30th Aug 2006 07:02
Mwana Africa PLC30 August 2006 30th August 2006 Mwana Africa plc Audited results for the 12 months to 31st March 2006 London, 30th August 2006 - The Board of Mwana Africa plc ("The Board"), thepan-African resource company, is pleased to announce its financial results forthe year to 31st March 2006, the first consolidated set of financial resultssince African Gold plc and Mwana Africa Holdings joined together as Mwana Africaplc in October 2005. Financial Highlights • Group turnover of £25.1 million • Group profit before tax of £1.765 million • Loss for the financial year (after minority interests) of £0.1 million • Loss per share (basic and diluted) of 0.11p • Positive cashflow from operations of £4.0 million • Capital expenditure and financial investment of £4.4 million • Successful fundraising in April 2006 of £42.1m to finance acquisitions Operational Highlights • Bindura Nickel feasibility study ongoing for additional nickel deposits at Hunters Road. Capital expenditure to extend the life of the existing Trojan mine to 2018 and Shangani mine to 2012 currently underway • Phase one of Freda Rebecca refurbishment has begun with production at the rate of 48,000oz per year planned by the end of 2007, up from 20,000oz this year • In Ghana drilling has begun at Ahanta, and will begin at Banka in September • In the DRC drilling will begin before the end of this year at Kibolwe (Copper) and the first phase of an exploration programme at Zani-Kodo (Gold) will be agreed before the end of September following geological assessments • Cluff Mining (Zimbabwe) acquired in December 2005 and with it a 50% stake in the dormant Maligreen mine and 100% of neighbouring former Cluff ( Zimbabwe) exploration titles • Entry into Diamond sector in DRC through acqusition of Sibeka (holds a 20% interest in the DRC's state-owned diamond producer, Societe Miniere de Bakwanga (MIBA)) and of stake in Gravity Diamonds • Agreement to enter into a joint venture agreement with Energy Equity Resources, a privately owned oil and gas group, to jointly develop African oil and gas exploration and production assets • Appointment of Ken Owen as Technical Director and Charl du Plessis as Vice President Exploration Commenting on the announcement, Kalaa Mpinga, Chief Executive Officer of MwanaAfrica, said: "Mwana Africa plc has had a busy and productive beginning as a public company.We have made substantial progress developing our production and explorationassets and advanced strategically by forging joint ventures and makingacquisitions across a range of commodities. "We see opportunities for growth across a broad range of commodities. Thepotential of the African continent to regain its status as a major naturalresources force is clear, and it is attracting more and more internationalbusinesses to invest there. We believe that Mwana Africa is well positioned tobenefit from this global shift" ENDS Enquiries: Kalaa Mpinga, CEO Tel. +44 207 654 5588Oliver Baring, Executive ChairmanMwana Africa plc Tom Randell or Maria Suleymanova Tel. +44 207 653 6620Merlin Copies of this statement will be available on the Company's website,www.mwanaafrica.com. Attached: Chairman's Statement Chief Executive's Statement Financial Highlights: Consolidated Profit and Loss Statement Consolidated Balance Sheet Company Balance Sheet Consolidated Cash Flow Statement Chairman's Statement Mwana Africa was established in October 2005, bringing together the assets oflisted company African Gold plc and those of Mwana Africa Holdings (Proprietary)Limited, a private company. Mwana Africa plc is now able to consider proposalsthat would have been beyond the reach of either of the original companies. Oursuccess in raising capital to finance acquisition opportunities through a publicplacing on the London Stock Exchange's Alternative Investments Market (AIM) inApril 2006 is evidence of the market's support for the new company and itsdiverse asset base. 66,900,000 shares were issued, raising £42.1 million. This achievement certainly serves to underscore the growing interest in Africaas the last largely untapped reservoir of resources in this boom period in thecommodities sector. It also highlights the growing appetite for investing inexploration companies as the realisation grows that reserves - be they inprecious metals, base metals or oil - need to be replenished. Since miningoperations cannot be established overnight, companies with a strong explorationasset base and with drill-ready projects are attractive to investors and MwanaAfrica fits into this category. At this juncture, it is appropriate for me to highlight the excellentexploration assets that we hold in the Democratic Republic of the Congo (DRC),Ghana and in Zimbabwe. In the DRC we have exploration licences covering some13,000 square kilometres and containing copper, zinc, cobalt and gold. Ourlicences are concentrated in the highly prospective Ituri gold province in thenorth-east of the country and the Katanga Copper Belt. In Ghana, two of ourtargets in the highly prospective Ashanti belt are drill ready. In Zimbabwe, thecompany has licences around the Bindura Nickel Corporation's two mines which areprospective for nickel deposits; and around Freda Rebecca mine and Maligreenmine, which are prospective for gold. The fact that these prospects are situatedin the vicinity of our operations enhances their value because of the very realpossibility of being able to use existing infrastructure should miningactivities commence. Since Mwana Africa plc was formed in October last year, we have become a seriousinvestor in the diamond sector through the purchase of Sibeka from Umicore. Sibekaholds a 20% interest in the DRC's state-owned diamond producer, Societe Minierede Bakwanga (MIBA), one of the world's largest producers of industrial diamonds.In this acquisition we have enjoyed the support of the International MonetaryFund (IMF), the World Bank, the workforce and the surrounding communities in theprovince of Kasai where the mining activities are concentrated. This transactiontook place in May 2006 and was followed two months later with our acquisition of14.99% of the issued share capital of Gravity Diamonds Limited. Listed on AIMand the Australian Stock Exchange (ASX), Gravity Diamonds is an explorationcompany in which BHP Billiton has a 10.6% shareholding. Gravity Diamonds willuse the funds raised through the sale of shares to Mwana Africa for drilling andexploration activities at their Kasai Shield property in the DRC. There will be those who question our deepening involvement in the DRC and indeedour holdings in state companies. While we understand why these issues areraised, we would argue the case for more investment in the country, not less.The DRC is a vast country with immense natural resources - the soil is believedto contain every mineral listed on the periodic table. It is also one of thepoorest nations in the world following years of civil war in which an estimated3 million people lost their lives in the conflict and through the famine anddisease that came in its wake. If ever there was a country in need of rebuildingit is the DRC and this will only happen to any significant extent wheninternational companies invest in projects and play their part in establishingand maintaining infrastructure. The expansion of existing businesses and thestarting up of new ventures will lead to job creation on the scale that thecountry so desperately needs, enabling people to feed their families and toeducate their children. It is perhaps apt to point out here that history hasshown that political transformation is far more likely to follow economicregeneration than to precede it. We hope the recent elections will prove to beanother important milestone on DRC's road to recovery. No doubt our considerableinterests in Zimbabwe will also be a cause for comment and we would make thesame case for our continuing presence there, as for the DRC. I should like to thank my fellow board members and our management team for theircontribution to our achievements in this past year. I am confident that therewill be many new developments to report to our shareholders in the years to comeas we grow into one of the key resource groups on the African continent. Oliver BaringExecutive Chairman Chief Executive's Statement Mwana Africa translates into 'Sons of Africa' in a number of languages spoken inEast, Central and Southern Africa. It is the first African owned and managedresources business to be listed on the London Stock Exchange's AlternativeInvestments Market (AIM). This is significant for two reasons: first, we areproud to be at the forefront of exposing Africa's mineral wealth to theinvestment community; and second, we believe that we - as Africans - have aspecial knowledge and understanding of doing business in Africa. The combination of the assets of African Gold and Mwana Africa Holdings hasprovided Mwana Africa with a diversified portfolio of resources - gold, nickel,copper, diamonds, zinc and cobalt - in three countries, The Democratic Republicof the Congo (DRC), Ghana, and Zimbabwe. This solid platform for growth, bothfrom an operational and exploration point of view, combined with an exceptionalboard that brings both a knowledge of the markets and of the resources industry,and a team of skilled senior managers who are highly knowledgeable about miningin Africa, positions us well for the future. At this point I should like to draw attention to the recent appointments of KenOwen as Technical Director and Dr Charl du Plessis as Vice President:Exploration. Ken, most recently a consultant with SRK, has held a number ofhigh-level managerial positions in Anglo American including that of SeniorVice-President: Mining, and with De Beers as Consulting Mining Engineer. Charl,who joined us from AngloGold Ashanti, is a highly regarded geologist with wideexperience in African resource exploration and development. Together they addconsiderable strength to the company. From the outset we have had no intention of confining our exploration oroperations opportunities to three countries in Africa or placing limits on thecommodities that we target. On the contrary, our strategy is to look foropportunities in different countries across the continent and across theresources spectrum, and to enter into partnerships with industry leaders onmajor new projects. And we have had a very busy year on this front. We entered the diamond industry in May 2006 when we signed an agreement withmaterials technology group Umicore to acquire a 100% interest in Sibeka for acash consideration of US$11 million. Sibeka's major asset is a 20% interest inSociete Miniere de Bakwanga (MIBA), the leading diamond producer in the DRC.Over the past five years MIBA has produced an annual average of 6 million caratsof diamonds. This was followed in July 2006 by our acquisition of a 14.99%interest in Gravity Diamonds for a consideration of £2.06 million. On 28 June 2006, we agreed to enter into a joint venture agreement with EnergyEquity Resources Limited (EER) to develop African oil and gas exploration andproduction assets. A privately owned international oil and gas company, EER'score interests include exploration and production opportunities worldwide, butwith a particular focus on West Africa. This joint venture is set to broadenMwana's geographic spread by taking the company into Angola where there are twoprojects in an advanced stage of negotiation. In April 2006 Mwana made an underwritten cash offer (to rival an existing offerfrom First Quantum) to acquire Adastra Minerals, an international mining companylisted on the Toronto Stock Exchange and on AIM with mineral assets in CentralAfrica. Although our bid was not successful in this instance, it clearlydemonstrated Mwana's intention to pursue the sort of acquisitions that willsupport our aim of becoming a key resources group on the continent. It served toraise the profile of the company and has resulted in Mwana being offered anumber of prospects. When evaluating opportunities, Mwana is highly selective,applying stringent criteria regarding shareholder value before proceeding. Welook out for operations that do not need vast expenditure on infrastructure,where there is production history and development potential. We keep ourorganisation tight, skilled, focused and flat in structure; and are open toentering into partnerships with bigger players when major investments areneeded. Mwana has a 53% interest in the Bindura Nickel Corporation, Zimbabwe's largestnickel producer which operates two mines - Shangani and Trojan - in Zimbabwe.The production lives of both of these mines will be extended by the deepening ofaccess infrastructure and a feasibility study is being undertaken to extend theresource base at Hunters Road. This study should be completed in a year's time.The full benefits of the high nickel price have not been realised owing to thedifficult operating conditions caused by the hyperinflationary environment inZimbabwe. The government of Zimbabwe has approved our investment proposal for refurbishingthe Freda Rebecca gold mine and the project has been classified as a 'nationalpriority' which gives Mwana certain tax incentives. The repatriation ofinvestment proceeds has also been guaranteed. In these circumstances we havebeen able to get the refurbishment of the mine under way to return Freda Rebeccato a 90,000-ounce-a-year gold producer (the current production is 20,000 ouncesa year). This is a most welcome development not least because Mwana owns highlyprospective exploration licences around the existing operation which may lead tothe life of mine being extended beyond its present ten-year estimate. On the exploration front, we can report good progress particularly in the DRCand Ghana where we are involved in a number of greenfields projects. Closest todevelopment are the gold prospects in Ghana, including Ahanta, where drillinghas started, and Banka in Ghana where drilling will start shortly. Others worthsingling out are Kilbolwe in the DRC's Katanga province where resource drillingfor base metals will begin soon and the Lombe Zinc project where a targetgeneration exercise undertaken with our Joint Venture partner Anglo American hasidentified several new targets for follow up and drilling. At Zani-Kodo, in thenorth-east of the DRC, a first phase exploration programme will be designedbefore the end of the third quarter of 2006. The fact that we are a Pan-African resources company will be perceived both as astrength and as a weakness: a strength because of the continent's untappedriches in this sector and a weakness because of the so-called country risksassociated with our assets. We remain cautious and aware of the potential risks,but I must reiterate that we have the great advantage of a team that is highlyknowledgeable about mining on the continent and a vast network of contacts; insome cases these go back decades. We have good working relationships with thestateowned companies with which we have joint venture agreements or in which wehold interests. Our view is that we need to work with governments so that we canextract value from our assets, while at the same time making a real contributionto the communities in which we establish operations. Community relatedactivities are an integral part of doing business. Given the strides we have made in a year, we are facing the future withenthusiasm and optimism. We are confident that the market for commodities willremain robust. The fundamentals for this look promising: the threat of higherinterest rates in developed countries; the instability in the Middle East;falling global production in sectors such as gold; and the rising fuel price.All of these suggest that while there is likely to be volatility from time totime, the resources market should remain a sound area for investors. For ourpart, we will continue to pursue growth opportunities, looking for diversity interms of our assets and with regard to the countries in which we operate. Ourultimate goal is to become the preferred vehicle, and partner of choice, in theAfrican resources sector for investors and entrepreneurs. I would like to thank the management and employees for their hard work andcommitment during an eventful year. Kalaa MpingaChief Executive Officer August 2006 Consolidated Profit and Loss account for the year ended 31 March 2006 2006 2005 £000 £000 GROUP TURNOVER 25,106 7 ---------- --------Continuing operations 17 7Acquisitions 25,089 - ---------- -------- Cost of sales (12,908) (24) ---------- --------GROSS PROFIT/(LOSS) 12,198 (17) Administrative expenses (9,990) (539) ---------- --------OPERATING PROFIT/(LOSS) 2,488 (556) ---------- --------Continuing operations (1,772) (556)Acquisitions 4,260 - ---------- -------- Interest receivable and similar income 225 24 Interest payable and similar charges (948) - ---------- --------PROFIT/(LOSS) ON ORDINARY ACTVITIES 1,765 (532)BEFORE TAXATION Tax on profit/loss on ordinary (700) -activities ---------- --------PROFIT/(LOSS) ON ORDINARY ACTIVITIES 1,065 (532)AFTER TAXATION Minority interests (1,165) - ---------- --------LOSS FOR THE FINANCIAL YEAR (100) (532) ========== ========LOSS PER SHARE - Basic & Diluted (0.11p) (2.00p)(restated) The loss on ordinary activities after taxation for the current and prior yeararose on continuing operations. Consolidated balance sheet as at 31 March 2006 2006 2005 £000 £000FIXED ASSETSIntangible assets 12,980 5,967Tangible assets 65,365 278 ---------------- ---------------- 78,345 6,245 ---------------- ----------------CURRENT ASSETSStocks 8,773 10Debtors 9,455 63Cash at bank and in hand 14,311 932 ---------------- ---------------- 32,539 1,005CREDITORS: amounts falling due (14,037) (576)within one year ---------------- ----------------NET CURRENT ASSETS 18,502 429 ---------------- ----------------TOTAL ASSETS LESS CURRENT 96,847 6,674LIABILITIESProvision for liabilities (3,356) - ---------------- ----------------TOTAL ASSETS LESS LIABILITIES 93,491 6,674 ================ ================ CAPITAL AND RESERVESCalled up share capital 17,938 3,124Share premium account 54,116 8,611Profit and loss account (3,547) (5,061) ---------------- ---------------- 68,507 6,674Minority interest 24,984 - ---------------- ----------------SHAREHOLDERS' FUNDS - EQUITY 93,491 6,674 ================ ================ These financial statements were approved by the board of directors on 28thAugust 2006 and were signed on its behalf by: O A G BaringExecutive Chairman Company Balance Sheet as at 31 March 2006 2006 2005 £000 £000FIXED ASSETSTangible assets 10 -Investments 46,277 1,460 --------------- ---------------- 46,286 1,460 --------------- ----------------CURRENT ASSETSDebtors 7,672 4,367Cash at bank and in hand 12,539 883 --------------- ---------------- 20,211 5,250CREDITORS: amounts falling due (494) (158)within one year --------------- ----------------NET CURRENT ASSETS 19,717 5,092 --------------- ----------------TOTAL ASSETS LESS LIABILITIES 66,003 6,551 =============== ================ CAPITAL AND RESERVESCalled up share capital 17,938 3,124Share premium account 54,116 8,611Profit and loss account (6,051) (5,184) --------------- ----------------SHAREHOLDERS' FUNDS - EQUITY 66,003 6,551 =============== ================ These financial statements were approved by the board of directors on 28thAugust 2006 and were signed on its behalf by: O A G BaringExecutive Chairman Consolidated cash flow statement for the year ended 31 March 2006 2006 2005 £000 £000CASH FLOW STATEMENTCash flow from operating activities 4,000 (88)Returns on investments and servicing of (723) 24financeTaxation (493) -Capital expenditure and financial (4,414) (3,922)investmentAcquisitions and disposals (4,366) (70) ------- -------Cash outflow before financing (5,996) (4,056)Financing 17,153 2,517 ------- -------Increase/(decrease) in cash in the 11,157 (1,540)period ======= ======= RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT Increase/(decrease) in cash in the 11,157 (1,540)period ------ ------- Movement in net debt in the period 11,157 (1,540)Net debt at the start of the period 932 2,471 ------ -------Net debt at the end of the period 12,089 932 ======= ======= During the year, the Group acquired Mwana Africa Holdings (Proprietary) Limitedand its subsidiaries. Consideration of £43.2m was paid to the shareholders ofMwana Africa Holdings (Propriety) Limited and settled by a share issue by theCompany. This transaction did not have in impact on the consolidated cash flowstatement presented above. The Group incurred transactions costs which were paidin cash and are included above. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Asa Resources