[miningmx.com] — YOMHLABA Resources has been an unlucky company virtually ever since it listed on AltX. The share was suspended in March 2005, soon after Yomhlaba listed through the old Zenith Concessions shell, after it lost its major contract to supply coal to BHP Billiton.
Soon after this, two directors quit and the company switched designated advisers. Even its planned rescue by selling control to the Royal Bafokeng and acquiring the Umlaba and Ilanga collieries hasn’t gone smoothly.
Last week, the company secretary resigned and the JSE referred the documentation of the reconstruction and acquisitions to a monitoring panel, which advised that the documents conflicted with both Gaap (generally accepted accounting practice) and the dreaded IFRS, mainly because it treated the two deals as one, rather than as separate transactions.
This may sound rather technical, but it has a significant impact on the balance sheet. The problem is that while the Ilanga purchase included an element of goodwill, Umlaba was acquired for less than stated asset value.
These items should not have been netted off but shown separately and the goodwill on Ilanga impaired if and as necessary.
The underlying position of the company remains the same, and there’s no impact on pro forma headline earnings which, including the two mines for six months, remain a negative 1.1c/share. Unadjusted earnings, on the other hand, soar from 5.7c to 29.0c as they include the discount on Umlaba’s net asset value. Frankly, though, this figure doesn’t mean much.
The Ilanga deal has been dragging on since December 2005. Late last year investors were told that the terms had changed substantially and that Umlaba would now be included in the deal. The revised transaction was put to shareholders for approval on June 30 at an extraordinary general meeting and was duly passed.
“The process of meeting the requirements of the JSE in relation to the lifting of the suspension of trading in Yomhlaba shares on AltX is underway and an announcement will be released to this effect in due course,” it said today.
Meanwhile, the company apparently is continuing its claim against BHP Billiton, though this also seems to be taking an unconscionable time.
The share was quoted at a nominal 20c before the suspension, with 500 million shares in issue. As part of the restructuring, there’s to be a 10-for-one consolidation, while the ultimate potential issued equity, after conversion of loans, is no less than 462 million consolidated shares, of which the Royal Bafokeng will own the lion’s share and historic shareholders will hold little more than 10%.
Still, it’s better to own 10% of something than 100% of nothing. If the Royal Bafokeng can do anything like as well in coal as they have in platinum, through their stake in Impala, Yomhlaba minorities may gain some consolation for the collapse of the original venture.
And when and if the deal goes through, the JSE may even consider lifting the suspension of trading in the share.
