| Mon 13 Mar 2006, 17:00 | | Matodzi - Reviewed Interim Report For The Six Mont |
|
MTZ
MTZ
Matodzi - Reviewed Interim Report For The Six Months Ended 30 September 2005
MATODZI RESOURCES LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1933/004523/06)
Share Code: MTZ & ISIN: ZAE000042412
("Matodzi" or "the Company" or "the Group")
REVIEWED INTERIM REPORT FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2005
CONDENSED CONSOLIDATED INCOME STATEMENTS
Previously
Reviewed reported Restated Restated
restated unaudited unaudited reviewed
six months six months six months year
ended ended ended ended
30 September 30 September 30 September 31 March
2005 2005 2004 2005
Notes R"000 R"000 R"000 R"000
Revenue 217 782 214 446 141 257 279 451
Total (133 741) (132 073) (90 718) (203 951)
production
costs
Production (113 059) (113 874) (82 016) (167 675)
costs
Depreciation (15 583) (14 000) (8 702) (21 359)
Other non (5 099) (4 199) - (14 917)
cash
operating
expenses
Operating 84 041 82 373 50 539 75 500
profit
Finance costs 2 (32 890) (29 160) (24 982) (59 560)
Net loss on 4 (16 886) (16 820) (63 050) (81 945)
remeasurement
of
investments
at fair value
General and (5 887) (6 521) (13 982) (17 081)
administra-
tive expenses
Net 3 28 378 29 872 (51 475) (83 086)
profit/(loss)
before
taxation
Income tax 5 (30 262) (30 262) (86) (35 748)
expense
Net loss for (1 884) (390) (51 561) (118 834)
the period
Profit 6 29 826 26 571 (705) 5 690
attributable
to minority"s
interest
Loss (31 710) (26 961) (50 856) (124 524)
attributable
to equity
holders
Net loss for (1 884) (390) (51 561) (118 833)
the period
Loss per 7 (21) (18) (34) (83)
share -
(cents)*
Diluted loss (9) (7) (14) (35)
per share -
(cents)**
* The attributable loss per share has been restated in prior years for IFRS and
other adjustments
** The diluted loss per share takes into account the adjusted number of shares
in issue after the completion of the proposed transactions in note 13.
CONDENSED CONSOLIDATED BALANCE SHEETS
Previously
Reviewed reported Restated Restated
restated unaudited unaudited reviewed
30 September 30 September 30 September 31 March
2005 2005 2004 2005
Notes R"000 R"000 R"000 R"000
ASSETS
Non-current
assets
Property, 269 319 193 598 290 072 278 760
plant and
equipment
Investment 309 - - 309
property
Goodwill 8 - 81 618 - -
Investments 9 146 929 147 979 75 155 56 261
and loans
receivable
Total non 416 557 423 195 365 227 335 330
current
assets
Current
assets
Inventory 25 216 20 789 - 21 082
Trade and 16 195 16 964 46 438 20 850
other
receivables
Cash and 10 60 374 60 374 56 595 58 566
cash
equivalents
Total 101 785 98 127 103 033 100 498
current
assets
Total assets 518 342 521 322 468 260 435 828
EQUITY
Equity 11 (305 775) (288 840) (200 776) (274 444)
attributable
to equity
holders
Minority 47 423 48 929 11 202 17 597
interest
Total equity (258 352) (239 911) (189 574) (256 847)
LIABILITIES
Deferred 62 727 65 903 - 32 465
taxation
Interest- 12 625 908 625 498 625 053 569 975
bearing
borrowings
Provisions 15 815 - - 14 916
Total non 704 450 691 401 625 053 617 356
current
liabilities
Current
liabilities
Interest 12 42 498 42 455 7 784 35 279
bearing
borrowing
Trade and 29 747 27 377 24 997 40 040
other
payables
Total 72 245 69 832 32 781 75 319
current
liabilities
Total equity 518 342 521 322 468 260 435 828
and
liabilities
Number of
shares in
issue
Ordinary 149 812 424 156 722 157 149 262 157 149 262 157
shares of 25
cents each
"B" 200 000 000 200 000 000 200 000 000 200 000 000
Preference
shares of 1
cent each
CONDENSED CONSOLIDATED CASH FLOW STATEMENTS
Previously
reported Restated Restated
Reviewed unaudited unaudited reviewed
restated six months six months year
six months ended ended ended
ended 30 September 30 September 31 March
30 September 2005 2004 2005
2005
R"000 R"000 R"000 R"000
Cash flows from 58 073 52 254 56 317 66 897
operating activities
Cash flows from (119 795) (114 812) (26 323) (21 388)
investing activities
Cash flows from 63 530 64 366 16 654 3 110
financing activities
Net movement in cash (1 808) 1 808 46 648 48 619
and cash equivalent
Cash and cash 58 566 58 566 97 97
equivalents at
beginning of period
Cash of subsidiary - - 9 850 9 850
acquired 1 April
2004
Cash and cash 60 374 60 374 56 595 58 566
equivalents at end
of period
CONDENSED STATEMENT OF CHANGES IN EQUITY
Accumu-
Share Share lated Minority
capital premium loss interest Total
R"000 R"000 R"000 R"000 R"000
Balance 31 March 2004 37 315 42 010 (229 245) 11 907 (138 013)
(restated)
Net loss for the - - (55 162) (705) (55 867)
period ended on 30
September 2004
IFRS adjustment - - - 4 306 - 4 306
Property, plant and
equipment
Balance 30 September 37 315 42 010 (280 101) 11 202 (189 574)
2004
Net loss for the - - (50 526) 6 395 (44 131)
period ended on 31
March 2005
IFRS adjustment - - - 2 037 - 2 037
Property, plant and
equipment
Adjustment for - - (6 182) - (6 182)
capital-isation of
pre-production
expenditure
Adjustment for - - (4 081) - (4 081)
depreciation on the
right to mine
Adjustment for non - -- (14 916) - (14 916)
provision of
rehabilitation costs
Balance 31 March 2005 37 315 42 010 (353 769) 17 597 (256 847)
Issue of shares 138 241 379
Net loss for the - - (34 208) 29 826 (4 382)
period ended on 30
September 2005
IFRS adjustment - - - 2 498 - 2 498
Property, plant and
equipment
Balance on 30 37 453 42 251 (385 479) 47 423 (258 352)
September 2005
Notes to the financial report
1 Significant accounting policies
Matodzi is a company domiciled in South Africa. The condensed consolidated
interim financial statements of the Company for the six-months ended 30
September 2005 comprise the Company and its subsidiaries, together referred to
as "the Group".
The condensed consolidated interim financial statements were authorised for
issuance on 9 March 2006.
1.1 Statement of compliance
The condensed consolidated interim financial statements have been prepared in
accordance with International Financial Reporting Standards ("IFRS") for interim
financial statements. These are the Group"s first condensed consolidated interim
financial statements for part of the period covered by the first IFRS annual
financial statements and IFRS 1 First-time Adoption of IFRS has been applied.
The condensed consolidated interim financial statements do not include all the
information required for full annual financial statements.
1.2 Basis of preparation
The financial statements are prepared on the historic cost basis except that the
following costs are stated at the fair value: financial instruments held for
trading. The preparation of the interim financial reporting requires management
to make judgements, estimates and assumptions that affect the application of
policies and reported amounts of assets and liabilities, income and expenses.
These condensed consolidated interim financial statements have been prepared on
the basis of IFRS in issue that are effective or available for early adoption at
the Group"s first IFRS annual reporting date, 31 March 2006. Based on these
IFRSs, the Board of Directors have made assumptions about the accounting
policies expected to be adopted when the first IFRS annual financial statements
are prepared for the year ended 31 March 2006.
The preparation of the condensed consolidated interim financial statements in
accordance with IAS 34 resulted in changes to the accounting policies as
compared with the most recent annual financial statements prepared under
previous Generally Accepted Accounting Practice ("GAAP"). These accounting
policies have been applied consistently to all periods presented in these
condensed consolidated interim financial statements. They have also been applied
in preparing an opening IFRS balance sheet at 31 March 2004 for the purpose of
the transition to IFRS.
The accounting policies have been applied consistently throughout the Group for
purposes of these condensed consolidated interim financial statements.
1.3 First-time adoption of IFRS
IFRS adjustments
Property, plant and equipment
Matodzi has applied the provision of IAS 16 - Property, plant and equipment,
which requires that the Group perform an annual review and assessment of the
useful life of its assets, depreciation method and residual values at the end of
each financial year. Where items of property, plant and equipment comprise
individual components for which different depreciation methods are used, each
component is accounted for separately. The adoption of IAS 16 has resulted in a
decrease in the depreciation charge of R2,5 million for the six-months ended 30
September 2005 (six-months ended 30 September 2004 :R4,3 million), as a result
of the plant being componentised into significant components.
1.4 Other adjustments
Pre-production expenditure
In prior periods expenditure relating to donations, head office administration
costs were capitalised as property, plant and equipment. This expenditure does
not qualify as assets and has thus been expensed.
Rehabilitation costs
The full environmental liability for the Letseng diamond mine and the Witnigel
mine has not been recognised in the prior year.
Goodwill
The amount previously disclosed as Goodwill in Letseng is considered to be a
right to mine and has therefore now been disclosed as Property, plant and
equipment.
Depreciation
Depreciation has been adjusted for depreciation on the right to mine. The
mineral rights are to be written-off over 10 years.
R"000
Accumulated Loss - 1 April 2004 - SA GAAP (229 245)
IFRS Adjustment - Property, plant and equipment -
Accumulated Loss - 1 April 2004 - IFRS (229 245)
Net loss after tax - 30 September 2004 - SA GAAP (55 162)
IFRS Adjustment - Property, plant and equipment 4 306
Accumulated Loss - 30 September 2004 - IFRS (280 101)
Net loss after tax - 31 March 2005 - SA GAAP (52 526)
IFRS Adjustment - Property, plant and equipment 2 037
Adjustment for incorrect capitalisation of pre- (6 182)
production expenditure
Adjustment for depreciation on right to mine (4 081)
Adjustment for non provision of rehabilitation costs (14 916))
Accumulated Loss - 31 March 2005 - IFRS (353 769)
Net profit after tax - 30 September 2005 - SA GAAP (34 208)
IFRS Adjustment - Property, plant and equipment 2 498
Accumulated Loss - 31 March 2005 - IFRS (385 479)
Reviewed Restated Restated
restated unaudited reviewed
30 September 30 September 31 March
2005 2004 2005
Net Profit/(loss) after tax - (34 208) (55 162) (109 769)
SA GAAP
Adjustment for incorrect - - (6 182)
classification of pre-
production expenditure
Adjustment for non provision - - (14 916)
of rehabilitation costs
IFRS Adjustment - Property, 2 498 4 306 6 343
plant and equipment
Net loss after tax - IFRS (31 710) (50 856) (124 524)
Property, plant and equipment 189 594 207 988 205 678
- SA GAAP
IFRS adjustment - Property, 2 498 4 306 2 037
plant and equipment
Reclassification of (309) - (309)
investment property,
Adjustment for incorrect - - (6 182)
classification of pre-
production expenditure
Adjustment for incorrect 81 618 77 778 81 618
classification of right to
mine
Adjust for depreciation of (4 082) - (4 082)
right to mine
Property, plant and equipment 269 319 290 072 278 760
- IFRS
Previously
reported Restated Restated
Reviewed unaudited Unaudited reviewed
30 September 30 September 30 September 31 March
2005 2005 2004 2005
R"000 R"000 R"000 R"000
2 Finance costs
Interest received 3 837 980 363 2 439
Foreign exchange
losses (3 334) - - -
Preference shares (9 616) (9 458) (10 236) (20 472)
- "B" prefs
Preference shares (9 464) (9 337) (9 226) (18 452)
- Witnigel
Interest on loans (14 313) (11 345) (5 883) (23 075)
(32 890) (29 160) (24 982) (59 560)
3 Profit/(loss) for
the period is stated
after taking into
account the
following:
Depreciation (15 853) (14 045) (13 048) (23 704)
Retrenchment (223) (223) - -
costs
Impairment of - - - (24 207)
mineral rights and
mining assets
Profit on - - - 40 732
restructuring of
debt - Preference
shares
4 Net loss on
remeasurement of
investment at fair
value
Investments (16 886) (16 820) (63 050) (81 945)
210 255 713 JCI ordinary shares @ R0.16 (31 March 2005 - 210 255 713
JCI ordinary shares @ R0.25)
5 Income tax expense
current year - (86) (127)
Deferred tax
current year (30 262) (30 262) - (35 621)
(30 262) (30 262) (86) (35 748)
6 Profit
attributable to
minority interest
Letseng Diamonds (11 614) (11 042) (8) (2 286)
Letseng (18 212) (15 529) 713 (5 793)
Investment Holdings
(29 826) (26 571) 705 (8 079)
7 Loss per share is
calculated as
follows:
Attributable loss (31 710) (26 961) (50 856) (124 524)
for year
Weighted average 149 537 291 149 812 424 149 262 157 149 262 157
number of ordinary
shares in issue
Diluted average 362 537 291 362 812 424 362 262 157 362 262 157
number of ordinary
shares in issue
Reconciliation
between attributable
loss and headline
loss
Attributable (31 710) (26 961) (50 856) (124 524)
loss
Impairment of - - - 24 207
mineral rights and
property, plant and
equipment
Profit on - - - (40 732)
restructuring of
debt - Preference
shares
Headline loss (31 710) (26 961) (50 856) (141 049)
Headline loss per (21) (18) (34) (94)
share
8 Goodwill
Letseng - 81 618 - -
9 Investments
Listed 33 641 33 641 69 355 50 461
investments
Unlisted - 1 000 1 000 1 000
investments
Loans receivable 113 288 113 338 4 800 4 800
Directors" - 1 000 1 000 1 000
valuation of
unlisted investments
The directors are satisfied the loans are recoverable. 210 255 713 JCI
ordinary shares have been valued at the price at which they were delisted
on the JSE i.e. R0.16 (31 March 2005: 210 255 713 JCI ordinary shares @
R0.25)
10 Cash and cash
equivalents
Cash balances 60 374 60 374 56 595 58 566
11 Shareholder"s
interest
During the period under review, the Company"s authorised share capital
remained unchanged at 250 000 000 ordinary shares of 25 cents each.
Preference shares previously reflected as part of shareholder"s equity
have been reclassified and are accounted in the financial statements as
debt. As a result of the reclassification, the comparable interim period
for the prior year was restated in accordance with the March 2005 Annual
Financial Statements. The effect of this restatement on net profit/loss is
an increase in finance costs of R19 462 000.
Under the general authority granted to the board of directors at the
annual general meeting on the 18 August 2004, 7 460 000 new Matodzi
ordinary shares were listed in terms of an application to the JSE as a
general issuance of shares for cash. Subsequently, following the decline
in the share price of Matodzi, these were not taken-up by the proposed
investor, and ended being held as treasury shares by the Company. The JSE
has informed the Company that this is a breach of the conditions under
which the listing approval for the shares was granted, and consequently
the Company has undertaken to delist and cancel these shares. In light of
the foregoing, the "treasury shares" as at 30 September 2005 have been
deemed as cancelled, and the share capital and share premium adjusted
accordingly.
12 Interest-bearing
borrowings
Preference 356 298 356 013 342 136 337 216
shares
Loans payable 312 108 311 940 290 701 268 038
668 406 667 953 632 837 605 254
Current portion 42 498 42 455 7 784 35 279
of interest bearing
borrowings
625 908 625 498 625 053 569 975
Letseng Investment Holdings repaid the loan to the Industrial Development
Corporation from the proceeds of a new facility granted by Investec Bank which
is secured by all the shares held in Letseng Diamonds. The current balance of
this loan is R270 412 703.
13 Going Concern
The Group incurred a net loss for the period ended 30 September 2005 amounting
to R31.7 million (31 March 2005: R124.5 million). At period-end the Group"s
total liabilities exceeded its total assets by R258.3 million (31 March
2005:R256.8 million). The liabilities consist primarily of obligations relating
to the Matodzi and Witnigel Investment (Proprietary) Limited preference shares
owned by JCI Limited.
Matodzi is in process of concluding two transactions that would restore the
solvency of the Company. The transactions which are described in detail below
will have the effect of eliminating R356.3 million debt, and result in JCI
Limited ("JCI") becoming the majority shareholder in Matodzi.
The first transaction involves the 200 million Witnigel Preference shares owned
by JCI Investment Finance (Proprietary) Limited, a wholly owned subsidiary of
JCI Limited ("JCI"), which are classified as debt in Matodzi"s accounts. The
transaction proposed is that the 200 million Witnigel Preference shares will be
purchased by Matodzi through the issuance of new Matodzi ordinary shares to the
value of R13.3 million. The effect of the transaction will be that Matodzi will
have eliminated R184.5 million of external debt and retain 83.3 million JCI
ordinary shares as an investment. The directors envisage no problems
implementing this transaction before the Matodzi year-end.
The other transaction involves the 200 million "B" Preference shares in Matodzi
owned by JCI Investment Finance (Proprietary) Limited ("the Matodzi Preference
shares"), which are classified as debt. These Matodzi Preference shares will be
redeemed through the issuance of 200 million new Matodzi ordinary shares to JCI.
The Matodzi Preference shares represented R171.8 million of debt as at 30
September 2005 (31 March 2005:R162.1 million). Shareholders approved this
transaction at the 2005 annual general meeting, and the required statutory
approvals are in the process of being finalised. The directors are confident
that these approvals will be granted shortly.
Based on current cash flow projections for Matodzi it is possible the Company
may experience a cash shortfall post 30 September 2005, however, JCI has
undertaken to provide financial support to fund such cash shortfalls,
particularly in light of the above transactions that will see Matodzi becoming a
subsidiary of JCI. The cash flows of LetSeng are anticipated to be sufficient to
meet all operating, capital expenditure and debt service obligations for the
next twelve months. If a decision is taken to undertake the expansion programme
at LetSeng on completion of the current exploration drilling programme, the
Company will in conjunction with JCI, the other major LetSeng Diamonds
shareholder, review the financing of Matodzi.
If the two transactions described above are not implemented as proposed, and JCI
fails to agree on subordinating its debt, there is significant doubt that the
Matodzi will be able to reverse its insolvent position in the normal course of
business, and therefore a material uncertainty exists that Matodzi will continue
as a going concern without the partial disposal of a major portion of its
assets. The directors are confident that the proposed transactions pertaining to
the two sets of preference shares will be concluded as proposed and consequently
that Matodzi will meet its obligations as they fall due. Accordingly the
directors continue to adopt the going concern basis in the preparation of the
financial statements.
14 Subsequent events
There have been no material events subsequent to the reporting period and
before the date of this report that need to be disclosed.
15 DIRECTORATE CHANGES
In compliance with paragraph 3.59 of the Listings Requirements of JSE
Limited, the following information is disclosed with effect from 9 March 2006:
Advocate Linda Makatini has resigned as an Independent Non-Executive director,
and Mr John Chris Lamprecht withdraws as alternate to Mr Peter Henry Gray, and
has been appointed as a non-executive director.
Directors in office are as follows:
Andrew Mlangeni - (Non-Executive Chairman)
Sello Mashao Rasethaba - (Chief Executive Officer)
Peter Henry Gray - (Non-Executive Officer)
John Chris Lamprecht - (Non-Executive)
Mafika Edmund Mkwanazi - (Non-Executive)
Thabo Mosololi - (Non-Executive)
Review report of the independent auditors of Matodzi
KPMG has, without qualifying their review opinion included an emphasis of
matter, which draws attention to note 13 headed "Going concern" which indicates
that the Group"s total liabilities exceed their total assets by R258.3 million
(31 March 2005:R256.8 million). These matters along with other matters as set
forth in note 13 indicate the existence of a material uncertainty which may cast
significant doubt about the Group having sufficient cash resources to meet its
current obligations in the normal course of business, which may have an adverse
impact on the Group"s ability to continue operating as a going concern.
REVIEWED RESULTS 30 SEPTEMBER 2005
In accordance with the JSE listings requirements, the interim results for the
six months ended 30 September 2005 have been reviewed by KPMG following their
appointment as auditors to the Company in November 2005. The most significant
items requiring restatement following the review were:
Periods prior to - 31 March 2005
* Pre-production expenditure of R6.2 million previously capitalised in 2005
financial year which should have been expensed to the income statement as a
prior year adjustment;
* The independent review commissioned for the LetSeng Diamond life of mine plan
to facilitate the mineral reserve and resource declaration also reviewed the
estimate of the rehabilitation provision, resulting in a provision of R11.1
million;
* Following the implementation of componentisation as required by IFRS, the
amortisation charges for the prior periods have been restated to the extent of
R6.3 million;
* The goodwill stemming from the acquisition premium paid for LetSeng Diamonds
has been reclassified as mining assets, requiring amortisation, which has been
used over the useful life of the diamond recovery plant (10 years), resulting in
an additional R4.0 million depreciation charge;
Six months ended 30 September 2005
* Foreign exchange losses of R3.3 million stemming from timing differences on
the repatriation of the diamond proceeds previously deducted from diamond
revenue have been accounted for as finance costs in the reviewed results;
* Maintenance stock was understated to the amount of R3.8 million necessitating
a reduction in production costs and an addition to the inventories on hand shown
in the balance sheet;
* The creditor for amounts owing to the alluvial operators on the LetSeng
Diamond concession was not raised, requiring an addition of R3.7 million to
production costs and an additional amount owing to trade payables on the balance
sheet;
* As a consequence of the implementation of componentisation as required by
IFRS, the amortisation charge was recalculated resulting in a R2.5 million
reduction in the previously reported amortization;
* Following the reclassification of goodwill to mining assets, the amortization
required in the current period amounted to R4.0 million;
* The revised estimate of the rehabilitation provision for LetSeng Diamonds
resulting in raising a provision of R11.1 million in the prior period, which
necessitated a R0.9 million provision in the current period;
* The investment of R1.0 million in Skygistics (Proprietary) Limited (previously
Startrack Communications (Pty) Limited) was fully impaired, with the charge to
income statement offset by the reversal of other overstated provisions;
* A duplication of a deferred tax provision of R3.7 million on the balance sheet
was reversed; and
* Other minor differences on both the income statement and balance sheet account
for the further changes.
The consequences of the restatements for the respective reporting periods are as
follows:
Loss attributable Six months ended Unaudited six Audited year
to equity holders 30 September months ended ended 31 March
(R"000) 2005 30 September 2005
2004
Results (26 961) (50 144) (112 868)
previously
reported
Reviewed results (31 710) (50 856) (124 524)
Difference (4 749) (712) (11 656)
Diamond revenue from LetSeng of R217.8 million was 154% up from the previous
interim period (R141.3 million), reflecting the potential of the mine and
positioning itself to exceed revenue of R279.5 million for the 2005 financial
year. The demand for rough and polished diamonds remained strong, although the
strengthening of the Rand against the US Dollar partially impacted on diamond
revenues. As the ramp-up in production at LetSeng continues, the operating
profit margins improved and are expected to improve further as the mine reaches
full production.
Pending restructuring of the "B" Preference shares and the Wits Nigel Preference
shares as discussed in the 2005 annual financial statements, finance charges
remain high. Post restructuring of these preference shares, approximately R19
million of non-cash finance charges for the six-month period would be eliminated
from the results of Matodzi.
The further decline in the share price of JCI Limited to R0.16/share from
R0.25/share in March 2005 accounts for a R16.9 million adjustment in fair value.
At the forthcoming Annual General Meeting, a proposal to shareholders will be
submitted to consider distributing this investment to shareholders and moving
towards developing Matodzi into a focused diamond company.
The loss attributable to ordinary shareholders decreased from R50.9 million to
R31.7 million, and headline loss per share decreased from 34 cents per share to
21 cents per share respectively for the six months ended September 2004 and the
six months ended September 2005. The comparable loss attributable to ordinary
shareholders for the six months ended March 2005 was R76.1 million and headline
loss was 51 cents per share.
LETSENG
The key aspects relevant to the mine are as follows:
* Letseng is unique in that it is a kimberlite type deposit that exhibits
characteristics that are similar to alluvial deposits, namely low diamond grade
with high diamond values;
* the presence of large stones in the Satellite Pipe and Stockpile has been
reaffirmed by recent production;
* the occurrence of the large (+10ct) diamonds can be predicted and the
cumulative size frequency distribution curves dating back from inception of the
mine, up until now reflected the same percentage occurrence of large diamonds;
* the diamond market outlook for Letseng is positive as there are no known mines
scheduled to come into production in the medium term which would produce similar
stones to Letseng, i.e. 5cts and larger and, in particular, stones of 10cts
upwards of top colour and top quality;
* global jewellery demand is expected to rise in excess of 5% per annum for the
next five years and global diamond production is predicted to remain constant
over the same period leading to a squeeze in supply; and
* prices for both rough and polished diamonds are expected to rise at an average
annual rate in excess of 5% and better quality top range jewellery with Letseng-
type diamonds are expected to perform particularly well.
LETSENG DIAMONDS Six months Six months Year
Ended ended ended
30 Sept 2005 20 Sept 2004 31 March 2005
Ore treated Tonnes (000) 1152 801 1732
Diamond yield Carats/100tonne 1.71 2.26 2.14
Diamonds recovered Carats 19658 18066 37049
Average revenue R/tonne 189 176 161
Average revenue $/Carat 1734 1227 1245
Cash costs R/tonne 98 102 97
Cash costs R/carat 5751 4540 4526
Total production costs R/cara 6803 5260 5505
Average exchange rate achieved
ZAR/USD 6.38 6.372 6.06
Capital expenditure R000"s 6274 14122 38546
The ore treated increased 33% to 192 037 tonnes per month for the six months
ended 30 September 2005 from an average of 144 323 tonnes per month for the year
ended 31 March 2005. Cash costs per ounce increased marginally by 1% to R98 per
tonne from March 2005 and reduced by 5.7% from R102 per tonne for September
2004. Capital expenditure relates to ongoing projects to further improve
operational performance. Letseng is demonstrating it"s potential and the strong
performance was reflected in the cash generation of R94 million for the six-
month period ended September 2005.
115 million tons of kimberlite were mined and processed for the recovery of
19,658 carats at a grade of 1,7 carats per hundred tons. 72% of the kimberlite
was derived from the satellite pipe pit and 28% from the main stockpile.
For and on behalf of the board
Sello Mashao Rasethaba Andrew Mlangeni
Chief Executive Officer Chairman
Johannesburg
13 March 2006
Sponsor
SASFIN CAPITAL
A division of Sasfin Bank Ltd
Date: 13/03/2006 05:03:31 PM Produced by the JSE SENS Department
