Miranda Mineral Holdings Ltd FY 2012 results

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Miranda Mineral Holdings Ltd FY 2012 results

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Miranda Mineral Holdings Ltd FY 2012 results

  1. 1. Highlights • Agreement reached, subject to shareholder approval, for the conversion of R41.7 million debt to equity after year end • General issue of shares for cash raising R8.5 million • Significant progress made in settling litigation matters Miranda Mineral Holdings Limited (Incorporated in the Republic of South Africa) (Registration number: 1998/001940/06) Share code: MMH  ISIN: ZAE000074019 (“Miranda” or “the Company” or “the Group”) Condensed reviewed provisional results for the year ended 31 August 2012 Condensed statement of financial position as at 31 August 2012 Condensed consolidated statement of comprehensive income for the year ended 31 August 2012 Restated Restated Reviewed audited audited year ended year ended year ended 31 August 31 August 31 August 2012 2011 2010 Notes R’000 R’000 R’000 Assets Non-Current Assets 46 976 41 645 63 431 17 044 – 24 601 Property, plant and equipment Other financial assets Intangible assets 11 19 711 2 438 24 827 15 093 2 468 45 870 Current Assets 022 8 433 6 27 458 1 818 3 323 3 292 Trade and other receivables Other financial assets Cash and cash equivalents 3 311 – 2 711 2 905 – 24 553 Total Assets 50 078 52 998 90 889 Equity and Liabilities Equity 68 804 (8 277) 12 468 Total capital Accumulated loss Equity attributable to equity holders of the parent Non-controlling interest 121 945 (128 004) 115 051 (100 830) 115 051 (45 384) (6 059) (2 218) 14 221 (1 753) 69 667 (863) Liabilities 58 355 40 530 Non-Current Liabilities 791 1 832 – – 791 Finance lease obligation Deferred tax Provision for rehabilitation 22 086 2 760 755 327 750 1 815 221 724 Current Liabilities 38 698 57 564 19 325 41 698 – – 4 117 11 749 Loans from shareholders 5 Finance lease obligation Operating lease liability Trade payables Other payables 6 16 268 1 056 27 7 715 13 632 2 928 965 22 7 329 8 081 Total Equity and Liabilities 078 50 52 998 90 889 (2,53) 4,38 24,18 (10,05) 327 187 (4.34) 284 511 8,06 284 511 Net asset value per share (cents) 2 Net tangible asset value per share (cents) 2 Number of shares in issue (‘000) continue as a going concern and are reviewed by the directors on a regular to basis to evaluate and assess the Group’s ability to function as a going concern: Reviewed Audited • Loss for the year - the Group incurred a loss of R27.6 million year ended year ended (2011: R55 million); current liability position - (excluding the loan conversion amount of 31 August 31 August • Net 2012 2011 R41.7 million) is R7.4 million (2011: R32.7 million); Notes R’000 R’000 • Cash flow - on 15 October 2012 the Company concluded a subscription Operating loss before interest and tax (26 147) (54 494) agreement with Russell Stone Green Investments (Proprietary) Limited, Investment revenue 48 268 to subscribe for 46 806 167 new Miranda Shares at a price of 18.16 Fair value adjustment 126 (30) cents per share. The shares will be listed on the JSE on 10 December Finance costs (1 994) (774) 2012 after receipt of the subscription proceeds of R8.5 million which will be used to ensure that the Group is sufficiently funded until it generates Loss before taxation (27 967) (55 030) production revenue; Taxation 327 (106) • Loans - agreement has been reached to convert outstanding loans in Loss for the year (27 640) (55 136) amount of R47.1 million into equity; Total comprehensive loss (27 640) (55,136) • SSMS claim - the parties agreed a settlement of R8 million in full and final settlement of all disputes, subject to a formal settlement agreement Loss and total comprehensive being concluded on or before 23 November 2012; refer to paragraph 10 loss attributable to: for details of the original dispute; Equity holders of the parent (27 174) (54 063) Non-controlling interest (466) (1 073) • Production - the Group has made progress with its negotiations to conclude an off take agreement for the Sesikhona project; (27 640) (55 136) Reconciliation of headline loss Basic loss for the year Adjusted for - Profit on sale of non-current asset - Profit on sale of investment - Profit on sale of mining property - Impairments (net of non controlling interest) (27 174) 1 966 16 179 • – – Condensed consolidated statement of cash flow and for the year ended 31 August 2012 Net cash from operating activities Net cash from investing activities Net cash from financing activities Total changes Balance at 01 Sep 2011 - audited Total comprehensive loss for the year Conversion of par value ordinary shares to no par value ordinary shares Share issue (33 160) 3 228 30 513 (25 387) (8 393) 11 938 2 711 24 553 Total cash and cash equivalents at the end of the year 3 292 2 711 581 (21 842) (45 383) (54 063) (1 384) 69 668 (54 063) (1 384) (863) (1 073) 184 68 805 (55 136) (1 200) During the past months Management completed the review of all the projects in this Division. This exercise resulted in the consolidation of various Prospecting Rights and Mining Rights into two focus project areas, namely the Sesikhona and Burnside Projects. Management has concentrated on ensuring that all compliance issues are resolved so as to ensure that mining can commence in 2013 on both Projects. Consideration is being given to the disposal of those rights that fall outside of the main project areas as well as the rights over properties that are too small to exploit as stand-alone projects. 11.1 Sesikhona project – – (55 447) (55 447) (889) (56 336) (100 830) (27 174) 14 221 (27 174) (1 752) (466) 12 469 (27 640) 112 206 6 894 (112 206) – 6 894 – Total changes 119 100 (112 206) Balance at 31 August 2012 - reviewed 121 945 – 6 894 – – 6 894 6 894 (27 174) (20 280) (466) (20 746) 121 945 (128 004) (6 059) (2 218) (8 277) Notes to group reviewed condensed provisional results 1. Basis of preparation The Group reviewed condensed provisional results for the year ended 31 August 2012 have been prepared in accordance with the group’s accounting policies, which comply with International Financial Reporting Standards as well as the AC 500 standards as issued by the Accounting Practices Board, IAS 34 – Interim Financial Reporting, the Listings Requirements of the JSE Limited and the Companies Act of South Africa and are consistent with those of the previous period. They have been prepared under the supervision of the Group’s Finance Director, Carina de Beer CA (SA). All monetary information is presented in the functional currency of the Company being South African Rand. The Group’s principal accounting policies and assumptions have been applied consistently over the current and prior financial period. Refer to note 8 for a statement on going concern. 2. Financial review The Group reported a basic loss of 9.46 (2011: 19.00) cents per share, headline loss of 8.71 (2011: 11.23) cents per share, negative net asset value of 2.53 (2011: net asset value of 4.34) cents per share and a net negative tangible asset value of 10.05 (2011: negative 7.58) cents per share. The negative net asset value of 2.53 cents per share is mainly due to a provision for a PAYE of R4.7 million and increased costs in relation to the company’s current operational and litigious matters. Current liabilities (excluding the loan conversion amount of R41.7 million) of R15.8 million (2011: R38.7 million) exceed current assets of R8.4 million (2011: R6 million). Current liabilities consist of trade payables of R4.1 million and other payables of R11.7 as detailed in note 6. 3. Prior period restatement In prior years the provision for rehabilitation was recorded using the value of the rehabilitation guarantee required by the Department of Mineral Resources. This amount required was determined based on expected levels of mining activities. To date, only site establishment has occurred resulting in an estimated rehabilitation liability as at the reporting date of R0.8 million. As a result, the comparative figures have been restated by reducing the rehabilitation liability from R9.2 million in 2010 to R0.8 million in 2012 as well as the corresponding reduction in intangible assets and property, plant and equipment. As the restatement only affects tangible net asset value, a restatement is only required on the consolidated statements of financial position which now reflect the correct liability for rehabilitation. 4. Auditor’s review opinion These provisional results have been reviewed by the Group’s auditors, PKF (JHB) Inc. and their review report, with an emphasis of matter, is available for inspection at the Company’s registered office. The emphasis of matter paragraph relates to the going concern assumption which is dependent on the successful outcome of the various matters detailed under note 8 – statement on going concern. PKF (JHB) Inc was appointed as auditors during the current year. 5. Subsequent events 5.1 Loan conversion - Incubex loan On 9 November 2012 Miranda reached agreement with Incubex in terms of which existing debt will be converted into shares. Incubex agreed to the conversion of their full outstanding debt amounting to R38.9 million into equity. The price at which the outstanding loans will be converted is 18.16 cents resulting in 214 165 508 new Miranda shares to be issued in terms of a specific issue of shares. The above mentioned conversion is subject to regulatory approvals and shareholder approval. A terms announcement will be released in due course. 5.2 Loan conversion - Satiolor loan On Friday, 9 November 2012, Miranda signed a convertible loan agreement with Satiolor (Proprietary) Limited (“Satiolor”) for a loan of R2, 5 million in order to settle part of a claim against the Company by Yakani. The above mentioned conversion is subject to regulatory approvals and shareholder approval and a terms announcement will be released in due course. 6. Other payables 6.1 SSMS As previously reported, the arbitration proceedings between SSMS, regarding outstanding amounts and claims in respect of a mining contract with SSMS, remain on hold pending the outcome of settlement negotiations. The parties are currently in the process of negotiating a settlement. R7 million has been accrued for in the year end results and is included in other payables. 6.2 SARS Included in other payables is an amount of R4.8 million claimed by the South African Revenue Services (“SARS”) in relation to PAYE that was not deducted by the Company and paid over to SARS. The Group’s legal counsel is of the view that Miranda has a strong case to succeed with its objection to the claim. 7. Group Segmental Analysis IFRS 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by Management in order to allocate resources to the segments and to assess their performance. The Group has identified its operating segments based on its main exploration divisions and aggregated them into coal, diamonds, gold, base metals and industrial minerals and other. These values have been reconciled to the consolidated financial results. The measures reported on by the Group are in accordance with the accounting policies adopted for preparing and presenting the consolidated annual financial statements. Segment operating expenses comprise all operating expenses of the different reportable segments and are either directly attributable to the reportable segment, or can be allocated to the reportable segment on a reasonable basis. The segment assets and liabilities comprise all assets and liabilities of the different segments that are employed by the reportable segments and are either directly attributable to the reportable segments, or can be allocated to the reportable segment on a reasonable basis. 8. Statement on going concern The financial statements set out in this report are the responsibility of the Company’s directors. They have been prepared by Management on the basis of appropriate accounting policies which have been consistently applied and which are supported by prudent judgments and estimates. The financial statements have been prepared in accordance with International Financial Reporting Standards and on the basis of accounting policies applicable to going concern. The following matters are impacting on the Group’s ability to Base Metals & Industrial (Figures in R‘000) Coal Diamonds Gold Minerals Other Group Mining properties Development properties Exploration and evaluation asset Mineral rights Other assets 16,636 – – – – 16,636 3,920 – – – – 3,920 11,026 271 69 75 – 11 441 8,929 – – 311 – 9 240 3,519 – – 200 5,122 8 841 Segment liabilities Restated audited year ended 31 August 2011 Segment result: Loss before taxation Taxation Loss after taxation Segment assets (9,152) (6,686) (1,599) (344) (22,592) (23,809) (55,030) (90) (11) (2) (3) – (106) (6,776) (1,610) (346) (22,595) (23,809) (55,136) 47,710 643 144 718 3,783 52,998 Mining properties Capital work-in-progress Exploration and evaluation asset Mineral rights Other assets 16,595 – – – – 16,595 3,920 – – – – 3’920 11,218 293 74 82 – 11,667 8,929 – – 311 – 9,240 7,048 350 70 325 3,783 11,576 Segment liabilities (10,439) (348) (70) (108) (104) 11.2 Burnside project The Mining Right over the Burnside property has been executed. A scoping study has been commissioned which will be completed by mid-November 2012 and environmental studies are being undertaken to ensure the issuing of the Integrated Water Use Licence. Early stage discussions with interested off-takers are being held. 11.3 Uithoek project Several attempts have been made to renegotiate the JV agreement with the Simpson family, who are the holders of the mining right, but these have been unsuccessful. Management is now in the process of assessing the situation and exploring avenues in order to recover both costs incurred to-date and potential earnings lost. 11.4 Boschhoek project Discussions with representatives of the SANDF are on-going in respect of access onto the Farm Boschhoek. Although entry to the underground mining operations on this farm can be gained from Burnside it will be necessary to have very limited surface access in order to sink ventilation shafts. Further information regarding the progress of the discussions will be provided when available. 11.5 Acquisitions Prospecting Rights over 10 farms in the Dannhauser, Vryheid and Newcastle districts have been acquired. These properties will complement the existing rights which are already held in the respective areas. The rights are held in four companies all of which are now subsidiaries of Miranda Coal. No material change occurred during the six months period from 29 February 2012 to 31 August 2012. 12. Changes to the board Ms. C de Beer was appointed Financial Director with effect 8 October 2012, after the resignation of Ms. M vd Merwe on 26 June 2012. Mr. M Yates, an independent non-executive director of the Company, has been appointed as Lead Independent Director of the Board with effect 9 October 2012. 13. Strategic review and future prospects The Board’s main focus is to bring the Group’s assets to account and is of the view that the Group is well positioned to fast track its projects to generate production revenue. The strengthening of the executive committee and recent additions to the Board facilitated a process of reviewing the Group’s current assets and defining a strategy going forward that will enhance shareholder value and bring the Group’s assets to account. The Board is also continuously seeking new investment opportunities and potential acquisitions that will progress its strategy and vision. With most litigious matters resolved and a potential off take on Sesikhona, the Group is set to commence production Q3-2013. 14. Cautionary announcement Further to the advanced discussions referred to in paragraph 11.1 supra, which if successfully concluded, may have a material effect on the price of Miranda ordinary shares. Shareholders are therefore advised to exercise caution when dealing in the securities of the Company until a further announcement is made in this regard. For and on behalf of the Board M Gous Company Secretary Centurion 14 November 2012 PricewaterhouseCoopers Corporate Finance (Proprietary) Ltd, 2 Eglin Road, Sunninghill, 2157 (6,706) (126) (30) (45) (21,060) (27,967) 277 33 7 10 – 327 (6,429) (93) (23) (35) (21,060) (27,640) 44,030 271 69 586 5 122 50,078 (72) Negotiations with a preferred Mining Contractor have reached an advanced stage and it is anticipated the discussions will be finalised during 2012. A Buyer for the Sesikhona anthracite has been identified and a Coal Sale Agreement will be concluded subject to all compliance issues being in place. Mining is scheduled to commence during the first quarter of 2013. Sponsor: Reviewed year ended 31 August 2012 Segment result: Loss before taxation Taxation Loss after taxation Segment assets (359) 10.2 Yakani has instituted action against the Company (and former directors and Management of the Company) for the amount of R39, 6 million arising out of alleged misrepresentations pertaining to the prospecting right application made by Miranda Minerals (Proprietary) Limited, a subsidiary of the Company, in respect of the Rozynenbosch farm. This claim is currently being vigorously defended by the Company and it strongly denies that there was any misrepresentation. 11. Operational review Total after NCI 112 206 115 051 – – 10.1 A possible claim by SSMS for damages in an amount of R70 million. Sesikhona Kliprand Colliery (Proprietary) Limited has instituted a counter claim for damages for R10.6 million. The parties have however, subsequent to year end, agreed a settlement, subject to a formal agreement being concluded by 23 November 2012 as detailed above. Non controlling interest (“NCI”) 115 051 – – – Management applies its judgment to the probabilities and advice it receives from its advisers in assessing if an obligation is probable, more likely than not or remote. At year end the Group had the following contingent liabilities: Total attributable to equity holders of parent 112 206 – – 2 845 – Litigious matters are largely resolved save for matters as disclosed under paragraph 6. 10. Contingent liability Total cash and cash equivalents movement for the year Cash and cash equivalents at the beginning of the year Stated Share Total Accumulated capital premium capital loss 2 845 – – • In view of all of the above, the Board of Miranda is satisfied with the progress made in terms of all of the above as well as the improvement of the Group’s – 22 114 debt to equity ratio after year end. It is also of the view that upon execution of (25 013) (31 949) an off take agreement the Group will be sufficiently self-funded. The litigious matters are being vigorously defended and the board is of the view that the Weighted average number of potential contingencies are not material to the Group’s overall position. shares in issue (‘000) 287 317 284 511 Loss per share (cents) 2 (9,46) (19,00) 9. Dividends Headline loss per share (cents) 2 (8,71) (11,23) No dividends were recommended or declared for the period under review (2011: nil). Condensed consolidated statement of changes in equity as at 31 August 2012 Balance at 01 Sep 2010 - audited Total comprehensive loss for the year Business combinations The Group has been granted a R15 million insurance guarantee facility which can potentially free up a further R3.5 million in cash from existing cash guarantees in favour of the DMR, subject to execution of an off take agreement mentioned above; and (54 063) (48,664) (29,569) (58,355) (40,530) (Private Bag X36, Sunninghill, 2157) Transfer Secretaries: Computershare Investor Services (Pty) Limited, 70 Marshall Street, Johannesburg, 2001 (PO Box 61051, Marshalltown, 2107) Tel: 011 370 5000 Company Secretary and place where registers are kept: Fusion Corporate Secretarial Services (Pty) Ltd, represented by Melinda Gous, Nr 56 Regency Road, Route 21 Corporate Park, Nellmapius Drive, Irene, Centurion (PO Box 68528, Highveld, 0169) Tel: 082 896 0548 Company registered office: Ground Floor, Pecanwood Building, The Greens Office Park, Charles de Gaulle Crescent, Highveld Techno Park, Centurion Postal address: PO Box 1045, North Riding, 2162 Tel: 012 665 4200 Fax: 012 665 4258 Email: info@mirandaminerals.com Web: www.mirandaminerals.com

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