SINO GOLD MINING LIMITED
SGX - Half Year Results - Mr Jake Klein, President and CEO
Mon, 18 Aug 2008 11:15AM
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Mr Jake Klein
Mon, 18 Aug 2008
11:15AM Australia/NSW
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SINO GOLD MINING LIMITED (SGX)
ASX code: SGX
Website: http://www.sinogold.com.au
Industry: Materials
Principal Activities:
An operating gold mining and development company.
Address:
44 Market Street, Level 22
SYDNEY
NSW
Phone: (02) 8259 7000
Fax: (02) 8259 7070
Executives & Directors
Mr James E Askew , Chairman, Non Exec. Director
Mr Jacob Klein , Executive Director, CEO
Mr Hanjing Xu , Executive Director
Mr Brian H Davidson , Non Exec. Director
Mr Peter W Cassidy , Non Exec. Director
Mr Peter John Housden , Non Exec. Director
Mr Thomas David McKeith , Non Exec. Director
Mr Liangang Li , Non Exec. Director
Mr Roger Howe , Investor Relations
Mr Ivo John Polovineo , Company Secretary
Company Podcasts
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Company ASX Announcements
Company ASX announcements can be viewed on the ASX website.
Announcements from the preceding six months are shown below.
Please refer to the relevant stock exchange if any of the above information is incorrect
SINO GOLD MINING LIMITED (SGX) Events
Australia/NSW
SINO GOLD MINING LIMITED (SGX)
| Change in substantial holding | Tue, 6 Jan 2009 |
| Ceasing to be a substantial holder | Mon, 5 Jan 2009 |
| Becoming a substantial holder | Mon, 22 Dec 2008 |
| Change in substantial holding from CBA | Mon, 22 Dec 2008 |
| Appendix 3B - exercise of options | Thu, 18 Dec 2008 |
| Appendix 3B - issue of employee options | Wed, 17 Dec 2008 |
| Ceasing to be a substantial holder | Mon, 15 Dec 2008 |
| 2009 Production Guidance and Project Update | Thu, 11 Dec 2008 |
| Fatal Accident at White Mountain Mine | Fri, 5 Dec 2008 |
| Becoming a substantial holder | Tue, 25 Nov 2008 |
Please note: This company appears on this website as a result of its listing on the Australian Securities Exchange. Boardroom Radio does not claim any association with any company listed on this site.
PRESENTATION BY JAKE KLEIN, PRESIDENT AND CHIEF EXECUTIVE OFFICER OF SINO GOLD MINING LIMITED (SGX)
“SGX - Half Year Results”
http://www.brr.com.au/event/49370
MONDAY, AUGUST 18, 2008, 11:15 AM.
SGX Welcome, everyone, to this morning's conference call. I know there are a number of companies lining up to release their results so we will try and be as
10 brief and as quick as possible.
This morning, we will be talking to the half year presentation which was released this morning to the ASX and the Appendix 4D which of course includes our financial statements. The format will be that I will briefly talk to
15 the presentation and then of course we will open up the lines for Q&A.
I am joined by my colleagues this morning, Wayne Rossiter, our CFO; Cobb Johnstone, our Chief Operating Officer; Roger Howe, Investor Relations Manager; and Xu Hanjing is in Sydney this morning, our Executive Director
20 responsible for business development.
Turning to the presentation. I would have to say that as the CEO of the Company it feels really good to be presenting a results presentation where we have, for really the first time, some results to talk to. You can see this
25 company is a very, very substantially transformed company to the one which released results previously, and you can see that on the first page of this presentation where have given the results overview to have sold $100 million of revenue of gold in the first six months. Certainly different. Very different to the first half of 2007 where our revenue line was nil.
30
Profit before hedging and tax, and we have tried to demystify these accounts by extracting the hedging anomalies which will continue to persist through the accounts for the next number of years but we will talk to that in some detail, a $20.6 million profit before hedging and tax compared to a $3.1 million loss
35 last year. Profit before tax, and of course that then includes the hedging amounts, of $4.3 million and a net loss after tax of $1.6 million. Highlight for the past six months was the generation of operating cash flow, $19.4 million generated principally by Jinfeng but a small contribution from BioGold as opposed to a $7.9 million net operating absorption of cash in the six months,
40 first half of 2007.
Looking at the breakdown of sales revenue in the first half, you can see that Jinfeng contributed gold sales of 70,532 ounces at a spot price of $988. BioGold sold 23,342 ounces at an average price of $993. Other sales at
45 BioGold represent silver. Approximately 400,000 ounces of silver were sold and posted through the facility and that gold equivalent is 7323 ounces, $993 average revenue per ounce. That gives us a total number of ounces sold of 101,000 ounces at approximately $990 for just over $100 million in revenue. That contributed close to $32 million of mine operating earnings, a significant change from last year, the previous six months, and the comparative period.
Of course, you can see how significant the contribution from Jinfeng has been
5 in those numbers, $30.7 million of that $31.8 was contributed by Jinfeng. BioGold contributed $1.1 million in earnings. I would hazard a guess that that was probably the first time that BioGold has made a positive contribution. We did take it over in December last year, and very pleased with the changes which our managers have made at that (inaudible) (0:04:11) and at least was
10 able to make a small but important contribution for the past six months.
Of course, we highlight the fact that with the hedging that has been closed out now, all future sales will be unhedged.
15 The next page tries to demystify the hedge accounting which, as I said, will continue to persist through the accounts over the next number of years to impact the first half of 2012 and we will have to take an amortization of that entire hedge for close-out amount of $125 million over that period. From our perspective, it would be much cleaner to write it all off in one hit, but the
20 accounting rules suggest that it must be amortized over the previous hedge period.
Looking at the breakdown, you can see that spot sales revenue is $100.2 million, operating cost is $61.8 million, additional depreciation and
25 amortization of $6.5 million gives you mine operating earnings of $31.9 million. Corporate and other expenses of $14 million, that includes $4.3 million of non-cash charges which principally relate to the write-off of Shandong Exploration, the Hexi joint venture where we have drilled but without success over there. We have a second joint venture in Shandong
30 which we will be drilling over the next couple of months. It also includes come share-based payments which need to be written-off and a net gain on fair value of options of $1.3 million. That gives you an operating profit of $17.9 million. Other income principally interest of $2.7 million gets you down to the profit before hedging and tax of $20.6 million. Then you see the impact of this
35 adjustment or accounting treatment of the hedging loss and hedging amortization, $16.4 million. That gives you the accounting profit before income tax of $4.3. Income tax expense of $5.9 million of which $3.7 million is deferred tax and that gets you down to the net loss after tax of $1.6million.
40 We then referenced and tried to break down and break out the numbers to get you down to the EBITDA number. Again, it contains really just a recalibration or reshuffle of those numbers on the previous page. Nothing substantial to highlight there other than that we did on an earnings before interest tax and depreciation report a $30.8 million earnings. As I said, for the
45 first time in this Company's history as it listed into the (inaudible) (0:07:16) earnings number, I think, the interest and borrowing costs of $3.4 million, depreciation and amortization of $6.7 million reconciles back to that profit before hedging and tax of $20.6 million.
Where did the money go because we did generate an operating cash flow surplus, but you can see that we have also a significant and substantial capital program. Jinfeng underground development and other capital expenditure at Jinfeng, $17.2 million. White Mountain development cost of
5 $22.7 million. We have now spent, as of June, about 50% of the White Mountain development cost. There is about $30 million still to go over there. At Jinfeng, the underground, we have approximately an additional $16 million to $20 million where by the end of this year we will have developed four sub-levels. Beyinhar acquisition and evaluation of $9.9 million. That included a
10 payment for the transfer of all the exploration licenses. Eastern Dragon acquisition payments of $66 million. Exploration of $7.7 million and other miscellaneous capital items of $5.4 million.
A very strong balance sheet at the end of June. I think the transactions which
15 we have done have really put us in extremely good shape. I think in these volatile capital markets, we are in a very strong position to prosper in this period of high volatility. Net assets of $655 million. Available cash $81 million. The only real secured debt is the Jinfeng project debt of $36 million and that gives you a very low gearing ratio of around 6%. We are in fairly advanced
20 discussions with restructuring that Jinfeng project debt. It is our intention, as we have indicated before and appropriate for a company of our size and structure now, to convert that into a largely corporate and much more flexible facility. Certainly, indications suggest that the availability of debt at a corporate level will be something which a number of banks will submit a
25 proposal on. We are well funded to grow our production base from the current reserve base of 4.8 million ounces and resource base of 8.2 million ounces.
What can you expect from Sino over the second half of this year? Well, Jinfeng gold production continued increase. We are targeting over 80,000
30 ounces from Jinfeng in the second half of 2008. We are on track for that first gold from White Mountain. We have made good progress on the construction over there. Beyinhar development decision by the end of this year. Initial Eastern Dragon JORC resource. We will continue to drill actively there as we do in a number of other exploration areas in China.
35
We could not resist the final slide with the Olympic rings. It is relevant and inappropriate, but I really do think that this Company presenting these results is in a very strong position. We have recorded a first half operating profit. That is a substantial change from where we were a year ago. We have a strong
40 balance sheet, $81 million in cash at the end of June, a very low amount of gearing. We are unhedged. We have a low cost of production. I think we have terrific growth in front of us. So we certainly believe that we are delivering on a strategy. We are transforming ourselves from a single mine company. When we talk to you in six months’ time, hopefully presenting the second half
45 results, we will be talking about double production from Jinfeng, White Mountain and BioGold.
PRESENTATION CONCLUDED
Contact brr@brr.com.au for more information
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