| Wed 6 Jun 2012, 8:00 | | AEA - African Eagle Resources plc - Preliminary announcement of audited |
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AEA
AEA
AEA - African Eagle Resources plc - Preliminary announcement of audited
financial results for the year ended 31 December 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)
PRELIMINARY ANNOUNCEMENT OF AUDITED FINANCIAL RESULTS FOR THE YEAR ENDED 31
DECEMBER 2011
6 June 2012: African Eagle Resources plc ("African Eagle" or the "Company")
(AIM: AFE; AltX: AEA) today announces its preliminary results for the year ended
31 December 2011
Dutwa Project:
* Majority of Wamangola resource upgraded to JORC indicated category
* Positive results from testwork establish atmospheric tank leaching as most
competitive project economics
* Aidan Schoonbee appointed as Dutwa Project Manager
* SGS Metallurgy of Perth selected for pilot-scale hydrometallurgical testing
programme
* Lycopodium Minerals of Perth selected as engineer to prepare the bankable
feasibility study
Corporate:
* Julian McIntyre appointed as Non-Executive Director
* Trevor Moss appointed as Chief Executive Officer
* IFC invests in the Company and becomes major shareholder
* Don Newport and Christopher Pointon appointed as Independent Non-Executive
Directors
* Placing and open offer raises GBP9.5 million
* Board restructured and Chris Pointon appointed Chairman
African Eagle`s recently appointed Chairman, Chris Pointon, said "Over the past
six months, African Eagle has transitioned from a diversified explorer into a
project development company fully focused on the development of the Dutwa nickel
project. We have confirmed that Dutwa has the size and metallurgical
characteristics to become a highly competitive nickel producer.
As part of this transition, the Board and management team have been restructured
to bring in development, operating and project finance skills and I am confident
we now have the right project team, ably supported by world class consultants.
Most of the Company`s non-core assets have been successfully spun off to free up
the Company`s management and financial resources to concentrate exclusively on
Dutwa.
The bankable feasibility study is progressing well. A resource upgrade is due
to be announced shortly and the bulk sample for the pilot plant testwork, due to
commence in August, has been shipped."
The Company also announces the publication of its 2011 Annual Report and
Financial Statements, which is being posted to shareholders today and is
available on the Company`s website: www.africaneagle.co.uk.
The information in this preliminary announcement has been extracted from the
audited financial statements for the year ended 31 December 2011 and as such,
does not contain all of the information required to be disclosed in the
financial statements prepared in accordance with IFRS.
For further information, please visit www.africaneagle.co.uk or contact:
African Eagle Resources plc
Trevor Moss, CEO
Alex Buck
+44 20 7248 6059
Canaccord Genuity Limited (NOMAD and Joint Broker)
Rob Collins or Andrew Chubb
+ 44 20 7523 8000
Ocean Equities Limited (Joint Broker)
Guy Wilkes
+44 20 7786 4370
Russell & Associates, Johannesburg
Charmane Russell or Marion Brower
+27 11 880 3924
Letter from the Chief Executive Officer
Dear Shareholders,
It is six months since I took over from my able predecessor, the Company`s
founder Mark Parker, with a mandate to lead African Eagle and to transform it
from an exploration company into a focused nickel development company.
Much has changed in that time and African Eagle is now well positioned to
develop into a mid cap base metal producer. During my short time as CEO we have
made good progress in our efforts to focus the Company`s activities towards the
timely development of our flagship Dutwa nickel project in Tanzania.
From my first day I have sought to extract the maximum benefit from the inherent
strengths of the project - its location in a mining friendly and stable
democratic country, its exceptionally favourable metallurgy, the favourable
location of the resources on the tops of two hills and the skills of the
Tanzanians who have already ably assisted in the considerable development
efforts so far.
In these past six months we have thoughtfully assembled a world-class team of
dedicated professionals who are working in an integrated way to rapidly advance
the development of Dutwa through old-fashioned common sense, hard work and
teamwork. Engineers, social and environmental specialists, brokers, JV partners,
investors and all levels of Company`s management and staff are working closely
together with a single collective objective. We have much to accomplish and have
set a bold target for ourselves. The project deserves the best we can muster and
we have mustered the best.
Trevor A. Moss
CEO
Chairman`s Statement*
Dear Shareholders
In my Statement last year, I reported that we were taking steps towards the pre-
feasibility stage of the Dutwa project, and throughout 2011, we continued work
towards that goal. On his arrival at the Company, Trevor conducted a thorough
review, and recommended that the project was robust enough to move directly to a
bankable feasibility study (BFS).
We can look back on 2011 as the year when African Eagle changed from being a
mineral explorer to a mine developer. Resource drilling, metallurgical test work
and economic analysis continued to demonstrate the value of our Dutwa Nickel
Project.
We have made key board and management changes, to give African Eagle the
capabilities needed to develop Dutwa. It has been a particular pleasure for me
to have welcomed Trevor Moss as our new Chief Executive Officer, Andrew
Robertson as Finance Director, Julian McIntyre as a Non-Executive Director,
Aidan Schoonbee as Dutwa Project Manager and (just after the year end), Don
Newport and Dr. Chris Pointon as Independent Non-Executive Directors.
Key Appointments
On the finance front, Andrew Robertson joined us as Finance Director in
December, taking over from Bevan Metcalf. Andrew is a Chartered Accountant with
35 years experience and prior to joining us, was Chief Financial Officer for
several TSX listed Canadian gold mine operators and developers. Andrew has
extensive experience in capital and debt funding and in setting up the financial
systems which will be necessary for a producing mine in Tanzania. In May 2011,
Julian McIntyre, a founder of MWB Capital, joined the Board as a Non-Executive
Director after MWB bought an 11% stake in African Eagle. Julian brings a City
background and the skills of a successful entrepreneur.
Early in 2012, the Board further enhanced its base of expertise by appointing Dr
Chris Pointon and Mr Don Newport as independent Non-Executive Directors. Don and
Chris are two of the best qualified people in our industry and we count
ourselves extremely lucky to attract them. Chris worked for Rio Tinto, Billiton
and BHP Billiton, where he headed the Stainless Steel Materials Division,
building it into one of the world`s largest nickel and ferrochrome producers. He
was a member of BHP Billiton`s Executive Committee from the Company`s formation
in 2001 until his retirement in 2006.
With 23 years of sector-specific experience, Don is a veteran of the London
mining finance industry who, after heading up the Metals & Mining Team at
Barclays Bank, went on to lead the Global Mining Finance team at Standard Bank.
In 2008, Don was honoured with the Mining Journal`s Lifetime Achievement Award
for "an outstanding contribution to the advancement of the international mining
industry".
A year ago, I reported that Mark Parker, our Managing Director and African
Eagle`s founder, had made the pragmatic decision to step aside as soon as the
Board found the right person to take over as Chief Executive Officer and drive
the development of Dutwa. We were delighted when Trevor Moss, a seasoned
professional engineer with 30 years experience in the mining industry, agreed to
lead the team. Trevor, who has worked for such major groups as Barrick Gold,
Cyprus Amax and Newmont Mining, was attracted to African Eagle by the
opportunity to build Tanzania`s first industrial metals mine. His most recent
role, which particularly attracted us, was as Chief Operating Officer of Nevsun
Resources, for whom he successfully brought the Bisha gold mine in Eritrea into
production, below budget and on time.
In addition to these important additions to our Board, in January we appointed
Mr Aidan Schoonbee as the Project Manager for the development of Dutwa. Aidan
has more than 20 years of experience in the African mining industry and has
managed projects from feasibility study through to operation. Aidan will work
closely with Dr. Chad Czerny (Project Manager of Metallurgy), a world authority
on nickel laterite processing who is now overseeing metallurgical test work and
process design in Australia.
IFC Subscription
At the end of the year, we were very pleased to welcome the International
Finance Corporation (IFC), the commercial investment arm of the World Bank
Group, as a leading investor and strategic long term partner. The IFC carried
out detailed due diligence on the Dutwa project, which covered not only
technical and legal matters but also environmental and social aspects. The
latter are criteria which the Board believes are critical to the responsible
development of mining operations, a view shared by the Government of Tanzania.
We will be working with the IFC and the Government of Tanzania to ensure the
Dutwa project is developed in full compliance with the Equator Principles.
Technical Progress
2011 was a year of good progress on the Dutwa project. I refer you to our
Operational Review for the details. In my Statement last year, I reported that
we were taking steps towards the pre-feasibility stage of the Dutwa project, and
throughout 2011, we continued work towards that goal. On his arrival with the
Company, Trevor conducted a thorough review, and recommended that the project
was robust enough to dispense with a formal pre-feasibility report and move
directly to a bankable feasibility study (BFS). The Board agreed with this
judgement, which will avoid repetition, save management time and costs, and lead
to faster project development. We are confident that the deep experience of
Trevor and his team will enable us to manage the risks of fast tracking the
project.
To this end in early 2012 we have appointed the key contractors for the
completion of the BFS all located in Perth Western Australia, the global heart
of nickel laterite expertise, namely Lycopodium as study engineer, SGS Oretest
for the pilot plant, Snowden as resource geologists and mine planners and Knight
Pie?sold as geotechnical engineer. These appointments followed the 2011
engagement of both Citrus Partners of the UK and MTL Consulting a Tanzanian
consultancy for preparation of the environmental and social impact study.
Legacy Projects
Although we didn`t reach the end 2011 target to spin out or divest our Zambian
copper assets, as anticipated in my statement last year, this is being actively
progressed at the time of writing. Chris Davies moved over to be interim CEO of
Cobra Copper and resigned from the Board of African Eagle, I would like to thank
him for his 11 years service as Operations Director. At the Miyabi gold project
in Tanzania, our joint venture partner, ASX listed Brightstar Resources, has
achieved encouraging drilling results. BrightStar is earning a 75% interest from
African Eagle by funding and managing the project through to a Feasibility
Study.
Instead of its planned listing on the ASX, Jacana Resources Limited was
successfully sold into ASX listed Syrah Resources Limited. African Eagle`s
agreement with Jacana to transfer a number of licences in Mozambique, Tanzania
and Zambia, mainly for uranium exploration, was fulfilled by Syrah and the
Company received GBP0.47 million out of a total of about GBP0.64 million
expected under the transaction, with the balance expected to be received later
this year.
Financing
In January 2011, we took advantage of the strong demand for our shares and
placed 23.86 million shares at 15.5p to raise gross proceeds of GBP3.7 million.
With the market weakness that share price momentum was not maintained, however,
and the placing price for the IFC subscription agreed in November was 6.8p for a
total of GBP3.1 million. After receiving that sum in February this year, we had
GBP4.6 million in the bank.
In April 2012 we raised GBP9.5 million to secure a significant contribution to
the funding for the BFS through a placing with existing and new shareholders,
and from an open offer.
The Year Ahead
Challenges lie ahead to raise capital for the development of Dutwa but banks,
government lending agencies and potential off-take customers are already making
encouraging approaches.
Our management and Board will seek the best advice, capital structure and
optimal pricing to fund this project. The appointment of our new CEO signalled a
significant acceleration of progress on the Dutwa project and I can assure you
that there is much work going on in Tanzania, Western Australia and London,
towards a successful completion of a BFS to be published in the first quarter of
2013.
It is the Board`s intention to appoint an Advisor to work with us on the project
finance for Dutwa and we will maintain an aggressive timetable to finance and
construct Dutwa and bring it into production by the end of 2015.
The new direction that the Company is taking requires a fresh Board of Directors
and as such, Mark Parker, Geoffrey Cooper and I have resigned as directors.
Great thanks must go to them all for their hard work, commitment and financial
support over the past decade. Particular thanks go to Mark Parker, founder of
the Company who recognised the great potential of Dutwa.
I welcome all our new Directors to the Board as our Company takes its next steps
towards becoming a nickel mine developer and I would like to thank all our
employees and managers for their hard work and commitment during this period of
change.
Euan Worthington
Chairman
*(Covering the period 1 January 2011 - 24 April 2012)
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2011
Year to 31 Year to 31
December December
2011 2010
GBP GBP
Depreciation expense (30,511) (41,661)
Employee benefits expense (677,784) (588,557)
Impairment of deferred exploration expenditure (1,640,836) (57,498)
Share of loss in associate (9,116) (2,337)
Other expenses (819,479) (469,169)
Other income - 120,000
Operating loss (3,177,726) (1,039,222)
Finance income:
Bank interest receivable 10,117 28,182
Foreign exchange gain/(loss) on translation 207,485 (23,490)
Loss before tax (2,960,124) (1,034,530)
Income tax expense - -
Loss attributable to equity owners for the year (2,960,124) (1,034,530)
Other comprehensive income/(loss):
Exchange differences on translation of foreign (233,131) 182,155
operations
Available for sale investments:
Fair value adjustment (170,400) 210,400
Other comprehensive (loss)/income for the year (403,531) 392,555
Total comprehensive loss attributable to equity (3,363,655) (641,975)
owners for the year
Loss per share:
Basic and diluted loss per share from total and (0.7p) (0.3p)
continuing operations
Headline loss per share from total and (0.3p) (0.3p)
continuing operations
Consolidated Statement of Financial Position
For the year ended 31 December 2011
31 December 31 December
2011 2010
GBP GBP
ASSETS
Non-current assets
Property, plant and equipment 81,259 43,578
Available for sale investments 160,000 330,400
Investment in associates 2,677,921 2,564,515
Investment in joint ventures 32,993 33,664
Deferred exploration costs 11,126,684 11,176,584
Total non-current assets 14,078,857 14,148,741
Current assets
Cash and cash equivalents 2,285,347 3,170,709
Other receivables - Short term 509,556 451,239
2,794,903 3,621,948
Exploration assets held for sale 2,465,518 1,098,843
Total current assets 5,260,421 4,720,791
Total assets 19,339,278 18,869,532
LIABILITIES
Current liabilities
Other payables (385,494) (395,253)
Total liabilities (385,494) (395,253)
Net assets 18,953,784 18,474,279
EQUITY
Equity attributable to owners of the parent:
Share capital 4,095,862 3,847,622
Share premium account 27,201,169 23,888,084
Merger reserve 705,723 705,723
Available for sale revaluation reserve 40,000 210,400
Foreign currency reserve (190,266) 42,865
Retained losses (12,898,704) (10,220,415)
Total equity 18,953,784 18,474,279
Consolidated Statement of Changes in Equity
For the year ended 31 December 2011
Share Share Merger Available
capital premium reserve for sale
account revaluation
reserve
GBP GBP GBP GBP
Balance at 31 December 2,967,622 21,678,832 705,723 -
2009
Loss for year - - - -
Other Comprehensive
income/(loss):
Exchange differences on - - - -
translation of foreign
operations
Available for sale - - - 210,400
investments - fair value
adjustment
Total comprehensive - - - 210,400
income/(loss) for the year
Transactions with equity
owners for 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 3,847,622 23,888,084 705,723 210,400
2010
Loss for year - - - -
Other Comprehensive
income/(loss):
Exchange differences on - - - -
translation of foreign
operations
Available for sale - - - (170,400)
investments - fair value
adjustment
Total comprehensive - - - (170,400)
income/(loss) for the year
Transactions with equity
owners for 2011:
Issue of share capital 248,240 3,512,720 - -
Share issue costs - (199,635) - -
Share-based payments - - - -
Total transactions with 248,240 3,313,085 - -
equity owners
Balance at 31 December 4,095,862 27,201,169 705,723 40,000
2011
Foreign Retained Total
currency losses equity
reserve
GBP GBP GBP
Balance at 31 December (139,290) (9,422,679) 15,790,208
2009
Loss for year - (1,034,530) (1,034,530)
Other Comprehensive
income/(loss):
Exchange differences on 182,155 - 182,155
translation of foreign
operations
Available for sale - - 210,400
investments - fair value
adjustment
Total comprehensive 182,155 (1,034,530) (641,975)
income/(loss) for the year
Transactions with equity
owners for 2010:
Issue of share capital - - 3,300,000
Share issue costs - - (210,748)
Share-based payments - 236,794 236,794
Total transactions with - 236,794 3,326,046
equity owners
Balance at 31 December 42,865 (10,220,415) 18,474,279
2010
Loss for year - (2,960,124) (2,960,124)
Other Comprehensive
income/(loss):
Exchange differences on (233,131) - (233,131)
translation of foreign
operations
Available for sale - - (170,400)
investments - fair value
adjustment
Total comprehensive (233,131) (2,960,124) (3,363,655)
income/(loss) for the year
Transactions with equity
owners for 2011:
Issue of share capital - - 3,760,960
Share issue costs - - (199,635)
Share-based payments - 281,835 281,835
Total transactions with - 281,835 3,843,160
equity owners
Balance at 31 December (190,266) (12,898,704) 18,953,784
2011
Consolidated Statement of Cash Flows
For the year ended 31 December 2011
Year to 31 Year to 31
December 2011 December 2010
GBP GBP
Operating activities
Loss before taxation (2,960,124) (1,034,530)
Adjustments for non-cash items:
Depreciation 30,511 41,661
Exchange loss/(gain) (3,953) (1,115)
Loss on disposal of property, plant and 1,082 423
equipment
Impairment of deferred exploration 1,640,836 57,498
expenditure
Share-based payments 281,835 236,794
Share of loss in associate 9,116 2,337
Share of joint venture loss 680 975
Recognition of investment in a listed - (120,000)
company
Other cash flows
Interest received (10,117) (28,182)
(Increase)/decrease in other receivables (59,300) (326,205)
Increase in other payables 69,783 2,043
Cash flows from operating activities (999,651) (1,168,301)
Investing activities
Payments to acquire property, plant and (69,828) (1,961)
equipment
Deferred exploration expenditure (3,137,095) (1,800,872)
Interest received 10,117 28,182
Investments in associates (248,740) (270,436)
Cash flows used in investing activities (3,445,546) (2,045,087)
Financing activities
Proceeds from issue of share capital 3,561,325 3,089,252
Cash flows from financing activities 3,561,325 3,089,252
Net (decrease)/increase in cash and cash (883,872) (124,136)
equivalents
Cash and cash equivalents at beginning of 3,170,709 3,293,014
year
Exchange (loss)/gain (1,490) 1,831
Cash and cash equivalents at end of year 2,285,347 3,170,709
Basis of Preparation
The financial information set out above do not constitute statutory accounts as
defined in Section 435 of the Companies Act 2006 in respect of the 2011 Accounts
but have been extracted from the Group`s 2011 audited statutory financial
statements. The auditor`s report on the statutory financial statements for the
years ended 31 December 2011 and 2010 were unqualified and did not contain any
statement under Section 498(2) or (3) of the Companies Act 2006.
Sponsor
Merchantec Capital
6 June 2012
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