Final Audited Results

RNS Number : 3679N

African Minerals Ltd

10 June 2010

 

10 June 2010

African Minerals Limited

("African Minerals" or "the Company")

Final Audited Results for the year ended 31 December 2009

African Minerals Limited (AIM:AMI), the mineral exploration and development company with significant iron ore and base metal interests in Sierra Leone, West Africa, today announces its audited results for the year ended 31 December 2009.

2009 Highlights:

Finance

·; Loss for the year: US$13.87 million (2008 - US$23.61 million)

·; Cash at bank and short term deposits as at 31 December 2009: US$76.6 million (2008 - US$28.9 million)

·; £63.8M raised before expenses in July 2009 by way of cash placing with new and existing institutional investors

·; £80M raised before expenses by way of cash placing in January 2010

·; Investment agreement signed with China Railway Materials Commercial Corporation ("CRM") under which CRM will invest £167.9M in return for 12.5% of the enlarged issued share capital of the Company. The investment agreement is scheduled to complete on or before 31 July 2010. CRM also signed a long-term agency agreement with African Minerals for up to 8 Mtpa of hematite production and a long-term off-take agreement for a minimum of 10 Mtpa of magnetite production at benchmark pricing

·; Remaining interest of 70% in Marampa iron ore project sold to Cape Lambert Resources Limited (ASX:CFE) for total consideration of US$30.9 million

 

Tonkolili Iron Ore Project

·; One of the largest exploration drilling programmes in Africa in 2009, over 120,000 metres of drilling

·; JORC compliant magnetite iron ore resource increased to 10.5Bt - the world's largest reported magnetite iron ore resource

·; 9.7 Bt of the mineral resource has an average in situ grade of 30.1% iron, with the balance of 0.8 Bt grading 16.8% iron in situ

·; Test work shows this iron ore concentrate has a grade of 70.3% Fe at a mass recovery of 26.5% and contains

low levels of impurities

 

Infrastructure

·; Construction commenced on development of port and railway infrastructure for phase 1 of the Project

·; Design commenced for the port at Tagrin Point in support of the planned 45 Mtpa mine at Tonkolili.

Key Management Appointments

·; Alan Watling joined the Board on 1 February 2009 as Chief Executive Officer, bringing a wealth of project management and execution experience to the Company

·; John Blanning joined the Company on 16 March 2009 as Vice President - Mine Engineering and has over 23 years mining experience both in owner operations and contracting, having most recently been Head of Mining at Fortescue Metals Group

·; Steve Allard joined the Company on 23 March 2009 as Vice President - Infrastructure. Prior to joining the Company, Steve was most recently Head of Port, Fortescue Metals Group, where he was integral in the successful transition from design and construction phase into operations

·; On 1 February 2010 Craig Smith joined the Board as Chief Financial Officer

·; On 19 August 2009 and 26 May 2010 Murray John and Dermot Coughlan respectively joined as Non- Executive Directors, bringing substantial experience and expertise to the Board

Commenting on the results, Frank Timis, Executive Chairman said:

"2009 has been a year of dramatic change and progress for African Minerals and our focus has shifted almost exclusively to our iron ore project at Tonkolili, Sierra Leone. It has been an exciting period, in which a number of critical milestones have been reached. We have carried out one of the largest exploration programmes in Africa in 2009, proving up the largest reported JORC compliant magnetite iron ore resource in the world. This comes at a time of extremely high demand for iron ore by China and India, and African Minerals is strategically placed to provide high grade ore with strong grade consistency to the steel mills in these regions.

I would like to thank our new CEO Alan Watling, his management team, and all of African Minerals' staff and contractors, our partners and other stakeholders and the Government of Sierra Leone for all their hard work and loyal support in bringing the Company to this promising stage in its development, and look forward to a year of further growth and progress across all of our assets as we begin building our mine, port and rail infrastructure in preparation for production."

 

The company also notes that its Nomad and Broker has changed its name from Canaccord Adams Limited to Canaccord Genuity Limited.

Enquiries:

African Minerals Limited	Tel: +44 (0) 1481 726833
Frank Timis Alan Watling
Canaccord Genuity Limited	Tel: +44 (0) 20 7050 6500
Robert Finlay
Guy Blakeney
Mirabaud Securities Limited	Tel: +44 (0) 20 7878 3360
Rory Scott Pav Sanghara
Pelham Bell Pottinger Limited	Tel: +44 (0) 20 7861 3232
Klara Kaczmarek Philip Dennis

 

 

 

 

 

 

 

 

 

 

 

AFRICAN MINERALS LIMITED

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 December 2009

 

 

		2009		2008
	Notes	US$		US$
Continuing Operations
Revenue	1	160,727		2,213,905
Cost of sales		-		(5,997,029)
Gross profit/(loss)		160,727		(3,783,124)
Impairment of intangible fixed assets	10	-		(12,735,143)
Net operating expenses	3	(1,812,138)		(36,945,937)
Profit on investment in subsidiary	4	13,594,833		28,763,034
Operating profit/(loss)		11,943,422		(24,701,170)
Finance income	8	191,619		1,084,478
Profit/(loss) before tax		12,135,041		(23,616,692)
Tax		-		-
Profit/(loss) for the year from continuing operations		12,135,041		(23,616,692)
Discontinued Operations
Loss for the year from discontinued operations	26	(26,011,707)		-
Loss for the year		(13,876,666)		(23,616,692)
Other comprehensive income		-		-
Total comprehensive loss for the year		(13,876,666)		(23,616,692)
Attributable to equity holders of the parent		(13,876,666)		(23,616,692)
Basic loss per share - cents	9	(6.95)		(14.33)
Basic earnings/(loss) per share continuing activities - cents	9	6.07		(14.33)
Diluted loss per share - cents	9	(6.95)		(14.33)
Diluted earnings/(loss) per share continuing activities - cents	9	5.78		(14.33)

 

 

There were no recognised gain and losses other than those stated above.

 

AFRICAN MINERALS LIMITED

CONSOLIDATED AND COMPANY BALANCE SHEETS

At 31 December 2009

		Group		Company		Group		Company
		2009		2009		2008		2008
	Notes	US$		US$		US$		US$
Non-current assets
Intangible fixed assets	10	83,506,886		42,016,459		76,760,367		22,919,401
Tangible fixed assets	11	4,874,362		1,459,069		14,655,954		816,449
Investments	12	-		902		-		1,002
Trade and other receivables	13	-		170,732,237		-		147,146,491
Total non-current assets		88,381,248		214,208,667		91,416,321		170,883,343
Current assets
Inventories	14	1,587,022		-		1,720,186		-
Trade and other receivables	13	22,378,452		18,642,922		22,492,416		903,892
Financial assets at fair value
through profit or loss	15	42,207,102		42,207,102		8,328,411		8,328,411
Short term investments	16	71,742,400		71,742,400		-		-
Cash and cash equivalents	17	4,904,921		4,667,819		28,859,165		24,044,166
Assets of disposal group
classified as held for sale	26	7,388,947		-		-		-
Total current assets		150,208,844		137,260,243		61,400,178		33,276,469
Total assets		238,590,092		351,468,910		152,816,499		204,159,812
Equity
Share capital	18	2,136,396		2,136,396		1,875,174		1,875,174
Share premium account		310,055,096		310,055,096		209,136,256		209,136,256
Equity reserves		13,251,459		13,251,459		9,942,383		9,942,383
Profit and loss account		(95,597,009)		19,795,060		(82,302,856)		(19,843,060)
Attributable to equity holders		229,845,942		345,238,011		138,650,957		201,110,753
Minority interest		-		-		7,300,022		-
Total equity		229,845,942		345,238,011		145,950,979		201,110,753
Non-current liabilities
Provisions	20	731,094		-		1,165,364		-
Total non-current liabilities		731,094		-		1,165,364		-
Current liabilities
Trade and other payables	21	7,490,833		6,230,899		5,700,156		3,049,059
Liabilities of disposal group
classified as held for sale	26	522,223		-		-		-
Total current liabilities		8,013,056		6,230,899		5,700,156		3,049,059
Total liabilities		8,744,150		6,230,899		6,865,520		3,049,059
Total equity and liabilities		238,590,092		351,468,910		152,816,499		204,159,812

The financial statements were approved by the Board on 7 June 2010 and were signed on its behalf by:

 

ALAN WATLING CRAIG SMITH

Director and Chief Executive Officer Director and Chief Financial Officer

AFRICAN MINERALS LIMITED

CONSOLIDATED CASH FLOW STATEMENT

For the year ended 31 December 2009

 

 

		2009		2008
		US$		US$
Loss for the period		(13,876,666)		(23,616,692)
Share-based payments		5,383,474		4,868,504
Depreciation of tangible fixed assets		4,795,445		5,982,436
Amortisation of intangible fixed assets		-		2,808,571
Impairment of intangible fixed assets		19,320,508		12,735,143
Loss on disposal of tangible fixed assets		592,594		3,445,398
Profit on disposal of subsidiary		(13,594,833)		(28,763,034)
(Increase)/decrease in financial assets at fair value
through profit or loss		(15,070,620)		6,671,993
Unrealised foreign exchange (gain)/loss		(2,967,778)		2,092,414
Interest received		(191,619)		(1,084,478)
Operating loss before working capital changes		(15,609,495)		(14,859,745)
(Increase)/decrease in inventories		(1,248,578)		886,847
(Increase)/decrease in trade and other receivables		(4,799,977)		1,089,875
Increase in provisions		58,281		495,777
Increase in trade and other payables		1,820,306		1,120,536
Net cash flow from operating activities		(19,779,463)		(11,266,710)
Cash flows from investing activities
Interest received		191,619		1,084,478
Proceeds of sales of tangible assets		1,125,127		434,000
Payments to acquire tangible assets		(920,911)		(1,687,526)
Payments to acquire intangible assets		(32,516,393)		(42,639,158)
Payments to acquire financial assets		-		(1,443,850)
Investment in subsidiary		-		4,667,288
(Increase)/decrease in short term deposits with banks		(71,742,400)		41,158,671
Net cash (outflow)/inflow from investing activities		(103,862,958)		1,573,903
Cash flows from financing activities
Proceeds of ordinary share issue		98,995,407		32,988,447
Proceeds of exercise of options		692,770		1,111,612
Proceeds of exercise of warrants		-		1,449,097
Net cash inflow from financing activities		99,688,177		35,549,156
Net (decrease)/increase in cash and cash equivalents		(23,954,244)		25,856,349
Cash and cash equivalents at beginning of period		28,859,165		3,002,816
Cash and cash equivalents at end of period		4,904,921		28,859,165

 

 

AFRICAN MINERALS LIMITED

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2009

 

			Share		Profit and
		Share	premium	Equity	loss
		capital	account	reserves	account	Total
	Note	US$	US$	US$	US$	US$
As at 1 January 2008		1,552,582	161,811,643	5,999,876	(58,968,839)	110,395,262
Allotments during the year		322,592	48,290,887	-	-	48,613,479
Issue expenses - shares		-	(1,609,596)	-	-	(1,609,596)
Issue expenses - warrants		-	(107,760)	107,760	-	-
Share-based payments		-	-	4,868,504	-	4,868,504
Reserves transfer - options		-	-	(241,725)	241,725	-
Reserves transfer - warrants		-	751,082	(792,032)	40,950	-
Loss for the year		-	-	-	(23,616,692)	(23,616,692)
As at 31 December 2008		1,875,174	209,136,256	9,942,383	(82,302,856)	138,650,957
As at 1 January 2009		1,875,174	209,136,256	9,942,383	(82,302,856)	138,650,957
Allotments during the year		261,222	105,006,877	-	-	105,268,099
Issue expenses - shares		-	(5,579,922)	-	-	(5,579,922)
Share-based payments		-	-	5,383,474	-	5,383,474
Reserves transfer - options		-	-	(582,513)	582,513	-
Reserves transfer - warrants		-	1,491,885	(1,491,885)	-	-
Loss for the year		-	-	-	(13,876,666)	(13,876,666)
As at 31 December 2009	18/19	2,136,396	310,055,096	13,251,459	(95,597,009)	229,845,942

 

 

African Minerals Limited is registered and domiciled in Bermuda and is listed on the AIM market of the London Stock Exchange.

 

Statement of compliance

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) adopted by the International Accounting Standards Board (IASB), and interpretations issued by the Standing Interpretations Committee of the IASB.

 

Basis of preparation

The Group financial statements have been prepared in accordance with the historical cost basis and are presented in US dollars. All values are rounded to the nearest dollar.

 

The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

 

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision only affects that period, or in the period of revision and future periods if the revision affects both current and future periods.

 

The accounting policies set out below have been applied consistently to all periods presented in the financial statements by all Group entities.

 

Basis of consolidation

Subsidiaries

The consolidated financial statements incorporate the financial information of African Minerals Limited and its subsidiaries. Subsidiaries are those entities over whose financial and operating policies the Group has the power to exercise control. Where necessary, the accounting policies of the subsidiaries are adjusted to ensure consistency with the policies adopted by the Group.

 

Transactions eliminated on consolidation

Intra-group balances and any unrealised gains and losses or income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements.

  

Intangible fixed assets

Exploration and evaluation costs arising following the acquisition of an exploration licence are capitalised on a project by project basis pending determination of the technical feasibility and commercial viability of the project. Costs incurred include appropriate technical and administrative overheads. Deferred exploration costs are carried at historical cost less any impairment losses recognised.

 

If an exploration project is successful, the related costs will be transferred to mining assets and amortised over the estimated life of mineral reserves on a unit of production basis. Where a project is relinquished, abandoned, or is considered to be of no further commercial value to the Company, the related costs are written off.

 

The recoverability of deferred exploration costs is dependent upon the discovery of economically recoverable mineral reserves, the ability of the Company to obtain necessary financing to complete the development of mineral reserves and future profitable production or proceeds from the disposal thereof.

 

1. ACCOUNTING POLICIES (CONTINUED)

 

Tangible Fixed Assets

Exploration costs are capitalised as intangible fixed assets until a decision is made to proceed to development. Related costs are then transferred to mining assets. Before reclassification, exploration costs are assessed for impairment and any impairment loss recognised in the profit and loss account. Subsequent development costs are capitalised under mining assets, together with any amounts transferred from intangible exploration assets. Mining assets are amortised over the estimated life of the commercial mineral reserves on a unit of production basis.

 

Plant and machinery, fixtures and fittings, motor vehicles and leasehold improvements are shown at cost less accumulated depreciation and impairment losses. The cost of tangible fixed assets is their purchase cost, together with any incidental cost of purchase.

 

Depreciation is charged to the income statement on a straight-line basis over the expected useful lives of the assets concerned. The depreciation rates are as follows:

Plant and machinery	20-30
Fixtures and fittings	20-30

 

Subsequent expenditure relating to a fixed asset item is capitalised when it is probable that future economic benefits from the use of the asset will be increased. All other subsequent expenditure is recognised as an expense in the period in which it is incurred. Repairs and maintenance which neither materially add to the value of assets nor appreciably prolong their useful lives are charged against income. Surpluses/(deficits) on the disposal of fixed assets are credited/(charged) to income. The surplus or deficit is the difference between the net disposal proceeds and the carrying amount of the asset.

 

Financial instruments:

Trade and other receivables

Trade and other receivables are stated at cost less provision for doubtful debts.

 

Cash and cash equivalents

Cash and cash equivalents are measured at fair value, based on the relevant exchange rates at balance sheet date.

 

Short-term investments

Deposits with financial institutions that are not repayable on demand without penalty are classified as short-term investments and are included within investing activities in the cash flow statement. Interest on short-term investments is recognised on an accruals basis over the life of the investment.

 

Derivative instruments

Derivative instruments are measured at fair value.

 

Impairment

The carrying amounts of the Group's assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. An asset's carrying value is written down to its estimated recoverable amount, being the higher of its net selling price and value in use, if that is less than the asset's carrying amount.

 

Impairment reviews for deferred exploration and evaluation costs are carried out on a project by project basis, as each project has the potential to be an economically viable cash generating unit. An impairment review is undertaken when indicators of impairment arise but normally when one of the following conditions apply;

- unexpected geological occurrences render a deposit uneconomic

- title to an asset is compromised

- variations in commodity prices render the project uneconomic

- variations in the currency of operation

- variations to the fiscal and tax legislation in the country of operation

 

 

 

 

 

 

 

 

 

 

 

 

1. ACCOUNTING POLICIES (CONTINUED)

 

Borrowings

Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost with any difference between the proceeds (net of transaction costs) and the redemption value recognised in the income statement over the period of the borrowings using the effective interest rate method.

 

Revenue

Revenue comprises gross diamond sale proceeds less selling costs. Selling costs include marketing commissions and costs, transportation, insurance and security costs and government royalty payments.

 

Operating leases

Payments made under operating leases are recognised on a straight-line basis over the term of the lease.

 

Net financing costs

Net financing costs comprise interest payable on borrowings calculated using the effective interest rate method and interest receivable on funds invested.

 

Deferred taxation

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit or loss. Deferred tax is provided using the full liability method.

 

A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the associated unused tax losses and deductible temporary differences can be utilised.

 

Foreign currencies

Transactions denominated in foreign currencies are translated at the exchange rate ruling at the date of transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the rates of exchange ruling at the balance sheet date. Any gain or loss arising from a change in exchange rates subsequent to the date of the transaction is included as an exchange gain or loss in the profit and loss account.

Inventories

Inventories are valued at the lower of cost and net realisable value.

 

Provisions

Provisions are recognised when the Group has a legal or constructive obligation as a result of past events, for which it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated.

 

The estimated cost of environmental rehabilitation on mine closure is based on the present value of estimated costs and a provision is raised accordingly.

 

Share- based payments

 

The Group issues equity-settled share-based payments to certain Directors, officers, employees and suppliers. Fully-paid shares are valued at market value at the date of issue. Options and warrants are valued at fair value at the date of grant and are expensed on a straight-line basis over the estimated vesting period.

 

Fair value is measured by use of the Black-Scholes pricing model. The estimated life of the instrument used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.

 

Segment reporting

A segment is a component of the Group distinguishable by geographical location (geographical segment), or by its economic activity (business segment), which is subject to risks and rewards that are different from those of other segments.

 

2. SEGMENT REPORTING

 

		Gold and
Business Segments	Iron Ore	base metals	Diamonds	Infrastructure	Corporate	Total
2009	US$	US$	US$	US$	US$	US$
Revenue	-	-	160,727	-	-	160,727
Operating profit/(loss)	11,279,900	(3,679)	-	(32,837)	700,038	11,943,422
Interest receivable	-	-	-	-	191,619	191,619
Tax	-	-	-	-	-	-
Profit/(loss) for the year	11,279,900	(3,679)	(26,011,707)	(32,837)	891,657	(13,876,666)
Segment assets	76,064,090	8,920,309	7,388,947	6,541,568	139,675,178	238,590,092
Segment liabilities	1,158,028	31,437	522,223	343,619	6,688,843	8,744,150
Cash utilised in operations	(862,835)	(594,297)	(8,990,139)	47,373	(9,379,565)	(19,779,463)
Cash flows from investing	(25,350,656)	(868,172)	(474,759)	(4,846,700)	(72,322,671)	(103,862,958)
Cash flows from financing	-	-	-	-	99,688,177	99,688,177
Net movement in cash and cash equivalents	(26,213,491)	(1,462,469)	(9,464,898)	(4,799,327)	17,985,941	(23,954,244)
Capital expenditure on tangible assets	149,021	-	-	-	771,890	920,911
Capital expenditure on intangible assets	26,326,762	868,172	474,759	4,846,700	-	32,516,393
Depreciation of tangible fixed assets	4,671,167	4,359	-	24,022	95,897	4,795,445
Amortisation of intangible fixed assets	-	-	-	-	-	-
Impairment of tangible fixed assets	-	-	19,320,508	-	-	19,320,508
Geographical segments	Sierra Leone	Canada	Bermuda	UK	Guernsey	Total
2009	US$	US$	US$	US$	US$	US$
Revenue	-	-	160,727	-	-	160,727
Segment assets	96,338,795	2,576,119	138,720,213	584,739	370,226	238,590,092
Segment liabilities	2,055,307	-	6,230,089	121,687	337,067	8,744,150
Cash utilised in operations	(10,709,888)	(385,831)	(4,188,260)	(1,533,847)	(2,961,637)	(19,779,463)
Cash flows from investing	(30,969,669)	(576,118)	(72,193,402)	(64,033)	(59,736)	(103,862,958)
Cash flows from financing	-	-	99,688,177	-	-	99,688,177
Net movement in cash and cash equivalents	(41,679,557)	(961,949)	23,306,515	(1,597,880)	(3,021,373)	(23,954,244)
Capital expenditure on tangible assets	154,521	-	642,621	64,033	59,736	920,911
Capital expenditure on intangible assets	31,940,275	576,118	-	-	-	32,516,393
Depreciation of tangible fixed assets	4,757,975	-	-	23,782	13,688	4,795,445
Amortisation of intangible fixed assets	-	-	-	-	-	-
Impairment of tangible fixed assets	19,320,508	-	-	-	-	19,320,508

 

 

		Gold and
Business Segments	Iron Ore	base metals	Diamonds	Infrastructure	Corporate	Total
2008	US$	US$	US$	US$	US$	US$
Revenue	-	-	2,213,905	-	-	2,213,905
Operating loss	(1,587,511)	(23,203)	(12,782,141)	(15,981)	(10,292,334)	(24,701,170)
Interest receivable	-	-	-	-	1,084,478	1,084,478
Tax	-	-	-	-	-	-
Loss for the year	(1,587,511)	(23,203)	(12,782,141)	(15,981)	(9,207,856)	(23,616,692)
Segment assets	71,385,782	6,210,196	40,552,160	(50,582)	34,718,943	152,816,499
Segment liabilities	1,025,143	815,113	785,268	150,311	4,089,685	6,865,520
Cash utilised in operations	1,094,073	10,165,096	(469,709)	130,997	(22,187,167)	(11,266,710)
Cash flows from investing	(18,339,647)	(15,137,751)	(2,326,088)	(3,022,931)	40,400,320	1,573,903
Cash flows from financing	-	-	-	-	35,549,156	35,549,156
Net movement in cash and cash equivalents	(17,245,574)	(4,972,655)	(2,795,797)	(2,891,934)	53,762,309	25,856,349
Capital expenditure on tangible assets	661,683	103,492	89,372	-	832,979	1,687,526
Capital expenditure on intangible assets	29,546,736	7,832,775	2,236,716	3,022,931	-	42,639,158
Depreciation of tangible fixed assets	1,387,887	5,171	4,495,651	-	93,727	5,982,436
Amortisation of intangible fixed assets	-	-	2,808,571	-	-	2,808,571
Impairment of tangible fixed assets	-	9,743,953	2,991,190	-	-	12,735,143
Geographical segments	Sierra Leone	Canada	Bermuda	UK	Guernsey	Total
2008	US$	US$	US$	US$	US$	US$
Revenue	1,884,187	-	329,718	-	-	2,213,905
Segment assets	116,070,206	2,103,091	34,093,921	524,552	24,729	152,816,499
Segment liabilities	3,071,560	488,704	3,049,059	254,752	1,445	6,865,520
Cash utilised in operations	(672,146)	8,214,521	(15,532,915)	(3,239,188)	(36,982)	(11,266,710)
Cash flows from investing	(28,997,728)	(9,828,689)	40,409,991	860	(10,531)	1,573,903
Cash flows from financing	-	-	35,549,156	-	-	35,549,156
Net movement in cash and cash equivalents	(29,669,874)	(1,614,168)	60,426,232	(3,238,328)	(47,513)	25,856,349
Capital expenditure on tangible assets	854,547	-	816,448	6,000	10,531	1,687,526
Capital expenditure on intangible assets	40,011,953	2,627,205	-	-	-	42,639,158
Depreciation of tangible fixed assets	5,951,723	-	-	30,073	640	5,982,436
Amortisation of intangible fixed assets	2,808,571	-	-	-	-	2,808,571
Impairment of tangible fixed assets	4,906,454	7,828,689	-	-	-	12,735,143

 

 

 

 

GEOGRAPHICAL ANALYSIS OF NET OPERATING EXPENSES

 

Year ended 31 December 2009	Sierra Leone	Bermuda	UK	Guernsey	Total
	US$	US$	US$	US$	US$
Depreciation of tangible fixed assets	4,757,975	-	23,782	13,688	4,795,445
Depreciation of tangible fixed assets
transferred to disposal group	(2,917,394)	-	-	-	(2,917,394)
Amortisation of intangible fixed assets	-	-	-	-	-
Loss on disposal of tangible fixed assets	592,594	-	-	-	592,594
Employee costs	2,740,993	621,204	250,682	2,259,244	5,872,123
Foreign exchange differences	(297,240)	(2,109,721)	(31,195)	(14,575)	(2,452,731)
Other operating charges	225,740	3,399,080	1,095,246	889,181	5,609,247
Financial assets at fair value
through profit or loss - fair value gains	-	(15,070,620)	-	-	(15,070,620)
Share-based payments	-	5,383,474	-	-	5,383,474
	5,102,668	(7,776,583)	1,338,515	3,147,538	1,812,138

 

Year ended 31 December 2008	Sierra Leone	Bermuda	UK	Guernsey	Total
	US$	US$	US$	US$	US$
Depreciation of tangible fixed assets	5,951,723	-	30,073	640	5,982,436
Amortisation of intangible fixed assets	2,808,571	-	-	-	2,808,571
Loss on disposal of tangible fixed assets	3,017,912	416,000	11,486	-	3,445,398
Employee costs	380,436	499,811	1,816,664	-	2,696,911
Foreign exchange differences	29,517	4,341,158	70,326	3,045	4,444,046
Other operating charges	1,188,052	3,480,471	1,332,530	27,025	6,028,078
Financial assets at fair value
through profit or loss - fair value losses	-	6,671,993	-	-	6,671,993
Share-based payments	-	4,868,504	-	-	4,868,504
	13,376,211	20,277,937	3,261,079	30,710	36,945,937

 

3. NET OPERATING EXPENSES

 

	2009		2008
	US$		US$
Depreciation of tangible fixed assets	4,795,445		5,982,436
Depreciation of tangible fixed assets
transferred to disposal group	(2,917,394)		-
Amortisation of intangible fixed assets	-		2,808,571
Loss on disposal of tangible fixed assets	592,594		3,445,398
Employee costs	5,872,123		2,696,911
Foreign exchange differences	(2,452,731)		4,444,046
Other operating charges	5,609,247		6,028,078
Financial assets at fair value
through profit or loss - fair value (gain)/loss	(15,070,620)		6,671,993
	(3,571,336)		32,077,433
Share-based payments:
Options (See Note 19)	5,383,474		4,868,504
	1,812,138		36,945,937

 

Net operating expenses include:
	2009		2008
	US$		US$
Auditors' remuneration:
-audit services	134,581		125,713
-other services	16,573		18,175
Operating leases payments	-		525,442

 

 

 

4. PROFIT ON DISPOSAL OF SUBSIDIARY

 

		Tranche 1	Tranche 2	2009		2008
	Note	US$	US$	US$		US$
Proceeds
Shares in Cape Lambert received during the year		3,409,775	12,430,507	15,840,282		11,395,725
Shares in Cape Lambert deferred	13	-	15,086,615	15,086,615		-
Cash received during the year		11	-	11		4,667,331
Cash deferred	13	-	-	-		20,000,000
Total proceeds		3,409,786	27,517,122	30,926,908		36,063,056
Net assets disposed		1,216,670	16,115,405	17,332,075		7,300,022
Profit on disposal of subsidiary		2,193,116	11,401,717	13,594,833		28,763,034

 

During the year, the Company sold 70% (2008: 30%) of the shares in Marampa Iron Ore Limited for consideration of US$30,926,908 (2008: US$36,063,056) and the profit on disposal amounted to US$13,594,833 (2008: US$28,763,034). The disposal was transacted in two separate tranches as follows:

 

On 22 January 2009, the Company sold 5% of the shares in Marampa Iron Ore Limited for consideration of US$3,409,786 (comprising shares in Cape Lambert Resources Limited (formerly Cape Lambert Iron Ore Limited) ("Cape Lambert") amounting to US$3,409,775 and cash amounting to US$11).

 

On 4 December 2009, the Company sold its remaining 65% interest in the shares in Marampa Iron Ore Limited in exchange for shares in Cape Lambert amounting to US$27,517,122, of which US$12,430,507 was satisfied by shares in Cape Lambert received during the year and US$15,086,615 was satisfied by shares in Cape Lambert received in January 2010, following the vote at Cape Lambert's General Meeting held on 25 January 2010 to issue the shares.

 

 

 

5. DIRECTORS' EMOLUMENTS

	2009		2008
	US$		US$
Aggregate emoluments	5,556,715		6,047,544

 

Detailed disclosures of the Director's remuneration and interests in shares and options over the Company's shares are shown in the Report of the Remuneration Committee.

 

No Director has retirement benefits accruing to him as a result of his services to the Group.

 

6. EMPLOYEE INFORMATION

 

The number of employees at the various mining and exploration operations (excluding the non-executive Directors of the Group) at the end of the period was 663 (2008: 870)

 

 

 

 

 

 

 

7. EMPLOYEE COSTS

 

	2009		2008
	US$		US$
Wages and salaries	8,943,203		6,800,869
Social security costs	216,118		406,312
	9,159,321		7,207,181
Less:
Cost of sales	-		(1,196,708)
Capitalised costs	(3,287,198)		(3,313,562)
Employee costs included within net operating expenses (note 3)	5,872,123		2,696,911

 

8. INTEREST RECEIVABLE

 

	2009		2008
	US$		US$
Interest receivable on short term investments	191,619		1,084,478

 

9. LOSS PER SHARE

	2009		2008
	US$		US$
Loss for the year	(13,876,666)		(23,616,692)
Continuing operations	12,135,041		(23,616,692)
Discontinued operations	(26,011,707)		-
Basic earnings/(loss) per share - cents

 

Basic earnings per share is calculated by dividing the profit attributable to equity holders of the company by the weighted average number of ordinary shares in issue during the year.

	Shares		Shares
Basic weighted average number of common shares in issue	199,628,275		164,695,368
Basic loss per share - cents	(6.95)		(14.33)
Basic earnings/(loss) per share continuing activities - cents	6.07		(14.33)
Diluted earnings/(loss) per share - cents

 

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. For share options, a calculation is done to determine the number of shares that could have been acquired at fair value (determined as the average annual market share price of the company's shares) based on the monetary value of the subscription rights attached to outstanding share options. The number of shares calculated as above is compared with the number of shares that would have been issued assuming the exercise of the share options.

 

	Shares		Shares
Basic weighted average number of common shares in issue	199,628,275		164,695,368
Adjustment for share options	10,202,154		-
	209,830,429		164,695,368
Diluted loss per share - cents	(6.95)		(14.33)
Diluted earnings/(loss) per share continuing activities - cents	5.78		(14.33)

 

10. INTANGIBLE FIXED ASSETS

				Total
				US$
Cost
At 1 January 2008				61,200,835
Additions				49,840,642
Disposals				-
Transfer from tangible assets				-
As at 31 December 2008				111,041,477
At 1 January 2009				111,041,477
Additions				27,884,339
Transferred to disposal group classified as held for sale				(21,137,820)
As at 31 December 2009				117,787,996
Amortisation
At 1 January 2008				18,737,396
Charge for the period				2,808,571
Impairment				12,735,143
As at 31 December 2008				34,281,110
At 1 January 2009				34,281,110
Charge for the period				-
Impairment				19,320,508
Transferred to disposal group classified as held for sale				(19,320,508)
As at 31 December 2009				34,281,110
Net book value
At 1 January 2008				42,463,439
At 31 December 2008				76,760,367
At 1 January 2009				76,760,367
At 31 December 2009				83,506,886

 

 

 

Intangible fixed assets comprise the cost of purchasing mineral exploration licences and certain deferred exploration expenditure on the Company's mineral licences. The Board of Directors regularly assesses the potential of each mineral licence and writes off any deferred exploration expenditure that it believes to be unrecoverable. The Board of Directors undertook an impairment review of the Group's intangible assets as at 31 December 2009 and the impairment charge for the current year (see note 26) was US$19,320,508 (2008: US$12,735,143).

 

 

 

11. TANGIBLE FIXED ASSETS

		Plant &		Fixtures &
		machinery		fittings		Total
		US$		US$		US$
Cost
At 1 January 2008		31,263,343		1,312,655		32,575,998
Additions		1,568,166		119,360		1,687,526
Disposals		(5,160,281)		(861,502)		(6,021,783)
As at 31 December 2008		27,671,228		570,513		28,241,741
At 1 January 2009		27,671,228		570,513		28,241,741
Additions		791,643		129,268		920,911
Disposals		(6,039,606)		(9,173)		(6,048,779)
Transferred to disposal group
classified as held for sale		(15,039,998)		(131,400)		(15,171,398)
As at 31 December 2009		7,383,267		559,208		7,942,475
Depreciation
At 1 January 2008		9,153,785		591,951		9,745,736
Charge for the year		5,740,058		242,378		5,982,436
Disposals		(1,818,896)		(323,489)		(2,142,385)
As at 31 December 2008		13,074,947		510,840		13,585,787
At 1 January 2009		13,074,947		510,840		13,585,787
Charge for the year		4,649,528		145,917		4,795,445
Disposals		(4,048,617)		(282,441)		(4,331,058)
Transferred to disposal group
classified as held for sale		(10,872,866)		(109,195)		(10,982,061)
As at 31 December 2009		2,802,992		265,121		3,068,113
Net book value
At 1 January 2008		22,109,558		720,704		22,830,262
At 31 December 2008		14,596,281		59,673		14,655,954
At 1 January 2009		14,596,281		59,673		14,655,954
At 31 December 2009		4,580,275		294,087		4,874,362

 

12. INVESTMENTS

	Company		Company
	2009		2008
	US$		US$
Cost and net book value
At 1 January	1,002		502
Additions	-		500
Disposals	(100)		-
At 31 December	902		1,002

 

 

 

The undertakings in which the Group's interest at the year end is more than 20% are as follows:

 

 

	Country of	Class of share		Percentage held	Percentage held
Subsidiary undertaking	incorporation	capital held	Principal activity	2009	2008
African Minerals (Guernsey) Ltd	Guernsey	Ordinary	Service company	100%	100%
African Minerals (SL) Ltd	Sierra Leone	Ordinary	Diamond exploration and service company	100%	100%
African Minerals (UK) Ltd	England	Ordinary	Service and holding company	100%	100%
African Minerals Engineering Ltd	Bermuda	Ordinary	Holding company	100%	-
African Minerals Engineering Ltd	England	Ordinary	Service company	100%	-
African Power (SL) Ltd	Sierra Leone	Ordinary	Power company	100%	100%
African Power Ltd	Bermuda	Ordinary	Holding company	100%	100%
African Railway & Port Services (SL) Ltd	Sierra Leone	Ordinary	Infrastructure company	100%	100%
African Railway & Port Services Ltd	Bermuda	Ordinary	Holding company	100%	100%
Gori Hills Nickel (SL) Ltd	Sierra Leone	Ordinary	Nickel exploration	100%	100%
Gori Hills Nickel Ltd	Bermuda	Ordinary	Holding company	100%	100%
Lovetta Uranium (SL) Ltd	Sierra Leone	Ordinary	Uranium exploration	100%	100%
Lovetta Uranium Ltd	Bermuda	Ordinary	Holding company	100%	100%
Marampa Iron Ore (SL) Ltd *	Sierra Leone	Ordinary	Iron ore exploration	-	70%
Marampa Iron Ore Ltd *	Bermuda	Ordinary	Holding company	-	70%
Nimini Hills Nickel (SL) Ltd	Sierra Leone	Ordinary	Nickel exploration	100%	100%
Nimini Hills Nickel Ltd	Bermuda	Ordinary	Holding company	100%	100%
Sierra Leone Gold (SL) Ltd	Sierra Leone	Ordinary	Gold and base metals exploration	100%	100%
Sierra Leone Gold Ltd	Bermuda	Ordinary	Holding company	100%	100%
Sierra Leone Hard Rock (SL) Ltd ^	Sierra Leone	Ordinary	Diamond exploration	100%	100%
Sierra Leone Hard Rock Ltd ^	Bermuda	Ordinary	Holding company	100%	100%
SLDC Management Ltd	Sierra Leone	Ordinary	Holding company	100%	100%
Tonkolili Iron Ore (SL) Ltd	Sierra Leone	Ordinary	Iron ore exploration	100%	100%
Tonkolili Iron Ore Ltd	Bermuda	Ordinary	Holding company	100%	100%
White River Resources Inc	Canada	Ordinary	Nickel exploration	100%	100%
White River Resources Ltd	Bermuda	Ordinary	Holding company	100%	100%

 

* These entities were sold during the year - see note 4
^ These entities were held for sale at the year end - see note 26

 

 

 

13. TRADE AND OTHER RECEIVABLES

	Group		Company		Group		Company
	2009		2009		2008		2008
	US$		US$		US$		US$
Non-current
Amounts owed by Group companies	-		170,732,237		-		147,146,491
	-		170,732,237		-		147,146,491
Current
Trade receivables	218,374		-		10,239		-
VAT Recoverable	225,251		-		185,522		-
Other debtors	18,023,564		15,086,674		20,323,700		307,395
Prepayments and deposits	3,911,263		3,556,248		1,972,955		596,497
	22,378,452		18,642,922		22,492,416		903,892

 

At 31 December 2008, other debtors included US$20,000,000 deferred funding to undertake feasibility study of Marampa Iron Ore Limited's exploration project (see note 4).

 

At 31 December 2009, other debtors included US$15,086,615 deferred share consideration in respect of the disposal of Marampa Iron Ore Limited (see note 4).

 

 

14. INVENTORIES

	2009		2008
	US$		US$
Diamonds held for resale	-		237,448
Gold	414,899		414,899
Consumables and stores	1,172,123		1,067,839
	1,587,022		1,720,186

 

15. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

 

	Group		Company		Group		Company
	2009		2009		2008		2008
	US$		US$		US$		US$
Listed securities:
Equity securities - UK	1,703,173		1,703,173		1,002,037		1,002,037
Equity securities - Australia	40,503,929		40,503,929		7,326,374		7,326,374
	42,207,102		42,207,102		8,328,411		8,328,411

Financial assets at fair value through profit or loss are presented within 'operating activities' as part of changes in working capital in the cash flow statement.

 

Changes in fair values of financial assets at fair value through profit or loss are recorded in 'Net operating expenses' in the Income Statement (see note 3).

 

16. SHORT TERM INVESTMENTS

	Group		Company		Group		Company
	2009		2009		2008		2008
	US$		US$		US$		US$
Short term deposits with banks	71,742,400		71,742,400		-		-

 

 

 

 

 

17. FINANCIAL INSTRUMENTS

 

The Group uses financial instruments comprising cash, liquid resources and items such as short term debtors and creditors that arise from its operations. The principal risks relate to currency exposure and liquidity. Short term debtors and creditors have been excluded from the following disclosures.

 

The Group uses financial instruments to maximise returns from funds held on deposit. The Group's policy is to raise cash in advance of when it is required by analysing the costs and benefits of equity and debt financing.

 

The breakdown of the Group and Company financial assets as at 31 December 2009 is shown below:

	Group		Company		Group		Company
	2009		2009		2008		2008
	US$		US$		US$		US$
Cash and bank balances	4,904,921		4,667,819		28,859,165		24,044,166
Short term investments:
Short term deposits with banks	71,742,400		71,742,400		-		-
	76,647,321		76,410,219		28,859,165		24,044,166

 

In respect of monetary assets and liabilities held in currencies other than US Dollars, the Group ensures that net exposure is kept to an acceptable level by buying or selling foreign currencies at spot rates where necessary to address short term imbalances. Foreign exchange differences on retranslation of such assets and liabilities are taken to the income statement.

 

Financial assets consist of short-term deposits in US Dollars and Sterling which earn market interest rates.

 

 

18. SHARE CAPITAL

	2009			2008
	Number of	2009		Number of	2008
	shares	US$		shares	US$
Authorised
Common shares of US$ 0.01 each	350,000,000	3,500,000		350,000,000	3,500,000
Preference shares of US$ 0.001 each	100,000,000	100,000		100,000,000	100,000
Issued and fully paid - common shares of US$ 0.01 each
At 1 January	187,517,441	1,875,174		155,258,241	1,552,582
Allotments during the period	26,122,213	261,222		32,259,200	322,592
At 31 December	213,639,654	2,136,396		187,517,441	1,875,174

 

i. On 16 June 2009, 100,000 new common shares were issued for consideration of US$122,670 on the exercise of share options.

ii. On 24 June 2009, 75,000 new common shares were issued for consideration of US$61,264 on the exercise of share options.

iii. On 3 July 2009, 200,000 new common shares were issued for consideration of US$242,745 on the exercise of share options.

iv. On 16 July 2009, 25,538,880 new common shares were issued by way of a placing for gross proceeds of US$104,575,329 before issue expenses of US$5,579,922.

v. On 21 July 2009, 200,000 new common shares were issued for consideration of US$247,215 on the exercise of share options.

vi. On 8 September 2009, 8,333 new common shares were issued for consideration of US$18,876 on the exercise of share options.

 

 

 

 

 

 

 

19. EQUITY RESERVES

 

a.) OPTIONS

The Group has issued share options under a share option scheme adopted by the Group on 5 November 2004. Movements in share options over US$ 0.01 common shares in the Company were as follows:

 

		2009		2008
		Weighted	2009	Weighted	2008
		average price	Number	average price	Number
Outstanding at beginning of year		126.1p	9,921,154	103.8p	10,601,154
Lapsed during year		84.8p	(516,667)	82.8p	(2,380,000)
Exercised during year		72.6p	(583,333)	75.0p	(750,000)
Cancelled during year		150.1p	(7,221,154)	0.0p	-
Granted during year		105.0p	15,048,455	164.1p	2,450,000
Outstanding at the end of the year		99.5p	16,648,455	126.1p	9,921,154
Exercisable at the end of the year			3,400,000		4,115,387

 

The fair value of options granted during the year was estimated using the Black-Scholes pricing model with the following significant assumptions:

 

Expected life (years)	5.0
Risk-free interest rate	2.48%
Volatility	78%
Weighted average fair value per option	$0.58

 

The stock-based compensation recognised as an expense in the year to 31 December 2009 was US$5,383,474 (2008: US$4,868,504). A transfer of US$582,513 (2008: US$241,725) was made from the equity reserve to the profit and loss reserve during the year. This represented the reversal of the charge made through the Income Statement prior to 2009 for options exercised in 2009.

 

Total options existing at 31 December 2009 over US$ 0.01 common shares in the Company are summarised below:

 

				At 31 December		At 31 December
Date of grant	Exercise Price	Expiry Date	Note	2009		2008
21 November 2004	50.0p	21 November 2010	1	1,000,000		1,000,000
21 November 2004	50.0p	21 November 2010	2	600,000		600,000
19 July 2005	75.0p	19 July 2010	2	-		100,000
7 September 2005	75.0p	7 September 2010	2	-		400,000
28 February 2006	50.0p	28 February 2011	2	-		75,000
5 April 2006	75.0p	5 April 2011	2	-		500,000
29 January 2007	115.0p	28 January 2012	2	-		1,300,000
1 May 2007	129.0p	30 April 2012	2	-		175,000
6 September 2007	165.5p	5 September 2012	2	-		500,000
9 November 2007	156.0p	8 November 2012	2	-		1,721,154
4 December 2007	149.5p	3 December 2012	2	-		1,200,000
8 January 2008	136.5p	7 January 2013	2	-		125,000
28 January 2008	117.0p	27 January 2013	2	-		500,000
19 February 2008	129.5p	18 February 2013	2	-		50,000
4 March 2008	163.5p	3 March 2013	2	-		400,000
18 March 2008	140.0p	17 March 2013	2	-		25,000
15 May 2008	194.5p	15 May 2013	2	-		1,000,000
24 June 2008	172.5p	23 June 2013	2	-		250,000
19 February 2009	50.0p	18 February 2014	2	11,598,455		-
3 March 2009	100.0p	30 June 2014	3	250,000		-
3 March 2009	140.0p	30 June 2014	3	250,000		-
3 March 2009	200.0p	30 June 2014	3	300,000		-
3 March 2009	250.0p	30 June 2014	3	400,000		-
3 March 2009	300.0p	30 June 2014	3	300,000		-
3 March 2009	350.0p	30 June 2014	3	300,000		-
3 March 2009	375.0p	30 June 2014	3	250,000		-
3 March 2009	400.0p	30 June 2014	3	450,000		-
27 July 2009	289.0p	26 July 2014	2	50,000		-
4 August 2009	315.0p	3 August 2014	2	500,000		-
5 August 2009	315.0p	4 August 2014	2	200,000		-
11 November 2009	374.0p	10 November 2014	2	200,000		-
				16,648,455		9,921,154

 

Note 1:

Subject to the rules of the Share Option Plan each of these options were fully vested on 10 May 2005.

 

Note 2:

Subject to the rules of the Share Option Plan and the requirements noted below, each of the outstanding options is exercisable as follows:

 

- one-third of the shares under option following the first anniversary of the date of grant,

- a further one-third of the shares under option following the second anniversary of the date of grant,

- the final one-third of the shares under option following the third anniversary of the date of grant,

 

provided that the option holder remains a director or employee of the Group, or if the option holder's employment is terminated, within ninety days of the termination.

 

Note 3:

Subject to the rules of the Share Option Plan each of the outstanding options is exercisable when the Company's share price has traded at or above the Exercise Price for 14 consecutive trading days.

 

 

 

Details of share options exercised, lapsed and cancelled during the year are as follows:

 

	Exercise
	price	Date of Grant	Date of exercise	Number of options
Directors	115.0p	29 January 2007	Cancelled	1,000,000
	117.0p	28 January 2008	Cancelled	500,000
	194.5p	15 May 2008	Cancelled	1,000,000
Senior management	75.0p	5 April 2006	16 June 2009	100,000
	75.0p	5 April 2006	3 July 2009	200,000
	75.0p	5 April 2006	21 July 2009	200,000
	50.0p	28 February 2006	24 June 2009	75,000
	136.5p	8 January 2008	8 September 2009	8,333
	75.0p	7 September 2005	Lapsed	400,000
	136.5p	8 January 2008	Lapsed	16,667
	115.0p	29 January 2007	Lapsed	100,000
	75.0p	19 July 2005	Cancelled	100,000
	115.0p	29 January 2007	Cancelled	200,000
	129.0p	1 May 2007	Cancelled	175,000
	165.5p	6 September 2007	Cancelled	500,000
	156.0p	9 November 2007	Cancelled	1,721,154
	149.5p	4 December 2007	Cancelled	1,200,000
	136.5p	8 January 2008	Cancelled	100,000
	129.5p	19 February 2008	Cancelled	50,000
	163.5p	4 March 2008	Cancelled	400,000
	140.0p	18 March 2008	Cancelled	25,000
	172.5p	24 June 2008	Cancelled	250,000

 

b.) WARRANTS

Movements in warrants over US$ 0.01 common shares in the Company in the year were as follows:

		2009	2008
		Number	Number
As at 1 January		1,341,667	2,325,000
Warrants granted in the year		-	266,667
Warrants lapsed in the year		(1,075,000)	(300,000)
Warrants exercised in the year		-	(950,000)
As at 31 December		266,667	1,341,667

 

During the year, a transfer of US$1,491,885 (2008: US$751,082) was made from the equity reserve to the share premium account representing the reversal of the charge made against the share premium account for warrants lapsed in 2009. Also in the year a transfer of US$nil (2008: US$40,950) was made from the equity reserve to the profit and loss account reserve, representing the charge previously expensed through the Income Statement on warrants exercised. The fair value of warrants included as a share issue cost and charged to the Share Premium Account was US$nil (2008: US$107,760).

 

Total warrants existing at 31 December 2009 over US$ 0.01 ordinary shares in the Company are summarised below:

 

Date of grant	Number of warrants	Exercise price US$	Expiry date
October 2008	266,667	1.09	April 2010

 

 

20. PROVISIONS

	Group		Company		Group		Company
	2009		2009		2008		2008
	US$		US$		US$		US$
Employee benefit provision	731,094		-		690,210
Alluvial mine restoration	-		-		475,154		-
	731,094		-		1,165,364		-

 

21. TRADE AND OTHER PAYABLES

	Group		Company		Group		Company
	2009		2009		2008		2008
	US$		US$		US$		US$
Trade creditors	6,281,974		5,436,827		5,228,930		2,933,227
Other taxes and social security	374,808		-		295,516		-
Accruals	834,051		794,072		175,710		115,832
	7,490,833		6,230,899		5,700,156		3,049,059

 

22. OPERATING LEASE COMMITMENTS

 

At 31 December, the Group had annual commitments under non-cancellable operating leases expiring:

 

	Group			Company		Group				Company
	2009			2009		2008				2008
	US$			US$		US$				US$
		Land &		Plant &			Land &		Plant &
		buildings		equipment			buildings		equipment
		2009		2009			2008		2008
		US$		US$			US$		US$
Within one year		-		-			120,465		-
Between two and five years		-		-			-		-

 

 

23. POST BALANCE SHEET EVENT

 

On 11 February 2010, the Company announced that it had raised £80 million before issue costs by way of a cash placing with institutional investors. A total of 20 million new common shares in the company were placed at the price of 400 pence per share.

 

On 31 March 2010, the Company signed three definitive agreements with China Railway Materials Commercial Corporation (CRM) in connection with the Tonkolili iron ore project. The principal terms of the agreements are as follows:

 

Subscription Agreement

On Completion CRM will acquire 33,579,474 common shares of the Company at £5.00 per share, for a total consideration of £167,897,370 and representing 12.5% of the enlarged issued share capital of the Company. Following Completion the issued share capital of the Company will be 268,635,793 common shares. The funds from the subscription together with the funds raised in the underwritten cash placing completed on 11 February 2010 will fully fund the planned capital expenditure for the Company's development of Phase One of the Project. Under the Subscription Agreement CRM has the right to maintain its 12.5% shareholding in the event of any future equity placings by the Company. CRM has the right to appoint one non-executive director to the board of the Company and to retain this position unless CRM's shareholding in the Company falls below 5%. Subject to conditions Completion is expected to occur no later than 31 July 2010.

 

Hematite Agency Agreement

The Company has appointed CRM as the Company's exclusive agent for expected sales into China of no less than 5 Mtpa and no more than 8 Mtpa of hematite iron ore. The Hematite Agency Agreement will commence on the earlier of the first commercial production of hematite iron ore from the Project or 31 December 2011 and will terminate on the 20th anniversary of its commencement. Under the Hematite Agency Agreement CRM will receive a commission on hematite iron ore sold by the Company to Chinese buyers. The Hematite Agency Agreement is conditional upon Completion of the Subscription Agreement

 

Magnetite Guaranteed Off-take Agreement

The Company and CRM have entered into a magnetite iron ore purchase agreement under which CRM will buy a minimum of 10 Mtpa of the Company's magnetite production from Phase Two of the Project in each contract year. The Off-take Agreement will commence on the date that the Company is in a position to commence commercial production of and ship magnetite iron ore from the Tonkolili mine and will be for a minimum of 20 years. The price to be paid by CRM will be determined based on generally accepted international benchmark pricing. Pricing is based on "FOB Trimmed" pricing and will be reviewed annually. CRM has the right to extend the Magnetite Off-take Agreement for a further five years upon 12 months' notice to the Company. The Magnetite Off-take Agreement is conditional upon Completion of the Subscription Agreement.

 

24. RELATED PARTY TRANSACTIONS

 

During the year, the following related party transactions occurred:

 

(a) Rent and administration services, excluding VAT, amounting to US$357,281 (2008: US$nil) and security deposits amounting to US$46,988 (2008: US$nil) were charged by Eastern Petroleum Corporation Limited, a company of which Frank Timis is a director and has an ownership interest. In the balance sheet as at the year end, trade and other receivables includes security deposits amounting to US$46,988 (2008: US$nil) owed by Eastern Petroleum Corporation Limited and trade and other payables includes US$61,341 (2008: US$nil) owed to Eastern Petroleum Corporation Limited.

 

(b) Legal fees, excluding VAT, amounting to US$360,437 (2008: US$590,214) were charged by Clyde & Co LLP, a firm of which Christopher Duffy is a partner. In the balance sheet as at the year end, trade and other payables includes US$122,705 (2008: US$226,856) owed to Clyde & Co LLP.

 

 

25. REPORTING JURISDICTIONS

 

The Company is a reporting issuer in certain Canadian jurisdictions. However, the Company is a "designated foreign issuer" as defined in Canadian National Instrument 71-102 and is subject to foreign regulatory requirements, including those of the AIM market of the London Stock Exchange. As such, the Company is exempt from certain requirements otherwise imposed on reporting issuers in Canada. In particular, financial statements of the Company may be prepared under International Financial Reporting Standards or accounting principles that meet the non-Canadian disclosure requirements to which the Company is subject.

 

 

26. ASSETS OF DISPOSAL GROUP CLASSIFIED AS HELD FOR SALE AND DISCONTINUED OPERATIONS

 

The assets and liabilities related to Sierra Leone Hard Rock Limited and its subsidiary company Sierra Leone Hard Rock (SL) Limited have been presented as held for sale. The Group's management decided in late 2009 to divest the Group of its diamond operations so as to concentrate fully on its iron ore development at Tonkolili. On 13 January 2010 it was announced that on 12 January 2010 the Group had completed the sale of Sierra Leone Hard Rock Limited and its subsidiary company to Obtala Resources plc in a share transaction valued at US$6,866,724.

 

(a) Assets of disposal group classified as held for sale
	Group		Group
	2009		2008
	US$		US$
Property, plant and equipment	4,189,337		-
Intangible assets	1,817,312		-
Inventory	1,381,742		-
Other current assets	556		-
	7,388,947		-
(b) Liabilities of disposal group classified as held for sale
	Group		Group
	2009		2008
	US$		US$
Trade and other payables	29,513		-
Other current liabilities	159		-
Provisions	492,551		-
	522,223		-

 

Analysis of the result of discontinued operations, and the result recognised on the re-measurement of assets of disposal group, is as follows:

	Group		Group
	2009		2008
	US$		US$
Revenue	237,448		-
Expenses	(6,928,647)		-
Loss before tax of discontinued operations	(6,691,199)		-
Tax	-		-
Loss after tax of discontinued operations	(6,691,199)		-
Pre-tax loss recognised on the re-measurement of
assets of disposal group	(19,320,508)		-
Tax	-		-
After tax loss recognised on the re-measurement of
assets of disposal group	(19,320,508)		-
Loss for the year from discontinued operations	(26,011,707)		-