Multi-commodity mining and processing company, Petmin Limited, today (8 September 2009) announced that its headline earnings per share (HEPS) increased by 46% to 22.29 cents (2008: 15.31 cents) in difficult trading conditions.
Petmin, which is listed on the JSE and AIM, achieved a 52% increase in sustainable profit before tax to R173 million (2008: R114 million) for the year ended 30 June 2009. Revenue rose by 18% from R667 million to R789 million.
Fully diluted NAV per share is estimated by the directors to be R3.74.
At 30 June 2009, Petmin had cash resources of R176 million and undrawn bank facilities of R150 million. Net cash flow from operating activities rose by 43% to R225 million (2008: R157 million).
Capital expenditure of R291 million was incurred for the year under review (2008: R229 million). Of this amount, R187 million was spent on exploration drilling and mine development programmes to expand existing operations, and R91 million on plant and mining equipment.
During the year Petmin concluded the sale of Springlake Holdings (Pty) Limited to Shanduka Coal for R85 million and all outstanding conditions precedent were met on 29 June 2009.
Commenting on the results COO Bradley Doig said: “We are of the view that trading conditions will improve slowly in the year ahead and, while operations were appropriately scaled during the reporting period, they are well positioned to take advantage of any increase in demand.”
Production at Petmin’s Anthracite Division (Somkhele and Springlake operations) was 1 016 940 tonnes (2008: 1 219 601 tonnes) while sales amounted to 960 764 tonnes (2008: 1 188 519 tonnes).
This decrease in production was anticipated, given the significant decline in the international market for metallurgical coal in the latter part of calendar 2008 and the South African ferrochrome industry’s lower production levels in the six months ended 30 June 2009.
Somkhele, however, was shielded from the reduction in international demand by sales in terms of its long-term export agreement.
Mining at this operation is progressing well and sufficient overburden in the pits has been pre-stripped to ensure that decreased levels of development expenditure can be maintained in the year ahead without reducing production. Mining from Area 1 has been delayed, pending a visible, sustainable increase in market demand.
The exploration drilling programme at Somkhele was verified by Snowden Mining Industry Consultants in their report dated June 2009. The drilling programme resulted in 23.97 million tonnes of additional resources being delineated in areas contiguous with current operations. As at 30 June 2009 Somkhele had reserves of 31.61 million run-of- mine tonnes which at current production levels provides for a life of mine of in excess of 30 years. This reserve figure excludes the 23.97 million tonnes of resources delineated during the year.
The long-term export contract has been renegotiated for the period after 30 June 2009 to accommodate the reduced short-term demand in the international market for anthracite. The terms have been amended to reflect 200 000 tonnes per year over four years, from the current 350 000 tonnes in 2010 and 400 000 tonnes in 2011, at an average price of $119 per tonne.
Petmin subsidiary Petmin Logistics contracted with the South African Port Authorities to provide a dedicated export facility at Richards Bay for a minimum of 600 000 tonnes per year for four years.
Although production was slightly down at SamQuarz silica mine, which produced 1 333 613 tonnes of silica and chert in 2009 compared with 1 385 906 tonnes in 2008, this operation achieved increased sales of 1 511 850 tonnes of silica and chert, from 1 434 853 tonnes in the previous year. Profit before tax was steady at R48 million (2008: R47 million).
Capital expenditure was focused on increasing production capacity, both in the open pit and the plant, to ensure that customers’ demand can be met reliably. The installation of an emergency generator was completed in the six months to 31 December 2008.
SamQuarz was granted a new order mining right conversion for its mining licence on 30 April 2009.
During the year under review Petmin capitalised its R25 million loan to Veremo Holdings (Pty) Limited and increased its interest in Veremo Minerals (Pty) Limited to an effective 34.9% (2008: 25%) economic interest. Petmin retained a 25% interest in the remainder of the project, which, once in production, will produce an estimated 700 000 tonnes of pig-iron a year.
Renewals of new order prospecting rights for all of the Veremo prospecting areas were approved and executed on 7 May 2009.
In its results commentary, Petmin management said it was well positioned:
Petmin announced that the negotiations referred to in the cautionary announcement published on 19 August 2009 had been terminated. The company’s due diligence process indicated that the potential investment did not meet Petmin’s investment criteria.
Condensed Preliminary Consolidated Financial Statements for the year ended 30 June 2009 (PDF - 142KB)
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