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South African Coal Mining Hldgs Ltd - Reviewed Condensed Results For The 6 Months Ended On 30 June 2012

Release Date: 08/10/2012 07:15:00      Code(s): SAH     
SOUTH AFRICAN COAL MINING HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
Registration number 1994/009012/06
Share code: SAH      ISIN: ZAE0000102034
("SACMH" or "the company")

REVIEWED CONDENSED RESULTS OF SACMH AND ITS SUBSIDIARIES
("THE GROUP")
for the six months ended 30 June 2012

CONSOLIDATED CONDENSED STATEMENT OF FINANCIAL POSITION

                                                         Reviewed        Unaudited          Audited
                                                            As at            As at            As at
                                                          30 June          30 June      31 December
R'000                                                        2012             2011             2011
ASSETS
Non-current assets                                        501 104          557 223          525 715
Property, plant and equipment                              97 437          134 171          111 360
Intangibles                                               393 000          418 517          407 130
Investments                                                10 667            4 535            7 225
Current assets                                             47 731           47 555           58 731
Inventories                                                 5 506           17 463           22 349
Trade and other receivables                                37 716           22 267           35 681
Cash and cash equivalents                                   4 509            7 825              701
Current assets held for sale                                3 242                            3 242
Total assets                                              552 077          604 778          587 688

EQUITY AND LIABILITIES
Capital and reserves                                       23 924          139 246           59 384
Issued capital and premium                                233 885          233 885          233 885
Accumulated loss                                         (209 961)         (94 639)        (174 501)
Non-current liabilities                                   400 765          416 490          380 820
Shareholder's loan                                        235 629                          213 353
Interest bearing liabilities                                              220 611              989
Non-interest bearing liabilities                           34 800           46 600           34 800
Non-current provisions                                     36 680           47 027           34 540
Deferred taxation                                          93 656          102 252           97 138
Current liabilities                                       121 228           49 042          141 324
Trade and other payables                                   44 012           24 372           39 416
Current portion of non-interest bearing liabilities        11 600                           18 200
Current portion of interest bearing liabilities            50 012           19 550           50 483
Current portion of provisions                              15 604            5 120           16 001
Bank overdraft                                                                             17 224
Current liabilities held for sale                           6 160                            6 160
Total equity and liabilities                              552 077          604 778          587 688
Number of shares in issue ('000)                          452 454          452 454          452 454
Net asset value per share (cents)                            5,29            30,78            13,12
Tangible net asset deficit per share (cents)               (59,72)          (38,67)          (54,34)

CONSOLIDATED CONDENSED STATEMENT OF COMPREHENSIVE INCOME

                                                         Reviewed        Unaudited          Audited
                                                    Six months to    Six months to            As at
                                                          30 June          30 June      31 December
R'000                                                        2012             2011             2011
Revenue                                                   135 710          174 247          347 338
Cost of sales                                            (127 287)        (159 309)        (341 039)
Gross profit                                                8 423           14 938            6 299
Other losses                                                               (1 288)               
Foreign exchange loss                                      (2 733)            (601)         (31 481)
Net impairment of assets                                                                   (4 226)
Loss on sale/scrapping of assets                                                             (852)
Depreciation                                              (14 483)          (6 931)         (28 352)
Amortisation of mining rights                             (10 689)          (3 149)         (11 846)
Rehabilitation provision                                   (1 746)          (1 255)          (5 809)
Operating expenses                                        (11 778)         (15 801)         (17 412)
Operating loss before finance costs and taxation          (33 006)         (14 087)         (93 679)
Finance costs                                              (5 936)          (5 816)         (12 882)
Finance income                                                                              1 680
Loss before taxation                                      (38 942)         (19 903)        (104 880)
Taxation                                                    3 482            1 229            6 344
Total comprehensive loss attributable
 to ordinary shareholders                                 (35 460)         (18 674)         (98 536)
Weighted average number of shares in issue ('000)         452 454          452 454          452 454
Headline loss reconciliation
Basic loss per share (cents)                                (7,84)           (4,13)          (21,78)
Impairments per share (cents)                                                                0,93
Tax effects thereon (cents)                                                                  0,19
Headline loss per share (cents)                             (7,84)           (4,13)          (20,66)

CONSOLIDATED CONDENSED STATEMENT OF CASH FLOW 

                                                                Reviewed        Unaudited           Audited
                                                           Six months to    Six months to             As at
                                                                 30 June          30 June       31 December
R'000                                                               2012             2011              2011
Cash flows generated from operations                              12 605           17 064             6 573
Net finance charges paid                                          (5 936)          (5 816)          (11 201)
Taxation paid                                                                         (5)                
Net cash from/(utilised) in operating activities                   6 669           11 243            (4 628)
Cash flows from investing activities
Purchase of property, plant and equipment                           (560)         (30 097)          (36 286)
Net cash used in investing activities                               (560)         (30 097)          (36 286)
Cash from financing activities
Borrowings repaid                                                 (7 890)                           (7 304)
Net liabilities raised                                            22 813           21 205            26 221
Net cash from financing activities                                14 923           21 205            18 917
Net decrease in cash and cash equivalents                         21 032            2 351           (21 997)
Cash and cash equivalents at the beginning of the period           4 509            7 825           (16 523)
Cash and cash equivalents at the end of the period                 4 509            7 825           (16 523)

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

                                            Share       Share    Shareholder     Accumulated
R'000                                     capital     premium           loan            loss        Total
Balance at 31 December 2010                45 246     188 639         15 246         (75 965)     173 166
Transfer to interest bearing liabilities                             (15 246)                     (15 246)
Total comprehensive loss attributable
 to ordinary shareholders                                                            (18 674)     (18 674)
Balance at 30 June 2011                    45 246     188 639                       (94 639)     139 246
Total comprehensive loss attributable
 to ordinary shareholders                                                         (79 862)     (79 862)
Balance at 31 December 2011                45 246     188 639                      (174 501)      59 384
Total comprehensive loss attributable
 to ordinary shareholders                                                            (35 460)     (35 460)
Balance at 30 June 2012                    45 246     188 639                      (209 961)      23 924

Statement of compliance and basis of preparation
The reviewed condensed consolidated financial report has been prepared, under the supervision of David Miller, CA(SA), Chief Financial Officer,
in accordance with the recognition and measurement principles of International Financial Reporting Standards (IFRS), including the information required
by International Accounting Standard (IAS) 34: Interim Financial Reporting, the AC 500 standards issued by the Accounting Practices Board or its
successor, the Listings Requirements of the JSE Limited, and in compliance with the requirements of the South African Companies Act, 71 of 2008.

The condensed consolidated financial report has been prepared in accordance with the historical cost convention, except for certain financial instruments
which are stated at fair value, and is presented in Rand, which is SACMH's functional and presentation currency.

The auditors, Deloitte & Touche, have issued their modified review report with an emphasis of matter on going concern on the condensed consolidated
interim financial report for the six months ended 30 June 2012. The review was conducted in accordance with ISRE 2410 Review of Interim Financial
Information Performed by the Independent Auditor of the Entity. A copy of their modified review report is available for inspection at the company's registered
office. Any reference to future financial performance included in this announcement has not been reviewed and reported on by the company's auditors.
The auditor's report does not necessarily cover all of the information contained in this announcement. Shareholders are therefore advised that in order to
obtain a full understanding of the nature of the auditor's work they should obtain a copy of that report together with the accompanying financial information
from the registered office of the company.

Any reference to future financial performance included in this announcement has not been reviewed and reported on by the company's auditors. These
financial results have been prepared on the going concern basis taking into account that JSW Energy Limited (a company listed on the Indian stock
exchanges) and operating through its subsidiary JSW Energy Natural Resources South Africa Proprietary Limited, continues to support SACMH as
reflected in the Annual Report for the year ended 31 December 2011 issued in July 2012.

COMMENTARY
1. Performance for the six months to 30 June 2012
   Market prices for RB1 Export coal have rapidly depreciated over the six-month period to 30 June 2012. This deprecation in prices has been close
   to 19% from the beginning of January to end of June 2012. Among the key reasons for these factors are the depressed demand conditions
   that exist in Europe and China and a relatively benign demand from India; the latter was expected to play through much stronger during the first half
   of this year. This has directly impacted the revenue per ton reflected below.

   The gross profit for the period reduced to R8,4 million (2011: R14,9 million). The decrease was a result of a lower sales volume of 175 432 tons
   (2011: 204 304 tons) as well as lower revenue per ton of R773,58 (2011: R852,14) which was not fully offset by the improved cost per ton of R725,56
   (2011: R779,76).

	   1.1 Mining performance
               Open cast operations at Vlakfontein came to an end in March 2012 which reduced total Run of Mine (ROM) volumes in the second quarter.
               Underground operations at Mooifontein continued and a total of 302 080 (2011: 345 236) tons of ROM was mined during the period.
	   1.2 Production performance
               ROM mined was processed through the wash plant at Umlabu. A total of 352 087 tons (2011: 268 225 tons) with an average yield of 47%
              (2011: 52%); yields deteriorated after the completion of the Open Cast area at Vlakfontein in March 2012, due to the systemic yield of the
               B Seam in Mooifontein not being blended with higher yielding seams. Total production for the period was 183 013 tons (2011: 139 477 tons).
	   1.3 Health and safety
               Health and safety levels were maintained during the period with no recorded incidents.
	   1.4 Management
               During the period the Mine Manager, Phillip Buckle, left the operation. His responsibilities are being fulfilled by existing staff including the
               Group's Chief Operating Officer, Roelof Hugo.

2. Logistics
   The Group's rail allocation to Richards Bay Coal Terminal (RBCT) in terms of the Quattro allocation scheme administered by the Department of
   Minerals and Resources (DMR) is 157 000 (2011:157 000) tons per annum. This together with the direct allocation in terms of RBCT's Phase V
   expansion of 100 000 tons (2011: 70 000 tons) per annum equates to a total annual allocation of 257 000 tons (2011: 227 000 tons).

3. Revenue
   Sales revenue for the period was R135,7 million (2011: R174,3 million) representing 175 432 tons (2011: 204 304 tons) reflecting an average selling
   price of USD95,20/ZAR773,52 (2011: USD119,98/ZAR:853.14) per ton. Sales volumes in the period included 47 861 tons of stock produced and
   16 415 tons purchased from third parties, which was not included in this period.

4. Impairment of Mining Right
   The adverse effect of the reduction in the forecast price of RB1 Export coal at 30 June 2012 has been largely offset by the depreciation of the Rand
   Dollar exchange rate at 30 June 2012. The Life of Mine (LOM) valuation was also updated to reflect current yields from the reserves mined, which has
   resulted in improving the forecasted performance over the expected LOM. This together with the reduction in the carrying value of assets at the end
   of the period has resulted in no impairment of the mining right being required. This position will be reviewed again at year-end and any appropriate
   adjustments will be effected as at 31 December 2012.

5. Depreciation
   The estimated life of the Mooifontein and Vlakfontein areas have been reduced which has resulted in an additional charge of R3 million in depreciation
   for the period, in addition the reduction in the estimated life of the wash plant resulted in a further charge of R4 million.

6. Amortisation of mining right
   The rate at which the production was amortised against the mining right was increased from R11,74 per ton to R30,36 per ton as a result of
   the reduction of the Group's provable reserves to 11,04 Mt from 25,7 Mt. As a result the amortisation charge in the current period increased by
   R6,6 million.

7. Asset management
   No significant capital expenditure took place during the period.

8. Investments
   During the period a further 283 ordinary shares in RBCT were acquired in terms of the subscription and access agreement. In terms of the agreement
   the additional shares increased the Group's entitlement to 100 000 tons (2011: 70 000 tons) at RBCT.

9. Updated statement of reserves and resources and prospects
   As reported in the Group's Integrated Report for the year-end 31 December 2011 in July 2012, JSW Energy together with management is continuing
   to evaluate the latest Independent Engineer's Report (IER) to identify opportunities to further maximise the economical extraction through detailed
   engineering and feasibility studies. These are expected to be completed by 31 December 2012.

10. Financing activities
    During the period working capital facilities with Standard Bank of South Africa were replaced by JSW Energy. JSW Energy has extended R18,8 million
    (2011: R27,1 million) in support of the Group's operations and continues to commit financial support to the Group.

11. Taxation
    No taxation has been provided as the Group has incurred a taxable loss for the period. Deferred tax provisions of R3,5 million (2011: R1,2 million)
    have been released as a result of the reduction in the carrying value of the mineral right.

12. Going concern
    The Group incurred a net loss of R35 million (2011: R19 million) during the six months. The Group's going concern has been underwritten by the
    support of JSW Energy (a company listed on the Indian stock exchanges) which operates through its subsidiary JSW Energy Natural Resources
    South Africa Proprietary Limited ("JSWENRSAL") supporting SACMH. JSW Energy has confirmed its support in writing of their intention to continue
    financial support of SACMH, subject to the following:
    	 JSW obtains Board approval for additional funding at the time;
    	 JSW fulfils all regulatory requirements as prescribed by Indian legislation; and
    	 JSW remains the majority shareholder.

    In terms of the loan agreements JSW Energy has undertaken not to accept repayment of its loan accounts until such stage as SACMH's assets, fairly
    valued, exceed its liabilities. The group's Life of Mine plan reflects that operations are expected to produce positive cash flows after servicing all debt
    and capital requirements by 2015.

13. Events after the reporting period
    Regulatory approval in respect of the approval of the Water Use Licence Application ("WULA") to allow the Group to begin operations on the Voorslag
    reserve has not been received from the Department of Water Affairs. A number of on-going submissions have been made and every effort is being
    made to expedite this process. While management is confident that approval will be granted, no commitment has, however, been received. This
    delay will have a significant impact on production levels for the second half of the year, as well as the overall profitability of the Group.

14. Capital expenditure commitments
    No significant commitments have been made.

15. Contingencies and commitments
    There have been no significant changes from those disclosed in the Group's Integrated Report for the year ended 31 December 2011.

16. Prospects
    The strategic challenges facing the Group as highlighted in the Annual Report are still key aspects to repositioning the Group. The urgency of these
    matters has been enhanced by the deteriorating market conditions facing the company, in particular the significantly lower coal prices and lower
    volumes of mining.

    The planned BEE transaction is in progress with on-going discussions with various parties; the time taken to consummate a transaction is taking
    longer due to the prevailing market conditions and potential acquirers requiring extended periods of time to complete their assessments of the
    company and the synergies with their respective operations.

    The Group is investigating the long-term acquisition of a meaningful and high-quality source of ROM to allow it to complement the quality of its
    resource as well as to compensate for the loss of volumes in the mining of the Group's own reserves.

    The Group needs to effect a strategic transaction, inter alia, with a BEE counterparty wherein it acquires/secures and/or effects a complementary
    reserve asset base which will complement and de-risk the position of the Group and allow for a more sustainable business model to be effected.

    Please refer to paragraph 13 above. Continued delays in the approval of the WULA will have a significant impact on the Group's future profitability.

17. Related party transactions
    During the period the Group received funding from its shareholder JSWENRSAL. 

18. Changes to directorate
    Mr QMSM Mokoetle was appointed as Independent non-executive Chairman on 7 February 2012.

QMSM Mokoetle	                                                       AJL Rayment
Chairman	                                                       Chief Executive Officer

3 October 2012

Directors: 	        QMSM Mokoetle (Independent Non-executive Chairman), AJL Rayment (CEO), DGA Miller (CFO)
                        VP Garg (Non-executive)*, PP Menon (Non-executive)* *India
Registered office:	3rd Floor, 198 Oxford Road, Illovo, Sandton

Company secretary:	Mrs PF Smit

Transfer secretary:	Computershare Investor Services (Pty) Limited

Sponsor:	        Exchange Sponsors

Auditors:	        Deloitte & Touche

Investor relations:	Renay Tandy, Ngage Tel (011) 867 7763

Website:	        www.sacmh.co.za

Date: 08/10/2012 07:15:00 Supplied by www.sharenet.co.za                     
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