11th Dec 2006 07:02
African Platinum Plc11 December 2006 African Platinum plc / Ticker: APP / Index: AIM / Sector: Platinum and precious metals 11 December 2006 AFRICAN PLATINUM PLC INTERIM RESULTS African Platinum plc ("Afplats" or "the company") announces its results for thesix month period ended 30 September 2006. HIGHLIGHTS 1. Signed a Transaction Framework Agreement ("TFA") with Impala PlatinumHoldings ("Implats"), the world's second biggest platinum producer, wherebyImplats would invest in Afplats' South African assets as a strategic partnerholding 29.9% of the equity. 2. Concluded negotiations with the Bakwena Ba-Mogopa traditional communityas the Broad Based Economic Empowerment ("BEE") partner in the Leeuwkop project,as required by the South African mining charter. 3. Completed an independent scoping study on the expansion potential of theGreater Leeuwkop Area which concluded that the construction of two further minesin the lease area with total production peaking at approximately 1 million 4Eounces per year may be achievable. 4. Granted New Order prospecting right by the South African Department ofMinerals and Energy on the Leeuwkop 402JQ property - flagship project on theWestern Limb of the Bushveld Complex. 5. Reached agreement with Impala Refining Services to purchase all theconcentrate produced by the Leeuwkop project for a 10-year period from the startof production, renewable thereafter for a further five years. 6. SRK Consulting completed a Competent Persons Report confirming thesalient features of the Leeuwkop Definitive Feasibility Study published earlierthis year. 7. New resource base published incorporating the adjacent Imbasa and Inkosiproperties, which increased the 4E (three platinum group elements plus gold)mineral resource in the Greater Leeuwkop Project area to 92 million ounces. 8. Ranked fourth in terms of 4E resources in southern Africa, behind themajors Anglo Platinum, Impala and Lonmin, but significantly larger than those ofits junior peers. STATEMENT BY BRIAN MORITZ, NON-EXECUTIVE CHAIRMAN: I am pleased to report that African Platinum plc has made substantial progresstowards developing the Leeuwkop Phase 1 project having successfully completedthe majority of the regulatory requirements for developing a mining project inSouth Africa. In addition to complying with the 2014 BEE requirements andobtaining a New Order Prospecting Right on the Leeuwkop property, the initialproject development capital has been secured through the introduction of Implatsas a strategic partner in Afplats' South African subsidiary companies. Together with our BEE partners we have a total 4E resource base in the GreaterLeeuwkop Project of 92 million ounces. Phase 1 is to develop a 300,000 ounce 4Eper year mining and concentrating operation. In the longer term we aim triplethe size of this operation. As well as developing a mining operation, our strategy is to identify andacquire additional quality PGM exploration and mining projects in Africa. Tothis end, the company has continued to expand its resource base on the westernlimb of the Bushveld Complex by completing a Scoping Study on the along strikeextensions to the Leeuwkop project and is also examining a number of otheropportunities. Project Financing In terms of the TFA with Implats, Afplats will vend its South Africansubsidiaries, Afplats (SA), Imbasa Platinum and Inkosi Platinum into a new SouthAfrican incorporated company in which Implats will subscribe for a 29.9% holdingfor a consideration of ZAR1.068 billion. The transaction was agreed upon a valuation of GBP0.45 per share of the issuedshare capital of Afplats. This represents a 50% premium to the six month VolumeWeighted Average Price (VWAP) of GBP0.30. Afplats believes that the premiumreflects fair value for this style of transaction and reduces the potentialdilution that would have been experienced by shareholders in a capital raisingusing a standard rights issue. The subscription consideration is expected to provide funding for the first twoand a half years of the projects development. By this time we expect to havebeen mining the UG2 reef for 11 months. The introduction of Implats as astrategic partner secures the initial funding for the project, and validates thetechnical and commercial viability of the Leeuwkop project, plus the proposedalong strike expansions. A definitive agreement is currently being drafted with the aim to have concludedthe transaction in the first quarter of 2007, subject to all required regulatoryapprovals being granted, thereby allowing immediate development of the LeeuwkopProject to commence. Details of the transaction will be provided toshareholders at an EGM that will be called early in 2007 to seek shareholderapproval for the transaction. Turning to the results, the year-to-date loss is in line with expectations andis typical of a mining company at this stage of its development. Capitalexpenditure of some £0.8 million remains within budget and cash in hand of £9.2million is more than sufficient to fund the company's overheads and currentexploration programme. In summary, I believe we are achieving our goal of being recognised as a premierinstitutional-quality platinum investment opportunity in the global market. Thedeal with Implats not only enables us to secure financing but I believe itendorses the progress we have made on developing our flagship project. We arewell on the way to elevating the company to rank amongst the mid-tier PGMcompanies and I believe that we can significantly increase the value of theoperation going forward. Brian MoritzChairman11th December 2006 AFRICAN PLATINUM PLCUNAUDITED CONSOLIDATED PROFIT AND LOSS ACCOUNTFOR THE 6 MONTHS ENDED 30TH SEPTEMBER 2006 6 months 6 months Year ended ended ended 30th September 30th September 31st March Notes 2006 2005 2006 (Restated*) (Restated*) £000's £000's £000's TURNOVER - - - Net operating expenses (2,601) (1,694) (3,715) Impairment of acquisition,exploration and development costs - - (4,310) OPERATING LOSS (2,601) (1,694) (8,025) Interest receivable 226 379 632 LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION (2,375) (1,315) (7,393) Taxation - - - LOSS FOR THE FINANCIAL PERIOD (2,375) (1,315) (7,393) LOSS PER SHAREBasic and diluted 3 (0.54) p (0.32) p (1.79) p * See Note 2 UNAUDITED CONSOLIDATED BALANCE SHEET AT 30 SEPTEMBER 2006 30th September 30th September 31st March 2006 2005 2006 £000's £000's £000'sFIXED ASSETSIntangible assets 10,086 14,574 12,762Tangible assets 122 162 154Investments 307 307 307 10,515 15,043 13,223 CURRENT ASSETSDebtors 493 789 309Cash at bank and in hand 9,237 12,475 11,050 9,730 13,264 11,359 Creditors: Amounts falling duewithin one year (981) (910) (1,225) NET CURRENT ASSETS 8,749 12,354 10,134 TOTAL ASSETS LESS CURRENTLIABILITIES 19,264 27,397 23,357 CAPITAL AND RESERVESCalled up share capital 451 411 435Share premium account 32,533 30,051 31,452Other reserves 123 128 131Profit and loss account (13,843) (3,193) (8,661) EQUITY SHAREHOLDERS' FUNDS 19,264 27,397 23,357 UNAUDITED CONSOLIDATED CASH FLOW STATEMENTFOR THE 6 MONTHS ENDED 30TH SEPTEMBER 2006 6 months 6 months Year ended ended ended 30th September 30th September 31st March 2006 2005 2006 £000's £000's £000's Cash outflow from operating activities (2,357) (1,872) (3,063) Returns on investments and servicing offinance 226 379 632 Capital expenditure and financialinvestment (771) (4,113) (5,492) Acquisitions and disposals - (15) (19) CASH OUTFLOW BEFORE USE OF LIQUIDRESOURCES AND FINANCING (2,902) (5,621) (7,942) Management of liquid resources 34 4,514 15,154 Financing 1,089 378 1,274 (DECREASE)/INCREASE IN CASH IN THE PERIOD (1,779) (729) 8,486 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS 6 months 6 months Year ended ended ended 30th September 30th September 31st March 2006 2005 2006 £000's £000's £000's (Decrease)/increase in cash in theperiod (1,779) (729) 8,486 Cash inflow from decrease in liquid resources (34) (4,514) (15,154) NET FUNDS AT BEGINNING OF PERIOD 11,050 17,718 17,718 NET FUNDS AT END OF PERIOD 9,237 12,475 11,050 UNAUDITED CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSESFOR THE 6 MONTHS ENDED 30TH SEPTEMBER 2006 6 months 6 months Year ended ended ended 30th September 30th September 31st March Notes 2006 2005 2006 (Restated*) (Restated*) £000's £000's £000's Loss for the financial period (2,375) (1,315) (7,393) Foreign currency translation adjustmentsrelating to subsidiary undertakings (2,998) 488 914 Total recognised gains and losses relatingto the period (5,373) (827) (6,479) Prior year adjustment 2 (317) Total recognised losses since lastannual report (5,690) * See Note 2 NOTES: FOR THE 6 MONTHS ENDED 30TH SEPTEMBER 2006 1. These interim financial statements do not constitute statutory accountsof the group within the meaning of Section 240 of the Companies Act 1985 andshould be read in conjunction with the Annual Report for 2006. Statutoryaccounts for the year ended 31 March 2006, which were prepared under accountingpractices generally accepted in the UK, have been reported on by the groupauditors and delivered to the registrar of companies The report of the auditorswas unqualified and did not contain statements under section 237(2) or (3) ofthe Companies Act 1985. 2. ADOPTION OF FRS 20 The accounting policies adopted in the preparation of the results to 30thSeptember 2006 are consistent with those set out in the 2006 Annual Report withthe exception of the adoption of FRS 20 - 'Share Based Payments'. The adoptionof FRS 20 requires a prior period adjustment to be made. This has increased theloss for the year ended 31st March 2006 by £317,000 and the loss for the 6months ending 30 September 2005 by £133,000. 3. LOSS PER ORDINARY SHARE The calculation of basic and diluted loss per ordinary share is based onthe following losses and number of shares. 6 months 6 months Year ended ended ended 30th September 30th September 31st March 2006 2005 2006 £000's £000's £000's (Restated*) (Restated*) Loss for the financial (2,375) (1,315) (7,393) Weighted average number of shares 443,625,389 406,087,504 413,913,629 * See Note 2 Due to the loss incurred in the period, there is no dilutive effect from theissue of share options and warrants. 4. POST BALANCE SHEET EVENT - AGREEMENT REACHED WITH THE BAKWENA NATION In November 2003 a Prospecting Agreement on the farm Leeuwkop 402 JQ("Leeuwkop"), was concluded with the Bakwena Ba Mogopa Nation ("the Bakwena") interms of which the Bakwena granted prospecting rights to African Platinum plc'ssubsidiary Afplats (Proprietary) Limited ("Afplats"). The Prospecting Agreementprovided that, in the event that prospecting activities proved the commercialviability of PGM mining operations, the parties would conclude a joint venturearrangement to carry out mining operations in Leeuwkop. A definitive feasibility study proving the commercial viability of a miningoperation was concluded and announced in February 2006. As a consequence theparties agreed a Memorandum of Understanding (MOU) in October 2006 whichincludes: * The Bakwena have the rights to subscribe for 26% of Afplats at par. * African Platinum plc or its nominated subsidiary will inject Rand 1 billioninto Afplats and will subscribe for 74% of the share capital. * Afplats will useits best endeavours to source the remaining capital requirement as debt. * In the event that Afplats is unable to secure sufficient debt to cover thebalance of funding for the mining operation, then the parties would togetherfund the shortfall in proportion to their shareholdings of 74% and 26%. * African Platinum plc will pay Rand 7.5 million per annum to the Bakwena for 8years commencing on the granting of the Mining Right. Ends For further information, please contact Roy Pitchford+27 11 467 [email protected] Russell Lamming+27 (11) 467 1858 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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