30th Mar 2007 08:49
Cluff Gold PLC30 March 2007 Cluff Gold plc ("Cluff Gold" or "the Company") Preliminary Results for the Year to 31 December 2006 Highlights • Gold resources increased by over 70% at the Company's flagshipBaomahun Gold Project in Sierra Leone and at the Angovia Gold Project in Coted'Ivoire • Attributable gold resources increased to over 1.4 million ounces • Development decision made to bring into production the deposits atKalsaka in Burkina Faso and at Angovia in Cote d'Ivoire - both will use the goldheap leaching technique • Successful Placing of 22,600,000 new ordinary shares of 1p each at aplacing price of 68p to raise approximately £15.4 million before expenses -April 2006 Post Year End Highlights • Successful Placing of 22,600,000 new ordinary shares of 1p each at aplacing price of 68p to raise approximately £15.4 million before expenses -March 2007 • Company fully funded to construct the two projects at Kalsaka andAngovia and to continue its aggressive exploration programmes at Baomahun andelsewhere Further Key Developments • US$ 5 million spent on Baomahun exploration programme to completeearn-in of 60% interest in the licence area • Appointment of Charles Lutyens, previously senior corporate financeexecutive of Rio Tinto, to the Board as Chief Finance Officer • Drilling at Karbasso in Mali planned for 2007 Chairman, J.G. Cluff commented, "Commencing the development of two mines andcommissioning a pre-feasibility study for a third (Baomahun in Sierra Leone)more than fulfils the objectives we set ourselves last year. The gradesannounced this week from Sierra Leone are most encouraging and we are confidentthat a further boost to our resource base will eventuate as a result of theresource estimation to be conducted before June. "We are looking forward to an exciting year ahead in which we expect the Companywill transform from development to production, whilst adding further value fromour exploration programmes." For further information, please contact: Cluff Gold WH Ireland Parkgreen CommunicationsJ.G. Cluff / Douglas Chikohora David Youngman / Katy Mitchell Cathy Malins / Annabel LeatherChairman / Technical DirectorTel: +44 (0) 20 7340 9790 Tel: +44 (0) 161 832 2174 Tel: 44 (0) 20 7851 7480 Chairman and Chief Executive's Statement Since my last statement your company can claim to have made good progresstowards our objective of becoming a gold producer and of adding significantly toour resource base as a result of our exploration programmes. In April 2006, we raised through BMO Capital Markets approximately £15.4 millionbefore expenses through a private placement of shares at 68 pence per share.This enabled the company to continue its exploration programmes at the BaomahunGold Project in Sierra Leone, the Angovia Gold Project in Cote d'Ivoire and theKalsaka Gold Project in Burkina Faso; to commence a new programme of explorationin Mali and to commence a study for a heap leach facility for Angovia. During the year under review we took the decision to develop the deposits atAngovia in Cote d'Ivoire and at Kalsaka in Burkina Faso. We plan to haveAngovia in production by the last quarter of this year, building up to ananticipated annualised production rate of 40,000 ounces. Kalsaka is expected toproduce from the second quarter of 2008 building up to an annualised productionrate of 60,000 ounces. These two developments are under the overall supervisionof Tony Smith (who previously brought the Ayanfuri Mine in Ghana into productionfor Cluff Resources, on time and under budget). By the time I next write thisannual statement we should accordingly be in production. Meanwhile our exploration programme in Sierra Leone, a joint venture withWinston Mines Limited, has added value as a result of a virtually continuousdrilling programme. Our technical auditors, SRK, signed off on a resource of880,000 ounces last November. With as much as 70% of the defined mineralisedzone yet to be drilled it is clear that this project shows good promise. TheCompany expects to provide a revised mineral resource estimate before June andit is our intention to continue to drill throughout the year. We have now spentthe US$5 million required to earn our 60% interest in the joint venture and weare in discussions with our partner to formalise a new joint venture agreement. We plan to drill Karbasso in Mali this year. Its prospectivity has undoubtedlybenefited from proximity to the Syama Mine (5 million ounces) and from thesuperlative grades reported recently at Etruscan's Finkola permit. Your management debated internally and with our advisers, BMO Capital Markets,and our larger shareholders, as to the appropriate method of funding theCompany's two development programmes at Angovia and Kalsaka. It was theunanimous view of all concerned that these programmes should be funded throughequity and not project finance. Accordingly, on March 16 2007, we successfullycompleted a placing of approximately £15.4 million before expenses at 68 penceper share with the support of BMO Capital Markets, our Nomad WH Ireland Limited,and of Smith's Corporate Advisory Limited. We are now fully funded not only todevelop Angovia and Kalsaka but also to maintain our chosen level of explorationat Baomahun and Karbasso. As we move towards production a number of additional disciplines are requiredand our operational staff has therefore been expanded. Our board has remainedunchanged other than the welcome arrival of Chief Finance Officer, CharlesLutyens, previously a senior corporate finance executive at Rio Tinto plc andrecently Managing Director of Rio Tinto India. We are looking forward to an exciting year ahead in which we expect the Companywill transform from development to production, whilst adding further value fromour exploration programmes. The support of advisers, shareholders and staff ismuch valued by your management. JG CluffChairman and Chief Executive30 March 2007 Consolidated Profit and Loss Accountfor the year ended 31 December 2006 Restated Year ended Year ended Notes 31 December 2006 31 December 2005 £ £ Turnover - -Cost of sales - -Gross profit - -Administration expenses (1,950,952) (1,452,695) Operating loss (1,950,952) (1,452,695)Interest receivable and similar income 452,489 82,069Interest payable and similar charges 6 (399,686) (46,283)Profit on disposal of a subsidiary undertaking - 23,741Loss on ordinary activities before taxation (1,898,149) (1,393,168)Tax on loss on ordinary activities - (450)Loss on ordinary activities after taxation (1,898,149) (1,393,618) Basic and diluted loss per share (pence) 7 (4.82) (6.61) All transactions arise from continuing operations. Consolidated Statement of Total Recognised Gains and Losses Restated Year ended Year ended 31 December 2006 31 December 2005 £ £Loss for year (1,898,149) (1,393,618)Exchange translation differences on consolidation (61,456) (58,766)Total recognised loss for the year (1,959,605) (1,452,384)Prior year adjustment- share option charge (387,456)Total recognised losses since the last annual report (2,347,061) Consolidated Balance Sheetas at 31 December 2006 Restated As at As at As at As at Notes 31 December 31 December 31December 2006 31 December 2006 2006 2005 £ £ £ £Fixed assetsIntangible 8 2,709,267 4,859,348Negative goodwill (51,237) (51,237)Tangible 9 5,304,912 46,433 7,962,942 4,854,544Current assets Debtors 276,198 873,626Cash at bank and in hand 10,821,58888 431,883 11,097,786 1,305,509Creditors: amounts falling due within one (484,628) (376,740)yearNet current assets 10,613,158 928,769Net assets 18,576,100 5,783,313 Capital and reserves Called up share capital 460,916 229,536Share premium account 20,651,747 6,467,774Merger reserve 1,320,151 1,320,151Other reserve 724,495 387,456Profit and loss account (4,581,209) (2,621,604)Shareholders' funds 18,576,100 5,783,313 Consolidated Cash Flow Statementfor the year ended 31 December 2006 Notes Year ended 31 Year ended 31 Year ended 31 Year ended 31 December 2006 December 2006 December 2005 December 2005 £ £ £ £ Net cash outflow from operations 13 (1,508,576) (1,598,571)Returns on investments and servicingof financeInterest received 452,489 82,069Interest paid and similar charges - (46,283)Taxation - (450)Capital expenditurePurchase of intangible fixed assets (2,249,449) (1,655,293)Purchase of tangible fixed assets (974,395) (58,219)Net cash outflow from capital (3,223,844) (1,713,512)expenditureAcquisitions and disposalsAcquisition of subsidiary - (2,421,718)undertakingsNet cash acquired with subsidiary __ 10,088undertakingsDisposal of subsidiary undertaking - 28,882Net cash outflow from acquisitions - (2,382,748)and disposals of subsidiaryundertakingsNet cash outflow before management of (4,279,931) (5,659,495)liquid resources and financingManagement of liquid resources(Increase)/decrease in short -term (10,680,981) 5,427,945depositsFinancingIssue of ordinary share capital 16,266,760 209,998Issue costs (1,197,438) (38,682)Net cash inflow from financing 15,069,322 171,316Increase/(decrease) in cash 108,410 (60,234) Notes 1. Basis of Financial Information The financial information set out above does not constitute the group'sstatutory information for the year ended 31 December 2006, but is derived fromthose financial statements. The financial statements for 2006 will be deliveredprior to the Company's Annual General Meeting. The auditors have not yetreported on these financial statements; however, they anticipate issuing anunqualified report which will not contain statements under the Companies Act1985, s237 (2) or (3). 2. Nature of business and going concern The Group is involved in the acquisition, exploration and development of golddeposits in West Africa. In common with many exploration companies, the Group raises funds in discretetranches in order to fund its activities. The Company raised £15.4 millionbefore expenses, on 20 March 2007, by way of placement in order to fund furtherexploration in West Africa; construct and bring into production the Angoviaproject in Cote d' Ivoire and the Kalsaka project in Burkina Faso as well as forgeneral working capital purposes. Details of the placing are included in thePost balance sheet events note. Given these financial resources, the strength of the assets currently in theCompany's portfolio and the strong gold price, the Directors consider itappropriate to prepare these financial statements on the going concern basis.The use of that basis assumes that the Company meets its commitments as theyfall due. 3. Intangible fixed assets accounting policy i) Deferred exploration and evaluation costs All costs associated with mineral exploration and investments are capitalised ona project-by-project basis, pending determination of the feasibility of theproject. Costs incurred include appropriate technical and administrativeexpenses, as well as associated finance costs, but not general overheads. If anexploration project is successful, the related costs will be transferred tomining assets and amortised over the estimated life of the commercial orereserves 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 discoveryof economically recoverable ore reserves, the ability of the Company to obtainnecessary financing to complete the development of ore reserves and futureprofitable production or proceeds from the disposal thereof. ii) Intangible fixed assets - goodwill Goodwill (positive and negative) is recognised as the difference betweenconsideration paid and the fair value of the assets acquired. Negative goodwillis recognised in the Profit and Loss Account over the periods that non-monetaryacquired assets are recovered. 4. Tangible fixed assets accounting policy Mining, development and associated property, plant and equipment Exploration costs are capitalised as intangible fixed assets until a decision ismade to proceed to development. Related costs are then transferred to miningassets. Before reclassification, exploration costs are assessed for impairmentand any impairment loss recognised in the profit and loss account. Subsequentdevelopment costs are capitalised under mining assets, together with any amountstransferred from intangible exploration assets. Mining assets are amortisedover the estimated life of the commercial ore reserves on a unit of productionbasis. 5. Segmental analysisBy geographical location: 2006 2006 2005 2005 Operating Loss Net assets Operating Loss Net assets £ £ £ £ UK (1,933,830) 10,448,602 (1,417,780) 2,934,189Burkina Faso - 3,234,905 - 2,249,734Sierra Leone - 3,215,250 - 429,397Cote d'Ivoire - 1,632,313 - 169,993Ghana (1,712) - (13,708) -Zimbabwe - - (1,675) -Mali - 45,030 (19,532) -Congo (10,000) - - -Madagascar (5,410) - - -Total (1,950,952) 18,576,100 (1,452,695) 5,783,313 6. Interest payable and similar charges Interest payable and similar charges represent £399,686 losses on foreignexchange relating to translation of United States dollar cash balances toSterling on the balance sheet date. 7. Earnings per share The calculation of earnings per ordinary share on the net basis is based on theloss on ordinary activities after taxation of £1,898,149 (2005 restated loss:£1,393,618) and on 39,368,861(2005: 21,092,466) ordinary shares being theweighted average number of ordinary shares in issue. There is no differencebetween the diluted loss per share and loss per share presented. 8. Intangible fixed assets Deferred exploration and evaluation costs £Group Cost 4,859,348 At 31 December 2005Exchange loss on re-translation (61,456)Additions 2,310,905Transfer to development costs (4,399,530)Net book value At 31 December 2006 2,709,267At 31 December 2005 4,859,348 9. Tangible fixed assets Mining, Development and Associated Property, Motor Vehicles, Plant and Equipment Office equipment, costs fixtures and £ fittings Total £ £ Group CostAt 31 December 2005 - 76,320 76,320Transferred from intangible fixed assets 4,399,530 - 4,399,530Additions 726,359 186,580 912,939At 31 December 2006 5,125,889 262,900 5,388,789Accumulated Depreciation - 29,887 29,887 At 31 December 2005Charge in the year - 53,990 53,990At 31 December 2006 - 83,877 83,877Net book value at 31 December 2006 5,125,889 179,023 5,304,912Net book value at 31 December 2005 - 46,433 46,433 10. Share Options The Group has applied the requirements of FRS 20 Share-based payments, inaccordance with the transitional provisions, to all equity instruments grantedafter 7 November 2002 and unvested at 1 January 2006. The adoption of FRS 20 has resulted in a change in the accounting policy forshare based payments. Until 31 December 2005 the provision of share options toindividuals did not result in a charge to the profit and loss account. A prioryear adjustment has been made to the financial information set out for theperiod ended 31 December 2005 to apply charges to the profit and loss accountfor share options granted at these dates. The charge included withadministration costs in the profit and loss account for the twelve months to 31December 2006 is £337,039. Accounts for prior periods have been restated to showthe following charges: year ended 31 December 2005 - £357,775 and period ended31 December 2004 - £29,681. 11. Post balance sheet events The Company raised £15.4 million before expenses by placing 22,600,000 newordinary shares of 1p each in the Company at a placing price of £0.68 per share. The shares were admitted to trading on AIM on 20 March 2007. 12. Reconciliation of operating loss to operating cash flow Restated Group Group 2006 2005 £ £ £Operating loss (1,950,952) (1,452,695)Depreciation 53,990 25,139Shares issued to Directors - 20,002Charge arising on share options valuation 337,039 357,775Increase in debtors (120,277) (102,150)Increase/(decrease) in creditors 171,624 (446,642)Net cash outflow from operating (1,508,576) (1,598,571)activities Annual Report The Annual Report will be sent to shareholders on or around 13 April 2007.Additional copies will be available to the public, free of charge, from theCompany's registered office at 24 Queen Anne's Gate, London SW1H 9AA. Annual General Meeting The Company's Annual General Meeting will be held on 17 May 2007 at 10 am at theoffices of Maclay Murray & Spens, One London Wall, London EC2Y 5AB. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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