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PETMIN
(REG NO. 72/01062/06)
("PETMIN" OR "THE COMPANY")
AUDITED RESULTS FOR THE YEAR ENDED 28 FEBRUARY 1999
GROUP INCOME STATEMENT
YEAR ENDED YEAR ENDED
28/02/99 28/02/98
R'000 R'000
TURNOVER 56 656 47 958
PROFIT ON ORDINARY ACTIVITIES BEFORE FINANCING COSTS 1070 3 921
FINANCING COSTS 690 2 490
PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 380 1 431
TAXATION - 360
PROFIT BEFORE EXCEPTIONAL ITEMS 380 1 071
EXCEPTIONAL ITEMS (NOTE 2) 77 222 60 156
NET PROFIT FOR THE YEAR 77 602 61 227
DIVIDENDS (NOTE 3) 136 931 2 881
(ACCUMULATED LOSS)/RETAINED PROFIT FOR THE YEAR (59 329) 58 346
OPENING RETAINED EARNINGS AS RESTATED 65 534 3 951
OPENING RETAINED EARNINGS AS PREVIOUSLY REPORTED 24 913 3 951
PRIOR YEAR ADJUSTMENT (NOTE 4) 40 621 -
TRANSFERS FROM RESERVES - 3 237
CLOSING RETAINED EARNINGS 6 205 65 534
HEADLINE EARNINGS PER SHARE (CENTS) 1.3 3.7
EARNINGS PER ORDINARY SHARE (CENTS) 269.3 212.5
DIVIDEND PER SHARE (CENTS) 475.3 10.0
WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES IN ISSUE 28 812 560 28 812 560
GROUP BALANCE SHEET
28/02/99 28/02/98
R'000 R'000
CAPITAL EMPLOYED
ORDINARY SHARE CAPITAL (NOTE 8) 20 000 7 203
SHARE PREMIUM 101 287 78 480
NON-DISTRIBUTABLE RESERVES 6 000 12 096
DISTRIBUTABLE RESERVES 6 205 24 913
ORDINARY SHAREHOLDERS' INTEREST 133 492 122 692
LONG-TERM LIABILITIES 13 703 800
LONG-TERM PROVISIONS (NOTE 9) 25 331 -
172 526 123 492
EMPLOYMENT OF CAPITAL
FIXED ASSETS 189 591 59 868
INVESTMENTS 460 71 050
NET CURRENT LIABILITIES (17 525) (7 426)
172 526 123 492
COMMENTS
1. CHANGE IN ACCOUNTING POLICY
WITH EFFECT FROM THE BEGINNING OF THE YEAR, THE GROUP CHANGED ITS ACCOUNTING
POLICY FROM THE "APPROPRIATION METHOD" WHICH IS ACCEPTED AS GENERALLY ACCEPTED
ACCOUNTING PRACTICE IN THE SOUTH AFRICAN GOLD MINING INDUSTRY, AND ADOPTED THE
"AMORTISATION METHOD" WHICH IS MORE ACCEPTED UNDER INTERNATIONAL ACCOUNTING
STANDARDS. THE COMPARATIVE FIGURES IN THE INCOME STATEMENT ARE THE SAME AS
THOSE PREVIOUSLY REPORTED AS THE CHANGE IN ACCOUNTING POLICY HAD NO EFFECT ON
THE PREVIOUS YEAR'S RESULTS.
2. OVER ACHIEVEMENT OF THE PROFIT WARRANTIES
AS ANNOUNCED IN THE PRESS ON 9 SEPTEMBER 1998, PETREX (PROPRIETARY) LIMITED
("PETREX"), A WHOLLY OWNED SUBSIDIARY OF PETMIN, RECEIVED AN ADDITIONAL 13 216
144 MOLOPE GROUP LIMITED ("MOLOPE") "N" ORDINARY SHARES AS CONSIDERATION FOR
THE EXCEEDED PROFITS IN TERMS OF THE DISPOSAL AGREEMENTS. THE EXCEPTIONAL ITEM
REPRESENTS THE ADDITIONAL MOLOPE "N" ORDINARY SHARES RECEIVED AS CONSIDERATION.
3. PARTIAL UNBUNDLING
PETMIN APPROVED THE DISTRIBUTION, IN SPECIE, OF ITS ENTIRE SHAREHOLDING OF 28
812 560 "N" ORDINARY SHARES IN MOLOPE TO ITS SHAREHOLDERS, BY WAY OF DIVIDEND
AS A PARTIAL UNBUNDLING TRANSACTION IN TERMS OF SECTION 60 OF THE INCOME TAX
ACT (ACT 113 OF 1993, AS AMENDED).
PETMIN SHAREHOLDERS, REGISTERED AS SUCH ON 29 JANUARY 1999, RECEIVED 1 MOLOPE
"N" ORDINARY SHARE FOR EVERY 1 PETMIN ORDINARY SHARE REGISTERED IN THEIR NAME.
THE MOLOPE "N" ORDINARY SHARE CERTIFICATES WERE POSTED TO THE SHAREHOLDERS ON
12 FEBRUARY 1999. THE DIVIDENDS PAID REPRESENT THE PARTIAL UNBUNDLING
TRANSACTION.
4. PRIOR YEAR ADJUSTMENT
THE PRIOR YEAR ADJUSTMENT REPRESENTS AN ADJUSTMENT OF INVESTMENTS IN
SUBSIDIARIES WRITTEN OFF IN THE PREVIOUS YEAR. THE 1998 FIGURES HAVE BEEN
RESTATED. A SPECIAL RESOLUTION IN THIS REGARD WILL BE TABLED AT THE NEXT ANNUAL
GENERAL MEETING.
5. ACQUISITIONS
AS ANNOUNCED IN THE PRESS ON 9 SEPTEMBER 1998, NIGEL GOLD MINING COMPANY
(PROPRIETARY) LIMITED ("NIGEL"), A WHOLLY OWNED SUBSIDIARY OF PETMIN, ACQUIRED
THE REDUCTION AND GOLD EXTRACTION BUSINESS COMPRISING CIRCUITS 1 AND 2 FROM
REFRACTORY GOLD (PROPRIETARY) LIMITED FOR R16 150 000. IT WAS FURTHER ANNOUNCED
THAT NIGEL ACQUIRED CERTAIN MINING TITLES AND SURFACE RIGHT PERMITS FROM
VOGELSTRUISBULT METAL HOLDINGS LIMITED FOR R550 000. IN BOTH INSTANCES THE
CONSIDERATION WAS PAID IN CASH.
AS ANNOUNCED IN THE PRESS ON 7 DECEMBER 1998, PETREX ACQUIRED 100% OF THE
ISSUED SHARE CAPITAL OF AND SHAREHOLDERS LOANS AGAINST GROOTVLEI PROPRIETARY
MINES LIMITED ("GROOTVLEI") AND 100% OF THE ISSUED SHARE CAPITAL OF AND
SHAREHOLDERS LOANS AGAINST CONSOLIDATED MODDERFONTEIN MINES LIMITED ("CONS
MODDER") FOR A TOTAL CONSIDERATION OF R90 000 000 FROM HARMONY GOLD MINING
COMPANY LIMITED ("HARMONY"). THE PURCHASE CONSIDERATION WAS SETTLED BY THE
ISSUING, IN RENOUNCEABLE FORM, OF 40 000 000 NEW ORDINARY SHARES IN PETMIN AT
150 CENTS PER SHARE AND R30 000 000 IN THE FORM OF A LOAN ACCOUNT FROM HARMONY.
THE LOAN IS REPAYABLE IN 21 EQUAL MONTHLY INSTALMENTS FROM 31 MARCH 1999 AND
BEARS INTEREST AT A FIXED RATE OF 10% PER ANNUM.
THE ACQUISITION OF GROOTVLEI AND CONS MODDER HAS INCREASED THE ORE RESERVES OF
PETMIN BY AT LEAST 100% AND THE FORECASTED ANNUAL GOLD PRODUCTION FROM ABOUT 1
500 KILOGRAMS TO 4 000 KILOGRAMS.
6. GOLD MINING
THE PARTIAL UNBUNDLING AND THE ACQUISITIONS WILL ENSURE THAT PETMIN REMAINS
FOCUSSED ON ITS MAIN ACTIVITY, NAMELY GOLD MINING AND PETMIN'S ASSETS PRIMARILY
CONSIST OF 100% OF THE ISSUED SHARE CAPITAL OF NIGEL, GROOTVLEI AND CONS
MODDER. PETMIN NOW OWNS AND OPERATES NIGEL GOLD MINE, GROOTVLEI GOLD MINE AND
CONS MODDER GOLD MINE ON THE EAST RAND.
PETMIN BELIEVES THAT SOUTH AFRICA'S MINING INDUSTRY STILL HAS SOME WAY TO GO TO
REACH THE HIGH LEVEL OF OUTSOURCING PREVALENT IN AUSTRALIA AND CANADA WHERE
REPORTEDLY ABOUT 90% OF SERVICES ARE OUTSOURCED. IT IS AGAINST THIS BACKGROUND
THAT PETMIN FURTHER BELIEVES THAT BY OUTSOURCING ALL THE VARIOUS MINING
OPERATIONS AND SERVICES INCLUDING ENGINEERING, OPENCAST MINING, HOSTEL
ADMINISTRATION AND SECURITY, THE COST OF PRODUCTION WILL BE SUBSTANTIALLY
REDUCED. IT IS THEREFORE THE STYLE AND MANAGEMENT PHILOSOPHY OF PETMIN TO
SUPPORT SMALL BUSINESS INITIATIVES BY OUTSOURCING ITS TOTAL PRODUCTION AND
SERVICES TO VARIOUS SPECIALISED OUTSOURCING COMPANIES.
REVIEW OF OPERATIONS
NIGEL WAS IN A DEVELOPMENT PHASE AND COSTS INCURRED UP TO 30 SEPTEMBER 1998
RELATING TO THE DEVELOPMENT AND EVALUATION OF THE MINERAL RESOURCES AT THE
NUMBER 1 AND 2 SHAFTS AT SPRINGS DAGGAFONTEIN AND AT THE NUMBER 4 SHAFT AT
MARIEVALE HAVE BEEN CAPITALISED. THE GROOTVLEI AND CONS MODDER OPERATIONS WERE
TAKEN OVER ON 15 DECEMBER 1998 AND ABNORMAL COSTS RELATING TO THE STARTING UP
AND THE DEVELOPMENT AND EVALUATION OF THE MINERAL RESOURCES INCURRED AT BOTH
THE OPERATIONS HAVE BEEN ACCOUNTED FOR AS WORKING COSTS.
7. THE YEAR AHEAD
THE DIRECTORS OF PETMIN ARE CONFIDENT THAT WITH THE STYLE AND MANAGEMENT
PHILOSOPHY OF PETMIN BY OUTSOURCING WITHOUT COMPRISING ITS CODE OF CONDUCT AND
STANDARDS THE PROSPECTS FOR THE YEAR AHEAD REMAIN POSITIVE - THE DIRECTORS
BELIEVE THAT THE NIGEL, GROOTVLEI AND CONS MODDER OPERATIONS CAN ACHIEVE
SUBSTANTIAL PROFITS. A FORWARD GOLD HEDGING AGREEMENT FOR ABOUT 60% OF THE GOLD
PRODUCTION UNTIL APRIL 2000 WAS CONCLUDED.
FORECASTED PRODUCTION LEVELS
GOLD CASH COST CAPITAL
TONS YIELD PRODUCED R/T EXPENDITURE
MILLED (G/T) (KG) MILLED R/KG (R'000)
NIGEL 215 700 3.39 720 170 50 929 791
GROOTVLEI 414 897 4.74 1 968 210 44 273 5 380
CONS
MODDER 390 863 2.81 1 097 138 49 169 712
TOTAL 1 021 460 3.71 3 785 174 46 957 6 883
THE ABOVE CASH COST INCLUDES THE NET COST OF PUMPING THE EXTRANEOUS UNDERGROUND
WATER AT A RATE OF 100 MEGA LITRES PER DAY. THE PUMPING COST IS BASED ON THE
ASSUMPTION THAT A SUBSIDY WILL BE RECEIVED FROM THE DEPARTMENT OF MINERAL AND
ENERGY AFFAIRS. APPLICATION FOR THE SUBSIDY HAS BEEN MADE AND THE DIRECTORS ARE
CONFIDENT THAT THE APPLICATION WILL BE SUCCESSFUL. THERE ARE VARIOUS PARTIES
INTERESTED TO DESALINATE THE WATER FOR DOMESTIC USE AND NEGOTIATIONS ARE
UNDERWAY TO CONSTRUCT A 10 MEGALITRE DESALINATION PILOT PLANT BEFORE THE END OF
1999 AND TO HAVE A FULLY OPERATIONAL DESALINATION PLANT IN OPERATION TOWARDS
THE END OF 2002.
8. SHARE CAPITAL
IN ORDER TO CONCLUDE THE ACQUISITIONS, PETMIN'S AUTHORISED SHARE CAPITAL WAS
INCREASED FROM 40 000 000 ORDINARY SHARES TO 120 000 000 ORDINARY SHARES. 51
187 440 ORDINARY SHARES WERE ISSUED AT THE END OF FEBRUARY 1999, INCREASING THE
ISSUED SHARE CAPITAL FROM 28 812 560 ORDINARY SHARES TO 80 000 000 ORDINARY
SHARES.
9. LONG-TERM PROVISIONS
28/02/99 28/2/98
R'000 R'000
PROVISION FOR REHABILITATION COSTS 30 635 -
LESS: ENVIRONMENTAL TRUST FUND (11 330) -
PROVISION FOR POST-RETIREMENT LIABILITIES 5 679 -
PROVISION FOR LONG SERVICE AWARDS 347 -
25 331 -
10. YEAR 2000 COMPLIANCE
THE PROGRAMME TO ENSURE THAT THE GROUP IS YEAR 2000 COMPLIANT IN ALL MATERIAL
ASPECTS, IS PLANNED TO BE COMPLETED BY THE END OF JUNE 1999. THIS WILL ENSURE
THAT THERE WILL BE A FURTHER SIX MONTHS OF DETAILED INTEGRATED TESTING PRIOR TO
THE CRITICAL DATE CHANGE. ALL RELATED COSTS ARE WITHIN BUDGET AND HAVE BEEN
EXPENSED IN THE ABOVE RESULTS.
11. ANNUAL REPORT
THE ANNUAL REPORT OF PETMIN FOR THE YEAR ENDED 28 FEBRUARY 1999 WILL BE POSTED
TO SHAREHOLDERS AT OR ABOUT THE END OF MAY 1999.
ON BEHALF OF THE BOARD
P J NEL P F DU PREEZ
CHAIRMAN MANAGING DIRECTOR
DIRECTORS:
PJ NEL (NON-EXECUTIVE CHAIRMAN), PF DU PREEZ (MANAGING DIRECTOR), J A STRIJDOM,
HVW CHAPMAN, JC DU PREEZ, GJH COMBRINCK
REGISTERED OFFICE:
28 VISAGIE STREET, GUARANTEE HOUSE, 5TH FLOOR.
PO BOX 9446, PRETORIA, 0001
TRANSFER SECRETARIES:
MERCANTILE REGISTRARS,
11 DIAGONAL STREET, JOHANNESBURG.
PO BOX 1053, JOHANNESBURG, 2000
AUDITORS:
PRICEWATERHOUSECOOPERS INC.
83 LOIS AVENUE, MENLYN.
PO BOX 35296, MENLOPARK, 0102
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