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SAL
SAL
Sallies Limited - Sustainable profits in sight
SALLIES LIMITED
(Incorporated in the Republic of South Africa)
Registration number 1903/001879/06
JSE Share Code: SAL
ISIN: ZAE000022588
SALLIES - SUSTAINABLE PROFITS IN SIGHT
Johannesburg, 28 March 2006 - Long-embattled fluorspar producer Sallies said
today its prospects had been brightened significantly by the breakthrough
developments - including a fully underwritten R65 million rights offer - of
recent weeks.
Results for the six months to December, announced today, were still poor with
the company posting a R16.7 million loss. During this period, its perennial
problems with the exchange rate and the onerous Honeywell supply agreement were
exacerbated by lack of access to one of the Witkop mine"s deposits and a
consequent reduction in feed grade and recoveries.
Chief executive Izak Marais said while the March quarter would still be tough, a
performance improvement was expected in the June quarter and the company was set
to make a strong start to its new financial year which starts in July.
"The mining licence for the Buffelshoek deposit has now been sorted out, which
means that we can get our feed grade and therefore our production back to
budgeted levels. Our termination of the Honeywell agreement in January because
of overdue payments has freed more than half of our production for sale to other
customers at better prices in a global fluorspar market which continues to be
buoyant. Our BEE status is being secured through the agreement in which African
Renaissance Investments is acquiring a 30% stake in the business of Sallies, and
the proceeds of the rights offer now under way will strengthen the balance sheet
and give us the means to acquire Buffalo Fluorspar, subject to the due diligence
currently in progress," Marais said.
Chairman Peter Flack said through grit and hard work the company had succeeded
in overcoming numerous obstacles it faced at the beginning of the year
"The company has had to contend with the rand, the Honeywell contract and delays
in the approval of mining and water rights which severely prejudiced its
operations. The fact that it has not only survived these adversities but now
actually has a real chance of a prosperous future is little short of miraculous.
After years of precarious existence, Sallies is now moving onto solid ground,
although much still remains to be done," Flack said.
Flack said the company"s immediate objectives were :
* to finalise all its mining rights and to obtain the Integrated Water Use
Licence which will enable it to commercialise its pilot-stage recycling project;
* to increase plant availability to the design capacity of 180 000 WMT;
* to complete the rights offer and the BEE transaction; and
* subject to a favourable due diligence, to acquire Buffalo Fluorspar, thus
expanding Sallies" output and enhancing its low-cost production capability.
For further information call Izak Marais on 083 298 2000
Issued by du Plessis Associates on behalf of Sallies Limited. dPA contact Helen
McKane on Tel : +2711 7284701, Fax: +2711 7282547 or e-mail: sallies@dpapr.com
Date: 28/03/2006 12:16:03 PM Produced by the JSE SENS Department
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