SIM - Simmers - Abridged Reviewed Unaudited Consolidated Interim Results
Thu, 13 Nov 2008
SIM
SIIF
SIM - Simmers - Abridged Reviewed Unaudited Consolidated Interim Results
As At 30 September 2008
Simmer & Jack Mines Limited
Incorporated in the Republic of South Africa
(Registration number 1924/007778/06)
Share code: SIM & ISIN: ZAE000006722
("Simmers" or "the Company" or "the Group")
ABRIDGED REVIEWED UNAUDITED CONSOLIDATED INTERIM RESULTS
As at 30 September 2008
SALIENT POINTS
F2009 YTD
* Grew revenue 52% from
R371 million for the six months ending 30 September 2007
to R563,3 million
* Gross profit from mining activities up 103% from a loss of R31,9 million to a
profit of R934 000
* Value of total assets increased marginally by 5% from R3,7 million to R3,9
million
* Net asset value decreased 7% from R2,3 billion in September 2007 to R2 billion
* Headline loss for the comparative period widened from 10,26 cps to 17,05 cps
* Overall gold production fell marginally by 2,9% from 81 254 ounces for the
corresponding period to 78 850 ounces
* Added almost 40 000 ounces of low-cost heap leachable NI 43-101 compliant
resources at TGME, bringing the total to 163 000 resource ounces
* Mining right at Elandsdrift and Frankfort
granted; production from Duke`s Hill
initiated
* Phase 1 of BGM`s Number Five shaft rehabilitation project completed
* Ezulwini gold plant commissioned; prospecting right over adjoining property
granted; uranium production delayed to Q4 F2009
* Mine Waste Solutions` gold plant expanded; mining system for Buffelsfontein
dam complex commissioned
ABRIDGED REVIEWED UNAUDITED CONSOLIDATED INTERIM RESULTS for the six months
ended 30 September 2008 - Reviewed
COMMENTS
The first six months of the 2009 financial year from 1 April to 30 September
2008 showed an increase in gold produced at all operations, with the exception
of BGM, where safety-related stoppages resulted in an 8% drop in
production
compared to the same period in F2008. The gold price was 48% higher than the
corresponding reporting period in F2008, resulting in a 103% jump in gross
profit from mining activities. Total cash costs, however, increased by 37%, from
R403 million in the first half of F2008 to R549 million in the comparative
period of F2009, mainly as a result of inflationary pressure on mining
consumables, reagents and fuel, as well as a 13,3% increase in Eskom rates,
effective July 2008. A R21 million (2007: Rnil) net realisable value adjustment
on the stockpile at Ezulwini Mine and increased Aberdeen royalties, resulting
from higher gold commodity prices and an additional 606 kg of gold from MWS
(2007: nil kg), contributed towards the increase in the Group`s cost of
production. The capitalisation of revenues from Ezulwini Mine and increased
finance costs relating to higher Aberdeen royalties also impacted negatively on
the Group`s
net loss before taxation. The first half of the financial year was
also marked by a significant ramp-up of operations at Ezulwini and MWS,
resulting in an increase in capital expenditure and a corresponding reduction in
cash resources and investment revenue compared to the previous period.
BUFFELSFONTEIN GOLD MINE (BGM)
In the period under review, Phase 1 of the rehabilitation of the high-grade
Number Five shaft was completed, culminating in the hoisting of ore from the
shaft. Phase 2 is underway with Phase 3 earmarked for completion by the end of
the current financial year. This is expected to significantly alter the
production profile of the mine by allowing access to large, un-mined blocks of
high-grade ore. A development project at the high-grade Number Two shaft was
initiated in the period under review, to access a large block of high-grade
ground at Kromdraai, estimated to
contain some 362 000 ounces of gold. Plans to
increase production in Q2 of F2009 were unfortunately halted by a fatality at
the high-grade Number Two shaft in August 2008 which resulted in the shaft being
closed for almost two weeks. Significant work has subsequently been done in
terms of introducing additional support and safety measures, which while pushing
up the cash costs for the quarter above the forecasted range of US$800, are
designed to play a key role in preventing any future seismic-related fatalities.
TRANSVAAL GOLD MINING ESTATES (TGME )
Both TGME`s underground and surface projects are currently in a development
phase pending feasibility studies that are due for completion in March 2009. It
has been established that BIOX technology will increase recoveries at the
underground Frankfort Mine from current levels of 65% to between 75% and 80%. It
remains to test the technology on TGME`s next underground
targets at Beta and
Rietfontein. Should these targets prove amenable to BIOX, it will bring 700 000
LOM resource ounces that were previously considered uneconomical, to book. The
Company is hoping to convert 400 000 of its almost 2.6 million resource ounces
(Measured, Indicated and Inferred) to reserves by March 2009. The BIOX
feasibility study is due for completion in March 2009. In the interim, mining at
Duke`s Hill was reinitiated to complement the decreased production at Frankfort.
The ore at Duke`s Hill is less refractory than at Frankfort, albeit of a lower
grade.
The surface pre-feasibility study to investigate the very significant near-
surface low-grade gold deposits in the region was completed in March 2008 and
confirmed that there was sufficient potential to achieve 200 000 surface reserve
ounces by March 2009. Recent cutbacks in exploration expenditure have resulted
in
this target being revised to 87 000 ounces by the end of the financial year.
The Company still expects to define 600 000 surface reserve ounces by 2013. To
date, 163 000 compliant surface resource ounces have been defined. Of these, 100
000 ounces will be treated using four heap leach pads which are expected to
yield 80 000 ounces of gold over the next four years at an average cash
operating cost of US$266/oz. The first of these is at Elandsdrift, which was
originally anticipated to commence in June 2007. The mining right was, however,
only granted in March 2008 and the pad was commissioned in October 2008,
following the granting of a Water Use Licence. The first gold is expected in
December 2008. Elandsdrift is expected to yield a total of 5 777 ounces over 14
months.
A full analysis of the performance and prospects for BGM and TGME can be found
in the Management Discussion
and Analysis for Q1 of F2009 and Q2 of F2009, on
www.simmers.co.za.
FIRST URANIUM CORPORATION (FIU)
In the period under review, Simmers` stake in FIU diluted from 65,47% to 62,3%,
as a result of FIU issuing 6,1 million First Uranium common shares to Waterpan
Mining Consortium for the acquisition of the remaining 10% interest in Ezulwini
Mining Company. Construction of the gold and uranium plant continued apace
during the period under review and the gold plant was commissioned at Ezulwini
in July this year. The uranium plant has however been further delayed from
October 2008 until the end of Q4 of F2009, due to delays on the part of the ECMP
contractor in completing certain of the drawings, which in turn resulted in
delays in the delivery of certain construction materials. At Mine Waste
Solutions (MWS), the extension and upgrade of the gold
plant was completed and
the construction of the uranium plant is on track for commissioning in December
2008, with the first yellow cake expected in April 2009. MWS produced 420,49 kg
(13 519 ounces) of gold between 6 June and 30 September 2007 at an average cash
cost of R128 567/kg (US$472), compared to 630 kg (20 359 ounces) at an average
cash cost of R95 766/kg (US$382/oz). The cash costs for the current period are
in line with planned levels, due largely to the successful switch from the semi-
depleted MWS dams that needed expensive, manual loading, to hydraulic mining
operations of the Buffelsfontein complex.
Subsequent to the end of Q2 of F2009, FIU announced a gold stream transaction
with Gold Wheaton Corporation (GW) whereby GW will purchase 25% of the estimated
2,1 million ounces of the life of mine gold production from MWS, in return for
US$125 million, payable before 27 February 2009, and an ongoing payment equal
to
the lesser of US$400 per ounce and the prevailing spot price.
Detailed disclosures of the interim results for First Uranium can be viewed at
www.firsturanium.com.
PROSPECTS
In addition to achieving its production targets, the Company`s focus for the
next six months is on optimising expenditure and rationalising costs. Post Q2,
the technical reports for each operation were updated and revised to take into
account increases in the costs of consumables and power, and in the case of
Simmers, reflect a slower, more selective build-up of new, accretive projects,
which are now expected to be largely funded from cash flow from operations.
Should funding be secured for these new growth projects, they will be
accelerated accordingly.
STATEMENT OF FINANCIAL
POSITION
Reviewed Unaudited Audited
six six twelve
months months months
as at as at as at
30 Sep 08 30 Sep 07 31 Mar 08
as at 30 September 2008 Notes R`000 R`000 R`000
ASSETS
Non-current assets
Investment property 17 193 9 481 17 303
Property, plant and equipment 2 3 022 230 1 351 794 2 043 581
Goodwill 7 415 7 415 7 415
Financial assets 15 867 13 283 15 876
Environmental rehabilitation
trust fund 3 175 235 152 288 167 418
3 237 940 1 534 261 2 251 593
Current assets
Inventories 4 81 527 44 888 51 668
Trade and other receivables 5 169 751 106 891 130 099
Cash and cash equivalents 424 782 2 051 472 1 582 012
676 060 2 203 251 1 763 779
Non-current assets held for
sale 1 274 1 033 2 192
Total assets 3 915 274 3 738 545 4 017 564
EQUITY AND LIABILITIES
Equity
Equity attributable to owners
of the parent
Share capital 843 357 829 520 843 357
Reserves 1 378 003 942 116 1 418 872
Accumulated loss (658 721) (439 421) (509 644)
Convertible debentures -
equity 6 280 580 280 580 280 580
Equity of owners of the
parent 1 843 219 1 612 795 2 033 165
Non-controlling interest 303 010 622 689 334 169
2 146 229 2 235 484 2 367 334
LIABILITIES
Non-current
liabilities
Convertible debentures - debt 6 890 583 731 860 844 963
Deferred tax 86 177 86 157 84 941
Financial liabilities 7 - 157 555 -
Environmental rehabilitation
provision 8 253 219 252 006 254 638
1 229 978 1 227 578 1 184 542
Current liabilities
Financial liabilities 7 122 650 231 147 535
Trade and other payables 9 416 416 275 252 318 153
539 066 275 483 465 688
Total liabilities 1 769 045 1 503 061 1 650 230
Total equity and liabilities 3
915 274 3 738 545 4 017 564
STATEMENT OF COMPREHENSIVE INCOME
Reviewed Unaudited Audited
six six twelve
months months months
as at as at as at
30 Sep 08 30 Sep 07 31 Mar 08
for the period ended
30 September 2008 R`000 R`000 R`000
Revenue 563 288 371 054 854 915
Cost of production (562 354) (403 028) (915 022)
Profit/(loss) from mining activities 934 (31 974) (60 107)
Other income 24 873 35 600 66 968
General administrative
and overhead
expenditure (131 421) (100 589) (169 950)
Share option costs (67 218) (25 540) (78 555)
Loss before finance charges/income
and fair value adjustments (172 832) (122 503) (241 644)
Finance income 43 627 75 765 142 505
Fair value adjustments 26 573 - 39 163
Finance charges (69 522) (60 424) (139 496)
Comprehensive loss before income tax (172 154) (107 162) (199 472)
Taxation (8 082) (373) (33 098)
Comprehensive loss for the period (180 236) (107 535) (232 570)
Attributable to:
Owners of the parent (149 077)
(97 461) (167 684)
Non-controlling interest (31 159) (10 074) (64 886)
(180 236) (107 535) (232 570)
Basic loss per share (cents) (17,05) (10,26) (22,05)
Diluted loss per share (cents) (15,82) (9,97) (20,67)
Refer to note 10
STATEMENT OF CASH FLOWS
Reviewed Unaudited Audited
six six twelve
months months months
as at as at as at
30 Sep 08 30 Sep 07 31 Mar 08
for the period ended
30 September 2008 R`000 R`000 R`000
Cash flows from operating
activities
Cash absorbed by operations (58 065) (30 758) (202 664)
Finance income 43 627 73 150 142 505
Finance costs (69 522) (31 605) (139 496)
Tax paid (4 340) - (5 305)
Net cash from operating activities (88 299) 10 787 (204 960)
Cash flows from investing (1 067 511) (501 877) (1 113 984)
activities
Cash flows from financing (1 419) 1 378 732 1 236 473
activities
Net effect of exchange rate
changes on cash
held in foreign - - 500 653
currencies
Net (decrease)/increase in cash (1 157 230)
and cash equivalents 887 642 418 182
Cash at the beginning of the 1 582 012 1 163 830 1 163 830
period
Total cash at end of the period 424 782 2 051 472 1 582 012
STATEMENT OF CHANGES IN EQUITY
Attributable to owners of the parent
Total
for the period ended Share Share share
30 September 2008 capital premium capital Reserves
R`000 R`000 R`000 R`000
Balance
at 1 April 19 280 454 829 474 109 934 326
2007
Loss for the period - - - -
Issue of shares for 454 369 901 370 355 -
cash
Share issue cost - (14 944) (14 944) -
written off against
share premium
Convertible debentures - - - -
- equity
Net movement in - - - 7 790
reserves
Non-controlling -
- - -
interest movement
Total changes 454 354 957 355 411 7 790
Balance at 30 19 734 809 786 829 520 942 116
September 2007
Loss for the period - - - -
Issue of shares for 1 004 4 572 5 576 -
cash & treasury shares
Share issue cost - 8 261 8 261 -
written off against
share premium
Net movement in - - - 476 756
reserves
Non-controlling - - - -
interest movement
Total changes 1 004 12 833 13 837 476 756
Balance at 31 March 20 738 822 619 843 357 1 418 872
2008
Loss for the period - - - -
Net movement in - - - (40 869)
reserves
Total changes - - - (40 869)
Balance at 30 20 738 822 619 843 357 1 378 003
September 2008
STATEMENT OF CHANGES IN EQUITY (continued)
Attributable to equity holders
of the owners of the parent
Non-
Control-ling
interest Total
equity
Total
Conver- attribu-
tible Accumu- table to
Deben- lated owners of
for the period ture - loss the parent
ended equity
30 September 2008
R`000 R`000 R`000 R`000 R`000
Balance at 1 - (341 1 066 475 401 751 1 468 226
April 2007 960)
Loss for the - (97 (97 461) (10 074) (107 535)
period 461)
Issue of shares - - 370 355 - 370 355
for cash
Share issue cost - - (14 944) - (14 944)
written off
against share
premium
Convertible 280 580 - 280 580
- 280 580
debentures -
equity
Net movement in - - 7 790 - 7 790
reserves
Non-controlling - - - 231 012 231 012
interest movement
Total changes 280 580 (97 546 320 220 938 767 258
461)
Balance at 30 280 580 (439 1 612 795 622 689 2 235 484
September 2007 421)
Loss for the - (70 (70 223) (54 812) (125 035)
period 223)
Issue of shares -
- 5 576 - 5 576
for cash &
treasury shares
Share issue cost - - 8 261 - 8 261
written off
against share
premium
Net movement in - - 476 756 - 476 756
reserves
Non-controlling - - - (233 708) (233 708)
interest movement
Total changes - (70 420 370 (288 520) 131 850
223)
Balance at 31 280 580 (509 2 033 165 334 169 2 367 334
March 2008 644)
Loss for the - (149 (149 077) (31 159) (180 236)
period 077)
Net movement in - - (40 869) - (40 869)
reserves
Total changes - (149 (189 946) (31 159) (221 105)
077)
Balance at 30 280 580 (658 1 843 219 303 010 2 146 229
September 2008 721)
1 ACCOUNTING POLICIES
1.1 General information
Simmer and Jack Mines, Limited ("the Company") and its subsidiaries (together
"the Group") mine mainly gold and uranium. The Group has mining operations in
Gauteng, North West and Mpumalanga Provinces in South Africa.
1.2 Presentation of Financial Statements
The condensed financial statements for the interim period have been prepared in
compliance with International Financial Reporting Standards ("IFRS"), the
Companies Act of South Africa and in accordance with International Accounting
Standards (IAS 34): Interim Financial Reporting. The financial statements have
been prepared on the historical cost basis, unless otherwise stated.The
principal accounting policies are consistent with those applied in the annual
financial statements for the year ended 31 March 2008.
Grant Thornton`s unmodified review report on the condensed financial statements
contained in this interim
report is available for inspection at the company`s
registered office.
2 PROPERTY, PLANT AND EQUIPMENT
Reviewed Unaudited Audited
six six months twelve
months months
as at 30 as at 30 as at 31
Sep 08 Sep 07 Mar 08
Accu- Accu-
mulated Carry- mulated Carry-
depre- ing depre- ing
Cost ciation value Cost ciation value
R`000 R`000 R`000 R`000 R`000 R`000
Land
and
buildings 29 515 (2 892) 26 623 37 462 (1 070) 36 392
Forestry
asset 276 - 276 - - -
Plant and
equipment 1 329 885 (132 481) 1 197 404 462 004 (118 585) 343 419
Furniture
and
fixtures 10 151 (2 479) 7 672 9 083 (2 108) 6 974
Motor
vehicles 16 328 (2 055) 14 273 5 189 (866) 4 323
Mining
assets 708 518 (80 962)
627 550 754 173 (56 894) 697 279
Computer
equipment
and
software 19 958 (6 922) 13 036 9 177 (3 901) 5 277
Decommis-
sioning
asset - - - 17 810 - 17 810
Tailings
for
Process-
sing 240 681 (7 765) 232 916 - - -
Develop-
ment
