CMO - CHROMETCO LIMITED - 2016 Year End SENS

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 29 FEBRUARY 2016 
 
Provisional condensed consolidated statement of financial position
 
Note
Reviewed as
at 29 Feb 2016
R'000
Audited as
at 28 Feb 2015
R'000
Assets
 
 
 
Non-current assets
 
284 761
187 599
Tangible assets
 
1 999
2 268
Intangible assets
9
279 755
183 752
Environmental rehabilitation investments
10
3 007
1 579
Current assets
 
2 477
8 373
Trade and other receivables
 
792
1 039
Cash and cash equivalents
 
1 685
7 334
Total assets
 
287 238
195 972
Equity and liabilities
 
 
 
Capital and reserves
 
233 867
160 928
Stated capital
 
158 062
54 187
Retained earnings
 
49 960
74 539
Attributable  to  ordinary shareholders
 
208 022
128 726
Non-controlling Interest
 
25 845
32 201
Non-current liabilities
 
53 041
33 865
Deferred taxation
 
49 010
30 964
Environmental rehabilitation provision
11
4 032
2 902
Current liabilities
 
330
1 179
Trade and other payables
 
320
1 169
Provisions
 
10
10
Total equity and liabilities
 
287 238
195 972
 
Provisional condensed consolidated statement of comprehensive income
 
Note
Reviewed
for the year ended 
29 Feb 2016
R'000
Audited
for the year ended 
28 Feb 2015
R'000
Revenue
5
3 894
672
Cost of sales
 
-
-
Gross profit
 
3 894
672
Other income
6
317
1 102
Depreciation
 
(88)
(56)
Amortisation of intangible assets
 
(7 872)
(6 873)
Operating expenses
 
(9 046)
(8 694)
Loss before interest and taxation
 
(12 794)
(13 848)
Investment income
 
246
536
Finance costs
 
(341)
(157)
Loss before taxation
7
(12 890)
(13 469)
Taxation
8
(18 046)
(4 553)
Loss for the year
 
(30 936)
(18 022)
Other comprehensive income
 
-
-
Total comprehensive loss for the year
 
(30 936)
(18 022)
Loss and total comprehensive loss for the year
 
-
-
attributable to:
 
 
 
Equity holders
 
(24 579)
(16 812)
Non-controlling interest
 
(6 357)
(1 210)
Basic earnings / (loss) per share (cents)
13
(10.77)
(8.20)
Diluted earnings / (loss) per share (cents)
13
(10.77)
(6.11)
 
Provisional condensed consolidated statement of cash flows 
Note
Reviewed for the
year ended
29 Feb 2016
R'000
Audited for the
year ended
28 Feb 2015
R'000
 
 
 
Cash flows from operating activities
(4 221)
(6 012)
Cash flows from investing activities
(1 428)
(1 598)
Cash flows from financing activities
-
-
Net (decrease)/increase in cash and cash equivalents
(5 649)
(7 610)
Cash and cash equivalents at beginning of year
7 334
14 943
Cash and cash equivalents at end of year
1 685
7 334
 
Provisional condensed consolidated statement of changes in equity 
 
Stated capital
R'000
Retained earnings / (accumulated loss)
R'000
Non- controlling interest
R'000
Total
R'000
Balance  at  1  March 2014
54 187
91 351
33 412
178 950
Total  comprehensive loss for the year
-
(16 812)
(1 210)
(18 022)
Balance at 1 March 2015
54 187
74 539
32 202
160 928
Total  comprehensive loss for the year
-
(24 579)
(6 357)
(30 936)
Issue of shares
103 875
-
-
103 875
Balance at 29 February 2016
158 062
49 960
25 845
233 867
 
Commentary – Financial and operational overview. 
1. The directors present the reviewed results for the year ended 29 February 2016
2. Basis of preparation.
The provisional condensed reviewed group annual financial statements for the year ended 29 February 2016 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, contains as a minimum information required by 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 all material respects with IFRS and are consistent with those applied in the financial period ended 28 February 2015.
The accounting policies applied in the preparation of the provisional consolidated financial statements from which the summary consolidated financial statements were derived are in terms of IFRS and are consistent with those accounting policies applied in the preparation of the previous consolidated annual financial statements.
 
The provisional condensed reviewed group annual financial statements were prepared by the chief financial officer, Ms. E Johnson. 
 
3. Auditors report.
The modified review report issued on these provisional condensed group annual financial statements by Chrometco group’s auditors, Mazars, is available for inspection at the group's registered office during normal office hours. The review report included an emphasis of matter paragraph referring to the going concern note in the provisional financial information. The group has incurred operating losses for a number of years due to limited trading. The ability of the group to fund operations in the foreseeable future is largely dependent on the ability of the directors to arrange for alternative sources of funding and the realisation of the income from potential expansion opportunities as more fully described in the note pertaining to going concern. 
 
These conditions, along with the matters set forth in the notes to the accompanying provisional financial information, indicate the existence of a material uncertainty which may cast significant doubt about the company’s ability to continue as a going concern. 
 
4. Nature of business.
The group 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. Revenue.
Revenue for the current year primarily comprises sales of chrome ore. The group had an arrangement in terms of which a third party extracted chrome ore from the Rooderand Mine, for which the group was entitled to a variable price depending on grade. Revenue for the year increased to R3.9 million (2015: R0.7 million). This amount includes an amount of R2.5 million being a recovery of rehabilitation expenditure from International Ferro Metals Limited (“IFM”).
 
6. Other income.
The group received approximately R0.3 million from the final liquidation of DCM Chrome Proprietary Limited (“DCM”).
 
7. Loss for the year.
Net loss for the year is arrived at after taking the following items into account:
Legal and professional fees of R1.2 million (2015: R2.3 million). Legal fees relate to transaction costs in respect of the 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 (“DMR”).
 
Environmental rehabilitation cost of R0.97 million (2015: R0.45 million) relating to the increase in its environmental rehabilitation provision. 
 
8. Taxation.
A taxation charge of R18.0 million was recognized for the year (2015: R4.6 million).   No deferred tax asset is being recognized. 
 
9. Intangible assets.
 
New ordermining right
Rooderand
R'000
Geological information Rooderand
R'000
Total
R'000
Useful life
30 years
29 years
 
Carrying amount 1 March 2014
172 078
18 547
190 625
Cost
186 030
19 500
205 530
Accumulated depreciation
13 952
953
14 905
Additions
-
-
-
Amortisation
6 201
672
6 873
Disposals
-
-
-
Carrying amount 1 March 2015
165 877
17 875
183 752
Cost
186 030
19 500
205 530
Accumulated depreciation
20 153
1 625
21 778
Additions
103 875
-
103 875
Amortisation
7 200
672
7 872
Disposals
-
-
-
Carrying amount 29 February 2016
262 552
17 203
279 755
Cost
289 905
19 500
309 405
Accumulated depreciation
27 353
2 297
29 650
 
 Refer note 15 for further information.
 
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).
 
2016
R’000
2015
R'000
Balance at beginning of the year
1 579
478
Cash contributions to fund
1 483
1 474
Net investment management fees
(55)
(373)
Balance at the end of the year
3 007
1 579
 
11. Environmental rehabilitation provision.
During the year under review the group recognised a provision for decommission costs and environmental rehabilitation relating to surface mining activities at the Rooderand Chrome Mine. 
 
 
2016

R’000
2015
R’000
Balance at beginning of the year
 
2 902
-
Decommissioning cost capitalized to property, plant and equipment
 
180)
2,298 
Increase in rehabilitation provisionfor the period
 
969
447
Interest unwind on rehabilitationprovision
 
341
157 
Balance at the end of the year
 
4 032
2,902
 
12. Net asset value per share.
 
2016
2015
Net asset value per share attributable to equity holders (cents)
75.66
62.81
Closing number of shares ('000)
274 929
204 929
 
13. Reconciliation between loss and headline loss per share.
 
2016
2015
(Loss)/earnings attributable to equity holders                                 
(24,579)
(16 812)
Adjustments:
 
 
Profit on disposal of plant                 
-
-
Headline (loss)/profit attributable to equity holders                       
(24,579)
(16 812)
Headline (loss)/profit per share (cents) 
(10.77)
(8.20)
Diluted headline (loss)/profit per share (cents)                        
(10.77)
(6.11)
Weighted average number of shares (`000)                            
228,262
204 929
Potential ordinary shares with dilutive effect                        
-
70 000
Diluted weighted average number of shares                                
228,262
274 929
 
14. Segment Information.
Segment information is not disclosed as the group is not yet operational.
 
15. General review of operations.
In the third quarter of the 2013 financial year, Chrometco entered into an agreement with Realm Resources Ltd and Nkwe Platinum SA (Pty) Ltd to acquire geological data, drill cores and the platinum group-metals (“PGM”) prospecting rights on the Remainder Portion of Rooderand. The last and final condition to this transaction was Section 102 approval by the DMR to grant the inclusion of the PGM and Base Metals mining rights on the Remainder Portion of Rooderand to the group’s existing mining right for chrome on that tenement. This was successfully completed in the third quarter of the 2016 financial year, and in terms of the agreement, Chrometco issued a further 70 million shares to Realm Resources Ltd and Nkwe Platinum SA (Pty) Ltd, in equal quantities. Conclusion of this transaction resulted in the addition of 4.5 million ounces of PGMs to the group's mineral resource portfolio, which has been independently valued at R103.9m. 
 
16. Going Concern.
The group incurred operating losses for a few years due to prevailing poor market conditions, which led to limited opportunities for mining without increased risk. The ability of the Company to fund operations in the foreseeable future is largely dependent on the ability of the company to attract alternative sources of funding, such as a new injection of cash, or to acquire cash generating assets, while continuing to look for opportunities to extract cash from the current assets.
 
17. Prospects.
The group currently has a chrome mine in the North West province of the Republic of South Africa and has been focusing on the consolidation of the PGM resources on its Rooderand chrome property while simultaneously extracting value from its chrome resource.  The group is also interested in the exploration and beneficiation of mineral related opportunities.
 
18. Changes to the board.
Mr. TW Scott resigned as financial director of the group on 30 May 2015. Mr. M Scott was appointed as financial director with effect from 1 July 2015, and he resigned on 1 December 2015. Mr. R McConnachie resigned as alternate director on 21 January 2016.
 
Ms. EM Johnson has been appointed as chief financial officer and will fulfil the duties of the financial director as an interim arrangement, as agreed with the JSE. 
 
19. Dividends
No dividend has been declared for the period (2015: R nil).
 
Signed on behalf of the Board of Directors.
 
JG Scott 
Chairman
 
PJ Cilliers
Managing Director
 
Johannesburg
31 May 2016
 
Directors: 
JG Scott+ (Chairman), PJ Cilliers (MD), R Rossiter*, E Bramley*, IWS Collair+,  
* non-executive
+ independent non-executive
 
CORPORATE INFORMATION 
Designated Advisor: 
PSG Capital
 
Company Secretary:  
The Green Board Company Secretaries 
 
Registered Office 
71 Van Beek Avenue 
Glenanda 
2091 
 
Postal address 
PO Box 758 
Mondeor 
2110
 
Auditors 
Mazars
 
 
Ticker: 
CMO
CategoryTypeCD: 
C
Source: 
JSE Security Exchange - SENS
DateTime: 
31/05/2016 - 08:50
Date: 
31/05/2016