Petmin Limited (JSE: PET; AIM: PTMN), the South African-based minerals, mining and processing company which services the metallurgical and industrial sectors, is pleased to announce its results for the year ended 30 June 2007.
* The weighted number of shares in issue was increased by 55% in order to fund the development of Somkhele.
Profit before interest and tax was R91.1million (2006: R57 million) and net profit after tax of R 74.4 million (2006: R48.6 million) with a fully diluted headline earnings per share (HEPS) of 5.16 cents (2006: 4.52 cents). Basic earnings per share for the year was 16.14 cents compared to 16.38 cents in 2006.
The increase in headline earnings per share was achieved despite the issue of 40 million shares in the second quarter of the 2007 financial year and 91.3 million shares in the second quarter of 2006 year to fund the development of Somkhele, which only commenced production in June 2007.
Commenting on the results, Chairman Piet Nel and Chief Executive Officer Jan du Preez said that, in respect of the Group’s SamQuarz silica mining and processing operation, a 41% increase in revenue reflected a 29% increase in production, a response to improved customer demand for SamQuarz product. Disciplined cost control contributed to profitability.
While performance at the Group’s Springlake colliery for the first six months was disappointing as previously reported, a performance improvement programme had been successfully implemented in the six months to 30 June. In the second half of the year, production of saleable tonnes increased by 18% to 369,960 tonnes from the first half’s 313,363 tonnes. A new order mining right was granted for the Besterdale licence area, adding approximately 500,000 ROM tonnes to Springlake’s opencast sections.
The Somkhele anthracite project was commissioned on 1 June 2007 and the first export cargo of 32,000 tonnes was dispatched from Richards Bay during June 2007. The plant, which has a nominal capacity of 120,000 ROM tonnes per month, is fully operational. A new order mining right granted for Somkhele’s Area 1 would enable the operation to increase production substantially and to bring forward its originally forecast production ramp up.
Looking ahead, capital expenditure of approximately R28 million will be incurred in the new financial year at SamQuarz to increase capacity, maintain existing infrastructure, further develop the open pit, and to update the life of mine (LOM) models. The company believes that this active exploration may double the proven reserves, resulting in a life of mine in excess of 20 years at current production levels. At Springlake, a planned increase in opencast production and measures taken in respect of the underground operations are expected to result in an improved performance in 2008. A dollar-based offtake agreement for 350,000 tonnes of duff material to March 2009 has been signed and capital expenditure of R14 million committed. At Somkhele, capital expenditure of R42 million is budgeted to double production, ensure that Area 1 is in production as soon as possible, and accelerate the exploration programme in Areas 4 and 5 to further increase the reserve base. A dollar-based export agreement for 400,000 tonnes of unsized coal to December 2008 has been secured and negotiations are under way with a number of customers for medium- to long-term offtake agreements.
Acquisitive growth remains Petmin’s focus, say Nel and du Preez, and management is continuously reviewing potential new business opportunities focused on industrial minerals and bulk commodities.
© 2009 Petmin Limited