| Thu 29 Sep 2011, 8:00 | | AEA - African Eagle Resources plc - Review of progress and results for the |
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AEA
AEA
AEA - African Eagle Resources plc - Review of progress and results for the
six months ended 30 June 2011
African Eagle Resources plc
Incorporated in England and Wales
(Registration number 3912362)
(AIM share code: AFE AIM ISIN: GB0003394813)
(JSE share code: AEA JSE ISIN: GB0003394813)
REVIEW OF PROGRESS AND RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2011
African Eagle Resources plc ("African Eagle" or the "Company", ticker AIM:
AFE, AltX: AEA) announces progress made so far in 2011 together with its
financial results for the half year to 30 June 2011.
African Eagle`s Half Year Report for the period ended 30 June 2011 can be
viewed at:
http://www.africaneagle.co.uk/downloads/InterimFinancialStatements30June2011.
pdf
Highlights - six months to 30 June 2011
Operations - Dutwa
- JORC compliant resource upgraded to 98.6 million tonnes
- Geotechnical studies for pre-feasibility study ("PFS") completed and
mining studies delivered
- Metallurgical and other testwork well advanced
- Identified significant capital and operating cost savings
- Bulk ore sample 2 drilling completed ahead of schedule
Financials
- The loss after tax for the 6 months to 30 June 2011 at GBP712,583 is
GBP324,752 higher than for the corresponding period last year. This
variance is the result of: a one-off gain in 2010 relating to the
recognition of shares in Kibo Mining (GBP120,000); higher other
expenditure including business development, recruitment, legal and
professional fees; and a higher share based option charge
- Cash in hand at 30 June of GBP4.7 million
- Net assets increased by 34% to GBP20.8 million
Corporate
- Raised GBP3.7 million (before expenses) in January for PFS work at Dutwa
- Cobra Copper Limited ("Cobra Copper") incorporated as Zambian copper
spinout
- Canaccord Genuity Limited appointed as Nominated Adviser and Broker
- Julian McIntyre joins the board representing MWB Capital, the Company`s
largest shareholder
Since 30 June 2011
- Trevor Moss appointed CEO
- Dutwa mineralogical results suggest amenability to upgrading and cost
savings
- Drilling commenced to further define Ngasamo nickel resource
- Additional gold mineralised system discovered by our partner at Miyabi
The Company`s Chairman, Euan Worthington commented "Since we discovered Dutwa
in 2008, we have made excellent progress. So far this year, we have upgraded
half the resource to JORC Indicated category, delivered an updated financial
model, completed drilling for the second bulk ore sample and received the
mining geotechnical report. Our metallurgical process tests are well
advanced and we are busy drilling the final resource programme. These studies
have shown us several ways which should cut Dutwa`s operating costs and
improve the economics."
For further information, see the Company`s web site www.africaneagle.co.uk or
contact one of the following:
African Eagle Resources plc
Mark Parker (Managing Director)
Euan Worthington (Chairman)
Sandra Spencer (PR Consultant)
+44 20 7248 6059
+44 77 5640 6899
+44 75 1535 7790
Canaccord Genuity Limited
Andrew Chubb
Bhavesh Patel
+44 20 7050 6500
Ocean Equities Limited
Guy Wilkes
+44 20 7786 4370
Russell & Associates, Johannesburg
Charmane Russell
Marion Brower
+27 11 8803924
+27 82 8928052
CHAIRMAN`S STATEMENT
Dear Shareholder,
It seems like it was only yesterday that I was writing my statement for the
2010 annual report, but I am pleased to report that we have been making
excellent progress, especially towards the PFS on our headline Dutwa project.
Our key achievements since the year end have been:
- Appointment of a new CEO to take Dutwa through to production;
- Geotechnical studies for PFS completed;
- Progress on metallurgical and other testwork;
- Identifying significant capital and operating cost savings;
- Drilling completed for Bulk ore sample 2;
- In January we raised GBP3.7 million for PFS work; and
- Cobra Copper incorporated as Zambian copper spinout.
Board Reorganisation
As we announced earlier this month, we are very pleased to have secured the
services of Trevor Moss to lead the Company and steer development of our
Dutwa Nickel Mine. Trevor has extensive experience of mine development, with
his most recent success being the building of Nevsun Resources` Bisha Project
in Eritrea. Trevor led the team that was responsible for the construction,
project management, completion and successful start up of the Bisha mine
which was achieved under budget and ahead of schedule in a challenging
operational environment.
Mark Parker will remain on the Board of AFE and once he has handed over the
reins to Trevor, he will become Director of Corporate Development,
responsible for overseeing our joint ventures and managing and developing new
nickel opportunities.
We have also been interviewing candidates for a Finance Director as successor
to Bevan Metcalf. Working with Trevor, the new FD will manage the project
financing for the Dutwa development and an announcement will be made in due
course.
In May 2011, Mr Julian McIntyre joined the Board in a non-executive capacity.
A successful entrepreneur and investor, Julian is founder and principal of
MWB Capital, a private investment company which has an 11.11% shareholding in
African Eagle.
Dutwa Nickel Project
We have seen exceptional progress at Dutwa from our discovery in 2008, via a
scoping study in mid-2009 and our resource update to almost 100 million
tonnes in January 2011, to the pit optimisation and financial model announced
this March - most mines take more than 10 years from discovery to production.
Now we are already well advanced on our feasibility study, which we hope to
complete around the end of next year. We are currently doing a suite of lab
tests on our first 12 tonne bulk sample to work out in detail the best way to
process the ore. Additionally, we are drilling to upgrade the whole deposit
to the JORC indicated category required for the definitive feasibility study
("DFS") and have recently received the rock property tests results and
geotechnical study for the mining engineering and pit design. Our second 15
tonne bulk ore sample is ready to be shipped for testing once analysis of the
first bulk sample has been completed. Studies of transport options and
reagents are underway and the study of social and environmental aspects of
the project will commence shortly.
One of the more exciting findings recently comes from a study by a team led
by renowned Professor Richard Herrington at the Natural History Museum in
London. This showed that the nickel bearing minerals in the ores in the
Wamangola and Ngasamo deposits are mostly fine grained and can be upgraded by
simple mechanical processes. Lab tests in Perth have since confirmed this.
Upgrading would allow more efficient leaching of the ore and lower acid
consumption, which in turn reduces the amount of sulphur to be transported
from coastal ports and lowers the required tonnages of neutralising agents,
lowering operating costs.
The financial modelling completed in March indicated that the cash cost of
production from Dutwa is likely to be very competitive and that the capital
costs to develop Dutwa will be among the world`s lowest for a nickel laterite
leach operation. Nonetheless, we are working hard to find ways to reduce
these costs further, especially for reagents (sulphur and alkalis) and
transport, which together account for three quarters of expected operating
costs. The upgrading mentioned above is just one of several promising ideas
African Eagle is pursuing in this area.
Key news expected over the coming months will include the JORC resource
upgrade and the revised pit optimisation resulting from it, the metallurgical
test results and the engineering design work. As these results become
available, we will feed them into the engineering design and financial model,
leading to a PFS report expected around the end of the year and a DFS at the
end of 2012.
Cobra Copper
As I noted in April 2011, we plan to raise private equity, accelerate the
work programme and then list shares in a new company holding our Zambian
copper assets. We have called this company Cobra Copper, recruited a CFO and
a new country manager and discussed the investment with a number of parties.
Despite recent turmoil in financial markets, the outlook for the copper price
buoyed by demand from China, is very positive.
Miyabi Gold Project
BrightStar Resources Limited ("BrightStar"), our partners in the Miyabi Gold
Project in Tanzania, has wasted no time getting down to work testing
extensions to the 520,000 oz JORC resource. In mid-August, BrightStar
announced that it had completed a 400-hole, 11,000m RAB drilling programme.
The drilling outlined mineralised shear zones at the granite/greenstone
contact and in splays off the contact, with good potential to host additional
gold resources. Not all the assays results have been received yet, but
intersections to date included:
- 9m @ 1.82g/t gold from 21m; and
- 6m @ 1.14 g/t gold from 18m including 3m at 2.1 g/t.
The holes were shallow, averaging 27m, and will now be followed up by deeper
reverse circulation (RC) drilling. Higher grades are expected below the
depleted oxide zone, as seen elsewhere on the project.
Plans and Milestones
Our key objective remains to complete the DFS around the end of 2012.
Milestones for the coming months are:
- Upgrade the JORC resources to indicated category;
- Complete bench-scale testwork and decide on the best processing route;
- Update the optimisation mine plan and economic model;
- Prepare PFS report;
- Begin pilot scale testwork on bulk ore sample 2; and
- Secure funding for Cobra Copper.
Euan Worthington
Chairman
African Eagle Resources plc
Condensed Interim Consolidated Statement of Comprehensive Income
For the six months ended 30 June 2011
6 months to 6 months to Year to
30 June 30 June 31 December
2011 2010 2010
Note Unaudited Unaudited Audited
GBP GBP GBP
Depreciation expense (15,961) (21,062) (41,661)
Employee benefits expense (326,004) (211,274) (588,557)
Impairment of deferred (47,017) (14,337) (57,498)
exploration expenditure
Share of loss in associates (1,873) (4,920) (2,337)
Other expenses (354,104) (256,822) (469,169)
Other income 5 - 120,000 120,000
Operating loss (744,959) (388,415) (1,039,222)
Finance income:
Bank interest receivable 7,168 19,217 28,182
Foreign exchange gain/(loss) 25,208 (18,633) (23,490)
Loss before tax (712,583) (387,831) (1,034,530)
Income tax expense - - -
Loss attributable to equity (712,583) (387,831) (1,034,530)
owners for the period
Other comprehensive
(loss)/income:
Exchange differences on (536,618) 198,393 182,155
translation of foreign operations
Available for sale investments: (110,400) 20,000 210,400
Fair value adjustment available
for sale investments
Other comprehensive (loss)/income (647,018) 218,393 392,555
for the period
Total comprehensive loss (1,359,601) (169,438) (641,975)
attributable to equity owners for
the period
Loss per share:
Basic/diluted loss per share from 3 (0.2p) (0.1p) (0.3p)
total and continuing operations
Headline/diluted loss per share 3 (0.2p) (0.2p) (0.3p)
from total and continuing
operations
All operations are continuing.
The accompanying notes form an integral part of these condensed interim
consolidated financial statements.
African Eagle Resources plc
Condensed Interim Consolidated Statement of Financial Position
As at 30 June 2011
30 June 2011 30 June 2010 31 December
Unaudited Unaudited 2010
Note Audited
GBP GBP GBP
ASSETS
Non-current assets
Property, plant and equipment 34,468 64,753 43,578
Available for sale investments 5 220,000 140,000 330,400
Investment in associates 2,870,698 2,318,401 2,564,515
Investment in joint ventures 33,300 35,054 33,664
Deferred exploration costs 4 11,761,144 10,562,228 11,176,584
Total non-current assets 14,919,610 13,120,436 14,148,741
Current assets
Cash and cash equivalents 4,726,587 1,726,671 3,170,709
Other receivables 635,751 253,422 451,239
Exploration assets held for 6 1,078,634 882,148 1,098,843
sale
Total current assets 6,440,972 2,862,241 4,720,791
Total assets 21,360,582 15,982,677 18,869,532
LIABILITIES
Current liabilities
Other payables (562,975) (326,145) (395,253)
Total liabilities (562,975) (326,145) (395,253)
Net assets 20,797,607 15,656,532 18,474,279
EQUITY
Equity attributable to owners
of the parent:
Share capital 4,093,472 2,967,622 3,847,622
Share premium account 27,188,181 21,678,832 23,888,084
Merger reserve 705,723 705,723 705,723
Available for sale revaluation 100,000 20,000 210,400
reserve
Foreign currency reserve (493,753) 59,103 42,865
Retained losses (10,796,016) (9,774,748) (10,220,415)
Total equity 20,797,607 15,656,532 18,474,279
The accompanying notes form an integral part of these condensed interim
consolidated financial statements.
African Eagle Resources plc
Condensed Interim Consolidated Statement of Cash Flows
For the six months ended 30 June 2011
6 months 6 months to Year to 31
to 30 June 30 June 2010 December
2011 Unaudited 2010
Unaudited Audited
Notes GBP GBP GBP
Operating activities
Loss before taxation (712,583) (387,831) (1,034,530)
Adjustments for:
Depreciation 15,961 21,062 41,661
Exchange gain (953) (391) (1,115)
Loss on disposal of property, - 238 423
plant and equipment
Interest received (7,168) (19,217) (28,182)
Impairment of deferred 47,017 14,337 57,498
exploration expenditure
Share-based payments 136,982 35,762 236,794
Share of loss in associate 1,873 4,920 2,337
venture
Increase in other receivables (196,800) (128,027) (326,205)
Increase in other payables 74,794 24,523 2,043
Share of joint venture 368 (460) 975
loss/(gain)
Recognition of investment in 5 - (120,000) (120,000)
a listed company
Cash flows from operating (640,509) (555,084) (1,168,301)
activities
Investing activities
Payments to acquire property, (8,014) (1,467) (1,961)
plant and equipment
Payments for deferred (940,115) (911,600) (1,800,872)
exploration expenditure
Interest received 7,168 19,217 28,182
Investments in associates (400,987) (119,935) (270,436)
Cash flows used in investing (1,341,948) (1,013,785) (2,045,087)
activities
Financing activities
Proceeds from issue of share 3,545,947 - 3,089,252
capital (net of issue costs)
Cash flows from financing 3,545,947 - 3,089,252
activities
Net increase/(decrease) in 1,563,490 (1,568,869) (124,136)
cash and cash equivalents
Cash and cash equivalents at 3,170,709 3,293,014 3,293,014
beginning of year
Exchange gain/(loss) (7,612) 2,526 1,831
Cash and cash equivalents at 4,726,587 1,726,671 3,170,709
end of year
The accompanying notes form an integral part of these condensed interim
consolidated financial statements.
African Eagle Resources plc
Condensed Interim Consolidated Statement of Changes in Equity
For the six months ended 30 June 2011
Share Share Merger Available
capital premium reserve for sale
account revaluation
reserve
GBP GBP GBP GBP
Balance at 1 January 2010 2,967,622 21,678,832 705,723 -
Loss for period - - - -
Exchange differences on - - - -
translation of foreign
operations
Available for sale - - - 20,000
investments
Total comprehensive loss for - - - 20,000
the period
Transactions with equity
owners for the first half of
2010:
Share based payments - - - -
Total transactions with - - - -
equity owners
Balance at 30 June 2010 2,967,622 21,678,832 705,723 20,000
Loss for period - - - -
Exchange differences on - - - -
translation of foreign
operations
Available for sale - - - 190,400
investments
Total comprehensive loss for - - - 190,400
the period
Transactions with equity
owners for the second half of
2010:
Issue of share capital 880,000 2,420,000 - -
Share issue costs - (210,748) - -
Share based payments - - - -
Total transactions with 880,000 2,209,252 - -
equity owners
Balance at 31 December 2010 3,847,622 23,888,084 705,723 210,400
Loss for period - - - -
Exchange differences on - - - -
translation of foreign
operations
Available for sale - - - (110,400)
investments
Total comprehensive loss for - - - (110,400)
the period
Transactions with equity
owners for the first half of
2011:
Issue of share capital 245,850 3,499,575 - -
Share issue costs - (199,478) - -
Share based payments - - - -
Total transactions with 245,850 3,300,097 - -
equity owners
Balance at 30 June 2011 4,093,472 27,188,181 705,723 100,000
African Eagle Resources plc
Condensed Interim Consolidated Statement of Changes in Equity (continued)
For the six months ended 30 June 2011
Foreign Retained Total
currency losses attributable
reserve to
owners
Unaudited
GBP GBP GBP
Balance at 1 January 2010 (139,290) (9,422,679) 15,790,208
Loss for period - (387,831) (387,831)
Exchange differences on translation 198,393 - 198,393
of foreign operations
Available for sale investments - - 20,000
Total comprehensive loss for the 198,393 (387,831) (169,438)
period
Transactions with equity owners for
the first half of 2010:
Share based payments - 35,762 35,762
Total transactions with equity - 35,762 35,762
owners
Balance at 30 June 2010 59,103 (9,774,748) 15,656,532
Loss for period - (646,699) (646,699)
Exchange differences on translation (16,238) - (16,238)
of foreign operations
Available for sale investments - - 190,400
Total comprehensive loss for the (16,238) (646,699) (472,537)
period
Transactions with equity owners for
the second half of 2010:
Issue of share capital - - 3,300,000
Share issue costs - - (210,748)
Share based payments - 201,032 201,032
Total transactions with equity - 201,032 3,290,284
owners
Balance at 31 December 2010 42,865 (10,220,415) 18,474,279
Loss for period - (712,583) (712,583)
Exchange differences on translation (536,618) - (536,618)
of foreign operations
Available for sale investments - - (110,400)
Total comprehensive loss for the (536,618) (712,583) (1,359,601)
period
Transactions with equity owners for
the first half of 2011:
Issue of share capital - - 3,745,425
Share issue costs - - (199,478)
Share based payments - 136,982 136,982
Total transactions with equity - 136,982 3,682,929
owners
Balance at 30 June 2011 (493,753) (10,796,016) 20,797,607
The accompanying notes form an integral part of these condensed interim
consolidated financial statements.
African Eagle Resources plc
Notes to the Condensed Interim Consolidated Financial Statements
For the six months ended 30 June 2011
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
AIM market of the London Stock Exchange and the Alternative Exchange of the
Johannesburg Stock Exchange Limited (AltX). African Eagle is a holding
company of a mineral exploration and development group of companies (the
"Group"). The Group is focused on becoming a nickel producer and is currently
undertaking a pre-feasibility study on its Dutwa Nickel project in Tanzania.
The Company has prepared its unaudited condensed consolidated financial
statements on a going concern basis which assumes that the Company will be
able to realise assets and discharge liabilities in the normal course of
business. At June 30, 2011 the Company had cash and cash equivalents of
GBP4.7 million. The directors believe that the current funds will be
sufficient to finance the completion of the PFS and general working capital.
African Eagle`s unaudited condensed 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 26 September
2011.
2 Statement of Compliance and basis of preparation
The Financial Statements are for the six months ended 30 June 2011. 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 2010, which were
prepared under International Financial Reporting Standards ("IFRS") as
adopted by the European Union ("EU").
The financial information is prepared under the historical cost convention
and in accordance with the recognition and measurement principles contained
within IFRS as endorsed 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
2010. These extracts do not constitute statutory accounts within the meaning
of Section 435 of the Companies Act 2006.
3 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 anti-dilutive.
Loss per share 30 June 30 June 31 December
2011 2010 2010
GBP GBP GBP
Loss for the period (712,583) (387,831) (1,034,530)
Weighted average number of 405,960,448 296,762,128 318,942,950
shares in issue
Basic & diluted headline (0.2p) (0.1p) (0.3p)
loss per share
African Eagle Resources plc
Notes to the Condensed Interim Consolidated Financial Statements
For the six months ended 30 June 2011
(b) Headline loss per share
Headline loss per share has been calculated in accordance with the South
African Institute of Chartered Accountants Circular 3/2009 - Headline
Earnings. Circular 3/2009 is effective for interim and/or annual financial
periods ending on or after 31 August 2009.
The calculation of headline loss per share is based on the headline loss for
the year divided by the weighted average number of shares in issue during the
year. No diluted headline loss per share has been calculated as it would be
antidilutive by reducing the headline loss per share.
Headline Loss
30 June 30 June 31 December
2011 2010 2010
GBP GBP GBP
Loss for the period (712,583) (387,831) (1,034,530)
Adjusted for:
Plus loss on sale of fixed assets - 238 423
Plus impairment of deferred 47,017 14,337 57,498
exploration assets
Plus Group share of associated 1,873 4,920 2,337
loss
Plus/(Less) Group share of Joint 368 (460) 975
Venture
Less Recognition of investment in - (120,000) (120,000)
a listed company
Headline loss (663,325) (488,796) (1,093,297)
Weighted average number of shares in 405,960,448 296,762,128 318,942,950
issue
Basic and undiluted headline loss (0.2p) (0.2p) (0.3p)
per share
4 Deferred Exploration
30 June 30 June 31 December
2011 2010 2010
GBP GBP GBP
Cost:
At 1 January 11,176,584 10,261,104 10,261,104
Foreign currency exchange (387,441) 308,119 201,181
differences
Additions 1,019,018 889,490 1,870,640
Assets held for sale - (882,148) (1,098,843)
Impairment charge (47,017) (14,337) (57,498)
Balance at the period end 11,761,144 10,562,228 11,176,584
African Eagle Resources plc
Notes to the Condensed Interim Consolidated Financial Statements
For the six months ended 30 June 2011
5 Available for sale investments
30 June 30 June 31
December
2011 2010 2010
GBP GBP GBP
Cost:
Balance brought forward 330,400 - -
Investments during the period - 120,000 120,000
Adjustment to fair value (110,400) 20,000 210,400
Balance at the period end 220,000 140,000 330,400
Investment in listed companies at 30 June 2011 represents the Company`s 2.12%
interest in Kibo Mining, a AIM listed explorer (ticker: KIBO). This
investment was received in respect of compensation arising from the
termination of a joint venture between the Company and Sloane Developments
Limited (a wholly owned subsidiary of Kibo Mining). Available for sale assets
in the 30 June 2010 Accounts, included the Igurubi gold project in Tanzania
(GBP882,148), which has been reclassified as assets held for sale.
6 Assets held for sale
30 June 30 June 31
December
2011 2010 2010
GBP GBP GBP
Cost:
Balance brought forward 1,098,843 - -
Foreign currency exchange (loss)/gain (37,225) - -
Transfer from deferred exploration - 882,148 1,098,843
costs
Additions 17,016 - -
Balance at the period end 1,078,634 882,148 1,098,843
This relates to African Eagle`s Igurubi gold project in Tanzania and uranium
projects in Tanzania, Zambia and Mozambique. The Company has agreed terms for
Peak Resources (Ticker: ASX: PEK) to acquire the Company`s 75% interest in
Igurubi. The delay in completing the deal is down to non-receipt of the
licence due to administrative delays at the Ministry of Mines. In November
2010 the Company announced it had vended its uranium division to Jacana
Resources Limited a privately owned Australian company in return for cash and
shares. Jacana is progressing with its due diligence. An update on both
agreements is expected shortly.
7 Events after the balance sheet date
On 1 July 2011 the Company announced that employees had exercised 239,000
share options at an exercise price of 6.5 pence.
On 1 August 2011 the Company announced that it had granted 4,996,000 share
options to employees at an exercise price of 10 pence, being 19.3% above the
closing price of the Company`s shares on 29 July 2011. None of the options
were granted to directors.
Sponsor
Merchantec Capital
29 September 2011
Date: 29/09/2011 08:00:38 Produced by the JSE SENS Department.
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