TIDMAMA
RNS Number : 3644J
Amara Mining PLC
07 April 2015
7 April 2015 AIM: AMA
Amara Mining plc
2014 AUDITED FULL YEAR RESULTS
Amara Mining plc (the "Company" and, together with its
subsidiaries, "Amara" or the "Group"), the AIM-listed West African
focused gold mining company, is pleased to announce its audited
results for the year ended 31 December 2014.
HIGHLIGHTS
-- Total Mineral Resources at Yaoure Gold Project in Côte
d'Ivoire ("Yaoure") increased to 6.8 million ounces(1) following
the 2014 drilling programme, underlining its position as the
largest gold development project in West Africa by Mineral
Resource
-- 466% increase in Indicated Mineral Resources at Yaoure
compared to December 2013(2) update, further increasing Amara's
confidence in the deposit
-- Final stages of optimisation work underway for delivery of a
Pre-Feasibility Study ("PFS") for Yaoure, which is anticipated to
be announced in early Q2 2015 - expected to confirm compelling
economics outlined in Preliminary Economic Assessment ("PEA") in
March 2014
-- Cash as at 31 December 2014 of US$2 million and financial
position strengthened by post-period placing to raise US$22
million
-- Fully funded to Q1 2016 including the delivery of a Bankable
Feasibility Study "(BFS") for Yaoure, which is expected in December
2015
-- Second strong growth opportunity in Baomahun Gold Project
("Baomahun") - potential to be a compelling second project for
Amara, assisting the Group in its goal of becoming a mid-tier
producer
-- Further cost efficiency measures implemented resulting in a
substantial decrease in general and administrative ("G&A")
costs - management team streamlined and Group strategy focused on
the advancement of Yaoure
John McGloin, Executive Chairman of Amara Mining plc,
commented:
"At the start of 2014 our Yaoure Gold Project was just one of
many gold development projects in West Africa. However following
the completion of a compelling Preliminary Economic Assessment and
a highly successful drilling programme, Yaoure is now recognised as
one of the most exciting projects in the region. With Mineral
Resources of nearly seven million ounces, Yaoure is the largest
gold development project in West Africa and Amara has the largest
resource base of any London-listed junior gold mining
company.(3)
"The strong support the recent placing received is further
testimony to the quality of Yaoure and we are fully-funded to
deliver a BFS for Yaoure in December 2015. We are in the final
stages of optimisation work for the PFS and I look forward to
delivering it early in Q2 2015. Despite the challenging market
conditions, I am delighted that Amara has started 2015 in good
shape by solidifying its financial position and further increasing
our resource base. We are now well positioned to deliver the next
major African gold mine."
Notes
1. Announced on 06 January 2015
2. Indicated Mineral Resources at Yaoure in December 2013
estimate were 780,000oz (20.3Mt at 1.20g/t), compared to 4.4Moz
(106.3Mt at 1.29g/t) in January 2015 estimate
3. A junior miner is defined here as an explorer/developer or a
producer with FY14 production of <200koz
For more information please contact:
Amara Mining plc
John McGloin, Chairman and Chief Executive
Officer
Pete Gardner, Finance Director
Katharine Sutton, Head of Investor +44 (0)20 7398
Relations 1420
Peel Hunt LLP
(Nominated Adviser & Joint Broker)
Matthew Armitt +44 (0)20 7418
Ross Allister 8900
GMP Securities Europe LLP
(Joint Broker)
Richard Greenfield +44 (0)20 7647
Alex Carse 2800
Farm Street Communications
(Media Relations) +44 (0)7593
Simon Robinson 340 107
About Amara Mining plc
Amara is a gold explorer/developer with assets in West Africa.
The Group is focused on unlocking the value in its development
projects. At Yaoure in Côte d'Ivoire, this will be done by
increasing the confidence in the existing Mineral Resource and
economics at the project as Amara progresses it through to
Pre-Feasibility Study and Bankable Feasibility Study. At Baomahun,
this will be achieved by gaining an improved understanding of the
exploration upside potential and underground opportunity. With its
experience of bringing new mines into production, Amara aims to
further increase its production profile with highly prospective
opportunities across both assets.
CHAIRMAN AND CEO'S STATEMENT
It is a pleasure to present my first Annual Report in the dual
role of Chairman and Chief Executive Officer of Amara Mining
plc.
The weakness in the gold price over the past two years has
created an attractive entry point for investors to buy into gold
mining stocks. Companies with high quality assets are trading at
the lowest levels seen for more than a decade, generating the
opportunity for investors to ride the cycle upwards as the next
gold bull market begins.
At the start of 2014, our Yaoure Gold Project in Côte d'Ivoire
was just one of many gold development projects in West Africa.
However, after the delivery of an outstanding PEA and another
successful drilling programme, Yaoure is recognised as one of the
most exciting projects in the region. With economics that remain
strong at a gold price of US$1,000/oz and large scale production
over a long mine life, we are developing a top African gold
mine.
The Largest Gold Development Project in West Africa
The PEA, which was completed in March 2014, demonstrated that
Yaoure is a highly economic gold project at current gold prices and
remained robust at much lower prices. On this basis, Amara
undertook an 85,574 metre drilling programme at Yaoure to increase
the drill density, improving our geological knowledge and
confidence in the Mineral Resource estimate. We believe it was the
largest drilling programme in Africa at the time and it created
over 420 jobs for local people in a variety of roles from junior
geologist to laboratory technician, bringing skills and prosperity
to the area.
The objective of the 2014 drilling programme was to upgrade a
significant portion of the largely Inferred Mineral Resource base
to the higher confidence Indicated category. We achieved this goal,
reporting a 466% increase in Indicated resources. Within the
economic pit shells, designed at gold prices of US$800 and US$950
per ounce, approximately 80% of the Mineral Resources are now in
the Indicated category. It is these resources that are the focus of
the PFS.
The drilling programme also increased the size of the Yaoure
resource base by over half a million ounces compared to the
December 2013 Mineral Resource estimate. This brings Yaoure's
Mineral Resources to 6.8 million ounces, making it the largest gold
development project in West Africa and delivering a discovery cost
of just US$6/oz. It also brings Amara's total attributable Mineral
Resources to 9.6 million ounces, the largest resource base of any
London-listed junior gold mining company.[i]
Advancing Yaoure Towards a Pre-Feasibility Study
In conjunction with the drilling programme, Amara began work
towards the next stage of economic study for Yaoure, the PFS. To
supervise this process, we appointed Nigel Tamlyn, a mining
engineer with over 30 years' experience in the construction and
operation of mining projects. He has previously worked in Côte
d'Ivoire for La Mancha Resources and in Ghana for Golden Star
Resources. We expect to grow our development team around Nigel as
we progress the project from PFS to BFS and then to a construction
decision.
The PEA identified a number of optimisation opportunities and
these are being investigated as part of the work towards the PFS
and, ultimately, the BFS. They included amendments to the site
layout and the use of electric shovels as part of the mining fleet
to fully utilise the availability of low cost power at Yaoure.
During 2014 we also conducted a comprehensive metallurgical test
work campaign. The results indicate that Yaoure's rock is softer
than previously thought, which may positively impact the process
selection for the project. We expect this optimisation work to
yield reductions in both the upfront capital cost and the operating
costs of the project, confirming the compelling economics for
Yaoure that are outlined in the PEA.
The metallurgical test work to be released as part of the PFS
also confirms that Yaoure's material is simple and non-refractory,
with recoveries remaining robust at around 90%. This is another
important milestone in de-risking the Yaoure deposit.
Fully-Funded to Bankable Feasibility Study
In order to continue to drive Yaoure along the value curve,
Amara completed a placing on 21 January 2015, which raised GBP14.6
million (US$22 million). As a result, Amara is fully funded to Q1
2016, including the delivery of a BFS in December 2015.
It was very encouraging that the fundraising received strong
support from both new and existing investors, so much so that it
was oversubscribed and upsized, which is an endorsement of Yaoure's
potential. A leading mining-focused private equity fund, Tembo
Capital Mining Fund LP ("Tembo Capital"), participated in the
placing and now owns 5.9% of Amara's issued share capital,
strengthening Amara's shareholder base. This is a further testimony
to Yaoure's compelling economics and I was delighted that even in
an unpredictable gold price environment the project received such
strong backing to allow Amara to continue to unlock its value.
To maintain our strong financial position, Amara has continued
to streamline our activities to reduce costs. Since 2012, Amara has
delivered a 38% decrease in G&A costs from US$9.6 million per
annum to US$5.9 million in 2014. This is the result of a 38%
reduction in headcount in London, salary cuts by the Board, senior
and middle management in H2 2013 and 2014 and other measures to
conserve cash.
The majority of the proceeds of the placing are being used to
advance Yaoure, with US$7.5 million assigned to further exploration
and resource definition and US$2.4 million towards the BFS. US$0.8
million was also raised to expand Amara's technical team as we
advance towards a construction decision.
A Second Compelling Growth Opportunity
Although Yaoure was our focus in 2014, the Baomahun Gold Project
in Sierra Leone hosts a 2.8 million ounce Mineral Resource with a
high grade core. Over the past few years I have been proud to
witness Sierra Leone's development, with improving infrastructure
and a growing mining industry. I am deeply saddened by the recent
Ebola crisis, but I am pleased to see that recent statistics from
the World Health Organisation indicate that the new infection rate
has reduced substantially from its high in late 2014.
As a result of Ebola, Baomahun remained in an evaluation phase
throughout the period. We plan to conduct further optimisation work
on the existing Feasibility Study ("FS") to improve the economics,
given the continuing tough market conditions. Initially this will
be conducted through a re-examination of existing data, including
re-logging of the core, to better understand and delineate the high
grade core of the deposit. We believe that there are additional
targets that could be delineated and tested as a result of this
work. However the extent of the work in country is very much
dependent on the abatement of the Ebola situation, which will be
the subject of a risk assessment and discussion with our
consultants.
We believe that Baomahun has the potential to be a second
compelling growth opportunity for Amara. Alongside Yaoure, Baomahun
will assist Amara in achieving its goal of becoming a mid-tier
producer with production of between 350,000 and 400,000 ounces per
annum at low operating costs.
Strengthening Relationships in West Africa
As we have continued to build our confidence in the Yaoure
deposit through drilling and further metallurgical and engineering
studies, we have also continued to strengthen our relationship with
the communities living close to the project in Côte d'Ivoire. Our
initiatives have centred on the three key focuses of education,
healthcare and infrastructure development and have included
projects such as building 16 latrines for three schools in nearby
villages, re-profiling 8km of local roads and rehabilitating a
water pump.
In Sierra Leone we have worked alongside the government and
local people in the fight against Ebola. Amara continued to invest
in the villages close to Baomahun during the past year, providing
chlorine for hand washing, medicines, food and educational
pamphlets to local people as well as donating vehicles to the
government with funds to allow them to be converted into
ambulances. We also maintained our investment in sustainable
livelihood projects, such as rice and cassava farms and community
fish ponds, in order to allow local people's lives to return to
normal as soon as the Ebola situation improves.
In Burkina Faso, we have continued to work alongside the
government and local communities during the liquidation of the
subsidiary company that owns the Sega mine, Seguénéga Mining SA
("SMSA"). Despite one creditor seeking to delay the liquidation
process, all preferential creditors, which include the employees of
the Kalsaka/Sega Gold Mine ("Kalsaka/Sega") and the local people
living nearby, received the remainder of the payments they were
owed in December 2014. Management in Burkina Faso is fully focused
on ensuring that the mine is closed in an efficient manner, with
all environmental obligations fulfilled from a bonded bank
account.
Well-Positioned for Growth
Finally, I would like to thank my fellow Board members for their
enthusiasm, hard work and valuable guidance. 2014 was a year of
considerable change for Amara as we transitioned from being a
small-scale producer to an explorer/developer, but I believe this
has crystallised where the value in the Group truly lies: in our
growth assets.
I look forward to updating you on our continued progress over
the course of 2015, including delivering the PFS in early Q2 2015
and the BFS in December. Despite the challenging market conditions,
we have started 2015 in good shape and we are well positioned to
deliver further growth, with the most robust portfolio of any gold
growth company in West Africa.
OPERATIONAL REVIEW
YAOURE GOLD PROJECT, CÔTE D'IVOIRE
A Top African Gold Mine
Yaoure has the potential to be one of the top gold mines in
Africa. With average production of 279,000 ounces/annum over a 10
year mine life in the PEA 6.5Mtpa scenario, it delivers a
compelling IRR of 33% and an NPV of US$613 million at a gold price
of US$1,250 per ounce and a discount rate of 8%[ii]. It is one of
the few projects that remain resilient at a gold price of US$1,000
per ounce, with an IRR of 19% and a breakeven point of below US$800
per ounce. Yaoure is the largest gold development project in West
Africa with 6.8 million ounces of Mineral Resources (106Mt at
1.29g/t for 4.4Moz Indicated and 63Mt at 1.19g/t for 2.4Moz
Inferred) and significant exploration upside potential. Amara owns
100% of Yaoure through Amara Mining Cote d'Ivoire SARL.
Yaoure's location is highly advantageous for developing a
large-scale gold mine due to its close proximity to the Kossou dam,
which offers low-cost hydro-electric power and abundant water. It
is situated 40km from a dual carriageway linking the political
capital of Yamoussoukro with the commercial capital of Abidjan. As
a brownfield site, relocation requirements are expected to be
minimal, reducing the timeline from exploration to production.
Amara intends to utilise this excellent existing infrastructure to
full effect, minimising the upfront capital requirement for the
project.
Largest Drilling Programme in Africa
Amara conducted a drilling programme between April and October
2014, which the Directors believe was the largest in Africa at the
time. A total of 85,574 metres were drilled, including 2,957 metres
of geotechnical drilling.[iii]
The results demonstrate the strong continuity of the higher
grade CMA zone, which has the potential for selective mining at the
start of Yaoure's mine life. They also confirm the presence of
significant higher grade areas within the Yaoure Central zone, with
intercepts including 17 metres at 7.3g/t and 5 metres at
17.0g/t.
Significant intercepts from 2014 Drilling Programme
Zone Borehole Length (m) Grade (g/t) From (m)
---------- ---------- ----------- ------------ ---------
CMA YDD0240 10 6.1 158
---------- ---------- ----------- ------------ ---------
CMA YRC0682 31 5.4 184
---------- ---------- ----------- ------------ ---------
CMA YRC0688 22 9.1 48
---------- ---------- ----------- ------------ ---------
CMA YRC0698 36 4.2 108
---------- ---------- ----------- ------------ ---------
Yaoure
Central YDD0215 17 7.3 180
---------- ---------- ----------- ------------ ---------
Yaoure
Central YDD0216G 42 3.2 249
---------- ---------- ----------- ------------ ---------
Yaoure
Central YDD0229R 5 17.0 179
---------- ---------- ----------- ------------ ---------
Yaoure
Central YDD0273 20 4.1 239
---------- ---------- ----------- ------------ ---------
466% Increase in Indicated Resources
The objective of the 2014 drilling programme was to increase
confidence in the Mineral Resource estimate through closer spaced
drilling. Thus the average drill spacing was reduced from 100m to
50m across the Yaoure deposit. Amara delivered two Mineral Resource
updates in September 2014 and January 2015 based on these results.
The second update resulted in a 466% increase in higher confidence
Indicated resources compared to the December 2013 Mineral Resource
update. The Indicated portion of the deposit contains the highest
grade areas and will form the basis for Mineral Reserve
definition.
The Mineral Resource remains strong at higher cut-off grades,
with 3.1 million ounces (46.7Mt at 2.05g/t) above a 1.0g/t cut-off
grade in the Indicated category. Amara used pit shells priced at
US$800 per ounce and US$950 per ounce as the basis for the
different scenarios of the PEA released in March 2014. Following
the January 2015 Mineral Resource update, these pit shells remain
robust, with almost 80% of contained gold within the Indicated
category. This significant upgrade in categorisation of Mineral
Resources substantially de-risked the Yaoure deposit and increased
Amara's confidence in it.
Based on the drilling programmes undertaken between late 2011
and the end of October 2014, the average discovery cost per ounce
at Yaoure is US$6/oz, which compares favourably to the average
discovery cost in Africa in 2013 of US$33/oz[iv].
Amara also expanded the size of the resource, increasing the
total Mineral Resource at Yaoure by 523,000 ounces compared to the
December 2013 update. This brings Amara's total Mineral Resources
to 9.6 million ounces, the largest resource base of any
London-listed junior gold mining company.[v]
Yaoure Mineral Resource estimate within a US$1500 per ounce pit
shell, including cut-off grade sensitivity, as of 5 January
2015
Indicated Inferred
-------- ---------------------------- --------------------------
Cut-Off Tonnes Grade Content Tonnes Grade Content
g/t (Mt) (g/t) (Koz) (Mt) (g/t) (Koz)
Au
-------- ------- ------- -------- --------- ------- --------
0.5 106.3 1.29 4,416 63.0 1.19 2,405
-------- ------- ------- -------- --------- ------- --------
0.8 62.5 1.75 3,526 37.4 1.57 1,883
-------- ------- ------- -------- --------- ------- --------
1.0 46.7 2.05 3,070 26.9 1.83 1,580
-------- ------- ------- -------- --------- ------- --------
Yaoure Mineral Resource estimate within a US$950 per ounce pit
shell, including cut-off grade sensitivity, as of 5 January
2015
Indicated Inferred
-------- ---------------------------- --------------------------
Cut-Off Tonnes Grade Content Tonnes Grade Content
g/t (Mt) (g/t) (Koz) (Mt) (g/t) (Koz)
Au
-------- ------- ------- -------- --------- ------- --------
0.5 64.8 1.48 3,079 20.2 1.28 831
-------- ------- ------- -------- --------- ------- --------
0.8 42.4 1.92 2,620 14.1 1.55 706
-------- ------- ------- -------- --------- ------- --------
1.0 33.9 2.18 2,377 10.5 1.78 602
-------- ------- ------- -------- --------- ------- --------
Yaoure Mineral Resource estimate within a US$800 per ounce pit
shell, including cut-off grade sensitivity, as of 5 January
2015
Indicated Inferred
-------- ---------------------------- --------------------------
Cut-Off Tonnes Grade Content Tonnes Grade Content
g/t (Mt) (g/t) (Koz) (Mt) (g/t) (Koz)
Au
-------- ------- ------- -------- --------- ------- --------
0.5 50.7 1.57 2,560 15.6 1.35 676
-------- ------- ------- -------- --------- ------- --------
0.8 35.2 1.98 2,241 11.7 1.58 595
-------- ------- ------- -------- --------- ------- --------
1.0 28.8 2.22 2,058 8.9 1.80 513
-------- ------- ------- -------- --------- ------- --------
Notes to tables
1. The effective date of the Yaoure Mineral Resource estimates
is 5 January 2015, prepared by Mario E Rossi, GeoSystems
International, Inc.
2. The estimates assume an open pit mining scenario, processing
via tank leaching. Pit slopes are 44 in oxide, 53 in sulphide.
Recoveries have been assumed at 90%. Pit Optimisation was completed
by A. Wheeler for all prices shown here.
3. Mineral Resources which are not Mineral Reserves do not have
demonstrated economic viability.
4. There are no known environmental, permitting, legal, title,
taxation, socio-economic, marketing, and political or other
relevant issues that may materially affect the resource
estimates.
5. Totals and average grades are subject to rounding to the
appropriate precision and some columns or rows may not compute
exactly as shown.
6. The stated resources include dilution in the block model that
relates to the level of low selectivity envisioned in an open pit
operation, assuming 10m bench heights.
Compelling PEA and Strengthened Technical Team in Advance of
PFS
Amara completed a PEA for Yaoure in Q1 2014, which confirmed
that Yaoure is a top tier gold development project and that it
should be advanced to the next stage of engineering study and
economic assessment, a PFS. The PEA examined a range of throughput
scenarios, but the 6.5Mtpa scenario utilising a pit shell priced at
US$800 per ounce proved to be the most economic, therefore the PFS
will also be based on a 6.5Mtpa throughput.
Key Parameters of Yaoure PEA: 6.5Mtpa scenario
Parameter Unit Rate
------------------------------ ------------- --------
Ore mined Mt 64
------------------------------ ------------- --------
Average head grade mined g/t 1.53
------------------------------ ------------- --------
Waste mined Mt 314
------------------------------ ------------- --------
Strip ratio waste:ore 4.9
------------------------------ ------------- --------
Contained gold Koz 3.1
------------------------------ ------------- --------
Average gold recovery rate % 95
------------------------------ ------------- --------
Average annual production
over life of mine ("LOM") ounces 279,000
------------------------------ ------------- --------
Open pit mine life years 10
------------------------------ ------------- --------
Processing plant capacity Mtpa 6.5
------------------------------ ------------- --------
Total pre-production capital
cost US$ million 357
------------------------------ ------------- --------
Total capital payback period years 2.6
------------------------------ ------------- --------
Total cash costs (including
royalties) US$/oz 594
------------------------------ ------------- --------
All-in sustaining costs US$/oz 624
------------------------------ ------------- --------
All-in costs US$/oz 743
------------------------------ ------------- --------
Nigel Tamlyn was appointed as Senior Project Manager for Yaoure
and he is responsible for overseeing the PFS, which is expected in
early Q2 2015 and the BFS in December 2015. As a graduate of the
Camborne School of Mines and the University of the Witwatersand,
Nigel is a mining engineer with over 30 years' experience in the
construction and operation of mining projects. His work has spanned
a variety of commodities, including gold, in West, South and East
Africa, Australia, North America, Russia and Europe. Initially
employed for 17 years by Gold Fields, he most recently held the
position of Chief Operating Officer and Technical Director for
TSX-listed La Mancha Resources, where he supervised the delivery of
a number of National Instrument ("NI") 43-101 compliant technical
reports for African gold mines. Prior to that, he was General
Manager of TSX-listed Golden Star Resources' Bogoso Prestea gold
mine in Ghana for three years.
Optimisation Opportunities for PFS
The PEA identified a number of optimisation opportunities for
Yaoure and following its completion, Amara commenced work on a
number of key areas to further improve the project economics. Nigel
is overseeing this work, which includes a comprehensive
metallurgical test work programme, and supervising Amara's external
consultants including Tetra Tech, the lead consultant for the
PFS.
The PFS will incorporate an upgraded plant design as a result of
the metallurgical testwork results and optimised site layout. Other
optimisation opportunities require longer to study and will be
presented at a later date.
There may be potential for staged development and selective
mining of the high grade CMA zone at the start of Yaoure's mine
life, and the potential to process this material through a smaller
plant, reducing upfront capital costs will be examined. While an
initial understanding of this will be available at the PFS stage,
it is anticipated that detailed costing and scheduling will not be
completed until later in the year. In addition, opportunities will
be explored to lower operating costs through a greater use of
electrical power for mining and through the utilisation of dry
tailings disposal.
As Amara continues to move the project towards a PFS and
ultimately BFS, the Group will gain further understanding of these
opportunities to ensure the optimal path for development is taken.
This will be done in conjunction with our application for an
exploitation (mining) licence.
Yaoure Exploration Strategy in 2015
The priority of Yaoure's exploration programme in 2015 is to
support the advancement of the project through to a construction
decision. Approximately 80% of the Mineral Resources within the
US$950 per ounce pit shell are now in the Indicated category.
Improving the understanding of mineralisation controls through
closer spaced drilling will allow Amara to further upgrade the
Mineral Resource to the Measured and Indicated categories.
Amara believes there remains significant exploration upside in
and around Yaoure and accordingly there are three other key
objectives for Yaoure's exploration team in 2015:
1. Opportunity to increase Yaoure's Mineral Resources through
closer spaced drilling - historic reverse circulation drilling and
rip line data, collected when Yaoure was being operated previously,
has highlighted areas of the current block-model defined as waste
where gold mineralisation may be present. While this data cannot be
used within the current Mineral Resource estimate, it may indicate
that by reducing the drill spacing in the Yaoure Central zone the
estimate of total gold content could increase through demonstrating
greater continuity of high and low grade areas. Undertaking this
work is also expected to upgrade a portion of the Indicated
resources to the Measured category, further increasing Amara's
confidence in the deposit.
2. Opportunity to add further near-pit Mineral Resources - the
2014 drilling programme defined new structures at depth in the
Yaoure deposit, which when projected through to surface coincide
with artisanal mining activity. Drilling these structures up-dip
may result in the discovery of additional near-surface ounces,
which could be used to expand the current pit shell and further
improve Yaoure's profitability.
3. Opportunity to gain a better understanding of long-term
regional potential - Utilising Amara's increased knowledge of gold
genesis and mineralisation controls from the Yaoure deposit, the
Company has embarked on a regional target generation programme,
initially utilising geophysics and soil geochemistry. The Yaoure
resource area is contained in only a small portion of Amara's total
exploration licences and soil geochemistry and structural mapping
have identified other areas similar to the resource area. Through
further geological mapping, trenching and soil sampling, Amara
intends to identify drilling targets with the potential to deliver
satellite deposits for Yaoure.
BAOMAHUN GOLD PROJECT, SIERRA LEONE
High Grade Deposit with Upside Potential
Baomahun is a feasibility stage, Archean-age gold project in
central Sierra Leone, with a high grade core and grades that
strengthen at depth. With 1.21 million ounces of Probable Reserves
(23.27Mt at 1.62g/t) and Mineral Resources of 2.24 million
Indicated ounces (38.4Mt at 1.81g/t) and 0.54 million Inferred
ounces (6.6Mt at 2.2g/t), it forms a second strong growth
opportunity for Amara. Amara owns 100% of Baomahun through Baomahun
Gold Limited.
The FS, which was completed in Q2 2013, demonstrated that the
project is robust and economically viable at a gold price of
US$1,350 per ounce[vi]. Amara is now focused on gaining a better
understanding of the project with the aim of delivering the same
strong returns in the current uncertain gold price environment.
Baomahun Mineral Reserves and Mineral Resources, both as of 19
November 2012
Tonnes Grade (g/t) Gold (Moz)
Classification (Mt)
------------- ---------------- ------- ------------ -----------
RESERVES(1)
Open Pit Probable 23.27 1.62 1.21
------------- ---------------- ------- ------------ -----------
RESOURCES(2)
Open Pit Indicated 34.9 1.62 1.82
Inferred 3.4 1.15 0.12
Underground Indicated 3.5 3.80 0.43
Inferred 3.2 3.95 0.41
Total Indicated 38.4 1.81 2.24
Inferred 6.6 2.52 0.54
------------------------------ ------- ------------ -----------
Notes to Mineral Resources and Reserves
1. CIM definitions were used for Mineral Resources and Mineral Reserves
2. Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability
3. A cut-off grade of 0.5g/t was applied within a US$1,500/oz
open pit shell and a 2.0g/t cut-off for Mineral Resources suitable
for underground mining. The resources suitable for underground
mining are not included in the FS. The Mineral Reserve is reported
at a cut-off grade of 0.5 g/t Au at a gold price of US$1,100/oz
4. The Mineral Resource is inclusive of the Mineral Reserve. The
Mineral Reserve was estimated by construction of a block model
within constraining wireframes and based on Indicated Resources
5. Mining dilution of 5% was added to the Mineral Reserve
6. The Mineral Reserves were estimated based on the NI 43-101
Mineral Resources, both effective as of 19 November 2012
7. A 93.4% metallurgical gold recovery was used for the Mineral Reserve
8. Due to rounding, some columns or rows may not add up exactly to the computed totals
First Phase of Optimisation Work Complete
Smaller Open Pit and Plant
In January 2014 Amara announced the results of the first phase
of optimisation work for the FS[vii]. This work focused on
'right-sizing' the plant to the deposit to reflect the current
market conditions and the outlook for the gold price. The desk top
study demonstrated that a 1Mtpa plant would allow for the selective
mining of the deposit's higher grade core in a smaller open pit and
enable longer term mine feed from underground sources, ensuring
that the full potential of Baomahun's Mineral Resource is
unlocked.
Transformational Underground Opportunity
Through the exploitation of Baomahun's underground as well as
the open pit, there is the opportunity to extend the current 10
year LOM and boost production in year 7 onwards. Based on the
scoping study conducted by independent consultants, Snowden Mining
Industry Consultants Pty Limited, the inclusion of material from
the underground potentially transforms Baomahun's economics, with
the post-tax IRR increasing to 25% and the post-tax NPV to US$192
million at a US$1,250 gold price. The LOM doubles to 20 years, with
an average production rate of 90,000 ounces per annum for the first
16 years. The deposit remains open at depth, which further
increases the opportunity for a stable, long-term producing gold
mine in Sierra Leone.
Key Parameters of Baomahun FS and Optimisation Work
Parameter Unit FS OP Only OP & UG
(2Mtpa) (1Mtpa) (1Mtpa)
------------------------- -------- --------- --------- ---------
Average production/year oz 94,360 62,580 77,870
Life of mine yrs 12 10 20
Total cash
cost US$/oz 799 711 668
Upfront capital
cost US$m 253 143 143
Payback period yrs 3 5 5
NPV @ US$1,250/oz US$m 70 50 192
IRR @ US$1,250/oz % 16 17 25
------------------------- -------- --------- --------- ---------
Strategy for Baomahun in 2015
Following the announcement of the optimisation work in January,
Baomahun remained in an evaluation phase for 2014 due to the Ebola
outbreak in Sierra Leone. Amara had planned to commence a
small-scale drilling programme at Baomahun in 2014 to enhance the
Group's understanding of the continuity of the high grade core of
the deposit, but this course of action was not possible due to the
situation in country.
Encouragingly, the World Health Organisation's statistics
demonstrate that the rate of new infections in Sierra Leone has
decreased substantially from its highs of late 2014, with 63 new
cases reported in the week commencing Sunday 22 February 2015
compared to over 530 new cases in the week commencing 7 December
2014. New infection rates in the other two affected countries,
Liberia and Guinea, have decreased further still.
The focus of Amara's efforts at Baomahun will be to gain a
greater understanding of the high grade core of the deposit and to
evaluate the potential to grow the 2.8Moz Mineral Resource. The
first step towards achieving these objectives will be to re-log the
core, ensuring a thorough geological understanding has been gained
from the extensive drilling completed to date. The next step will
be to undertake a small-scale, low cost drilling programme, if
appropriate, aiming to demonstrate greater continuity of the high
grade mineralisation of the deposit, increasing in-pit resources
and de-risking the project.
In addition, Amara will gain a more thorough understanding of
Baomahun's underground opportunity by evaluating the optimal place
in the orebody to transition between open pit and underground
mining and the most optimal underground mining strategy. While the
FS focused on the lower grade halo surrounding the higher grade
core, Amara will now channel its efforts to advancing the case for
a smaller, higher grade scenario for Baomahun, which will be fed
initially by the open pit and subsequently by the underground
mine.
Amara believes that Baomahun has the potential to be a
compelling second project for the Group. Once Yaoure is in steady
state production it will generate strong cash flow which could be
used for the development of Baomahun. Through further optimisation
work it is expected that Baomahun's production could increase from
an average production rate of 90,000 ounces over a 16 year LOM in
the combined open pit and underground 1Mtpa scenario to closer to
100,000 ounces per annum. Alongside Yaoure, Baomahun will assist
Amara in achieving its goal of becoming a mid-tier producer with
production of between 350,000 and 400,000 ounces per annum at low
operating costs.
FINANCIAL REVIEW
2014 marked an important transition for Amara with the closure
of the Kalsaka/Sega mine in Burkina Faso and the emergence of
Yaoure as the Group's flagship development project. With the
underperformance of Kalsaka/Sega in 2013 and 2014, driven by the
weakening gold price, the closure represents a simplification of
the Group and it allows management to focus on the true value
within the development assets.
Kalsaka/Sega Closure
As reported on 5 August 2014, mining ceased at Kalsaka/Sega
following receipt of a default notice to SMSA, the operating
company for the Sega mine, from BCM Burkina SARL ("BCM"), the
mining contractor, due to overdue invoices. Prior to the cessation
of mining, the mine had been operating on a break-even basis at the
EBITDA level, an improvement compared to 2013. However, the mine
had required funding from the Company for capital expenditure and
had generated a higher level of creditors than normal due to cash
locked up in working capital associated with the heap leach
inventory and recoverable VAT.
Production Statistics
Unit 2014 2013
------------------ -------- --------- ---------
Ore mined kt 885 1,228
------------------ -------- --------- ---------
Waste mined kt 4,392 5,615
------------------ -------- --------- ---------
Strip ratio w:o 4.96 4.57
------------------ -------- --------- ---------
Ore processed kt 871 1,359
------------------ -------- --------- ---------
Average ore
head grade g/t 1.41 1.29
------------------ -------- --------- ---------
Gold production oz 35,241 42,348
------------------ -------- --------- ---------
Gold sold oz 41,227 37,920
------------------ -------- --------- ---------
Gross revenue US$000 45,156 56,798
------------------ -------- --------- ---------
Cost of sales US$000 (36,859) (49,822)
------------------ -------- --------- ---------
Other operating
costs US$000 (8,172) (8,750)
------------------ -------- --------- ---------
EBITDA US$000 125 (1,774)
------------------ -------- --------- ---------
Cash cost US$/oz 1,278 1,383
------------------ -------- --------- ---------
At the time of the default notice, high grade ore was being
mined at Sega, but this had not yet delivered strong gold flow from
the heaps due to the nature of the heap leach cycle. This replaced
lower grade ounces in the heap that had been stacked in the
preceding months from an area of the resource that had
underperformed the original block model. BCM requested a parent
company guarantee for the debts of SMSA from Amara Mining plc,
which was not included in the original mining contract and could
not be provided, leading to the notice of default.
A liquidator has now been appointed for SMSA by the courts in
Burkina Faso to manage the unlocking of the working capital to
generate funds to repay creditors. The remaining ore in the
stockpiles from Sega are now being stacked and it is expected that
it will take a further six months to recover all the gold due to
the leach cycle. In addition, significant amounts of VAT are
recoverable by SMSA which should allow SMSA to make significant
payments to all creditors.
SMSA was removed from the consolidation with effect from 9
December 2014 on appointment of the liquidator. The remaining
Burkina entities have been presented as a disposal group held for
sale in the Group Financial Statements following the commitment of
the Company's board to sell these operations on 4 December 2014.
Kalsaka Mining SA ("KMSA") controls the processing plant for the
Kalsaka/Sega mine which, along with the exploration portfolio, is
currently being marketed for sale and a transaction is expected
within 12 months. A full provision has been made against the net
assets of the disposal group due to the uncertainty concerning the
recovery of full value of some amounts or the ability of Amara to
generate proceeds from the sale process. The whole of the Burkinabe
group has been treated as a discontinued operation in the income
statement.
In addition, BCM has initiated preliminary legal proceedings in
Burkina Faso claiming joint and several liability of Amara Mining
plc and KMSA for the debts of SMSA. They have also claimed a
conservatory seizure over certain assets directly owned by the
Company in Côte d'Ivoire pending the outcome of the Burkina Faso
litigation. Amara has obtained detailed legal advice that supports
the Directors' view that this action is highly unlikely to succeed
and that this does not constitute a contingent liability in
accordance with IAS 37 Provisions, Contingent Liabilities and
Contingent Assets. It is not expected that the dispute will result
in a material outflow of economic benefits for the Company.
Accounts Review
With the closure of the Kalsaka/Sega mine, the presentation of
the Group's income statement for 2014 is materially different from
2013, with all of the revenue and costs associated with the mine
presented in a single loss from discontinued operations. Only the
G&A costs of the Group, together with interest income and
expenses, are set out on the face of the income statement. The
US$20m loss reported in 2014 primarily relates to the discontinued
Burkinabe entities, and it is expected that a much smaller loss
will be announced in 2015.
The Group's balance sheet at 31 December 2014 is also simplified
compared to the previous year, with all assets and liabilities
associated with the disposal group included as a single item within
current assets and current liabilities as appropriate. The Group's
remaining assets relate primarily to the investment at the Yaoure
and Baomahun projects, which total US$47 million and US$86 million
respectively. In addition to trade and other payables, the Group
continues to recognise an environmental liability representing the
historic mining activity at the Yaoure project totalling US$3
million, which is likely to be incurred either during the
construction of, or on the closure of, the much larger Yaoure
development currently being contemplated.
During 2014 Amara's cashflow has primarily been invested in Côte
d'Ivoire to further the Yaoure property, delivering the PEA in
March 2014 and two Mineral Resource updates in September 2014 and
January 2015. A total of US$19.6 million was invested in 2014, of
which US$17.4 million (89%) was invested at Yaoure. The Samsung
debt facility, which totalled US$13.3 million at 1 January 2014,
was fully repaid leaving the Group debt free.
Fully Funded to Bankable Feasibility Study
The most important financial issue in the current market is the
availability of cash to allow the PFS and BFS at Yaoure to be
completed. On 21 January 2015, post the period end, Amara announced
a placing to raise GBP14.6 million (US$22 million), leaving the
Group fully financed to deliver these goals in 2015. Amara was
fully funded to deliver the PFS following the previous placing in
March 2014, however some of the Company's largest shareholders had
told the directors that they did not want the cash position to get
too low in the weeks preceding the delivery of the PFS. They felt
this would leave Amara vulnerable at a time when it was important
that Yaoure was advanced as rapidly as possible.
The oversubscribed and upsized placing was supported by new and
existing investors and mining-focused private equity fund, Tembo
Capital, joined the register, buying approximately 5.9% of the
Company's issue share capital (post admission of the placing
shares). This was a further endorsement for the project. Of the
placing proceeds, US$2.5 million is assigned to the technical work
for the BFS and US$7.5 million will be used for further exploration
and resource definition at Yaoure.
AMARA MINING PLC
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2014
Notes 2014 2013(1)
US$000 US$000
Continuing operations
General and administrative expenses (5,938) (7,809)
Other operating costs (1,169) -
Impairment of mine development
and associated property, plant
and equipment costs - (2,594)
-------- --------
Operating loss (7,107) (10,403)
Finance income 29 240
Finance costs (838) (1,086)
Loss before taxation (7,916) (11,249)
Income tax expense - -
Loss for the year from continuing
operations (7,916) (11,249)
Discontinued operations
Loss for the year from discontinued
operations, net of tax 8 (11,884) (40,855)
Loss and total comprehensive
income for the year (19,800) (52,104)
Attributable to:
Equity shareholders of the parent
company
Loss for the year from continuing
operations (7,908) (11,054)
Loss for the year from discontinued
operations (7,824) (36,042)
-------- --------
Loss for the year attributable
to owners of the parent (15,732) (47,096)
Non-controlling interests
Loss for the year from continuing
operations (8) (195)
Loss for the year from discontinued
operations (4,060) (4,813)
------- -------
Loss for the year attributable
to non-controlling interests (4,068) (5,008)
Loss per share - basic and diluted
(cents per share)
Loss from continuing operations (2.64) (6.39)
Loss from discontinued operations (2.62) (20.82)
------- -------
Loss per share 5 (5.26) (27.21)
(1) Comparative results have been amended to reflect the results
of the Burkinabe and Liberian operations within the loss for the
year from discontinued operations, net of tax, as per the
requirements of IFRS 5 - Non-current assets held for sale and
discontinued operations.
AMARA MINING plc
CONDENSED consolidated statement of financial position
As at 31 December 2014
Notes 2014 2013
US$000 US$000
ASSETS
Non-current assets
Intangible assets 6 127,417 110,222
Property, plant and equipment 7 5,927 22,208
Corporation tax receivable - 2,414
Total non-current assets 133,344 134,844
Current assets
Inventories 486 24,522
Other receivables 1,789 5,954
Cash and cash equivalents 1,687 11,372
Total current assets 3,962 41,848
Assets of disposal group held
for sale 9 13,506 -
TOTAL ASSETS 150,812 176,692
CAPITAL AND RESERVES
Share capital 5,598 3,785
Share premium 200,420 173,242
Merger reserve 15,107 15,107
Share option reserve 4,721 4,678
Currency translation reserve 987 987
Accumulated losses (93,109) (77,941)
total equity attributable to
the parent 133,724 119,858
Non-controlling interests (4,360) (2,839)
total equity 129,364 117,019
NON-Current liabilities
Provisions 3,150 10,156
Total non-current liabilities 3,150 10,156
Current liabilities
Trade and other payables 4,792 36,355
Borrowings - 13,162
Total current liabilities 4,792 49,517
Liabilities of disposal group
held for sale 9 13,506 -
TOTAL LIABILITIES 21,448 59,673
TOTAL EQUITY AND LIABILITIES 150,812 176,692
AMARA MINING plc
CONDENSED consolidated statement of changes in equity
For the year ended 31 December 2014
ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT
Share Currency
Share Share Merger option translation Accumulated Non-controlling Total
capital premium reserve reserve reserve losses Sub-total interests equity
US$000 US$000 US$000 US$000 US$000 US$000 US$000 US$000 US$000
BALANCE AT 1
JANUARY
2013 2,951 163,241 15,107 3,932 987 (31,067) 155,151 2,169 157,320
Loss for the
year - - - - - (47,096) (47,096) (5,008) (52,104)
Total
comprehensive
income for the
year - - - - - (47,096) (47,096) (5,008) (52,104)
Issue of
ordinary
share capital 834 10,001 - - - - 10,835 - 10,835
Share option
charge - - - 968 - - 968 - 968
Reserve transfer
on exercise or
lapse of share
options - - - (222) - 222 - - -
BALANCE AT 31
DECEMBER
2013 3,785 173,242 15,107 4,678 987 (77,941) 119,858 (2,839) 117,019
Loss for the
year - - - - - (15,732) (15,732) (4,068) (19,800)
Total
comprehensive
income for the
year - - - - - (15,732) (15,732) (4,068) (19,800)
Issue of
ordinary
share capital 1,813 29,013 - - - - 30,826 - 30,826
Share issue
costs - (1,835) - - - - (1,835) - (1,835)
Non-controlling
interest
disposed - - - - - - - 2,547 2,547
Share option
charge - - - 607 - - 607 - 607
Reserve transfer
on exercise or
lapse of share
options - - - (564) - 564 - - -
BALANCE AT 31
DECEMBER
2014 5,598 200,420 15,107 4,721 987 (93,109) 133,724 (4,360) 129,364
AMARA MINING plc
CONDENSED consolidated statement of cash flows
For the year ended 31 December 2014
2014 2013
US$000 US$000
CASH FLOWS FROM/(USED IN) OPERATING
ACTIVITIES
Operating loss for the year from
continuing operations (7,107) (10,403)
Operating loss for the year from
discontinued operations (9,454) (40,323)
Depreciation and amortisation 11,745 6,607
(Increase)/decrease in other receivables (4,555) 13
Increase in trade and other payables 6,119 23,450
Decrease in inventories 6,715 1,052
(Decrease)/increase in provisions (3,086) 858
Share option charge 607 968
Impairment of deferred exploration
and evaluation costs - 9,747
Impairment of mine development
and associated property, plant
and equipment costs - 20,118
Loss on disposal of property, plant
and equipment - 68
NET CASH FLOWS FROM OPERATING ACTIVITIES 984 12,155
Income taxes paid (779) (4,858)
-------- --------
CASH FLOWS FROM/(USED IN) INVESTING
ACTIVITIES
Interest received 87 175
Interest paid (590) (1,280)
Purchase of property, plant and
equipment (1,536) (9,035)
Purchase of intangible assets -
deferred exploration (17,497) (21,060)
Purchase of intangible assets -
mining rights (5) -
Disposal of subsidiary net of cash (49) -
Cash acquired from business combination - 10,000
NET CASH FLOWS USED IN INVESTING
ACTIVITIES (19,590) (21,200)
CASH FLOWS FROM/(USED IN)financing
ACTIVITIES
Proceeds from the issue of share
capital 28,105 -
Issue costs paid (1,835) -
Repayment of borrowings (13,332) (6,668)
NET CASH FLOWS FROM/(USED IN) FINANCING
ACTIVITIES 12,938 (6,668)
NET DECREASE IN CASH AND CASH EQUIVALENTS (6,447) (20,571)
Cash and cash equivalents at start
of period 11,372 31,810
Exchange (loss)/gain on cash and
cash equivalents (224) 133
CASH AND CASH EQUIVALENTS AT END
OF YEAR 4,701 11,372
CASH AND CASH EQUIVALENTS COMPRISE
Cash at bank 1,687 11,372
Cash at bank - disposal group held
for sale 3,014 -
4,701 11,372
Cash flows from discontinued operations have been presented in
note 8
Included in cash and cash equivalents is US$2,997,000 (2013:
US$3,359,000) in respect of a restricted bank account held for the
purposes of the rehabilitation of Kalsaka mine site in Burkina
Faso.
AMARA MINING plc
notes to the condensed consolidated FINANCIAL STATEMENTS
For the year ended 31 December 2013
1 FINANCIAL STATEMENTS
The financial information set out above does not constitute the
company's statutory accounts for the years ended 31 December 2014
or 2013. The financial information for 2014 and 2013 are derived
from the statutory accounts for 2014 and 2013. The auditor has
reported on both the 2014 and 2013 accounts; their reports were (i)
unmodified, (ii) did not include a reference to any matters to
which the auditor drew attention by way of emphasis without
qualifying their reports and (iii) did not contain a statement
under section 498 (2) or (3) of the Companies Act 2006.
The 2013 statutory accounts have been delivered to the registrar
of companies; the 2014 accounts will be filed in due course.
Full financial statements for the year ended 31 December 2014
will shortly be published on the Groups website at
www.amaramining.com and posted to shareholders and, after adoption
at the Annual General Meeting on 3 June 2015, they will be
delivered to the registrar.
2 BASIS OF PREPARATION, ACCOUNTING POLICIES AND GOING CONCERN
Whilst the financial information included in this preliminary
announcement has been presented in accordance with International
Financial Reporting Standards as adopted by the EU (IFRS), this
announcement in itself does not constitute full compliance with
IFRS. Details of the accounting policies are those set out in the
annual report for the year ended 31 December 2013. These accounting
policies have remained unchanged for the financial year ended 31
December 2014 except for those new standards issued and adopted in
the year.
The Group is involved in the acquisition, exploration,
development and operation of gold mines and resources in West
Africa.
The Directors regularly review cashflow forecasts to determine
whether the Group has sufficient cash reserves to meet future
working capital requirements, progress its exploration projects and
take advantage of business opportunities that may arise. The Group
manages its treasury function to ensure that cash is primarily held
in politically stable countries. This minimises the risk of
political events preventing the Group from continuing to make
payments required for the Group's operations to continue.
On 6 February 2015 the Company completed a fund raising for
GBP14.6m. Based on subsequent forecast cash flows the Directors are
satisfied that the Group has sufficient cash resources to meet its
financial obligations, in particularly the exploration and
development costs of its projects, as they fall due for the
foreseeable future. Accordingly the Directors have concluded that
it is appropriate for the financial statements to be prepared on a
going concern basis
3 DIVIDENDS
The directors do not recommend the payment of a dividend (2013:
nil).
4 SEGMENTAL REPORTING
Operating segments have been identified on the basis of internal
reports about components of the Group that are regularly reviewed
by the Group's chief operating decision maker. The Group's chief
operating decision maker is considered by management to be the
Board of Directors. The operating segments included in internal
reports are determined on the basis of their significance to the
Group. In particular, operating mines are reported as separate
segments together with exploration projects that have significant
capitalised expenditure. An analysis of the Group's business
segments is set out below.
Kalsaka/ Yaoure Baomahun All other Total
Sega segments
US$000 US$000 US$000 US$000 US$000
Year ended 31 December
2014
External revenue
- sale of gold 45,156 - - - 45,156
Direct costs of production (36,859) - - - (36,859)
Other operating and
administrative costs (8,172) - (897) (5,300) (14,369)
Segmental result
- EBITDA 125 - (897) (5,300) (6,072)
Total assets 13,506 60,778 86,628 1,947 162,859
Capital expenditure 1,249 17,377 942 7 19,575
The Kalsaka/Sega operating segment was discontinued during the
year - details are provided in note 8.
Kalsaka/ Yaoure Baomahun All other Total
Sega segments
US$000 US$000 US$000 US$000 US$000
Year ended 31 December
2013
External revenue
- sale of gold 56,798 - - - 56,798
Direct costs of production (49,822) - - (175) (49,997)
Other operating and
administrative costs (8,750) - - (5,619) (14,369)
Segmental result
- EBITDA (1,774) - - (5,794) (7,568)
Total assets 84,635 43,388 86,031 6,496 220,550
Capital expenditure 14,085 9,090 8,110 3 31,288
In 2014 the Group had two customers 2014 2013
(2013: two).
% %
Customer A 67 52
Customer B 33 48
The segmental result reported represents earnings before
interest, tax, depreciation and amortisation (EBITDA) and excludes
share option charges, which is the measure of segmental profit
regularly reported to the Board of Directors. The accounting
policies of the reporting segments are different from the Group's
accounting policies as follows:
-- Pre-commissioning income and expenditure at operating mines
is not capitalised in the segmental results.
-- Income is accrued for gold bullion on hand at the period end
in segmental results and, accordingly, no stock is recognised for
this item.
-- The depreciation charge against segmental assets is based on
a different total asset cost compared to the statutory accounts due
to the fact that income and expenditure is not capitalised during
the commissioning period. In addition, the total asset cost is
depreciated from the commencement of mining operations.
4 SEGMENTAL REPORTING (continued)
A reconciliation of segmental revenue to the statutory financial
statements is as follows:
2014 2013
US$000 US$000
Revenue for reportable segments 45,156 56,798
Change in accrued revenue for gold
bullion stock at year-end 8,184 (4,395)
Revenue for statutory accounts
- note 23 53,340 52,403
A reconciliation of EBITDA to loss for the year is as
follows:
2014 2013
US$000 US$000
EBITDA for reportable segments (6,072) (7,568)
Depreciation and amortisation (12,928) (6,607)
Share option charge (607) (968)
Net interest payable (673) (1,205)
Loss on disposal of property, plant
and equipment - 82
Impairment of stock-pile - (3,172)
Margin on gold bullion stock at
year-end 3,021 (1,210)
Impairment of deferred exploration
and evaluation costs - (9,747)
Impairment of mine development
and associated property, plant
and equipment costs - (20,118)
Foreign exchange loss (197) (656)
VAT provision net of direct fees
in year - (782)
Net assets disposed (2,259) -
Income tax (85) (153)
Loss for the year from continuing
and discontinued operations (19,800) (52,104)
A reconciliation of segmental assets to the statutory financial
statements is as follows:
2014 2013
US$000 US$000
Total assets for reportable segments 162,859 220,550
EBITDA capitalised during commissioning
phase of mining operations 12,656 5,962
Differences in depreciation and
amortisation (195) 749
Impairment of non-current assets (24,508) (51,779)
Accrued revenue for gold bullion
stock at year-end - 1,210
Total assets 150,812 176,692
Geographic information
Burkina Faso Côte Sierra Leone UK Other Total
d'Ivoire
US$000 US$000 US$000 US$000 US$000 US$000
Year ended 31
December 2014
Revenue 53,119 - - - 221 53,340
Non-current assets - 46,972 86,259 113 - 133,344
Year ended 31
December 2013
Revenue 52,403 - - - - 52,403
Non-current assets 18,711 29,830 85,672 154 477 134,844
All assets of the Burkina Faso segment are shown within the
disposal Group held for sale; accordingly none are included in the
non-current assets of the Group.
5 LOSS PER SHARE
2014 2013
The calculation of the basic US$000 US$000
and diluted loss per share is
based on the following data:
Loss for the purposes of loss
per share (net loss for the
year attributable to equity
holders of the parent)
Continuing operations (7,908) (11,054)
Discontinued operations (7,824) (36,042)
Total loss for the year attributable
to owners of the parent (15,732) (47,096)
Number of shares
Weighted average number of ordinary
shares for the year ('000's) 298,884 173,086
Effect of share options in issue
(1) - -
Weighted average for the purposes
of diluted loss per share ('000's) 298,884 173,086
(1) None of the share options in issue are dilutive at the
current share price.
6 INTANGIBLE ASSETS Deferred
Exploration exploration
and mining and evaluation Total
rights costs US$000
US$000 US$000
COST
At 1 January 2013 56,548 70,414 126,962
Additions - 22,253 22,253
Impairment - (9,747) (9,747)
Transfer to property,
plant and equipment (26,326) 4,206 (22,120)
At 31 December 2013 30,222 87,126 117,348
Additions 5 18,034 18,039
Reclassification to
assets held for sale (6,033) - (6,033)
At 31 December 2014 24,194 105,160 129,354
------------- --------------- --------
AMORTISATION
------------- --------------- --------
At 1 January 2013 6,849 - 6,849
Charge for the year 277 - 277
At 31 December 2013 7,126 - 7,126
------------- --------------- --------
Charge for the year 844 - 844
Reclassification to
assets held for sale (6,033) - (6,033)
At 31 December 2014 1,937 - 1,937
NET BOOK VALUE
At 31 December 2014 22,257 105,160 127,417
At 31 December 2013 23,096 87,126 110,222
At 1 January 2013 49,699 70,414 120,113
Included above is an amount of US$81.3m in relation to the
Baomahun Gold Project. A further US$4.9m is included within
Property Plant and Equipment in Note 7 relating to Baomahun. These
amounts are recoverable through the exploitation or sale of the
project. In order to recover this amount through exploitation
significant additional funds would be required to construct an
operating mine.
Also included above is US$46.1m in relation to the Yaoure Gold
Project. A further US$0.9m is included within Property Plant and
Equipment in Note 7 relating to Yaoure. Yaoure faces the same risk
as described above for Baomahun.
7 PROPERTY, PLANT Mining, development Motor vehicles,
AND EQUIPMENT and associated office
property, equipment,
plant and fixtures
equipment & computers Total
cost US$000 US$000
US$000
COST
At 1 January 2013 87,563 7,353 94,916
Additions 8,854 181 9,035
Impairment (20,118) - (20,118)
Business combination - 709 709
Transfer from/(to)
intangible assets 22,157 (37) 22,120
Disposals (101) (98) (199)
----------------------- --------------- -----------
At 31 December
2013 98,355 8,108 106,463
Additions 1,492 44 1,536
Disposals (20,472) (822) (21,294)
Reclassification
to assets held
for sale (42,429) (4,782) (47,211)
At 31 December
2014 36,946 2,548 39,494
DEPRECIATION
At 1 January 2013 65,360 5,174 70,534
Charge for the
year 13,170 592 13,762
Disposals (10) (31) (41)
At 31 December
2013 78,520 5,735 84,255
Charge for the
year 10,134 767 10,901
Disposals (19,276) (677) (19,953)
Reclassification
to assets held
for sale (38,095) (3,541) (41,636)
At 31 December
2014 31,283 2,284 33,567
NET BOOK VALUE
At 31 December
2014 5,663 264 5,927
At 31 December
2013 19,835 2,373 22,208
At 1 January 2013 22,203 2,179 24,382
8 DISCONTINUED OPERATIONS
In August 2014 the company announced the cessation of mining
operations at the Kalsaka/Sega gold project in Burkina Faso. One
subsidiary, Seguenega Mining SA, was placed into liquidation on 9
December 2014 and has been deconsolidated at that date. The
remaining controlled subsidiaries have been classified as held for
sale as disclosed in note 9.
On 1 September 2014 the assets of ADS (Liberia) Inc were sold
and the company was placed into formal dissolution on 20 October
2014.
As at 31 December 2013 these reporting segments were not
discontinued or classified as held for sale, accordingly the
comparative consolidated statement of comprehensive income has been
represented to show the discontinued operations separately from the
continuing operations.
2014 2014 2014 2013 2013 2013
Burkina Liberia Total Burkina Liberia Total
Faso Faso
US$000 US$000 US$000 US$000 US$000 US$000
a) Net assets
disposed
Property, plant
and equipment 1,196 - 1,196 - - -
Inventories 15,577 - 15,577 - - -
Other receivables 8,641 - 8,641 - - -
Cash and cash
equivalents 49 - 49 - - -
--------- --------- -------- --------- --------- --------
Total assets 25,463 - 25,463 - - -
Trade and other
payables (25,211) (63) (25,274) - - -
Provisions (477) - (477) - - -
--------- --------- -------- --------- --------- --------
Total liabilities (25,688) (63) (25,751) - - -
Non-controlling
interest recycled
on disposal 2,547 - 2,547 - - -
--------- --------- -------- --------- --------- --------
Net assets disposed 2,322 (63) 2,259 - - -
========= ========= ======== ========= ========= ========
b) Results of
discontinued operations
Revenue 53,119 221 53,340 52,403 - 52,403
Costs of sales (54,071) (9) (54,080) (55,651) (405) (56,056)
--------- --------- -------- --------- --------- --------
Gross (loss)/profit (952) 212 (740) (3,248) (405) (3,653)
Other operating
costs (5,110) (1,284) (6,394) (8,933) (466) (9,399)
--------- --------- -------- --------- --------- --------
Operating loss (6,062) (1,072) (7,134) (12,181) (871) (13,052)
Finance income 58 - 58 68 - 68
Finance costs (144) - (144) (447) - (447)
--------- --------- -------- --------- --------- --------
Loss before taxation (6,148) (1,072) (7,220) (12,560) (871) (13,431)
Income tax (85) - (85) (153) - (153)
--------- --------- -------- --------- --------- --------
Loss after tax
before impairment
charge (6,233) (1,072) (7,305) (12,713) (871) (13,584)
Impairment charge (2,320) - (2,320) (27,271) - (27,271)
--------- --------- -------- --------- --------- --------
Net loss for the
year (8,553) (1,072) (9,625) (39,984) (871) (40,855)
========= ========= ======== ========= ========= ========
Net assets disposed (2,322) 63 (2,259) - - -
Net loss for the
year (8,553) (1,072) (9,625) (39,984) (871) (40,855)
--------- --------- -------- --------- --------- --------
Loss on discontinued
operations (10,875) (1,009) (11,884) (39,984) (871) (40,855)
========= ========= ======== ========= ========= ========
c) The consolidated statement of cash flows includes
the following amounts related to discontinued operations
2014 2013
Total Total
US$000 US$000
Operating activities (1,672) 15,199
Investing activities (1,191) (14,017)
Financing activities - 19
------------- ------------
Net cash utilised
in discontinued
operations (2,863) 1,201
============= ============
9 DISPOSAL GROUP HELD FOR SALE
The Burkinabe subsidiaries that remain in the control of the
Company have been presented as a disposal group held for sale
following the commitment of the Company's Board, on 4 December
2014, to sell the operations. The subsidiaries held for sale are
Kalsaka Mining SA, Cluff Gold Sega Sarl and Cluff Mining Burkina
Sarl. Efforts to sell the disposal group have commenced, and a sale
is expected within 12 months. The disposal group has been treated
as a discontinued operation and included in note 8.
A provision totalling US$2.3m has been made against the net
assets of the disposal group due to uncertainty concerning full
recovery of some amounts, equally the Company has no requirement to
compensate for any shortfall with regard to liabilities,
accordingly assets and liabilities are considered to total the same
amount.
At 31 December 2014, the disposal group comprised the following
assets and liabilities:
Assets of disposal group held 2014
for sale
US$000
Property, plant and equipment 5,575
Inventory 1,744
Other receivables and recoverable
taxes 3,173
Cash and cash equivalents 3,014
13,506
Liabilities of disposal group
held for sale
Trade and other payables 10,063
Provisions 3,443
13,506
There are no cumulative income or expenses included in other
comprehensive income relating to the disposal group.
10 LITIGATION
Cote d'Ivoire
In February 2011 the Company received a proposal for additional
costs sustained by the mining contractor at the heap leach mining
operations at Yaoure totalling US$9.2m. An updated claim was made
in June 2011 totalling a further US$5.4m. Further claims for
additional charges and interest were made in December 2013 and in
December 2014 for a total claim of US$36.4m.
Whilst the situation remains unresolved, the Company has
received external advice that confirms that the current provision
of US$1.0m (included in accruals) is, in the opinion of the
Directors, the maximum payable under the terms of the contract.
The terms of the contract clearly state that the rates set out
therein shall apply regardless of the difficulty in performing the
works under the contract, such that the majority of the additional
costs claimed cannot be recovered under the contract. The continued
addition of cumulative interest charges to the claim is also
completely without merit.
Burkina Faso
On 4 August 2014 the Company's subsidiary Seguenega Mining SA
received a suspension of works notice from the mining contractor
for the Kalsaka/Sega gold project in Burkina Faso due to none
payment of invoices. The mining contractor initiated preliminary
legal proceedings in Burkina Faso and Cote d'Ivoire claiming joint
and several liability against the Company for the debts of the
subsidiary totalling approximately US$18.0m (at the year-end
exchange rate) plus damages. The total amount of unpaid invoices is
disputed by Seguenega Mining SA. The court appointed liquidator has
stated the total debt due of Seguenega Mining SA, to the
contractor, to be US$14.4m (7.8 billion West African CFA
Franc).
The Company has no contractual responsibility for the debts of
Seguenega Mining SA, which was placed into liquidation on 9
December 2014, and has not provided a parent company guarantee. The
Company has received detailed legal advice that the Company is not
liable for the debts of its subsidiary and the legal action is
considered highly unlikely to succeed or have any recourse to the
Company. As the possibility of a transfer of benefits is considered
to be remote no provision has been made and it does not meet the
definition of a contingent liability in accordance with IAS 37
Provisions, Contingent Liabilities and Contingent Assets.
Subsequent to the year end the liquidator of Seguenega Mining SA
commenced payments to outstanding creditors, including partial
payment of the outstanding balance due to the mining
contractor.
11 EVENTS AFTER THE REPORTING PERIOD
On 21 January 2015 the Company announced the placement of
91,250,000 ordinary shares of 1p at 16p. The placement was subject
to shareholder approval which was sought and received at the
General Meeting held on 6 February 2015. Following the placing of
these shares the Company had 420,386,077 ordinary shares of 1p in
issue.
[i] A junior miner is defined here as an explorer/developer or a
producer with FY14 production of <200koz.
[ii] See NI 43-101 compliant technical report entitled,
'Technical Report and Preliminary Economic Assessment of the Yaoure
Gold Project, Côte d'Ivoire', dated 25 April 2014
[iii] See press release entitled, 'Completion of drilling
campaign at Yaoure Gold Project', dated 21 October 2014
[iv] See article by MinEx Consulting in Mining Journal, August
2014
[v] See reference i.
[vi] See NI 43-101 compliant technical report entitled,
'Feasibility Study of the Baomahun Project in Sierra Leone NI
43-101 Technical Report', dated 28 June 2013
[vii] See press release entitled, 'Results of first phase of
Baomahun optimisation work', dated 30 January 2014
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR BXGDSRUGBGUD
Amara (LSE:AMA)
Historical Stock Chart
From Mar 2024 to Apr 2024
Amara (LSE:AMA)
Historical Stock Chart
From Apr 2023 to Apr 2024