| Thu 15 Jun 2006, 9:00 | | Miranda - Reviewed abridged interim financial resu |
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MMH
MMH
Miranda - Reviewed abridged interim financial results for the six months ended
28 February 2006
Miranda Mineral Holdings Limited
(previously Proper Group Limited)
(incorporated in the Republic of South Africa)
Registration number: 1998/001940/06
Share code: MMH & ISIN: ZAE000074019
("Miranda" or "the company" or "the group")
Reviewed abridged interim financial results for the six months ended 28 February
2006
Highlights
* Listing on main board of the JSE on 19 December 2005
* New order prospecting rights granted by the DME for the group"s North West
alluvial diamond project
* First two subcontracting agreements signed on the North West diamond project
(Ventersdorp district)
* SAMREC compliant CPR completed on Rozynenbosch base metal and silver project
recording an indicated mineral resource of 14 million tons with an in-situ value
of R3.6 billion
* Rights granted to prospect for gold ore on the farms Burlington 217 KU (3404
hectares) and Islington 219KT (2907 hectares) in the Letaba district
* Five guarantees lodged with the DME in respect of the group"s prospecting
program for alluvial and kimberlite diamonds, on five farms covering a total of
2059 hectares, in the Odendaalsrus and Henneman districts
* Net asset value of the group improves to R2 per share
Balance Sheets
(Figures in R"000) Reviewed Reviewed Audited
as at as at as at
28 Feb 2006 28 Feb 2005 31 Aug 2005
ASSETS
Non-current Assets 307,875 33 33
Fixed assets 306,866 33 33
Intangible assets 1,009 - -
Current Assets 599 309 352
Loan receivable 114 307 350
Receivables and deposits 318 2 2
Cash and cash 167 - -
equivalents
Total Assets 308,474 342 385
EQUITY AND LIABILITIES
Capital and Reserves 307,503 (138) (460)
Issued capital 1,537 307 307
Share premium 29,952 5,866 5,866
Accumulated loss (8,308) (6,311) (6,633)
Non-distributable 284,323 - -
reserve
Non-current Liabilities
Loans payable - 479 844
Current Liabilities 971 1 1
Accounts payable 971 - -
Bank overdraft - 1 1
Total Equity and 308,474 342 385
Liabilities
Net asset value per 200.0 (0.4) (1.5)
share (cents)
Net tangible asset value 199.7 (0.4) (1.5)
per share (cents)
Shares in issue - 153,731 30,746 30,746
closing ("000)
Income Statements
(Figures in R"000) Reviewed Reviewed Audited
six months six months Year ended
ended ended 31 Aug 2005
28 Feb 2006 28 Feb 2005
Revenue - - -
Operating expenses (1,675) (176) (498)
Profit/(Loss) before (1,675) (176) (498)
interest and taxation
Net finance cost and - - -
taxation
Net loss after taxation (1,675) (176) (498)
Loss for the period (1.1) (0.6) (1.62)
(cents per share)
Headline loss (cents per (1.1) (0.6) (1.62)
share)
Shares in issue - 153,731 30,746 30,746
weighted average ("000)
Cash Flow Statements
(Figures in R"000) Reviewed Reviewed Audited
Six months Six months Year
Ended ended Ended
28 Feb 2006 28 Feb 2005 31 Aug 2005
Cash Flows from
Operating Activities
Cash paid to suppliers (1,924) (176) (498)
and employees
Cash Flows from 2,700 38 (5)
Investing Activities
Acquisition of fixed (0) (33) (33)
assets
Expenditure on tangible (22,616) - -
exploration and
evaluation assets as a
result of increasing
operations
Share capital issue 25,316 - -
Decrease in loans 236 71 28
receivable
Cash Flows from
Financing Activities
Long term liabilities (844) 138 503
raised/(repaid)
Increase in cash and 168 - -
cash equivalents
Cash and cash (1) (1) (1)
equivalents at beginning
of year
Cash and cash 167 (1) (1)
equivalents at end of
year
Statements of Changes in Equity
(Figures in R"000) Share Share Accumu- Non Total
Capital Premium lated Distri-
profit/ butable
(loss) reserve
Balance at 1 Sep 2005 307 5,866 (6,633) - (460)
Issue of share capital 1,230 - - - 1,230
Premium on issue of - 24,086 - - 24,086
share capital
Non distributable - - - 284,322 284,322
reserve
Net loss for the period - - (1,475) - (1,475)
Balance at 28 Feb 2006 1,537 29,952 (8,308) 284,322 307,503
COMMENTARY
FINANCIAL AND OPERATIONAL REVIEW
Shareholders are advised to be circumspect when making direct comparisons with
the group"s historical financial results as the interim results for the period
ended 28 February 2006 reflect the establishment of Miranda as a listed
exploration company. During the reporting period, management focused on the
implementation of the listing in December 2005 and on the process of converting
the exploration permits from "old order" rights to that of "new order" rights.
The bulk of the operating expenses for the period of R1.7 million (equivalent to
a loss of 1.1 cents per share; February 2005, before the Miranda acquisition:
loss of 0.6 cents per share) have been incurred in the course of carrying out
these activities.
Miranda Minerals (Pty) Ltd, a wholly-owned subsidiary of Miranda, acquired the
mineral rights to 894 properties covering approximately 158 000 hectares and 110
farms from Gold Fields in 1999 and 2000. These minerals rights comprise
diamonds, base metals, clay, sand, coal, industrial minerals and platinum.
Miranda has so far identified commercially feasible projects on 74 of the
original farms in the portfolio and has lodged 54 applications for new order
prospecting rights.
Miranda"s strategy is to develop strategic joint venture partnerships with
certain approved mining and exploration contractors in return for participation
when a project moves to its eventual mining phase. Since the group therefore
does not intend to prospect or mine directly, its strategy reduces the need for
a large and expensive in-house exploration department, whilst allowing the
flexibility to develop a number of projects simultaneously. Miranda will in
turn receive a pre-determined share of the revenue generated by each project.
The listing process was completed with a cost to the company of only R276 000,
considerably lower than other companies that recently listed on the JSE in the
same industry. Management"s focus on submitting permit applications and dealing
with the outstanding queries from the Department of Minerals and Energy ("DME")
during the past six months will increasingly shift towards the evaluation of the
exploration opportunities.
In this regard, management has been specifically tasked by the Board to select
the best opportunities available to the group and to have them analysed and
evaluated by an independent competent person. This process will assist the
Board in realising and optimising the value on these projects, as well as in
negotiations with its strategic partners. The first such project announcement
made by the group was the evaluation of the Rozynenbosch resource.
The Board has also tasked management with procuring joint venture arrangements
with suitable contractors. Following the granting of new order prospecting
rights for the group"s North West alluvial diamond project outside Potchefstroom
on the Blaauwbank and Turffontein farms, Miranda announced on SENS that it had
concluded transactions with joint venture partners on the North West diamond
project.
NOTES TO THE INTERIM RESULTS
1. DIRECTORS" EVALUATION OF ROZYNENBOSCH DEPOSIT
Geological investigations costing in excess of R11.7 million in current terms
have been conducted on the Lead-Silver-Zinc-Copper deposit located on the farm
Rozynenbosch 104 (3,978 hectares) in the Kenhardt District of the Northern Cape
Province ("the Rozynenbosch deposit"). These investigations have resulted in
the company completing an audited and SAMREC compliant resource estimate showing
an Indicated Mineral Resource of 14 million tonnes, grading at Pb=1.79%,
Zn=.46%, Cu=.03%, Ag=34.1g/t, and translating to an estimated in-situ gross
project value of R3.63 billion.
The Resource Estimate Report referred to above, was completed by Mr R Mossom
(B.Sc. Pr. Sci. Nat) of Merlin Resources. Mr Mossom is a SAMREC approved
Geologist and the directors are satisfied that he has the relevant knowledge and
experience to compile the report having previously been involved in similar base
metal sulphide projects in South Africa.
Consistent with the company"s business model of earning royalties from strategic
joint venture partners who will mine the deposit, the directors have placed a
value of R284 million on the project. This value has been arrived at by
discounting the future cash flows attributable to Miranda based on a royalty
income of 15% appropriately adjusted for risk at a discount factor of 15.25%.
(The DCF model has been prepared by Mr W Ison (B.Comm. MBA) and reviewed by Mr
KJ Gribnitz (B.Comm. Hons. M.Comm. CIS Grad.)).
The Directors have reviewed and accepted both the Resource Estimate Report and
the valuation model and are in agreement with the methodology and resultant
valuations therein. A reporting accountants report has been prepared by the
company"s auditors on the valuation model and techniques adopted and confirms
the assumptions and methodology used as appropriate and reasonable.
Accordingly, the directors are of the opinion that the Rozynenbosch deposit has
been fairly valued. The revaluation of the Rozynenbosch deposit has had the
effect of increasing the net asset value of the group to R2 per share (2005,
before the Miranda acquisition: (0.4) cents per share).
The valuation model and Resource Estimate Report can be viewed on the company"s
website at www.mirandaminerals.com.
2. STATEMENT ON BUSINESS MODEL AND GOING CONCERN
Miranda"s primary activity is that of exploration and exploration companies by
their very nature are not cash generative in the short term.
The business of Miranda is to establish the commercial viability of mineral
resources within its portfolio of mineral assets by entering into joint venture
projects with contractors who assume overall financial responsibility for the
exploration costs in return for the option to participate when the project moves
to the final mining phase.
This model reduces the risk and the internal capital requirement of the company.
Even so, the success of the funding model is based on accessing both internal
sources of capital (cash flow generated from joint venture projects) and
external sources of capital (capital raised in the market when required and when
the timing is appropriate).
The Board is managing its cash flow requirements very carefully and has obtained
undertakings for interest free loans from the main shareholders to fund any work
for the next three to six months, should the need arise. The reason for this
approach is for the company to establish the value of its major assets and to
determine the possibility of cash generation from its diamond projects. This
information would enable the directors to place a more appropriate value on the
company when considering other funding alternatives that may be available from
time to time, which include issuing shares for cash.
3. PROSPECTS
The company is satisfied with the results and expenditure to date and is
confident it will continue to attract joint venture partners capable of further
developing its mineral prospects, in particular the Rozynenbosch base metal and
silver resource and the alluvial diamond projects on the farms Turffontein and
Blaauwbank.
4. BASIS OF PREPARATION AND ACCOUNTING POLICIES
The abridged interim financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRS) for the first time (IFRS 1
for first time adoption has been applied). The company has elected to early
adopt IFRS 6: Exploration for and Evaluation of Mineral Resources. Except as
modified by International Financial Reporting Standards for the year ended 28
February 2006, the financial statements have been prepared under the historical
cost convention and the accounting policies are consistent with those of the
previous year.
The application of IFRS to the financial statements required no adjustment to
the historical financial results as previously reviewed/ audited and reported
given that the company had no operations and was effectively a "shell" company
at the comparative reporting period dates.
The value of the Rozynenbosch mineral resource is stated at fair value (per note
1), which treatment is in accordance with International Financial Reporting
Standards (IFRS 6) and its interpretation adopted by the International
Accounting Standards Board. A reporting accountants report confirming that the
group"s accounting policies are in compliance with IFRS has been prepared by the
company"s auditors and is available for inspection at the company"s offices.
5. DIVIDENDS
No dividends were recommended or declared for the interim period.
6. REVIEW OPINION BY AUDITORS
The interim results have been reviewed by the company"s auditors Compendium
(Pretoria) Inc, who have performed their review in accordance with the
guidelines for auditors on review of interim financial information issued by the
South African Institute of Chartered Accountants. The unqualified review report
prepared by the company"s auditors is available for inspection at the company"s
offices.
Centurion
14 June 2006
For and on behalf of the Board
TV Mokgatlha, Chairman
RJ Nel, Chief Executive Officer
Sponsor
Sasfin Capital
(a division of Sasfin Bank Limited)
Corporate Advisor
Radagast Capital (Pty) Limited
Transfer secretaries
Computershare Investor Services 2004 (Pty) Ltd
Registered address
Mirkwood Estate
Plot 26
Klipkop, JR 396
Gauteng
Date: 15/06/2006 09:00:23 AM Produced by the JSE SENS Department
