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African Eagle Resources PLC : Half Year Progress and Reports
African Eagle Interim Results Announcement
RNS
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2012
28 September 2012: African Eagle Resources plc ("African Eagle" or the "Company") (AIM: AFE; AltX: AEA) today announces its interim results for the six months ended 30 June 2012, which are also available on the Company's website: www.africaneagle.co.uk .
Operational Highlights
Dutwa Development
Corporate Development
Commenting on the results, African Eagle's Chairman, Chris Pointon said "I am pleased to report solid progress has been made across all of the key work streams on the Dutwa Bankable Feasibility Study ("BFS"). We recently reported very exciting and positive metallurgical test work results on the Wamangola Ferruginous Siliceous ("FeSi") ore which represent a real break-through for the project and have the potential to substantially improve the project economics.
The metallurgical results are of such significance that the Board has decided to allow more time for an expanded test programme on the transition ore and ore from the adjacent Ngasamo deposit in the fourth quarter of 2012, with the pilot plant run now scheduled to occur in 2013. The BFS is now due to be completed in the second half of 2013.
We have also increased our levels of confidence in the quality and size of the Dutwa resource and recently announced a revised JORC Resource with 94% of the total 107 million tonnes ("Mt") being classified in the Indicated category. The FeSi ore comprises 70% of the total resource.
On the corporate front we have appointed Ambassador Paul Rupia as a Non-Executive Director and David Newbold as Finance Director. Ambassador Rupia brings over 49 years of experience in Tanzania's diplomatic and civil service and will add vital in-country experience and contacts to the Board. David has an excellent track record in the financing, structuring, risk mitigation, governance and operation of natural resource businesses globally. We already have a first-class project management team, and I believe that with the addition of Paul and David the Board and management now have the skills and experience required to ensure African Eagle can successfully develop the Dutwa Project."
For further information, please visit www.africaneagle.co.uk or contact:
African Eagle Resources plc
Trevor Moss, CEO
Alex Buck
+44 20 7248 6059
Canaccord Genuity Limited (NOMAD)
Rob Collins or Andrew Chubb
+ 44 20 7523 8000
Ocean Equities Limited (Joint Broker)
Guy Wilkes
+44 20 7786 4370
Russell & Associates, Johannesburg
Charmane Russell or Marion Brower
+27 11 880 3924
About African Eagle
African Eagle Resources plc is a nickel development and exploration company listed on the London AIM (AFE) and Johannesburg AltX (AEA) stock exchanges. The Company's flagship project is the Dutwa Nickel project in Tanzania located about 25km south of Lake Victoria and 110km east of Mwanza within greenstone gold belts which host many of Tanzania's operating and developing gold mines. The Company is currently conducting a Bankable Feasibility Study, which is due for publication during 2013.
CHAIRMAN'S STATEMENT
Dear Shareholder,
It gives me great pleasure to present my first report to you as Chairman of your Company and to have the opportunity to tell you about the excellent progress we are making in advancing the Dutwa Nickel Project through development and towards production.
We have made significant progress on the Dutwa Bankable Feasibility Study ("BFS") and recently reported very exciting and positive metallurgical test work results. We think these results represent a real break-through for the project and have the potential to substantially improve the project economics.
The outcome demonstrates the potential to upgrade the ore, doubling the nickel grade of the run-of-mine ore, from around 1% to 2%, before processing through the atmospheric tank leaching circuit, by a simple screening process, and without the need for fine grinding. This, if confirmed by the balance of the test work programme, means that between half and one-third of the run-of-mine ore can be rejected prior to processing, the rejected portion being below cut-off grade. Hence the capacity of the capital-intensive processing plant, which will extract the nickel from the concentrated ore, can be correspondingly smaller than previously planned for the same nickel output. Although capital cost estimates will only be available when the BFS is complete, we are confident that they will be strongly competitive. Furthermore, the upgraded ore leaches more rapidly, and with lower sulphuric acid and limestone requirements per kg of nickel extracted, than the run-of-mine ore. The net result will be a positive impact on the operating costs as well as the capital costs of the Project.
The test work was done on the Wamangola Ferruginous Siliceous ("FeSi") ore, which comprises around 45% of the total Dutwa resource. We therefore need to extend the tests to the Transition ore and ore from the adjacent Ngasamo deposit, which comprise the rest of the resource. This work has already commenced.
This expanded test work programme is essential to ensure we have fully defined the process flowsheet and metallurgical parameters before commencing full scale pilot plant work. The purpose of the high value but expensive pilot plant campaigns of the type we plan to undertake is to confirm technical parameters for the engineering specification of the commercial scale plant. It is therefore vital that we have the pilot plant properly configured and representative of the commercial scale plant we plan to build. We aim to update shareholders on the further progress of this work early next year.
The metallurgical results are of such significance that the Board has decided to allow more time for this expanded test programme in the fourth quarter of 2012, with the pilot plant run now scheduled to occur in 2013. The BFS is now due to be completed in the second half of 2013.
We continue to increase our levels of confidence in the Dutwa resource and, following drilling campaigns at both Ngasamo and Wamangola completed earlier this year, we recently announced a revised JORC mineral resource statement for the Project. 94% of the total 107 million tonne ("Mt") 0.93% Ni grade resource has been upgraded and classified in the Indicated category with FeSi ore comprising 70% of the total resource.
In addition, work continues on other key areas for the optimisation of operating costs, most importantly transport of raw materials and finished product, and the procurement of sulphur.
Current funds will carry us through to the start of the pilot plant test campaign, but we will need to secure additional funds to allow us to complete the BFS. We will make further announcements in this regard in due course.
In relation to our legacy projects, I am pleased to report that we have entered into a binding agreement with Elephant Copper Limited ("Elephant") for the disposal of our remaining Zambian copper assets, the wholly owned Katanga Resources Limited and 49.9% interest in Kujima Mining and Exploration Limited. The total consideration of the transaction will be 15 million shares in Elephant and a 2% Net Smelter Return on the Katanga assets, which will be applicable once the assets reach production. The transaction is conditional, amongst other things, on approval of the Zambian Minister of Mines. We expect to finalise the transaction shortly and this will complete the disposal of our remaining Zambian assets.
Turning to corporate issues and governance, I am particularly pleased to welcome Ambassador Paul Rupia to the Board of African Eagle. Ambassador Rupia brings over 49 years of experience in Tanzania's diplomatic and civil service, having represented Tanzania as Ambassador to the United Nations, Ambassador to Ethiopia and Deputy High Commissioner to the United Kingdom. He also served as Chief Secretary to the President and Head of Tanzania's Civil Service. He has a thorough knowledge of both the public and private sector in Tanzania, and will add vital in-country knowledge, experience and contacts to the Board.
We have also appointed David Newbold as Finance Director. David has an excellent track record in the financing, structuring, risk mitigation, governance and operation of natural resource businesses globally.
We already have a first-class project management team, and I believe that with the addition of Paul and David the Board and management now have the skills and experience required to ensure African Eagle can successfully develop the Dutwa Project.
Additionally we have appointed Cutfield Freeman & Co Ltd ("CF&Co") to support us as financial advisers. They will work alongside David to develop and execute a financing strategy for the Dutwa Nickel Project which will embrace strategic investor, equity and debt elements. CF&Co is a well known and respected independent financial advisory services consultancy with a wealth of experience in successfully executing transactions in the mining and metal processing industries, including a number of major nickel projects.
In conclusion, we have had an extremely busy and productive first half of the year. We have an experienced Board and Management, and we are now entirely focused on bringing Dutwa through feasibility into development and on towards production. We have engaged contractors - Lycopodium, Knight Piesold, Snowden, Citrus Partners and CF&Co - who are leaders in our sector, familiar with nickel and with East Africa. We have made significant and encouraging progress in advancing the BFS, unlocking the potential of this remarkable orebody. Lastly, but not least, we have benefitted from the support and commitment of our main shareholders. I believe we are well placed to continue to move forward with Dutwa.
Christopher Pointon
Chairman
28 September 2012
Financial Review
For the six months ended 30 June 2012
Condensed Interim Consolidated Statement of Comprehensive Income
Review of six months ended 30 June 2012 (reviewed) compared to the six month period ended 30 June 2011 (unaudited).
The loss after tax for the six months to 30 June 2012 at £4.4m is £3.7m higher than for the corresponding period last year. This variance can be explained by:
Condensed Interim Consolidated Statement of Financial Position
Review as at 30 June 2012 (reviewed) compared to 31 December 2011 (audited)
The Company is in the process of disposing of its Zambian assets and impaired the assets during the period. See note 4 below for further information.
Cash and cash equivalents increased by £8.3m due to the fund raisings in February and April 2012 with approximately £12.5m before expenses being raised.
Deferred exploration costs at £14.7m are £3.5m higher than at 31 December 2011. The increase includes £3.4m related to the Dutwa Nickel Project.
Other payables amounted to £1.8m, £1.4m higher than at 31 December 2011. The increase was mainly due to higher accruals relating to the Dutwa Nickel Project.
At £26.8m, total equity increased by £7.8m. Share capital and share premium increased by £12.2m as a result of the fund raisings, after expenses. The foreign currency reserve increased by £0.3m as a result of the exchange differences in the period on the translation of foreign operations. The retained loss increased by £4.2m in line with the loss for the half year.
Condensed Interim Consolidated Statement of Comprehensive Income
For the six months ended 30 June 2012
All operations are continuing.
The accompanying notes form an integral part of these reviewed condensed interim consolidated financial statements.
Condensed Interim Consolidated Statement of Financial Position
As at 30 June 2012
The accompanying notes form an integral part of these reviewed condensed interim consolidated financial statements.
Condensed Interim Consolidated Statement of Cash Flows
For the six months ended 30 June 2012
The accompanying notes form an integral part of these reviewed condensed interim consolidated financial statements.
Condensed Interim Consolidated Statement of Changes in Equity
For the six months ended 30 June 2012
The accompanying notes form an integral part of these reviewed condensed interim consolidated financial statements.
Notes to the Condensed Interim Consolidated Financial Statements
For the six months ended 30 June 2012
1. Nature of Operations and General Information
African Eagle Resources plc ("African Eagle" or the "Company") is a public limited company incorporated and domiciled in England, with its primary listing on the AIM market of the London Stock Exchange and a secondary listing on the Alternative Exchange of the Johannesburg Stock Exchange Limited ("AltX"). African Eagle is the holding company of a mineral development and exploration group of companies (the "Group"). The Group is focused on becoming a nickel producer and is currently undertaking a feasibility study on its Dutwa Nickel Project in Tanzania.
The Company has prepared its condensed interim consolidated financial statements ("Financial Statements") on a going concern basis which assumes that the Company will be able to realise assets and discharge liabilities in the normal course of business. At 30 June 2012 the Group had cash and cash equivalents of £10.6 million. The Company, as at the date of approval of these Financial Statements, has sufficient funding to meet the Group's working capital requirements for the next 12 months for going concern purposes. The Company will, however, need to raise additional funds to start the pilot plant campaign and to complete the BFS and other planned activity.
The Directors are confident that they will be able to secure additional funding to undertake the current planned program of activity over the 12 months from the date of approval of this review, but, in common with other companies at this stage of development, there can be no certainty that the funding will be available.
African Eagle's Financial Statements are presented in pounds sterling (£), which is also the functional currency of the parent company. The Financial Statements were approved for issue by the Board of Directors on 27 September 2012.
2 Statement of Compliance and basis of preparation
The Financial Statements are for the six months ended 30 June 2012. They do not include all the information required for full annual financial statements and should be read in conjunction with the audited consolidated financial statements of the Group for the year ended 31 December 2011, which were prepared under International Financial Reporting Standards ("IFRS") as adopted by the European Union ("EU").
The financial information is prepared under the historical cost convention and in accordance with the recognition and measurement principles contained within IFRS as endorsed by the EU.
The comparative amounts in the Financial Statements include extracts from the Company's consolidated financial statements for the year ended 31 December 2011. These extracts do not constitute statutory accounts within the meaning of Section 435 of the Companies Act 2006.
3 Loss Per Share
(a) Basic loss per share
The calculation of basic loss per share is based on the loss for the period divided by the weighted average number of shares in issue during the period. In calculating the diluted loss per share potential ordinary shares such as share options and warrants have not been included as they would have the effect of decreasing the loss per share. Decreasing the loss per share would be anti-dilutive.
(b) Headline loss per share
Headline loss per share has been calculated in accordance with the South African Institute of Chartered Accountants Circular 3/2009 - Headline Earnings. Circular 3/2009 is effective for interim and/or annual financial periods ending on or after 31 August 2009.
The calculation of headline loss per share is based on the headline loss for the year divided by the weighted average number of shares in issue during the year. No diluted headline loss per share has been calculated as it would be anti-dilutive by reducing the headline loss per share.
5 Deferred Exploration
6 Assets held for sale
Assets held for sale relate to the Igurubi gold project in Tanzania and the copper assets in Zambia. The impairment relates to the Zambian copper assets (see note 4 above).
7 Events after the balance sheet date
On 27 July 2012 the Company announced that it had executed a binding agreement with Elephant for the disposal of its remaining Zambian copper assets. This is conditional, amongst other things, on approval of the Zambian Minister of Mines.
On 27 July 2012 the Company announced that it had granted 10,300,000 share options over ordinary shares to certain Directors and key employees. The exercise price of 3.36 pence is based on the 90 day volume weighted average price at market close on 26 July 2012.
Independent Review Report to African Eagle Resources plc
Introduction
We have been engaged by the company to review the financial information in the half-yearly financial report for the six months ended 30 June 2012 which comprises the condensed interim consolidated statement of financial position, condensed interim consolidated statement of comprehensive income, condensed interim consolidated statement of changes in equity, consolidated statement of cash flows and the related explanatory notes that have been reviewed. We have read the other information contained in the half yearly financial report which comprises only the Chairman's Statement and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
This report is made solely to the company in accordance with guidance contained in ISRE (UK and Ireland) 2410, 'Review of Interim Financial Information performed by the Independent Auditor of the Entity'. Our review work has been undertaken so that we might state to the company those matters we are required to state to them in a review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusion we have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The AIM rules of the London Stock Exchange require that the accounting policies and presentation applied to the financial information in the half-yearly financial report are consistent with those which will be adopted in the annual accounts having regard to the accounting standards applicable for such accounts.
As disclosed in Note 2, the annual financial statements of the group are prepared in accordance with IFRS as adopted by the European Union. The financial information in the half-yearly financial report has been prepared in accordance with the basis of preparation in Note 2.
Our responsibility
Our responsibility is to express to the Company a conclusion on the financial information in the half-yearly financial report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the financial information in the half-yearly financial report for the six months ended 30 June 2012 is not prepared, in all material respects, in accordance with the basis of accounting described in Note 2.
GRANT THORNTON UK LLP
Statutory Auditor, Chartered Accountants
London
27 September 2012
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