REVIEW OF PROGRESS AND RESULTS FOR THE HALF YEAR ENDED 30 JUNE 2009
(Thomson Reuters ONE) - Half Year Results25 September 2009REVIEW OF PROGRESS AND RESULTS FOR THE HALF YEAR ENDED 30 JUNE 2009African Eagle Resources plc ("African Eagle" or the "Company", tickerAIM: AFE, AltX: AEA) announces progress made so far in 2009 togetherwith its financial results for the half year to 30 June 2009.African Eagle's Half Year Report for the period ended 30 June 2009can be viewed at:http://www.africaneagle.co.uk/downloads/InterimFinancialStatements30June2009.pdfBevan MetcalfCompany SecretaryAfrican Eagle Resources plcChairman'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 millionDear ShareholderIn late 2008, on the basis of a comprehensive strategic review of ourassets and activities, African Eagle's Board determined that theCompany should concentrate its efforts and resources on the Dutwanickel laterite project in Tanzania. We believe that Dutwa, of allour projects, for each dollar spent would deliver the best return toshareholders.Our adherence to this strategy has paid off, with the results ofmetallurgical testwork announced in February and the Scoping Studycompleted in June showing that Dutwa is likely to be a highlyprofitable operation, thanks to its uniquely straightforwardmetallurgy. 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 capitalvia a highly successful Offer and Placing, completed early in August.DutwaAt the end of November 2008 and on completion of a ReverseCirculation (RC) and diamond drilling programme the Company publishedan estimate for Dutwa which showed there to be 340,000 tonnes ofcontained nickel and 11,000 tonnes of contained cobalt in a resourceof 31 million tonnes at 1.1% nickel and 0.034% cobalt. The resourcereport indicated the potential to increase both the resource sizeand the confidence level.The metallurgical characteristics of nickel laterites are of crucialimportance and Dutwa's unique high silica, low iron and magnesiummineralogy resulted in very positive results from the leach test workcarried out on drill core samples, showing that recoveries in excessof 80% nickel could be achieved with very low acid consumptions.Coupled with the resource determination we were encouraged, after athorough and detailed bidding process, to award a contract for ascoping study on Dutwa to GRD-Minproc in March 2009.To the 31 million tonnes resource at Dutwa, we added our share of thenegotiated option and joint venture agreement over the adjacentNgasamo deposit in April. This agreement with SAFINA a.s. has thepotential to add up to an additional 15 to 20 million tonnes ofnickeliferous laterite, which we believe to be very similar inmineralogy and nature to that at Dutwa. Under the agreement withSAFINA, African Eagle is currently preparing to drill andmetallurgically test this potentially major increment to the globalnickel resource of a larger Dutwa project.The draft Scoping Study prepared by GRD-Minproc was presented toAfrican Eagle in its final form in July. The study evaluated a numberof potential metallurgical processing routes and used modelling tooptimize a mining plan and cut-off grade for each process route usingthe resource determined earlier, together with an upside componentbased on our expectations of the input Ngasamo could make.Atmospheric tank leaching was determined to be the most likelyprocess route but heap leaching might also be viable.Financial modelling of the technical outcomes showed that at today'snickel prices, the Dutwa project could be expected to generate a netcash-flow (EBIT) of US$53 million to US$130 million per year over amine 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 byoptimising revenue and reducing costs, there is a very clear case forfurther feasibility study and the Company has commenced work onthis. Initial focus will be directed towards investigating ways toreduce costs, especially transport costs, and increase revenues. Wewill also drill the adjacent Ngasamo deposit, improve the resourcemodel and refine the metallurgical information. A start has beenmade on the additional metallurgical test work at Mintek Laboratoriesin South Africa, including column and tank leach tests, sizinganalysis and physical test work to establish more definitively theoptimum processing routes.Other ProjectsExploration on other projects has been limited to a VTEM helicopterelectromagnetic survey to search for "blind" copper zones at Mkushi.This was co-funded by CGA Mining, our partner on the project. We alsoannounced, in May, an in-house deposit model showing potential for inexcess of 700,000 ounces at Igurubi, based on interpretation ofexisting data on our most advanced gold and copper projects.The board is reviewing all alternatives with regard to these projectsincluding the outright sale, joint venture and other possiblecorporate initiatives. The clear strategy is to realise value for theCompany and its shareholders from what are some very attractiveproperties.FinancingThe successful results from Dutwa, coupled with the recovery ofmetals prices since January, encouraged us to raise new capital forthe next stage of work. More than half of our shares are held byprivate investors and we were very keen to give as many shareholdersas possible the opportunity to take part in the capital raising,whilst keeping costs to a minimum. To do so, we successfully workedthrough a raft of complex rules and regulations in Europe, althoughwe were not able to extend the Offer into South Africa. The OpenOffer to shareholders was in fact oversubscribed, and together with asmall Placing to institutional investors, we raised £3.37 million(gross).The commitment of our shareholders to the company in supporting thefinancing is a clear endorsement of the Board's strategy toconcentrate its effort on the Dutwa nickel laterite project.Together with the Company's existing cash resources, (which, throughour effective cash conservation measures amounted to £1.5 million atJune 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 afeasibility study on Dutwa and for general working capital.In ConclusionIn summary then, 2009 to date has been about advancing Dutwa, with aresource determined, metallurgical processing examined, additionalpotential resource tonnage added, a positive scoping study completedand a full feasibility study commenced. All these culminated in asuccessful placing and Open Offer to shareholders completed in earlyAugust, 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 statementfor the 2008 Annual Report. With this rise, the feasibility study onDutwa underway, and the green shoots of a recovering global economywhich I hoped for six months ago now in evidence, I think we're ontrack to deliver a much better 2009 than I cautiously promised toshareholders in April.For further information:Mark ParkerManaging DirectorAfrican Eagle+44 20 7248 6059+44 77 5640 6899Nicola MarrinSeymour Pierce Limited, LondonNominated Adviser+44 20 7107 8000Charmane RussellRussell & Associates, Johannesburg+27 11 8803924+27 82 8928052Ed Portman / Leesa PetersConduit PR, London+44 20 7429 6607+44 77 3336 3501Condensed Consolidated Statement of Comprehensive LossFor 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 expenditureImpairment 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 12,467 149,977 228,856Foreign exchange (14,037) (36,020) 363,183(loss)/gainLoss before tax (613,974) (808,647) (5,481,959)Income tax expense - - -Loss attributable toequity owners for the (613,974) (808,647) (5,481,959)periodOther comprehensive(loss)/income:Exchange differences on (1,751,419) 1,106,220 1,907,024translation of foreignoperationsAvailable for sale 617 (2,679) (4,495)investmentsOther comprehensive (1,750,802) 1,103,541 1,902,529(loss)/income for theperiodTotal comprehensive (2,364,776) 294,894 (3,579,430)(loss)/incomeattributable to equityowners for the periodLoss per share:Basic/diluted loss per (0.3p) (0.4p) (2.6p)share from total andcontinuing operationsHeadline/diluted loss per (0.2p) (0.4p) (1.0p)share from total andcontinuing operationsAll operations are continuing.The accompanying notes form an integral part of these consolidatedfinancial statements.Condensed Consolidated Statement of Financial PositionAt 30 June 2009 30 June 2009 30 June 2008 31 Dec 2008 Unaudited Unaudited Audited Note £ £ £ASSETSNon-current assetsProperty, plant and 78,538 160,798 122,246equipmentGoodwill - 103,188 -Available for sale 2,583 3,783 1,967investmentsInvestment in associates 1,910,516 2,362,972 2,123,371Investment in joint 34,595 - 35,293venturesDeferred exploration 4 8,868,615 10,925,073 9,717,268costsTotal non-current assets 10,894,847 13,555,814 12,000,145Current assetsOther receivables 140,393 747,774 137,636Cash and cash equivalents 1,538,250 4,631,777 2,709,957Total current assets 1,678,643 5,379,551 2,847,593Total assets 12,573,490 18,935,365 14,847,738LIABILITIESCurrent liabilitiesOther payables (350,546) (706,653) (269,218)Total liabilities (350,546) (706,653) (269,218)Net assets 12,222,944 18,228,712 14,578,520EQUITYEquity attributable toowners of the parent:Share capital 2,125,402 2,125,402 2,125,402Share premium account 19,323,784 19,325,622 19,323,784Merger reserve 705,723 705,723 705,723Available for sale (13,077) (11,878) (13,694)revaluation reserveForeign currency reserve (1,033,669) (83,054) 717,750Retained losses (8,885,219) (3,833,103) (8,280,445)Total equity 12,222,944 18,228,712 14,578,520The accompanying notes form an integral part of these consolidatedfinancial statements.Condensed Consolidated Statement of Changes in EquityAt 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) 17,560,197December 2007 2,123,402Loss for - - - - - (808,647) (808,647)periodOthercomprehensiveincome:Exchange - - - - 1,106,220 - 1,106,220differencesontranslationof foreignoperationsAvailable for - - - (2,679) - - (2,679)saleinvestmentsTotal - - - (2,679) 1,106,220 (808,647) 294,894comprehensiveincome forthe periodTransactionswith equityowners forthe firsthalf of 2008:Issue of 2,000 14,000 - - - - 16,000share capitalShare issue - - - - - - -costsShare based - - - - - 357,621 357,621paymentsTotal 2,000 14,000 - - - 357,621 373,621transactionswith equityownersBalance at 30 2,125,402 19,325,622 705,723 (11,878) (83,054) (3,833,103) 18,228,712June 2008The accompanying notes form an integral part of these consolidatedfinancial 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) 17,560,197December 2007 2,123,402Loss for year - - - - - (5,481,959) (5,481,959)Othercomprehensiveloss:Exchange - - - - 1,907,024 - 1,907,024differencesontranslationof foreignoperationsAvailable for - - - (4,495) - - (4,495)saleinvestmentsTotal - - - (4,495) 1,907,024 (5,481,959) (3,579,430)comprehensiveloss for theyearTransactionswith equityowners for2008:Issue of 2,000 14,000 - - - - 16,000share capitalShare issue - (1,838) - - - - (1,838)costsShare-based - - - - - 583,591 583,591paymentsTotal 2,000 12,162 - - - 583,591 597,753transactionswith equityownersBalance at 31 2,125,402 19,323,784 705,723 (13,694) 717,750 (8,280,445) 14,578,520December 2008The accompanying notes form an integral part of these consolidatedfinancial 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) 14,578,520December 2008Loss for - - - - - (613,974) (613,974)periodOthercomprehensiveloss:Exchange - - - - (1,751,419) - (1,751,419)differencesontranslationof foreignoperationsAvailable for - - - 617 - - 617saleinvestmentsTotal - - - 617 (1,751,419) (613,974) (2,364,776)comprehensiveloss for theperiodTransactionswith equityowners forthe firsthalf of 2009:Issue of - - - - - - -share capitalShare issue - - - - - - -costsShare based - - - - - 9,200 9,200paymentsTotal - - - - - 9,200 9,200transactionswith equityownersBalance at 30 2,125,402 19,323,784 705,723 (13,077) (1,033,669) (8,885,219) 12,222,944June 2009The accompanying notes form an integral part of these consolidatedfinancial statements.Condensed Consolidated Statement of Cash FlowsFor 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 activitiesLoss before taxation (613,974) (808,647) (5,481,959)Adjustments for:Depreciation 30,461 40,914 86,405Exchange (gain)/loss (24) 1,298 (8,141)Loss on disposal of 150 - 1,839property, plant andequipmentInterest received (12,467) (149,977) (228,856)Impairment of deferred 145,071 83,738 4,442,563exploration expenditureShare-based payments 9,200 357,621 583,591MCJV - Group share of the 7,634 - 15,385lossImpairment of goodwill - - 103,188Decrease/(Increase) in other (13,856) (320,049) 273,662receivables(Decrease)/Increase in other 66,682 (9,488) (116,230)payablesKujima - Group share of 762 - (1,540)joint venture gainCash flows from operating (380,361) (804,590) (330,093)activitiesInvesting activitiesPayments to acquire - (31,391) (43,892)property, plant andequipmentPayments for deferred (601,045) (1,571,051) (4,020,510)exploration expenditureInterest received 12,467 149,977 228,856Investments in associates (168,379) (194,519) (185,718)Investments in joint - - (33,753)venturesCash flows used in investing (756,957) (1,646,984) (4,055,017)activitiesFinancing activitiesProceeds from issue of share - 16,000 14,162capitalCash flows from financing - 16,000 14,162activitiesNet decrease in cash and (1,137,318) (2,435,574) (4,370,948)cash equivalentsCash and cash equivalents at 2,709,957 7,051,744 7,051,744beginning of periodExchange (gain)/loss (34,389) 15,607 29,161Cash and cash equivalents at 1,538,250 4,631,777 2,709,957end of periodThe accompanying notes form an integral part of these consolidatedfinancial statements.Notes to the Condensed Consolidated Half Year Financial StatementsFor the six months ended 30 June 20091 Nature of Operations and General InformationAfrican Eagle Resources plc ("African Eagle" or the "Company") is apublic limited company incorporated and domiciled in England. TheCompany is listed on the Alternative Investment Market ("AIM") of theLondon Stock Exchange and the Alternative Exchange of theJohannesburg Stock Exchange Limited (AltX), and has consented to itsshares being traded on the London PLUS Markets. African Eagle is aholding company of a group of mineral exploration and developmentcompanies (the "Group"). The principal activities of the Group arethe exploration and development of mineral deposits, especiallynickel, gold, and copper in Tanzania, Zambia and Mozambique.The Group has sufficient financial resources following a successfulfund raising (see note 5) to finance its exploration activities andfor this reason the Directors continue to adopt the going concernbasis in preparing the financial statements.African Eagle's unaudited condensed consolidated half year financialstatements ("Financial Statements") are presented in pounds sterling(£), which is also the functional currency of the parent company. TheFinancial Statements were approved for issue by the Board ofDirectors on 23 September 2009.2 Statement of Compliance and basis of preparationThe Financial Statements are for the six months ended 30 June 2009. They do not include all the information required for full annualfinancial statements and should be read in conjunction with theaudited consolidated financial statements of the Group for the yearended 31 December 2008, which were prepared under InternationalFinancial Reporting Standards ("IFRS") as adopted by the EuropeanUnion ("EU").The financial information is prepared under the historical costconvention and in accordance with the recognition and measurementprinciples contained within IFRS as endorsed by the EU.The revised version of IASB's key standard, IAS 1, Presentation ofFinancial Statements, is mandatory for periods beginning on or after1 January 2009 and has been applied to these half year FinancialStatements. The revised standard introduces new terms for theindividual Financial Statements. The adoption of the standard doesnot affect the financial position of the Group. The measurement andrecognition of the Group's assets, liabilities, income and expensesis unchanged.The comparative amounts in the Financial Statements include extractsfrom the Company's consolidated financial statements for the yearended 31 December 2008. These extracts do not constitute statutoryaccounts within the meaning of Section 435 of the Companies Act 2006(the "Act").Notes to the Condensed Consolidated Half Year Financial StatementsFor the six months ended 30 June 20093 Loss Per Share(a) Basic loss per shareThe basic loss per share is calculated as the loss for the perioddivided by the weighted average number of shares in issue during theperiod. In calculating the diluted loss per share potential ordinaryshares such as share options and warrants have not been included asthey 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 212,540,128 212,394,524 212,467,525in issueBasic & diluted headline loss per (0.3p) (0.4p) (2.6p)share(b) Headline loss per shareHeadline loss per share has been calculated in accordance with theInstitute of Investment Management and Research's ("IIMR") Statementof Investment Practice No.1 entitled 'The Definition of HeadlineEarnings' and the South African Institute of Chartered AccountantsCircular 8/2007 entitled Headline Earnings. The calculation ofheadline loss per share is net of tax at the UK prevailing rate of28%. No diluted headline loss per share has been calculated as itwould 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 NetLoss for (613,974) (808,647) (5,481,959)the periodAdjustedfor:(Less)/plus 150 108 83,738 60,291 1,839 1,324profit/lossonsale offixedassets Plusimpairment 145,071 104,451 - 4,442,563 3,198,646ofexplorationassets PlusGroup share 7,634 5,344 - 15,385 11,077ofassociatedloss LessGroup share 762 549 - (1,540) (1,109)of JointVenture Plusimpairment - - - 103,188 74,295of GoodwillHeadline (503,522) (748,356) (2,197,725)lossWeightedaverage 212,540,128 212,394,524 212,467,525number ofshares inissueBasic &undiluted (0.2p) (0.4p) (1.0p)headlineloss pershareNotes to the Condensed Consolidated Half Year Financial StatementsFor the six months ended 30 June 20094 IntangiblesAt 30 June 2009 Deferred Total Exploration costs £ £Cost:At 1 January 2009 9,717,268 9,717,268Foreign currency exchange differences (1,326,422) (1,326,422)Additions 622,840 622,840Impairment costs (145,071) (145,071)At 30 June 2009 8,868,615 8,868,615At 30 June 2008 Goodwill on Deferred Total Consolidation Exploration costs £ £ £Cost:At 1 January 2008 103,188 8,441,854 8,545,042Foreign currency exchange - 694,451 694,451differencesAdditions - 1,872,506 1,872,506Impairment costs - (83,738) (83,738)At 30 June 2008 103,188 10,925,073 11,028,261At 31 December 2008 Goodwill on Deferred Total Consolidation Exploration costs £ £ £Cost:At 1 January 2008 103,188 8,441,854 8,545,042Foreign currency exchange - 1,758,217 1,758,217differencesAdditions - 3,959,760 3,959,760Impairment costs (103,188) (4,442,563) (4,545,751)At 31 December 2008 - 9,717,268 9,717,268Notes to the Condensed Consolidated Half Year Financial StatementsFor the six months ended 30 June 20095 Post-reporting date eventsOn August 7, 2009 the Company announced that the Open Offer toEligible Shareholders ("Open Offer") was oversubscribed. Afterscaling 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, andaccordingly, 53,417,500 Offer Shares were issued at a price of 4peach. It also announced that a placing had been completed by SeymourPierce, of 30,804,500 new Ordinary Shares with new and existinginvestors at a price of 4p each, raising gross proceeds ofapproximately £1.2 million (the "Placing"). Following the issue ofthese new Ordinary Shares there are 296,762,128 Ordinary Shares inissue.The Directors subscribed for 1,222,500 shares in the Placing and250,000 shares in the Open Offer.Details of individual Directors' subscriptions and their consequentholdings and percentages following the Placing and the Offer are asfollows: Subscription Subscription Number of Percentage in Placing in Offer Ordinary Shares of Enlarged held, after the ShareDirector Placing and Offer CapitalJohn Park 250,000 - 6,926,801 2.33%Euan 250,000 - 1,060,000 0.36%WorthingtonMark Parker 312,500 225,000* 4,033,857 1.36%Christopher 152,500 25,000 971,730 0.33%DaviesBevan 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---END OF MESSAGE---This announcement was originally distributed by Hugin. The issuer is solely responsible for the content of this announcement.
Datum: 25.09.2009 - 09:01 Uhr
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