23rd May 2007 07:01
Central African Gold PLC23 May 2007 Central African Gold Plc / Ticker: CAN / Market: AIM / Sub-sector: Gold Mining 23 May 2007 Central African Gold Plc ("CAG" or "the Company") Final Results The Board is pleased to announce the Company's results for the year ended 31December 2006. Highlights: • Formed a CAG managerial and operational team with proven delivery on projects in Africa • Raised £9 million (US$17 million) on the AIM market operated by the London Stock Exchange in April to fund growth and development • Licence to explore Medinandi prospect gained within the Songhoi Ressources SA venture • Twenty-three gold exploration licences acquired in southern and western Mali, with further drilling and exploration planned for 2007 • Raised £17 million (US$33 million) in December for acquisition of Bibiani gold mine in Ghana • Completed the purchase of Bibiani gold mine in late 2006 • Immediate production and revenue generation at Bibiani gold mine • Acquired Falcon Gold Zimbabwe and Olympus Gold Mines effective 1 March 2007, for just over US$6 million, providing further immediate production to the Company Extract from the Company's Annual Report: It has been a landmark year for CAG that has seen the Company grow from a cashshell into a company of substance. We have taken our first steps towardsachieving our goal of becoming a mid-tier producing company with a world classexploration portfolio. There were two main areas of significant change and progress during the year: • During 2006, we put in place a knowledgeable and experienced team, with an excellent balance of exploration, mining, engineering, financial and management competence. What makes us unique is that for a company of our size and positioning, we have an unrivalled technical skills base supported by in-the-field and on-the-ground know-how. We are also able to use proprietary in-house software applications and expertise that result in rapid, high-level targeting of opportunities and the expeditious interpretation of data, thus significantly shortening the exploration pipeline. • At the beginning of 2006, CAG had in its portfolio a number of exploration properties in Mali and Botswana on which little progress had been made. By the end of the financial year, we are able to report the conclusion of the acquisition of a producing asset, the Bibiani gold mine, and approval to transfer prospecting licences in Ghana; the initiation of the exploration programme at the Medinandi prospect in west Mali; and the regional data interrogation and field validation of the balance of the Mali and Botswana portfolios. Post year-end, we have added to our initial production base through the purchase of controlling interests in Falcon and Olympus gold mines in Zimbabwe. Our shareholders have continued to display confidence in CAG. Twowell-subscribed share placements on London's AIM market, in April and December,have reflected the market's belief in our progress and supported our growthstrategy at a time when the market was less generous than it had been for sometime. Most importantly, our market successes have enabled the purchase of theBibiani gold mine, which we believe is both an undervalued and underperformingasset that we can turn to significant account over the next two years. We have taken on this mine with a view to turning an operation currently set toproduce 50,000 ounces in FY2007, into a substantial underground operation withan annual production of at least 110,000 ounces by the end of 2008. We believethat, geologically, Bibiani gold mine has the right pedigree to deliver theounces required of a world-class orebody, situated as it is on the Sefwi-Bibianigreenstone belt, host to 17 million ounces of gold mineral resources. The size and scale of Bibiani fits comfortably into CAG's profile, far more sothan into that of a large mining group. We have confidence that, by concertedlyapplying innovative geological techniques and using our experience with similarorebodies in Africa, we can generate a better understanding of the Bibianiorebody and employ appropriate and cost-effective mining methods. Our approachseeks to remodel, drill and sample the Bibiani orebody in order to: • increase the resource base and assist with the bulk underground development programme due to start in the third quarter of 2007; • target immediate production of 40,000 ounces a year from the re-treatment of tailings and 10,000 ounces from the underground production for FY2007; and • continue with exploration on the mining lease and two prospecting licence areas; and in particular, intensify our exploration efforts on 15 prioritised targets. We feel confident we can expand our current resource base of 1.473 million ounces with continuing exploration and development work. In the short space of time we have owned the operations, we have seen the gold inventory increase from 0.9 million ounces to 1.473 million ounces. Our second area of focus is Mali, boasting some of the lowest-cost gold mines inthe world. The establishment of two exploration companies, entered into in 2006,gave us access to some 23 properties, six in west Mali and 17 in south Mali, asubstantial footprint in a prospective and investor-friendly region. Phase 1 ofa 15,000-metre reverse circulation ("RC") and diamond drilling ("DD") programmehas begun on the Medinandi prospect in west Mali, with in excess of 9,000 metresof RC drilling completed to date. Encouraging mineralisation has beenencountered; we await the assay results and it is anticipated that an interimresource statement on this property will be released shortly. Good progress hasbeen made with the balance of the portfolio in terms of regional datainterrogation and field validation, with properties being aggressivelyprioritised for follow-up exploration. Our presence in Botswana on the Kraaipan greenstone belt (extending from SouthAfrica into southern Botswana) arises from a 53% controlling stake in anAustralian-based exploration company, which owns the rights to an area covering872km2 of the north-west extension of the Kraaipan belt. Airborne magnetic andelectromagnetic surveys have been followed up with limited drilling, and theensuing year will include follow-up ground work on targets identified throughavailable data collation and re-interpretation. Post year end, we acquired an 84.7% stake in Falcon Gold Zimbabwe Limited and100% of the issued share capital of Olympus Gold Mines Limited (effective from 1March 2007). Falgold and Olympus both have the rights to extensive claim areaslocated throughout Zimbabwe, with mining activities and exploration propertiescentred on the Kadoma, Shurugwe and Bulawayo regions. The combined resourceestimates for both companies stands at 2.47 million ounces of gold withJORC-compliant reserves of 631,000 ounces of gold. CAG's attributable portion ofthese reserves and resources is 578,000 and 2,167,000 ounces respectively. These acquisitions complement not only our gold production profile and strategyin Ghana, but also the greenfields exploration portfolio being established inMali and Botswana. Zimbabwe hosts arguably one of the highest gold-endowedArchaean greenstone belts in the world, allowing us to rapidly leverage ourposition up the value curve for our shareholders in an attractive gold priceenvironment. A mining company's portfolio does not just include gold producing mines andexploration properties. The nature of our business means we are intimatelyinvolved in both the environment and the communities of the areas that supportour activities. It is our responsibility to ensure that our employees have theability to feed, educate and nurture their families, and that there will be anenvironment left behind, long after we are gone, that will continue to sustainthem. We believe that a company must be a responsible citizen of the communityin which it operates. Our approach is not one of subsidisation. We want theprogrammes that we initiate to be economically viable and non-paternalistic;importantly, we want to get to those areas where we can make a difference byengaging with the very communities in which we are based. These are our aims,and moving forward into 2007 our corporate citizenship programme will take shapeto ensure that the benefits reach the right people. We believe in the value of people, and in our team. I am confident that we have,and continue to attract, the right people for the work that lies ahead. It bearsrepeating that our team has extensive African experience: many of them have beenborn and/or raised in Africa, the value of which cannot be underestimated, andhave track records of working in challenging economic and social conditionsacross the continent. The coming year will see us using our growth opportunitiesto establish our credibility in the market, with a view to strengthening ourproduction base around our centres of strategic excellence and in regionsselected for their geological prospectivity and value accretion. We also intendexamining the possibility and logic of extending our capital base beyond ourLondon listing. We are confident of our ability to deliver on the promises thatwe have made to shareholders and look forward to reporting to them on a regularbasis during the year ahead. Financial review The 2006 financial year was a year of transition, opportunity and growth for CAGand the group. To facilitate these developments, and directed by the new management team, aplacing of 100 million shares at nine pence per share was completed in April2006, raising just over £9 million (US$17 million). After the acceptance of a final binding offer of £18 million (US$36 million) forthe Bibiani gold mine and £2 million (US$4 million) for the two adjacentprospecting licences in Ghana from AngloGold Ashanti Ghana Limited, a further188.8 million shares were issued in December 2006 at nine pence per share. Thisplacement raised just over £17 million, or US$33 million, the balance of thepurchase price being made up from internal funds. In order to fund the working capital requirements for the further development ofthe Bibiani gold mine, a debt facility of £8 million (US$15 million) wasconcluded with Investec Bank Limited in January 2007. The facility is for aperiod of 30 months and attracts interest at LIBOR plus 2.5%. The operating results of the group reflected a loss of £3.9 million or 1.69pence per share, mainly resulting from the increase in expenditure arising fromthe increased corporate activity in the group. Interest received increased to£0.3 million owing to increased levels of cash on hand. In the last month of thefinancial year, CAG recorded a gross profit of £0.2 million from Bibiani goldmine. This reflects the key change of the Company becoming a producer. The group's net asset value rose to £24.7 million, from £1.3 million, mainly dueto the acquisition of Bibiani gold mine, its associated assets and net currentassets and related fund raising. Exploration assets increased by £0.3 million,reflecting the raised level of exploration activity in Mali on the Medinandiproperties. Cash at year-end was £5.1 million (of which £1.4 million isrestricted) compared with £1.2 million at the end of 2005. An amount of £4.0 million was utilised in operations with a further £18.7million being devoted to investing activities. These outflows were fundedthrough the placement of shares generating £25.2 million net of expenses,resulting in an overall increase in cash of £3.9 million. Financial results Both the group and the parent company financial statements have been prepared inaccordance with IFRS as adopted by the EU and applicable laws. Extracts fromthese financial statements for the year ended 31 December 2006, are detailedbelow. Consolidated income statementFor the year ended 31 December 2006 Year to 31 Year to 31 December December 2006 2005 £'000 £'000 Revenue 487 -Cost of Sales (270) -Gross Profit 217 -Administrative charges (5,248) (314) Administrative expenses (3,169) (310) Share based payments (2,079) (4)Fair values adjustments 945 -Operating loss before financing costs (4,086) (314)Financial income 338 35Financial expense (212) -Loss before tax (3,960) (279)Income tax expense (9) -Loss for the year (3,969) (279)Attributable to: Equity holders of the parent (3,938) (250) Minority interest (31) (29)Loss for the year (3,969) (279)Basic and diluted earning per share (pence) (1.69p) (0.15p) All activities were in respect of continuing operations Consolidated balance sheetsFor the year ended 31 December 2006 Group Company Year to 31 Year to 31 Year to 31 Year to 31 December December December December 2006 2005 2006 2005 £'000 £'000 £'000 £'000Assets Investment and loans - - 18,768 246 Property, plant and equipment 17,131 - - - Exploration assets 560 287 - -Total non-current assets 17,691 287 18,768 246 Inventories 2,827 - - - Trade and other receivables 2,330 52 1,146 - Amount due by subsidiaries - - 2,507 50 Cash and cash equivalents 5,076 1,194 3,207 1,121Total current assets 10,233 1,246 6,860 1,171Total assets 27,924 1,533 25,628 1,417 Equity Share capital 459 166 459 166 Share premium 26,389 1,460 26,389 1,460 Other reserves 68 - - - Retained earnings (2,216) (357) (1,335) (328)Total equity attributable to equity holders 24,700 1,269 25,513 1,298of the parentMinority interest 39 87 - -Total equity 24,739 1,356 25,513 1,298 Liabilities Provisions 1,389 - - - Deferred taxation 383 - - -Total non-current liabilities 1,772 - - - Trade and other payables 1,404 177 115 119 Taxation 9 - - -Total current liabilities 1,413 177 115 119Total liabilities 3,185 177 115 119Total equity and liabilities 27,924 1,533 25,628 1,417 Statement of cash flowsFor the year ended 31 December 2006 Group Company Year to 31 Year to 31 Year to 31 Year to 31 December 2006 December 2005 December 2006 December 2005 £'000 £'000 £'000 £'000Cash flows from operating activitiesLoss before tax (3,960) (279) (2,846) (217)Adjusted for:Financial income (338) (35) (336) (35)Financial expense 212 - - -Share based payment 2,079 4 1,787 4Depreciation 97 - - -Impairment 25 - - -Fair value adjustment (945) - - -Exchange rate adjustments (153) (3) - -Increase in inventories (263) - - -(Increase)/decrease in trade and other (1,774) 15 (3,551) 17receivablesIncrease/(decrease) in trade and other 1,023 124 (4) 80payablesNet cash utilised in operating activities (3,997) (174) (4,950) (151) Cash flows from investing activitiesInterest received 338 35 336 35Acquisition of business net cash (18,385) - - -Acquisition of exploration assets (298) (104) - -Acquisition of property, plant and equipment (378) - - -Investment and advances - - (18,522) -Net cash from investing activities (18,723) (69) (18,186) 35Cash flow from financing activitiesProceeds from the issue of share capital 25,222 - 25,222 -Net cash from financing activities 25,222 25,222Net increase in cash and cash equivalents 2,502 (243) 2,086 (116)Cash and cash equivalents at 1 January 1,194 1,437 1,121 1,237Cash acquired (restricted) 1,390 - - -Effect of exchange rate fluctuations on cash (10) - - -heldCash and cash equivalents at 31 December 5,076 1,194 3,207 1,121 Statement of recognised income and expensesFor the year ended 31 December 2006 Group Company Year to 31 Year to 31 Year to 31 Year to 31 December December December December 2006 2005 2006 2005 £'000 £'000 £'000 £'000 Foreign exchange translation differences 68 - - -Net income recognised directly in equity 68 - - - Loss for the period (3,969) (279) 2,847 (218)Total recognised income and expense for (3,901) (279) 2,847 (218)the yearAttributable to: Equity holders of the parent (3,870) (250) 2,847 (218) Minority interest (31) (29) - - (3,901) (279) 2,847 (218) Annual report: The Company's Annual Report will be sent to shareholders on or about 23 May2007. Additional copies will be made available to the public, free of charge,from the Company's investor relations representatives at St Brides Media andFinance Ltd, 3rd Floor Aldermary House, 10-15 Queen Street, London, EC4N 1TX. Afull copy of the report may be downloaded from our website atwww.centralafricangold.com. Annual General Meeting: Notice is hereby given that the 2007 Annual General Meeting of the company willbe held at St Brides Media and Finance Ltd, 3rd Floor Aldermary House, 10-15Queen Street, London, EC4N 1TX on 15 June 2007 at 10:00am. Further details onthe Notice of Meeting and the resolutions which will be proposed are availableon our website at www.centralafricangold.com. For further information please contact or visit www.centralafricangold.com orcontact: Greg Hunter Central African Gold Plc Tel: +27 (0)82 882 4222 In London: Hugo de Salis St Brides Media & Finance Ltd Tel: +44 (0)20 7242 4477 Felicity Edwards St Brides Media & Finance Ltd Tel: +44 (0)20 7242 4477 Simon Raggett Strand Partners Limited Tel: +44 (0)20 7409 3494 Braden Saunders Strand Partners Limited Tel: +44 (0)20 7409 3494 In South Africa: Nicole Broome Central African Gold Tel +27 11 676 2500 Mobile +27 83 601 1702 Charmane Russell Russell and Associates Tel: + 27 11 880 3924 Mobile + 27 82 372 5816 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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