| Wed 23 Aug 2006, 12:00 | | Metorex - Consolidated Reviewed Provisional Result |
|
MTX
MEMTX
Metorex - Consolidated Reviewed Provisional Results For The Financial Year Ended
30 June 2006
Metorex Limited
(Registration number: 1934/005478/06)
(Incorporated in the Republic of South Africa)
JSE code: MTX
ISIN: ZAE000022745
Issuer code: MEMTX
Listed on the JSE Limited and London Stock Exchange
* Earnings per share increased by 302%
* Ruashi/Sable projects commissioned
* Chibuluma achieves design capacity in June 2006
* Vergenoeg fluorspar expansion complete
* Ruashi Phase II bankable feasibility complete
Consolidated Income Statement
Year ended Year ended
30 June 2006 30 June 2005
R000"s (Reviewed) (Restated)
Revenue:
Mineral sales
Copper 295 313 61 276
Coal 440 779 385 765
Fluorspar 156 546 122 743
Gold 395 544 363 823
Antimony 165 925 95 606
Other - 796
Gross revenue 1 454 107 1 030 009
Realisation costs 128 390 84 167
On-mine revenue 1 325 717 945 842
Cost of production 954 325 823 659
Stock movement 7 272 (13 326)
Depreciation 75 361 50 597
Mining profit 288 759 84 912
Other income 7 184 14 472
Operating income before finance costs 295 943 99 384
Finance income 8 158 3 817
Finance costs (11 576) (13 786)
Income before taxation 292 525 89 415
Taxation - normal and STC 18 613 4 818
Taxation - deferred 62 012 26 032
Income after taxation from
continuing operations 211 900 58 565
Discontinued operations (2 244) (12 439)
Profit for the year 209 656 46 126
Attributable to:
Equity holders of the parent 155 394 27 401
Minority interest 54 262 18 725
209 656 46 126
From continuing and discontinued
operations:
Earnings per share (cents) 54,3 13,5
Diluted earnings per share (cents) 53,1 12,7
From continuing operations:
Earnings per share (cents) 55,1 19,6
Diluted earnings per share (cents) 53,9 18,4
Earnings per share and headline
earnings per share are calculated
using the following:
Income attributable to ordinary
shareholders 155 394 27 401
Profit on sale of subsidiary shares (20 152) (4 607)
Profit on sale of fixed assets,
net of tax (1 014) -
Discontinued operations 2 244 2 357
Headline earnings (R000"s) 136 472 25 151
Headline earnings per share (cents) 47,7 12,3
Diluted headline earnings
per share (cents) 46,7 11,6
Weighted average number of shares
in issue (000"s) 286 147 203 717
Diluted number of shares in issue
(000"s) 292 455 216 584
Consolidated Balance Sheet
Year ended Year ended
30 June 2006 30 June 2005
R000"s (Reviewed) (Restated)
ASSETS
Non-current assets
Property, plant and equipment 930 084 568 727
Mineral rights 309 254 250 748
Goodwill 18 309 18 309
Investments 929 929
Rehabilitation trust funds 41 056 43 033
Deferred tax asset 262 16 170
1 299 894 897 916
Current assets
Inventories 57 688 47 691
Trade and other receivables 273 870 161 777
Derivative instruments 599 -
Taxation prepaid 3 592 4 985
Bank balances and cash 91 590 207 779
427 339 422 232
Total assets 1 727 233 1 320 148
EQUITY AND LIABILITIES
Capital and reserves
Share capital and premium 802 038 765 197
Hedging and translation reserve (145 202) (60 631)
Retained income 278 824 123 430
Share option equity 7 536 3 500
Equity reserve (128 066) (128 066)
Equity attributable to equity
holders of parent 815 130 703 430
Minority interest 153 438 150 822
Total equity 968 568 854 252
Non-current liabilities
Long-term liabilities
- interest bearing 66 330 48 953
Long-term provisions 78 799 72 645
Deferred tax liabilities 135 985 74 456
281 114 196 054
Current liabilities
Trade and other payables 226 494 162 577
Short-term borrowings
- interest bearing 39 750 43 610
Short-term provisions 35 011 29 673
Derivative instruments 161 479 14 947
Bank overdraft 3 421 18 713
Taxation 11 396 322
477 551 269 842
Total equity and liabilities 1 727 233 1 320 148
Net asset value per share (cents) 282 251
Net tangible asset value
per share (cents) 276 245
Condensed Consolidated Cash Flow Statement
Year ended Year ended
30 June 2006 30 June 2005
R000"s (Reviewed) (Audited)
Cash generated before working
capital changes 351 848 129 260
Working capital changes (34 260) (5 732)
Cash generated by operations 317 588 123 528
Dividends paid to minorities (15 132) (3 009)
Taxation paid (6 408) (6 702)
Finance costs, net (3 418) (9 969)
Cash inflows from operating activities 292 630 103 848
Cash outflows from investing activities (428 011) (131 045)
Cash inflows from financing activities 34 562 217 220
Net (decrease)/increase in cash a
nd cash equivalents (100 819) 190 023
Cash at beginning of year 189 066 (1 041)
Effect of foreign exchange rate changes (78) 84
Cash at end of year 88 169 189 066
Condensed Statement of Changes in Equity
Year ended Year ended
30 June 2006 30 June 2005
R000"s (Reviewed) (Restated)
Shareholders" equity at start
of year - Restated 854 252 538 984
Ordinary shares issued 36 841 263 386
Hedging and translation reserve (84 571) (9 881)
Net income for the year 155 394 27 401
Share option equity 4 036 2 500
Minority interest 2 616 31 862
Total equity 968 568 854 252
COMMENTARY
SAFETY AND TRAINING
The Group conducts its activities with due regard to the safety and health of
its employees and runs approved training programmes through its respective
training centres. Barberton Mines (Pty) Limited was awarded a Million Fatality
Free Shifts trophy for which the management and staff are to be commended.
However, the Group reports with regret the death of three employees through mine
accidents during the past year.
FINANCIAL RESULTS AND CASH FLOW
The Group"s repositioning in 2005, focusing on long-life, high-margin projects,
together with continued internal expansion, resulted in improved levels of
production and cost improvements. The robust commodity prices experienced during
the second half of the year further boosted earnings.
All divisions contributed meaningfully to the Group"s earnings for the year. The
most significant improvement came from the copper division with a revenue
increase of 382% and a contribution of 37% of Group EBITDA compared to a loss
last year.
The revenue from mineral sales increased by 41% to R1,454 million from the
previous year. The main volume increase occurred in the copper division with a
186% increase in sales volumes with the remainder of the divisions, with the
exception of Barberton Mines gold sales, producing volume increases ranging
between 8% and 17% during the year. The most significant commodity price
increase was reflected in copper at a 69% improvement from the previous year.
The remainder of the Group"s commodities reflected price increases ranging
between 7% and 48%. The increase of 16% in Group production cash costs is
largely due to increased production volumes from the copper, coal and industrial
minerals divisions. Adjusting for the increases in production volumes, the
increase in cash costs of production was approximately 5%. The profit margin
from mining increased to 25% from 13% and the profit from mining operations
increased to R288,8 million from R84,9 million the previous year.
Earnings per share of 54,3 cents constitutes a 302% increase on the previous
year and headline earnings of 47,7 cents per share is a 288% increase on the
previous year.
In calculating the earnings and headline earnings per share, the weighted
average number of shares in issue has been applied. The additional shares issued
for the Ruashi project are included in this weighted average number of shares in
issue, however the Ruashi capital project has yet to contribute to earnings.
The Group generated R351,8 million of cash before working capital changes. R479
million was spent on capital projects, mainly Ruashi and Sable, leaving Group
cash balances of R88,2 million remaining at year-end.
DIVISIONAL PERFORMANCE FOR THE YEARS ENDED 30 JUNE
Financial Performance 2006 2005 2004 2003
Gross revenue (R"000) 1 454 107 1 030 009 1 055 417 886 317
EBITDA (R"000) 371 304 149 981 103 179 84 093
#Cash mining
profit margin (%) 25 13 7 9
*EPS (cents) 54,3 13,5 (8,6) 7,4
*HEPS (cents) 47,7 12,3 2,2 9,1
Market
capitali-
sation (R"000) 3 237 093 1 167 321 428 764 385 042
Shares in
issue (`000) 289 026 279 933 187 233 175 019
Share price (cents) 1 120 417 229 220
ZAR/US$ rate
- Average (R/$) 6,4 6,2 6,9 9,1
ZAR/US$ rate
- Closing (R/$) 7,2 6,7 6,2 7,6
DENOTES
* Prior years restated.
Cash mining profit as percentage of gross revenue.
DIVISIONAL PERFORMANCE FOR THE YEARS ENDED 30 JUNE (UNREVIEWED) - continued
COPPER
Chibuluma South 2006*
Tons milled (t) 363 311
Headgrade (%) 2,7
Concentrator and smelter recovery (%) 81,6
Copper produced (t) 8 002
Copper sold (t) 8 017
Average price ($/t) 5 427
Cash cost/ton sold ($/t) 2 984
#Cash mining profit margin (%) 45
* First year of production.
Mining and development of the Chibuluma South Mine commenced at the start of the
financial year, during which production has ramped-up to the design capacity of
40 000 tons per month of ore milled. The headgrade has been affected by a barren
area within the orebody in the upper levels, which is pinching out with depth
with anticipated increased headgrades going forward. The South mine and
concentrator are operating efficiently and production levels are expected to be
bettered during the forthcoming financial year.
The decline shaft development continues to be accelerated in order to establish
ore reserve access for approximately 18 months ahead of mine production. The
contribution to the Group earnings for the year, at a cash mining profit margin
of 45%, has been significant and resulted in a 37% contribution to the Group
EBITDA.
COAL
Wakefield 2006 2005 2004 2003
ROM production
(excl. Eskom) (t) 4 472 890 4 440 714 2 536 563 2 448 765
Yield (%) 56 57 55 56
Produced (t) 2 486 234 2 531 983 1 383 485 1 362 612
Sold
(excl. Eskom) (t) 2 511 627 2 317 208 1 422 166 1 416 569
Sold - Eskom (t) 896 333 1 077 220 639 597 -
Average price
(excl. Eskom) (R/t) 164 154 137 127
Total cash
cost/tonne
(excl. Eskom) (R/t) 139 123 131 112
#Cash mining
profit margin (%) 21 26 11 12
The run of mine coal production for the year was largely in line with that of
the previous financial year and was hampered by strike action during the first
two months of the financial year at the underground mining operations.
Coal sales, excluding Eskom, increased by 8% during the year, which is mainly
attributable to increased production levels from the Middelburg Townlands
Colliery. Eskom discard dump coal sales however declined by 17% during the year.
The average coal price achieved increased by 7% from that of the previous year
and unit operating costs also increased by approximately 13% due to higher
overburden stripping costs and particularly the higher diesel price. The cash
mining profit margin declined to 21% from 26% the previous year.
Further to a company announcement dated 7 July 2006, subject to the signing of a
Definitive Sale of Shares Agreement and satisfying certain conditions precedent,
Metorex has agreed to sell its 74% interest in Wakefield for R314,5 million.
FLUORSPAR
Vergenoeg 2006 2005 2004 2003
Tons milled (t) 470 623 428 976 455 032 436 096
CaF2 grade (%) 43,3 42,6 40,7 37,1
CaF2 recovery (%) 73,7 70,8 68,8 62,1
Acidspar
produced (dmt) 155 007 129 454 127 400 102 016
Acidspar sold (dmt) 149 051 126 205 136 467 101 516
Price
(acidspar) ($/dmt) 155 138 115 99
Total cash
cost/ton (R/t) 755 776 701 728
#Cash mining
profit margin (%) 28 20 14 21
During the first quarter of 2006 Vergenoeg successfully completed an expansion
programme aimed at achieving a 40% increase in production.
For the 2006 year, acidspar production increased by 20% with improvements in
both the feed grade and plant recovery. Fluorspar sales volume increased by 18%
and at improved prices, which resulted
in a reduction in the cash cost per ton sold and an improvement in the cash
mining profit margin from 20% to 28%.
GOLD
Barberton 2006 2005 2004
Tons milled (t) 313 779 316 094 349 219
Headgrade (g/t) 10,7 11,1 10,4
Overall recovery (%) 92 92 91
Produced (kg) 3 088 3 230 3 305
Sold (kg) 3 108 3 201 3 321
Price: Spot (R/kg) 108 683 86 265 88 133
Hedge (R/kg) 90 047 101 890 100 900
Total cash cost/kg (R/kg) 88 177 85 073 75 460
#Cash mining profit
margin (%) 16 12 23
Barberton Mines gold production was largely in line with that of the previous
year. The effects of the introduction of larger underground machines at Fairview
mine and the establishment of underground access between Fairview mine and Sheba
mine, are planned to result in a 10% increase in gold production during the
forthcoming year. The gold price has assisted in lifting the cash mining profit
margin from 12% during the previous year to 16% in the current year.
Whilst the gold headgrade is high by South African gold industry standards, as a
greenstone belt deposit, its grade is highly variable.
ANTIMONY
Cons Murch 2006 2005 2004 2003
Tons milled (t) 447 547 437 798 475 601 550 049
Produced: Sb (mtu) 576 317 502 194 522 238 506 773
Au (kg) 675 672 718 916
Sold: Sb (mtu) 585 600 500 021 520 976 551 352
Au (kg) 669 671 706 916
Price: Sb ($/mtu) 44,2 30,7 24,9 24,3
Au ($/oz) 560 416 386 331
Total cash
cost/mtu
(R/mtu) 209 194 191 170
#Cash mining
profit margin (%) 18 (1) (6) 13
Net of gold revenue.
Antimony production and sales volumes have increased by approximately 16% as a
result of improved antimony grades. The antimony price has increased by 44% in
US Dollar terms and 48% in Rand terms. The cash cost per mtu sold has increased
by 8% as a result of higher off-mine charges, which are proportionate to the
higher antimony price. The earnings contribution for the year has increased from
a negative contribution in 2005 to a 13% contribution to the Group EBITDA for
the current year.
Evaluative work is currently taking place with regard to the potential of re-
equipping the Athens and Gravelotte shafts to access additional ore
resources/reserves.
RUASHI/SABLE PROJECT
The Ruashi capital development programme is largely complete with cold
commissioning of the concentrator, having commenced in June 2006 and first ore
feed to the plant during July 2006. The fine-tuning of the plant and
rectification of snagging is taking place concurrently with the production build
up, which at mid-August 2006 was at approximately 50% of design capacity. This
build-up is expected to be complete shortly. The design capacity of the Ruashi
concentrator is for the production of copper/cobalt concentrate containing 10
000 tons of copper and 1 000 tons of cobalt per annum in Phase I.
A bankable feasibility study on Phase II of the Ruashi project, which involves
the expansion of the existing plant infrastructure, construction of a solvent
extraction, electrowinning circuit and acid plant, and an increase in mining
volumes, is complete and has been submitted to the lead financiers for funding.
Phase II is being fast-tracked with site establishment procedures having
commenced, negotiations with Societe Nationale d"Electricite ("SNEL") having
been initiated and the sourcing of electrical and mechanical components for the
expanded plant under way.
In addition, a drilling team has been mobilised for the evaluation of the
Musonoi and Sokoroshe exploration targets situated in the Kolwezi and Lubumbashi
regions respectively.
The Sable processing complex at Kabwe in Zambia was commissioned during May 2006
and has been producing a combination of standard and A-grade copper cathode
since that date from purchases of third-party material. The leach and
electrowinning circuits are commissioned and operational with the solvent
extraction plant expected to be commissioned in August/September enabling it to
process the Ruashi concentrates on arrival.
Acid is being purchased by Sable until such time as the acid plant is
commissioned.
The movement of material from Lubumbashi to Sable by rail is deemed to be the
most sensible long-term option, but teething problems are being encountered with
implementing this structure. A combination of road and rail transport is
presently being utilised.
FUTURE PROSPECTS
The Group remains committed to the investment in and management of high-quality,
long-life mining projects which strategy during the past year resulted in a
Memorandum of Understanding signed for the sale of Wakefield Investments (Pty)
Limited (coal division).
It is anticipated by the Board that the expansion at the fluorspar operation,
fine-tuning of the gold division, the achievement of full design capacity at
Chibuluma and commencement of production from Ruashi mine and the Sable
processing facility should, together with the sustained robust commodity prices
and a marginally weaker Rand, lead to continued earnings growth notwithstanding
the potential exclusion of the coal division"s earnings.
CAPITAL EXPENDITURE AND COMMITMENTS
Group capital expenditure totalled R479 million (2005: R160 million), which was
mainly related to the Ruashi/Sable projects, Chibuluma South production ramp-up,
the Middelburg Townlands expansion project and Vergenoeg plant expansions.
Contracted capital commitments at 30 June 2006 amount to R33,2 million (2005:
R21,8 million), whilst uncontracted commitments amount to R38,1 million (2005:
R264,5 million).
Operating lease commitments, which fall due within the next year, amount to R9,3
million (2005: R5,3 million), whilst commitments of R7,7 million (2005: R12,6
million) fall due during the next four years.
SHARES ISSUED
(1) 31 August 2005: 3,3 million shares at R4,41/share;
18 October 2005: 2,9 million shares at R5,05/share - To increase the Company"s
shareholding in Ruashi Holdings from 76% to 84%.
(2) July 2005 - June 2006: 2,89 million shares at average R2,54/share - Share
option implementations.
ACCOUNTING POLICIES
The reviewed provisional results have been prepared in accordance with IAS 34,
Interim Financial Reporting Standards. The accounting policies are consistent
with those adopted in the financial year ended 30 June 2005, except for the
application of IFRS 2: Share-based payments and the adoption of the Revised
International Accounting Standards and interpretations of the new and revised
Standards and Interpretations issued by the International Financial Reporting
Interpretations Committee (IFRIC) of the IASB that are relevant to its
operations and effective for accounting periods beginning on 1 January 2005.
The review report as compiled by the Group"s external auditors is available at
the Group"s registered head office. The Group complies with the Companies Act
and the Listing Requirements as prescribed by the JSE.
IMPLICATIONS OF ADOPTING IFRS 2: SHARE-BASED PAYMENTS
IFRS 2: Share-based Payments became effective for the financial year ended 30
June 2006. In terms of IFRS 2, the Group now recognises the cost of share
options (share-based payments) from 1 July 2005. IFRS 2 required that all
options granted after 7 November 2002, not vested by 1 July 2005, be accounted
for.
The Group has adopted an appropriate valuation model to fair value the employee
share options. The value of the share options has been determined as of the
grant date of the options and has been expensed on a straight-line basis over
the expected exercise period. Based on this model, the following costs for the
financial years ended after 7 November 2002, with share option grants qualifying
for IFRS 2, have been accounted for:
F2004: R1 million (against opening retained earnings)
F2005: R2,5 million (against opening retained earnings)
F2006: R4,0 million (current year)
The corresponding entry for the above adjustments was shareholders" equity
within the share-based payment reserve. The effect on opening shareholders"
equity is R0,6 million. The F2005 annual net earnings of R29,9 million have been
restated to R27,4 million, the difference being the share-based costs for that
year. These costs are included in other expenses. Earnings per share, headline
earnings per share and diluted earnings per share have also been restated.
DIVIDEND
In view of the funding requirements of the new projects and capital intensive
expansion plans in three of the four divisions, no dividend is recommended for
the 12 months ended 30 June 2006.
By order of the Board
A S Malone C D S Needham
Chairman Managing Director
23 August 2006
Contact details for Metorex Limited and Corporate Advisers
Postal: PO Box 2814, Saxonwold, 2132, South Africa
Telephone: (+27 11) 880-3155
Facsimile: (+27 11) 880-3322
Website: www.metorexgroup.com E-mail: ir@metorexgroup.com
Registrars: South Africa and United Kingdom
Link Marketing Services (Pty) Limited, PO Box 4844,
Johannesburg, 2000, South Africa
Telephone: (+27 11) 834-2266
The Capita Group PLC, The Registry, 34 Beckenham Road, Beckenham, Kent, BR34TU,
England Telephone: (+44 208) 639-2157
Company secretaries
Moore Stephens MWM, PO Box 1574, Houghton, 2041,
RSA Telephone: (+27 11) 728-7240
Auditors
Deloitte & Touche, Private Bag X6, Gallo Manor, 2052,
South Africa Telephone: (+27 11) 806-5000
ADR Programme - North America and Canada
The Bank of New York, 101 Barclay Street, New York, NY 10286,
USA Telephone: (+1 212) 815-3326
website: www.metorexgroup.com
e-mail: ir@metorexgroup.com
Date: 23/08/2006 12:00:14 PM Produced by the JSE SENS Department
