15th Sep 2006 13:14
African Platinum Plc15 September 2006 African Platinum plcTicker: APPIndex: AIMSector: Platinum and precious metals PRELIMINARY RESULTS FOR THE YEAR ENDED 31 MARCH 2006 African Platinum plc ("the company") announces its preliminary results for theyear ended 31 March 2006. HIGHLIGHTS * Definitive feasibility study confirms Leeuwkop as one of the most attractivedevelopment opportunities on Bushveld Complex.* Resource now 92 million ounces, making the Greater Leeuwkop Project one oftop four PGM resource bases in South Africa.* Significant progress in Black Economic Empowerment (BEE) negotiations andsecuring of new order rights. STATEMENT BY BRIAN MORITZ, NON-EXECUTIVE CHAIRMAN: Since the publication of our last annual report, your company has madesignificant advances on all fronts, and our vision of building it into one ofthe world's premier platinum businesses has become an increasingly tangiblereality. The highlights of this busy period were:* The completion of a definitive feasibility study on our flagship Leeuwkopproject, which provided confirmation that this is indeed one of the mostattractive development opportunities on the Bushveld Complex.* A resource update on the adjacent Imbasa and Inkosi properties, whichincreased the 4E mineral resource in the Greater Leeuwkop Project to 92 millionounces. Afplats and its BEE partners are now ranked fourth in terms of itsplatinum group metals resources in Southern Africa (behind the majors AngloPlatinum, Impala and Lonmin), and has a published resource base which issignificantly larger than those of its junior peers.* Significant progress in negotiations with our prospective black economicempowerment partners and in securing the appropriate mining and prospectingrights.* The further strengthening of our management team through the appointment ofan international PGM authority, Dr Jock Harmer, as exploration manager.* The marshalling of a formidable support team, including SRK as independentengineers, Rand Merchant Bank as advisor on the structure and funding of theLeeuwkop project and JPMorgan Cazenove as nominated advisor and broker.* The groundwork has been advanced to raise the necessary funds for thedevelopment of the first phase of the Leeuwkop project, which is planned to be alow-cost mine producing some 300 000 ounces of 4E per year by 2011.* The appointment of Shaft Sinkers as the preferred tenderer for thedevelopment of the Leeuwkop Phase 1 twin shaft system and the signing of anagreement with Impala Refining Services (IRS), the world's largest purchaser ofPGM concentrate for the sale of 10 years of Leeuwkop's production. STRONG POSITIVE FUNDAMENTALS FOR PGMS These developments took place against the backdrop of a market which continuedto be characterised by strong positive fundamentals and robust demand for allPGMs. The platinum and rhodium markets experienced supply deficits and the palladiummarket experienced a surplus for the fifth year in a row. Metal prices werewell supported, with the 2005 basket price averaging US$803/oz, up 20% on theprevious year. The best performer for the year was rhodium, which increased by114% to an average of US$2 031/oz. Platinum production and demand are forecast to grow in 2006, with the currentmarginal deficit remaining. The expected growth in production is dependent onSouth African expansion programmes ramping up as planned. Beyond 2006 demand islikely to remain strong, albeit that the price-sensitive jewellery market willcontinue to soften the positive impact of the burgeoning industrial andautomotive sectors. The further tightening of emission regulations in thedeveloped world, and the introduction of such regulations in developing regions,will underpin demand in the automotive sector. Palladium supply is expected to increase on the back of the South Africanexpansion programmes. The overhang from Russian stockpiles - without whichpalladium would have been in deficit in 2005 - remains a significant factor inthe market. Although rhodium represents only 10% of the metal in the Leeuwkop concentrate,its high price makes it a major revenue driver. We expect supply to increase inline with the other metals, but at the same time demand will be driven upward bya combination of rising consumption in the automotive sector and the glassindustry, specifically in Asia where there has been a rapid expansion of LCDglass manufacturing capacity. THE FUTURE IS HERE In the relatively short time since its admission to trading on the AIM market ofthe London Stock Exchange, Afplats has grown rapidly from an entrepreneurialstart-up venture into a business of real substance which is on the brink ofdeveloping its first mine. In a market which is very buoyant and likely to remain so for the foreseeablefuture, the company's exceptional asset base, prime location, enormous expansionpotential and clear, practicable business strategy have placed it at theforefront of the new generation of platinum juniors. Our ultimate aim is toelevate it to the top of the mid-tier level of the PGM companies - an ambitionwhich is clearly within our reach. While much has been achieved, much more remains to be done. Management's focusnow is on completing the project finance structure and raising the developmentcapital, settling the BEE partnerships and securing all the required rights. In the year ahead, we plan to start the main development of Leeuwkop Phase 1 andto complete a scoping study of the expansion potential along strike of theGreater Leeuwkop Project, encompassing the Imbasa and Inkosi properties.Exploration within this area as well as elsewhere in Africa will continue. In April this year, the company advised shareholders that it had withdrawn itsapplication for a listing on the American Stock Exchange. After giving thismatter a great deal of consideration, the board concluded that the effort andexpense involved in such a listing could not be justified at a time when oursmall management team and limited resources were fully focused on thedevelopment of Leeuwkop. It is worth noting that none of the platinum majorshas a US listing and that most of our North American shareholders are in anyevent able to trade on AIM. In consultation with our advisors, the boardcontinues to review an overseas listing and related opportunities to complementthe London listing. THE BOARD At an extraordinary general meeting on 25 July 2006, shareholders voted toremove the then chairman Charles Hansard as a director of the company. Dr MarkBristow resigned as an independent non-executive director. Following thatmeeting I accepted appointment as chairman, on the basis that I would holdoffice until an external candidate for the role was identified and appointed. On behalf of the board I thank Charles and Mark for the considerablecontributions they made to Afplats at a critical stage of its development. Ishould like to express my appreciation to my colleagues for their counsel andsupport during what has been a challenging time for the board and the company.I should also like to express the board's appreciation to chief executive RoyPitchford and his team for the substantial progress the company has made. Brian MoritzChairman15 September 2006 CONSOLIDATED PROFIT AND LOSS ACCOUNTfor the year ended 31 March 2006 £000 2006 2005TURNOVER - -Net operating expenses (3 398) (2 213)Impairment of acquisition, exploration and development costs Note 4 (4 310) -OPERATING LOSS (7 708) (2 213)Interest receivable 632 452LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION (7 076) (1 761)Taxation on loss on ordinary activities - -LOSS ON ORDINARY ACTIVITIES AFTER TAXATION (7 076) (1 761)Minority interests - 13LOSS FOR THE FINANCIAL YEAR (7 076) (1 748)LOSS PER SHAREBasic and diluted (1.71p) (0.54p) The operating loss for the year arises from the group's continuing operations.There were no differences between reported profits and losses and historicalcost profits and losses on ordinary activities before taxation. CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSESfor the year ended 31 March 2006 £000 2006 2005Loss for the financial year (7 076) (1 748)Foreign currency translation adjustments relating to subsidiary 914 (79)undertakingsTotal recognised gains and losses for the year (6 162) (1 827) CONSOLIDATED BALANCE SHEETat 31 March 2006 £000 2006 2005FIXED ASSETSIntangible assets 12 762 9 951Tangible assets 154 123Investments 307 307 13 223 10 381CURRENT ASSETSDebtors 309 521Cash at bank and in hand and on deposit 11 050 17 718 11 359 18 239CREDITORS: Amounts falling due within one year (1 225) (1 210)NET CURRENT ASSETS 10 134 17 029NET ASSETS 23 357 27 410CAPITAL AND RESERVESCalled up share capital 435 395Share premium account 31 452 29 458Other reserves 131 56Profit and loss account (8 661) (2 499)EQUITY SHAREHOLDERS' FUNDS 23 357 27 410 CONSOLIDATED CASH FLOW STATEMENTfor the year ended 31 March 2006 £000 2006 2005Cash outflow from operating activities (3 063) (1 942)Returns on investments and servicing of finance 632 452Capital expenditure and financial investment (5 492) (4 034)Acquisitions and disposals (19) (43)CASH OUTFLOW BEFORE USE OF LIQUID RESOURCES AND FINANCING (7 942) (5 567)Management of liquid resources 15 154 (13 765)Financing 1 274 20 788INCREASE IN CASH IN THE YEAR 8 486 1 456RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDSIncrease in cash in the year 8 486 1 456Cash inflow/outflow from decrease/increase in liquid resources (15 154) 13 765NET FUNDS AT 1 APRIL 2005 17 718 2 497NET FUNDS AT 31 MARCH 2006 11 050 17 718 NOTES1. Basis of Accounting - The financial statements have been prepared under thehistorical cost convention and in accordance with applicable United Kingdomaccounting 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 2006. 3. The calculation of basic loss per share is based on the loss attributableto ordinary shareholders £7 076 000 (2005: £1 748 000) divided by the weightedaverage number of shares in issue during the year 413 913 629 (2005: 318 465750) 4. Two impairment charges have been made to the intangible assets in 2006 thatamount to £4 310 000. These charges comprise a write-down of the intangiblesrelating to the Tau Mining Limited investment (£4 025 000) and Mimic (Private)Limited investment (£285 000) where it was decided to suspend furtherexploration on these prospects to focus attention on the main South AfricanBushveld project. 5. No dividend has been declared for the period or in the previous year. 6. See the company's Annual Report for the year ended 31 March 2006 for a fullset of notes to these accounts, including details of additional policies andpost balance sheet events. The report will be available to download from 30September 2006 at www.afplats.com. 7. The financial information set out above does not constitute the company'sstatutory accounts for the years ended 31 March 2006 or 2005. Statutoryaccounts for 2005 have been delivered to the registrar of companies, and thosefor 2006 will be delivered in due course. The auditors have reported on thoseaccounts; their report was (i) unqualified, (ii) did not include a reference toany matters 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. ANNUAL REPORT AND ACCOUNTS The company intends to publish and distribute its Annual Report for the yearended 31 March 2006 by 30 September 2006. Notice convening the AGM will be sentout separately later in the year. The accounts, which will be posted on 30 September 2006 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 project and Ore Reserves and Mineral Resources, comprehensivenotes to the accounts and list post-balance sheet events. EnquiriesKathy du Plessis, Investor and Media RelationsTel +27 (0) 11 728 4701, Fax: +27 (0) 11 728 2547, E-mail: [email protected] DISCLAIMER: Investing in all equities, including natural resources-relatedequities carries risks which should be taken into consideration when making aninvestment. This announcement contains forward-looking statements regardingAfrican Platinum plc, including the development of its mining developmentprojects. Actual results relating to any and all of these subjects may differmaterially from those presented. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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