31st Oct 2006 11:43
GVM Metals Ltd31 October 2006 GVM METALS LIMITED QUARTERLY REPORT GVM Metals Limited ("GVM" or "the Company") is pleased to announce itsoperational report for the 1st quarter ended 30 September 2006. A full copy ofthis report, as released today on the ASX, is available at the Company'swebsite, www.gvm.com.au. Highlights • Unaudited Group profit before interest and tax of $A1.6 million for the first three months of the year. • UK Institutional placement of 24,615,384 shares raised GBP3.2 million ($A7.8 million) in July 2006 to facilitate development of the Holfontein and Limpopo coal programmes. Cash at the end of the quarter was $A6.6 million. • GVM Metals Ltd executes a binding Heads of Agreement to acquire the remaining 51% interest in the Holfontein coal project and 50% of the Baobab JV coal project. • Nimag (Pty) Ltd's nickel magnesium alloy business continued to operate well ahead of budget. Its smaller FeSi Mag and fibre businesses reported growing profit levels for the quarter. Discussion of Results Nimag Group of Companies - GVM 74% interest with option to acquire balance byshare issue) The Nimag Group's quarterly profit before interest and tax increased by 30%compared to the June 06 quarter. The nickel magnesium business continued tooutperform its budget, whilst the smaller FeSi Mag and Fibres businessesreported profits for the quarter compared to losses recorded for the June 06financial year. The operational cash flow was however, negatively influenced by the payment ofR1.5 million provisional tax and an increase in working capital (excluding cash)of R7.5 million. The increase was primarily due to a reduction in tradecreditors and increases in both trade debtors and inventory. The trade debtorsand inventory are expected to decrease to normal levels during the next quarter,which will significantly improve the operational cash position. Cash wasfurther consumed by the R1.2 million repayment of long term loans during thequarter. Continuation of a weaker Rand and high nickel price indicate a highly positiveoutlook for the rest of the financial year. Coal Activities GVM executed binding Heads of Agreement with Motjoli Resources (Pty) Ltd tomerge the two companies' coal interests. The acquisition will result inHolfontein project being wholly owned by GVM. However, the suspensive conditionsof the transaction and regulatory approval in Australia and South Africa are yetto be satisfied. The Heads of Agreement includes the acquisition of Motjoli's 51% interest in theBaobab joint-venture coal project and its 100% interest in three Limpopoprospecting licences adjacent to those held by the Baobab joint-venture. Adetailed description of these projects is contained in the Annual Report whichis to be posted to shareholders in the next week. The consideration payable for the Holfontein and Baobab J.V. interests is34,863,226 ordinary shares plus a further 3,417,964 ordinary shares to be issuedon the grant of an export allocation to GVM at the Richards Bay coal terminalfor a minimum of 100,000 metric tonnes of coal per annum. The in-fill Holfontein drilling programme is continuing and the estimatedcompletion horizon is the quarter ending 31 December 2006. The results ofdrilling so far are closely in line with expectations. The bankable feasibilitystudy is expected to be completed by the end of March 2007. Limpopo Coal Project - GVM 74% interest GVM expect to finalise the Limpopo coal transaction dependent on thesatisfaction of various conditions precedent. Additional exploration will becommissioned during the next quarter together with a high level scoping study ofthe coal area. Preliminary discussions with various infra-structure participantsto ascertain capacity for possible coal exports are ongoing. For more information contact: Simon Farrell, Managing Director - GVM - +61 417 985 383 or +61 8 9322 6776 Leesa Peters / Abi Singleton - Conduit PR - +44(0) 20 7429 6606 Olly Cairns - Corporate Synergy Plc - +44(0) 20 7448 4400 www.gvm.com.au This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
MCM.L