29th Jun 2009 07:00
NOVENTA LIMITED
("Noventa" or the "Company")
[AIM: NVTA]
PRELIMINARY AUDITED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2008
Noventa Limited ("Noventa" or "the Company"), the AIM quoted tantalum mining and exploration company with operating assets in Mozambique, announces the consolidated audited results of the Group for the year ended 31 December 2008.
29 June 2009
For further information please contact:
Clinton Wood
Noventa Limited
+27 (0) 82 880 3392 / +27 (0) 11 823 1400
www.noventa.net
Gerard Kisbey-Green
Investec Investment Banking
+44 (0) 20 7597 5167
CHAIRMAN'S STATEMENT
29 June 2009
Dear Shareholder,
2008 was an extremely difficult year for Noventa. The performance of the Group continued to be adversely affected by the delay in ramping up production to targeted levels. This was compounded by the current global financial and economic crisis.
During the year the Company produced 143,578 pounds of tantalum concentrate compared to the target of 200,000 pounds. Despite 7,274 kilograms of morganite rough being extracted during the year (i.e. compared to a target of 5,000 kilograms), the quality was significantly lower than expected.
At the end of May 2009 operations at Marropino were placed on care and maintenance for reasons set out in the announcement to shareholders dated 24 April 2009. A decision as to when operations will recommence will be made after the necessary funding has been secured for the construction of the hard rock circuit. This decision will also be subject to the prior fulfilment of a number of undertakings that had been given by various government departments in Mozambique.
The staff headcount is to be reduced from 373 to approximately 40; a significant number of which have already been retrenched. The employees remaining at the Marropino mine comprise predominantly of security, maintenance and camp support personnel. The number of support personnel in the regional offices (i.e. Maputo, Quelimane and Johannesburg) has also been significantly reduced.
The Board and the executive management team remain focused on securing the necessary funding for the hard rock circuit at Marropino and the development of Morrua.
Shareholders will be kept informed of progress made in securing a new strategic equity partner.
I would like to thank my fellow board members, the management team, advisors and employees for their considerable efforts over the past year.
Clinton Wood
Chairman
Noventa Limited
Preliminary audited results
Consolidated income statement for the year ended
|
2008 |
2007 |
||
|
US$000 |
US$000 |
||
|
Revenue |
8,023 |
1,617 |
|
|
Cost of sales |
(4,432) |
(914) |
|
|
Gross profit |
3,591 |
703 |
|
|
Administrative expenses |
(4,501) |
(7,708) |
|
|
Other operating expenses |
(13,920) |
(9,261) |
|
|
Exploration and evaluation expenses |
(19) |
(617) |
|
|
(Loss) / profit on disposal of property, plant and equipment |
(141) |
11 |
|
|
Operating loss |
(14,990) |
(16,872) |
|
|
Net finance expense |
(496) |
(152) |
|
|
Finance income |
275 |
540 |
|
|
Finance expense |
(771) |
(692) |
|
|
Loss before taxation |
(15,486) |
(17,024) |
|
|
Taxation |
(7,088) |
2,688 |
|
|
Loss for the year |
(22,574) |
(14,336) |
|
|
US cents |
US cents |
||
|
Basic and diluted loss per share |
(63) |
(47) |
|
Noventa Limited
Preliminary audited results
Consolidated balance sheet as at
|
31 Dec 2008 |
31 Dec 2007 |
||||
|
US$000 |
US$000 |
||||
|
Non-current assets |
|||||
|
Property, plant and equipment |
4,852 |
10,267 |
|||
|
Intangible assets |
1,733 |
1,811 |
|||
|
Deferred tax asset |
- |
7,088 |
|||
|
6,585 |
19,166 |
||||
|
Current assets |
|||||
|
Inventories |
863 |
862 |
|||
|
Trade and other receivables |
3,997 |
1,857 |
|||
|
Cash and cash equivalents |
2,540 |
2,145 |
|||
|
7,400 |
4,864 |
||||
|
Total assets |
13,985 |
24,030 |
|||
|
Equity |
|||||
|
Share capital |
32 |
28 |
|||
|
Share premium |
42,876 |
34,220 |
|||
|
Convertible loan |
1,987 |
- |
|||
|
Merger reserve |
8,858 |
8,858 |
|||
|
Employee share incentive reserve |
479 |
274 |
|||
|
Translation reserve |
214 |
(5) |
|||
|
Retained losses |
(44,729) |
(22,155) |
|||
|
Total equity |
9,717 |
21,220 |
|||
|
Non-current liabilities |
|||||
|
Provisions |
245 |
234 |
|||
|
245 |
234 |
||||
|
Current liabilities |
|||||
|
Other interest-bearing loans and borrowings |
59 |
- |
|||
|
Trade and other payables |
3,964 |
2,576 |
|||
|
4,023 |
2,576 |
||||
|
Total liabilities |
4,268 |
2,810 |
|||
|
Total equity and liabilities |
13,985 |
24,030 |
Noventa Limited
Preliminary audited results
Consolidated cash flow statement for the year ended
|
2008 |
2007 |
||
|
US$000 |
US$000 |
||
|
Cash flows from operating activities |
|||
|
Loss for the year |
(22,574) |
(14,336) |
|
|
Adjustments for: |
|||
|
Depreciation |
3,737 |
1,564 |
|
|
Impairment of property, plant and equipment |
2,443 |
- |
|
|
Loss / (profit) on disposal of property, plant and equipment |
141 |
(11) |
|
|
Amortisation of intangible assets |
78 |
311 |
|
|
Employee share incentive expense |
205 |
274 |
|
|
Foreign exchange loss / ( profit) |
219 |
(17) |
|
|
Finance expense |
106 |
501 |
|
|
Finance income |
(79) |
(467) |
|
|
Taxation |
7,088 |
(2,688) |
|
|
Operating loss before changes in working capital and provisions |
(8,636) |
(14,869) |
|
|
(Increase) / decrease in trade and other receivables |
(2,140) |
868 |
|
|
Increase in inventories |
(1) |
(217) |
|
|
Increase in trade and other payables |
1,388 |
767 |
|
|
Increase in provisions |
11 |
14 |
|
|
Net cash used in operating activities |
(9,378) |
(13,437) |
|
|
Cash flows from investing activities |
|||
|
Interest (paid) / received |
(27) |
467 |
|
|
Proceeds from sale of property, plant and equipment |
- |
14 |
|
|
Acquisition of property, plant and equipment |
(906) |
(3,364) |
|
|
Net cash used in investing activities |
(933) |
(2,883) |
|
|
Cash flow from financing activities |
|||
|
Proceeds from issue of new shares |
9,021 |
15,643 |
|
|
Share issue expenses |
(361) |
(4,481) |
|
|
Proceeds from new loans |
2,046 |
- |
|
|
Net cash inflow from financing activities |
10,706 |
11,162 |
|
|
Net increase / (decrease) in cash and cash equivalents |
395 |
(5,158) |
|
|
Cash and cash equivalents at beginning of year |
2,145 |
7,303 |
|
|
Cash and cash equivalents at end of year |
2,540 |
2,145 |
|
Noventa Limited
Preliminary audited results
Consolidated statement of recognised income and expense for the year ended
|
2008 |
2007 |
||
|
US$000 |
US$000 |
||
|
Foreign currency translation differences for foreign operations |
219 |
(17) |
|
|
Income and expense recognised directly in equity |
219 |
(17) |
|
|
Loss for the year |
(22,574) |
(14,336) |
|
|
Total recognised income and expense for the year |
(22,355) |
(14,353) |
REVIEW OF RESULTS
The Group reported a loss of $22.6million (2007: $14.3 million) for the financial year.
While it is not unusual for mineral resource companies to experience operational difficulties in ramping up production to targeted levels, it is disappointing that targeted production levels have not yet been achieved on a sustainable basis. The result for the year reflects the continued operational difficulties experienced in ramping up production at the Marropino mine. Operations at the Marropino mine have been impacted by a number of factors. During the first eight months of 2008, production was affected by unforeseen equipment outages in the wet processing plant, including the failure of certain OEM bridge screens that were not manufactured to specification. In addition, the variability of the quality of run-of-mine ore (i.e. lower grade and higher percent oversize material) and poor efficiencies within the wet processing plant (i.e. recovery rates) negatively impacted on production.
The Group's performance and finances have also been affected by the delays in the delivery of grid power to the Marropino mine. In the intervening period it has been necessary to produce power using ageing diesel generators which have significantly impacted on operations i.e. through the high cost of diesel and power outages resulting in the wet plant not being operated at optimal capacity and/or availability.
Despite significant progress having been made toward achieving key performance targets the Company has not achieved anticipated production levels that would allow it to produce sufficient saleable product to sustain on-going operational and capital expenditure. As a result, the Company has had to rely on the proceeds from various fund raising activities in 2008 to sustain operations.
SUBSEQUENT EVENTS
In addition to the operational difficulties experienced in ramping up production to targeted levels, the Company has been directly impacted by the current global financial and economic crisis:
The bankers providing the pre-shipment finance facility gave notice in April 2009 that the facility is no longer available. This is despite Noventa complying with all covenants;
The broad based decrease in the provision of credit by the banking sector has resulted in an inability to replace the pre-shipment facility or to secure short term loans on acceptable terms, despite the Company's balance sheet being un-geared;
The decrease in global trade has reduced the frequency with which ships allowed to carry tantalum concentrate call at the port of Walvis Bay. This together with the withdrawal of the pre-shipment facility have placed excessive strain on the working capital funding requirements;
A significant decrease in demand for capacitor grade powder has meant that our customer is not in a position to improve the payment terms on which they purchase concentrate from the Company to compensate for the above; and
The Company's morganite joint venture partners have experienced a marked decrease in demand and have not been able to honour their commitments to the Company.
It is disappointing that the above factors have resulted in the Board having to place the Company's operations on care and maintenance, especially at a time when the plant has been performing ahead of expectations with average availability exceeding 80% in the first quarter of 2009.
Discussions are being held with various potential investors who have expressed an interest in providing the necessary funding to construct the hard rock circuit at the Marropino mine and develop Morrua. The Board believes there is a realistic prospect of obtaining the necessary financial support and funding within an acceptable timeframe.
Shareholders are referred to the going concern note in the basis of preparation section of this announcement.
NOTES TO THE FINANCIAL STATEMENTS
1. Basis of preparation
The consolidated financial statements have been prepared and approved by the Directors in accordance with International Financial Reporting Standards as adopted by the European Union ("Adopted IFRS") and has been applied consistently to all years presented.
Adopted IFRS require management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on a regular basis. Revisions to accounting estimates are recognised in the year in which the estimate is revised if the revision affects only that year or in the year of the revision and future year if the revision affects both current and future year.
The consolidated financial statements include the results of the company and its subsidiaries. The financial statements are presented in US dollars and have been prepared on the historical cost basis except for derivative financial instruments and share-based payments which are stated at fair value.
Non-current assets are stated at the recoverable amount which will be the lower of depreciated cost and fair value less costs to sell.
Going concern
The global financial and economic crisis has had a significant impact on the availability and cost of raising new capital, either in the form of debt or equity. As such, the Board recognizes that there is a material uncertainty as to whether the necessary funding for the hard rock circuit at Marropino and the development of Morrua will in fact be secured and, if secured, the timed receipt thereof.
Despite this uncertainty the group financial statements have been prepared on the going concern basis, which the Board, after careful deliberation, believes to be appropriate for the following reasons:
The Board believes there is a realistic prospect of securing the necessary financial support and funding within an acceptable timeframe;
The Board believes that the Company has, or will have access to, sufficient resources to sustain operations on a care and maintenance basis until the necessary funds can be secured to re-commence operations.
The Board believes there is still no indication that there are any fatal flaws in the design and / or construction of the wet process plant at the Marropino mine that will prevent the plant achieving targeted production.
The grade of the deposit at Marropino (albeit varied) is not a contributory factor to the production shortfalls.
The assets of the group are unencumbered and can therefore be used as collateral.
The Group has an off-take agreement for all forecast saleable concentrate produced through to at least 2012.
The medium term outlook for suppliers of primary tantalum concentrate remains extremely positive in light of the limited number of opportunities (i.e. both greenfield developments and expansions to existing capacity) that can be brought to account in a relatively short period of time to meet anticipated demand for regularized material.
The financial statements are prepared on a going concern basis; therefore the financial information does not include any adjustments that would result from the basis of preparation being inappropriate. If the going concern assumption was not appropriate, certain assets would need to be written down and liabilities not recognised in the balance sheet may crystallise.
2. Loss per share:
The acquisition of Highland African Mining Company Limited by Noventa Limited in 2007 has been accounted for as a reverse acquisition, using merger accounting principles. The consolidated loss per share comparative has therefore been presented as if Noventa Limited had been the holding company of the Group throughout the periods being presented.
Basic loss per share is calculated by dividing the loss attributable to ordinary shareholders by the weighted average number of ordinary in issue during the reporting period.
There is no difference between the diluted loss per share and the loss per share presented.
|
Shares in issue |
Weighted average in issue |
||||
|
No. |
No. |
||||
|
Calculation of weighted average number of shares in issue: |
|||||
|
Number of shares issued re share-for-share exchange |
20,255,812 |
20,255,812 |
|||
|
Shares issued on incorporation of Noventa Limited (i) |
1,837,208 |
1,837,208 |
|||
|
Conversion of loan notes |
6,430,563 |
5,056,360 |
|||
|
New shares on listing |
4,600,497 |
3,617,377 |
|||
|
Share options that vested |
10,568 |
7,094 |
|||
|
At 31 December 2007(i) |
33,134,648 |
30,773,851 |
|||
|
At 1 January 2008 |
33,134,648 |
33,134,648 |
|||
|
New shares issued |
3,045,685 |
1,797,435 |
|||
|
Conversion of loan notes |
1,522,843 |
732,296 |
|||
|
At 31 December 2008(i) |
37,703,176 |
35,664,379 |
|||
|
(i) excludes 1,743,928 shares issued to the Noventa EBT |
|||||
|
Year ended 31 December 2008 |
Year ended 31 December 2007 |
||
|
US$000 |
US$000 |
||
|
The losses used in the calculations are : |
|||
|
Loss attributable to shareholders |
(22,574) |
(14,336) |
|
|
Basic loss per share : |
(22,574) |
(14,336) |
|
|
Effect of dilutive securities |
- |
- |
|
|
Diluted loss per share : |
(22,574) |
(14,336) |
|
|
Basic and diluted loss per share (US cent) |
(63) |
(47) |
3. Contingent liability
Legal
A former contractor at the Marropino mine has instigated a legal claim for $0.9 million against HAMC Project Services (Pty) Limited and its management on the grounds that the company and its management were responsible for his wrongful imprisonment in Mozambique relating to an incident of theft at the Marropino mine in April 2006. Management is vigorously defending the claim and the company's legal counsel is of the opinion that his case will not succeed.
Commitments in terms of off-take agreements
While the Group is not in default of its obligations in terms of its signed tantalum off-take agreement, should the Group be unable to deliver the required volume of concentrate as stipulated in the off-take agreement, the Group may be required to compensate the off-taker for losses and / or damages sustained as a direct result of a breach of the off-take agreement.
4. Changes in equity
|
Share capital |
Share premium |
Convertible loan |
Merger reserve |
Employee share incentive reserve |
Translation reserve |
Retained losses |
Total Equity |
|
|
US$000 |
US$000 |
US$000 |
US$000 |
US$000 |
US$000 |
US$000 |
US$000 |
|
|
Balance at 1 January 2007 |
17 |
- |
- |
8,858 |
- |
12 |
(6,583) |
2,304 |
|
Total recognised income and expenses for the year |
- |
- |
- |
- |
- |
(17) |
(14,336) |
(14,353) |
|
Share based payments |
- |
- |
- |
- |
274 |
- |
- |
274 |
|
Issue of share capital |
5 |
16,874 |
- |
- |
- |
- |
- |
16,879 |
|
Expenses incurred in issuing share capital |
- |
(4,481) |
- |
- |
- |
- |
- |
(4,481) |
|
Treasury shares held by the company |
- |
- |
- |
- |
- |
- |
(1,236) |
(1,236) |
|
Conversion of loan notes |
6 |
21,827 |
- |
- |
- |
- |
- |
21,833 |
|
Balance at 31 December 2007 |
28 |
34,220 |
- |
8,858 |
274 |
(5) |
(22,155) |
21,220 |
|
Total recognised income and expenses for the year |
- |
- |
- |
- |
- |
219 |
(22,574) |
(22,355) |
|
Share-based payments |
- |
- |
- |
- |
205 |
- |
- |
205 |
|
Issue of convertible loan |
- |
- |
2,000 |
- |
- |
- |
- |
2,000 |
|
Issue of share capital |
3 |
6,018 |
- |
- |
- |
- |
- |
6,021 |
|
Expenses incurred in issuing share capital |
- |
(361) |
(13) |
- |
- |
- |
- |
(374) |
|
Conversion of loan notes |
1 |
2,999 |
- |
- |
- |
- |
- |
3,000 |
|
Balance at 31 December 2008 |
32 |
42,876 |
1,987 |
8,858 |
479 |
214 |
(44,729) |
9,717 |
5. Annual report and financial statements for 2008
The annual report and financial statements for the year ended 31 December 2008 have been posted to shareholders. A copy of the annual report and financial statements has also been placed on the Noventa website (i.e. www.noventa.net).
Related Shares:
PAR.L