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OAKBAY RESOURCES AND ENERGY LIMITED - Reviewed condensed consolidated interim results for the six months ended 31 August 2016

Release Date: 30/11/2016 17:45
Code(s): ORL     PDF:  
Wrap Text
Reviewed condensed consolidated interim results 
for the six months ended 31 August 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 interim results 
for the six months ended 31 August 2016

Salient features and financial highlights
* Excellent safety results with over 6 600 fatality free shifts now completed.
* Revenue increased by 86%.
* Coal production of 614 726 tonnes following the acquisition of the
  Brakfontein Colliery in February 2016.
* Gold production of 106.59 kilograms.
* Loss per share and Headline loss per share declined by 30%.


Condensed consolidated interim statements of financial position

                                                 Unaudited
                                   Reviewed      31 August      Audited
                                  31 August           2015  29 February
                                       2016       Restated         2016
                         Notes        R'000          R'000        R'000
Assets
Non-current assets               10 677 517      7 857 029   10 725 731
Plant and equipment               2 083 128      1 978 206    2 081 515
Investment property                   1 029              -        1 029
Mineral resources                 7 912 830      5 205 629    7 966 572
Deferred tax                10      597 440        602 667      594 659
Long-term receivables                10 300          9 128       10 614
Environmental rehabilitation
guarantee deposits                    2 439          2 439        2 439
Environmental rehabilitation
obligation investments               70 351         58 960       68 903
Current assets                      334 713        450 995      504 150
Inventories                         192 912        205 578      183 516
Amounts owing by
related parties             12      123 865         19 933       44 380
Trade and other
receivables                          17 258         25 751       51 277
Cash and cash
equivalents                             678        199 733      224 977
Total assets                     11 012 230      8 308 024   11 229 881
Equity and liabilities
Equity                            5 731 558      4 935 387    5 775 197
Stated capital                      466 398        466 398      466 398
Retained income                   5 265 160      4 468 989    5 308 799
Non-controlling
interest                          1 969 482        746 563    1 994 047
                                  7 701 040      5 681 950    7 769 244
Liabilities
Non-current liabilities           2 943 501      2 156 994    2 973 222
Amount owing to holding
company                     12      373 574        408 516      383 074
Other financial
liabilities                 11       75 720         74 660       82 349
Deferred tax                10    2 215 592      1 457 576    2 230 640
Environmental rehabilitation
provision                   13      278 615        216 242      277 159
Current liabilities                 367 689        469 080      487 415
Amount owing to holding
company                     12       25 850              -            - 
Other financial
liabilities                 11       36 088        195 492      235 147
Trade and other
payables                             82 661         61 435       87 679
Amounts owing to
related parties             12      222 796        212 153      164 589
Current tax payable                     294              -            - 
Total liabilities                 3 311 190      2 626 074    3 460 637
Total equity and
liabilities                      11 012 230      8 308 024   11 229 881
Net asset value and share 
information Net asset 
value per share 
attributable to the 
owners of the
entity (cents)                       716,44         616,92       721,90
Total number of ordinary 
shares in issue                 800 000 000    800 000 000  800 000 000

Condensed consolidated interim statements of profit or loss and other 
comprehensive income

                                                   Unaudited
                                        Reviewed    6 months      Audited
                                        6 months       ended    12 months
                                           ended   31 August        ended
                                       31 August        2015  29 February
                                            2016    Restated         2016
                                           R'000       R'000        R'000
Revenue                                  243 510     130 724      273 714
Cost of sales                           (162 519)   (101 227)    (227 757) 
Gross profit                              80 991      29 497       45 957
Other income                               6 891       3 216       20 287
Other operating expenses                (139 537)    (57 514)     (67 301) 
Operating (loss)/profit                  (51 655)    (24 801)      (1 057) 
Finance income                             4 368      12 000       49 392
Finance costs                            (38 452)    (21 503)     (46 836) 
(Loss)/Profit before tax                 (85 739)    (34 304)       1 499
Income tax expense                        17 535      (9 206)     (18 412) 
(Loss)/profit for the period             (68 204)    (43 510)     (16 913) 
Other comprehensive income                     -           -            -
Total comprehensive (loss)/income
for the period                           (68 204)    (43 510)     (16 913) 
Total comprehensive (loss)/income
attributable to:                         (43 639)    (33 589)      (5 092) 
Owners of the company                    (24 565)     (9 921)     (11 821) 
Non-controlling interest                 (68 204)    (43 510)     (16 913) 
Earnings per share information
Per share information                      (5,45)      (4,20)       (0,64)
Basic loss per share (cents)^              (5,45)      (4,20)       (0,64) 
Diluted basic loss per share
(cents)*^                                  (5,45)      (4,20)       (0,68) 
Headline loss per share (cents)^           (5,45)      (4,20)       (0,68)
Diluted headline loss per share
(cents)*^
Reconciliation between total basic 
loss and total headline loss
Total comprehensive loss for the
period                                   (68 204)    (43 510)     (16 913) 
Loss attributable to non-
controlling interest                      24 565       9 921       11 821
Total basic loss for the period 
attributable to owners of the
company                                  (43 639)    (33 589)      (5 092) 
Adjusted for:
After tax profit on the disposal of
plant and equipment                            -           -         (484) 
Non-controlling interest thereon               -           -          126
Total headline loss for the period
attributable to owners of the
company                                  (43 639)    (33 589)      (5 450)
Reconciliation between ordinary 
shares in issue and weighted number
of ordinary shares
Number of shares in issue -
beginning of the period              800 000 000 800 000 000  800 000 000
Shares issued during the period                -           -            - 
Number of shares in issue -
beginning of the period*             800 000 000 800 000 000  800 000 000

*There are no dilutive potential ordinary shares in issue which results in
no dilutionary effect.

The headline earnings per share is calculated in terms of the requirements 
of Circular 2/2015 as issued by the South African Institute of Chartered 
Accountants (”SAICA”).

Condensed consolidated interim statement of changes in equity

                                                       Stated    Retained 
                                                      Capital    earnings
                                                        R’000       R’000
Balance at 28 February 2015                           466 398   4 502 578
Total comprehensive loss for the period#                    -     (33 589) 
Issue of shares to non-controlling shareholders             -           - 
Changes in ownership interest - control not lost            -           - 
Unaudited balance at 31 August 2015 restated          466 398   4 468 989
Total comprehensive loss for the period#                    -      28 497
Issue of shares to non-controlling shareholders             -           – 
Changes in ownership interest - control not lost            -     811 313
Audited balance at 29 February 2016                   466 398   5 308 799
Total comprehensive loss for the period#                    -     (43 639) 
Reviewed balance at 31 August 2016                    466 398   5 265 160

                                         Equity 
                                    attributable   
                                          to the         Non-
                                       owners of  controlling      Total 
                                     the company     interest     equity
                                           R’000        R’000      R’000
Balance at 28 February 2015            4 968 976      756 484  5 725 460
Total comprehensive loss for the
period#                                  (33 589)      (9 921)   (43 510) 
Issue of shares to non-
controlling shareholders                       –            –          – 
Changes in ownership interest -
control not lost                               –            –          – 
Unaudited balance at 31 August
2015 restated                          4 935 387      746 563  5 681 950
Total comprehensive loss for the
period#                                   28 497       (1 900)    26 597
Issue of shares to non-
controlling shareholders                       –    2 060 697  2 060 697
Changes in ownership interest -
control not lost                         811 313     (811 313)         – 
Audited balance at 29 February
2016                                   5 775 197    1 994 047  7 769 244
Total comprehensive loss for the
period#                                  (43 639)     (24 565)   (68 204) 
Reviewed balance at 31 August
2016                                   5 731 558    1 969 482  7 701 040
#The total comprehensive loss for the period represents loss for the 
reporting period as no element of other comprehensive income exists.

Condensed consolidated interim statements of cash flows

                                                    Unaudited
                                          Reviewed   6 months     Audited
                                          6 months      ended   12 months
                                             ended  31 August       ended
                                         31 August       2015 29 February
                                              2016   Restated        2016
                                             R'000      R'000       R'000
Cash flows from operating activities
Cash generated from operations              37 029      5 068      52 863
Finance income                               2 920        (82)     20 463
Finance costs                                 (667)     3 708     (14 398) 
Net cash generated from operating
activities                                  39 282      8 694      58 928
Cash flows from investing activities
Acquisitions resulting in additions of
plant and equipment                        (21 780)   (20 384)    (73 281) 
Proceeds on disposal of plant and
equipment                                        -          -       2 064
Acquisitions resulting in expansion of
investment property                              -          -      (1 029) 
Increase in long-term receivables           (1 488)         -           - 
Net cash used in investing activities      (23 268)   (20 384)    (72 246) 
Cash flows from financing activities
Proceeds from other financial
liabilities                                      –          –      46 907
Repayment of other financial
liabilities                               (234 140)   (37 500)    (37 500) 
Proceeds from loans from holding
company                                     25 850     42 002      45 489
Repayment of loans from holding
company                                     (9 500)         –           - 
Net finance lease repayments                     -     (1 685)     (1 686) 
Proceeds/(repayment) of amounts owning
to related parties                          57 457     33 670      (4 490) 
Proceeds from amounts owing by related
parties                                    (79 980)   (16 126)     (1 487) 
Net cash generated from financing
activities                                (240 313)    20 361      47 233
Total movement in cash and equivalents
for the period                            (224 299)     8 671      33 915
Cash and equivalents at the beginning
of the period                              224 977    191 062     191 062
Total cash and equivalents at the end
of the period                                  678    199 733     224 977

Commentary
The directors are pleased to present the reviewed interim results for the 
six month period ended 31 August 2016 (“the period”). Oakbay Resources 
reported a 86% increase in turnover due to the positive earnings effect 
of coal mining activities undertaken during the period under review. 
Furthermore, the Group reported a 150% deterioration in loss before 
tax primarily due to the substantially lower gold production, compared 
to the prior period, as well as the effect of increased amortisation 
and depreciation charges.

The six months ended 31 August 2016 marks the first reporting period 
for which the financial results of the Group's coal mining activities 
are reflected. The Group acquired the Brakfontein Colliery on 
29 February 2016 as part of its strategy to position itself as 
a diversified miner and supplier of energy related natural resources.

1. Basis of preparation
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 reviewed condensed consolidated financial statements 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 JSE Limited, and the Companies Act of 
South Africa (Act 71 of 2008), as amended. The principal accounting 
policies, which comply with IFRS, have been consistently applied in 
all material respects in the current and comparative periods.

The accounting policies applied in the reviewed condensed consolidated 
financial statements are the same as those applied in the Group’s 
consolidated financial statements. All new interpretations and 
standards were assessed and adopted with no material impact.

These reviewed condensed consolidated financial statements should 
be read in conjunction with the Group’s consolidated financial 
statements for the period ended 30 June 2016, which have been 
prepared in accordance with IFRS. A copy of the full set of the 
Group’s consolidated financial statements can be obtained from 
the Company’s registered office.

2. Management's responsibility
The reviewed condensed consolidated financial statements for the 
period ended 31 August 2016 were prepared under the supervision of 
Mr TW Scott, CA (SA), the Group Financial Director. The reviewed 
condensed consolidated financial statements comprise the condensed 
statement of financial position at 31 August 2016 and the condensed 
statements of profit or loss and other comprehensive income, changes 
in equity and cash flows for the reporting period ended then.

The board of directors of Oakbay Resources (“the Board”) takes full 
responsibility for the preparation of this report and that the financial 
information has been correctly extracted from the underlying 
consolidated financial statements.

3. Supplementary information
Except for supplementary information provided in the commentary of 
this report, the unaudited interim results for the six-month period 
ended 31 August 2015 have been included in the condensed consolidated 
financial statements and segmental reporting analysis as supplementary 
information. The supplementary information has not been reviewed by the 
Group’s auditor as indicated.

4. Independent review by the Auditor
These condensed consolidated interim financial statements have been 
reviewed by the Company's auditors, SizweNtsalubaGobodo Inc. The review 
of the condensed consolidated interim financial statements was performed 
in accordance with ISRE 2410, Review of Interim Financial Information 
Performed by the Independent Auditor of the Entity. The auditors issued
and unmodified review conclusion.

The auditor’s review report issued in terms of the condensed consolidated 
financial statements does not necessarily report on all the information 
contained in this announcement. Any reference to future financial performance 
included in this announcement has not been reviewed or reported on by the 
Company’s auditor. This includes the supplementary information provided 
in terms of the condensed consolidated financial statements and segmental 
reporting analysis.

A copy of the auditor’s unmodified review report on the condensed consolidated 
financial statements is available for inspection at the Company’s registered 
office, together with the financial statements identified in the auditor’s 
review report. Shareholders are advised to obtain the relevant auditor’s 
review report and set of financial statements to gain a full understanding 
of the nature of the respective auditor’s engagement.

5. 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.

6. Financial performance and position
Revenue increased by 86% compared to the prior period mainly due to the impact 
of coal sales from the Group's newly acquired coal operations at the Brakfontein 
Colliery. Total comprehensive losses for the period increased from R43.510 
million in the prior period to R68.204 million by 31 August 2016 primarily as a 
result of increased amortisation charges relating to the Brakfontein acquisition 
as well as additional depreciation charges to plant and equipment purchased in 
the second half of the 2015/2016 financial year.

The company had a strong financial position at 29 February 2016 with total assets 
of R11.012 billion compared to total liabilities of R3.311 billion.

7. Safety
The group’s Shiva Uranium mine continues with its excellent safety record, with 
zero fatalities and serious injuries being experienced during the six months 
under review.

The Shiva Uranium mine has achieved over 6 600 fatality free production shifts 
by the end of 31 August 2016, with five lost time injuries taking place during 
this period. The company is firmly committed to safety practices at its operations 
and ensures that mine employees and management strive toward and ensure safe 
working practices. The company’s health and safety committee is responsible 
for monitoring safety plans and implementing safety initiatives at the mine. 
Mine management specifically emphasises the importance of using “on-the-job” 
safety training initiatives as well as constant supervision of safety standards 
and safety compliance.

Safety and the reduction of safety risk continues to remain the highest priority 
for management, and the company looks forward to improving its safety performance 
going forward, with an overall goal of zero harm.

8. Segmental analysis
Operational segments
Information related to each reportable segment is set out below. Segment profit 
or loss after tax is used to measure performance because management believes that 
this information is the most relevant in evaluating the results of the respective
segments relative to other entities that operate in the same industries.

                                                  Revenue 
                                                     from         
                                                 external 
                                                customers          EBITDA*
                                                    R’000           R’000
Gold operations
31 August 2016^^                                   67 803         (38 236)
31 August 2015^                                    98 778            (501)
29 February 2016^^^                               185 012             758
Coal/Contract Mining
31 August 2016^^                                  175 707          61 428
31 August 2015^                                    31 946           8 817
29 February 2016^^^                                88 702          78 029
Uranium Development
31 August 2016^^                                        -          (2 269)
31 August 2015^                                         -          (5 667)
29 February 2016^^^                                     -          (4 382) 
Central Services
31 August 2016^^                                        -            (890)
31 August 2015^                                         -         (16 153)
29 February 2016^^^                                     -         (46 194) 
Total operations
31 August 2016^^                                  243 510          20 033
31 August 2015^                                   130 724         (13 504)
29 February 2016^^^                               273 714          28 211


                                              Depreciation  Finance income
                                                     R’000           R’000
Gold operations
31 August 2016^^                                   (14 222)              -
31 August 2015^                                     (8 904)              -
29 February 2016^^^                                (19 069)              - 
Coal/Contract Mining
31 August 2016^^                                   (55 668)              -
31 August 2015^                                       (869)              -
29 February 2016^^^                                      -               - 
Uranium Development
31 August 2016^^                                      (853)              -
31 August 2015^                                          -               -
29 February 2016^^^                                 (1 739)              - 
Central Services
31 August 2016^^                                      (945)          4 368
31 August 2015^                                     (1 524)         12 000
29 February 2016^^^                                 (8 460)         49 392
Total operations
31 August 2016^^                                   (71 688)          4 368
31 August 2015^                                    (11 297)         12 000
29 February 2016^^^                                (29 268)         49 392

                                                                Profit or 
                                                               (loss) for 
                                             Finance cost      the period
                                                    R’000           R’000
Gold operations
31 August 2016^^                                        -         (52 458)
31 August 2015^                                         -          (9 405)
29 February 2016^^^                                     -         (18 311) 
Coal/Contract Mining
31 August 2016^^                                        -           5 760
31 August 2015^                                         -           7 948
29 February 2016^^^                                     -          78 029
Uranium Development
31 August 2016^^                                        -          (3 122)
31 August 2015^                                         -          (5 667)
29 February 2016^^^                                     -          (6 121) 
Central Services
31 August 2016^^                                  (38 452)        (35 919)
31 August 2015^                                   (21 503)        (27 180)
29 February 2016^^^                               (46 836)        (52 098) 
Total operations
31 August 2016^^                                  (38 452)        (85 739)
31 August 2015^                                   (21 503)        (34 304)
29 February 2016^^^                               (46 836)          1 499

* Earnings before interest taxation depreciation and amortisation (EBITDA) 
  is equal to the operating profit or (loss) before taking depreciation or 
  amortisation into account.
^ The information relating to this period is unaudited.
^^ The information relating to this period is audited.
^^^ The information relating to this period has been audited. The group did 
    not have any inter-segmental revenue.

Segmental assets and liabilities
The amounts provided to management with respect to total assets and liabilities 
are measured in a manner consistent with that of the financial statements. 
These assets and liabilities are allocated based on the operations of the 
segment and the physical location of the asset. The table below provides 
information on segment assets and liabilities as per the statement of 
financial position.

                                             Total segment   Total segment 
                                                    assets     liabilities
                                                     R'000           R'000
Gold operations
31 August 2016^^                                   543 053         278 615
31 August 2015^                                    781 159               -
29 February 2016^^^                                545 273         277 159
Coal/Contract Mining
31 August 2016^^                                 2 782 521         758 824
31 August 2015^                                          -               -
29 February 2016^^^                              2 782 521         773 063
Uranium Development
31 August 2016^^                                 6 635 166       1 457 577
31 August 2015^                                  6 625 232       1 457 577
29 February 2016^^^                              6 635 168       1 457 577
Central Services
31 August 2016^^                                 1 051 490         816 174
31 August 2015^                                    901 633       1 168 497
29 February 2016^^^                              1 266 919         952 838
Total operations
31 August 2016^^                                11 012 230       3 311 190
31 August 2015^                                  8 308 024       2 626 074
29 February 2016^^^                             11 229 881       3 460 637

^ The information relating to this period is unaudited.
^^ The information relating to this period has been reviewed.
^^^ The information relating to this period has been audited.

The chief operating decision-maker reviews the group’s internal reporting in 
order to assess performance and has determined the operating segments based 
on these reports. The business performance of the operating segments is 
evaluated from the market and product performance perspective. The segments 
have not changed from the prior reporting period.

The segment relating to the coal operations of the entity reflects the coal 
contract mining in the previous reporting periods at the Brakfontein Colliery, 
which was acquired during February 2016, referred to as "contract mining" 
and the mining of coal for the Group's own benefit in the current period, 
since the acquisition, referred to as "coal mining".

The head office, gold operations and uranium development segments all operate 
in the Republic of South Africa. All segment revenue has been derived from 
South African operations based on the geographic location of customers 
and all segment assets are located in the Republic of South Africa based 
on the physical geographic location of the assets.

9. Operational overview
Key indicators

                               6 months   6 months   12 months 
                                  ended      ended       ended
                              31 August  31 August 29 February
                                   2016       2015        2016   Movement*
Gold bearing ore 
milled (tonnes)                 254 957    343 073     657 606       (26%) 
Gold sold (kg)                   106.59     215.34      377.08       (51%) 
Coal mined (tonnes)             614 726    420 304   1 100 000        46%


* The movement is based on the comparison of the respective tonnes and 
kilograms for the periods ended 31 August 2016 and 31 August 2015 as both 
of these periods are reflective of operations for a six-month period. The 
tonnes and kilograms reflected for the period 29 February 2016 represents
a twelve-month period and is therefore not comparable.

Gold operations
Gold production from opencast gold mining operations at the Shiva Uranium mine 
for the six months ended 31 August 2016 amounted to a total of 3,430 ounces 
(106.59 kg). This was significantly lower to gold production in the comparative 
period, during which 6,293 ounces (215.34 kg) of gold was produced during the 
six months ended 31 August 2015.

Gold production for the six months has been primarily constrained by the 
effect of the declining availability and efficiency of the gold treatment 
plant, coupled with production issues in the opencast section. The company 
also experienced several production stoppages during the period due to 
ongoing security issues at the Shiva Uranium mine.

Mine management has been focused on improving plant availability and reliability. 
Significant achievements have recently been made in this regard and increasing 
plant availability has recently come on line. Plant recoveries remain a concern 
for management and efforts are currently underway to realise a significant and 
immediate improvement in plant efficiency and performance.

The company is also investigating higher grade gold opportunities with a view 
to improving overall gold production.

Uranium operations and further exploration
The company’s recently completed an option analysis study on its uranium project; 
the results of which indicated that the potential for the Shiva Uranium project 
is significantly more promising than the results indicated in the 2009 bankable 
feasibility study. The company intends to focus on immediately implementing the
recommendations of the study, which will be a pre-cursor to the forthcoming 
second bankable feasibility study.

Ongoing underground development on the uranium section continued successfully 
during the six month under review, and the company is well placed to ramp-up 
development on its underground uranium operations in the future.

Coal operations
Following the successful completion of the acquisition of the Brakfontein 
Colliery in February 2016, the group is pleased to report the first operational 
results of its coal mining activities. The acquisition marks the group’s first 
step in expanding and diversifying its activities, especially with regard to 
energy related natural resources.

Coal production for the six months ended 31 August 2016 totalled 614,726 tonnes, 
with average monthly production at approximately 102,000 tonnes per month. 
Consistency in achieving targeted monthly production remains management’s 
primary concern, and management is focusing on improving the reliability and 
efficiency of its opencast equipment. Coal production during the six months 
was also interrupted by several labour stoppages due to strike action 
undertaken by mine employees.

10. Deferred tax

                                                   Unaudited
                                        Reviewed   31 August      Audited
                                       31 August        2015  29 February
                                            2016    Restated         2016
                                           R'000       R'000        R'000
Deferred tax asset                       597 440     602 667      594 659
Deferred tax liability                (2 215 592) (1 457 576)  (2 230 640)
Total net deferred tax liability      (1 618 152)   (854 909)  (1 635 981) 
Deferred tax asset
Deductible temporary differences on
uranium and gold operations              596 242     602 667      593 461
Deductible temporary differences on
coal operations                            1 198           -        1 198
Total deferred tax asset                 597 440     602 667      594 659
Deferred tax liability
Taxable temporary differences on
mineral resource assets - gold and
uranium                               (1 457 577) (1 457 576)  (1 457 576)
Taxable temporary differences on
mineral resource assets - coal          (758 015)          -     (773 064) 
Total deferred tax liability          (2 215 592) (1 457 576)  (2 230 640) 
Reconciliation of net deferred tax
liability
Balance at the beginning of the
period                                (1 635 981)   (845 703)    (845 703) 
Deferred tax asset acquired through
business combination                           -           -        1 198
Deferred tax liabilities acquired
through business combination                   -           -     (773 064)
Charge to profit or loss                  17 829      (9 206)     (18 412) 
Balance at the end of the period      (1 618 152)   (854 909)  (1 635 981)

Deferred tax has been measure at the rates that are expected to apply when 
the group 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 has not been offset in 
the statement of financial position as the Group has no legal right to settle 
current tax amounts on a net basis although the deferred tax amounts are 
levied by the same taxing authority.

11. Other financial liabilities
                                                     Unaudited
                                          Reviewed   31 August      Audited
                                         31 August        2015  29 February
                                              2016    Restated         2016
                                             R'000       R'000        R'000
Industrial Development Corporation
("IDC") borrowings
Balance at the beginning of the period     123 732     146 186      146 186
Repayments for the period                  (37 500)    (37 500)     (37 500) 
Fair value adjustment                            -       1 530       (3 235) 
Accrued finance cost for the period         25 576       9 584       18 281
Balance at the end of the period           111 808     119 800      123 732
Bank of Baroda (“BoB”) facility                                  
Balance at the beginning of the period     193 764     146 858      146 858 
(Repayment)/drawn-down on loan facility   (196 640)          -       46 906
Finance costs for the period                 2 876       3 494            - 
Balance at the end of the period                 -     150 352      193 764
Analysis of current and non-current                              
portions of other financial liabilities                          
Non-current portion of other financial                           
liabilities                                 75 720      74 660       82 349
Current portion of other financial                               
liabilities                                 36 088     195 492      235 147
Total balance at the end of the period     111 808     270 152      317 496

Terms and conditions relating to the IDC loan
In terms of the restructured loan agreement, which was effective 24 June
2014, the terms of the loan are such that it attracts interest at prime plus 2% 
and is repayable at the maturity date of the loan on 31 March 2018. The 
repayment of the capital amount remained unchanged with remaining payments 
of R37.5 million due on 30 June 2017 and 31 March 2018 respectively.

There are fair value adjustments that were recorded in profit or loss due to 
changes in timing of the cash flows relating to the interest portion. 
Previously the interest on the capital amount of the loan was assumed to
be due and payable on a quarterly basis based on the interpretation of the 
restructured loan agreement. The revised interpretation provides for interest 
to be repaid at the maturity date of the loan of 31 March 2018. The change in 
the timing of the repayment of interest was not considered
to be a significant modification as the change in value is less than 10%

The loan is secured against the moveable and immovable property of Shiva
Uranium Proprietary Limited.

Terms and conditions relating to the BoB facility
Borrowings on the BoB facility are secured against, and to the extent of,
cash fixed deposits invested by the Company and held at the BoB. The loans bear 
interest at variable rates linked to investment rates on fixed deposits and has 
no fixed terms of repayment. The facility was settled in full during the current 
period using cash fixed deposits on hand at the BoB. The loan is denominated 
in South African Rands.

12. Related parties
Balances related to related parties

                                                   Unaudited
                                        Reviewed   31 August      Audited
                                       31 August        2015  29 February
                                            2016    Restated         2016
                                           R'000       R'000        R'000
Amounts owing by related parties
Tegeta Exploration and Resources
Proprietary Limited                      116 306      14 692       38 336
Surya Crushers Proprietary Limited         7 370       4 575        5 522
Other                                        189         666          522
Balance at the end of the period         123 865      19 933       44 380
Amounts owing to related parties     
Action Investments Proprietary       
Limited                                  115 652     129 590      114 446
Confident Concepts Proprietary       
Limited                                   79 718           -            - 
JIC Engineering Services             
Proprietary Limited                            -      28 946            - 
Scipio Proprietary Limited                     -       3 184            - 
Westdawn Investments Proprietary     
Limited                                   21 664      44 798       45 632
Unlimited Investments Proprietary    
Limited                                    4 511       4 511        4 511
Other                                      1 251       1 124            - 
Balance at the end of the period         222 796     212 153      164 589
Amounts owing to the holding         
company - Oakbay Investments         
Proprietary Limited                  
Non-current portion of amounts       
owing to the holding company             373 574     408 516      383 074
Current portion of amounts owing to  
the holding company                       25 850           -            - 
Balance at the end of the period         399 424     408 516      383 074


Terms and conditions of the Action Investments loan
The loan granted by Action Investments is unsecured, bears interest at LIBOR 
plus 3%. The principle and interest accrued on the loan shall become due and 
payable upon written demand from the lender. No notice to repay the loan has 
been received at the reporting date. The loan is denominated in South 
African Rands.

Terms and conditions of the Oakbay Investments Proprietary Limited loan
The loan granted by Oakbay Investments Proprietary Limited is unsecured, 
bears no interest and is repayable on 367 days after notice of repayment is 
issued by the shareholder to the company. No notice to repay the loan has 
been received at the reporting date. For purposes of determining the fair 
value of the loan, a discounted cash flow model has been applied on the 
basis that the interest rate applicable is the prime interest rate less 
3% representing the risk adjusted opportunity cost of borrowings.

General terms and conditions related to amounts owing by or to related parties
All other related party loans are unsecured, bear no interest and there are 
no specified fixed terms of repayment. All of these loans are denominated 
in South African Rands.

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

Transactions with related parties*

                                                    Unaudited
                                         Reviewed   31 August      Audited
                                        31 August        2015  29 February
                                             2016    Restated         2016
                                            R'000       R'000        R'000

Services rendered to related parties       45 407           -      104 508
Tegeta Exploration and Resources                                
Proprietary Limited                           842           -        9 311
Surya Crushers Proprietary Limited         46 249           -      113 819
Services rendered from related parties                          
Westdawn Investments Proprietary                                
Limited                                    23 968           -       29 878
Confident Concepts Proprietary Limited     79 718           -            -
                                          103 686           -       29 878

*Only transactions with related parties, that are considered to be material, 
are disclosed and included in under this note.

13. Environmental rehabilitation provision

                                                   Unaudited
                                        Reviewed   31 August      Audited
                                       31 August        2015  29 February
                                            2016    Restated         2016
                                           R'000       R'000        R'000

Reconciliation of the balance for 
the period
Balance at the beginning of the
period                                   277 159     209 811      209 811
Unwinding of interest                      8 583       8 287       12 861
(Reversed)/capitalised to property,                             
plant and equipment                       (2 221)       (359)      43 604
Revision of estimate in environmental                           
rehabilitation provision recognised                             
in profit or loss                         (4 906)     (1 497)       4 030
Acquired through business combination          -           -        6 853
Balance at the end of the period         278 615     216 242      277 159


The environmental provision includes estimated costs for the rehabilitation 
of gold, uranium and coal mining sites. The group is required by law to 
undertake rehabilitation works as part of their ongoing operations. The 
group makes contributions into environmental rehabilitation obligation 
funds and holds guarantees to fund a portion of the estimated costs of 
rehabilitation.

Change in estimates arise from changes in resources, changes in life of mine 
as well as changes in laws and regulations governing environmental matters. 
Increases in decommissioning provisions relate to the increase in the 
expected future discounted cost of decommissioning plant and equipment. 
Changes in estimates relating to decommissioning provisions are included 
in the cost of property, plant and equipment. Changes in the rehabilitation 
provision relates to the expected future discounted costs of rehabilitating 
mining areas.

Changes in estimates relating to rehabilitation provisions are recognised as 
an expense in the period in which the change in estimate arises.

14. 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.

15. Capital commitments
The Group does not have any capital commitments for which specific board approval 
has been obtained as at 31 August 2016.

16. Changes to the Board of Directors
The following changes were effected to the Board of Directors during the six-month 
period ended 31 August 2016:

* Mr AK Gupta resigned as Non-Executive Chairman with effect from 08 April 2016.
* Mr V Gupta resigned as Chief Executive Officer with effect from 08 April 2016.
* Mr J Roux was appointed as Chief Executive Officer with effect from 17 May 2016.
* Mr N Howa was appointed as Non-executive director with effect from 09 June 2016 
  and subsequently resigned with effect from 17 October 2016.
* Mr TW Rensen previously the company’s Lead Independent Non-executive Director, 
  was appointed as Independent Non-executive Chairman with effect from 08 April 2016.

17. Events after the reporting period
* The company successfully appointed a JSE approved sponsor on 1 September 2016.
* In October 2016, legal proceedings involving the Group, its holding company, Oakbay 
  Investments Proprietary Limited and several others indicated that five transactions 
  and/or activities pertaining to the Oakbay Resources and Energy group of companies 
  were reported to the Financial Intelligence Centre ("the FIC") in terms of section 
  29 of the financial Intelligence Centre Act ("FICA"). The Group has not yet been able 
  to identify or confirm the existence of the reported transactions in its accounting 
  records and banking statements, and requires further information to do so. The Group 
  has not yet been able to procure this additional information from the FIC. Further to 
  this, the Audit Committee has requested that the Group's external auditors perform an 
  independent investigation of these transactions, and shareholders will be updated 
  accordingly on the results of this investigation upon its conclusion.

Other than mentioned in this report, there were no other material events after the 
reporting date that require disclosure.

18. Dividend declaration
In line with group strategy, no dividend has been declared for the interim period.

19. Prior period errors
The Group has previously communicated the impact of a prior period error relating to 
the unrecognised deferred tax assets relating to unutilised tax losses and tax credits 
in Shiva Uranium Proprietary Limited, which was 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 period ended 
28 February 2011.

The prior period error resulted in the restatement of the previously reported interim 
financial results for the six-month period ended 31 August 2015. The table below reflects 
the impact of the prior period error on this comparative information:

Reporting period ended 31 August 2015

                                               Unaudited
                                           As previously   Unaudited  Unaudited 
                                                reported Adjustments   Restated 
                                                   R’000       R’000      R’000
Consolidated statement of financial       
position                                  
Deferred tax assets                                    -     602 667    602 667
Total assets                                           -     602 667    602 667
Stated capital                                   466 398           -    466 398
Retained income                                4 023 015     445 974  4 468 989
Non-controlling interest                         589 870     156 693    746 563
Total equity                                   5 079 283     602 667  5 681 950
Deferred tax liabilities                       1 457 576           -  1 457 576
Total liabilities                              1 457 576           -  1 457 576
Net asset value per share                 
attributable to the owners of the         
entity (cents)                                    561,18       55,75     616,92
Consolidated statement of profit or        
loss and other comprehensive income       
Income tax expense                                     -      (9 206)    (9 206)
Loss and total other comprehensive        
loss for the period                              (34 304)     (9 206)   (43 510) 
Total comprehensive (loss)                
attributable to:                          
Owners of the company                            (26 777)     (6 812)   (33 589) 
Non-controlling interest                          (7 527)     (2 394)    (9 921)
(34 304)     (9 206)   (43 510)           
Earnings per share information            
Per share information                     
Basic loss per share (cents)                       (3,35)      (0,85)     (4,20) 
Diluted basic loss per share              
(cents)                                            (3,35)      (0,85)     (4,20) 
Headline loss per share (cents)                    (3,35)      (0,85)     (4,20) 
Diluted headline loss per share           
(cents)                                            (3,35)      (0,85)     (4,20)

For and behalf of the Board of Directors

TW Rensen                             J Roux
Chairman                              Chief Executive Officer
30 November 2016                      30 November 2016

Directors
TW Rensen* (Chairman) (Irish), J Roux (Chief Executive Officer), TW Scott
(Financial Director), DJ Nyamane*, MV Pamensky*.
*This director is a Independent Non-executive director. 

Administrative information
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
South Africa
2010

Company secretary
iThemba Governance and Statutory Solutions Proprietary Limited
Monument Office Park
Block 5 Suite 201
79 Steenbok Avenue
Monument Park
South Africa

P O Box 25160
Monument Park
South Africa
0105

External auditors
SizweNtsalubaGobodo Inc.
20 Morris Street East
Woodmead Johannesburg South Africa

P O Box 2939
Saxonwold
South Africa
2132

Transfer Secretaries
Trifecta Capital Services Proprietary Limited
Capital House
31 Beacon Road Florida North Roodepoort South Africa

P O Box 61272
Marshalltown
South Africa
2107

Sponsor
River Group
2 Kloof Trio
211 Kloof Street
Waterkloof
South Africa

P O Box 2579
Brooklyn Square
South Africa
0075 

www.oakbay.co.za

30 November 2016

Johannesburg

Corporate advisor and sponsor
River Group
Date: 30/11/2016 05:45:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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