26th Sep 2005 07:01
Cluff Gold PLC26 September 2005 CLUFF GOLD PLC ("Cluff Gold" or "the Company") Interim Results for the Six Month Period to June 2005 Highlights • Cluff completed the acquisition of the entire share capital of Cluff Mining (West Africa) Ltd and Cluff Mining (Zimbabwe) Holdings Ltd from the Ridge Mining Group for US$5.01m • Exploration data acquired for the Mt Yaoure licence in Cote d'Ivoire, including drill assay results from around the Angovia Mine • High grade drilling results from the Baomahun Gold Project in Sierra Leone confirm its potential as a substantial gold project • Appointment of Edward Haslam, formerly Chief Executive of Lonmin Plc, to the Board as non executive director Post Period End Highlights • Analysis of the historical drill data at Angovia in Cote d'Ivoire by SRK has added substantial sulphide potential to the oxide resource, aggregating to potentially 800,000 ounces • Joint venture agreement signed over the Karbasso licence area in Mali, which is likely to be underlain by a major NNE trending structure, which also underlies the Syama gold mine licence some 20km to the south For further information, please contact: Cluff Gold Numis Securities Parkgreen CommunicationsJ.G. Cluff / Douglas Chikohora John Harrison Cathy Malins / Annabel LeatherChairman / Technical Director Tel: 020 7776 1500 Tel: 020 7493 3713 CHAIRMAN AND CHIEF EXECUTIVE'S STATEMENT This is my first interim statement since your Company's IPO on AIM in December2004. On 7 January 2005, the Group completed the acquisition of the entireshare capital of both Cluff Mining (West Africa) Ltd and Cluff Mining (Zimbabwe)Holdings Limited from the Ridge Mining Group for a total consideration ofUS$5.01 million. I am pleased to report progress at all of our projects, spreadacross the prospective gold regions of West Africa. Your Company's assets aredistributed between advanced stage projects - the Angovia deposit in Coted'Ivoire and the Kalsaka deposit in Burkina Faso - and good quality explorationprojects in Sierra Leone, Ghana and Mali. Whilst aiming to propel all of theseendeavours forward, including exploration for additional reserves which hold outthe probability of evolving into one million ounce plus deposits, your board isprimarily driven by the imperative of generating cash flow from our reserves. Let me turn now to these projects. Those of you who have seen the pressreleases which we have issued, with I hope disciplined regularity since lastDecember, will be aware principally of good assay results from the Baomahun GoldProject in Sierra Leone and of a 95% independently audited increase in resourcepotential at the Angovia Gold Project in Cote d'Ivoire. A resource calculationwill be undertaken for the Baomahun Gold Project as soon as the drilling iscompleted and all the assay results are received. At Angovia, analysis of thehistorical drill data by SRK Consulting has added substantial sulphide potentialto the oxide resource aggregating to potentially 800,000 ounces. This has beenachieved at virtually no cost to your Company but clearly such a dramaticincrease in the scale of the project has led us to re-examine our intention tofast track a cheap oxide development programme. A validation drilling programmedesigned to enable the preparation of an Indicated Mineral Resource as definedby the JORC Code is underway. Meanwhile at the Kalsaka Gold Project in BurkinaFaso, our activity has been confined to a successful attempt to reducedevelopment costs, with a study conducted by consultants GBM MineralsEngineering Consultants in conjunction with SRK. During the six months to 30 June 2005, the Group's operating loss was £398,364compared to a loss of £560,379 in the corresponding period in 2004. The decreasein loss for the period was due to interest earned on larger cash reserves placedon deposit following the listing on AIM in December 2004 and registration of theUK Group companies for VAT purposes during the period. Costs amounting to£808,559 during the period have been capitalised and reflect expenditureincurred with respect to the drilling programme on the Baomahun project inSierra Leone, pre-feasibility study work on the Angovia project in Cote d'Ivoireand the re-estimation of the Kalsaka project costs in Burkina Faso as well ascivil works which have commenced on the project. The recent strength of virtually all commodity prices has resulted in anintensely competitive capital market in the junior mining sector. We haveconstructed a portfolio of properties which we believe both provide the Companywith the prospect of medium term cash flow whilst also offering shareholdersparticipation in exploration programmes which could add substantial value to theCompany. Your management has long experience of African mining and has been responsiblefor the discovery of six gold deposits, including the Geita mine in Tanzania,and have previously brought four mines into production. We contemplate thefuture with the confidence that we shall continue our momentum of growth bydiscovery and development. I should take this opportunity to welcome Ed Haslam, former CEO of Lonmin plc,to our board and to thank our staff for their commitment to the Company. J G CluffChairman and Chief Executive26th September 2005 INDEPENDENT REVIEW REPORT TO CLUFF GOLD PLC Introduction We have been instructed by the company to review the financial information forthe six months ended 30 June 2005 which comprises the profit and loss account,the statement of total recognised gains and losses, the balance sheet, the cashflow statement and related notes. We have read the other information containedin the interim report and considered whether it contains any apparentmisstatements or material inconsistencies with the financial information. This report is made solely to the company and in accordance with Bulletin 1999/4issues by the Auditing Practices Board. Our work has been undertaken so that wemight state to the company those matters we are required to state to them in anindependent review report and for no other purpose. To the fullest extentpermitted by law, we do not accept or assume responsibility to anyone other thanthe company, for our review work, for this report, or for the conclusions wehave formed. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by the directors. The directorsare responsible for preparing the interim report in accordance with the rules ofthe London Stock Exchange for companies trading securities on the AlternativeInvestment Market which require that the half-yearly report be presented andprepared in a form consistent with that which will be adopted in the company'sannual accounts having regard to the accounting standards applicable to suchannual accounts. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4issued by the Auditing Practices Board. A review consists principally of makingenquiries of group management and applying analytical procedures to thefinancial information and underlying financial data based thereon, assessingwhether the accounting policies and presentation have been consistently appliedunless otherwise disclosed. A review excludes audit procedures such as tests ofcontrols and verification of assets, liabilities and transactions. It issubstantially less in scope than an audit performed in accordance with AuditingStandards and therefore provides a lower level of assurance than an audit.Accordingly we do not express an audit opinion on the financial information. Going concern In arriving at our review conclusion we have considered the adequacy of thedisclosures made in note 1 to the interim financial information concerning theuncertainty relating to the availability of future funding to allow the Group tocontinue its operations, exploration programmes and pre-feasibility study work.In view of the significance of this uncertainty, we consider that it should bebrought to your attention. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 30 June 2005. PKF (UK) LLPChartered AccountantsLondon, UK26th September 2005 CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE SIX MONTHS ENDED 30 JUNE 2005 Notes Six months to Six months to Six months to 30 June 2005 30 June 2004 31 December (unaudited) (unaudited) 2004 (proforma) (audited) £ £ £ Administration expenses 3 (445,684) (572,773) (1,158,089) ________ ________ _________ Operating loss (445,684) (572,773) (1,158,089)Interest receivable and similar income 47,320 12,394 18,550 ________ ________ _________ Loss on ordinary acitivities after taxation (398,364) (560,379) (1,139,539) Tax on loss on ordinary activities - - - ________ ________ _________ Loss on ordinary activities after taxation 4 (398,364) (560,379) (1,139,539) ________ ________ _________Loss per share- undiluted 2 (0.02) (0.62) (1.27) ________ ________ _________ All transactions arise from continuing operation. CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES FOR THE SIX MONTHS ENDED 30 JUNE 2005 Six months to Six months to Six months to 30 June 2005 30 June 2004 31 December (unaudited) (unaudited) 2004 (proforma) (audited) £ £ £ Loss for the financial period (398,364) (560,379) (1,139,539)Exchange translation differences on consolidation (12,060) - - _________ ________ __________ Total loss recognised for the period (410,424) (560,379) (1,139,539) _________ ________ __________ CONSOLIDATED BALANCE SHEET AT 30 JUNE 2005 Notes At 30 June 2005 At 30 June At 31 December (unaudited) 2004 2004 (unaudited) (unaudited) (proforma) £ £ £ FIXED ASSETSIntangible 7 3,993,939 77,215 602,822Tangible 32,552 8,445 8,400Associates - 154,094 165,845 ________ ________ _________ 4,026,491 239,754 777,067 CURRENT ASSETSDebtors 320,825 41,390 31,522Cash at bank and in hand 6 1,541,848 315,073 5,920,062 ________ ________ _________ 1,862,673 356,463 5,951,584 CREDITORS: amounts falling due within one year (229,743) (199,897) (696,016) ________ ________ _________ NET CURRENT ASSETS 1,632,930 156,566 5,255,568 ________ ________ _________ NET ASSETS 5,659,421 396,320 6,032,635 ________ ________ _________ CAPITAL AND RESERVESCalled up share capital 210,157 88,206 208,793Share premium account 5,679,076 - 5,643,230Adjustment for shares in subsidiary - (441,958) -Merger reserve 1,320,151 1,320,151 1,320,151Profit and loss account (1,549,963) (570,079) (1,139,539) EQUITY SHAREHOLDERS' FUNDS 4 5,659,421 396,320 6,032,635 ________ ________ _________ CONSOLIDATED CASH FLOW STATEMENT FOR THE SIX MONTHS ENDED 30 JUNE 2005 Notes Six months Six months to Period to to 30 June to 30 June 31 December 2005 2004 2004 (unaudited) (unaudited) (unaudited) (proforma) £ £ £ Net cash outflow from operating activities 5 (1,174,156) (458,884) (947,123) Returns on investments and servicing of financeInterest received 47,320 12,394 18,550 Capital expenditurePurchase of intangible fixed assets (764,241) (77,215) (349,940)Purchase of tangible fixed assets (27,629) (10,134) (13,148)Purchase of investments - (154,094) (165,845) __________ _________ _________ Net cash outflow from capital expenditure (791,870) (241,443) (528,933) Acquisitions 7 (2,421,718) - - __________ _________ _________ Net cash outflow before management of liquidresources and financing (4,340,424) (687,933) (1,457,506) Management of liquid resourcesDecrease/(increase) in short term deposits 4,360,137 665,000 (5,843,000) FinancingIssue of ordinary share capital - 1,510 7,908,357Issue costs (37,790) - (530,789) __________ _________ _________ Net cash (outflow)/inflow from financing (37,790) 1,510 7,377,568 __________ _________ _________ (Decrease)/increase in cash 6 (18,077) (21,423) 77,062 __________ _________ _________ The cash flows arising from the issue of ordinary share capital for the periodended 31 December 2004 include share issues by the subsidiary prior to the dateof merger. EXPLANATORY NOTES TO THE INTERIM REPORT FOR THE PERIOD ENDED 30 JUNE 2005 1. BASIS OF PREPARATION OF FINANCIAL STATEMENTS The interim financial information set out on pages 3 to 5 has been prepared onthe same basis and using the same accounting policies as were applied in drawingup the group's statutory financial statements for the period from 6 July 2003 to31 December 2004. The financial information for the six months ended 30 June 2005 and six monthsended 30 June 2004 is unaudited. In the opinion of the directors the financialinformation for these periods fairly presents the financial position, results ofoperations and cash flows for the period and is in conformity with generallyaccepted accounting principles. This interim financial information does notcomprise statutory accounts within the meaning of section 240. The financial information for the period ended 31 December 2004 has beenextracted from the group's audited financial statements for that period whichhave been filed with the Registrar of Companies. The auditors report on thesefinancial statements was unqualified and did not contain a statement underSection 237(2) of the Companies Act 1985. Nature of business and going concern The company is at an early stage of development and its planned activitiesare the acquisition, exploration and development of gold resource properties inseveral countries in West Africa. In common with many exploration companies the Company raises funds indiscrete tranches and the company raised approximately £5.63 million net ofexpenses in December 2004. The funds, contingent on specific exploration resultsand consequential work programmes, are forecast to provide sufficient workingcapital until mid 2006. The Directors consider it appropriate to prepare thesefinancial statements on the going concern basis. However, these funds will not be sufficient to bring any projects intoproduction and, in due course, further funding will therefore be required forthese projects. In the event that the Group is unable to secure further financeit may not be able to fully develop these projects. Basis of consolidation The acquisition by the Company of Cluff Gold UK Limited in November 2004 wasaccounted for in accordance with the principles of merger accounting as set outin FRS 6. Merger accounting requires consolidated financial information to bepresented as if the companies had been combined throughout the current andprevious periods and the previous balance sheet dates. The comparativeinformation set out with the interim financial information represents theassets, liabilities, results and cash flows of Cluff Gold Plc and its whollyowned subsidiary Cluff Gold UK Limited for the period from its incorporation to30 June 2004 and 31 December 2004, adjusted to reflect the capital structure ofthe Company immediately after the share for share exchange. The figures for thesix months to 30 June 2004 are presented as pro-forma information because theshare for share exchange took place in November 2004. The consolidated financial information includes the financial information of theCompany's other subsidiary undertakings using the acquisition method ofaccounting. Under this method the results of the acquired entity are includedin the consolidated profit and loss account from the date of acquisition.Negative goodwill arising on the acquisitions is recognised in the profitaccount in the periods expected to benefit. Further details of the acquisitionsare set out in note 7. 2. LOSS PER SHARE The calculation of loss per ordinary share is based on losses of £398,364 to 30June 2005 (loss of £560,379 to 30 June 2004; loss of £1,139,539 to 31 December2004) and the weighted average number of ordinary shares outstanding of20,977,229 at 30 June 2005 (895,881 at 30 June 2004; 895,881 at 31 December2004). There is no difference between the diluted loss per share and the lossper share presented. 3. ADMINISTRATIVE EXPENSES Administrative expenses for the six months ending 30 June 2005 includes £130,763of VAT written off in 2004 but was recovered. 4. RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS Six months Six months Period to to 30 June to 30 June 31 December 2005 2004 2004 (unaudited) (unaudited) (audited) (proforma) £ £ £ Loss for the financial period (398,364) (560,379) (1,139,539)Merger reserve arising on consolidation - - 1,320,151New share capital subscribed 75,000 1,510 5,852,023Exchange translation differences on consolidation (12,060) - -Listing expenses paid (37,790) - - _________ _________ _________ Net increase in shareholders' funds (373,214) (558,869) 6,032,635Shareholders' funds at beginning of the period 6,032,635 926,699 - _________ _________ _________ Shareholders' funds at end of period 5,659,421 367,830 6,032,635 _________ _________ _________ 5. NET CASH OUTFLOW FROM OPERATING ACTIVITIES Six months Six months Period to to 30 June to 30 June 31 December 2005 2004 2004 (unaudited) (unaudited) (audited) (proforma) £ £ £ Operating loss (445,684) (572,773) (1,158,089)Depreciation 8,430 1,689 4,748Exchange differences arising on consolidation(12,060) - -Increase in debtors (104,784) (12,900) (16,421)(Decrease)/Increase in creditors (620,058) 125,100 222,639 _________ _________ _________ Net cash outflow from operating activities(1,174,156) (458,884) (947,123) _________ _________ _________ 6. RECONCILIATION OF CASH TO NET FUNDS Six months Six months Period to to 30 June to 30 June 31 December 2005 2004 2004 (unaudited) (unaudited) (audited) (proforma) £ £ £ Cash at bank and in hand 58,985 73 77,062Short term deposits (included within cash atbank and in hand in the balance sheet) 1,482,863 315,000 5,843,000 _________ _________ _________ Net funds 1,541,848 315,073 5,920,062 _________ _________ _________ 7. ACQUISITIONS On 7 January 2005, Cluff Gold UK Ltd completed the acquisition of the entireissued share capital of both Cluff Mining (West Africa) Ltd (a subsidiary whichhas a 78% interest in the Kalsaka Gold project in Burkina Faso) and Cluff Mining(Zimbabwe) Holdings Limited from the Ridge Mining Group for a totalconsideration of US$5.01 million. The acquisitions were made following theexercise of options contained in agreements made on 10 February 2004 (andamended on 10 September 2004) between (i) Ridge Gold Mines Limited, Cluff GoldUK Ltd and Ridge Mining plc in respect of the shares in Cluff Mining (WestAfrica) Ltd; and (ii) Ridge Gold Mines Limited and Cluff Gold UK Ltd in respectof the shares in Cluff Mining (Zimbabwe) Holdings Limited. The considerationpayable in respect of each agreement was US$5 million and US$10,000respectively. Net assets acquired were valued in accordance with FRS 7 "Fair values inacquisition accounting". The difference between consideration and net assetvalues has been taken as negative goodwill on acquisition. The fair value ofassets acquired includes approximately £6.3 million in respect of deferredexploration costs. The fair values of these assets will be considered furtherprior to reporting the results for the year ending 31 December 2005. Negativegoodwill has arisen as a result of this acquisition and has been initiallyassessed at approximately £3.3 million. Intangible fixed assets are analysedbelow; Six months Six months Period to to 30 June to 30 June 31 December 2005 2004 2004 (unaudited) (unaudited) (audited) (proforma) £ £ £ Intangible Fixed Assets Deferred Exploration costs 7,293,291 77,215 602,822 Negative goodwill (3,299,352) - - _________ _________ _________ 3,993,939 77,215 602,822 _________ _________ _________ This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Amara Mining