Reviewed condensed consolidated interim financial results For the six months ended 31 August 2015

Transcription

1 Oakbay Resources and Energy Limited (Incorporated in the Republic of South Africa) (Registration number 2009/021537/06) Share code: ORL ISIN: ZAE ("Oakbay Resources" or "the Group" or the Company ) Reviewed condensed consolidated interim financial results For the six months 31 August 2015 SALIENT FEATURES * Diversification of income streams by way of commencement of contract mining activities * Declining production in open cast gold mining operations led to a lower contribution from gold operations * Over fatality free shifts which equates to over 6.2 million fatality free man hours * Zero incidents of labour unrest * Invested R20 million in uranium development and gold production * Completion of scoping phase of feasibility study * Preparing for local and international capital raising Condensed consolidated statement of financial position Reviewed six Audited twelve months months 31 August February 2015 Notes R'000 R'000 Assets Non-current assets 7,254,362 7,244,453 Property, plant and equipment 1,978,206 1,969,946 Mineral resources and reserves 5,205,629 5,205,629 Environmental rehabilitation obligation investments 58,960 57,536 Environmental rehabilitation guarantee deposits 2,439 2,439 Deposits 9,128 8,903 Current assets 450, ,518 Trade and other receivables 1,596 16,981 Amounts owing to related parties 9 44,088 27,962 Inventories 205, ,513 Cash and cash equivalents 199, ,062 Total assets 7,705,357 7,688,971 Equity Stated capital 466, ,398 Retained earnings 4,023,015 4,049,792 Total equity attributable to owners of the company 4,489,413 4,516,190 Non-controlling interest 589, ,397

2 Total equity 5,079,283 5,113,587 Liabilities Non-current liabilities 2,156,994 2,144,268 Loans and borrowings 5 74, ,367 Environmental rehabilitation provision 4 216, ,811 Amount owing to holding company 9 408, ,514 Deferred taxation 1,457,576 1,457,576 Current liabilities 469, ,116 Trade and other payables 61,435 77,675 Loans and borrowings 5 195, ,362 Amounts owing to related parties 9 212, ,079 Total liabilities 2,626,074 2,575,384 Total equity and liabilities 7,705,357 7,688,971 Net asset value per share (in Rands) Closing number of shares 800,000, ,000,000 Condensed consolidated statement of profit or loss and other comprehensive income Reviewed six Reviewed six months months 31 August August 2014 R'000 R'000 Revenue 130, Cost of sales (101,227) (76 943) Gross profit/(loss) 29,497 (699) Other operating income 3, Other operating expenses (57,514) (59 379) Operating loss (24,801) (22 873) Finance income 12, Finance expense (21,503) ( ) Loss before income tax for the period (34,304) ( ) Taxation Loss for the period (34,304) ( ) Other comprehensive income - Loss and total comprehensive income for the period (34,304) ( ) Loss and total comprehensive income attributable to: Owners of the company (26,777) ( ) Non-controlling interest (7,527) (36 558) (34,304) ( ) Earnings per share Basic loss per share (cents) (3.35) ( ) Diluted loss per share (cents) (3.35) ( )

3 Headline loss per share (cents) (3.35) ( ) Diluted headline loss per share (cents) (3.35) ( ) Reconciliation between earnings and headline earnings Total comprehensive loss for the six month period (26,777) ( ) Adjustments: - - Headline loss attributable to ordinary (26,777) ( ) shareholders Weighted average number of shares 800,000,000 1,000 Condensed consolidated statement of changes in equity Attributable to owners of the company Share Share Stated capital premium capital R 000 Balance at 1 March ,025 Loss for the period Other comprehensive income Total comprehensive income at 31 August ,025 Conversion of shares to no par value (1) (56,025) 56,026 Issue of ordinary shares 410,372 Profit for the period Other comprehensive income Total comprehensive income at 28 February ,398 Loss for the period Other comprehensive income Total comprehensive income at 31 August ,398 Attributable to owners of the company Retained earnings Total Balance at 1 March ,087,357 4,143,383 Loss for the period (117,084) (117,084) Other comprehensive income Total comprehensive income at 31 August ,970,273 4,026,299 Conversion of shares to no par value Issue of ordinary shares 410,372 Profit for the period 79,519 79,519 Other comprehensive income Total comprehensive income at 28 February ,049,792 4,516,190

4 Loss for the period (26,777) (26,777) Other comprehensive income Total comprehensive income at 31 August ,023,015 4,489,413 Non-controlling interest Total Balance at 1 March ,772 4,742,155 Loss for the period (36,558) (153,642) Other comprehensive income - Total comprehensive income at 31 August ,214 4,588,513 Conversion of shares to no par value Issue of ordinary shares 410,372 Profit for the period 35, ,702 Other comprehensive income - Total comprehensive income at 28 February ,397 5,113,587 Loss for the period (7,527) (34,304) Other comprehensive income Total comprehensive income at 31 August ,870 5,079,283 Condensed consolidated statements of cash flows Reviewed Audited six twelve months months 31 August 28 February R'000 R'000 Cash flows from operating activities 10,340 (29 955) Cash generated from operations 6,714 (15,451) Interest paid (82) (15,228) Interest received 3, Cash flows from investing activities (22,030) (31 440) Additions to property, plant and equipment (20,384) (30 031) Rehabilitation investment (1,424) (1 370) Increase in deposits (222) (39) Cash flows from financing activities 20, Increase in amounts owing by related parties (16,126) (39) Repayment of loans and borrowings (37,500) (4 466) Increase in amount owing to related parties 33, Decrease in finance lease liability (1,685) - Increase in amount owing to holding company 42, Net increase/(decrease) in cash and cash equivalents 8,671 (1 573) Cash and cash equivalents at the beginning of the year 191, Cash and cash equivalents at the end of the

5 period 199, Commentary Financial and operational overview 1. The directors present the reviewed condensed consolidated interim financial results for the six months 31 August Basis of preparation These condensed consolidated interim financial results for the six months 31 August 2015 have been prepared in accordance with the framework concepts and the recognition and measurement criteria of International Financial Reporting Standards ( IFRS ), and the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee, as well as the presentation and disclosure requirements of IAS 34 Interim Financial Reporting, the JSE Limited Listings Requirements and the Companies Act of South Africa. The group accounting policies and methods of measurement and recognition comply in material respects with IFRS and are consistent with those applied in the previous financial period. These condensed consolidated interim financial results have been prepared under the supervision of Trevor Scott (BCom (Hons), BAcc, CA(SA))in his capacity as Financial Director of the Group. 2.2 Reviewed results auditor s conclusion KPMG Inc., Oakbay' Resources independent auditors, have reviewed the condensed consolidated interim financial results of Oakbay Resources. The review was conducted in accordance with International Standards on Review Engagements 2410: Review of Interim Financial Information performed by the Independent Auditor of the Entity. They have expressed an unmodified review conclusion on the results. The condensed consolidated interim financial results comprise the condensed consolidated statement of financial position at 31 August 2015, condensed consolidated statement of comprehensive income, condensed consolidated statement of changes in equity and condensed consolidated statement of cashflows for the six months then and selected explanatory notes. The review report is available for inspection at Oakbay Resources registered office. Any forecast information included in this announcement has neither been reviewed nor reported on by the company s auditors. 3. Nature of the business Oakbay Resources and Energy Limited is incorporated in the Republic of South Africa. These condensed consolidated interim financial statements comprise the Company and its subsidiaries (together referred to as the 'Group' and individually as Group entities ). Its principal business activity is the mining and exploration of mineral resources, particularly uranium and gold deposits, and the possible beneficiation thereof. The Group currently owns and operates the Shiva Uranium Mine, a uranium and gold mine in the North West province of the Republic of South Africa.

6 The Group is currently engaged in open cast gold mining while simultaneously focusing on the completion of a bankable feasibility study on its uranium prospects. 4. Environmental rehabilitation provision Six months Year 31-Aug 28-Feb Balance at the beginning of the period 209, ,749 Unwind of interest 8,287 11,141 Capitalised to property, plant and equipment (359) 40,644 Change in estimate in environmental rehabilitation provision recognised in profit or loss (1,497) 24,277 Balance at the end of the period 216, , Loans and borrowings Industrial Development Corporation ("IDC") borrowings Six months Year 31-Aug 28-Feb Balance at the beginning of the period - 1 March 146, ,676 Loan repayments for the period (37,500) (80,000) Conversion of debt to equity - (225,022) Fair value adjustment ito IAS39 due to changes in timing of cash flows 1,530 5,386 Fair value adjustment ito IAS39 due to conversion of debt to equity - (60,265) Interest accrued 9,584 55,411 Balance at the end of the period 119, ,186 Bank of Baroda facility Six months Year 31-Aug 28-Feb Balance at the beginning of the period 146,858 - Draw down on loan facility - 144,960 Interest expense 3,494 1,898 Balance at the end of the period 150, ,858

7 Total non-current liabilities 74, ,367 Total current liabilities 195, , , , Events after the reporting period Subsequent to 31 August 2015, Oakbay subsidiary company, Shiva Uranium, acquired open cast mining equipment at a cost of R42 million. The equipment is int to improve production capabilities in the open cast gold operation. Save for the equipment purchase previously described, the directors are not aware of any other matter or circumstance rising since the 31 August 2015, not otherwise dealt with in the condensed interim consolidated financial statements, which would affect the operations of the Group or the results of those operations significantly. 7. General review of operations 7.1 Safety During the six months 31 August 2015, the company s safety performance remained consistently excellent, with zero fatalities and serious injuries being experienced during the period. Safety is a core value of the group and an integral part of the culture with a goal of Zero Harm. At 30 September 2015, the group had achieved a total of fatality free shifts; which equates to approximately 6.2 million fatality free hours. The lost time injury frequency rate (LTIFR) for the six month period was 1.65 per one thousand employees in service; which is well below the industry average of 3.8. The continuous commitment of the mine employees and management toward safe working practices remains the uppermost priority of the company. Safety initiatives at the mine continue to be driven by the Health and Safety Committee and the ongoing focus on reinforcing excellent communication standards between the committee and workplace health and safety representatives is progressing well. Constant supervision of safety standards and safety compliance matters remains a focus point for the Health and Safety Committee as well as daily safety training initiatives. During the six months, senior executive management continued with their initiative of chairing weekly safety meetings with the relevant supervisors in order to discuss safety achievements and pro-active action to prevent any accidents and injuries. Safety remains the highest priority for management and the company is constantly re-evaluating its safety procedures in line with its philosophy of zero tolerance to unsafe acts and reducing safety risk to its lowest possible level. 7.2 Gold production Gold mining operations maintained their profitability but production for the six month period was constrained due to declining efficiencies in the open cast mining section, primarily resulting from the availability of

8 open cast mining equipment. As a result, the volume of reef tons processed for the six months 31 August 2015 was lower than expected. Subsequent to 31 August 2015, the company invested approximately R42 million in new open cast mining equipment in order to ensure consistence in the availability of material for processing. In the face of declining production, management maintained their efforts to boost efficiencies, improve productivity and aggressively manage costs. Significant efforts in grade management ensured that grades consistent with expectations were maintained during the period under review. Oakbay Resources outlook for its gold production will remain optimistic as further improvements in operational efficiencies are expected to translate into increased production and operating output. Management's focus on the forthcoming six month period will largely entail ensuring that plant processing capacity is maintained. The company also intends to investigate higher grade gold project opportunities that may present themselves over the next few months. 7.3 Uranium operations and further exploration Notwithstanding insignificant movements in spot uranium prices during the six months under review, the general consensus amongst analysts is that a supply deficit will arise in the fourth quarter of With approximately 200 million pounds of high grade uranium ore, as well as a world class processing plant and related mine infrastructure already installed and commissioned on site, the company is poised to take advantage of an expected increase demand for uranium in the short to medium term horizon. The company continues with the development of its uranium operations while the scoping assessment for the feasibility study is near completion. Accelerated development of the uranium operation is expected to commence during the 2016 calendar year. The company remains optimistic that uranium prices will significantly improve over the next 18 months and intends to capitalise on increasing investor confidence. Management intend focusing their efforts on securing capital to fund the accelerated development programme, as well as securing beneficial medium to long term supply agreements. 7.4 Contract mining As part of its strategy to diversify sources of income while ongoing uranium development takes place, the company utilised spare resource capacity to undertake contract mining activities during the six month period ending 31 August These activities had a strong positive contribution to both revenue and earnings during the interim period and offset declining profitability from the gold operations. 8. Dividends No dividend has been declared for the interim period (2014: Rnil). 9. Changes to the Board of Directors

9 Shareholders are advised that Mr. Terry Rensen has been appointed as the lead independent director of Oakbay Resources and Energy Limited with effect from 1 December Mr. Mark Pamensky will remain on the board as an independent non-executive director. 10. Related parties Six months Year 31-Aug Feb-15 Amounts owing by related parties Arctos Trading Proprietary Limited 24,155 24,155 Surya Crushers Proprietary Limited 4,575 3,368 Blackedge Exploration Proprietary Limited 5 - Tegeta Exploration and Resources Proprietary Limited 14,692 - Other ,088 27,962 Amounts owing to related parties Westdawn Investments Proprietary Limited (44,798) (25,752) Unlimited Investments Proprietary Limited (4,511) (4,514) JIC Engineering Services Proprietary Limited (28,946) (28,883) Blackedge Exploration Proprietary Limited (179) - Scipio Proprietary Limited (3,184) - Sahara Computers Proprietary Limited (154) - VR Laser Proprietary Limited (335) - Confident Concepts Proprietary Limited (456) - Action Investments (129,590) (109,930) (212,153) (169,079) All loans owing by and to related parties are denominated in ZAR and are unsecured, interest free and there are no specific fixed terms of repayment except for the loan granted by Action Investments. The Action Investments loan is denominated in USD and interest is accrued at LIBOR plus 3%. The balance at 31 August 2015 is USD (28 February 2015: USD ) and the loan is repayable on demand. Six months Year 31-Aug Feb-15 Amount owing to holding company Oakbay Investments Proprietary Limited 408, , , , The repayment terms are 367 days notice on demand from the holding company. Oakbay Investments Proprietary Limited has subordinated its right to claim

10 or accept repayment of its loan to the company in favour of the other creditors until the total assets of the company, fairly valued, exceed its total liabilities. 11. Segment reporting Basis for identification of reportable segments The chief operating decision maker s view is that to assess the performance of the company there are four reportable segments, namely those relating to gold operations, contract mining, uranium development and head office. The gold operation segment primarily entails gold mining and processing operations. The contract mining operation primarily entails coal contract mining. The uranium development segment relates to the uranium project development. Currently, the uranium mining and processing operation is in development phase and is not operating commercially. The major activities relating to uranium development entail mine and plant infrastructure expansion, as well as resource exploration. The segment information has been prepared in accordance with IFRS 8 Operating Segments, which defines the requirements for the disclosure of financial information of an entity's segments. Information about reporting segments Gold Six months Six months R 000s 31-Aug Aug-14 Revenue from external customers 98, Inter-segment revenue 98, Operating loss before depreciation (501) Depreciation (8,904) EBITDA (9,405) Finance cost Finance income Loss for the period (9,405) Contract Mining Six months Six months R 000s 31-Aug Aug-14 Revenue from external customers 31,946 Inter-segment revenue 31,946 Operating loss before depreciation 8,817 Depreciation (869) EBITDA 7,948 Finance cost

11 Finance income Loss for the period 7,948 Uranium Development Six months Six months R 000s 31-Aug Aug-14 Revenue from external customers Inter-segment revenue Operating loss before depreciation (5,667) Depreciation EBITDA (5,667) Finance cost Finance income Loss for the period (5,667) Head Office Six months Six months R 000s 31-Aug Aug-14 Revenue from external customers Inter-segment revenue Operating loss before depreciation (16,153) Depreciation (1,524) EBITDA (17,677) Finance cost (21,503) (131,493) Finance income 12, Loss for the period (27,180) (130,769) Total Six months Six months R 000s 31-Aug Aug-14 Revenue from external customers 130, Inter-segment revenue 130, Operating loss before depreciation (13,504) (13,349) Depreciation (11,297) 9,524 EBITDA (24,801) (22,873) Finance cost (21,503) 131,493 Finance income 12, Loss for the period (34,304) (153,642) Gold Six months Twelve months R 000s 31-Aug Feb-15

12 Segment assets 781, ,305 Segment liabilities 182,556 Contract Mining Six months Twelve months R 000s 31-Aug Feb-15 Segment assets Segment liabilities Uranium Development Six months Twelve months R 000s 31-Aug Feb-15 Segment assets 6,625,232 6,769,123 Segment liabilities Head Office Six months Twelve months R 000s 31-Aug Feb-15 Segment assets 223, ,543 Segment liabilities 2,062, ,252 Total Six months Twelve months R 000s 31-Aug Feb-15 Segment assets 7,630,216 7,688,971 Segment liabilities 2,062,689 1,117,808 Varun Gupta Chief Executive Officer 27 November 2015 Directors: A Gupta (Chairman), V Gupta (CEO), T Scott (FD), M Pamensky (Independent non-executive and LID)*, D Nyamane (Independent nonexecutive), T Rensen (Independent non-executive)** Sponsor: Sasfin Capital (a division of Sasfin Bank Limited). Company Secretary: ithemba Governance and Statututory Solutions Proprietary Limited Registered Office: 89 Gazelle Avenue, Corporate Park South, Midrand, 1685 Postal Address: Postnet Suite 458, Private Bag x9, Benmore, 2010

13 *Will revert from LID to independent non-executive director with effect from 1 December 2015 **Appointed as LID with effect from 1 December November 2015