Wrap Text
Reviewed interim results
Oakbay Resources and Energy Limited
(Incorporated in the Republic of South Africa)
(Registration number 2009/021537/06)
Share code: ORL ISIN: ZAE 000196085
("Oakbay Resources" or "the Group" or “the Company”)
Reviewed condensed consolidated interim financial results
For the six months ended 31 August 2015
SALIENT FEATURES
* Diversification of income streams by way of commencement of contract
mining activities
* Declining production in open cast gold mining operations led to a
lower contribution from gold operations
* Over 5 500 fatality free shifts which equates to over 6.2 million
fatality free man hours
* Zero incidents of labour unrest
* Invested R20 million in uranium development and gold production
* Completion of scoping phase of feasibility study
* Preparing for local and international capital raising
Condensed consolidated statement of financial position
Reviewed six Audited twelve
months ended months ended
31 August 2015 28 February 2015
Notes R'000 R'000
Assets
Non-current assets 7,254,362 7,244,453
Property, plant and equipment 1,978,206 1,969,946
Mineral resources and reserves 5,205,629 5,205,629
Environmental rehabilitation
obligation investments 58,960 57,536
Environmental rehabilitation
guarantee deposits 2,439 2,439
Deposits 9,128 8,903
Current assets 450,995 444,518
Trade and other receivables 1,596 16,981
Amounts owing to related
parties 9 44,088 27,962
Inventories 205,578 208,513
Cash and cash equivalents 199,733 191,062
Total assets 7,705,357 7,688,971
Equity
Stated capital 466,398 466,398
Retained earnings 4,023,015 4,049,792
Total equity attributable to
owners of the company 4,489,413 4,516,190
Non-controlling interest 589,870 597,397
Total equity 5,079,283 5,113,587
Liabilities
Non-current liabilities 2,156,994 2,144,268
Loans and borrowings 5 74,660 110,367
Environmental rehabilitation
provision 4 216,242 209,811
Amount owing to holding
company 9 408,516 366,514
Deferred taxation 1,457,576 1,457,576
Current liabilities 469,080 431,116
Trade and other payables 61,435 77,675
Loans and borrowings 5 195,492 184,362
Amounts owing to related
parties 9 212,153 169,079
Total liabilities 2,626,074 2,575,384
Total equity and liabilities 7,705,357 7,688,971
Net asset value per share (in
Rands) 5.61 5.64
Closing number of shares 800,000,000 800,000,000
Condensed consolidated statement of profit or loss and other
comprehensive income
Reviewed six Reviewed six
months ended months ended
31 August 2015 31 August 2014
R'000 R'000
Revenue 130,724 76 244
Cost of sales (101,227) (76 943)
Gross profit/(loss) 29,497 (699)
Other operating income 3,216 37 205
Other operating expenses (57,514) (59 379)
Operating loss (24,801) (22 873)
Finance income 12,000 724
Finance expense (21,503) (131 493)
Loss before income tax for the period (34,304) (153 642)
Taxation – –
Loss for the period (34,304) (153 642)
Other comprehensive income - –
Loss and total comprehensive income
for the period (34,304) (153 642)
Loss and total comprehensive income
attributable to:
Owners of the company (26,777) (117 084)
Non-controlling interest (7,527) (36 558)
(34,304) (153 642)
Earnings per share
Basic loss per share (cents) (3.35) (11 708 400)
Diluted loss per share (cents) (3.35) (11 708 400)
Headline loss per share (cents) (3.35) (11 708 400)
Diluted headline loss per share
(cents) (3.35) (11 708 400)
Reconciliation between earnings and
headline earnings
Total comprehensive loss for the six
month period (26,777) (117 084)
Adjustments: - -
Headline loss attributable to ordinary (26,777) (117 084)
shareholders
Weighted average number of shares 800,000,000 1,000
Condensed consolidated statement of changes in equity
Attributable to owners
of the company
Share Share Stated
capital premium capital
R’000 R’000 R’000
Balance at 1 March 2014 1 56,025 –
Loss for the period
Other comprehensive income – – –
Total comprehensive income at
31 August 2014 1 56,025 –
Conversion of shares to no par value (1) (56,025) 56,026
Issue of ordinary shares – – 410,372
Profit for the period – – –
Other comprehensive income – – –
Total comprehensive income at
28 February 2015 – – 466,398
Loss for the period – – –
Other comprehensive income – – –
Total comprehensive income at
31 August 2015 – – 466,398
Attributable to owners
of the company
Retained
earnings Total
R’000 R’000
Balance at 1 March 2014 4,087,357 4,143,383
Loss for the period (117,084) (117,084)
Other comprehensive income – –
Total comprehensive income at 31 August 2014 3,970,273 4,026,299
Conversion of shares to no par value – –
Issue of ordinary shares – 410,372
Profit for the period 79,519 79,519
Other comprehensive income – –
Total comprehensive income at 28 February 2015 4,049,792 4,516,190
Loss for the period (26,777) (26,777)
Other comprehensive income – –
Total comprehensive income at 31 August 2015 4,023,015 4,489,413
Non-controlling
interest Total
R’000 R’000
Balance at 1 March 2014 598,772 4,742,155
Loss for the period (36,558) (153,642)
Other comprehensive income – -
Total comprehensive income at 31 August 2014 562,214 4,588,513
Conversion of shares to no par value – –
Issue of ordinary shares – 410,372
Profit for the period 35,183 114,702
Other comprehensive income – -
Total comprehensive income at
28 February 2015 597,397 5,113,587
Loss for the period (7,527) (34,304)
Other comprehensive income – –
Total comprehensive income at 31 August 2015 589,870 5,079,283
Condensed consolidated statements of cash flows
Reviewed Audited
six twelve
months months
ended ended
31 August 28 February
2015 2015
R'000 R'000
Cash flows from operating activities 10,340 (29 955)
Cash generated from operations 6,714 (15,451)
Interest paid (82) (15,228)
Interest received 3,708 724
Cash flows from investing activities (22,030) (31 440)
Additions to property, plant and equipment (20,384) (30 031)
Rehabilitation investment (1,424) (1 370)
Increase in deposits (222) (39)
Cash flows from financing activities 20,361 59 822
Increase in amounts owing by related parties (16,126) (39)
Repayment of loans and borrowings (37,500) (4 466)
Increase in amount owing to related parties 33,670 16 272
Decrease in finance lease liability (1,685) -
Increase in amount owing to holding company 42,002 58 327
Net increase/(decrease) in cash and cash
equivalents 8,671 (1 573)
Cash and cash equivalents at the beginning of
the year 191,062 3 094
Cash and cash equivalents at the end of the
period 199,733 1 521
Commentary – Financial and operational overview
1. The directors present the reviewed condensed consolidated interim
financial results for the six months ended 31 August 2015.
2.1 Basis of preparation
These condensed consolidated interim financial results for the six months
ended 31 August 2015 have been prepared in accordance with the framework
concepts and the recognition and measurement criteria of International
Financial Reporting Standards (“IFRS”), and the SAICA Financial Reporting
Guides as issued by the Accounting Practices Committee, as well as the
presentation and disclosure requirements of IAS 34 – Interim Financial
Reporting, the JSE Limited Listings Requirements and the Companies Act
of South Africa. The group accounting policies and methods of measurement
and recognition comply in material respects with IFRS and are consistent
with those applied in the previous financial period. These condensed
consolidated interim financial results have been prepared under the
supervision of Trevor Scott (BCom (Hons), BAcc, CA(SA))in his capacity as
Financial Director of the Group.
2.2 Reviewed results – auditor’s conclusion
KPMG Inc., Oakbay' Resources’ independent auditors, have reviewed the
condensed consolidated interim financial results of Oakbay Resources.
The review was conducted in accordance with International Standards on
Review Engagements 2410: Review of Interim Financial Information
performed by the Independent Auditor of the Entity. They have expressed
an unmodified review conclusion on the results.
The condensed consolidated interim financial results comprise the
condensed consolidated statement of financial position at 31 August
2015, condensed consolidated statement of comprehensive income,
condensed consolidated statement of changes in equity and condensed
consolidated statement of cashflows for the six months then ended and
selected explanatory notes. The review report is available for inspection
at Oakbay Resources’ registered office.
Any forecast information included in this announcement has neither been
reviewed nor reported on by the company’s auditors.
3. Nature of the business
Oakbay Resources and Energy Limited is incorporated in the Republic of
South Africa. These condensed consolidated interim financial statements
comprise the Company and its subsidiaries (together referred to as the
'Group' and individually as “Group entities”). Its principal business
activity is the mining and exploration of mineral resources, particularly
uranium and gold deposits, and the possible beneficiation thereof. The
Group currently owns and operates the Shiva Uranium Mine, a uranium and
gold mine in the North West province of the Republic of South Africa.
The Group is currently engaged in open cast gold mining while
simultaneously focusing on the completion of a bankable feasibility
study on its uranium prospects.
4. Environmental rehabilitation provision
Six
months Year
ended ended
31-Aug 28-Feb
2015 2015
R’000 R’000
Balance at the beginning of the period 209,811 133,749
Unwind of interest 8,287 11,141
Capitalised to property, plant and equipment (359) 40,644
Change in estimate in environmental rehabilitation
provision recognised in profit or loss (1,497) 24,277
Balance at the end of the period 216,242 209,811
5. Loans and borrowings
Industrial Development Corporation ("IDC") borrowings
Six
months Year
ended ended
31-Aug 28-Feb
2015 2015
R’000 R’000
Balance at the beginning of the period - 1 March 146,186 450,676
Loan repayments for the period (37,500) (80,000)
Conversion of debt to equity - (225,022)
Fair value adjustment ito IAS39 due to changes in
timing of cash flows 1,530 5,386
Fair value adjustment ito IAS39 due to conversion
of debt to equity - (60,265)
Interest accrued 9,584 55,411
Balance at the end of the period 119,800 146,186
Bank of Baroda facility
Six
months Year
ended ended
31-Aug 28-Feb
2015 2015
R’000 R’000
Balance at the beginning of the period 146,858 -
Draw down on loan facility - 144,960
Interest expense 3,494 1,898
Balance at the end of the period 150,352 146,858
Total non-current liabilities 74,660 110,367
Total current liabilities 195,492 184,362
270,152 294,729
6. Events after the reporting period
Subsequent to 31 August 2015, Oakbay subsidiary company, Shiva Uranium,
acquired open cast mining equipment at a cost of R42 million. The
equipment is intended to improve production capabilities in the open cast
gold operation. Save for the equipment purchase previously described, the
directors are not aware of any other matter or circumstance rising since
the 31 August 2015, not otherwise dealt with in the condensed interim
consolidated financial statements, which would affect the operations of
the Group or the results of those operations significantly.
7. General review of operations
7.1 Safety
During the six months ended 31 August 2015, the company’s safety
performance remained consistently excellent, with zero fatalities and
serious injuries being experienced during the period. Safety is a core
value of the group and an integral part of the culture with a goal of
Zero Harm. At 30 September 2015, the group had achieved a total of
5 589 fatality free shifts; which equates to approximately 6.2 million
fatality free hours. The lost time injury frequency rate (LTIFR) for
the six month period was 1.65 per one thousand employees in service;
which is well below the industry average of 3.8.
The continuous commitment of the mine employees and management toward
safe working practices remains the uppermost priority of the company.
Safety initiatives at the mine continue to be driven by the Health and
Safety Committee and the ongoing focus on reinforcing excellent
communication standards between the committee and workplace health and
safety representatives is progressing well. Constant supervision of safety
standards and safety compliance matters remains a focus point for the
Health and Safety Committee as well as daily safety training initiatives.
During the six months, senior executive management continued with their
initiative of chairing weekly safety meetings with the relevant supervisors
in order to discuss safety achievements and pro-active action to prevent
any accidents and injuries.
Safety remains the highest priority for management and the company is
constantly re-evaluating its safety procedures in line with its philosophy
of zero tolerance to unsafe acts and reducing safety risk to its lowest
possible level.
7.2 Gold production
Gold mining operations maintained their profitability but production for
the six month period was constrained due to declining efficiencies in the
open cast mining section, primarily resulting from the availability of
open cast mining equipment. As a result, the volume of reef tons processed
for the six months ended 31 August 2015 was lower than expected. Subsequent
to 31 August 2015, the company invested approximately R42 million in new
open cast mining equipment in order to ensure consistence in the availability
of material for processing. In the face of declining production, management
maintained their efforts to boost efficiencies, improve productivity and
aggressively manage costs. Significant efforts in grade management ensured
that grades consistent with expectations were maintained during the period
under review.
Oakbay Resources’ outlook for its gold production will remain optimistic
as further improvements in operational efficiencies are expected to translate
into increased production and operating output. Management's
focus on the forthcoming six month period will largely entail ensuring that
plant processing capacity is maintained. The company also intends to
investigate higher grade gold project opportunities that may present
themselves over the next few months.
7.3 Uranium operations and further exploration
Notwithstanding insignificant movements in spot uranium prices during the
six months under review, the general consensus amongst analysts is that a
supply deficit will arise in the fourth quarter of 2017. With approximately
200 million pounds of high grade uranium ore, as well as a world class
processing plant and related mine infrastructure already installed and
commissioned on site, the company is poised to take advantage of an
expected increase demand for uranium in the short to medium term horizon.
The company continues with the development of its uranium operations while
the scoping assessment for the feasibility study is near completion.
Accelerated development of the uranium operation is expected to commence
during the 2016 calendar year. The company remains optimistic that uranium
prices will significantly improve over the next 18 months and intends to
capitalise on increasing investor confidence. Management intend focusing
their efforts on securing capital to fund the accelerated development
programme, as well as securing beneficial medium to long term supply
agreements.
7.4 Contract mining
As part of its strategy to diversify sources of income while ongoing
uranium development takes place, the company utilised spare resource
capacity to undertake contract mining activities during the six month
period ending 31 August 2015. These activities had a strong positive
contribution to both revenue and earnings during the interim period and
offset declining profitability from the gold operations.
8. Dividends
No dividend has been declared for the interim period (2014: Rnil).
9. Changes to the Board of Directors
Shareholders are advised that Mr. Terry Rensen has been appointed as
the lead independent director of Oakbay Resources and Energy Limited
with effect from 1 December 2015. Mr. Mark Pamensky will remain on
the board as an independent non-executive director.
10. Related parties
Six months
ended Year ended
31-Aug-15 28-Feb-15
R’000 R’000
Amounts owing by related parties
Arctos Trading Proprietary Limited 24,155 24,155
Surya Crushers Proprietary Limited 4,575 3,368
Blackedge Exploration Proprietary Limited 5 -
Tegeta Exploration and Resources Proprietary
Limited 14,692 -
Other 661 439
44,088 27,962
Amounts owing to related parties
Westdawn Investments Proprietary Limited (44,798) (25,752)
Unlimited Investments Proprietary Limited (4,511) (4,514)
JIC Engineering Services Proprietary Limited (28,946) (28,883)
Blackedge Exploration Proprietary Limited (179) -
Scipio Proprietary Limited (3,184) -
Sahara Computers Proprietary Limited (154) -
VR Laser Proprietary Limited (335) -
Confident Concepts Proprietary Limited (456) -
Action Investments (129,590) (109,930)
(212,153) (169,079)
All loans owing by and to related parties are denominated in ZAR and are
unsecured, interest free and there are no specific fixed terms of repayment
except for the loan granted by Action Investments. The Action Investments
loan is denominated in USD and interest is accrued at LIBOR plus 3%. The
balance at 31 August 2015 is USD 9 758 921 (28 February 2015: USD 9 582 879)
and the loan is repayable on demand.
Six months
ended Year ended
31-Aug-15 28-Feb-15
R’000 R’000
Amount owing to holding company
Oakbay Investments Proprietary Limited 408,516 366,514.00
408,516 366,514.00
The repayment terms are 367 days’ notice on demand from the holding company.
Oakbay Investments Proprietary Limited has subordinated its right to claim
or accept repayment of its loan to the company in favour of the other
creditors until the total assets of the company, fairly valued, exceed its
total liabilities.
11. Segment reporting
Basis for identification of reportable segments
The chief operating decision maker’s view is that to assess the performance
of the company there are four reportable segments, namely those relating to
gold operations, contract mining, uranium development and head office.
The gold operation segment primarily entails gold mining and processing
operations. The contract mining operation primarily entails coal contract
mining. The uranium development segment relates to the uranium project
development. Currently, the uranium mining and processing operation is in
development phase and is not operating commercially. The major activities
relating to uranium development entail mine and plant infrastructure expansion,
as well as resource exploration.
The segment information has been prepared in accordance with IFRS 8
Operating Segments, which defines the requirements for the disclosure of
financial information of an entity's segments.
Information about reporting segments
Gold
Six months Six months
ended ended
R’000s 31-Aug-15 31-Aug-14
Revenue from external customers 98,778 76 244
Inter-segment revenue – –
98,778 76 244
Operating loss before depreciation (501) –
Depreciation (8,904) –
EBITDA (9,405) –
Finance cost – –
Finance income – –
Loss for the period (9,405) –
Contract Mining
Six months Six months
ended ended
R’000s 31-Aug-15 31-Aug-14
Revenue from external customers 31,946 –
Inter-segment revenue – –
31,946 –
Operating loss before depreciation 8,817 –
Depreciation (869) –
EBITDA 7,948 –
Finance cost – –
Finance income – –
Loss for the period 7,948 –
Uranium Development
Six months Six months
ended ended
R’000s 31-Aug-15 31-Aug-14
Revenue from external customers – –
Inter-segment revenue – –
– –
Operating loss before depreciation (5,667) –
Depreciation – –
EBITDA (5,667) –
Finance cost – –
Finance income – –
Loss for the period (5,667) –
Head Office
Six months Six months
ended ended
R’000s 31-Aug-15 31-Aug-14
Revenue from external customers – –
Inter-segment revenue – –
– –
Operating loss before depreciation (16,153) –
Depreciation (1,524) –
EBITDA (17,677) –
Finance cost (21,503) (131,493)
Finance income 12,000 724
Loss for the period (27,180) (130,769)
Total
Six months Six months
ended ended
R’000s 31-Aug-15 31-Aug-14
Revenue from external customers 130,724 76 244
Inter-segment revenue – –
130,724 76 244
Operating loss before depreciation (13,504) (13,349)
Depreciation (11,297) 9,524
EBITDA (24,801) (22,873)
Finance cost (21,503) 131,493
Finance income 12,000 724
Loss for the period (34,304) (153,642)
Gold
Six months Twelve months
ended ended
R’000s 31-Aug-15 28-Feb-15
Segment assets 781,159 592,305
Segment liabilities – 182,556
Contract Mining
Six months Twelve months
ended ended
R’000s 31-Aug-15 28-Feb-15
Segment assets – –
Segment liabilities – –
Uranium Development
Six months Twelve months
ended ended
R’000s 31-Aug-15 28-Feb-15
Segment assets 6,625,232 6,769,123
Segment liabilities – –
Head Office
Six months Twelve months
ended ended
R’000s 31-Aug-15 28-Feb-15
Segment assets 223,825 327,543
Segment liabilities 2,062,689 935,252
Total
Six months Twelve months
ended ended
R’000s 31-Aug-15 28-Feb-15
Segment assets 7,630,216 7,688,971
Segment liabilities 2,062,689 1,117,808
Varun Gupta
Chief Executive Officer
27 November 2015
Directors: A Gupta (Chairman), V Gupta (CEO), T Scott (FD), M Pamensky
(Independent non-executive and LID)*, D Nyamane (Independent non-executive),
T Rensen (Independent non-executive)**
Sponsor: Sasfin Capital (a division of Sasfin Bank Limited).
Company Secretary: iThemba Governance and Statututory Solutions
Proprietary Limited
Registered Office: 89 Gazelle Avenue, Corporate Park South, Midrand, 1685
Postal Address: Postnet Suite 458, Private Bag x9, Benmore, 2010
*Will revert from LID to independent non-executive director with effect
from 1 December 2015
**Appointed as LID with effect from 1 December 2015 www.oakbay.co.za
27 November 2015
Date: 27/11/2015 05:00:00 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,
information disseminated through SENS.