Final Results

27th May 2009 07:00



NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO THE UNITED STATES OR TO US PERSONS (AS DEFINED IN REGULATION S UNDER THE US SECURITIES ACT OF 1933, AS AMENDED)

 Wednesday 27 May, 2009 AIM:CLF / TSX:CFG

Cluff Gold plc

("Cluff Gold" or the "Company")

Preliminary Results for the Year Ended 31st December, 2008

Highlights 

For the year ended 31 December 2008 (the period under review) and the period ended 26 May 2009

 

  Comment

Algy Cluff, Chairman and Chief Executive, said today "2008 has been a pivotal year for the Company in that this was the year which saw us emerge from an explorer to a producer. To bring two mines onto production in two countries, neither of which has a strong mining support framework, was a formidable task but with a good team, hard work and a little luck, we won through. I am pleased to report that production this year has improved month on month and I expect both operations to be out of commissioning by mid-year with indications supporting combined production of 100,000 ounces of gold for 2009.

I am also pleased to report that for the fourth year running our Group resource position has increased and is now over 2 million ounces of Measured and Indicated resources of gold with an additional Inferred resource of over 600,000 ounces of gold. Most of this increase came from Baomahun, our flagship Gold Project located in Sierra Leone, where we acquired the remaining 40% interest in August 2008.

Financially, the Company raised just over US$25 million at the beginning of 2008 in order to complete the construction of the two Gold Mines at Kalsaka and Angovia and thought it prudent to arrange a Loan Facility of US$10 million in September of last year to ensure adequate working capital throughout the commissioning phase of both mines. This year, an amount of just over US$11 million was raised principally to accelerate the drilling programme at Baomahun before the onset of rains. I am hopeful that results from this drilling will provide support for an enlarged mining operation including both open pit and underground workings.

With a resilient gold price, forecast production from operations and good results from our drilling programme, I am confident that we shall build upon the efforts of 2008 and end this year in a strong position to take advantage of opportunities within our area of West Africa."

Results

The consolidated net loss after taxation of the Group in respect of the year ended 31 December 2008 amounted to US$945,005 (2007: loss of US$4.8 million); loss per share 1.08 cents (2007: 7.47 cents). The result for the year includes a credit in respect of the acquisition of the remaining 40% interest in the Baomahun Gold Project which has arisen as a consequence of the fair value rules which underpin IFRS. Also, it should be noted that whilst operations are in the commissioning phase, operating results are not reflected on the income statement but are instead included within mining development costs on the balance sheet.

The assets of the Group at 31 December 2008 amounted to US$128.5 million (2007: US$69.6 million) which include intangible assets amounting to approximately US$43.1 million (2007: US$10.7 million) and tangible assets amounting to approximately US$77.4 million (2007: US$41.4 million). Intangible assets include accumulated deferred exploration and evaluation costs mainly on the Baomahun Gold Project; the acquisition cost of the remaining interest in Baomahun and the assigned value of the mining licences granted by the governments of Burkina Faso and Cote d'Ivoire. 

Cash balances held by the Group at year end amounted to approximately US$5.2 million (2007: US$13.9 million). In March 2008, the Company raised approximately US$25.4 million before expenses through a private placement of 14,570,000 shares at 88 pence per share. These funds were used principally to complete the construction of the Angovia and Kalsaka Gold Mines. In September 2008, in order to ensure adequate working capital through the commissioning phase of both operations, the Company arranged a US$10 million Loan Facility with RMB Australia Holdings Limited, of which US$6 million has been drawn down.

Post Balance Sheet Events

In February 2009, the Company listed on the Toronto Stock Exchange and in March 2009, the Company successfully raised gross proceeds of US$11.4 million through the placement of 20,285,000 shares at 40 pence per share. These funds will be used principally to accelerate the drilling programme designed to test the down dip and along strike extensions at the Baomahun Gold Project in Sierra Leone and to increase production at the Kalsaka Gold Mine by further investment in the on-site plant and equipment and through additional ore reserve drilling.

Dividend policy

The Directors do not recommend the payment of a dividend.

Annual Report

The Annual Report and Accounts will be available on our website www.cluffgold.com and will be posted to shareholders on 3 June, 2009.

Annual General Meeting (AGM)

The AGM will be held on 26 June 2009 at 10am at the offices of Maclay Murray & Spens LLP, One London Wall, London, EC2Y 5AB. 

  Competent Person

Douglas D. Chikohora has reviewed and approved the information contained in this announcement. Mr Chikohora (MSc, MIMMM, CEng) is Technical Director of the Company. Further information regarding Group resources may be found in tabular form on the Company's website and in the Annual Report. 

For further information, please contact:

Cluff Gold J.G. Cluff / Eileen Carr	WH Ireland Katy Mitchell
Chairman / Director
Tel: +44 (0) 20 7340 9790	Tel: +44 (0) 161 832 2174

Joanna Longo Investor Relations (Canada) The Equicom Group +1 416 815 0700 ext 233 [email protected]

Simon Robinson Investor Relations (U.K.) Farm Street Communications Ltd +44 (0) 207 099 2212 [email protected]

This News Release includes certain "forward-looking information" within the meaning of applicable Canadian securities legislation. All statements other than statements of historical fact, included in this release, including, without limitation, the positioning of the Company for future success, statements regarding potential future production at Angovia and Kalsaka, exploration and drilling results at Baomahun, and future capital plans and objectives of Cluff Gold, are forward-looking information that involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from Cluff Gold's expectations include, among others, risks related to international operations, the actual results of current exploration and drilling activities, changes in project parameters as plans continue to be refined as well as future price of gold. Although Cluff Gold has attempted to identify important factors that could cause actual results to differ materially, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. Cluff Gold does not undertake to update any forward-looking statements that are included herein, except in accordance with applicable securities laws.

NO REGULATORY AUTHORITY HAS APPROVED OR DISAPPROVED THE CONTENT OF THIS PRESS RELEASE.

Dear Shareholder,

2008 has been a pivotal year in the development of your Company. It was the year which saw us emerge from "explorer" to "producer". Two mines were brought into production and our flagship exploration project continued to improve. I will not deny that, at times, operational challenges have been tough, but with a good team, hard work and a little luck we have ended the year in much better shape than when we began. I believe that 2009 will see the fruition of our past efforts, with production from both the Kalsaka and Angovia Gold Mines improving on a monthly basis. I am also pleased to report that drilling has restarted at Baomahun where the resource will be tested at depth and along strike, the results of which could expand that resource significantly. 

Operations

Angovia Gold Mine poured its first gold in March 2008. The development timetable for this mine had experienced some delays from inclement weather and late delivery of equipment and continued to face challenges throughout 2008 with poor performance from the reconditioned plant and equipment and low production rates from the mining contractor due to poor levels of equipment availability. In order to overcome these problems, certain plant and equipment were replaced or upgraded and the mining contractor increased the size of the mining fleet in January 2009. The results so far this year have been encouraging, with mining performance currently close to budget. However, as with most heap leach projects, it takes time for this increase in mining performance to translate into gold production. That said, I am confident that the tide has turned at Angovia and that the mine will be fully commissioned by mid year. 

Kalsaka Gold Mine poured its first gold in October 2008 and although this was later than expected, the ramp up of production has been as scheduled. Gold production in the first quarter of 2009 was 12,890 ounces and the gold plant has now been successfully commissioned. The mining contractor was replaced at the year end and a newer, larger mining fleet has now been deployed. All in all, I am pleased to report that operations are on track to achieve our forecast gold production of 60,000 ounces for 2009. 

To bring two gold mines into production in the same year in two countries, neither of which has a strong mining support framework, has been a formidable task and I applaud our personnel in Cote d'Ivoire, Burkina Faso and London for achieving this feat.

Exploration

During the year, results from our exploration work have significantly increased the potential of the Baomahun Gold Project. Our Measured and Indicated resources categories for Baomahun increased sevenfold during this period to over 1.0 million ounces of gold and results from deeper drilled holes indicate the possibility of the original open pit resource being supplemented by an underground deposit. Work has started to test this potential with a 15,000 metre drilling programme already underway.

Exploration elsewhere during 2008 was put on hold as the Group focused its attention and funds on bringing the two new gold mines into production. 

Acquisition

In February 2008, your Company successfully negotiated the acquisition of the remaining 40% of the Baomahun Gold Project for the sum of US$21.8 million, which was to be satisfied by the issue of 12.4 million shares in your Company, subject to the completion of various conditions precedent. In August of 2008, the last remaining condition, being the Government approval of the Mining Lease, had been achieved and the shares were duly issued. However, during the period from February to August 2008, the share price of your Company had fallen in line with world markets thus creating an unrealisable gain of US$9 million which has been credited to this year's income statement.

I am very pleased that we acquired 100% ownership of the Baomahun Gold Project as I believe this project has major potential.

Financing

In March 2008, your Company successfully completed a placing of 14,570,000 ordinary shares at a price of 88 pence per share and raised approximately US$25.4 million before expenses. The funds were raised with the support of BMO Capital Markets, W H Ireland Limited and Smith's Corporate Advisory Limited. The funds raised were used to complete the construction and development of both the Angovia and Kalsaka Gold Mines and to complete the exploration drilling at the Baomahun Gold Project.

In September 2008, a US$10 million Loan Facility was arranged with RMB Australia Holdings Limited to ensure adequate working capital during the commissioning phase of both gold mines. Currently, US$6 million has been drawn down from this facility.

A further fundraising was completed in March 2009 which is described below in "Post balance Sheet Events".

Market

Gold remains an enigma - notwithstanding its relatively robust performance it continues to disappoint its more evangelical supporters by failing to erupt though the US$1,000 per ounce barrier. This may not altogether be a bad thing as I fear that if it does stage a sustained rally the law of diminishing returns could apply with Governments introducing excess profit taxes and workers demanding higher wages. It must also be recognised that, although the intellectual case for holding and investing in gold is very compelling in this uncertain economic environment, gold has its enemies - notably the civil servants and politicians. A high gold price suggests they are failing to do their job properly and through Central Banks, they have the power to hold back the price. At some point, of course, even they could be overwhelmed by the inflation which they seem to deliberately foster. In the meanwhile if gold moves in a band between US$850 and US$1,000 per ounce our gold mines should provide highly satisfactory returns.

Post balance sheet events

In February 2009, the Toronto Stock Exchange granted approval for the listing of your Company's shares on that Exchange under the symbol "CFG". Our shares will continue to be quoted and traded on AIM but I hope that this secondary listing will enhance investor choice, improve liquidity for shareholders and provide greater access for investors in our stock.

In March 2009, your Company successfully completed a placing of 20,285,000 ordinary shares at a price of 40 pence per share and raised approximately US$11.4 million before expenses. The funds were raised with the support of BMO Capital Markets, Thomas Weisel Partners and Smith's Corporate Advisory Limited, all of whom I would like to thank especially as raising money in this current economic climate is not without its challenges. The funds raised have enabled your Company to commence further exploration drilling at the Baomahun Gold Project prior to the onset of rains in Sierra Leone and will also allow for additional drilling at and around the Kalsaka Gold Mine in order to increase the mineral resource thereby supporting increased throughput at that gold mine.

Board

I would like to welcome Ronald Winston and Geoffrey Stanley to our Board of Directors, both of whom joined at the beginning of October. Ronald, best known as Chairman of Harry Winston Inc., brings with him a wealth of experience of doing business in Africa while Geoffrey has many years' experience worldwide not only on the technical side but also on the corporate side of mining. Both directors are based in North America and will be most helpful in supporting our Toronto listing. I am very pleased that your Company continues to attract such high calibre members to the Board.

Conclusion

It is the judgement of some that we operate in a politically volatile part of the world. This argument could be construed as a criticism of virtually anywhere in the developing world at the moment. However, in West Africa we are involved in countries which we believe boast excellent geology and which is complemented by sensible mining investment codes. In addition, the law to which they adhere is based on the English and French systems. We have, in the countries in which we operate, established sensible and practical partnerships with the governments with whom we work and, whilst there is no denying the complexity of operating mines in Africa, I am confident that we have the capacity to do so. I would like to thank our country teams for their hard work and dedication; my fellow board members for their support; and you the shareholder for staying with us during one of the most tumultuous times in living memory.

J.G.Cluff

Chairman and Chief Executive

26 May, 2009

Cluff Gold plc and subsidiary undertakings

CONSOLIDATED INCOME STATEMENT

For the year ended 31 December 2008

		2008	2007
		US$	US$
OPERATING COSTS General and administrative		(8,422,750)	(5,629,533)
Exploration costs written off		(781,256)	-
Negative goodwill arising on acquisition of subsidiary		8,956,273	-
OPERATING LOSS		(247,733)	(5,629,533)
Interest payable and similar charges		(1,099,839)	(742,933)
Interest receivable and similar income		402,567	1,591,507
Loss before taxATION		(945,005)	(4,780,959)
Taxation		-	-
Loss after taxation		(945,005)	(4,780,959)
Loss per share (CENTS) - Basic and diluted		(1.08)	(7.47)

  

Cluff Gold plc and subsidiary undertakings

CONSOLIDATED BALANCE SHEET 

As at 31 December 2008

		2008	2007
		US$	US$
ASSETS
Non-current assets
Intangible assets
- Exploration costs and exploration and mining rights		43,071,310	10,693,223
Property, plant and equipment
- Mine development costs		77,372,771	41,395,030
- Other		879,254	1,275,479
TOTAL NON-CURRENT ASSETS		121,323,335	53,363,732
Current assets
Trade and other receivables		1,956,427	2,174,099
Inventories of mined ore and consumables		-	103,575
Cash at bank		5,171,404	13,921,966
TOTAL CURRENT ASSETS		7,127,831	16,199,640
TOTAL ASSETS		128,451,166	69,563,372
CAPITAL AND RESERVES
Share capital		1,840,697	1,288,558
Share premium		89,407,388	64,990,510
Share option reserve		3,151,989	1,611,500
Merger reserve		15,107,298	2,500,366
Accumulated losses		(5,375,963)	(12,845,955)
Currency translation reserve		699,715	6,715,029
Total equity		104,831,124	64,260,008
NON-Current liabilities
Provisions for other liabilities and charges		4,102,653	1,250,620
TOTAL NON-CURRENT LIABILITIES		4,102,653	1,250,620
Current liabilities
Trade and other payables		19,517,389	4,052,744
TOTAL CURRENT LIABILITIES		19,517,389	4,052,744
TOTAL LIABILITIES		23,620,042	5,303,364
TOTAL EQUITY AND LIABILITIES		128,451,166	69,563,372

Cluff Gold plc and subsidiary undertakings

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 

For the year ended 31 December 2008

	Share  capital	Share  premium	Share option  reserve	Merger reserve	Currency translation reserve	Accumulated  losses	Total  equity
	US$	US$	US$	US$	US$	US$	US$
BALANCE AT 1 JANUARY 2008	1,288,558	64,990,510	1,611,500	2,500,366	6,715,029	(12,845,955)	64,260,008
Loss for the period	-	-	-	-	-	(945,005)	(945,005)
Profit on partial disposal of subsidiaries	-	-	-	-	-	8,414,997	8,414,997
Exchange translation differences on consolidation	-	-	-	-	(6,015,314)	-	(6,015,314)
Total recognised income and expenses	-	-	-	-	(6,015,314)	7,469,992	1,454,678
Issue of ordinary share capital	552,139	26,295,077	-	12,606,932	-	-	39,454,148
Issue costs		(1,878,199)	-	-	-	-	(1,878,199)
Share option charge	-	-	1,540,489	-	-	-	1,540,489
BALANCE AT 31 DECEMBER 2008	1,840,697	89,407,388	3,151,989	15,107,298	699,715	(5,375,963)	104,831,124
BALANCE AT 1 JANUARY 2007	844,104	37,282,361	1,326,884	2,500,366	2,568,705	(8,064,996)	36,457,424
Loss for the period	-	-	-	-	-	(4,780,959)	(4,780,959)
Exchange translation differences on consolidation	-	-	-	-	4,146,324	-	4,146,324
Total recognised income and expenses	-	-	-	-	4,146,324	(4,780,959)	(634,635)
Issue of ordinary share capital	444,454	29,735,227	-	-	-	-	30,179,681
Issue costs	-	(2,027,078)	-	-	-	-	(2,027,078)
Share option charge	-	-	284,616	-	-	-	284,616
BALANCE AT 31 DECEMBER 2007	1,288,558	64,990,510	1,611,500	2,500,366	6,715,029	(12,845,955)	64,260,008

Cluff Gold plc and subsidiary undertakings

CONSOLIDATED CASH FLOW STATEMENT 

For the year ended 31 December 2008

	2008	2007
	US$	US$
CASH FLOWS USED IN OPERATING ACTIVITIES
Operating loss for the period	(247,733)	(5,629,533)
Depreciation	79,056	58,191
(Decrease)/increase in trade and other payables	(39,706)	4,354,850
Decrease/(increase) in trade and other receivables	217,672	(463,524)
Increase in stock and work in progress	-	(103,575)
Share option charge	766,494	284,616
Exploration costs written off	781,256	-
Negative goodwill on acquisition	(8,956,273)	-
Exchange loss	718,079	-
NET CASH FLOWS USED IN OPERATING ACTIVITIES	(6,681,155)	(1,498,975)
CASH FLOWS USED IN INVESTING ACTIVITIES
Interest receivable	397,409	1,499,725
Interest payable	(73,232)	(662)
Purchase of property, plant and equipment	(25,703,554)	(22,537,283)
Purchase of intangible assets	(6,658,766)	(10,801,495)
NET CASH FLOWS USED IN INVESTING ACTIVITIES	(32,038,143)	(31,839,715)
CASH FLOWS FROM financing ACTIVITIES
Proceeds from the issue of share capital	26,602,422	30,179,681
Issue costs paid	(1,878,199)	(2,027,078)
Net proceeds from, loan	5,929,042	-
Amounts funded on behalf of joint venture party	-	(1,170,000)
NET CASH FLOWS FROM FINANCING ACTIVITIES	30,653,265	26,982,603
NET DECREASE IN CASH AND CASH EQUIVALENTS	(8,066,033)	(6,356,087)
Cash and cash equivalents at start of period	13,921,966	21,180,012
Exchange losses on cash and cash equivalents	(1,440,222)	(901,959)
CASH AND CASH EQUIVALENTS AT END OF PERIOD	4,415,711	13,921,966
CASH AND CASH EQUIVALENT COMPRISE
Cash at bank	3,151,512	622,504
Short term deposits	2,019,892	13,299,462
	5,171,404	13,921,966
Bank overdraft	(755,693)	-
Cash and cash equivalents	4,415,711	13,921,966

  

The financial information set out in this preliminary statement does not constitute the group's statutory financial statements for the year ended 31 December 2008, but is derived from those financial statements. The financial statements for 2008 have not been delivered to the Registrar of Companies and will be distributed to shareholders prior to the Company's Annual General Meeting. The auditors have reported on these financial statements and have issued an unqualified report which does not contain statements under the UK Companies Act 1985, s237 (2) or (3). An emphasis of matter paragraph is included in their audit report regarding the carrying value of the Angovia Gold Mine. The financial statements for 2007 have been delivered to the Registrar of Companies.

1. Summary of significant accounting policies

a) Basis of Preparation

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 in the financial statements. 

The financial information is presented in US Dollars. The functional currency of the parent Company is currently Sterling. Operations denominated in other currencies are included in this financial information in accordance with the policies set out below. The group has chosen to present its financial statements in US dollars as it is the currency most relevant to our investors.

b) Nature of business and going concern

The Company is a public company incorporated and domiciled in England. The address of the registered office is 24 Queen Anne's Gate, London, SW1H 9AA

The Group is involved in the acquisition, exploration and development and operation of gold deposits in West Africa.

The Group has raised equity funds in discrete tranches in order to fund both its exploration and development activities. The Company raised gross proceeds of approximately US$25.4 million in March 2008 by way of a placement in order to fund the completion of construction of the Angovia and Kalsaka Gold Mines and to fund the requirements for working capital during the commissioning phase of both operations. Due to the delay in start up of both mines, the Company arranged a US$10 million facility with RMB Australia Holdings Limited in September 2008 in order to ensure adequate working capital cover. At the date of this report, US$6 million of this facility had been drawn down. In March 2009, the Company raised gross proceeds of US$11.4 million in order to accelerate definition drilling on the Baomahun Gold Project; to increase the resource at Kalsaka by additional drilling and to upgrade the plant at the Kalsaka Gold Mine in order to increase throughput. The cash balance at the end of April stood at US$11.6 million.

As stated elsewhere in this report, the Kalsaka Gold Mine is performing to expectations and mining performance at the Angovia Gold Mine has significantly improved since the beginning of 2009. The gold price remains strong and indications are that this will continue.

Given these financial resources, the current and anticipated performance of the Group's operations and the strong gold price, the Directors consider it appropriate to prepare these financial statements on the going concern basis. The use of that basis assumes that the Company meets its commitments as they fall due.

  c) Mining and development costs

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 is recognised in the income statement. Subsequent development costs are capitalised under mining assets, together with any amounts transferred from intangible exploration assets. During the commissioning of each project, all costs directly related to that operation are capitalised. Any revenues generated during this period are treated as a contribution against those costs and credited against mining and development costs. At the end of the commissioning phase, when the mine is capable of substantially operating in the manner intended by management, capitalisation ceases and the mining assets are amortised over the estimated life of the commercial ore reserves on a unit of production basis.

d) Intangible fixed assets - deferred exploration and evaluation costs

All costs incurred prior to obtaining the legal right to undertake exploration and evaluation activities on a project are written off as incurred.

All costs associated with mineral exploration and investments are capitalised on a project by project basis, pending determination of the feasibility of the project. Costs incurred include appropriate technical and administrative expenses. If an exploration project is successful, the related costs will be transferred to mining assets and amortised over the estimated life of the commercial ore 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 group, the related costs are written off.

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

2.	LOSS PER SHARE	2008	2007
	The calculation of the basic and diluted earnings per share is based on the following data:	US$	US$
	Losses for the purposes of earnings per share (net loss for the year attributable to equity holders of the parent)	(945,005)	(4,780,959)
	Number of shares
	Weighted average number of ordinary shares for the purposes of earnings per share	87,230,853	64,037,103

There is no difference between the diluted loss per share and the basic loss per share presented. Due to the loss incurred in the period the effect of the share options in issue is anti-dilutive.

At 31 December 2008 there were 9,710,100 (31 December 2007: 4,454,793) share options in issue which would have a potentially dilutive effect on the basic earnings per share in the future. 

 3. PROPERTY, PLANT AND EQUIPMENT

		Mining, development and associated property, plant and equipment cost US$	Motor vehicles, office equipment, fixtures & computers US$	Total US$
	COST
	At 1 January 2007	10,032,390	514,548	10,546,938
	Additions	21,684,923	1,134,425	22,819,348
	Transfer from intangible assets	5,870,435	-	5,870,435
	Exchange difference on retranslation	3,807,282	149,680	3,956,962
	At 31 December 2007	41,395,030	1,798,653	43,193,683
	At 1 January 2008	41,395,030	1,798,653	43,193,683
	Additions	37,743,658	509,116	38,252,774
	Transfer from intangible assets	446,329	-	446,329
	Exchange difference on retranslation	(2,212,246)	(245,286)	(2,457,532)
	At 31 December 2008	77,372,771	2,062,483	79,435,254
	DEPRECIATION
	At 1 January 2007	-	164,164	164,164
	Charge for the year	-	340,256	340,256
	Exchange difference on retranslation	-	18,754	18,754
	At 31 December 2007	-	523,174	523,174
	At 1 January 2008	-	523,174	523,174
	Charge for the year	-	821,892	821,892
	Exchange difference on retranslation	-	(161,837)	(161,837)
	At 31 December 2008	-	1,183,229	1,183,229
	NET BOOK VALUE
	At 31 December 2008	77,372,771	879,254	78,252,025
	At 31 December 2007	41,395,030	1,275,479	42,670,509

In accordance with industry practice all costs and revenues incurred during the commissioning phase of operations are capitalised.

Carrying value of the Angovia Gold Mine

Included within the mine development and associated costs are amounts of US$35.4 million in respect of the Angovia Gold Mine. Due to the underperformance of the Angovia Gold Mine in 2008, a detailed impairment review of the operation was undertaken which considered not only 2008 performance but also the actions taken by management to rectify the various operational shortfalls and preparation of an updated detailed economic model. This model does not indicate any impairment. Since the beginning of 2009, a larger mining fleet, deployed to site by the mining contractor, has led to an increase in equipment availability and hence an increase in operational performance. The replacement of second hand plant equipment with newer, better designed plant equipment has increased the plant capacity and performance. With these actions the mine performance is now moving towards budget and the Angovia Gold Mine is expected to exit commissioning by mid year. Because of this an impairment charge is not considered appropriate at this time. However, should the increase in performance not continue or should the production of gold not increase, then this decision will be revisited and an impairment provision may be required.

 

	4. INTANGIBLE ASSETS	Exploration and Mining Rights US$	Deferred exploration and evaluation costs US$	Total US$
	COST
	At 1 January 2007	-	5,302,577	5,302,577
	Additions	-	10,801,495	10,801,495
	Transfer to property, plant and equipment	-	(5,870,435)	(5,870,435)
	Exchange difference on retranslation	-	459,586	459,586
	At 31 December 2007	-	10,693,223	10,693,223
	At 1 January 2008		10,693,223	10,693,223
	Additions	30,222,997	7,401,459	37,624,456
	Transfer to property, plant and equipment	-	(446,329)	(446,329)
	Exploration costs written off	-	(781,256)	(781,256)
	Exchange difference on retranslation	-	(4,018,784)	(4,018,784)
	At 31 December 2008	30,222,997	12,848,313	43,071,310
	AMORTISATION
	At 1 January 2007	-	-	-
	Charge for the year	-	-	-
	At 31 December 2007	-	-	-
	At 1 January 2008	-	-	-
	Charge for the year	-	-	-
	At 31 December 2008	-	-	-
	CARRYING AMOUNT
	At 31 December 2008	30,222,997	12,848,313	43,071,310
	At 31 December 2007		10,693,223	10,693,223

Included within Exploration and Mining rights is an amount of US$21.8 million in relation to the acquisition of the remaining 40% in Baomahun Gold Project. In addition, the Group holds two mining licences relating to the Kalsaka and Angovia Gold Mines. The value assigned to these two licences amount to US$6 million and US$ 2.4 million respectively.

These amounts are recoverable through the exploitation of the projects.

On 4 August 2008, Cluff Gold plc issued 12,390,909 shares at a price of 52.5p to acquire 100% of Winston Mining Limited, a company which held the Baomahun exploration licence on behalf of Mr R Winston in which the Group had already earned 60% interest. Winston Mining Limited had no further assets or liabilities at the acquisition date.

The fair value of the remaining 40% interest in the licence, based on a valuation of the underlying resource, was US$21.8m. When the acquisition was negotiated the Cluff Gold plc share price was 88p but by the time all the conditions relating to the sale had been fulfilled the share price had fallen to 52.5p. This fall in the share price has reduced the consideration to £6.5m and a negative goodwill balance US$ 8.95 million has accordingly been released to the income statement.

This company has not traded since the acquisition date and therefore there are no amounts attributable to this entity in the income statement.

5. Post balance sheet events

i) In February 2009, the Company announced that approval had been granted by the Toronto Stock Exchange for the listing of its entire share capital.

ii) In March 2009, the Company raised US$11.4 million before expenses by placing 20,285,000 new ordinary shares of 1 pence each in the Company at a placing price of 40 pence per share. The Shares were admitted to trade on AIM on 31 March 2009.

ENDS:

ENDFR FGGZKGVZGLZZ

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Amara Mining