Half-yearly Report

10 December 2014 Mwana Africa PLC ("Mwana", the "Group" or the "Company") Unaudited results for the six months to 30 September 2014 Mwana Africa is pleased to announce its unaudited interim financial resultsfor the six months to 30 September 2014. Financial highlights - Revenue is up 30.6% to $84.9m (H1 FY2014: $65.0m) - EBITDA is $17.1m (H1 FY2014: $12.9m) - Profit after is tax: $7.7m (H1 FY2014: $7.5m) - Cash balance: $6.9m (H1 FY2014: $9.2m), about $4.8m of which was obtainedthrough the share placement in September 2013 - The movement in cash for the period was $2.2m which comprised cash generatedby operations of $5.8m, cash utilised in investing activities of $9.6m andcash advanced through financing activities of $1.7m, which consisted of thedrawing down of an overdraft - First-half earnings per share $0.37 (H1 FY2014: $0.48). Earnings per sharehave decreased despite the 3% increase in profit versus the comparable periodlast year due to an increase of Company ordinary shares in issue Operational highlights Freda Rebecca - The Group sold 30,058oz gold from Freda Rebecca in the six months toSeptember 2014 (H1 2014: 32,252oz) - Tonnes mined and milled increased by 10.5% and 11.6% respectively comparedto H1 FY2014 - Revenue declined by 11.6% due to a 6.8% drop in ounces sold, a 5.1% fall inthe average gold price per ounce (H1 FY2015: $1,283/oz vs H1 FY2014:$1,352/oz) - Lower gold production during the half year contributed to a 9.2% increase incash costs to $969/oz and a 5.7% increase in the all-in sustaining costs to$1,161/oz - Technical challenges associated with power failures at two absorption tankswere overcome promptly, affecting operations only for a few weeks Bindura Nickel Corporation (BNC) Trojan Nickel Mine ("Trojan") - 77.0% increase in sales of nickel in concentrate to 3,879 tonnes (t) in thehalf year (H1 FY2014: 2,191t) - Mill head grade: 1.507% nickel in line with Trojan mine plan - Mill throughput: 309,989t (H1 FY2014: 302,965t) - Average metal price received of $18,168/t (H1 FY2014: $14,268/t) - All-in sustaining costs: $14,669/t (H1 FY2014: $12,770/t) - Recoveries were affected by the lower head grade achieved and the need toreduce magnesium oxide in concentrates to meet customer requirements - The upside of lower impurity penalties was more than offset downside ofreduced recovery Bindura Smelter and Refinery (BSR) - Smelter restart programme approved and planning in progress with coreproject team in place - Key equipment orders and contracts, including for control andinstrumentation, the furnace off-gas system, converters, the precipitatoroverhaul, furnace and converter bricks, transformer inspection, cleaning andtesting, cooling system coolers, engineering design and project support andconverter repairs have been made Klipspringer - 56,617 carats (ct) from retreatment of Marsfontein fine residue tailings - 39,113ct sold in New York and Amsterdam at an average price of $20.14/ct - Evaluation of resumption of underground mining and reprocessing of coarsetailings dumps continuing - 70% of the care and maintenance costs (totalling $336,000) covered by shareof diamond sales profit - 600,000t pre-resource estimate at slimes dam 1 (grade 0.80ct/t) - Sampling planned at slimes dams 2 and 3 during 2015 - Bulk sampling of tailings dump planned for Q4 FY2015 - Application for the renewal of mining rights continues Zani-Kodo - Additional drilling as part of pre-feasibility study allowedreclassification of 26,000oz shallow mineralisation to indicated status - Total gold resource unchanged at 2.975 million ounces - District-scale exploration continuing with promising mineralised zones atShaba and Djalasega East Katanga Copper - Drilling with eight rigs on four main targets: Kawesitu; Kamungoti; KibolweExtension; and Lunsano - Sampling of Kawesitu drill is on-going - First dispatch made in early November. Post period highlights - BSR submission to the Environmental Management Authority (EMA) made inOctober 2014 with financial planning for the smelter at an advanced stage - Proposed $20 million bond issue will fund the majority of the smelterrestart. The bond has been granted Prescribed Asset status by the Minister ofFinance and Economic Development of Zimbabwe and Liquid Asset Status by theReserve Bank of Zimbabwe. A parent guarantee from Mwana has been provided - DRC drilling at Katanga Copper will resume after end of rainy season (April2015) - No additional resource estimates currently available - Appointment of two non-executive directors, Mr Ngoni Kudenga and Mr HerbertMashanyare, to the Board of Mwana Kalaa Mpinga, Chief Executive Officer of Mwana Africa, commented: "The first half of the current year saw considerable operating progress acrossall of the Group's key projects. This progress is continuing and augurs wellfor future growth. Safety is our priority and it is with deep regret that I report the death ofour colleague Jim Tembo in an accident at Trojan Nickel Mine. Jim leavesbehind a widow and three children and my sincere condolences go to Jim'sfamily and friends. All efforts to ensure safety remain an unrelentingpriority. At Freda Rebecca consistent throughput is now being achieved andthis is helping to contain costs and ensure that the mine remains profitableshould gold prices retreat further whilst at Trojan, the primary focuscontinues to be the ramping up of operations. The decision to restart Bindura's smelter at a total capital cost of $26.5million has been central to our planning for sustainable and profitable nickelproduction. Completion of the resizing of head-office has reduced overheads, enabling ourfocus to move towards containing costs at the operational level. Our aimremains fixed on restraining costs to levels that should allow our operationsto remain profitable no matter what becomes of metal prices." For further information contact: Mwana Africa PLCKalaa Mpinga, CEOYim Kwan, Finance DirectorCaroline Mathonsi, Investor RelationsTel: + 44 (0) 203 696 5470 Nominated adviser and brokerPeel Hunt LLPMatthew Armitt / Ross Allister Tel: +44 (0) 20 7418 8900 Public and investor relationsRussell and AssociatesJim Jones / Leigh King Tel: +27 (0) 11 880 3924 Qualified person Charl du Plessis, formerly Executive Vice President Exploration of MwanaAfrica, who is now retained as an independent contractor, holds a PhD and is amember of the AusIMM, is a 'qualified person' as defined in the AIM rules. Theexploration and resource information contained in this report pertaining toZani-Kodo has been reviewed and verified by Dr Du Plessis. About Mwana Africa PLC Mwana Africa PLC is a pan-African, multi-commodity mining and developmentcompany. Mwana's principal operations and exploration activities cover gold,nickel, copper and diamonds in Zimbabwe, the Democratic Republic of Congo(DRC) and South Africa. Six-month Review and Outlook While production at our nickel and gold operations was higher during H1 FY2015than in the corresponding period of the preceding year, the six months werenot without challenges. The gold price continued its decline and unitproduction costs of nickel rose in line with the metal price. The diamondmarket remained a buyer's market with suppliers pressured by tight liquidity. To illustrate this, the average gold price achieved by Freda Rebecca in H1FY2015 was $1,283/oz compared to $1,352/oz in H1 FY2014. On the other hand,average nickel prices rose with BNC achieving an average nickel price of$18,168/t for the period under review, compared to $14,268/t in the sameperiod last year. With both Freda Rebecca and Trojan mines operating steadily, and theintroduction of a more appropriate corporate cost structure, attention hasturned to containing on-mine costs. Despite the persistent weakness ofcommodity prices, both our producing mines continue to generate operatingprofits. At Freda Rebecca, tailings test work showed low recoveries and price due togold price constraints. Modifications to the tailings retreatment plant totreat the run of mine ore are now being considered. At BNC we have initiated a re-opening of the smelter and, by the end of H1FY2015, satisfactory progress was being made At Klipspringer, extractive operations remain confined to the recovery ofdiamonds from tailings residue. Underground operations remain on care andmaintenance. Exploration work within the Hailiang JV on our Katanga concessions continuesto progress with particular focus on high-priority targets. Drilling takesplace during the dry season with laboratory work and field explorationactivities continuing throughout the year. Review of operations and exploration Freda Rebecca Gold Mine - Zimbabwe Gold sold fell to 30,058oz versus 32,252oz in the comparative period inFY2014, however mining stabilised over that period with production stopesbecoming fully available and expected grades being intersected. Though theaverage head grade was lower at 2.17g/t in the half year against 2.30g/t in H1FY2014, mill throughput over the same period showed an increase from 522,499tto 583,298t. Much of the improvement in gold production occurred in the second quarter ofthe half year, following improved plant and equipment availability. The secondquarter saw an increase in plant running hours as a result of equipmentrepairs and upgrades. And a further improvement is being sought in H2 2015following completion of repairs in the September quarter. Consideration is being given to modifying the tailings retreatment plant totreat the run of mine ore due to gold price constraints. The Group is continuing to focus on reducing all-in sustaining costs throughproduction efficiency initiatives and an increase in volumes produced toensure that margins can be maintained in a declining gold price environment.In the September quarter all-in sustaining costs were $1,061/oz. Table 1Freda Rebecca production results H1 FY2015 H1 FY2014 Variance Six months ended Six months ended 30 Sept 2014 30 Sept 2013 Tonnes mined (t) 661,526 598,879 10.5%Tonnes milled (t) 583,298 522,499 11.6%Head grade (g/t) 2.17 2.30 -5.7%Recovery (%) 79.3% 81% -2.2%Gold sales (oz) 30,058 32,252 -6.8%Average gold price 1,283 1,352 -5.1%received ($/oz)C1 Cash cost 969 887 9.2%($/oz) All-in sustaining 1,161 1,098 5.7%costs ($/oz)Note: Figures shown are unaudited and may vary upon final audit.Gold ounces produced incorporate gold released from or caught in `lock-up' foreach period. Cash cost per ounce sold includes costs for mining, processing,administration, accounting movements for stockpiles, gold-in-circuit, and netproceeds from by-product credits. It excludes capital costs for exploration,mine development or processing mill capital works, and the cost of royalties. All-in sustaining costs reflect cash costs per ounce sold plusdepreciation and amortisation, thus incorporating the capital cost ofproduction, plus interest, other indirect costs and royalties. All-insustaining costs represent all costs attributable to gold production over theperiod. Table 2Financial ($'000) H1 FY2015 H1 FY2014 Six months ended Six months ended 30 Sept 2014 30 Sept 2013 Revenue 38,556 43,623Cost of sales (27,928) (28,187)Gross profit 10,628 15,436Selling, distribution (7,694) (6,335)and other expensesProfit before tax 2,934 9,101Note: The numbers shown are after the elimination of intercompany transactionswithin the group for consolidation purposes. Bindura Nickel Corporation - Zimbabwe A combination of greater mill throughput and higher head grades lifted theproduction of nickel in concentrate to 3,879t from 2,191t in H1 FY2014. Thefigures are not strictly comparable as H1 FY2014 covered the first-six-monthperiod of continuous operations since the re-opening of the Trojan mine. During the half year refurbishment of some of the mining equipment was largelycompleted. This refurbishing involved the withdrawal of trackless equipmentfrom the workings, and its return has contributed to the currently highermilling and mining rates. The result is that the second quarter's operationsand costs offer a better indication of what might be expected in futureperiods versus the average for H1 FY2015. The second quarter's cash costs rose by 1% to US$13,900t due to thecontinuation of the mobile plant refurbishment programme and an increase inthe nickel price -as revenue increases, costs attributed to the off-takeagreement also rise - while all-in sustaining costs were 8% lower atUS$14,566/t. As the Company returned to profit it was possible to reverse adeferred tax provision originally charged against the all-in sustaining costsreported in the Q1 accounts. As a result, the reported Q1 FY2015 all-insustaining costs of $15,750 per tonne should be reduced by $974 a tonne to$14,776 for comparative purposes. Table 3BNC production results H1 FY2015 H1 FY2014 Six months ended Six months ended 30 Sept 2014 30 Sept 2013 Tonnes mined (t) 316,351 274,092Tonnes milled (t) 309,989 302,965Head grade (% Ni) 1.5 1.1Recovery (%) 83.3 83.5Nickel sales 3,879 2,191(tonnes in concentrate)Average nickel price 18,168 14,268($/t)C1 Cash cost ($/t) 13,827 11,909All-in sustaining costs 14,669 12,770($/t)Note: Figures shown are unaudited and may vary upon final audit. Average nickel price represents the average LME nickel priceutilised under the terms of the Glencore off-take contract. Cash costs per tonne include costs for mining, processing,administration, off-take costs and penalties, transport costs, accountingmovements for stockpiles, and net proceeds from by-product credits andexcludes capital costs for exploration, mine development or processing millcapital works, and, the cost of royalties. All-in sustaining costs reflect cash cost per tonne plusdepreciation and amortisation, thus incorporating the capital cost ofproduction, plus interest, other indirect costs and royalties. All-insustaining costs represent all costs attributable to nickel production overthe period. Table 5BNC key financial performance indicators (unaudited)$'000 H1 FY2015 H1 FY2014 Six months ended Six months ended 30 Sept 2014 30 Sept 2013 Revenue 46,386 21,371Cost of sales (22,908) (9,488)Gross profit 23,478 11,883Selling, distribution and (11,613) (7,118)other expensesProfit/(loss) before tax 11,865 4,766Bindura smelterThe plan to implement the modifications required to restart the plant safelyand quickly includes limited modifications to the furnace, the introduction offurnace off-gas cleaning prior to the electro-static precipitator (ESP),allowing better control of freeboard pressure, improvement in buildinghygiene, a six-month rebuild of the ESP, minor modifications to the feedsystem to improve furnace operation and safety, and electrical and controlsystem upgrades to ensure safe and efficient operations. The 12-month accelerated restart plan was independently reviewed by Hatch Gobaand begins with Trojan concentrates alone, using only 60% of the smeltercapacity. Therefore third party concentrates to fill the rest of the 60,000tnameplate capacity continue to be sought. Following the period end, theCompany announced that its subsidiary BNC is seeking to raise a $20.0m bond tocontribute to the smelter restart. Zani-Kodo - Democratic Republic of CongoDistrict-scale exploration is continuing. While this has delivered someinteresting mineralisation indications, no exploratory drilling was carriedout during H1 FY2015, nor is any planned for the immediate future. As aresult, there have been no additions to the current 2.975Moz gold resourceestimate. During H1 FY2015, 26,000oz of near-surface mineralisation amenableto open-pit exploitation were converted to indicated status. Subarea Cut Off (g/t) Category Tonnes (t) Grade (g/t) Au (ozs) Kodo Main 0.5 Indicated 4,799,487 3.63 560,075 0.5 Inferred 10,330,969 3.52 1,169,000 Lelumodi 0.5 Indicated 1,118,644 2.06 74,260 0.5 Inferred 8,154,092 1.81 475,072 Lelumodi North 0.5 Inferred 1,150,062 2.34 86,589 Badolite 0.5 Inferred 2,806,940 2.34 211,010 Zani Central 0.5 Inferred 9,683,455 1.28 398,894 TOTAL 38,043,649 2.43 2,974,900COPPERKatanga Copper - Democratic Republic of Congo The 2014 exploration programme remains in progress, with a total nine drillrigs operating on five Priority One (`P1') targets: Lunsano, Kawesitu,Mifumbi, Kamungoti, and KibolweEast (At the same time exploration programmescomprising geological mapping, soil sampling, high-resolution ground-magsurveys and trenching have been conducted for Priority Two targets, with theobjective to advance them to drill targets for 2015. At, Kawesitu a total of 2,930.07m diamond core drilling was completed on 10holes. Drilling was focused on two priority targets: Target 1 is a geologicaltarget where the flank of an anticline overlain by the dolomite; Target 2 iscut by a regional-scale ENE trending shear zone and was confirmed by infillsoil sampling results and an IP survey. Drilling for both targets intersectedoxide mineralization (dominantly malachite) in shallow parts, confirmed byNiton on-site quick assay. In borehole KWSDD001 a continuous 80m interval ofstrong quartz-calcite-pyrite alteration containing visible chalcopyrite wasintersected. This intercept, coupled with visible chalcopyrite intersected inboreholes KWSDD003 and 006, suggest potential primary (sulphide)mineralisation at Target 1 along an approximately 1.5km long structural targetfor follow-up drilling in 2015. A total of 785 samples were taken at Kawesituand dispatched to ALS South Africa. Assay results are pending DIAMONDSKlipspringer Diamond Mine - South Africa During H1 FY2015, 56,617ct were recovered and 39,113ct sold in New York andAmsterdam at an average price of $20.14/ct while 17,024ct were placed in stockfor future sale. Together with the JV partner, Klipspringer is aiming toincrease the tailings operation's monthly slimes throughput from 18,000t to21,000t and we expect to reach this higher throughput before the end of thecurrent financial year. Table 6Klipspringer Diamond Mine production results H1 FY2015 Slimes processed (t) 84,563Diamonds recovered (ct) 56,617Diamonds sold (ct) 39,113Average price ($/ct) 20.14Diamonds - other interestsMwana Africa has minority stakes in a number of other pre-resource stagediamond projects including a 20% interest in Société Minière de Bakwanga(MIBA) in the DRC and an 18% interest in the Camafuca project in Angola. The prospecting licence for the BK16 project in Botswana, in which the companyhad an interest of 55%, was not renewed during the period. Financial reviewIncome statement The group reported revenue of $84.9m for the period (H1 FY2014: $65.0m). FredaRebecca generated $38.5m of revenue (H1 FY2014: $43.6m) from the sale of30,058oz of gold (H1 FY2014: 32,252oz) and BNC generated $46.4m of revenue (H1FY2014: $21.4m) from the sale of 3,879t (H1 FY2014: 2,191t) of nickel inconcentrate. The group generated a gross profit of $34.1m (H1 FY2014: $30.7m) for theperiod; $10.6m (H1 FY2014: $18.8m) at Freda Rebecca and $23.4m at BNC (H1FY2014: $11.9m). Operating costs were $73.0m (H1 FY2014: $55.9m) due to increased tonnes soldby BNC of 1,678t and increase in average cost of sales per tonne for BNC andFR. No impairment or reversal of impairment of assets was recorded in the period.The group reported a profit before tax of $11.9m (H1 FY2014: $10.0m). Fullydiluted earnings per share for the period were 0.37 cents per share (cps) (H1FY2014: 0.45cps). Cash flowThe group generated $5.8m (H1 FY2014: -$0.1m) of cash flow from operationsduring the period. Freda Rebecca and BNC respectively generated $4.8m (H1FY2014: $13.0m) and $1.6m (H1 FY2014: $5.3m) of operating cash flows, offsetby $1.4m (H1 FY2014: $0.5m) which was utilised for expenses incurred inrelation to the interest in the diamond recovery JV, and additional cash flowsgenerated by other Mwana entities. Working capital absorbed $12.6m (H1 FY2014: $12.1m) of cash flow, with $9.4mrelating to BNC and $4.8m relating to Freda Rebecca. Combined with financingcosts of $0.4m (H1 FY2014: $0.3m) this yielded a net cash inflow fromoperations of $5.8m (H1 FY2014: -$0.1m). Capital investment comprised $9.6m (H1 FY2014: $11.8m) of which $4.6m (H1FY2014: $7.9m) was spent on property, plant and equipment, and a further $5.1m(H1 FY2014: $6.6m) on exploration assets. The balance of capital investmentwas spent on several other items as detailed in the cash flow statement. At 30 September 2014 the group held cash balances of $6.9m (H1 FY2014: $9.2m). Consolidated Statement of Profit and LossFor the six months ended 30 September 2014(Unaudited) 6 months 6 months Year ended ended ended 30.09.2014 30.09.2013 31.03.2014 Unaudited Unaudited Audited $'000 $'000 $'000 Revenue 84,942 64,993 142,460Cost of sales (50,834) (34,308) (83,850)Gross profit 34,108 30,685 58,610Other income 534 505 620Freight and insuranceexpenses (5,700) (8,242) (12,098)General and administrativeexpenses (6,792) (5,167) (11,240)Care and maintenance expenses (833) (1,269) (1,890)Corporate expenses (2,705) (3,607) (6,442)Operating profit 18,612 12,905 27,560Retrenchment andrestructuring expenses[1] (213) - (2,004)Dividends received 24 - -Profit/(loss) on sale ofassets (43) 6 (1,636)Fair value adjustment 9 - (6)Foreign exchange gain/(loss) (1,311) (14) 1,055EBITDA[2] 17,078 12,897 24,969Impairment loss (471) - (671)Impairment reversal 188 - 27,987Depreciation (4,571) (3,378) (7,631)Finance income 48 763 319Finance expense (369) (300) (1,033)Net profit before income tax 11,903 9,982 43,940Income tax credit/(expense) (4,221) (2,521) 6,655Net profit for the period 7,682 7,461 50,595Net profit attributable to:Equity holders of the parent 5,124 5,524 36,605Non-controlling interest 2,558 1,937 13,990Net profit for the period 7,682 7,461 50,595Earnings per shareBasic earnings per share(cents) 0.37 0.48 2.89Diluted earnings per share(cents) 0.37 0.45 2.89 Following a decision to reduce corporate costs, certain staff retrenchment andonce-off costs in respect of restructuring costs were incurred during the 6months ended 30 September 2014 in respect of London, Johannesburg and DRC(SEMHKAT). Earnings before interest, impairments, tax, depreciation andamortisation Consolidated Statement of Comprehensive IncomeFor the six months ended 30 September 2014(Unaudited) 6 months 6 months ended ended Year ended 30.09.2014 30.09.2013 31.03.2014 Unaudited Unaudited Audited $'000 $'000 $'000Profit for the period 7,682 7,461 50,595Other comprehensiveprofit/(loss)Items that are or may bereclassified subsequently toprofit and loss:Foreign currency translationdifferences 785 (548) (884)Other comprehensiveprofit/(loss) for the period,net of income tax 785 (548) (884)Total comprehensive profitfor the period 8,467 6,913 49,711Total comprehensive profitattributable to:Equity holders of the parent 5,909 4,976 35,721Non-controlling interest 2,558 1,937 13,990Total comprehensive profitfor the period 8,467 6,913 49,711 Consolidated Statement of Financial PositionAs at 30 September 2014(Unaudited) 30.09.2014 30.09.2013 31.03.2014 Unaudited Unaudited Audited $'000 $'000 $'000ASSETSNon-current assetsProperty, plant and equipment 81,210 53,419 81,355Intangible assets 66,556 62,203 62,986Investments 579 1,395 615Deferred tax assets 14,138 1,186 19,406Non-current receivables 2,392 1,159 2,288Total non-current assets 164,875 119,362 166,650Current assetsInventories 15,257 11,674 12,994Trade and other receivables 21,616 22,789 18,832Cash and cash equivalents 6,922 9,214 9,089Total current assets 43,795 43,677 40,915Total assets 208,670 163,039 207,565EQUITYIssued share capital 99,572 98,967 99,572Share premium 69,536 69,193 69,536Reserves 97,523 97,819 97,157Retained earnings (135,504) (172,317) (140,628)Total equity attributable to:Equity holders of the parent 131,127 93,662 125,637Non-controlling interest 5,888 (9,007) 3,284Total equity 137,015 84,655 128,921LIABILITIESNon-current liabilitiesLoan payable - non-current 2,345 3,380 2,446Rehabilitation provisions 17,765 18,765 17,847Other payables - 8,537 -Deferred tax liabilities 16,886 10,506 18,878Total non-current liabilities 36,996 41,188 39,171Current liabilitiesTrade payables 10,790 11,368 15,300Accruals and other payables 16,143 16,465 19,745Loans payable - current 3,584 - 1,823Provisions 4,142 9,363 2,605Total current liabilities 34,659 37,196 39,473Total liabilities 71,655 78,384 78,644Total equity and liabilities 208,670 163,039 207,565 Consolidated Statement of Changes in EquityFor the six months ended 30 September 2014(Unaudited) Total equity attribu- Invest- able ment to equity Trans- revalu- Share holders Non-con- Share Share lation ation Treasury based Total Retained of the trolling Total capital premium reserve reserve stock payments reserves earnings parent interest equity $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000Balance as at 31March 2013(Audited) 95,162 69,088 95,108 - (1,719) 3,137 96,526 (177,949) 82,827 (10,793) 72,034Profit for theyear - - - - - - - 36,605 36,605 13,990 50,595Foreign currencytranslationdifferences - - (884) - - - (884) - (884) - (884)Totalcomprehensiveloss for theyear - - (884) - - - (884) 36,605 35,721 13,990 49,711Contributions byanddistributions toownersIssue ofordinary shares 4,410 - - - - - - 4,410 837 5,247Dividends - - - - - - - - - (750) (750)Premium on shareissue lessexpenses - 2,101 - - - - - - 2,101 - 2,101Disposal oftreasury stock - (1,653) - - 1,719 - 1,719 - 66 - 66Share-basedpaymenttransactions - - - - - 512 512 - 512 - 512Share-basedpaymentreversals - - - - - (716) (716) 716 - - -Totalcontributions byanddistributions toowners 4,410 448 - - 1,719 (204) 1,515 716 7,089 87 7,176Balance as at 31March 2014(Audited) 99,572 69,536 94,224 - - 2,933 97,157 (140,628) 125,637 3,284 128,921 Consolidated Statement of Changes in Equity (continued)For the six months ended 30 September 2014(Unaudited) Total equity attribu- Invest- table ment to equity Non- Trans- revalu- Share holders con- Share Share lation ation Treasury based Total Retained of the trolling Total capital premium reserve reserve stock payments reserves earnings parent interest equity $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000Balance as at31 March 2014(Audited) 99,572 69,536 94,224 - - 2,933 97,157 (140,628) 125,637 3,284 128,921Profit for theperiod - - - - - - - 5,124 5,124 2,558 7,682Foreigncurrencytranslationdifferences - - 785 - - - 785 - 785 - 785Totalcomprehensiveloss for theperiod - - 785 - - - 785 5,124 5,909 2,558 8,467Contributionsby anddistributionsto ownersIssue ofordinary shares - - - - - - - - - 46 46Share IssueExpenses - - - - - - - - - - -Dividends paidby subsidiary - - - - - - - - - - -Share-basedpaymenttransactions - - - - - (419) (419) - (419) - (419)Share-basedpaymentreversals - - - - - - - - - - -Totalcontributionsby anddistributionsto owners - - - - - (419) (419) - (419) 46 (373)Balance as at30 September2014(Unaudited) 99,572 69,536 95,009 - - 2,514 97,523 (135,504) 131,127 5,888 137,015 Consolidated Statement of Cash FlowsFor the six months ended 30 September 2014(Unaudited) 6 months 6 months Year ended ended ended 30.09.2014 30.09.2013 31.03.2014 Unaudited Unaudited Audited $'000 $'000 $'000Cash flows from operatingactivitiesProfit/(loss) before income tax 11,903 9,982 43,940Adjustments for:Foreign exchange movements 1,311 (920) (1,055)Depreciation 4,571 3,724 7,631Fair value adjustments (9) - 6Charge in relation to share-basedpayments (419) 230 512Increase/(decrease) inrehabilitation provisions 82 - (1,046)Increase/decrease in otherprovisions 937 319 (9,947)Impairment loss 471 15 671Impairment reversal (188) (27,987)Loss/(profit) on sale ofnon-current assets 43 (6) 1,636Finance income (48) (763) (319)Finance expense 369 300 1,033 19,023 12,881 15,075(Increase)/decrease in inventories (2,263) (468) (1,788)(Increase)/decrease in trade and (2,784) (10,813)other receivables (9,881)(Decrease)/increase in creditors (7,513) (1,764) 9,074 6,463 768 11,548Finance expense (369) (300) (1,033)Income tax paid (332) (526) (4,421)Net cash inflows/(outflows) fromoperating activities 5,762 (58) 6,094Cash flows from investingactivitiesAdditions to property, plant and (12,770)equipment (4,573) (7,879)Investment in intangible (5,235)exploration assets (5,132) (3,941)Investments 36 - -Increase in non-current receivables (104) - -Proceeds from sale of property, 49plant and equipment 103 10Finance income 48 763 319Net cash used in investingactivities (9,622) (11,047) (17,637)Cash flows from financingactivitiesProceeds from issue of sharecapital - 6,042 6,990Share issue expenses - (413) (413)Dividends paid to non-controllinginterests - (151) (150)Share issuance to NCI 46 - 837Loans advanced/(repaid) 1,660 (283) (1,827)Net cash from financing activities 1,706 5,195 5,437Net increase/(decrease) in cash andcash equivalents (2,154) (5,910) (6,106)Cash and cash equivalents atbeginning of period 9,089 15,194 15,194Exchange rate movement in cash andcash equivalents at beginning ofperiod (13) (70) 1Cash and cash equivalents at end ofperiod 6,922 9,214 9,089 For the six months ended 30 September 2014(Unaudited) Reporting entity Mwana Africa PLC (the "Company") is a company domiciled in the United Kingdom.The condensed consolidated interim financial statements of the Company as atand for the six months ended 30 September 2014 comprise the Company and itssubsidiaries (together referred to as the "Group") and the Group's interestsin associates and jointly controlled entities. The audited consolidatedfinancial statements of the Group as at and for the year ended 31 March 2014are available upon request from the Company's registered office at 2nd Floor,1 Catherine Place, London, SW1E 6DX or at www.mwanaafrica.com. Statement ofcompliance These condensed financial statements have been prepared inaccordance with International Accounting Standard ("IAS") 34, InterimFinancial Reporting, as adopted by the EU. These condensed financialstatements have been prepared using the same accounting policies as used inthe preparation of the Group's annual financial statements for the year ended31 March 2014, which were prepared in accordance with International FinancialReporting Standards as adopted by the EU ("IFRS"). They do not include all ofthe information required for full annual financial statements, and should beread in conjunction with the consolidated financial statements of the Groupfor the year ended 31 March 2014. The financial information presented in thisdocument is unaudited. The comparative figures for the financial year ended 31March 2014 are not the Company's statutory accounts for that financial year.Those accounts have been reported on by the Company's auditor and delivered tothe Registrar of Companies. The report of the auditor was unqualified,included emphasis of matter paragraphs in which the auditor drew attention tosignificant uncertainties that may cast significant doubt regarding goingconcern and the carrying value of investments, and did not contain a statementunder section 498(2) or (3) of the Companies Act 2006. These sections addresswhether proper accounting records have been kept, whether the Company'saccounts are in agreement with those records and whether the auditor hasobtained all the information and explanations necessary for the purposes ofits audit. Going concern The Directors, having considered the Group's and the Company's current tradingactivities, funding position and projected funding requirements and theZimbabwean environment for the period at least twelve months from the date ofapproval of these Interim Financial Statements, consider it appropriate toadopt the Going Concern basis in preparing the Interim Financial Statementsfor the six months ended 30 September 2014. The Group's business activities,together with the factors likely to affect its future development, performanceand position are set out in the Operational Review on pages 8 to 15. Thefinancial position of the Group, its cash flows and liquidity position are asset out in the Financial Review on page 15. The group reports a profit for thesix months ended 30 September 2014 of $7.7m (H1 FY2014: $7.5m). As at 30September 2014, the group held cash of $6.9m (H1 FY2014: $9.2m). During thesix months to 30 September 2014, FR's cash flow contribution to the Group felldue to a lower gold price and lower production relative to the same periodlast year. However, BNC's Trojan recommenced production in this period whichaugmented the Group's cash flow. Having two mines in production represents astrengthening of the Group's cash generating ability. Discussions are on-goingwith the Zimbabwean Government pertaining to the implementation of thecountry's Indigenisation Act in relation to Mwana's Zimbabwean assets. Mwana'simplementation of the Indigenisation Act may reduce the quantum of cash flowMwana receives from its Zimbabwean entities. Furthermore, the lack of clarityaround indigenisation makes it harder for Mwana to raise funding as requiredfor its Zimbabwean assets. The Directors have prepared the cash flow forecastsof the Group and are of the opinion that the Group's current cash resources,together with the cash forecast to be generated by FR and BNC, are sufficientto fund all of the Group's planned activities for at least 12 months from thedate of these Financial Statements. The Directors are aware that variousuncertainties might affect the validity of their forecasts. Theseuncertainties include metal prices, mining and processing risks and resourceand reserve risks, in addition to indigenisation risks in Zimbabwe. TheDirectors, however, believe they have the ability to manage cash flows andimplement indigenisation proposals so as to minimise the cash flow impact tothe Group. However, the Directors acknowledge that there is no certainty thatmitigation efforts will be successful. The Directors have concluded that thecombination of these circumstances represents a material uncertainty that maycast significant doubt on the Company's and the Group's ability to continue asa going concern and that the Company and the Group may therefore be unable torealise all their assets and discharge all of their liabilities in the normalcourse of business. Nevertheless, after making enquiries and considering theuncertainties described above the Directors have a reasonable expectation thatthe Company and the Group have adequate resources to continue in operationalexistence for the foreseeable future. Accordingly they continue to adopt thegoing concern basis in preparing these Financial Statements which do notinclude any adjustments that would result from the going concern basis ofpreparation being inappropriate. Significant accounting policies In the preparation of these condensed financial statements, the Group hasapplied the same accounting policies as those presented in the Group'sconsolidated financial statements for the year ended 31 March 2014, as set outon pages 53 to 57 of the Annual Report. Management is currently assessing thepotential impact of the changes of the following amendments to publishedstandards and interpretations which are effective for the Group for the halfyear ended 30 September 2014, which are not anticipated to be material orsignificant:Transition guidance: Amendments to IFRS 10, IFRS 11 and IFRS 12 -The amendments simplify the transition to these new standards and provideadditional relief from disclosures. For entities that present one year ofcomparatives, the amendments: simplify the transition process by requiring theconsolidation conclusion to be tested at the start of the year in which IFRS10 is adopted; remove the requirement to disclose the impact of the change inaccounting policy for the year in which the standards are adopted; and require disclosures in respect of unconsolidated structured entities be provided onlyprospectively. For entities that provide additional comparatives on avoluntary basis, only the period immediately preceding the year of adoption ofthe standards needs to be restated. IFRS 10 Consolidated Financial Statements- Part of a new suite of standards on consolidation and related standards,replacing the existing accounting for subsidiaries and joint ventures (nowjoint arrangements), and making limited amendments in relation to associates.IFRS 10 supersedes IAS 27 Consolidated and Separate Financial Statements andSIC-12 Consolidation - Special Purpose Entities. It provides a single model tobe applied in the control analysis for all investees, including entities thatcurrently are SPEs in the scope of SIC-12. An investor controls an investeewhen:it is exposed or has rights to variable returns from its involvementwith that investee; it has the ability to affect those returns through itspower over that investee; and there is a link between power and returns. IAS 27 (2011) carries forward the existing accounting and disclosurerequirements of IAS 27 (2008) for separate financial statements, with someminor clarifications. The requirements of IAS 28 (2008) and IAS 31 forseparate financial statements have been incorporated into IAS 27 (2011). IFRS11 Joint Arrangements - Part of a new suite of standards on consolidation andrelated standards, replacing the existing accounting for subsidiaries andjoint ventures (now joint arrangements), and making limited amendments inrelation to associates. All parties to a joint arrangement are within thescope of IFRS 11. IFRS 11: carves out from IAS 31, those cases in which thereis a separate vehicle but that separation is overcome by form, contract orother facts and circumstances. removes the choice of equity or proportionateaccounting for JCEs (as under IAS 31) IFRS 12 Disclosure of Interests in OtherEntities -Part of a new suite of standards on consolidation and relatedstandards, replacing the existing accounting for subsidiaries and jointventures (now joint arrangements), and making limited amendments in relationto associates. Contains the disclosure requirements for entities that haveinterests in subsidiaries, joint arrangements (i.e. joint operations or jointventures), associates and/or unconsolidated structured entities. IAS 27Separate Financial Statements (2011) - IAS 27 (2011) carries forward theexisting accounting and disclosure requirements of IAS 27 (2008) for separatefinancial statements, with some minor clarifications. The requirements of IAS28 (2008) and IAS 31 for separate financial statements have been incorporatedinto IAS 27 (2011). IAS 28 Investments in Associates and Joint Ventures (2011)- IAS 28 (2011) amendsIAS 28 (2008) as follows: associates and joint venturesheld for sale - IFRS 5 applies to an investment,or a portion of aninvestment, in an associate or a joint venture that meets thecriteria to be classified as held for sale. For any retained portion of the investmentnot classified as held for sale, the equity method is applied until disposal ofthe portion held for sale. After disposal, any retained interest is accountedfor using the equity method if the retained interest continues to be anassociate or a joint venture. changes in interests held in associates andjoint ventures - IAS 28 (2011) does notrequire remeasurement of the retainedinterest in the investment upon cessation ofsignificant influence or joint control. Previously, IAS 28 (2008) and IAS 31 wouldhave required remeasurement of any retained interest in all cases, even if significantinfluence was succeeded by joint control. Investment Entities (Amendments to IFRS 10, IFRS 12 and IAS 27) - The amendments exemptan investment entity from the requirement to consolidate the investments that it controls.Instead, it accounts for these investments at fair value through profit or loss. Offsetting Financial Assets and Financial Liabilities - Amendments to IAS 32 -The amendments clarify the offsetting criteria, specifically: when an entity currently has a legal right of set off; and when gross settlement is equivalent to net settlement. An entity `currently has a legally enforceable right of set-off' if the right is: not contingent on a future event; and enforceable in both the normal course of business, and in the event ofdefault, insolvency or bankruptcy of the entity and all of the counterparties. Gross settlement is equivalent to net settlement if and only if the grosssettlement mechanism has features that:eliminate or result in insignificantcredit and liquidity risk; and process receivables and payables in a singlesettlement process or cycle. Recoverable amount disclosures for non-financialassets - Amendments to IAS 36 - The amendments reverse the unintendedrequirement in IFRS 13 Fair Value Measurement to disclose the recoverableamount of every cash-generating unit to which significant goodwill orindefinite-lived intangible assets have been allocated. Under the amendments,recoverable amount is required to be disclosed only when an impairment losshas been recognised or reversed. IFRIC 21 Levies - The interpretation definesa levy as an outflow from an entity imposed by a government in accordance withlegislation. That levy is recognised as a liability when - and only when - thetriggering event specified in the legislation occurs. Continuing hedgeaccounting after derivative novations - Amendments to IAS 39 - The amendmentsadd a limited exception to IAS 39 to provide relief from discontinuing anexisting hedging relationship when a novation that was not contemplated in theoriginal hedging documentation meets specific criteria. The Group has reviewedthe effect of these amendments and interpretations, and has concluded thatthey have no material impact on these condensed consolidated interim financialstatements. The Group is currently assessing the potential impacts of theother new and revised standards and interpretations that will be effectivefrom 1 April 2014 and beyond, and which the Group has not early-adopted. TheGroup does not anticipate that these will have a material impact on theGroup's overall results and financial position. Standards, Amendments andInterpretations that are not yet effective The following new, revised andamended standards and interpretations have been issued and endorsed by the EUunless otherwise stipulated, but are not yet effective and have not beenadopted by the Group in these consolidated financial statements. IFRS 9`Financial Instruments', IASB effective 1 January 2015, however, not yetendorsed by the EU. Based on the nature of the Group's financial assets, theadoption of the standard is not expected to have a material impact on thefinancial position or performance of the Group; IFRS 10 `ConsolidatedFinancial Statements', issued in May 2011, replaces the consolidationrequirements in SIC-12 `Consolidation - Special Purpose Entities' and IAS 27`Consolidated and Separate Financial Statements'. This standard builds onexisting principles by identifying the concept of control as the determiningfactor in whether an entity should be included within the consolidatedfinancial statements of the parent company. The standard provides additionalguidance to assist in the determination of control where this is difficult toassess. The standard has been endorsed by the EU and is effective for theaccounting period beginning 1 January 2014. The Group is yet to assess IFRS10's full impact on its financial position or performance; IFRS 11 `JointArrangements', issued in May 2011, replaces IAS 31 `Interests in jointventures'. The standard establishes accounting principles based on the rightsand obligations of the joint arrangement rather than its legal form. Thestandard introduces two types of joint arrangement - joint operations andjoint ventures - and eliminates proportionate consolidation for any form ofjoint arrangement. The standard has been endorsed by the EU and is effectivefor the accounting period beginning 1 January 2014. The Group is yet to assessIFRS 11's full impact on its financial position or performance; IFRS 12`Disclosure of Interests in Other Entities', issued in May 2011, is a newstandard that establishes the disclosure requirements for all entities that aGroup has an interest in, including subsidiaries, joint arrangements,associates, special purpose vehicles and other off-balance sheet vehicles. Thestandard has been endorsed by the EU and is effective for the accountingperiod beginning 1 January 2014. The Group is yet to assess IFRS 12's fullimpact on its financial position or performance; and Improvements to IFRSs:There are a number of amendments to certain standards following the 2011annual improvements project which have not yet been endorsed by the EU. Theimpact of any consequential changes to the consolidated financial statementsis not likely to be significant. Operating segmentsThe Group has four reportable segments, as described below, which are theGroup's strategic business units. The strategic business units offer differentproducts and services, and are managed separately because they requiredifferent technology and marketing strategies. The following summary describes the operations in each of the Group'sreportable segments: Business Segment DescriptionGold Gold mining activitiesNickel Nickel mining. Smelting and refining activities are currently on care and maintenance.Diamonds Diamond mining activities currently on care and maintenanceExploration Gold and base metal exploration activities For information about reportable segments - Operations see www.mwanaafrica.com Gold Nickel 6 months 6 months 6 months 6 months ended ended Year ended ended ended Year ended 30.09.2014 30.09.2013 31.03.2014 30.09.2014 30.09.2013 31.03.2014 Unaudited Unaudited Audited Unaudited Unaudited Audited $'000 $'000 $'000 $'000 $'000 $'000 External revenue 38,556 43,623 77,449 46,386 21,370 65,011Reportable segmentassets 63,160 68,504 68,872 70,108 21,431 69,844Reportableadditions toproperty, plantand equipment 1,753 3,231 5,986 2,267 4,524 7,031Reportableadditions tointangible assets - - - - - -Reportable segmentprofit/(loss)before impairmentreversal and tax 2,934 9,101 8,577 11,865 4,766 18,209Impairmentreversal - - - - - -Reportable segmentprofit/(loss)before tax 2,934 9,101 8,577 11,865 4,766 46,196 Diamonds Exploration Total 6 months 6 months 6 months 6 months 6 months 6 months ended ended Year ended ended ended Year ended ended ended Year ended 30.09.2014 30.09.2013 31.03.2014 30.09.2014 30.09.2013 31.03.2014 30.09.2014 30.09.2013 31.03.2014 Unaudited Unaudited Audited Unaudited Unaudited Audited Unaudited Unaudited Audited $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000External revenue - - - - - - 84,942 64,993 142,460Reportable segmentassets 1,186 1,488 1,224 67,304 63,007 65,263 201,758 154,430 205,203Reportable additionsto property, plantand equipment - - - 1 116 358 4,021 7,871 13,375Reportable additionsto intangible assets - - - 3,941 3,941 15,331 3,941 3,941 15,331Reportable segmentprofit/(loss) beforeimpairment reversaland tax (1,411) (481) (1,027) 558 (448) (1,925) 13,946 12,938 (24,505)Impairment reversal - - - - - - - - -Reportable segmentprofit/(loss) beforetax (1,411) (481) (1,027) 558 (448) (1,925) 13,946 12,938 (51,821) 6 months 6 months ended ended Year ended 30.09.2014 30.09.2013 31.03.2014 Unaudited Unaudited Audited $'000 $'000 $'000 Reconciliation of reportable segment profit or loss: Total profit for reportable segments 13,946 12,938 51,821 Unallocated amounts: Other corporate expenses (2,043) (2,956) (7,881) Consolidated profit/(loss) before income tax 11,903 9,982 45,940 Business Segment Statement of Profit and Loss Earnings Per ShareBasic earnings per share (EPS) is computed by dividing the profit or lossafter taxation for the period attributable to ordinary shareholders by the sumof the weighted average number of ordinary shares in issue for dividendsduring the period. Diluted earnings per share is computed by dividing theprofit or loss after taxation for the period attributable to ordinaryshareholders by the sum of the weighted average number of ordinary shares inissue, adjusted for the effect of all dilutive potential ordinary shares thatwere outstanding during the period. 30.09.2014 30.09.2013 31.03.2014 Unaudited Unaudited Audited $'000 $'000 $'000 EarningsProfit/(loss) attributableto ordinary shareholders 5,124 5,524 36,605 Weighted average number ofshares Number Number NumberIssued ordinary shares atthe beginning of the year 1,397,780,675 1,119,727,051 1,119,727,051Effect of shares issued - 20,619,999 146,596,861Weighted average shares atthe end of the year forbasic and diluted EPS 1,397,780,675 1,140,347,050 1,266,323,912Basic Earnings/(loss) pershare 0.37 0.48 2.89Diluted earnings/(loss) pershare 0.37 0.45 2.89 Post balance sheet eventsThere were no events after balance sheet date that required additionaldisclosure besides those detailed below: At BNC the smelter restart plan isunderway and its commissioning is forecast for August 2015; Post thehalf-year, BNC announced it will shortly be seeking funding through a $20million fixed-term debt instrument (the "bond") to help fund the restart ofthe Bindura smelter. The bond has been granted Prescribed Asset status ("PAstatus") by the Minister of Finance and Economic Development of Zimbabwe andLiquid Asset Status by the Reserve Bank of Zimbabwe, and consequently BNC hascommenced the process of raising the bond of $20 million; and Post the halfyear, FR began a process of raising $10 million through an overdraft facilityto be obtained from EcoBank, $4m of which facility has already been secured. Commitments and contingent liabilitiesCommitmentsCapital commitments at the end of the period relating to property, plant andequipment for BNC and FR, for which no provision has been made, are asfollows: 30.09.2014 30.09.2013 31.03.2014 Unaudited Unaudited Audited $'000 $'000 $'000 Contracted 7,645 716 1,220