TIDMFLOR

RNS Number : 4059A

Fluormin PLC

30 March 2012

Fluormin plc

("Fluormin" or the "Company")

INTERIM REPORT AND ACCOUNTS FOR THE SIX MONTHS ENDED

31 DECEMBER 2011

CHAIRMAN'S STATEMENT

Chairman's Statement

Recent months have proven to be challenging for the Company, with the Company's Witkop mine in South Africa facing operational and cost pressures at a time where acid grade fluorspar prices have declined substantially from the time of the Company's listing on the AIM Market.

Management is actively considering a variety of options to reduce costs and, in particular, an upgrade of ore feed into the Witkop mill through the use of ore sorting technology. Subsequent to the period end, the Company has disposed of its 20% interest in Kenya Fluorspar Company Limited in order to secure additional funding for the Company pending the outcome of ongoing sorting technology trials. These trials, if effective, would lower the operational costs of the Witkop mine by increasing the ore feed head grade to the milling circuit. The economic viability of the mine will be determined by the outcome of these trials.

Financial

For the six months to 31 December 2011, the Group recorded an attributable loss of GBP4,323,000. This compares to an attributable loss of GBP2,796,000 for the year ended 30 June 2011. After accounting for attributable losses, net assets as at 31 December 2011 increased to GBP15,545,000 (from GBP5,976,000 as at 30 June 2011).

The net loss for the six months to 31 December 2011 includes an impairment charge of GBP8,434,000 against the non-current assets of Witkop. The impairment decision reflects the reduction in the fair value of the assets of Witkop in light of the operational challenges at the Witkop mine and the weaker outlook for Fluorspar prices.

As at 31 December 2011, the Company had cash and cash equivalent holdings of GBP8,197,000, trade and other receivables of GBP1,249,000 and inventories of GBP4,172,000 (as compared to GBP1,280,000, GBP89,000 and nil, respectively, as at 30 June 2011). The Company also had loans to associates (Fluorone Trading Limited) of GBP1,253,000 as at 31 December 2011.

Operational

Witkop produced 46,687 wmt of acid grade Fluorspar for the six months ended 31(st) December 2011. 50,936 wmt of acid grade Fluorspar were transported to Durban by rail and exported at average prices in excess of US$429 per dmt.

Substantial efforts were made during the period to overcome several challenges, including water shortages, power outages, unplanned plant maintenance, lower than expected feed grade and higher than expected stripping ratios. Water supply is now steady and Eskom, the South Africa state supplier of electricity, has undertaken efforts to improve the reliability of power supply to the mine.

With respect to feed grade, the Company is undertaking a substantial infill drill programme to reduce grade variability and dilution. With respect to stripping, mining contractors were retained during the period of December to March and have aided the Company in removing substantial quantities of waste and overburden.

Fluorspar Market

The global weakness in growth, accentuated by particular weakness in aluminium consumption, contributed to the failure to deplete inventory after a rapid restocking of inventory in the summer of 2011. As a result, the immediate and mid-term market outlook is negative with substantial inventory reported at Chinese ports.

Fluormin plc

Interim Results for the six months to 31 December 2011

Operational Update

Witkop faced several operational challenges in achieving its targeted name plate production. These have included water shortages, power outages and lower ore grade to the plant, each of which impacted on production. In addition, production was interrupted by its annual shutdown for maintenance.

The outlook for further water shortages and power outages has improved since 31 December 2011. In relation to the lower ore grade to the plant, the Company has embarked on an extensive infill RC drill programme to improve mine planning and grade control.

Whilst plant performance has been satisfactory, plant availability has continued to impact production post 31 December 2011. Recent changes in the management of the engineering and maintenance function are anticipated to improve plant availability.

Operational Highlights for Fluormin to 31 December 2011

 
 Ore Mined                             794 kt 
 Waste Mined                          1,059 kt 
 Produced tonnes                     46,687 wmt 
 Shipped tonnes                      50,936 wmt 
 Average price of shipped tonnes*      US$429 
 Cost of sales                       US$367 Per 
                                        tonne 
 Product inventory as at December 
  31 2011                              8,859 
 Mill Feed Grade                       8.45% 
 Plant recovery                        78.78% 
----------------------------------  ----------- 
 

Production for January and February averaged 6,176 dmt per month. Reflecting the RC drill programme and improved plant availability production improved to 7,604 dmt in March 2012.

* Note: average prices of shipped tonnage are typically negotiated and settled between three to nine months in advance of shipment and reflect weighted average prices (FOB Durban).

 
 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 
 

For the six months ended 31 December 2011

 
                                          Un-audited       Un-audited             Audited 
                                            6 months         6 months           12 months 
                                            ended 31         ended 31            ended 30 
                                            December         December                June 
                                                2011             2010                2011 
                                             GBP'000          GBP'000             GBP'000 
 
Continuing Operations 
Revenue                                       10,588                -                   - 
Exploration expenses                               -            (124)               (116) 
Cost of sales                                (9,544)                -                   - 
Net foreign exchange gain                        180                -                   - 
Profit/(loss) from mining activities           1,224            (124)               (116) 
Depreciation                                   (579)                -                   - 
Operating profit/(loss) from 
 mining activities                               645            (124)               (116) 
 
Administrative expenses                      (2,338)            (735)             (2,614) 
Impairment Charge                            (8,434)                -                   - 
 
Operating (loss)                            (10,127)            (859)             (2,730) 
 
Investment income                              (361)                -                  61 
Share in (loss) of joint venture               (164)                -                 (4) 
 
Total (loss) for the period 
 from continuing operations                 (10,652)            (859)             (2,673) 
 
Other comprehensive income                         -                -                   - 
 
Discontinued Operations 
 
Profit on disposal of subsidiaries             6,329                -                   - 
(Loss) for the period from discontinued 
 operations                                        -                -               (123) 
 
Total comprehensive income/(loss) 
 for the period attributable 
 to the equity holders of the 
 parent                                      (4,323)            (859)             (2,796) 
 
Earnings per share 
 
Basic and diluted (loss) per 
 share (pence)                                (7.98)           (8.7)*             (15.31) 
 
*restated 
 
 
 CONSOLIDATED STATEMENT OF FINANCIAL POSITION 
 

As at 31 December 2011

 
                                                Un-audited                    Un-audited                   Audited 
                                               31 December                    31December                   30 June 
                                                      2011                          2010                      2011 
                                                   GBP'000                       GBP'000                   GBP'000 
 
Non-current assets 
Mineral rights                                         711                             -                         - 
Property, plant and equipment                        6,072                            40                        38 
Investments                                          2,600                           776                       776 
Share in assets of joint 
 venture                                               139                             -                       311 
                               ---------------------------   ---------------------------   ----------------------- 
                                                     9,522                           816                     1,125 
Current assets 
Inventories                                          4,172                             - 
Trade and other receivables                          1,249                         3,211                        89 
Loans to affiliated companies                        1,253                             -                     3,864 
Cash and cash equivalents                            8,197                         3,272                     1,280 
                               ---------------------------   ---------------------------   ----------------------- 
                                                    14,871                         6,483                     5,233 
 
 Current liabilities 
Trade and other payables                           (1,704)                         (151)                     (382) 
                               ---------------------------   ---------------------------   ----------------------- 
                                                   (1,704)                         (151)                     (382) 
Non-current liabilities 
Environmental Rehabilitation                       (3,912)                             -                         - 
Debentures                                         (3,232)                             -                         - 
                               ---------------------------   ---------------------------   ----------------------- 
                                                   (7,144)                             -                         - 
                               ---------------------------   ---------------------------   ----------------------- 
Net current assets                                  13,167                         6,332                     4,851 
 
Net assets                                          15,545                         7,148                     5,976 
 
Equity 
Share capital                                        8,364                         2,721                     3,805 
Shares to be issued                                      -                         3,161                         - 
Share premium account                                  780                        10,122                    12,199 
 Share option reserve                                  582                            97                       862 
Retained reserves                                    5,819                       (8,953)                  (10,890) 
                               ---------------------------   ---------------------------   ----------------------- 
 
Total equity                                        15,545                         7,148                     5,976 
 
 
 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the six months ended 31 December 2011

 
                     Ordinary    Shares                                         Share 
                        share     to be      Preference      Share             Option    Retained 
                      capital    issued   share capital    premium            Reserve    earnings              Total 
                      GBP'000   GBP'000         GBP'000    GBP'000            GBP'000     GBP'000            GBP'000 
 
 
 
 Balance at 31 
  December 
  2010                  2,721     3,161               -     10,122                 97     (8,953)              7,148 
==================  =========  ========  ==============  =========  =================  ==========  ================= 
 
 Ordinary equity 
  subscription          1,084   (3,161)               -      2,077                  -           -                  - 
 
 Conversion of 
 preference 
 shares in the 
 period                     -         -               -          -                  -           -                  - 
 
 Total 
  comprehensive 
  loss for the 
  period                    -         -               -          -                  -     (1,937)            (1,937) 
 
 Share based 
 payments                   -         -               -          -                  -           -                  - 
 
 Transfer from 
  share 
  option reserve            -         -               -          -                765           -                765 
 
 Balance at 30 
  June 
  2011                  3,805         -               -     12,199                862    (10,890)              5,976 
==================  =========  ========  ==============  =========  =================  ==========  ================= 
 
 Total 
  comprehensive 
  profit/ (loss) 
  for the period            -         -               -          -                  -     (4,323)            (4,323) 
 
 Ordinary equity 
  subscription          4,559         -               -      9,613                  -           -             14,172 
 
 Capital reduction          -         -               -   (21,032)                  -      21,032                  - 
 
 Share option 
  charge 
  reversed for 
  options 
  bought out                -         -               -          -              (280)           -              (280) 
 
 Balance at 31 
  December 
  2011                  8,364         -               -        780                582       5,819             15,545 
==================  =========  ========  ==============  =========  =================  ==========  ================= 
 
 
 
 
 
 CONSOLIDATED STATEMENT OF CASH FLOWS 
 

For the six months ended 31 December 2011

 
                                                     Un-audited            Un-audited                   Audited 
                                                       6 months              6 months                 12 months 
                                                       ended 31              ended 31                  ended 30 
                                                       December              December                      June 
                                                           2011                  2010                      2011 
                                                        GBP'000               GBP'000                   GBP'000 
 
Cash flows from operating activities 
Operating loss from continued and 
 discontinued operations before 
 interest and tax                                      (10,652)                 (859)                   (2,853) 
Add : Depreciation charges for 
 the period                                                 579                     4                         7 
 Add : Share option charge reversed 
  for options bought out                                  (280)                    49                       814 
Add: Share in loss of joint venture                         164                     -                         - 
Add: Impairment Charge                                    8,434                     -                         - 
Add: Sale of Subsidiary                                   6,329                     -                         - 
Less: Foreign Exchange gain                               (218)                     -                     (127) 
Operating profit/( loss) before 
 working capital changes                                  4,356                 (806)                   (2,159) 
 
(Increase) in other trade and other 
 receivables                                            (1,160)                   (5)                      (45) 
(Increase) Decrease in loans to 
 affiliated companies                                     (755)                     -                   (3,864) 
Increase in loan taken by subsidiary                      1,539 
Increase / (Decrease) in trade 
 and other payables                                       1,322                    77                       308 
 
Net cash flow from operating activities                   5,302                 (734)                   (5,760) 
 
Cash flows from investing activities 
Purchases of plant and equipment                              -                   (1)                       (1) 
Trade investments made                                  (2,992)                 (776)                   (1,079) 
Investment income received                                   22                     -                       175 
-----------------------------------------  --------------------   -------------------   ----------------------- 
Net cash from investing activities                      (2,970)                 (777)                     (905) 
 
Cash flows from financing activities 
Proceeds of issue of share capital                        4,585                 4,322                     7,484 
 
Net cash from financing activities                        4,585                 4,322                     7,484 
 
Net increase in cash and cash equivalents                 6,917                 2,811                       819 
 
Cash and cash equivalents at the 
 beginning 
 of the period                                            1,280                   461                       461 
 
Cash and cash equivalents at the 
 end 
 of the period                                            8,197                 3,272                     1,280 
-----------------------------------------  --------------------   -------------------   ----------------------- 
 
 
 
 
  NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS 
 
   1.   Statement of Compliance 

The consolidated interim financial information for the six months ended 31 December 2011 has been prepared using accounting policies consistent with International Financial Reporting Standards ("IFRS") as adopted by the European Union applied in accordance with the provisions of the Companies Act 2006.

The financial figures included in this interim report do not contain sufficient information to constitute an interim financial report as that term is defined in IAS 34.

The consolidated interim financial information is un-audited and does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. The statutory accounts for the year ended 30 June 2011, which were prepared under IFRS, have been delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under S498(2) or S498(3) of the Companies Act 2006.

There is no material seasonality associated with the Group's activities.

   2.   Accounting Policies 

The interim financial information has been prepared using accounting policies consistent with IFRS, as set out in the last annual report to 30 June 2011, except as described below:

The International Accounting Standards Board has issued a number of international financial reporting standards which are effective for future accounting periods of the Group. The Directors do not anticipate that the adoption of any of these would have a material impact on the financial statements.

   3.   Dividends 

No dividends were paid or proposed in the 6 months ended 31 December 2011 (for year ended 30 June 2011 - GBP NIL).

   4.   Operating Segments 

The Group's operations are located in Tunisia, South Africa and the United Kingdom. The Group's exploration activities are located in Tunisia, it's operating mine in South Africa and its administration and management is based in the United Kingdom.

The segments presented in this note reflect the separate segments and companies within the Group and is how management information is presented to the Chief Operating Decision Maker.

Segment operating profit/(loss) and profit/(loss) for the period by geography are reconciled to entity operating profit/(loss) and entity profit/(loss) for the period as follows:

 
 
                         Segment Operating Profit/              Profit/(Loss) For Period 
                         (Loss) from continued and 
                          discontinued operations 
----------------  -------------------------------------  ------------------------------------- 
                   Un-audited   Un-audited      Audited   Un-audited   Un-audited      Audited 
                     6 months     6 months    12 months     6 months     6 months    12 months 
                     ended 31     ended 31        ended     ended 31     ended 31        ended 
                     December     December      30 June     December     December      30 June 
                         2011         2010         2011         2011         2010         2011 
                      GBP'000      GBP'000      GBP'000      GBP'000      GBP'000      GBP'000 
----------------  -----------  -----------  -----------  -----------  -----------  ----------- 
 Tunisia                 (24)        (181)        (350)         (24)        (181)        (350) 
----------------  -----------  -----------  -----------  -----------  -----------  ----------- 
 United Kingdom       (9,647)        (857)      (2,850)      (3,843)        (857)      (2,793) 
----------------  -----------  -----------  -----------  -----------  -----------  ----------- 
 South Africa           (576)            -            -        (576)            -            - 
----------------  -----------  -----------  -----------  -----------  -----------  ----------- 
 Consolidation 
  adjustment              120          179          347          120          179          347 
----------------  -----------  -----------  -----------  -----------  -----------  ----------- 
 Total Entity 
  operating 
  /(loss) and 
  entity(loss)       (10,127)        (859)      (2,853)      (4,323)        (859)      (2,796) 
----------------  -----------  -----------  -----------  -----------  -----------  ----------- 
 
 
 
                                            Segment Total Assets 
--------------------------  --------------------------------------------------- 
                                  Un-audited        Un-audited          Audited 
                              6 months ended    6 months ended        12 months 
                                 31 December       31 December    ended 30 June 
                                        2011              2010             2011 
                                     GBP'000           GBP'000          GBP'000 
--------------------------  ----------------  ----------------  --------------- 
 Tunisia                                  25                49               47 
--------------------------  ----------------  ----------------  --------------- 
 United Kingdom                       11,612             7,331            5,031 
--------------------------  ----------------  ----------------  --------------- 
 South Africa                         14,758                 -                - 
--------------------------  ----------------  ----------------  --------------- 
 Consolidation adjustment            (2,002)              (81)            1,280 
--------------------------  ----------------  ----------------  --------------- 
 Group Assets                         24,393             7,299            6,358 
--------------------------  ----------------  ----------------  --------------- 
 

In accordance with IFRS 8, Operating Segments, the information presented in this note is the same as that reported to the Chief Operating Decision Maker for the purposes of making decisions about allocating resources to the segment and assessing its performance.

   5.   Taxation 

No liability in respect of income tax has arisen during the period. No deferred tax liability or asset has been recognised in the period.

The deferred tax asset has not been recognised in the accounts as there is not sufficient evidence that there will be taxable profits in the near future against which the deductible temporary differences can be utilised within the meaning of IAS 12.

   6.   Earnings per ordinary share (basic and diluted) 

The calculation of the basic loss per share attributable to the ordinary equity holders of the parent has been calculated on the net loss after tax of GBP4,323,000 (2010 - GBP859,000) using the weighted average number of ordinary shares of 54,170,013 (2010 -9,869,437 restated post share capital consolidation). All share options in issue decrease the loss per share for the period, and as such are deemed anti-dilutive. Therefore the diluted loss per share is the same as the basic loss per share.

   7.   Ordinary Share Capital 

During the period the Company issued 40,000,000 ordinary shares up to August 2011. On 31(st) August 2011 the share capital was consolidated on a 25 to 1 basis. 28,798,000 new ordinary shares were issued up to December 2011. Following these issues the current called up allotted and fully paid ordinary shares of 15 pence each is set out in the table below:

 
        Called up, allotted and fully                       Shares to 
         paid                                                      be 
         Ordinary shares of 15 pence                           issued   Nominal Value 
         each                            Share Capital                           2011 
--------------------------------------  --------------  -------------  -------------- 
 
                                           Number '000    Number '000         GBP'000 
--------------------------------------  --------------  -------------  -------------- 
       Balance at 30 June 2011                 634,129              -           3,805 
--------------------------------------  --------------  -------------  -------------- 
 Shares issued during the period 
  up to 31(st) August                           40,000              -             240 
--------------------------------------  --------------  -------------  -------------- 
 Share Capital Consolidation 25-1            (647,164)              -               - 
--------------------------------------  --------------  -------------  -------------- 
 Shares issued during the period 
  up to 31(st) December                         28,798              -           4,319 
--------------------------------------  --------------  -------------  -------------- 
 Balance on 31 December 2011                    55,763              -           8,364 
--------------------------------------  --------------  -------------  -------------- 
 
   8.   Share Option Reserve 
 
                                           Share Option Reserve 
----------------------------------  ----------------------------------  --------------- 
 
                                          Un-audited        Un-audited          Audited 
                                      6 months ended    6 months ended        12 months 
                                         31 December       31 December    ended 30 June 
                                                2011              2010             2011 
                                             GBP'000           GBP'000          GBP'000 
----------------------------------  ----------------  ----------------  --------------- 
 Balance on 1 July 2011/2010                     862                48               48 
----------------------------------  ----------------  ----------------  --------------- 
 Share based payments - share 
  option scheme                                    -                54              814 
----------------------------------  ----------------  ----------------  --------------- 
 Decrease for cancelled share                  (280)                 -                - 
  options 
----------------------------------  ----------------  ----------------  --------------- 
 Reserve transfer for expired                      -               (5)                - 
  share options 
----------------------------------  ----------------  ----------------  --------------- 
 Balance at 31 December 2011/2010                582                97              862 
----------------------------------  ----------------  ----------------  --------------- 
 

The share option reserve arises as a result of the expense recognised in the income statement for the cost of share-based employee compensation arrangements. The decrease represents the amount previously charged to the Share Option Reserve Account and now no longer required due to options having lapsed either through the expiry of the exercise dates thereof or as a result of the employees leaving the Group.

   9.   Impairment Charge 

The net loss for the six months to 31 December 2011 includes an impairment charge of GBP8,434,000 against the non-current assets of Witkop (excluding restricted cash). The impairment decision reflects the reduction in the fair value of the assets of Witkop in light of the operational challenges at the Witkop mine and the weaker outlook for Fluorspar prices.

The carrying value of the property, plant and equipment and mineral rights before impairment was GBP14,401,000.

10. Investments

On 8 September 2011 Fluormin's aggregate shareholding in Sallies increased to 78.29 % and to 58% of the Sallies debenture in issue. The consideration for this purchase was GBP5.135 million for the shares, satisfied by the issue of 13,125,449 ordinary shares. The consideration for the debentures was GBP2.06 million, satisfied by the issue of 5,338,078 ordinary shares to Firebird. The completion of the Sallies transaction initiated a mandatory offer by the Company to the minority holders of Sallies' shares and debentures and any holder of options to subscribe for Sallies shares.

On 16 December 2011, the mandatory offer for Sallies closed where the Company purchased the remaining 21.71% of Sallies shares for the consideration of ZAR 38,870,813 and 1,734,969 ordinary Fluormin shares.

The investment in Sallies has been subsequently impaired (refer to note 9).

On 8 September, Fluormin acquiring 1,000,000 shares in Kenya Fluorspar Company, equating to a 20% holding, and a USD 500,000 loan. The consideration for this was GBP1.8 million which was satisfied by the issue of 4,643,788 ordinary Shares to Firebird. The loan has subsequently been repaid.

11. Availability of report

Copies of this report are available from the Company's business address at Blackwell House, Guildhall Yard, London, EC2V 5AE.

This information is provided by RNS

The company news service from the London Stock Exchange

END

IR JLMFTMBJTBBT

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