Upload
lesley-carr
View
228
Download
10
Embed Size (px)
Citation preview
Alexkor Limited Select Committee 8 March 2005
INDEX
• Location
• Corporate Structure
• Financial Review
• Challenges
• Mining
• Litigation
• Way Forward
LOCATION
Northern CapeSemi desert with limited agricultural potentialSmall seasonal tourist industryLocal economy mineral driven
CORPORATE STRUCTURE
CORPORATE STRUCTURE
Alexkor Limited
Alexander Bay Mining (ABM) Social Infrastructure Alexander Bay Trading (ABT)
North Mine
South Mine
River Mine
Shallow Marine
Deep Marine
Hospital
Schools
Recreation
437 Houses
Dairy Farm
Oyster Farm
Citrus Farm
Ostritch Farm
Guest Houses
Airport
FIANCIAL REVIEW
ResultsCompared to FY’03
• Earnings per share up 570% to 71.5 cents • Return on shareholders funds of 89%• Operating expenses well contained up 0.2% to R238 million• US$ price per carat up 9%• Diamond production up 0.6% to 79,725 carats• US$ exchange rate down 22%• Cash and cash equivalent at year end up 6% to R71.4 million• Profit margin rose from 2.14% to 13,50%• The current ratio at 1:4.09• Diamond production income decreased from R251.2 million to R227.04
million.• Net asset value per share improved from 27.2 cent to 90.36 cents.• ABT reduced the operating loss by 98% to R82,276 from R5.02 million• Capex (Replace of property, plant and equipment) up 43% to R15.9 million • Exploration spend up 497% to R13.5 million• Net tangible value up to 358 cents/share from 316 cents/share
NET PROFIT/(LOSS)
Net Profit / (Loss)
13.6 9.7 10.7 6.5
-24.2
-67.1
-45.8 -45.4
1.77 6.27
-3.9
35.73
-11.95
-80
-60
-40
-20
0
20
40
60
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Years
Mill
ion
s
Net Profit / (Loss)
Diamond prices achievedDiamond Prices
0
100
200
300
400
500
600
700
Jul-0
2
Oct-
02
Jan-
03
Apr-0
3Ju
l-03
Oct-
03
Jan-
04
Apr-0
4Ju
l-04
Oct-
04
Jan-
05
Apr-0
5Ju
l-05
Oct-
05
Jan-
06
Apr-0
6Ju
l-06
Oct-
06
Jan-
07
$/C
t
Budget Actual
FY'03 FY'04 FY'05 FY'06 FY'07
Net operating expenses(R millions)
0
50
100
150
200
250
300
350
1997 1998 1999 2000 2001 2002 2003 2004
Available Cash as at 30 June 2004
BANK BALANCE MOVEMENT 2002/2004
R -
R 20
R 40
R 60
R 80
R 100
R 120
Mill
ions
TOTAL Poly. (TOTAL)
R/$ Exchange Rates
0.00
2.00
4.00
6.00
8.00
10.00
12.00
24-J ul-
02
28-
Aug-02
25-
Sep-02
23-Oct-
02
27-
Nov-02
15-J an-
03
05-Feb-
03
05-
Mar-03
02-Apr-
03
07-
May-03
05-J un-
03
09-J ul-
03
07-
Aug-03
04-
Sep-03
09-Oct-
03
06-
Nov-03
11-Dec-
03
15-J an-
04
11-Feb-
04
10-Mar-
04
07-Apr-
04
12-
May-04
07-J un-
04
Series1
Diamond % Comparison
0
10
20
30
40
50
60
SMALLS 3-6GR +8GR
SMALLS 33 28 45 49 47 44 43 46 37 38 27 22 31 21 26 26 31 28 24 26 21 34 30 28 19 32 33
3-6GR 35 37 36 33 38 36 36 32 36 34 34 32 32 34 36 36 34 33 31 35 34 32 31 37 34 37 38
+8GR 33 35 19 18 16 20 21 20 29 29 39 47 37 46 38 38 36 39 45 39 43 34 39 35 47 31 29
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27
3
RevenueTotal Revenue R264 million
71%
8%
7%
14%
Marine mining Land mining Beach mining Agriculture and other
ABM operating profit
2004 2003R '000 R '000
Total operating profit 26,117 58,843 (6,476) (10,989)
Less: Hospital (2,757) (3,317) Municipality (3,637) (2,599) ABT (82) (5,072)
32,593 69,831
TOTAL ALEXKOR
2004 2003 VARIANCE
Carats 79,725.51 79,269.00 0.60%
Price 402.69 369.00 9%
Exchange rate 6.80 8.90 -24%
$:Revenue $32,104,666 $29,250,261 9%
R: Revenue 218,311,729.00 261,327,323.00 -16%
Needed = 96,000 Carats to be in line with the Previous Year
NON - OPERATIONAL COST FOR YEAR - ENDING JUNE 2004
Down - scaling 2,080,000 Not budgeted
Incentive Bonus 2,154,195 Provision
Alexkor Rehabiliation Trust Fund 1,260,000 DME increase from R100,000 to R230,000
Price Deviations 587,936 Consignment belonging to Barlows and Komatsu
Bad Debt 1,032,997 Bad Debts from prior years
Legal Costs 3,440,379 Richterveld case, Nabera , etc.
10,555,507
RSC Levies 713,241 From prior years
TOTAL 11,268,748
MAIN REASONS FOR CARATAGE SHORT FALL
Ruslyns Unilateral Withdrawal
- Noordsif (9,027 ç) - Witvoorkop (7,487 ç)
( 16,511 ç)
Midmarine contract
(5,892 cts)
Shallow Marine - Boat Units
(17,969 ç)
Total Caratage shortfall FY' 04 = 40,372 ç
Loss in Diamond Income = R111 million
MINING
CARAT PRODUCTION 2003/2004
(11%) Land
(15%) Beach
Marine (74%)
CARAT PRODUCTION 1928: 537 968 CT 1994/5: 216 000 (15 MONTHS)
0
50000
100000
150000
200000
250000
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Land Sea 2005 Land 2005 Sea
Marine Mining
SHALLOW WATER SEA DAYS
0
2
4
6
8
10
12
14
Jul AugSep Oct NovDec Jan FebMar AprMayJun
Sea
Day
s actual
budget
CUMMULATIVE CARAT PROJECTION LAND AND MARINE
0
20000
40000
60000
80000
100000
120000
140000
160000
180000
CA
RA
TS
Land
Marine
Land 52030 64500 72700 72700 72700
Marine 66000 72500 87000 87000 87000
FY2005 FY2006 FY2007 FY2008 FY2009
5 Year Carat Plan
Revenue/Profit PlanALEXKOR LTD
CONSOLIDATED OPERATING BUDGET
THREE YEAR PROJECTION
DESCRIPTION BUDGET FY '05 ACTUALS BUDGET FT BUDGET BUDGET BUDGET
(9 months) Mar-04 Mar-04 FY'06 FY'07 FY'08
TOTAL INCOME 291,743,729 265,027,222 430,219,945 446,559,347 485,253,648 503,362,270
DIAMOND INCOME 211,633,100 182,464,834 313,974,472 333,336,325 365,237,244 376,144,882
OTHER INCOME 31,050,068 36,988,633 47,275,792 43,884,096 46,517,142 49,308,170
INTERNAL INCOME 49,060,561 45,573,755 68,969,681 69,338,926 73,499,262 77,909,218
TOTAL EXPENSES 268,052,449 233,590,176 399,799,839 379,738,244 385,387,073 404,746,761
PERSONNEL EXPENSES 40,794,668 37,356,916 53,215,789 57,656,464 61,115,852 64,782,803
CONSUMABLES AND MAINTENANCE 29,896,302 25,964,708 34,057,042 42,253,440 44,788,647 47,475,965
GENERAL EXPENDITURE 25,791,170 19,779,809 47,453,747 36,321,871 38,187,446 40,155,542
DEPRECIATION 8,010,953 7,197,159 12,595,480 11,322,147 12,001,476 12,721,565
PROFESSIONAL SERVICES 25,779,086 14,112,219 27,052,836 36,434,442 38,620,508 40,937,739
REVENUE SPLIT CONTRACTORS 87,054,751 83,885,895 156,454,902 124,057,812 114,679,554 118,119,940
INTERNAL CHARGES 50,725,519 45,293,470 68,970,043 71,692,067 75,993,591 80,553,207
OPERATING PROFIT / (LOSS) 23,691,280 31,437,046 30,420,106 66,821,104 99,866,575 98,615,509
CHALLENGES
Major Challenges
• Massive replacement Capex
• Extensive exploration on land
• Land Claims case
• Litigation
• Long term liabilities
Timeline• Timeline:
– 18 Dec 2003, DPE Min, N.C Premier, Dep. Min Land Affairs + RV community + LRC
– 23 Dec 2003, RV Community submitted proposal to Government.
– 31 March 2004 Government responds to RV settlement proposal.
– LCC 1st & 2 nd April 2004• New DPE Minister @ Alexkor 15/07/2004
– Main Hearing 2005
RV Settlement Proposal
• 90% of Alexkor Shareholding• 10% Transfer to NAMDA• Restoration of the rights in the subject land
– Ownership of subject land;– The right to minerals in the subject land.– Exclusive beneficial use & occupation of land.
• Compensation for minerals extracted• Repair of and compensation for environmental
damage• NB: Undue burden on the governments LTD
resources.
Rationale• Controlling interest to an SEP• Mitigate against over reliance on Government fund• Viability of Mining Activities needs a capital injection of ±R500
million• SEP: Infuse technical & strategic expertise to the company• Government:
– Oversight Role S –T– Exit Strategy L –T– Implementation Spec Period
• Alexkor to invest in other sustainable economic development models
• Government cannot provide seed funding• Participation by RV @ BOD level in carving the final end state of
Alexkor Ltd
Capital additions vs disposalsCAPITAL ADDITIONS VS DISPOSALS
(R MILLION)
0
10
20
30
40
50
60
70
80
1996 1997 1998 1999 2000 2001 2002 2003 2004
ADDITIONS DISPOSALS
Exploration costs (R millions)
1999 - 2004
6.29 6.29
12.92
3.832.26
13.5
-
2.004.00
6.00
8.00
10.0012.00
14.00
16.00
1999 2000 2001 2002 2003 2004
MIL
LIO
NS
1999 - 2004
LITIGATION
NABERA / ALEXKORREMUNERATION FOR VALUE ADDED
MANAGEMENT FEEAND
CHARGEABLE COSTS
Snowden jointly appointed Nabera claimedR3.1 million
¹/з of R357 million
R119 million
Misapplication/Inconsistentapplication of agreed
Valuation Methodology
Technical/Legal advice
Will oppose claim
Internal Auditors
Nabera owes R826,603
Mediation
Parties are prepared to talk
Alexkor put R6.1 Million in trust
WAY FORWARD
Long term liabilities• Provision for post medical retirement aid decreased by R5
million. Total liability is R86.5 million.
200388 employees still on ourbooks. Valuation was based on 2/3contribution, whereas itshould have been 100%.Contribution increase: In service employees 10.2% and pensioners17.5%
2004
As of 1 January 2004:• Capping of medical aid• Pensioners moved from
Executive Option to
Comprehensive Option.
• EMPR, Vol3,CSIR,1994: R17.58 million• @ June 30, 2004 escalated R32.93 million• @ June 30, 2004 Rehabilitation Trust Fund:
R8.8 million• @ October 2003, monthly contribution increased
from R100 000 to R230 000• Prescribed formula in the Aide-Memoire of DME
(R201,518)• Reg 5.16.3 of Mineral Act 50 of 1991
– SPC determining the quantum– Completion towards end of first semester FY’05
Long term liabilities (continued…)