TIDMMCM
RNS Number : 0640G
MC Mining Limited
13 March 2020
ABN 98 008 905 388
FINANCIAL REPORT
FOR THE HALF-YEARED
31 DECEMBER 2019
CORPORATE DIRECTORY
REGISTERED OFFICE Suite 8, 7 The Esplanade
Mt Pleasant, Perth, WA 6153
Telephone: +61 8 9316 9100
Facsimile: +61 8 9316 5475
Email: perth@mcmining.co.za
SOUTH AFRICAN OFFICE South Block
Summercon Office Park
Cnr Rockery Lane and Sunset Avenue
Lonehill
Telephone: +27 10 003 8000
Facsimile: +27 11 388 8333
BOARD OF DIRECTORS Non-executive
Bernard Pryor (Chairman)
An Chee Sin
Andrew Mifflin
Brian He Zhen
Khomotso Mosehla
Peter Cordin (retired 22 November
2019)
Sebastiano Randazzo
Shangren Ding
Thabo Mosololi (resigned 31 December
2019)
Executive
David Brown (resigned 31 January
2020)
Brenda Berlin
COMPANY SECRETARY Tony Bevan
AUSTRALIA UNITED KINGDOM SOUTH AFRICA
AUDITORS PricewaterhouseCoopers N/A PricewaterhouseCoopers
Level 15 Inc.
125 St Georges Terrace 4 Lisbon Lane
Perth WA 6000 Waterfall City
Australia Jukskei View 2090
South Africa
BANKERS National Australia Investec Bank ABSA Bank
Bank Limited plc The Podium
Level 1, 1238 Hay 2 Gresham Street Norton Rose Building
Street London EC2V 7QP 15 Alice Lane
West Perth WA 6005 United Kingdom Sandton South Africa
Australia
CORPORATE DIRECTORY (CONTINUED)
AUSTRALIA UNITED KINGDOM SOUTH AFRICA
BROKERS N/A Mirabaud Securities N/A
Limited
5(th) Floor
10 Bressenden Place
London SW1E 5DH
United Kingdom
Peel Hunt LLP
Moor House
120 London Wall
London EC2Y 5ET
United Kingdom
LAWYERS Squire Patton Boggs Squire Patton Boggs WHITE & CASE SA
(AU) (UK) 4(th) Floor, Tower
Level 21 LLP 2 102 Rivonia Road
300 Murray Street 2 Park Lane Sandton
Perth WA 6000 Leeds Johannesburg 2196
Australia LS3 1 ES South Africa
United Kingdom
NOMAD/ CORPORATE N/A Peel Hunt LLP Investec Bank Limited
SPONSOR Moor House 100 Grayston Drive
120 London Wall Sandown 2196
London EC2Y 5ET Johannesburg
United Kingdom South Africa
Index
The reports and statements set out below comprise the half-year
report presented to shareholders:
Contents Page
Directors' Report 4
Condensed Consolidated Statement of Profit or Loss
and Other Comprehensive Income 8
Condensed Consolidated Statement of Financial Position 9
Condensed Consolidated Statement of Changes in Equity 10
Condensed Consolidated Statement of Cash Flows 11
Notes to the Condensed Consolidated Half-year Report 12
Directors' Declaration 27
Auditor's Independence Declaration 28
Independent Auditor's Review Report 29
The Directors of MC Mining Limited ("MC Mining" or "the
Company") submit herewith the financial report of MC Mining and its
subsidiaries ("the Group") for the half-year ended 31 December
2019. A ll amounts are expressed in US dollars unless stated
otherwise.
In order to comply with the provision of the Corporations Act
2001, the directors report as follows:
Directors
The names of the directors of the company during or since the
end of the half-year are:
Bernard Pryor (Chairman) Sebastiano Randazzo
An Chee Sin Shangren Ding
Andrew Mifflin Thabo Mosololi
Brian He Zhen David Brown*
Khomotso Mosehla Brenda Berlin*
Peter Cordin
* - Executive director
Peter Cordin retired on 22 November 2019, Thabo Mosololi
resigned on 31 December 2019 and David Brown resigned on 31 January
2020 . All other directors held office during and since the end of
the previous financial year.
Review of Operations
Principal activity and nature of operations
The principal activity of the Company and its subsidiaries is
the mining, exploration and development of coking and thermal coal
properties in South Africa.
The Company's principal assets and projects include:
-- Uitkomst Colliery, an operating metallurgical coal mine ("Uitkomst");
-- Makhado Project, a hard coking and thermal coal exploration
and evaluation project ("Makhado Project" or "Makhado");
-- Vele Colliery, on care and maintenance, a semi-soft coking
and thermal colliery ("Vele Colliery"); and
-- Three exploration stage coking and thermal coal projects,
namely Chapudi, Generaal, and Mopane, in the Soutpansberg Coalfield
(collectively the "GSP Projects").
The Company's focus on safety continued with seven lost time
incidents ("LTI's") recorded during the six months under review
(FY2019 H1: 1).
Uitkomst Colliery - Newcastle (Utrecht) (100% owned)
Uitkomst comprises the existing underground coal mine with a
planned life of mine ("LOM") extension directly to the north of
current operations, totalling 15 years remaining LOM. The LOM
extension requires the development of a north adit (horizontal
shaft) and the colliery has applied for an amendment to its
authorisations prior to commencing this extension. This development
is subject to receipt of the regulatory approvals, available funds
and prevailing market conditions.
Uitkomst sells sized coal (peas) products and a 0 to 40mm
product into the metallurgical domestic market for use as
pulverised coal while the peas are supplied to local energy
generation facilities. In the prior period an additional saleable
product from Uitkomst's discard was identified resulting in an
additional circa 14,500 tonnes of high-ash, coarse discard
("middlings") saleable coal per annum, thereby increasing the
overall yield from Uitkomst's ROM coal.
Seven LTI's were recorded during the period.
Production tonnages for the period were 262,696 tonnes. Sales
tonnages were 161,821 tonnes, consisting of 147,234 tonnes of
Uitkomst ROM, and 14,587 tonnes of middlings. Revenue for the
period was $11,359 thousand with a gross profit of $282
thousand.
Makhado Coking Coal Project (95% owned)
The MC Mining Board approved the revised evaluation plan for the
Makhado project in phases accelerating the time to market compared
to previous plans that envisaged initial development occurring on
the eastern side of the project, achieving MC Mining's stated
strategy of self-sufficiency while ensuring continued scalability.
Phase 1 includes the construction of the west pit and modifications
to the existing Vele processing plant while Phase 2 incorporates
development of the Makhado processing plant and related
infrastructure as well as mining of the east and central pits.
The construction of the Phase 1 pit, plant and infrastructure
will take nine months, with the first coal sales in month ten. The
west pit will generate approximately 3,000 thousand tonnes per
annum of ROM coal that will be crushed, screened and scalped at
Makhado and the residual circa 2,000 thousand tonnes of scalped ROM
coal will be trucked to the Vele Colliery for final processing.
Phase 1 will produce approximately 540 thousand tonnes per annum of
hard coking coal and 570 thousand tonnes per annum of a thermal
coal by-product that will be trucked to Musina siding for sale to
the domestic and export customers, utililising previously tested
road and rail logistics infrastructure.
In the prior period, the Company signed an off-take agreement
with ArcellorMittal South Africa ("AMSA") for the purchase of
between 350 thousand and 450 thousand tonnes of Phase 1 hard coking
coal annually. An off-take agreement for the Phase 1 thermal coal
by-product was also secured, with prices linked to the US dollar
export prices.
The conclusion of the two off-take agreements allowed the
Company to progress the Phase 1 composite debt/equity funding
initiatives and resulted in the Industrial Development Corporation
("IDC") credit committee approval of a (ZAR245,000 thousand) term
loan facility in July 2019 to fund the construction of the Project.
The equity portion of the funding package is expected to be
completed in H1 CY2020.
The Phase 2 east and central pits will be developed in circa
CY2022 and the entire Makhado Project has a minimum LOM of 46
years. Phase 2 will produce approximately 4,000 thousand tonnes per
annum of ROM coal that will yield some 1,700 thousand tonnes per
annum of saleable hard coking coal and thermal coal.
In the prior period, a coal purchase agreement with Huadong Coal
Trading Center Co., Ltd, a Chinese state-owned enterprise, for the
off-take of up to 450,thousand tonnes per annum of hard coking coal
to be produced by Phase 2, was signed.
The project has all the regulatory permits required to commence
mining.
Vele Colliery - Limpopo (Tuli) Coalfield (100% owned)
The Vele Colliery recorded no LTIs during the period.
The colliery remained on care and maintenance during the
period.
The Colliery's processing plant will be modified as part of the
Phase 1 of the Makhado Project and Vele's regulatory authorisations
accommodates the requirements of the modifications.
The recommencement of mining at the Vele Colliery is aligned
with the timing of the government gazetted Musina-Makhado Socio
Economic Zone. Compliance with regulatory and licensing
requirements at the Colliery is monitored through internal
inspections, external audits conducted by the Department of Water
and Sanitation ("DWS"), as well as audits conducted by the
Environmental Compliance Officer. Vele also participates in the
Project Steering Committee in line with the historic October 2014
Biodiversity Off-take Agreement between the Company, the Department
of Environmental Affairs (DEA) and the South African National Parks
(SANParks).
Greater Soutpansberg Projects (effectively 74% owned)
The GSP Projects recorded no LTIs during the period.
The South African Department of Mineral Resources ("DMR")
granted a mining right for the Chapudi coking and thermal coal
project during the prior period.
In the current period, the DMR granted a mining right for the
Generaal Project.
The Mopane Project Mining Right application is at an advanced
stage and the Company anticipates that this will be granted in the
near future, resulting in the commencement of the various studies
required for the outstanding water and environmental regulatory
approvals .
Corporate
Approval by the IDC Credit Committee of a term loan facility of
$17,439 thousand (ZAR245,000 thousand), the initial step in the
composite debt and equity funding package for the construction of
Phase 1 of Makhado.
The second tranche ($8,542 thousand (ZAR120,000 thousand)) of
the existing IDC facility to MC Mining's subsidiary, Baobab Mining
and Exploration (Pty) Ltd was extended for a further 6 months.
Financial review
The loss for the six months under review was $7,059 thousand or
4.95 cents per share compared to a loss of $3,612 thousand, or 2.49
cents per share for the prior corresponding period.
The loss for the period under review of $7,059 thousand (FY2019
H1: $3,612 thousand) includes:
-- revenue of $11,359 thousand (FY2019 H1: $15,201 thousand) and
cost of sales of $11,077 thousand (FY2019 H1: $12,312 thousand),
resulting in a gross profit of $282 thousand (FY2019 H1: $2,889
thousand);
-- a net impairment of $1,237 thousand consisting of the
impairment of the Freewheel Trade and Invest 37 (Pty) Ltd
("Freewheel") amount recognised on acquisition ($1,804 thousand) of
Freewheel which was liquidated and impairment reversals for the
Harissia properties sold during the current period ($529 thousand)
and certain components of the Vele plant that was also sold during
the period ($38 thousand) that were previously impaired ;
-- income tax credit of $256 thousand (FY2019 H1: expense of $628 thousand);
-- net foreign exchange loss of $180 thousand (FY2019 H1: gain
of $81 thousand) arising from the translation of borrowings and
cash due to changes in the ZAR:USD and ZAR:AUD exchange rates
during the period as well as the realisation of the foreign
currency translation reserve relating to the Freewheel liquidation.
The prior period also includes exchange differences on inter-group
loan balances denominated in ZAR and converted to AUD for MC Mining
whose functional currency was AUD and changed to ZAR as of 1 July
2019 ;
-- employee benefit expense of $2,998 thousand (FY2019 H1:
$2,568 thousand) in administrative expenses;
-- other expenses of $2,179 thousand (FY2019 H1: $2,131 thousand);
-- depreciation of $238 thousand (FY2019 H1: $127 thousand) in administrative expenses.
As at 31 December 2019, the Company had cash and cash
equivalents of $3,820 thousand compared to cash and cash
equivalents of $8,811 thousand at 30 June 2019.
Authorised and issued share capital
MC Mining had 140,879,585 fully paid ordinary shares in issue as
at 31 December 2019. 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 by or paid by MC Mining Limited
during the six months.
Basis of preparation
The attached interim financial statements for the half-year
ended 31 December 2019 contains an independent auditor's review
report which includes an emphasis of matter paragraph with regards
to the existence of a material uncertainty that may cast
significant doubt about the Group's ability to continue as a going
concern.
For further information, refer to note 2 of the interim
financial statements together with the auditor's review report.
Events after the reporting period
Sale of Bakstaan properties
Subsequent to the period end, the Company finalised the sale of
land and buildings held by its subsidiary Bakstaan. These land and
buildings are classified as assets held for sale at 31 December
2019. The assets were sold for $214 thousand (ZAR3,000 thousand)
inclusive of Value Added Tax at 15%.
David Brown resignation
David Brown resigned as Chief Executive Officer and Executive
director on 31 January 2020. In lieu of his six-month notice
period, 208,537 shares have been issued to him, being one-third of
the 2017 performance rights granted to him. These shares issued
cannot be disposed of for a period of one year until 31 January
2021. The balance of his performance rights (2,211,214) have been
forfeited.
Rounding off of amounts
The Company is a company of the kind referred to in ASIC
Legislative Instrument 2016/191, and in accordance with that
Instrument amounts in the directors' report and the half-year
financial report are rounded off to the nearest thousand dollars,
unless otherwise indicated.
Auditor's Independence Declaration
The auditor's independence declaration is included on page 28 of
the half-year report.
The half-year report set out on pages 8 to 27, which has been
prepared on a going concern basis, was approved by the board on 13
March 2020 and was signed on its behalf by:
________________________________
________________________________
Bernard Robert Pryor Brenda Berlin
Chairman Acting Chief Executive Officer
13 March 2020 13 March 2020
Dated at Johannesburg, South Africa, this 13(th) day of March
2020.
Six months Six months
ended ended
31 Dec 2019 31 Dec 2018
Note $'000 $'000
--------------------------------------------- ----- ------------- -------------
Continuing operations
Revenue 4 11,359 15,201
Cost of sales 5 (11,077) (12,312)
------------- -------------
Gross profit 282 2,889
Other operating income 6 145 1,331
Other operating gains 7 319 15
Impairment 8 (1,237) (132)
Administrative expenses 9 (5,415) (4,844)
Operating loss (5,906) (741)
Interest income 159 508
Finance costs (1,568) (2,751)
------------- -------------
Loss before tax (7,315) (2,984)
Income tax credit/(charge) 10 256 (628)
------------- -------------
LOSS AFTER TAX (7,059) (3,612)
Other comprehensive profit/(loss),
net of income tax
Items that may be reclassified subsequently
to profit or loss
Exchange differences on translating
foreign operations 57 (7,965)
------------- -------------
Total comprehensive loss for the
period (7,002) (11,577)
------------- -------------
Loss for the period attributable
to:
Owners of the parent (6,980) (3,512)
Non-controlling interests (79) (100)
------------- -------------
(7,059) (3,612)
------------- -------------
Total comprehensive loss attributable
to:
Owners of the parent (6,923) (11,477)
Non-controlling interests (79) (100)
------------- -------------
(7,002) (11,577)
------------- -------------
Loss per share 12
Basic and diluted (cents per share) (4.95) (2.49)
The accompanying notes are an integral part of these
condensed consolidated financial statements
31 Dec 2019 30 June
2019
Note $'000 $'000
------------------------------------- ----- ------------ ----------
ASSETS
Non-current assets
Exploration and evaluation assets 13 94,513 94,871
Development assets 13 25,877 26,919
Property, plant and equipment 31,803 32,713
Right-of-use assets 14 1,154 -
Other receivables - 219
Other financial assets 4,525 5,006
Restricted cash 15 68 68
Total non-current assets 157,940 159,796
------------ ----------
Current assets
Inventories 926 1,042
Trade and other receivables 3,372 2,996
Tax receivable 200 201
Other financial assets - 23
Cash and cash equivalents 15 5,153 8,811
------------ ----------
Total current assets 9,651 13,073
Assets classified as held for sale 209 939
Total assets 167,800 173,808
------------ ----------
LIABILITIES
Non-current liabilities
Lease liabilities 16 1,647 689
Deferred consideration 17 2,664 2,665
Borrowings 18 808 898
Provisions 5,967 6,564
Deferred tax liability 5,495 5,750
Total non-current liabilities 16,581 16,566
------------ ----------
Current liabilities
Lease liabilities 16 287 312
Deferred consideration 17 288 1,406
Borrowings 18 14,866 13,401
Trade and other payables 8,413 8,850
Provisions 454 536
Other liabilities - 176
Overdraft 15 1,333 -
Current tax liabilities 421 420
------------ ----------
Total current liabilities 26,062 25,101
Total liabilities 42,643 41,667
------------ ----------
NET ASSETS 125,157 132,141
------------ ----------
EQUITY
Issued capital 19 1,040,950 1,040,950
Accumulated deficit (890,324) (884,297)
Reserves (24,904) (24,601)
------------ ----------
Equity attributable to owners of
the parent 125,722 132,052
Non-controlling interests (565) 89
------------ ----------
TOTAL EQUITY 125,157 132,141
------------ ----------
The accompanying notes are an integral part of these condensed
consolidated financial statements
Issued Accumulated Share Capital Warrants Foreign Attributable Non-controlling Total
capital deficit based profits reserve currency to owners interests equity
payment reserve translation of the
reserve reserve parent
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
--------------- ---------- ------------ -------- -------- --------- ------------ ------------- ---------------- ---------
Balance at 1
July 2019 1,040,950 (884,297) 2,234 91 1,134 (28,060) 132,052 89 132,141
Total
comprehensive
profit/(loss)
for the
period - (6,980) - - - 256 (6,724) (654) (7,378)
---------- ------------ -------- -------- --------- ------------ ------------- ---------------- ---------
Loss for the
period -
continuing
operations - (6,980) - - - - (6,980) (79) (7,059)
Freewheel NCI
de-recognised - - - - - - - (575) (575)
Other
comprehensive
loss,
net of tax - - - - - 57 57 - 57
- - - - - 199 199 - 199
---------- ------------ -------- -------- --------- ------------ ------------- ---------------- ---------
Share based
payments - - 466 - - - 466 - 466
Performance
rights
forfeited - 754 (754) - - - - - -
Performance
rights
expired - - (72) - - - (72) - (72)
---------- ------------ -------- -------- --------- ------------ ------------- ---------------- ---------
Balance at 31
December
2019 1,040,950 (890,523) 1,874 91 1,134 (27,804) 125,722 (565) 125,157
---------- ------------ -------- -------- --------- ------------ ------------- ---------------- ---------
Balance at 1
July 2018 1,040,950 (851,535) 2,052 91 1,134 (22,352) 170,340 394 170,734
Total
comprehensive
profit/(loss)
for the
period - (3,512) - - - (7,965) (11,477) (100) (11,577)
---------- ------------ -------- -------- --------- ------------ ------------- ---------------- ---------
Loss for the
period -
continuing
operations - (3,512) - - - - (3,512) (100) (3,612)
Other
comprehensive
loss,
net of tax - - - - - (7,965) (7,965) - (7,965)
---------- ------------ -------- -------- --------- ------------ ------------- ---------------- ---------
Dividends paid
by subsidiary - (11) - - - - (11) - (11)
Share based
payments - - 300 - - - 300 - 300
Share options
expired - 606 (606) - - - - - -
---------- ------------ -------- -------- --------- ------------ ------------- ---------------- ---------
Balance at 31
December
2018 1,040,950 (854,452) 1,746 91 1,134 (30,317) 159,152 294 159,446
---------- ------------ -------- -------- --------- ------------ ------------- ---------------- ---------
The accompanying notes are an integral part of these
condensed
consolidated financial statements
Six months ended 31 Dec 2019 Six months ended 31 Dec 2018
Note $'000 $'000
----------------------------------------------- ----- ----------------------------- -----------------------------
Cash Flows from Operating Activities
Receipts from customers 12,188 20,529
Payments to employees and suppliers (15,510) (24,129)
----------------------------- -----------------------------
Cash used in operatio ns (3,322) (3,600)
Interest received 159 285
Interest paid (18) (20)
Tax paid - (331)
Dividend paid - (49)
----------------------------- -----------------------------
Net cash used in operating activities (3,181) (3,715)
----------------------------- -----------------------------
Cash Flows from Investing Activities
Purchase of property, plant and equipment (368) (505)
Payments for exploration and evaluation assets 13 (1,293) (70)
Proceeds on disposal of property, plant and
equipment 1,641 -
Bio-diversity off-set agreement payment (89) -
Sale of Opgoedenhoop mining right - 1,174
Net proceeds from sale of Mooiplaats Colliery - 1,594
Khethekile acquisition - consideration paid 20 - (521)
Khethekile acquisition - deferred
consideration payment 18 (119) (99)
PAN deferred consideration payment 18 (1,063) -
Decrease/(increase) in other financial assets 542 (2,690)
Payments for development assets 13 (4) (2)
-----------------------------
Net cash used in investing activities (753) (1,119)
----------------------------- -----------------------------
Cash Flows from Financing Activities
Lease repayments (561) (60)
Borrowings repayments 19 (297) (154)
-----------------------------
Net cash used in financing activities (858) (214)
----------------------------- -----------------------------
NET DECREASE IN CASH AND CASH EQUIVALENTS (4,792) (5,048)
Cash and cash equivalents at the beginning of
the half-year 8,811 10,931
Foreign exchange differences (199) (390)
----------------------------- -----------------------------
Cash and cash equivalents at the end of the
half-year 15 3,820 5,493
----------------------------- -----------------------------
The accompanying notes are an integral part of these condensed
consolidated financial statements
1. significant accounting policies
Statement of compliance
The half-year financial report is a general purpose financial
report prepared in accordance with the Corporations Act 2001 and
AASB 134: 'Interim Financial Reporting'. Compliance with AASB 134
ensures compliance with International Financial Reporting Standard
IAS 34 '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.
Basis of preparation
The condensed consolidated financial statements have been
prepared on the basis of historical cost, except for the
revaluation of financial instruments and assets held for sale. Cost
is based on the fair values of the consideration given in exchange
for assets.
All amounts are presented in United States dollars, unless
otherwise noted.
The company is of a kind referred to in ASIC Legislative
Instrument 2016/191, relating to the 'rounding off' of amounts in
the directors' report. Amounts in the directors' report and the
half-year financial report have been rounded off in accordance with
the instrument to the nearest thousand dollars, or in certain
cases, to the nearest dollar.
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 2019 annual
financial report for the financial year ended 30 June 2019, except
for the impact of the Standards 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. The group has adopted AASB 16
Leases retrospectively from 1 July 2019, but has not restated
comparatives for the 2019 reporting period, as permitted under the
specific transition provisions in the standard. The
reclassifications and the adjustments arising from the new leasing
rules are therefore recognised in the opening balance sheet on 1
July 2019. On adoption of AASB 16, the group recognised lease
liabilities in relation to leases which had previously been
classified as 'operating leases' under the principles of AASB 117
Leases. These liabilities were measured at the present value of the
remaining lease payments, discounted using the lessee's incremental
borrowing rate as of 1 July 2019. The weighted average lessee's
incremental borrowing rate applied to the lease liabilities on 1
July 2019 was 12%.
For leases previously classified as finance leases the entity
recognised the carrying amount of the lease asset and lease
liability immediately before transition as the carrying amount of
the right of use asset and the lease liability at the date of
initial application. The measurement principles of AASB 16 are only
applied after that date.The application of these amendments does
not have any material impact on the disclosures or the amounts
recognised in the Group's condensed consolidated half-year
report.
(i) Practical expedients applied
In applying AASB 16 for the first time, the Group has used the
following practical expedients permitted
by the standard:
-- applying a single discount rate to a portfolio of leases with
reasonably similar characteristics
-- relying on previous assessments on whether leases are onerous
as an alternative to performing
an impairment review - there were no onerous contracts as at 1
July 2019
-- accounting for operating leases with a remaining lease term of less than 12 months as at 1
July 2019 as short-term leases
-- The low value lease exemption - the group has elected to take
the low value exemption with a value of $5 thousand for the
individual leased asset value
The Group has also elected not to reassess whether a contract
is, or contains a lease at the date of
initial application. Instead, for contracts entered into before
the transition date the group relied on its
assessment made applying AASB 117 and Interpretation 4
Determining whether an Arrangement contains
a Lease.
1. significant accounting policies (CONTINUED)
(ii) Adjustments recognised in the Statement of Financial
Position on 1 July 2019
The change in accounting policy affected the following items in
the Statement of Financial Position on 1 July 2019:
-- property, plant and equipment - decrease by $75 thousand
-- right-of-use assets - increase by $1,453 thousand
-- lease liabilities - increase by $1,378 thousand.
2. GOING CONCERN
The Consolidated Entity has incurred a net loss after tax for
the half year ended 31 December 2019 of $7,059 thousand (31
December 2018: loss of $3,612 thousand). During the six-month
period ended 31 December 2019 net cash outflows from operating
activities were $3,181 thousand (31 December 2018 net outflow:
$3,715 thousand). As at 31 December 2019 the Consolidated Entity
had a net current liability position of $16,202 thousand (30 June
2019: net current liability position of $11,089 thousand).
The current liability position as at 31 December 2019 is
primarily a result of borrowings of $14,397 thousand payable to the
Industrial Development Corporation of South Africa ("IDC") during
May 2020.
The directors have prepared a cash flow forecast for the
twelve-month period ended 31 March 2021, taking into account
available facilities, additional funding that is expected to be
raised and expected cash flows to be generated by Uitkomst, which
indicates that the Consolidated Entity will have sufficient cash to
fund their operations for at least the twelve-month period from the
date of signing this report.
These cash flow forecasts referred to above include the
following assumptions:
-- A settlement in full of the currently utilised IDC facility
which is due in May 2020 (refer note 18). The settlement could
potentially be in equity;
-- A drawdown of the new IDC term facility of $17,439 thousand
(ZAR245,000 thousand) ), subject to the finalisation of securing
not less than $17,083 thousand (ZAR240,000 thousand) additional
funding and settlement of the current IDC facility;
-- In addition to the $17,083 thousand (ZAR240,000 thousand)
referred to above, further funding of approximately $3,559 thousand
(ZAR50,000 thousand) is required, giving a total additional funding
required of $20,000 thousand (ZAR290,000 thousand).
The Company is exploring and progressing a number of
alternatives to raise the additional funding of $20,000 thousand
including, but not limited to:
-- The issue of new equity for cash in the Company to certain
current as well a potential new shareholders;
-- The issue of new equity for cash in the corporate entities holding the Makhado project;
-- Debt funding;
-- Contractor funding such as build, own, operate, transfer ("BOOT") arrangements.
The conclusion of the debt and equity raise is by its nature an
involved process and is subject to successful negotiations with the
external funders and shareholders. An equity raise may be subject
to a due diligence process.
Subject to raising the additional funding, the development of
Phase 1 of the Makhado project will subsequently commence within
the twelve months following the signing of these interim financial
statements. If the currently utilised IDC facility is not settled
in equity, the Consolidated Entity would explore alternative
measures to satisfy its obligations under the arrangements. In
addition, the Consolidated Entity's ability to continue as a going
concern for the twelve months following the signing of these
interim financial statements is dependent on the raising of the
above-mentioned additional funding of $20,000 thousand. The
Consolidated Entity's ability to continue as a going concern beyond
the twelve months following the signing of these interim financial
statements is dependent on the successful development of Phase 1 of
the Makhado project and its subsequent ramp-up to planned levels of
production.
2. GOING CONCERN (CONTINUED)
These conditions give rise to a material uncertainty that may
cast significant doubt on the Consolidated Entity's ability to
continue as a going concern, and therefore, that it may be unable
to realise its assets and discharge its liabilities in the normal
course of business.
These consolidated interim financial statements do not give
effect to adjustments that would be necessary to the carrying value
and classification of assets and liabilities, should the
Consolidated Entity be unable to continue as a going concern. Such
adjustments could be material.
The Group has a history of successful capital raisings to meet
the Consolidated Entity's funding requirements. The directors
believe that at the date of signing the interim financial
statements there are reasonable grounds to believe that they will
be successful in achieving the matters set out above and that the
Consolidated Entity will have sufficient funds to meet their
obligations as and when they fall due, and are of the opinion that
the use of the going concern basis remains appropriate.
3. 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.
Information reported to the Group's Chief Executive Officer
("CEO") for the purposes of resource allocation and assessment of
performance is more specifically focused on the stage within the
mining pipeline that the operation finds itself in.
The Group's reportable segments under AASB 8 are therefore as
follows:
-- Exploration
-- Development
-- Mining
The Exploration segment is involved in the search for resources
suitable for commercial exploitation, and the determination of the
technical feasibility and commercial viability of resources. As of
31 December 2019, projects within this reportable segment include
four exploration stage coking and thermal coal complexes, namely
the Chapudi Complex (which comprises the Chapudi project, the
Chapudi West project and the Wildebeesthoek project), Generaal
(which comprises the Generaal Project and the Mount Stuart
Project), Mopane (which comprises the Voorburg Project and the
Jutland Project) and Makhado (comprising the Makhado project, and
the Makhado Extension project).
The Development segment is engaged in establishing access to and
commissioning facilities to extract, treat and transport production
from the mineral reserve, and other preparations for commercial
production. As at 31 December 2019, projects included within this
reportable segment includes the Vele Colliery, in the early
operational and development stage but currently on care and
maintenance and Klipspruit which is included in the Uitkomst
Colliery.
The Mining segment is involved in day to day activities of
obtaining a saleable product from the mineral reserve on a
commercial scale and consists of Uitkomst Colliery.
The Group evaluates performance on the basis of segment
profitability, which represents net operating (loss) / profit
earned by each reportable segment.
Each reportable segment is managed separately because, amongst
other things, each reportable segment has substantially different
risks.
The Group accounts for intersegment sales and transfers as if
the sales or transfers were to third parties, i.e. at current
market prices.
The Group's reportable segments focus on the stage of project
development and the product offerings of coal mines in
production.
3. SEGMENT INFORMATION (continued)
The following is an analysis of the Group's results by
reportable operating segment for the period under review:
For the six months ended 31 December 2019
$'000 $'000 $'000 $'000
-------------------------------- ------------
Exploration Development Mining Total
------------ ------------ ---------
Revenue - - 11,359 11,359
Cost of sales - - (11,077) (11,077)
------------ ------------ ---------
Gross Profit - - 282 282
Other operating income 71 20 21 112
Other operating gains/(losses) 375 (124) - 251
Administrative expenses (619) (434) (233) (1,286)
(Impairment)/impairment
reversal (1,804) 38 - (1,766)
------------ ------------ ---------
Profit and loss before
interest (1,977) (500) 70 (2,407)
Interest income 8 - 6 14
Finance costs (1,176) (190) (202) (1,568)
------------ ------------ ---------
Loss before tax (3,145) (690) (126) (3,961)
------------ ------------ ---------
For the six months ended 31 December 2018
$'000 $'000 $'000 $'000
------------------------- ------------
Exploration Development Mining Total
------------ ------------ ---------
Revenue - - 15,201 15,201
Cost of sales - - (12,312) (12,312)
------------ ------------ ---------
Gross Profit - - 2,889 2,889
Other operating income 33 - 19 52
Other operating losses (27) - - (27)
Administrative expenses (791) (483) (387) (1,661)
Profit and loss before
interest (785) (483) 2,521 1,253
Interest income 9 - - 9
Finance costs (2,416) (164) (71) (2,651)
------------ ------------ ---------
(Loss)/profit before
tax (3,192) (647) 2,450 (1,389)
------------ ------------ ---------
The following is an analysis of the Group's assets by reportable
operating segment:
31 Dec 30 June
2019 2019
$'000 $'000
-------- --------
Exploration 100,390 99,931
Development 27,256 27,029
Mining 33,722 31,601
-------- --------
Total segment assets 161,368 158,561
-------- --------
3. SEGMENT INFORMATION (continued)
Reconciliation of segment information to the consolidated
financial statements:
31 Dec 2019 31 Dec
2018
$'000 $'000
------------ --------
Total loss for reportable segments (3,961) (1,389)
Other operating gains/(losses) 68 42
Administrative expenses (4,128) (3,316)
Other operating income 32 1,280
Impairment reversal 529 -
Interest income 145 500
Finance costs - (101)
------------ --------
Loss before tax (7,315) (2,984)
------------ --------
31 Dec 2019 30 June
2019
$'000 $'000
------------ ----------
Total segment assets 161,368 158,561
Unallocated property, plant and equipment 297 2,178
Other financial assets 3,897 4,403
Unallocated current assets 2,238 8,666
Total assets 167,800 173,808
------------ ----------
The reconciling items relate to corporate assets.
4. REVENUE
Revenue consists of the sale of coal by the Uitkomst Colliery.
All coal sales during the period were made to
customers in South Africa, mainly in the steel industry.
5. COST OF SALES
Cost of sales consists of:
31 Dec
2019 31 Dec 2018
$'000 $'000
--------- ------------
Salaries and wages (4,238) (4,007)
Mining contractor - (1,311)
Underground mining (1,493) (2,120)
Depreciation and amortisation (1,266) (919)
Logistics (345) (453)
Other direct mining costs (3,461) (3,533)
Coal purchases - (358)
Inventory adjustment (187) 496
Other (87) (107)
--------- ------------
(11,077) (12,312)
--------- ------------
6. OTHER OPERATING INCOME
Other operating income includes:
31 Dec 2019 31 Dec 2018
$'000 $'000
------------ ------------
Profit on sale of Opgoedenhoop mining right - 1,174
Rental income 35 92
Other 110 65
------------ ------------
145 1,331
------------ ------------
7. OTHER OPERATING GAINS OR (LOSSES)
Other operating gains or losses include:
31 Dec 2019 31 Dec 2018
$'000 $'000
------------ ------------
Foreign exchange (loss)/profit
Unrealised 8 5
Realised 11 76
Foreign currency translation reserve realised (199) -
on liquidation of Freewheel
Loss on sale of assets (124) -
De-recognition of Freewheel non-controlling 575 -
interest
Other 48 (66)
------------ ------------
319 15
------------ ------------
8. IMPAIRMENT
The impairment charge of $1,237 consists of the following:
31 Dec 2019 31 Dec 2018
$'000 $'000
------------ ------------
Impairment of Freewheel at acquisition asset (1,804) -
recognised 1
Harrisia Investment Holdings (Pty) Ltd properties 529 -
sold 2
Vele plant sale 2 38 -
Vehicle impairment - (132)
(1,237) (132)
------------ ------------
1 - Impairment arose on liquidation of Freewheel Trade and
Invest 37 (Pty) Ltd.
2 - Impairment reversals for assets previously impaired.
9. ADMINISTRATIVE EXPENSES
31 Dec
2019 31 Dec 2018
$'000 $'000
-------- ------------
Employee costs (2,998) (2,586)
Depreciation and amortisation (238) (127)
Other (2,179) (2,131)
-------- ------------
(5,415) (4,844)
-------- ------------
10. INCOME TAX CHARGE
The tax charge relates to the following
31 Dec
2019 31 Dec 2018
$'000 $'000
------- ------------
Current income tax expense - (109)
Deferred tax current year 256 (519)
256 (628)
------- ------------
11. DIVIDS
No dividend has been paid by MC Mining Limited or is proposed in
respect of the half-year ended 31 December 2019 (FY 2019 H1:
Nil).
12. LOSS PER SHARE
31 Dec 2019 31 Dec
2018
------------ ----------
12.1 Basic loss per share
Cents per Cents per
share share
------------ ----------
Basic loss per share
From continuing operations (4.95) (2.49)
$'000 $'000
------------ ----------
Loss for the period attributable to owners of
the parent (6,980) (3,512)
31 Dec 2019 31 Dec
2018
------------ ------------
'000 shares '000 shares
------------ ------------
Weighted number of ordinary shares
Weighted average number of ordinary shares for
the purposes of basic loss per share 140,880 140,880
------------ ------------
12.2 Diluted loss per share
Diluted loss per share is calculated by dividing the loss
attributable to owners of the Company by the weighted average
number of ordinary shares outstanding during the year plus the
weighted average number of dilutive ordinary share that would be
issued on conversion of all the dilutive potential ordinary shares
into ordinary shares.
As the Company is in a loss position, the diluted potential
ordinary shares impact is anti-dilutive.
12.3 Headline loss per share (in line with JSE listing requirements)
The calculation of headline loss per share at 31 December 2019
was based on the headline loss attributable to ordinary equity
holders of the Company of $5,994 thousand ( FY 2019 H1 : $4,591
thousand) and a weighted average number of ordinary shares
outstanding during the period ended 31 December 2019 of 140,879,585
( FY 2019 H1 : 140,879,585).
12. LOSS PER SHARE (continued)
The adjustments made to arrive at the headline loss are as
follows:
31 Dec
31 Dec 2019 2018
$'000 $'000
------------ --------
Loss for the period attributable to ordinary
shareholders (6,980) (3,512)
Adjust for:
Impairment 1,804 95
Asset held for sale impairment reversal (567) -
Profit on sale of assets 125 (1,174)
De-recognition of Freewheel non-controlling
interest (575) -
Foreign currency translation reserve realised
on liquidation of Freewheel 199 -
------------ --------
Headline loss (5,994) (4,591)
------------ --------
Headline loss per share (cents per share) (4.25) (3.26)
13. DEVELOPMENT, EXPLORATION AND EVALUATION ASSETS
A reconciliation of development, exploration and evaluation
assets is presented below:
Exploration and evaluation assets
31 Dec 2019 30 June
$'000 2019 $'000
------------ ------------
Balance at beginning of period 94,871 116,889
Additions 1,293 5,819
Movement in rehabilitation asset (40) 19
Disposals - (570)
Impairment (1,804) (23,309)
Foreign exchange differences 193 (3,977)
------------ ------------
Balance at end of period 94,513 94,871
------------ ------------
Development assets
31 Dec 2019 30 June
$'000 2019 $'000
------------ ------------
Balance at beginning of period 26,919 28,033
Additions 4 5
Disposals (502) (1,880)
Movement in rehabilitation asset (562) 802
Reversal of impairment(1) - 1,277
Transfer to assets classified as held for
sale - (607)
Foreign exchange differences 18 (711)
------------ ------------
Balance at end of period 25,877 26,919
------------ ------------
The reversal of impairment in the in the prior period relates to
the sale of land that had previously been impaired.
13. DEVELOPMENT, EXPLORATION AND EVALUATION ASSETS (continued)
As of 31 December 2019 the net book value of the following
project assets were included in Exploration and evaluation
assets:
-- Vele Colliery: $927 thousand
-- Baobab: $34,637 thousand
-- GSP: $58,619 thousand
-- Uitkomst: $330 thousand
As of 31 December 2019 the net book value of the following
project assets were included in Development assets:
-- Vele Colliery: $25,877 thousand
Management have identified no indicators that the assets may be
impaired. Accordingly, as no indicators were noted, management have
not performed an impairment assessment at 31 December 2019.
14. RIGHT-OF-USE ASSETS
The Group leases various assets including land, buildings, plant
and machinery and vehicles. The movement in the right-of-use assets
is as follows:
30 Jun
31 Dec 2019 2019
$'000 $'000
------------- -------
Balance at beginning of the period - -
Impact of adopting AASB16 - 1 July 2019 1,378 -
Transfer from Property plant and equipment 75 -
Additions 66 -
Depreciation (358) -
Foreign exchange differences (7) -
------------- -------
Balance at end of period 1,154 -
------------- -------
15. CASH AND CASH EQUIVALENTS
30 Jun
31 Dec 2019 2019
$'000 $'000
------------- -------
Bank balances 5,153 8,811
Bank overdraft (1,333) -
3,820 8,811
------------- -------
Restricted cash 68 68
68 68
------------- -------
The overdraft facility was provided by ABSA Bank in the prior
period for $1,424 thousand (ZAR20,000 thousand). Contract debtors
are pledged as security for overdraft facilities.
16. LEASES
During the prior period, as part of the acquisition of
Khethekile (refer note 20), Uitkomst Colliery assumed certain
vehicle leases.
In addition, Uitkomst Colliery also entered into an asset
financing arrangement with ABSA Bank Limited for the acquisition of
new underground mining equipment. The rolling five-year facility is
subject to a floating coupon at the South African prime rate
(currently 10% per annum) plus 0.5% and is secured by the mining
equipment purchased.
In the previous year, the group only recognised lease
liabilities in relation to leases that were classified as 'finance
leases' under AASB 117 Leases. The assets were presented in
property, plant and equipment. In the current period previously
classified "operating leases" have been classified in terms of AASB
16 as disclosed in note 1.
The movement in the lease liabilities is as follows:
30 Jun
31 Dec 2019 2019
$'000 $'000
------------- -------
Balance at beginning of the period 1,001 -
Acquired on acquisition of Khethekile (note
20) - 92
Impact of adopting AASB16 - 1 July 2019 1,378 -
Additions 66 960
Interest 61 328
Repayments (561) (378)
Foreign exchange differences (11) (1)
------------- -------
Balance at end of period 1,934 1,001
------------- -------
The maturity of the Group's undiscounted lease payments is as
follows:
30 Jun
31 Dec 2019 2019
$'000 $'000
------------- -------
Not later than one year 1,022 312
Later than one year and not later than five
years 1,336 941
Later than five years 125 -
------------- -------
2,483 1,253
Less future finance charges (549) (252)
------------- -------
Present value of minimum lease payments 1,934 1,001
------------- -------
Reconciliation between lease commitments as at 30 June 2019 and
IFRS 16 lease liability as at 1 July 2019:
31 Dec 2019
$'000
-------------
Lease commitments as at 30 June 2019 1,876
Short term leases (145)
Low value leases (4)
Discounting of lease liabilities (345)
(4)
-------------
Impact of adopting IFRS 16 - 1 July 2019 1,378
-------------
17. DEFERRED CONSIDERATION
30 Jun
31 Dec 2019 2019
$'000 $'000
------------- -------
Opening balance 4,071 2,017
Deferred consideration on Khethekile acquisition - 629
Deferred consideration on the acquisition
of Lukin and Salaita - 2,527
Interest accrued 102 162
Repayments (1,182) (239)
Deferred finance charges - (33)
Fair value adjustment - (839)
Foreign exchange differences (39) (153)
------------- -------
2,952 4,071
------------- -------
Current 288 1,406
Non-current 2,664 2,665
------ ------
2,952 4,071
------ ------
Included in the prior year balance is the deferred consideration
for the acquisition of PAR Coal from Pan African Resources Plc
("Pan African") on 30 June 2017. The final amount was settled on 1
July 2019.
Khethekile acquisition deferred consideration
During the prior period, as part of the acquisition of
Khethekile (refer note 20), the transaction included a deferred
consideration of $717 thousand (ZAR9,500 thousand) of the
acquisition price. This amount is payable in monthly instalments of
$24 thousand (ZAR350 thousand) over 27 months. There is no interest
payable on the outstanding balance.
Lukin and Salaita deferred consideration
In the prior year, the Company's subsidiary, Baobab Mining and
Exploration (Pty) Ltd ("Baobab"), completed the
acquisition of the properties Lukin and Salaita, the key surface
rights required for its Makhado hard coking and thermal coal
project for an acquisition price of $4,982 thousand (ZAR70,000
thousand). $2,491 thousand (ZAR35,000 thousand) of the acquisition
price has been deferred to the earlier of:
-- the third anniversary of the transfer of the properties; or
-- the first anniversary of production of coal underlying the properties; or
-- completion of a potential land claims and expropriation
process. In terms of current legislation, this will result in
Baobab receiving market related compensation and will be followed
by negotiations with the Minister of Land Affairs and the
successful claimants, who are shareholders in Baobab, for long-term
access to the properties.
The deferred consideration accrues interest at the South African
prime interest rate (currently 10%) less 3.0%.
18. BORROWINGS
30 Jun
31 Dec 2019 2019
$'000 $'000
------------- -------
Opening balance 14,299 10,191
Loan advanced
- PARMS* loan acquired - 1,550
* Enprotec - 579
Interest accrued 1,580 2,981
Repayments
- Enprotec (148) (461)
- PARMS* (149) (231)
Deferred finance charges - (1)
Foreign exchange differences 92 (309)
------------- -------
15,674 14,299
------------- -------
30 Jun
31 Dec 2019 2019
$'000 $'000
------------- -------
Non-current 808 898
Current 14,866 13,401
------------- -------
15,674 14,299
------------- -------
* - Pan African Resources Management Services (Pty) Ltd
("PARMS")
Industrial Development Corporation of South Africa Limited
The Company has a loan agreement (the "Loan Agreement") with the
Industrial Development Corporation of South Africa Limited ("IDC")
and Baobab Mining and Exploration Proprietary Limited ("Baobab"), a
subsidiary of MC Mining and owner of the NOMR for the Makhado
Project. In terms of the Loan Agreement, the IDC will advance loan
funding up to $17,083 thousand (ZAR240,000 thousand) to Baobab to
advance the operations and implementation of the Makhado Project.
The loan funding is to be provided in two equal tranches of $8,542
thousand (ZAR120,000 thousand) upon written request from Baobab.
The first tranche was drawn down in May 2017.
The loan is repayable on the third anniversary of each advance.
On the third anniversary, the Company is required to repay the loan
amount plus an amount equal to the after tax internal rate of
return equal to 16% of the amount of each advance.
MC Mining is also required to issue warrants, in respect of MC
Mining shares, to the IDC pursuant to each advance date as soon as
the relevant shareholder approval is obtained. The warrants for the
first draw down equated to 2.5% (equating to 2,408,752 shares) of
the entire issued share capital of MC Mining as at 5 December 2016.
The price at which the IDC shall be entitled to purchase the MC
Mining shares is equal to a thirty percent premium to the 30 day
volume weighted average price of the MC Mining shares as traded on
the JSE as at 5 December 2016 (ZAR0.60 per share (ZAR12.00 after
the premium and the 20:1 share consolidation in December 2017)).
The IDC is entitled to exercise the warrants for a period of five
years from the date of issue.
Furthermore, upon each advance date, Baobab shall be required to
issue new ordinary shares in Baobab to the IDC equivalent to 5% of
the entire issued share capital of Baobab at such time. As a result
of the first draw down, 5% of Baobab's equity was issued to the IDC
during the period under review.
If the second tranche of $8,542 thousand (ZAR120,000 thousand)
is not required by Baobab and therefore not advanced to Baobab, the
IDC may elect to exercise one of the following rights:
-- Baobab shall issue new ordinary shares in Baobab equivalent
to 5% of the entire issued share capital of Baobab to the IDC for
an aggregate subscription price of $4,271 thousand (ZAR60,000
thousand); or
-- MC Mining shall issue ordinary shares in the Company
equivalent to 1% of its entire issued share capital to the IDC for
an aggregate share price of $0.07 (ZAR1); or
-- A penalty fee of $854 thousand (ZAR12,000 thousand) shall be paid to the IDC by Baobab
18. BORROWINGS (continued)
PARMS
As part of the acquisition of the underground mining equipment
and liabilities of Khethekile (refer note 20), the Group assumed a
loan of $1,462 thousand (ZAR20,539 thousand) from PARMS. The loan
bears interest at the South African Prime rate and is compounded
monthly. It is repayable in 48 monthly instalments of approximately
$39 thousand (ZAR543 thousand) per month and commenced in January
2019.
Environmental and Process Technologies (Pty) Ltd
("Enprotec")
In the prior period, Uitkomst Colliery entered into an agreement
with Enprotec for the supply and installation of an upgrade to
modify its plant for the purchase price of $620 thousand (ZAR8,717
thousand). This was to facilitate the production of an additional
high ash, coarse discard product. The purchase price was payable
over 12 instalments of $52 thousand (ZAR726 thousand), which
commenced in September 2018. This was settled in full during the
period.
19. ISSUED CAPITAL
During the reporting period, there were no shares issued.
31 Dec 2019 30 June
2019
$'000 $'000
------------ ----------
140,879,585 (FY 2019 H1: 140,879,585) fully
paid ordinary shares 1,040,950 1,040,950
------------ ----------
Fully paid ordinary shares carry one vote per share and carry
the right to dividends.
Options
There were no options outstanding at 31 December 2019.
On 21 October 2018 1,000,000 options granted to Investec
expired.
On 27 November 2018 250,000 options granted to non-executive
directors expired.
Performance Rights
On 22 November 2019, 3,722,907 performance rights were issued to
senior management. On 29 November 2019 1,082,875 performance rights
expired.
20. BUSINESS COMBINATIONS
Effective from 1 August 2018, the underground operations at
Uitkomst Colliery, which were historically undertaken by an
independent mining contractor, Khethekile Mining (Pty) Ltd
("Khethekile") were acquired by Uitkomst. Uitkomst acquired all of
Khethekile's mining equipment, loans, trade payables, accrued
expenses and took transfer of the Khethekile employees that worked
at Uitkomst Colliery.
The acquisition of the Khethekile business was agreed to be
settled as follows:
-- A cash consideration of $1,238 thousand (ZAR16,400 thousand)
of which $521 thousand (ZAR6,900 thousand) was payable on closing
and the balance, $717 thousand (ZAR9,500 million) payable in 27
monthly instalments
20. BUSINESS COMBINATIONS (CONTINUED)
Fair value of assets and liabilities acquired:
1 August
2018
$'000
---------
Non-current assets
Plant and equipment 5,008
Non-current liabilities
Loans 1,263
Finance lease liabilities 11
Current liabilities
Trade and other liabilities 1,479
Loans 1,024
Finance lease liabilities 81
---------
1,150
---------
Purchase consideration
1 August
2018
$'000
---------
Cash consideration paid 521
Cash consideration deferred 629
---------
1,150
---------
Goodwill
No goodwill arose on the acquisition of the assets as the fair
value of the assets were equivalent to the acquisition value of the
assets.
21. CONTINGENCIES AND COMMITTMENTS
Contingent liabilities
The Group has no significant contingent liabilities at reporting
date.
Commitments
In addition to the commitments of the parent entity, subsidiary
companies have typical financial commitments associated with their
NOMRs granted by the South African Department of Mineral
Resources.
22. EVENTS SUBSEQUENT TO REPORTING DATE
Sale of Bakstaan properties
Subsequent to the period end, the Company finalised the sale of
land and buildings held by its subsidiary Bakstaan. These land and
buildings are classified as assets held for sale at 31 December
2019. The assets were sold for $214 thousand (ZAR3,000 thousand)
inclusive of Value Added Tax at 15%.
David Brown resignation
David Brown resigned as Chief Executive Officer and Executive
director on 31 January 2020. In lieu of his six-month notice
period, 208,537 shares have been issued to him, being one-third of
the 2017 performance rights granted to him. These shares issued
cannot be disposed of for a period of one year until 31 January
2021. The balance of his performance rights (2,211,214) have been
forfeited.
23. KEY MANAGEMENT PERSONNEL
Remuneration arrangements of key management personnel are
disclosed in the annual financial report.
24. FINANCIAL INSTRUMENTS
Fair value of financial assets and liabilities
The fair value of a financial asset or a financial liability is
the amount at which the asset could be exchanged or liability
settled in a current transaction between willing parties in an
arm's length transaction. The fair values of the Group's financial
assets and liabilities approximate their carrying values, as a
result of their short maturity or because they carry floating rates
of interest.
All financial assets and liabilities recorded in the
consolidated financial statements approximate their respective fair
values.
The following table provides an analysis of financial
instruments that are measured subsequent to initial recognition at
fair value, grouped into Level 1 to 3, based on the degree to which
the fair value is observable.
Level 1 fair value measurements are those derived from quoted
prices in active markets for identical assets or liabilities. The
balances classed here are financial assets comprising deposits and
listed securities.
Level 2 fair value measurements are those derived from inputs
other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly or
indirectly. The financial assets classed as Level 2 comprise of
investments with investment firms. These investments serve as
collateral for rehabilitation guarantees. The fair value has been
determined by the investment firms' fund statement .
Level 3 fair value measurements are those derived from valuation
techniques that include inputs for the asset or liability that are
not based on observable market data.
There were no assets reclassified into / out of fair value
through profit and loss ("FVTPL") during the year nor were any
assets transferred between levels.
As at 31 December Level 1 Level Level 3 Total
2019 2
------------------- ----------- ------ -------- ------
Financial assets
at FVTPL - 4,111 - 4,111
------------------- ----------- ------ -------- ------
As at 30 June Level 1 Level Level 3 Total
2019 2
------------------- ----------- ------ -------- ------
Financial assets
at FVTPL 23 4,581 - 4,604
------------------- ----------- ------ -------- ------
The Directors declare that in the directors' opinion,
1. The condensed financial statements and notes of the
consolidated entity are in accordance with the following:
a. complying with accounting standards and the Corporations Act 2001; and
b. giving a true and fair view of the consolidated entity's
financial position as at 31 December 2019 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, made pursuant to section 303(5) of the
Corporations Act 2001.
On behalf of the Directors
________________________________ ________________________________
Bernard Robert Pryor Brenda Berlin
Chairman Acting Chief Executive Officer
13 March 2020 13 March 2020
Dated at Johannesburg, South Africa, this 13(th) day of March
2020.
Auditor's Independence Declaration
As lead auditor for the review of MC Mining Limited for the
half-year ended 31 December 2019, I
declare that to the best of my knowledge and belief, there have
been:
(a) no contraventions of the auditor independence requirements
of the Corporations Act 2001 in
relation to the review; and
(b) no contraventions of any applicable code of professional
conduct in relation to the review.
This declaration is in respect of MC Mining Limited and the
entities it controlled during the period.
Douglas Craig Perth
Partner 13 March 2020
PricewaterhouseCoopers
Independent auditor's review report to the members of MC Mining
Limited
Report on the half-year financial report
We have reviewed the accompanying half-year financial report of
MC Mining Limited (the Company) and the entities it controlled
during the half-year (together the Group), which comprises the
Condensed consolidated statement of financial position as at 31
December 2019, the Condensed consolidated statement of changes in
equity, Condensed consolidated statement of cash flows and
Condensed consolidated statement of profit or loss and other
comprehensive income for the half-year ended on that date, selected
other explanatory notes and the directors' declaration.
Directors' responsibility for the half-year financial report
The directors of the Company are responsible for the preparation
of the half-year financial report that gives a true and fair view
in accordance with Australian Accounting Standards and the
Corporations Act 2001 and for such internal control as the
directors determine is necessary to enable the preparation of the
half-year financial report that gives a true and fair view and is
free from material misstatement whether due to fraud or error.
Auditor's responsibility
Our responsibility is to express a conclusion on the half-year
financial report based on our review. We conducted our review in
accordance with Australian Auditing Standard on Review Engagements
ASRE 2410 Review of a Financial Report Performed by the Independent
Auditor of the Entity, in order to state whether, on the basis of
the procedures described, we have become aware of any matter that
makes us believe that the half-year financial report is not in
accordance with the Corporations Act 2001 including giving a true
and fair view of the Group's financial position as at 31 December
2019 and its performance for the half-year ended on that date; and
complying with Accounting Standard AASB 134 Interim Financial
Reporting and the Corporations Regulations 2001. As the auditor of
MC Mining Limited, ASRE 2410 requires that we comply with the
ethical requirements relevant to the audit of the annual financial
report.
A review of a half-year financial report consists of making
enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit
conducted in accordance with Australian Auditing Standards and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
Independence
In conducting our review, we have complied with the independence
requirements of the Corporations Act 2001.
Conclusion
Based on our review, which is not an audit, we have not become
aware of any matter that makes us believe that the half-year
financial report of MC Mining Limited is not in accordance with the
Corporations Act 2001 including:
1. giving a true and fair view of the Group's financial position
as at 31 December 2019 and of its performance for the half-year
ended on that date;
2. complying with Accounting Standard AASB 134 Interim Financial
Reporting and the Corporations Regulations 2001.
Material uncertainty related to going concern
We draw attention to Note 2 in the financial report, which
indicates that the Group incurred a net loss of US$7,059,000 during
the half year ended 31 December 2019 and a net cash outflow from
operating activities of US$3,181,000. The Group is dependent on the
settlement in full of the existing IDC term facility, obtaining
additional financing or raising additional capital to enable it to
continue its normal business activities, including the commencement
of the development of Phase 1 of the Makhado project. These
conditions, along with other matters set forth in Note 2, indicate
that a material uncertainty exists that may cast significant doubt
on the Group's ability to continue as a going concern. Our
conclusion is not modified in respect of this matter.
PricewaterhouseCoopers
Douglas Craig Perth
Partner 13 March 2020
This information is provided by RNS, the news service of the
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contact rns@lseg.com or visit www.rns.com.
END
IR KKNBQOBKKFND
(END) Dow Jones Newswires
March 13, 2020 04:00 ET (08:00 GMT)
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