TIDMMCM
RNS Number : 0418T
MC Mining Limited
15 March 2023
ABN 98 008 905 388
FINANCIAL REPORT
FOR THE HALF-YEARED
31 DECEMBER 2022
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 Ground Floor
Greystone Building
Fourways Golf Park, Roos Street
Fourways
2191
Telephone: +27 10 003 8000
Facsimile: +27 11 388 8333
BOARD OF DIRECTORS Non-executive
Nhlanhla Musa Nene
Andrew David Mifflin
Brian He Zhen
Khomotso Brian Mosehla
An Chee Sin
Ontiretse Mathews Senosi
Yi He
Julian Hoskin
Executive
Godfrey Gomwe
COMPANY SECRETARY Tony Bevan
AUSTRALIA UNITED KINGDOM SOUTH AFRICA
AUDITORS Mazars Assurance Pty N/A Mazars
Ltd 101 on Olympus
Level 11, 307 Queen Pentagon Park
Street, Brisbane QLD Bloemfontein
4000 South Africa
Australia
BANKERS National Australia ABSA Bank
Bank Limited North Campus
Level 1, 1238 Hay Street 15 Alice Lane
West Perth WA 6005 Sandton
Australia South Africa
CORPORATE DIRECTORY (CONTINUED)
AUSTRALIA UNITED KINGDOM SOUTH AFRICA
BROKERS N/A Tennyson Securities N/A
65 Petty France
London SW1H 9EU
United Kingdom
LAWYERS K&L GATES N/A FALCON & HUME
Level 31 2nd Floor, 8 Melville
1 O'Connell Street Road Illovo
Sydney, NSW 2000 Johannesburg, 2196
Australia South Africa
NOMINATED N/A Strand Hanson Investec Bank
ADVISER/ CORPORATE 26 Mount Row Limited
SPONSOR London W1K 3SQ 100 Grayston Drive
United Kingdom Sandton
2196
Johannesburg
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 10
Condensed Consolidated Statement of Financial Position 11
Condensed Consolidated Statement of Changes in Equity 12
Condensed Consolidated Statement of Cash Flows 13
Notes to the Condensed Consolidated Half-year Report 14
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 2022.
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:
Nhlanhla Nene (Chairman) Khomotso Mosehla
Godfrey Gomwe* An Chee Sin
Andrew Mifflin Mathews Senosi
Brian He Zhen Junchao Liu**
Yi He*** Julian Hoskin***
* Executive director (Managing Director & Chief Executive Officer (CEO))
** Resigned 10 March 2023
*** appointed 10 March 2023
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 and thermal coal mine (Uitkomst);
-- Makhado Project, a hard coking and thermal coal exploration
and evaluation project (the Makhado Project or Makhado);
-- Vele Aluwani Colliery, a semi-soft coking and thermal
colliery (Vele) previously on care and maintenance but outsourced
and recommissioned in December 2022; and
-- Three exploration stage coking and thermal coal projects,
namely Chapudi, Generaal, and Mopane, in the Soutpansberg Coalfield
(collectively the GSP).
The Company's focus on safety continued with three lost time
incidents (LTIs) recorded during the six months under review (H1
FY2022: three incidents).
Uitkomst Colliery - Utrecht, KwaZulu-Natal (84% owned)
The Uitkomst Colliery recorded three LTI's during the period (H1
FY2022: three LTIs).
Uitkomst comprises the existing underground coal mine with a
planned life of mine (LOM) extension directly to the north of
current operations, approximately 15 years remaining LOM. The LOM
extension requires the development of adit 2k (horizontal shaft)
and the development is subject to receipt of the regulatory
approvals, available funds and prevailing market conditions.
Uitkomst sells a 0 to 40mm (duff) product into the metallurgical
domestic market for use as pulverised coal. The colliery also sells
unsized coal into the export coal market via the Coal Sales and
Marketing Agreement (Marketing Agreement) with Overlooked
Collieries (Pty) Ltd (Overlooked). Uitkomst supplies sized coal
(peas) products to local energy generation facilities and also
sells smaller volumes of a high-ash, coarse discard coal
(middlings) product.
The initial Marketing Agreement with Overlooked was signed in
July 2022 and was due to expire on 31 December 2022. During the
period, the key terms of the Marketing Agreement were extended for
a further six months to June 2023 ensuring Uitkomst has a route to
market for the majority of its coal, at prices linked to
international coal indexes rather than at floating and fixed price
domestic prices.
Uitkomst produced 225,389 tonnes (t) (H1 FY2022: 217,228t) of
run of mine (ROM) coal during the period and the colliery had
27,058t (H1 FY2022: 10,803t; FY2022: 15,534t) at site at the end of
the period with a further 36,764t at port (H1 FY2022: nil t;
FY2022: 22,169t). Uitkomst sold 104,855t of coal during the six
months consisting of 98,924t of high-grade peas and duff, with
71,955t exported (H1 FY2022: nil t) and the balance sold
domestically. The exported volumes are 5,352t lower than previously
reported following the subsequent receipt of an updated third party
confirmation. The colliery also sold 5,931 tonnes of lower grade
middlings coal (H1 FY2022: 11,655t).
The Uitkomst Colliery generated pleasing results for the period
with revenue of $14.0 million (H1 FY2022: $13.0 million) yielding a
gross profit of $3.9 million (H1 FY2022: $2.1 million).
MC Mining increased its interest in the Uitkomst Colliery during
the period when it bought back the 14% interest belonging to a
black industrialist shareholder, for $0.5 million. The terms of the
transaction ensure that the Uitkomst equity purchased satisfies the
'once empowered, always empowered' principle in South Africa.
Makhado Coking Coal Project - Soutpansberg Coalfield, Limpopo
(67.3% owned)
No LTIs were recorded at Makhado during the period (H1 FY2022:
nil LTIs).
MC Mining's flagship Makhado Project is situated in the
Soutpansberg Coalfield and all regulatory approvals are in place
and surface rights over the mining and processing areas have been
secured. MC Mining is heavily invested in the Makhado Project as
the complex regulatory environment in South Africa demanded
significant capital and time investment to achieve its current
'shovel ready' status.
The development of the Makhado Project is expected to deliver
positive returns for shareholders and position MC Mining as South
Africa's pre-eminent hard coking coal (HCC) producer. During the
period, the Company appointed Erudite (Pty) Ltd (Erudite) to
complete the detailed planning for a full process design for the
Makhado coal processing plant (CPP). Erudite expects to complete
the planning during H1 CY2023 and this plan is also required by
potential funders to complete their assessments.
The Company also employed independent consultants to review the
Makhado mine plan and this forms part of the detailed execution
plan. MC Mining's directors approved the commencement of early
works Makhado and the Company allocated ZAR71.3 million ($4.1
million) to this and expects to have this completed at the end of
H1 CY2023. The early works commenced in February 2023 and include
amongst others, a bridge and internal roads, initial bulk
earthworks, site security and communication infrastructure.
The Makhado CPP optimisation study was completed by independent
experts during the period and the results of this study are being
used in Erudite's detailed CPP and infrastructure design work. The
planned Makhado CPP annual ROM feed capacity is expected to result
in an increase of the ROM capacity from 3.0 million tonnes per
annum (Mtpa) to 4.0 Mtpa in addition to further refinements of the
plant design.
Makhado is expected to produce HCC with an ash content of less
than 10% and would be the only significant HCC producer in South
Africa resulting in obvious advantages for South African steel
producers. Development of Makhado is also expected to have a
positive impact on employment and the general Limpopo province
economy resulting in the creation of 650 direct jobs. The funding
initiatives for Makhado continued during the period and these are
expected to be finalised in first half of CY2023 following
completion of the detailed designs for the Makhado CPP and updated
mine plan.
Vele Colliery - Tuli Coalfield, Limpopo (100% owned)
The Vele Colliery recorded no LTIs during the period (H1 FY2022:
nil LTIs) .
The Vele Colliery had been on care and maintenance since late
CY2013 and the Company assessed various strategies to utilise the
asset. These assessments confirmed the significant capital and
technical investment required to optimise production at the
colliery. Following the increase in international thermal coal
prices in CY2022, the outsourcing of operations at Vele was
identified as the optimal strategy as this would secure the
necessary investment from a third party to de-water the opencast
pit, modify and recommission the CPP and remove a significant
portion of the ongoing costs associated with the colliery.
The assessment of outsourcing opportunities resulted in the
conclusion of a five-year Contract Mining Agreement (Mining
Agreement) with Hlalethembeni Outsourcing Services (Pty) Ltd (HOS)
in December 2022. HOS is mining in terms of an agreed mine plan on
an exclusive basis until 22 December 2027 and is targeting monthly
production of 60,000t of saleable thermal coal from Vele. HOS is
responsible for all mining and processing costs while the Company
remains responsible for the colliery's regulatory compliance,
rehabilitation guarantees, relationships with authorities and
communities as well as the supply of electricity and water.
HOS recommissioned the Vele CPP in late December 2022 and first
coal sales commenced in early CY2023. Operations at the colliery
are expected to ramp-up to full production during Q2 CY2023. The
recommissioning of the Vele Colliery adds a further cash generating
unit to MC Mining's portfolio, with limited financial or human
capital contributions and is a potential funding contributor for
Makhado. The recommencement of operations at Vele created
approximately 245 permanent job positions and also alleviates any
'use it or lose it' risk associated with unutilised mining assets
in South Africa.
Greater Soutpansberg Projects - Soutpansberg Coalfield, Limpopo
(74% owned)
The GSP reported no LTIs during the period (H1 FY2022: nil LTIs)
.
The South African Department of Mineral Resources & Energy
(DMRE) has granted mining rights for the three project areas
comprising the GSP, namely, Chapudi, Mopane and Generaal.
The three GSP project areas contain over 7.0 billion gross
tonnes in situ of inferred HCC, semi-soft coking coal and thermal
coal resources. The exploration and development of the GSP is the
catalyst for MC Mining's long-term growth and positions the Company
to be a potential long-term domestic and export metallurgical coal
supplier. The Company anticipates commencing with the various
studies required for the outstanding water and environmental
regulatory approvals following the construction of the Makhado
Project.
Corporate
The Industrial Development Corporation of South Africa Limited
(IDC) is a 6.7% shareholder in MC Mining's subsidiary, Baobab
Mining & Exploration (Pty) Ltd (Baobab), the owner of the
Makhado Project. The bank continues to provide support for the
development of Makhado. MC Mining previously utilised the existing
IDC loan facility to develop the project and during the period, the
IDC extended the date for repayment of the ZAR160 million loan
($9.4 million) plus interest thereon, as well as the terminal draw
down date of the new ZAR245 million ($14.4 million) loan facility,
to 30 June 2023. Draw down of the additional ZAR245 million ($14.4
million) loan facility remains subject to the IDC confirming its
due diligence and credit approval.
In November 2022, MC Mining completed a fully underwritten 1.012
for 1 renounceable rights offer (the Rights Offer) of new ordinary
shares of no par value in the Company (each, a New Share) at an
issue price of A$0.20 per New Share for eligible shareholders in
Australia and New Zealand, and at ZAR2.36 per New Share for
eligible shareholders in South Africa. The Rights Offer raised
gross proceeds of A$40 million (equivalent to approximately ZAR472
million) from the issue of 200,026,719 New Shares.
The funds raised from the Rights Issue will be used to meet the
Company's equity contribution (required for the IDC's proposed debt
funding) in relation the continued development of Makhado including
an enhanced development strategy that optimises HCC production and
capex, general working capital and costs of the Rights Issue. The
Rights Issue also resulted in a reduction of debt owed under the
ZAR60 million Standby Facility ($3.5 million) owing to Dendocept
(Pty) Ltd (Dendocept).
The Company also repaid the ZAR20 million ($0.4 million) loan
owing to the Senosi Group Investment Holdings (Proprietary) Limited
(SGIH), during the period.
Financial review
The loss after tax attributable to the owners of the parent for
the six months under review was $1,275,553 or 0.50 cents per share
compared to a loss after tax of $773,579 or 0.54 cents per share
for the prior corresponding period.
The loss after tax for the period under review of $1,309,550
(FY2022 H1: $828,362) includes:
-- revenue of $14,049,152 (FY2022 H1: $13,030,159) and cost of
sales of $10,136,800 (FY2022 H1: $10,912,725), resulting in a gross
profit of $3,912,352 (FY2022 H1: gross profit of $2,117,435);
-- income tax expense of $1,045,821 (FY2022 H1: credit of $510,083);
-- net foreign exchange gain of $19,971 (FY2022 H1: loss of
$186,698) arising from the translation of borrowings and cash due
to movement in the ZAR:USD and ZAR:AUD exchange rates during the
period;
-- employee benefit expense of $2,078,638 (FY2022 H1:
$1,201,849) which included non-cash employee expenses of $609,388
(FY2022 H1: $389,025) and cash employee expenses of $1,469,250
(FY2022 H1: $812,824)
-- other expenses of $1,961,130 (FY2022 H1: $1,661,537); and
-- depreciation of $47,914 (FY2022 H1: $45,570) included in administrative expenses.
As at 31 December 2022, the Company had cash and cash
equivalents of $20,090,399 compared to cash and cash equivalents of
$2,993,504 at 30 June 2022.
Authorised and issued share capital
MC Mining had 397,681,589 fully paid ordinary shares in issue as
at 31 December 2022. 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 during the
six months.
Basis of preparation and going concern
The interim financial statements for the half-year ended 31
December 2022 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.
The directors have prepared a cash flow forecast for the
12-month period ending 31 March 2024, taking into account available
facilities, additional funding that is expected to be raised and
expected cash flows to be generated by the Uitkomst Colliery and
the Vele Colliery which indicates that the Group will have
sufficient cash to fund its operations for at least the
twelve-month period from the date of signing this report.
The existing ZAR160 million ($9.4 million), excluding accrued
interest, IDC facility is repayable on 30 June 2023 and the
Company's cash flow forecasts include the assumption that it can
negotiate a deferred settlement to when the Makhado Project is at
steady state production, as opposed to being payable in June 2023,
with the balance being added to the new R245 million ($14.4
million) IDC facility. The construction of the Makhado Project is
conditional on the Company raising further funding (the Additional
Funding ). MC Mining is exploring and progressing a number of
alternatives to raise the Additional Funding including, but not
limited to, the issue of new equity for cash in both the Company
and its subsidiary companies which own the Makhado Project, the
sale of minority stakes in the corporate entities holding the
Makhado Project, further debt funding and contractor funding, such
as build, own, operate, transfer ( BOOT ) arrangements.
The conclusion of the Additional Funding is by its nature an
involved process and is subject to successful negotiations with the
external funders and shareholders, as well as the potential
funder's due diligence procedures. As such, whilst the directors
are confident, there can be no guarantee that the required funds
will be raised. In the event that the parties cannot reach
agreement on further deferment terms or the Company does not repay
the loan by the repayment date, the financing documentation allows
for the existing IDC facility to be converted into equity.
For further information, refer to note 2 of the interim
financial statements together with the auditor's review report.
Events after the reporting period
Director resignation
Mr Junchao Liu, Haohua Energy International (Hong Kong) Co.
Ltd's ( HEI ) shareholder representative director, resigned as a
Non-Executive Director on 10 March 2023. HEI is MC Mining's sixth
largest shareholder, owning 5.8% of the issued shares.
Appointment of Non-Executive Directors
Ms Yi (Christine) He and Julian Hoskin were appointed as
Non-Executive Directors of the Company on 10 March 2023. Ms He is
the Managing Director of Dendocept, a 7.1% shareholder in the
Company and holds a further 2.2% in her personal capacity and joins
the board as a shareholder nominee Director for the Dendocept
Consortium, which collectively holds 23.9% of MC Mining's issued
shares. Mr Hoskin was appointed as an Independent Non-Executive
Director and is an Australian resident.
Rounding off of amounts
The Company is 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 10 to 27, which has been
prepared on a going concern basis, was approved by the board on 15
March 2023 and was signed on its behalf by:
Nhlanhla Nene Godfrey Gomwe
Chairman Managing Director & Chief Executive
Officer
15 March 2023 15 March 2023
Dated at Johannesburg, South Africa, this 15(th) day of March
2023.
Six months Six months
ended ended
31 Dec 31 Dec
2022 2021
Note $'000 $'000
--------------------------------------------- ----- ----------- -----------
Continuing operations
Revenue 4 14,049 13,030
Cost of sales 5 (10,137) (10,913)
----------- -----------
Gross profit 3,912 2,117
Other operating income 6 352 42
Other operating gains 7 205 188
Expected credit loss reversal 8 291 -
Administrative expenses 9 (4,089) (2,909)
Operating profit/(loss) 671 (562)
Interest income 128 73
Finance costs (1,063) (850)
----------- -----------
Loss before tax (264) (1,339)
Income tax (expense)/credit 10 (1,045) 510
----------- -----------
LOSS AFTER TAX (1,309) (829)
Other comprehensive loss, net of
income tax
Items that may be reclassified subsequently
to profit or loss
Exchange differences on translating
foreign operations (2,373) (9,817)
----------- -----------
Total comprehensive loss for the
period (3,682) (10,646)
----------- -----------
Loss after tax for the period attributable
to:
Owners of the parent (1,275) (774)
Non-controlling interests (34) (55)
----------- -----------
(1,309) (829)
----------- -----------
Total comprehensive profit/(loss)
attributable to:
Owners of the parent (3,648) (10,591)
Non-controlling interests (34) (55)
----------- -----------
(3,682) (10,646)
----------- -----------
Loss per share
Basic and diluted (cents per share) 12 (0.50) (0.54)
The accompanying notes are an integral part of these
condensed consolidated financial statements
31 Dec 30 June
2022 2022
Note $'000 $'000
--------------------------------------- ----- ---------- ----------
ASSETS
Non-current assets
Exploration and evaluation assets 13 66,232 67,839
Development assets 13 16,919 17,739
Property, plant and equipment 22,745 23,475
Right-of-use assets 14 2,733 3,132
Other financial assets 4,965 4,599
Restricted cash 15 261 100
Total non-current assets 113,855 116,884
---------- ----------
Current assets
Inventories 16 6,944 4,445
Trade and other receivables 1,438 1,093
Cash and cash equivalents 15 20,090 2,993
---------- ----------
Total current assets 28,472 8,531
Total assets 142,327 125,415
---------- ----------
LIABILITIES
Non-current liabilities
Provisions 8,289 8,048
Deferred tax liability 4,266 4,232
Lease liabilities 17 1,716 2,057
Total non-current liabilities 14,271 14,337
---------- ----------
Current liabilities
Borrowings 19 16,394 21,656
Trade and other payables 9,814 9,307
Bank overdraft 15 1,132 1,529
Provisions 195 203
Tax liabilities 741 362
Lease liabilities 17 818 885
Total current liabilities 29,094 33,942
Total liabilities 43,365 48,279
---------- ----------
NET ASSETS 98,962 77,136
---------- ----------
EQUITY
Issued capital 20 1,070,278 1,045,395
Accumulated deficit (927,520) (926,245)
Reserves (42,938) (41,190)
---------- ----------
Equity attributable to owners of
the parent 99,820 77,960
Non-controlling interests (858) (824)
---------- ----------
TOTAL EQUITY 98,962 77,136
---------- ----------
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 2022 1,045,395 (926,245) 1,263 91 - (42,544) 77,960 (824) 77,136
Total
comprehensive
profit/(loss)
for the
period - (1,275) - - - (2,373) (3,648) (34) (3,682)
---------- ------------ -------- -------- --------- ------------ ------------- ---------------- ---------
Loss for the
period -
continuing
operations - (1,275) - - - - (1,275) (34) (1,309)
Other
comprehensive
loss,
net of tax - - - - - (2,373) (2,373) - (2,373)
Performance
rights issued - - 625 - - - 625 - 625
Shares issued 26,503 - - - - - 26,503 - 26,503
Share issue
costs (1,620) - - - - (1,620) - (1,620)
Balance at 31
December
2022 1,070,278 (927,520) 1,888 91 - (44,917) 99,820 (858) 98,962
---------- ------------ -------- -------- --------- ------------ ------------- ---------------- ---------
Balance at 1
July 2021 1,041,884 (907,202) 1,494 91 1,177 (30,199) 107,245 (721) 106,524
Total
comprehensive
profit/(loss)
for the
period - (774) - - - (9,817) (10,591) (55) (10,646)
---------- ------------ -------- -------- --------- ------------ ------------- ---------------- ---------
Loss for the
period -
continuing
operations - (774) - - - - (774) (55) (829)
Other
comprehensive
loss,
net of tax - - - - - (9,817) (9,817) - (9,817)
---------- ------------ -------- -------- --------- ------------ ------------- ---------------- ---------
Share based
payments - - 277 - - - 277 - 277
Performance
rights
expired - 369 (369) - - - - - -
Balance at 31
December
2021 1,041,884 (907,607) 1,402 91 1,177 (40,016) 96,931 (776) 96,155
The accompanying notes are an integral part of these
condensed consolidated financial statements
Six months ended 31 Dec 2022 Six months ended 31 Dec 2021
Note $'000 $'000
----------------------------------------------- ----- ----------------------------- -----------------------------
Cash Flows from Operating Activities
Receipts from customers 14,394 17,798
Payments to employees and suppliers (14,336) (15,179)
----------------------------- -----------------------------
Cash generated in operatio ns 58 2,619
Interest received 128 16
Interest paid (126) (129)
Tax (paid)/refund (464) 45
Net cash generated in operating activities (404) 2,551
----------------------------- -----------------------------
Cash Flows from Investing Activities
Purchase of property, plant and equipment (626) (567)
Investment in exploration and evaluation
assets 13 (732) (30)
Increase in other financial assets (326) (101)
Payments for development assets 13 (273) (3)
Restricted cash movement (161) -
-----------------------------
Net cash used in investing activities (2,118) (701)
----------------------------- -----------------------------
Cash Flows from Financing Activities
Proceeds from issue of shares 23,039 -
Share issue costs (1,620) -
Lease repayments 17 (415) (424)
Proceeds from borrowings 19 289 -
Borrowings repayments 19 (1,610) (351)
Net cash generated/(used) in financing
activities 19,683 (775)
----------------------------- -----------------------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 17,161 1,075
Cash and cash equivalents at the beginning of
the half-year 1,464 1,023
Foreign exchange differences 333 (192)
----------------------------- -----------------------------
Cash and cash equivalents at the end of the
half-year 15 18,958 1,906
----------------------------- -----------------------------
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 financial statement. 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 2022 annual
financial report for the financial year ended 30 June 2022, 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).
Where applicable, certain comparatives have been adjusted to
conform with current year presentation.
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.
2. Going Concern
The Consolidated Group has incurred a net loss after tax for the
six months ended 31 December 2022 of $1.3 million (31 December
2021: loss of $0.8 million). During the period ended 31 December
2022, net cash outflows from operating activities were $0.4 million
(31 December 2021 net inflow: $2.6 million). As at 31 December 2022
the Consolidated Group had a net current liability position of $0.6
million (30 June 2022: net current liability position of $25.4
million).
During November 2022, the settlement date of the $9.4 million
(ZAR160 million) IDC loan facility, excluding accrued interest, was
extended to 30 June 2023. The IDC also agreed to extend the
terminal drawdown date in respect of the conditional $14.4 million
(ZAR245 million) term loan agreed to partially finance the
development of the Makhado Project, also to 30 June 2023, subject
to the satisfaction of the outstanding conditions, including the
IDC reaffirming its financial due diligence and credit
approval.
The Directors have prepared a cash flow forecast for the
12-month period ended 31 March 2024, taking into account available
facilities, additional debt and equity funding that although not
yet concluded is expected to be raised, and expected cash flows to
be generated by Uitkomst and the Vele Colliery. On the basis of
these equity and debt funding initiatives being successfully
implemented, the forecast indicates that the Group 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:
-- Meeting commitments to creditors arising from continuing operations;
-- Deferring the settlement of the existing IDC loan (plus
accrued interest) to when Makhado is at steady state production as
opposed to being payable in June 2023 (refer note 19) and/or
converting this facility to equity;
-- Continued favorable coal prices and utilization of cash
generated by the Company's collieries;
-- A drawdown of the new IDC term facility of $14.4 million (ZAR245 million);
2. Going Concern (continued)
-- Contractor funding including a BOOT arrangement of $6.5 million (ZAR110 million); and
-- In addition to the $14.4 million (ZAR245 million) new IDC
term loan facility and $6.5 million (ZAR110 million) BOOT
arrangement referred to above, securing additional composite
debt/equity funding of approximately $82.4 million (ZAR1.4 billion)
required ( Additional Funding ) to finance the development of the
Makhado Project, through either a debt or equity.
The Group is still in negotiations with the IDC on the deferral
of the existing loan repayment, which may have an impact on its
ability to draw down on the new facility. This is due to the new
facility being subject to certain conditions precedent which are
still to be met, one of which is the settlement of the current
facility. In addition, draw down on the conditional $14.4 million
(ZAR245 million) term loan is subject to successful conclusion of a
due diligence exercise and credit approval.
The Group is exploring and progressing several alternatives to
raise the Additional Funding including, but not limited to:
-- The issue of new equity for cash in the Company or its
subsidiary that owns the Makhado project;
-- Further debt funding;
-- Cash generated by the Company's Collieries;
-- Further contractor BOOT funding arrangements; and
-- The sale of a minority stake in the subsidiary companies holding the Makhado Project.
The conclusion of the debt and equity raise funding initiatives
as included in the cash flow forecast and for purposes of obtaining
the Additional Funding as outlined above, and renegotiations with
the IDC on current and further funding, is by its nature an
involved process subject to successful negotiations with the
external funders and shareholders. In addition, any equity or debt
raised is likely to be subject to a due diligence process.
These conditions create a material uncertainty that may cast
significant doubt on the entity's ability to continue as a going
concern and, therefore, the Group may be unable to realize its
assets and discharge its liabilities in the normal course of
business.
The Directors are of the opinion that the going concern basis
remains appropriate as a result of the following
considerations:
-- The Group is already in discussions with the IDC on the
deferral of the settlement of the existing loan and the
restructuring of the conditions precedent in relation to the new
facility;
-- The Group has a history of successful capital raisings to
meet the Group's funding requirements; and
-- The Group has the capacity if necessary to reduce its
operating cost structure in order to minimise its working capital
requirements and defer the timing of any future capital
raising.
Subject to raising the required funding noted above, the
development of the Makhado Project is expected to commence within
the twelve months following the signing of these interim financial
statements.
Based on the above, the directors are satisfied at the date of
signing the interim financial statements that there are reasonable
grounds to believe that they will be successful in obtaining the
required funding and that the Group will have sufficient funds to
meet its obligations as and when they fall due and are of the
opinion that the use of the going concern basis remains
appropriate
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 Group be
unable to continue as a going concern. Such adjustments could be
material.
2. 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 Managing Director and 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 2022, 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 the Makhado 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 2022, projects included within this
reportable segment includes the Vele Colliery, in the early
operational stage with the ramp-up to full production expected in
Q2 FY2023 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.
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 2022
$'000 $'000 $'000 $'000
-------------------------------- ------------
Exploration Development Mining Total
------------ ------------ ---------
Revenue - - 14,049 14,049
Cost of sales - (4) (10,130) (10,134)
------------ ------------ ---------
Gross Profit - (4) 3,919 3,915
Other operating income - 6 13 19
Expected credit loss
reversed - - 291 291
Other operating gains/(losses) 2 2 8 12
Administrative expenses (269) (425) (48) (742)
Profit/(loss) before
interest (267) (421) 4,183 3,495
Interest income 32 4 24 60
Finance costs (272) (318) (311) (901)
------------ ------------ ---------
Profit/(loss) before
tax (507) (735) 3,896 2,654
------------ ------------ ---------
For the six months ended 31 December 2021
$'000 $'000 $'000 $'000
-------------------------------- ------------
Exploration Development Mining Total
------------ ------------ ---------
Revenue - - 13,030 13,030
Cost of sales - - (10,913) (10,913)
------------ ------------ ---------
Gross Profit - - 2,117 2,117
Other operating income 2 22 14 38
Other operating gains/(losses) - - 62 62
Administrative expenses (533) (333) (85) (951)
Profit and loss before
interest (531) (311) 2,108 1,266
Interest income 5 - 15 20
Finance costs (360) (203) (288) (850)
------------ ------------ ---------
Loss before tax (886) (514) 1,835 435
------------ ------------ ---------
The following is an analysis of the Group's assets by reportable
operating segment:
31 Dec 2022 30 June
2022
$'000 $'000
------------ --------
Exploration 78,196 86,031
Development 17,513 31,337
Mining 28,944 31,418
------------ --------
Total segment assets 124,653 148,786
------------ --------
Reconciliation of segment information to the consolidated
financial statements:
31 Dec 2022 31 Dec
2021
$'000 $'000
------------ --------
Total profit/(loss) before tax for reportable
segments 2,654 435
Other operating gains 193 126
Administrative expenses (3,347) (1,957)
Other operating income 334 5
Interest income 68 52
Finance costs (164) -
Cost of sales (2) -
Loss before tax (264) (1,339)
------------ --------
31 Dec 2022 30 June
2022
$'000 $'000
------------ --------
Total segment assets 124,653 115,999
Unallocated property, plant and equipment 5,436 4,964
Other financial assets 4,084 4,037
Other receivables 261 100
Unallocated exploration and evaluation assets 312 1
Unallocated current assets 7,581 314
Total assets 142,327 125,415
------------ --------
The reconciling items relate to corporate assets.
4. Revenue
Revenue consists of the sale of coal by the Uitkomst Colliery.
Coal sales during the period were made to customers in the steel
industry in South Africa and domestic and export thermal coal
sales.
5. Cost of sales
Cost of sales consists of:
31 Dec
31 Dec 2022 2021
$'000 $'000
------------ ---------
Salaries and wages (4,447) (4,537)
Underground mining (1,395) (2,048)
Depreciation and amortisation (1,208) (1,245)
Logistics 579 (52)
Other direct mining costs (4,275) (3,447)
Inventory adjustment 2,322 498
Other (1,713) (82)
------------ ---------
(10,137) (10,913)
------------ ---------
6. Other operating income
Other operating income includes:
31 Dec 31 Dec
2022 2021
$'000 $'000
------- -------
Sale of scrap 10 -
Other 342 42
------- -------
352 42
------- -------
7. Other operating gains
Other operating gains or losses include:
31 Dec 31 Dec
2022 2021
$'000 $'000
------- -------
Foreign exchange (loss)/profit
Unrealised (71) (170)
Realised 91 (16)
Other 185 374
------- -------
205 188
------- -------
8. Expected credit loss reversal
31 Dec 31 Dec
2022 2021
$'000 $'000
Reversal of expected credit losses 291 -
291 -
------- -------
9. Administrative expenses
31 Dec
2022 31 Dec 2021
$'000 $'000
-------- ------------
Employee costs (2,079) (1,201)
Depreciation and amortisation (48) (46)
Other (1,962) (1,662)
-------- ------------
(4,089) (2,909)
-------- ------------
10. Income tax expense/(credit)
The income tax expense/(credit) relates to the following:
31 Dec
2022 31 Dec 2021
$'000 $'000
------- ------------
Current income tax expense 849 (45)
Deferred tax current year 196 (465)
1,045 (510)
------- ------------
11. Dividends
No dividend has been paid by MC Mining or is proposed in respect
of the half-year ended 31 December 2022 (FY 2021 H1: nil)
12. Loss per share
31 Dec 31 Dec
2022 2021
---------- -----------
12.1 Basic loss per share
Cents per Cents
share per share
---------- -----------
Basic loss per share
From continuing operations (0.50) (0.54)
$'000 $'000
---------- -----------
Loss for the period attributable to owners of
the parent (1,275) (774)
31 Dec 31 Dec
2022 2021
------------ ------------
'000 shares '000 shares
------------ ------------
Weighted number of ordinary shares
Weighted average number of ordinary shares for
the purposes of basic loss per share 254,493 154,420
------------ ------------
12.3 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.
12.4 Headline loss per share (in line with JSE listing requirements)
The calculation of headline loss per share at 31 December 2022
was based on the headline loss attributable to ordinary equity
holders of the Company of $1,275,550 ( FY 2022 H1 : $773,579) and a
weighted average number of ordinary shares outstanding during the
period ended 31 December 2022 of 254, 493,063 ( FY 2022 H1 :
154,419,555).
The adjustments made to arrive at the headline loss are as
follows:
31 Dec 31 Dec
2022 2021
$'000 $'000
-------- -------
Loss after tax for the period attributable
to ordinary shareholders (1,275) (774)
Headline loss (1,275) (774)
-------- -------
Headline loss per share (cents per share) (0.50) (0.54)
13. Development, Exploration and Evaluation Assets
A reconciliation of development, exploration and evaluation
assets is presented below:
Exploration and evaluation assets
31 Dec 30 June
2022 $'000 2022 $'000
------------ ------------
Balance at beginning of period 67,839 93,467
Additions 732 134
Movement in rehabilitation asset 21 88
Foreign exchange differences (2,360) (11,000)
Impairment - (14,850)
------------ ------------
Balance at end of period 66,232 67,839
------------ ------------
Development assets
31 Dec 30 June
2022 2022 $'000
$'000
------------ ------------
Balance at beginning of period 17,739 19,055
Transfer to property, plant and equipment (651) -
Additions 273 5
Movement in rehabilitation asset 250 1,115
Foreign exchange differences (692) (2,436)
------------ ------------
Balance at end of period 16,919 17,739
------------ ------------
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:
31 Dec 30 June
2022 2022
$'000 $'000
-------- --------
Balance at beginning of the period 3,132 2,588
Additions - 119
Depreciation (270) (637)
Modification - 1,462
Foreign exchange differences (129) (400)
-------- --------
Balance at end of period 2,733 3,132
-------- --------
15. Cash and cash equivalents
30 June
31 Dec 2022 2022
$'000 $'000
------------- --------
Bank balances 20,090 2,993
Bank overdraft (1,132) (1,529)
18,958 1,464
------------- --------
Restricted cash 261 100
261 100
------------- --------
The bank overdraft relates to an ABSA Bank Limited (ABSA)
facility for $1.5 million (ZAR24.9 million). The facility is for
short-term working capital requirements and potential expansion
opportunities. It has a floating coupon at the South African Prime
rate (currently 10.75% per annum) plus 3.0%, with a general
notarial bond over Uitkomst's assets as well as a cession of the
colliery's trade receivables. The facility is subject to annual
review.
16. Inventory
30 June
31 Dec 2022 2022
$'000 $'000
------------- --------
Consumable stores 671 580
Consignment inventory 3,418 1,460
Finished goods 2,854 2,450
Other 33 8
Provision for obsolete inventory (32) (53)
------------- --------
6,944 4,445
------------- --------
17. Lease liabilities
The movement in the lease liabilities is as follows:
30 June
31 Dec 2022 2022
$'000 $'000
------------- --------
Balance at beginning of the period 2,942 2,412
Modification (8) 1,339
Additions - 119
Interest 134 281
Repayments (415) (864)
Foreign exchange differences (119) (345)
------------- --------
Balance at end of period 2,534 2,942
------------- --------
The maturity of the Group's undiscounted lease payments is as
follows:
30 June
31 Dec 2022 2022
$'000 $'000
------------- --------
Not later than one year 818 885
Later than one year and not later than five
years 2,155 2,707
Later than five years 313 332
------------- --------
3,286 3,924
Less future finance charges (752) (982)
------------- --------
Present value of minimum lease payments 2,534 2,942
------------- --------
18. Deferred consideration
30 June
31 Dec 2022 2022
$'000 $'000
-------------- --------
Opening balance - 2,796
Interest accrued - 39
Repayments - (2,670)
Foreign exchange differences - (165)
-------------- --------
- -
--------------------------------------------- --------
18. Deferred consideration (continued)
Lukin and Salaita deferred consideration
In the 2019 financial year, the Company's subsidiary, Baobab,
completed the acquisition of the properties Lukin and Salaita, the
key surface rights required for its Makhado Project for an
acquisition price of $4.1 million (ZAR70 million). $2.1 million
(ZAR35 million) 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 would result in
Baobab receiving market related compensation and would 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 and accrued interest payments owed
were settled on 1 March 2022.
19. Borrowings
31 Dec 30 June
2022 2022
$'000 $'000
-------- --------
Opening balance 21,656 19,482
Loans acquired during the year 289 7,953
Transfer to share capital - (3,024)
Repayments (5,074) (644)
Interest accrued 460 537
Foreign exchange differences (937) (2,648)
Balance at end of period 16,394 21,656
-------- --------
Non-current - -
Current 16,394 21,656
------- -------
16,394 21,656
------- -------
Industrial Development Corporation of South Africa Limited
The IDC has provided longstanding financial support for the
development of the Makhado Project. In March 2017 MC Mining secured
a facility of which ZAR160 million ($9.4 million) was drawn to
progress Makhado to its fully-permitted status and to partially
fund the acquisition of the surface rights over the project area.
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. In terms of the IDC facility, as a result
of ZAR160 million of the facility being drawn, the IDC was issued
with 6.7% of the shares in MC Mining subsidiary, Baobab, the owner
of the Makhado Project. The IDC has extended the date for repayment
date for the ZAR160 million (plus accrued interest) to 30 June
2023.
The IDC also agreed to extend the terminal draw down date in
respect of the conditional July 2019 ZAR245 million ($14.4 million)
new facility for the development of the Makhado Project, to 30 June
2023, which facility is still subject to successful conclusion of a
due diligence exercise and credit approval. The ZAR245 million new
facility remains part of the composite Makhado funding package,
subject to the repayment of the March 2017 facility, along with
accrued interest thereon.
MC Mining is required to issue warrants, in respect of MC Mining
shares, to the IDC on the drawdown of the March 2017 facility. The
warrants for the first $7.1 million (ZAR120 million) 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 IDC was
entitled to exercise the warrants for a period of five years from
the date of issue and these warrants expired on 16 June 2022. The
price at which the IDC was entitled to purchase the MC Mining
shares was equal to a thirty percent premium to the 30-day volume
weighted average price of the MC Mining shares as traded on the
JSE. The warrants for the second draw down of ZAR40 million ($2.4
million) equate to 0.833% of the entire share capital of MC Mining
as at 1 October 2020, and it is not known if or precisely when
these warrants will be issued as the Company is in discussions with
the IDC to restructure the ZAR160 million facility. Furthermore,
upon each advance, Baobab is required to
19. Borrowings (continued)
issue new ordinary shares in Baobab to the IDC equivalent to 5%
of the entire issued share capital of Baobab if the drawdown was
ZAR120 million. Following the total drawdowns of ZAR160 million,
the IDC is a 6.7% shareholder in Baobab.
Dendocept (Pty) Ltd
The R60 million ($3.5 million) Standby Loan Facility obtained
from Dendocept is unsecured and bears interest at the South African
Prime plus 3% with a maturity date of June 2023. The outstanding
balance on the final maturity date was payable in cash or MC Mining
equity. The R60 million owing in terms of the Standby Loan Facility
was settled by the issue of MC Mining equity as part of the
November 2022 Rights Issue.
Senosi Group Investment Holdings (Pty) Ltd
During February 2022, MC Mining and its subsidiary Limpopo Coal
Company Proprietary Limited ( Limpopo Coal ), entered into a staged
ZAR86 million ($5.1 million) Convertible Advance and Subscription
Agreement (the SGIH Agreement) with SGIH. In terms of the SGIH
Agreement, SGIH paid ZAR46 million ($2.7 million) and 38.3 million
new MC Mining shares were issued to SGIH on 6 April 2022.
SGIH also conditionally agreed to subscribe for a further 33.3
million new MC Mining shares, raising an additional ZAR40 million
($2.4 million), conditional on shareholder approval. The Company's
shareholders declined to approve the issue of the shares to SGIH at
a general meeting on 15 July 2022. As a result, the two tranches of
ZAR10 million paid by SGIH during April and May 2022, plus
interest, were due to be repaid by Limpopo Coal. The ZAR20 million
($1.2 million) loan from SGIH plus interest at the South African
prime interest rate, was repaid during the period.
20. Issued Capital
During the reporting period the Company issued 200,026,719
ordinary shares.
31 Dec 2022 30 June
2022
$'000 $'000
------------- ----------
397,681,589 (FY2022: 197,654,870) fully
paid ordinary shares 1,070,278 1,045,395
------------- ----------
Fully paid ordinary shares carry one vote per share and carry
the right to dividends.
Options
Shareholders authorised the issue of 12,000,000 share options to
the Managing Director and CEO on 30 November 2022. The options were
granted subsequent to period end.
Performance Rights
During July 2022 the directors issued 9,183,906 performance
rights to management in terms of the shareholder approved
Performance Rights Scheme.
Shareholders authorised 7,000,000 performance rights for issue
to MC Mining directors on 30 November 2022. The performance rights
were granted subsequent to period end.
During November 2022, 381,219 performance rights granted to
management in 2019 vested and a further 1,602,393 special incentive
performance rights granted to management in September 2020 vested
on the commissioning of the Vele Colliery CPP in December 2022. As
at 31 December 2022, the ordinary MC Mining shares due for these
performance rights had not been issued. The South African
regulatory approval for the issue of the ordinary MC Mining shares
was received subsequent to period end and the ordinary MC Mining
shares are expected to be issued in March/April 2023.
No further performance rights expired or were cancelled during
the period.
21. Contingencies and Commitments
Contingent liabilities
The Group has no significant contingent liabilities at reporting
date.
Commitments
As at 31 December 2022, the Group had a $0.2 million commitment
which relate to its social and labour plan at Uitkomst Colliery. In
addition to the amount provided in the consolidated statement of
financial position.
In addition to the commitments of the parent entity, subsidiary
companies have typical financial commitments associated with their
mining rights granted by the South African Department of Mineral
Resources & Energy (DMRE) .
22. Events subsequent to reporting
Director resignation
Mr Junchao Liu, HEI's shareholder representative director,
resigned as a Non-Executive Director on 10 March 2023. HEI is MC
Mining's sixth largest shareholder, owning 5.8% of the issued
shares.
Appointment of Non-Executive Directors
Ms Yi (Christine) He and Julian Hoskin were appointed as
Non-Executive Directors of the Company on 10 March 2023. Ms He is
the Managing Director of Dendocept, a 7.1% shareholder in the
Company and holds a further 2.2% in her personal capacity and joins
the board as a shareholder nominee Director for the Dendocept
Consortium, which collectively holds 23.9% of MC Mining's issued
shares. Mr Hoskin was appointed as an Independent Non-Executive
Director and is an Australian resident.
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 period nor were any assets
transferred between levels.
As at 31 December 2022 ($'000) Level Level Level Total
1 2 3
-------------------------------- ------------ --------- --------- ---------
Other Financial Assets - 4,965 - 4,965
- 4,965 - 4,965
--------------------------------------------- --------- --------- ---------
As at 30 June 2022 ($'000) Level Level Level Total
1 2 3
-------------------------------- ------------ --------- --------- ---------
Other Financial Assets - 4,599 - 4,599
- 4,599 - 4,599
--------------------------------------------- --------- --------- ---------
Directors' Declaration
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 2022 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
Nhlanhla Nene Godfrey Gomwe
Chairman Managing Director and Chief Executive
Officer
15 March 2023 15 March 2023
Dated at Johannesburg, South Africa, this 15(th) day of March
2023.
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END
MSCUVOBROSUOARR
(END) Dow Jones Newswires
March 15, 2023 03:40 ET (07:40 GMT)
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