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GVM
GVGVM
GVM - GVM Metals - Reviewed Interims for the 6 months ended 31 December 2006
GVM Metals Limited
(previously, "Golden Valley Mines Limited")
(Incorporated and registered in Australia)
(Registration number ACN 008 905 388)
Share code on the JSE Limited: GVM & ISIN: AU000000GVM1
Share code on the Australian Stock Exchange Limited: GVM & ISIN: AU000000GVM1
Reviewed Interims for the 6 months ended 31 December 2006
GVM Metals Limited ("GVM" or "the Company") is pleased to announce its
operational report together with the consolidated financial report for the half-
year ended 31 December 2006. A full copy of this report is available at the
Company`s website, www.gvm.com.au .
Highlights
- Results of the Consolidated Entity for the half-year
ended 31 December 2006 after income tax was a profit of AUD$912,368 (2005: loss
of AUD$141,447)
- Profit before interest and tax for the Group`s main operating entity,
Nimag (Pty) Ltd, was AUD$3,534,000.
- Shares commenced trading on the Johannesburg Stock Exchange ("JSE") on
30 November 2006.
- Audit reviewed Group profit before interest and tax of AUD$2 million for the
first six months of the year.
- Cash at the end of the half year was AUD$10.7 million.
- 12,200,000 GVM shares to raise GBP2.44 million (AUD$ 6.1 million) were
placed with Global Coal Management plc (previously Asia Energy plc).
- GVM executed a binding Sale of Shares and Claims
Agreement to acquire 100% of Baobab Mining and Exploration
(Pty) Ltd which owns the remaining 50% of the Baobab J.V. coal project.
The remaining 50% is currently held by Motjoli Resources, which GVM has
previously agreed to acquire.
- Granting of Section 11 approval in terms of the South
African Mineral and Petroleum Resources Development Bill satisfying the last
remaining condition to acquire the Limpopo Coal project. As a result, in
November 2006, 20,812,500 GVM shares were issued to the Limpopo Coal vendors.
- GVM exercised its call option to acquire the outstanding
26% of Nimag (Pty) Ltd by the allotment of 4,620,557 GVM shares and a cash
payment of AUD$75,000.
Post period highlights
- Heads of Agreement reached to acquire Kelso Mining Ltd
for GBP 10.0 million which allows GVM to acquire 70% of Coal of Africa Ltd
(CoAL) which owns the Mooiplaats coal project. This is subject to an EGM. A
Competent Persons Report (`CPR`) is currently being prepared and it is a
condition of the acquisition of CoAL that the CoAL properties contain a JORC
and SAMREC compliant resource in excess of 450 million tonnes of coal.
- Further placement of 8,333,333 GVM shares to raise GBP
2.5 million (AU$ 6.25 million). This is also subject to an EGM.
Discussion of the Results
NiMag Group of Companies ("Nimag")
(GVM - 100%)
The Nimag Group`s reviewed profit before interest and tax for the first six
months of the 2007 financial year is ZAR 19 million (AUD$ 3.5 million). The
Nickel Magnesium business continued to outperform its budget, whilst the
smaller FeSiMag and Fibres businesses reported a combined loss of AUD$ 265,000
for the first six months of the financial year. Management expect the FeSiMag
and Fibres businesses to return to profitability in the second half of the
financial year. Continued exchange rate levels and high nickel prices signify a
positive outlook for the second half of the financial year.
Holfontein Coal Project (49% now - 100% on completion of Motjoli acquisition)
The Holfontein in-fill drilling programme will be completed by the end of the
third quarter of the current financial year. Drilling results already
analysed have identified metallurgical and thermal coal deposits typical to
the region. Geo-hydrological studies commenced in late 2006 and will
be completed prior to the bankable feasibility study which is
anticipated hopefully no later than the end of March 2007.
Baobab Coal Project (100% on completion of acquisitions)
The acquisition of Petmin`s 50% interest in the Baobab coal project will take
the form of GVM acquiring 100% of Baobab Mining & Exploration (Pty) Ltd, a
Petmin subsidiary company. The purchase consideration of GBP 2.5 million (AUD$
6 million) cash is subject to GVM obtaining shareholder, ASX (if required) and
South African Reserve Bank approval, as well as approval in terms of Section 11
of the Mineral and Petroleum Resources Development Bill of South Africa.
Limpopo Coal Project (74%)
During December, GVM secured Section 11 approval in terms of the Mineral and
Petroleum Resources Development Bill of South Africa, satisfying the last of
the conditions precedent of the Limpopo Coal transaction. Shortly thereafter,
GVM issued the required share consideration and the acquisition was settled and
completed at the end of 2006.
Additional exploration of the Limpopo Coal area was commissioned during the
second quarter of the financial year, together with the collection of
geo-scientific data. The data collected will be used to generate a geological
model of the project and identify potential drilling targets.
Preliminary discussions with various infra-structure participants are underway
to ascertain capacity for possible coal exports. Furthermore, consultations
with surface right owners commenced in 2006 and will continue in 2007 in
conjunction with the Aeromag and geological surveys.
CONSOLIDATED INCOME STATEMENT
FOR THE HALF-YEAR ENDED 31 DECEMBER 2006
Consolidated Consolidated
Note 31.12.2006 31.12.2005
$ $
Sale of goods 26,018,773 15,137,300
Revenue from disposal of - (67,992)
investments
Other 435,140 176,737
Total revenue 26,453,913 15,246,045
Changes in inventory, raw materials (19,908,344) (11,571,313)
and consumables used
Consulting, accounting & (181,156) (217,469)
professional expenses
Employee expenses (1,779,542) (1,438,889)
Depreciation and amortisation (80,257) (126,441)
expenses
Diminution in investments (6,488) (1,081)
Doubtful / Bad debt expense (375,000) (1,159)
Exploration expense (179,355) -
Office rent and outgoings (334,504) (75,326)
Borrowing costs (266,423) (346,902)
Other expenses from ordinary (1,515,691) (1,377,445)
activities
Share of net profit/(losses) of
associate accounted for using the
equity method - (98,630)
Profit / (Loss) from continuing 1,827,153 (8,610)
operations before income tax
Income tax expense (914,785) (132,837)
Profit / (Loss) after income tax 912,368 (141,447)
for the half year
Profit attributable to minority (478,742) (124,690)
equity interest
Net profit / (loss) attributable to 433,626 (266,137)
members of the parent entity
GOLDEN VALLEY MINES LIMITED
STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2006
Basic earnings per share for GVM 0.73 (0.96)
Metals Limited cents cents
Headline earnings per share 0.74 (0.84)
cents cents
There are no dilutive potential
ordinary shares therefore diluted
earnings or loss per share has not
been calculated or disclosed.
CONSOLIDATED BALANCE SHEET
AS AT 31 DECEMBER 2006
Consolidated Consolidated
Note 31 December 30 June
2006 2006
$ $
CURRENT ASSETS
Cash assets 10,704,803 985,333
Receivables 5,015,464 6,374,684
Inventory 4,447,916 3,245,656
Other financial assets 2,866,364 -
Total Current Assets 23,034,547 10,605,673
NON CURRENT ASSETS
Assets held for sale 94,596 94,596
Intangibles 6,130,397 7,441,280
Mineral interests 12,187,055 -
Other financial assets 696,091 699,992
Property, plant and equipment 1,700,194 1,803,312
Deferred tax 34,949 36,669
Total Non Current Assets 20,843,282 10,075,849
TOTAL ASSETS 43,877,829 20,681,522
CURRENT LIABILITIES
Payables 6,113,855 5,940,126
Interest bearing liabilities 1,106,565 2,451,628
Provisions 101,285 125,790
Current tax liability 1,037,375 459,586
Total Current Liabilities 8,359,080 8,977,130
NON CURRENT LIABILITIES
Payables 1,375,608 1,340,777
Interest bearing liabilities 1,598,880 2,702,261
TOTAL NON CURRENT LIABILITIES 2,974,488 4,043,038
TOTAL LIABILITIES 11,333,568 13,020,168
NET ASSETS 32,544,261 7,661,354
EQUITY
Contributed equity 2 59,568,553 35,396,353
Reserves 137,488 426,521
Accumulated losses (30,233,030) (30,666,656)
GOLDEN VALLEY MINES LIMITED
STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2006
TOTAL PARENT EQUITY INTEREST 29,473,011 5,156,218
Minority Equity Interests 3,071,250 2,505,136
TOTAL EQUITY 32,544,261 7,661,354
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR
THE HALF YEAR ENDED 31 DECEMBER 2006
$ $ $ $
Foreign
Ordinary Capital Currency Share
Share Profit Translation Options
Capital Reserves Reserves Reserve
Balance at
1.7.2005 34,500,935 136,445 1,108,117 -
Shares
issued
during the 50,000
period
Loss
attributable
to members
of parent
entity
Profit
attributable
to minority
interests
Reserves
attributable
to minority
interests
Foreign
currency
translation
adjustments
attributable (213,996)
to members
of parent
entity
Balance at
31.12.2005 34,550,935 136,445 894,121 -
Balance at
1.7.2006 35,396,353 136,445 (261,124) 551,200
Shares
issued
during the 24,460,590
period
Profit/
(Loss)
attributable
to members
of parent
entity
Profit
attributable
to minority
interests
Reserves
attributable
to minority
interests
Reversal of
minority
interests
following
100%
acquisition
of a
controlled
entity
Minority
interest in
a controlled
entity
Share based
payment 165,600
Share issue
costs (288,390)
Foreign
currency
translation
adjustments
attributable (454,633)
to members
of parent
entity
Balance at
31.12.2006 59,568,553 136,445 (715,757) 716,800
$ $ $
Retained Minority
profits/ Equity
(losses) Interests Total
Balance at
1.7.2005 (30,079,645) 3,306,117 8,971,969
Shares
issued
during the 50,000
period
Loss
attributable
to members (266,137) (266,137)
of parent
entity
Profit
attributable 124,690
to minority 124,690
interests
Reserves
attributable (79,943)
to minority (79,943)
interests
Foreign
currency
translation
adjustments
attributable (213,996)
to members
of parent
entity
Balance at
31.12.2005 (30,345,782) 3,350,864 8,586,583
Balance at
1.7.2006 (30,666,656) 2,505,136 7,661,354
Shares
issued
during the 24,460,590
period
Profit/
(Loss)
attributable
to members 433,626 433,626
of parent
entity
Profit
attributable
to minority 478,742 478,742
interests
Reserves
attributable (31,133)
to minority (31,133)
interests
Reversal of
minority
interests
following (2,952,745)
100%
acquisition
of a (2,952,745)
controlled
entity
Minority
interest in 3,071,250
a controlled 3,071,250
entity
Share based
payment 165,600
Share issue
costs (288,390)
Foreign
currency
translation
adjustments
attributable (454,633)
to members
of parent
entity
Balance at
31.12.2006 (30,233,030) 3,071,250 32,544,261
CONSOLIDATED CASH FLOW STATEMENT
FOR THE HALF-YEAR ENDED 31 DECEMBER 2006
Consolidated Consolidated
31.12.2006 31.12.2005
$ $
Cash Flows used in Operating
Activities
Cash receipts in the course of 22,297,704 15,574,251
operations
Interest received 157,124 14,287
Cash payments in the course of (20,100,088) (15,966,308)
operations
Interest paid (266,423) (346,902)
Tax paid (296,993) (125,739)
Net cash generated by/(used in) 1,791,324 (850,411)
operating activities
Cash Flows used in Investing
Activities
Deposits paid on investments (2,866,364) -
Proceeds from sale of equity - 169,137
investments
Payments for investments (449,555) (24,121)
Payments for property, plant and (59,951) (99,668)
equipment
Net cash provided by investing (3,375,870) 45,348
activities
Cash Flows from Financing Activities
Proceeds from issues of shares and 13,582,719 50,000
options to outside equity interest
Repayment of borrowings (1,341,231) (533,487)
Net cash provided by financing 12,241,488 (483,487)
activities
NET INCREASE IN CASH HELD 10,656,942 (1,288,550)
Cash at the beginning of the half- 49,764 1,027,493
year
Exchange rate adjustment (1,903) (297,069)
Cash at the end of the half-year 10,704,803 (558,126)
The accompanying notes form part of these financial statements.
NOTE 1
(a) Basis of preparation of Half Year Report
The half-year consolidated financial statements are a general purpose financial
report prepared in accordance with the requirements of the Corporations Act
2001, Accounting Standard AASB 134: Interim Financial Reporting, and other
authoritative pronouncements of the Australian Accounting Standards Board.
It is recommended that this financial report be read in conjunction with the
annual financial report for the year ended 30 June 2006 and any public
announcements made by GVM Metals Limited and its controlled entities during the
half-year in accordance with continuous disclosure requirements arising under
the Corporations Act 2001.
The half-year report does not include full disclosures of the type normally
included in an annual financial report.
The accounting policies adopted are consistent with those of the previous
financial year and corresponding interim reporting period.
(b) Principles of consolidation
Controlled entities
The financial statements of controlled entities results are included from the
date control commences until the date control ceases.
Outside interests in the equity and results of the entities that are controlled
by the Company are shown as a separate item in the consolidated financial
statements.
Associates
Associates are those entities, other than partnerships, over which the
consolidated entity exercises significant influence and which are not intended
for sale in the near future.
In the consolidated financial statements, investments in associates are
accounted for using equity accounting principles. Investments in associates are
carried at the lower of the equity accounted amount and recoverable amount. The
consolidated entity`s equity accounted share of the associates` net profit or
loss is recognised in the consolidated statement of financial performance from
the date the significant influence commences until the date the significant
influence ceases. Other movements in reserves are recognised directly in
the consolidated reserves.
Transactions eliminated on consolidation
The balances and effects of transactions, between controlled entities included
in the consolidated financial statements have been eliminated.
(c) Dividends
No dividend has been paid or is proposed in respect of the
half-year ended 31 December 2006 (2005: None).
Consolidated
31 Dec 2006
$
2. CONTRIBUTED EQUITY
Issued and Paid-Up Capital
93,559,328 (2006: 31,310,887) fully paid ordinary
shares 59,568,553
Movements in contributed equity
Opening balance at beginning of the half-year 35,396,353
- 24,615,384 ordinary shares issued on 12 Jul 2006
(AIM) 7,795,600
- 4,620,557 ordinary shares issued on 24 Nov 2006 1,848,231
- 20,812,500 ordinary shares issued on 30 Nov 2006 8,741,250
- 12,200,000 ordinary shares issued on 21 Dec 2006
(allotted Jan 07) 6,075,509
Less: share issue costs (288,390)
Total equity at the end of the half-year 59,568,553
Options
The following options to subscribe for ordinary fully paid shares
are outstanding at balance date:
Number Number Exercise Expiry Date
Issued Quoted Price
9,000,000 - $0.50 30 September 2011
75,000 quoted options expired during the six months under review.
3. SEGMENT INFORMATION
Segment results, assets and liabilities include items directly attributable to
a segment as well as those that can be allocated on a reasonable basis.
Unallocated items mainly comprise interest or dividend-earning assets and
revenue, interest bearing loans, borrowings and expenses, and corporate assets
and expenses.
Business segments
The consolidated entity comprises the following main business segments:
Manufacturing Mineral processing by Nimag in South Africa Investing Equity
investments in South Africa, Australia, Canada and United Kingdom
31 December 2006
Primary reporting industry Manufacturing Investing Consolidated
$ $ $
Revenue
Total segment revenue 26,111,206 240,115 26,351,321
Unallocated revenue - - 102,592
Total revenue 26,453,913
Results
Segment results 3,375,320 (1,596,804) 1,778,514
Unallocated items - - 48,639
Net profit before income tax 1,827,153
Depreciation and
amortisiation 76,130 4,127 80,257
Provision for diminution of - 6,488 6,488
investment
31 December 2006
Primary reporting industry Manufacturing Investing Consolidated
$ $ $
Assets
Segment assets 18,099,537 25,371,828 43,471,365
Unallocated corporate assets - - 311,868
Equity accounted investment 94,596 - 94,596
held for sale
Consolidated total assets 43,877,829
Liabilities
Segment liabilities 9,860,653 1,302,418 11,163,071
Unallocated liabilities - 170,498 170,498
Consolidated total liabilities 11,333,568
4. BUSINESS COMBINATION (ACQUISITION OF CONTROLLED ENTITIES)
The company acquired control of the following entities during the period:
Consolidated
entity`s
interest at:
Name Country Date 31.12.06 30.6.06
of of % %
Incorporation Acquisition
(i) Nimag (Pty)Ltd SouthAfrica 22/11/06 100% 74%
(ii) Limpopo Coal
(Pty) Ltd South Africa 30/11/06 74% -
Details of the acquisitions are as follows:
i. During the half year ended 31 December 2006, the Company
exercised its call option to acquire the remaining 26% interest in the issued
capital of Nimag (Proprietary) Limited. The Nimag acquisition was satisfied by
the issue of 4,620,557 ordinary shares at a deemed issue price of $0.40 per
share and a cash payment of $75,000. The share issue was approved by
shareholders at the Company`s annual general meeting on the 22nd of November
2006. The total value of the consideration amounted to $1,923,223.
$
Purchase consideration:
Cash consideration 75,000
Issue of shares 1,848,223
Total consideration 1,923,223
Fair value of the remaining interests in the
net assets of Nimag acquired 2,952,745
Discount on acquisition adjusted against
(Nimag) Goodwill on consolidation 1,029,522
ii. During the half year, the Company acquired 74% of the controlled
entity, Limpopo Coal (Pty) Ltd. The acquisition was settled with the issue of
20,812,500 ordinary shares at a deemed price of $0.42 in December 2006.
$
Purchase consideration:
Issue of shares 8,741,250
Total consideration 8,741,250
Fair value of assets held at acquisition date 11,812,500
Minority equity interests in acquisition (3,071,250)
8,741,250
5. DISPOSAL OF CONTROLLED ENTITIES
The consolidated entity did not lose control over any entities during the half
year period or the half year ended 31 December 2006.
6. CONTINGENT LIABILITIES
The consolidated entity has potential contingent liabilities if the conditions
precedent to purchase the remaining 51% in the Holfontein Coal Project and 50%
of the Baobab Coal Project, are fulfilled. The purchase of the remaining
portion of the Holfontein project will require the issue of 14,868,283 GVM
shares, while the completion of the Baobab acquisition will entail the issue of
20,000,000 GVM shares.
7. EVENTS SUBSEQUENT TO REPORTING DATE
On 7 February 2007, the Company announced that an agreement had
been reached to acquire Kelso Mining Limited (`Kelso`) for GBP 10 million whose
principle asset is the right to acquire 70% of Coal of Africa Limited (`CoAL`).
The terms of the Kelso and CoAL agreement contain a number of preconditions
including Joint Ore Reserves Committee ("JORC") and South African Mineral
Resource Committee ("SAMREC") compliant resource statuses, as well as
regulatory and shareholder approval. Should GVM opt to exercise its option to
purchase 70% of CoAL, a further consideration of GBP 30 million will be
payable.
On 20 February 2007, the Company announced that it had agreed to
make a further placement of 8,333,333 GVM shares to raise GBP 2.5 million (AU$
6.25 million). The Company will shortly lodge a Notice of Meeting seeking
shareholder approval for the this placement.
There are no other matters or events which have arisen since the end of the
financial period which have significantly affected or may significantly affect
the operations of the consolidated entity, the results of those operations or
the state of affairs of the consolidated entity in subsequent financial years.
DIRECTORS DECLARATION
In the opinion of the directors of GVM Metals Limited ("the Company"):
(a) the financial statements and notes set out in the
announcement, are in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the financial
position of the consolidated entity as at 31 December 2006 and of its
performance, as represented by the results of its operations and cash flows for
the half-year ended on that date; and
(ii) complying with Australian Accounting Standard AASB 134
"Interim Financial Reporting" and the Corporations Regulations
2001; and
(b) there are reasonable grounds to believe that the Company
will be able to pay its debts as and when they become due and payable.
Dated at Perth, Western Australia, this 9th day of March 2007.
Signed in accordance with a resolution of the Directors:
S. J. Farrell
Director
Date: 12/03/2007 12:02:57 Produced by the JSE SENS Department.
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