14th Mar 2008 07:53
Coal of Africa Limited14 March 2008 COAL OF AFRICA LIMITED ('THE COMPANY') Coal of Africa Limited ('CoAL' or 'the Company') is pleased to announce itsinterim results for the half-year ended 31 December 2007. A full copy of thisreport, as released today on the ASX, is available at the Company's website,www.coalofafrica.com. The directors present their report together with the consolidated financialreport for the half-year ended 31 December 2007: 1. Directors The directors of the Company in office during or since the end of the half-yearare: Name Period of directorship Mr Richard Linnell Director since 1 August 2001 Chairman Mr Simon J Farrell Director since 21 December 2000 Managing Director Mrs Nonkqubela Mazwai Resigned 22 January 2008 Deputy Managing Director Mr Blair Sergeant Non-Executive Director since 30 June 2004 Financial Director Financial Director since 1 January 2008 Resigned as Company Secretary 14 December 2007 Mr Peter G Cordin Director since 1 December 1997 Non-Executive Director Mr Steve Bywater Appointed 8 February 2007 Non-Executive Director Mr Graham Taggart Resigned 21 December 2007 Non- Executive Director Mr Nchakha Moloi Resigned 22 January 2008 Non- Executive Director Mrs Shannon Coates Company Secretary since 14 December 2007 2. Results The results of the consolidated entity for the half-year ended 31 December 2007after income tax was a loss of A$2,237,709 (2006: profit of A$433,626)primarily attributable to a foreign exchange adjustment of A$2.98 million oncash on hand at the end of the period (contained within 'Other expenses fromordinary activities' in the P&L statement). The cash balance at the end of December was A$113,587,201. 3. Review of Activities Highlights • Shareholder approval obtained for the change of name from GVM MetalsLimited to Coal of Africa Limited ('CoAL'). • Issue of 80,000,000 shares raising more than A$115 million to fundacquisitions and development of CoAL's projects. • Payment of an additional £17 million thereby increasing the Company'sstake in the Mooiplaats Coal Project to 46.3%. • Coal of Africa Limited granted New Order Mining Rights for portions 1and 9 of the Mooiplaats Coal Project. • Over 37,000 metres of drilling were completed during the six monthson the Mooiplaats Coal Project, increasing the total amount drilled on theproject to over 65,000 metres. The results of the drilling are in line withmanagement expectations and mine planning has commenced. • Exploration expenditure included the payment of ZAR20 million toExxaro Resources Limited for drilling information on 1,200 boreholes pertainingto the Baobab Coal Project. • An agreement was concluded to acquire six farms comprising 7,000Halocated in the vicinity of the Baobab Coal Project from Sekoko Coal (Pty) Ltd. • Conclusion of an agreement to acquire 60% of the Tshikunda CoalProject. Tshikunda is contiguous with Exxaro Limited's Tshikondeni coal projectand consists of 32,000 hectares located in the Pafuri coal field in SouthAfrica. • JORC / SAMREC compliant 'Inferred' status at Thuli Coal Projectexpected Q2 2008. • Finalised an agreement to explore, with the option to acquire, anarea comprising 552Ha consisting of a remaining portion of the farm Holfonteinand portions of the neighboring farm Wildebeesfontein. • Cash on hand at the end of the period of more than A$113 million. Post period highlights • Section 11(1) approval granted by the South African Department ofMinerals and Energy satisfying the last condition precedent for the acquisitionof 70% of the Mooiplaats Coal Project. • Agreement reached and payment made (save for the issue of 4.75million CoAL shares which is subject to shareholder approval at a Shareholder'smeeting to be held on the 8th of April 2008) to acquire the remaining 30%interest in the Mooiplaats Coal project. • Signing of a Co-operation Agreement with Transnet Freight Rail ('TFR') whereby CoAL will be assisted by TFR to acquire coal freight rights to theRichards Bay and Maputo ports. CoAL has indicated that it will require railcapacity of 1 to 1.5 Mt in 2009 increasing to 10Mt by 2012. • Motjoli Resources disposes of its shares in CoAL to Signet Mining(Pty) Ltd, a broad based Black Economic Empowerment company linked toMvelaphanda Holdings Limited. • New Order Mining Rights application for the Holfontein Coal Projectlodged. Commenting on the results, Simon Farrell, Managing Director of CoAL, said," Weare pleased to report strong development across the Company's coal projects aswell as the acquisition of further farms in the Limpopo region. Discussions withmining contractors and potential off take partners are near conclusion at theMooiplaats Coal Project with production in line to commence Q3 this year. Postperiod highlights include reaching an agreement to take our stake in the projectto 100% as well as the signing of a Co-operation Agreement with Transnet FreightRail for coal freight rights to the Richards Bay and Maputo ports. " For more information contact: Simon Farrell, Managing Director CoAL +61 417 985 383 or +61 8 9322 6776Petronella Gorrie The Event Shop +27 82 827 8815Jos Simson/Leesa Peters Conduit PR +44(0) 20 7429 6603Olly Cairns / Romil Patel Blue Oar Securities Plc +61 6430 163 or +44(0) 20 7448 4400 www.coalof africa.com Discussion of the Results Mooiplaats Coal Project(100% on completion of the Coal of Africa Limited transaction) During the period, CoAL was granted Mining Rights for portions 1 and 9 in termsof Section 23 of the Mineral and Petroleum Resources Development Act,encompassing some 940 hectares of the 22,000 hectare project. Mining on theseportions is expected to commence in the second half of the 2008 calendar year. The infill drilling programme at Mooiplaats was completed during the period andover 37,000 metres were drilled, bringing the total metres drilled on theproject to over 65,000. On completion of the exploratory drilling phases,additional holes were drilled to enable water monitoring. The independentconsultants' project reports on phases 1 and 2 of the drilling, together with areport on mining floor and roof support requirements, is expected shortly. A further £17 million was paid and 8,888,888 shares issued as purchaseconsideration to acquire up to 46.3% of the Mooiplaats Coal Project. The balancepayable of £10 million in cash and 4,444,445 shares will deliver the remaining23.7% of the initial 70% stake in the project which was completed subsequent tobalance sheet date. An Environmental Rehabilitation deposit of ZAR11 millionwas invested in a Trust in compliance with South African Department of Mineralsand Energy requirements. The funds will be used for future rehabilitationexpenses incurred on completion of mining on the Mooiplaats Coal Project. Discussions with mining contractors are near conclusion and those with potentialoff take partners - including Eskom - continued during the period under review.As a result of the substantial increase in the price of export thermal coal, theCompany is reviewing its earlier plans of supplying largely unwashed thermalcoal to the domestic market and is now focusing on the possibility ofconcentrating on producing washed coals for the export market. Baobab Coal Project (100%) CoAL acquired drilling information from Exxaro Resources Limited on 1,200boreholes for ZAR 20 million. Gemecs (Pty) Ltd completed an initial geologicalevaluation of the Fripp and Tanga properties based on the Exxaro data and theevaluation yielded potential resources of over 346 million tonnes of coal in 'Measured, 'Indicated' and 'Inferred' resource categories. Total resources atFripp and Tanga stand at 713 million tonnes. East Coast Maritime (Pty) Ltd were appointed to assess railway, road and portinfrastructure required for CoAL's Baobab and Thuli coal projects and theirmandate has been extended to Phase 2 of the project. Phase 1 of the study wasfinalized in early 2008 and details the infrastructure in place while Phase 2will develop the infrastructure and relationships identified in Phase 1. A co-operation agreement was signed with Transnet Freight Rail ('TFR') wherebyCoAL will be able to acquire coal transport capacity from TFR. The agreementformalised the interaction between CoAL and TFR whereby TFR will assist CoAL inacquiring the following freight tonnages for the export of coking coal throughthe Richards Bay and Maputo ports: • 2009 - 1 to 1.5 Mt pa• 2010 - 4 to5 Mt pa• 2011 - 4 to5 Mt pa• 2012 - 10 Mt pa CoAL and TFR plan to complete the pre-feasibility study on the rail capacity bythe end of May 2008. Thuli Coal Project (Limpopo) (74%) LudikCore (Pty) Ltd and GeoMechanics (Pty) Ltd commenced drilling on the ThuliCoal Project and are expected to deliver a JORC / SAMREC compliant 'Inferred'status on the Prospect area by the end of April 2008. An Aeromagnetic study ofthe Baobab, Thuli and Tshikunda Coal Projects has been contracted for February2008 with results expected by the end of the first quarter of the 2008 calendaryear. Holfontein Coal Project (100%) During the December quarter, consultants continued to prepare the Mining WorkProgramme as well as the Social and Labour Plan and Environmental Impact Study.The application for the New Order Mining Right for the Holfontein Coal Projectwas submitted to the South African Department of Minerals and Energy in early2008. Drilling on the new portion of Holfontein and the portions ofWildebeesfontein acquired in the previous quarter commenced in February 2008. Nimag Group of Companies (100%) The Nimag Group's profit before interest and tax for the six months was ZAR5.5million (A$913k). The nickel magnesium business continued to experience toughertrading conditions in the form of thinner margins and increased working capitalrequirements due to depressed global nickel demand combined with slow movementof goods at Durban harbour. The smaller Ferro Silicon business operated wellahead of expectations contributing to the Nimag Group's profitability. Auditor's Independence Declaration A copy of the auditor's independence declaration as required under Section 307Cof the Corporations Act 2001 is set out on page 16 of the full copy of thisreport, as released today on the ASX. Signed in accordance with a resolution of the directors: ________________________________ S.J. FarrellDirector Dated at Perth, Western Australia, this 14th day of March 2008. CONSOLIDATED INCOME STATEMENTFOR THE HALF-YEAR ENDED 31 DECEMBER 2007 Consolidated Consolidated Note 31.12.2007 31.12.2006 A$ A$ Sale of goods 23,874,760 26,018,773Other 1,258,453 435,140Total revenue 25,133,213 26,453,913 Changes in inventory, raw materials and consumables used (20,113,062) (19,908,344)Consulting, accounting & professional expenses (285,763) (181,156)Employee expenses (2,169,059) (1,779,542)Depreciation and amortisation expenses (83,570) (80,257)Loss on disposal of asset held for sale (7,919) -Diminution in investments - (6,488)Doubtful / Bad debt expense - (375,000)Exploration expense - (179,355)Office rent and outgoings (150,980) (334,504)Borrowing costs (87,216) (266,423)Other expenses from ordinary activities (4,228,877) (1,515,691) Profit / (Loss) from continuing operations before income tax (1,993,233) 1,827,153 Income tax expense (244,476) (914,785) Profit / (Loss) after income tax for the half year (2,237,709) 912,368 Profit attributable to minority equity interest - (478,742) Net profit / (loss) attributable to members of the parent entity (2,237,709) 433,626 Basic earnings/ (loss) per share for Coal of Africa Limited (0.75) cents 0.73 cents Diluted earnings/ (loss) per share (0.70) cents 0.64 cents Headline earnings/ (loss) per share (0.75) cents 0.74 cents There are no dilutive potential ordinary shares thereforediluted earnings or loss per share has not been calculated ordisclosed. CONSOLIDATED BALANCE SHEETAS AT 31 DECEMBER 2007 Consolidated Consolidated Note 31 December 2007 30 June 2007 A$ A$ CURRENT ASSETS Cash assets 113,587,201 61,530,490Receivables 6,231,455 8,984,168Inventory 5,612,005 5,519,744 Total Current Assets 125,430,661 76,034,402 NON CURRENT ASSETS Assets held for sale - 94,596Intangibles 4,045,835 3,964,042Mineral interests 68,907,289 67,852,973Exploration Expenditure 13,027,279 1,123,850Other financial assets 68,584,343 12,928,598Property, plant and equipment 2,249,737 1,648,834Deferred tax 242,771 239,686 Total Non Current Assets 157,057,254 87,852,579 TOTAL ASSETS 282,487,915 163,886,981 CURRENT LIABILITIES Payables 2,419,525 9,319,361Provisions 119,048 95,355Current tax liability 15,077 1,711,840 Total Current Liabilities 2,553,650 11,126,555 NON CURRENT LIABILITIESPayables 1,375,608 1,375,608Interest bearing liabilities 414,032 506,261 TOTAL NON CURRENT LIABILITIES 1,789,640 1,881,869 TOTAL LIABILITIES 4,343,290 13,008,424 NET ASSETS 278,144,625 150,878,557 EQUITY Contributed equity 2 304,917,749 177,189,359Reserves 7,086,039 5,310,652Accumulated losses (36,930,413) (34,692,704) TOTAL PARENT EQUITY INTEREST 275,073,375 147,807,306 Minority Equity Interests 3,071,250 3,071,250 TOTAL EQUITY 278,144,625 150,878,557 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE HALF YEAR ENDED 31 DECEMBER 2007 A$ A$ A$ A$ A$ A$ A$ Ordinary Capital Foreign Share Retained Minority Total Share Profit Currency Options profits/ Equity Capital Reserves Translation Reserve (losses) Interests Reserves Balance at 1.7.2007 177,189,359 136,445 (2,705,466) 7,879,673 (34,692,704) 3,071,250 150,878,557Shares issued during the period 121,763,054 121,763,054Options exercised during the period 741,960 (270,839) 471,121Share based payments 12,126,257 12,126,257Options issued for capital raising (1,607,675) 1,607,675 -Share issue costs (5,295,206) (5,295,206)Profit/ (Loss) attributable to (2,237,709) (2,237,709)members of parent entityForeign currency translation 438,551 438,551adjustments attributable to membersof parent entityBalance at 31.12.2007 304,917,749 136,445 (2,266,915) 9,216,509 (36,930,413) 3,071,250 278,144,625 A$ A$ A$ A$ A$ A$ A$ Ordinary Capital Foreign Share Retained Minority Total Share Profit Currency Options profits/ Equity Capital Reserves Translation Reserve (losses) Interests Reserves Balance at 1.7.2006 35,396,353 136,445 (261,124) 551,200 (30,666,656) 2,505,136 7,661,354Shares issued during the period 24,460,590 24,460,590Profit/ (Loss) attributable to 433,626 433,626members of parent entityProfit attributable to minorityinterests 478,742 478,742Reserves attributable to minorityinterests (31,133) (31,133)Reversal of minority interestsfollowing 100% acquisition of acontrolled entity (2,952,745) (2,952,745)Minority interest in a controlledentity 3,071,250 3,071,250Share based payment 165,600 165,600Share issue costs (288,390) (288,390)Foreign currency translation (454,633) (454,633)adjustments attributable to membersof parent entityBalance at 31.12.2006 59,568,553 136,445 (715,757) 716,800 (30,233,030) 3,071,250 32,544,261 CONSOLIDATED CASH FLOW STATEMENTFOR THE HALF-YEAR ENDED 31 DECEMBER 2007 Consolidated Consolidated 31.12.2007 31.12.2006 A$ A$ Cash Flows used in Operating Activities Cash receipts in the course of operations 21,280,449 22,297,704Interest received 1,123,623 157,124Cash payments in the course of operations (30,539,045) (20,100,088)Interest paid (74,993) (266,423)Tax paid (12,512) (296,993) Net cash generated by/(used in) operating activities (8,222,478) 1,791,324 Cash Flows used in Investing Activities Deposits paid on investments - (2,866,364)Proceeds from sale of equity investments 496,618 -Exploration expenditure (10,086,067) -Payments for investments (46,505,343) (449,555)Payments for property, plant and equipment (667,834) (59,951) Net cash provided by investing activities (56,762,626) (3,375,870) Cash Flows from Financing Activities Proceeds from issues of shares and options 116,938,970 13,582,719Repayment of borrowings (100,152) (1,341,231) Net cash provided by financing activities 116,838,818 12,241,488 NET INCREASE IN CASH HELD 51,853,714 10,656,942 Cash at the beginning of the half-year 61,530,490 49,764 Exchange rate adjustment 202,997 (1,903) Cash at the end of the half-year 113,587,201 10,704,803 The accompanying notes form part of these financial statements. NOTE 1 (a) Basis of preparation of Half Year Report The half-year consolidated financial statements are a general purpose financialreport prepared in accordance with the requirements of the Corporations Act2001, Accounting Standard AASB 134: Interim Financial Reporting, and otherauthoritative pronouncements of the Australian Accounting Standards Board. This half-year financial report does not include all the notes of the typenormally included in an annual financial report. It is recommended that thishalf-year financial report be read in conjunction with the 30 June 2007 annualfinancial report and any public announcements made by the company and itscontrolled entities during the half-year in accordance with any continuousdisclosure obligations arising under the Corporations Act 2001. These half year consolidated financial statements were approved by the Board ofDirectors on 14th March 2008. These consolidated half-year financial statements have been prepared using thesame accounting policies as used in the annual financial statements for the yearended 30 June 2007, except for the adoption of amending mandatory standards forannual reporting periods beginning on or after 1 January 2007, as described inNote 1(d). (b) Principles of consolidation The consolidated half year financial statements comprise the financialstatements of Coal of Africa Limited and its controlled entities. A controlled entity is any entity controlled by Coal of Africa Limited. Controlexists where Coal of Africa Limited has the capacity to dominate thedecision-making in relation to the financial and operating policies of anotherentity so that the other entity operates with Coal of Africa Limited to achievethe objectives of Coal of Africa Limited. All intercompany balances and transactions between entities in the economicentity, including any unrealised profits have been eliminated on consolidation.Where a controlled entity has entered or left the economic entity during theyear its operating results have been included from the date control was obtainedor until the date control ceases. (c) Dividends No dividend has been paid or is proposed in respect of the half-year ended 31December 2007 (2006: None). (d) Changes in accounting policies New/revised standards and interpretations applicable for the years commencing 1July 2007 have been reviewed and it was determined that changes were notrequired to the existing accounting policies adopted by Coal of Africa Limited.The major new standards are AASB 7 and AASB 2007-4 which will have an effect onyear end disclosures only. Certain Australian Accounting Standards have recentlybeen issued or amended but are not yet effective and have not been adopted bythe group for the interim reporting period. The directors have not yet assessedthe impact of these new or amended standards (to the extent relevant to thegroup) and interpretations. Consolidated 31 Dec 2007 A$2. CONTRIBUTED EQUITY Issued and Paid-Up Capital297,429,472 (2006: 93,599,328) fully paid ordinary shares 304,917,749 Movements in contributed equityOpening balance at beginning of the half-year 177,189,359 - 181,818 ordinary shares issued on 6 July 2007 47,010- 8,888,888 ordinary shares issued on 29 Oct 2007 12,126,257- 80,000,000 ordinary shares issued on 28 Nov 2007 121,716,044- 590,063 options exercised on 21 Dec 2007 741,960- 2,000,000 options issued on 21 Dec 2007 in lieu of capital raising fees (1,607,675)Less: share issue costs (5,295,206) Total equity at the end of the half-year 304,917,749 Options The following options to subscribe for ordinary fully paid shares areoutstanding at balance date: Number Issued Number Quoted Exercise Price Expiry Date 13,500,000 - A$0.50 30 September 2011 555,575 - GBP0.54 31 May 2009 196,688 - GBP0.34 17 May 2009 7,000,000 - A$1.25 30 September 2012 1,625,000 - GBP0.65 30 November 2009 375,000 - A$1.50 30 November 2009 590,063 options at GBP0.34 each were exercised during the six months underreview. 3. SEGMENT INFORMATION Segment results, assets and liabilities include items directly attributable to asegment as well as those that can be allocated on a reasonable basis.Unallocated items mainly comprise interest or dividend-earning assets andrevenue, interest bearing loans, borrowings and expenses, and corporate assetsand expenses. Business segments The consolidated entity comprises the following main business segments: Manufacturing Mineral processing by Nimag in South AfricaInvesting Equity investments in South Africa, Australia and United Kingdom 31 December 2007Primary reporting industry Manufacturing Investing Consolidated A$ A$ A$RevenueTotal segment revenue 23,975,437 - 23,975,437Unallocated revenue 106,309 1,051,467 1,157,776Total revenue 25,133,213 31 December 2007Primary reporting industry Manufacturing Investing Consolidated A$ A$ A$ResultsSegment results 912,940 (2,906,173) (1,993,233)Net profit before income tax (1,993,233) Depreciation and amortisation 50,695 32,875 83,570 AssetsSegment assets 13,803,524 268,684,391 282,487,915Consolidated total assets 282,487,915 LiabilitiesSegment liabilities 2,785,169 1,558,121 4,343,290Consolidated total liabilities 4,343,290 4. BUSINESS COMBINATION (ACQUISITION OF CONTROLLED ENTITIES) The Company did not acquire control of any entities during the period. 5. DISPOSAL OF CONTROLLED ENTITIES The consolidated entity did not lose control over any entities during the halfyear period or the half year ended 31 December 2007. 6. CONTINGENT LIABILITIES The Company has a potential contingent liability of GBP10 million and the issueof 4,444,445 shares in CoAL if the remaining conditions precedent of theMooiplaats transaction are satisfied. The consolidated entity has an additionalpotential contingent liability not exceeding A$ 9.3 million (ZAR 55 million) onexploration if the conditions precedent to purchase the 60% shareholding inTshikunda Mining (Pty) Ltd are fulfilled. The purchase of 74% of Sekoko Coal(Pty) Ltd will require exploration expenditure of up to A$ 9.3 million if theremaining conditions precedent are satisfied. In accordance with normal industrypractice the Company has agreed to provide financial support to its 100%controlled entities. There are no other contingent liabilities as at 31 December2007. 7. EVENTS SUBSEQUENT TO REPORTING DATE • On 18 February 2008, the Company announced that the Deputy DirectorGeneral: Mineral Regulation Department of Minerals and Energy granted approvalfor the transaction in terms of Section 11(1) of the Minerals and PetroleumResources Development Act 2002, satisfying the last condition precedent for CoALto complete its acquisition of 70% of the issued capital of the South Africancompany that owns the Mooiplaats Coal Project. CoAL made the final GBP 10million cash payment and will seek shareholder approval for issue the remaining4,444,445 shares in the Company to take its interest in the project to 70%. • On 18 February 2008, CoAL announced that it had also reachedagreement to acquire the remaining 30% interest in the Mooiplaats Coal Project.The consideration paid for the remaining 30% was ZAR 130 million (A$ 21,905,000)together with the issue of 4.75 million shares in CoAL, the issue of which issubject to Shareholder approval. There are no other matters or events which have arisen since the end of thefinancial period which have significantly affected or may significantly affectthe operations of the consolidated entity, the results of those operations orthe state of affairs of the consolidated entity in subsequent financial years. In the opinion of the directors, 1. The financial statements and notes of the consolidatedentity are in accordance with the Corporations Act 2001, including: a. complying with Accounting Standard AASB 134: InterimFinancial Reporting and the Corporations Regulations 2001; and b. giving a true and fair view of the consolidatedentity's financial position as at 31 December 2007 and of its performance forthe half year ended on that date. 2. There are reasonable grounds to believe that the companywill be able to pay its debts as and when they become due and payable. This declaration is made in accordance with a resolution of the Board ofDirectors. ________________________________ S. J. Farrell Director Dated at Perth, Western Australia, this 14th day of March 2008. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
MCM.L