Johannesburg, South Africa. 27 February 2006. Petmin Limited has reported a 58% increase in profit to R38.9 million for the six months to 31 December 2005 compared with the equivalent period in the preceding financial year.
This reflects:
Profit from SamQuarz was R4.6 million compared with R1.9 million for three months of the comparative period, and that from Springlake for the month of December 2005 was R1.4 million.
The company's income statement for the comparative period has been adjusted to reflect the R22.8 million profit on acquisition of its subsidiary, SamQuarz (Pty Limited, previously taken directly to equity as a reserve. The effect of the adjustment is to increase profit for the period ended 31 December 2004 by this amount.
Total revenue for the six months ended 31 December 2005 increased by 180% to R57.6 million. SamQuarz contributed R41.7 million for the six months compared with R20.6 million for three months of the comparative period, while Springlake contributed R15.9 million in the month of December 2005.
Reflecting the increase in profit for the period under review, headline earnings per share (EPS) increased by 109% to 2.34 cents and net asset value per share rose by 45% to 76.05 cents. Basic EPS were 18% up to 17.64 cents. Profit on acquisition of subsidiary, Springlake Holdings, offset the dilutive impact on EPS of an increased number of shares in issue.
Looking ahead, the company says additional share issues for cash of at least R60 million (subject to shareholder approval) and increased debt funding for the development of its Somkhele anthracite mine are likely to have a dilutive effect on EPS until Somkhele is in full production during the second quarter of 2007 and its marketing targets and resultant revenue streams are realised.
The company says it is in possession of a facility letter from a major South African bank for debt funding of R40 million for Somkhele and is in the process of finalising the terms.
At Somkhele, a drilling programme has yielded expected additional proven reserves in Area 1 of 9.329 million run-of-mine tonnes (ROM t). These, together with those previously reported for Area 2 of 2.349 million ROM t, gives a total of 11.678 million ROM t, sufficient for more than 12 years of production at a full production capacity of 950 000 t a year.
Petmin has consequently authorised the development of the mine and a contract to build a R56.7 million coal beneficiation plant was signed in December 2005. Earthworks for the plant site and access roads are more than 50% complete and the project is on target for commissioning in November 2006.
Somkhele is expected to add considerable value to the Petmin Group due to the quality of the resource and the demand for high quality reductants in the smelting sector and will augment Springlake's production through product-blending opportunities.
SamQuarz continued to deliver consistent production results in the six months under review with revenue in line with that for the comparative period. SamQuarz produced 476 528 ROM t and generated sales revenue of R41.7 million for the six months. Contribution to Group profit was R4.6 million.
Petmin says the impact on SamQuarz of the slow-down of the ferrochrome market and resultant smelter shutdowns in South Africa has been largely offset by a management focus on cost reduction and improvements in efficiencies.
SamQuarz, it says, is well placed to take advantage of any ferrochrome market improvements and flat glass growth opportunities such as the installation of a second float-line at PFG, a major producer and exporter of flat glass in South Africa and a key customer of SamQuarz.
For Springlake colliery, the continued strength of the rand against the US dollar remains a negative factor on export revenues denominated in US dollars, but demand for anthracite remains firm. Development in the northern section of the colliery's underground operations is progressing well and improved production levels are expected towards the third quarter of 2006 as mining is concentrated in the Northern reserve block.
Petmin says its Anchor BEE consortium is now well established. It consists of Dark Capital (Pty) Limited, Lebone Resources (Pty) Limited, Zondwa Resources, Popcru Mining Investments (Pty) Limited and Umsobomvu Coal (Pty) Limited.
The consortium represents more than 40% of shareholders and the total equity controlled by BEE groupings is more than 50%.
A number of board changes have been announced. Jan du Preez, a qualified chartered accountant, has been appointed an executive director and succeeds Dawie Warmenhoven as Chief Executive Officer with effect from 1 February 2006. Du Preez, the current chairman of Petmin's executive committee, has 15 years' experience in the mining industry and has an indirect interest in Petmin shareholder, Midnight Storm (Pty) Ltd (“Midnight”). Midnight has been instrumental in the change of control of Petmin and its repositioning since February 2004.
Warmenhoven remains an executive director and an active member of the executive committee.
Bradley Doig, appointed as a non-executive director of Petmin and as a member of the executive committee since November 2005, has been appointed an executive director and assumes the role of Chief Operating Officer with effect from 1 February 2006.
Petmin is currently trading under a cautionary published on 1 February 2006 in which it stated that it is engaged with talks with an internationally listed company that may have a material effect on the price of the company's securities.
Petmin Limited, previously Petra Mining Limited, is a South African-based, JSE-listed minerals, mining and processing company which services the metallurgical and industrial sectors. The company has embraced the spirit and intent of South Africa's minerals legislation: one of its major shareholders is the New Africa Mining Fund (NAMF) and, as a result of a number of black economic empowerment (BEE) transactions, it now boasts a BEE shareholding of above 52%. The company has two primary interests in South Africa.
© 2009 Petmin Limited