| Thu 25 Sep 2008, 17:12 | | AEA - African Eagle Resources Plc - Results for the half year ended 30 June 2008 |
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AEA
AEA
AEA - African Eagle Resources Plc - Results for the half year ended 30 June 2008
African Eagle Resources Plc
(Incorporated in England and Wales, registered number 3912362)
AIM share code: AFE AIM ISIN: GB0003394813
JSE share code: AEA JSE ISIN: GB0003394813
REVIEW OF PROGRESS
AND
RESULTS FOR THE HALF YEAR ENDED 30 JUNE 2008
News Report
26 September 2008
African Eagle Resources plc ("African Eagle" or the "Company", ticker AIM: AFE,
AltX: AEA) announces
progress made so far in 2008 together with its financial results for the half
year to 30 June 2008.
African Eagle`s Half Year Report for the period ended 30 June 2008 can be viewed
at
http://www.africaneagle.co.uk/downloads/InterimFinancialStatements30June2008.pdf
Bevan Metcalf
Company Secretary
African Eagle Resources plc
Chairman`s Statement
Dear Shareholder
The six months covered by this interim report and, indeed, to September, has
been a period in which the markets have recoiled from risk, actual or perceived,
and smaller companies in general, and miners and explorers in particular, have
been grouped together and seen as uniformly risky regardless of the qualities
that distinguish one company from another. That it is, for the most part, a
crisis generated by factors and actions outside of the resources world is
irrelevant when we and our peers have been affected by it to the degree that we
have.
However, despite our recent share price history, African Eagle`s fundamentals
have improved considerably since I wrote to you last in the 2007 Annual Report.
There are two key points which I would like to make on your Company in the
context of these markets:
* firstly, with regard to our assets, African Eagle has never been in a
stronger position than it is now; and
* secondly, that market fundamentals are more likely than not to keep metals
prices above long-term averages
Mkushi is close to feasibility, we have the thrilling nickel discoveries at
Dutwa and Zanzui, and cash in the bank. We have also made excellent progress at
several of our other projects.
Demand from China and India remains
In the world outside, there are still a billion housewives in China and India
who want that washing machine, refrigerator and air conditioner, and those
nations will have to build the infrastructure to support these demands. History
shows us that metal consumption per capita is far higher during this development
phase of economies than it is when nations are already rich, and that remains a
positive aspect for the minerals industry from where the metal and services
required to meet those aspirations originate.
Of course, there will be troughs and peaks in market sentiment and metal prices
as the current credit crisis resolves itself but with the current inability of
juniors to raise financing, delays in exploring and bringing exploration
discoveries to production and the ultimate demise of many cash poor explorers,
it is my view that pressure will be brought to bear on the supply side of the
equation. Companies like African Eagle which have cash resources and can resist
returning to the markets will survive this downturn. With our assets, I believe
we will emerge stronger as metal prices increase and sanity returns to a sector
that needs explorers to provide for the future.
Major laterite discovery at Dutwa
From the beginning of the year to late September, we have made what we believe
to be a major nickel laterite discovery at Dutwa, in the eastern Lake Victoria
Goldfields in Tanzania.
RC drill results to date from Dutwa include:
* 30m at 2.26% nickel from 12m depth, including 15m at 3.60%
* 63m at 1.07% nickel from surface, including 30m at 1.35%
* 48m at 1.32% nickel from 3m depth, including 6m at 2.39%
* 51m at 1.22% nickel from surface, including 6m at 2.44%
* 36m at 1.67% nickel from 15m depth, including 12m at 3.15%
The grades we are seeing at Dutwa are comparable with those at many major nickel
laterite deposits worldwide and these early results, coupled with the extent of
the geochemical anomaly, suggest a substantial nickel endowment. This is a
highly significant discovery, the first of its type in Tanzania, and appears
very promising. I hope to bring you much more on this project on a regular basis
over the coming months. Some 70 km to the south of Dutwa is the Zanzui project,
which is also beginning to show similar signs of nickel mineralogy.
Mkushi feasibility nearing completion
The Mkushi Feasibility study is nearing completion and we will report on this
separately in due course. During the period the resource at Mkushi was updated
to 18.5 Mt at a grade of 0.83% copper, the full Mining Licence application was
approved by the Government of Zambia and new drill results were reported which
included:
* 9.0% copper over 6m from depth 180m
* 1.9% copper over 22m from depth 3m
* 2.4% copper over 18m from depth 53m
* 2.9% copper over 13m from depth 12m
Progress at Miyabi, Ndola, Sasare/Eagle Eye and Mokambo
We have regained unencumbered control of both the Miyabi gold project in
Tanzania and the Ndola copper project in Zambia.
Randgold Resources` exploration at Miyabi was directed principally at testing
their conceptual deposit model and was not intended to increase the existing
500,000+ oz resource in the Miyabi Gold Corridor. Their decision not to proceed
was a function of their intention to focus exploration efforts on West Africa.
Now that African Eagle has regained full control and ownership of the project,
we will resume work building on the existing gold resources, using the extensive
results of the regional exploration, geological drilling and structural
modelling generated by Randgold`s team over the past 15 months, together with
the gold mineralised targets identified from our own exploration.
We are currently in discussions with other groups on new joint ventures to take
Miyabi forward.
At Ndola, whilst we are disappointed that Phelps Dodge Mining Zambia Limited
(PDMZ) chose not to continue with the project, we recognise that they have
different priorities. PDMZ injected $2.27M into exploration into the project,
generating four copper exploration targets which we expect to follow up with new
partners in due course.
At Mweze, in the Sasare/Eagle Eye project area we discovered high grade copper
mineralisation with one drill hole intercept of 4.03% Cu over 33m. We have also
begun an internal assessment of an iron ore occurrence in the south of the
project area and uranium exploration continued in the north.
Diamond drilling in partnership with Copperbelt Minerals has continued at
Mokambo on the Zambian Copperbelt and we await a number of assays from this
programme.
Strategic stake by TWP
In March, TWP, a major South African mining services contractor, took a
strategic 5% shareholding in African Eagle. TWP has skills, capabilities and
assets which complement African Eagle`s own assets and skills.
Concentration of effort
There remain many more excellent assets in African Eagle`s portfolio and we will
continue to maintain these and seek other parties to assist us in progressing
them but in these parlous times it is our first duty as a board to survive the
downturn and to do so we must actively control our outgoings. Given the current
markets we have decided to concentrate our efforts on a few advanced exploration
programmes and joint venture partnerships in the second half of 2008 in order to
drive these up the value curve and thus we will scale down exploration
activities on a number of our other project areas.
Our principal exploration focus, therefore, over the next six months will be on
the Dutwa and Zanzui projects where we expect to advance the nickel potential of
the former to resource status, on a timely decision as to the development of the
Mkushi copper project and on the securing of new partners for our other
projects.
I look forward to reporting on all these in the Annual Report for 2008.
John Park
Chairman
For further information:
Mark Parker
Managing Director
African Eagle
+44 20 7248 6059
+44 77 5640 6899
Nicola Marrin
Seymour Pierce Limited,
London
Nominated Adviser
+44 20 7107 8000
Charmane Russell
Russell & Associates,
Johannesburg
+27 11 8803924
+27 82 8928052
Ed Portman / Leesa Peters
Conduit PR, London
+44 20 7429 6607
+44 (0) 7733 363 501
Condensed Consolidated Half Year Income Statement
Consolidated Half Year Financial Statements For the period ended 30 June 2008
6 6 Year to
months months 31
Not to 30 to 30 Decembe
e June June r 2007
2008 2007 Audited
Unaudit Unaudit
ed ed
GBP GBP GBP
Depreciation expense (40,914 (41,894 (83,023
) ) )
Employee benefits expense (545,19 (271,09 (622,39
2) 9) 5)
Impairment of deferred exploration (83,738 (44,008 (131,66
expenditure ) ) 8)
Other expenses (252,76 (174,10 (534,54
0) 0) 2)
Operating loss (922,60 (531,10 (1,371,
4) 1) 628)
Finance costs:
Bank interest receivable 149,977 59,310 216,623
Foreign exchange gain/(loss) (36,020 27,082 28,137
)
Loss before tax (808,64 (444,70 (1,126,
7) 9) 868)
Income tax expense - - -
Loss for the period (808,64 (444,70 (1,126,
7) 9) 868)
Loss per share:
Basic loss per share from total and 4 (0.4p) (0.3p) (0.7p)
continuing operations
Diluted loss per share from total and 4 (0.4p) (0.3p) (0.7p)
continuing operations
Headline loss per share from total 4 (0.4p) (0.3p) (0.6p)
and continuing operations
Diluted headline loss per share from 4 (0.4p) (0.3p) (0.6p)
total and continuing operations
All operations are continuing.
The accompanying notes form an integral part of these consolidated financial
statements.
Condensed Consolidated Half Year Balance Sheet
Consolidated Half Year Financial Statements For the period ended 30 June 2008
30 June 30 June 31 Dec
2008 2007 2007
Note Unaudit Unaudit Audited
ed ed
GBP GBP GBP
ASSETS
Non-current assets
Property, plant and equipment 160,798 178,426 156,337
Goodwill 103,188 106,188 103,188
Available for sale investments 3,783 9,819 6,462
Investment in Associates 2,362,9 - 1,809,9
72 01
Deferred exploration costs 10,925, 8,683,7 8,441,8
073 95 54
Total non-current assets 13,555, 8,978,2 10,517,
814 28 742
Current assets
Other receivables 747,774 294,364 383,339
Cash and cash equivalents 4,631,7 1,711,8 7,051,7
77 06 44
Total current assets 5,379,5 2,006,1 7,435,0
51 70 83
Total assets 18,935, 10,984, 17,952,
365 398 825
LIABILITIES
Current liabilities
Other payables (706,65 (193,26 (392,62
3) 2) 8)
Total liabilities (706,65 (193,26 (392,62
3) 2) 8)
Net assets 18,228, 10,791, 17,560,
712 136 197
EQUITY
Equity attributable to equity
holders of parent
Share capital 2,125,4 1,540,3 2,123,4
02 41 02
Share premium account 19,325, 12,415, 19,311,
622 012 622
Merger reserve 705,723 705,723 705,723
Available for sale revaluation (11,878 (8,169) (9,199)
reserve )
Foreign currency reserve (83,054 (1,006, (1,189,
) 936) 274)
Retained losses (3,833, (2,854, (3,382,
103) 835) 077)
Total equity 18,228, 10,791, 17,560,
712 136 197
The accompanying notes form an integral part of these consolidated financial
statements.
Condensed Consolidated Half Year Cash Flow Statement
Consolidated Half Year Financial Statements For the period ended 30 June 2008
6 months 6 Year to
to 30 months 31
Note June 2008 to 30 Decembe
Unaudited June r 2007
2007 Audited
Unaudit
ed
GBP GBP GBP
Cash flows from operating activities
Loss after taxation (808,647) (444,70 (1,126,
9) 868)
Adjustments for:
Depreciation 40,914 41,894 83,023
Exchange loss 1,298 - (25)
Profit on disposal of property, - (512) (516)
plant and equipment
Interest received (149,977) (59,310 (216,62
) 3)
Impairment of deferred exploration 83,738 44,008 131,668
expenditure
Share based payments 357,621 79,268 234,185
MCJV - Group share of the loss - - 4,118
Impairment of investments for resale - - 2,335
Impairment of goodwill - - 3,000
Increase in other receivables (320,049) (43,149 (135,99
) 9)
(Decrease)/increase in other (9,488) 21,315 32,068
payables
Net cash used in operating (804,590) (361,19 (989,63
activities 5) 4)
Cash flows from investing activities
Payments to acquire property, plant (31,391) (55,917 (78,280
and equipment ) )
Payments for deferred exploration (1,571,05 (1,134, (2,775,
expenditure 1) 568) 401)
Investments in associates (194,519) - -
Proceeds from sale of tangible - 512 516
assets
Interest received 149,977 59,310 216,623
Net cash used in investing (1,646,98 (1,130, (2,636,
activities 4) 663) 542)
Cash flows from financing activities
Proceeds from issue of share capital 16,000 673,191 8,152,8
62
Net cash used from financing 16,000 673,191 8,152,8
activities 62
Net (decrease)/increase in cash and (2,435,57 (818,66 4,526,6
cash equivalents 4) 7) 86
Cash and cash equivalents at 7,051,744 2,516,7 2,516,7
beginning of period 12 12
Exchange gain 15,607 13,761 8,346
Cash and cash equivalents at end of 4,631,777 1,711,8 7,051,7
period 06 44
The accompanying notes form an integral part of these consolidated financial
statements.
Notes to the Condensed Consolidated Half Year Financial Statements
Consolidated Half Year Financial Statements For the period ended 30 June 2008
1 Nature of Operations and General Information
African Eagle Resources plc ("African Eagle" or the "Company") is a public
limited company incorporated and domiciled in England and is listed on the
Alternative Investment Market ("AIM") of the London Stock Exchange and the
Alternative Exchange of the JSE Limited (AltX). African Eagle is a holding
company of a mineral exploration and development group of companies (the
"Group"). The principal activities of the Group are the exploration and
development of mineral deposits, especially copper, gold and nickel, in
Tanzania, Zambia and Mozambique.
African Eagle`s unaudited consolidated half year financial statements
("Financial Statements") are presented in pounds sterling (GBP), which is also
the functional currency of the parent company. The Financial Statements were
approved for issue by the Board of Directors on 25 September 2008.
2 Basis of Preparation
The Financial Statements are for the six months ended 30 June 2008. They do not
include all the information required for full annual financial statements and
should be read in conjunction with the audited consolidated financial statements
of the Group for the year ended 31 December 2007, which were prepared under
International Financial Reporting Standards ("IFRS") as adopted by the European
Union ("EU").
The Financial Statements have been prepared under the historical cost convention
except for share based payments which are valued at the date of grant.
The Directors have adopted the going concern basis in preparing the Financial
Statements and in accordance with accounting policies consistent with those set
out in the Group`s financial statements for the year ended 31 December 2007,
which were prepared in accordance with IFRS as adopted by the EU.
The comparative amounts in the Financial Statements include extracts from the
Company`s consolidated financial statements for the year ended 31 December 2007.
These extracts do not constitute statutory accounts under s240 of the Companies
Act 1985 (the "Act").
3 Share Issues
During the period to 30 June 2008, 200,000 shares were issued to satisfy share
options previously granted under the Company`s employee share option scheme.
Shares allotted in 2007 and 2008 are detailed below:
6 months to 30 June 2008 Number Share Share
Capital Premium
(GBP) (GBP)
At 1 January 2008 212,340,128 2,123,402 19,311,622
Issue of shares 200,000 2,000 14,000
Expenses on share issues - - -
At 30 June 2008 212,540,128 2,125,402 19,325,622
6 months to 30 June 2007 Number Share Share
Capital Premium
(GBP) (GBP)
At 1 January 2007 147,824,890 1,478,249 11,803,913
Issue of shares 6,209,254 62,092 613,535
Expenses on share issues - - (2,436)
At 30 June 2007 154,034,144 1,540,341 12,415,012
Year to 31 December 2007 Number Share Share
Capital Premium
(GBP) (GBP)
At 1 January 2007 147,824,890 1,478,249 11,803,913
Issue of shares 64,515,238 645,153 8,039,188
Expenses on share issues - - (531,479)
At 31 December 2007 212,340,128 2,123,402 19,311,622
4 Loss Per Share
(a) Basic loss per share
The calculation of basic loss per share is based on the loss for the period
divided by the weighted average number of shares in issue during the period. In
calculating the diluted loss per share potential ordinary shares such as share
options and warrants have not been included as they would have the effect of
decreasing the loss per share. Decreasing the loss per share would be
antidilutive.
Loss per share 6 months to 6 months to Year to
30 June 30 June 31 December
2008 2007 2007
GBP GBP GBP
Loss for the period (808,647) (444,709) (1,126,868)
Weighted average number of 212,394,524 152,144,955 172,383,883
shares in issue
Basic & diluted headline (0.4p) (0.3p) (0.7p)
loss per share
(b) Headline loss per share
Headline loss per share has been calculated in accordance with the Institute of
Investment Management and Research`s ("IIMR") Statement of Investment Practice
No.1 entitled `The Definition of Headline Earnings` and the South African
Institute of Chartered Accountants Circular 8/2007 entitled Headline Earnings.
The calculation of headline loss per share is net of tax at the UK prevailing
rate of 30% for 2007 and 28% for 2008. No diluted headline loss per share has
been calculated as it would be antidilutive by reducing the headline loss per
share.
Headline loss per share 6 months to 6 months to Year to
30 June 30 June 31 December
2008 2007 2007
GBP GBP GBP
Loss for the period (808,647) (444,709) (1,126,868)
Adjusted for:
Less profit on sale of fixed - (358) (361)
assets
Plus impairment of 60,291 30,086 92,168
exploration assets
Plus Group share of - - 2,883
associated loss - - 2,100
Plus impairment of goodwill - - 1,635
Plus impairment of available
for sale financial assets
Headline loss (Net) for the (748,355) (414,262) (1,028,443)
period
Weighted average number of 212,394,524 152,144,955 172,383,883
shares in issue
Basic & diluted headline (0.4p) (0.3p) (0.6p)
loss per share
5 Intangibles
At 30 June 2008 Goodwill on Deferred Total
consolidati Explorat
on ion
costs
GBP GBP GBP
Cost:
At 1 January 2008 103,188 8,441,85 8,545,04
4 2
Foreign currency exchange - 694,451 694,451
differences
Additions - 1,872,50 1,872,50
6 6
Impairment costs - (83,738) (83,738)
At 30 June 2008 103,188 10,925,0 11,028,2
73 61
At 30 June 2007 Goodwill on Purchase Deferred Total
consolidati d Explorat
on goodwill ion
costs
GBP GBP GBP GBP
Cost:
At 1 January 2007 103,188 3,000 7,172,86 7,279,05
9 7
Foreign currency exchange - - 430,622 430,622
differences
Additions - - 1,124,31 1,124,31
2 2
Impairment costs - - (44,008) (44,008)
At 30 June 2007 103,188 3,000 8,683,79 8,789,98
5 3
At 31 December 2007 Goodwill on Purchase Deferred Total
consolidati d Explorat
on goodwill ion
costs
GBP GBP GBP GBP
Cost:
At 1 January 2007 103,188 3,000 7,172,86 7,279,05
9 7
Foreign currency exchange - - 260,330 260,330
differences
Additions - - 2,954,34 2,954,34
2 2
Transfer to investment in - - (1,814,0 (1,814,0
associates 19) 19)
Impairment costs - (3,000) (131,668 (134,668
) )
At 31 December 2007 103,188 - 8,441,85 8,545,04
4 2
Goodwill is reviewed annually for impairment or when changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. Goodwill
on consolidation relates to the acquisition of Katanga Resources Ltd in 2002.
The goodwill is linked to the recovery of the deferred exploration costs on the
Katanga mineral licences. The directors have reviewed the Katanga deferred
exploration costs by licence in conjunction with the goodwill on consolidation
and believe the goodwill to be fairly valued.
Following the incorporation of Mkushi Copper Joint Ventures Ltd in 2007 the
Mkushi exploration licences were transferred to the joint venture company. The
Mkushi intangible asset was in turn transferred to investments under Non-current
assets in the consolidated balance sheet.
Date: 25/09/2008 17:12:01 Produced by the JSE SENS Department.
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