Portfolio Committee Briefing
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Portfolio Committee Briefing 26 October 2005 PowerPoint PPT Presentation


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Portfolio Committee Briefing 26 October 2005. Content. Company Background Overview of Operations Financial and Production Review Mine Production Challenges Short-term Production Improvement Plans Health and Safety Statistics Possible Opportunities for Growth

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Portfolio Committee Briefing 26 October 2005

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Portfolio committee briefing 26 october 2005

Portfolio Committee Briefing

26 October 2005


Content

Content

  • Company Background

  • Overview of Operations

    • Financial and Production Review

    • Mine Production Challenges

    • Short-term Production Improvement Plans

    • Health and Safety Statistics

  • Possible Opportunities for Growth

  • Social Responsibility and Investment

  • Uncertainties & Litigation Issues

  • Conclusion


Core business diamond mining through abm

Core Business: Diamond Mining through ABM


Non core business agricultural and tourism through abt

Non-Core Business: Agricultural and Tourism through ABT


Other assets under management

Other Assets Under Management


Portfolio committee briefing 26 october 2005

Location of Operations


Portfolio committee briefing 26 october 2005

Financial & Production Review


Financial production review

Financial & Production Review

Consolidated Results (R’000)


Portfolio committee briefing 26 october 2005

Financial & Production Review


Portfolio committee briefing 26 october 2005

Financial & Production Review


Financial production review1

Financial & Production Review

In Summary:

  • Total revenue was R152.4m compared to R264.7m in 2004.

  • Diamond production income decreased from R182.5 million to R143.9 million.

  • Diamond production down 38%

  • Operating costs decreased by 32%

  • Total operating loss was R 0.9 million

  • ABT operating loss increased from R0.084m to R5.5m

  • Price per carat up 15% (US$), whereas the ave. R/$ rate was 6.04 vs. 6.80 in 2004

  • Capex up 43% to R17.71 million with main expenditure of R13.53m on replacement of equipment

  • Exploration reduced by 69% to R4.18m


Revenue split total r152 4 million

Revenue Split (Total R152,4 million)

Financial & Production Review


Financial production review2

Financial & Production Review

Carat Production 2005 (49 577 carats)


Net profit loss

Financial & Production Review

Net profit/(loss)


Better diamond prices achieved

Better diamond prices achieved

Financial & Production Review


Net operating expenses under control

Financial & Production Review

Net operating expenses under control


Available cash as at 31 march 2005 r42 7m

Financial & Production Review

Available Cash as at 31 March 2005 (R42,7m)


Portfolio committee briefing 26 october 2005

Financial & Production Review

Persistent strengthening of the Rand


Portfolio committee briefing 26 october 2005

Production and Other Challenges


Major difficulties

Major Difficulties:

  • Mining a mineral resource that is not well defined

  • Huge replacement Capex programme required

  • Extensive exploration on land is necessary

  • Current marine mining methods often hampered by poor sea weather

  • Financial provisions for both long-term & other liabilities

    • Rehabilitation liability

    • Provision for post retirement medical aid

    • Other unforeseen expenses related to legal matters

  • Main constraint is the lack of funding ability for Capex and exploration


Areas that attributed to production shortfall

Areas that Attributed to Production Shortfall:

Against Approved Production Budget for 2005


Declining carat production

Declining Carat Production


Company currently under capitalised

Company currently under-capitalised


Inconsistent exploration programme

Inconsistent Exploration programme


Portfolio committee briefing 26 october 2005

Continuous Downward Trend on Sea Days


Unpredictability of the number of sea days 2005

Unpredictability of the number of sea days: 2005


Short term production improvement plans

Short-term production improvement plans:

  • Implementation of double shift work on land mining

  • Involvement of labour in production planning sessions

  • Implementation of remote mining techniques

  • Place emphasis on cost reduction and control

  • Market development for ABT products


Portfolio committee briefing 26 october 2005

Safety and Health


Safety and health statistics

Safety and Health Statistics:

  • The N.C opencast mines LTI average is 0.99

  • Higher rates for Alexkor as a result of extensive diving operation in comparison to peers

  • No fatality for the period under review

  • Awarded the DME 1000 FFPS in April 2005


Portfolio committee briefing 26 october 2005

Possible Growth Opportunities


Possible growth opportunities

Possible Growth Opportunities

  • Acquisition of mineral rights in other parts of the country

  • Restart mining operations at Muisvlak

  • Embark on an extensive exploration programme

  • Recapitilise current land mining

  • Replacement of current mining equipment

    Constraint: Lack of funding capacity


Portfolio committee briefing 26 october 2005

Social Responsibility & Investment


Portfolio committee briefing 26 october 2005

Social Responsibility and Investment:


Social responsibility and investment skills development

Social Responsibility and InvestmentSkills Development:

  • Five out of ten current bursary holders are females

  • Seven out of 11 HDSA employees in mentorship programme are females

  • Three out of 10 HDSA apprentices are females

  • Trained 3 females as heavy earthmoving machine operators

  • ABET classes to improve literacy, numeracy and life skills of employees and community

  • Alexkor expended 3.14% of total wage bill in 2005 on training


Cat 769 dump truck operated by a lady

CAT 769 Dump Truck – Operated by a Lady


Social responsibility and investment community support

Social Responsibility and InvestmentCommunity Support:

  • Providing Health Care and emergency services to Alexander Bay and Richtersveld Communities

  • Maintenance of Alexander Bay town.

  • Providing portable water to A/Bay and Port Nolloth

  • Ad-hoc donations & rental subsidies of R11 million for period 2000-2005

  • Involvement in HIV/Aids awareness projects


Employment equity as at 30 september 2005

Employment Equity, as at 30 September 2005

Total workforce = 6% African, 73% Coloured, 21% Whites


Portfolio committee briefing 26 october 2005

Uncertainties and Litigation Issues


Uncertainties and litigation issues

Uncertainties and Litigation Issues

  • Outcome and Impact of Land Claims case on Alexkor

  • Awaiting court proceedings and ruling on other legal matters

  • Possible restructuring post land claims case

  • Financial implications include legal fees and possible compensation

  • Limited provision has been made for payment of possible settlement amounts

  • Alexkor counterclaimed against some of the cases

  • We expect the cases to be concluded by 2nd quarter of 2006


Portfolio committee briefing 26 october 2005

Conclusion


Conclusion

Conclusion

  • Short-term focus is on improving financial performance:

    • Optimise the use of available resources

    • Implement initiatives for productivity improvement

    • Continuous reduction of both operating costs and pay-limit

  • Develop a long-term strategy to transform the company:

    • Move Alexkor beyond a single mine company

  • Collaborate with established companies and leverage on their ability to fund expansion plans

  • Implementation of remote mining techniques


Portfolio committee briefing 26 october 2005

Thank you


Financial production review3

Financial & Production Review

Consolidated Results (R’000)


Portfolio committee briefing 26 october 2005

Financial & Production Review


Portfolio committee briefing 26 october 2005

Financial & Production Review


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