TIDMCZA
RNS Number : 0451D
Coal of Africa Limited
16 March 2011
HALF-YEAR FINANCIAL REPORT FOR
PERIOD ENDED 31 DECEMBER 2010
The Directors present their report on the consolidated entity
comprising Coal of Africa Limited ("CoAL" or "the Company" or "the
Group") and the entities it controlled for the six months ended 31
December 2010 together with the auditor's review report
thereon:
1. Directors
The Directors of the Company in office during the six months and
to the date of this report are:
Richard Linnell (Chairman)*
Peter Cordin*
Steve Bywater*
Khomotso Mosehla*
David Murray*
Rudolph Torlage*
Mikki Xayiya*
John Wallington (Chief Executive Officer)**
Simon Farrell (Deputy Chairman)**
Professor Alfred Nevhutanda **
Blair Sergeant (Finance Director)**
* Non-executive director
** Executive director
Review of Operations
Principal activity and nature of operations
The principal activity of the Consolidated Entity is the
exploration, development and mining of its coal interests in South
Africa.
During the 2010 financial year, the Company commenced production
of export quality thermal coal from its Mooiplaats thermal coal
project ("Mooiplaats Colliery") in Mpumalanga, South Africa. The
acquisition of the NuCoal group of companies, also in Mpumalanga,
added to the Company's production profile. CoAL exports the coal
through the Matola Terminal in Maputo, Mozambique ("Matola
Terminal").
CoAL also owns the Vele coking coal project ("Vele Colliery")
and the Makhado coking coal project ("Makhado Project"), situated
in Limpopo, South Africa. These are coking coal projects that the
Company expects will supply both domestic and export markets. The
construction of Vele Colliery was almost complete by the end of
December 2010 and will be commissioned once the necessary
regulatory approvals have been obtained. The Company has undertaken
extensive exploration activities on the Makhado Project and has
agreed to acquire coal prospects in the vicinity, which will
substantially increase the project's coal resource.
These interim financial statements report the results of the
consolidated entity for the six months ended 31 December 2010 and
its financial position at that date. The financial statements have
been prepared for the Australian Stock Exchange ("ASX"), the
Alternative Investment Market ("AIM")of the London Stock Exchange
and these Limited("JSE").
The period under review has been characterised by:
-- The achievement of 1,000 fatality free production shifts at
the Mooiplaats Colliery.
-- Total coal sales of $93m for the period compared to Nil
during the corresponding period last year;
-- Vele Compliance Notice resulting in the closure of the
colliery on 5 August 2010. The Company is well advanced in meeting
regulatory and mitigation requirements.
-- Increasing production profile at Mooiplaats - up 59% to
375,000 run of mine ("ROM") tonnes for the period.
-- Approval from the Department of Mineral Resources ("DMR") for
the exchange of New Order Prospecting Rights ("NOPR") between CoAL
and Rio Tinto controlled entities ("Rio Farm Swap") allowing for
the submission of the Makhado Project New Order Mining Right
("NOMR") Application.
-- Makhado Project Definitive Feasibility Study ("DFS") near
completion.
-- Makhado bulk sample on schedule for testing by ArcelorMittal
- extraction of over 350,000 bank cubic metres ("bcm") of material
during the six months.
-- Agreement reached with Rio Tinto to acquire the Chapudi Coal
Project and several other coal exploration properties (collectively
"the Rio Coal Assets") for US$75 million, increasing resources by
an estimated 1.040 million tonnes.
Woestalleen Colliery - Witbank Coal field (100%)
The Zonnebloem Colliery continued its impressive safety record
during the period, and has not recorded a single lost time injury
since start-up in 2008.
Woestalleen produced 948,057 tonnes of export coal and 201,450
tonnes of domestic coal between July and December 2010. This was
generated from 1,692,233tonnes ofROM coal from the Zonnebloem,
Klipbank and Hartogshoop collieries. The ROM production was lower
than the previous six-month period as a result of seasonal rainfall
and the near completion of the Klipbank and Hartogshoop collieries'
life of mine. The production lost as a result of the closure of
Hartogshoop and Klipbank will be made up by an increase in
production from the Zonnebloem Colliery.
Mooiplaats Colliery - Ermelo Coalfield (100%)
The Mooiplaats Colliery achieved the significant milestone of
1,000 fatality free production shifts during September 2010 that
had increased to over 1,200 shifts by the end of December 2010.
Production from the initial three sections increased during the
six-month period with the fourth added in October 2010. The
colliery increased production by 59% compared to the previous six
months generating 375,752 tonnes of ROM coal compared to 236,798
tonnes in the corresponding period. ROM purchases to supplement the
plant feed totaled 317,103 tonnes compared to 262,248 tonnes in the
prior comparative period. During the half-year, 716,810 tonnes (H1
2010: 448,192) of ROM coal was processed yielding 383,153 tonnes of
export quality coal (H1 2010: 150,457) and 123,628 tonnes of
middlings coal (H1 1010: 39,652).
The deployment of a fifth section at the Mooiplaats Colliery is
planned for mid-2011. A review of the Colliery is currently under
way with the objective of maximising value. This will involve
restructuring where appropriate and revision of mine planning based
on the improved geological information as a consequence of targeted
exploration work.
Despite upgrade and expansion related delays at the Matola
Terminal and train derailment in December 2010, the Company railed
364,967 tonnes (H1 1010: 169,404) of Mooiplaats and Woestalleen
coal to the port, a 115% increase over the previous six months.
Export sales totaled 352,268 tonnes (H1 2010: 263,681) and domestic
sales were 141,697 tonnes (H1 2010: 51,909).
At the end of October 2010, a Pre-Compliance Notice ("the
Notice") was issued to the Mooiplaats Colliery. Company
representatives met with the Mpumalanga Department of Economic
Development, Environment and Tourism shortly thereafter and
subsequently the Notice was withdrawn. The Company continues to
work with the relevant state departments to ensure full
compliance.
Vele Colliery - Tuli Coalfield (100%)
Vele Colliery recorded one lost time injury during the
construction and development phases of the project.
Project development included the construction of the open cast
pit, processing plant and related mining infrastructure.
As a consequence of significant opposition to the Colliery, due
primarily to a purported proximity to the Mapungubwe Heritage Site
and ambitions for the creation of a Trans-Frontier park, in August
2010, the Department of Environmental Affairs ("DEA") issued a
Compliance Notice for specific activities under taken during the
construction of the Vele Colliery requiring the cessation of all
activities on site. The Company has subsequently submitted
rectification papers in terms of section 24G of the South African
National Environmental Management Amendment Act, 1998 (Act No. 107
of 1998) ("NEMA") requesting permission to continue with the
activities relevant to the Compliance Notice. CoAL has fully
adhered to the instructions contained within the Compliance Notice
and is complying with all relevant legislation. The Company expects
clarity soon on the appropriate approvals enabling it to recommence
activities. With reference to the Integrated Water Use License
("IWUL"), the Company has cooperated fully with the Department and
complied with the legal requirements. The Company is expectant
therefore that a decision in this regard should be imminent.
During November 2010, representatives of the United Nations
Educational, Scientific and Cultural Organisation ("UNESCO") and
senior government officials from the DMR and DEA visited the site
to assess the co-existence of the Vele Colliery with the Mapungubwe
World Heritage site. The Company is confident that it has addressed
the concerns and designed sufficient mitigation into the mining
layout and processes to ensure co-existence with eco-tourism and
agriculture.
Makhado Project - Soutpansberg coal field (100%)
The extraction of the bulk sample at the Makhado Project
commenced during the reporting period and by the end of December
2010, over 350,000 bcm's of material had been removed allowing for
the extraction of the 19,100 tonne sample bulk sample to be sent to
Exxaro Resources Limited's ("Exxaro") Tshikondeni mine for
processing. The coking coal produced will be sent to
ArcelorMittal's works for testing. The results of these tests are
required for the completion of the DFS and to facilitate the
finalisation of terms and conditions for the proposed off-take
agreement between CoAL and ArcelorMittal.
By the end of the December 2010, CoAL had largely completed the
DFS for the Makhado Project and is currently undergoing a review
process, expected to be completed by end March 2011. This will be
followed by the detailed design phase of the Project when approved
by the CoAL Board, anticipated to be early in the third quarter of
the calendar year.
Significant progress was made during the period towards
completing the NOMR application for the Makhado Project which
included baseline social and environmental studies conducted by
independent experts. Consultation with interested and affected
parties continued with the communities and land claimants affected
by the Project. The NOMR was lodged subsequent to the end of the
period. Extensive economic, social and environmental impact studies
will be prepared as part of the process in formulating a detailed
Environmental Management Programme("EMP").
During the period, CoAL received confirmation from the DMR that
the application for Ministerial consent in terms of the Mineral and
Petroleum Resources Development Act (no. 28 of 2002) ("MPRDA") to
effect the Rio Farm Swap had been approved. The rationalisation of
the farms allowed CoAL to lodge the NOMR application for this
Project. The Rio Farm Swap rationalizes the NOPR into well defined,
economic coal projects and creates a further three significant coal
projects around the Makhado Project.
During November 2010, the Company announced that it had entered
into an agreement to acquire certain coal assets from Rio Tinto
group companies. These assets are situated in the Soutpansberg
Basin comprising both thermal and coking coal resources and are for
the most part, contiguous to CoAL's existing holdings in the area.
One of these projects, the Chapudi Coal Project, provides an
estimated additional 1.040 million tonne JORC resource and is
contiguous with the Company's Makhado Project. CoAL will retain
properties that were to be exchanged in accordance with the Rio
Farm Swap.
CoAL intends to use the acquisition of the Rio Coal Assets to
continue and further build upon its extensive Broad Based Black
Economic Empowerment ("BBBEE") initiatives. Specifically, CoAL
intends to develop the Chapudi Coal Project and a potential
Independent Power Producer project in collaboration with its
proposed BBBEE partners, including the local communities and other
broad based groupings.
The acquisition consideration payable by CoAL for the Rio Coal
Assets is US$75million and CoAL provided the Vendors with a US$2
million cash deposit. The remainder of the consideration comprises
US$45 million payable on completion of the sale, including approval
in accordance with Section 11 of the MPRDA. The remaining US$30
million deferred cash consideration is not payable until either the
granting of a NOMR covering one or more of the projects, or 2
years, whichever is the earlier.
Educational Trust
The Company established an educational trust in 2008 that
provides bursaries to students from the areas surrounding CoAL's
projects in the Limpopo and Mpumalanga provinces. Students
sponsored by the trust have been provided with the opportunity to
study mining and associated fields at academic and technical
tertiary institutions in South Africa.
In 2010, the educational trust sponsored 39 students and the
Company is proud to announce that at the end of the period, a
bursary student graduated from Pretoria University with a Bachelor
of Science in Metallurgical Engineering. A further two students
completed their academic studies and have undertaken their
in-service training prior to graduating later in 2011. The
remaining students are supported and mentored by the trustees as
well as CoAL staff.
Financial Results
Revenue from the sale of coal for the six months totalled
$93,386,039. No sales of coal were reported for the corresponding
period last year. Revenue from the sale of coal arising from the
acquisition of NuCoal only accrued to the Group with effect from
January 2010.
The loss for the six months under review amounted to
$57,371,902, or 11.25 cents per share compared to a loss of
$41,421,106 or 12.30 cents per share for the prior corresponding
period. This result is characterised by the high level of non-cash
charges to the statement of comprehensive income.
CoAL's decision to restate the results for the year ended 30
June 2010, following a review of the accounting treatment for the
option issued in terms of its Broad Based Black Economic
Empowerment transaction, has had no effect on the current period's
operating result. Shareholders are referred to Note 6 of the
half-year report.
Depreciation and amortisation of $30,287,571 was the biggest
contributor to the loss. Further impairments of $11,907,600 were
recorded to the carrying value of assets held for sale, following
the decision to dispose of Holfontein and NiMag. The Company also
recorded an unrealised exchange loss of $9,774,201 that arose from
the translation of inter-group loan balances. Share option expenses
contributed a further $1,442,242 in non-cash expenditure.
As at 31 December 2010, the Company had cash of $23,304,834 and
working capital of $ 11,930,635 compared to cash of $101,062,757
and working capital of $73,275,992 in June 2010. The Company has
embarked on a number of initiatives to improve control of its
working capital and to ensure the flow of operational capital is
more efficient. These include a review of the existing operating
structures and costs.
CoAL continues to work on a number of new debt facilities and
remains confident of securing one or more currently under
negotiation, which if finalised, will ensure that the Company has
the ability to repay the US$20 million facility to JP Morgan.
Marketing
The seaborne traded export thermal coal prices have steadily
increased during the six months and peaked at approximately US$130
per tonne for Free On Board sales from the Richards Bay Coal
Terminal. These coal prices were underpinned by substantial demand
for South African coal in Asia, specifically India and China, while
the European market remained relatively subdued. The US dollar
weakness has resulted in strong Australian and South African
currencies that in turn increased the cost base for the coal
produced in these territories.
The international thermal coal market remains volatile and
intra-day movements of several dollars on the paper and physical
markets are not uncommon. Sustained demand from India and China as
well as supply side constraints from countries exporting coal and a
colder than expected European winter has further supported thermal
coal prices in late 2010.The domestic thermal coal market has
remained relatively stable to firm due to the demand for export
thermal coal.
Australian supply disruptions as a result of severe flooding and
an extreme wet season has impacted global hard coking coal prices
whichhave steadily increased, peaking above US$330 per tonne from a
low of just above US$200 per tonne.
Authorised and issued share capital
At 31 December 2010, Coal of Africa Limited had 530,514,663
fully paid ordinary shares in issue. The holders of ordinary shares
are entitled to one vote per share and are entitled to receive
dividends when declared.
Dividends
No dividends were declared or paid during the six months.
Highlights and events after the reporting period
-- The NOMR application for the Makhado Project was lodged with
the DMR during January 2011 and accepted in February 2011 thus
enabling the Company to commence with the extensive economic,
social and environmental impact studies required for the completion
of the EMP.
-- During January 2011, the DMR executed the NOPR for the Rio
Farm Swap, completing the final administrative step required for
completion of the transaction.
-- The Company completed the extraction of the Makhado Project
bulk sample, which will now be processed at Exxaro's Tshikondeni
Colliery to produce some 5,000 tonnes of coking coal.
-- Commissioning of the Phase 3 expansion at the Matola Terminal
providing CoAL with 3 million tonnes per annum allocation at the
port.
Outlook
Expected developments during the next reporting period
include:
-- Clarity and resolution of the situation at Vele.
-- Completion of the Makhado bulk sample tests at ArcelorMittal
followed by the DFS.
-- Commissioning of Phase 3 of the Matola Terminals upgrade
during March 2011, thereby increasing CoAL's export allocation from
one to three million tonnes per annum.
-- Increasing the production profile at the Mooiplaats Colliery
to assist in meeting the port allocation referred to above.
-- Progress the Rio Coal Asset acquisition, including finalizing
terms with potential partners.
Additional disclosures
The additional information can be found in the notes to the
half-year financial statements. These disclosures have been
included to give a true and fair view of the Company's financial
performance and position as required by the Corporations Act
2001.
Corporate Activity
The Company previously announced that it intends transferring
its primary listing from the ASX and would seek approval for
admission to listing on the Official List of the UK Listing
Authority and to trading on the London Stock Exchange's Main Market
("LSE"). As a result of the delay in the commencement of the Vele
Colliery, the CoAL Board considered it prudent that the transfer to
the LSE be delayed.
Auditors
The change in the Company's auditors to Deloitte was approved by
shareholders on 17 November 2010.
Auditor's Independence Declaration
A copy of the auditor's independence declaration as required
under Section 307C of the Corporations Act 2001 is set out on page
23.
The half-year report set out on pages 10 to 21, which has been
approved on the going concern basis, was approved by the board on
16 March 2011 and was signed on its behalf by:
________________________________
John Wallington
Chief Executive Officer
Dated at Johannesburg, South Africa, this 16(th) day of March
2011
Resource Estimation:
The information in this report that relates to the Chapudi Coal
Project's estimated 1,040Mt JORC Resource is based on information
compiled by Steen Kristensen, who is a member of the Australian
Institute of Mining and Metallurgy and who qualifies as a Competent
Person as defined in the 2004 Edition of the 'Australasian Code for
Reporting of Exploration Results, Minerals Resources and Ore
Reserves' ("JORC Code"). Steen is a full-time employee of Rio Tinto
Energy and has experience that is relevant to the style of
mineralisation and type of deposits under consideration. . Steen
Kristensen consents to the inclusion in the report of the matters
based on his information in the form and context in which it
appears.
The information in this report that relates to exploration
results, mineral resources or ore reserves in respect of the
Makhado coking coal project is based on information compiled by
Mark Craig Stewardson, who is registered as a Professional Natural
Scientist (PrSci Nat, Reg. No. 400119/93) with the South African
Council for Natural Scientific Professions ("SACNASP"), which is a
Recognised Overseas Professional Organisation ("ROPO") in terms of
the JORC Code.Mark Craig Stewardson is employed by Mineral
Corporation Consultancy and has sufficient experience that is
relevant to the style of mineralisation and type of deposit under
consideration and to the activity that he is undertaking to qualify
as a Competent Person as defined in the JORC Code. Mark Craig
Stewardson consents to the inclusion in this announcement of the
matters based on his information in the form and context in which
it appears.
6 months 6 months
ended 31 ended 31
December December
2010 2009
A$ A$
Sale of goods 93,386,039 -
Cost of sales (excluding distribution
costs) (74,797,040) (1,421,219)
------------- -------------
Gross Profit 18,588,999 (1,421,219)
Interest and other income 1,445,775 2,000,571
Distribution costs (14,528,097) (4,124)
Take or Pay obligations (103,595) (3,392,587)
------------- -------------
Total distribution costs (14,631,692) (3,396,711)
Consulting, accounting & professional
expenses (2,700,045) (1,856,334)
Employee benefits expenses (7,182,528) (3,055,371)
Depreciation and amortisation expenses (30,287,571) (6,801,171)
Foreign exchange losses (9,774,201) (6,110,165)
Diminution in investments (138,644) (6,223,000)
Diminution in value of assets held
for sale (11,907,600) (8,692,665)
Environmental provision (1,694,201) -
Finance costs (668,263) (144,106)
Other expenses (14,529,063) (3,822,072)
-------------
Total administration and other expenses (78,882,116) (36,704,884)
Loss before tax (73,479,034) (39,522,243)
Income tax benefit 13,214,808 3,474,376
-------------
Loss from continuing operations (60,264,226) (36,047,867)
Discontinued operation
Profit from discontinued operations 568,975 864,410
Loss after income tax (59,695,251) (35,183,457)
------------- -------------
Other Comprehensive Income
Exchange differences on translating
foreign operations 2,323,349 (6,237,649)
------------- -------------
Total comprehensive loss for the period (57,371,902) (41,421,106)
------------- -------------
Basic loss per share (11.25) (12.30)
cents cents
------------- -------------
The Consolidated Entity's potential ordinary shares were
not considered dilutive as the Entity is in a loss position.
The accompanying notes form part of these half-year financial
statements.
Consolidated Consolidated
31 December
2010 30 June 2010
Note A$ A$
CURRENT ASSETS
Cash and cash equivalents 23,304,834 101,062,757
Trade and other receivables 18,109,172 31,812,006
Inventories 25,837,439 28,874,316
Assets held for sale 15,381,454 17,428,303
Other assets 365,635 396,602
Total Current Assets 82,998,534 179,753,984
-------------- --------------
NON CURRENT ASSETS
Mining Assets 240,168,179 266,316,598
Exploration Expenditure 33,485,961 29,374,946
Property, plant and equipment 174,737,732 182,928,437
Development Expenditure 73,153,973 45,557,064
Logistics assets 34,082,673 37,897,472
Deferred tax assets 25,017,402 12,208,693
Other financial assets 21,366,716 21,373,986
Other intangible assets - 3,540,213
Total Non Current Assets 602,012,636 599,197,409
-------------- --------------
TOTAL ASSETS 685,011,170 778,771,393
-------------- --------------
CURRENT LIABILITIES
Trade and other payables 50,308,724 80,726,868
Borrowings 19,679,200 24,352,867
Provisions 366,774 1,023,228
Current tax liability 713,201 375,029
Total Current Liabilities 71,067,899 106,477,992
NON CURRENT LIABILITIES
Borrowings 1,783,386 1,758,055
Provisions 16,027,772 10,790,064
Deferred tax liabilities 25,643,512 33,327,021
TOTAL NON CURRENT LIABILITIES 43,454,670 45,875,140
-------------- --------------
TOTAL LIABILITIES 114,522,569 152,353,132
-------------- --------------
NET ASSETS 570,488,601 626,418,261
============== ==============
EQUITY
Contributed equity 3 778,046,671 778,046,671
Reserves 97,781,170 94,015,579
Retained earnings (310,592,787) (250,897,536)
TOTAL PARENT EQUITY INTEREST 565,235,054 621,164,714
-------------- --------------
Non Controlling Interests 5,253,547 5,253,547
TOTAL EQUITY 570,488,601 626,418,261
============== ==============
The accompanying notes form part of these half-year financial
statements.
Foreign
Capital Currency Share Non
Contributed Profit Translation Options Retained controlling
equity Reserve Reserve Reserve earnings Total Interest
A$ A$ A$ A$ A$ A$ A$
Balance at
30.6.2010
previously
reported 778,046,671 136,445 (4,875,339) 9,754,473 (161,897,536) 621,164,714 5,253,547
Effect of
prior period
error for
Firefly
options
(note 6) - - - 89,000,000 (89,000,000) - -
------------ -------- ------------ ------------ -------------- ------------- ------------
As Re-stated 778,046,671 136,445 (4,875,339) 98,754,473 (250,897,536) 621,164,714 5,253,547
-------------- ------------ -------- ------------ ------------ -------------- ------------- ------------
Balance at
1.7.2010 778,046,671 136,445 (4,875,339) 98,754,473 (250,897,536) 621,164,714 5,253,547
-------------- ------------ -------- ------------ ------------ -------------- ------------- ------------
Options
exercised
during the
period - - - - - - -
-------------- ------------ -------- ------------ ------------ -------------- ------------- ------------
Capital
raising - - - - - - -
-------------- ------------ -------- ------------ ------------ -------------- ------------- ------------
Share based
payments - - - 1,442,242 - 1,442,242 -
-------------- ------------ -------- ------------ ------------ -------------- ------------- ------------
Share issue
costs - - - - - - -
-------------- ------------ -------- ------------ ------------ -------------- ------------- ------------
Profit/
(Loss)
attributable
to members
of parent
entity - - - - (59,695,251) (59,695,251) -
-------------- ------------ -------- ------------ ------------ -------------- ------------- ------------
Minority
interests in
investments - - - - - - -
-------------- ------------ -------- ------------ ------------ -------------- ------------- ------------
Foreign
currency
translation
adjustments
of foreign
controlled
operations - - 2,323,349 - - 2,323,349 -
-------------- ------------ -------- ------------ ------------ -------------- ------------- ------------
Balance at
31.12.2010 778,046,671 136,445 (2,551,990) 100,196,715 (310,592,787) 565,235,054 5,253,547
-------------- ------------ -------- ------------ ------------ -------------- ------------- ------------
The accompanying notes form part of these half-year financial
statements.
Foreign
Capital Currency Share
Contributed Profit Translation Options Retained Non-Controlling
equity Reserve Reserve Reserve earnings Total interest
A$ A$ A$ A$ A$ A$ A$
Balance at
1.7.2009 569,267,119 136,445 (1,823,690) 8,876,771 (60,456,243) 523,640,036 7,679,634
Options
exercised
during the
period 1,255,747 - - (509,235) - 746,512 -
Capital
raising 102,601,864 - - - - 102,601,864 -
Share based
payments 4,139,200 - - - - 4,139,200 -
Share issue
costs (3,386,764) - - - - (3,386,764) -
-------------- ------------ -------- ------------ ---------- ------------- ------------- ----------------
Profit/
(Loss)
attributable
to members
of parent
entity - - - - (35,183,457) (35,183,457) -
-------------- ------------ -------- ------------ ---------- ------------- ------------- ----------------
Minority
interests in
investments - - - - - (23,587) (23,587)
-------------- ------------ -------- ------------ ---------- ------------- ------------- ----------------
Foreign
currency
translation
adjustments
of foreign
controlled
operations - - (6,237,649) - - (6,237,649) -
-------------- ------------ -------- ------------ ---------- ------------- ------------- ----------------
Balance at
31.12.2009 673,877,166 136,445 (8,061,339) 8,367,536 (95,639,700) 586,296,155 7,656,047
-------------- ------------ -------- ------------ ---------- ------------- ------------- ----------------
The accompanying notes form part of these half-year financial
statements.
Consolidated Consolidated
31 December 31 December
2010 2009
A$ A$
Cash Flows used in Operating Activities
Cash receipts in the course of operations 127,107,072 11,234,131
Interest received 1,134,982 1,828,547
Cash payments in the course of operations (154,987,532) (11,419,938)
Interest paid (668,263) (185,001)
Tax paid (8,003,269) (19,492)
Net cash (used in)/ generated by operating
activities (35,417,010) 1,438,247
-------------- -------------
Cash Flows used in Investing Activities
Deposits paid on investments - (11,802,283)
Receipts from investments - 1,446,416
Payments for development assets (25,319,911) -
Exploration expenditure (4,225,363) (4,644,188)
Proceeds on disposal of assets 2,772,173 -
Payments for investments (3,965,885) (10,271,719)
Payments for property, plant and equipment (11,533,742) (68,059,625)
Net cash used in investing activities (42,272,728) (93,331,399)
-------------- -------------
Cash Flows from Financing Activities
Other loans repaid (982,140) -
Proceeds from issues of shares and
options - 99,961,612
Net cash (used in)/provided by financing
activities (982,140) 99,961,612
-------------- -------------
NET (DECREASE)/ INCREASE IN CASH HELD (78,671,878) 8,068,460
Cash at the beginning of the half-year 101,062,757 87,032,875
Exchange rate adjustment 913,955 (1,059,277)
Cash at the end of the half-year 23,304,834 94,042,058
-------------- -------------
The accompanying notes form part of these half-year financial
statements.
1. Corporate information
The financial report of CoAL for the half-year ended 31 December
2010 was authorised for issue in accordance with a resolution of
the directors on 16 March 2011. CoAL is a company incorporated in
Australia and limited by shares, which are publicly traded on the
ASX, AIM and the JSE.
The nature of the operations and principal activities of the
group are described in the Directors' Report.
2. Summary of significant accounting policies
Statement of compliance
The half-year financial report is a general purpose financial
report prepared in accordance with the requirements of the
Corporations Act 2001 and AASB 134: Interim Financial Reporting.
Compliance with AASB 1334 ensures compliance with International
Financial Reporting Standard 134 Interim Financial Reporting. The
half year report does not include notes of the type normally
included in an annual financial report and should be read in
conjunction with the most recent annual financial report.
Going Concern
The financial statements have been prepared on the basis that
the Group is a going concern, which contemplates the continuity of
normal business activity, realisation of assets and the settlement
of liabilities in the normal course of business. The Company will
fund its future strategic and working capital requirements through
capital raisings or debt, as it has successfully transacted in the
past.
CoAL continues to work on a number of new debt facilities and
remains confident of securing one or more currently under advanced
negotiation, which if finalised, will ensure that the Company has
the ability to repay the US$20 million facility to JP Morgan which
is due and payable on 24 March 2011 without affecting other planned
cash flows.
Should the new debt facilities not be secured as planned the
Directors are comfortable that the payment of the US$20 million
facility will be settled using existing cash reserves. The quantum
and timing of all discretionary expenditures will be minimized or
deferred to suit the Company's cash flow requirements from
operations
Basis of preparation
The half-year condensed consolidated financial statements have
been prepared on the basis of historical cost, except for the
revaluation of certain non-current assets and financial
instruments. Cost is based on the fair values of the consideration
given in exchange for assets. All amounts are given in Australian
dollars, unless otherwise noted.
The Directors are of the opinion that the basis upon which the
financial statements are prepared is appropriate in the
circumstances.
The accounting policies and methods of computation adopted in
the preparation of the half-year financial report are consistent
with those adopted and disclosed in the company's 2010 annual
financial report for the financial year ended 30 June 2010, except
for the impact of the Standard and Interpretations described below.
These accounting policies are consistent with the Australian
Accounting Standards and with International Financial Reporting
Standards ("IFRS").
The Group has adopted all of the new and revised Standards and
Interpretations issued by the Australian Accounting Standards Board
("the AASB") that are relevant to their operations and effective
for the current reporting period.
New and revised Standards and amendments thereof and
Interpretations effective for the current reporting period that are
relevant to the Group include:
Amendments to AASB 5, 8, 101, 107, 117, 118, 136 and 139 as a
consequence of AASB 2009-5 Further Amendments to Australian
Accounting Standards arising from the Annual Improvements
Project
AASB 2009-5 Introduces amendments into Accounting Standards that
are equivalent to those made by the IASB under its program of
annual improvements to its standards. A number of the amendments
are largely technical, clarifying particular terms, or eliminating
unintended consequences. Other changes are more substantial, such
as the current/non-current classification of convertible
instruments, the classification of expenditures on unrecognised
assets in the statement of cash flows and the classification of
leases of land and buildings.
The adoption of these amendments has not resulted in any changes
to the Group's accounting policies and have no affect on the
amounts reported for the current or prior periods.
(a) Dividends
No dividend has been paid or is proposed in respect of the
half-year ended 31 December 2010 (2009: None).
Consolidated
31 December
2010
A$
3. CONTRIBUTED EQUITY
530,514,663 fully paid ordinary shares 778,046,671
=============
Movements in contributed equity
Opening balance at beginning of the period 778,046,671
Total equity at the end of the period 778,046,671
-------------
Fully paid ordinary shares carry one vote per share and carry
the right to dividends.
Options
The following options to subscribe for ordinary fully paid
shares are outstanding at balance date:
Number Number Quoted Exercise Expiry Date
Issued Price
9,074,998 - A$0.50 30 September 2011
250,000 - A$2.05 1 May 2012
7,000,000 - A$1.25 30 September 2012
1,000,000 - A$1.90 30 September 2012
600,000 - A$1.25 1 May 2012
1,650,000 - A$3.25 31 July 2012
5,000,000 - A$2.74 30 November 2014
912,500 - A$1.90 30 June 2014
2,500,000 - A$1.20 9 November 2015
1* - GBp0.60 1 November 2014
No options were exercised during the six months under
review.
*1 Option to subscribe for 50 million ordinary shares for 60
pence each between 1 November 2010 and 1 November 2014 as approved
by shareholders on 22 April 2010.
4. SEGMENT INFORMATION
AASB 8 requires operating segments to be identified on the basis
of internal reports about components of the Group that are
regularly reviewed by the chief operating decision maker in order
to allocate resources to the segment and to assess its
performance.
Operating segments
The Group comprises the following main operating segments:
Coal exploration and mining: Mining of coal at the Mooiplaats
and Woestalleen collieries and exploration activities across other
coal related interests
Investing: Equity investments in South Africa, Australia and
United Kingdom
Segment performance for the six months ended 31 December 2010:
Revenue Segment profit/ (loss)
Half-year ended Half-year ended
31
December 31 December 31 December 31 December
2010 2009 2010 2009
A$ A$ A$ A$
Continuing
operations
Coal mining
and
exploration 93,386,039 28,237 18,588,999 (1,421,219)
Investing 1,134,982 1,826,898 - -
Other 309,293 145,436 - -
94,830,314 2,000,571 18,588,999 (1,421,219)
Revenue Segment profit/ (loss)
Half-year ended Half-year ended
31
31 December December 31 December 31 December
2010 2009 2010 2009
SEGMENT INFORMATION
(CONTINUED)
Interest and
other income 1,445,775 2,000,571
Distribution
costs (14,631,692) (3,396,711)
Consulting, accounting &
professional fees (2,700,045) (1,856,334)
Foreign
exchange
losses (9,774,201) (6,110,165)
Employee
expenses (7,182,528) (3,055,371)
Depreciation and
amortisation expenses (30,287,571) (6,801,171)
Diminution in
investments (138,644) (6,223,000)
Environmental
provisions (1,694,201) -
Impairment of
assets held
for sale (11,907,600) (8,692,665)
Finance costs (668,263) (144,106)
Other expenses from ordinary
activities (14,529,063) (31,822,072)
Net loss before tax from
continuing operations (73,479,034) (40,097,471)
------------- -------------
Discontinued
operations
Alloy
manufacturing 14,899,659 11,247,799 568,975 864,410
Loss before
tax (72,910,059) (39,522,243)
Income tax expenses (continuing and
discontinuing operations) 13,214,808 3,474,376
Consolidated
segment
revenue and
loss for the
period 109,729,973 13,248,370 (59,695,251) (35,183,457)
------------ ----------- ------------- -------------
The revenue reported above represents revenue generated from
external customers. There were no inter-segment sales during the
period.
Segment profit represents the profit earned by each segment
without allocation of administration costs and directors' salaries,
finance costs, income tax expense, depreciation or amortisation
expenses.
The following is an analysis of the Group's assets by reportable
opening segment:
Segment
Half-year ended
31 December
2010 30 June 2010
A$ A$
Coal mining and exploration 629,883,774 111,048,913
Investing 33,829,755 596,202,841
Other 21,297,641 71,519,639
685,011,170 778,771,393
------------ ---------------
5. ASSETS HELD FOR SALE
31 December
2010 30 June 2010
A$ A$
HOLFONTEIN INVESTMENTS (PTY) LTD
Carrying value of investment at
beginning of the year 17,428,303 25,540,957
Diminution in value of asset held for
sale (8,317,942) (8,386,435)
Capitalised expenditure - at cost - 136,705
Exchange differences (63,927) 137,076
Carrying value at end of year 9,046,434 17,428,303
------------ -------------
The Company's investment in the Holfontein Project continues to
be available for sale. CoALhas entered into a formal sale process
to dispose of the investment.
NIMAG (PTY) LTD
Carrying value of investment at beginning 10,575,137 -
of the year
Diminution in value of asset held for (3,589,658) -
sale
Exchange differences (352,956) -
Share of subsidiaries' net (loss) / 589,131 -
profit
------------
Carrying value at end of year 7,221,654 -
------------
CoAL considers NiMag a non-core asset and has commenced with a
formal disposal process.
6. PRIOR YEAR ADJUSTMENT
The Annual Report for the year ended 30 June 2010 disclosed the
basis of an agreement entered into with respect to BBBEE. CoAL
reported that the option granted on 22 April 2010 to give effect to
the transaction had not been issued at the reporting date and that,
based on the advice received - the transaction did not meet the
requirements of AASB 2 - Share Based Payment - did not record the
transaction in accordance with AASB 2.
The Board has reviewed the advice given and consulted further on
this matter and has, regrettably, concluded that the provisions of
AASB 2 do apply to the transaction. It is therefore necessary to
restate the financial statements.
This has resulted in a non-cash charge of $89,000,000 to the
Statement of Comprehensive Income and a corresponding credit to
Equity in the Statement of Financial Position. The effect of this
adjustment has been to increase the loss per share for the year
ended 30 June by 19.48 cents per share to 41.69 cents per share.
The accounting treatment has no effect on the result for the
current reporting period nor has it any effect on shareholder value
as at 30 June 2010.
PRIOR YEAR ADJUSTMENT (CONTINUED)
The effect of the misstatement is reflected below:
June 2010 June 2010
Re-stated Disclosed
balances previously
A$ A$
STATEMENT OF COMPREHENSIVE INCOME
Net loss attributable to members of
the parent entity (190,441,293) (101,441,293)
Other comprehensive income
Foreign currency translation
differences (3,051,649) (3,051,649)
-------------- --------------
Total comprehensive loss for the
period (193,492,942) (104,492,942)
CONSOLIDATED STATEMENT OF FINANCIAL
POSITION
EQUITY
Contributed equity 778,046,671 778,046,671
Reserves 94,015,579 5,015,579
Retained earnings (250,897,536) (161,897,536)
Total parent equity interest 621,164,714 621,164,714
============== ==============
7. (LOSS)/ EARNINGS PER SHARE
December December
2010 2009
A$ A$
Basic loss per share (cents per share) (11.25) (12.30)
Weighted average number of ordinary
shares used as the denominator 530,514,663 456,817,409
============ ============
Headline Earnings Reconciliation
Profit / (Loss) after income tax for
the period attributable to ordinary
shareholders (59,695,251) (35,183,457)
Diminution in value of assets and investments 12,046,244 15,773,641
Profit / (Loss) after income tax for
the period attributable to ordinary
shareholders (47,649,007) (19,409,816)
Headline loss per share (cents
per share) (8.98) (6.79)
As at 31 December 2010, there were 25,487,498 (June 2010:
25,487,498) options outstanding over unissued capital exercisable
at amounts ranging between $0.50 and $3.25 (June 2010: $0.50 and
$3.25). The Consolidated Entity's potential ordinary shares were
not considered dilutive as the Entity is in a loss position.
8. CONTINGENT LIABILITIES
In accordance with normal industry practice, the Company has
agreed to provide financial support to its controlled entities.
Contingent liabilities relate to legal proceedings instituted by
Envicoal (Pty) Ltd in South Africa. The claimant, Envicoal (Pty)
Limited, has claimed the sum of ZAR188,808,550 ($28,038,070),
alternatively ZAR157,098,650 ($23,329,150), further alternatively
ZAR139,670,450 ($20,741,062) from CoAL's wholly owned
subsidiary,
NuCoal (Pty) Ltd in terms of a written Coal Supply Agreement
concluded by the parties in August 2007. NuCoal has defended the
matter and it has been referred to arbitration. The Directors are
of the opinion that the action currently holds insufficient
certainty of the outcome of the proceedings for provision to be
made in the financial statements.
CoAL is currently involved in a dispute with Ferret Mining (Pty)
Ltd ("Ferret Mining") who has claimed restitution of 26% of the
issued share capital of Mooiplaats Mining Limited, on the basis of
a fraud which has allegedly been perpetrated between two
individuals who are not related to Mooiplaats Mining Limited or the
Group. The Company anticipates that the claim will in all
likelihood be heard later in 2011, although this depends upon how
actively Ferret Mining, as the applicant, pursues the matter going
forward. If Ferret Mining is successful in its claim, the Company
has received legal advice that Ferret Mining will in any event be
obliged to compensate the Company for the fact that the shares,
which are the subject of the restitution claim, are now
significantly more valuable than they were when previously owned by
Ferret Mining. The Company will apply for a conditional
counter-relief to that effect and will do so when its response
papers are filed.
A further matter relates to Motjoli Resources (Proprietary)
Limited ("Motjoli") and Motjoli Resources Advisory Services CC
("Motjoli Advisory") (together the "Plaintiffs") who have
instituted an action in the South Gauteng High Court, citing,
amongst others, CoAL and Mooiplaats Mining Limited as defendants.
The Plaintiffs are claiming a contractual entitlement to be issued
with a further 4,750,000 shares in connection with the acquisition
of the Mooiplaats Colliery. In addition, Motjoli is claiming
payment from the defendants of ZAR95,475,000 ($14,178,038).
Mooiplaats Mining Limited and the Company have defended this claim
and filed an appeal. The Plaintiffs have taken no further steps
since the filing of the appeal.
There are no other contingent liabilities as at 31 December
2010.
9. EVENTS SUBSEQUENT TO REPORTING DATE
Lodging and Acceptance of the Makhado Project NOMR
The NOMR for the Makhado Project was lodged with the DMR during
January 2011. The DMR approved the Makhado Project NOMR application
in February 2011 enabling the Company to commence with extensive
economic, social and environmental impact studies allowing for the
completion of an extensive EMP.
Execution of the Rio Farm Swap
During January 2011, the DMR executed the NOPR for the Rio Farm
Swap, completing the final administrative step required to complete
the transaction.
Makhado Bulk Sample Progress
The Company completed the extraction of the Makhado bulk sample
allowing for the transport of the sample to Exxaro's Tshikondeni
Colliery where the sample will be beneficiated into approximately
4,400 tonnes of coking coal. The coking coal will be tested by
ArcelorMittal'sVanderbijlpark operations facilitating the
finalisation of terms relating to the proposed off-take agreement
between CoAL and ArcelorMittal.
There are no other matters or events which have arisen since the
end of the financial period which have significantly affected or
may significantly affect the operations of the consolidated entity,
the results of those operations or the state of affairs of the
consolidated entity in subsequent financial years.
Funding
CoAL continues to work on a number of new debt facilities and
remains confident of securing one or more currently under
negotiation, which if finalised, will ensure that the Company has
the ability to repay the US$20 million facility to JP Morgan due on
24 March 2011.
In the opinion of the Directors,
1. The financial statements and notes of the consolidated entity
are in accordance with the Corporations Act 2001, including:
a. complying with Accounting Standard AASB 134: Interim
Financial Reporting and the Corporations Regulations 2001; and
b. giving a true and fair view of the consolidated entity's
financial position as at 31 December 2010 and of its performance
for the half year ended on that date.
2. There are reasonable grounds to believe that the Company will
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 of Directors.
________________________________
John Wallington
Director
Dated at Johannesburg, South Africa, this 16th day of March
2011
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR GCGDXCUBBGBL
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