6th Dec 2007 07:02
Mwana Africa PLC06 December 2007 Mwana Africa plc Unaudited results for the 6 months to 30th September 2007 London, 6th December 2007 - The Board of Mwana Africa plc "Mwana", thepan-African resource company, is pleased to announce its unaudited interimfinancial results for the six months to 30th September 2007. Financial Highlights for the six month period • Group turnover of £49.9 million • Positive cashflow from operations of £7.01 million • Group loss before tax of £2.46 million • Loss per share (diluted) of 1.16p • Capital expenditure and financial investment of £17.7 million • Cash at bank as at 30th September 2007, denominated in £ or US$ of £31.9 million, and denominated in Zimbabwean Dollars of £1.4 million Operational Highlights • The Hunters Road nickel project in Zimbabwe has entered the bankable feasibility stage ahead of planned first production in Q1 2009. We have doubled the resource base of Bindura Nickel Corporation "BNC" and the higher total production will increase utilisation of BNC's smelting capability. • Mwana's near term diamond strategy includes: o Advanced stage negotiations with a substantial partner to form a joint venture to develop Mwana's kimberlite diamond assets in the DRC. o Plans to bring the Klipspringer diamond mine in South Africa into production during 2008, in which, Mwana holds approximately a 61% interest. The target is for production of 88,000 carats per annum (61% of which is attributable). o Bringing the Tshikapa and Badibanga alluvial projects in the DRC into production as soon as possible. o Negotiations to begin the development of the Camafuca project in Angola, formerly part of SouthernEra Diamond Incorporation's portfolio of African diamond assets, which is one of the largest known undeveloped diamond-bearing kimberlite complexes worldwide. Mwana holds an 18% free carried interest in Camafuca. o Pursue sale options for the former Gravity Diamonds Limited's assets in Australia and the former SouthernEra asset portfolio in Canada. o Discussions with the DRC Government about MIBA continue. • Gold production from the Freda Rebecca Mine in Zimbabwe is planned to resume soon and ongoing reconstruction works are expected to facilitate production at the rate of c75k oz per year by the end of 2008. • Exploration continues at the Zani-Kodo gold joint venture with OKIMO in the Ituri region of the DRC, the current phase is nearing completion. • Exploration is complete at Kibolwe in the DRC and the resource modelling scheduled for Q1 2008 is expected to lead to a pre-feasibility study to be completed in 2008. Commenting on the announcement, Kalaa Mpinga, Chief Executive Officer of MwanaAfrica, said: "We are pursuing growth in our main business areas of nickel, gold, copper anddiamonds making progress in each one. In particular, at Hunters Road we havedoubled our nickel resources and will start producing in little more than ayear. In our experience there has never been a better time to be producing andexploring on the African continent." ENDS Enquiries: Kalaa Mpinga, CEOOliver Baring, Executive ChairmanMwana Africa plc Tel. +44 207 654 5588 Tom Randell or Anca SpiridonMerlin Tel. +44 207 653 6620 Copies of this statement and copies of the interim accounts to 30 September2007, including the notes thereto will be available on the Company's website,www.mwanaafrica.com. Chairman's Statement 6th December 2007 The two major themes that stand out this half year are our pace of acquisitionsand our increasing exploration effort. The two themes reinforced each otherduring the period when our exploration strength was boosted substantially by theaddition of two high quality teams of exploration professionals from GravityDiamonds and SouthernEra. With the acquisition of Gravity Diamonds in May, we consolidated the size andscope of our strategically important diamond assets in the prolific Kasai cratonin the DRC. SouthernEra Diamonds was then finally acquired in September bringingwith it assets including the Camafuca project in North Eastern Angola, one ofthe largest known but undeveloped diamond-bearing kimberlite complexesworldwide, in which Mwana now holds an 18% free carried interest. TheSouthernEra acquisition also included the Klipspringer diamond mine in SouthAfrica, in which Mwana holds approximately a 61% interest. This mine was builtand operated in a Joint Venture with Naka Diamonds, a Black Empowerment Group.As part of Mwana's integration strategy following the merger with GravityDiamonds and acquisition of SouthernEra, we are also looking at options to sellthe former Gravity Diamonds assets in Australia and the former SouthernEra assetportfolio in Canada. Updates on this will be provided to shareholders in duecourse. At MIBA, in the DRC, we have been able to make only limited progress onrestructuring aimed at restoring production levels but remain hopeful that itwill be possible to speed up this process. Overall, we can be pleased thatfollowing our two acquisitions we have all the ingredients required to create amajor integrated African diamond exploration and production business. On the exploration front, our team has translated a substantial increase inexpenditure into a very impressive series of advances in our base and preciousmetals exploration portfolio. This has meant that the results of our gold andcopper exploration in the DRC and our gold exploration in Ghana have in eachcase taken us much closer to decisions on production, our goal in each case. In Zimbabwe, the Freda Rebecca Mine is close to completing improvement worksthat would facilitate a return to production. We are also moving into thefeasibility study stage for a major project at Hunters Road at a rate of 60,000tonnes per month, producing 2,400 tonnes per year of metal. Inclusion of theHunters Road project leads to a doubling of Bindura Nickel Company's resourcesand ultimately output. For both Freda Rebecca and Hunters Road the excellentwork on the ground has however been hampered by economic uncertainty, problemswith securing adequate mine supplies and the deterioration of transport andother infrastructure. These factors have all had an obvious negative impact onour employees' morale and their productivity. We are doing all we can toameliorate the situation whilst also continuing to run the business. Our primaryconcern during the last six months has been to support our employees and retaintheir skills. There has of course been an impact on the overall financial performance of Mwanaduring the last six months, as a result of the reduced nickel price during theperiod added to operational difficulties in Zimbabwe, the overvalued officialexchange rate and exceptionally high domestic inflation. As a result of the problem with our Zimbabwean operations and their reporting inZimbabwean dollars, we have reported a loss before tax of £3.4 million, althoughrevenue increased to £49.9 million and positive cashflow generated fromoperations was more than £7 million. Our cash resources are strong and we remaincommitted to financing our plans for substantial exploration activity, inparticular focusing on the Katanga and Ituri regions, and to activelyconsidering further acquisition opportunities. The outlook for the mining business across Africa is I believe as good as it hasbeen in several decades, and Mwana is well placed to grow profitably in severalcommodities and countries across the continent. Oliver Baring Executive Chairman Consolidated income statementFor the six months ended 30 September 2007(Unaudited) 6 months ended 6 months ended Year ended 30.09.2007 30.09.2006 31.03.2007 £000 £000 £000 Revenue 49,936 46,053 121,860Cost of sales, administrative, (56,708) (32,916) (93,717)selling and distribution costs ---------- ---------- ---------Operating (loss)/profit (6,772) 13,137 28,143Finance income 4,477 13,254 11,106Finance cost (162) (409) (46) ---------- ---------- ---------(Loss)/profit before tax (2,457) 25,982 39,203Income tax (1,320) (5,041) (2,383) ---------- ---------- ---------(Loss)/profit after tax (3,777) 20,941 36,820Loss/(profit) attributable to 686 (10,414) (17,934)minority interest ---------- ---------- ---------(Loss)/profit attributable to (3,091) 10,527 18,886equity shareholders of the ---------- ---------- ---------parentEarnings/(loss) per share- Basic (1.16p) 4.46p 7.79p- Diluted (1.16p) 4.21p 7.17p For additional understanding of the financial situation of the group, referenceshould be made to note 3. Consolidated balance sheetAs at 30 September 2007(Unaudited) Note 30.09.2007 30.09.2006 31.03.2007 £000 £000 £000AssetsProperty, plant and 67,836 61,751 68,541equipmentIntangible assets 5 114,668 13,213 15,099Investments 6,004 8,879 12,009Deferred tax - 386 6 ---------- ---------- ---------Total non-current assets 188,508 84,229 95,655 ---------- ---------- --------- Cash and cash equivalents 3 33,335 58,571 38,693Restricted cash 190 - -Available for sale financial 3 2,595 - 2,090assetsInventories 11,495 8,333 12,211Trade and other receivables 14,215 16,506 22,727Tax receivable 72 57 164 ---------- ---------- ---------Total current assets 61,902 83,467 75,885 ---------- ---------- --------- ---------- ---------- ---------Total assets 250,410 167,696 171,540 ---------- ---------- ---------EquityIssued capital 4 32,598 24,792 24,917Share premium 40,320 87,888 250Retained earnings 94,258 2,314 97,301 ---------- ---------- ---------Equity attributable to equity 167,176 114,994 122,468shareholders of the parentMinority interest 39,975 32,502 36,941 ---------- ---------- ---------Total equity 207,151 147,496 159,409 ---------- ---------- ---------LiabilitiesTrade and other payables 12,738 11,790 8,013Taxation payable 4,629 2,895 52 ---------- ---------- ---------Total current liabilities 17,367 14,895 8,065 ---------- ---------- ---------Provisions 3,180 2,917 2,645Deferred tax liability 5 22,712 2,388 1,421 ---------- ---------- ---------Total non-current 25,892 5,305 4,066liabilities ---------- ---------- --------- ---------- ---------- ---------Total equity and liabilities 250,410 167,696 171,540 ---------- ---------- --------- For additional understanding of the financial situation of the group, referenceshould be made to note 3. Consolidated cash flow statementFor the six months ended 30 September 2007(Unaudited) 6 months ended 6 months ended Year ended 30.09.2007 30.09.2006 31.03.2007 £000 £000 £000Cash flow from operatingactivities(Loss)/profit before taxation (2,457) 25,982 39,203Adjustments for:Depreciation 3,224 1,032 1,333Foreign exchange movement 810 (348) (1,755)Loss on sale of fixed assets - - 371Non-cash provisions 453 1,236 978Charge in relation to - 76 1,062share-based paymentsFinance income (4,477) (13,254) (11,106)Finance costs 162 409 46 --------- --------- --------- (2,285) 15,133 30,132(Increase)/decrease in trade and 9,109 (8,053) (14,717)other receivables(Increase)/decrease in 293 (218) (4,468)inventoriesIncrease/(decrease) in 1,041 2,530 (744)creditorsIncrease in available for sale (1,065) - (1,762)assets --------- --------- ---------Cash generated from operations 7,093 9,392 8,441Finance costs (162) (409) (46)Income taxes paid (1,020) (2,622) (3,398) --------- --------- ---------Net cash from operating 5,911 6,361 4,997activities --------- --------- ---------Cash flows from investingactivitiesAcquisition of subsidiaries net (9,177) - (5,739)of cash acquiredPurchase of property plant and (5,141) (2,929) (13,097)equipmentSale of plant and machinery - 34 34Investment in intangible (3,346) (880) (3,332)exploration assetsAcquisition of investments (119) (8,879) (6,273)Finance income 4,477 13,254 11,106 --------- --------- ---------Net cash used in investing (13,306) 600 (17,301)activities --------- --------- ---------Cash flow from financingactivitiesProceeds from issue of share 2,158 40,626 39,929capitalDividends paid to minority (21) (1,319) (1,091)shareholders --------- --------- ---------Net cash from financing 2,137 39,307 38,838activities --------- --------- ---------Net increase / (decrease) in (5,258) 46,268 26,534cash and cash equivalentsCash and cash equivalents at 38,671 12,089 12,089beginning of periodExchange rate movement in cash (78) 4 48and cash equivalents at --------- --------- ---------beginning of periodCash and cash equivalents at end 33,335 58,361 38,671of period --------- --------- --------- For additional understanding of the financial situation of the group, referenceshould be made to note 3. Consolidated statement of recognised income and expenseFor the six months ended 30 September 2007(Unaudited) 6 months ended 6 months ended Year ended 30.09.2007 30.09.2006 31.03.2007 £000 £000 £000(Loss)/profit for the period (3,091) 10,527 18,886Remeasurement gain on available (139) - 139for sale financial assets, netof deferred taxNet exchange differences on the 187 (4,742) (6,055)retranslation of net ---------- ---------- ---------investmentsNet (reduction in)/addition to (3,043) 5,785 12,970shareholders' funds ---------- ---------- --------- Notes to the interim financial reportFor the six months ended 30 September 2007(Unaudited) 1. GENERAL INFORMATION These interim consolidated financial statements are for the six months ended 30September 2007. The comparative figures for the financial year ended 31 March2007 are not the company's statutory accounts for that financial year. Thoseaccounts, which were prepared under UK GAAP, have been reported on by thecompany's auditors and delivered to the registrar of companies. The report ofthe auditors was (i) unqualified, (ii) did not include a reference to anymatters to which the auditors drew attention by way of emphasis withoutqualifying their report, and (iii) did not contain a statement under section 237(2) or (3) of the Companies Act 1985. 2. BASIS OF PREPARATION The AIM Rules require that the next annual consolidated financial statements ofthe company, for the year ending 31 March 2008, be prepared in accordance withInternational Financial Reporting Standards (IFRSs) as adopted by the EU("adopted IFRSs"). This interim financial information has been prepared on the basis of therecognition and measurement requirements of adopted IFRSs that are effective (oravailable for early adoption) at 31 March 2007, the Group's first annualreporting date at which it is required to use adopted IFRSs. Based on theseadopted IFRSs, the directors have applied the accounting policies, which theyexpect to apply when the first annual IFRS financial statements are prepared forthe year ending 31 March 2008. However, the adopted IFRSs that will be effective (or available for earlyadoption) in the annual financial statements for the year ending 31 March 2008are still subject to change and to additional interpretations and thereforecannot be determined with certainty. Accordingly, the accounting policies forthat annual period will be determined finally only when the annual financialstatements are prepared for the year ending 31 March 2008. The interim financial report is to be read in conjunction with the Annual Reportfor the year ended 31 March 2007, the Financial Information related to IFRSrestatement and correction under UK GAAP issued on 6 December 2007 and anypublic announcements made by the Company and its subsidiaries during the period. Notes to the interim financial reportFor the six months ended 30 September 2007(Unaudited) 3. OPERATIONAL RISKS The Zimbabwean economy currently experiences hyper inflation and ismanaged under an official exchange rate which is fixed from time to time by theZimbabwean Reserve Bank. This has the effect of eroding both the Group's grossprofit margin and the buying power of cash balances held in Zimbabwean Dollars.This is partly compensated for by high interest rates earned on ZimbabweanDollar denominated cash balances. "Finance income" includes £3.7m of interestearned on such Zimbabwean Dollar cash balances during the six months underreview. Of the Group's £33.3m cash and cash equivalents at the balance sheet date, only£1.4m was held in Zimbabwean Dollars. The remittance of cash from Zimbabwe issubject to foreign exchange controls and the limited availability of foreignexchange in the country. The Directors have prepared the interim results on the basis of their judgementthat the functional currency under IAS 21 of the Group's subsidiary, BinduraNickel Corporation Limited, is the US dollar. The directors judge that thefunctional currency of BNC is the US$ based on revenue, capital expenditure andthe majority of costs being denominated in US$. The Group continues to use theOld Mutual rate to translate the transactions and balances denominated inZimbabwean dollars into US dollars. For the interim period to 30 September2007, the Directors considered that the Old Mutual rate continues to give a moreaccurate representation of the purchasing power of Zimbabwean dollars, than theofficial exchange rate. The Directors note the proposed Mines and Minerals Amendment bill which is expected to be presented to the Zimbabwean Parliament. This bill might impact on the Group's holdings in its Zimbabwean subsidiaries. No provision or adjustment has been recorded in relation to this matter, which the Directors consider to be appropriate. 4. CALLED UP SHARE CAPITAL 30.09.2007 30.09.2006 31.03.2007 £000 £000 £000Authorised553,000,000 ordinary shares of 10 55,300 27,650 55,300pence each (2006: 276,500,000 ordinary ---------- ---------- ----------shares of 10 pence)Allotted, called up and fully paidOpening balance 249,170,654 ordinary 24,917 17,938 17,938shares of 10 pence each (2006:179,376,154 shares of 10 pence each)Issued during the period 7,681 6,854 6,979 ---------- ---------- ----------Closing balance 325,983,321 ordinary 32,598 24,792 24,917shares of 10 pence each (2006: ---------- ---------- ----------247,920,654 shares of 10 pence each) Notes to the interim financial reportFor the six months ended 30 September 2007(Unaudited) 4. CALLED UP SHARE CAPITAL (CONTINUED) Movements in Issued Share Capital Issued priceDate Event £ Number of shares1 April 2007 Opening balance 249,170,65421 May 2007 Consideration shares 0.64 13,711,13212 July 2007 Exercise of share options 0.43 5,000,0008 August 2007 Exercise of share options 0.47 25,00010 September 2007 Consideration shares 0.64 47,754,28217 September 2007 Consideration shares 0.64 5,691,96924 September 2007 Consideration shares 0.58 4,630,284 -------------30 September 2007 Closing balance 325,983,321 ------------- 5. ACQUISITION ACCOUNTING On 21 May 2007, the Group acquired the remaining 82.5% of the share capital ofGravity Diamonds Limited through the issue of shares and payment and cash.Gravity Diamonds Limited is now a 100% owned subsidiary. On 19 September 2007, the Group acquired a further 74.4% of the outstandingshare capital of SoutherEra Inc., through the issue of shares. SouthernEraDiamonds Inc. is now an 83.8% owned subsidiary. The acquisition accounting that has been recorded in the interim financialstatements for the six months ended 30 September 2007 is provisional. The provisional acquisition accounting includes fair value adjustments whichhave increased the carrying value of intangible capitalised exploration assets.In recording the deferred tax liabilities in relation to such exploration costtax goodwill of £21.5m has also arisen. Notes to the interim financial reportFor the six months ended 30 September 2007(Unaudited) 6. GROUP RECONCILITIAON OF EQUITY 6 months ended 6 months ended Year ended 30.09.2007 30.09.2006 31.03.2007 £000 £000 £000(Loss)/profit for the period (3,091) 10,527 18,886Credit in relation to - 76 1,062share-based paymentsNew share capital subscribed 47,751 40,626 41,001(net of issue costs)Net exchange differences on the 187 (4,742) (6,055)retranslation of netinvestmentsRemeasurement gain on available (139) - 139for sale financial assets, netof deferred taxPurchase of own shares - - (1,072) ---------- ---------- ---------Net addition to shareholders' 44,708 46,487 53,961fundsOpening shareholders' funds 122,468 68,507 68,507 ---------- ---------- ---------Closing shareholders' funds 167,176 114,994 122,468 ---------- ---------- --------- 7. POST BALANCE SHEET EVENTS On 13 November 2007 the Group entered into a scheme of arrangement to acquireall the 16.2% of SouthernEra Diamonds Inc's issued share capital that it doesnot already own. An interim order for the approval of the scheme was granted on15 November 2007 and completion of the scheme is expected on 19 December 2007. 8. CONTINGENT LIABILITIES There are no significant changes to Group's exposure to contingent liabilitiessince 31 March 2007. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Asa Resources