Chromex Mining plc / Epic: CHX / Market: AIM / Sector: Mining &
Exploration
3 June 2009
Chromex Mining plc ("Chromex" or "the Company")
Interim Results
Chromex Mining plc, the AIM listed chrome mining company focused in
Southern Africa, is pleased to announce its results for the six
months ended 31 March 2009.
OVERVIEW
* Inaugural profit achieved despite difficult trading
conditions
* Strong cash position of approximately GBP 2.3
million
* Processing plant at Stellite constructed on time and
within budget, with offtake agreement in place
* Granted a Mining Right to extract Platinum Group
Metals and gold at Stellite
CHAIRMAN'S STATEMENT
I am delighted to announce that Chromex has achieved a first profit
in the six months to 31 March 2009, a time which has been an
especially difficult one for the mining sector, combining general
economic uncertainty with unprecedented turbulence in demand and
price. As far as Chromex is concerned it was also a period where
sales have been restricted to semi beneficiated product pending
completion of the Stellite processing facility. I believe that this
initial profit indicates the potential of the Company when fully
beneficiated product is available and the predicted improvement in
the chrome market takes place.
Stellite
The construction of the processing plant at Stellite is complete, on
time and within budget. It is currently in the commissioning phase
and first sales of beneficiated product are expected at the end of
June 2009. The primary product will be a 44% Cr2O3 concentrate,
which is expected to command a premium price in the market.
Mining has been put on hold to allow existing stockpiles to be used
up during plant commissioning. Both the operation of the plant and
the mining itself are being undertaken by contractors rather than by
owner operated labour. This has already proved invaluable in
enabling Chromex to react quickly to market changes in a way which
would not be possible if we had a substantial labour force.
It remains our strategy to retain ore in the ground when prices are
low rather than depleting our resource. We remain confident that we
can be cash flow positive on low volumes, thus preserving our ore
resource for sale at a more appropriate point in the price cycle.
Importantly, we secured a positive amendment to our Mining Right over
Stellite to include the extraction of Platinum Group Metals and gold
from the Stellite plant tailings stream. Test work to confirm the
economics of extraction and treatment will commence as soon as plant
commissioning has been completed.
Mecklenburg
We remain confident that the challenge by Samancor Chrome Ltd against
our Mining Right at Mecklenburg will be unsuccessful. The process
requires the Department of Minerals and Energy in South Africa,
Samancor and Chromex to submit affidavits to the High Court, which
has proved to be a lengthy and drawn out process. For this reason,
no date for the Court hearing has been set and our best estimate is
that the case may not be settled before early 2010. Following this,
a decision will be made as to the timing of development of the
Mecklenburg mine.
It is notable that independent analysts value Stellite alone at more
than the Company's market capitalisation, so that Mecklenburg is
wholly discounted in the current share price.
Finance
Chromex is pleased to announce a profit before tax for the six months
ended 31 March 2009 of GBP 81,000 (2008 - loss GBP 282,000) on a
turnover of GBP 1,613,000 (2008 - nil). No tax is payable on this
profit, but there is a charge of GBP 34,000 relating to an adjustment
of deferred tax. For the year ended 30 September 2008 the loss was
stated at GBP 1,406,000, but this was after a charge of GBP 790,000
relating to share options, so that the loss on a comparable basis was
GBP 616,000.
The plant construction has been financed in part by a convertible
loan facility of ZAR 30 million (GBP 2,199,000), which has not been
fully drawn down.
Directors
Phoevos Pouroulis and Guy Gibbons have stepped down from the Board
with immediate effect. Phoevos, who was responsible for marketing
and sales, is establishing a new multi commodity trading company,
which will include chrome. He will remain responsible for Chromex's
sales through his new company and his resignation is solely to avoid
any potential conflicts of interest.
Finance Director Guy Gibbons, who was employed by Chromex for one
third of his time, has decided to seek a full time position, which
Chromex was unable to offer. To compensate for Guy's resignation,
Chromex has strengthened the accounting function in South Africa,
where all operations take place. I will assume overall
responsibility for finance. The position will be reviewed when mine
construction begins at Mecklenburg, but, should we decide to recruit
a dedicated finance director at that time, he is likely to be based
in Johannesburg rather than London.
I would like to thank both Phoevos and Guy for their contributions to
the successful development of Chromex.
Russell Lamming, Nigel Wyatt and I remain as executive Directors of
the Company, while James Burgess, Vusi Nkosi and Robert Sinclair are
Non-executive Directors.
Future prospects
The Stellite plant is now in its commissioning stage. It is expected
that 44% concentrate, which commands a premium price, will be
available for commercial sales at the end of June 2009. Chromex is
receiving a number of enquiries for supply of product in addition to
the Metalmin offtake agreement previously announced.
Despite the delays caused by legal disputes we expect to be in a
position to progress the development of the Mecklenburg mine by mid
2010, subject to market conditions. We believe that the turbulence
in the market for chrome will result in further resources becoming
available for acquisition, and we are actively pursuing opportunities
to increase the 41 million tonnes of chrome resource presently under
our control.
Within the junior mining sector Chromex stands out as having positive
cash flow as well as healthy cash resources.
All these factors enable the Directors to look forward to the future
with confidence
Brian Moritz
Chairman
3 June 2009
Unaudited consolidated income statement
For the six months ended 31 March 2009
6 Months ended 6 Months ended Year ended 30
31 March 2009 31 March 2008 September 2008
£'000 £'000 £'000
Revenue 1,613 - 440
Cost of sales (1,068) - (204)
Gross profit 545 - 236
Administrative expenses (500) (331) (956)
Cost of bankable (27) (8) (46)
feasibility study
Fair value of share - - (790)
options issued
Profit / (loss) from 18 (339) (1,556)
operations
Finance income 63 57 151
Finance expense - - (1)
Profit / (loss) before 81 (282) (1,406)
tax
Taxation (34) - -
Profit / (loss) for the 47 (282) (1,406)
period
Profit / (loss) per
share: 0.06p (0.44)p (1.94)p
Basic
Diluted 0.05p (0.44)p (1.94)p
The operating profit for the period arises from the Group's
continuing operations
Unaudited consolidated balance sheet
As at 31 March 2009
31 March 31 March 30 September 2008
2009 2008 £'000
£'000 £'000
Assets
Non-current assets
Property, plant and equipment 6,824 2 5,480
Deferred tax 79 - 106
Intangible assets 886 400 886
7,789 402 6,472
Current assets
Inventories 134 - 123
Trade and other receivables 407 9 590
Cash and cash equivalents 2,270 2,009 2,566
2,811 2,018 3,279
Total assets 10,600 2,420 9,751
Equity and liabilities
Equity attributable to equity
holders of the company
Share capital 850 636 847
Share premium 9,120 2,440 9,071
Accumulated losses (1,118) (867) (1,165)
Exchange reserve 423 81 29
Total equity 9,275 2,290 8,782
Non-current liabilities
Provisions 399 - 286
Loans and borrowings 734 - 1
1,133 - 287
Current liabilities
Trade and other payables 192 130 682
192 130 682
Total equity and liabilities 10,600 2,420 9,751
Unaudited consolidated cash flow statement
For the six months ended 31 March 2009
6 Months ended 6 Months Year ended 30
31 March 2009 ended 31 September 2008
£'000 March 2008 £'000
£'000
Net cash generated from / 263 (234) (806)
(used in) operating
activities
Cash flows from investing
activities
Purchase of property, plant (1,407) (2) (25)
and equipment
Acquisition of subsidiaries - - (3,977)
Financing income 63 57 151
Financing costs - - (1)
Net cash (used in) / from (1,344) 55 (3,852)
investing activities
Cash flows from financing
activities
Proceeds of issues of share 52 - 4,817
capital
Net cash acquired with - - 219
subsidiary
Proceeds from borrowings 733 - -
Net cash from financing 785 - 5,036
activities
Net (decrease)/ increase in
cash and cash equivalents (296) (179) 378
Cash and cash equivalents at
the beginning of the period 2,566 2,188 2,188
Cash and cash equivalents at
the end of the period 2,270 2,009 2,566
Notes:
1. The financial information set out above does not comprise
full accounts as defined in the Companies Act 1985.
2. The Company has applied same accounting policies in
preparation of this financial information as were applied in its
annual financial statements at 30 September 2008.
3. Profit per share is calculated on the basis of profits of
£47,000 (2008 - loss of £282,000) and a weighted average of
84,960,000 ordinary shares in issue (2008 - 63,580,000 shares).
Warrants and share options outstanding were not included in the
calculation of prior period diluted losses per share, as in the
opinion of the directors, they were anti-dilutive.
4. No dividend is proposed in respect of the period.
**ENDS**
For further information please visit www.chromexmining.co.uk or
contact:
Russell Lamming Chromex Mining plc Tel: +44 (0) 7810 870
587
Brian Moritz Chromex Mining plc Tel: +44 (0) 7976
994300
William Vandyk Blue Oar Securities plc Tel: +44 (0) 20 7448
4400
Guy Wilkes Ocean Equities Limited Tel: +44 (0) 20 7786
4370
St Brides Media & Finance Ltd Tel: +44 (0) 20 7236
Hugo de Salis 1177
Felicity Edwards St Brides Media & Finance Ltd Tel: +44 (0) 20 7236
1177
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