CASH resources at Oakbay Resources And Energy evaporated during in the 12 months ended February, but the company insisted it remained a going concern.
Cash and cash equivalents totalled R2.7m as of February 28 compared to R225m at the same point in the previous financial year owing to production losses and the repayment of a loan to Bank of Baroda.
“Management draws attention to the fact that, as at the date of this report, the current liabilities exceed the current assets by R15.9m and despite the continued losses management is confident that based on their assessment and the turnaround strategy implemented the group will remain a going concern,” it said in comments to its financial statement.
However, Oakbay’s auditor, SizweNtsalubaGobodo, included an emphasis of matter on going concern conditions which means there is a material uncertainty regarding the company’s future. Oakbay added, in its unqualified audit opinion that there was no “material uncertainty” as a going concern.
On June 30, some R37.5m is due to the Industrial Development Corporation as part of a R123.7m loan. A further installment of R37.5m is due on March 31, 2018. Since February 28, the company has forwarded R48.8m which represents the shortfall in its rehabilitation fund.
The Gupta-owned company is also seeking a new sponsor after River Group tendered its resignation from June 1. However, the sponsor’s resignation will not be effective until a replacement sponsor is sourced, said Oakbay.
Operationally, Oakbay had a poor time during the 12 month period.
Gold production fell 47% to 201 kilograms owing to lower availability and efficiency of the gold retreatment plant at the Shiva Uranium mine in Orkney. There were also “production issues” in the opencast section as well as production stoppages due to “ongoing security issues at the Shiva Uranium mine”.
“Mine management implemented a turnaround action plan in February 2017 with additional excavators sourced for the opencast section to boost production and upgrade the gold plant,” it said.
The Brakfontein coal mine, bought by Oakbay in February 2016, produced 1.2 million tonnes, with steady state output achieved in the second half of the year under review.
Yet there were problems too: the lack of reliability and efficiency of the mine’s opencast equipment affected planned production. “Management is focusing on how to address these issues with stoppages due to labour unrest having been successfully resolved in the second half of the year,” it said.
The biggest hit, however, was an after-tax impairment of the Shiva Uranium mine resource totalling R879.8m following an independent valuation on the property. The impact was a loss of R937m compared to a previous year’s loss of R16.9m.
