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SABLE METALS & MINERAL LTD - Abridged annual financial statements for the year ended 28 February 2014

Release Date: 04/06/2014 17:42
Code(s): SMM     PDF:  
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Abridged annual financial statements for the year ended 28 February 2014

                                                
SABLE METALS AND MINERALS LIMITED
(formerly Sable Platinum Limited)
(Incorporated in the Republic of South Africa)
(Registration number: 2001/006539/06)
JSE share code: SMM     ISIN: ZAE000185674
(“Sable” or “the company” or “the group”)

ABRIDGED ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 28 FEBRUARY 2014

GROUP HIGHLIGHTS

• In order   to further diversify the company’s activities, a number of prospecting rights for
  vanadium, iron ore and rutile were applied for during the year.
  o Prospecting rights for these minerals were granted on the Abrina project area during June 2013
    and on the Doornpoort project areas during July 2013.
  o An application for vanadium, iron ore and rutile was accepted on the farm Einde in July 2013.
  o Subsequent to year-end:
    - the prospecting right for vanadium was granted on Portion 3 of the farm Uitvalgrond.
    - Sable was notified that the application for iron ore on the farm Bierkraal was accepted by
      the DMR during December 2013.
    - Sable was notified that the application for vanadium, iron ore and rutile was accepted on
      the farm Witvley in February 2014.

•   Negotiations with the community members on the Syferfontein project area were conducted
    throughout the year and a memorandum of understanding was signed with the various parties at the
    beginning of November 2013. This paves the way to concluding a final agreement on this project, a
    withdrawal of the court proceedings and the grant of a mining right on this project.

• A letter agreement was concluded with Global Initiatives (Pty) Ltd (“Global”) in April 2013 to
  acquire a stake in the Selebi Phikwe tailings deposit, subject to a financial, legal and
  technical due diligence and the conclusion of comprehensive agreements.
  o This project was to produce pig-iron from the slag dump at BCL Limited’s (“BCL”) copper, nickel
    and cobalt mine at Selebi Phikwe.
  o A project team was appointed to undertake a scoping study on the production of pig iron and it
    was concluded that this was uneconomic. However, if the scope of the project was changed to
    include a steel plant and produce wire rod and rebar, then the project may be viable.
  o The revised project was presented to the board in August 2013 and authority was given to
    conclude final agreements with Global.
  o Negotiations with Global on the final structure and funding of the transaction have not
    progressed to a conclusion and subsequent to year-end, the board has decided to suspend
    negotiations with Global.

• Shareholders approved the change of name to Sable Metals and Minerals Ltd in January 2014.

CORPORATE PROFILE

Sable Platinum Holdings (Pty) Ltd reverse listed into New Corpcapital Ltd on 23 November 2012. New
Corpcapital duly changed its name to Sable Platinum Ltd and on 3 March 2014 changed its name to
Sable Metals and Minerals Ltd, to more fully reflect the diverse nature of the company, hereafter
referred to as “the company” or “Sable”.

Application will be made to the JSE to change the classification on the JSE from the platinum and
precious metals sector to the general mining sector in due course.

The company’s primary business objective is the exploration, evaluation and development of several
exploration projects, situated mainly on the western limb of the Bushveld Complex. In the process
of conducting its exploration program for platinum group metals (“PGMs”), the company discovered
that many of the properties over which it has a prospecting right contained the Vanadium Magnetite
Reef (“VMR”) in what appear to be significant proportions. Following a preliminary report prepared
by one of the company’s directors, René Hochreiter, the decision was taken that the company should
apply for the rights to explore the VMR’s for vanadium, iron ore and rutile. Prospecting rights for
these minerals have been granted during the year on the Abrina and Doornpoort project areas.
Subsequent to year-end, a prospecting right for vanadium was granted on Portion 3 of the farm
Uitvalgrond.    These grants are considered to be significant because VMR outcrops on these
properties, Abrina and Doornpoort are on rail line and the Uitvalgrond property is contiguous with
that of Evraz Vametco Alloys (Pty) Ltd which been mining and processing this reef for forty years.

Whilst further exploration of these reefs will be required, the company is of the view that they
have the potential to add significant value to shareholders. It is the opinion of the board that
the vanadium and magnetite reefs could represent an earlier entry to cash flow than the longer term
platinum projects.
The company is continuing to explore all avenues for a capital raise which, if completed, will
provide the company with sufficient cash to bring at least one mining operation into production,
after the necessary licences are granted.


BASIS OF PREPARATION

The abridged annual financial statements for the year ended 28 February 2014 have been prepared in
accordance with the JSE Listings Requirements, the South African Companies Act (Act 71 of 2008)
(“the Companies Act”) as amended, the recognition and measurement requirements of International
Financial Reporting Standards, IAS 34: Interim Financial Reporting and the SAICA Financial
Reporting Guides as issued by the Accounting Practices Committee. These financial statements have
been prepared under the supervision of M van Tonder, Chartered Accountant (S.A.), the financial
director. The full report is available at the company’s registered office.

The abridged annual financial statements have been derived from the audited financial statements
for the year ended 28 February 2014 but is not itself audited. The auditor’s report does not
necessarily cover all the information contained in these abridged annual financial statements and
accordingly, a copy of the auditor’s report is available for inspection at Sable’s registered
offices.

The directors take full responsibility for the preparation of the abridged annual financial
statements and that the financial information has been correctly extracted from the underlying
audited annual financial statements.

The accounting policies applied by the group in these abridged annual financial statements are
consistent with those applied in the previous year. The new standards and interpretations that
became effective in the current year and adopted by the group did not have a material effect on the
annual financial statements. More details on these standards and interpretations can be found in
the integrated report.

AUDIT OPINION

Grant Thornton (Jhb) Inc. audited the annual financial statements and expressed an opinion that it
presents fairly, in all material respects, the financial position of Sable Metals and Minerals
Limited as at 28 February 2014, and its financial performance and cash flows for the year then
ended in accordance with International Financial Reporting Standards, and the requirements of the
Companies Act of South Africa.

Without qualifying their opinion, the auditors draw attention to the disclosure on going concern
which indicates that the group incurred a net loss of R10 701 271 for the year ended 28 February
2014. This disclosure also indicates that these conditions, along with other matters, indicate the
existence of a material uncertainty which may cast significant doubt on the group’s ability to
continue as a going concern. The going concern assumption is subject to the successful outcome of
the matters referred to in the going concern disclosure in note 30 of the annual financial
statements and detailed below.

GOING CONCERN AND SPECIFIC ISSUE OF SHARES FOR CASH

The annual financial statements have been prepared on the basis of accounting policies applicable
to a going concern. This basis presumes that funds will be available to finance future operations
and that the realisation of assets and settlement of liabilities, contingent obligations and
commitments will occur in the ordinary course of business.

Sable is an exploration company not yet in a cash-generating position which is obliged to fund
exploration by equity. Sable is currently raising capital in order to continue its exploration
programme and to cover all general and administration costs. Sable’s future prospects and stability
relies on its ability to raise capital for the ensuing year.

The ability of the group to continue as a going concern is dependent on, and subject to, the
successful outcomes of the matters detailed below.

At 28 February 2014, Sable had accumulated losses of R160 081 928 and the group had accumulated
losses of R85 592 340.

Sable is currently in discussions with a number of investors to subscribe for additional shares.

In addition to this, Sable concluded a funding arrangement on 31 May 2014 with one of its non-
executive directors, Mr Botha Schabort, who may assign such benefits to a nominee of his choosing.

In terms of this arrangement R10 million is payable in tranches over the course of the next four
months. In return, and subject to what follows below, Mr. Schabort will receive ordinary shares in
Sable at the lesser of 54.09529 cents per share or at a 10% discount to the 30 day VWAP on the day
the funds are received.
In addition and upon receipt of the initial tranche of R1.5 million (already paid) he will be
entitled to a commission of 2% on the gross proceeds received by Sable (or its subsidiaries) (“the
group”) on ore to be sold by it.

This commission shall increase pro-rata to the additional tranches received to a maximum aggregate
commission of 5%.

Botha also has the right to a like commission on any ore body sold by the group or on the sale of
any mineral right held by it.

Sable has the right exercisable entirely at its discretion but on prior notice to Botha to raise
alternate capital and elect not to receive any further financing from him. Mr. Schabort in turn has
the right to accelerate his investment prior to receipt of this notice.

Presuming that the entire subscription of R10 million has been made by Mr. Schabort, if the group
has not been granted a mining right and concluded an offtake agreement for the sale of a minimum of
50 000 tonnes of ore per month, which ore is to be supplied from the property holding the mining
right:

- within a period of two and a half years from the date of first payment, a penalty of R2.5 million
  will accrue to Botha which amount shall be credited to his loan account;

- within a period of two years and nine months from the date of first payment, a further penalty of
  R2.5 million shall be credited to his loan account;

- within a period of three years from the date of first payment, a further penalty of R5 million
  will accrue which amount shall also be credited to his loan account.

In the event that Sable has exercised its right to seek alternate funding, thereby precluding any
further subscription for shares by Mr. Schabort the above penalties shall be pro-rated to the
actual investment made by him.

This agreement is subject to approval by shareholders in a general meeting and all regulatory
approvals being obtained by Sable. A circular to shareholders is currently being prepared.
Shareholders, independent of the transaction, holding 122 214 824 shares representing 84 % of the
shares eligible to vote have given an irrevocable undertaking to approve the transaction.

The directors believe that one of the group companies has a claim against SARS of approximately
R 3.2 million relating to overpaid tax during the 2001 year of assessment. The directors are in
discussions with SARS relating to this claim. The directors have no reason to believe that this
claim does not have merit. The timing of the refund (if approved) is uncertain at this point and
therefore is not recorded as an asset on the statement of financial provision.

The directors are doing everything they can to expedite receipt of the money from SARS.

The group currently has a cash burn rate of approximately R700 000 per month and is taking steps to
reduce this to R620 000 per month from September 2014.


STATEMENTS OF FINANCIAL POSITION AS AT 28 FEBRUARY 2014

                                                      Group                               Company
                                             2014               2013             2014               2013

Figures in Rand

ASSETS
Non current assets
Plant and equipment                       576 896           790 117                 -                -
Intangible assets                       1 200 000         1 200 000                 -                -
Investments in subsidiaries                     -                 -       181 322 745      182 526 810
Loans to subsidiaries                           -                 -         3 356 401                -
Other financial assets                    563 506           249 517                 -                -

                                        2 340 402         2 239 634       184 679 146      182 526 810
Current assets
Current tax receivable                            -       1   166   824             -                -
Trade and other receivables               990   794       1   077   426             -                -
Cash                                       30   767       4   730   620         9 576          191 609
                                        1 021   561       6   974   870         9 576          191 609
Total assets                            3 361   963       9   214   504   184 688 722      182 718 419

EQUITY AND LIABILITIES
Equity
Stated capital                         85 747 232       82 747 232         303 883 938     300 883 938
Accumulated loss                      (85 592 340)     (74 891 069)       (160 081 928)   (157 867 281)
Equity attributable to
equity holders of the parent                 154 892       7 856 163       143 802 010             143 016 657
Non controlling interest                     (87 855)        (85 615)                -                       -

Total shareholders’ interest                 67 037        7 770 548       143 802 010             143 016 657

LIABILITIES
Non current liabilities
Loans from subsidiaries                            -                  -    40 806 417              39 621 468
Other financial liabilities                  523 014            443 014             -                       -
                                             523 014            443 014    40 806 417              39 621 468

Current liabilities
Trade and other payables                 1 547 159         1 000 942            80 295                  80 294
Loan from director                       1 100 000                 -                 -                       -
Bank overdraft                             124 753                 -                 -                       -
                                         2 771 912         1 000 942            80 295                  80 294
Total liabilities                        3 294 926         1 443 956        40 886 712              39 701 762
Total equity and liabilities             3 361 963         9 214 504       184 688 722             182 718 419

Net asset value per share (cents)               0.10              5.39                   -                    -
Tangible net asset value per share (cents)     (0.69)             4.57                   -                    -


STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 28 FEBRUARY 2014

                                                        Group                                  Company
                                               2014               2013              2014                 2013

Figures in Rand

Revenue                                     247 847             711 498                   -                    -
Other income                                 18 261             743 455                   -                    -
Operating expenses                         (586 812)                  -                   -                    -
Exploration costs                                 -      (13    839 245)                  -                    -
General and administration costs        (10 448 392)     (23    729 262)   (2 261       454)       (30 728   324)
Operating loss                          (10 769 096)     (36    113 554)   (2 261       454)       (30 728   324)
Investment revenue                           66 118             616 815        46       807                    -
Finance costs                                  (533)             (2 884)                  -                    -
Loss before taxation                    (10 703 511)      (35   499 623)       (2 214   647)       (30 728   324)
Taxation                                          -             (60 093)                  -                    -
Loss for the year                       (10 703 511)      (35   559 716)       (2 214   647)       (30 728   324)
Other comprehensive income                        -                   -                   -                    -
Total comprehensive loss for the year   (10 703 511)     (35    559 716)   (2 214       647)       (30 728   324)
Loss attributable to:
Owners of the parent                    (10 701 271)     (35 480 808)      (2 214 647)             (30 728 324)
Non controlling interest                     (2 240)         (78 908)               -                        -
                                        (10 703 511)     (35 559 716)      (2 214 647)             (30 728 324)

Loss per share (cents)                         (7.22)           (21.67)
Headline loss per share (cents)                (7.22)           (21.67)


STATEMENTS OF CHANGES IN EQUITY

                                     Stated    Accumulated             Total            Non               Total
                                    capital           loss      attributable    controlling              equity
                                                 to equity          interest
                                                holders of
                                                the parent

Figures in Rand

GROUP
Balance at 1 March 2012           48 552 160   (39 410 261)       9 141 899          (6 707)          9 135 192
Loss for the year                          -   (35 480 808)     (35 480 808)        (78 908)        (35 559 716)
Other comprehensive income                 -             -                -               -                   -
Total comprehensive loss
for the year                               -  (35 480 808)       (35 480 808)        (78 908)        (35 559 716)
Issue of shares                   15 152 410           -         15 152 410               -           15 152 410
Listing fees on issue of shares   (5 987 215)          -         (5 987 215)              -           (5 987 215)
Share-based payment on   
reverse listing                   25 029 877           -          25 029 877              -           25 029 877
Total contributions by and
distributions to owners of
company recognised
directly in equity                34 195 072            -        34 195 072               -           34 195 072
Balance at 1 March 2013           82 747 232   (74 891 069)       7 856 163         (85 615)           7 770 548
Loss for the year                          -   (10 701 271)    (10 701 271)          (2 240)        (10 703 511)
Other comprehensive income                 -             -              -                -                    -
Total comprehensive loss
for the year                              -    (10 701 271)   (10 701 271)          (2 240)         (10 703 511)
Issue of shares                   3 000 000              -      3 000 000                -            3 000 000
Total contributions by and
distributions to owners
of company recognised
directly in equity                3 000 000              -      3 000 000             -             3 000 000
Balance at 28 February 2014      85 747 232    (85 592 340)       154 892       (87 855)               67 037


                                                                    Stated     Accumulated               Total
                                                                   capital            loss              equity

Figures in Rand

COMPANY
Balance on 1 September 2012                                   169 201 552      (127 138 957)        42 062 595
Loss for the 6 months ended 28 February 2013                            -       (30 728 324)       (30 728 324)
Other comprehensive income                                              -                 -                 -
Total comprehensive loss for the
6 months ended 28 February 2013                                           -    (30 728 324)      (30 728   324)
Odd lot offer                                                     (74   494)             -           (74   494)
Repurchase offer                                              (20 488   765)             -       (20 488   765)
Issue of shares on reverse listing                            199 912   310              -       199 912   310
Treasury shares                                               (47 666   665)             -       (47 666   665)
Total contributions by and
distributions to owners of
company recognised directly in equity                         131 682 386                 -        131 682 386
Balance at 1 March 2013                                       300 883 938      (157 867 281)       143 016 657
Loss for the year                                                       -        (2 214 647)       (2 214 647)
Other comprehensive income                                              -                 -                 -
Loss for the year                                                       -        (2 214 647)       (2 214 647)
Issue of shares                                                 3 000 000                 -         3 000 000
Total contributions by and
distributions to owners of company
recognised directly in equity                                   3 000 000                 -         3 000 000
Balance at 28 February 2014                                   303 883 938      (160 081 928)      143 802 010


STATEMENTS OF CASH FLOWS

                                                           Group                              Company
                                                   2014             2013            2014                2013

Figures in Rand

Cash flows from operating activities
Cash used in operations                    (9 892 626)     (21 036 170)      (1 057 388)        (215 702)
Interest income                                66 118          313 183           46 807                -
Finance costs                                    (533)          (2 884)               -                -
Tax received (paid)                         1 166 824          (60 093)               -                -
Net cash from operating activities         (8 660 217)     (20 785 964)      (1 010 581)        (215 702)
Cash flows from investing activities
Purchase of plant and equipment              (30 400)         (81 850)                 -                -
Loan advanced from subsidiary                      -               -          1 184 949       39 621 468
Loan advanced to subsidiary                        -               -         (3 356 401)     (18 842 508)
Loan advanced from related party              80 000               -                  -                -
Increase in other financial assets          (313 989)              -                  -                -
Net cash from investing activities          (264 389)       (81 850)        (2 171 452)      20 778 960
Cash flows from financing activities
Proceeds on share issue                     3 000 000     10 629 060         3 000 000                 -
Repayment of other financial liabilities            -      (290 861)                -                  -
Loan received from director                1 100 000              -                 -                 -
Repurchase of shares and odd lot offer            -               -                 -        (20 563 258)
Share issue listing expenses                      -      (5 987 215)                -                 -
Cash on reverse listing of
New Corpcapital Limited                           -       20 855 157                -                 -
Net cash from financing activities         4 100 000       25 206 141     3 000   000        (20 563 258)
Total cash movement for the year         (4 824 606)       4 338 327       (182   033)                -
Cash at the beginning of the year          4 730 620         392 293        191   609            191 609
Total cash at the end of the year           (93 986)       4 730 620          9   576            191 609
INTEGRATED REPORT AND NOTICE OF AGM

The company`s integrated annual report, together with a notice convening the annual general
meeting, will be mailed to shareholders on Wednesday 11 June 2014. The annual general meeting will
be held on Thursday, 10 July 2014 at 10h00 at the offices of the company, 4 Fricker Road, Illovo.

The last day to trade in order to be eligible to participate in and vote at the annual general
meeting is Friday, 27 June 2014 and the record date for voting purposes is Friday, 4 July 2014.

An electronic copy of the company’s integrated annual report is available on the company’s website,
www.sablemetals.co.ca

For and on behalf of the Board

Executive directors: JG Allan (Chief Executive Officer); RC Hochreiter;
DN Levithan; M van Tonder (Financial Director)
Non-executive director: PB Schabort
Independent non-executive directors: TA Wixley (Chairman); NN Lazarus; CP Mostert
Company registered address: 4 Fricker Road, Illovo, 2196
Company postal address: PO Box 411130, Craighall, 2024


4 June 2014
Sponsor
Java Capital
       

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