Key financial and operational highlights

Financial highlights

	Net cash flow from operating activities increased by 12% to R361 million from R322 million
	Headline earnings per share 17.50 cents, down 8% from 19.09 cents in 2010
	Profit of R101 million after tax (2010: R108 million)
	Normal dividend of 4 cents per share declared (prior year: 4 cents)
	Cash on hand of R269 million (2010: R283 million)
	Interest-bearing debt to equity ratio of 11.48% (2010: 7.55%)

Operational highlights

	Zero fatalities at Somkhele and SamQuarz, and only two lost time injury accidents across the Group for the whole year
	Successful conversion of Somkhele’s Area 2 and Area 3 mining right
	Construction of second plant at Somkhele to more than double capacity on track for commissioning in early 2012
	Accelerated exploration programme at Somkhele expected to more than double current reserves and resources
	Strong operating performance despite negative effect of stronger Rand/Dollar exchange rate
	Agreement for the sale of SamQuarz for R259 million concluded

Exploration and development project highlights

50% stake in Liberian iron ore project (Mt Ginka) secured

Phased investment up to 40% in Canadian iron sands project (NAIC) underway

Phased investment up to 37.5% in Turkish copper project (RCR) in progress

10% investment in Red Crescent Resources completed – access to zinc and manganese

Pre-feasibility on Veremo pig-iron and mining right application submitted

Exploration projects investment to date:

–	Mt Ginka $2 million
–	RCR (and Sivas Project) CDN$4.64 million
–	NAIC US$3.5 million

Headline earnings per share (HEPS)	Profit before tax

Group financial performance summary to 30 June 2011

The summary financial information presented below has been extracted from the Audited Consolidated Annual Financial Statements for the year ended 30 June 2011. The summary consolidated financial information presented below does not include all of the information required for full annual financial statements and should be read in conjunction with the consolidated annual financial statements for the year ended 30 June 2010, which are available at www.petmin.co.za.

Group performance summary to 30 June 2011

	Year ended 30 June 2011	Year ended 30 June 2010
Revenue (R’000)	641,467	489,354
- Somkhele (R’000)	471,385	334,880
- SamQuarz (R’000)	170,082	154,474

Profit after tax (R’000)	100,982	107,717
Headline earnings (R’000)	100,982	107,717
Weighted average shares in issue (000)	576,908	564,135
Total shares in issue at year end (000)	576,908	576,908
Share price 30 June (R)	2.90	2.75
Implied p/e ratio (on HEPS)	16.57	14.41
EPS (c)	17.50	19.09
HEPS (c)	17.50	19.09
Director’s valuation of NAV per share	4.95	4.45

Business overview

Consolidated statement of financial position as at 30 June 2011

	30 June 2011	30 June 2010
	R’000	R’000
ASSETS
Non-current assets	1,126,251	982,107
Property, plant and equipment	620,662	482,039
Intangible assets	1,889	4,407
Investment in equity accounted investee	470,138	470,661
Investments	33,562	25,000
Current assets	664,515	614,230
Inventories	22,134	28,436
Trade and other receivables	117,496	102,688
Current tax assets	4,656	4,186
Cash and cash equivalents	227,792	180,031
Assets classified as held for sale	292,437	298,889
Total assets	1,790,766	1,596,337
EQUITY AND LIABILITIES
Ordinary share capital and reserves	1,317,162	1,241,421
Share capital	143,398	142,681
Share premium	337,807	331,337
Share option reserve	5,627	3,121
Foreign currency translation reserve	(319)	–
Retained earnings	830,649	764,282
Non-current liabilities	249,604	159,357
Interest-bearing loans and borrowings	96,674	42,128
Deferred tax liabilities	133,206	99,519
Environmental rehabilitation provision	19,724	17,710
Current liabilities	224,000	195,559
Trade and other payables	88,131	75,365
Current portion of non-current liabilities	23,466	14,379
Shareholders for dividend	996	–
Liabilities classified as held for sale	111,407	105,815
Total equity and liabilities	1,790,766	1,596,337

Segment reporting

Segment information is presented in the annual financial statements in respect of the Group’s segments.

The segment reporting format reflects the Group’s management and internal reporting structure as reviewed by the chief operating decision-makers.

Segment revenue represents revenue to external customers. There was no inter-segment revenue during the year ended 30 June 2011 or the prior year. Inter-segment pricing is determined on an arm’s length basis.

Segment results include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.

Segment report for the year ended 30 June 2011

		Silica (Discontinued)		Anthracite		Business of Tomorrow
	Units of measure	Year ended 30 June 2011	Year ended 30 June 2010	Year ended 30 June 2011	Year ended 30 June 2010	Year ended 30 June 2011	Year ended 30 June 2010
Saleable tonnes produced	(tonnes)	1,325,868	1,255,559	524,006	467,843	–	–
Tonnes sold	(tonnes)	1,248,989	1,171,355	579,087	411,630	–	–
Segment revenue	R’000	170,082	154,474	471,385	334,880	–	–
Segment revenue per tonne sold	(R/tonne)	R136.18	R131.88	R814.01	R813.55
Segment finance expense)/income
Finance income	R’000	1,838	3,031	569	1,677	–	–
Finance expense	R’000	(357)	(368)	(852)	(4,063)	–	–
Segment Profit per tonne sold	(R/tonne)	R26.47	R33.05	R202.05	R292.50
– Segment result	R’000	33,058	38,715	117,006	120,402	(566)	–
Segment Profit/(loss) before tax	R’000	33,058	38,715	117,006	120,402	(566)	–
Segment tax (expense)	R’000	(8,977)	(11,135)	(33,599)	(34,433)	–	–
Segment Profit after tax	R’000	24,081	27,580	83,407	85,969	(566)	–
Segment capital expenditure – combined	R’000	63,294	21,614	268,069	81,384	467	–
Segment capital expenditure	R’000	63,294	21,614	86,718	24,659	467	–
Segment capital expenditure – pre-strip	R’000	–	–	181,351	56,725	–	–
Segment depreciation – combined	R’000	16,560	12,433	166,307	102,984	–	–
Segment depreciation	R’000	16,560	12,433	9,458	15,288	–	–
Segment depreciation – pre-strip	R’000	–	–	156,849	87,696	–	–
Share option costs included in segment
Profit/(loss) before tax	R’000	–	–	–	–	–	–
Segment assets	R’000	288,061	296,713	805,728	690,707	527,676	495,661
Segment liabilities	R’000	111,407	105,815	435,167	407,959	428	–

		Other (Corporate office)		Eliminations		Consolidated
		Year ended 30 June 2011	Year ended 30 June 2010	Year ended 30 June 2011	Year ended 30 June 2010	Year ended 30 June 2011	Year ended 30 June 2010
Saleable tonnes produced	(tonnes)	–	–	–	–	1,849,874	1,723,402
Tonnes sold	(tonnes)	–	–	–	–	1,828,076	1,582,985
Segment revenue	R’000	–	–	–	–	641,467	489,354
Segment revenue per tonne sold	(R/tonne)
Segment finance expense)/income
Finance income	R’000	4,666	4 408	–	–	7,073	9,116
Finance expense	R’000	(339)	(517)	–	–	(1,548)	(4,948)
Segment Profit per tonne sold	(R/tonne)
– Segment result	R’000	(2,479)	(5,500)	–	–	147,019	153,617
Segment Profit/(loss) before tax	R’000	(2,479)	(5,500)	–	–	147,019	153,617
Segment tax (expense)	R’000	(3,461)	(332)	–	–	(46,037)	(45,900)
Segment Profit after tax	R’000	(5,940)	(5,832)	–	–	100,982	107,717
Segment capital expenditure – combined	R’000	29,547	19,827	–	–	361,377	122,825
Segment capital expenditure	R’000	29,547	19,827	–	–	180,026	66,100
Segment capital expenditure – pre-strip	R’000	–	–	–	–	181,351	56,725
Segment depreciation – combined	R’000	408	293	–	–	183,275	115,710
Segment depreciation	R’000	408	293	–	–	26,426	28,014
Segment depreciation – pre-strip	R’000	–	–	–	–	156,849	87,696
Share option costs included in segment
Profit/(loss) before tax	R’000	2,546	–	–	–	2,546	–
Segment assets	R’000	432,119	486,516	(262,818)	(367,108)	1,790,766	1,602,490
Segment liabilities	R’000	28,525	40,473	(101,923)	(194,816)	473,604	361,069

The open pit mining profile at Somkhele requires that overburden be removed from the pit before coal can be extracted. This overburden removal is capitalised to the development cost of the open pit (so called “pre-strip”) and is then expensed on a units-of-production basis as the coal is extracted from the open pits. As disclosed last year, overburden removal volumes increased markedly this year to ensure supply of run-of-mine coal to feed both the existing and the second plant at Somkhele.

Reportable segments

The Group comprises the following main reportable segments:

	Silica mining and marketing (“Silica”) – Discontinued operation;
	Anthracite mining and marketing (“Anthracite”); and
	Business of Tomorrow, which includes Petmin’s exploration and development projects. This segment has been designated as a reportable segment in order to achieve fairer presentation due to its significance.

Condensed consolidated statement of cash flows for the year ended 30 June 2011

	Year ended 30 June 2011	Year ended 30 June 2010
	R’000	R’000
Cash generated by operations	142,018	149,449
Adjustments for:
– Depreciation	191,946	118,226
– Other non-cash items	26,688	9,806
Operating cash flows before changes to working capital, tax paid and net finance income	360,652	277,481
Working capital changes	(782)	50,673
Income tax paid	(4,590)	(10 010)
Net finance income	5,525	4,168
Net cash flow from operating activities	360,805	322,312
Cash flows from investing activities
Investment in jointly controlled entities	(13,552)	–
Investment in listed shares	(8,216)	–
Acquisition of property, plant and equipment	(361,431)	(122,825)
Other	(231)	(2,130)
Net cash flows from investing activities	(383,430)	(124,955)
Cash flows from financing activities
Proceeds from specific and general share issues
for cash during the year	29	26,640
Treasury shares acquired	(15,204)	(14,085)
Payment on options forfeited	–	(101)
Repayment of borrowings	(22,718)	(53,093)
Increase in borrowings	80,152	35,200
Dividends paid	(33,617)	–
Net cash flows from financing activities	8,642	(5,439)
Net increase in cash and cash equivalents	(13,983)	191,918
Cash and cash equivalents at beginning of year	283,014	91,096
Cash and cash equivalents at end of year	269,031	283,014

Somkhele Anthracite Mine	SamQuarz Silica Mine


Somkhele Anthracite Mine – saleable tonnes produced, tonnes sold, sales revenue and profit before tax	SamQuarz Silica Mine – saleable tonnes produced, tonnes sold, sales revenue and profit before tax


Somkhele Anthracite Mine – average sales price, cost and profit per tonne, profit margin	SamQuarz Silica Mine – average sales price, cost and profit per tone, profit margin

Note: Margin is lower due to stronger Rand and increased strip ratio	Note: Margin is lower because of increased mining costs due to depth and legacy pricing formula

Corporate profile

Petmin is a high-growth multi-commodity mining company which generates cash from operating assets and pays a dividend to shareholders. It is geographically diversified with mining and development assets in South Africa and exploration projects in Liberia, Turkey and Canada.

Petmin is focused on commodities that support the steel value chain and are required for urbanisation and infrastructure growth. It is South Africa’s leading producer of metallurgical anthracite and is developing exploration projects in copper, iron ore and iron sands.

Petmin is listed on the Johannesburg Stock Exchange and London’s Alternative Investment Market (AIM). The company intends to move its London listing to the main board and become part of the FTSE 250 by 2015.

Petmin’s corporate and operational management teams have a substantial stake in the business and track records of delivering value to shareholders through operational efficiency combined with well-timed acquisitions and disposals. Petmin has a strong balance sheet with low gearing of only 11.48% and cash reserves of R269 million (this will rise to R460 million after completion of the SamQuarz sale).