Wrap Text
TBX - Thabex Limited - Condensed interim reviewed group results for the six
months ended 31 August 2011
THABEX LIMITED
("Thabex" or "the Company" or "the Group")
Registration Number 1988/000763/06
(Incorporated in the Republic of South Africa)
JSE share code: TBX ISIN Code: ZAE000013686
Young Lions Exploring Africa
CONDENSED INTERIM REVIEWED GROUP RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2011
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at As at As at
31 August 31 August 28 February
2011 2010 2011
Reviewed Reviewed Audited
R`000 R`000 R`000
Assets
Non-current assets 12 321 17 962 17 476
Plant and equipment 2 664 3 723 3 237
Exploration and evaluation 9 657 14 239 14 239
assets
Current assets 1 935 1 992 1 601
Inventories 977 900 666
Short-term trading investments 27 24 24
Trade and other receivables 870 742 855
Cash and cash equivalents 61 326 56
Total assets 14 256 19 954 19 077
Equity and liabilities
Capital and reserves
Share capital 2 545 2 399 2 399
Share premium 28 559 27 975 27 975
Accumulated loss (30 337) (22 935) (23 477)
Equity attributable to equity 767 7 439 6 897
holders of the Group
Non-controlling shareholders` 1 821 2 560 2 026
interest
Total equity 2 588 9 999 8 923
Non-current liabilities 1 937 1 937 1 937
Loans and borrowings 1 937 1 937 1 937
Current liabilities 9 731 8 018 8 217
Bank overdraft 169 170 196
Trade and other payables 4 726 3 553 3 501
Short-term loans 4 295 3 820 4 045
Taxation payable 541 475 475
Total equity and liabilities 14 256 19 954 19 077
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Six months Six months Year
ended ended ended
31 August 31 August 28 February
2011 2010 2011
Reviewed Reviewed Audited
R`000 R`000 R`000
Revenue - 121 409
Cost of sales - (99) (333)
Gross profit - 22 76
Other operating income - 345 544
Impairment of exploration and (4 582) - -
evaluation assets
Administration expenses (680) (224) (1 163)
Other operating expenses (1 724) (1 943) (3 067)
Operating loss (6 986) (1 800) (3 610)
Finance income 3 - 3
Finance expenses (82) (14) (26)
Loss and total comprehensive (7 065) (1 814) (3 633)
loss for the period
Attributable to:
Equity holders of the parent (6 860) (1 741) (3 017)
Non-controlling shareholders` (205) (73) (616)
interest
Basic loss per share (cents) (2.83) (0.73) (1.26)
Diluted basic loss per share (2.83) (0.73) (1.26)
(cents)
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Six months Six months Year
ended ended ended
31 August 31 August 28 February
2011 2010 2011
Reviewed Reviewed Audited
R`000 R`000 R`000
Net cash outflow from operating (735) (406) (1 447)
activities
Net cash inflow from investing 38 509 9
activities
Net cash inflow from financing 730 - 1 244
activities
Increase/(Decrease) in cash and 33 103 (194)
cash equivalents
Cash at the beginning of the (141) 53 53
period
Cash at the end of the period (108) 156 (141)
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Six months Six months Year
ended ended ended
31 August 31 August 28 February
2011 2010 2011
Reviewed Reviewed Audited
R`000 R`000 R`000
Share capital at the end of the 2 545 2 399 2 399
period
Ordinary shares issued 146 - -
Share capital at the beginning 2 399 2 399 2 399
of the period
Share premium at the end of the 28 559 27 975 27 975
period
Share premium on ordinary 584 - -
shares issued
Share premium at the beginning 27 975 27 975 27 975
of the period
Accumulated loss at the end of (30 337) (22 935) (23 477)
the period
Loss and total comprehensive (6 860) (1 741) (3 017)
loss for the period
Changes in ownership interests - 298 1 032
in subsidiaries that do not
result in a loss of control
Accumulated loss at the (23 477) (21 492) (21 492)
beginning of the period
Total equity attributable to 767 7 439 6 897
the equity holders of the
parent
Non-controlling shareholders` 1 821 2 560 2 026
interest at the end of the
period
Loss and total comprehensive (205) (73) (616)
loss for the period
Changes in ownership interests - 203 212
in subsidiaries that do not
result in a loss of control
Non-controlling shareholders` 2 026 2 430 2 430
interest at the beginning of
the period
Total equity at the end of the 2 588 9 999 8 923
period
NOTES
SEGMENTAL ANALYSIS
Six months Six months Year
ended ended ended
31 August 31 August 28 February
2011 2010 2011
Reviewed Reviewed Audited
R`000 R`000 R`000
Total segment assets
Thabex Ltd - exploration and 19 854 16 792 15 656
management services
Tradepost 121 (Pty) Ltd - 7 105 7 466 7 173
Monastery kimberlite project
Salt River Resources Ltd - base 7 366 7 356 7 367
mineral project
Angel Diamonds (Pty) Ltd - Kolo 1 915 3 512 2 030
kimberlite project
Minnex Exploration (Pty) Ltd - 465 822 751
alluvial and kimberlite
projects
Reportable assets 36 705 35 948 32 977
Assets not allocated to 41 159 57
segments
Consolidation adjustments and (22 490) (16 153) (13 957)
inter-company eliminations
Total assets 14 256 19 954 19 077
Total segment liabilities
Thabex Ltd - exploration and 10 246 6 972 7 234
management services
Tradepost 121 (Pty) Ltd - 3 331 2 722 3 161
Monastery kimberlite project
Salt River Resources Ltd - base 8 641 8 785 8 641
mineral project
Angel Diamonds (Pty) Ltd - Kolo 554 2 873 2 657
kimberlite project
Minnex Exploration (Pty) Ltd - 936 847 830
alluvial and kimberlite
projects
Reportable liabilities 23 708 22 199 22 524
Liabilities not allocated to 3 364 2 981 3 088
segments
Consolidation adjustments and (15 404) (15 225) (15 458)
inter-company eliminations
Total liabilities 11 668 9 955 10 154
External revenue
Thabex Ltd - 121 372
Tradepost 121 (Pty) Ltd - - 37
- 121 409
Finance income
Thabex Ltd 3 - 2
Tradepost 121 (Pty) Ltd - - 1
Salt River Resources Ltd - - -
Minnex Exploration (Pty) Ltd - - -
3 - 3
Finance expense
Thabex Ltd 4 5 8
Tradepost 121 (Pty) Ltd - - -
Angel Diamonds (Pty) Ltd 12 9 18
Minnex Exploration (Pty) Ltd 66 - -
Inter-company elimination - - -
82 14 26
Segment profit/(loss)
Thabex Ltd 456 151 (1 248)
Tradepost 121 (Pty) Ltd (238) (362) (1 094)
Salt River Resources Ltd (1) (2) 153
Angel Diamonds (Pty) Ltd 1 987 (65) (1 330)
Minnex Exploration (Pty) Ltd (96) - (54)
Reportable profit/(loss) 2 108 (278) (3 573)
Other subsidiaries (292) (36) (245)
Consolidation adjustments and (8 802) (1 500) 185
inter-company eliminations
Loss before interest and (6 986) (1 814) (3 633)
taxation
BASIS OF PREPARATION
The Group`s condensed consolidated interim financial results for the six months
ended 31 August 2011 are prepared and presented in accordance with International
Financial Reporting Standards, International Accounting Standard IAS 34 Interim
Financial Reporting, South African Statements and Interpretations of Statements
of Generally Accepted Accounting Practice (AC 500 Series), the Companies Act,
2008 (Act 71 of 2008) and the Listings Requirements of JSE Limited ("the
Listings Requirements"). The accounting policies applied by the Group in these
condensed consolidated financial statements, which are based on reasonable
judgments and estimates, are consistent with those applied in the previous year.
These financial results have been prepared by M Welthagen - P Eng (Int), MEng,
MPhil, BComm Hons.
NET ASSET VALUE AND HEADLINE EARNINGS PER SHARE
NET ASSET VALUE Six months Six months Year
ended ended ended
31 August 31 August 28 February
2011 2010 2011
Reviewed Reviewed Audited
Net asset value per share 0.30 4.17
(cents) 2.88
Net tangible asset value per (3.49) (1.77) (3.06)
share (cents)
Shares in issue 254 468 870 239 868 870 239 868 870
RECONCILIATION OF HEADLINE R`000 R`000 R`000
LOSS
Loss attributable to equity (6 860) (1 741) (3 017)
holders of the parent
Impairment of exploration and 4 582 - -
evaluation assets
Loss on disposal of equipment 61 - -
and vehicles
Headline loss (2 217) (1 741) (3 017)
Weighted average of number of 242 646 044 239 868 870 239 868 870
shares in issue
Diluted weighted average of 242 646 044 239 868 870 239 868 870
number of shares in issue
Headline loss per share (0.91) (0.73) (1.26)
(cents)
Diluted headline loss per (0.91) (0.73) (1.26)
share (cents)
RESULTS AND FINANCIAL POSITION
The Group continued with its exploration activities and the headline loss per
share increased from 0.73 cents to 0.91 cents. The net asset value per share
decreased from 2.88 cents to 0.30 cents during the interim period. The loss for
the period is stated after the R4.58 million impairment of an exploration and
evaluation asset in Minnex Exploration (Pty) Ltd ("Minnex") as there has been no
confirmation that the applicable Prospecting Permit has been renewed.
Share capital and share premium increased by R730 000 as a result of the
specific issues of shares for cash ("specific issues") which are still to be
approved by the JSE.
Short term loans increased from R4.0 million in February 2011 to R4.3 million as
a result of a further advance by Dr JA Cruise, a related party (Non-executive
Chairman of Salt River Resources Ltd ("SRR"), a subsidiary of Thabex), who has
undertaken not to request repayment until such date that the Group`s current
assets exceed its current liabilities. From 30 November 2011 the short term loan
will carry interest at a rate of 5 percent per annum.
Contingent liabilities
In the annual financial statements for the year ended 28 February 2011, the
Group reported a contingent liability of R5.81 million against possible legal
action from Mantle Diamonds Limited ("Mantle Diamonds") for expenditure incurred
by that company for their own account and risk on the Kolo Kimberlite project in
Angel Diamonds (Proprietary) Limited ("Angel Diamonds"). The possibility for a
liability has diminished to such an extent that Thabex`s board of directors
("the Board") do not consider there to be a likelihood of success by Mantle
Diamonds should they institute a claim especially as Mantle Diamonds did not
oppose the liquidation application of Angel Diamonds. Thabex also has contingent
liabilities in respect of a dispute relating to the capitalisation of minority
shareholders loan accounts in Angel Diamonds for R1.33 million. Furthermore
should a judgement for liquidation of Thabex be in favour of the applicant,
Thabex will appeal immediately and if not successful an estimated amount of R1
million may be payable as legal costs.
Dividends
No dividends have been declared during the period under review (2010: nil).
Directorate
There were no changes to the Board during the period under review.
Subsequent events
The Board is not aware of any material events or circumstances that have
occurred between the end of the August 2011 interim period and the date of this
report, which may have a material impact on the Group that has not already been
addressed in this report.
Going concern
The Group incurred a net loss of R7.1 million (2010: R1.8 million) for the six
month period ended 31 August 2011. At that date, the Group`s current liabilities
exceeded its current assets by R7.8 million (2011: R6.6 million).
The processing of the oxidised dump on the Monastery Mine area achieved the
required results during the period under review to enable the Board to make
reasonable estimates and assumptions about the finalisation of a mining plan and
capital requirements. Thabex and its corporate advisor, PanMin Global Limited,
have commenced talks with investors to raise sufficient funding to commence
mining operations, subject to the finalisation of all the regulatory
requirements, during the next twelve months.
Although the Board is encouraged by the developments at Monastery Mine, the
Board has also considered the Company`s present financial position and will be
recommending, subject to the Listings Requirements and the completion of an
independent Competent Persons Report ("CPR") on the Monastery Kimberlite
project, that Thabex proceed to raise approximately R10 million before costs
through a rights issue to reduce the Company`s current liabilities to a more
sustainable level. The proceeds from the proposed rights issue have been
included in the Group`s cash flow forecast on the basis that it is expected to
be completed by the end of May 2012. Most of Thabex`s major shareholders have
indicated that they will take up their rights. In addition to the above, the
Group has planned specific issues to raise R2 million at 100 cents per share in
December 2011. Thabex has been able to obtain irrevocable letters of intent to
enable the Company, subject to the Listings Requirements, to effect these
specific issues.
This capital raising is expected to produce sufficient cash to allow the Company
and its subsidiaries to meet their obligations in the normal course of business
for the foreseeable future. Accordingly, the financial statements are prepared
on the basis of accounting policies applicable to a going concern.
Should this fundraising not be successful, there is a material uncertainty that
may cast significant doubt on the ability of the Company and its subsidiaries to
realise their assets and settle their liabilities in the normal course of
business.
Review opinion
These condensed consolidated financial results have been reviewed by the
Company`s auditor, KPMG Inc. The Company`s auditor has disclaimed a conclusion
on the condensed consolidated financial results of the Group as at and for the
six month period ended 31 August 2011. The review report on these condensed
consolidated financial results is available for inspection at the Company`s
registered office. An extract of the disclaimer of conclusion on these results
is set out below:
"Basis for disclaimer of conclusion
The going concern paragraphs in the selected notes accompanying the condensed
group interim results for the six month period ended 31 August 2011 gives
details of the fundraising assumptions that are expected to result in the
Company and its subsidiaries being able to obtain sufficient cash to meet their
obligations in the normal course of business for the foreseeable future. These
paragraphs indicate that should this fundraising not be successful, there is a
material uncertainty that may cast significant doubt on the ability of the
Company and its subsidiaries to realise their assets and settle their
liabilities in the normal course of business. Because the plans relating to the
fundraising are not sufficiently advanced, it is not possible to conclude on
whether the assumptions relating to the fundraising are reasonable and
supportable.
Comparatives are those disclosed in the group financial statements for the year
ended 28 February 2011 and the condensed interim group results for the six
months ended 31 August 2010. We issued a disclaimer of opinion on the group
financial statements for the year ended 28 February 2011 and a disclaimer of
conclusion on the condensed interim group results for the six months ended 31
August 2010.
Disclaimer of conclusion
Because of the significance of the matters described in the Basis for Disclaimer
of Conclusion paragraph, we have not been able to obtain sufficient appropriate
evidence to provide a basis for a review conclusion on the accompanying
financial information. Accordingly, we do not express a conclusion on the
condensed interim group results."
COMMENTARY
Diamonds in the Kingdom of Lesotho
Angel Diamonds submitted an application for a Mining License to the Commissioner
of Mines in Lesotho on 12 December 2008. Thabex has reported the legal matters
regarding Angel Diamonds in detail on SENS. Even though the Liquidation
Application on 8 October 2010 by Mr TP Mosebo, a director of Angel Diamonds, was
discharged with costs, it has come to the attention of the Board that, on the
very same day Mr Mosebo applied for liquidation of Angel Diamonds, a new
company, Reskol Diamond Mining (Proprietary) Limited, a subsidiary of French
listed Batla Minerals SA, was registered in the Kingdom of Lesotho, with Messrs
Mosebo and Engelbrecht as shareholders and directors. Furthermore, it appears
that all fiduciary duties of Messrs Mosebo and Engelbrecht, being the High Court
appointed managers of Angel Diamonds to that company and its shareholders, were
deliberately ignored and Thabex will be laying further fraud charges against
them for seizing the corporate opportunity of Angel Diamonds for their own
benefit.
Shareholders are referred to the update about the various High Court actions
published on SENS on 1 December 2011. On 5 December 2011 the Honourable Judge,
presiding over the matter, postponed the hearing in the main interdict (Case
CIV/APN/664/2010 of 30 November 2010) and the interdict of 30 September 2011, to
11 June 2012. Considering the numerous court papers which are in the public
domain, neither the above minority shareholders, the provisional liquidators,
the Commissioner of Mines and Geology, the Minister of Natural Resources, nor
the Prime Minister of the Kingdom of Lesotho are able or willing to account for
the 1 000 carats produced during the period Mantle Diamonds was involved in the
project.
Diamonds in South Africa
Minnex Exploration (Proprietary) Limited ("Minnex")
Minnex has a royalty agreement with Steyn Diamante CC. Once alluvial diamond
mining commences on the Farm Middelwater about 40km north of Prieska in the
Northern Cape Province, 2.5% of turnover will be paid as a royalty. Minnex has
been unable to confirm that the Prospecting Right on the area has been renewed
and as a result has impaired the exploration and evaluation asset by R4.58
million.
Monastery Mine (Proprietary) Limited ("Monastery")
Monastery is situated about 15km south of the town of Marquard in the Free State
Province. Prospecting activities have so far consisted of sampling, analysis and
metallurgical test. Since the commencement of the oxidised dump testing during
July 2010 to date, a total of 1 197ct of rough diamonds have been produced,
including the production by Dry Harts Diamonds CC ("Dry Harts"). The largest
rough diamond produced by Thabex at Monastery was a 23.95ct pure diamond. The
contract with Dry Harts was cancelled on 13 November 2011, due to their
inability to produce diamonds at the required rate of production. Monastery is
planning to appoint a new contractor during January 2012.
Analysing the above results, and taking into account the estimated dilution
factor when the oxidised dump was stacked during 1980, the bottom cut off screen
size of 3 mm utilised during the production of the above results and comparing
both the excepted quality and grade, these results compare favourably to the
results achieved during 1980 to 1983 when about 14 000 carats were produced. The
expected grade for the first 100 meters of the Monastery Kimberlite pipe is an
estimated 25cpht (carat per hundred tons).
Monastery has also conducted several meetings with interested and affected
parties during the period under review and applied for an extension to its
Prospecting Right in order to facilitate the finalisation of the planned
refurbishment of its present 100 tons per hour Dens Medium Separator recovery
plant to include the recovery of the ilmenite content of the Monastery
Kimberlite to further enhance the economic viability of the project.
Renewal of cautionary announcement
Shareholders are referred to the renewal of cautionary announcement of 6
December 2011 and are advised to continue exercising caution when dealing in the
Company`s securities.
Diamonds in Namibia
Minnex Exploration Namibia (Proprietary) Limited ("Minnex Namibia") (an 80%
subsidiary of Minnex)
Minnex Namibia has applied for an extension of the prospecting rights to the two
Exclusive Prospecting License areas during July 2011 and the outcome of the
application is pending.
Salt River Resources Limited ("SRR")
SRR has engaged an independent consultant to update the Company`s CPR,
previously approved by the JSE, for the proposed rights offer in Thabex as
detailed in the going concern paragraph above.
Future prospects
Production results from the oxidised dump at Monastery Mine confirms that the
number of gem quality rough diamonds in the Monastery Kimberlite are at least
20% of the total rough diamond production as previously reported and the size
frequency distribution of the rough diamonds recovered confirms the possibility
of recovering large rough diamonds. The largest rough diamond of 244ct was
reported during 1972. Metallurgical testing of the high ilmenite content at
Monastery is necessary to ensure the turning to account of this project. SRR is
continuing to conduct a pre-feasibility study of the Salt River Base Mineral
Project. SRR has not been able to secure funding to complete a Bankable
Feasibility Study of its poly-metallic (Cu-Pb-Zn-Ag-Au) project in the Kenhardt
district of the Northern Cape Province and is considering several funding
options to proceed. Save for the litigation regarding the granting of the Mining
License in the Kingdom of Lesotho, no other changes in the mineral information
of the Company have occurred during the period under review.
On behalf of the Board
Jeffrey Raymond Rapoo
Chairman
MJ Ratshedi
Executive Director
Johannesburg
8 December 2011
Registered office:51 Austin Street, Northcliff, Johannesburg, 2195
Auditors: KPMG Inc. KPMG Forum, 1226 Schoeman Street, Hatfield, Pretoria, 0083
Company secretaries: SA Mineral Investments (Pty) Ltd
51 Austin Street, Northcliff, Johannesburg, 2195
Transfer secretaries: Link Market Services South Africa (Pty) Ltd
11 Diagonal Street, Johannesburg, 2001
Telephone number: +27 11 678 0791
Website: www.thabex.com
E-mail: info@thabex.com
Sponsor: Merchantec Capital, 2nd Floor, North Block, Hyde Park Office Tower,
Corner 6th Rd and Jan Smuts Ave, Hyde Park
Directorate: JR Rapoo (Chairman), M Welthagen (CEO)*, Dr JW Kruger#, M Kamwanga
(Financial Director)*##, RM Ratshedi*, Prof DL Reid**, AP Roux
*Executive director, #Independent director, ** New Zealand, ##Democratic
Republic of the Congo
Date: 09/12/2011 09:00:43 Supplied by www.sharenet.co.za
Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
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