Sallies to raise yet more cash to stay afloat

�

�

Tom Dale, Sallies CEO

� Sallies' run of misery continues unabated
� Sallies boss quits as firm fails to improve
� Sallies in dramatic share free fall
� Sallies mum on pending figures
� Sallies' Marais given ultimatum
� I was not fired - Izak Marais, outgoing CEO, Sallies

> JSE:SALLIES LIMITED:
28c

Click here to find out more about how to use this button

Sallies to raise yet more cash to stay afloat
Allan Seccombe
Posted: Fri, 19 Oct 2007

[miningmx.com] -- SALLIES needs to raise more money to ensure it can stay in business, says new CEO Tom Dale, who says the fluorspar miner was in a mess when he took over the company at the start of October.

Izak Marais resigned unexpectedly as CEO with effect from 1 October as Sallies prepared to bring out a poor set of annual results that showed a deepening loss and a negative cash balance.

�We need more money,� Dale told Miningmx.

We need more money

In a statement accompanying Sallies� results for the year to end-June he said the company would remain a going concern provided additional funding was available.

Sallies posted a R42m loss for the period against a R39m loss in the previous year. The cash balance shrank by R90m over the year to a negative R29m.

Shareholders have already been asked to back two rights issues in the last two years to raise R105m, but Dale said he had only asked shareholders once for money -- R75m -- and what had gone on before he joined the company didn�t matter much to him.

Management had not yet decided how much more it needs to raise or how it will go about it. It�s difficult to see shareholders backing yet another rights issue.

�What I�ve got to do is present good information accurately and shareholders or other sources of finance must decide whether the company is worth supporting or not,� Dale said.

Shareholders were likely to regard another full rights issue in poor light, said Mark Madeyski, an analyst at Afrifocus Securities. "It's a very weak point. Where has all that money gone?"

The company has turned increasingly poor results as it struggled with mining methods, grade, dilution and costs. Its R65m purchase of the Buffalo fluorspar mine and plant a year ago have not performed anywhere near expectations and management is now conducting a strategic review of the asset.

The main challenge for Dale and his partner in management Johan Blersch, who is commercial director and who joined when Dale did, has been sorting out the entire way Sallies operates.

�I only got involved in Sallies in February 2007 and became CEO in October. The history before that is not really of concern to me. What we found is that the management information system -- the operational and financial control information system -- had essentially collapsed,� he said.

Click Here to subscribe to our daily newsletter

The mined grades had been too low, dilution and ore losses were too high, blasting techniques were wrong and giving wrong sized fragmentation so big chunks of ore slowed up loading, transport and crushing. The blend at the flagship Witkop plant was not right, he said.

�We think we know what the key mining problems are and we�ve got better people there now. We are not going to do anything else except focus on the operations until we�ve fixed them or admitted we can�t fix them,� he said.

Madeyski came to the defence of Marais, who is widely seen as having been pushed out of his job, saying he�d been too involved in too many aspects of the business out of necessity instead of focussing on his operational strengths.

�In these results, if you read between the lines, they are putting a hell of a lot of blame on Marais, which I think is rather unfair. It seems there are a lot of excuses again,� Madeyski said.

Sallies will not meet the forecast of a R30m to R40m profit made in June because of a 23-day strike over August and September that cost R9m in lost revenue and the technical and operational issues that have to be addressed.

�I don�t want to make anymore forecasts. That forecast was based on previous management�s forecasts. We are going through everything and I don�t want to make any projections until we�ve got our hands around what we can consistently deliver,� Dale said.

�