26th Nov 2007 11:05
Weatherly International PLC26 November 2007 Weatherly International plc ('The Company' or 'Weatherly International') Full Year Results Financial Highlights • Turnover of US$63.1 million • Operating gross profit of US$9.71 million • Net profit of US$12.4 million or US$0.04 per basic share • Cash at bank US$13.3 million, as at 30 June 2007 • Tangible asset valuation of US$96.4 million. • Net asset per share increased from 11.93 US cents to 23.62 US cents year on year Corporate and Operational Highlights • Acquisition of Ongopolo for US$35.1 million • Total production of 22,711 tonnes of blister copper, with 6,307 tonnes belonging to Weatherly • Successful smelter refurbishment of No 1 furnace on time and within budget • Successful rehabilitation of four existing mines and completed commissioning of the new Tschudi mine, making five mines now in production. • US$8 million placement to fund doubling of annual smelter capacity to 50,000 tonnes Weatherly International plc, the AIM listed integrated base metals producer withcopper mining and smelting operations in Namibia, is pleased to announce aprofit of US$12.4 million, or US$0.04 per basic share, on turnover of US$63.1million and group production of 22,711 tonnes of copper for the financial yearended 30 June 2007. Rod Webster, CEO of Weatherly International, commented "Weatherly has had anoutstanding year, culminating in a maiden profit of US$12.4 million. Since ouracquisition of the distressed Ongopolo assets, we have successfullyrehabilitated the mines and refurbished the smelter. We are in sound position with US$13.3 million cash in the bank, no material debtand a balance sheet which more accurately reflects our assets, following itsrestructuring. This provides Weatherly with a solid base going forward. The outlook for 2008 is positive for Weatherly. We have a clearly definedproduction strategy, are fully funded for our immediate growth projects, andwill be focusing our attention during 2008 on regional exploration andcompleting the Berg Aukas and Tschudi Open Pit feasibility studies." For further information Paul Craven/John Norris, Weatherly International Tel: +44 (0)207 868 2232 Jakob Kinde/Stephen Pickup, Libertas Capital Tel: +44 (0)207 569 9650 Alex Buck, Buckbias Ltd Tel: +44 (0)207 244 8053 Chairman's statement Dear Shareholder It gives me great pleasure to present Weatherly's first full-year accountsincorporating the results of our Namibian operations, and to announce our maidenprofit of US$12.42 million. It has been an exceptional year for Weatherly, starting with the acquisition ofthe failing Namibian copper mining and smelting company, Ongopolo, in July 2006for a total consideration of US$35.1 million. At the time of acquisition,Ongopolo was on the brink of insolvency with just one mine operating well belowits capacity, a smelter in disrepair, substantial debts, and a demoralisedworkforce. However, we saw tremendous potential in the assets and our confidencehas been justified by the progress achieved during the past year. On the mining side, we successfully rehabilitated four existing mines andcommissioned the new Tschudi mine, with five mines now in production. At thesame time we improved safety practices, revised the mine planning, identifiedour priority growth projects and further refined our medium-term productionstrategies. The Tsumeb smelter was rebuilt within schedule and budget and is currently beingexpanded to 50,000 tonnes. The project is expected to be completed in twostages, with commissioning of the Ausmelt furnace in 2008 and start-up of theoxygen plant by mid-2009. The smelter expansion was funded by a US$8 millionplacement to Dundee Precious Metals at a price of 25p per share. We willcontinue to process our own in-country concentrates, while also processing agrowing quantity of imported concentrates. All outstanding commercial liabilities to the Government of the Republic ofNamibia inherited with the acquisition have been resolved, and unsecuredcreditors are being repaid in accordance with the undertakings given. In the Chairman's interim statement in March 2007, I indicated that the companywould review the value of its Namibian assets. The process was completed duringthis accounting period and more appropriate values are now reflected in theconsolidated balance sheet, which gives Weatherly a stronger balance sheet andgreater flexibility with respect to its future financing options. Going forward,the financial statements will be prepared under IFRS (International FinancialReporting Standards) to conform with reporting requirements. In July 2007, Ongopolo was renamed Weatherly Mining Namibia. In addition, anOngopolo subsidiary housing the smelter company was renamed Namibia CustomSmelters and transferred to a new holding company. We believe this restructuringwill allow an appropriate differentiation of risk in the market betweenWeatherly's mining and smelting operations in Namibia. The new corporatearrangement will also allow both companies to access appropriate finance. In August 2007, Weatherly raised £9.28 million (net of expenses) through theissue of 48,000,000 shares at 21 pence. The proceeds will allow for thecontinuing rehabilitation of existing mines, regional exploration and thefeasibility studies of our growth projects. In line with the rapid growth of our operations and plans for furtherdevelopment, we have strengthened our management team with the appointment offour highly experienced managers to lead our business in Namibia. At thecorporate level, Paul Craven joined Weatherly in April 2007 and was appointedChief Financial Officer and a member of the Board in June 2007. Weatherly is now a major employer in Namibia, with a workforce of over 1,000including more than 120 new jobs created in the past year. We continue torestructure the workforce to improve productivity through an increase in thewage levels of our employees, the introduction of modern mining techniques bycontracting a wide range of mining specialists, and the transfer of skills andtraining programmes for young Namibians. Weatherly looks forward to meeting the challenge of consolidating and furtherstrengthening the sound financial position we have established in our first yearof operations in Namibia by enhancing the resource base and continuing todevelop the company as an integrated base metals producer. I would like to end by thanking everyone who has a stake in WeatherlyInternational - our shareholders, our employees, our fellow London and NamibianBoard members, and the people of Namibia. I greatly value your contributions tomaking the Weatherly group a profitable, growing and sustainable integratedmetals producer. Wolf MartinickChairman26 November 2007 Chief Executive's review Overview At the time of acquisition, Ongopolo was a company in severe distress with onlyone mine, Otjihase, in production. Immediately accessible ore reserves acrossall mines were generally depleted, most plant and equipment was inoperative, andthe workforce and management demoralised. This was the challenge facingWeatherly in late July 2006. Since then Weatherly has invested some US$44 million in regenerating thebusiness, with most of this spent on rehabilitating and re-equipping theoperations. By the financial year-end three mines were operational, a furthertwo mines were in development and the No 1 reverbatory furnace had been rebuilt.Although the increase in production was too late to be substantially reflectedin this set of financials, it does confirm that an operational turnaround iswell underway. It is now some 16 months after the acquisition and Weatherly now has five minesin production and is evaluating a range of expansion options for all the sites.The Ongopolo name has disappeared and two new companies, Weatherly MiningNamibia ("WMN") and Namibia Custom Smelters ("NCS"), have emerged. Each of thesecompanies has its own clearly defined growth strategy, performance targets andmanagement structure. Weatherly Mining Namibia WMN currently operates five mines feeding three concentration plants located inthe central and the northern regions of Namibia. Combined milling capacity isapproximately two million tonnes of ore per annum, of which less than two thirdsis currently being utilised. The short to medium term strategy is to expand theproduction of the existing mines and to develop new satellite mines to fullyutilise the available capacity. The table below summarises the current mine/concentrator relationships. Thereserves and resources for each of the mines are contained in Table A on page 9of this report. Mine Status as at Nov '07 Central OperationsOtjihase production Otjihase ConcentratorMatchless production (nameplate capacity 1,000,000tpa) Kombat OperationsKombat No 1 shaft production Kombat ConcentratorKombat No 3 shaft (lead) evaluation (nameplate capacity 400,000tpa)Kombat Central Open Pit evaluationGross Otavi evaluationAsis Far West future evaluation Northern OperationsTsumeb West production Tsumeb ConcentratorTschudi Underground production (nameplate capacity 500-700,000tpa)Tschudi Open Pit evaluationTsumeb De Wet Shaft future evaluation Central Operations Otjihase is an underground mining operation recovering pillars left by previousmining. This is achieved by filling the voids with a cement sand fill and cablebolting the roof to ensure stability and support. Much of the work during thepast year was aimed at preparing the Karuma block for extraction, which willunderpin production for the next five years. Key achievements were thesuccessful commissioning of the backfill plant and the commencement of cablebolting operations in May 2007. The first ore from this block was extracted inthe fourth quarter 2007, although the full benefits are not anticipated untilsecond quarter 2008. Matchless is a shallow underground mine some 80 kilometres south west ofOtjihase, exploiting the most westerly shoot associated with the Matchlessmineralisation. The mine was semi-operational at the time of acquisition butrequired a major upgrade of the power, ventilation and mobile equipment tobecome fully operational. This was achieved in the fourth quarter of 2006. Asmining progresses, it is anticipated that the Western shoot will eventually linkback to the existing deeper workings (River shoots), with potential for a largeroperation. Production from Otjihase (including Matchless) was 462,442 tonnes of ore grading1.15% copper, 5.5 grams per tonne of silver and 0.3 grams per tonnes of gold.Mill recovery for copper was 91%. Copper production attributable to Otjihase was4,856 tonnes. Kombat Operations Kombat is a historically significant underground mine some 440 kilometres northof Windhoek. The mine was flooded in 2005 and has been the subject of limitedproduction and evaluation since then. Initially the focus was at Asis Far West,where a new 800-metre shaft had been sunk by the previous owners at a cost ofUS$30 million. Subsequent drilling revealed that the best mineralisation lay afurther 150 metres below the bottom shaft level. The decision was taken inJanuary 2007 to place the shaft on care and maintenance in favour of dewateringthe flooded No 1 Shaft, and concentrating on retrieving high grade reserves thatwere lost in the 2005 flooding. Despite a number of setbacks, the pumping systemhas been upgraded and sufficient progress has been made for mining to resume,which it did in November 2007. In addition to the No 1 Shaft ore-bodies, there is considerable potential foralternative sources of ore from the areas surrounding Kombat. These areas can bemined as either supplementary ore or, in the event of a dewatering setback, asan alternative mill feed. Two areas were investigated during 2006/07. The first, Kombat Open Pit, was an area extending some four kilometres east ofNo 1 Shaft that had the potential to support a series of open pits. Acomprehensive drilling program together with some trial open pitting was carriedout across two of the more promising zones. The drilling and metallurgicalresults are being analysed by consultants RSG Global, with the final reportsexpected early in 2008. The second area drilled was the Gross Otavi Central ore-body which lies some 14kilometres east along the main road to Otavi. A total of 13 confirmation holeswere completed and results were generally consistent with the previous drillingon which the "historical" resource of 158,000 tonnes at 1.5% copper and 6% leadwas based. Encouraged by the current high lead price, combined with the abilityof the Kombat concentrator to treat both lead and copper ores, Weatherly isconducting a feasibility study to examine the potential of Gross Otavi as asmall satellite mine using the Kombat concentrator. Northern Operations The Tsumeb West mine, located south west of the town of Tsumeb, is the first ofa number of mines being developed to feed the Tsumeb concentrator. Previously inoperation until 2004, the mine was successfully recommissioned in May 2007 alongwith the concentrator. Although the proven resource is small, the mine isexpected to be a reliable low-cost contributor for some time as the ore-bodiesall continue at depth. Tschudi refers to a large area of mineralisation occurring along the geologicalcontact of a major syncline some 20 kilometres west of Tsumeb. A small part ofthis contact (2 kilometres of strike) was extensively drilled by Goldfields inthe 1970s and 1980s, and this forms the basis of Weatherly's underground andopen pit developments. The initial focus has been on bringing a smallunderground mine into production ahead of a larger open pit development. Most ofthe underground access tunnels and infrastructure were completed in thefinancial year, with the mine subsequently achieving first production in October2007. Tschudi Underground and Tsumeb West are expected to provide 500,000 tonnesof ore annually to the Tsumeb concentrator. Mine production Total mine production for the financial year was 5,726 tonnes of coppercontained in concentrates. The majority of production was from the Otjihase andMatchless mines, supplemented by small tonnages from development work at Kombatand Tsumeb West, prior to a full resumption of activities. The actual breakdown was as follows: Mine Tonnes of copper Otjihase including Matchless 4,856 Kombat 694 Tsumeb West 176 Total 5,726 Group average cash cost of copper (C1) US$ 4,190/tonne. Namibia Custom Smelters The Tsumeb smelter is one of only four commercial smelters currently operatingin Africa. It is linked by rail to the Otjihase and Kombat mines, and to theAtlantic port of Walvis Bay. The smelter comprises two reverbatory furnaces, oneof which is currently inactive, and three converters. The active reverbatoryfurnace runs on coal, with the waste heat being used to generate approximately60% of the plant's internal power requirements. The complex also contains theremains of the lead sinter plant, lead blast furnaces and refinery, which are nolonger operable. Lead products recovered as part of the copper smelting processare collected and sold as high grade dusts. The plant also incorporates fourarsenic roasters that produce arsenic trioxide powder which is sold underlong-term contracts to the wood preservative industry. One of the first tasks undertaken following the acquisition was to rebuild thesmaller No 1 reverbatory furnace. Work started in August 2006 and was completedat the end of the same month, well within budget and ahead of schedule. During2006/07, the smelter treated a range of concentrates from Weatherly's own minesas well as concentrates from the Democratic Republic of Congo, Zambia,Mauritania and Bulgaria under tolling agreements. Despite the array ofconcentrates being treated, the smelter performed above expectations, achievingan overall copper recovery of 96.4%. Smelter production for 2006/07 totalled 22,711 tonnes of blister copper, ofwhich 6,307 tonnes belonged to Weatherly. Cu (t) Ag (kg) Au(kg) Weatherly blister (mine production plus purchases) 6,307 5,757 98 Tolling (Republic House) 16,404 16,381 231 Total 22,711 22,138 329 The focus for the coming year will be to further expand the smelter's capabilityto treat complex concentrates through the incorporation of an Ausmelt furnaceand associated oxygen plant. This will improve overall profitability andsignificantly reduce operating costs. Details of this are contained in the"Identifying longer term growth" section below. Marketing, sales and treasury All blister copper produced by Weatherly during the year was sold at the smeltergate to the trading group Republic House, pricing normally a function of the4-month forward LME (London Metals Exchange) price. The average weighted copperprice achieved by Weatherly was US$6,821 per tonne. Weatherly produces a blistercopper product containing 98.6% copper, plus significant silver and gold. Copper prices during the year were volatile, reflecting the continued strongdemand by China and India, and a number of supply bottlenecks relating toexisting and developing mines. Spot prices ranged from US$5,426 to US$8,220 pertonne of copper. The concentrate market was equally choppy as the market moved to an increasedsupply of cathode and a shortage of concentrates. The benchmark treatment/refining charges for most of the year were US$60 per tonne and 6 cents per poundand moving down. This trend is expected to continue in 2007/08, but will haveminimal effect on Weatherly as the prices for the coming year have already beenlocked in under the purchase agreement with Dundee Precious Metals (Chelopech). Costs associated with transport and shipping also rose in 2006/07, but were morethan offset by increasing prices for the gold and silver contained in theblister copper. In general, improvement in the value of the gold and silveroffset the transport, refining and other realisation charges associated withsales. Operating costs were also affected by the volatility in US$/Randfluctuations which ranged from a low of 6.77 to a high of 7.91, averaging 7.22(source OANDA.com). As at 30 June 2007, the company held cash reserves equivalent to US$13 million,of which 30% was held in sterling and the remainder in US dollars. Weatherly remained unhedged both in metal prices and currency during the year,but the company has put in place some downside copper price protection for thecoming year. Identifying longer term growth Tsumeb Smelter Expansion In June 2007, Weatherly concluded a deal with Dundee Precious Metals to processup to 50,000 tonnes of concentrate per annum from the Chelopech mine inBulgaria. As part of the deal, Weatherly is expanding the smelter and willeventually double its annual capacity to 50,000 tonnes of blister copper. Theexpansion is underway and the first stage, commissioning of the Ausmelt furnace,is due in the first quarter of 2008. The second stage, which incorporates anoxygen plant, is expected to be completed 12 months later. This second stagewill significantly reduce treatment costs, thereby putting the smelter on aninternationally competitive footing. Berg Aukas Zinc Mine The Berg Aukas Mine, located approximately 80 kilometres from the Tsumebsmelter, historically produced lead, zinc and vanadium before the mine wasclosed and flooded in 1978. At that time, the remaining "historical" reserveswere calculated at 1.7 million tonnes grading at 17% zinc, 5% lead and 0.6%vanadium pentoxide (recalculated and verified by RSG Global). Basic above-groundinfrastructure remains in place at the decommissioned mine. Weatherly believes there is an opportunity to resume production at Berg Aukasand has initiated a feasibility study. During the coming year, the mine workingswill be dewatered as part of an underground evaluation program to verify thereserves and resources and obtain metallurgical samples for the design of a newconcentrator. Completion of the feasibility study is expected before the end of2008. Tschudi Open Pit The ore-body characteristics at Tschudi indicate support for an open pit miningmethod, potentially with subsequent underground operations below the open pitworkings. Based on the global resources of 43 million tonnes at 0.8% Cu and 11grams per tonne Ag, an open pit scoping study was undertaken by Tony Cameron andAssociates in 2006. The study concluded that open pitting of the top 120 meterswas viable 3.2 million tonnes grading 1.2% copper and 19 grams per tonne ofsilver on a stripping ratio of 8.5:1. The programme for the coming year is toinfill-drill the ore west of the underground operation to JORC classification asa prerequisite for completing a feasibility study. Tsumeb Tailing Retreatment During 2006/07, Weatherly entered into a joint venture with Applied IntellectualCapital ("AIC"), another AIM-quoted company, to investigate the feasibility ofrecovering copper, lead, zinc and silver from the Tsumeb tailings dam. AIC hasdeveloped a number of innovative technologies for recovering base and preciousmetals from alkaline environments. Under the agreement, AIC paid Weatherly US$1million, and agreed to commit a further US$3.6 million in establishing a pilotplant on site as part of completing a bankable feasibility study. If it provesviable, the project would then proceed to development on a 50/50 fullycontributing basis. This technology could potentially also be applied to Weatherly's other tailingsdams at Kombat and Luanshya in Zambia. Divestments During 2006/07, Weatherly disposed of its remaining 10% shareholding in theValencia uranium deposit for US$9.5 million and its Otavi limestone deposit forUS$1.2 million. It also agreed to sell the Tsumeb office block for US$0.5million. Proceeds from the sales were used to pay outstanding taxes to thegovernment and loans to unsecured creditors agreed as part of the Ongopoloacquisition. Exploration Weatherly holds some 2,770 square kilometres of exploration tenements containinga large number of advanced targets. "Historical" (see Table B on page 9) andcurrent (see Table A on page 9) ore resources and reserves comprise over 950,000tonnes of contained copper metal as well as significant amounts of lead, zinc,gold and silver in Namibia. Priorities during 2006/07 were to drill outmineralisation that had the potential to become producing satellites withintrucking distance of existing concentrators (Tschudi, Kombat Open Pit and GrossOtavi). This will continue to be the main thrust in the medium term. Elsewhere, Weatherly is keen to advance its regional exploration program andspent most of the 2006/07 year collating the vast amount of information arisingfrom some 40 years of field work carried out by Goldfields and Newmont. A numberof targets have been identified and it is planned to begin a regionalexploration program in 2008. Strengthening our management team We were pleased to welcome three experienced and talented new members to ourteam in Namibia: Ron Clarke as Country Manager, Craig Rix as Chief FinancialOfficer in Namibia, and Deon Garbers as Managing Director of Weatherly MiningNamibia. We are also pleased to announce the promotion of Hans Nolte to ManagingDirector of Namibia Custom Smelters. In all, over 20 new management appointments have been made to increase thecapability of the organisation and prepare for future profitable growth. Towardsthe end of the year, a new Namibian head office was established in Windhoek toreplace the former office located in Tsumeb. Engaging our workforce Weatherly is one of the largest private employers in Namibia with over 1,000people engaged at the various sites. The company's financial success ultimatelydepends on having a highly capable and committed workforce. In order to ensurethis, a comprehensive restructuring program has been initiated involving thereassessment of all positions in the smelter and at the new Tsumeb West andKombat mines. At Otjihase, change management consultants have been engaged toassist in improving productivity at all levels. In all, some 123 new jobs werecreated and 114 new people employed during the period. In June 2007, the company reached a new substantive wage agreement with theNamibian Mine Workers Union that led to significant wage increases for most ofthe workforce. For many employees, this was the first pay increase for more thanthree years. Importantly, a key component of the increases is in the form ofproductivity payments that are directly linked for the first time to output. Thenew wage structure, together with a greater emphasis on training, has broughtabout significant improvements in both morale and performance. Commitment to safety Weatherly is determined to eliminate job-related injuries throughout itsoperations. Sadly, there were two fatalities during the year - one resultingfrom a rock fall at Kombat, and the other a vehicle accident at Otjihase. Boththese accidents were symptomatic of the low level of safety awareness and poorwork practices that are a legacy of the past and which we are committed toeradicate. Weatherly has implemented a number of initiatives to ensure greatersafety, including basic tag-in procedures and self-rescuers as standard issue.The introduction of mechanical scalers at Otjihase is also expected to have abig impact in reducing accidents arising from rockfalls during the process ofmaking areas safe. Safety statistics for 2006/07 and 2005/06 years were as follows: Type of injury 2006/07 2005/06 Fatality 2 0Reportable 5 9Disabling 16 10Minor 36 39Total 59 58 Community involvement. Weatherly supports and funds a number of community-based projects. The two mostimportant projects for 2006/07 were assisting the National Institute for Miningand Metallurgy in establishing a new campus in Tsumeb, and the Ondundu FarmProject. In the case of the Institute, Weatherly donated a number of buildings,lathes, welding machines and materials to be used by the apprentices. Thecompany also agreed to sell a number of flats to assist with the housing ofpeople being relocated. Weatherly continued to finance the community Ondundu Farm Project, which trainslocal Namibians in basic farming skills. The objective is to assist the projectin becoming a self-funding enterprise. The company also made contributions toAIDS awareness campaigns and to the Copper Festival which is held annually inTsumeb. Environment Weatherly carried out a detailed due diligence of all environmental liabilitiesprior to acquiring the assets of Ongopolo and these were assessed as beingminimal, the current provision being US$ 4.2 million. Weatherly, as thesuccessor of Ongopolo, has no responsibility for any liabilities thatpre-existed the formation of Ongopolo as the Namibian Government wrote offexisting liabilities at the time Ongopolo acquired the Goldfields assets fromthe liquidator. Weatherly is committed to maintaining the highest environmental standards aspart of its overall business philosophy. The mining operations are mostlyunderground and so have relatively little impact on the surrounding environment.The smelter constantly monitors its gaseous emissions and remains fullycompliant with government and statutory requirements. The company has beenproactive in initiating a clean-up of a number of areas which were neglectedunder the previous management. During the forthcoming year, Weatherly will be reviewing its environmentalmonitoring, management and reporting systems to ensure it continues to implementthe highest possible standards. The company also expects to begin constructionof a new hazardous waste disposal site which has been fully permitted by theappropriate authorities. Luanshya It is disappointing to report that there has been no further progress inresolving the dispute relating to exploration licence PLLS 239 in Zambia.Weatherly is still awaiting a date to be set for the High Court to hear thematter. In the meantime, the Zambian Government has applied to the courts tohave Luanshya Copper Mines Limited joined with the government as co-defendants.It is anticipated that there will be some resolution to the matter in the comingyear. This dispute does not affect Weatherly's nearby PLLS 252 license or itsability to treat the tailings on license PLLS 240 for the recovery of copper. Outlook The business outlook for the forthcoming financial year is positive. We now havefive operating mines, clearly identified growth prospects, a smelter expansionunderway to double capacity, and a strong and committed management team. The keypriorities during the 2008 calendar year will be to commission the smelterexpansion, to ensure a successful ramp-up of production at the recentlycommissioned Kombat, and Tschudi mines, to complete the feasibility studies forthe Berg Aukas zinc mine and the Tschudi open pit, and to start regionalexploration. Rod WebsterChief Executive Officer26 November 2007 TABLE A WEATHERLY MINING NAMIBIA, SUMMARY OF MINERAL RESOURCES AS AT 24 APRIL 2006 DEPOSIT RESOURCE INSITU TONNES AND GRADES INSITU METAL CATEGORY Tonnes Cu % Ag g/t Au g/t Cu metal Ag metal Au metal tonnes kg kgOTJIHASE Measured 3,773,033 2.34 9.03 0.43 88,289 34,062 1,612 Indicated 4,636,447 1.92 7.64 0.31 88,834 35,422 1,455 Inferred 4,203,805 1.36 5.06 0.21 57,172 21,255 875 TOTAL 12,613,285 1.86 7.19 0.31 234,295 90,738 3,942TSCHUDI Measured 13,573,000 0.82 9.75 - 110,857 132,324 - Indicated 26,312,000 0.83 10.85 - 217,863 285,446 - Inferred 3,531,000 0.84 11.01 - 29,625 38,875 - TOTAL 43,416,000 0.83 10.52 - 358,346 456,645 -TSUMEB WEST Measured 34,644 2.65 13.00 - 918 450 - Indicated 648,769 2.29 18.73 - 14,857 12,154 - Inferred - - - - - - - TOTAL 683,413 2.31 18.62 - 15,775 12,605 -MATCHLESS Measured - - - - - - -WESTERN Indicated 988,618 3.00 - - 29,659 - -EXTENSION Inferred 47,635 2.48 - - 1,181 - - TOTAL 1,036,253 2.98 - - 30,840 - -KOMBAT ASIS Measured - - - - - - -WEST (19-22 Indicated 104,600 2.49 28.00 - 2,605 2,929 - LEVEL) Inferred 235,000 3.77 50.00 - 8,855 11,750 - TOTAL 339,600 3.37 43.22 - 11,460 14,679 -KOMBAT ASIS Measured - - - - - - - FAR WEST Indicated 1,641,864 2.29 - - 37,599 - - Inferred 572,775 2.29 - - 13,117 - - TOTAL 2,214,639 2.29 - - 50,715 - - GRAND TOTAL 60,303,190 1.16 10.07 0.31 701,431 574,667 3,942 Note:Resources based on "Ongopolo's Mineral Properties and Mines, Competent Persons Reportand Technical Valuation, 24 April 2006", prepared by RSG Global on behalf of WeatherlyInternational plc and found in the Acquisition, Placing and Admission to trading on Aimdocument, 22 June 2006 . TABLE BHISTORICAL RESOURCES INSITU TONNES AND GRADES INSITU METALDeposit Tonnes Cu Pb Zn Ag (g Au Ge V.O. Cu Pb Zn Ag Au Remarks (%) (%) (%) /t) (g/ (ppm) (%) metal metal metal metal metal t) tonnes tonnes tonnes kg kgWEATHERLY MINING NAMIBIA HISTORICAL RESOURCES Kombat 500,000 0.30 1.99 - 15.00 - - - 1,500 9,950 - 7,500 - Remaining resource/Lead reserve calculated byDeposit Goldfields in 1984 Gross 160,000 1.54 5.85 - 15.40 - - - 2,464 9,360 - 2,464 - Historical resourceOtavi calculated byCentral GoldfieldsMine Harasib 1,240,000 - 1.66 2.67 - - - - - 20,584 33,108 - - Historical resourceDeposit calculated by Goldfields Berg Aukas 1,650,000 - 4.60 17.40 - - - 0.60 - 75,900 287,100 - - Remaining resource/Mine reserve calculated by Goldfields in 1987 Elbe A 5,910,000 1.20 - 0.97 8.30 0.45 - - 70,920 - 57,327 49,053 2,660 Resource calculatedGossan by Gold Fields inDeposit 1989 Old 1,060,000 2.50 - - - - - - 26,500 - - - - Remaining resource/Matchless reserve calcuated byMine Goldfields in 1984 Tsumeb 150,000 2.96 - - 61.00 - - - 4,440 - - 9,150 - Remaining resource/Mine Open reserve calculated byPit Goldfields in 1984 Uris 180,000 2.27 - - - - - - 4,086 - - - - Remaining resource/Mining reserve calculated byArea Goldfields in 1984 Kombat 228,070 2.18 - - 6.36 0.12 - - 4,972 - - 1,451 27 Calculated byAsis West Weatherly in 2007(12-15Level) Kombat 10,600,000 0.21 0.19 - - 2.00 - - 22,260 20,140 - - 21,200 Remaining resource/Tailings reserve calculated by Goldfields in 1984Tsumeb 16,000,000 0.71 - - - - - - 113,600 - - - - Remaining resource/Tailings reserve calculated by Goldfields in 1994Tsumeb 2,000,000 - - 9.03 - - 262 - - - 180,600 - - Zinc Ox feasibilitySlag Dumps 2003 TOTAL 39,678,070 0.72 0.96 5.17 10.02 1.43 262 0.60 250,742 135,934 558,135 69,618 23,887 PUKU MINERALS (ZAMBIA) LIMITED 'Old dump' 48,100,000 0.45 - - - - - - 216,450 - - - - Resource calculated by ZCCM Akotiti 44,100,000 0.25 - - - - - - 110,250 - - - - Resource calculated by ZCCM Chongo dam 61,960,000 0.14 - - - - - - 86,744 - - - - Resource calculated by ZCCM TOTAL 154,160,000 0.27 - - - - - - 413,444 - - - - Note: Resources/reserves outlined in Table B are estimated according to SAMREC standards in force at the time of the analysis.Management expects minimal material differences between these historic resource estimates and JORC compliant estimates.The Company is in the process of updating these historic estimates. Consolidated profit and loss accountFor the year ended 30 June 2007 Year Six ended months ended 1 30 June 30 June 2007 2006 Note US$,000 US$,000 Group turnover 63,158 -Cost of sales (53,453) - Gross profit 9,705 - Administrative expenses (7,583) (1,266) Other operating income 2 1,608 324 Operating profit/(loss) 2 3,730 (942) Interest receivable 350 208 Interest payable and other similar charges -Charge for environmental provision (592) Profit on sales of assets 9,530 - Profit/(loss) on ordinary activities 13,018 (734)before taxation Tax on profit/(loss) on ordinary - -activities Profit/(loss) on ordinary activities after 13,018 (734)taxation Minority interest (599) - Net profit/(loss) attributable to 12,419 (734)shareholders Basic earnings/(loss) per share (US cents) 4 3.73 (0.42)Diluted earnings/(loss) per share (US 4 3.69 (0.42)cents) Continuing operations All activities are continuing operations. None of the group's activities werediscontinued during the current year or in previous periods. 1 The comparative reporting period is for a six month period. The financialperiod of Weatherly was shortened in 2006 to align the parent company year endwith the year end of the Namibian subsidiary acquired. Consolidated and company balance sheet At 30 June 2007 Consolidated Company As at As at As at As at 30 June 30 June 30 June 30 June 2007 2006 2007 2006 US$,000 US$,000 US$,000 US$,000 Fixed assetsIntangible assetsNegative goodwill (14,952) - - -Mining licences 6,175 6,175 - -Tangible assets 96,443 - - -Investments - 467 36,095 1,398 87,666 6,642 36,095 1,398 Current assetsStocks 1,504 - - -Debtors 8,493 3,740 22,800 10,382Cash at bank 13,280 18,842 13,169 18,839 23,277 22,582 35,969 29,221 Creditors- amounts falling due 17,754 1,682 1,815 1,684within one year Net current assets 5,523 20,900 34,154 27,537 Total assets less current 93,189 27,542 70,249 28,935liabilities Creditors- amounts falling due 4,702 - - -after more than one year Provision for liabilities 4,248 - - -and charges Net assets 84,239 27,542 70,249 28,935 Capital and reservesCalled up share capital 3,043 2,779 3,043 2,779Share premium account 53,665 27,983 53,665 27,983Merger reserve 18,471 6,151 18,471 6,151Capital redemption 454 - 454 -reserveShare based payments 271 48 271 48reserveProfit and loss account 6,100 (9,419) (5,655) (8,026) Shareholders' funds 82,004 27,542 70,249 28,935 Minority interest 2,235 - - - 84,239 27,542 70,249 28,935 Consolidated cash flow statementFor the year ended 30 June 2007 Year Six ended months ended Notes 30 June 30 June 2007 2006 US$ US$ Net cash outflow from operating activities 3(a) (5,346) (3,051) Returns on investment and servicing offinanceInterest received 350 211 Capital expenditure and financial investmentPayments to acquire tangible fixed assets (33,372) -Receipt from sales of tangible fixed assets 10,759 - (22,613) - Acquisitions and disposalsPurchase of subsidiary undertaking (20,000) -Net cash acquired with subsidiary 14,893 -undertakingPayments to acquire investments - (1,942) (467)acquisition costs (7,049) (467) FinancingIssue of ordinary share capital 27,205 15,042Share issue costs (1,237) (1,101) 25,968 13,941 (Decrease)/increase in cash 3(b) (8,690) 10,634 Reconciliation to net cash Net cash at 1 July ( 2006 year - balance at 18,842 6,2971 January) (Decrease)/increase in cash (8,690) 10,634Non cash movement on differences in foreign 1,924 1,911currency Net cash at 30 June 12,076 18,842 Cash at bank 13,280 18,842Bank overdraft (1,204) -Net cash at 30 June 12,076 18,842 1. GENERAL The financial information herein does not constitute statutory accounts asdefined in section of the Companies Act 1985. The financial information has been extracted from the Group's 2007 statutoryfinancial statements upon which the auditors reported on 26 November 2007. Theopinion was unqualified and does not include any statement under section 237 ofthe Companies Act 1985. The accounts have been prepared in accordance with theapplicable accounting standards and under the historical cost convention otherthan investment properties carried at market value. Copies of the annual report will be available from the Company's registeredoffice in the near future. 2. OPERATING PROFIT Year Six ended months endedThis is stated after charging/ 30 June 30 June(crediting): 2007 2006 US$,000 US$,000 Foreign exchange (345) (227)Management fees (88) (324) Depreciation of owned assets 6,742 -Amortisation of negative (2,773) -goodwill Operating lease payments 284 -Loss on sale of tangible assets 290 - Auditors remuneration 132 51 3. NOTES TO THE STATEMENT OF CASH FLOWS (a) Reconciliation of operating profit to net cash inflow from operating activities: (b) 30 June 30 June 2007 2006 US$,000 US$,000 Profit /(loss) for the financial period 3,730 (942)Depreciation and impairment of tangible 6,742 -fixed assetsLoss on sale of assets 290 -Amortisation of negative goodwill (2,773) -Share-based payment 223 48(Increase)/decrease in stocks subsequent to (313) -acquisition(Increase)/decrease in debtors subsequent 1,960 (3,583)to acquisitionIncrease/(decrease) in creditors subsequent (15,205) 1,426to acquisition (5,346) (3,051) (c) Analysis of net funds: At 1 Cash Exchange At 30 July flow differences June 2006 2007 US$,000 US$,000 US$,000 US$,000Cash at bank and 18,842 (8,690) 1,924 12,076in hand 4. EARNINGS/(LOSS) PER SHARE The calculation of basic and fully diluted earnings/(loss) per ordinary share isbased upon the following data: 30 June 30 June 2007 2006 US$,000 US$,000 Profit/(loss) for the year attributable 12,419 (734)to shareholders Basic earnings/(loss) per share (US 3.73 (0.42)cents)Diluted earnings/(loss) per share (US 3.69 (0.42)cents) Basic earnings per share has been calculated by dividing the profit for the yearattributable to ordinary shareholders by the weighted average number of sharesin issue throughout the year; the diluted earnings per share has been calculateddividing the profit for the year attributable to ordinary shareholders by theweighted average number of shares including the effect of share options inissue. The weighted average number of ordinary shares used in the calculation of thebasic and diluted earnings/(loss) per share for each year was calculated asfollows: 30 June 30 June 2007 2006 Issued ordinary shares at start of 230,904,593 143,779,593yearShares issued during the year 125,241,962 87,125,000Issued ordinary shares at end of 356,146,555 230,904,593year Weighted average number of ordinary 333,325,298 176,152,954shares at end of year - basicearnings per shareEffect of share options in issue 3,082,894 -Weighted average number of ordinary 336,408,192 176,152,954shares at end of year - dilutedearnings per share This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Weatherly International Plc