JSE- and AIM-listed minerals, mining and processing company Petmin Limited today (17 September 2008) announced a 411% increase in profit after tax to R380 million (2007: R74 million) for the year ended 30 June 2008.
Cash produced from the operations went up by 236% to R252 million (2007: R75 million) and gross profit rose by 193% to R164 million (2007: R56 million).
The results of the company for the period under review reflect the inclusion of the results of Somkhele Colliery for 12 months. This KwaZulu-Natal operation started production in June 2007.
Headline earnings per share (HEPS) rose by 190% to 15.31 cents, while earnings per share (EPS) went up 370% to 74.15 cents. Net asset value (NAV) per share was 100% higher to 170.46 cents (2007: 85.25 cents).
Apart from the effect of the inclusion of Somkhele on the company’s results, there was an improved performance from Springlake Colliery in the second half of the year; and a consistently strong performance by silica mine SamQuarz, which increased its revenue by 20% to R153 million and its gross profit by 30% to R60 million.
Capital expenditure of R216 million was incurred in the year to 30 June 2008 to expand operations (2007: R113 million).
Commenting on Petmin’s results, Chief Operating Officer Bradley Doig said: “Our cash and profit results reflect the company’s ability to turn development projects into high-yielding, cash-generative assets.”
Petmin anthracite division (Somkhele and Springlake) produced 1,219,601 tonnes and sold 1,199,592 tonnes of anthracite in the period under review. The 63% increase in tonnages sold reflects the first full year of production from Somkhele. Some 75% of these sales tonnages were exported.
Management says that Somkhele has delivered on its potential to become a profitable mine and a competitive alternative source of carbon units to replace coke as a reductant in certain metallurgical processes. Demand from inland metallurgical customers for its product has increased substantially. Expanded production is planned to meet the combined demands of the inland metallurgical and export markets.
Mining at Somkhele is currently from two pits in Area 2. The development of Area 1 is progressing well and management expects first production from this area in the latter half of calendar 2008.
Somkhele has mineral rights over a total of 28,742 hectares of land, of which 1,430 hectares are currently being mined and 21,939 hectares explored. Once the exploration programme is complete, the mine’s reserve base will increase significantly.
In order to de-risk the export channels for the anthracite division, the group acquired a 70% interest in Petmin Logistics (Pty) (Ltd) (formerly ZMS Logistics (Pty) Ltd) which has contracted with the Transnet Port Terminals to provide export facilities of a minimum of 600,000 tonnes a year for four years at the Richards Bay Dry Bulk Terminal.
Springlake’s financial performance improved in the second half of the financial year, with 76% of its profits being generated during this period.
SamQuarz’s production went up by 11.8% to 1,385,906 tonnes (2007: 1,240,000 tonnes) and 1,434,853 tonnes (2007: 1,394,810 tonnes) of silica and chert were sold.
Improved prices negotiated on key sales contracts and increased sales volumes, largely in the construction sector, are the main reasons for the rise in revenue.
Capital expenditure has been focused on expanding production capacity both in the open pit and the plant to ensure that increased demand can be met.
The power cuts that occurred in South Africa during the year under review did not have a material effect on Petmin’s production and sales. Nevertheless, to mitigate the risk of power cuts in its operations, Petmin has ordered standby generators which will be in operation in the first quarter of 2009.
Since 23 May 2008, Petmin has held a 25% interest in Veremo Holdings (Pty) Ltd. The cost of the acquisition was R73 million.
Looking ahead, Petmin expects:
This media release may contain certain forward-looking statements concerning Petmin’s operations, economic performance and financial condition, and plans and expectations. These statements, including without limitation, those concerning the market outlook for the company’s products, expectations of prices, production, the commencement and completion of certain exploration and production projects, may contain forward-looking views. Such views involve both known and unknown risks, assumptions, uncertainties and other important factors that could materially influence the actual performance of the company. No assurance can be given that these will prove to be correct and no representation or warranty express or implied is given as to the accuracy or completeness of such views or as to any of the other information in this media release. Petmin’s future results may differ materially from past or current results, and actual results may differ materially from those projected in the forward-looking statements.
Petmin will not be responsible for any loss or damage howsoever arising of any nature, including consequential loss or damage suffered or incurred, directly or indirectly, pursuant to or as a result of the use of, or any reliance on, this media release or the information contained herein.
© 2009 Petmin Limited