Sallies CEO puts his head on the line

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Tom Dale, Sallies CEO

� New chairman for Sallies
� Sallies still hanging in there
� New Sallies shareholder unveiled
� Sallies: good money after bad?
� Sallies talks tough on fluorspar market
� Sallies to raise yet more cash to stay afloat
� Sallies boss quits as firm fails to improve

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Sallies CEO puts his head on the line
Allan Seccombe
Posted: Thu, 11 Sep 2008

[miningmx.com] -- TOM Dale, CEO of fluorspar producer Sallies has staked his position on the embattled company posting a profit in 2009.

It will be an interesting financial year for the company. It should have settlement of the Honeywell dispute early in calendar 2009. It will also make a decision on whether to buy another crusher for its key Witkop operation, a cost that could run at about R30m or more.

In a show of confidence that the producer of 144,000 tonnes of acid-grade fluorspar has begun turning the corner Dale told a results presentation that Sallies is awaiting a permit to explore and possibly develop a deposit of metallurgical-grade fluorspar in Zambia. Sallies is also putting together an exploration team to hunt for the mineral in Mozambique.

Dale argued Sallies, after a long run of losses and a series of capital raisings, was turning the corner and financial 2008 was a year of two distinct halves, with Witkop mine moving sharply into operating profit and Buffalo sharply reining in its losses.

It posted an operating profit of R7.8m, but a headline loss of R29m because of high legal fees, admin and finance costs.

�If Sallies doesn�t turn a profit in 2009 I�ll resign,� Dale told Miningmx.

Production at Witkop lifted 10% to 118,137 tonnes. This is the most saleable material Sallies produces, with phosphate contamination at 400 parts per million. Buffalo increased output by 52% to 25,720 tonnes, but it has a phosphate level of 1,200 ppm, making it a more difficult product to sell.

Sallies has brought in a new marketing company for its production. This is New York-based CMC Cometals, which is the dominant trader of fluorspar. The former Europe and US-based agents have not been retained.

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�We will now approach the market with more sophistication rather than being taken for a ride as we were,� Johann Blersch, Sallies� commercial director, told Miningmx. �We want to be a lot smarter about marketing our product.�

The spot price for fluorspar is around $400/tonne. Sallies retired contracts for between $175 and $155/tonne in July and has other contracts �somewhere above $200� that expire in December. Higher prices will kick in from then, said Dale.

Asked how Sallies proposed funding a R30m crusher, Dale was non-committal. Similarly when asked about funding exploration of the Zambian deposit as well as scouring Mozambique, Dale was vague and would not be pressed for a straight answer.

Not only that, but Sallies has to hold onto some cash in case the Honeywell decision goes against it. The demand has shrunk to $4.5m from $6.8m and Sallies has lodged a counter claim of $3.8m. The final hearing is in October and a decision is expected early next year.

�It won�t kill the company if the decision goes against us,� said Dale, who took up the role of chief executive in October 2007.

Asked how seriously investors should take the talk about investing in Zambia and exploring Mozambique, analyst Mark Mayedeski said: "It comes down to the old cliche of learning to walk before you can run. They are still learning to walk."

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