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
* Comprehensive strategic review to deliver best return to
shareholders
* Dutwa successes: metallurgical testwork, resource
estimation and Ngasamo Joint Venture
* Scoping study makes strong investment case for Dutwa
project
* Successful and innovative fund-raising of £3.37 million
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
profitable operation, thanks to its uniquely straightforward
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
SAFINA, African Eagle is currently preparing to drill and
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
based on our expectations of the input Ngasamo could make.
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
financing is a clear endorsement of the Board's strategy to
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
6 months to 30 6 months to Year to 31
June 2009 30 June 2008 December 2008
Unaudited Unaudited Audited
£ £ £
Depreciation expense (30,461) (40,914) (86,405)
Employee benefits expense (205,723) (545,192) (979,613)
Impairment of deferred (145,071) (83,738) (4,442,563)
exploration expenditure
Impairment of goodwill - - (103,188)
Other expenses (231,149) (252,760) (462,229)
Operating loss (612,404) (922,604) (6,073,998)
Finance costs:
Bank interest receivable 12,467 149,977 228,856
Foreign exchange (14,037) (36,020) 363,183
(loss)/gain
Loss before tax (613,974) (808,647) (5,481,959)
Income tax expense - - -
Loss attributable to
equity owners for the (613,974) (808,647) (5,481,959)
period
Other comprehensive
(loss)/income:
Exchange differences on (1,751,419) 1,106,220 1,907,024
translation of foreign
operations
Available for sale 617 (2,679) (4,495)
investments
Other comprehensive (1,750,802) 1,103,541 1,902,529
(loss)/income for the
period
Total comprehensive (2,364,776) 294,894 (3,579,430)
(loss)/income
attributable to equity
owners for the period
Loss per share:
Basic/diluted loss per (0.3p) (0.4p) (2.6p)
share from total and
continuing operations
Headline/diluted loss per (0.2p) (0.4p) (1.0p)
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
30 June 2009 30 June 2008 31 Dec 2008
Unaudited Unaudited Audited
Note
£ £ £
ASSETS
Non-current assets
Property, plant and 78,538 160,798 122,246
equipment
Goodwill - 103,188 -
Available for sale 2,583 3,783 1,967
investments
Investment in associates 1,910,516 2,362,972 2,123,371
Investment in joint 34,595 - 35,293
ventures
Deferred exploration 4 8,868,615 10,925,073 9,717,268
costs
Total non-current assets 10,894,847 13,555,814 12,000,145
Current assets
Other receivables 140,393 747,774 137,636
Cash and cash equivalents 1,538,250 4,631,777 2,709,957
Total current assets 1,678,643 5,379,551 2,847,593
Total assets 12,573,490 18,935,365 14,847,738
LIABILITIES
Current liabilities
Other payables (350,546) (706,653) (269,218)
Total liabilities (350,546) (706,653) (269,218)
Net assets 12,222,944 18,228,712 14,578,520
EQUITY
Equity attributable to
owners of the parent:
Share capital 2,125,402 2,125,402 2,125,402
Share premium account 19,323,784 19,325,622 19,323,784
Merger reserve 705,723 705,723 705,723
Available for sale (13,077) (11,878) (13,694)
revaluation reserve
Foreign currency reserve (1,033,669) (83,054) 717,750
Retained losses (8,885,219) (3,833,103) (8,280,445)
Total equity 12,222,944 18,228,712 14,578,520
The accompanying notes form an integral part of these consolidated
financial statements.
Condensed Consolidated Statement of Changes in Equity
At 30 June 2009
Share Share Merger Available Foreign Retained Total
capital premium reserve for sale currency losses attributable
account revaluation reserve to
reserve owners
Unaudited
£ £ £ £ £ £ £
Balance at 31 19,311,622 705,723 (9,199) (1,189,274) (3,382,077) 17,560,197
December 2007 2,123,402
Loss for - - - - - (808,647) (808,647)
period
Other
comprehensive
income:
Exchange - - - - 1,106,220 - 1,106,220
differences
on
translation
of foreign
operations
Available for - - - (2,679) - - (2,679)
sale
investments
Total - - - (2,679) 1,106,220 (808,647) 294,894
comprehensive
income for
the period
Transactions
with equity
owners for
the first
half of 2008:
Issue of 2,000 14,000 - - - - 16,000
share capital
Share issue - - - - - - -
costs
Share based - - - - - 357,621 357,621
payments
Total 2,000 14,000 - - - 357,621 373,621
transactions
with equity
owners
Balance at 30 2,125,402 19,325,622 705,723 (11,878) (83,054) (3,833,103) 18,228,712
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
Share Share Merger Available Foreign Retained Total
Capital premium reserve for sale currency Losses attributable
account revaluation reserve to owners
reserve Audited
£ £ £ £ £ £ £
Balance at 31 19,311,622 705,723 (9,199) (1,189,274) (3,382,077) 17,560,197
December 2007 2,123,402
Loss for year - - - - - (5,481,959) (5,481,959)
Other
comprehensive
loss:
Exchange - - - - 1,907,024 - 1,907,024
differences
on
translation
of foreign
operations
Available for - - - (4,495) - - (4,495)
sale
investments
Total - - - (4,495) 1,907,024 (5,481,959) (3,579,430)
comprehensive
loss for the
year
Transactions
with equity
owners for
2008:
Issue of 2,000 14,000 - - - - 16,000
share capital
Share issue - (1,838) - - - - (1,838)
costs
Share-based - - - - - 583,591 583,591
payments
Total 2,000 12,162 - - - 583,591 597,753
transactions
with equity
owners
Balance at 31 2,125,402 19,323,784 705,723 (13,694) 717,750 (8,280,445) 14,578,520
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
Share Share Merger Available Foreign Retained Total
Capital premium reserve for sale currency Losses attributable
account revaluation reserve to owners
reserve Unaudited
£ £ £ £ £ £ £
Balance at 31 2,125,402 19,323,784 705,723 (13,694) 717,750 (8,280,445) 14,578,520
December 2008
Loss for - - - - - (613,974) (613,974)
period
Other
comprehensive
loss:
Exchange - - - - (1,751,419) - (1,751,419)
differences
on
translation
of foreign
operations
Available for - - - 617 - - 617
sale
investments
Total - - - 617 (1,751,419) (613,974) (2,364,776)
comprehensive
loss for the
period
Transactions
with equity
owners for
the first
half of 2009:
Issue of - - - - - - -
share capital
Share issue - - - - - - -
costs
Share based - - - - - 9,200 9,200
payments
Total - - - - - 9,200 9,200
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
6 months 6 months to 30 Year to 31
to 30 June June 2008 December 2008
2009 Unaudited Audited
Unaudited
£ £ £
Operating activities
Loss before taxation (613,974) (808,647) (5,481,959)
Adjustments for:
Depreciation 30,461 40,914 86,405
Exchange (gain)/loss (24) 1,298 (8,141)
Loss on disposal of 150 - 1,839
property, plant and
equipment
Interest received (12,467) (149,977) (228,856)
Impairment of deferred 145,071 83,738 4,442,563
exploration expenditure
Share-based payments 9,200 357,621 583,591
MCJV - Group share of the 7,634 - 15,385
loss
Impairment of goodwill - - 103,188
Decrease/(Increase) in other (13,856) (320,049) 273,662
receivables
(Decrease)/Increase in other 66,682 (9,488) (116,230)
payables
Kujima - Group share of 762 - (1,540)
joint venture gain
Cash flows from operating (380,361) (804,590) (330,093)
activities
Investing activities
Payments to acquire - (31,391) (43,892)
property, plant and
equipment
Payments for deferred (601,045) (1,571,051) (4,020,510)
exploration expenditure
Interest received 12,467 149,977 228,856
Investments in associates (168,379) (194,519) (185,718)
Investments in joint - - (33,753)
ventures
Cash flows used in investing (756,957) (1,646,984) (4,055,017)
activities
Financing activities
Proceeds from issue of share - 16,000 14,162
capital
Cash flows from financing - 16,000 14,162
activities
Net decrease in cash and (1,137,318) (2,435,574) (4,370,948)
cash equivalents
Cash and cash equivalents at 2,709,957 7,051,744 7,051,744
beginning of period
Exchange (gain)/loss (34,389) 15,607 29,161
Cash and cash equivalents at 1,538,250 4,631,777 2,709,957
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
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. The
Company is listed on the Alternative Investment Market ("AIM") of the
London Stock Exchange and the Alternative Exchange 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.
2 Statement of Compliance and basis of preparation
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
3 Loss Per Share
(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.
Loss per share 6 months to 6 months to Year to
30 June 30 June 31 December
2009 2008 2008
£ £ £
Loss for the period (613,974) (808,647) (5,481,959)
Weighted average number of shares 212,540,128 212,394,524 212,467,525
in issue
Basic & diluted headline loss per (0.3p) (0.4p) (2.6p)
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
June June Dec 31,
30, 2009 30, 2008 2008
£ £ £ £ £ £
Gross Net Gross Net Gross Net
Loss for (613,974) (808,647) (5,481,959)
the period
Adjusted
for:
(Less)/plus 150 108 83,738 60,291 1,839 1,324
profit/loss
on
sale of
fixed
assets
Plus
impairment 145,071 104,451 - 4,442,563 3,198,646
of
exploration
assets
Plus
Group share 7,634 5,344 - 15,385 11,077
of
associated
loss
Less
Group share 762 549 - (1,540) (1,109)
of Joint
Venture
Plus
impairment - - - 103,188 74,295
of Goodwill
Headline (503,522) (748,356) (2,197,725)
loss
Weighted
average 212,540,128 212,394,524 212,467,525
number of
shares in
issue
Basic &
undiluted (0.2p) (0.4p) (1.0p)
headline
loss per
share
Notes to the Condensed Consolidated Half Year Financial Statements
For the six months ended 30 June 2009
4 Intangibles
At 30 June 2009
Deferred Total
Exploration costs
£ £
Cost:
At 1 January 2009 9,717,268 9,717,268
Foreign currency exchange differences (1,326,422) (1,326,422)
Additions 622,840 622,840
Impairment costs (145,071) (145,071)
At 30 June 2009 8,868,615 8,868,615
At 30 June 2008
Goodwill on Deferred Total
Consolidation Exploration costs
£ £ £
Cost:
At 1 January 2008 103,188 8,441,854 8,545,042
Foreign currency exchange - 694,451 694,451
differences
Additions - 1,872,506 1,872,506
Impairment costs - (83,738) (83,738)
At 30 June 2008 103,188 10,925,073 11,028,261
At 31 December 2008
Goodwill on Deferred Total
Consolidation Exploration costs
£ £ £
Cost:
At 1 January 2008 103,188 8,441,854 8,545,042
Foreign currency exchange - 1,758,217 1,758,217
differences
Additions - 3,959,760 3,959,760
Impairment costs (103,188) (4,442,563) (4,545,751)
At 31 December 2008 - 9,717,268 9,717,268
Notes to the Condensed Consolidated Half Year Financial Statements
For the six months ended 30 June 2009
5 Post-reporting date events
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
investors at a price of 4p each, raising gross proceeds of
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:
Subscription Subscription Number of Percentage
in Placing in Offer Ordinary Shares of Enlarged
held, after the Share
Director Placing and Offer Capital
John Park 250,000 - 6,926,801 2.33%
Euan 250,000 - 1,060,000 0.36%
Worthington
Mark Parker 312,500 225,000* 4,033,857 1.36%
Christopher 152,500 25,000 971,730 0.33%
Davies
Bevan Metcalf 137,500 - 207,500 0.07%
Geoffrey 120,000 - 909,300 0.31%
Cooper
* to be held by Mr Mark Parker's Self-Invested Personal Pension
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