Wrap Text
Unaudited condensed consolidated Financial results for the six months ended 31 August 2015
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”)
Unaudited condensed consolidated Financial results
for the six months ended 31 August 2015
Commentary
1. Restatement of the results for the year ended 28 February 2015
The JSE advised Sable Metals and Minerals Limited (“Sable” or “the company”)
that they had reviewed the Integrated Annual Financial Statements (“AFS”) as
part of an ongoing proactive monitoring review process and disagreed with the
board’s judgmental decision on the classification of the Familia Asset Managers
Proprietary Limited (“Familia") as a subscription for shares as equity. The
opinion of the JSE was that this was not compliant with IAS 32.25. IAS 32.25
states that “A financial instrument may require the entity to deliver cash
or another financial asset in the event of the occurrence or non-occurrence
of uncertain future events or on the outcome of uncertain circumstances) that
are beyond the control of both the issuer and the holder of the instrument”
and “The issuer of such an instrument does not have the unconditional right
to avoid delivering cash or another financial asset (or otherwise to settle
it in such a way that it would be a financial liability”. Management has
agreed to include this re-statement as per IAS 8 in the interim results for
the 6 months ended 31 August 2015.
As a result of this the present value of the liability of R10 million at June
2017 is calculated as R6 295 056 as at 28 February 2015 and R6 951 382 as at
31 August 2015. These amounts have been reported as non-current liabilities
as of the restated AFS for February 2015 and the interim results for 31
August 2015. Share capital at 28 February 2015 has been re-stated in order to
account for the difference between the present value of the R10 million and the
R10 million received.
Restatement of the 2015 AFS had the following changes to the 2015 AFS and the
Interim Results for August 2015:
• Balance Sheet Items
- Share capital was reduced from R97 889 857 to R91 594 801
- The difference being the present value of the Familia loan, R6 295 056,
is now reported as a non-current liability
• Income Statement items
- There is no change to the 2015 Income Statement
- The difference in the present value of the Familia loan at February 2015
and August 2015, R656 326, is now taken as an expense in the Income Statement
to 31 August 2015
• Changes in Equity
- Equity attributable to shareholders declines by the present value of the
Familia loan, R6 295 056
• Cash flow Statement
- There is no change to the Cash Flow Statement
2. Sable operational review
Retention Permit accepted
The application for a Retention Permit on the Abrina Project for Platinum
Group Metals, Vanadium and Iron ore was accepted by the Department of Mineral
Resources (“DMR”) subject to the provision of certain documentation to the DMR.
The required documentation in support of this application has already been
submitted to the DMR.
Sable released a SENS announcement on 19 March 2015 wherein it was announced
that the company had signed an agreement whereby an investor would provide funding
to Sable on the basis that negotiations were being conducted with a view to the
investor acquiring one or more assets from the company.
In the light of the above announcement the company ceased further exploration on
the assets in question, pending finalisation of these negotiations.
SARS asset
The SARS tax asset of R3.2 million originating from the reverse listing of Sable
into New Corpcapital Limited on 23 November 2012 has been reviewed by SARS and
declined. This asset had already been impaired in full and thus has no impact on
the AFS.
3. Financial overview
Sable is still in the exploration phase and does not generate cash from its
activities. The group made a net loss of R4.0 million for the period (Aug 2014:
R6.9 million).This includes R656 326 arising as a result of the increased present
value calculated on the Familia funding referred to in the restatement of results
above.
Management continue to monitor the cash flow situation on an ongoing basis.
As is common with many junior exploration and mining companies, the group raises
capital for exploration and other projects as and when required.
4. Transactions
Shareholders are referred to the SENS announcements regarding a specific issue of
shares, restructuring and a Scheme of Arrangement as well as a disposal of shares
in three subsidiaries to Lemur Resources respectively (“the Lemur disposal”) that
was released on 13 August 2015 and 14 August 2015 respectively.
Due to the current cash constraints within the company, as reported on more fully
in the 2015 integrated annual report, Broken Land Adventures Proprietary Limited
(“BLA”) offered to subscribe for 200 000 000 (two hundred million) new Sable shares
at 4 cents per share for an aggregate amount of R8 000 000 (eight million rand)
subject to certain conditions precedent.
This subscription will be subject to Sable divesting of all its assets and
liabilities, with the exception of its shareholding in Sable Platinum Holdings
Proprietary Limited (“SPH”). SPH will acquire and retain the shares in Roan Platinum
Proprietary Limited, Sable Platinum Joint Venture Proprietary Limited, Middelwave
Trade and Invest 4 Proprietary Limited, Fast Pace Trade and Invest 32 Proprietary
Limited, Coveway Trade and Invest 46 Proprietary Limited, Ochre Shimmer Trade and
Invest 72 Proprietary Limited, Rickshaw Trade and Invest 86 Proprietary Limited,
Squirewood Investments 98 Proprietary Limited, Bridge Line Proprietary Limited,
Saddle Path Props 54 Proprietary Limited, Fast Pull Trade and Invest Proprietary
Limited, Dotfull Trading Proprietary Limited and Writer Star Trade and Invest
Proprietary Limited, (“the retained companies”). Sable and BLA entered into a
Heads of Agreement on 11 August 2015 and a subscription agreement on 14 September
2015, more fully described in the above SENS announcements.
Sable undertook to restructure the group by deregistering Corpcapital Investments
Proprietary Limited, Corpcapital Investments 2 Proprietary Limited and Withdrawn
Investments Limited, or, if possible, transferring those shares owned by Sable to
Sable Platinum Mining Limited (SPM) which will complete the deregistration of the
said companies. As part of the restructuring it is proposed that shareholders
approve and authorise that the 41 648 396 Sable shares held in escrow by Java
Capital Limited be released, and that the 7 214 709 share rights vest on the
effective date.
A scheme of arrangement is also proposed between BLA, Sable, SPH and SPM in order
for Sable to divest itself of all its assets and liabilities, rights and obligations,
with the exception of its shareholding in SPH and for SPH to divest itself of all
its assets and liabilities, rights and obligations. SPH will however acquire the
shares in the retained companies from SPM. SPM will repurchase its shares issued
to SPH and issue shares in SPM to all shareholders in Sable pro rata to their current
shareholding in Sable.
More detail on the above can be found on the SENS announcements released on
13 August 2015 and 14 August 2015 as well as the Circular to be posted to
Shareholders in due course. The circular is currently with the JSE and TRP
for comments and approval and will be released no later than 31 January 2016.
Sable announced on 13 August 2015 that agreement had been reached with Lemur
Resources Limited (“Lemur”) wherein Sable would sell 65% of Great 1 Line Invest
Proprietary Limited, 74% of Gemsbok Magnetite Proprietary Limited and 51% of Caber
Trade and Invest 1 Proprietary Limited to Lemur Resources for a consideration of
$600 000 (six hundred thousand US dollars). The disposal is subject to shareholder
approval, and details are contained in the circular referred to above. Lemur has
already advanced R5million as at 31 August 2015 and this is shown as a liability
in the interim results. Once approved by shareholders, this will convert from being
a liability to income on disposal of assets.
5. Dividend Policy
No dividend has been declared for the interim period.
6. Changes to the board of directors
On 1 June 2015, René Hochreiter changed from executive director to non-executive
director. The board agreed that his employment contract be terminated effective
31 May 2015. It is believed that René could still add value on the board and
therefore remain as a non-executive director.
The resignations of Willie Thabe and Botha Schabort were accepted on 16 July
2015 and 1 September 2015 respectively. The board wishes to thank Willie and
Botha for their contributions to the Sable board and wishes them well for
their future.
Eshaan Singh was appointed on 1 September 2015 as part time financial director
as endorsed by the JSE. The board would like to welcome Eshaan into his new role
within the group. Consequently James Allan will now only fulfil the role of
chief executive officer.
Subsequent to Willie Thabe’s resignation, the Board agreed not to fill his
vacancy on the audit and risk committee. The audit and risk committee still
comprises three independent non-executive directors, namely Mpho Mokgatlhe
(chairman), Charles Mostert and Mike Rogers, therefore complying with the
requirements of the Companies Act, 2008 as amended.
Charles Mostert was appointed as chairman of the remuneration and nominations
committee as well as the social and ethics committee and these committees still
comply with all the relevant legislative and regulatory requirements.
During the reporting period, the company changed sponsors and Exchange Sponsors
(2008) Proprietary Limited was appointed as sponsors of the company with effect
from 12 August 2015.
7. Litigation
The company is not aware of any legal or arbitration proceedings (including any
such proceedings which are pending or threatened), which may have or may have had,
in the last 12 months, a material effect on the group’s financial position save for
the Syferfontein litigation:
• this litigation concerns a joint venture agreement concluded between Caber Trade
and Invest 1 (Pty) Ltd (“Caber”) and MKR Bakwena Tribal Minerals NPC (“MKR”) on
19 February 2008. It was envisaged that the prospecting right issued by the DMR to
MKR in respect of all minerals to be found over the farms Portion 2 Uitvalgrond
and Syferfontein (“the Syferfontein properties”) would be ceded to Caber. The
transaction was subject to Section 11 approval being obtained. Section 11 approval
was duly granted.
• the Section 11 approval has been placed in issue by MKR, alleging that the party
who concluded the joint venture agreement and the addenda thereto in respect of the
Syferfontein properties with SPM on MKR’s behalf was not authorised to do so.
Accordingly, so MKR alleges, Section 11 approval ought not to have been granted.
• The aforesaid allegations have been made by MKR despite a two year investigation
conducted by the DMR, and a consultative meeting at the DMR with the Chairman of MKR,
prior to recommending that Section 11 approval be granted. This investigation confirmed
that both MKR and the community whom it purports to represent were in agreement with
the grant of Section 11 approval. In the application brought by SPM in the North
Gauteng High Court under case number 26513/2011 and heard on 27 and 28 February 2012,
SPM sought to entrench its pre-emption right to apply for a mining right over the
Syferfontein properties based upon Section 19(1)(b) of the MPRDA. This litigation is
currently pending. Caber applied for a mining right in August 2011.
• Although negotiations with the affected parties have taken place from time to time
these negotiations have now stalled and the matter has been enrolled for hearing on
14 June 2016.
8. Going concern
As Sable is an exploration company and is not yet in a cash-generating position; it is
obliged to fund its exploration program out of capital. The group is currently raising
capital in order to continue its exploration programme and to cover all general and
administration costs. The company’s future prospects and stability relies on its ability
to raise capital for the ensuing year.
At 31 August 2014, the group had accumulated losses of R105 257 855.
As at 30 November 2015, the group had a cash balance of R1 023 818 but also creditors
due of R134 789.
Lemur Resources paid a further R1 000 000 to Sable on 6 November and a further balance
of approximately R2 640 000 will be paid upon approval by shareholders of the Lemur
disposal. The final amount is calculated on an exchange rate of R14.40 and the final
amount will depend on the exchange rate at the time of the shareholders meeting. The
company has a cash burn rate of approximately R450 000 per month.
Agreement has been reached with BLA to provide further funding in the form of equity
or shareholder loans, with a minimum amount of R1 000 000 and to provide additional
funding as and when required to fund the company.
The interim 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.
9. Segment reporting
During the period under review, the board reviewed the segmental reporting and made
the decision that, due to the operating circumstances, it was decided to assess the
operations based on operating profit and loss of the entity as one operating segment.
Unaudited condensed consolidated statements of financial position as at 31 August 2015
Group
AFS as
Unaudited Unaudited Restated reported
31 August 31 August 28 February 28 February
Figures in Rand 2015 2014 2015 2015
Assets
Non-current assets
Plant and equipment 143 316 473 603 238 993 238 993
Intangible assets 1 200 000 1 200 000 1 200 000 1 200 000
Other financial assets 829 664 563 506 687 033 687 033
2 172 980 2 237 109 2 126 026 2 126 026
Current assets
Current tax receivable 54 229 -
Trade and other receivables 70 000 274 584 251 681 251 681
Cash and cash equivalents 1 546 286 1 509 000 33 198 33 198
1 670 515 1 783 584 284 879 284 879
Total assets 3 843 495 4 020 693 2 410 905 2 410 905
Equity and Liabilities
Equity
Share capital 91 594 801 87 889 857 91 594 801 97 889 857
Reserves 1 778 618 - 1 778 618 1 778 618
Accumulated loss (105 057 855) (92 465 402) (100 928 894) (100 928 894)
Cash received on
shares to be sold 614 170 5 645 000 - -
Equity attributable
to equity holders
of the parent (11 070 266) 1 069 455 (7 555 475) (1 260 419)
Non-controlling
interest (88 578) (87 855) (88 578) (88 578)
Total shareholders’
interest (11 158 844) 981 600 (7 644 053) (1 348 997)
Liabilities
Non-current liabilities
Loan from Familia 6 951 382 6 295 056 -
Other financial liabilities 281 529 523 014 250 924 250 924
Loan from director 1 056 138 1 097 638 1 097 638 1 097 638
8 289 049 1 620 652 7 643 618 1 348 562
Current liabilities
Trade and other payables 713 290 1 418 441 1 444 251 1 444 251
Other financial liabilities 6 000 000 - 967 089 967 089
Bank overdraft - - - -
6 713 290 1 418 441 2 411 340 2 411 340
Total liabilities 15 002 339 3 039 093 10 054 958 3 759 902
Total equity and liabilities 3 843 495 4 020 693 2 410 905 2 410 905
Unaudited condensed consolidated statements of comprehensive income
for the 6 months ended 31 August 2015
Group
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
31 August 31 August 28 February
2015 2014 2015
Figures in Rand
Revenue - - -
Other income 167 700 - 2 092 182
Re-imbursement of expenses
Operating expenses
- Exploration costs
- General and administration costs (4 296 661) (6 775 417) (17 315 336)
Operating loss (4 128 961) (6 775 417) (15 223 154)
Investment revenue - -
Finance costs - (97 645) (114 123)
Loss before taxation (4 128 961) (6 873 062) (15 337 277)
Taxation - -
Loss for the period (4 128 961) (6 873 062) (15 337 277)
Other comprehensive income -
Total comprehensive loss for the period (4 128 961) (6 873 062) (15 337 277)
Total comprehensive loss attributable to:
Owners of the parent (4 128 961) (6 873 062) (15 336 554)
Non-controlling interest - - (723)
(4 128 961) (6 873 062) (15 337 277)
Loss attributable to:
Owners of the parent (4 128 961) (6 873 062) (15 336 554)
Non-controlling interest - - (723)
Headline loss attributable to
ordinary shareholders (4 128 961) (6 873 062) (15 337 277)
Unaudited condensed consolidated statements of changes in equity
Unaudited for the Unaudited for the Restated for the Audited for the
6 months ended 6 months ended year ended year ended
31 August 31 August 28 February 28 February
2015 2014 2015 2015
Figures in Rand
Total attributable
to equity holders
of the parent
Opening balance (7 644 053) 154 892 67 037 67 037
Loss for the period
/ year (4 128 961) (6 873 062) (15 337 277) (15 337 277)
Other comprehensive
income - -
Total comprehensive
loss for the period
/ year (4 128 961) (6 873 062) (15 337 277) (15 337 277)
Issue of shares 2 142 625 - -
Cash received for
shares to be issued 614 170 5 645 000 12 142 625 12 142 625
Share Incentive scheme 1 778 618 1 778 618
Total contributions by
and distributions to
owners of company
recognised directly
in equity 614 170 7 787 625 13 921 243 13 921 243
Familia Loan PV as per
agreement - (6 295 056) -
Closing balance (11 158 844) 1 069 455 (7 644 053) (1 348 997)
Non-controlling
interest
Total equity (11 158 844) 1 069 455 (7 644 053) (1 348 997)
Earnings per share calculation
31 August 31 August 28 February
Figures in Rand 2015 2014 2015
Loss after taxation (4 128 961) (6 873 062) (15 337 277)
Less: non-controlling interest - - (723)
Loss attributable to the owners of the parent (4 128 961) (6 873 062) (15 336 554)
Headline Loss (4 128 961) (6 873 062) (15 336 554)
Number of shares in issue 227 911 808 196 869 837 227 911 808
Weighted average number of shares
at the end of the period 227 911 808 155 038 152 206 406 866
Adjusted weighted average number
of shares at the end of the period 227 911 808 155 038 152 206 406 866
Loss per share (cents) (1.81) (4.43) (7.43)
Headline loss per share (cents) (1.81) (4.43) (7.43)
Unaudited condensed consolidated statements of cash flows
Group
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
31 August 31 August 28 February
Figures in Rand 2015 2014 2015
Cash flows from operating activities
Cash used in operations (4 254 881) (6 084 639) (12 619 551)
Interest income - -
Finance costs - (114 123)
Net cash from operating activities (4 254 881) (6 084 639) (12 733 674)
Cash flows from investing activities
Sale of plant and equipment 70 299 149 122
Loan advanced form related party -
Loans from Director (41 500) -
Increase in other financial assets - (123 527)
Net cash from investing activities - 25 595
Cash flows from financing activities 28 799
Proceeds on share issue 8 142 625 12 142 625
Loan received from director (100 000) (2 362)
Loan advanced from related party 125 000 695 000
Loan advanced from Lemur 5 000 000
Share issue listing expenses (355 000)
Proceeds of share to be issued 614 170 -
Net cash from financing activities 5 739 170 7 687 625 12 835 263
Total cash movement for the period 1 513 088 1 602 986 127 184
Cash at the beginning of the period 33 198 (93 986) (93 986)
Total cash at end of the period 1 546 286 1 509 000 33 198
Notes to the financial statements
Basis of preparation
These unaudited consolidate interim financial statements for the six months ended
31 August 2015 have been prepared in accordance with the conceptual framework and
the recognition and measurement requirements of International Financial Reporting
Systems (“IFRS”), the presentation and disclosure requirements of IAS34 Interim
Financial Reporting, the SAICA Financial Reporting Guides issued by the Accounting
Practices Committee, the JSE listing requirements and the Companies Act (Act 71 of
2008). The accounting policies applied in the preparation of these unaudited
condensed consolidated interim financial statements comply with IFRS and are
consistent with those used in the annual financial statements for the year ended
February 2015. These results have not been reviewed or audited by the groups auditors
Grant Thornton Inc. the interim financial statements have been prepared under the
supervision of Eshaan Singh (B Compt), the financial director.
Litigation
Shareholders are referred to the Syferfontein litigation so defined and detailed
previously in the integrated report as well as the reverse listing circular and are
advised that settlement of this matter has still not been concluded and the litigation
is ongoing. The matter has been enrolled for hearing on 14 June 2016.
Sable’s erstwhile joint venture partners in Coveway Trade and Invest 46 (Pty) Ltd,
Mineral Capital Assets (Pty) Ltd and Platinum Mile (Pty) Ltd , have initiated an
appeal to the Minister in terms of Section 96 of the Mineral and Petroleum Resources
Development Act against the decision of the Regional Manager (North West Province)
to accept an application for a prospecting right for vanadium, iron ore and rutile
lodged by the company’s subsidiary Writer Star Trade and Invest (Pty) Ltd over the
properties Zandbult 119JQ and Zandfontein 124 JQ. This appeal has been opposed by Sable.
Save as set out above the directors are not aware of any legal or arbitration
proceedings that are pending or threatened that may have or have had in the recent
past, being the previous 12 months, a material effect on the company’s financial position.
By order of the board
Sandton
4 December 2015
Executive directors: James Allan (chief executive officer); Eshaan Singh
(part time financial director)
Non-executive directors: René Hochreiter; David Levithan
Independent non-executive directors: Mike Rogers (chairman);
Charles Mostert; Mpho Mokgatlhe
Registration number: 2001/006539/06
Registered address: 85 Protea Road, Chislehurston, 2196
Business postal address: PO Box 411130, Craighall, 2024
Company secretary: Juba Statutory Services Proprietary Limited
Transfer secretaries: Computershare Investor Services Proprietary Limited
Sponsor: Exchange Sponsors (2008) Proprietary Limited
Date: 04/12/2015 12:32:00 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.