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Petmin posts 'healthy' 9% profit

Johannesburg – Petmin [JSE:PET] has reported a 9% rise in headline earnings per share to 19.06 cents for the year ended June 2012.

Net cash flow from operations was up 23% to R443.8m‚ while annual profit grew 12% to R112.7m.

Like-for-like earnings per share from continuing operations were up 23% to 16.82 cents‚ while the dividend was up 25% to 5.0 cents per share.

Petmin described the operational performance as “healthy”‚ saying it is preparing for growth following significant investment and expansion.

R523m has been invested to double capacity and deliver on its strategy despite difficult market conditions.

Among the operation highlights were a rise in Somkhele’s annual production capacity from 530‚000 tonnes to 1.2 million saleable tonnes‚ while investment was approved for a third processing plant at Somkhele. The extended life of Somkhele mine is now more than 20 years.

In addition‚ the New Order Mining Right was extended to cover new mining areas at Somkhele and there was accelerated investment in North Atlantic Iron Corporation (NAIC) pig iron project.

Petmin chief executive Jan du Preez said: "Benchmarked against our peers in the resources sector‚ Petmin had a satisfactory year of significant investment for future growth. We are reporting healthy financial results after our operations performed well and generated cash in a difficult economic climate."

"We are pleased to declare an increased dividend while keeping funds in reserve for the development of new mining areas at Somkhele and the development of our Canadian iron sands to pig iron project."

Petmin also reported a significant investment of R523m during the year. Capital expenditure at Somkhele was R388m‚ of which R177m was spent on pre-stripping the open pits to feed the second wash plant. The second plant was commissioned for a total capital cost of R162m‚ of which R119m was spent in the year to end June 2012.

Petmin's investment in development projects was R98m during the year‚ with a further R36m at SamQuarz.

Its flagship Somkhele anthracite mine is reaping the benefits of investment in a second wash plant‚ with production more than doubling in May and June 2012 compared to the same period in 2011. Somkhele's total annual production capacity is now in excess of 1.2 million saleable tonnes of metallurgical anthracite.

"This is a strongly cash-generative operation which has more than doubled its production capacity and significantly increased its reserves. Somkhele now has the flexibility to increase production in response to market demand‚" du Preez said.

Petmin's 'Business of Tomorrow' exploration activity showed satisfactory results and management is encouraged by progress at NAIC and is accelerating its investment in this project as it advances towards a Pre-Feasibility Statement.

Following satisfactory exploration results‚ Petmin is considering its options for the future of its interest in the Mt Ginka iron project in Liberia.

Based on results received from initial exploration activity‚ Petmin has written down its investment in the Red Crescent Resources-controlled Sivas copper project in Turkey as the results did not meet Petmin's criteria for further investment.

Petmin's director of business development‚ Bradley Doig‚ said: "Early-stage exploration is an inherently risky business‚ but out of three projects NAIC has a very positive maiden resource statement and is moving rapidly towards pre-feasibility‚ and Mt Ginka has good prospects that's a very good success rate for exploration and validates Petmin's rigorous investment criteria and project selection."

Petmin has signed approved term sheets with its bankers‚ Standard Bank‚ securing‚ in addition to the existing R100m overdraft facilities‚ new medium-term debt facilities of R225m and an R100m revolving credit facility.



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