| Mon 19 Feb 2007, 7:00 | | MTX - Metorex Limited - Consolidated unaudited res |
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MTX
MEMTX
MTX - Metorex Limited - Consolidated unaudited results for the six months
ended 31 December 2006
METOREX LIMITED
Registration number: 1934/005478/06
JSE code: MTX
ISIN ZAE000022745
Issue code: MEMTX
Incorporated in the Republic of South Africa
Listed on the JSE Limited and the London Stock Exchange
CONSOLIDATED UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2006
Earnings per share increased by 141%
EBITDA increased by 133%
Ruashi Phase II development programme commenced
Reverse take-over of Pan African Resources PLC agreed
Shareholding in Chibuluma and Barberton increased
Consolidated income statement
Six months Six months
31 December 2006 31 December 2005
(Unaudited) (Restated)
R000 R000
Revenue
Mineral sales
Copper 382 620 93 478
Fluorspar 110 454 66 950
Gold 223 877 195 623
Antimony 73 978 79 472
Gross revenue 790 929 435 523
Realisation costs 80 594 50 136
On-mine revenue 710 335 385 387
Cost of production 453 893 295 403
Stock movement (23 047) (1 546)
Depreciation 45 458 25 895
Mining profit 234 031 65 635
Other expenses (1 105) (886)
Held for sale and 13 203 29 855
discontinued operations
Operating income before 246 129 94 604
finance costs
Finance income 1 906 3 638
Finance costs (3 920) (3 313)
Income before taxation 244 115 94 929
Taxation 54 428 19 521
Profit for the period 189 687 75 408
Attributable to:
Equity holders of the 150 442 60 499
parent
Minority interest 39 245 14 909
189 687 75 408
From continuing and
discontinued operations:
Earnings per share (cents) 51,03 21,21
Diluted earnings per share 49,35 20,16
(cents)
From continuing operations:
Earnings per share (cents) 47,90 21,24
Diluted earnings per share 46,33 20,19
(cents)
Earnings per share and
headline earnings per share
are calculated using the
following:
Income attributable to 150 442 60 499
ordinary shareholders
Profit on sale of assets, - (22 340)
net of tax
Discontinued operations 1 198 89
Headline earnings (R000) 151 640 38 248
Headline earnings per share 51,44 13,41
(cents)
Diluted headline earnings 49,74 12,75
per share (cents)
Weighted average number of 294 796 285 210
shares in issue (000)
Diluted number of shares in 304 822 300 065
issue (000)
Consolidated balance sheet
31 December 2006 31 December 2006
(Unaudited) (Restated)
R000 R000
ASSETS
Non-current assets
Property, plant and 951 411 803 819
equipment
Mineral rights 465 040 304 767
Goodwill 11 514 11 514
Investments 929 929
Rehabilitation trust funds 34 907 33 864
Deferred tax asset 7 112 262
1 470 913 1 155 155
Current assets
Inventories 74 418 42 952
Trade and other receivables 242 421 206 726
Derivative instruments 3 632 599
Taxation prepaid 3 536 3 592
Bank balances and cash 41 834 78 952
Asset classified as held 222 983 213 368
for sale
588 824 546 189
Total assets 2 059 737 1 701 344
EQUITY AND LIABILITIES
Capital and reserves
Share capital and premium 889 232 802 038
Hedging and translation (134 570) (145 202)
reserve
Retained income 429 266 278 824
Share option equity 10 536 7 536
Equity reserve (128 066) (128 066)
Equity attributable to 1 066 398 815 130
equity holders
Minority interest 226 262 153 438
Total equity 1 292 660 968 568
Non-current liabilities
Long-term liabilities - 53 359 58 002
interest bearing
Long-term provisions 72 219 71 029
Deferred tax liabilities 220 610 125 072
346 188 254 103
Current liabilities
Trade and other payables 146 162 136 876
Short-term borrowings - 29 541 29 848
interest bearing
Short-term provisions 28 249 31 661
Derivative instruments 85 145 161 479
Bank overdraft 2 852 3 421
Taxation 20 181 9 607
Liabilities associated with 108 759 105 781
asset held for sale
420 889 478 673
Total equity and 2 059 737 1 701 344
liabilities
Net asset value per share 358 283
(cents)
Net tangible asset value 354 279
per share (cents)
Condensed consolidated cash flow statement
Six months Six months
31 December 2006 31 December 2005
(Unaudited) (Restated)
R000 R000
Cash generated by 223 451 25 891
operations
Minorities distributions (51 734) (2 567)
Taxation paid (3 923) (2 605)
Finance costs, net (2 014) 325
Cash inflows from operating 165 780 21 044
activities
Cash outflows from (199 928) (168 434)
investing activities
Cash (outflows)/inflows (1 071) 61 677
from financing activities
(35 219) (85 713)
Net decrease in cash and
cash equivalents
Cash at beginning of year 75 531 168 007
Effect of foreign exchange (1 330) (78)
rate changes
Cash at end of period 38 982 82 216
Condensed statement of changes in equity
Six months Six months
31 December 2006 31 December 2005
(Unaudited) (Unaudited)
R000 R000
Shareholders` equity at 968 568 854 252
start of period
Ordinary shares issued 87 194 33 248
Hedging and translation 10 632 (30 763)
reserve
Net income for the period 150 442 60 499
Share option equity 3 000 1 500
Minority interest 72 824 29 885
Total equity 1 292 660 948 621
Commentary
The Chief Executive Officer, Charles Needham said: "We are delighted with
these results with our revenues and earnings up very significantly. This
has been driven, in the main, by volume increases and not just higher
commodity prices.
"We have made progress on a number of fronts across the business during the
period, which included the commissioning of the Ruashi I mine and
commencement of the construction of the Ruashi II project and the Zinc
Processing Plant at Kabwe, Zambia. In addition, we increased our interests
in Chibuluma and Barberton, and entered into an agreement with Pan African
Resources to create a focused gold production and exploration company. We
remain confident about our production targets across our various operations
and with future increased production coming on stream, we expect to see
meaningful earnings growth in the medium term."
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 the
Safety Achievement flag by the Mine Health and Safety Council as well as the
first place in the shallow to deep Gold and Platinum Mines division, for
their commitment to safety and health.
The Group reports that no fatalities occurred during the past six months.
Management and employees are commended for this achievement.
FINANCIAL RESULTS AND CASH FLOW
The Group produced record earnings for the six months following significant
volume increases from its copper and fluorspar divisions, and assisted by
robust commodity prices. Group revenue increased by 82% to R791 million. The
cash mining profit increased to R280 million from R92 million and the Group
profit margin increased from 21% to 35%.
Group operating costs and depreciation increased in line with volume
expansions.
Earnings from Wakefield are classified as an Asset Held for Sale. The
transaction awaits Competition Commission approval, which is expected
towards the end of February 2007. For the period, EBITDA of R38 million is
attributable to Wakefield, which after interest, tax and depreciation
accounts for R13,2 million of the profit.
The Ruashi/Sable production build-up was slower than expected with improved
performance anticipated during the second half of the year.
The Group generated R223 million of cash during the period of which R200
million was spent on capital projects, being mainly Ruashi Phase II, Sable
and the Chibuluma decline development.
STATEMENT OF FINANCIAL PERFORMANCE AND RELATED STATISTICS FOR THE SIX MONTHS
ENDED 31 DECEMBER
Financial performance 2006 2005
*Gross revenue (R000) 790 929 435 523
EBITDA (including Coal) (R000) 317 091 136 300
Cash mining profit margin % 35 21
EPS (cents) 51,03 21,21
HEPS (cents) 51,44 13,41
Market capitalisation (R000) 4 824 846 2 071 166
Shares in issue (000) 297 830 287 662
Share price (cents) 1 620 720
ZAR/US$ rate - Average (R/$) 7,22 6,53
ZAR/US$ rate - Closing (R/$) 6,99 6,31
DENOTES
* Restated Cash mining profit as percentage of gross revenue.
STATEMENT OF FINANCIAL PERFORMANCE AND RELATED STATISTICS FOR THE SIX MONTHS
ENDED 31 DECEMBER(continued)
Financial performance 2004 2003
*Gross revenue (R000) 316 223 429 970
EBITDA (including Coal) (R000) 62 019 32 565
Cash mining profit margin % 13 6
EPS (cents) 3,58 (12,36)
HEPS (cents) 6,51 (3,49)
Market capitalisation (R000) 498 460 411 295
Shares in issue (000) 188 098 175 019
Share price (cents) 265 235
ZAR/US$ rate - Average (R/$) 6,24 7,10
ZAR/US$ rate - Closing (R/$) 5,67 6,58
DENOTES
* Restated Cash mining profit as percentage of gross revenue.
COPPER
Chibuluma South 2006 2005 2004 2003
Tons milled (t) 256 310 156 127 - -
Headgrade (%) 2,5 2,8 - -
Overall recovery (%) 84 79 - -
Copper produced (t) 5 274 3 380 - -
Copper sold (t) 5 288 3 462 - -
Copper price ($/t) 7 026 4 135 - -
Total cash
cost/ton sold ($/t) 2 871 2 728 - -
Chibuluma experienced increased levels of production, which combined with
the improved average copper price resulted in a significant contribution to
Group earnings. The headgrade was affected by the continued presence of the
barren area within the orebody.
The on-mine cost structure has been well managed at approximately $1
500/ton. Off-mine charges increased significantly in line with global
treatment charges and copper price participation. Recently concluded smelter
terms indicate a significant reduction in the treatment charges, which will
bode well for Chibuluma during the forthcoming calendar year.
On 1 February 2007, Metorex announced that it has reached agreement with the
Industrial Development Corporation of South Africa Ltd to acquire its 35%
interest in Chibuluma South for $21 million. Zambian ministerial approval
has been received.
COPPER (continued)
Ruashi/Sable 2006 2005 2004 2003
Tons milled (t) 223 092 - - -
Copper produced (t) 2 217 - - -
Copper sold (t) 2 185 - - -
Cobalt produced (t) 53 - - -
Total cash cost/ton
of copper sold ($/t)5 567 - - -
Metallurgical balancing and plant fine tuning issues affected copper
recoveries and throughput at Ruashi. An action plan has been implemented and
full production levels are expected by March 2007.
The Sable processing facility performed exceptionally well. Copper
recoveries exceeded management expectations. Approximately 50 tons of cobalt
are locked up in process and not reflected in the results for the current
period. The asset plant construction is planned for completion and
commissioning in April 2007.
The Ruashi Phase II project has been accelerated with a target commissioning
date of the first quarter of 2008. The bankable feasibility has been
finalised and lead finance arrangers appointed. Long lead time items have
been ordered and civils construction is in progress. The Phase II capital
cost approximates $180 million, which includes a cobalt metal circuit,
working capital and powerline recovery costs.
The Ruashi Phase II project will produce 45 000t/yr of copper and 3 500t/yr
of cobalt.
FLUORSPAR
Vergenoeg 2006 2005 2004 2003
Tons milled (t) 288 048 229 023 213 118 227 750
CaF2 grade (%) 43 44 42 41
CaF2 recovery (%) 70 73 71 68
Acidspar produced (dmt) 88 858 66 240 64 034 63 032
Acidspar sold (dmt) 81 094 68 610 50 905 64 825
Price (all grades)(R/dmt)1 273 924 862 763
Total cash
cost/ton sold (R/t) 825 765 750 742
Production levels at Vergenoeg increased by 34% from the previous period as
a result of an expansion programme completed during the first quarter of
2006.
Following significantly improved acidspar prices, the cash mining profit
margin increased further, which, combined with the increased production
output, resulted in record profits.
GOLD
Barberton 2006 2005 2004 2003
Tons milled (t) 166 377 157 452 161 980 169 067
Headgrade (g/t) 9,24 11,44 10,27 10,96
Overall recovery (%) 92 92 91 92
Produced (kg) 1 410 1 660 1 510 1 701
Sold (kg) 1 423 1 648 1 561 1 747
Price: Spot (R/kg) 144 564 96 772 83 322 86 172
Hedge (R/kg) 94 497 90 133 100 423 100 957
Total cash
cost/kg sold (R/kg) 104 371 82 671 87 042 73 886
Gold production at Barberton Mines was lower than the previous period due to
reduced grades, which also affected the cash cost of production. Tons milled
increased but has not yet reached its targeted 10% increase from previous
periods.
Post the half year the mine has seen an improvement in the grade, which is
typical of the variability of the greenstone deposits.
Metorex announced on 20 December 2006 that an agreement has been signed
whereby it will dispose of its 74% interest in Barberton Mines at an
enterprise value of R500 million for an issue of shares in Pan African
Resources Plc ("PAR"), subject to the fulfilment of certain conditions
precedent. The proposed transaction constitutes a reverse take-over of PAR,
whereby Metorex will hold 55% of PAR`s issued share capital. PAR is a gold-
focused exploration company with exciting activities in Mozambique and the
Central African Republic. The transaction is expected to create significant
shareholder value by incorporating Barberton Mines into a separately listed
gold vehicle with an exploration division.
ANTIMONY
Cons Murch 2006 2005 2004 2003
Tons milled (t) 213 260 225 733 223 129 247 729
Produced: Sb (mtu) 201 132 341 289 245 543 271 124
Au (kg) 278 372 379 366
Sold: Sb (mtu) 191 800 326 041 239 429 263 049
Au (kg) 279 370 381 360
Price: Sb ($/mtu) 53,42 37,30 29,70 22,30
Au ($/oz) 556 464 412 359
Total cash
cost/mtu sold
(R/mtu) 333 174 204 204
Net of gold revenue
Consolidated Murchison experienced a disappointing six months with both gold
and antimony production grades down from the previous period. Significant
resources are currently being allocated to plant improvements and
underground development. Raise boring has been introduced in order to
expedite development, which should add flexibility to the currently
constrained mining plan.
Following the above areas of focus, management expects production levels to
recover during the next period.
FUTURE PROSPECTS
The Group remains committed to the investment in and management of high-
quality, long-life mining projects.
In the short term, production build-up at Ruashi, commissioning of the Zinc
plant at Sable and plant expansions at Chibuluma are expected to further
enhance earnings.
The Ruashi Phase II project, which is expected to be commissioned during the
first quarter of 2008, would lead to significant earnings growth in the
medium term.
Exploration has commenced at the Group`s Musonoi and Sokoroshe deposits in
the DRC and the Kasempa and Chifupu copper deposits in Zambia, which
together with gold exploration in Pan African Resources Plc, holds potential
for further growth in the longer term.
Vergenoeg together with ICF and IDC are progressing the feasibility study on
the construction of an Aluminium Fluoride plant at Richards Bay.
CAPITAL EXPENDITURE AND COMMITMENTS
Group capital expenditure totalled R200 million (2005: R171 million), which
was mainly applied to the Ruashi/Sable projects, Chibuluma South decline
development and fast-tracking of development and exploration at the Athens
and Monarch shafts at Consolidated Murchison.
Contracted capital commitments amount to R57,5 million (2005: R73,5
million), whilst uncontracted commitments amount to R1 260 million (2005:
R141,2 million).
Operating lease commitments, which fall due within the next year, amount to
R20,5 million (2005:
R13,5 million), whilst commitments of R17,7 million (2005: R16,3 million)
fall due during the next four years.
SHARES ISSUED
(1) 31 August 2006: 7,5 million shares at R11,26/share - To increase the
Company`s shareholding in Barberton Mines (Pty) Ltd from 54% to 74%.
(2) July 2006 - Dec 2006: 1,1 million shares at average R2,32/share - Share
option implementations.
ACCOUNTING POLICIES
The unaudited consolidated interim 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 2006.
The Group complies with the Companies Act and the Listing Requirements as
prescribed by the JSE.
PRESENTATIONAL CHANGES
In terms of IFRS 5: Non-current Assets Held for Sale and Discontinued
Operations, assets classified as held for sale should be separately
presented on the face of the balance sheet and the results thereof
separately presented as discontinued operations in the income statement.
Based on this reporting requirement, Wakefield (Coal operations) has been
classified as an asset held for sale.
DIVIDEND
With the funding requirement on new project developments, no dividend is
declared for the six months ended 31 December 2006.Consideration will be
given to declaring a dividend for the year ending 30 June 2007.
By order of the Board
A S Malone C D S Needham
Chairman Managing Director
19 February 2007
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
Investor relations
College Hill, PO Box 413187, Craighall, 2024, South Africa
Telephone: (+27 11) 447-3030
Registrars: South Africa and United Kingdom
Link Market 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
Sponsor
Barnard Jacobs Mellet Corporate Finance (Pty) Ltd, PO Box 62200,
Marshalltown, 2107, RSA
Telephone: (+27 11) 283-0300
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
Date: 19/02/2007 07:00:06 Produced by the JSE SENS Department.
