29th Jun 2006 17:44
Central African Gold PLC29 June 2006 Central African Gold Plc / Ticker: CAN / Index: AIM / Sector: Mining & Exploration 29 June 2006 Central African Gold plc ('CAG' or 'the Company') Final Results For the Year ended 31 December 2005 Chairman's Statement It gives me great pleasure to report on the developments the Company has madewithin the last year. However, most of the significant events that have affectedthe Company, happened post year end, so I feel it is prudent to include these inmy statement so that our shareholders are fully appraised of the currentsituation and the strategy being employed. Exploration Update Over the period we have made good progress having broadened our geographicalfocus from Botswana through the signing of a new Joint Venture deal in Mali,expanded the Board through the appointment of Greg Hunter (CEO) and Mark Rosslee(FD) and strengthened the balance sheet via an institutional placing. As aresult the Board is confident that the progress made this last year placesCentral African Gold "CAG" in good stead to pursue an aggressive growth strategyin Africa and fulfil its objective of becoming a significant African goldproducer. The Company's main strategy is to acquire projects either through majority orminority stakes or through Joint Ventures. The recent Joint Venture with MaliMining House ('MMH') provides CAG with a solid foothold in the highlyprospective West African Birimian Gold Belt, an area which makes Mali the thirdlargest producer in Africa. Under the agreement CAG and MMH have established an80% - 20% Joint Venture Company which has assumed ownership of the licencesissued by the Malian Ministry of Mines, Energy and Water. CAG is providing thetechnical and financial resources required to progress the various projects,while MMH, a company established by members of the Malian Union Nationale desOperateurs Miniers ('UNOMIN'), a collective of Malian title-holders, has assumeda 20% free-carried stake. Reconnaissance work had been undertaken to review the large volume ofgeophysical and geochemical data that exists over the southern and westernregions of Mali. Large anomalies have already been identified in the area and asa result exploration commenced late January 2006 with the assistance of GuyFransceshi Consulting, a Belgium-based consulting group which has extensiveexperience in this region. Early indications have shown promising results.Areas with the greatest prospectivity will be identified, prioritised andadvanced as quickly as possible through the implementation of a comprehensiveprogramme of soil sampling, field mapping and reinterpretation of the airbornegeophysics. We have also made progress through our 53% controlling interest in Golden TauMining Ltd ('Golden Tau') which has been carrying out an exploration programmeover its 872 square kilometres Kraaipan Project in southern Botswana. Theproject covers most of the area underlain by the Kraaipan Greenstone Terrane, anArchaean greenstone belt that is an extension of the greenstone belt in SouthAfrica, which hosts gold mines and historically had up to four million ouncescombined gold resource and past production. As reported in the Interim statement, a trial helicopter EM survey (known as aVTEM survey) was flown over a portion of the licence area in late 2004. Aninterpretation of re-processed aeromagnetic surveys together with the new VTEMdata identified over 50 specific target areas which have now been located andtested on the ground using a ground TEM geophysical survey. This work hasenabled a detailed geological mapping of the belt to be produced for the firsttime. An initial programme of seven reverse circulation drill holes (1025metres) was undertaken to test three strong geophysical and geological targetzones. All holes intersected a greenstone succession comprising mafic volcanics,invariably interspersed with banded iron formation and sediment rock units andoccasional ultramafic rock units (talcose). The highest gold value is 0.83 g/tgold and the disseminated sulphides would explain the VTEM anomaly. Thestrongest VTEM anomalies have yet to be drill tested. This work has identified new areas within the Company's licences that areprospective for gold mineralisation. Directorate Change In order to accelerate the development of the Company, I was very pleased thatwe were able to recruit Greg Hunter and Mark Rosslee to the positions of CEO andFinance Director respectively. They bring with them great experience andenthusiasm and share the Company's vision to build Central African Gold into asignificant mining company in Africa. They have also brought with them anexperienced team who will assist them in fulfilling an aggressive growthstrategy to acquire and develop significant opportunities. As a result of this,the Company is already evaluating growth opportunities, one of which wasannounced and would be classified as a reverse take-over. This transactionhowever is not being pursued at present but the Company continues to evaluateother prospects and will provide details in due course. As a result of the recent appointments, Andrew Groves, Brian Moritz and I havedecided to step down from the Board with effect from the end of June. We believethat the Company is now in a strong position, being well financed and run by anexperienced team of gold professionals. It has been our policy that we step downonce the initial corporate development stage has been completed. However we willremain very supportive of Greg and his team and will assist where possible inbuilding a successful Company, delivering shareholders with sustainable growth. Share Placing In order to strengthen the balance sheet the Company raised £9,000,735 on 21April 2006 through the placing of 100,008,167 new ordinary shares, the proceedsof which will be used to acquire new projects in Africa that can be brought intoproduction in the short to medium term and to develop existing projects. Thishas increased the shareholder base and strengthened the Company's balance sheet. Operating results For the 12-month period ending 31 December 2005 we are reporting a pre- andpost- tax loss of £274,695. As I mentioned, we are investing both time andfinance in developing, identifying and acquiring suitable projects and we arenot in production. However we are conscious that we must manage our costsprudently and I believe following the fund raising we are in a financiallystrong position to achieve our corporate objectives. The management teamprovides CAG with real ability to make discoveries, is well funded, organisedand skilled with a high degree of corporate governance and I believe the teamwill draw on past experience to progress from an explorer to a producer. Nomad We have recently signed on Strand Partners as our Nominated Adviser whom Ibelieve is the right partner to help us grow the Company. In conclusion, this has been a good year for CAG. We were able to identify newbusiness ventures and projects, formed strong relationships with connections inthe west and south Mali region and brought on a very experienced team. Thefocused approach has already prioritised a potential hit list of futureopportunities that will fulfil our investment criteria and generate near termrevenue. The Company is confident that the new team will develop CAG into asignificant gold producing and exploration company in the near future. FinallyI'd like to take this opportunity to thank all those involved in the Company andwish them all well in the future. Philippe EdmondsChairman 28 June 2006 Consolidated Profit and Loss AccountFor the year ended 31 December 2005 Notes Year 26 November 2003 to ended 31 December 31 December 2005 2004 £ £ TURNOVER - - Operating expenses 2 (310,486) (123,257) OPERATING LOSS (310,486) (123,257) Interest receivable 3 35,791 7,149 LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION 4 (274,695) (116,108) Taxation 6 - - LOSS ON ORDINARY ACTIVITIES AFTER TAXATION (274,695) (116,108) Minority interests 28,793 632 LOSS FOR THE FINANCIAL PERIOD 14 (245,902) (115,476) LOSS PER ORDINARY SHARE Basic and diluted 7 (0.148p) (0.094p) The operating loss for the period arises from the group's continuing operations. Consolidated Statement of Total Recognised Gains and LossesFor the year ended 31 December 2005 Year 26 November 2003 to ended 31 December 31 December 2005 2004 £ £ Loss for the financial period (245,902) (115,476) Foreign currency translation adjustments relating to subsidiary undertakings (37) 4,815 Total recognised gains and losses for the period (245,939) (110,661) Consolidated Balance Sheet31 December 2005 Notes 2005 2004 £ £ FIXED ASSETSIntangible assets 8 286,633 179,823 CURRENT ASSETSDebtors 10 52,486 67,254Cash at bank and in hand 1,194,093 1,436,502 1,246,579 1,503,756 CREDITORS: Amounts falling due within one year 11 (177,242) (52,845) NET CURRENT ASSETS 1,069,337 1,450,911 TOTAL ASSETS LESS CURRENT LIABILITIES 1,355,970 1,630,734 CAPITAL AND RESERVESCalled up share capital 12 165,743 165,743Share premium account 13 1,459,793 1,459,793Profit and loss account 14 (356,600) (110,661) EQUITY SHAREHOLDERS' FUNDS 15 1,268,936 1,514,875 Minority interests 87,034 115,859 1,355,970 1,630,734 Approved by the board and authorised for issue on 28 June 2006 Philippe EdmondsDirector Company Balance Sheet31 December 2005 Notes 2005 2004 £ £ FIXED ASSETSInvestments 9 246,060 246,060 CURRENT ASSETSDebtors 10 49,618 67,007Cash at bank and in hand 1,120,962 1,237,109 1,170,580 1,304,116 CREDITORS: Amounts falling due within one year 11 (119,221) (39,401) NET CURRENT ASSETS 1,051,359 1,264,715 TOTAL ASSETS LESS CURRENT LIABILITIES 1,297,419 1,510,775 CAPITAL AND RESERVESCalled up share capital 12 165,743 165,743Share premium account 13 1,459,793 1,459,793Profit and loss account 14 (328,117) (114,761) EQUITY SHAREHOLDERS' FUNDS 15 1,297,419 1,510,775 Approved by the board and authorised for issue on 28 June 2006 Philippe EdmondsDirector Consolidated Cash Flow StatementFor the year ended 31 December 2005 Notes Year 26 November 2003 to ended 31 December 31 December 2005 2004 £ £ Cash outflow from operating activities 16a (174,336) (133,256) Returns on investments and servicing of finance 16b 35,791 7,149 Capital expenditure and financial investment 16b (103,864) (55,046) Acquisitions and disposals 16b - (7,881) CASH OUTFLOW BEFORE FINANCING (242,409) (189,034) Management of liquid resources 16b (878,350) (168,007) Financing 16b - 1,625,536 (DECREASE)/INCREASE IN CASH IN THE PERIOD (1,120,759) 1,268,495 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS Year 26 November 2003 to ended 31 December 31 December 2005 2004 £ £ (Decrease)/increase in cash in the period (1,120,759) 1,268,495Cash inflow from increase in liquid resources 878,350 168,007 MOVEMENT IN NET FUNDS IN THE PERIOD (242,409) 1,436,502 NET FUNDS AT BEGINNING OF THE PERIOD 1,436,502 - NET FUNDS AT END OF THE PERIOD 16c 1,194,093 1,436,502 BASIS OF ACCOUNTING The financial statements have been prepared under the historical cost conventionand in accordance with applicable accounting standards. BASIS OF CONSOLIDATION The consolidated financial statements incorporate those of Central African Goldplc and all its subsidiary undertakings. Subsidiaries acquired during theperiod are consolidated using the acquisition method. The difference betweenthe cost of acquisition of shares in subsidiaries and the fair value of theseparable net assets acquired is capitalised and written off on a straight linebasis over its estimated economic life. Provision is made for impairment whereconsidered necessary. All financial statements are made up to 31 December 2005. FOREIGN CURRENCIES Assets and liabilities denominated in foreign currencies are translated at therate of exchange ruling at the balance sheet date. Transactions in foreigncurrencies are recorded at the rate ruling at the date of the transaction. Alldifferences are taken to the profit and loss account. Assets and liabilities of overseas subsidiaries are translated at the rateruling at the balance sheet date and the result for the period is translated atthe average rate ruling in the period. Exchange differences arising are dealtwith through reserves. INTANGIBLE FIXED ASSETS All costs relating to the acquisition, exploration and development incurred bythe Company or its subsidiary undertakings on its mineral properties are carriedas intangible assets until such time as it is determined that there arecommercially exploitable reserves at which time such costs will be transferredto tangible fixed assets to be amortised over the expected productive life ofthe asset. The directors periodically review the intangible assets forimpairment and where a project is abandoned or is considered not to beeconomically viable, the related costs are written off. DEFERRED TAXATION Deferred tax is recognised in respect of all timing differences that haveoriginated but not reversed at the balance sheet date where transactions orevents that result in an obligation to pay more tax in the future or a right topay less tax in the future have occurred at the balance sheet date. Timingdifferences are differences between the group's taxable profits and its resultsas stated in the financial statements that arise from the inclusion of gains andlosses in tax assessments in periods different from those in which they arerecognised in the financial statements. Deferred tax is measured at the average tax rates that are expected to apply inthe periods in which timing differences are expected to reverse, based on taxrates and laws that have been enacted or substantially enacted by the balancesheet date. Deferred tax is measured on a non-discounted basis. INVESTMENTS Investments are stated at cost and provision is made for any impairment invalue. Notes to the Financial Statements For the year ended 31 December 2005 1. LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION The group's loss before taxation was all derived from its principal activityundertaken in Western Australia and Botswana. 2 OPERATING EXPENSES Year 26 November 2003 to ended 31 December 31 December 2005 2004 £ £ Administration expenses (310,486) (123,257) 3 INTEREST RECEIVABLE Year 26 November 2003 to ended 31 December 31 December 2005 2004 £ £ Bank interest receivable 35,791 7,149 4 LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION Year 26 November 2003 to ended 31 December 31 December 2005 2004 £ £ Loss on ordinary activities before taxation is stated after charging: Amounts payable to Baker Tilly and their associates in respect of both audit and non-audit services Audit services - statutory UK audit 25,450 5,000 - statutory overseas audit 4,190 1,222 Tax compliance services 3,000 3,000 5 EMPLOYEES There were no employees other than the directors of the company during the period. Year 26 November 2003 to ended 31 December DIRECTORS' REMUNERATION 31 December 2005 2004 £ £ Amounts payable for directors' services 24,000 24,000 Joint highest paid directors: AS Groves - emoluments 12,000 12,000 PH Edmonds - emoluments 12,000 12,000 6 TAXATION Year 26 November 2003 to ended 31 December 31 December 2005 2004 £ £ Current tax: UK corporation tax on losses of the period - - Total current tax - - Factors affecting tax charge for period: Loss on ordinary activities before tax (274,695) (116,108) Loss on ordinary activities multiplied by the rate of corporation tax for small companies of 19% (52,192) (22,061) Effects of: Expenses not deductible for tax purposes 1,845 2,326 Unrelieved tax losses carried forward 50,347 19,735 Tax charge for period - - The Group and Company's unrelieved tax losses of approximately £321,680 (2004:£88,000) have not been recognised as a deferred tax asset as there is currentlyinsufficient evidence that the asset will be recoverable in the foreseeablefuture. 7 LOSS PER ORDINARY SHARE The calculation of basic and diluted loss per ordinary share is based on the following losses and number of shares. Year 26 November 2003 to ended 31 December 31 December 2005 2004 £ £ Loss for the financial period (245,902) (115,476) 2005 2004 No. of shares No. of shares Weighted average number of shares 165,742,856 122,387,988 Due to the loss incurred in the period, there is no dilutive effect from theissue of share options and warrants. 8 INTANGIBLE FIXED ASSETS Development costs £ GROUP Cost 1 January 2005 179,823 Additions 103,864 Exchange rate adjustment 2,946 31 December 2005 286,633 9 INVESTMENTS Shares in subsidiary undertakings £ Company Cost 1 January 2005 and 31 December 2005 246,060 Details of the company's subsidiary undertakings are set out below: Class of Percentage Country of Nature of business holding held incorporation Golden Tau Mining Limited Ordinary 53.1% Australia Australian mining company*Motako (Proprietary) Limited Ordinary 100% Botswana Botswana mining companyCentral African Gold Nigeria Limited Ordinary 100% Nigeria Dormant*indirectly held 10 DEBTORS Group Group Company Company 2005 2004 2005 2004 £ £ £ £ Due within one year: Other debtors 52,486 67,254 49,618 67,007 11 CREDITORS: Amounts falling due Group Group Company Company within one year. 2005 2004 2005 2004 £ £ £ £ Trade creditors 11,778 10,870 4,609 5,401 Other creditors 50,503 6,753 40,021 - Accruals and deferred income 114,961 35,222 74,591 34,000 177,242 52,845 119,221 39,401 Included within trade creditors is a credit card balance of £1,367 (2004:£2,778) which is secured on a cash deposit balance held by the company'sbankers. 12 SHARE CAPITAL Group and Group and company company 2005 2004 £ £ Authorised: 1,000,000,000 ordinary shares of 0.1p each 1,000,000 1,000,000 Allotted, issued and fully paid: 165,742,856 ordinary shares of 0.1p each 165,743 165,743 At 31 December 2005, the following share options and warrants over ordinaryshares of 0.1p each of the Company had been granted and not exercised: Share options: Date of grant Number of shares Exercise Price Exercise Period 5 March 2004 10,000,000 1p 5 March 2004 to 4 March 2009 16 December 2005 10,000,000 3.11p 16 December 2005 to 16 December 2010 Share warrants: Number of shares to be issued Exercise Price Exercise Period 30,000,000 1p 31 March 2004 to 31 March 2011 The warrants are held in trust. On 19 January 2004 the company provided a bonus scheme to the directors that, inthe event of the offer proceeding and the company's shares and warrants beingadmitted to trading on AIM, upon the trading price for the company's sharesreaching a price of 15p per share, AS Groves, PH Edmonds and RA Pitchford wouldbe issued 10 million warrants each and that upon the trading price for thecompany's shares reaching a price of 25p per share, AS Groves, PH Edmonds and RAPitchford would be issued a further 10 million warrants each. There were nowarrants issued under the scheme during the period. On 6 March 2006 33m share options were granted with an exercise price of 3.75p.The vesting period for these options is between 6 March 2006 and 6 March 2013. 13 SHARE PREMIUM ACCOUNT Group and Group and company company 2005 2004 £ £ 1 January 2005 1,459,793 - Premium on shares issued during the period - 1,566,257 Share issue costs - (106,464) 31 December 2005 1,459,793 1,459,793 Included within share issue costs in 2004 are fees of £12,560 charged by thecompany's auditors. 14 PROFIT AND LOSS ACCOUNT Group Group Company Company 2005 2004 2005 2004 £ £ £ £ 1 January 2005 (110,661) - (114,761) - Loss for the financial period (245,902) (115,476) (213,356) (114,761) Foreign currency translation (37) 4,815 - - adjustments 31 December 2005 (356,600) (110,661) (328,117) (114,761) In accordance with s230 of the Companies Act 1985, Central African Gold plc hasnot presented its own profit and loss account. 15 RECONCILIATION OF MOVEMENT IN Group Group Company Company SHAREHOLDERS' FUNDS 2005 2004 2005 2004 £ £ £ £ Loss for the financial period (245,902) (115,476) (213,356) (114,761) Issue of shares during the - 1,732,000 - 1,732,000 period Issue costs - (106,464) - (106,464) Exchange rate adjustments (37) 4,815 - - Net (reduction in)/addition to shareholders' funds (245,939) 1,514,875 (213,356) 1,510,775 Opening shareholders' funds 1,514,875 - 1,510,775 - Closing shareholders' funds 1,268,936 1,514,875 1,297,419 1,510,775 16 CASH FLOWS 2005 2004 £ £a Reconciliation of operating loss to net cash outflow from operating activities Operating loss (310,486) (123,257) Decrease/(increase) in debtors 14,768 (67,161) Increase in creditors 124,397 48,088 Exchange rate adjustments (3,015) 9,074 Net cash outflow from operating activities (174,336) (133,256) 16 2005 2004 £ £ b Analysis of cash flows for headings netted in the cash flow Returns on investments and servicing of finance Interest received 35,791 7,149 Net cash inflow from returns on investments and servicing of finance 35,791 7,149 Capital expenditure and financial investment Purchase of intangible fixed assets (103,864) (55,046) Net cash outflow from capital expenditure and financial investment (103,864) (55,046) Acquisitions and disposals Purchase of subsidiary undertaking - (246,060) Cash acquired with subsidiary - 238,179 Net cash outflow from acquisition and disposals - (7,881) Management of liquid resources Cash placed on deposit (878,350) (168,007) Net cash outflow from management of liquid resources (878,350) (168,007) Financing Proceeds from issue of share capital - 1,732,000 Share issue costs - (106,464) Net cash inflow from financing - 1,625,536 At 31 December At 31 December 2005 2004c Analysis of net funds £ £ Cash at bank and in hand 147,736 1,268,495 Cash on deposit 1,046,357 168,007 1,194,093 1,436,502 17 RELATED PARTY TRANSACTIONS Central African Mining & Exploration Company Plc (CAMEC), Capricorn ResourcesPlc (Capricorn), African Platinum plc (AP) and White Nile Limited had commondirectors with Central African Gold plc. During the year CAMEC charged management fees to the company of £45,540 (2004:£Nil). The company made payments on behalf of CAMEC of £Nil (2004: £26,921), regardingCapricorn of £4,911 (2004: £Nil), regarding AP of £Nil (2004: £12,000) andregarding White Nile Limited of £Nil (2004: £6,188). CAMEC also made payments onbehalf of the company of £40,021 (2004: £Nil). As at 31 December 2005, thecompany owed CAMEC £40,021 (2004: £Nil) which is included in creditors.Capricorn owed £4,911 (2004: £Nil), AP owed £Nil (2004: £6,188), all of whichare included in debtors. These balances were settled post year end. 9 POST BALANCE SHEET EVENTS On 20 April 2006 the company placed 100,008,167 ordinary shares of 0.1p each at9p raising gross cash proceeds of £9,000,735. These funds will be used forcapital projects which can be brought into production in the short to mediumterm. Further to the announcement of the signing of the joint venture agreement withthe Mali Mining House SA on 16 December 2005, a new limited company, MaliGoldfields SA was incorporated in Mali on 1 February 2006. Central African Goldplc holds an 80% interest in the company in accordance with the joint venturecontract. Subsequent to the year end, Gold Tau Mining Limited entered into an optionagreement for the purchase of a prospecting licence located in the Republic ofMozambique. The agreement provides for the company the sole and exclusive rightto acquire the licence for US$125,000 and conduct exploration on the tenementduring the option period expiring 31 July 2006. The consideration for the grantof the option was US$25,000. The company and CAMEC have entered into an arms length agreement whereby neitherCAMEC nor its management team will take any steps, directly or indirectly,itself or through any associate company, to exert any influence over the board,management, administration or business of CAG, including, without limitation,through its familiarity with the business, activities, management team,personnel and professional advisers of CAG or through its shareholding in CAG. All future dealings between CAMEC and its management and CAG will be conductedon an arm's length and commercial basis. This agreement will remain in force andof effect until such time that the aggregated shareholding of CAMEC and MessrsPH Edmonds and AS Groves is less than 10% of the issued share capital of CAG. 10 FINANCIAL INSTRUMENTS The group's financial assets comprise cash. The group has various otherfinancial assets, such as trade debtors and trade creditors that arise directlyfrom its operations which have not been included in the following disclosures. The main risks arising from the group's financial instruments are interest raterisks and liquidity risk. The policies for managing these risks are regularlyreviewed and agreed by the Board. It is, and has been throughout the period under review, the group's policy thatno trading in financial instruments should be undertaken. Foreign exchange risk The functional currencies of the group are Sterling and Australian Dollars.The group's foreign subsidiaries, as named in note 9, are denominated in foreigncurrencies. The Group does not hedge against the effects of movements inexchange rates. The risks are monitored by the Board on a regular basis. Interest rate risk The group's policy on interest rate management is agreed at Board level and isreviewed on an ongoing basis. Interest rate profile of financial assets The interest rate risk profile of the Group's financial assets as at 31 December2005 was: Fixed Floating rate Rate Total £ £ £ Sterling 1,000,000 120,962 1,120,962 Australian dollars 46,357 26,774 73,131 1,046,357 147,736 1,194,093 Of which: Cash at bank and in hand 1,046,357 147,736 1,194,093 The fixed deposits at 31 December 2005 (2004) are short term deposits. TheSterling deposit earns interest at 4.281% (2004: Nil) and the Australian dollardeposit earns interest at 5.35% (2004: 5.23%). Floating rate instant access deposits in Sterling and Australian dollars earninterest at prevailing bank rates. Liquidity risk It is the group's policy to finance its business by means of internallygenerated funds supported by the group's bankers and external share capital.Facilities are regularly reviewed by the Board. Facility The group does not currently have an overdraft facility. Fair value There is no material difference between the fair value of borrowings and otherfinancial instruments and their book value at the balance sheet date. The interest rate risk profile of the group's financial assets as at 31 December2004 was: Fixed Floating rate Rate Total £ £ £ Sterling - 1,237,109 1,237,109 Australian dollars 168,007 31,386 199,393 168,007 1,268,495 1,436,502 Of which: Cash at bank and in hand 168,007 1,268,495 1,436,502 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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