growth at the 17 million ounce Phase 2 project at the Greater
Messina (the company`s Doornvlei area and the SouthPlats/Mvelaphanda Joint
Venture on the neighbouring Dwaalkop).
Debt
Short-term liabilities are principally made up of structured borrowings advanced
by the company`s bankers and are secured over the assets of the company. Other
debt, including the shareholder`s loan from SouthPlats, is subordinate to bank
debt. Overdraft facilities advanced to the company are secured by issue of
guarantees, supported by cash on deposit, in favour of the company`s bankers,
made by SouthPlats.
During the foreseeable period of production build up at the Voorspoed section,
the company is and will continue to remain dependent upon the continued
financial support of SouthPlats and the company`s bankers as well as the
successful conclusion of the Lonmin transaction; SouthPlats having warranted
such support as may be necessary to preserve the going concern status of the
company.
Directors
During the year under review Mr WM Eksteen retired from the board. In February
2005 Messrs A MacPhee and MW Rosslee were appointed as executive directors of
the company.
Subsequent events
Subsequent to the year ended 31 December 2004, the RMB consortium has deferred
the principal portion of the February 2005 payment of R44 million. The R26
million interest portion of the February payment was met through an inter-
company facility between SouthPlats and Messina Platinum. Under the deferral
agreement, the RMB consortium has been paid a fee of one million SouthPlats
warrants with an exercise price of C$2.15. Upon presentation to SouthPlats and
Messina Platinum of a proposal to restructure the balance of Messina`s
outstanding project debt, a further fee of one million warrants (with the same
exercise price) shall be payable to the RMB consortium.
Shareholders were advised in March 2005 that Lonmin Plc (`Lonmin`) and
SouthPlats have entered into an agreement pursuant to which Lonmin will offer to
acquire the outstanding common shares of SouthPlats (the company`s ultimate
holding company). The total cost of the acquisition of SouthPlats will be US$263
million comprising the equity value of US$190 million, acquired debt of US$58
million and the Implats contract of US$15 million. The transaction has since
been successfully concluded.
Accounting policies adopted by the company in preparing the annual results are
consistent with the policies adopted in the preparation of the company`s
previous year`s financial statements and comply with statements of Generally
Accepted Accounting Practice in South Africa.
The full results of the company have been audited by the company`s auditors,
PricewaterhouseCoopers Inc, as is required by the rules of the JSE Securities
Exchange South Africa. The auditor`s opinion on the full results of the company
containing an emphasis of matter regarding the continued financial support from
the group`s ultimate holding company and its bankers as well as the successful
conclusion of the proposed Lonmin transaction is available for inspection at the
company`s registered office. The audit report on the full results is dated 29
March 2005.
The auditor`s opinion on the abridged results of the company containing the same
matter of emphasis paragraph referred to in the preceding paragraph is also
available for inspection at the company`s registered office. The audit report
on the abridged results is dated 30 June 2005.
For and on behalf of the Board
Mr FJ Grimbeek Mr JN Robinson
Director Director
30 June 2005
The directors for the year under review was as follows:
Dr. CMH Jennings - Chairman (Canadian)*, PC Evans - CEO,
TC Dawson (Canadian)*, LJ Fox (USA)*, A MacPhee (UK),
RR Mphahlele+, MW Rosslee
(* non-executive) (+ independent)
Subsequent to the conclusion of the Lonmin transaction the above mentioned
directors resigned (effective 14 June 2005) and the following directors have
been appointed to the board of Messina:
BA Mills - Executive Chairman (American), IP Farmer (British, JF Grimbeek, RR
Mphahlele, JN Robinson (British) and AG Ross (Canadian).
Sponsor:
Rand Merchant Bank (A division of FirstRand Bank Limited)
Corporate Finance
Secretary and registered office Transfer secretaries
P McElligott Computershare Investor Services
17 Georgian Crescent 2004 (Pty) Limited
Bryanston East, 2152 70 Marshall Street
Johannesburg Johannesburg 2001
(PO Box 98811, (PO Box 61051,
Bryanston East, 2152) Marshalltown, 2000)
Date: 01/07/2005 09:26:36 AM
Produced by the JSE SENS Department
