12th Mar 2007 07:01
GVM Metals Ltd12 March 2007 12 March 2007 GVM METALS LIMITED Interims for the 6 months ended 31 December 2006 GVM Metals Limited ("GVM" or "the Company") is pleased to announce itsoperational report together with the consolidated financial report for thehalf-year ended 31 December 2006. A full copy of this report is available at theCompany's website, www.gvm.com.au. Highlights • Results of the Consolidated Entity for the half-year ended 31 December 2006 after income tax was a profit of AUD$912,368 (2005: loss of AUD$141,447) • Profit before interest and tax for the Group's main operating entity, Nimag (Pty) Ltd, was AUD$3,534,000. • Shares commenced trading on the Johannesburg Stock Exchange ("JSE") on 30 November 2006. • Audit reviewed Group profit before interest and tax of AUD$2 million for the first six months of the year. • Cash at the end of the half year was AUD$10.7 million. • 12,200,000 GVM shares to raise GBP£2.44 million (AUD$ 6.1 million) were placed with Global Coal Management plc (previously Asia Energy plc). • GVM executed a binding Sale of Shares and Claims Agreement to acquire 100% of Baobab Mining and Exploration (Pty) Ltd which owns the remaining 50% of the Baobab J.V. coal project. The remaining 50% is currently held by Motjoli Resources, which GVM has previously agreed to acquire. • Granting of Section 11 approval in terms of the South African Mineral and Petroleum Resources Development Bill satisfying the last remaining condition to acquire the Limpopo Coal project. As a result, in November 2006, 20,812,500 GVM shares were issued to the Limpopo Coal vendors. • GVM exercised its call option to acquire the outstanding 26% of Nimag (Pty) Ltd by the allotment of 4,620,557 GVM shares and a cash payment of AUD$75,000. Post period highlights • Heads of Agreement reached to acquire Kelso Mining Ltd for GBP 10.0 million which allows GVM to acquire 70% of Coal of Africa Ltd (CoAL) which owns the Mooiplaats coal project. This is subject to an EGM. A Competent Persons Report ('CPR') is currently being prepared and it is a condition of the acquisition of CoAL that the CoAL properties contain a JORC and SAMREC compliant resource in excess of 450 million tonnes of coal. • Further placement of 8,333,333 GVM shares to raise GBP 2.5 million (AU$ 6.25 million). This is also subject to an EGM. Discussion of the Results NiMag Group of Companies ("Nimag")(GVM - 100%) The Nimag Group's reviewed profit before interest and tax for the first sixmonths of the 2007 financial year is ZAR 19 million (AUD$ 3.5 million). TheNickel Magnesium business continued to outperform its budget, whilst the smallerFeSiMag and Fibres businesses reported a combined loss of AUD$ 265,000 for thefirst six months of the financial year. Management expect the FeSiMag andFibres businesses to return to profitability in the second half of the financialyear. Continued exchange rate levels and high nickel prices signify a positiveoutlook for the second half of the financial year. Holfontein Coal Project (49% now - 100% on completion of Motjoli acquisition) The Holfontein in-fill drilling programme will be completed by the end of thethird quarter of the current financial year. Drilling results already analysedhave identified metallurgical and thermal coal deposits typical to the region.Geo-hydrological studies commenced in late 2006 and will be completed prior tothe bankable feasibility study which is anticipated hopefully no later than theend of March 2007. Baobab Coal Project (100% on completion of acquisitions) The acquisition of Petmin's 50% interest in the Baobab coal project will takethe form of GVM acquiring 100% of Baobab Mining & Exploration (Pty) Ltd, aPetmin subsidiary company. The purchase consideration of GBP 2.5 million (AUD$ 6million) cash is subject to GVM obtaining shareholder, ASX (if required) andSouth African Reserve Bank approval, as well as approval in terms of Section 11of the Mineral and Petroleum Resources Development Bill of South Africa. Limpopo Coal Project (74%) During December, GVM secured Section 11 approval in terms of the Mineral andPetroleum Resources Development Bill of South Africa, satisfying the last of theconditions precedent of the Limpopo Coal transaction. Shortly thereafter, GVMissued the required share consideration and the acquisition was settled andcompleted at the end of 2006. Additional exploration of the Limpopo Coal area was commissioned during thesecond quarter of the financial year, together with the collection ofgeo-scientific data. The data collected will be used to generate a geologicalmodel of the project and identify potential drilling targets. Preliminary discussions with various infra-structure participants are underwayto ascertain capacity for possible coal exports. Furthermore, consultations withsurface right owners commenced in 2006 and will continue in 2007 in conjunctionwith the Aeromag and geological surveys. Commenting on the results today, Simon Farrell, Managing Director of GVM said,'We are pleased with the Company's progress for the half year. The binding Saleof Shares and Claims Agreement to acquire 100% of Boabab Mining and ExplorationLtd furthers GVM's coal interests and combined with the JSE listing ensures GVMcontinues to set itself in becoming a major South African coal producer'. For more information contact: Simon Farrell, Managing Director - GVM - +61 417 985 383 or +61 8 9322 6776 Jos Simson/Leesa Peters - Conduit PR - +44(0) 20 7429 6666/ +44 (0) 7899 870 450 Olly Cairns - Corporate Synergy Plc - +44(0) 20 7448 4400 www.gvm.com.au CONSOLIDATED INCOME STATEMENTFOR THE HALF-YEAR ENDED 31 DECEMBER 2006 Consolidated Consolidated Note 31.12.2006 31.12.2005 $ $ Sale of goods 26,018,773 15,137,300Revenue from disposal of investments - (67,992)Other 435,140 176,737Total revenue 26,453,913 15,246,045 Changes in inventory, raw materials and consumables used (19,908,344) (11,571,313)Consulting, accounting & professional expenses (181,156) (217,469)Employee expenses (1,779,542) (1,438,889)Depreciation and amortisation expenses (80,257) (126,441)Diminution in investments (6,488) (1,081)Doubtful / Bad debt expense (375,000) (1,159)Exploration expense (179,355) -Office rent and outgoings (334,504) (75,326)Borrowing costs (266,423) (346,902)Other expenses from ordinary activities (1,515,691) (1,377,445)Share of net profit/(losses) of associate accounted for usingthe equity method - (98,630)Profit / (Loss) from continuing operations before income tax 1,827,153 (8,610) Income tax expense (914,785) (132,837) Profit / (Loss) after income tax for the half year 912,368 (141,447) Profit attributable to minority equity interest (478,742) (124,690) Net profit / (loss) attributable to members of the parent 433,626 (266,137)entity Basic earnings per share for GVM Metals Limited 0.73 cents (0.96 cents) Headline earnings per share 0.74 cents (0.84 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 2006 Consolidated Consolidated Note 31 December 2006 30 June 2006 $ $ CURRENT ASSETS Cash assets 10,704,803 985,333Receivables 5,015,464 6,374,684Inventory 4,447,916 3,245,656Other financial assets 2,866,364 - Total Current Assets 23,034,547 10,605,673 NON CURRENT ASSETS Assets held for sale 94,596 94,596Intangibles 6,130,397 7,441,280Mineral interests 12,187,055 -Other financial assets 696,091 699,992Property, plant and equipment 1,700,194 1,803,312Deferred tax 34,949 36,669 Total Non Current Assets 20,843,282 10,075,849 TOTAL ASSETS 43,877,829 20,681,522 CURRENT LIABILITIES Payables 6,113,855 5,940,126Interest bearing liabilities 1,106,565 2,451,628Provisions 101,285 125,790Current tax liability 1,037,375 459,586 Total Current Liabilities 8,359,080 8,977,130 NON CURRENT LIABILITIESPayables 1,375,608 1,340,777Interest bearing liabilities 1,598,880 2,702,261 TOTAL NON CURRENT LIABILITIES 2,974,488 4,043,038 TOTAL LIABILITIES 11,333,568 13,020,168 NET ASSETS 32,544,261 7,661,354 EQUITY Contributed equity 2 59,568,553 35,396,353Reserves 137,488 426,521Accumulated losses (30,233,030) (30,666,656) TOTAL PARENT EQUITY INTEREST 29,473,011 5,156,218 Minority Equity Interests 3,071,250 2,505,136 TOTAL EQUITY 32,544,261 7,661,354 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE HALF YEAR ENDED 31 DECEMBER 2006 $ $ $ $ $ $ $ Ordinary Capital Foreign Share Retained Minority Total Share Profit Currency Options profits/ Equity Capital Reserves Translation Reserve (losses) Interests Reserves Balance at 1.7.2005 34,500,935 136,445 1,108,117 - (30,079,645) 3,306,117 8,971,969Shares issued during the period 50,000 50,000Loss attributable to members of (266,137) (266,137)parent entityProfit attributable to minorityinterests 124,690 124,690Reserves attributable to minorityinterests (79,943) (79,943)Foreign currency translation (213,996) (213,996)adjustments attributable to membersof parent entityBalance at 31.12.2005 34,550,935 136,445 894,121 - (30,345,782) 3,350,864 8,586,583 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 2006 Consolidated Consolidated 31.12.2006 31.12.2005 $ $ Cash Flows used in Operating Activities Cash receipts in the course of operations 22,297,704 15,574,251Interest received 157,124 14,287Cash payments in the course of operations (20,100,088) (15,966,308)Interest paid (266,423) (346,902)Tax paid (296,993) (125,739) Net cash generated by/(used in) operating activities 1,791,324 (850,411) Cash Flows used in Investing Activities Deposits paid on investments (2,866,364) -Proceeds from sale of equity investments - 169,137Payments for investments (449,555) (24,121)Payments for property, plant and equipment (59,951) (99,668) Net cash provided by investing activities (3,375,870) 45,348 Cash Flows from Financing Activities Proceeds from issues of shares and options to outside equity 13,582,719interest 50,000Repayment of borrowings (1,341,231) (533,487) Net cash provided by financing activities 12,241,488 (483,487) NET INCREASE IN CASH HELD 10,656,942 (1,288,550) Cash at the beginning of the half-year 49,764 1,027,493 Exchange rate adjustment (1,903) (297,069) Cash at the end of the half-year 10,704,803 (558,126) 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. It is recommended that this financial report be read in conjunction with theannual financial report for the year ended 30 June 2006 and any publicannouncements made by GVM Metals Limited and its controlled entities during thehalf-year in accordance with continuous disclosure requirements arising underthe Corporations Act 2001. The half-year report does not include full disclosures of the type normallyincluded in an annual financial report. The accounting policies adopted are consistent with those of the previousfinancial year and corresponding interim reporting period. (b) Principles of consolidation Controlled entities The financial statements of controlled entities results are included from thedate control commences until the date control ceases. Outside interests in the equity and results of the entities that are controlledby the Company are shown as a separate item in the consolidated financialstatements. Associates Associates are those entities, other than partnerships, over which theconsolidated entity exercises significant influence and which are not intendedfor sale in the near future. In the consolidated financial statements, investments in associates areaccounted for using equity accounting principles. Investments in associates arecarried at the lower of the equity accounted amount and recoverable amount. Theconsolidated entity's equity accounted share of the associates' net profit orloss is recognised in the consolidated statement of financial performance fromthe date the significant influence commences until the date the significantinfluence ceases. Other movements in reserves are recognised directly in theconsolidated reserves. Transactions eliminated on consolidation The balances and effects of transactions, between controlled entities includedin the consolidated financial statements have been eliminated. (c) Dividends No dividend has been paid or is proposed in respect of the half-year ended 31December 2006 (2005: None). Consolidated 31 Dec 2006 $2. CONTRIBUTED EQUITY Issued and Paid-Up Capital 93,559,328 (2006: 31,310,887) fully paid ordinary shares 59,568,553 Movements in contributed equity Opening balance at beginning of the half-year 35,396,353- 24,615,384 ordinary shares issued on 12 Jul 2006 (AIM) 7,795,600- 4,620,557 ordinary shares issued on 24 Nov 2006 1,848,231- 20,812,500 ordinary shares issued on 30 Nov 2006 8,741,250- 12,200,000 ordinary shares issued on 21 Dec 2006 (allotted Jan 07) 6,075,509Less: share issue costs (288,390) Total equity at the end of the half-year 59,568,553 Options The following options to subscribe for ordinary fully paid shares areoutstanding at balance date: Number Issued Number Quoted Exercise Price Expiry Date 9,000,000 - $0.50 30 September 2011 75,000 quoted options expired during the six months under review. 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 inSouth Africa Investing Equity investments in SouthAfrica, Australia, Canada and United Kingdom 31 December 2006Primary reporting industry Manufacturing Investing Consolidated $ $ $RevenueTotal segment revenue 26,111,206 240,115 26,351,321Unallocated revenue - - 102,592Total revenue 26,453,913 ResultsSegment results 3,375,320 (1,596,804) 1,778,514Unallocated items - - 48,639Net profit before income tax 1,827,153 Depreciation and amortisiation 76,130 4,127 80,257Provision for diminution of investment - 6,488 6,488 31 December 2006Primary reporting industry Manufacturing Investing Consolidated $ $ $AssetsSegment assets 18,099,537 25,371,828 43,471,365Unallocated corporate assets - - 311,868Equity accounted investment held for sale 94,596 - 94,596Consolidated total assets 43,877,829 LiabilitiesSegment liabilities 9,860,653 1,302,418 11,163,071Unallocated liabilities - 170,498 170,498Consolidated total liabilities 11,333,568 4. BUSINESS COMBINATION (ACQUISITION OF CONTROLLED ENTITIES) The company acquired control of the following entities during the period: Consolidated entity's interest at:Name Country of Date of 31.12.06 30.6.06 Incorporation Acquisition % %(i) Nimag (Pty) Ltd South Africa 22/11/06 100% 74%(ii) Limpopo Coal (Pty) Ltd South Africa 30/11/06 74% - Details of the acquisitions are as follows: i. During the half year ended 31 December 2006, the Company exercisedits call option to acquire the remaining 26% interest in the issued capital ofNimag (Proprietary) Limited. The Nimag acquisition was satisfied by the issue of4,620,557 ordinary shares at a deemed issue price of $0.40 per share and a cashpayment of $75,000. The share issue was approved by shareholders at theCompany's annual general meeting on the 22nd of November 2006. The total valueof the consideration amounted to $1,923,223. $Purchase consideration:Cash consideration 75,000Issue of shares 1,848,223Total consideration 1,923,223 Fair value of the remaining interests in the net assets of 2,952,745Nimag acquiredDiscount on acquisition adjusted against (Nimag) Goodwill 1,029,522on consolidation ii. During the half year, the Company acquired 74% of the controlledentity, Limpopo Coal (Pty) Ltd. The acquisition was settled with the issue of20,812,500 ordinary shares at a deemed price of $0.42 in December 2006. $Purchase consideration:Issue of shares 8,741,250Total consideration 8,741,250 Fair value of assets held at acquisition date 11,812,500Minority equity interests in acquisition (3,071,250) 8,741,250 5. DISPOSAL OF CONTROLLED ENTITIES The consolidated entity did not lose control over any entities during the halfyear period or the half year ended 31 December 2006. 6. CONTINGENT LIABILITIES The consolidated entity has potential contingent liabilities if the conditionsprecedent to purchase the remaining 51% in the Holfontein Coal Project and 50%of the Baobab Coal Project, are fulfilled. The purchase of the remaining portionof the Holfontein project will require the issue of 14,868,283 GVM shares, whilethe completion of the Baobab acquisition will entail the issue of 20,000,000 GVMshares. 7. EVENTS SUBSEQUENT TO REPORTING DATE • On 7 February 2007, the Company announced that an agreement had beenreached to acquire Kelso Mining Limited ('Kelso') for GBP 10 million whoseprinciple asset is the right to acquire 70% of Coal of Africa Limited ('CoAL').The terms of the Kelso and CoAL agreement contain a number of preconditionsincluding Joint Ore Reserves Committee ("JORC") and South African MineralResource Committee ("SAMREC") compliant resource statuses, as well as regulatoryand shareholder approval. Should GVM opt to exercise its option to purchase 70%of CoAL, a further consideration of GBP 30 million will be payable. • On 20 February 2007, the Company announced that it had agreed to make afurther placement of 8,333,333 GVM shares to raise GBP 2.5 million (AU$ 6.25million). The Company will shortly lodge a Notice of Meeting seekingshareholder approval for the this placement. 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. DIRECTORS DECLARATION In the opinion of the directors of GVM Metals Limited ("the Company"): (a) the financial statements and notes set out in theannouncement, are in accordance with the Corporations Act 2001, including: (i) giving a true and fair view of the financial position ofthe consolidated entity as at 31 December 2006 and of its performance, asrepresented by the results of its operations and cash flows for the half-yearended on that date; and (ii) complying with Australian Accounting Standard AASB 134 "Interim Financial Reporting" and the Corporations Regulations 2001; and (b) there are reasonable grounds to believe that the Company will beable to pay its debts as and when they become due and payable. Dated at Perth, Western Australia, this 9th day of March 2007. Signed in accordance with a resolution of the Directors: ________________________________ S. J. Farrell Director This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
MCM.L