COMPANY OPERATIONAL AND FINANCIAL REVIEW
Revenue was significantly higher than in 2019 which can be attributed to a 38% increase in sales volumes combined with a significant deterioration in the USD/NAD exchange rate at the start of the COVID-19 global outbreak. The exchange rate remained extremely volatile throughout the year, before returning to pre-pandemic levels in December 2020. Several mitigating actions were taken to maintain operations during the year, which included temporary scaled down operations and additional health and safety measures to ensure the health of our employees throughout. The weaker exchange rate and mitigation steps however impacted cost efficiency. In addition, the extreme and sudden devaluation of the Namibia Dollar, resulted in significant exchange rate losses, both on prepayments for 2020 sales, as well as the foreign currency hedge derivative, which neutralised the exchange rate benefit from the revenue stream, ultimately resulting in a reduced net profit after tax from normal operations of N$443 million (2019: N$ 503 million). Further details of the company’s financial performance are set out in the summary statement of comprehensive income.
Production of uranium oxide for the year was 2 489 metric tonnes compared to 2 449 metric tonnes in 2019. A total of 19 370 510 metric tonnes (2019: 22 411 993 metric tonnes) were mined from the open pit and 8 718 593 metric tonnes (2019: 8 006 058 metric tonnes) of ore were milled. The mine is currently operating on an approved Life of Mine Plan to 2026 (2019: 2026).
No dividends were declared during the year (2019: No dividends declared).
Holding Company and Ultimate Holding Company
The company’s immediate holding company is CNUC Namibia Mining Limited (previously Skeleton Coast Diamonds Limited, name changed effective 15 August 2019), a company registered in Namibia. China National Nuclear Corporation Limited (CNNC), registered in China, is the company’s ultimate holding company.
In November 2018, the preceding ultimate holding company, Rio Tinto plc, announced that a binding agreement was signed with China National Uranium Corporation Limited (CNUC China) for the sale of its entire 68.6% stake in Rössing Uranium Limited. China National Uranium Corporation Limited is an affiliate of China National Nuclear Corporation Limited. On the 16th of July 2019, the sale process was concluded and ownership transferred to the new ultimate majority shareholder, China National Nuclear Corporation Limited (CNNC).
The COVID-19 pandemic has developed rapidly in 2020, with a significant number of cases being confirmed. Measures taken by various governments to contain the virus have affected economic activity and the company’s business in various ways:
- Short-term interruptions in the supply of ammonia imported from South Africa affected production, with four days of production lost during Q2 of 2020.
- Due to government measures taken, we had to scale down our mining operations temporarily during Q2 of 2020. This did, however, not negatively impact our milled or final product production and we were able to still meet production targets during that period.
- The re-prioritised mining sequence did, however, impact the second half of the year in terms of grade and blending sequence, resulting in lower than planned production, and the production plan had to be amended to accommodate this change.
The COVID-19 pandemic did not adversely impact the company’s revenue or liquidity during 2020. The business resilience and ability to adapt the operations at short notice meant the company could still deliver on sales contracts and due to reduced operations in certain aspects, managed to save costs. The measure taken by the government to alleviate liquidity with a focus on more efficient refunds of VAT also assisted the company’s liquidity position in 2020.
In the period since 31 December 2019, the significant exchange rate weakening of the NAD against the USD during 2020 had the most significant impact on our financial results. The company realised losses on the monthly hedge transactions to a total of N$ 152 241 786, against a planned realised gain for the year on the hedge of N$163 601 250 at a planned average exchange rate of USD/NAD 14.40. By the 2020 year-end, the exchange rate finally returned to a rate of USD/NAD 14.68, but the impact from the extreme volatility in the exchange rate was significant during the course of 2020 and featured in various aspects of the financial results.
Depending on the duration of the COVID-19 crisis and continued negative impact on economic activity, the company might experience further interruptions of supply in 2021. The exact impact on our activities in the remainder of 2021 and thereafter cannot be predicted. We also refer to the Director’s report note on going concern in the annual financial statements. The directors have no reason to believe that the company will not be a going concern in the foreseeable future based on forecasts and available cash resources. The viability of the company is supported by the annual financial statements.
The summary results for the year ended 31 December 2020 have been audited by Ernst & Young Namibia. The auditor’s unqualified opinion is available for inspection at the company’s registered office.
F L Namene (Chairman), J S Coetzee (Managing), F Li**, Y Li** (alternate Z Fang**), H P Louw*, G N Simubali
(alternate C W H Nghaamwa).
*South African **Chinese
G D Labuschagne
PO Box 22391
Ernst & Young Namibia
P O Box 1857
Summary Statement of Cash Flows for the year ended 31 December 2020
Notes to the Summary Annual Financial Statements for the year ended 31 December 2020
1. Reporting Entity
Rössing Uranium Limited is a company domiciled in the Republic of Namibia. These are the summary annual financial statements of the company as at and for the year ended 31 December 2020. The audited annual financial statements of the company as at and for the year ended 31 December 2020 are available upon request from the Company’s registered office.
2. Statement of compliance
These summary annual financial statements have been prepared in accordance with the framework concepts and the measurement and recognition requirements of IFRS and disclosure requirements of IAS 34, Interim Financial Reporting and the requirements of the Company’s Act of Namibia. They do not include all of the information required for full annual financial statements, and should be read in conjunction with the annual financial statements of the company as at and for the year ended 31 December 2020.
3. Significant accounting policies
The accounting policies applied by the company in these summary annual financial statements are the same as those applied by the company in its annual financial statements as at and for the year ended 31 December 2020. The company has adopted IFRS 16 Leases retrospectively from 1 January 2019, but has not restated comparatives for the 2018 reporting period, as permitted under the specific transition provisions in the standard. In applying IFRS 16 for the first time, the company has used the practical expedient permitted by the standard for accounting for operating leases with a remaining lease term of less than 12 months as at 1 January 2019, as short-term leases. In all other aspects, the accounting policies and methods of computation applied in the preparation of the summary consolidated financial report are consistent with those applied for the period ended 31 December 2019.