Wrap Text
Condensed Consolidated Interim Results
for the Six-Month Period Ended 31 December 2018
Bauba Platinum Limited
Incorporated in the Republic of South Africa
(Registration number 1986/004649/06)
JSE share code: BAU
ISIN: ZAE000145686
(Bauba or the Company or the Group)
Condensed consolidated interim results
for the six-month period ended 31 December 2018
Highlights
- 12-month offtake agreement concluded with an advance R73,500 million
part-payment received
- Moeijelijk chrome ore spiral wash plant successfully commissioned in
November 2018
- Revenue decreased by 21,6% to R90,363 million (six-month period ended
31 Dec 2017: R115,241)
- Investment in property, plant and equipment increased by 54,0% to
R42,235 million (six-month period ended 31 Dec 2017: R27,424 million)
Commentary
Financial review
Bauba's performance for the six months to 31 December 2018 was adversely
impacted by administrative delays by the Department of Water and
Sanitation (DWS) in processing an amended water use licence application
(WULA) and by the Department of Mineral Resources (DMR) to approve
amendments to Moeijelijk's environmental authorisation in terms of
section 102 of the Mineral and Petroleum Resources Development Act
(MPRDA). This resulted in an effective loss of two months opencast
production, as the opencast had to ramp up back to planned production
levels, as well as loss of four months of concentrate sales due to the
delayed commissioning of our new wash plant. These setbacks were
anticipated and highlighted to the market in Bauba's 2018
integrated annual report released 24 October 2018.
The wash plant was commissioned and commenced production in November
2018. However, it was only operated for two thirds of December 2018
due to the festive season holidays. During November and December 2018,
the wash plant was still in the "ramp-up" phase and produced
approximately 29 000 tonnes of chrome concentrate. As at 31 December
2018, there was 82 686 tonnes of chrome ore inventory (ROM) on hand.
Since January 2019, the wash plant has been producing according to
its planned throughput levels, with spiral feed achieved approximating
35 000 tonnes in a month.
The chrome ore market was weak during this interim period. Up until
the wash plant commenced production, Bauba was only selling 40 basis
run-of-mine (ROM), realising a significantly lower value than Bauba's
concentrate basket value, which is heavily weighted towards speciality
grade concentrates. Based on actual January and February 2019 sales,
the current concentrate basket generated a weighted average free on
truck (FOT) price that is significantly greater than the 40 basis ROM
equivalent that was previously sold.
Outlook
The January 2019 basket price detailed above did not include foundry
sales as Bauba is still gradually breaking into this market, but
foundry volumes are expected to improve over time. Based on Bauba's
current wash plant production and positive assay results, Bauba is
confident that the targeted foundry sales will
be achieved.
During February 2019, Bauba entered into a Foundry Chrome - Commodity
Purchase Contract with a leading foundry chrome trader and secured the
sale of a minimum quantity of foundry grade material over a four-month
period. This contract, together with Bauba's existing offtake agreement,
will enhance Bauba's future profit margins by increasing the value it
receives from premium speciality chrome ore concentrate sales.
These factors, in combination with a chrome ore market that has been
improving and is currently trending upwards, ought to contribute
positively towards Bauba's full year results.
Changes to the board
On 8 February 2019, Ms Thabile Makgala was appointed as an independent
non- executive director. Thabile holds a Bachelor of Science degree in
Mining Engineering from the University of the Witwatersrand as well as
a Master of Business Administration from the University of Stellenbosch
Business School and has dedicated almost two decades of service to the
mining industry. Her diverse professional experience includes general
management, strategy, business development and business planning.
Mineral resources and mineral reserves
As at 31 December 2018, there have been no material changes to the
mineral resources and mineral reserves as reported in Bauba's 2018
integrated annual report.
Condensed consolidated statement of comprehensive income
for the six-month period ended 31 December 2018
Unaudited Unaudited Audited
31 Dec 2018 31 Dec 2017 30 Jun 2018
Note R'000 R'000 R'000
Revenue 90 363 115 241 234 261
Cost of sales (66 642) (42 286) (81 595)
Gross profit 23 721 72 955 152 666
Other income 71 - 1 169
Operating and
administrative
expenses (36 381) (30 283) (56 259)
Finance income 2 818 4 070 7 281
(Loss)/profit
before tax (9 771) 46 742 104 857
Income tax
credit/(expense) 18 (16 791) (32 947)
(Loss)/profit for
the period (9 753) 29 951 71 910
Other comprehensive
income - - -
Total comprehensive
(loss)/profit for
the period (9 753) 29 951 71 910
(Loss)/profit
attributable to:
Equity holders of
the parent (9 666) 15 887 38 248
Non-controlling
interest (87) 14 064 33 662
Total comprehensive
(loss)/profit
attributable to:
Equity holders of the
parent (9 666) 15 887 38 248
Non-controlling
interest (87) 14 064 33 662
Basic (loss)/earnings
per share (cents) 12 (2,55) 4,19 10,09
Diluted (loss)/
earnings per share
(cents) 12 (2,54) 4,16 10,02
Headline (loss)/
earnings per share
(cents) 12 (2,55) 4,19 10,09
Diluted headline
(loss)/earnings per
share (cents) 12 (2,54) 4,16 10,02
Condensed consolidated statement of financial position
as at 31 December 2018
Unaudited Unaudited Audited
31 Dec 2018 31 Dec 2017 30 Jun 2018
Note R'000 R'000 R'000
Assets
Non-current assets 266 601 191 740 231 965
Intangible assets 5 143 266 153 225 149 010
Property, plant and
equipment 6 123 335 38 515 82 955
Current assets 95 936 92 806 90 805
Inventory 7 51 057 18 581 17 441
Trade and other
receivables 3 734 4 707 3 287
Cash and cash
equivalents 41 145 69 518 70 077
Total assets 362 537 284 546 322 770
Equity and liabilities
Equity 276 822 242 569 284 937
Share capital and share
premium 512 500 512 500 512 500
Reverse asset
acquisition reserve (282 988) (282 988) (282 988)
Share-based payment
reserve 2 932 885 1 294
Accumulated loss (10 458) (23 153) (792)
Non-controlling
interest 54 836 35 325 54 923
Non-current liabilities 19 444 11 617 23 082
Environmental
rehabilitation
provision 8 - 5 724 3 620
Deferred tax 19 444 5 893 19 462
Current liabilities 66 271 30 360 14 751
Trade and other
payables 6 286 11 705 10 994
Prepayment 10 53 455 - -
Other financial
liabilities 9 218 6 168 461
Environmental
rehabilitation
provision 8 5 192 2 551 -
Current tax payable 1 120 9 936 3 296
Total equity and
liabilities 362 537 284 546 322 770
Condensed consolidated statement of cash flow
for the six-month period ended 31 December 2018
Unaudited Unaudited Audited
31 Dec 2018 31 Dec 2017 30 Jun 2018
R'000 R'000 R'000
Operating profit before
working capital changes (1 780) 50 778 107 075
Working capital changes 14 441 (17 563) (21 421)
Tax paid (2 176) (1 998) (11 225)
Distribution/dividend paid - (58 730) (58 730)
Net cash effects from
operating activities 10 485 (27 513) 15 699
Net cash effects from
investing activities (39 417) (25 167) (67 820)
Acquisition of intangible
asset - (1 813) (2 193)
Acquisition of property,
plant and equipment (42 235) (27 424) (72 908)
Finance income 2 818 4 070 7 281
Total cash movement for the
period (28 932) (52 680) (52 121)
Cash and cash equivalents
at the beginning of the
period 70 077 122 198 122 198
Cash and cash equivalents
at the end of the period 41 145 69 518 70 077
Condensed consolidated statement of changes in equity
for the six-month period ended 31 December 2018
Share Reverse
capital asset Share
and acquisition option
premium reserve reserve
R'000 R'000 R'000
Balance at 1 July 2017 550 402 (282 988) 477
Share-based payment
reserve movement - - 408
Total comprehensive profit
for the period - - -
Distribution/dividend paid (37 902) - -
Balance at
31 December 2017 512 500 (282 988) 885
Share-based payment
reserve movement - - 409
Total comprehensive profit
for the period - - -
Balance at 1 July 2018 512 500 (282 988) 1 294
Share-based payment
reserve movement - - 1 638
Total comprehensive loss
for the period - - -
Balance at
31 December 2018 512 500 (282 988) 2 932
Non-
Retained controlling Total
loss interest equity
R'000 R'000 R'000
Balance at 1 July 2017 (39 040) 42 089 270 940
Share-based payment
reserve movement - - 408
Total comprehensive profit
for the period 15 887 14 064 29 951
Distribution/dividend paid - (20 828) (58 730)
Balance at
31 December 2017 (23 153) 35 325 242 569
Share-based payment
reserve movement - - 409
Total comprehensive profit
for the period 22 361 19 598 41 959
Balance at 1 July 2018 (792) 54 923 284 937
Share-based payment
reserve movement - - 1 638
Total comprehensive loss
for the period (9 666) (87) (9 753)
Balance at
31 December 2018 (10 458) 54 836 276 822
Notes to the condensed consolidated results
for the six-month period ended 31 December 2018
1. Basis of preparation
These condensed consolidated financial results have been prepared under
the supervision of Jonathan Knowlden CA(SA), the financial director,
in accordance with and contain information required by IAS 34: Interim
Financial Reporting as well as the SAICA Financial Reporting Guides as
issued by the Accounting Practices Committee and Financial Pronouncements
as issued by the Financial Reporting Standards Council and the requirements
of the Companies Act of South Africa.
The accounting policies applied in the preparation of the condensed
consolidated financial results for the six-month period ended 31 December
2018 are in terms of International Financial Reporting Standards and, with
the exception of IFRS 9: Financial Instruments and IFRS15: Revenue from
Contracts with Customers which became effective during the current period,
are consistent with the accounting policies applied in the preparation of
the group's annual financial statements for the year ended 30 June 2018.
2. Auditor's review
These condensed consolidated financial results for the period ended
31 December 2018 have not been reviewed or audited by the group's auditor.
3. Board
Ms Thabile Makgala was appointed as an independent non-executive director
on 8 February 2019. During the period under review, no other changes were
made to the board.
4. Share capital
There were no changes to the issued share capital during the period
under review.
5. Intangible assets
Accumulated
amortisation
and Carrying
Cost impairments value
R'000 R'000 R'000
31 December 2018 (unaudited)
Platinum mineral rights 30 555 (10 394) 20 161
Chrome mineral rights 156 907 (33 802) 123 105
Total mineral rights 187 462 (44 196) 143 266
31 December 2017 (unaudited)
Platinum mineral rights 30 555 (10 394) 20 161
Chrome mineral rights 156 527 (23 463) 133 064
Total mineral rights 187 082 (33 857) 153 225
30 June 2018 (audited)
Platinum mineral rights 30 555 (10 394) 20 161
Chrome mineral rights 156 907 (28 058) 128 849
Total mineral rights 187 462 (38 452) 149 010
Opening Closing
Reconciliation of balance Additions Amortisation balance
intangible assets R'000 R'000 R'000 R'000
31 December 2018
(unaudited)
Platinum mineral
rights 20 161 - - 20 161
Chrome mineral
rights 128 849 - (5 744) 123 105
Total mineral
rights 149 010 - (5 744) 143 266
31 December 2017
(unaudited)
Platinum mineral
rights 20 161 - - 20 161
Chrome mineral
rights 138 143 1 813 (6 892) 133 064
Total mineral
rights 158 304 1 813 (6 892) 153 225
30 June 2018
(audited)
Platinum mineral
rights 20 161 - - 20 161
Chrome mineral
rights 138 143 2 193 (11 487) 128 849
Total mineral
rights 158 304 2 193 (11 487) 149 010
6. Property, plant and equipment
Mine
Furniture infra-
Motor and office structure and
vehicles equipment equipment Total
R'000 R'000 R'000 R'000
31 December 2018
(unaudited)
Cost
At 1 July 2018 2 998 339 82 851 86 188
Additions - 85 42 150 42 235
At 31 December 2018 2 998 424 125 001 128 423
Accumulated
depreciation
At 1 July 2018 1 217 131 1 885 3 233
Depreciation 230 59 1 566 1 855
At 31 December 2018 1 447 190 3 451 5 088
Carrying value at
31 December 2018 1 551 234 121 550 123 335
31 December 2017
(unaudited)
Cost
At 1 July 2017 2 849 191 10 497 13 537
Additions 190 31 27 203 27 424
At 31 December 2017 3 039 222 37 700 40 961
Accumulated
depreciation
At 1 July 2017 796 56 805 1 657
Depreciation 230 33 526 789
At 31 December 2017 1 026 89 1 331 2 446
Carrying value at
31 December 2017 2 013 133 36 369 38 515
Mine
Furniture infra-
Motor and office structure and
vehicles equipment equipment Total
R'000 R'000 R'000 R'000
30 June 2018
(audited)
Cost
At 1 July 2017 2 849 191 10 497 13 537
Additions 406 148 72 354 72 908
Disposals (257) - - (257)
At 30 June 2018 2 998 339 82 851 86 188
Accumulated
depreciation
At 1 July 2017 796 56 805 1 657
Depreciation 460 75 1 080 1 615
Disposals (39) - - (39)
At 30 June 2018 1 217 131 1 885 3 233
Carrying value at
30 June 2018 1 781 208 80 966 82 955
During the six-month period ended 31 December 2018 there were additions
of R42,150 million (2017: R27,203 million) to Mine infrastructure and
equipment. The additions relate mainly to the development of the
Moeijelijk underground mine of R7,408 million (2017: Rnil), construction
of the wash plant of R13,154 million (2017: Rnil), Eskom electricity
supply project payments of R4,726 million (2017: Rnil) and capitalisation
of the pre-stripping costs in accordance with IFRIC 20 of R10,543 million
(2017: Rnil).
None of the items of property, plant and equipment have been encumbered.
7. Inventory
Unaudited Unaudited Audited
31 Dec 2018 31 Dec 2017 30 Jun 2018
R'000 R'000 R'000
Chrome ore 51 057 18 581 17 441
Inventory is based on direct and indirect costs incurred in the production
of chrome ore. There was 82 686 tonnes of inventory (ROM) held at the
reporting date (2017: 40 793 tonnes).
8. Environmental rehabilitation provision
Unaudited Unaudited Audited
31 Dec 2018 31 Dec 2017 30 Jun 2018
R'000 R'000 R'000
Balance at the beginning
of the period 3 620 8 258 8 258
- provision recognised
during the period 1 572 17 -
- provision reversed
during the period - - (4 638)
Balance at the end
of the period 5 192 8 275 3 620
Due within one year
or less 5 192 2 551 -
Due after more than one
year - 5 724 3 620
Environmental obligations are based on the group's environmental plans.
Full provision is made based on the net present value of the estimated
cost of restoring the environmental disturbance that has occurred up to
the reporting date.
9. Other financial liabilities
Unaudited Unaudited Audited
31 Dec 2018 31 Dec 2017 30 Jun 2018
R'000 R'000 R'000
Royalties payable - 3 501 205
Chrome ore advance receipt - 2 485 -
Other 218 182 256
Balance at the end of the
period 218 6 168 461
Current liabilities
At amortised cost 218 6 168 461
10. Prepayment
Unaudited Unaudited Audited
31 Dec 2018 31 Dec 2017 30 Jun 2018
R'000 R'000 R'000
Opening balance - - -
Add: Prepayment advanced 73 500 - -
Less: Repayment (20 045) - -
Closing balance 53 455 - -
Bauba successfully concluded an offtake agreement for the supply of
240 000 tonnes of chrome ore to be supplied over a 12-month period.
In August 2018, Bauba received a prepayment of R73,500 million which
represents a part-payment of the offtake agreement. This prepayment is
repayable in equal monthly instalments of R6,682 million, with the final
payment due at the end of August 2019.
11. Operating segments
Platinum
Chrome explo- Intragroup
projects ration Corporate elimination Total
R'000 R'000 R'000 R'000 R'000
31 December 2018
(unaudited)
Revenue 90 363 - 4 859 (4 859) 90 363
Loss before tax (5 808) - (3 963) - (9 771)
Income tax credit 18 - - - 18
Loss after tax (5 790) - (3 963) - (9 753)
Finance income 1 454 - 1 746 (382) 2 818
Depreciation,
amortisation and
impairment (7 564) - (35) - (7 599)
Acquisition of
intangible asset - - - - -
Total assets 301 906 20 161 78 057 (37 587) 362 537
Total liabilities (121 526) - (1 776) 37 587 (85 715)
31 December 2017
(unaudited)
Revenue 115 241 - 6 358 (6 358) 115 241
Profit before tax 45 262 - 1 480 - 46 742
Income tax
expense (16 791) - - - (16 791)
Profit after tax 28 471 - 1 480 - 29 951
Finance income 2 580 - 1 490 - 4 070
Depreciation,
amortisation and
impairment (7 656) - (25) - (7 681)
Acquisition of
intangible asset 1 813 - - - 1 813
Total assets 263 881 20 161 28 044 (27 540) 284 546
Total liabilities (68 793) - (724) 27 540 (41 977)
30 June 2018
(audited)
Revenue 234 261 - 11 750 (11 750) 234 261
Profit before tax 105 953 - 30 146 (31 242) 104 857
Income tax
expense (32 947) - - - (32 947)
Profit after tax 73 006 - 30 146 (31 242) 71 910
Finance income 5 433 - 2 452 (604) 7 281
Depreciation,
amortisation and
impairment (13 048) - (54) - (13 102)
Acquisition of
intangible asset 2 193 - - - 2 193
Total assets 283 124 20 161 26 448 (6 963) 322 770
Total
liabilities (43 498) - (1 298) 6 963 (37 833)
The Bauba group segmental analysis is based on the Moeijelijk chrome
project, platinum exploration and corporate activities. The group was
reliant on one major customer in respect of chrome ore sales.
12. Earnings per share
Unaudited Unaudited Audited
31 Dec 2018 31 Dec 2017 30 Jun 2018
R'000 R'000 R'000
Headline (loss)/earnings
reconciliation:
(Loss)/profit attributable
to equity holders of the
parent (9 666) 15 887 38 248
Headline (loss)/earnings (9 666) 15 887 38 248
Basic (loss)/earnings per
share (cents) (2,55) 4,19 10,09
Diluted (loss)/earnings per
share (cents) (2,54) 4,16 10,02
Headline (loss)/earnings
per share (cents) (2,55) 4,19 10,09
Diluted headline
(loss)/earnings per share
(cents) (2,54) 4,16 10,02
Number of shares in issue
at the end of the period
('000) 379 020 379 020 379 020
Reconciliation of weighted
average number of shares to
diluted weighted average
number of shares:
Weighted average number of
shares ('000) 379 020 379 020 379 020
Dilutive potential ordinary
shares relating to long-term
incentive scheme ('000) 1 994 2 560 2 560
Diluted weighted average
number of shares ('000) 381 014 381 580 381 580
13. Fair value and financial instruments
The carrying values of all financial instruments approximate fair value.
All financial instruments are measured at amortised cost.
14. Going concern
The cashflow forecast prepared by Bauba management, based on current
available information, indicates that the group will be able to meet its
commitments within the next 12 months as they fall due. The group has
sufficient resources to continue as a going concern and has therefore
concluded that it is appropriate to prepare the condensed consolidated
financial statements on a going concern basis.
15. Subsequent events
The directors are not aware of any significant matter or circumstance
arising since the end of the financial period, not otherwise dealt with
in this report or the financial statements, which significantly affects
the financial position of the group or the results of its operations to
the date of this report.
8 March 2019
Johannesburg
Corporate information
Nature of business
Exploration and mining of mineral resources
Registration number
1986/004649/06
Country of incorporation
Republic of South Africa
Directors
Non-executive
NPJ van der Hoven (chairman)
M Luyt*
SM Dolamo*
D Smith*
Dr NM Phosa
King TV Thulare (alternate)
Ms T Makgala*
* Independent
Executive
NW van der Hoven (Chief executive officer)
JA Knowlden (Financial director)
Company secretary
Merchantec Proprietary Limited
E-mail bauba@acorim.co.za
Registered address
Cube Workspace
1 Wedgewood Link
Bryanston, Johannesburg, 2191
Republic of South Africa
Telephone: +27 (0) 11 699 5720
Fax: +27 (0) 11 388 3962
E-mail: info@bauba.co.za
Web: www.bauba.co.za
Postal address
PO Box 1658
Witkoppen, 2068
Transfer secretaries
Computershare Investor Services
Proprietary Limited
Rosebank Towers
15 Biermann Avenue
Rosebank, 2196
PO Box 61051
Marshalltown, 2107
Telephone: +27 (0) 11 370 5000
Sponsor
Merchantec Capital
Auditor
BDO South Africa Incorporated
Attorneys
Venter de Villiers
Tabacks Legal Advisors
Bankers
Nedbank Limited
Date: 08/03/2019 04:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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