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OAKBAY RESOURCES AND ENERGY LIMITED - Reviewed condensed consolidated financial results for the year ended 29 February 2016

Release Date: 10/06/2016 17:20
Code(s): ORL     PDF:  
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Reviewed condensed consolidated financial results for the year ended 29 February 2016

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 financial results for the year ended 
29 February 2016

Condensed consolidated statement of financial position as at 
29 February 2016

                                       Reviewed    Reviewed      Reviewed 
                                     year ended  year ended    year ended
                                    29 February 28 February   28 February
                                           2016        2015          2014 
                                                  (Restated)    (Restated)
                                          R’000       R’000         R’000
Assets                                                        
Non-current assets                   10 725 731   7 856 326     7 790 085
Property, plant and equipment         2 081 515   1 969 946     1 871 519
Mineral resources and reserves        5 205 629   5 205 629     5 205 629
Intangible asset                      2 760 943           –             – 
Deferred tax assets                     594 659     611 873       634 133
Investment property                       1 029           –             – 
Environmental rehabilitation                                  
obligation investments                   68 903      57 536        54 598
Environmental rehabilitation                                  
guarantee deposits                        2 439       2 439         2 439
Deposits                                 10 614       8 903        21 767
Current assets                          504 149     444 518       183 840
Trade and other receivables              51 278      16 981        10 647
Amounts owing by related parties         44 379      27 962        27 345
Inventories                             183 515     208 513       142 754
Cash and cash equivalents               224 977     191 062         3 094
Total assets                         11 229 880   8 300 844     7 973 925
Equity and liabilities                                        
Stated capital                          466 398     466 398             – 
Share capital                                 –           –             1
Share premium                                 –           –        56 025
Retained earnings                     5 308 798   4 502 577     4 556 615
Equity attributable to owners of                              
the company                           5 775 196   4 968 975     4 612 641
Non-controlling interest              1 994 047     756 484       763 647
Total equity                          7 769 243   5 725 459     5 376 288
Non-current liabilities               2 973 222   2 144 268     1 591 325
Loans and borrowings                     82 349     110 367             – 
Environmental rehabilitation                                  
provision                               277 159     209 811       133 749
Amount owing to holding company         383 074     366 514             – 
Deferred tax liabilities              2 230 640   1 457 576     1 457 576
Current liabilities                     487 415     431 117     1 006 312
Trade and other payables                 87 679      77 676       108 036
Loans and borrowings                    235 147     184 362       404 695
Amount owing to holding company               –           –       252 416
Amounts owing to related parties        164 589     169 079       241 165
Total liabilities                     3 460 637   2 575 385     2 597 637
Total equity and liabilities         11 229 880   8 300 844     7 973 925
NAV per share attributable to
owners of the company (in cents)         721.90     621.12 461 264 100.00
Number of shares in issue         800 000 000  800 000 000          1 000

Condensed consolidated statement of profit or loss and other 
comprehensive income 
for the year ended 29 February 2016

                                                  Reviewed       Reviewed 
                                                year ended     year ended
                                               29 February    28 February
                                                      2016           2015 
                                                                (Restated)
                                                     R’000          R’000
Revenue                                            273 714        165 049
Cost of sales                                     (227 757)      (123 161) 
Gross profit                                        45 957         41 888
Other operating income                              20 287         32 426
Other operating expenses                           (67 301)       (51 142) 
Operating (loss)/profit                             (1 057)        23 172
Finance income                                      49 392          6 572
Finance costs                                      (46 836)       (68 684) 
Net finance income/(costs)                           2 556        (62 112) 
Profit/(loss) before tax                             1 499        (38 940) 
Income tax                                         (18 412)       (22 261) 
Loss for the year                                  (16 913)       (61 201) 
Other comprehensive income                               –              – 
Total comprehensive loss for the year              (16 913)       (61 201) 
Attributable to:                                              
Equity holders of the company                       (5 092)       (54 038) 
Non-controlling interest                           (11 821)        (7 163) 
Total comprehensive loss for the year              (16 913)       (61 201)
Basic loss per share (in cents)                      (0.64)        (27.02) 
Diluted basic loss per share (in cents)              (0.64)        (27.02)
Headline loss per share (in cents)                   (0.68)        (41.42) 
Diluted headline loss per share (in cents)           (0.68)        (41.42)

Reconciliation between basic loss and 
headline loss for the year ended 
29 February 2016
Total comprehensive loss for the year              (16 913)       (61 201) 
Loss attributable to owners of the company
Loss attributable to non-controlling interest       (5 092)       (54 038)
                                                   (11 821)        (7 163)
Adjustments:
After tax (profit)/loss on disposal of plant 
and equipment                                         (484)           173
After tax reversal of impairment on property             –        (39 108) 
Total headline loss for the year                   (17 397)      (100 136) 
Headline loss attributable to owners of 
the company                                         (5 450)       (82 850)
Portion attributable to non-controlling 
interest                                           (11 947)       (17 286)
Weighted average number of shares in issue     800 000 000    200 000 750
Diluted portion of shares                                -              -
Weighted average number of shares for 
purposes of dilution                           800 000 000    200 000 750

Condensed consolidated statement of cash flows 
for the year ended 29 February 2016

                                                  Reviewed       Reviewed 
                                                year ended  year ended to
                                               29 February    28 February
                                                      2016           2015
                                                     R’000          R’000
Cash flows from operating activities                55 790         (7 397) 
Cash generated/(utilised) by operations             49 725        (13 657) 
Interest paid                                      (14 398)          (312) 
Interest received                                   20 463          6 572
Cash flows from investing activities               (72 246)       (89 725) 
Acquisitions resulting in expansion to
property, plant and equipment                      (73 281)       (89 725)
Proceeds from disposal of property, plant
and equipment                                        2 064              – 
Acquisition of investment property                  (1 029)             – 
Cash flows from financing activities                50 371        285 090
Proceeds on issue of ordinary share capital              –        185 350
Proceeds from borrowings                            46 907        144 960
Repayment of borrowings                            (37 500)       (80 000) 
Payment of finance lease liabilities                (1 686)        (3 789) 
Decrease in amounts owing to related parties        (4 761)       (74 912) 
Decrease/(increase) in amounts owing by              1 922           (617)
related parties
Increase in amount owing to holding company         45 489        114 098
Net decrease in cash and cash equivalents           33 915        187 968
Cash and cash equivalents at the beginning
of the year                                        191 062          3 094
Cash and cash equivalents at the end of 
the year                                           224 977        191 062


Condensed statement of changes of equity 
for the year ended 29 February 2016
                                                     Share         Share
                                                   capital       premium
                                                     R’000         R’000
Balance at 1 March 2013, as previously reported          1        56 025
Impact of prior period adjustment                        –             – 
Restated balance at 1 March 2013                         1        56 025
Total comprehensive loss for the period                       
(restated)#                                                   
Balance at 28 February 2014 (Restated)                   1        56 025
Conversion of shares to no par value                    (1)      (56 025) 
Issued ordinary shares                                   –             – 
Total comprehensive loss for the period                       
(restated)#                                              –             –
Balance at 28 February 2015 (Restated)                   –             – 
Total comprehensive income for the period#               –             – 
Increase in non-controlling interest due to issue             
of shares in subsidiary                                  –             –
Transfer of equity                                       –             – 
Balance at 29 February 2016                              –             –
                                                   
Condensed statement of changes of equity 
for the year ended 29 February 2016

                                                                     Total 
                                                             shareholder’s 
                                                                    equity
                                                              attributable
                                        Stated    Retained          to the
                                        capital   earnings          owners
                                          R’000      R’000           R’000
Balance at 1 March 2013, as
previously reported                           –  4 279 693       4 335 719
Impact of prior period adjustment                  435 228         435 228
Restated balance at 1 March 2013              –  4 714 921       4 770 947
Total comprehensive loss for the
period (restated)#                            –   (158 306)       (158 306) 
Balance at 28 February 2014
(Restated)                                    –  4 556 615       4 612 641
Conversion of shares to no par value     56 026          –               – 
Issued ordinary shares                  410 372          –         410 372
Total comprehensive loss for the             
period (restated)#                            –    (54 038)        (54 038)
Balance at 28 February 2015
(Restated)                              466 398  4 502 577       4 968 975
Total comprehensive income for the
period#                                       –     (5 092)         (5 092) 
Increase in non-controlling interest
due to issue of shares in subsidiary          –          –               –
Transfer of equity                            –    811 313         811 313
Balance at 29 February 2016             466 398  5 308 798       5 775 196

Condensed statement of changes of equity 
for the year ended 29 February 2016

                                                          Non- 
                                                   controlling
                                                      interest        Total
                                                         R’000        R’000
Balance at 1 March 2013, as previously reported        642 461    4 978 180
Impact of prior period adjustment                      152 919      588 147
Restated balance at 1 March 2013                       795 380    5 566 327
Total comprehensive loss for the period
(restated)#                                            (31 733)    (190 039) 
Balance at 28 February 2014 (Restated)                 763 647    5 376 288
Conversion of shares to no par value                         –            – 
Issued ordinary shares                                       –      410 372
Total comprehensive loss for the period
(restated)#                                             (7 163)     (61 201)
Balance at 28 February 2015 (Restated)                 756 484    5 725 459
Total comprehensive income for the period#             (11 821)     (16 913) 
Increase in non-controlling interest due to issue
of shares in subsidiary                              2 060 697    2 060 697
Transfer of equity                                    (811 313)           – 
Balance at 29 February 2016                          1 994 047    7 769 243

#The total comprehensive income for the period is equal to the profit for 
the year as no element of other comprehensive income exists.

Commentary

The directors are pleased to present the reviewed annual results for the 
financial year ended 29 February 2016 (“the year”). Oakbay Resources reported 
a 66% increase in turnover and a 104% improvement in profit before tax, primarily 
due to the positive earnings effect of coal contract mining activities undertaken 
during the year under review. Gold production for the year remained constant with 
378kg of gold produced in the prior period, compared  to  377kg  gold  produced  
in  the  current  period.  The  group supplemented its income during the year 
under review by undertaking coal contract mining activities and successfully 
mined approximately 1.1 mt of coal for the year ended 29 February 2016.

As a critical part of its strategy to position itself as a diversified miner 
and supplier of energy related natural resources, the group completed its 
acquisition of the Brakfontein coal project during the year under review. 
As the transaction was completed in close proximity to the end of the 
financial year, the earnings effect of this acquisition will only be 
realised for the first time during the 2016/2017 financial year.

Basis of preparation
These condensed consolidated financial results for the period ended 
29 February 2016 have been prepared in accordance with the framework 
concepts and the measurement and recognition requirements of International 
Financial Reporting Standards (“IFRS”), the SAICA Financial Reporting Guides 
as issued by the Accounting Practices Committee and the Financial Reporting 
Pronouncements as issued by the Financial Reporting Standards Council and 
the information as required by IAS 34: Interim Financial Reporting, the 
Listings Requirements of the JSE Limited, and the Companies Act of South 
Africa (Act 71 of 2008), as amended.

The reviewed condensed consolidated financial statements do not include 
all the disclosure required for a complete set of annual financial 
statements prepared in accordance with IFRS as issued by the 
International Accounting Standards Board.

The reviewed condensed consolidated financial statements appearing in this 
announcement are the responsibility of the directors of the Group and the 
board takes full responsibility for the preparation of these financial 
statements.

The reviewed condensed consolidated financial statements for the year ended
29 February 2016 were prepared under the supervision of Mr. T. W. Scott 
CA (SA) in his capacity as Financial Director. The reviewed condensed 
consolidated financial statements comprise the condensed consolidated 
statement of financial position at 29 February 2016 and the condensed 
statements of profit or loss and other comprehensive income, changes in 
equity and cash flows for the year then ended.

The reviewed condensed consolidated financial statements of the Group 
are prepared as a going concern on a historical cost basis except for 
certain financial instruments, which are stated at fair value as 
applicable.

The principal accounting policies, which comply with IFRS, applied during 
the preparation of the condensed financial statements are consistent in 
all material aspects to the accounting policies adopted and applied in 
the consolidated annual financial statements for the prior reporting 
period ended 28 February 2015. All new interpretations and standards 
were assessed and adopted with no material impact.

Unqualified review opinion
These provisional condensed consolidated financial statements have been 
reviewed by SizweNtsalubaGobodo Inc. in terms of International Standards 
on Review Engagements. A copy of this unmodified review report is 
available for inspection at the Company’s registered office. 
The review report does not necessarily report on all the information 
contained in this announcement, specifically commentary that appears in
paragraphs of these provisional condensed consolidated financial statements
concerning the nature of the business, safety, financial performance and
position, operational review and prospects as well as production data
which has merely been read in order to identify significant inconsistencies
between this commentary and the condensed consolidated financial statements.

Shareholders are therefore advised that in order to obtain a full 
understanding of the nature of the auditor’s engagement they should 
obtain a copy of the review report together with the accompanying 
financial information from the Company’s registered office – available 
during normal business hours.

Any reference to future financial performance included in this announcement 
has not been reviewed or reported on by the Company’s auditor.

SizweNtsalubaGobodo Inc. were appointed as auditors, as announced on 
21 April 2016 by the Company, and have reviewed but not audited the 
comparative information presented for the financial years ending 
28 February 2015 (restated) and 28 February 2014 (restated). The restated
comparative information was not audited by the Company’s previous auditors.

Nature of the business
Oakbay Resources’ business activity is the mining and exploration of 
mineral resources, particularly uranium, gold and coal deposits, and 
the beneficiation thereof. The group owns one of the most significant 
uranium projects in Africa, Shiva Uranium, which boasts one of the largest 
high quality uranium ore bodies in the world, as well as a world class 
uranium processing plant that has been recently commissioned. At the 
Shiva Uranium mine, located near Klerksdorp in the North-West Province 
of South Africa, the group mines and produces gold while it focuses on 
the development of its uranium project. Oakbay Resources also mines and 
supplies thermal coal from its Brakfontein project, located near Delmas 
in the Mpumalanga Province of South Africa.

Safety
During the year, the company maintained its excellent safety record with 
zero fatalities or serious injuries being experienced during the period. 
Safety remains the topmost priority and is embedded in every aspect of 
the operating culture of the group. At 29 February 2016, Oakbay Resources 
had achieved a total of 6 039 fatality free shifts, and had a total of 
31 injuries at the mine compared to 37 injuries in the previous period.
The group’s safety performance is the result of ongoing efforts by mine 
employees, unions and management toward maintaining safe working 
conditions and practices.

Operational review
Key indicators

                                                            % increase/
                                         2016        2015    (decrease)
Ore milled (tonnes)                   657 606     791 540         (17%)
Gold sold (kg)                         377.08      378.82       (0.31%) 
Coal mined (tonnes)                 1 100 000           0          100%

Gold operations
Gold production for the year under review remained substantially the same 
year-on-year, albeit off a lower volume of milled ore. Gold production for 
the year was constrained due to the lower plant and equipment availability 
that was experienced, in conjunction with difficult low-grade mining 
conditions. Management focused their efforts on improving production 
efficiencies through plant and equipment availability in the open-cast 
mining section, as well as the gold plant while aggressively controlling 
costs.

The second half of the year saw the company experiencing significant 
higher ZAR gold prices; which had a positive effect on gold revenue 
compared to the prior year. The company also focused on identifying 
alternative sources of higher  grade  gold  bearing  ore  in  order 
to  supplement  existing  gold operations at the Shiva Uranium mine. 
Further exploration activities on areas of geological interest are 
also currently underway.

Uranium operations and further exploration
With over 200 million pounds of high grade uranium ore*, as well as 
existing processing capabilities, the Group’s Shiva Uranium project 
represents a significant opportunity to take advantage of the expected 
upswing in uranium demand in the medium term. The ongoing development 
of the Shiva Uranium project remains a priority for management and the 
board of directors as part of our strategy to unlock the significant 
value in the sizeable uranium ore body.

The Company is well advanced with a detailed options analysis study 
regarding the optimisation of the uranium mining and production project, 
and is a pre-cursor to the completion of the updated bankable feasibility 
study. The Company intends to continue advancing with both the updated
bankable feasibility study, as well as initiate its fundraising programme 
with a view to accessing additional capital or debt in the near future. 
While uranium prices have remained frustratingly low in US Dollar terms 
over recent months, growth in the international nuclear industry remains 
positive and is expected to result in a significant supply deficit in the 
near to medium term. Given the size of the uranium ore body, together with 
the associated gold content and existing plant and underground mine 
infrastructure, Shiva Uranium remains well placed to take advantage 
of forecasted market conditions, especially at the prevailing 
exchange rate.

*As per the Group's Samrec compliant mineral resource statement published 
in the 2015 Integrated Annual Report (available on the Company's website
www.oakbay.co.za). The aforementioned resource statement was signed off by
a Competent Person, the details of which appear in the 2015 Integrated
Annual Report.

Coal operations
From March 2015, the company commenced with coal contract mining operations 
as part of its strategy to diversify its revenue streams while the 
development of the Shiva Uranium project and other initiatives are 
underway. During the year under review, the company successfully mined 
approximately 1.1mt of coal at the Brakfontein Colliery which had a 
positive effect on revenue and financial performance for the period.
In November 2015, the company announced its intention to acquire the
Brakfontein project as a step forward in achieving the group’s ambition of
positioning itself as a significant miner and supplier of energy related 
natural resources. The acquisition of the Brakfontein project was completed 
in late February 2016. Accordingly, the group is now mining the Brakfontein 
asset for its own benefit, rather than in the capacity of a contract miner. 
In addition to the Brakfontein activities, the group continues to search for 
further open cast contract mining opportunities in the coal sector, as well 
as the potential acquisition of well-priced, high quality coal assets.

Financial performance and position
The company’s overall financial performance for the year improved compared to 
the prior year, with the company incurring a loss for the year of R16.9 million 
compared with a loss of R61.2 million in the prior year. The primary reasons 
for the year-on-year change in financial performance were the result of the 
unwinding of deferred tax assets relating to the utilisation of accumulated 
tax credits and available assessed losses, together with the effect of 
relatively attractive margins realised from contract mining activities 
and a higher ZAR gold price. The current year loss also included the 
effect of the write-down of unrecoverable metals in process inventory and the 
impairment of receivables. The company had a strong financial position at 
29 February 2016 with total assets of R11.2 billion compared to total 
liabilities of R3.5 billion.

Segmental analysis
Information about reportable segments

                                                            Gold
                                                   Year ended  Year ended
R’ 000s                                             29-Feb-16   28-Feb-15
Revenue from external customers                       185 012     165 049
Inter-segment revenue                                       –           –
                                                      185 012     165 049
Operating profit/(loss) before depreciation               758      52 267
Depreciation                                          (19 069)    (24 136) 
Finance income                                              –           – 
Finance cost                                                –           –
Profit/(loss) for the period before tax               (18 311)     28 131

Segmental assets and liabilities

                                                            Gold
                                                   Year ended  Year ended
R’ 000s                                             29-Feb-16   28-Feb-15
Segment assets                                        545 273     592 305
Segment liabilities                                   277 159     182 556

                                                       Contract Mining
                                                    Year ended Year ended
R’ 000s                                              29-Feb-16  28-Feb-15
Revenue from external customers                         88 702          – 
Inter-segment revenue                                        –          –
                                                        88 702          –
Operating profit/(loss) before depreciation             78 029          –

Depreciation                                                 –          – 
Finance income                                               –          – 
Finance cost                                                 –          –
Profit/(loss) for the period before tax                 78 029          –

Segmental assets and liabilities

                                                    Coal/Contract Mining
                                                   Year ended  Year ended
R’ 000s                                              29-Feb-16  28-Feb-15
Segment assets                                       2 782 521          – 
Segment liabilities                                    773 064          –

                                                      Uranium Development
                                                    Year ended Year ended
R’ 000s                                              29-Feb-16  28-Feb-15
Revenue from external customers                              –          – 
Inter-segment revenue                                        –          –
                                                           
Operating profit/(loss) before depreciation             (4 382)   (16 678)
Depreciation                                            (1 739)    (1 791) 
Finance income                                               –          – 
Finance cost                                                 –          –
Profit/(loss) for the period before tax                 (6 121)   (18 469)

Segmental assets and liabilities

                                                     Uranium Development
                                                    Year ended Year ended
                                                     29-Feb-16  28-Feb-15
R’ 000s                                                         (Restated) 
Segment assets                                       6 635 166  6 769 123
Segment liabilities                                  1 457 576  1 457 576

                                                      Central Services
                                                    Year ended Year ended
R’ 000s                                              29-Feb-16  28-Feb-15
Revenue from external customers                              –          – 
Inter-segment revenue                                        –          –
                                                             –          –
Operating profit/(loss) before depreciation            (46 194)    16 398
Depreciation                                            (8 460)    (2 888) 
Finance income                                          49 392      6 572
Finance cost                                           (46 836)   (68 684)
Profit/(loss) for the period before tax                (52 098)   (48 602)

Segmental assets and liabilities

                                                       Central Services
                                                    Year ended Year ended
                                                     29-Feb-16  28-Feb-15
R’ 000s                                                         (Restated) 
Segment assets                                       1 266 919    939 416
Segment liabilities                                    952 838    935 253

                                                            Total
                                                    Year ended Year ended
R’ 000s                                              29-Feb-16  28-Feb-15
Revenue from external customers                        273 714    165 049
Inter-segment revenue                                        –          –
                                                       273 714    165 049
Operating profit/(loss) before depreciation             28 211     51 987
Depreciation                                           (29 268)   (28 815) 
Finance income                                          49 392      6 572
Finance cost                                           (46 836)   (68 684)
Profit/(loss) for the period before tax                  1 499     38 940

Segmental assets and liabilities

                                                             Total
                                                    Year ended Year ended
                                                     29-Feb-16  28-Feb-15
R’ 000s                                                         (Restated) 
Segment assets                                      11 229 880  8 300 844
Segment liabilities                                  3 460 637  2 575 385

Loans and borrowings
Industrial Development Corporation ("IDC") borrowings

                                                                  Reviewed 
                                                       Reviewed       year       
                                                     year ended      ended
                                                    29 February     28-Feb
                                                           2016       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) 
Application of effective-interest-rate-method to
apply amortised cost in terms of IAS39 due to
changes in timing of cash flows                          (3 235)     5 386
Application of effective–interest-rate-method to 
apply amortised cost in terms of IAS39 due to
conversion of debt to equity                                  –    (60 265) 
Interest accrued                                         18 281     55 411
Balance at the end of the period                        123 732    146 186

The IDC loan is secured against the moveable and  immovable property of 
Shiva Uranium Proprietary Limited. The loan bears interest at a rate of 
prime plus 2%, compounded daily. The loan has the following repayment 
terms at 29 February 2016:
30 June 2016 – R37.5 million
31 March 2017 – R37.5 million
31 March 2018 – R37.5 million plus capitalised interest from 
28 November 2014.

Bank of Baroda (“BoB”) facility

                                                                  Reviewed 
                                                       Reviewed       year       
                                                     year ended      ended
                                                    29 February     28-Feb
                                                           2016       2015
                                                          R’000      R’000
Balance at the beginning of the period - 1 March        146 858          – 
Draw down on loan facility                               46 906    144 960
Unpaid interest                                               –      1 898
Balance at the end of the period                        193 764    146 858

Borrowings on the BoB facility are secured 
against, and to the extent of, cash fixed deposits 
invested by Oakbay Resources and Energy Limited 
and held at the BoB. The loans have no fixed 
terms of repayment and bear interest at 
variable rates linked to investment rates on 
fixed deposits. The facility was settled in full 
subsequent to financial year end using cash fixed 
deposits on hand at the BoB.

Other loans and borrowings                                    –      1 658
Analysis of current and non-current portions of 
loans and borrowings
Non-current portion of interest bearing loans and
borrowings                                               82 349    110 367
Current portion of interest bearing loans and
borrowings                                              235 147    184 362
Total loans and borrowings                              317 496    294 729

Environmental rehabilitation provision

                                                                 Reviewed 
                                                       Reviewed      year      
                                                     year ended     ended
                                                    29 February    28-Feb
                                                           2016      2015
                                                          R’000     R’000
Balance at the beginning of the period                  209 811   133 749
Unwinding of interest                                    12 861    11 141
Capitalised to property, plant and equipment             43 604    40 644
Change in estimate in environmental rehabilitation
provision recognised in profit or loss                    4 030    24 277
Acquired through business combination                     6 853         – 
Balance at the end of the period                        277 159   209 811

During the current reporting period, requirements of the recently promulgated 
financial provision regulations (GNR 1147, November 2015) published under the 
National Environmental Management Act, Act 107 of 1998 (NEMA), became effective. 
This, as well as ongoing mining activities, resulted in a change of estimate in 
the current environmental rehabilitation provision; which was accounted for in 
profit or loss and, where applicable, capitalised to property, plant and 
equipment as an asset for future decommissioning costs in terms of IFRIC 1: 
Changes in Existing Decommissioning, Restoration and Similar Liabilities and 
IAS 37: Provisions, Contingent Liabilities and Contingent Assets.

Prior period error relating to the recognition of deferred tax assets 
The Group has previously not recognised deferred tax assets relating to 
unutilised tax losses and tax credits in Shiva Uranium Proprietary Limited, 
which were predominantly acquired when the original acquisition of that 
entity took place, and was accounted for as a business combination in 
terms of IFRS 3 Business Combinations, during the financial year ended 
28 February 2011. This previous accounting treatment for deferred tax assets 
was adopted by the Group, based on advice received at that time, which 
resulted in the view being held that the Group was not permitted in terms 
of IFRS to account for unrecognised deferred tax assets acquired as part 
of the business combination, as well as the deferred tax effect resulting 
from the subsequent utilisation of tax losses and tax credits carried 
forward in the years following the acquisition. The Group, based on 
new advice, have taken the revised view that, in terms of IFRS 3 
Business Combinations and IAS 12: Income Taxes, the previous accounting 
treatment was incorrect and as a result, the Group has accordingly restated 
its comparative information to correctly reflect the recognition of the 
specific deferred tax asset and related movements, for the comparative 
periods in the profit or loss for the Group.

The total value of unrecognised deferred tax assets at the time of the 
business combination that should have been recognised amounted to 
R1.045 billion. Deferred tax liabilities recognised at the time of the 
business combination amounted to R1.47 billion.

The table below reflects the impact of the prior period error for deferred 
tax on the Group’s condensed consolidated financial statements:

                                                As
                                        previously  
                                          reported  Adjustments  As restated
Effect on opening equity at 
1 March 2013                                 R’000        R’000        R’000
Condensed consolidated statement 
of financial position
Stated Capital as at 1 March 2013           56 026            –       56 026
Opening retained income as at 
1 March 2013                             4 279 693      435 228    4 714 921
Opening non-controlling interests as
at 1 March 2013                            642 461      152 919      795 380
Total equity as at 1 March 2013          4 978 180      588 147    5 566 327
Reporting period ended 
28 February 2014
Condensed consolidated statement of 
financial position
Deferred tax assets                              –      634 133      634 133
Total assets                                     –      634 133      634 133
Stated Capital                              56 026            –       56 026
Retained income                          4 087 357      469 258    4 556 615
Non-controlling interests                  598 772      164 875      763 647
Total equity                             4 742 155      634 133    5 376 288
Deferred tax liabilities                 1 457 576            –    1 457 576
Total liabilities                        1 457 576            –    1 457 576
NAV per share attributable to the
owners of the company (in cents)       414 338 300   46 925 800  461 264 100

Condensed consolidated statement of 
profit or loss and other 
comprehensive income
Income tax income                                –      (45 986)     (45 986) 
Profit and total comprehensive
income                                           –      (45 986)     (45 986)
Losses attributable to non-
controlling interests                       43 689      (11 956)      31 733
Total losses attributable to non-
controlling interests                       43 689      (11 956)     (31 733) 
Loss per share (in cents)              (19 233 600)   3 402 964  (15 830 636) 
Diluted loss per share (in cents)      (19 233 600)   3 402 964  (15 830 636) 
Headline loss per share (in cents)     (19 233 600)   3 402 964  (15 830 636) 
Diluted headline loss per share 
(in cents)                             (19 233 600)   3 402 964  (15 830 636)

Reporting period ended 
28 February 2015
Condensed consolidated statement 
of financial position
Deferred tax assets                              –      611 873      611 873
Total assets                                     –      611 873      611 873
Stated Capital                             466 398            –      466 398
Retained income                          4 049 792      452 785    4 502 577
Non-controlling interests                  597 397      159 088      756 485
Total equity                             5 113 586      611 873    5 725 459
Deferred tax liabilities                 1 457 576            –    1 457 576
Total liabilities                        1 457 576            –    1 457 576
NAV per share attributable to the
owners of the company (in cents)            564.52        56.60       621.12

Condensed consolidated statement of 
profit or loss and other 
comprehensive income
Income tax expense                               –       22 261       22 261
Profit and total comprehensive
income                                           –       22 261       22 261
Losses attributable to non-
controlling interests                        1 375        5 788        7 163
Total losses attributable to non-
controlling interests                        1 375        5 788        7 163
Loss per share (in cents)                   (18.78)       (8.24)      (27.02) 
Diluted loss per share (in cents)           (18.78)       (8.24)      (27.02) 
Headline loss per share (in cents) #        (18.78)      (22.64)      (41.42) 
Diluted headline loss per share (in
cents) #                                    (18.78)      (22.64)      (41.42)


# The restatement impact on the Headline and Diluted headline loss per share 
emanating from the restatement detailed in this note is 8.24 cents as is the 
case with the Loss and Diluted loss per share. The remaining 14.40 cents 
emanates from the incorrect treatment of two transactions for purposes of 
Headline Earnings as per the rules depicted in Circular 02/2015. The 
amendments are reflected in the reconciliation between basic loss and 
headline loss for the year ended 28 February 2015 above, and relate to the
loss on disposal of plant and equipment (R0.173 million) and the reversal
of impairment on land (R39.108 million).

Deferred taxation

                                                                   Reviewed
                                                        Reviewed       year       
                                                      Year ended      ended
                                                     29 February     28-Feb
                                                            2016       2015
                                                           R’000      R’000 
                                                                  (Restated)
Deferred tax assets:
Balance at the beginning of the period                   611 873    634 133
Acquired through business combination                      1 198          – 
Decrease in deductible temporary differences             (18 412)   (22 261) 
Balance at the end of the period                         594 659    611 873
Deferred tax assets at the end of the period 
are comprised of:
Deductible temporary differences on uranium and
gold operations                                          593 461    611 873
Deductible temporary differences on coal operations        1 198          –
Balance at the end of the period                         594 659    611 873


                                                                   Reviewed 
                                                        Reviewed       year       
                                                      Year ended      ended
                                                     29 February     28-Feb
                                                            2016       2015
                                                           R’000      R’000 
                                                                  (Restated)
Deferred tax liabilities:
Balance at the beginning of the period                 1 457 576  1 457 576
Acquired through business combination                    773 064          – 
Balance at the end of the period                       2 230 640  1 457 576
Deferred tax liabilities at the end of the period 
are comprised of: 
Taxable temporary differences on mineral resource
assets – uranium and gold                              1 457 576  1 457 576
Taxable temporary differences on mineral resource
assets – coal                                            773 064          –
Balance at the end of the period                       2 230 640  1 457 576


Deferred tax has been measure at the rates that are expected to apply when 
the company realises the carrying amount of its assets, or settles the 
carrying amount of its liabilities.

A deferred tax asset is recognised for deductible temporary differences, 
unused tax losses and unused tax credits to the extent that it is probable 
that taxable profit will be available against which the deductible temporary
differences can be utilised and to the extent that sufficient taxable 
temporary differences exist against which deductible temporary differences 
can be utilised before they expire.

The deferred tax assets and deferred tax liabilities attributable to the 
uranium and gold mining operations of Shiva Uranium, has been offset in 
the statement of financial position as the entity has the legal right to 
settle current tax amounts on a net basis and the deferred tax amounts 
are levied by the same taxing authority on the same entity.

Related parties

                                                                  Reviewed 
                                                       Reviewed       year       
                                                     Year ended      ended
                                                    29 February     28-Feb
                                                           2016       2015
                                                          R’000      R’000 
                                                                 (Restated)
Amounts owing by related parties
Tegeta Exploration and Resources Proprietary             38 335          –
Limited
Surya Crushers Proprietary Limited                        5 522      3 368
Other                                                       522     24 594
Balance at the end of the period                         44 379     27 962
Amounts owing to related parties
Westdawn Investments Proprietary Limited                 45 632     25 752
Unlimited Investments Proprietary Limited                 4 511      4 514
JIC Engineering Services                                      –     28 883
Action Investments                                      114 446    109 930
Balance at the end of the period                        164 589    169 079

All loans owing by and to related parties are 
denominated in ZAR and are unsecured, interest 
free and there are no specified fixed terms of 
repayment.

The loan granted by Action Investments was 
denominated in US Dollars until 1 March 2015; 
whereupon it was redenominated to ZAR. Interest 
is accrued at LIBOR plus 3%. The foreign currency 
denominated balance of the loan at 28 February
2015 was USD 9 582 879. Both the principle and
interest accrued on the loan shall become due 
and payable upon written demand from the lender. 

Amounts owing to holding company:
Oakbay Investments Proprietary Limited                  383 074    366 514
Balance at the end of the period                        383 074    366 514

The repayment terms are 367 days’ notice on demand 
from the holding company. The loan is interest 
free and unsecured.

Transactions with related parties
Services rendered to related parties:
Tegeta Exploration and Resources Proprietary
Limited – coal contract mining services                 146 261     14 859
Services received from related parties: 
Westdawn Investments Proprietary Limited -
underground mining development services                  33 874     34 402


Outstanding related party balances do not attract interest, neither are 
settlement policies strictly adhered to in terms of monthly transactional 
accounts owed to or by related parties. This excludes the loan accounts 
which terms and conditions are set out above.

Acquisition of a business by a subsidiary company from a related party
On 29 February 2016, the acquisition of the business of Tegeta Exploration 
and Resources Proprietary Limited (“TER”) as a going concern (as announced 
on SENS on 11 December 2015) by the Group became unconditional. The 
transaction has been accounted for in terms of IFRS 3: Business 
Combinations. At the time of the acquisition, the business of TER 
solely consisted of the Brakfontein coal project. The associated assets 
and liabilities of TER were acquired by the Group and settled through 
an issue of 100 million shares in Shiva Uranium Proprietary Limited; 
which is a subsidiary of Oakbay Resources. The Brakfontein coal 
project is an existing miner and supplier of thermal coal and the 
acquisition will result in the Group moving toward its strategy of 
becoming a diversified miner and supplier of energy related 
natural resources.

The fair value of the purchase consideration in terms of the shares 
issued amounted to R2.06 billion. Acquisition costs of approximately 
R6.1 million were incurred and were classified under the “operating 
costs” category, in profit or loss for the year ended 29 February 2016.

As part of the acquisition, the Group acquired receivables with a fair 
value of R39.66 million which are equal to their underlying gross 
contractual amounts. At the reporting date, the Group did not expect 
any of the contractual cash flows related to the acquired trade and 
other receivables to be unrecoverable.

No contingent liabilities were assumed as part of the business 
combination and the transaction did not result in the recognition 
of goodwill or a gain on bargain purchase. Supply agreements were 
acquired as part of the transaction which have been recognised as 
“intangible assets” as indicated.

The following table summarises the recognised amounts for the assets 
acquired and liabilities assumed at the date of acquisition:

                                                  R’000         
                                                   Fair 
                                                 values         R’000
                                             recognised      Previous 
                                                     on      carrying 
                                            acquisition       amounts
Plant and equipment                              21 578        21 578
Mineral resources*                            2 760 943             - 
Deferred tax assets                               1 198         1 198
Trade receivables                                38 489        38 489
Inventory                                         2 288         2 288
Cash and equivalents#                            14 931        14 931
Deposits                                          1 169         1 169
Environmental rehabilitation obligation
funds                                             7 415         7 415
Deferred tax liabilities*                     (773 064)
Trade and other payables                        (7 068)       (7 068) 
Environmental rehabilitation obligation         (7 182)       (7 182) 
Net asset value                               2 060 697        72 818
Consideration for business combination –
share issue                                   2 060 697

* The mineral resources are represented by the supply agreements classified 
and recognised as an intangible asset due to the fact that the supply 
agreements represent the supply of the majority of the mineral resources 
over the estimated term of mining. The associated deferred taxation 
liability was raised in terms of the business combination at an applicable 
tax rate of 28% as there is currently no intention of selling the asset
acquired but rather the utilisation of the mineral resources by means 
of the supply agreements.

# The cash balances acquired during the transaction were lent to TER on 
the date of acquisition at the terms and conditions as set out above under 
“related parties” and has been included under “amounts owing by related parties”.

Financial instruments information
The group has not disclosed the fair values of financial instruments measured 
at amortised cost as their carrying amounts closely approximate their 
fair values. There were no financial instruments measured at fair value 
that were individually material at the end of the reporting period.

Write-down of inventories
During the reporting period, the Group wrote off metals-in-process inventory 
with a cost of R25.94 million due to the assessment of the net realisable 
value being R nil in terms of IAS 2: Inventories. The basis for this assessment 
of net realisable value is due to the uncertainty surrounding the timing and 
recoverability of metals-in-process inventories. The adjustment is recognised 
in profit or loss for the reporting period and classified under “cost of sales”.

Trade receivables
Changes in recoverability assessment – City of Matlosana receivable
In terms of IAS39: Financial Instruments: Recognition and Measurement, 
management identified evidence that the carrying amount of a receivable 
from the City of Matlosana is higher than its estimated recoverable amount, 
and accordingly, should be impaired at the end of the reporting period ended 
29 February 2016. The total consideration receivable is R17.76 million. The 
total assessment of future cash flows relating to the receivable is considered 
to be R9.43 million at the end of the reporting period; which resulted in an 
impairment charge of R8.45 million which is recognised in profit or loss for 
the period for the reporting period and classified under “operating expenses” 
by means of an allowance for impairments recognised in the statement of 
financial position.

Capital commitments
The Group does not have any capital commitments for which specific board 
approval has been obtained as at 29 February 2016.

Prospects
The Group experienced significantly difficult conditions in recent months as
a result of adverse and intense media interest surrounding the Company’s 
majority shareholder. These adverse conditions have resulted in the Company 
experiencing a loss of professional service providers, most notably the 
Group’s external auditors, sponsors and bankers. In response, management 
has focused its efforts in recent weeks on appointing new external auditors, 
issuing reviewed year end results, stabilising the Company’s transactional 
banking capabilities and searching for a new JSE approved sponsor. While 
prevailing conditions remain challenging, management is continuing with 
every effort to navigate the company through this difficult period;
while remaining focused on unlocking the value in the Shiva Uranium project. 
The medium to long term fundamentals for uranium prices, together with 
current prevailing ZAR gold prices, positions Shiva Uranium as a promising 
uranium investment opportunity. Additionally, Oakbay Resources’ recent 
expansion into coal mining and supply operations, as well as its ongoing 
search for acquisition opportunities at attractive valuations, positions 
the Group, and their broad range of stakeholders, well for the future.

Events after the reporting period
Subsequent to the end of the financial year on 29 February 2016, the 
Group settled its facility with the BoB in full.

Furthermore, the Group’s external auditors (KPMG Inc.) resigned as 
auditors of the Group in March 2016 and were replaced by SizweNtsalubaGobodo
Inc. in April 2016. The Group’s sponsors, Sasfin Bank Limited, terminated 
their sponsor mandate in March 2016, and the Group’s local banker terminated 
their banking services to Shiva Uranium on 6 June 2016.

Other than mentioned in this report and most notably under “Changes to 
the board”, there were no other material subsequent events that require 
disclosure.

Changes to the board
Both the company’s chairman, Mr. A. Gupta, and its CEO, Mr. V. Gupta
resigned on 8 April 2016. Mr. V. Gupta was replaced by Mr. J. Roux on 
17 May 2016 as the incoming CEO. Mr. T.W. Rensen, formerly the acting 
chairman of the board, has been appointed as independent non-executive 
chairman in a permanent role on 9 June 2016. Mr. N. Howa joins the board 
as a non-executive director on 9 June 2016.

Dividends
In line with group strategy, no dividend has been declared for the year. 

For and on behalf of the board of directors
J Roux
CEO
10 June 2016

Directors: TW Rensen*~ (Chairman), J Roux (CEO), TW Scott (FD), MV Pamensky*, 
DJ Nyamane*, N Howa#

*independent non-executive
~Irish
#non-executive

Registered Office:
Grayston Ridge Office Park, Block A, Lower Ground Floor,
144 Katherine Street, Sandown, Sandton, South Africa
Postal address
Postnet Suite 458
Private Bag X9
Benmore, 2010

Company secretary: iThemba Governance and Statutory Solutions (Pty) Limited, 
Monument Office Park, Suite 5 – 102, 79 Steenbok Avenue, Monumentpark, 0181, 
(PO Box 25160, Monumentpark, 0181)

Transfer  Secretaries:  Trifecta  Capital  Services  Proprietary  Limited,
Business Partners Tower Hive, 5th Floor, 3 Caxton Road, Industria, 2093, 
(PO Box 61272, Marshalltown, 2107)

www.oakbay.co.za
Date: 10/06/2016 05:20:00 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.

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