27th Sep 2005 09:45
African Platinum Plc27 September 2005 African Platinum plcTicker: APPIndex: AIMSector: Exploration Preliminary results for the year ended 31 March 2005 African Platinum plc (the "company") announces its preliminary results for theyear ended 31 March 2005. HIGHLIGHTS * A positive pre-feasibility study confirms that Leeuwkop is one of the most attractive development opportunities in the world's prime platinum region. * Continued exploration puts Afplats well on the way to achieving its goal of controlling a +100 million ounce PGM resource base. * The company extends its presence by acquiring exploration rights in other prospective regions of Southern Africa. * The board and management are strengthened through the appointment of executives with a record of technical success and value creation. * Continued marketing further enhances and extends the company's blue-chip share register. STATEMENT BY CHARLES HANSARD, NON-EXECUTIVE CHAIRMAN: "In the past year Afplats has taken great strides forward - it has undergone atransformation from an entrepreneurial entity into an asset-rich investmentvehicle. With a top class executive team in place and an eminent board tosupport and advise, your company now has the platform to achieve its immediategoal of developing the first phase of the Leeuwkop project and its longer-termobjective of building a premier platinum company on our world-class asset base. The highlight of this busy period was the completion of a positivepre-feasibility study on Leeuwkop - detailed elsewhere in this report - whichconfirmed that the size, grade and location of this deposit make it one of themore prospective development opportunities on the Western Limb of South Africa'sBushveld Complex, the world's prime platinum region. The Afplats in-housetechnical team supervised the programme of work in which individual componentswere undertaken by a suite of five independent consultancy firms widelyacknowledged in the industry as among the best in their fields. A definitive orbankable feasibility study is now under way. The pre-feasibility study essentially indicates that proven mining methods couldgenerate robust returns at Leeuwkop. It envisages a first-phase operationproducing 300 000 ounces of 4E concentrate per year with a mine life in excessof 20 years. We expect that the current 50 million ounce resource base will besignificantly increased by continuing exploration, but even at its present sizethe resource is a very substantial one, which will more than adequately supportLeeuwkop as a stand-alone producer. While management's focus has been on advancing this project, it has also beenactive on other fronts, notably the development of the greater Leeuwkop area.The first drill results from the Imbasa property, which is adjacent to Leeuwkop,have been very exciting, confirming the continuity of the Merensky and UG2 reefsinto this area and more than doubling the lateral mineralisation from 6kilometres to 13 kilometres. In another significant development, Afplats hasbeen granted the prospecting right for the Inkosi property, which lies adjacentto its existing prospecting rights. At the corporate level, there has been a sustained emphasis on marketing thecompany to prospective investors. Afplats already has a strong shareholderbase, which includes a number of blue-chip institutions, particularly in NorthAmerica. As part of a strategy to improve access to the North American market,the company has made an initial filing for a secondary listing on the AmericanStock Exchange and in the meantime, Afplats is also actively seeking to extendits following in the United Kingdom and Europe. An exceptional investment opportunity In a market characterised by the number of junior platinum companies competingfor investor attention, Afplats is clearly differentiated by the unique qualityof its flagship asset, which cogently underwrites its ambition of elevatingitself to the top of the mid-tier PGM companies. The company's objective of controlling a resource base of more than 100 millionounces on the Bushveld Complex has been made increasingly attainable by theexploration results from Imbasa and the acquisition of the Inkosi prospectingright. It has also advanced significantly towards its aim of defining anorebody that is capable of producing 1 million ounces of 4E per year. Afplats's greater Leeuwkop project area has a sufficient strike length toeventually accommodate three shaft systems all exploiting the deposit at thesame depth and with a potential life of around 50 years. The infrastructurewhich will be put in place for the mining areas will support and service anextended operation, thus reducing the level of additional expenditure requiredin the future. Not surprisingly, the aggregate production which Afplats canpotentially look forward to from the various phases of the Leeuwkop development,combined with a resource base unique for a company of its size, has enhanced ourprofile as an exciting investment prospect. It should be noted that Afplats has also been acquiring a range of greenfieldexploration prospects in countries neighbouring South Africa - including Molopoin Botswana and Snakes Head in Zimbabwe - and that it continues to look forfurther PGM opportunities throughout the region. A substantial asset base combined with a clear and practicable growth strategy,and managed by a team with a record of technical success and value creation inthis industry, make Afplats an exceptional early-stage investment opportunity.Its huge resource base, priced at less than US$5 per PGM ounce in the ground,and its long production life represent a substantial embedded call option on theplatinum price. These properties, we believe, will also in due course makeAfplats a premier institutional-quality counter in the global PGM market. A robust PGM market Although platinum supplies expanded more rapidly than demand in 2004, the yearstill ended with a market deficit of 80 000 ounces, according to JohnsonMatthey's industry review. Against this background, institutional investment inthe metal pushed the price to a peak of US$937 per ounce in April 2004. Sincethen the price has eased back, but has remained well supported by both investorand physical demand, and broke through the US$900 level again in June this year. During 2004, purchases of platinum for autocatalysts reached a new high andconsumption of platinum in industrial applications also grew strongly.Jewellery demand diminished in response to higher prices. Autocatalystpurchases are forecast to rise again this year and in the future, if forecastsfor a new market for diesels in the US should materialise, demand for platinumwill grow correspondingly, jewellery demand may also improve. Demand for palladium increased sharply in 2004 but was offset by a correspondingrise in production. Consequently the price was soft for most of the year. Itremains at the year-end level of US$184. We expect current market dynamics to be sustained in the short term. In thelonger term, there could be a narrowing of the price differential betweenplatinum and palladium, driven by the substitution of palladium for platinum inthe automotive sector. The basket price for the metals is likely to remainrobust, however. Strengthening the team Another strategic objective achieved over the past year was the strengthening ofthe board of directors and the management team. This process has included the appointment of three doyens of the global preciousmetals mining industry as non-executive directors. Mark Bristow is the chiefexecutive of Randgold Resources, which he built from scratch into a highlyregarded billion-dollar business. (Co-incidentally, Mark was involved in RandMines' original exploration of the Leeuwkop area as a geologist 20 years ago.)Roy Lander was a director of Anglo American and chief executive of itsZimbabwean operations. John Smithies is a former chief executive of ImpalaPlatinum, the world's second-largest producer. Their collective expertise hasadded substantial weight to the board. The two founders of Southern African Resources (as Afplats was formerly known),Messrs Edmonds and Groves, have both relinquished their executive positions andretired as directors. We thank them for the substantial contribution they madeto its development. In Roy Pitchford, Afplats has a chief executive with a track record ofachievement at the head of a number of southern African resources companies,including Zimbabwe Platinum Mines. He has been joined by three highlyexperienced managers - Charles Prentice, Russell Lamming and David Reeves - in asmall but potent executive team. Looking ahead This team's current priorities are * to complete the feasibility study on Leeuwkop in order for the board to make a development decision; * to complete the drilling at Imbasa and Inkosi during the first quarter of 2006; * to upgrade the indicated resource to the measured category and convert more of the inferred ounces to indicated status; * to initiate a scoping study for expanding production to 1 million ounces once this has been done; * to convert all prospecting rights to "new order" as defined in South African law; * to finalise the agreement with the company's black economic empowerment partners in accordance with the requirements of the South African Mining Charter; and * to complete the secondary listing on the American Stock Exchange currently in progress. Further down the road, the focus is on significantly increasing the size of theBushveld resource base, finding and developing other attractive PGMopportunities, and continuing to improve market awareness of the company and itsprospects. It is worth noting at this point that Afplats has the equivalent ofapproximately US$25 million in cash and no debt, and is, therefore, well placedto continue with the bankable feasibility study as well as to invest further inexploration opportunities until project funding has been secured. Appreciation I should like to thank my colleagues on the board, past and present, for theirwise counsel; the Afplats management team for their strong performance; ourshareholders for their support; and the company's advisors and suppliers fortheir assistance." Charles HansardChairman 27 September 2005 CONSOLIDATED PROFIT AND LOSS ACCOUNTfor the year ended 31 March 2005 2005 2004 £'000 £'000TURNOVER - - Net operating expenses (2,213) (497) OPERATING LOSS (2,213) (497) Interest receivable 452 12Interest payable and similar charges - (3) LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION (1,761) (488) Taxation - - LOSS ON ORDINARY ACTIVITIES AFTER TAXATION (1,761) (488)Minority interests 13 - LOSS FOR THE FINANCIAL YEAR (1,748) (488) LOSS PER SHAREBasic and diluted (0.54p) (0.27p) The operating loss for the period arises from the group's continuing operations. CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES31 March 2005 2005 2004 £'000 £'000Loss for the financial year (1,748) (488) Foreign currency translation adjustments relating to (79) 9subsidiary undertakings Total recognised gains and losses for the year (1,827) (479) CONSOLIDATED BALANCE SHEET31 March 2005 2005 2004 £'000 £'000FIXED ASSETSIntangible assets 9,951 3,183Tangible assets 123 30Investments 307 - 10,381 3,213 CURRENT ASSETSDebtors 521 1,345Cash at bank and in hand and on deposit 17,718 2,497 18,239 3,842 CREDITORS: Amounts falling due within one year (1,210) (702) NET CURRENT ASSETS 17,029 3,140 NET ASSETS 27,410 6,353 CAPITAL AND RESERVESCalled up share capital 395 255Share premium account 29,458 5,904Other reserves 56 67Profit and loss account (2,499) (672) EQUITY SHAREHOLDERS' FUNDS 27,410 5,554 Minority interests - 799 27,410 6,353 CONSOLIDATED CASH FLOW STATEMENTfor the year ended 31 March 2005 2005 2004 £'000 £'000Cash outflow from operating activities (1,942) (198) Returns on investments and servicing of finance 452 9 Capital expenditure and financial investment (4,034) (613) Acquisitions and disposals (43) (492) CASH OUTFLOW BEFORE USE OF LIQUID RESOURCES AND FINANCING (5,567) (1,294) Management of liquid resources (13,765) (800) Financing 20,788 3,606 INCREASE IN CASH IN THE PERIOD 1,456 1,512 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS Increase in cash in the period 1,456 1,512 Cash outflow from increase in liquid resources 13,765 800 NET FUNDS AT 1 APRIL 2004 2,497 185 NET FUNDS AT 31 MARCH 2005 17,718 2,497 NOTES 1. Basis of Accounting - The financial statements have been prepared under thehistorical cost convention and in accordance with applicable accounting UnitedKingdom standards 2. Basis of Consolidation - The consolidated financial statements incorporatethose of African Platinum plc and all its subsidiary undertakings. Subsidiariesacquired during the year are consolidated using the acquisition method. Thedifference between the cost of acquisition of shares in subsidiaries and thefair value of the separable net assets acquired is capitalised and written offon a straight-line basis over its estimated economic life. Provision is madefor impairment. All financial statements are made up to 31 March 2005. 3. The calculation of basic loss per share is based on the loss attributable toordinary shareholders £1,748,000 (2004: £488,000) divided by the weightedaverage number of shares in issue during the year 318,465,750 (2004:180,739,821). 4. No dividend has been declared for the period or in the previous year. 5. See the Company's Annual Report for the year ended 31 March 2005 for a fullset of notes to these accounts, including details of additional accountingpolicies and post balance sheet events. The report will be available todownload from 30 September 2005 at www.afplats.com 6. The financial information set out above does not constitute statutoryaccounts of the group as defined in section 240 of the Companies Act 1985. Theconsolidated profit and loss account and balance sheet have been extracted fromthe Company's 2005 statutory financial statements which are to be filed with theRegistrar of Companies. The auditors report on these financial statements isunqualified and were prepared under accounting practices generally accepted inthe UK. ANNUAL REPORT AND ACCOUNTS The company intends to publish and distribute its Annual Report and Accounts forthe year ended 31 March 2005 on Friday 30 September 2005. The accounts, which will be posted on 30 September 2005 on the company's websiteat www.afplats.com for viewing and downloading, will contain more detailedanalysis of the work undertaken by the company during the period, a report onthe company's projects and Ore Reserves and Mineral Resources, comprehensivenotes to the accounts and list post-balance sheet events. Enquiries: Kathy du Plessis, Investor & Media RelationsTel: +27 (0)11 728 4701 Fax: +27 (0)11 728 2547 E-mail: [email protected] This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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