22nd Oct 2008 07:00
22nd October 2008
Mwana Africa PLC
Strategy Update
In view of recent changes in economic conditions and falls in commodity prices, the Board of Mwana Africa PLC ("Mwana" or the "Company") has reviewed the company's strategy for its extensive exploration programme and its existing operations in South Africa and Zimbabwe. The Board has decided that, in the current conditions, Mwana's priorities should be to seek to conserve, as far as is reasonable, its existing cash balances by scaling back its exploration activities, and to preserve the integrity of its principal operating asset, BNC, in which Mwana holds a 52.9% stake. The Board believes that these actions will enable Mwana to retain the flexibility to take advantage of investment opportunities that may arise in due course.
Cash Position
Following the receipt of proceeds from the £25m placing completed in June, Mwana had cash balances of £26m (unaudited, and excluding cash balances held by BNC) as at 30th September 2008. Mwana recognises that cash is an especially precious resource in the current economic environment.
Exploration Focus
Over the past six months, good progress has been made in developing the exploration programme across Mwana's portfolio of base metal, gold and diamond prospects. However, following recent changes in economic conditions, it has been decided to scale these back significantly, while ensuring that conditions to retain exploration rights are satisfied, until the funding environment and the outlook for commodity prices have stabilised.
Base Metals
Mwana is conducting base metals exploration in Katanga, in the south east of the DRC, in part through a joint venture option agreement with Anglo American. Mwana is proceeding with a Preliminary Feasibility Study, expected to be completed within the next six months, for the Kibolwe copper prospect. The pace of exploration activity elsewhere in Mwana's part of the concession is being reduced, in part due to the onset of the rainy season. Mwana expects to resume exploration in 2009 with a reduced exploration programme.
Gold
At the Zani-Kodo gold prospect in the DRC, Mwana intends to conclude calculation and classification of resources for the Kodo Main and Kodo North zones, from which assay results from recently completed drilling programmes are awaited. The results of these calculations are expected in early 2009. Early-stage exploration, which has been commenced at several other district-scale prospects in the region, will be curtailed. Gold exploration activities in Ghana will be substantially reduced.
Diamonds
In diamonds, Mwana has a significant portfolio of prospects in the south west of the DRC. Mwana intends to maintain the pace of its externally funded kimberlite exploration programme, conducted under a joint venture agreement with BHP Billiton. Other kimberlite exploration in the DRC and South Africa, and development work on the company's alluvial prospects will be curtailed.
Operations Update
BNC is currently loss-making, having been seriously affected by continuing challenging conditions in Zimbabwe and, more recently, the sharp fall in global nickel prices. BNC is taking steps to reduce costs and the rate of cash outflow. Discussions have commenced with stakeholders to develop plans to lower the cost of supply from BNC's mines while maintaining its refining and smelting capacity, and to ascertain the availability of external funding. Mwana will make available limited funds to support BNC provided that conditions are appropriate.
The ramp up in production from the Klipspringer diamond mine in South Africa remains broadly on target. Operating costs (expressed in US dollars) have fallen as a result of the decline in the value of the South African Rand; however this benefit is expected to be offset by recent softening in the market price of diamonds.
Interim Results
The company expects to report its half year results on 10 December 2008.
A full version of this press release is available for download from the Company's website; www.mwanaafrica.com.
Enquiries:
Oliver Baring, Executive Chairman Tel: 020 7654 5580
Mwana Africa PLC
Tom Randell / Anca Spiridon Tel: 020 7653 6620
Merlin
Ryan Gaffney, Director Tel: 020 7050 6500
Canaccord Adams Li mited
This press release includes 'forward-looking statements'. Words such as 'anticipates', 'expects', 'intends', 'plans', 'forecasts', 'projects', 'budgets', 'believes', 'seeks', 'estimates', 'could', 'might', 'should' and similar expressions identify forward-looking statements. All statements other than statements of historical facts included in this press release, including, without limitation, those regarding Mwana Africa's business strategy and plans and objectives of management for future operations and acquisition opportunities, are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors which could cause the actual results, performance or achievements of Mwana Africa or the markets and economies in which Mwana Africa operates to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements, including, without limitation, political, regulatory and economic factors. Factors that would cause actual results or events to differ from current expectations include, among other things, political risks in the DRC and Zimbabwe (including whether the power sharing agreement will be successfully implemented), changes to regulations affecting Mwana Africa's activities, and the other risks involved in the mineral exploration industry. Mwana Africa believes that the assumptions inherent in the forward-looking statements are reasonable; however, forward looking statements are not guarantees of future performance and accordingly undue reliance should not be put on such statements due to the inherent uncertainty therein. Mwana Africa does not assume any responsibility to update any of such forward-looking statements, save as required by relevant law or regulatory authority.
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