| Mon 29 Aug 2005, 10:05 | | Barplats Investments Limited |
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Barplats Investments Limited
Incorporated in the Republic of South Africa
(Reg. no. 1987/004830/06)
(ISIN: ZAE000028692)
JSE code: BPL
(`Barplats` or `the company`)
Preliminary reviewed consolidated results for the year ended 30 June 2005 and
withdrawal of cautionary
Key features
- Fatality free year - safety continues to be a key focus
- Re-start phase yields better-than-planned results
- Operational profitability achieved
- Over 10 000 ozs of PGMs produced during plant commissioning
- Underground mining rate build-up on schedule
- Shareholders approve 26% BEE transaction
- Good progress on Mining Charter Scorecard compliance
- Additional opportunities in the offing
- Capital expenditure of R134.4 million
- Asset impairment reversal of R56 million
Consolidated reviewed income statements
Barplats Investments Limited and its subsidiaries
Company Group
2004 2005 For the year ended 30 Note 2005 2004
June (R`000) s
- - Revenue 40 177 112 893
- - Cost of sales 36 723 118 568
- - Mining costs 26 283 77 317
- - Ore purchased 5 987 -
- - Smelter slag purchased - 2 268
- - Concentrating costs 9 553 24 102
- - Amortisation 4 475 13 519
- - Other costs - 1 362
- - Closing inventory (9 575) -
- - Gross profit / (loss) 3 454 (5 675)
- 48 826 Other operating income 1 471 -
(3 406) (1 482) Administrative and other (14 169) (18 930)
operating expenses
- - Net exploration expense - (494)
- - Reversal of asset 3. 56 000 -
impairment
(3 406) 47 344 Operating profit/(loss) 46 756 (25 099)
before financing costs
- (11 Net financial costs 4. (21 806) (16 903)
371)
(3 406) 35 973 Profit / (loss) before 24 950 (42 002)
taxation
- - Income tax expense -
(26)
(3 406) 35 973 Profit / (loss) for the 24 950 (42 028)
period
Basic and diluted 5. 11.2 (18.9)
earnings/(loss) per share
(cents)
Headline loss per share 5. (14.0) (18.9)
(cents)
Consolidated reviewed balance sheets
Barplats Investments Limited and its subsidiaries
Company Group
2004 2005 As at 30 June Note 2005 2004
(R`000) s
ASSETS
54 461 296 676 Non-current assets 391 367 207 703
- - Property, plant and 6. 391 367 207 703
equipment
54 461 296 676 Investments in - -
subsidiaries
- 392 Current assets 46 974 2 909
- - Inventories 9 899 242
- - Trade and other 7. 30 509 433
receivables
- 392 Cash and cash 5 212 880
equivalents
- - Current taxation 1 354 1 354
asset
54 461 297 068 Total Assets 438 341 210 612
EQUITY AND
LIABILITIES
52 757 86 658 Equity 83 065 60 187
2 225 2 225 Issued capital 2 225 2 225
1 049 928 1 047 856 Share premium 1 047 856 1 049 928
(999 396) (963 423) Accumulated loss (967 016) (991 966)
- 40 278 Non-current 108 067 99 373
liabilities
- - Provision for 31 404 30 490
environmental
obligations
- 40 278 Borrowings 8. 76 663 68 883
1 704 170 132 Current liabilities 247 209 51 052
1 704 1 835 Trade and other 9. 37 387 5 130
payables
- - Bank overdrafts 5 140 -
- 168 297 Borrowings 10. 204 682 45 922
54 461 297 068 Total equity and 438 341 210 612
liabilities
Consolidated reviewed statement of changes in equity for the year ended 30 June
Barplats Investments Limited and its subsidiaries
Issued Share Accumulated Total
for the year ended 30 June capital premium deficit
(R`000)
Balance at 30 June 2003 2 225 1 049 (949 938) 102 215
928
Net Loss (42 028) (42 028)
Balance at 30 June 2004 2 225 1 049 (991 966) 60 187
928
Share issue expenses (2 072) (2 072)
Profit for the period 24 950 24 950
Balance as at 30 June 2005 2 225 1 047 (967 016) 83 065
856
Company reviewed statement of changes in equity for the year ended 30 June
Barplats Investments Limited
Issued Share Accumulated Total
for the year ended 30 June capital premium deficit
(R`000)
Balance at 30 June 2002 2 225 1 049 (994 567) 57 586
928
Net loss (1 423) (1 423)
Balance at 30 June 2003 2 225 1 049 (995 990) 56 163
928
Net Loss (3 406) (3 406)
Balance at 30 June 2004 2 225 1 049 (999 396) 52 757
928
Share issue expenses (2 072)
(2 072)
Profit for the period 35 973 35 973
Balance at 30 June 2005 2 225 1 047 (963 423) 86 658
856
Reviewed cash flow statements
Barplats Investments Limited and its subsidiaries
Company Group
2004 2005 As at 30 June (R`000) Notes 2005 2004
Cash flows from
operating activities
(1 722) (1 350) Cash utilised in (11 331) (7 650)
operations
- 5 783 Financial income 93 85
- - Interest paid (12 205) (13 717)
- - Taxation paid - (1 406)
- - Rehabilitation costs - (6 989)
(1 722) 4 433 Net cash (utilised (23 443) (29 677)
in) / generated by
operating activities
Cash flows from
investing activities
- - Additions to (134 403) (5 434)
property, plant and
equipment
- - Proceeds from 2 264 2 078
disposal of property,
plant and equipment
1 722 (193 390) Increase in loan to - -
subsidiary company
1 722 (193 390) Net cash utilised in (132 139) (3 356)
investing activities
Cash flows from
financing activities
- 191 422 Proceeds from 156 846 33 709
borrowings
- (2 072) Share issue expenses (2 072) -
- 189 350 Net cash generated by 154 774 33 709
financing activities
- 393 Net (808) 676
increase/(decrease)
in cash and cash
equivalents
- 0 Cash and cash 880 204
equivalents at the
beginning of the year
- 393 Cash and cash 72 880
equivalents at the
end of the year
Notes to the reviewed group income statement, balance sheet, statement of
changes in equity and cash flow statement
1. The principal accounting policies used by Barplats and its subsidiary
companies (`the group`) are in accordance with the International Financial
Reporting Standards of the International Accounting Standards Board and the
Companies Act, 61 of 1973 (as amended) and, other than the accounting policy
for stock, which has been changed from the first-in-first-out method to the
average method, are consistent with those applied in the financial
statements for the year ended 30 June 2004.
2. Although the audit is substantially complete, the results set out in this
announcement have been reviewed by Barplats` auditors, KPMG Inc, whose
modified opinion, which includes an emphasis of matter regarding the group`s
ability to continue as a going concern (refer to the funding and going
concern paragraph in the commentary below), is available for inspection at
the company`s registered office. The audited results will be included in
the annual financial statements to be mailed to shareholders during the
second half of September 2005. A further announcement will be published
setting out the audited results should the audited results differ materially
from the results set out in this announcement.
3. The asset impairment write-downs in prior years were partially reversed.
4. Net financial costs includes interest income of R0.09 million (2004: R0.09),
interest expense of R20.08 million (2004: R13.72 million), of which R7.88
million was capitalised (2004: Rnil), and net foreign exchange transaction
losses of R9.69 million (2004: Rnil).
5. The calculation of basic and diluted earnings per share is based on a net
profit of R24.95 million (2004: loss of R42.03 million). The calculation of
the headline loss per share is based on a net loss of R31.05 million (2004:
loss of R42.03 million), which is the profit for the period of R24.95
million excluding the impairment reversal of R56 million. The number of
shares in issue remained unchanged at 222 540 344.
6. Capital expenditure for the period under review amounted to R134.4 million
(excluding the impairment reversal of R56 million) (2004: R5.4 million), of
which R7.9 million comprised capitalised interest and R60.5 million
capitalised expenses. Capital expenditure approved and committed at 30 June
2005 amounted to R5.1 million (2004: Rnil).
7. Trade and other receivables includes: trade receivables of R26.1 million
(2004: R0 million), other receivables of R4.0 million (2004: R0.4 million)
and prepayments of R0.4 million (2004: Rnil).
8. Non-current liabilities: borrowings includes the long-term portion of the
amounts outstanding to Impala Platinum Holdings Limited (`Impala`) of R36.4
million (2004: R68.9 million) and Eagle Worldwide Investments, Limited
(`Eagle`) of R40,3 million (2004: Rnil).
9. Trade and other payables includes trade creditors of R17.1 million (2004:
R2.6 million), leave liability of R4.8 million (2004: R0 million) and other
payables of R15.5 million (2004: R2.4 million).
10.Current liabilities: borrowings includes the short-term portion of the
amounts outstanding to Impala of R36.4 million (2004: R45.9 million), Eagle
of R120.0 million (2004: Rnil) and Nedbank Capital of R48.3 million (2004:
Rnil).
11.The net asset value per share at 30 June 2005 is 37.3 cents (2004: 27.0
cents).
Commentary
Nature of business
Barplats is a platinum group metals (`PGMs`) mining company whose core business
is PGM mining and processing in South Africa`s Bushveld Igneous Complex (`the
BIC`). Barplats` two assets are:
the Crocodile River Mine on the Western Limb of the BIC near Brits in the
North-West Province; and
the Kennedy`s Vale Project on the Eastern Limb of the BIC near Steelpoort
in Mpumalanga.
Safety
There were no fatalities in the 137 463 shifts worked at Crocodile River Mine
during the 2005 financial year. The Lost Time Injury Frequency Rate and
Reportable Injury Frequency Rate (per million man hours) for the year, however,
were 5.14 and 4.28 respectively, both unacceptably high, with five reportable
accidents during the year. While much of the year`s work involved the re-opening
and making safe of the mine under difficult conditions with a new complement of
staff, the company`s target is zero accidents; consequently, improvement in the
year ahead will be a key focus. In this respect, a new behavior-based safety
programme called Kwena, introduced during the 2005 financial year, is expected
to be a major contributor.
People
At the start of the 2005 financial year the company had only nine employees. At
the end of the year there were 504 company employees and 499 employees of
service providers and sub-contractors on site.
Re-start phase
During the re-start phase to July 2005, the results achieved were better than
planned as described below.
Maroelabult
Crocodile River Mine`s Maroelabult section, previously mined by contractors, was
re-opened in July 2004. The focus was to make safe, re-equip underground and on
surface and begin development for a return to conventional mining. Development
and trial mining began in July 2004 and by February 2005 some 25 000 tonnes
(`t`) had been mined safely and cost effectively, vindicating our decision to
return to conventional mining. Production at Maroelabult began in March 2005
with the following profile:
2005 Tonnes 6E grade
(grammes per
tonne(`g/t`))
March 8 177 at 4.35
April 15 329 at 4.25
May 12 512 at 4.33
June 24 905 at 4.06
Total / weighted 60 923 4.20
average
Maroelabult is now building to its planned output of 40 000 tonnes per month
(`t/m`) at 4.2g/t 6E (platinum, palladium, rhodium, ruthenium, iridium and gold)
by April 2006.
Zandfontein
The Zandfontein section, ostensibly abandoned since 1991, was flooded to 10
metres above 1 Level. De-watering of the workings, now largely complete, making
safe and re-equipping, together with re-development of one of the declines to
provide the main ore conveyor way to surface, have been key objectives.
Importantly, sufficient mineable reserves have been identified on and above 1
Level to provide an output exceeding 30 000t/m for two years with minimal
development requirements. This will allow for development below 1 Level, in
terms of the 10-year plan (see the paragraph on long-term planning below) to
take place while the required production rate continues. Production at
Zandfontein began in April 2005 with the following results:
2005 Tonnes 6E grade
(g/t)
April 700 at 4.16
May 2 405 at 4.16
June 13 536 at 4.50
Total / weighted 16 641 4.43
average
Zandfontein is now building towards its planned short-term output of 30 000 t/m
at 4.2g/t 6E by February 2006.
Concentrator plant
The concentrator was found to be in a far worse physical condition than
estimated at the start of the year. The plant was totally refurbished and
upgraded at a cost of R51 million, which included a new assay laboratory. First
ore was milled on 14 March 2005 and commissioning of the plant proceeded
rapidly, with excellent recoveries.
Various ore types were fed into the plant during the commissioning period -
including some that was bought in - in order to provide data for planning
purposes and to validate certain assumptions. Consequently, the operating
statistics for the period are not indicative of steady state operations.
During the commissioning period, plant feed consisted of various ore types being
fed into the one primary mill, with reclaimed tailings from previous operators
being fed into a secondary mill. Throughput was as follows:
Production month UG2 ore Tailings Total
2005 (tonnes) (tonnes) (tonnes)
April 25 939 38 408 64 347
May 27 616 44 591 72 207
June 50 579 40 558 91 137
104 134 123 557 227 691
The calculated recoveries achieved during commissioning (below) were encouraging
given the mixed feeds, and are well within striking distance of the 78% budgeted
for the coming year.
2005 Metallurgical
recovery (%)
April 69
May 57
June 68
Pilot plant work on by-product chrome recovery has progressed well and a
detailed feasibility study into this important revenue-enhancing opportunity is
under way.
One major item outstanding from the concentrator upgrade programme is the
replacement of a primary mill, which was sold by the previous owners. This will
take a year to complete and thus restricts throughput to 90 000 tonnes per month
of hard rock until the replacement mill becomes operational. During this time
some 800 000 tonnes of tailings from previous operators will be treated through
the second stream secondary and tertiary mills.
Kennedy`s Vale
Encouraging results were obtained from our re-evaluation of previous studies
conducted on the Kennedy`s Vale orebody. Feasibility studies will continue in
the 2006 financial year.
Financial results
Whilst noting the impact of rand strength on the local industry during the year,
the company was fortunate to have budgeted on a stronger rand/dollar and lower
PGM basket price for the year under review.
The smooth commissioning period allowed better than planned metal sales to be
achieved:
2005 6E PGMs (ozs / Nickel (tonnes) Copper (tonnes)
kgs)
April 2 208/69 1.9 1.0
May 2 663/83 2.0 1.0
June 4 793/149 3.1 2.3
9 664/301 7.0 4.3
The board of directors is pleased to present a gross profit for the year of R3.5
million, which reflects the emphasis that has been placed on cost containment.
A decision was taken to partially reverse (R56 million) the impairment provision
that was created in prior years when the mine was placed in care and
maintenance, reflecting the group`s confidence in the future of the Crocodile
River Mine and the quality of the group`s assets.
The group received funding during the year of R150.6 million from Eagle, a
British Virgin Islands registered financier. A significant portion of these
funds was deployed in the various capital expenditure programmes, including the
rehabilitation of the concentrator plant (R51.0 million) and the reconfiguration
of the group`s mining activities at Maroelabult (R28.2 million) and Zandfontein
(R23.3 million).
During June 2005 Nedbank granted Barplats a R120 million loan facility that is
repayable in January 2006.
Funding and going concern
As noted elsewhere in this announcement, the company recommenced the production
of concentrate during March 2005. The results of the re-start have been better
than expected.
At 30 June 2005 the group`s current liabilities exceeded its current assets by
R200.2 million. Barplats is in the process of raising long-term funding to
expand the company`s mining operations and to optimize the company`s funding
profile. However, the introduction of Gubevu Consortium Investment Holdings
(Proprietary) Limited as a 26 per cent shareholder in Barplats on 22 July 2005
by way of an all-cash R172.8 million transaction, together with the company
receiving cash of R71.7 million by drawing down the balance of the Nedbank R120
million facility and the repayment of an amount of R120 million to Eagle
Worldwide Investments, Limited meant that at the date of this announcement, the
group has a remaining Eagle facility of US$24.3 (R154.5 million at an exchange
rate of R6.49 per US$) and R92.3 million cash on deposit.
On 31 January 2006 Barplats is required to repay the R120 million outstanding to
Nedbank. The company`s budgets and projected cash flow forecasts, which are
based on reasonable and supportable assumptions, indicate that the company will
generate positive cash flows during the six months from the date of this
announcement. The company also has the option to draw down on the remaining
Eagle facility noted above.
The directors are confident that the budgets and projected cash flow forecasts
will be achieved, that the company will meet its obligations as they fall due
and that the company will be a going concern in the year ahead. Accordingly,
the directors continue to adopt the going concern basis in the preparation of
the condensed consolidated preliminary financial statements.
BEE transaction
On 5 July 2005 Barplats shareholders approved the sale of a 26% stake in
Barplats for R172.8 million in cash to the broad based Black Economic
Empowerment Gubevu Consortium led by Dr Penuell Maduna. This transaction not
only provides Barplats with working capital but places us at the 10-year equity
target specified by the South African Mining Charter`s Scorecard.
Mining Charter Scorecard compliance
The company has worked both towards compliance with all aspects of the Mining
Charter Scorecard and meeting its obligations in terms of its Social and Labour
Plan. Notably, in respect of the former:
- 75% of our 504 employees are Historically Disadvantaged South Africans
(HDSAs);
- 12% are women; and
- of our management team, 31% are HDSAs.
Some 20.5% of the company`s procurement spend during the 2005 financial year
went to HDSA preferential procurement suppliers.
Mineral rights conversion
The group`s complete suite of mineral rights holdings was the subject of
applications in terms of the Mineral Resources and Petroleum Development Act.
Good progress has been made in finalising the New Order rights.
Long term planning
A 10-year mining and production plan for Crocodile River Mine, which has been
subjected to local and international technical audit, has been completed and
forms the basis of the company`s fund raising efforts in the 2006 financial
year.
Additional opportunities
The potential for a number of small (30 000 to 50 000t/m) additional satellite
mining operations (the `Crockettes`) on the Crocodile River Mine property is
being investigated, with detailed feasibility studies initiated.
Pilot plant work on by-product chrome recovery has progressed well and a
detailed feasibility study into this important revenue-enhancing opportunity is
under way.
In addition, the viability of re-commissioning the mine`s PGM smelter is being
investigated.
Rights offer of options and withdrawal of cautionary
Further to the announcement published on SENS on 21 June 2005 regarding the
proposed option rights offer and the cautionary announcement published on SENS
on 5 July 2005, shareholders are hereby advised that the board of directors of
Barplats has, following consultation with Barplats` major shareholders, resolved
not to proceed with the option rights offer and accordingly, shareholders are no
longer required to exercise caution when dealing in their Barplats shares.
Annual report and annual general meeting of shareholders
The audited financial statements, including a notice of the annual general
meeting, will be mailed to shareholders during the second half of September
2005.
Dividend
A dividend has not been declared for the year ended 30 June 2005 (2004: Rnil).
On behalf of the board
LOUCAS POUROULIS DAVID SALTER
Chairman Managing Director
29 August 2005
Directors: L.C. Pouroulis* (Chairman), J.D. Salter+ (Managing), J.A. Clark, P.J.
Gard+ J.M. Jansen van Vuuren * Cypriot + British
Sponsor: Nedbank Capital
Transfer Secretaries: Computershare Investor Services 2004 (Pty) Ltd, 70
Marshall Street, Johannesburg 2001
Secretary and Registered Office: T K Savage, 1st Floor, Platinum Place,
Turnberry Office Park, 48 Grosvenor Road, Bryanston 2191, South Africa
