| Wed 3 Aug 2005, 8:27 | | Results for 6 months ended 30 June 2005 |
|
KUMBA RESOURCES LIMITED
Incorporated in the Republic of South Africa
(Registration Number: 2000/011076/06)
Share Code: KMB
ISIN Number: ZAE000034310
("Kumba")
Reviewed Group Interim Financial Results and Physical Information
for 6 months ended 30 June 2005
* Sustained excellent operational performance
* Buoyant commodity prices
* Strong cash flow
* Headline earnings per share up 200%
* Major expansion projects under way
* Interim dividend of 160 cents per share
* Special dividend of 220 cents per share
GROUP INCOME STATEMENT
6-months 6-months 18-months
ended ended ended
30 June 30 June 31 Dec
2005 2004 2004
Restated Restated
Reviewed Reviewed Audited
Rm Rm Rm
Revenue 5 286 4 333 12 600
Operating expenses (3 775) (3 726) (10 755)
Net operating profit 1 511 607 1 845
Net financing costs (145) (145) (424)
Share of income/(losses) from 2 (20) (42)
equity accounted investments
Profit before taxation (Note 2) 1 368 442 1 379
Taxation (381) (155) (425)
Profit for the period 987 287 954
Attributable to:
Equity holders of the parent 954 243 889
Minority interest 33 44 65
987 287 954
Ordinary shares (million)
- in issue 304 302 302
- weighted average number of 303 298 300
shares
- diluted weighted average 309 300 302
number of shares
Attributable earnings per share
(cents)
- basic as previously reported 315 88 314
- basic restated 82 296
- diluted as previously 309 87 312
reported
- diluted restated 81 295
Dividend paid per share (cents) 90 60
in respect of the previous
financial year
Dividend paid per share (cents) 20
in respect of the first interim
period
Dividend declared per share 160 35 35
(cents) in respect of this
interim period
Final dividend declared per 90
share (cents) in respect of the
18-month period
Special dividend (cents) 220
RECONCILIATION OF HEADLINE
EARNINGS
Profit for the period 954 243 889
attributable to the equity
holders of the parent
Adjusted for:
- Impairment charges 7 32 35
- Share of associates goodwill 14 27
- Goodwill amortisation (2) (6)
- Share of associates 6 20
exceptionals
- Net deficit/(surplus) on 2 (4) 48
disposal or scrapping of
property, plant and equipment
- Net deficit/(surplus) on 1 (72)
disposal of investment in joint
ventures and associates
- Closure cost 2 35 35
- Taxation effect of (2) (8) (12)
adjustments
Headline earnings 963 317 964
Headline earnings per share
(cents)
- basic as previously reported 318 113 339
- basic restated 106 321
- diluted as previously 312 112 337
reported
- diluted restated 106 319
GROUP BALANCE SHEET
As at As at As at
30 June 30 June 31 Dec
2005 2004 2004
Restated Restated
Reviewed Reviewed Audited
Rm Rm Rm
ASSETS
Non-current assets
Property, plant and equipment 8 652 8 319 8 476
Biological assets 30 31 31
Intangible assets 91 71 71
Goodwill (Note 6) (50) (53)
Investments in associates (Note
11)
- listed 12 6
- unlisted 95 77 79
Deferred taxation (Note 8) 398 243 243
Other financial assets 367 300 286
9 633 9 003 9 139
Current assets
Inventories 1 414 1 349 1 348
Trade and other receivables 1 667 1 306 1 365
Cash and cash equivalents 2 003 1 274 1 297
5 084 3 929 4 010
Total assets 14 717 12 932 13 149
EQUITY AND LIABILITIES
Capital and reserves
Ordinary shareholders' funds 6 332 5 031 5 272
Minority interest 1 312 1 151 1 197
Total shareholders' funds 7 644 6 182 6 469
Non-current liabilities
Interest-bearing borrowings 2 524 2 759 2 331
Other long-term payables 596 570 609
Non-current provisions (Note 7) 690 533 599
Financial liabilities 29
Deferred taxation 1 194 978 1 042
5 004 4 869 4 581
Current liabilities
Trade and other payables 1 054 1 023 1 061
Interest-bearing borrowings 741 689 836
Taxation 256 155 182
Current provisions 18 14 20
2 069 1 881 2 099
Total equity and liabilities 14 717 12 932 13 149
Net debt 1 262 2 174 1 870
Net asset value per share 2 083 1 666 1 746
(cents)
Capital expenditure
- incurred 299 438 1 396
- contracted 1 359 486 219
- authorised but not contracted 2 558 621 668
Contingent liabilities 40 88 36
Operating lease commitments 167 194 167
Operating sublease rentals 29 28
receivable
GROUP CASH FLOW
6-months 6-months 18-months
ended ended ended
30 June 30 June 31 Dec
2005 2004 2004
Restated Restated
Reviewed Reviewed Audited
Rm Rm Rm
Net cash flows from operating 1 460 934 2 661
activities
Net financing costs (125) (129) (355)
Taxation paid (279) (31) (313)
Dividends paid in respect of (284) (64) (361)
the previous financial period
Net cash used in investing
activities
- capital expenditure (299) (438) (1 396)
- proceeds from disposal of 8 20 138
property, plant and equipment
- proceeds from disposal of 100
associate
- acquisition of joint ventures (5)
and associates
- other 244 (116) (159)
Net cash inflow 725 171 315
Net cash flow from financing
activities
- cash flows from issue of 54 132
shares
- borrowings (redeemed)/raised (73) 74 (126)
Net increase in cash and cash 706 245 321
equivalents
Increase in cash and cash 39 14 12
equivalents due to
proportionate consolidation of
joint ventures (Note 9)
Cash and cash equivalents at 1 258 1 015 964
beginning of period
Cash and cash equivalents at 2 003 1 274 1 297
end of period
GROUP STATEMENT OF CHANGES IN EQUITY
6-months 6-months 18-months
ended ended ended
30 June 30 June 31 Dec
2005 2004 2004
Restated Restated
Reviewed Reviewed Audited
Rm Rm Rm
Shareholders' funds at 5 353 5 015 4 895
beginning of period as
previously reported
Minority interest opening 1 110 1 226 1 191
balance
Prior year adjustment
- Environmental rehabilitation (174) (158) (151)
provision (Note 7)
- Deferred tax asset (Note 8) 93 93 93
- Deferred tax asset minority 87 87 87
interest (Note 8)
IFRS adjustments
- Negative goodwill adjustment 53
(Note 6)
- Decommissioning asset 7
restated
Adjusted shareholders' funds at 6 529 6 263 6 115
beginning of period
Changes in share capital and
premium
- issue of shares
- share premium* 54 132
- shares issued to Management 18 33
Share Trust
Changes in non-distributable
reserves
- currency translation 271 (30) (301)
differences
- financial instruments (37) (99) 10
movements
- realised in associate and (5) (11)
joint venture
- share-based payment charges 15 11 30
for the period
- transfer of attributable (20)
reserves of equity accounted
investments (Note 10)
- treasury shares 16
- transfer to capital 4
redemption reserve
- transfer of insurance reserve (5)
- transfer to retained income (5) (9)
Changes in minority interest
- currency translation 187 (148) (133)
differences
- income charge for the period 33 44 65
- minority share of reserve (94) (53) 4
movements
- minority share of dividends (11) (6) (17)
Changes in retained income
- net profit for the period 954 243 889
- dividends paid (273) (61) (344)
- reduction in dividends paid 2
to Trust
- realised in associate and 5
joint venture
- transfer of attributable 20
reserves of equity accounted
investments (Note 10)
- transfer to capital (4)
redemption reserve
- transfer from translation 5 9
reserve
Shareholders' funds at end of 7 644 6 182 6 469
period
* Issued to the Management Share Option Scheme due to options exercised.
** Dividends declared after this interim period comprise of a special dividend
of 220 cents and an interim dividend of 160 cents per share. STC at 12,5% is
payable.
NOTES TO THE REVIEWED FINANCIAL STATEMENTS
1. Basis of preparation
The interim financial results are prepared in accordance with
International Accounting Standard 34 on Interim Financial
Reporting and should be read in conjunction with the 2004
financial statements. The accounting policies adopted are
consistent with those applied in the annual financial
statements for the period ended 31 December 2004 except for
the changes noted in note 5, 6, 7, 8, 9 and 10. Where
applicable prior years have been adjusted.
6-months 6-months 18-months
ended ended ended
30 June 30 June 31 Dec 2004
2005 2004
Restated Restated
Reviewed Reviewed Audited
Rm Rm Rm
2. Profit before taxation
is arrived at after
- depreciation and (404) (321) (977)
amortisation of
intangible assets
- financing costs (278) (159) (471)
- interest received 133 14 47
- net realised foreign
exchange gains/(losses)
on:
currency exchange 169 (40) (210)
differences
revaluation of (60) 37 173
derivative instruments
- net unrealised foreign
exchange (losses)/gains
on:
currency exchange (26) 68 121
differences
revaluation of 66 (55) (124)
derivative instruments
- fair value adjustment 54 9 29
on financial assets
- fair value adjustment (1) (12) (5)
on financial liabilities
- impairment charges (7) (32) (35)
(Note 3)
- goodwill amortisation 2 6
- net surplus on (1) 72
disposal of investments
in joint ventures and
associates
- net (deficit)/surplus (2) 4 (48)
on disposal of fixed
assets
- share-based payment (15) (11) (30)
expense (Note 5)
3. Impairment charges
Impairment of cyanide (89)
chemicals plant
Impairment of fixed (1) (15) (15)
assets
Reversal of impairment 90
of shipping assets
Reversal of impairment 1
of other fixed assets
Impairment of intangible (11) (11)
assets
Impairment of (7) (6) (11)
investments
(7) (32) (35)
Taxation effect
(7) (32) (35)
4. Discontinued operation
On 21 April 2004 Ticor
Ltd announced its
intention to discontinue
its chemicals business,
included in the heavy
minerals segment. The
revenue, operating
results, assets,
liabilities and cash
flow of the chemicals
business for the current
and previous periods
are:
Revenue 1 72 217
Expenses 1 59 192
Provision for closure 2 33 35
Provision for impairment 89
Pre-tax loss (2) (22) (102)
Income tax expense 1 (7) 28
Total assets 24 124 76
Total external 4 81 6
liabilities
Cash inflows from 39 2 50
operating activities
5. Share-based payments
As part of the IFRS
improvements project
Kumba adopted IFRS 2
Share-based payments.
The adoption of IFRS 2
is made in accordance
with the transitional
provision of IFRS 2.
Prior years' figures
have been restated. The
amount of the adjustment
for the current and
comparable periods is as
follows:
Income statement impact:
- Reduction of profit 15 11 30
and loss for the period
Balance sheet impact:
- Retained income 49 20 34
decrease
- Equity-settled reserve 49 20 34
increase
The amount of the
adjustment relating to
the 30 June 2003
financial statements is
a decrease of R4 million
in retained income and
an increase of R4
million in equity-
settled reserve.
6. Business combinations
In line with IFRS 3
Business combinations
the carrying value of
previously recognised
negative goodwill at the
beginning of the period
was derecognised and
adjusted against the
opening balance of
retained earnings.
The effect of the
adjustment is as
follows:
No income statement
impact
Balance sheet impact:
Decrease in negative 53
goodwill
Increase in retained 53
income
7. Environmental
rehabilitation provision
A legal and constructive
obligation exists to
provide for
rehabilitation at the
Zincor refinery. The
provision has been
accounted for as a prior
year adjustment to
reflect the existence of
the obligation
originating from
previous periods.
The effect of the
adjustment is as
follows:
Income statement impact:
Increase in finance 8 8 23
charges
Balance sheet impact:
Decrease in retained 182 166 174
income
Increase in provisions 182 166 174
8. Deferred taxation
Sufficient re-
confirmation was
received of Ticor Ltd's
eligibility to claim a
bad debt deduction of
A$130,7 million as at 31
December 2002 resulting
in the subsequent
raising of a deferred
tax asset as a prior
year adjustment.
The effect of the
adjustment is as
follows:
No income statement
impact
Balance sheet impact:
Increase in retained 93 93 93
income
Increase in minority 87 87 87
interest
Increase in deferred tax 180 180 180
asset
9. Interests in joint
ventures
Kumba's majority
shareholder and parent,
Anglo American plc
changed its accounting
policies to be in line
with IFRS with effect 1
January 2005. Anglo
elected to account for
interests in joint
ventures per IAS 31, by
applying the
proportionate
consolidation method. To
be consistent with the
parent entity's policies
Kumba changed its
accounting policy from
the equity accounted
method to the
proportionate
consolidation method.
Prior years' figures
have been restated. This
policy change does not
impact on earnings per
share.
The effect of the change
in accounting policy is
as follows:
Income statement impact:
Increase in net 9 5 20
operating profit
Decrease in income from 9 5 20
equity accounted
investments
Balance sheet impact:
Decrease in investments 20 17 11
in joint ventures
Increase in property, 3 3 3
plant and equipment
Increase in financial 1
assets
Decrease in trade and 20 26 32
other receivables
Increase in cash and 36 39 39
cash equivalents
Increase in non-current 4
interest-bearing
borrowings
Increase in trade and 2
other payables
Decrease in net debt 27 39 39
Cash flow impact:
(Decrease)/increase in (6) 26 29
net cash flows from
operating activities
Increase in taxation 1 2
paid
Increase in borrowings 3
raised
Increase in opening 39 14 12
balance of cash and cash
equivalents
10. Reclassification and
presentation
The group has changed
the following
accounting policies to
be in line with the
accounting policies of
its majority
shareholder and parent,
Anglo American plc:
- The equity accounted
investments' recognised
profits were previously
transferred to a non-
distributable reserve
"Attributable reserves
of equity accounted
investments". The
opening balance of R20
million (2003: R11
million) of this
reserve was transferred
back to distributable
reserves and transfers
to this reserve have
ceased.
- Income from equity
accounted investments
were previously
presented as pre-tax
income, and the tax
shown as part of the
taxation charge. Only
the post-tax share of
equity accounted
profits are now
disclosed. The net
effect on earnings is
zero, however the line-
by-line effect on the
income statement is as
follows:
Decrease in income from 2 5 9
equity accounted
investments
Decrease in taxation 2 5 9
11. Investments
Listed investments in
associates
- market value 31 24
Unlisted investments in
associates
- directors' valuation 172 160 125
Subsequent to the
rights offer by the AST
group together with the
business combination
with Gijima Information
Technologies Afrika
(Pty) Ltd, Kumba no
longer has significant
influence in the newly
formed GijimaAST and
has ceased equity
accounting its
investment effective 3
May 2005
12. Contingent asset
At 30 June 2005 there was a probable inflow of economic
benefits that was contingent on the exercise of an option
held by the Hancock group, Kumba's partner in the Hope Downs
project, that gave it the option to obtain the interest Kumba
had in the Hope Downs project. The option was exercisable by
paying an amount of A$231,4 million on 1 July 2005. If not
paid, the option would have lapsed and Kumba would have
continued as a participant in the project. The settlement was
received on 1 July 2005 but is not reflected in the financial
results ended 30 June 2005. If the A$231,4 million settlement
was accounted for on 30 June 2005 it would have resulted in
an increase in net operating profit of R1 178 million,
taxation of R426 million, attributable earnings per share of
248 cents and net asset value of 245 cents per share. The
transaction is recorded on 1 July 2005 as that was the date
when all conditions precedent were met.
13. Related party transactions
During the period the company and its subsidiaries, in the
ordinary course of business, entered into various sale and
purchase transactions with associates and joint ventures.
These transactions were subject to terms that are no less
favourable than those arranged with third parties.
14. JSE Limited requirements
The interim announcement has been prepared in accordance with
the listings requirements of JSE Limited.
15. Corporate governance
The group complies with the Code of Corporate Practice and
Conduct published in the King II Report on Corporate
Governance.
16. Auditors' review
The interim results have been reviewed by the company's
auditors, Deloitte and Touche. Their unqualified review
opinion is available for inspection at the company's
registered office.
UNAUDITED PHYSICAL INFORMATION ('000 TONNES)
6-months 6-months 18-months 12-months
ended ended ended ended
30 June 30 June 31 Dec 31 Dec
2005 2004 2004 2004
Iron Ore
Production 15 511 15 212 44 952 30 112
Sales
- Export 10 603 10 542 30 762 20 923
- Domestic 4 813 4 741 14 107 9 371
Total 15 416 15 283 44 869 30 294
Coal
Production
- Power station 7 331 6 862 21 829 14 383
- Coking 1 174 1 166 3 486 2 409
- Other 1 441 1 281 3 880 2 652
Total 9 946 9 309 29 195 19 444
Sales
- Eskom 7 436 6 956 21 769 14 356
- Other domestic 2 010 2 043 6 058 4 112
- Export 609 497 1 688 1 090
Total 10 055 9 496 29 515 19 558
Heavy Minerals - Ticor
SA
Production
- Ilmenite 153 130 390 262
- Zircon 24 24 74 49
- Rutile 12 10 29 20
- Pig iron 37 41 85 63
- Scrap pig iron 5 3 11 5
- Chloride slag 56 48 123 96
- Sulphate slag 12 21 60 40
Sales
- Ilmenite 30 67 27
- Zircon 26 28 71 48
- Rutile 9 10 29 17
- Pig iron 29 30 68 58
- Scrap pig iron 6 4 11 8
- Chloride slag 65 42 96 84
- Sulphate slag 20 10 24 24
Heavy Minerals - Ticor
Limited
Production
- Ilmenite 105 116 347 236
- Zircon 17 18 59 38
- Rutile 8 9 26 18
- Synthetic rutile 55 54 168 112
- Leucoxene 5 5 20 11
- Pigment 26 26 78 53
Sales
- Ilmenite 10 20 52 30
- Zircon 17 17 58 38
- Rutile 8 15 32 21
- Synthetic rutile 27 22 79 50
- Leucoxene 4 9 25 17
Base Metals
Production
- Zinc concentrate 64 67 178 124
- Zinc metal 60 58 174 116
- Zincor 53 52 159 104
- Chifeng* 7 6 15 12
- Lead concentrate 13 14 45 27
Zinc metal sales
- Domestic 46 46 135 91
- Export 14 16 43 28
Total 60 62 178 119
Lead concentrate sales
- Export 11 6 29 12
* The effective interest in the Chifeng refinery has been disclosed.
COMMENTS
OPERATING RESULTS
Comments are for comparative purposes based on an analysis of the group's
reviewed financial results and physical information for the six-month periods
ended 30 June 2005 and 2004 respectively.
The results for the six-month period to 30 June 2005 reflect a continuation of
the excellent operational performance of the group.
Revenue and net operating profit increased by 22% and 149% to R5 286 million and
R1 511 million respectively. This was due to increased commodity prices across
all business segments, strong market demand and the ongoing realisation of the
benefits of the business improvement programme in respect of the revenue
enhancement and cost savings initiatives, which more than offset a stronger
currency.
An average exchange rate of R6,20 to the US dollar was realised compared with
R6,38 for the same six-month period in 2004.
EARNINGS
The more than doubling in net operating profit resulted in an increase in
attributable earnings by R711 million to R954 million and headline earnings by
R646 million to R963 million, after accounting for a 146% increase in the
group's tax charge due to the higher taxable income for the period. Attributable
earnings per share are 284% higher at 315 cents while headline earnings per
share are 200% higher at 318 cents.
The settlement of A$231,4 million before tax that was received on 1 July 2005
for Kumba's interest in the Hope Downs Project will be accounted for in the full
2005 financial year's results. The option payment of A$5,1 million pre-tax
received on 4 April 2005 is, however, included in the financial results for the
period under review.
CASH FLOW
Higher net cash flow from operating activities and lower capital expenditure,
offset to some extent by higher taxation and dividend payments, resulted in a
net cash inflow of R725 million compared with R171 million in the comparative
period. Net debt of R1 870 million at 31 December 2004 decreased to R1 262
million at 30 June 2005, with a debt to equity ratio of 17%.
SAFETY, HEALTH AND ENVIRONMENT
An average lost time injury frequency rate of 0,57 per two hundred thousand man-
hours worked (LTIFR) was recorded in the past six months compared with a rate of
0,50 in the previous six months to December 2004. A target of 0,35 LTIFR has
been set for the group.
Regrettably, two fatalities were suffered during the past six-month period and a
further one occurred shortly after the end of the period. The group remains
committed to zero fatalities and its ongoing safety awareness and preventative
programmes are being driven aggressively.
The group's HIV/Aids voluntary testing and counseling programme has now been
implemented at all its business units. Following the successful implementation
of pilot antiretroviral programmes at certain business units, the group is
extending the programme to all its businesses.
By 30 June 2005, the group had obtained international environment and safety
certifications (ISO 14001 and OHSAS 18001) in 9 of its 10 business units.
SEGMENT RESULTS
6-months ended 18-months 12-months
ended ended
30 June 31 Dec 31 Dec
Reviewed Audited Pro forma
R million 2005 2004 2004 2004
REVENUE
Iron Ore 2 819 2 120 6 065 4 250
Coal 1 044 892 2 733 1 878
Heavy Minerals 882 815 2 438 1 662
* Ticor SA 373 248 668 514
* Ticor Ltd 509 567 1 770 1 148
Base Metals 484 458 1 212 812
Industrial Minerals 51 44 138 95
Other 6 4 14 12
TOTAL 5 286 4 333 12 600 8 709
NET OPERATING PROFIT
Iron Ore 1 075 379 1 139 833
Coal 270 192 548 430
Heavy Minerals 149 98 206 254
* Ticor SA (14) (17) (19) (10)
* Ticor Ltd 163 115 225 264
Base Metals 11 (22) (151) (116)
Industrial Minerals 13 10 30 20
Other (7) (50) 73 (53)
TOTAL 1 511 607 1 845 1 368
OPERATIONS
Iron Ore
Higher production and sales volumes were recorded. Sishen mine increased
production by 262 000 tonnes to 14,2 Mt over the comparative period. Export
sales were 61 000 tonnes higher at 10,6 Mt while 315 000 tonnes over the
contractual tonnage were sold locally.
Revenue increased by 33% to R2 819 million and net operating profit by 184% to
R1 075 million as higher prices, increased sales volumes and operating
efficiencies more than offset a stronger rand. An average international iron ore
price increase of 71,5% came into effect on 1 April 2005 and will apply until 31
March 2006.
A new transport agreement, effective from 1 January 2005, was concluded with
Transnet providing for a rand-based rail tariff from Sishen mine to the Saldanha
Bay export facilities and for Kumba's growth in iron ore exports.
Coal
Total coal production and sales volumes increased by 7% and 6% to 9,9 Mt and
10,1 Mt respectively mainly as a result of increased demand from Eskom and
higher exports. Power station coal sales were 480 000 tonnes higher at 7,4 Mt
and export sales 112 000 tonnes higher at
609 000 tonnes.
Revenue increased by 17% as a result of higher volumes and sales prices. The
higher revenue together with ongoing cost containment resulted in net operating
income improving by 41% to R270 million.
Heavy Minerals
Ticor SA
Furnace 2 was successfully re-commissioned in January 2005 following its shut-
down to effect improvements and repairs. Record monthly titanium slag output was
recorded in March and May of the reporting period.
Revenue increased by 50% to R373 million in line with the increase in production
capacity of the furnaces and higher prices for zircon and low manganese pig
iron. The stronger currency and the cessation of the capitalisation of costs and
interest during the construction period resulted in an operating loss of R14
million.
Ticor Limited
Mineral production decreased marginally after the planned maintenance shut on
the mineral separation plant and successful relocation of the North mine
concentrator in April 2005.
Revenue declined by 10% due to the final closure in May 2004 of the company's
chemicals business. Net operating profit, however, increased by 42% to R163
million as a result of higher pigment and zircon prices, margin improvement
initiatives and the elimination of losses recorded by the chemicals business.
Base Metals
A 20% higher average realised zinc price of US$1 223 per tonne resulted in
revenue improving by 6% to R484 million despite continued depressed treatment
charges and lower export sales.
Net operating profit turned around from a loss of R22 million to a profit of R11
million. This resulted from higher revenue, the non-recurrence of impairment
charges raised in the comparative period and the benefits realised from the
business improvement programme. A provision raised for the intended introduction
of royalties by the Government of Namibia at the Rosh Pinah mine and higher
exploration costs, however, adversely affected the improvement in net operating
profit.
A provision of R182 million representing the business unit's best estimate for
the environmental rehabilitation of a residue disposal site at the Zincor
refinery, was raised against its prior year's retained income. The potential
extent of the liability was previously under investigation as part of a study
into the viability of a project for the reclamation of the zinc and other
residues. Investigation of viable reclamation alternatives is continuing.
Industrial Minerals
The marginal decline in off-take in both the aggregate and agricultural markets
was more than offset by higher average prices and sales volumes of metallurgical
dolomite to the steel industry.
Revenue and net operating profit, as a result, improved by 16% and 30%
respectively.
GROWTH OPPORTUNITIES
Iron Ore
The Sishen Expansion Project (SEP) at a capital cost of R3 billion for a 10 Mtpa
production increase at Sishen mine by 2009 concurrently with the Sishen-Saldanha
export channel capacity expansions, was approved in February 2005. Construction
has commenced with commissioning and production ramp-up scheduled from 2007.
A bankable feasibility for an initial 3 Mtpa mine at Sishen South has been
completed and will be presented to the Kumba Board for consideration in the
second half of the year. It is intended to increase production to at least 9
Mtpa in future synchronised with expansions to the export channel.
The exploration of the southern part of the Faleme iron ore deposit in Senegal
has been completed and a resource of approximately 240 Mt with a grading of 59%
Fe has been confirmed. Exploration in the north has commenced with the objective
of increasing the resource base. Progress has been made in developing an
investment case for the required rail and port infrastructure with Miferso, the
State mining agency. It is envisaged that a decision to proceed with the
bankable feasibility study for the mine could be taken during the last quarter
of 2005.
As announced, the Hancock group exercised its option to acquire Kumba's interest
in the Hope Downs Project by paying a settlement amount of A$231,4 million on 1
July 2005. As a consequence, Kumba has relinquished all its interests in the
project.
Coal
The finalisation of the rail agreement for the Phase V expansion at Richards Bay
between Spoornet and the coal industry as a precursor to the development of the
1 Mtpa Inyanda joint venture with Eyesizwe Coal near Witbank, remains to be
resolved.
The new coal benefication module (GG6) at Grootegeluk mine at a cost of R320
million to provide 700 000 tonnes of semi-soft coking coal to the planned Mittal
Steel market coke plant in Newcastle, is under construction.
Commissioning of the jig plant at the Leeuwpan mine near Delmas, at a capital
cost of R95 million, to deliver an additional 1 Mtpa of power station coal for
consumption by Eskom's Majuba power station, has commenced.
Following the conclusion of an agreement between Kumba and Anglo Coal Australia
for the joint development of Moranbah South and the adjoining Grosvenor South
coking coal deposits in the Bowen Basin coalfield of Queensland, good progress
has been made on the exploration of the potential open cut resources.
Exploration on the deeper underground long wall resources has also commenced.
A feasibility study for the production of 160 000 tonnes of char for the ferro-
alloy industry was completed during the year. The study is in the final approval
process, and if approved, construction will commence in April 2006 with
anticipated commissioning set for April 2007.
Heavy Minerals
The pre-feasibility study into the Ranobe deposit at Toliara in south-western
Madagascar has been completed. The bankable feasibility study into the viability
of the deposit to provide a long-term ilmenite feedstock supply to Ticor SA, has
commenced.
AlloyStreamTM
The commercialisation of AlloyStreamTM has been advancing steadily. The
technology allows the use of fine, un-agglomerated ore and non-coking coal to
produce high carbon ferro-manganese.
BLACK ECONOMIC EMPOWERMENT
Kumba, in close co-operation with its holding company, Anglo American plc, is
making good progress on its empowerment initiative to achieve a sustainable
position as a pre-eminent South African-based diversified mining company. Kumba
is confident that the proposals under consideration will satisfy the ownership
requirements of the Mineral and Petroleum Resources Development Act and
associated Charter.
OUTLOOK
Higher commodity prices, particularly the substantial iron ore price increase,
and strong market demand together with the ongoing benefits of Kumba's business
improvement programme, are expected to result in a further improvement in
earnings for the next six months.
DECLARATION OF DIVIDEND NUMBER 6 AND SPECIAL DIVIDEND
The directors have declared an interim dividend, number 6, of 160 cents per
share in respect of the past six-month period. Following the Hope Downs
settlement amount received, a special dividend of 220 cents per share, has also
been declared. Both the dividends have been declared in South African currency
and are payable to shareholders recorded in the books of the company at close of
business on 9 September 2005.
In compliance with the requirements of the electronic settlement system of JSE
Limited, the following dates are applicable:
Last day to trade cum dividend Friday, 2 September 2005
Shares trade ex dividend Monday, 5 September 2005
Record date Friday, 9 September 2005
Payment date Monday, 12 September 2005
Share certificates may not be dematerialised or rematerialised between 5
September 2005 and 9 September 2005, both days inclusive.
On behalf of the Board
AJ Morgan Dr CJ Fauconnier DJ van Staden
(Chairman) (Chief Executive) (Executive Director, Finance)
1 August 2005
Kumba Resources Limited
Registration number 2000/011076/06
JSE Share code KMB
ADR CODE KBREY
ISIN CODE ZAE 000034310
Registered office Kumba Resources Limited
Roger Dyason Road
Pretoria West, 0002
TEL NO +27 12 307 5000
FAX NO +27 12 307 4760
Transfer secretaries Computershare Investor Services 2004
(Pty) Limited
70 Marshall Street,
Johannesburg, 2001
PO Box 61051, Marshalltown, 2107
Directors
AJ Morgan (Chairman),
Dr CJ Fauconnier (Chief Executive),
PM Baum, BE Davison, TL de Beer,
JJ Geldenhuys, MJ Kilbride*, Dr D Konar,
CF Meintjes*, WA Nairn, SA Nkosi, CML Savage,
Dr NS Segal, F Titi, DJ van Staden*, PL Zim
*Executive
Company Secretary: MS Viljoen
Corporate Affairs and Investor Relations Trevor Arran +27 12 307 3292
Sponsor JP Morgan +27 11 507 0300
If you have any queries regarding your shareholding in Kumba Resources, please
contact the Transfer Secretaries at +27 11 370 5000
This report is available at the Kumba Resources website at:
http://www.kumbaresources.com
Date: 03/08/2005 07:00:26 AM Produced by the JSE SENS Department
