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TBX - Thabex Limited - - Summarised Audited Group Results for the year ended
28 February 2011 and Notice of Annual General Meeting
THABEX LIMITED
("Thabex" or "the Company" or "the Group")
Registration No 1988/000763/06
(Incorporated in the Republic of South Africa)
JSE share code: TBX ISIN Code: ZAE000013686
Young Lions Exploring Africa
SUMMARISED AUDITED GROUP RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2011 AND
NOTICE OF ANNUAL GENERAL MEETING
SUMMARISED CONSOLIDATED STATEMENT As at As at
OF FINANCIAL POSITION
28 28
February February
2011 2010
Audited Audited
Notes R`000 R`000
Assets
Non-current assets 17 476 18 448
Plant and equipment 3 237 4 209
Exploration and evaluation 14 239 14 239
assets
Current assets 1 601 2 088
Inventories 666 1 516
Short-term trading investments 24 33
Trade and other receivables 855 486
Cash and cash equivalents 56 53
Total assets 19 077 20 536
Equity and liabilities
Capital and reserves
Share capital 2399 2 399
Share premium 27 975 27 975
Accumulated loss (23 477) (21 493)
Total equity attributable to the 6 897 8 881
equity holders of the parent
Non-controlling shareholders` 2 026 2 431
interest
Total equity 8 923 11 312
Non-current liabilities 1 937 1 937
Loans and borrowings 1 937 1 937
Current liabilities 8 217 7 287
Bank overdraft 196 -
Trade and other payables 3 501 3 442
Short-term loans 2 4 045 3 370
Taxation payable 475 475
Total equity and liabilities 19 077 20 536
Year Year
ended ended
28 28
February February
2011 2010
Audited Audited
SUMMARISED CONSOLIDATED STATEMENT
OF COMPREHENSIVE INCOME
Revenue 409 421
Cost of sales (333) (293)
Gross profit 76 128
Other income 544 4 490
Administrative expenses (1 163) (2 579)
Other expenses (3 067) (5 715)
Operating loss (3 610) (3 676)
Finance income 3 463
Finance expenses (26) (6)
Loss before taxation (3 633) (3 219)
Taxation - 285
Loss for the year (3 633) (2 934)
Other comprehensive income
Net change in fair value of
available for sale
financial assets - 82
Net change in fair value of
available for sale
financial assets reclassified to - (82)
profit or loss
Other comprehensive income for - -
the year
Loss/total comprehensive loss for (3 633) (2 934)
the year
Attributable to:
Equity holders of the parent (3 017) (1 431)
Non-controlling shareholders` (616) (1 503)
interest
Basic loss per share (cents) 3 (1.26) (0.63)
Diluted loss per share (cents) 3 (1.26) (0.63)
Year Year
ended ended
28 28
February February
2011 2010
Audited Audited
SUMMARISED CONSOLIDATED STATEMENT
OF CASH FLOWS
Net cash outflow from operating (1 447) (7 931)
activities
Net cash inflow from investing 9 4 003
activities
Net cash inflow from financing 1 244 3 933
activities
Increase in cash and cash (194) 5
equivalents
Cash at beginning of year 53 48
Cash at end of year (141) 53
SUMMARISED CONSOLIDATED STATEMENT
OF CHANGES IN EQUITY
Share Capital 2 399 2 399
Issue of ordinary shares - 120
Share capital at the beginning 2 399 2 279
of the period
Share Premium 27 975 27 975
Share premium on issue of - 720
ordinary shares
Share issue expenses - (5)
Share premium at the beginning 27 975 27 260
of the period
Accumulated loss at end of the (23 477) (21 492)
period
Loss and total comprehensive (3 017) (1 431)
loss for the year
Changes in ownership interests
in subsidiaries
that do not result in a loss of 1 032 -
control
Accumulated loss at the (21 492) (20 061)
beginning of the period
Total equity attributable to the 6 897 8 882
equity holders of the parent
Non-controlling shareholders` 2 026 2 430
interest at end of the period
Loss and total comprehensive (616) (1 503)
loss for the period
Changes in ownership interests
in subsidiaries
that do not result in a loss of 1 212 3 933
control
Non-controlling shareholders` 2 430 -
interest at beginning of the
period
Total equity 8 923 11 312
Year Year
ended ended
28 28
February February
2011 2010
Audited Audited
SEGMENTAL ANALYSIS
Total segment assets
Thabex Limited 15 656 16 377
Tradepost 121 (Pty) Limited - 7 173 4 791
Monastery Mine
Salt River Resources (Pty) Limited 7 367 7 356
Angel Diamonds (Pty) Limited 2 030 1 824
Minnex Exploration (Pty) Limited 751 4 712
Reportable assets 32 977 35 060
Assets not allocated to segments 57 110
Consolidation adjustments and (13 957) (14 634)
inter-company eliminations
Total assets 19 077 20 536
Total segment liabilities
Thabex Limited 7 234 6 708
Tradepost 121 (Pty) Limited - 3 161 2 349
Monastery Mine
Salt River Resources (Pty) Limited 8 641 159
Angel Diamonds (Pty) Limited 2 657 413
Minnex Exploration (Pty) Limited 830 564
Reportable liabilities 22 524 10 193
Liabilities not allocated to 3 088 134
segments
Consolidation adjustments and (15 458) (1 103)
inter-company eliminations
Total liabilities 10 154 9 224
External revenue
Thabex Limited 372 421
Tradepost 121 (Pty) Limited 37 -
Total external revenue 409 421
Finance income
Thabex Limited 2 353
Salt River Resources (Pty) Limited 1 3
Minnex Exploration (Pty) Limited - 107
3 463
Finance expense
Thabex Limited 8 5
Angel Diamonds (Pty) Limited 18 1
26 6
Segment (loss)/profit
Thabex Limited (1 248) (1 972)
Tradepost 121 (Pty) Limited - (1 094) (530)
Monastery Mine
Salt River Resources (Pty) Limited 153 (661)
Angel Diamonds (Pty) Limited (1 330) (3 820)
Minnex Exploration (Pty) Limited (54) (18)
Reportable loss (3 573) (7 001)
Other subsidiaries (245) (342)
Consolidation adjustments and 185 4 124
inter-company eliminations
Loss before taxation (3 633) (3 219)
Notes:
1. Effect of disposal of 0.82% in Salt River Resources (Proprietary) Limited
("SRR"), 8.00% in Tradepost 121 (Proprietary) Limited and 3.00% in Monastery
Holdings (Proprietary) Limited has been recognised directly in equity.
2. The short term loan advanced by Dr JA Cruise, a related party (Non-
executive Chairman of SRR a subsidiary of Thabex), who has undertaken not to
request repayment until such date that the Group`s current assets reasonably
exceed its current liabilities.
3. On 23 April 2010 the Company`s shares were sub-divided from 1 to 10 as per
the Special resolution approved on 19 February 2010. The weighted average
number of shares in issue at 28 February 2011 is 239 868 870 (2010: 227 901
747).
Review of results
Operating loss
The Group incurred a loss for the year of R3.63 million (2010: loss of R2.93
million). The headline loss per share changed from 2.21 cents for the year
ended 28 February 2010 to a headline loss of 1.26 cents per share for the
year ended 28 February 2011. The net asset value per share of the Group
decreased from 4.72 cents per share at 28 February 2010 to 2.88 cents per
share as at 28 February 2011.
Headline loss per share
Year Year ended
ended
28 28
February February
2011 2010
Audited Audited
Headline loss per share (cents) (1.26) (2.21)
Diluted headline loss per share (1.26) (2.21)
(cents)
RECONCILIATION OF HEADLINE LOSS R`000 R`000
Reconciliation between loss and
headline loss
Loss attributable to ordinary (3 017) (1 431)
shareholders
Loss on disposal of plant and - 45
equipment
Profit on disposal of interest - (3 647)
in subsidiary
Headline loss (3 017) (5 033)
Net asset value per share
Number of shares in issue 239 868 239 868
870 870
Net asset value per share 2.88 4.72
(cents)
Net tangible asset value per (3.06) (1.22)
share (cents)
Going concern
The Group incurred a net loss of R3.63 million (2010: loss of R2.93 million)
for the year ended 28 February 2011. At that date, the Group`s current
liabilities exceeded its current assets by R6.61 million (2010: current
liabilities exceeded current assets by R5.20 million) (see note 2 above).
The board has considered the ability of the Company and its subsidiaries to
continue as going concerns and based on reasonable and supportable
assumptions, have concluded that the forecast levels of production and the
future benefits of the continuing prospecting operations of Monastery Mine,
an indirect subsidiary of Thabex, will produce sufficient cash flows to allow
the Company and its subsidiaries to meet their obligations in the normal
course of business for the foreseeable future.
Should the operations of the subsidiary fail to achieve forecast cash flows,
there will be a material uncertainty that may cast doubt on the ability of
the Company and its subsidiaries to continue as going concerns. The cash flow
assumptions are based on a production rate of 10 000 tons per month at an
average grade of 25cpht (carats per hundred tons) and a conservatively
modelled rough diamond price of US$150/ct and an exchange rate of R/US$7.00.
Contingent liabilities
In the annual financial statements for the year ended 28 February 2010, 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"). Thabex`s 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. This
however remains a contingent liability to Angel Diamonds in the annual
financial statements for the year ended 28 February 2011.
Basis of preparation
These Group financial results for the year ended 28 February 2011 constitute
a summary (prepared in accordance with the JSE Listings Requirements, the
South African Companies Act (Act 61 of 1973) as amended, and the recognition
and measurement requirements of International Financial Reporting Standards
and the presentation and disclosure requirements of International Accounting
Standard 34 Interim Financial Reporting (IAS 34) and the AC 500
interpretations as issued by the Accounting Practices Board of the South
African Institute of Chartered Accountants) of the Group`s audited financial
statements. The Group has applied the IFRS`s applicable to the year ended on
28 February 2011 and has not early adopted any new or revised standards
applicable after that date.
The accounting policies applied by the Group in these summarised consolidated
financial statements are consistent with those applied in the previous year,
except for the following:
From 1 March 2010 the Group has applied IAS 27 Consolidated and Separate
Financial Statements (2008) in accounting for changes in ownership interest
in subsidiaries without loss of control. The change in accounting policy has
been applied prospectively and has had no impact on the prior periods
presented. The surpluses on disposal of shares in subsidiaries which do not
result in a loss of control were previously credited/charged to the statement
of comprehensive income whereas they are now recognised directly in equity in
the consolidated annual financial statements.
The amendments also require that losses (including negative `other
comprehensive income` as detailed in the revised IAS 1 (AC 101) Presentation
of Financial Statements (2007)) have to be allocated to the non-controlling
interest even if doing so causes the non-controlling interest to be in a
deficit position. In the past losses were allocated only until the non-
controlling interests had a zero balance. The change in accounting policy was
applied prospectively and the impact on earnings per share for the current
year is shown above.
Dividends
No dividend has been declared during the year under review (2010: nil).
Directors` Responsibility for the Summary Financial Statements
The directors are responsible for the preparation of the summary financial
statements on the basis determined by management.
Auditor`s Responsibility
Our responsibility is to express an opinion on the summary group annual
financial statements based on our procedures, which were conducted in
accordance with International Standard on Auditing 810, Engagements to Report
on Summary Financial Statements.
Denial of Opinion
In our auditor`s report dated 20 October 2011, we expressed a disclaimer of
opinion on the group annual financial statements of Thabex Limited for the
year ended 28 February 2011. The basis for our disclaimer of opinion was due
to our inability to obtain sufficient appropriate audit evidence regarding
the appropriateness of management`s use of going concern assumption in the
preparation of the group annual financial statements, as well as regarding
the necessity of impairment of a significant exploration and evaluation
asset.
Our disclaimer of opinion stated that "the going concern note in the
director`s report indicates that the board has considered the ability of the
company and its subsidiaries to continue as going concerns and, based on
reasonable and supportable assumptions, has concluded that the forecast level
of production and future benefits of the continuing prospecting operations of
Monastery Mine (Pty) Ltd, a subsidiary, will produce sufficient cash flows to
allow the company and its subsidiaries to meet their obligations in the
normal course of business for the foreseeable future. We were unable to
obtain sufficient appropriate audit evidence to satisfy ourselves that the
assumptions applied by the board in preparing the going concern assessment
are reasonable and supportable.
An exploration and evaluation asset held by the company through its
subsidiary, Minnex Exploration Limited, is carried at R4 582 198 in the
consolidated statement of financial position at 28 February 2011. We were
unable to obtain sufficient appropriate audit evidence about whether the
relative prospecting permit has been renewed and whether further exploration
expenditure is planned. Consequently, we were unable to determine whether any
impairment of this asset is necessary.
The potential interaction and possible cumulative effects of these matters
are considered material and pervasive to the financial statements of the
company and its subsidiaries reflected in these financial statements".
Disclaimer of Opinion
Because of the significance of the matters discussed in the preceding
paragraphs above, it is inappropriate to express an opinion on the summary
group annual financial statements of Thabex Limited for the year ended 28
February 2011.
Commentary
Diamonds in the Kingdom of Lesotho
Angel Diamonds submitted an application for a Mining License ("ML") to the
Commissioner of Mines in Lesotho on 12 December 2008. The legal matters
regarding Angel Diamonds have been reported 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
("Reskol") was registered in the Kingdom of Lesotho, with Messrs Mosebo and
Engelbrecht as shareholders and directors. Any purported granting of a ML to
Reskol is considered as sub judice.
On 3 October 2011 the Company announced on SENS that Thabex and others have
successfully obtained an interim interdict in the High Court of Lesotho
against, inter alia, Reskol not to remove Angel Diamond`s plant and equipment
from the Kolo Kimberlite site area.
The most disturbing aspect of the legal route taken by three non-controlling
shareholders is the fact that neither these non-controlling shareholders, the
provisional liquidators nor the Commissioner of Mines and Geology of Lesotho
are able or willing to account for the 1 000 carats produced during the
period Mantle Diamonds was involved in the project. Furthermore, it appears
that all fiduciary duties owing by Messrs Mosebo and Engelbrecht, as High
Court appointed managers of Angel Diamonds to that company, at the time, were
flouted by them. The theft of the rough diamonds was reported to the Diamond
Theft Squad of the Royal Mounted Police of the Kingdom of Lesotho and also to
the Kimberley Process Secretariat.
Diamonds in South Africa
Minnex Exploration (Proprietary) Limited ("Minnex")
Minnex has a 2.5% royalty agreement on turnover with Steyn Diamante CC once
alluvial diamond mining commences on the Farm Middelwater about 40km north of
Prieska in the Northern Cape Province. As at the date of this report Minnex
has not been able to obtain a copy of the renewal of the Prospecting Permit
on this farm from Steyn Diamante CC.
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. Dry Harts Diamonds has commenced processing
the oxidised dump south of the open pit area of the Monastery Kimberlite
pipe. Since the commencement of the oxidised dump testing during July 2010 to
date, a total of 842 carats rough diamonds have been produced, including the
production by Dry Harts Diamonds. The largest rough diamond recovered was a
23.93ct pure diamond and the second largest was a high quality 9.95ct pure
diamond. The bottom cut-off screen size on the 14 Foot Gravity Rotary Pan
utilised for the processing of the oxidised dump material is 3mm.
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.
Directorate
The following changes to the board of Thabex occurred during the period under
review, up to and including the date of this report, Mr Joseph Ratshedi was
appointed as an executive director on 14 May 2010 and Mr CJ Engelbrecht
resigned from the board as an executive director on 15 April 2010.
Subsequent events
On 7 November 2010, a non-controlling shareholder of Angel Diamonds, Mr CV du
Plessis ("the Applicant") holding 4.33% of the issued share capital, applied
for the liquidation of Thabex. The matter was heard on 24 and 26 August 2011
and judgment was reserved. Other than this matter and the information
disclosed in the Commentary paragraph above relating to the diamonds in the
Kingdom of Lesotho and the Monastery Mine, the board of Thabex is not aware
of any material events or circumstances that have occurred between the end of
the 2011 financial year and the date of this report, which may have a
material impact on the Group.
Future prospects
Although 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% as previously reported, further metallurgical testing 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 year under
review.
Notice of annual general meeting
Notice is hereby given that the annual general meeting of shareholders of
Thabex will be held on Wednesday, 23 November 2011 at 10:00 at KPMG Forum,
1226 Schoeman Street, Hatfield, Pretoria, 0083 to conduct the business stated
in the notice of the annual general meeting, which is contained in the annual
report.
On behalf of the board
Jeffrey Raymond Rapoo
Chairman
Marius Welthagen
Chief Executive
Johannesburg
21 October 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 (Proprietary) Limited
51 Austin Street, Northcliff, Johannesburg, 2195
Transfer secretaries: Link Market Services South Africa (Proprietary) Limited
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 Ratchedi*, Prof DL Reid**, AP Roux
*Executive director, #Independent director, ** New Zealand, ##Democratic
Republic of the Congo
Date: 21/10/2011 15:44:01 Supplied by www.sharenet.co.za
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