10th Dec 2009 07:00
10th December 2009
Mwana Africa PLC
Unaudited results for the six months to 30 September 2009
Mwana Africa PLC ("Mwana", the "Group" or the "Company") is pleased to announce its unaudited interim financial results for the six months to 30 September 2009.
Key Features
|
● |
Freda Rebecca gold mine successfully returned to production. Since commissioning of the first phase of the refurbishment programme 2,580 ounces of gold dore have been produced |
|
● |
Approval received from Industrial Development Corporation of South Africa (the "IDC") for up to US$10 million debt funding for the expansion of production at the Freda Rebecca gold mine |
|
● |
Care and maintenance programme continuing at Bindura Nickel Corporation. Decision taken to implement a phased restart of operations, beginning with production of concentrate from the Trojan mine, subject to availability of finance. Discussions with potential financiers are underway |
|
● |
Klipspringer diamond mine in South Africa produced 10,726 carats (2008: 16,424) |
|
● |
Initial drilling at the Zani Kodo prospect in the DRC outlined JORC compliant indicated resources of 190,684 oz and inferred resources of 261,192 oz of gold |
|
● |
Agreement for sale of Konongo (Ghanaian gold exploration) concluded in May 2009 |
Financial Highlights
|
● |
Consolidated revenue of £8.5m (2008:£ 20.8m) |
|
● |
Loss before income tax and impairment of £3.9m (2008: £14.1m) |
|
● |
Consolidated net cash at 30 September 2009 was £13.5m (US$21.5m) (2008: £31.3m). Consolidated net cash at 4 December 2009 was £12.1m (US$20.1m) |
|
● |
Mwana Africa, excluding BNC held net cash of £9.1m (US$14.5m) at 30 September 2009 (2008: £25.8m). Net cash, excluding funds held by BNC, at 4 December 2009 was £7.3m (US$12.1m) |
Six Month Review
The past six months have seen notable achievements at each of the Company's principal assets.
Most significant of these was the resumption of production from the Freda Rebecca gold mine in Zimbabwe, in line with the timescale envisaged when the board decided to implement the restart, and coincident with a period of historically high gold prices. Production at the mine is continuing to ramp up successfully towards the planned rate of 30,000 ounces of gold per year. The provision of project finance by the IDC will enable the Company to accelerate implementation of the second phase of the refurbishment programme. Drawdown of the loan remains subject to legal documentation, and to fulfilment of certain conditions precedent, which the board expects will be satisfied in the first quarter of 2010.
Resource modelling at Zani Kodo, based on drilling along 700 metres of a strike which has been defined over nine kilometres, has demonstrated the potential of this project. The recently completed acquisition of Moto Goldmines by Randgold and by Anglogold demonstrates that Mwana is not alone in its belief in the potential of this area.
At BNC, the care and maintenance programme, begun approximately twelve months ago, continues to preserve the integrity of this substantial asset. During the period, a number of potential restart scenarios have been considered, and a decision has been taken to resume production from the Trojan mine and concentrator, subject to the availability of finance. Independent technical consultants have been appointed to review this scenario, and discussions with potential financiers have commenced.
Just as the Company has looked after its physical assets, so it has sought to preserve its cash position. During the period, Mwana completed the first stage of refurbishment of Freda Rebecca and continued to make progress at its portfolio of exploration prospects without recourse to external finance. BNC has funded the costs of its care and maintenance programme from its own resources.
OUTLOOK
Over the last six months, throughout the organisation, Mwana has looked for ways to improve the efficiency and quality of its projects. The board continues to be encouraged by developments in Zimbabwe, and notes the part that the resumption of production from Freda Rebecca is playing, and the role that BNC will play, in the rebuilding of that country.
The board remains cautiously optimistic on the prospects for commodity prices in the markets in which Mwana operates. The gold price continues to set new records as individuals and organisations around the world search for a store of value in the face of US dollar weakness and likely global inflation. Meanwhile the board believes that the price of nickel, which began to recover in the first half of the calendar year, has stabilised at a level at which BNC, and others in the nickel industry, can operate sustainably.
The prospects for commodity prices, for Zimbabwe and the specific prospects for Mwana have improved over the period. Mwana's board and management remain focussed on turning the Company's flagship projects to account.
This press release is available for download from the Company's website; www.mwanaafrica.com.
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Enquiries: |
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Mwana Africa PLC |
Tel: 020 7654 5580 |
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Oliver Baring, Executive Chairman |
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Donald McAlister, Finance Director |
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Canaccord Adams Limited |
Tel: 020 7050 6500 |
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Mike Jones / Guy Blakeney |
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Merlin |
Tel: 020 7726 8400 |
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Tom Randell / Anca Spiridon |
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References to dollars or "$" refer to US dollars unless otherwise stated.
This press release includes 'forward-looking statements'. Words such as 'anticipates', 'expects', 'intends', 'plans', 'forecasts', 'projects', 'budgets', 'believes', 'seeks', 'estimates', 'could', 'might', 'should' and similar expressions identify forward-looking statements. All statements other than statements of historical facts included in this press release, including, without limitation, those regarding Mwana Africa's business strategy and plans and objectives of management for future operations and acquisition opportunities, are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors which could cause the actual results, performance or achievements of Mwana Africa or the markets and economies in which Mwana Africa operates to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements, including, without limitation, political, regulatory and economic factors. Factors that would cause actual results or events to differ from current expectations include, among other things, political and regulatory risks and the other risks and hazards associated with mineral exploration, development and production. Mwana Africa believes that the assumptions inherent in the forward-looking statements are reasonable; however, forward looking statements are not guarantees of future performance and accordingly undue reliance should not be put on such statements due to the inherent uncertainty therein. Mwana Africa does not assume any responsibility to update any of such forward-looking statements, save as required by relevant law or regulatory authority. This report contains information regarding the results of various exploration activities. Where a mineral resource has not been defined, it should be noted that the potential quantity and grade is conceptual in nature, there has been insufficient exploration to define a mineral resource and that it is uncertain if further exploration will result in the target being delineated as a mineral resource. Charl du Plessis, Executive Vice President Exploration of Mwana Africa, who holds a PhD and is a Member of the AusIMM, is a 'Qualified Person' as defined in the AIM Rules and under NI 43-101, and the exploration and resource development information contained in this press release has been reviewed by Dr Du Plessis. Mineral resource estimates included herein are presented in accordance with the JORC Code. If presented in accordance with the CIM Definition Standards on Mineral Resources and Mineral Reserves adopted by the CIM Council, the mineral resource and mineral reserve presentation would be materially the same.
Operations Review
Bindura Nickel Corporation (BNC)
BNC's mines, smelter and refinery remain on care and maintenance. This programme is designed to preserve the condition of the existing infrastructure, in order to reduce the cost and risk of a return to operation. The programme includes continued dewatering of the mines, periodic test runs of key equipment and ongoing monitoring of major plant structures.
The costs of the care and maintenance programme have continued to be met from BNC's existing resources. BNC has also implemented a plan to realise value from existing stockpiles of in-process inventory. In the period, £7.2m was realised from sales of finished and in-process inventory, and dispatch of toll material.
The economic and operating environment in Zimbabwe has improved significantly, and BNC believes that many of the problems caused by hyperinflation have been resolved. Meanwhile, nickel prices have continued to recover from the lows seen in October 2008.
A number of potential restart scenarios have been considered, and a decision has been taken to resume production from the Trojan mine and concentrator, subject to the availability of finance. BNC believes that annual production of up to 6,000 tonnes of nickel in concentrate can be resumed with relatively limited capital expenditure, given the potential scale of the asset. Independent technical consultants have been appointed to review this scenario, and discussions with potential financiers have commenced.
The opportunity remains to restart and enhance the efficiency of BNC's other mines, smelter and refining assets. In addition, the company continues to assess the potential to develop the Hunters Road project.
Freda Rebecca
In March 2009, Mwana Africa announced its intention to restart production at the Freda Rebecca gold mine in Zimbabwe. The mine dewatering programme was substantially completed during July 2009, while surface workshop facilities were re-commissioned to allow for rehabilitation and maintenance of the existing underground mining fleet. Mining commenced in August 2009, and the commissioning of the primary crusher commenced in mid-August 2009. Refurbishment of the milling and leaching circuits was completed in September 2009. To date, 59,110 tonnes of ore have been milled at an average grade of 2.2 g/t.
The first commercial pour of gold following recommisioning took place on 13th October 2009, since when 2,580 ounces of dore gold have been produced. On average, proceeds from gold sales have been received 16 days from delivery.
Staffing levels have been increased to reflect the resumption of commercial operation. Freda Rebecca had 302 employees at 30th September 2009, and added a further 78 workers, principally on the mine, during October 2009. Certain management services at the mine and processing plant have initially been outsourced to contractors. Nonetheless, Freda Rebecca has been successful in attracting skilled labour both from within Zimbabwe and from abroad.
Expenditure during the period totalled £4.1 million, comprising capital investment of £2.6 million and working capital (including operating expenditure, and build up of stocks and spares) of £1.6 million.
The company's efforts are now focussed on achieving the planned ramp up of production to a rate of in excess of 30,000 ounces of gold per year, optimising plant performance and planning for the second phase of the refurbishment, which is expected to increase output to approximately 50,000 ounces of gold per year. In November, the Industrial Development Corporation of South Africa approved the provision of a loan of up to US$10 million debt funding for the project. The loan is subject to completion of legal documentation and certain conditions precedent to drawdown. Mwana Africa has committed to sell a 15% stake in Freda Rebecca to a local investor.
Klipspringer
The Klipspringer diamond mine in South Africa continued to operate despite challenging economic conditions. Market values of diamonds have been depressed, although prices have recently begun to increase. In May 2009 the mine achieved an average price of $75 per carat whilst a further sale in September 2009 realised an average of $84 per carat. At its November auction, an average price of $99 per carat was realised. Meanwhile the continued strength of the South African Rand has put pressure on US Dollar operating margins.
In this environment, a decision was taken to reduce the rate of production while keeping the mine open. In the six months to 30th September 2009 the mine produced 10,726 carats (2008: 16,424), was marginally loss making and experienced an operating cash outflow of £0.2m (2008: £0.1m outflow).
Klipspringer remains well positioned to benefit from improving market conditions. The rate of primary development has been increased to ensure flexibility in the underground environment, and an increase in the rate of production to 3,500 carats per month is planned.
Exploration Review
Zani Kodo -Gold (DRC)
An initial resource estimate was calculated at the Zani Kodo gold deposit in the DRC, based on the results of drilling along just 700m of a trend which has been accurately delineated over a strike length of 9 kilometres. The estimate outlined JORC compliant indicated resources of 190,684 oz of gold and JORC compliant inferred resources of 261,192 oz of gold.
In September, drilling commenced on the downdip extension of the Kodo Main high grade zone.
During the period, Mwana Africa received the approval of the DRC's Council of Ministers on the terms of renegotiation of its agreement with L'Office des Mines d'Or de Kilo-Moto ("OKIMO").
Semhkat -Base Metals (DRC)
A 648m core drilling programme was completed at Kibolwe West. 7 holes intersected copper mineralisation at varying depths and over varying widths along a 300m strike length. One of three holes drilled at Kiamato West to test the Mwashia-Grand Conglomérat contact at depth intersected significant sulphide mineralisation over a 40m width at 100m. Ambase completed a 1,100m diamond core drilling at Lombe. Work is planned to continue after the end of the rainy season.
Financial Review
Income Statement
The Group reported revenue of £8.5m (2008:£20.8m), substantially reduced from the previous year owing to the limited production at BNC reflecting its move to care and maintenance. Nonetheless, BNC was able to achieve revenue of £7.2 m (2008: £19.3m), principally from sales of finished and in-process inventory, and dispatch of toll material. Other Group revenue was generated predominantly from the Klipspringer diamond mine.
Operating costs of £12.6m were reduced substantially from the preceding period (2008: £35.4m) due to substantially reduced activity, reduced foreign exchange losses of £0.9m (2008: £8.1m) and lower depreciation at BNC during the period.
Following the improved outlook for commodity prices and for the economic environment in Zimbabwe, no impairment of assets was recorded in the period (2008: £135.0m). The group reported a loss before tax and impairment of £3.9m (2008: £14.1m).
Cashflow
The Group recorded a net cash outflow, after foreign exchange movements, of £5.4m (2008: £13.6m, excluding cash received from June 2008 placing).
As a result of sales of inventory, offset by the ongoing costs of the care and maintenance programme and a partial repayment to creditors, BNC recorded a net cash inflow of £2.0m (2008: £3.2m outflow). The group, excluding BNC, recorded a net cash outflow of £7.4m (2008: £10.4m, excluding cash received from June 2008 placing), relating to capitalised expenditure on the Freda Rebecca gold mine and on the company's exploration portfolio, and corporate costs.
Capital investment comprised £3.1m (2008: £4.3m) on property, plant and equipment, principally at Freda Rebecca, and £1.2m (2008: £7.0m) on exploration assets.
At 30th September 2009, the Group, excluding BNC, held cash balances of £9.1m (2008: £25.8m). BNC held cash balances of £4.4m (2008: £5.6m).
Contents
|
Page |
||
|
Consolidated balance sheet |
8 |
|
|
Consolidated income statement |
9 |
|
|
Consolidated statement of comprehensive income |
10 |
|
|
Consolidated statement of changes in equity |
11-12 |
|
|
Consolidated cash flow statement |
13 |
|
|
Notes to the condensed consolidated interim financial statements |
14-26 |
|
Consolidated balance sheet
As at 30 September 2009
(Unaudited)
|
Note |
30.09.2009 |
30.09.2008 |
31.03.2009 |
|||
|
Unaudited |
Unaudited |
Audited |
||||
|
£'000 |
£'000 |
£'000 |
||||
|
ASSETS |
||||||
|
Non-current assets |
||||||
|
Property, plant and equipment |
9 |
28,998 |
33,284 |
30,388 |
||
|
Intangible assets |
10 |
8,381 |
15,000 |
8,000 |
||
|
Investments |
11 |
1,227 |
131 |
1,377 |
||
|
Deferred tax assets |
- |
203 |
217 |
|||
|
Non-current receivables |
731 |
40 |
25 |
|||
|
Total non-current assets |
39,337 |
48,658 |
40,007 |
|||
|
Current assets |
||||||
|
Cash and cash equivalents |
12 |
13,498 |
31,647 |
19,198 |
||
|
Inventories |
2,853 |
17,974 |
8,378 |
|||
|
Trade and other receivables |
14,069 |
17,916 |
13,595 |
|||
|
Tax receivable |
84 |
- |
72 |
|||
|
Available-for-sale financial assets |
13 |
2,975 |
2,791 |
1,857 |
||
|
Assets held for sale |
2,005 |
1,000 |
2,544 |
|||
|
Total current assets |
35,484 |
71,328 |
45,644 |
|||
|
Total assets |
74,821 |
119,986 |
85,651 |
|||
|
EQUITY |
||||||
|
Issued share capital |
14 |
40,043 |
40,043 |
40,043 |
||
|
Share premium |
19,406 |
19,406 |
19,406 |
|||
|
Reserves |
61,239 |
5,068 |
64,351 |
|||
|
Retained earnings |
(80,760) |
12,569 |
(76,474) |
|||
|
Total equity attributable to equity holders of the parent |
39,928 |
77,086 |
47,326 |
|||
|
Non-controlling interest |
6,914 |
9,689 |
7,168 |
|||
|
Total equity |
46,842 |
86,775 |
54,494 |
|||
|
LIABILITIES |
||||||
|
Non-current liabilities |
||||||
|
Provisions |
15 |
5,180 |
6,162 |
5,580 |
||
|
Deferred tax liabilities |
839 |
3,790 |
887 |
|||
|
Total non-current liabilities |
6,019 |
9,952 |
6,467 |
|||
|
Current liabilities |
||||||
|
Trade and other payables |
21,960 |
22,418 |
24,378 |
|||
|
Bank overdrafts |
12 |
- |
301 |
312 |
||
|
Taxation payable |
- |
540 |
- |
|||
|
Total current liabilities |
21,960 |
23,259 |
24,690 |
|||
|
Total liabilities |
27,979 |
33,211 |
31,157 |
|||
|
Total equity and liabilities |
74,821 |
119,986 |
85,651 |
Consolidated income statement
For the six months ended 30 September 2009
(Unaudited)
|
6 months ended |
6 months ended |
Year ended |
||||
|
Note |
30.09.2009 |
30.09.2008 |
31.03.2009 |
|||
|
Unaudited |
Unaudited |
Audited |
||||
|
£'000 |
£'000 |
£'000 |
||||
|
Continuing operations |
||||||
|
Revenue |
8,548 |
20,842 |
28,306 |
|||
|
Cost of sales |
(8,053) |
(27,184) |
(54,400) |
|||
|
Gross profit/(loss) |
495 |
(6,342) |
(26,094) |
|||
|
Other income |
146 |
- |
- |
|||
|
Selling and distribution expenses |
(1,009) |
(4,412) |
(3,202) |
|||
|
Administrative expenses |
(2,672) |
(2,523) |
(9,144) |
|||
|
Other expenses |
(887) |
(1,299) |
(288) |
|||
|
Results from operating activities |
(3,927) |
(14,576) |
(38,728) |
|||
|
Finance income |
35 |
650 |
1,061 |
|||
|
Finance cost |
- |
(157) |
(210) |
|||
|
Loss before income tax and impairment |
(3,892) |
(14,083) |
(37,877) |
|||
|
Impairment |
7 |
- |
(134,993) |
(190,242) |
||
|
Loss before income tax |
(3,892) |
(149,076) |
(228,119) |
|||
|
Income tax expense |
(166) |
13,912 |
17,554 |
|||
|
Loss from continuing operations |
(4,058) |
(135,164) |
(210,565) |
|||
|
Discontinued operations |
||||||
|
Loss from discontinued operation (net of income tax) |
(294) |
- |
- |
|||
|
Loss for the period |
(4,352) |
(135,164) |
(210,565) |
|||
|
Loss attributable to: |
||||||
|
Owners of the Parent |
(4,286) |
(114,517) |
(187,445) |
|||
|
Non-controlling interest |
(66) |
(20,647) |
(23,120) |
|||
|
Loss for the period |
(4,352) |
(135,164) |
(210,565) |
Consolidated statement of comprehensive income
For the six months ended 30 September 2009
(Unaudited)
|
6 months ended |
6 months ended |
Year ended |
||||
|
30.09.2009 |
30.09.2008 |
31.03.2009 |
||||
|
Unaudited |
Unaudited |
Audited |
||||
|
£'000 |
£'000 |
£'000 |
||||
|
Other comprehensive (loss)/profit |
||||||
|
Foreign currency translation differences |
(4,389) |
21,637 |
64,703 |
|||
|
Net change in fair value of available-for-sale financial assets, net of tax |
1,332 |
- |
- |
|||
|
Other comprehensive (loss)/profit for the period, net of income tax |
(3,057) |
21,637 |
64,703 |
|||
|
Total comprehensive loss for the period |
(7,409) |
(113,527) |
(145,862) |
|||
|
Total comprehensive loss attributable to |
||||||
|
Owners of the Parent |
(7,155) |
(92,880) |
(122,742) |
|||
|
Non-controlling interest |
(254) |
(20,647) |
(23,120) |
|||
|
Total comprehensive loss for the period |
(7,409) |
(113,527) |
(145,862) |
|||
|
Loss per share |
||||||
|
Basic loss per share (pence) |
(1.02) |
(32.30) |
(48.60) |
|||
|
Diluted loss per share (pence) |
(1.02) |
(32.30) |
(48.60) |
|||
|
Continuing operations |
||||||
|
Basic loss per share (pence) |
(0.95) |
(32.30) |
(48.60) |
|||
|
Diluted loss per share (pence) |
(0.95) |
(32.30) |
(48.60) |
|||
Consolidated statement of changes in equity
For the six months ended 30 September 2009
(Unaudited)
|
Share capital |
Share premium |
Trans-lation reserve |
Other reserves |
Investment revaluation reserve |
Treasury stock |
Share based payments |
Retained earnings |
Total equity attributable to equity holders of the parent |
Non-con-trolling interest |
Total equity |
|||||||||||||
|
Note |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
||||||||||||
|
Balance at 31 March 2008 |
33,793 |
1,906 |
(2,527) |
42,836 |
- |
(1,072) |
2,910 |
68,135 |
145,981 |
30,334 |
176,315 |
||||||||||||
|
Profit or loss |
- |
- |
- |
- |
- |
- |
- |
(114,517) |
(114,517) |
(20,645) |
(135,162) |
||||||||||||
|
Foreign currency translation differences |
- |
- |
21,637 |
- |
- |
- |
- |
- |
21,637 |
- |
21,637 |
||||||||||||
|
Impairment applied against reserves |
- |
- |
(16,115) |
(42,836) |
- |
- |
- |
58,951 |
- |
- |
- |
||||||||||||
|
Total comprehensive income for the period |
- |
- |
5,522 |
(42,836) |
- |
- |
- |
(55,566) |
(92,880) |
(20,645) |
(113,525) |
||||||||||||
|
Contributions by and distributions to owners |
||||||||||||||||||||||
|
Issue of ordinary shares less expenses |
6,250 |
17,500 |
- |
- |
- |
- |
- |
- |
23,750 |
- |
23,750 |
|||||||||||
|
Share-based payment transactions |
- |
- |
- |
- |
- |
- |
235 |
- |
235 |
- |
235 |
|||||||||||
|
Total contributions by and distributions to owners |
6,250 |
17,500 |
- |
- |
- |
- |
235 |
- |
23,985 |
- |
23,985 |
|||||||||||
|
Balance as at 30 September 2008 |
40,043 |
19,406 |
2,995 |
- |
- |
(1,072) |
3,145 |
12,569 |
77,086 |
9,689 |
86,775 |
Condensed consolidated statement of changes in equity (continued)
For the six months ended 30 September 2009
(Unaudited)
|
Share capital |
Share premium |
Trans-lation reserve |
Other reserves |
Investment revaluation reserve |
Treasury stock |
Share based payments |
Retained earnings |
Total equity attributable to equity holders of the parent |
Non-con-trolling interest |
Total equity |
||||||||||||||||||||||||||||||
|
Note |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|||||||||||||||||||||||||||||
|
Balance at 31 March 2009 |
40,043 |
19,406 |
62,176 |
- |
- |
(1,072) |
3,247 |
(76,474) |
47,326 |
7,168 |
54,494 |
|||||||||||||||||||||||||||||
|
Profit or loss |
- |
- |
- |
- |
- |
- |
- |
(4,286) |
(4,286) |
(66) |
(4,352) |
|||||||||||||||||||||||||||||
|
Foreign currency translation differences |
- |
- |
(3,574) |
- |
- |
- |
- |
- |
(3,574) |
(815) |
(4,389) |
|||||||||||||||||||||||||||||
|
Revaluation of available-for-sale financial assets |
- |
- |
- |
- |
564 |
- |
- |
- |
564 |
502 |
1,066 |
|||||||||||||||||||||||||||||
|
Deferred tax on available-for-sale financial assets |
- |
- |
- |
- |
141 |
- |
- |
- |
141 |
125 |
266 |
|||||||||||||||||||||||||||||
|
Total comprehensive income for the period |
- |
- |
(3,574) |
- |
705 |
- |
- |
(4,286) |
(7,155) |
(254) |
(7,409) |
|||||||||||||||||||||||||||||
|
Contributions by and distributions to owners |
||||||||||||||||||||||
|
Share-based payment transactions |
- |
- |
- |
- |
- |
- |
(243) |
- |
(243) |
- |
(243) |
|||||||||||
|
Total contributions by and distributions to owners |
- |
- |
- |
- |
- |
- |
(243) |
- |
(243) |
- |
(243) |
|||||||||||
|
Balance as at 30 September 2009 |
40,043 |
19,406 |
58,602 |
- |
705 |
(1,072) |
3,004 |
(80,760) |
39,928 |
6,914 |
46,842 |
Consolidated cash flow statement
For the six months ended 30 September 2009
(Unaudited)
|
6 months ended |
6 months ended |
Year ended |
||||
|
Note |
30.09.2009 |
30.09.2008 |
31.03.2009 |
|||
|
Unaudited |
Unaudited |
Audited |
||||
|
£'000 |
£'000 |
£'000 |
||||
|
Cash flows from operating activities |
||||||
|
Loss before income tax |
(3,892) |
(149,076) |
(228,119) |
|||
|
Adjustments for: |
||||||
|
Depreciation |
93 |
4,637 |
11,850 |
|||
|
Stock write-off |
- |
- |
8,052 |
|||
|
Foreign exchange movements |
- |
3,257 |
(373) |
|||
|
Impairment charge |
- |
134,993 |
190,242 |
|||
|
Loss on sale of non-current assets |
- |
- |
4 |
|||
|
(Write-back)/charge in relation to share-based payments |
(243) |
235 |
337 |
|||
|
Loss from discontinued operations (net of tax) |
(294) |
- |
- |
|||
|
Finance income |
(35) |
(651) |
(1,061) |
|||
|
Finance costs |
- |
157 |
210 |
|||
|
(4,371) |
(6,448) |
(18,858) |
||||
|
(Increase)/decrease in trade and other receivables |
(1,693) |
(1,440) |
5,640 |
|||
|
(Increase)/decrease in inventories |
4,756 |
(36) |
6,473 |
|||
|
Increase in creditors |
430 |
3,698 |
1,114 |
|||
|
Increase/(decrease) in provisions |
27 |
32 |
(2,113) |
|||
|
Decrease in available for sale assets |
- |
- |
1,370 |
|||
|
Cash used in operations |
(851) |
(4,194) |
(6,374) |
|||
|
Finance costs |
- |
(157) |
(210) |
|||
|
Income tax paid |
(11) |
(176) |
(160) |
|||
|
Net cash used in operating activities |
(862) |
(4,527) |
(6,744) |
|||
|
Cash flows from investing activities |
||||||
|
Purchase of property, plant and equipment |
(3,057) |
(4,259) |
(5,909) |
|||
|
Proceeds from sale of property, plant and equipment |
- |
- |
1 |
|||
|
Proceeds on sale of available-for-sale financial assets |
17 |
- |
- |
|||
|
Investment in intangible exploration assets |
(1,184) |
(7,023) |
(14,296) |
|||
|
Acquisition of investments |
- |
- |
(218) |
|||
|
Finance income |
35 |
651 |
1,061 |
|||
|
Net cash used in investing activities |
(4,189) |
(10,631) |
(19,361) |
|||
|
Cash flows from financing activities |
||||||
|
Proceeds from issue of share capital |
- |
23,750 |
23,750 |
|||
|
Net cash from financing activities |
- |
23,750 |
23,750 |
|||
|
Net (decrease)/increase in cash and cash equivalents |
(5,051) |
8,592 |
(2,355) |
|||
|
Cash and cash equivalents at beginning of period |
18,886 |
21,241 |
21,241 |
|||
|
Exchange rate movement in cash and cash equivalents at beginning of period |
(337) |
1,513 |
- |
|||
|
Cash and cash equivalents at end of period |
12 |
13,498 |
31,346 |
18,886 |
Notes to the condensed consolidated interim financial statements
For the six months ended 30 September 2009
(Unaudited)
1. 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 at and for the six months ended 30 September 2009 comprise the Company and its subsidiaries (together referred to as the "Group") and the Group's interests in associates and jointly controlled entities. The audited consolidated financial statements of the Group as at and for the year ended 31 March 2009 are available upon request from the Company's registered office at Devon House, 12 - 15 Dartmouth Street, London, SW1H 9BL or at www.mwanaafrica.com.
2. STATEMENT OF COMPLIANCE
These condensed consolidated interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting. They do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of the Group as at and for the year ended 31 March 2009. These condensed consolidated interim financial statements were approved by the Board of Directors on 9 December 2009.
3. GOING CONCERN
The directors believe that it is appropriate to adopt the going-concern basis in preparing the financial statements for the period to 30 September 2009 having considered the Group's funding requirements for the next 12 months from the date of approval of the financial statements.
The Group's cash flow forecasts show that the Group can continue to operate for the foreseeable future using existing cash resources and the recently announced project loan facility to be provided by the Industrial Development Corporation (IDC) of South Africa. That facility of US$10m is subject to completion of loan documentation and a number of conditions precedent including the provision of political risk insurance. The funds will enable the expansion of production from the recently re-commissioned Freda Rebecca gold mine. The Bindura Nickel mines and processing facility remain on care and maintenance.
The Group's exploration expenditure is largely discretionary and is committed only when funding is available.
4. SIGNIFICANT ACCOUNTING POLICIES
Except as described below, the accounting policies applied by the Group in these condensed consolidated interim financial statements are the same as those applied by the Group in its consolidated financial statements as at and for the year ended 31 March 2009.
(a) Change in accounting policy
(i) Determination and presentation of operating segments
As of 1 January 2009 the Group determines and presents operating segments based on the information that internally is provided to the CEO, who is the Group's chief operating decision maker. This change in accounting policy is due to the adoption of IFRS 8 Operating Segments. Previously operating segments were determined and presented in accordance with IAS 14 Segment Reporting. The new accounting policy in respect of segment operating disclosures is presented as follows.
Comparative segment information has been re-presented in conformity with the transitional requirements of IFRS 8. Since the change in accounting policy only impacts presentation and disclosure aspects, there is no impact on earnings per share.
An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group's other components. Operating segment's results are reviewed regularly by the CEO to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available.
Segment results that are reported to the CEO include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly corporate assets (primarily the Company's headquarters), head office expenses, and income tax assets and liabilities.
Segment capital expenditure is the total cost incurred during the period to acquire property, plant and equipment, and intangible assets other than goodwill.
(ii) Presentation of financial statements
The Group applies revised IAS 1 Presentation of Financial Statements (2007), which became effective as of 1 January 2009. As a result, the Group presents in the consolidated statement of changes in equity all owner changes in equity, whereas all non-owner changes in equity are presented in the consolidated statement of comprehensive income. This presentation has been applied in these condensed interim financial statements as of and for the six months ended on 30 September 2009.
Comparative information has been re-presented so that it also is in conformity with the revised standard. Since the change in accounting policy only impacts presentation aspects, there is no impact on earnings per share.
(iii) Consolidated and separate financial statements
Amendments to IFRS 1, First-time Adoption of International Financial Reporting Standards, and IAS 27, Consolidated and Separate Financial Statements: Effective for years commencing on or after 1 January 2009. The adoption of these amendments, which relate to the measurement of the initial cost of investment in subsidiaries in the financial statements of the company only, will have no impact upon the group's net cash flows, financial position, total recognised income and expense or earnings per share.
(iv) Share based payments
Amendments to IFRS 2, Share-based Payments: Effective for years commencing on or after 1 January 2009. The amendment to IFRS 2 clarifies that vesting conditions are service conditions and performance conditions only; other features of a share-based payment are not vesting conditions. It also specifies that all cancellations, whether by the entity or by other parties, should receive the same accounting treatment. The adoption of the amendment to IFRS 2 has no impact on the group's net cash flows, financial position, total recognised income and expense or earnings per share.
(b) Standards, amendments and interpretations that are not yet effective and have not been adopted early by the group
Revised IFRS 3, Business Combinations: Effective for years beginning on or after 1 July 2009.
The scope of IFRS 3 (2008) has been extended to include business combinations involving only mutual entities and to business combinations achieved by contract alone. The definition of a business combination has been revised to focus on control. All items of consideration transferred by the acquirer are measured and recognised at fair value at the acquisition date, including contingent consideration. The adoption of this amendment may have an impact on future business combinations.
The Group is currently assessing the potential impacts of the other new and revised standards and interpretations that will be effective from 1 January 2010 and beyond, and which the Group has not early adopted. The Group does not anticipate that these will have a material impact on the Group's overall results and financial position.
5. ESTIMATES
The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.
Except as described below, in preparing these condensed consolidated interim financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements as at and for the year ended 31 March 2009.
During the six months ended 30 September 2009 management reassessed its estimates in respect of:
the recoverable amount of certain property, plant and equipment (see note 9)
provisions (see note 15)
6. FINANCIAL RISK MANAGEMENT
Liquidity Risk
Liquidity risk is defined as the risk that the group will not be able to meet its financial obligations as they fall due. The group's approach to managing liquidity is to ensure, as far as possible, that it has sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the group's reputation.
The directors note that the group has raised, and will continue to need to raise, finance for exploration and development as and when required.
The accounts of BNC, a 52.9% owned subsidiary of the Company, are consolidated in the accounts of the Group. Cash balances as disclosed in note 12 held by BNC are not readily available to the Group. BNC remains on care and maintenance and continues to fund expenses through realising value from its working capital positions. Discussions have been held with various financiers regarding the provisioning of restart funding. While the Group will consider making available limited funds to support BNC, provided that conditions are appropriate, BNC's liquidity is managed independently by BNC.
7. IMPAIRMENT
|
6 months ended |
6 months ended |
Year ended |
||||
|
30.09.2009 |
30.09.2008 |
31.03.2009 |
||||
|
Unaudited |
Unaudited |
Audited |
||||
|
£'000 |
£'000 |
£'000 |
||||
|
Impairment of goodwill |
- |
12,001 |
14,936 |
|||
|
Impairment of investments |
- |
5,792 |
6,713 |
|||
|
Impairment of property, plant and equipment |
- |
42,386 |
64,007 |
|||
|
Impairment of exploration and development assets |
- |
73,814 |
104,586 |
|||
|
Impairment of assets held for sale |
- |
1,000 |
- |
|||
|
Total Impairment |
- |
134,993 |
190,242 |
The directors have considered both external and internal sources in determining whether an impairment indicator exists. No impairment indicators exist and consequently no impairment testing has been performed at the end of the period. All assets and cash generating units will be subject to an annual impairment review at the end of the financial year, regardless of whether an impairment indicator exists.
8. OPERATING SEGMENTS
The Group has 4 reportable segments, as described below, which are the Group's strategic business units. The strategic business units offer different products and services, and are managed separately because they require different technology and marketing strategies. The CEO reviews internal management reports for each of the strategic business units. The following summary describes the operations in each of the Group's reportable segments:
|
● |
Gold: |
Gold mining and prospecting activities |
|
● |
Nickel |
Nickel mining, smelting and refining activities currently on care and maintenance |
|
● |
Diamonds: |
Diamond mining activities |
|
● |
Exploration: |
Gold and base metal exploration activities |
Information about reportable segments
|
Gold |
Nickel |
Diamonds |
Exploration |
Total |
|||||||||||
|
6 months ended |
6 months ended |
Year ended |
6 months ended |
6 months ended |
Year ended |
6 months ended |
6 months ended |
Year ended |
6 months ended |
6 months ended |
Year ended |
6 months ended |
6 months ended |
Year ended |
|
|
30.09.2009 |
30.09.2008 |
31.03.2009 |
30.09.2009 |
30.09.2009 |
31.03.2009 |
31.03.2009 |
30.09.2008 |
31.03.2009 |
30.09.2009 |
30.09.2008 |
31.03.2009 |
30.09.2009 |
30.09.2008 |
31.03.2009 |
|
|
Unaudited |
Unaudited |
Audited |
Unaudited |
Unaudited |
Audited |
unaudited |
Unaudited |
Audited |
Unaudited |
Unaudited |
Audited |
Unaudited |
Unaudited |
Audited |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
||||||
|
External revenue |
- |
- |
- |
7,206 |
- |
26,203 |
755 |
- |
1,422 |
- |
- |
- |
7,961 |
- |
27,625 |
|
Reportable segment loss before tax |
(931) |
(5,162) |
(15,315) |
(141) |
(45,558) |
(79,850) |
(367) |
(26) |
(551) |
- |
(95,648) |
(129,079) |
(1,439) |
(146,394) |
(224,795) |
|
Reportable segment assets |
9,623 |
11,386 |
8,490 |
40,591 |
56,487 |
43,402 |
4,442 |
1,477 |
1,430 |
9,390 |
20,183 |
12,191 |
64,046 |
89,533 |
65,513 |
|
Reportable additions to property, plant and equipment |
2,574 |
146 |
230 |
301 |
3,641 |
5,339 |
- |
55 |
54 |
178 |
400 |
217 |
3,053 |
4,242 |
5,840 |
|
Reportable additions to intangible assets |
- |
- |
- |
- |
- |
- |
- |
- |
- |
1,184 |
7,023 |
14,296 |
1,184 |
7,023 |
14,296 |
Reconciliation of reportable segment profit or loss
|
6 months ended |
6 months ended |
Year ended |
|
|
31.03.2009 |
30.09.2008 |
31.03.2009 |
|
|
unaudited |
Unaudited |
Audited |
|
|
Total loss for reportable segments |
(1,439) |
(146,394) |
(224,795) |
|
Other profit or loss |
|||
|
Elimination of discontinued operations |
(294) |
- |
- |
|
Unallocated amounts: |
|||
|
Other corporate expenses |
(2,159) |
(2,682) |
(3,324) |
|
Consolidated loss before income tax |
(3,892) |
(149,076) |
(228,119) |
9. PROPERTY, PLANT AND EQUIPMENT
|
Mining assets |
Smelter & refinery plant and equipment |
Plant and equipment |
Exploration assets |
Building & leasehold |
Motor vehicles |
Total |
||
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
||
|
Cost or deemed cost |
||||||||
|
Balance at 1 April 2008 (Audited) |
46,311 |
14,595 |
1,146 |
1,916 |
15,873 |
6,224 |
86,065 |
|
|
Additions |
3,843 |
386 |
540 |
4 |
211 |
925 |
5,909 |
|
|
Effect of movements in exchange rates |
18,643 |
8,836 |
346 |
793 |
6,181 |
2,484 |
37,283 |
|
|
Balance at 31 March 2009 (Audited) |
68,797 |
23,817 |
2,032 |
2,713 |
22,265 |
9,633 |
129,257 |
|
|
Additions |
1,919 |
- |
959 |
114 |
- |
65 |
3,057 |
|
|
Disposals |
- |
- |
(1) |
- |
- |
(27) |
(28) |
|
|
Effect of movements in exchange rates |
(7,380) |
(3,342) |
(66) |
(274) |
(2,389) |
(1,033) |
(14,484) |
|
|
Balance at 30 September 2009 (Unaudited) |
63,336 |
20,475 |
2,924 |
2,553 |
19,876 |
8,638 |
117,802 |
|
Depreciation and impairment losses |
||||||||
|
Balance at 1 April 2008 (Audited) |
(11,174) |
(1,965) |
(30) |
(490) |
(910) |
(2,754) |
(17,323) |
|
|
Depreciation for the year |
(6,437) |
(2,829) |
(271) |
(93) |
(1,101) |
(1,119) |
(11,850) |
|
|
Impairment loss |
(30,994) |
(8,493) |
(1,310) |
(1,969) |
(16,707) |
(4,534) |
(64,007) |
|
|
Effect of movements in exchange rates |
(3,169) |
(894) |
(7) |
(159) |
(367) |
(1,093) |
(5,689) |
|
|
Balance at 31 March 2009 (Audited) |
(51,774) |
(14,181) |
(1,618) |
(2,711) |
(19,085) |
(9,500) |
(98,869) |
|
|
Depreciation for the period |
- |
- |
(93) |
(32) |
- |
(30) |
(155) |
|
|
Disposals |
- |
- |
- |
- |
- |
5 |
5 |
|
|
Effect of movements in exchange rates |
5,200 |
1,549 |
126 |
274 |
2,047 |
1,019 |
10,215 |
|
|
Balance at 30 September 2009 (Unaudited) |
(46,574) |
(12,632) |
(1,585) |
(2,469) |
(17,038) |
(8,506) |
(88,804) |
|
Carrying amounts |
||||||||
|
At 31 March 2008 (Audited) |
35,137 |
12,630 |
1,116 |
1,426 |
14,963 |
3,470 |
68,742 |
|
|
At 31 March 2009 (Audited) |
17,023 |
9,636 |
414 |
2 |
3,180 |
133 |
30,388 |
|
|
At 30 September 2009 (Unaudited) |
16,762 |
7,843 |
1,339 |
84 |
2,838 |
132 |
28,998 |
10. INTANGIBLE ASSETS
|
Goodwill |
Development assets |
Exploration and evaluation costs |
Total |
|||||
|
£'000 |
£'000 |
£'000 |
£'000 |
|||||
|
Cost or deemed cost |
||||||||
|
Balance at 1 April 2008 (Audited) |
27,114 |
4,122 |
74,379 |
105,615 |
||||
|
Capitalised exploration costs |
- |
- |
14,296 |
14,296 |
||||
|
Transferred to assets held for sale |
- |
- |
(2,352) |
(2,352) |
||||
|
Effect of movements in exchange rates |
7,668 |
1,661 |
27,513 |
36,842 |
||||
|
Balance at 31 March 2009 (Audited) |
34,782 |
5,783 |
113,836 |
154,401 |
||||
|
Capitalised exploration costs |
- |
- |
1,184 |
1,184 |
||||
|
Effect of movements in exchange rates |
(1,368) |
(620) |
(7,290) |
(9,278) |
||||
|
Balance at 30 September 2009 (Unaudited) |
33,414 |
5,163 |
107,730 |
146,307 |
|
Amortisation and impairment losses |
||||||||
|
Balance at 1 April 2008 (Audited) |
(15,113) |
- |
(5,013) |
(20,126) |
||||
|
Effect of movements in exchange rates |
(4,733) |
- |
(2,020) |
(6,753) |
||||
|
Impairment loss |
(14,936) |
(5,783) |
(98,803) |
(119,522) |
||||
|
Balance at 31 March 2009 (Audited) |
(34,782) |
(5,783) |
(105,836) |
(146,401) |
||||
|
Effect of movements in exchange rates |
1,368 |
620 |
6,487 |
8,475 |
||||
|
Balance at 30 September 2009 (Unaudited) |
(33,414) |
(5,163) |
(99,349) |
(137,926) |
|
Carrying amounts |
||||||||
|
At 31 March 2008 (Audited) |
12,001 |
4,122 |
69,366 |
85,489 |
||||
|
At 31 March 2009 (Audited) |
- |
- |
8,000 |
8,000 |
||||
|
At 30 September 2009 (Unaudited) |
- |
- |
8,381 |
8,381 |
11. INVESTMENTS
|
Ownership % |
||||||||
|
30.09.2009 |
30.09.2008 |
31.03.2009 |
||||||
|
Unaudited |
Unaudited |
Audited |
||||||
|
£'000 |
£'000 |
£'000 |
||||||
|
Mantle Diamonds |
10.73 |
876 |
- |
978 |
||||
|
Others |
351 |
131 |
399 |
|||||
|
Total Investments |
1,227 |
131 |
1,377 |
The directors consider that the group does not have significant influence over the entities classified as investments, as it cannot influence the operating policy of these entities.
12. CASH AND CASH EQUIVALENTS
|
30.09.2009 |
30.09.2008 |
31.03.2009 |
||||
|
Unaudited |
Unaudited |
Audited |
||||
|
£'000 |
£'000 |
£'000 |
||||
|
Cash and cash equivalents |
13,498 |
31,647 |
19,198 |
|||
|
Bank overdrafts |
- |
(301) |
(312) |
|||
|
Total Cash and Cash Equivalents |
13,498 |
31,346 |
18,886 |
Of the total cash and cash equivalents of £13.5m (2008: £31.4m) held at the end of the period, cash held by certain subsidiary companies, principally BNC, totalled £4.4m (2008: £5.6m) and is not available for use by the parent company.
Exposure to currency risk
The group's exposure to currency risk was as follows, based on amounts held at the end of each period, translated to GBP at the prevailing rates:
|
30.09.2009 |
30.09.2008 |
31.03.2009 |
||||
|
Unaudited |
Unaudited |
Audited |
||||
|
£'000 |
£'000 |
£'000 |
||||
|
United States Dollar |
5,713 |
9,739 |
4,919 |
|||
|
South African Rand |
117 |
307 |
162 |
|||
|
British Pound |
7,668 |
21,300 |
13,805 |
|||
|
Total Cash and Cash Equivalents |
13,498 |
31,346 |
18,886 |
The following significant exchange rates applied against pound sterling during the period:
|
6 months ended |
6 months ended |
Year ended |
||||
|
30.09.2009 |
30.09.2008 |
31.03.2009 |
||||
|
Unaudited |
Unaudited |
Audited |
||||
|
United States Dollar |
||||||
|
Average rate |
1.5952 |
1.9344 |
1.7217 |
|||
|
Closing rate |
1.5922 |
1.8175 |
1.4214 |
|||
|
South Africa Rand |
||||||
|
Average rate |
12.9941 |
15.0656 |
15.0295 |
|||
|
Closing rate |
11.8344 |
14.8988 |
13.8163 |
13. AVAILABLE-FOR-SALE FINANCIAL ASSETS
|
30.09.2009 |
30.09.2008 |
31.03.2009 |
||||
|
Unaudited |
Unaudited |
Audited |
||||
|
£'000 |
£'000 |
£'000 |
||||
|
Equity Investments |
2,975 |
2,791 |
1,857 |
Available-for-sale financial assets represent investments in shares traded on the Zimbabwean Stock Exchange. These investments were made initially to preserve the value of the group's Zimbabwean dollar surpluses but may now be realised in order to settle ongoing operational cost requirements as part of BNC's broader plans to maintain its assets whilst on care and maintenance.
14. CALLED UP SHARE CAPITAL
|
30.09.2009 |
30.09.2008 |
31.03.2009 |
|||
|
Unaudited |
Unaudited |
Audited |
|||
|
£'000 |
£'000 |
£'000 |
|||
|
Authorised |
|||||
|
650,000,000 ordinary shares of 10 pence each (2008: 650,000,000 ordinary shares of 10 pence each) |
65,000 |
65,000 |
65,000 |
||
|
Allotted, called up and fully paid |
|||||
|
Opening balance 400,433,819 ordinary shares of 10 pence each (2008: 337,933,819 shares of 10 pence each) |
40,043 |
33,793 |
33,793 |
||
|
Issued during the period No share were issued during the period (2008: 62,500,000 shares of 10 pence each) |
- |
6,250 |
6,250 |
||
|
Closing balance 400,433,819 ordinary shares of 10 pence each (2008: 400,433,819 shares of 10 pence each) |
40,043 |
40,043 |
40,043 |
Movements in Issued Share Capital
|
Date |
Event |
Issued price £ |
Number of shares |
|
1 April 2008 |
Opening balance |
337,933,819 |
|
|
19 June 2008 |
Consideration shares |
0.400 |
62,500,000 |
|
31 March 2009 |
Year end balance |
400,433,819 |
|
|
30 September 2009 |
Closing balance |
400,433,819 |
15. PROVISIONS
|
30.09.2009 |
30.09.2008 |
31.03.2009 |
||||
|
Unaudited |
Unaudited |
Audited |
||||
|
£'000 |
£'000 |
£'000 |
||||
|
Rehabilitation Provision |
||||||
|
Balance at beginning of period |
5,580 |
5,557 |
5,557 |
|||
|
Provisions made during the period |
27 |
65 |
80 |
|||
|
Exchange rate adjustments |
(427) |
540 |
2,137 |
|||
|
Provisions reversed during the period |
- |
- |
(2,194) |
|||
|
Total Rehabilitation Provision |
5,180 |
6,162 |
5,580 |
The rehabilitation provision relates principally to the estimated closure and rehabilitation costs of the business operations of Bindura Nickel Corporation and Freda Rebecca, and the Klipspringer diamond mine.
16. POST BALANCE SHEET EVENTS
On 14 October 2009, the company announced the first production of gold at the Freda Rebecca gold mine in Zimbabwe. At the same time it was announced that planning for Phase 2 of the refurbishment programme, which would involve the rehabilitation of the second milling circuit and an increase in the capacity of underground mining equipment, was well advanced and would be expected to increase output to in excess of 50,000 ounces of gold per year.
On 4 November 2009, the company announced that the Industrial Development Corporation of South Africa (the "IDC") had approved the provision of up to US$10 million debt funding for the expansion of production at the Freda Rebecca gold mine. Funding will be made available in two tranches. The first tranche, up to US$4 million, will be applied to fund the remaining working capital requirements of Phase 1. The remainder of the funding will be applied to the capital expenditure and working capital requirements of Phase 2.
The IDC funding remains subject to documentation and the satisfaction of certain conditions.
17. CONTINGENT LIABILITIES AND COMMITTMENTS
The group monitors contingent liabilities, including, inter alia, those relating to taxation in the various jurisdictions in which the company operates, environmental, closure and other contingent liabilities on an ongoing basis. Provision for such liabilities is raised in the financial statements when the necessary recognition criteria have been satisfied. If circumstances exist where it is possible that a liability may arise, this is disclosed as a contingent liability. The directors are not aware of any contingent liabilities as at 30 September 2009.
The group has committed to sell a 15% shareholding in Freda Rebecca to a local investor.
18. RELATED PARTY TRANSACTIONS
Transactions between group subsidiaries, which are related parties, have taken place during the period, and have been eliminated on consolidation and are not disclosed in this note. No other related party transactions have taken place in the period.
Related Shares:
Asa Resources