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2009-09-25 08:01
African Eagle Resources PLC - REVIEW OF PROGRESS AND RESULTS FOR THE HALF YEAR ENDED 30 JUNE 2009 |
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REVIEW OF PROGRESS AND RESULTS FOR THE HALF YEAR ENDED 30 JUNE 2009
Half Year Results 25 September 2009
REVIEW OF PROGRESS AND RESULTS FOR THE HALF YEAR ENDED 30 JUNE 2009 African Eagle Resources plc ("African Eagle" or the "Company", ticker AIM: AFE, AltX: AEA) announces progress made so far in 2009 together with its financial results for the half year to 30 June 2009. African Eagle's Half Year Report for the period ended 30 June 2009 can be viewed at: http://www.africaneagle.co.uk/downloads/InterimFinancialStatements30June2009.pdf Bevan Metcalf Company Secretary African Eagle Resources plc Chairman's Statement Report to shareholders, by African Eagle Chairman, John Park
Dear Shareholder In late 2008, on the basis of a comprehensive strategic review of our assets and activities, African Eagle's Board determined that the Company should concentrate its efforts and resources on the Dutwa nickel laterite project in Tanzania. We believe that Dutwa, of all our projects, for each dollar spent would deliver the best return to shareholders.
Our adherence to this strategy has paid off, with the results of
metallurgical testwork announced in February and the Scoping Study
completed in June showing that Dutwa is likely to be a highly
metallurgy. Our farm-in agreement over the adjacent Ngasamo deposit, signed in April, should add at least 50% to the project resource. Our successes at Dutwa allowed us to raise £3.37 million new capital via a highly successful Offer and Placing, completed early in August. Dutwa At the end of November 2008 and on completion of a Reverse Circulation (RC) and diamond drilling programme the Company published an estimate for Dutwa which showed there to be 340,000 tonnes of contained nickel and 11,000 tonnes of contained cobalt in a resource of 31 million tonnes at 1.1% nickel and 0.034% cobalt. The resource report indicated the potential to increase both the resource size and the confidence level. The metallurgical characteristics of nickel laterites are of crucial importance and Dutwa's unique high silica, low iron and magnesium mineralogy resulted in very positive results from the leach test work carried out on drill core samples, showing that recoveries in excess of 80% nickel could be achieved with very low acid consumptions. Coupled with the resource determination we were encouraged, after a thorough and detailed bidding process, to award a contract for a scoping study on Dutwa to GRD-Minproc in March 2009.
To the 31 million tonnes resource at Dutwa, we added our share of the
negotiated option and joint venture agreement over the adjacent
Ngasamo deposit in April. This agreement with SAFINA a.s. has the
potential to add up to an additional 15 to 20 million tonnes of
nickeliferous laterite, which we believe to be very similar in
mineralogy and nature to that at Dutwa. Under the agreement with
metallurgically test this potentially major increment to the global nickel resource of a larger Dutwa project.
The draft Scoping Study prepared by GRD-Minproc was presented to
African Eagle in its final form in July. The study evaluated a number
of potential metallurgical processing routes and used modelling to
optimize a mining plan and cut-off grade for each process route using
the resource determined earlier, together with an upside component
Atmospheric tank leaching was determined to be the most likely process route but heap leaching might also be viable. Financial modelling of the technical outcomes showed that at today's nickel prices, the Dutwa project could be expected to generate a net cash-flow (EBIT) of US$53 million to US$130 million per year over a mine life of 15 to 20 years, depending on the processing method. In short, Dutwa would be profitable if it was in operation today. With opportunities to improve the bottom line still further by optimising revenue and reducing costs, there is a very clear case for further feasibility study and the Company has commenced work on this. Initial focus will be directed towards investigating ways to reduce costs, especially transport costs, and increase revenues. We will also drill the adjacent Ngasamo deposit, improve the resource model and refine the metallurgical information. A start has been made on the additional metallurgical test work at Mintek Laboratories in South Africa, including column and tank leach tests, sizing analysis and physical test work to establish more definitively the optimum processing routes. Other Projects Exploration on other projects has been limited to a VTEM helicopter electromagnetic survey to search for "blind" copper zones at Mkushi. This was co-funded by CGA Mining, our partner on the project. We also announced, in May, an in-house deposit model showing potential for in excess of 700,000 ounces at Igurubi, based on interpretation of existing data on our most advanced gold and copper projects. The board is reviewing all alternatives with regard to these projects including the outright sale, joint venture and other possible corporate initiatives. The clear strategy is to realise value for the Company and its shareholders from what are some very attractive properties. Financing
The successful results from Dutwa, coupled with the recovery of
metals prices since January, encouraged us to raise new capital for
the next stage of work. More than half of our shares are held by
private investors and we were very keen to give as many shareholders
as possible the opportunity to take part in the capital raising,
whilst keeping costs to a minimum. To do so, we successfully worked
through a raft of complex rules and regulations in Europe, although
we were not able to extend the Offer into South Africa. The Open
Offer to shareholders was in fact oversubscribed, and together with a
small Placing to institutional investors, we raised £3.37 million
(gross).
The commitment of our shareholders to the company in supporting the
concentrate its effort on the Dutwa nickel laterite project. Together with the Company's existing cash resources, (which, through our effective cash conservation measures amounted to £1.5 million at June 30, 2009), the net proceeds of the Placing and Open Offer will, to a large extent, be used to make a start on work leading to a feasibility study on Dutwa and for general working capital. In Conclusion In summary then, 2009 to date has been about advancing Dutwa, with a resource determined, metallurgical processing examined, additional potential resource tonnage added, a positive scoping study completed and a full feasibility study commenced. All these culminated in a successful placing and Open Offer to shareholders completed in early August, which raised in excess of £3.3 million. As I write this in mid September, the nickel price is up around $17,500, from $11,000 at the end of April when I wrote the statement for the 2008 Annual Report. With this rise, the feasibility study on Dutwa underway, and the green shoots of a recovering global economy which I hoped for six months ago now in evidence, I think we're on track to deliver a much better 2009 than I cautiously promised to shareholders in April. 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 77 3336 3501 Condensed Consolidated Statement of Comprehensive Loss For the six months ended 30 June 2009
exploration expenditure
Finance costs:
(loss)/gain
Loss attributable to
period Other comprehensive (loss)/income:
translation of foreign
operations
investments
(loss)/income for the period
(loss)/income attributable to equity owners for the period
Loss per share:
share from total and
continuing operations
share from total and continuing operations All operations are continuing. The accompanying notes form an integral part of these consolidated financial statements. Condensed Consolidated Statement of Financial Position At 30 June 2009
ASSETS
Non-current assets
equipment
investments
ventures
costs
Current assets
LIABILITIES
Current liabilities
EQUITY
Equity attributable to
owners of the parent:
revaluation reserve
The accompanying notes form an integral part of these consolidated financial statements. Condensed Consolidated Statement of Changes in Equity At 30 June 2009
December 2007 2,123,402
period
Other
comprehensive
income:
differences
on
translation
of foreign
operations
sale investments
comprehensive
income for
the period
Transactions
with equity
owners for
the first
half of 2008:
share capital
costs
payments
transactions
with equity
owners
June 2008 The accompanying notes form an integral part of these consolidated financial statements. Condensed Consolidated Statement of Changes in Equity (continued) At 30 June 2009
December 2007 2,123,402
Other
comprehensive
loss:
differences
on
translation
of foreign
operations
sale investments
comprehensive
loss for the
year
Transactions
with equity
owners for
2008:
share capital
costs
payments
transactions
with equity
owners
December 2008 The accompanying notes form an integral part of these consolidated financial statements. Condensed Consolidated Statement of Changes in Equity (continued) At 30 June 2009
December 2008
period
Other
comprehensive
loss:
differences
on
translation
of foreign
operations
sale investments
comprehensive
loss for the
period
Transactions
with equity
owners for
the first
half of 2009:
share capital
costs
payments
transactions with equity owners Balance at 30 2,125,402 19,323,784 705,723 (13,077) (1,033,669) (8,885,219) 12,222,944 June 2009 The accompanying notes form an integral part of these consolidated financial statements. Condensed Consolidated Statement of Cash Flows For the six months ended 30 June 2009
Operating activities
Adjustments for:
property, plant and
equipment
exploration expenditure
loss
receivables
payables
joint venture gain
activities
Investing activities
property, plant and
equipment
exploration expenditure
ventures
activities
Financing activities
capital
activities
cash equivalents
beginning of period
end of period The accompanying notes form an integral part of these consolidated financial statements. Notes to the Condensed Consolidated Half Year Financial Statements For the six months ended 30 June 2009
African Eagle Resources plc ("African Eagle" or the "Company") is a
public limited company incorporated and domiciled in England. The
Company is listed on the Alternative Investment Market ("AIM") of the
Johannesburg Stock Exchange Limited (AltX), and has consented to its shares being traded on the London PLUS Markets. African Eagle is a holding company of a group of mineral exploration and development companies (the "Group"). The principal activities of the Group are the exploration and development of mineral deposits, especially nickel, gold, and copper in Tanzania, Zambia and Mozambique. The Group has sufficient financial resources following a successful fund raising (see note 5) to finance its exploration activities and for this reason the Directors continue to adopt the going concern basis in preparing the financial statements. African Eagle's unaudited condensed consolidated half year financial statements ("Financial Statements") are presented in pounds sterling (£), which is also the functional currency of the parent company. The Financial Statements were approved for issue by the Board of Directors on 23 September 2009.
The Financial Statements are for the six months ended 30 June 2009. 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 2008, 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 revised version of IASB's key standard, IAS 1, Presentation of Financial Statements, is mandatory for periods beginning on or after 1 January 2009 and has been applied to these half year Financial Statements. The revised standard introduces new terms for the individual Financial Statements. The adoption of the standard does not affect the financial position of the Group. The measurement and recognition of the Group's assets, liabilities, income and expenses is unchanged. The comparative amounts in the Financial Statements include extracts from the Company's consolidated financial statements for the year ended 31 December 2008. These extracts do not constitute statutory accounts within the meaning of Section 435 of the Companies Act 2006 (the "Act"). Notes to the Condensed Consolidated Half Year Financial Statements For the six months ended 30 June 2009
(a) Basic loss per share The basic loss per share is calculated as 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.
2009 2008 2008
Weighted average number of shares 212,540,128 212,394,524 212,467,525
in issue
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 28%. No diluted headline loss per share has been calculated as it would be anti-dilutive by reducing the headline loss per share. Headline Loss
the period Adjusted for:
profit/loss
on
sale of
fixed
assets
Plus
of
exploration
assets
Plus
of
associated
loss
Less
of Joint
Venture
Plus
of Goodwill
loss
Weighted
number of
shares in
issue
Basic &
headline loss per share Notes to the Condensed Consolidated Half Year Financial Statements For the six months ended 30 June 2009
At 30 June 2009
Cost:
At 30 June 2008
Cost:
differences
At 31 December 2008
Cost:
differences
Notes to the Condensed Consolidated Half Year Financial Statements For the six months ended 30 June 2009
On August 7, 2009 the Company announced that the Open Offer to
Eligible Shareholders ("Open Offer") was oversubscribed. After
scaling back, the Open Offer raised Euro 2,499,939, equivalent to
£2,136,700 at the then ruling exchange rate of 1.17 Euro to £1, and
accordingly, 53,417,500 Offer Shares were issued at a price of 4p
each. It also announced that a placing had been completed by Seymour
Pierce, of 30,804,500 new Ordinary Shares with new and existing
approximately £1.2 million (the "Placing"). Following the issue of these new Ordinary Shares there are 296,762,128 Ordinary Shares in issue. The Directors subscribed for 1,222,500 shares in the Placing and 250,000 shares in the Open Offer. Details of individual Directors' subscriptions and their consequent holdings and percentages following the Placing and the Offer are as follows:
Worthington
Davies
Cooper
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