Johannesburg (miningweekly.com) – The shares of multi-commodity mining and processing company Petmin rose on Tuesday on the back of the JSE-listed company's impressive 46% increase in headline earnings per share in difficult trading conditions.
Petmin shares have risen more than 10% since Monday.
The company, which is also quoted on London's Aim, has attracted attention by achieving a 52% increase in sustainable profit before tax to R173-million in the 12 months to June 30 compared with R114-million last year.
Revenue rose by 18% to R789-million from R667-million, and headline earnings per share to 22,29c compared with 15,31c last year.
The directors estimate that the company's fully diluted net asset value a share is R3,74.
Petmin has cash resources of R176-million, undrawn bank facilities of R150-million and zero debt.
Net cash flow from operating activities rose by 43% to R225-million compared with R157-million in 2008.
Capital expenditure of R291-million was incurred for the year under review (2008: R229-million). Of this amount, R187-million was spent on exploration drilling and mine development programmes to expand existing operations, and R91-million on plant and mining equipment.
Petmin also concluded the sale of Springlake to Shanduka Coal for R85-million in the period.
COO Bradley Doig said: "We are of the view that trading conditions will improve slowly in the year ahead and, while operations were appropriately scaled during the reporting period, they are well positioned to take advantage of any increase in demand."
Production at Petmin's Anthracite Division (Somkhele and Springlake operations) was 1 016 940 t (1 219 601 t) while sales amounted to 960 764 t (1 188 519 t).
This decrease in production was anticipated, given the significant decline in the international market for metallurgical coal in the latter part of calendar 2008 and the South African ferrochrome industry's lower production levels.
Somkhele, however, was shielded from the reduction in international demand by sales in terms of its long-term export agreement.
Mining at Somkhele is progressing well and sufficient overburden in the pits has been prestripped to ensure that decreased levels of development expenditure can be maintained in the year ahead, without reducing production. Mining from Somkhele's Area 1 has been delayed, pending a visible, sustainable increase in market demand.
The exploration-drilling programme at Somkhele was verified by Snowden. The drilling programme resulted in 23,97-million ton of additional resources being delineated in areas contiguous with current operations. As at June 30, Somkhele had reserves of 31,61-million run of mine tons , which at current production levels provides for a life of mine of in excess of 30 years. This reserve figure excludes the 23,97-million tons of resources delineated during the year.
The long-term export contract has been renegotiated for the period to accommodate the reduced short term demand in the international market for anthracite. The terms have been amended to reflect 200 000t/y over four years, from the current 350 000 t in 2010 and 400 000 t in 2011, at an average price of $119/t.
Petmin subsidiary Petmin Logistics contracted with the South African Port Authorities to provide a dedicated export facility at Richards Bay for a minimum of 600 000t/y for four years.
Although production was slightly down at SamQuarz silica mine, which produced 1 333 613 t of silica and chert in 2009 compared with 1 385 906 t in 2008, this operation achieved increased sales of 1 511 850 t of silica and chert, from 1 434 853 tonnes in the previous year. Profit before tax was steady at R48-million (R47-million).
Capital expenditure was focused on increasing production capacity, both in the open pit and the plant, to ensure that customers' demand can be met reliably. The installation of an emergency generator was completed in the six months to December 31.
SamQuarz was granted a new order mining right conversion for its mining licence on April 30.
During the year, Petmin capitalised its R25-million loan to Veremo and increased its interest in Veremo Minerals to an effective 34,9% economic interest. It retained a 25% interest in the remainder of the project, which, once in production, will produce an estimated 700 000 t/y of pig iron.
Renewals of new order prospecting rights for all of the Veremo prospecting areas have been approved.
© 2009 Petmin Limited