CMO - CHROMETCO LIMITED - REVIEWED PROVISIONAL GROUP ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 28 FEBRUARY 2015

Chrometco Limited
(Incorporated in the Republic of South Africa)
(Registration number 2002/026265/06)
Share code: CMO     
ISIN: ZAE00007020249
("Chrometco" or "the group")

REVIEWED PROVISIONAL GROUP ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 28 FEBRUARY 2015

COMMENTARY – Financial and operational overview
 

1. The directors present the reviewed results for the year ended 28 February 2015.

2. Basis of preparation

The provisional reviewed group annual financial statements for the year ended 28 February 2015 have been prepared in accordance with the framework concepts and the recognition and measurement criteria of International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board, 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 South African Companies Act, 71 of 2008, as amended. The group accounting policies and methods of measurement and recognition comply in material respects with IFRS and are consistent with those applied in the financial period ended 28 February 2014.

The provisional group annual financial statements were prepared by the company’s previous financial director, TW Scott (CA) SA.
 

3. Auditors report

The unmodified review report issued on these provisional financial statements by Chrometco group’s auditors, Mazars, is available for inspection at the company's registered office during normal office hours.

4. Nature of business

The company is involved in the exploration of mineral resources and the possible beneficiation thereof. There has been no change to the group’s mineral resources and reserves statement from the statement presented in the prior year’s integrated annual report.

5. Turnover

Revenue for the current year primarily comprises sales of chrome ore. The company has an arrangement in terms of which a third party extractschrome ore from the Rooderand Mine, for which the company is entitled to variable price depending on grade.  Turnover decreased from R12.9 million to R0.7 million in the current year due to the fact that current year’s chrome production has been intermittent (refer to note 15) an the comparative period’s chrome sales represented the sale of stockpiled ore.

6. Other income

The group received approximately R1 million from the final liquidation of DCM Chrome Proprietary Limited (“DCM”). Pursuant to the Mining and Management Agreement entered into between the company and DCM, an amount of R10m was due to the company for mining activities undertaken by DCM in the 2011/2012 financial year. DCM failed to make the final payment to Chrometco and subsequently was placed into liquidation.

7. Net loss for the period

Net loss for the period is arrived at after taking the following items into account:

Legal and professional fees of R2.3 million, which increased from R1.068 million in the prior period. The increase in legal fees is due to transaction costs relating to chrome mining arrangements, BEE restructuring, as well as other ongoing activities relating the group’s section 11 and section 102 applications with the Department of Mineral Resources. 

Operating overheads at the Rooderand Mine decreased to R1.56 million compared to R1.81 million in the prior year as a result of cost cutting efforts. 

The company incurred an increase of R0.48 million relating to the increase in its environmental rehabilitation provision.

Salaries and remuneration expenses decreased to R1.30 million compared to R1.78 million in the prior period as a result of cost cutting efforts.

8. Property, plant and equipment

9. Taxation

Taxation expense for the year increased to R4.553 million compared to a saving of R7.631 million in the prior year. The year-on-year movement is primarily due to the fact that the company derecognised deferred tax assets of R5.816 million during the current year together with the reversal of taxable temporary differences of intangible assets of R1.2 million.  The deferred tax asset was derecognised as probable future taxable profits cannot reasonably be assured.

10. Environmental rehabilitation investment

During the year, the group contributed approximately R1.5 million to an environmental rehabilitation investment fund (managed by Guardrisk Insurance Company Limited).

11. Environmental rehabilitation provision

During the year, the company recognised a provision for decommission costs and environmental rehabilitation relating to surface mining activities at the Rooderand Chrome Mine.

12. Net asset value per share

13. Reconciliation between loss and headline loss per share

14. Change in classification

The company reclassified cash-based environmental rehabilitation investments of R0.478 million in the comparative year from cash to environmental rehabilitation investments, as this more correctly reflects the nature of the asset.  This also resulted in an increase to investing activities of the same amount in the statement of cash flows.

15. General review of operations.

During the period under review, the group focused its attention on the following important issues:-
- Conducting mining operations at the group’s Rooderand Chrome Mine; 
- Development of Platinum Group Metal (“PGM”) opportunities on the group’s Rooderand property; 
- DMR related activities required to conclude of the acquisition of the PGM prospecting rights from Nkwe Platinum SA and Realm Resources; and
- Commercialization of the Rooderand chrome resource; and
- Optimisation of the allocation of capital resources.

Ore production at the Rooderand Chrome Mine was lower than planned due to geological complexities, and production is intermittent to allow for periods of drilling, exploration and planning.

16. Prospects

The group currently has a chrome mine in the North West province of the Republic of South Africa and is focusing on the consolidation of the PGM resources on its Rooderand chrome property while simultaneously extracting value from its chrome resource.

The company is also interested in the exploration and beneficiation of mineral related opportunities.

17. Changes to the board

There were no changes to the board during the period under review. Subsequent to financial year end, Mr. T. Scott resigned as financial director of the company. The company is actively in the process of recruiting a suitable replacement (as announced on SENS on 26 May 2015).

18. Dividends

No dividend has been declared for the period (2014: R nil).

For and on behalf of the board of directors

PJ Cilliers                                                                                                        JG Scott
Managing Director                                                                                           Chairman

Directors: JG Scott* (Chairman), PJ Cilliers (MD), R Rossiter+, E Bramley*, IWS Collair+, R McConnachie+ (alternate to Mr. Rossiter).

* non-executive
+ independent non executive

29 May 2015

Designated Advisor: PSG Capital

Company Secretary: The Green Board Company Secretaries

Registered Office
70 Marshall Street
Johannesburg

Postal address: 
Sparrebosch Building
The Greens Office Park
Charles de Gaulle Crescent
Highveld Park Ext. 12
0169

www.chrometco.co.za